UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
ý☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 30, 201725, 2021
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file numbernumber: 001-35368
cpri-20211225_g1.jpg
CAPRI HOLDINGS LTD
Michael Kors Holdings Limited
(Exact Name of Registrant as Specified in Its Charter)
British Virgin IslandsN/A
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
33 Kingsway
London, United Kingdom
WC2B 6UF
(Address of Principal Executive Offices)principal executive offices)
(Registrant’s telephone number, including area code: 44 207 632 8600)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Ordinary Shares, no par valueCPRINew York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. 
x☒
Yes¨☐No
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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 
x☒
Yes¨☐No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerý☒Accelerated filer
¨
☐
Non-accelerated filer
¨ (Do not check if smaller reporting company)
☐		Smaller reporting company
¨
☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
¨☐
Yesx☒No
As of February 5, 2018, Michael KorsJanuary 26, 2022, Capri Holdings Limited had 152,184,610147,615,288 ordinary shares outstanding.


TABLE OF CONTENTS
Page
No.
PART I FINANCIAL INFORMATION
Item 1.
Financial Statements
3

TABLE OF CONTENTS
Page
No.
PART I FINANCIAL INFORMATION
Item 1.Financial Statements3
Condensed Consolidated Balance Sheets (unaudited) as of December 30, 2017December 25, 2021 and April 1, 2017March 27, 2021
3

Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three months and nine months ended December 30, 2017December 25, 2021 and December 31, 2016December 26, 2020
4

Condensed Consolidated Statements of Shareholders’ Equity (unaudited) for the three and nine months ended December 30, 2017December 25, 2021 andDecember 26, 2020
5

Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended December 30, 2017 25, 2021 and December 31, 2016 26, 2020
67

Notes to Condensed Consolidated Financial Statements (unaudited)
78

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
31

Item 3.
Quantitative and Qualitative Disclosures About Market Risk
5350

Item 4.
Controls and Procedures
5452

PART II OTHER INFORMATION
Item 1.
5553

Item 1A.
5553

Item 2.
5553

Item 6.5.
5553

Item 6.
54
5655




2



PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MICHAEL KORSCAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
December 25,
2021		March 27,
2021
Assets
Current assets
Cash and cash equivalents$261 $232 
Receivables, net449 373 
Inventories, net978 736 
Prepaid expenses and other current assets384 205 
Total current assets2,072 1,546 
Property and equipment, net460 485 
Operating lease right-of-use assets1,401 1,504 
Intangible assets, net1,895 1,992 
Goodwill1,447 1,498 
Deferred tax assets178 278 
Other assets227 178 
Total assets$7,680 $7,481 
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable$593 $512 
Accrued payroll and payroll related expenses149 116 
Accrued income taxes166 126 
Short-term operating lease liabilities437 447 
Short-term debt26 123 
Accrued expenses and other current liabilities381 297 
Total current liabilities1,752 1,621 
Long-term operating lease liabilities1,503 1,657 
Deferred tax liabilities443 397 
Long-term debt976 1,219 
Other long-term liabilities231 430 
Total liabilities4,905 5,324 
Commitments and contingencies (Note 10)00
Shareholders’ equity
Ordinary shares, no par value; 650,000,000 shares authorized; 221,322,510 shares issued and 147,252,018 outstanding at December 25, 2021; 219,222,937 shares issued and 151,280,011 outstanding at March 27, 2021— — 
Treasury shares, at cost (74,070,492 shares at December 25, 2021 and 67,942,926 shares at March 27, 2021)(3,686)(3,326)
Additional paid-in capital1,238 1,158 
Accumulated other comprehensive income213 56 
Retained earnings5,011 4,270 
Total shareholders’ equity of Capri2,776 2,158 
Noncontrolling interest(1)(1)
Total shareholders’ equity2,775 2,157 
Total liabilities and shareholders’ equity$7,680 $7,481 
 December 30,
2017		 April 1,
2017
Assets   
Current assets   
Cash and cash equivalents$317.1
 $227.7
Receivables, net288.0
 265.8
Inventories677.2
 549.3
Prepaid expenses and other current assets162.3
 121.9
Total current assets1,444.6
 1,164.7
Property and equipment, net599.4
 591.5
Intangible assets, net1,215.4
 418.1
Goodwill822.0
 119.7
Deferred tax assets64.7
 73.3
Other assets70.7
 42.3
Total assets$4,216.8
 $2,409.6
Liabilities and Shareholders’ Equity   
Current liabilities   
Accounts payable$290.2
 $176.3
Accrued payroll and payroll related expenses85.7
 61.1
Accrued income taxes68.7
 60.3
Short-term debt0.1
 133.1
Accrued expenses and other current liabilities277.4
 135.0
Total current liabilities722.1
 565.8
Deferred rent134.8
 137.8
Deferred tax liabilities217.0
 80.0
Long-term debt992.4
 —
Other long-term liabilities70.2
 31.0
Total liabilities2,136.5
 814.6
Commitments and contingencies
 
Shareholders’ equity   
Ordinary shares, no par value; 650,000,000 shares authorized; 210,302,628 shares issued and 152,167,403 outstanding at December 30, 2017; 209,332,493 shares issued and 155,833,304 outstanding at April 1, 2017—
 —
Treasury shares, at cost (58,135,225 shares at December 30, 2017 and 53,499,189 shares at April 1, 2017)(2,815.9) (2,654.9)
Additional paid-in capital803.3
 767.8
Accumulated other comprehensive loss(18.4) (80.6)
Retained earnings4,107.9
 3,560.3
Total shareholders’ equity of MKHL2,076.9
 1,592.6
Noncontrolling interest3.4
 2.4
Total shareholders' equity2,080.3
 1,595.0
Total liabilities and shareholders’ equity$4,216.8
 $2,409.6

See accompanying notes to consolidated financial statements.

3


MICHAEL KORSCAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In millions, except share and per share data)
(Unaudited)

Three Months Ended Nine Months Ended Three Months EndedNine Months Ended
December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016		 December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Total revenue$1,440.1
 $1,352.8
 $3,539.1
 $3,428.9
Total revenue$1,609 $1,302 $4,162 $2,863 
Cost of goods sold556.1
 547.1
 1,389.6
 1,387.2
Cost of goods sold561 454 1,374 1,003 
Gross profit884.0
 805.7
 2,149.5
 2,041.7
Gross profit1,048 848 2,788 1,860 
Selling, general and administrative expenses485.9
 407.6
 1,267.4
 1,130.0
Selling, general and administrative expenses656 538 1,800 1,414 
Depreciation and amortization54.0
 55.7
 149.9
 162.5
Depreciation and amortization47 52 146 160 
Impairment of long-lived assets2.6
 0.5
 18.9
 5.4
Restructuring and other charges (1)
28.0
 —
 51.3
 11.3
Impairment of assetsImpairment of assets— 90 33 110 
Restructuring and other chargesRestructuring and other charges14 1 25 18 
Total operating expenses570.5
 463.8
 1,487.5
 1,309.2
Total operating expenses717 681 2,004 1,702 
Income from operations313.5
 341.9
 662.0
 732.5
Income from operations331 167 784 158 
Other income, net(0.1) (4.1) (1.0) (4.7)Other income, net— (3)(2)(4)
Interest expense, net8.3
 3.4
 10.2
 5.1
Foreign currency loss (gain)27.0
 0.9
 (14.7) 2.2
Income before provision for income taxes278.3
 341.7
 667.5
 729.9
Provision for income taxes58.9
 70.4
 119.9
 151.6
Interest (income) expense, netInterest (income) expense, net(7)10 (11)39 
Foreign currency (gain) lossForeign currency (gain) loss(4)(13)1 (16)
Income before income taxesIncome before income taxes342 173 796 139 
Provision for (benefit from) income taxesProvision for (benefit from) income taxes19 (5)54 20 
Net income219.4
 271.3
 547.6
 578.3
Net income323 178 742 119 
Less: Net loss attributable to noncontrolling interest—
 —
 (0.2) (1.0)
Net income attributable to MKHL$219.4
 $271.3
 $547.8
 $579.3
Less: Net income (loss) attributable to noncontrolling interestLess: Net income (loss) attributable to noncontrolling interest1 (1)1 (2)
Net income attributable to CapriNet income attributable to Capri$322 $179 $741 $121 
       
Weighted average ordinary shares outstanding:
      Weighted average ordinary shares outstanding:
Basic152,047,963
 163,148,597
 152,772,067
 168,000,933
Basic149,717,485 150,661,252 150,975,773 150,236,612 
Diluted154,623,339
 165,214,045
 155,220,984
 170,222,588
Diluted152,375,294 151,958,057 153,834,120 151,417,457 
Net income per ordinary share attributable to MKHL:
      
Net income per ordinary share attributable to Capri:Net income per ordinary share attributable to Capri:
Basic$1.44
 $1.66
 $3.59
 $3.45
Basic$2.15 $1.19 $4.91 $0.80 
Diluted$1.42
 $1.64
 $3.53
 $3.40
Diluted$2.11 $1.18 $4.82 $0.80 
       
Statements of Comprehensive Income:
      Statements of Comprehensive Income:
Net income$219.4
 $271.3
 $547.6
 $578.3
Net income$323 $178 $742 $119 
Foreign currency translation adjustments41.6
 (20.1) 78.7
 (20.8)Foreign currency translation adjustments34 (27)147 26 
Net (loss) gain on derivatives(0.3) 9.4
 (16.4) 11.2
Net gain (loss) on derivativesNet gain (loss) on derivatives5 (7)9 (10)
Comprehensive income260.7
 260.6
 609.9
 568.7
Comprehensive income362 144 898 135 
Less: Net loss attributable to noncontrolling interest—
 —
 (0.2) (1.0)
Less: Other comprehensive income (loss) attributable to noncontrolling interest0.1
 (0.4) 0.1
 (0.4)
Comprehensive income attributable to MKHL$260.6
 $261.0
 $610.0
 $570.1
Less: Net income (loss) attributable to noncontrolling interestLess: Net income (loss) attributable to noncontrolling interest1 (1)1 (2)
Less: Foreign currency translation adjustments attributable to noncontrolling interestLess: Foreign currency translation adjustments attributable to noncontrolling interest— — (1)— 
Comprehensive income attributable to CapriComprehensive income attributable to Capri$361 $145 $898 $137 
(1) Restructuring and other charges includes store closure costs recorded in connection with the Retail Fleet Optimization Plan, as well as transaction and transition costs recorded in connection with the acquisitions of Jimmy Choo Group Limited (formerly known as Jimmy Choo PLC) and Michael Kors (HK) Limited and Subsidiaries (see Note 3 and Note 8).
See accompanying notes to consolidated financial statements.

4


MICHAEL KORSCAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTSTATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data which is in thousands)
(Unaudited)
 Ordinary SharesAdditional
Paid-in
Capital		Treasury SharesAccumulated Other Comprehensive IncomeRetained
Earnings		Total Equity of CapriNon-controlling InterestTotal Equity
 SharesAmountsSharesAmounts
Balance at September 25, 2021221,296 $— $1,225 (70,849)$(3,486)$174 $4,689 $2,602 $(2)$2,600 
Net income— — — — — — 322 322 1 323 
Other comprehensive income— — — — — 39 — 39 — 39 
Total comprehensive income— — — — — — — 361 1 362 
Vesting of restricted awards, net of forfeitures27 — — — — — — — — — 
Exercise of employee share options— — — — — — — — — — 
Share based compensation expense— — 13 — — — — 13 — 13 
Repurchase of ordinary shares— — — (3,222)(200)— — (200)— (200)
Balance at December 25, 2021221,323 $— $1,238 (74,071)$(3,686)$213 $5,011 $2,776 $(1)$2,775 
 Ordinary SharesAdditional
Paid-in
Capital		Treasury SharesAccumulated Other Comprehensive IncomeRetained
Earnings		Total Equity of CapriNon-controlling InterestTotal Equity
 SharesAmountsSharesAmounts
Balance at March 27, 2021219,223 $— $1,158 (67,943)$(3,326)$56 $4,270 $2,158 $(1)$2,157 
Net income— — — — — — 741 741 1 742 
Other comprehensive income (loss)— — — — — 157 — 157 (1)156 
Total comprehensive income— — — — — — — 898 — 898 
Vesting of restricted awards, net of forfeitures1,817 — — — — — — — — — 
Exercise of employee share options283 — 11 — — — — 11 — 11 
Share based compensation expense— — 69 — — — — 69 — 69 
Repurchase of ordinary shares— — — (6,128)(360)— — (360)— (360)
Balance at December 25, 2021221,323 $— $1,238 (74,071)$(3,686)$213 $5,011 $2,776 $(1)$2,775 



5


CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data which is in thousands)
(Unaudited)


 Ordinary Shares 
Additional
Paid-in
Capital
 Treasury Shares 
Accumulated
Other
Comprehensive
(Loss) Income
 
Retained
Earnings
 Total Equity of MKHL Non-controlling Interest Total Equity
 Shares Amounts  Shares Amounts   
Balance at April 1, 2017209,332
 $—
 $767.8
 (53,499) $(2,654.9) $(80.6) $3,560.3
 $1,592.6
 $2.4
 $1,595.0
Net income—
 —
 —
 —
 —
 —
 547.8
 547.8
 (0.2) 547.6
Other comprehensive income—
 —
 —
 —
 —
 62.2
 —
 62.2
 0.1
 62.3
Total comprehensive income—
 —
 —
 —
 —
 —
 —
 610.0
 (0.1) 609.9
Non-controlling interest for Jimmy Choo joint ventures

—
 —
 —
 —
 —
 —
 —
—
—
 3.1
 3.1
Partial repurchase of non-controlling interest—
 —
 0.5
 —
 —
 —
 —
 0.5
 (1.0) (0.5)
Vesting of restricted awards, net of forfeitures476
 —
 —
 —
 —
 —
 —
 —
 —
 —
Exercises of employee share options495
 —
 5.5
 —
 —
 —
 —
 5.5
 —
 5.5
Equity compensation expense

 —
 29.6
 —
 —
 —
 —
 29.6
 —
 29.6
Purchase of treasury shares—
 —
 —
 (4,636) (161.0) —
 —
 (161.0) —
 (161.0)
Redemption of capital/dividends—
 —
 —
 —
 —
 —
 (0.2) (0.2) (1.0) (1.2)
Other—
 —
 (0.1) —
 —
 —
 —
 (0.1) —
 (0.1)
Balance at December 30, 2017210,303
 $—
 $803.3
 (58,135) $(2,815.9) $(18.4) $4,107.9
 $2,076.9
 $3.4
 $2,080.3
 Ordinary SharesAdditional
Paid-in
Capital		Treasury SharesAccumulated Other Comprehensive Income (Loss)Retained
Earnings		Total Equity of CapriNon-controlling InterestTotal Equity
 SharesAmountsSharesAmounts
Balance at September 26, 2020218,563 $— $1,126 (67,942)$(3,326)$125 $4,274 $2,199 $— $2,199 
Net income (loss)— — — — — — 179 179 (1)178 
Other comprehensive loss— — — — — (34)— (34)— (34)
Total comprehensive income (loss)— — — — — — — 145 (1)144 
Vesting of restricted awards, net of forfeitures41 — — — — — — — — — 
Exercise of employee share options21 — — — — — — — — — 
Share based compensation expense— — 12 — — — — 12 — 12 
Repurchase of ordinary shares— — — (1)— — — — — — 
Balance at December 26, 2020218,625 $— $1,138 (67,943)$(3,326)$91 $4,453 $2,356 $(1)$2,355 


 Ordinary SharesAdditional
Paid-in
Capital		Treasury SharesAccumulated Other Comprehensive IncomeRetained
Earnings		Total Equity of CapriNon-controlling InterestTotal Equity
 SharesAmountsSharesAmounts
Balance at March 28, 2020217,320 $— $1,085 (67,894)$(3,325)$75 $4,332 $2,167 $1 $2,168 
Net income (loss)— — — — — — 121 121 (2)119 
Other comprehensive income— — — — — 16 — 16 — 16 
Total comprehensive income (loss)— — — — — — — 137 (2)135 
Vesting of restricted awards, net of forfeitures1,037 — — — — — — — — — 
Exercise of employee share options268 — — — — — — — — — 
Share based compensation expense— — 53 — — — — 53 — 53 
Repurchase of ordinary shares— — — (49)(1)— — (1)— (1)
Balance at December 26, 2020218,625 $— $1,138 (67,943)$(3,326)$91 $4,453 $2,356 $(1)$2,355 




See accompanying notes to consolidated financial statements.

6


MICHAEL KORSCAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended Nine Months Ended
December 30,
2017		 December 31,
2016		 December 25,
2021		December 26,
2020
Cash flows from operating activities   Cash flows from operating activities
Net income$547.6
 $578.3
Net income$742 $119 
Adjustments to reconcile net income to net cash provided by operating activities:   Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization149.9
 162.5
Depreciation and amortization146 160 
Equity compensation expense29.6
 26.7
Share based compensation expenseShare based compensation expense69 53 
Deferred income taxes33.1
 3.6
Deferred income taxes78 (37)
Impairment of long-lived assets

18.9
 5.4
Tax benefit on exercise of share options(0.2) (6.4)
Foreign currency (gains) losses(14.7) 2.2
Other non-cash charges5.1
 5.3
Impairment of assetsImpairment of assets43 113 
Changes to lease related balances, netChanges to lease related balances, net(95)(86)
Tax (benefit) expense on exercise of share optionsTax (benefit) expense on exercise of share options(3)5 
Amortization of deferred financing costsAmortization of deferred financing costs5 4 
Foreign currency gainsForeign currency gains(7)(16)
Credit lossesCredit losses2 (5)
Change in assets and liabilities:   Change in assets and liabilities:
Receivables, net17.1
 73.6
Receivables, net(84)(43)
Inventories20.8
 (20.2)
Inventories, netInventories, net(257)99 
Prepaid expenses and other current assets31.9
 (39.2)Prepaid expenses and other current assets(204)67 
Accounts payable(21.4) 74.4
Accounts payable94 34 
Accrued expenses and other current liabilities54.6
 11.8
Accrued expenses and other current liabilities165 80 
Other1.0
 17.7
Other long-term assets and liabilitiesOther long-term assets and liabilities19 (2)
Net cash provided by operating activities873.3
 895.7
Net cash provided by operating activities713 545 
Cash flows from investing activities   Cash flows from investing activities
Capital expenditures(83.8) (147.7)Capital expenditures(85)(85)
Purchase of intangible assets(3.2) (5.6)
Cash paid for business acquisitions, net of cash acquired(1,414.5) (480.6)
Realized gain on hedge related to Jimmy Choo acquisition4.7
 —
Cash paid for asset acquisitionsCash paid for asset acquisitions— (12)
Settlement of net investment hedgesSettlement of net investment hedges59 — 
Net cash used in investing activities(1,496.8) (633.9)Net cash used in investing activities(26)(97)
Cash flows from financing activities   Cash flows from financing activities
Debt borrowings2,078.8
 361.8
Debt borrowings501 2,276 
Debt repayments(1,222.1) (199.6)Debt repayments(846)(3,074)
Repurchases of treasury shares(161.0) (754.8)
Exercises of employee share options5.5
 8.0
Debt issuance costsDebt issuance costs— (4)
Repurchase of ordinary sharesRepurchase of ordinary shares(360)(1)
Exercise of employee share optionsExercise of employee share options11 — 
Other financing activities(0.2) —
Other financing activities31 — 
Net cash used in financing activities701.0
 (584.6)Net cash used in financing activities(663)(803)
Effect of exchange rate changes on cash and cash equivalents10.3
 (9.3)
Net increase (decrease) in cash and cash equivalents and restricted cash87.8
 (332.1)
Beginning of period (including restricted cash of $1.9 million at April 1, 2017)229.6
 702.0
End of period (including restricted cash of $0.3 million at December 30, 2017 and $1.1 million at December 31, 2016)$317.4
 $369.9
Effect of exchange rate changes on cash, cash equivalents and restricted cashEffect of exchange rate changes on cash, cash equivalents and restricted cash6 (8)
Net increase (decrease) in cash, cash equivalents and restricted cash Net increase (decrease) in cash, cash equivalents and restricted cash30 (363)
Beginning of periodBeginning of period234 592 
End of periodEnd of period$264 $229 
Supplemental disclosures of cash flow information   Supplemental disclosures of cash flow information
Cash paid for interest$6.5
 $3.1
Cash paid for interest$35 $46 
Cash paid for income taxes$85.0
 $164.7
Net cash paid (received) for income taxes Net cash paid (received) for income taxes$49 $(33)
Supplemental disclosure of non-cash investing and financing activities   Supplemental disclosure of non-cash investing and financing activities
Accrued capital expenditures$22.0
 $36.2
Accrued capital expenditures$24 $18 
See accompanying notes to consolidated financial statements.

7


MICHAEL KORSCAPRI HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Business and Basis of Presentation
Michael KorsCapri Holdings Limited (“MKHL,”Capri”, and together with its subsidiaries, the “Company”) was incorporated in the British Virgin Islands (“BVI”) on December 13, 2002. The Company is a holding company that owns brands that are leading designer, marketer, distributordesigners, marketers, distributors and retailerretailers of branded women’s and men'smen’s accessories, apparelfootwear and footwearready-to-wear bearing the Versace, Jimmy Choo and Michael Kors and Jimmy Choo tradenames and related trademarks “MICHAEL KORS,” “MICHAEL MICHAEL KORS,” “JIMMY CHOO,” and various other related trademarks and logos. The Company's business consists of fourCompany operates in 3 reportable segments: Versace, Jimmy Choo and Michael Kors ("MK") Retail, MK Wholesale, MK Licensing and Jimmy Choo.Kors. See Note 16 for additional information.
On November 1, 2017, the Company completed the acquisition of Jimmy Choo Group Limited, formerly known as Jimmy Choo PLC (“Jimmy Choo”) in cash for a total transaction value of $1.447 billion, including the repayment of existing debt obligations. As a result, the Company began consolidating Jimmy Choo into its operations beginning on November 1, 2017. Jimmy Choo is being reported as a separate reporting segment. See Note 3 and Note 16 for additional information.
On May 31, 2016, the Company acquired 100% of the stock of its previously licensed business in the Greater China region, Michael Kors (HK) Limited and Subsidiaries (“MKHKL”), which has operations in China, Hong Kong, Macau and Taiwan. As a result, the Company began consolidating MKHKL into its operations beginning on June 1, 2016. See Note 3 for additional information.
The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The interim consolidated financial statements as of December 30, 201725, 2021 and for the three and nine months ended December 30, 201725, 2021 and December 31, 201626, 2020 are unaudited. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended April 1, 2017,March 27, 2021, as filed with the Securities and Exchange Commission on May 31, 2017,26, 2021, in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.

The Company utilizes a 5252- to 53 week53-week fiscal year ending on the Saturday closest to March 31. As such,and the term “Fiscal Year” or “Fiscal” refers to the 52-weekthat 52- or 53-week period, ending on that day.period. The results for the three and nine months ended December 30, 201725, 2021 and December 31, 2016,26, 2020 are based on 13-week and 39-week periods, respectively. The Company’s Fiscal Year 2022 is a 53-week period ending April 2, 2022.

2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the consolidated financial statements include allowances for customer deductions, sales returns, sales discounts, and doubtful accounts,credit losses, estimates of inventory recovery, business combinations, fairnet realizable value, measurements, the valuation of share-based compensation, the valuation of deferred taxes, goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives used for amortization and depreciation of intangible assets and property and equipment.assigned to these assets. Actual results could differ from those estimates.


Reclassifications
Certain reclassifications have been made to the prior periods’ financial information in order to conform to the current period’s presentation. The Company reclassified $17.4 million of the previously recorded Fiscal 2018 transaction and transition costs related to the acquisition of Jimmy Choo and $11.3 million of transaction costs recorded in Fiscal 2017 in connection with the acquisition of MKHKL from selling, general and administrative expenses to restructuring and other charges in the Company's consolidated statements of operations and comprehensive income for the nine months ended December 30, 2017 and December 31, 2016, respectively, to provide a more transparent disclosure of these costs.
Seasonality
The Company experiences certain effects of seasonality with respect to its wholesale and retail segments.business. The Company’s MK Wholesale segment generally experiences its lowest sales in its first fiscal quarter. The Company’s MK Retail segmentCompany generally experiences greater sales during its third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during its first fiscal quarter.
COVID-19 Related Government Assistance and Subsidies
During the three and nine months ended December 25, 2021, the Company recorded $2 million and $9 million, respectively, related to government assistance and subsidies. During the three and nine months ended and December 26, 2020, the Company recorded $5 million and $28 million, respectively, related to government assistance and subsidies. These amounts mostly relate to rent support and payroll expense and were primarily recorded as a resultreduction of holiday season sales. In the aggregate,selling, general and administrative expenses.
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Cash, Cash Equivalents and Restricted Cash
All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Included in the Company’s first fiscal quarter typically experiences significantly less sales volume relativecash and cash equivalents as of December 25, 2021 and March 27, 2021 are credit card receivables of $44 million and $25 million, respectively, which generally settle within two to three business days.
A reconciliation of cash, cash equivalents and restricted cash as of December 25, 2021 and March 27, 2021 from the consolidated balance sheets to the other three quartersconsolidated statements of cash flows is as follows (in millions):
 December 25,
2021		March 27,
2021
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$261 $232 
Restricted cash included within prepaid expenses and other current assets3 2 
Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows$264 $234 
Inventories, net
Inventories primarily consist of finished goods with the exception of raw materials and its third fiscal quarter generally has higher sales volume relative towork in process inventory. The combined total of raw materials and work in process inventory, net, recorded on the other three quarters.Company’s consolidated balance sheets was $28 million as of December 25, 2021 and March 27, 2021.

The net realizable value of the Company’s inventory as of December 25, 2021 and March 27, 2021 includes the adverse impacts associated with the COVID-19 pandemic.
Derivative Financial Instruments
Forward Foreign Currency Exchange Contracts
The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these forward currency contracts to hedge the Company’s cash flows, as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation.
In connection with the July 25, 2017 recommended cash offer for the entire issued and to be issued share capital of Jimmy Choo, the Company entered into a forward foreign currency exchange contract with a notional amount of £1.115 billion to mitigate its foreign currency exchange risk related to the acquisition. This derivative contract was not designated as an accounting hedge. Therefore, changes in fair value were recorded to foreign currency (gain) loss in the Company's consolidated statement of operations. The Company’s accounting policy is to classify cash flows from derivative instruments in the same category as the cash flows from the items being hedged. Accordingly, the Company classified the $4.7 million realized gain relating to this derivative instrument within cash flows from investing activities for the nine months ended December 30, 2017.
The Company designates certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged, and the manner in which hedge effectiveness will be assessed prospectively and retrospectively.hedged. The effective portion of changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income (loss) until the hedged item effectsaffects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income (loss) are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. Effectiveness is assessed on a quarterly basis and any portion of the designated hedge contracts deemed ineffective is recorded to foreign currency gain (loss). If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency gain (loss)(gain) loss in the Company’s consolidated statements of operations and comprehensive income. The Company classifies cash flows relating to its derivative instrumentsforward foreign currency exchange contracts related to purchase of inventory consistently with the classification of the hedged item or within cash flows from operating activities for contracts related to inventory purchases.activities.
The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign currency transaction they are intended to hedge.

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Net Investment Hedges
The Company also uses fixed-to-fixed cross currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between the U.S. Dollars and the associated foreign currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”, and has designated these contracts as net investment hedges. The net gain or loss on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest (income) expense, net, in the Company’s consolidated statements of operations and comprehensive income. Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.
Interest Rate Swap Agreements
The Company also uses interest rate swap agreements to hedge the variability of its cash flows resulting from floating interest rates on the Company’s borrowings. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest (income) expense, net, in the same period during which the hedged transactions affect earnings.
During the third quarter of Fiscal 2022, the Company terminated its only interest rate swap. As a result, the Company recognized a $1 million gain within interest (income) expense, net, in the Company’s consolidated statements of operations and comprehensive income.
Leases

The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through September 2043. The Company’s leases generally have terms of up to 10 years, generally require a fixed annual rent and may require the payment of additional rent if store sales exceed a negotiated amount. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through December 2025. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its restructuring activities. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease.

The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term.

The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees, material restrictions or covenants.
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The following table presents the Company’s supplemental cash flow information related to leases (in millions):
Nine Months Ended
December 25, 2021December 26, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases (1)
$413 $341 
(1)Operating cash flows used in operating leases for the nine months ended December 25, 2021 and December 26, 2020 excluded $1 million and $41 million, respectively, of deferred rent payments due to the COVID-19 pandemic.
During the three and nine months ended December 25, 2021, the Company recorded sublease income of $2 million and $6 million, respectively, within restructuring and other charges for stores relating to our restructuring plan and selling, general and administrative expenses for all other locations. During the three and nine months ended December 26, 2020, the Company recorded sublease income of $1 million and $4 million, respectively, within restructuring and other charges for stores relating to our restructuring plan and selling, general and administrative expenses for all other locations. During the three and nine months ended December 25, 2021, the Company recorded $3 million and $13 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract. During the three and nine months ended December 26, 2020, the Company recorded $13 million and $37 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract. The aforementioned rent concessions were recorded as a reduction to variable lease expense within selling, general and administrative expenses.
Net Income per Share
The Company’s basic net income per ordinary share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted net income per ordinary share reflects the potential dilution that would occur if share option grants or any other potentially dilutive instruments, including restricted shares and restricted share units (“RSUs”), were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are included inas diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method.
The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in millions, except share and per share data):
 Three Months EndedNine Months Ended
December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Numerator:
Net income attributable to Capri$322 $179 $741 $121 
Denominator:
Basic weighted average shares149,717,485 150,661,252 150,975,773 150,236,612 
Weighted average dilutive share equivalents:
Share options and restricted shares/units, and performance restricted share units2,657,809 1,296,805 2,858,347 1,180,845 
Diluted weighted average shares152,375,294 151,958,057 153,834,120 151,417,457 
Basic net income per share (1)
$2.15 $1.19 $4.91 $0.80 
Diluted net income per share (1)
$2.11 $1.18 $4.82 $0.80 
(1)Basic and diluted net income per share are calculated using unrounded numbers.
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 Three Months Ended Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Numerator:       
Net income attributable to MKHL$219.4
 $271.3
 $547.8
 $579.3
Denominator:       
Basic weighted average shares152,047,963
 163,148,597
 152,772,067
 168,000,933
Weighted average dilutive share equivalents:       
Share options, restricted shares/units, and performance restricted share units2,575,376
 2,065,448
 2,448,917
 2,221,655
Diluted weighted average shares154,623,339
 165,214,045
 155,220,984
 170,222,588
        
Basic net income per share$1.44
 $1.66
 $3.59
 $3.45
Diluted net income per share$1.42
 $1.64
 $3.53
 $3.40

During the three and nine months ended December 30, 2017,25, 2021, share equivalents of 2,243,436208,168 shares and 2,503,782411,394 shares, respectively, have been excluded from the above calculations due to their anti-dilutive effect. Share equivalents of 1,906,9414,269,343 shares and 2,002,3004,540,029 shares respectively, have been excluded from the above calculations duringfor the three and nine months ended December 31, 2016.26, 2020, respectively, due to their anti-dilutive effect.
Please refer toSee Note 2 in the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2017March 27, 2021 for a complete disclosure of the Company’s significant accounting policies.
U.S. Tax Reform
On December 22, 2017, the United States ("U.S.") government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including, among other things, lowering U.S. statutory federal tax rate and implementing a territorial tax system. As the Company has a March 31 fiscal year-end, the lower tax rate will be phased in, resulting in a U.S. statutory federal tax rate of approximately 32% for the fiscal year ended March 31, 2018 and a 21% U.S. statutory federal tax rate for fiscal years thereafter. The Tax Act also adds many new provisions, including changes to bonus depreciation, limits on the deductions for executive compensation and interest expense, a tax on global intangible low-taxed income ("GILTI"), the base erosion anti-abuse tax ("BEAT") and a deduction for foreign derived intangible income ("FDII"). The Company is still evaluating the impact of these provisions of the Tax Act, which do not apply until 2019, and thus, has not adjusted any net deferred tax assets of its foreign subsidiaries for the new tax.


As part of the transition to the new territorial tax system, the Tax Act imposes a tax on the mandatory deemed repatriation of earnings of the Company’s foreign subsidiaries. In addition, the reduction of the U.S. statutory federal tax rate will cause the Company to re-measure its U.S. deferred tax assets and liabilities.  In accordance with Accounting Standards Codification ("ASC") 740, the Company recorded the effects of the tax law change during the three months ended December 30, 2017, which resulted in a provisional charge of $12.4 million, comprised of an estimated deemed repatriation tax charge of $0.3 million and an estimated deferred tax charge of $12.1 million due to the re-measurement of the Company’s net U.S. deferred tax assets. Conversely, the Company realized a $2.0 million net benefit for the three and nine month periods ended December 30, 2017 due to the corporate tax rate reductions. While the Tax Act has negatively impacted the Company's results of operations for the three and nine months ended December 30, 2017 by approximately 370 basis points and 160 basis points, respectively, the lower corporate rate is expected to to result in an ongoing reduced tax rate for the Company.
In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") 118 to provide guidance for companies that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The final transition impacts of the Tax Act may differ from the above estimate, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, or any changes in accounting standards for income taxes or related interpretations in response to the Tax Act. In addition, once the Company finalizes certain tax positions when it files its 2017 U.S. tax return, it will be able to conclude whether any further adjustments are required to its deferred tax balances in the U.S., as well as to the total liability associated with the one-time mandatory tax. The Company believes that the analysis performed to date is sufficient to calculate a reasonable estimate of the impacts of the Tax Act.
Recently Adopted Accounting Pronouncements
Business CombinationsGovernment Assistance Disclosures
In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805) - Clarifying the Definition of a Business," to clarify the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or businesses. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years with early adoption permitted. The Company adopted ASU 2017-01 during the three months ended December 30, 2017, which did not have a material impact on its consolidated financial statements.
Share-Based Compensation
In March 2016,November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, “ImprovementsASU 2021-10, “Disclosures by Business Entities about Government Assistance”, which requires all business entities provide annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. These disclosures include providing the nature of the transactions and the related accounting policy used to Employee Share-Based Payment Accounting,” which simplifies accountingaccount for the transactions, the amounts and presentationfinancial statement line items impacted by these transactions, and the significant terms and conditions of share-based payments, primarily relatingthese transactions, including commitments and contingencies related to such transactions. ASU 2021-10 is effective for the recognition and classification of excess tax benefits, accounting for forfeitures and tax withholding requirements.Company beginning in its Fiscal 2023 with early adoption permitted. The Company early adopted ASU 2016-092021-10 during the firstthird quarter of Fiscal 2018, as required. Accordingly, during2022 and will continue to utilize the three and nine months ended December 30, 2017, excess tax benefits of $0.1 million and $0.2 million, respectively, which would have been previously reflected within additional paid-in capital, were recognized within the Company’s provision of income taxes. This change is expected to increase volatility in future provisions for income taxes. In addition, the Company eliminated windfall tax benefits from the treasury stock method calculation used to compute its diluted earnings per share. Both of the above changes have been adopted on a prospective basis, whereas cash flows related to excess tax benefits, previously reflected within financing activities, have been presented within operating activities within the Company’s consolidated statements of cash flows on a retrospective basis. Cash flows related to excess tax benefits were $6.4 million during the nine months ended December 31, 2016. The Company continues to reflect estimated forfeitures in its share-based compensation expense.grant accounting model.
Recently Issued Accounting Pronouncements
We haveThe Company has considered all new accounting pronouncements and, other than the recent pronouncementspronouncement discussed below, havehas concluded that there are no new pronouncements that may have a material impact on ourthe Company’s results of operations, financial condition or cash flows based on current information.

Reference Rate Reform

Hedge Accounting
On August 28, 2017,In March 2020, the FASB issued ASU No. 2017-12, “Targeted Improvements2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and in January 2021, issued ASU 2021-01, “Reference Rate Reform: Scope”. Both of these updates aim to Accountingease the potential burden in accounting for Hedging Activities.” The new standard is intendedreference rate reform. These updates provide optional expedients and exceptions, if certain criteria are met, for applying accounting principles generally accepted in the United States to improve and simplify rules relating to hedge accounting, including the elimination of periodic hedge ineffectiveness, recognition and presentation of components excluded from hedge effectiveness assessment, the ability to elect to perform subsequent effectiveness assessments qualitatively,contract modifications, hedging relationships and other provisions designedtransactions affected by the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to provide more transparency aroundalternative reference rates, such as the economicsSecured Overnight Financing Rate (“SOFR”). The amendments were effective upon issuance and allow companies to adopt the amendments on a prospective basis through December 31, 2022. The Company has not applied this ASU to any contract modifications or new hedging relationships in the current year. As of a company’s hedging strategy. ASU 2017-12December 25, 2021, the Company’s outstanding borrowings under the 2018 Term Loan Facility of $495 million and the total availability of $1 billion under the 2018 Revolving Credit Facility are both indexed to LIBOR. As such, these agreements are likely to be impacted by these ASUs upon adoption.

3. Revenue Recognition
The Company accounts for contracts with its customers when there is effective forapproval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectibility of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in Fiscal 2020, with early adoption permitted. exchange for goods or services.
The Company is currently evaluatingsells its products through 3 primary channels of distribution: retail, wholesale and licensing. Within the impactretail and wholesale channels, substantially all of ASU 2017-12 on its consolidated financial statements.
Revenue Recognition
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers,” which provides new guidance forCompany’s revenues recognized from contracts with customers,consist of sales of products that represent a single performance obligation, where control transfers at a point in time to the customer. For licensing arrangements, royalty and will replace the existing revenue recognition guidance. ASU 2014-09 requires thatadvertising revenue is recognized at an amountover time based on access provided to the companyCompany’s trademarks.
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Retail
The Company generates sales through directly operated stores and e-commerce sites throughout the Americas (U.S., Canada and Latin America), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (including Australia).
Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is entitled torecognized when the gift card is redeemed or upon transferring control of goods or services to customers, as opposed to when risks and rewards transfer to a customer. In July 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date,” which deferred the effective date of ASU 2014-09 by one year, making it effective“breakage” for the interim reporting periods withinestimated portion of gift cards that are not expected to be redeemed. “Breakage” revenue is calculated under the annual reporting period beginning after December 15, 2017, or beginning withproportional redemption methodology, which considers the Company’s Fiscal 2019. This standard may be applied retrospectively to all prior periods presented, or using a modified retrospective method with a cumulative adjustment to retained earningshistorical patterns of redemption in jurisdictions where the year of adoption.
The FASB has issued several additional ASUs to provide implementation guidance on ASU No. 2014-09, including ASU No. 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” issued in December 2016, ASU No. 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients” issued in May 2016, ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” issued in April 2016, and ASU No. 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” issued in March 2016 . The Company is considering this guidance in evaluatingnot required to remit the impactvalue of ASU 2014-09.
Most of our business is comprised of retail and wholesale operations, where revenue is recognized at a point of time. The Company has completed the initial assessment of the new standard and is currently progressing in its implementation. While the evaluation process is not complete, based on our assessment to date, the Company believes that some of the potential impacts of implementing this standard will include the timing of revenue recognition for its licensing royalties, recognition of breakage revenue for unredeemed gift cards as wellunclaimed property. The contract liability related to gift cards, net of estimated “breakage”, of $15 million and $12 million as expanded financial statement disclosures, including revenue recognition policies to identify performance obligations to customersof December 25, 2021 and significant judgments in measurementMarch 27, 2021, respectively, is included within accrued expenses and recognition. The Company currently anticipates adopting this standard using the modified retrospective method with the cumulative adjustment to retained earnings recorded during the first quarter of Fiscal 2019.
Lease Accounting
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and a right-to-use asset on the balance sheet for all leases, except certain short-term leases. ASU 2016-02 is effective beginning with the Company’s Fiscal 2020, with early adoption permitted, and must be implemented using a modified retrospective approach for all leases existing at, or entered into after the beginning of the earliest comparative period that is presented in the financial statements. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements but expects that the adoption of this standard will result in a significant increase in assets andother current liabilities on its consolidated balance sheets.
Goodwill
In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies the test for goodwill impairment by eliminating Step 2 of the goodwill impairment analysis, while retaining the option to perform an initial qualitative assessment for a reporting unit to determine if a quantitative impairment test is required. ASU 2017-04 is effective in the Company’s Fiscal 2021 with early adoption permitted and should be applied on a prospective basis.consolidated balance sheet.
Loyalty Program. The Company is currently evaluatingoffers a loyalty program, which allows its Michael Kors U.S. customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the impactinitial sales transaction based on the estimated relative fair value of ASU 2017-04the benefits based on its consolidated financial statements.


Share-Based Compensation
In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scopeprojected timing of Modification Accounting”, which simplifies modification accountingfuture redemptions and historical activity. These amounts include estimated “breakage” for entitiespoints that change the terms or conditions of share-based awards. ASU 2017-09 is effective for the Company’s Fiscal 2019 with early adoption permitted and is requiredare not expected to be applied on a prospective basis.redeemed.
Wholesale
The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company will evaluate the impactalso has arrangements where its products are sold to geographic licensees in certain parts of ASU 2017-09 on any future changes to the termsEMEA, Asia and conditions of its share-based compensation awards.South America.
3. Acquisitions
Acquisition of Jimmy Choo Group Limited
On November 1, 2017, the Company completed the acquisition of Jimmy Choo, whereby JAG Acquisitions (UK) Limited, the Company’s wholly-owned subsidiary, acquired all of Jimmy Choo’s issued and to be issued shares at a purchase price of 230 pence per share in cash, for a total transaction value of $1.447 billion, including the repayment of existing debt obligations, which was funded through a combination of borrowings under the Company’s new $1.0 billion term loan facility, the issuance of the Senior Notes and cash on hand (please refer to Note 9 for additional information).
The following table summarizes the aggregate purchase price consideration paid to acquire Jimmy Choo in cash (in millions):
 November 1, 2017
Consideration paid to Jimmy Choo shareholders$1,181.2
Repayment of debt and related obligations266.2
Total purchase price$1,447.4


Licensing
The Company believes that this combination will further strengthenprovides its future growth opportunities while also increasing boththird-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic diversificationlicensing arrangements. Under geographic licensing arrangements, third party licensees receive the right to distribute and will allow it to grow its international presence throughsell products bearing the formationCompany’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of a global fashion luxury group, bringing together industry-leading luxury fashion brands. Asia.
The Company accountedrecognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Generally, the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, certain guaranteed minimums for this acquisitionVersace are multi-year based.
As of December 25, 2021, contractually guaranteed minimum fees from the Company’s license agreements expected to be recognized as a business combination under the acquisition method of accounting. The following table summarizes the preliminary purchase price allocation of fair values of the assets acquired and liabilities assumed at the date of acquisitionrevenue during future periods were as follows (in millions):
 November 1, 2017
Cash and cash equivalents$34.3
Accounts receivable30.7
Inventory(1)
126.2
Other current assets63.9
Current assets255.1
Property and equipment(2)
51.0
Goodwill(3)
684.9
Brand(4)
577.8
Customer relationships(5)
212.8
Lease rights5.9
Deferred tax assets22.5
Other assets28.1
Total assets acquired$1,838.1
  
Accounts payable$129.3
Other current liabilities96.5
Current liabilities225.8
Deferred tax liabilities134.9
Other liabilities26.9
Total liabilities assumed$387.6
  
Less: Noncontrolling interest in joint ventures$3.1
  
Fair value of net assets acquired$1,447.4
Fair value of acquisition consideration$1,447.4
Contractually Guaranteed Minimum Fees
Remainder of Fiscal 2022$
(1) Includes an inventory step-up adjustment of $9.5 million, which will be recognized as an adjustment to the Company's cost of goods sold in its statement of operations over twelve months.
(2) Includes a $7.0 million adjustment to reduce the fair value of Jimmy Choo's leasehold improvements, which will be recognized over the remaining lease term.
(3) Represents the difference between the purchase price over the net identifiable tangible and intangible assets acquired has been allocated to goodwill, which is not deductible for tax purposes.
7 
(4)
Fiscal 2023		Represents the fair value Jimmy Choo's brand, which is an indefinite-lived intangible asset due to being essential to the Company's ability to operate the Jimmy Choo business for the foreseeable future. The Jimmy Choo brand was valued using the relief-from-royalty method of the income valuation approach.29 
Fiscal 202426 
Fiscal 202523 
Fiscal 202623 
Fiscal 2027 and thereafter73 
 Total$181 
(5) Represents customer relationships associated with Jimmy Choo wholesale customersSales Returns
The refund liability recorded as of December 25, 2021 was $65 million, and geographic licensees, which are being amortized over 15 years and customer relationships with product licensees, which are being amortized over 18 years. These useful lives were estimated based on the timerelated asset for the right to recover returned product as of December 25, 2021 was $19 million. The refund liability recorded as of March 27, 2021 was $46 million, and the related future discounted cash flows. These intangible assetsasset for the right to recover returned product as of March 27, 2021 was $14 million.
13

Contract Balances
Total contract liabilities were valued using multi-period excess-earnings valuation method.
Jimmy Choo's results of operations have been included in our consolidated financial statements beginning on November 1, 2017. Jimmy Choo contributed revenue of $114.7$21 million and net income$18 million as of $8.1 million (after amortization of non-cash purchase accounting adjustmentsDecember 25, 2021 and transition and transaction costs) for the period from the date of acquisition through December 30, 2017.


The following table summarizes the unaudited pro-forma consolidated results of operations forMarch 27, 2021, respectively. For the three and nine months ended December 30, 2017 and December 31, 2016 as if the acquisition had occurred on April 3, 2016, the beginning of Fiscal 2017 (in millions):
 Three Months Ended Nine Months Ended
 December 30, 2017December 31, 2016 December 30, 2017December 31, 2016
Pro-forma total revenue$1,478.5
$1,499.1
 $3,832.6
$3,819.6
Pro-forma net income242.8
279.4
 574.2
586.2
Pro-forma net income per ordinary share attributable to MKHL:     
Basic$1.60
$1.71
 $3.76
$3.49
Diluted$1.57
$1.69
 $3.70
$3.44
The unaudited pro-forma consolidated results above are based on the historical financial statements of25, 2021, the Company recognized $1 million and Jimmy Choo and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of Fiscal 2017 and are not indicative of the future operating results of the combined company. The financial information for Jimmy Choo prior to the acquisition has been included$9 million, respectively, in the pro-forma results of operations on a calendar-year basis and includes certain adjustments to Jimmy Choo’s historical consolidated financial statements to align with U.S. GAAP and the Company's accounting policies. The pro-forma consolidated results of operations also include the effects of purchase accounting adjustments, including amortization chargesrevenue which related to the finite-lived intangible assets acquired, fair value adjustments relating to leases and fixed assets, and the related tax effects assumingcontract liabilities that the business combination occurred on April 3, 2016. Purchase accounting amortization of the inventory step-up adjustment has been excluded from the above pro-forma amounts due to the short-term nature of this adjustment. The pro-forma consolidated financial statement also reflect the impact of debt repayment and borrowings made to finance the acquisition (see Note 9) and exclude historical interest expense for Jimmy Choo. Transaction costs of $22.2 million and $39.6 million forexisted at March 27, 2021. For the three and nine months ended December 30, 2017,26, 2020, the Company recognized $2 million and $7 million, respectively, in revenue which have beenrelated to contract liabilities that existed at March 28, 2020. There were no material contract assets recorded within restructuringas of December 25, 2021 and other chargesMarch 27, 2021.
There were no changes in historical variable consideration estimates that were materially different from actual results.
Disaggregation of Revenue
The following table presents the Company’s segment revenue disaggregated by geographic location (in millions):
 Three Months EndedNine Months Ended
 December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Versace revenue - the Americas$89 $57 $283 $132 
Versace revenue - EMEA99 76 304 183 
Versace revenue - Asia63 62 186 168 
 Total Versace251 195 773 483 
Jimmy Choo revenue - the Americas51 32 127 71 
Jimmy Choo revenue - EMEA69 40 175 102 
Jimmy Choo revenue - Asia58 49 155 121 
Total Jimmy Choo178 121 457 294 
Michael Kors revenue - the Americas814 671 1,960 1,321 
Michael Kors revenue - EMEA237 183 616 447 
Michael Kors revenue - Asia129 132 356 318 
 Total Michael Kors1,180 986 2,932 2,086 
Total revenue - the Americas954 760 2,370 1,524 
Total revenue - EMEA405 299 1,095 732 
Total revenue - Asia250 243 697 607 
Total revenue$1,609 $1,302 $4,162 $2,863 
See Note 3 in the Company’s consolidated statements of operations and comprehensive income, have been excluded fromAnnual Report on Form 10-K for the above pro-forma consolidated results of operations due to their non-recurring nature.
Acquisition of Michael Kors (HK) Limited
On May 31, 2016, the Company acquired 100%fiscal year ended March 27, 2021 for a complete disclosure of the stock of MKHKL, its licensee in the Greater China region, which includes China, Hong Kong, Macau and Taiwan, to allow it to better manage opportunities and capitalize on the growth potential in the region. This acquisition was funded by a cash payment of $500.0 million. The Company accounted for the acquisition as a business combination and MKHKL’s results of operations have been included in its consolidated financial statements beginning on June 1, 2016.Company’s revenue recognition policy.
MKHKL contributed revenue of $79.8 million and $216.5 million, respectively, for the three and nine months ended December 30, 2017, and net income of $0.4 million and $2.8 million, respectively, for the three and nine months ended December 30, 2017. During the three months ended December 31, 2016, MKHKL contributed revenue of $65.7 million and net loss of $5.3 million, and revenue of $137.7 million and net loss of $11.3 million for the period from the date of acquisition through December 31, 2016 (after amortization of non-cash valuation adjustments and integration costs).


The following table summarizes the unaudited pro-forma consolidated results of operations for the three and nine months ended December 31, 2016 as if the acquisition had occurred on March 29, 2015, the beginning of Fiscal 2016 (in millions):
 Three Months Ended Nine Months Ended
 December 31, 2016 December 31, 2016
Pro-forma total revenue$1,352.8
 $3,455.3
Pro-forma net income271.0
 584.0
Pro-forma net income per ordinary share attributable to MKHL:   
Basic$1.66
 $3.48
Diluted$1.64
 $3.43
The unaudited pro-forma consolidated results above are based on the historical financial statements of the Company and MKHKL and are not necessarily indicative of the results of operations that would have been achieved if the acquisition was completed at the beginning of Fiscal 2016 and are not indicative of the future operating results of the combined company. The pro-forma consolidated results of operations reflect the elimination of intercompany transactions and include the effects of purchase accounting adjustments, including amortization charges related to the finite-lived intangible assets acquired (reacquired rights and customer relationships), fair value adjustments relating to leases, fixed assets and inventory, and the related tax effects assuming that the business combination occurred on March 29, 2015. The pro-forma consolidated results of operations for the nine months ended December 31, 2016 also reflect the elimination of transaction costs of approximately $11.3 million, which have been recorded within restructuring and other charges in the Company’s consolidated statements of operations and comprehensive income for the nine months ended December 31, 2016.
Other Acquisitions
During the three months ended July 1, 2017, the Company repurchased a portion of the non-controlling interest in its Latin American joint venture, MK (Panama) Holdings, S.A. and subsidiaries (“MK Panama”) for approximately $0.5 million. As of December 30, 2017, the Company has a 75% ownership interest in MK Panama.
4. Receivables, net
Receivables, net, consist of (in millions):
December 25,
2021		March 27,
2021
Trade receivables (1)
$457 $412 
Receivables due from licensees37 20 
494 432 
Less: allowances(45)(59)
Total receivables, net$449 $373 
(1)As of December 25, 2021 and March 27, 2021, $97 million and $81 million, respectively, of trade receivables were insured.
14
 December 30,
2017		 April 1,
2017
Trade receivables:   
Credit risk assumed by insured$283.1
 $294.0
Credit risk retained by Company90.6
 63.8
Receivables due from licensees31.0
 11.9
 404.7
 369.7
Less: allowances(116.7) (103.9)
 $288.0
 $265.8

Receivables are presented net of allowances for sales returns, discounts, markdowns, operational chargebacks and doubtful accounts. Sales returns are determined based on an evaluation of current market conditions and historical returns experience.credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues.
The Company’s allowance for doubtful accountscredit losses is determined through analysis of periodic aging of receivables that are not covered by insurance and assessments of collectability based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowance for doubtful accountscredit losses was $15 million and $25 million as of December 30, 2017 was $5.325, 2021 and March 27, 2021, respectively, including the impact related to COVID-19. The Company had $3 million of credit losses for the three months ended December 25, 2021 and $2 million for the nine months ended December 25, 2021. The Company had credit losses of $(3) million and $0.9$(5) million as of April 1, 2017.

for the three and nine months ended December 26, 2020, respectively.


5. Property and Equipment, net
Property and equipment, net, consistconsists of (in millions):
December 25,
2021		March 27,
2021
Leasehold improvements$581 $737 
Furniture and fixtures215 350 
Computer equipment and software208 359 
Equipment82 139 
Building49 51 
In-store shops48 53 
Land19 20 
Total property and equipment, gross (1)
1,202 1,709 
Less: accumulated depreciation and amortization (1)
(791)(1,271)
Subtotal411 438 
Construction-in-progress49 47 
Total property and equipment, net$460 $485 
 December 30,
2017		 April 1,
2017
Leasehold improvements$562.0
 $507.9
Furniture and fixtures270.4
 244.1
In-store shops269.4
 256.0
Computer equipment and software262.1
 226.2
Equipment116.5
 104.4
Building50.3
 40.6
Land15.8
 14.0
 1,546.5
 1,393.2
Less: accumulated depreciation and amortization(969.9) (833.9)
 576.6
 559.3
Construction-in-progress22.8
 32.2
 $599.4
 $591.5
(1)As of December 25, 2021, the Company wrote off $550 million of fully depreciated assets and related accumulated depreciation of assets no longer in use.
Depreciation and amortization of property and equipment for the three and nine months ended December 30, 2017 and December 31, 201625, 2021 was $46.9$34 million and $49.4$109 million, respectively,respectively. Depreciation and amortization of property and equipment was $132.7$41 million and $146.5$125 million respectively,for the three and nine months ended December 26, 2020, respectively. The Company recorded no property and equipment impairment charges for the three months ended December 25, 2021 and $3 million for the nine months ended December 30, 2017 and December 31, 2016.25, 2021. During the three and nine months ended December 30, 2017,26, 2020, the Company recorded fixed asset$13 million and $15 million in property and equipment impairment charges, of $2.6 million and $14.5 million, respectively which were related to underperforming Michael Kors full-price retail store locations, some of which will be closed as part of the Company's previously announced Retail Fleet Optimization Plan, as defined in(see Note 8. During the three and nine months ended December 31, 2016, the Company recorded fixed asset impairment charges of $0.5 million and $5.4 million, respectively, $0.5 million of which related to our wholesale operations and $4.9 million of which were related to underperforming Michael Kors full-price retail store locations.11 for additional information).

15

6. Intangible Assets and Goodwill

The following table details the carrying values of the Company’s intangible assets other thanand goodwill (in millions):
 December 25,
2021		March 27,
2021
Definite-lived intangible assets:
Reacquired rights$400 $400 
Trademarks23 23 
Customer relationships (1)
423 437 
Gross definite-lived intangible assets846 860 
Less: accumulated amortization(218)(184)
Net definite-lived intangible assets628 676 
Indefinite-lived intangible assets:
Jimmy Choo brand (2)
328 338 
Versace brand (1)
939 978 
Net indefinite-lived intangible assets1,267 1,316 
Total intangible assets, excluding goodwill$1,895 $1,992 
Goodwill (3)
$1,447 $1,498 
(1)The change in the carrying value since March 27, 2021 reflects the impact of foreign currency translation.
 December 30,
2017		 April 1,
2017
Definite-lived intangible assets:   
Reacquired Rights$400.4
 $400.4
Trademarks23.0
 23.0
Lease Rights78.9
 74.2
Customer Relationships223.3
 5.0
Total definite-lived intangible assets725.6
 502.6
Less: accumulated amortization(102.7) (84.5)
Net definite-lived intangible assets$622.9
 $418.1
    
Indefinite-lived intangible assets:   
Jimmy Choo brand$592.5
 $—
(2)Includes accumulated impairment of $249 million as of December 25, 2021 and March 27, 2021. The change in the carrying value since March 27, 2021 reflects the impact of foreign currency translation.
(3)Includes accumulated impairment of $265 million related to the Jimmy Choo reporting units as of December 25, 2021 and March 27, 2021. The change in the carrying value since March 27, 2021 reflects the impact of foreign currency translation.
Amortization expense for the Company’s definite-lived intangiblesintangible assets for the three months ended December 30, 2017 and December 31, 2016 was $7.1 million and $6.3 million, respectively, and was $17.2 million and $16.0 million, respectively, for the nine months ended December 30, 2017 and December 31, 2016. During the nine months ended December 30, 2017, the Company recorded impairment charges of $4.4 million relating to its intangible assets (See Note 11 for further information).


Estimated amortization expense for each of the next five years is as follows (in millions):
Remainder of Fiscal 2018$8.4
Fiscal 201933.7
Fiscal 202033.6
Fiscal 202133.5
Fiscal 202233.3
Thereafter480.4
 $622.9
The following table details the changes in goodwill for each of the Company's reportable segments (in millions):
 MK Retail MK Wholesale MK Licensing Jimmy Choo Total
Balance at April 1, 2017$91.9
 $25.9
 $1.9
 $—
 $119.7
Acquisition of Jimmy Choo—
 —
 —
 684.9
 684.9
Foreign currency translation—
 —
 —
 17.4
 17.4
Balance at December 30, 2017$91.9
 $25.9
 $1.9
 $702.3
 $822.0
Goodwill is not amortized but will be evaluated for impairment in the fourth quarter of Fiscal 2018, or whenever impairment indicators exist. There were no goodwill impairment charges recorded during the three and nine months ended December 30, 201725, 2021 was $13 million and $37 million, respectively. Amortization expense for the Company’s definite-lived intangible asset for the three and nine months ended December 31, 2016.26, 2020 was $12 million and $35 million for the three and nine months ended December 26, 2020, respectively.

7. Current Assets and Current Liabilities
Prepaid expenses and other current assets consist of the following (in millions):
December 25,
2021		March 27,
2021
Prepaid taxes$281 $133 
Other accounts receivables18 13 
Prepaid contracts16 11 
Interest receivable related to net investment hedges7 12 
Other62 36 
Total prepaid expenses and other current assets$384 $205 

16

 December 30,
2017		 April 1,
2017
Prepaid taxes$96.1
 $56.6
Prepaid rent22.9
 21.7
Leasehold incentive receivable9.5
 12.0
Prepaid insurance2.9
 3.2
Restricted cash0.3
 1.9
Unrealized gains on forward foreign exchange contracts—
 4.7
Other30.6
 21.8
 $162.3
 $121.9


Accrued expenses and other current liabilities consist of the following (in millions):
December 25,
2021		March 27,
2021
Other taxes payable$88 $46 
Return liabilities65 46 
Accrued capital expenditures24 17 
Accrued rent (1)
22 20 
Accrued advertising and marketing20 11 
Professional services16 13 
Gift cards and retail store credits16 12 
Accrued litigation14 12 
Accrued purchases and samples9 8 
Accrued interest4 10 
Restructuring liability4 9 
Charitable donations (2)
— 20 
Other99 73 
Total accrued expenses and other current liabilities$381 $297 
(1)The accrued rent balance relates to variable lease payments.
 December 30,
2017		 April 1,
2017
Other taxes payable$72.0
 $29.2
Accrued rent36.0
 21.5
Accrued advertising and marketing30.9
 10.7
Accrued capital expenditures22.0
 20.5
Professional services16.4
 7.1
Gift cards and retail store credits14.3
 12.9
Unrealized loss on forward foreign currency exchange contracts9.5
 0.4
Accrued samples7.0
 2.2
Accrued interest3.8
 0.3
Deferred income3.2
 0.1
Advance royalties0.6
 5.0
Other61.7
 25.1
 $277.4
 $135.0
(2)The charitable donations balance relates to a $20 million unconditional pledge to The Capri Holdings Foundation for the Advancement of Diversity in Fashion as of March 27, 2021 which was funded during the second quarter ended September 25, 2021.

8. Restructuring and Other Charges
On May 31, 2017,Capri Retail Store Optimization Program
As previously announced, the Company announced that it plansintends to close between 100 and 125approximately 170 of its Michael Kors full-price retail stores over the next two years,throughout Fiscal 2021 and Fiscal 2022, in connection with its Capri Retail Store Optimization Program in order to improve the profitability of its retail store fleet (“Retail Fleet Optimization Plan”). Over this time period,fleet. In addition, the Company has reassessed the total cost of the plan and now expects to incur approximately $100 - $125$25 million of one-time costs associated with theserelated to this program, including lease termination and other store closures. Collectively,closure costs, the majority of which are expected to result in future cash expenditures.
During the three and nine months ended December 25, 2021, the Company anticipates ongoing annual savingsclosed 13 and 39 of approximately $60its retail stores, respectively, which have been incorporated into the Capri Retail Store Optimization Program. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during the three and nine months ended December 25, 2021 were $10 million asand $6 million, respectively. Net restructuring (gains) charges recorded in connection with the Capri Retail Store Optimization Program were $(4) million and $1 million, during the three and nine months ended December 26, 2020, respectively. The below table presents a result of store closures and lower depreciation and amortization expense as a resultroll forward of the Company’s restructuring liability related to its Capri Retail Store Optimization Program (in millions):
Severance and benefit costsLease-related and other costsTotal
Balance at March 27, 2021$— $3 $3 
Additions charged to expense (1)
1 3 4 
Payments(1)(4)(5)
Balance at December 25, 2021$— $2 $2 
(1)Excludes $10 million of impairment charges recordedrelated to operating lease right-of-use assets partially offset by a net credit of $8 million related to gains on certain lease terminations during Fiscal 2017 and Fiscal 2018.
During the nine months ended December 30, 2017,25, 2021.

17

Other Restructuring Charges
In addition to the restructuring charges related to the Capri Retail Store Optimization Program, the Company closed 24incurred charges of its Michael Kors full-price retail stores under$1 million and $4 million during the Retail Fleet Optimization Plan. The below table presents a summary of cash charges recorded in connection with this plan for the MK Retail segment (in millions):
 Three Months Ended Nine Months Ended
 December 30,
2017		 December 30,
2017
Lease termination and store closure costs$2.4
 $7.7
Severance and benefits costs—
 0.6
Total restructuring charges$2.4
 $8.3
During the nine months ended December 30, 2017, the Company made payments of $6.8 million, primarily relating to lease termination and store closure costs. As of December 30, 2017, the Company’s remaining restructuring liability was $1.5 million, primarily relating to lease termination and store closure costs.
Other Charges
During the three months and nine months ended December 30, 2017,25, 2021, respectively, primarily relating to closures of corporate locations. In addition to the restructuring charges related to the Capri Retail Store Optimization Program, the Company recorded transaction costsincurred charges of $22.2$2 million and $39.6 million, respectively, in connection with the Jimmy Choo acquisition (see Note 3) within restructuring and other charges in its consolidated statements of operations. In addition, restructuring and other charges included transition costs of $3.4 million forduring the three months ended December 30, 2017, which were incurred in connection with the Jimmy Choo acquisition. During theand nine months ended December 31, 201626, 2020, respectively, primarily relating to closures of corporate locations.
Other Costs
During both three and nine months ended December 25, 2021 and December 26, 2020, the Company recorded transaction costs of $11.3$3 million and $15 million primarily related to equity awards associated with the acquisition of the Greater China business.

Versace.


9. Debt Obligations
The following table presents the Company'sCompany’s debt obligations (in millions):
 December 30,
2017		 April 1,
2017
Term Loan$550.0
 $—
4.000% Senior Notes450.0
 —
Revolving Credit Facilities—
 133.1
Other0.1
 —
Total debt1,000.1
 133.1
Less: Debt issuance costs5.4
 —
Less: Unamortized discount on long-term debt2.2
 —
Total carrying value of debt992.5
 133.1
Less: Short-term debt0.1
 133.1
Total long-term debt$992.4
 $—
Bridge Credit Agreement
December 25,
2021		March 27,
2021
Term Loan$497 $870 
Senior Notes due 2024450 450 
Revolving Credit Facilities20 — 
Other39 30 
Total debt1,006 1,350 
Less: Unamortized debt issuance costs3 7 
Less: Unamortized discount on long-term debt1 1 
Total carrying value of debt1,002 1,342 
Less: Short-term debt26 123 
Total long-term debt$976 $1,219 
On JulyJune 25, 2017, the Company and certain of its subsidiaries, as loan parties, entered into a bridge credit agreement providing for a term loan facility in the principal amount of £1.115 billion with the lenders from time to time party thereto and JPMorgan Europe Limited, as administrative agent. In connection with Term Loan Facility provided for under the 2017 Credit Facility, as described and defined below, the commitments under the bridge credit agreement were reduced to approximately £344.2 million as of September 30, 2017 and eliminated in their entirety as a result of the October 20, 2017 issuance of $450.0 million 4.000% senior notes due 2024. As a result, the bridge credit agreement was terminated.
Senior Unsecured Revolving Credit Facility
On August 22, 2017,2020, the Company entered into athe second amendment (the “Second Amendment”) to its third amended and restated senior unsecured credit facility, dated as of November 15, 2018 (as amended, the “2017“2018 Credit Facility”), with, among others, JPMorgan Chase Bank, N.A., as administrative agent, which replaced its prior 2015 senior unsecured revolving credit facility (“2015 Credit Facility”). The Company and its U.S., Canadian, Dutch and Swiss subsidiaries areagent.
Pursuant to the borrowers underSecond Amendment, the 2017 Credit Facility. The borrowers and certain material subsidiaries offinancial covenant in the Company provide unsecured guarantees of the 2017 Credit Facility. The 2017Company’s 2018 Credit Facility provides for a $1.0 billion revolving credit facility (the “Revolving Credit Facility”), which may be denominated in U.S. Dollars and other currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs. The Revolving Credit Facility also provides sub-facilities for the issuance of letters of credit of up to $75.0 million and swing line loans of up to $50.0 million. The 2017 Credit Facility also provides for a $1.0 billion term loan facility (the “Term Loan Facility”) to finance a portion of the purchase price of the Company’s acquisition of Jimmy Choo. The Revolving Credit Facility expires on August 22, 2022. The Term Loan Facility is divided into two tranches, a $600.0 million tranche that matures on the third anniversary of the initial borrowing of the term loans and a $400.0 million tranche that matures on the fifth anniversary of the initial borrowing of the term loans. The Company has the right to prepay its borrowings under the Term Loan Facility at any time in whole or in part. The Company has the ability to expand its borrowing availability under the 2017 Credit Facility in the form of revolving commitments or term loans by up to an additional $500.0 million, subject to the agreement of the participating lenders and certain other customary conditions.
On November 1, 2017, the Company's $1.0 billion Term Loan Facility was fully drawn to pay a portion of the acquisition consideration for Jimmy Choo and other fees and expenses related thereto. The loans under the Term Loan Facility are required to be repaid on the last business day of March, June, September and December of each year, commencing after the last business day of the first full fiscal quarter after the initial borrowing, in installments equal to 2.50% of the aggregate original principal amount of the term loans. During the three months ended December 30, 2017, the Company made accelerated payments on the Term Loans on a pro-rata basis. As of December 30, 2017, the carrying value of borrowings outstanding under the Term Loan Facility was $548.2 million, net of debt issuance costs of $1.8 million.


Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, at the following rates:
for any loans (except loans denominated in Canadian Dollars), the greater of Adjusted LIBOR for the applicable interest period and zero, plus an applicable margin based on the Company’s public debt rating;
for loans denominated in U.S. Dollars, an alternate base rate, which is the greatest of: (a) the prime rate publicly announced from time to time by JPMorgan Chase, (b) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate and zero, plus 50 basis points, and (c) the greater of the one-month London Interbank Offered Rate adjusted for statutory reserve requirements for Eurocurrency liabilities (“Adjusted LIBOR”) and zero, plus 100 basis points, in each case, plus an applicable margin based on the Company’s public debt ratings;
for loans denominated in Canadian Dollars, the Canadian prime rate, which is the greater of the PRIMCAN Index rate and the rate applicable to one-month Canadian Dollar banker’s acceptances quoted on Reuters (“CDOR”), plus 100 basis points, plus an applicable margin based on the Company’s public debt ratings; or
for loans denominated in Canadian Dollars, the average CDOR rate for the applicable interest period, plus 10 basis points per annum, plus an applicable margin based on the Company’s public debt ratings.
Borrowings under the Term Loan Facility bear interest, at the Company’s option, at (a) the alternate base rate plus an applicable margin based on the Company’s public debt ratings; or (b) the greater of Adjusted LIBOR for the applicable interest period and zero, plus an applicable margin based on the Company’s public debt ratings.
The Revolving Credit Facility also provides for an annual administration fee and a commitment fee equal to 0.10% to 0.25% per annum, based on the Company’s public debt ratings, applied to the average daily unused amount of the Revolving Credit Facility. The Term Loan Facility provides for a commitment fee equal to 0.10% to 0.25% per annum, based on the Company’s public debt ratings, applied to the undrawn amount of the Term Loan Facility, from September 23, 2017 until the term loans are fully drawn or the commitments under the Term Loan Facility terminate or expire. Loans under the 2017 Credit facility may be repaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than the customary breakage costs with respect to loans bearing interest based on Adjusted LIBOR or the CDOR rate.
The 2017 Credit Facility requires the Companyit to maintain a leverage ratio as of the end of each fiscal quarter of no greater than 3.5 to 1. Such leverage ratio is calculated as the ratio of the sum of total indebtedness asplus the capitalized amount of the date of the measurement plus six times the consolidated rent expenseall operating lease obligations for the last four consecutive fiscal quarters to Consolidated EBITDAR (as defined below)of no greater than 3.75 to 1.00 had been waived through the fiscal quarter ending June 26, 2021.
In addition, the Second Amendment added a new $230 million revolving line of credit with a maturity date of June 24, 2021 (the “364 Day Facility”).
The Second Amendment also permitted certain working capital facilities between the Company or any of its subsidiaries with a lender or an affiliate of a lender under the 2018 Credit Facility to be guaranteed under the 2018 Credit Facility guarantees and certain supply chain financings with, and up to $50 million outstanding principal amount of bilateral letters of credit and bilateral bank guarantees issued by a lender or an affiliate of a lender to be guaranteed and secured under the 2018 Credit Facility guarantees and collateral documents. The Second Amendment, among other things, also temporarily suspended the quarterly maximum leverage ratio covenant and imposed a minimum liquidity test during the period from June 25, 2020 until the earlier of (x) the date on which the Company delivers its financial statements for the fiscal quarter ending June 26, 2021 and (y) the date on which the Company certifies that its net leverage ratio as of the last four consecutiveday of the most recently ended fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus income tax expense, net interest expense, depreciationquarter was no greater than 4.00 to 1.00 (the “Applicable Period”).
On May 20, 2021, the Company determined it no longer desired to maintain this additional line of credit and amortization expense, consolidated rent expenseconsequently delivered a notice to the administrative agent terminating the 364 Day Facility, and other non-cash charges, subject to certain additions and deductions.the 364 Day Facility terminated on May 25, 2021. The 2017remainder of the 2018 Credit Facility also includes covenantsremains in full force and effect.
18

On May 26, 2021 (the “Election Date”), the Company delivered to the administrative agent the certificate required to terminate the Applicable Period. Effective as of the Election Date, the Company will be required to comply with the quarterly maximum net leverage ratio test of 4.00 to 1.00.
On September 23, 2021, the Company agreed to suspend its rights to borrow in all non-U.S. Dollar (i.e. Pounds Sterling, Euro, Swiss Francs and Japanese Yen) currency LIBOR rate tenors under the 2018 Credit Facility after December 31, 2021 given that limit additional indebtedness, guarantees, liens, acquisitions and other investments and cash dividendsnon-U.S. Dollar LIBOR will no longer be published after that are customary for financings of this type.  date.
As of December 30, 2017,25, 2021, and the date these financial statements were issued, the Company was in compliance with all covenants related to this agreement.
The 2017the 2018 Credit Facility contains events of default customary for financings of this type, including, but not limited to, payment of defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events under The Employee Retirement Income Security Act, material judgments, actual or asserted failure of any guaranty supporting the 2017 Credit Facility to be in full force and effect, and changes of control. If such an event of default occurs, the lenders under the 2017 Credit Facility would be entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2017 Credit Facility, subject to “certain funds” limitations in connection with the transaction governing the Term Loan Facility.
As of December 30, 2017,25, 2021, the Company had no$20 million of borrowings outstanding under the 20172018 Revolving Credit Facility. Stand-byFacility and no borrowings outstanding as of March 27, 2021. In addition, stand-by letters of credit of $11.3$29 million and $27 million were outstanding as of December 30, 2017. There were borrowings of $127.3 million outstanding under the prior 2015 Revolving Credit Facility as of April 1, 2017, which were recorded within short-term debt in the Company’s balance sheet as of April 1, 2017.25, 2021 and March 27, 2021, respectively. At December 30, 2017,25, 2021 and March 27, 2021, the amount available for future borrowings under the 20172018 Revolving Credit Facility was $988.7 million.were $951 million and $973 million, respectively.

In January 2018,As of December 25, 2021, the Company repaid an additional $210.0 million principal amountcarrying value of borrowings outstanding under the 2018 Term Loan Facility on a pro-rata basis.


Senior Notes
On October 20, 2017, Michael Kors (USA), Inc. (the “Issuer”), the Company’s wholly owned subsidiary, completedwas $495 million, which was all recorded within long-term debt in its offering of $450.0 million aggregate principal amount of 4.000% senior notesconsolidated balance sheets due 2024 (the “Senior Notes”) at an issue price of 99.508% of aggregate principal amount, pursuant to an exemption from registration under the Securities Act of 1933, as amended. The Senior Notes were issued under an indenture dated October 20, 2017, among the Issuer, the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (the “Indenture”). The Senior Notes were issued to finance a portion of the Company’s acquisition of Jimmy Choo and certain related refinancing transactions.
The Senior Notes bear interest at a rate of 4.000% per year, subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency therefore) downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes. Interestprepayments made on the Senior Notes is payable semi-annually on May 1 and November 1 of each year, beginning on May 1, 2018.

The Senior Notes are unsecured and are guaranteed by the Company and its existing and future subsidiaries that guarantee or are borrowers under the 2017 Credit Facility (subject to certain exceptions, including subsidiaries organized in China), including, following the closing of the acquisition, Jimmy Choo and all of its existing and future subsidiaries who are guarantors or borrowers under the 2017 Credit Facility (subject to certain exceptions, including subsidiaries organized in China).

The Senior Notes may be redeemed at the Company's option at any time in whole or in part at a price equal to 100% of the principal amount, plus accrued and unpaid interest, plus a “make-whole” amount calculated at the applicable Treasury Rate plus 30 basis points.
The Senior Notes rank equally in right of payment with all of the Issuer’s and guarantors’ existing and future senior unsecured indebtedness, senior in right of payment to any future subordinated indebtedness, effectively subordinated in right of payment to any of the Company’s subsidiaries’ obligations (including secured and unsecured obligations) and any of the Company’s secured obligations, to the extent of the assets securing such obligations.
The Indenture contains covenants, including those that limit the Company’s ability to create certain liens and enter into certain sale and leaseback transactions. In the event of a “Change of Control Triggering Event,” as defined in the Indenture, the Issuer will be required to make an offer to repurchase the Senior Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of the Senior Notes being repurchased plus any unpaid interest. These covenants are subject to important limitations and exceptions, as per the Indenture.
Term Loan during Fiscal 2022. As of December 30, 2017,March 27, 2021, the carrying value of the Senior Notes was $444.2 million, net of issuance costs and unamortized discount of $5.8 million.
Japan Credit Facility
In November 2017, the Company’s subsidiary in Japan entered into a short term credit facility (“Japan Credit Facility”) with Mitsubishi UFJ Financial Group (“MUFJ”) (the “Bank”) which may be used to fund general working capitals needs of Michael Kors Japan K.K. through November 29, 2018, subject to the Bank’s discretion. The Japan Credit Facility provides Michael Kors Japan K.K. with a revolving credit line of up to ¥1.0 billion (approximately $8.9 million). The Japan Credit Facility bears interest at a rate posted by the Bank plus 0.300% two business days prior to the date of borrowing or the date of interest renewal. As of December 30, 2017, the Company had no borrowings outstanding under the Japan Credit Facility.2018 Term Loan Facility was $865 million, of which $97 million was recorded within short-term debt and $768 million was recorded within long-term debt in its consolidated balance sheets.
Hong Kong Credit Facility
In November 2017,During Fiscal 2021, the Company began offering a supplier financing program to certain suppliers as the Company continues to identify opportunities to improve liquidity. This program enables suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s Hong Kong subsidiary, MKHKL, renewed its uncommitted credit facility (“HK Credit Facility”) with HSBC (the “Bank”), which maypayment obligations to suppliers) to a financial institution on a non-recourse basis in order to be usedpaid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, are not impacted by a suppliers’ decision to fund general working capital needs of MKHKL through November 30, 2018, subjectparticipate in this program. The Company does not reimburse suppliers for any costs they incur to participate in the Bank’s discretion.program and their participation is voluntary. The HK Credit Facility provides MKHKL with a revolving line of credit of up to 100.0 million Hong Kong Dollars (approximately $12.8 million), and may be used to support bank guarantees. In addition, this credit facility provides for a business card facility of up to 0.4 million Hong Kong Dollars (less than $0.1 million). Borrowings under the HK Credit Facility must be made in increments of at least 5.0 million Hong Kong Dollars and bear interest at the Hong Kong Interbank Offered Rate (“HIBOR”) plus 150 basis points. As of April 1, 2017, borrowingsamount outstanding under the HK Credit facility were 45.0this program as of December 25, 2021 and March 27, 2021 was $18 million Hong Kong Dollars (approximately $5.8 million), which wereand $17 million, respectively, and was recorded within short-term debt in the Company’s consolidated balance sheet assheets.
During the first quarter of April 1, 2017.Fiscal 2022, the Company's subsidiary, Versace, entered into an agreement with Banco BPM Banking Group (“the Bank”) to sell certain tax receivables to the Bank in exchange for cash. As of December 30, 2017, there were no borrowings25, 2021, the outstanding underbalance was $18 million, with $8 million and $10 million recorded within short-term debt and long-term debt in the HK Credit Facility. As of December 30, 2017, bank guarantees supported by this facility were 11.8 million Hong Kong Dollars (approximately $1.5 million). At December 30, 2017, the amount available for future borrowings under the Hong Kong Credit Facility was 88.2 million Hong Kong Dollars (approximately $11.3 million).Company’s consolidated balance sheets, respectively.


Other
In additionSee Note 12 to the above,Company’s Fiscal 2021 Annual Report on Form 10-K for additional information regarding the Company also had letters ofCompany’s credit outstanding of $4.4 million as of December 30, 2017, which have been issued outside its credit facilities.facilities and debt obligations.

10. Commitments and Contingencies
In the ordinary course of business, the Company is party to various legal proceedings and claims. Although the outcome of such itemsclaims cannot be determined with certainty, the Company’s management does not believeCompany believes that the outcome of all pending legal proceedings, in the aggregate, will not have a material adverse effect on its cash flow, results of operations or financial position.
Leases
Future minimum lease payments as of December 30, 2017 under the terms of the Company's noncancelable operating lease agreements are as follows (in millions):
Remainder of Fiscal 2018$98.9
Fiscal 2019304.5
Fiscal 2020280.4
Fiscal 2021262.2
Fiscal 2022234.1
Thereafter689.3
 $1,869.4
Please refer to the Contractual Obligations and Commercial Commitments disclosure within the Liquidity and Capital Resources section of the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2017March 27, 2021 for a detailed disclosure of other commitments and contractual obligations as of April 1, 2017.March 27, 2021.

19

11. Fair Value Measurements
Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-basemarket-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that a company has the ability
to access at the measurement date.
Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices included within Level 1, that are observable for the
asset or liability either directlyand inputs derived principally from or indirectly through corroboration withcorroborated by observable market data.
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.


At December 30, 201725, 2021 and April 1, 2017,March 27, 2021, the fair values of the Company’s foreign currency forwardderivative contracts the Company’s only derivative instruments, were determined using broker quotations, which were calculations derived from observable market information: the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but assesses the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair values of the forward contracts are included in prepaid expenses and other current assets, and in accrued expenses and other current liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities to the Company, as detailedCompany. The fair values of net investment hedges and interest rate swaps are included in other assets, and in other long-term liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company. See Note 12.


12 for further detail.
All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions):
 Fair value at December 25, 2021 using:Fair value at March 27, 2021 using:
 Quoted prices in
active markets for
identical assets
(Level 1)		Significant
other observable
inputs
(Level 2)		Significant
unobservable
inputs
(Level 3)		Quoted prices in
active markets for
identical assets
(Level 1)		Significant
other observable
inputs
(Level 2)		Significant
unobservable
inputs
(Level 3)
Derivative assets:
Forward foreign currency exchange contracts$— $6 $— $— $2 $— 
Net investment hedges— 40 — — 3 — 
Undesignated derivative contracts— 1 — — — — 
Total derivative assets$— $47 $— $— $5 $— 
Derivative liabilities:
Forward foreign currency exchange contracts$— $— $— $— $1 $— 
Net investment hedges— 24 — — 263 — 
Interest rate swap— — — — 1 — 
Total derivative liabilities$— $24 $— $— $265 $— 
20
 Fair value at December 30, 2017 using: Fair value at April 1, 2017 using:
 
Quoted prices in
active markets for
identical assets
(Level 1)
 
Significant
other observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
 
Quoted prices in
active markets for
identical assets
(Level 1)
 
Significant
other observable
inputs
(Level 2)
 
Significant
unobservable
inputs
(Level 3)
Forward foreign currency exchange contracts - assets$—
 $—
 $—
 $—
 $4.7
 $—
Forward foreign currency exchange contracts - liabilities$—
 $9.5
 $—
 $—
 $0.4
 $—

The Company'sCompany’s long-term debt obligations are recorded in its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company'sCompany’s long-term debt is estimated using external pricing data, including any available quoted market prices and based on other debt instruments with similar characteristics. Borrowings under revolving credit agreements, if outstanding, are recorded at carrying value, which approximates fair value due to the short-termfrequent nature of such borrowings. Please refer toborrowings and repayments. See Note 9 for detailed information relatingrelated to carrying values of the Company'sCompany’s outstanding debt. The following table summarizes the carrying values and estimated fair values of the Company'sCompany’s short- and long-term debt, based on Level 2 measurements (in millions):
December 25, 2021March 27, 2021
 December 30, 2017Carrying
Value		Estimated
Fair Value		Carrying
Value		Estimated
Fair Value
Senior Notes due 2024Senior Notes due 2024$448 $473 $447 $470 
Term LoanTerm Loan$495 $489 $865 $866 
Revolving Credit FacilitiesRevolving Credit Facilities$20 $20 $— $— 
 Carrying Value Estimated Fair Value
4.000% Senior Notes $444.2
 $453.0
Term Loan $548.2
 $553.4
The Company’s cash and cash equivalents, accounts receivable and accounts payable and restructuring liabilities are recorded at carrying value, which approximates fair value.
Non-Financial Assets and Liabilities
The Company’s non-financial assets include goodwill, intangible assets, operating lease right-of-use assets and property and equipment. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. The Company’s goodwill isand its indefinite-lived intangible assets (Versace and Jimmy Choo brands) are assessed for impairment at least annually, during the fourth quarter of each fiscal year, while its other long-lived assets, including fixedoperating lease right-of-use assets, property and finite-livedequipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company determines the fair values of these assets are determined based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.
During
21

The Company recorded $10 million and $43 million in impairment charges during the three months and nine months ended December 30, 2017, the25, 2021, respectively. The Company recorded $91 million and $113 million in impairment charges of $2.6 millionduring the three and $18.9 million, respectively, within the MK Retail segment.nine months ended December 26, 2020, respectively. The following table details the carrying values and fair values of the Company’s long-lived assets that have been impaired (in millions):
 Three Months Ended Nine Months Ended
 December 30, 2017 December 30, 2017
 Carrying Value Prior to Impairment Fair Value Carrying Value Prior to Impairment Fair Value
Fixed assets$3.5
 $0.9
 $16.9
 $2.4
Lease Rights—
 —
 3.6
 0.2
Customer relationships—
 —
 1.0
 —
Total$3.5
 $0.9
 $21.5
 $2.6
Duringduring the three and nine months ended December 31, 2016, the Company recorded25, 2021 and three and nine months ended December 26, 2020 (in millions):
Three Months Ended
December 25, 2021		Nine Months Ended
December 25, 2021
Carrying Value Prior to
Impairment		Fair Value
Impairment Charge (1)
Carrying Value Prior to ImpairmentFair Value
Impairment Charge (1)
Operating Lease Right-of-Use Assets$10 $— $10 $93 $53 $40 
Property and Equipment— — — 4 1 3 
Total$10 $— $10 $97 $54 $43 
Three Months Ended
December 26, 2020		Nine Months Ended
December 26, 2020
Carrying Value Prior to ImpairmentFair Value
Impairment Charge (1)
Carrying Value Prior to ImpairmentFair Value
Impairment Charge (1)
Operating Lease Right-of-Use Assets$284 $206 $78 

$321 $223 $98 
Property and Equipment17 4 13 21 6 15 
Total$301 $210 $91 $342 $229 $113 
(1)     Includes $10 million of impairment charges of $5.4 million, which included $4.9 millionthat were recorded within restructuring and other charges related to impair Michael Kors full-price retail store fixed assets with a book value of $5.4the Capri Retail Store Optimization Program for both the three and nine months ended December 25, 2021. Includes $1 million and a fair value$3 million of $0.5 million, as well as $0.5 millionimpairment charges that were recorded within restructuring and other charges related to fully impair fixed assets for certain Michael Kors U.S. wholesale operations.

the Capri Retail Store Optimization Program during the three and nine months ended December 26, 2020, respectively.


12. Derivative Financial Instruments
Forward Foreign Currency Exchange Contracts
The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes.
Net Investment Hedges
During the first quarter of Fiscal 2022, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.875 billion to hedge its net investment in Euro denominated subsidiaries (“First Quarter Modifications”).
During the third quarter of Fiscal 2022, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $1.5 billion. The modification of these hedges resulted in the Company receiving $59 million in cash during the third quarter of Fiscal 2022. This amount is classified within investing activities in the Company’s consolidated statements of cash flows.
22

Certain of these contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being November 2023. If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA’s, either party is required to post cash collateral. Due to an other-than-insignificant financing element for certain of First Quarter Modifications, the net interest cash inflows of $31 million during the nine months ended December 25, 2021 related to these contracts are classified as financing activities in the Company’s consolidated statements of cash flows.
As of December 25, 2021, the Company had multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $4 billion to hedge its net investment in Euro denominated subsidiaries and $194 million to hedge its net investment in Japanese Yen denominated subsidiaries against future volatility in the exchange rates between the U.S. Dollar and these currencies. Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on U.S. denominated debt for fixed rate payments of 0% to 4.457% in Euros and 0% to 3.408% in Japanese Yen. Certain of these contracts include mandatory early termination dates between August 2025 and February 2026, while the remaining contracts have maturity dates between May 2024 and February 2051. These contracts have been designated as net investment hedges.
When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest expense in the Company’s consolidated statements of operations and comprehensive income. Accordingly, the Company recorded interest income of $17 million and $44 million during the three and nine months ended December 25, 2021, respectively. Additionally, the Company recorded interest income of $6 million and $8 million during the three and nine months ended December 26, 2020, respectively. This change from prior year is primarily due to the Company having higher average notional amounts outstanding on these hedges during the current period.
Interest Rate Swap
The Company had an interest rate swap with an initial notional amount of $500 million that would have decreased to $350 million in April 2022. The swap was designated as a cash flow hedge designed to mitigate the impact of adverse interest rate fluctuations for a portion of the Company’s variable-rate debt equal to the notional amount of the swap. The interest rate swap converted the one-month adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237% through the date of termination.
When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. During the three and nine months ended December 25, 2021 and December 26, 2020, the Company recorded an immaterial amount of net interest expense related to this agreement.
During the third quarter of Fiscal 2022, the Company terminated its only interest rate swap. As a result, the Company recognized a $1 million gain within interest (income) expense, net, within the Company’s consolidated statements of operations and comprehensive income.
23

The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of December 30, 201725, 2021 and April 1, 2017March 27, 2021 (in millions):
     Fair Values
 Notional Amounts 
Current Assets (1)
 
Current Liabilities (2)
 December 30,
2017		 April 1,
2017		 December 30,
2017		 April 1,
2017		 December 30,
2017		 April 1,
2017
Designated forward foreign currency exchange contracts$168.9
 $167.5
 $—
 $4.7
 $7.1
 $0.4
Undesignated forward foreign currency exchange contracts20.6
 —
 —
 —
 2.4
 —
Total$189.5
 $167.5
 $—
 $4.7
 $9.5
 $0.4
Fair Values
 Notional AmountsAssetsLiabilities
 December 25,
2021		March 27,
2021		December 25,
2021		March 27,
2021		December 25,
2021		March 27,
2021
Forward foreign currency exchange contracts$124 $155 $6 (1)$2 (1)$— $1 (2)
Net investment hedges4,194 3,194 40 (3)3 (3)24 (4)263 (4)
Interest rate swap— 500 — — — 1 (4)
Total designated hedges4,318 3,849 46 5 24 265 
Undesignated derivative contracts (5)
23 13 1 (1)— — — 
Total$4,341 $3,862 $47 $5 $24 $265 
(1)
(1)Recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets.
(2)Recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets.
(3)Recorded within other assets in the Company’s consolidated balance sheets.
(4)Recorded within other long-term liabilities in the Company’s consolidated balance sheets.
(5)Represents undesignated hedges of inventory purchases.
Recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets.
(2)
Recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets.
The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheetsheets on a gross basis, as shown in the aboveprevious table. As of April 1, 2017, the Company had derivative assets of $4.7 million that were subject to master netting arrangements. As of December 30, 2017 and April 1, 2017, the Company had derivative liabilities of $9.5 million and $0.3 million, respectively, that were subject to master netting arrangements. IfHowever, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to setoffset-off amounts for similar transactions denominated in the same currencies, its net derivative liabilitiesthe resulting impact as of December 30, 201725, 2021 and April 1, 2017March 27, 2021 would be $9.5 million and $0.2 million, respectively, and it would have derivative net assets of $4.5 million as of April 1, 2017. Thefollows (in millions):
Forward Currency
Exchange Contracts		Net Investment
Hedges		Interest Rate
Swaps
December 25,
2021		March 27,
2021		December 25,
2021		March 27,
2021		December 25,
2021		March 27,
2021
Assets subject to master netting arrangements$7 $2 $40 $3 $— $— 
Liabilities subject to master netting arrangements$— $1 $24 $263 $— $1 
Derivative assets, net$7 $1 $25 $3 $— $— 
Derivative liabilities, net$— $— $9 $263 $— $1 
Currently, the Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties.
Changes in the fair value of the effective portion of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income and are reclassified from accumulated other comprehensive income (loss) into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of salesgoods sold within the Company’s consolidated statements of operations and comprehensive income. The net gain or loss on net investment hedges are reported within foreign currency translation gains and losses (“CTA”) as a component of accumulated other comprehensive income (loss). on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related investment is sold or liquidated. Changes in the fair value of the Company’s interest rate swaps that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of interest expense within the Company’s consolidated statements of operations and comprehensive income.
24

The following table summarizes the pre-tax impact of the effective portion of gains and losses on the Company’s designated forward foreign currency exchange contracts, net investment hedges and interest rate swaps (in millions):
Three Months EndedNine Months Ended
December 25, 2021December 26, 2020December 25, 2021December 26, 2020
Pre-Tax Gains
Recognized in OCI		Pre-Tax Losses
Recognized in OCI		Pre-Tax Gains
Recognized in OCI		Pre-Tax Losses
Recognized in OCI
Designated forward foreign currency exchange contracts$5 $(7)$7 $(7)
Designated net investment hedges$155 $(220)$327 $(262)
Designated interest rate swaps$1 $— $1 $(1)
The following tables summarize the pre-tax impact of the gains and losses within the consolidated statements of operations and comprehensive income related to the designated as hedgesforward foreign currency exchange contracts for the three and nine months ended December 25, 2021 and December 26, 2020 (in millions):
Three Months Ended
Pre-Tax Gain Reclassified from
Accumulated OCI		Location of Gain Recognized
December 25, 2021December 26, 2020
Designated forward foreign currency exchange contracts$— $(1)Cost of goods sold
 Three Months Ended
 December 30, 2017 December 31, 2016
 
Pre-Tax Loss
Recognized
in OCI
(Effective Portion)
 
Pre-Tax Loss
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
 
Pre-Tax Gain
Recognized
in OCI
(Effective Portion)
 
Pre-Tax Loss
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
Forward foreign currency exchange contracts$(2.4) $(2.2) $10.2
 $(0.2)


Nine Months Ended
Pre-Tax Loss (Gain) Reclassified from
Accumulated OCI		Location of Loss (Gain) Recognized
December 25, 2021December 26, 2020
Designated forward foreign currency exchange contracts$2 $(4)Cost of goods sold

 Nine Months Ended
 December 30, 2017 December 31, 2016
 Pre-Tax Loss
Recognized
in OCI
(Effective Portion)		 Pre-Tax Gain
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)		 Pre-Tax Gain
Recognized
in OCI
(Effective Portion)		 Pre-Tax Amount
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion)
Forward foreign currency exchange contracts$(17.7) $1.0
 $12.3
 $—
Amounts related to ineffectiveness were not material during all periods presented. The Company expects that substantially all of the amounts currently recorded in accumulated other comprehensive lossincome for its forward foreign currency exchange contracts will be reclassified into earnings during the next twelve12 months, based upon the timing of inventory purchases and turnover. These amounts are subject to fluctuations in the applicable currency exchange rates.
Undesignated Hedges
During the three and nine months ended December 30, 2017,25, 2021, a $1 million gain was recognized within foreign currency (gain) loss in the Company recognizedCompany’s consolidated statements of operations and comprehensive income as a net lossresult of $31.8 million and a net gain of $3.4 million, respectively, related tothe changes in the fair value of undesignated forward currency exchange contracts within foreign currency loss (gain) in the Company’s consolidated statement of operations. These amounts were primarily comprised of a $32.0 million loss and a $4.7 million gain during the three and nine months ended December 30, 2017, respectively, related to the derivative contract entered into on July 25, 2017 to mitigate foreign currency exchange risk associated with the Jimmy Choo acquisition that was subsequently settled on October 30, 2017.contracts. During the three and nine months ended December 31, 2016,26, 2020, a loss of $2 million was recognized within foreign currency (gain) loss in the Company recognized net gainsCompany’s consolidated statements of $1.8 millionoperations and $2.1 million, respectively, related tocomprehensive income as a result of the changes in the fair value of undesignated forward foreign currency exchange contracts within foreign currency loss (gain).contracts.
13. Shareholders’ Equity
Share Repurchase Program
On May 25, 2017,During the Company’sfirst quarter of Fiscal 2022, the Company reinstated its $500 million share repurchase program, which was previously suspended during the first quarter of Fiscal 2021 in response to the impact of the COVID-19 pandemic and the provisions of the Second Amendment of the 2018 Credit Facility. Subsequently, on November 3, 2021, the Company announced that its Board of Directors had terminated the Company’s existing $500 million share repurchase program (the “Prior Plan”), which had $250 million of availability remaining at the time, and authorized a new share repurchase program (the “Fiscal 2022 Plan”) pursuant to which the Company may, from time to time, repurchase up to $1.0 billion share repurchaseof its outstanding ordinary shares within a period of two years from the effective date of the program.
25

During the nine months ended December 30, 2017 and December 31, 2016,25, 2021, the Company repurchased 4,543,500purchased 5,934,244 shares and 15,114,538 shares, respectively, atfor a total cost of $157.8approximately $350 million and $750.0 million, respectively, under its share-repurchase programsincluding commissions, through open market transactions.transactions, with 2,712,275 shares purchased for a total cost of $150 million including commissions under the Prior Plan and 3,221,969 shares purchased for a total cost of $200 million including commissions under the Fiscal 2022 Plan. As of December 30, 2017,25, 2021, the remaining availability under the Company’s share repurchase program was $842.2$800 million.

During the nine months ended December 26, 2020, the Company did not purchase any shares through open market transaction as the Company’s share repurchase plan was suspended at that time.

Share repurchases aremay be made in open market or privately negotiated transactions, subject to market conditions, andapplicable legal requirements, trading transactions under the Company’s business priorities.insider trading policy and other relevant factors. The program may be suspended or discontinued at any time.
The Company also has in place a “withhold to cover” repurchase program, which allows the Company to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards. During the nine month periods ended December 30, 201725, 2021 and December 31, 2016,26, 2020, the Company withheld 92,536193,322 shares and 100,55248,147 shares, respectively, atwith a costfair value of $3.2$10 million and $4.8$1 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards.


14. Accumulated Other Comprehensive Income (Loss)
The following table details changes in the components of accumulated other comprehensive income (loss) (“AOCI”), net of taxes, for the nine months ended December 30, 201725, 2021 and December 31, 2016,26, 2020, respectively (in millions):
Foreign Currency Adjustments (1)
Net (Losses) Gains on Derivatives (2)
Other Comprehensive Income Attributable to Capri
Balance at March 27, 2021$57 $(1)$56 
Other comprehensive income before reclassifications148 7 155 
Less: amounts reclassified from AOCI to earnings— (2)(2)
Other comprehensive income, net of tax148 9 157 
Balance at December 25, 2021$205 $8 $213 
Balance at March 28, 2020$72 $3 $75 
Other comprehensive income (loss) before reclassifications26 (7)19 
Less: amounts reclassified from AOCI to earnings
— 3 3 
Other comprehensive income (loss), net of tax26 (10)16 
Balance at December 26, 2020$98 $(7)$91 
 Foreign Currency
Translation
(Losses) Gains		 
Net (Losses) Gains on
Derivatives (1)
 Other Comprehensive (Loss) Income Attributable to MKHL Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest Total Accumulated Other Comprehensive (Loss) Income
Balance at April 2, 2016$(77.7) $(3.2) $(80.9) $0.1
 $(80.8)
Other comprehensive (loss) income before reclassifications (2)
(20.4) 11.1
 (9.3) (0.4) (9.7)
Less: amounts reclassified from AOCI to earnings (3)
—
 (0.1) (0.1) —
 (0.1)
Other comprehensive (loss) income net of tax(20.4) 11.2
 (9.2) (0.4) (9.6)
Balance at December 31, 2016$(98.1) $8.0
 $(90.1) $(0.3) $(90.4)
          
Balance at April 1, 2017$(86.1) $5.5
 $(80.6) $(0.3) $(80.9)
Other comprehensive income (loss) before reclassifications (2)
78.6
 (15.4) 63.2
 0.1
 63.3
Less: amounts reclassified from AOCI to earnings (3)
—
 1.0
 1.0
 —
 1.0
Other comprehensive income (loss) net of tax78.6
 (16.4) 62.2
 0.1
 62.3
Balance at December 30, 2017$(7.5) $(10.9) $(18.4) $(0.2) $(18.6)
_________________________
(1)
Accumulated other comprehensive income balance related to net gains on derivative financial instruments as of December 30, 2017 and April 1, 2017 is net of a tax benefit of $1.5 million and a tax provision $0.8 million, respectively. Other comprehensive income (loss) before reclassifications related to derivative financial instruments for the nine months ended December 30, 2017 and December 31, 2016 is net of a tax provisions of $2.3 million and $1.1 million, respectively. All other tax effects were not material for the periods presented.
(2)
Foreign currency translation losses for the nine months ended December 30, 2017 and December 31, 2016 include net losses of $4.4 million and $3.1 million respectively on intra-entity transactions that are of a long-term investment nature. Foreign currency translation losses for the nine months ended December 30, 2017 are net of a $35.2 million translation gain relating to the newly acquired Jimmy Choo business.
(3)
Reclassified amounts relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations.
15.(1)Foreign currency translation adjustments for the nine months ended December 25, 2021 primarily include a $249 million gain, net of taxes of $78 million, relating to the Company’s net investment hedges, and a net $102 million translation loss. Foreign currency translation adjustments for the nine months ended December 26, 2020 primarily include a $198 million translation loss, net of taxes of $64 million, relating to the Company’s net investment hedges, which was offset by a net $227 million translation gain.
(2)Reclassified amounts primarily relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations and comprehensive income. All tax effects were not material for the periods presented.

26

14. Share-Based Compensation
The Company issuesgrants equity grantsawards to certain employees and directors of the Company at the discretion of the Company’s Compensation and Talent Committee. The Company has two2 equity plans, one1 stock option plan adopted in Fiscal 2008 the Michael Kors (USA), Inc. Stock Option Plan (as amended and restated, the “2008 Plan”), and the otherOmnibus Incentive Plan adopted in the third fiscal quarter of Fiscal 2012 and amended and restated with shareholder approval in May 2015, the Michael Kors Holdings Limited Amended and Restated Omnibus Incentive Planagain in June 2020 (the “Incentive Plan”). The 2008 Plan only provided for grants of share options and was authorized to issue up to 23,980,823 ordinary shares. As of December 30, 2017,25, 2021, there were no shares available to grant equity awards under the 2008 Plan.
The Incentive Plan allows for grants of share options, restricted shares and restricted share units,RSUs, and other equity awards, and authorizes a total issuance of up to 15,246,00018,846,000 ordinary shares.shares after amendments in June 2020. At December 30, 2017,25, 2021, there were 7,156,4453,951,587 ordinary shares available for future grants of equity awards under the Incentive Plan. Option grants issued from the 2008 Plan generally expire ten years from the date of the grant, and those issued under the Incentive Plan generally expire seven years from the date of the grant.


The following table summarizes the Company’s share-based compensation activity during the nine months ended December 30, 2017:25, 2021:
 OptionsService-Based RSUsPerformance-Based RSUs
Outstanding/Unvested at March 27, 20211,150,260 4,895,517 581,659 
Granted— 1,678,704 — 
Exercised/Vested(283,076)(1,804,289)(347,561)
Change due to performance condition— — 26,109 
Canceled/Forfeited(381,602)(275,969)— 
Outstanding/Unvested at December 25, 2021485,582 4,493,963 260,207 
 Options Restricted Shares Service-Based RSUs Performance-Based RSUs
Outstanding/Unvested at April 1, 20174,791,045
 185,425
 1,470,767
 401,777
Granted208,264
 —
 1,325,307
 139,562
Exercised/Vested(494,926) (113,999) (400,057) (81,212)
Decrease due to performance condition—
 —
 —
 (12,891)
Canceled/forfeited(75,167) (6,060) (189,305) —
Outstanding/Unvested at December 30, 20174,429,216
 65,366
 2,206,712
 447,236
The weighted average grant date fair value for options granted during the nine months ended December 30, 2017 and December 31, 2016 was $11.62 and $13.79, respectively. The weighted average grant date fair value of service-based and performance-based RSUs granted during the nine months ended December 30, 201725, 2021 was $37.33 and $34.68, respectively and $50.08 and $49.88, respectively, during the nine months ended December 31, 2016.
$51.75. The Company uses the Black-Scholes valuation model to estimate theweighted average grant date fair value of its share option awards. Beginning in Fiscal 2018, the Company started using its own historical experience in determining the expected holding period and volatility of its time-based share option awards. In prior periods, the Company used the simplified method for determining the expected life of its options and average volatility rates of similar actively traded companies over the estimated holding period, due to insufficient historical option exercise experience as a public company. The following table presents assumptions used to estimate the fair value of optionsservice-based RSUs granted during the nine months ended December 30, 2017 and December 31, 2016:
 Nine Months Ended
 December 30
2017		 December 31
2016
Expected dividend yield0.0% 0.0%
Volatility factor36.3% 30.1%
Weighted average risk-free interest rate1.8% 1.1%
Expected life of option4.69 years
 4.75 years
26, 2020 was $16.72.
Share-Based Compensation Expense
The following table summarizes compensation expense attributable to share-based compensation for the three and nine months ended December 30, 201725, 2021 and December 31, 201626, 2020 (in millions):
Three Months EndedNine Months Ended
December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Share-based compensation expense$13 $12 $69 $53 
Tax benefit related to share-based compensation expense$1 $2 $12 $11 
 Three Months Ended Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Share-based compensation expense$8.5
 $5.3
 $29.6
 $26.7
Tax (deficit) benefits related to share-based compensation expense (1)
$(0.6) $1.6
 $6.2
 $9.1
________________________
(1)
Due to the reduction in the corporate tax rate introduced by the Tax Act enacted on December 22, 2017 (see Note 2 for additional information), the Company has realized a net tax deficit during the three months ended December 30, 2017, as the benefit of the tax deduction was revalued to the lower tax rate during this period.
Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its historical forfeiture rate to date.rates. The estimated value of future forfeitures for equity grants as of December 30, 201725, 2021 is approximately $7.6$22 million.
Please refer toSee Note 1517 in the Company’s Fiscal 20172021 Annual Report on Form 10-K for additional information relating to the Company’s share-based compensation awards.



27

15. Income Taxes

The Company’s effective tax rate for the three and nine months ended December 25, 2021 was 5.6% and 6.8%, respectively. Such rates differ from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to the favorable effect of a net operating loss carryback claim made in the United States as a result of COVID-19 related losses generated in the prior fiscal year and the impact of global financing activities partially offset by the increases in uncertain tax positions during the three and nine months ended December 25, 2021. The tax rate for the nine months ended December 25, 2021 also benefited from recently enacted tax legislation in Italy which allowed the Company to reduce its deferred tax liabilities by allowing a step up of certain intangible assets resulting in lower future cash taxes partially offset by the impact of tax rate changes in the United Kingdom on the Company’s net deferred tax liabilities.

The global financing activities are related to the Company’s 2014 move of its principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, the Company funded its international growth strategy through intercompany debt financing arrangements. These debt financing arrangements reside between certain of our U.S., U.K. and Hungarian subsidiaries. Due to the difference in the statutory income tax rates between these jurisdictions, the Company realized lower effective tax rates for the three and nine months ended December 25, 2021.

16. Segment Information
Prior to the third quarter of Fiscal 2018, the Company’s business consisted of three reportable segments for its Michael Kors brand: Retail, Wholesale and Licensing. In connection with the acquisition of Jimmy Choo, theThe Company evaluated its reportable segments and concluded that Jimmy Choo represents a separate reportable segment. As such, the Company now operates its business through four reportable segments—MK Retail, MK Wholesale, MK Licensing3 operating segments - Versace, Jimmy Choo and Jimmy Choo—Michael Kors, which are based on its business activities and organization. The reportable segments are segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are revenue and operating income for each segment. The Company does not have identifiable assets separated by segment. The Company’s reportable segments represent channelscomponents of distributionthe business that offer similar merchandise, customer experience and sales/marketing strategies.
The Company's fourCompany’s 3 reportable segments are as follows:
MK Retail — segment includes sales through Michael Kors operated stores, including “Collection,” “Lifestyle” including “concessions,” and outlet stores located throughout the Americas (U.S., Canada and Latin America, excluding Brazil), Europe and certain parts of Asia, as well as Michael Kors e-commerce sales. Products sold through the MK Retail segment include women’s apparel, accessories (which include handbags and small leather goods such as wallets), men’s apparel, footwear and licensed products, such as watches, jewelry, fragrances and beauty, and eyewear.
MK Wholesale — segment includes sales primarily to major department stores and specialty shops throughout the Americas, Europe and Asia. Products sold through the MK Wholesale segment include accessories (which include handbags and small leather goods such as wallets), footwear and women’s and men’s apparel. The Company also has wholesale arrangements pursuant to which it sells products to Michael Kors geographic licensees in certain parts of EMEA (Europe, Middle East and Africa) and Asia, as well as in Brazil.
MK Licensing — segment includes royalties and other contributions earned on licensed products and use of the Company’s trademarks, and rights granted to third parties for the right to operate retail stores and/or sell the Company’s products in certain geographic regions such as Brazil, the Middle East, South Africa, Eastern Europe, certain parts of Asia and Australia.
Jimmy Choo•Versace — segment includes revenue generated from salesthrough the sale of footwear, handbagsVersace luxury accessories, ready-to-wear and small leather goodsfootwear through directly operated Jimmy Choo storesVersace boutiques throughout the AmericasNorth America (United States Canada and Latin America, excluding Brazil)Canada), certain parts of EMEA and certain parts of Asia, as well as through the Jimmy ChooVersace outlet stores and e-commerce site.sites. In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements that allow third parties to use the Versace trademarks in connection with retail and/or wholesale sales of Versace branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of sunglasses,jeans, fragrances, watches, jewelry, eyewear fragrance and softhome furnishings.
•Jimmy Choo — segment includes revenue generated through the sale of Jimmy Choo luxury footwear, handbags and small leather goods and accessories through directly operated Jimmy Choo retail and outlet stores throughout the Americas, certain parts of EMEA and certain parts of Asia, through its e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements.arrangements that allow third parties to use the Jimmy Choo trademarks in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of fragrances and eyewear.
•Michael Kors — segment includes revenue generated through the sale of Michael Kors products through 4 primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce sites, through which the Company sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. The Company also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops, and to its geographic licensees. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear.
28

In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands and, therefore, are not allocated to its segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information system expenses, including enterprise resource planning system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transition costs related to the Company’s acquisitions), impairment costs and COVID-19 related charges. The segment structure is consistent with how the Company’s CODM plans and allocates resources, manages the business and assesses performance. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. Corporate overhead expenses are allocated to the segments based upon specific usage or other allocation methods.
The following table presents the Company’s goodwill by reportable segment (in millions):
 As of
 December 30,
2017		 April 1,
2017
MK Retail$91.9
 $91.9
MK Wholesale25.9
 25.9
MK Licensing1.9
 1.9
Jimmy Choo702.3
 —
Total Goodwill$822.0
 $119.7


The following table presents the key performance information of the Company’s reportable segments (in millions):
 Three Months EndedNine Months Ended
 December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Total revenue:
Versace$251 $195 $773 $483 
Jimmy Choo178 121 457 294 
Michael Kors1,180 986 2,932 2,086 
Total revenue$1,609 $1,302 $4,162 $2,863 
Income (loss) from operations:
Versace$32 $13 $135 $(8)
Jimmy Choo16 (8)28 (37)
Michael Kors335 281 795 423 
Total segment income from operations383 286 958 378 
Less: Corporate expenses
(37)(29)(123)(90)
Restructuring and other charges(14)(1)(25)(18)
Impairment of assets (1)
— (90)(33)(110)
COVID-19 related charges(1)1 7 (2)
Total income from operations$331 $167 $784 $158 
 Three Months Ended Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Total revenue:       
MK Retail$846.3
 $836.7
 $2,111.2
 $1,996.8
MK Wholesale430.8
 473.1
 1,198.0
 1,319.7
MK Licensing48.3
 43.0
 115.2
 112.4
Michael Kors1,325.4
 1,352.8
 3,424.4
 3,428.9
Jimmy Choo114.7
 —
 114.7
 —
Total revenue$1,440.1
 $1,352.8
 $3,539.1
 $3,428.9
        
Income from operations:       
MK Retail$180.4
 $178.2
 $341.6
 $314.4
MK Wholesale100.5
 140.2
 263.6
 367.2
MK Licensing26.9
 23.5
 51.1
 50.9
Michael Kors307.8
 341.9
 656.3
 732.5
Jimmy Choo5.7
 —
 5.7
 —
Income from operations$313.5
 $341.9
 $662.0
 $732.5
(1)Impairment of assets during the nine months ended December 25, 2021 and the three and nine months ended December 26, 2020 primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

Depreciation and amortization expense for each segment are as follows (in millions):
 Three Months EndedNine Months Ended
 December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Depreciation and amortization:
Versace$13 $14 $39 $40 
Jimmy Choo8 8 23 23 
Michael Kors26 30 84 97 
Total depreciation and amortization$47 $52 $146 $160 
29

 Three Months Ended Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Depreciation and amortization:       
MK Retail$33.7
 $40.1
 $98.8
 $114.6
MK Wholesale13.9
 15.1
 43.5
 46.3
MK Licensing0.6
 0.5
 1.8
 1.6
Michael Kors48.2
 55.7
 144.1
 162.5
Jimmy Choo5.8
 —
 5.8
 —
Total depreciation and amortization$54.0
 $55.7
 $149.9
 $162.5

During the three and nine months ended December 30, 2017, the Company recorded impairment charges relating to Michael Kors full-price retail operations of $2.6 million and $18.9 million, respectively, and restructuring and other charges of $28.0 million and $51.3 million, respectively. Please refer to Notes 8 and 11 for additional information. During the nine months ended December 31, 2016, the Company recorded fixed asset impairment charges of $5.4 million, $4.9 million of which were related to 10 Michael Kors full-price retail locations still in operation and $0.5 million of which related to U.S. wholesale locations.
Total revenue (as recognized based(based on country of origin), and long-lived assets by geographic location are as follows (in millions):
 Three Months Ended Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Total revenue:       
The Americas (1)
$946.6
 $983.8
 $2,332.6
 $2,419.7
EMEA333.1
 256.7
 805.0
 728.7
Asia160.4
 112.3
 401.5
 280.5
Total revenue$1,440.1
 $1,352.8
 $3,539.1
 $3,428.9


 As of
 December 30,
2017		 April 1,
2017
Long-lived assets, excluding goodwill:   
The Americas (1)
$332.6
 $356.1
EMEA1,027.0
 197.7
Asia455.2
 455.8
Total Long-lived assets$1,814.8
 $1,009.6
 Three Months EndedNine Months Ended
 December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Revenue:
The Americas
(U.S., Canada and Latin America) (1)
$954 $760 $2,370 $1,524 
EMEA405 299 1,095 732 
Asia250 243 697 607 
Total revenue$1,609 $1,302 $4,162 $2,863 
(1)
Total revenue earned in the U.S. were $883.2 million and $2.164
(1)Total revenue earned in the U.S. was $885 million and $2.207 billion, respectively, for the three and nine months ended December 30, 2017 and $925.7 million and $2.261 billion for the three and nine months ended December 31, 2016. Long-lived assets located in the U.S. as of December 30, 2017 and April 1, 2017 were $286.4 million and $328.8 million, respectively.
17. Related Party Transactions
The Company’s Chief Creative Officer, Michael Kors, and the Company’s Chief Executive Officer, John Idol, and certain of the Company’s former shareholders, including Sportswear Holdings Limited, jointly owned Michael Kors Far East Holdings Limited, a BVI company, prior to the Company’s acquisition of MKHKL on May 31, 2016, which eliminated their ownership interests. On April 1, 2011, the Company entered into certain licensing agreements with certain subsidiaries of Michael Kors Far East Holdings Limited, including MKHKL, (the “Licensees”), which provided the Licensees with certain exclusive rights for use of the Company’s trademarks within China, Hong Kong, Macau and Taiwan, and to import, sell, advertise and promote certain of the Company’s products in these regions, as well as to own and operate stores bearing the Company’s tradenames. The agreements between the Company and the Licensees were scheduled to expire on March 31, 2041 and could be terminated by the Company at certain intervals if minimum sales benchmarks were not met. Royalties earned under these agreements were approximately $1.2 million during the two months ended May 31, 2016 preceding the acquisition. These royalties were driven by Licensee sales (of the Company’s goods) to their customers of approximately $28.9 million during the two months ended May 31, 2016 preceding the acquisition. In addition, the Company sold certain inventory items to the Licensees through its wholesale segment at terms consistent with those of similar licensees in the region. During the two-month period ended May 31, 2016 preceding the acquisition, amounts recognized as revenues in the Company’s consolidated statements of operations and comprehensive income related to these sales were approximately $7.9 million. Please refer to Note 3 for information relating to the Company’s acquisition of MKHKL on May 31, 2016.
A former executive officer of the Company (who is no longer a related party as of October 31, 2016) is married to a former employee of one of the Company’s suppliers of fixtures for its shop-in-shops, retail stores and showrooms. During the three and nine months ended December 31, 2016, purchases from this supplier reflected25, 2021. Total revenue earned in the Company’s consolidated financial statements were $1.1U.S. was $722 million and $1.7 million, respectively.
18. Non-cash Investing Activities
Significant non-cash investing activities during$1.414 billion, respectively, for the three and nine months ended December 30, 2017 and December 31, 2016 included non-cash allocations of the fair values of the net assets acquired in connection with the Company’s acquisition of the Jimmy Choo business on November 1, 2017 and the Greater China business on May 31, 2016, respectively. See Note 3 for additional information.26, 2020.
There were no other significant non-cash investing or financing activities during the fiscal periods presented.



30

ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis (“MD&A”) of our Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and notes thereto included as part of this interim report. This discussion contains forward-lookingForward-looking statements that are based upon current expectations. We sometimes identify forward-looking statements with such words as “may,” “expect,” “anticipate,” “estimate,” “seek,” “intend,” “believe” or similar words concerning future events. The forward-looking statements contained herein, include, without limitation, statements concerning our ability to execute on our future growth strategies, our ability to achieve intended benefits from acquisitions, future revenue sources and concentration, gross profit margins, selling and marketing expenses, capital expenditures, general and administrative expenses, capital resources, new stores, retail fleet optimization plan and anticipated cost savings, additional financings or borrowings and additional lossesprospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of the Company about future events, and are therefore subject to risks and uncertainties including, but not limited to, those discussed in this report thatwhich could cause actual results to differ materially from the future results contemplatedexpressed or implied by thesethe forward-looking statements. We also urge youAll statements other than statements of historical facts included herein, may be forward-looking statements. Without limitation, any statements preceded or followed by or that include the words “plans”, “believes”, “expects”, “intends”, “will”, “should”, “could”, “would”, “may”, “anticipates”, “might” or similar words or phrases, are forward-looking statements. These forward-looking statements are not guarantees of future financial performance. Such forward-looking statements involve known and unknown risks and uncertainties that could significantly affect expected results and are based on certain key assumptions, which could cause actual results to carefully reviewdiffer materially from those projected or implied in any forward-looking statements. These risks, uncertainties and other factors include the effect of the COVID-19 pandemic and its potential material and significant impact on the Company’s future financial and operational results if retail stores are forced to close again and the pandemic is prolonged, including that our estimates could materially differ if the severity of the COVID-19 situation worsens, or if there are further supply chain disruptions, including additional production delays and increased costs, the length and severity of such outbreak across the globe and the pace of recovery following the COVID-19 pandemic, levels of cash flow and future availability of credit, compliance with restrictive covenants under the Company’s credit agreement, the Company’s ability to integrate successfully and to achieve anticipated benefits of any acquisition and to successfully execute our growth strategies; the risk of disruptions to the Company’s businesses; risks associated with operating in international markets and our global sourcing activities; the risk of cybersecurity threats and privacy or data security breaches; the negative effects of events on the market price of the Company’s ordinary shares and its operating results; significant transaction costs; unknown liabilities; the risk of litigation and/or regulatory actions related to the Company’s businesses; fluctuations in demand for the Company’s products; levels of indebtedness (including the indebtedness incurred in connection with acquisitions); the timing and scope of future share buybacks, which may be made in open market or privately negotiated transactions, and are subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors, and such share repurchases may be suspended or discontinued at any time, the level of other investing activities and uses of cash; changes in consumer traffic and retail trends; loss of market share and industry competition; fluctuations in the capital markets; fluctuations in interest and exchange rates; the occurrence of unforeseen epidemics and pandemics, disasters or catastrophes; political or economic instability in principal markets; adverse outcomes in litigation; and general, local and global economic, political, business and market conditions, as well as those risks set forth underin Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended April 1, 2017,March 27, 2021, filed with the Securities and Exchange Commission on May 31, 2017, as supplemented by the risk factor set forth in our Form 10-Q for the quarterly period ended July 1, 2017, filed with the Securities and Exchange Commission on August 9, 2017.26, 2021.

Overview
Our Business
We areCapri Holdings Limited is a global fashion luxury group, consisting of industry-leading fashion luxuryiconic brands that are industry leaders in design, style and craftsmanship, led by a world-class management team and renowned designers. The Michael Kors brand was launched over 35 years ago by Michael Kors, whose vision has takenOur brands cover the Company from its beginnings as an Americanfull spectrum of fashion luxury sportswear house to a globalcategories including women’s and men’s accessories, footwear and apparel companyready-to-wear as well as wearable technology, watches, jewelry, eyewear and a full line of fragrance products. Our goal is to continue to extend the global reach of our brands while ensuring that they maintain their independence and exclusive DNA.
Our Versace brand has long been recognized as one of the world’s leading international fashion design houses and is synonymous with Italian glamour and style. Founded in 1978 in Milan, Versace is known for its iconic and unmistakable style and unparalleled craftsmanship. Over the past several decades, the House of Versace has grown globally from its roots in haute couture, expanding into the design, manufacturing, distribution and retailing of accessories, ready-to-wear, footwear, eyewear, watches, jewelry, fragrance and home furnishings businesses. Versace’s design team is led by Donatella Versace, who has been the brand’s artistic director for over 20 years. Versace distributes its products through a globalworldwide distribution network, that has presencewhich includes boutiques in over 100 countries through company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. On November 1, 2017, we completed the acquisition of Jimmy Choo Group Limited (formerly known as Jimmy Choo PLC) and its subsidiaries (collectively, “Jimmy Choo”). The combination of Michael Kors and Jimmy Choo brought together two iconic brands that are industry leaders in style and trend and created a global fashion luxury group with a diversified geographic and product portfolio, strengthening the Company's future revenue growth opportunities.
Michael Kors is a highly recognized luxury fashion brand in the Americas and Europe with accelerating brand awareness in other international markets. The Michael Kors brand features distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael KorsCollection establishes the aesthetic authoritysome of the entire brand and is carried by many of our retail stores, ourworld’s most glamorous cities, its e-commerce sites, as well as inthrough the finest luxurymost prestigious department and specialty stores in the world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and apparel, and addresses the significant demand opportunity in accessible luxury goods. More recently, we have begun to grow our men’s business in recognition of the significant opportunity afforded by the Michael Kors brand’s established fashion authority and the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.worldwide.
Since its inception,
31

Our Jimmy Choo has offeredbrand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand,, whose core product offering is women'swomen’s luxury shoes, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a growing men'smen’s luxury shoeshoes and accessory business. In addition, certain productscategories, such as sunglasses,fragrances and eyewear, fragrance and soft accessories are produced under licensing agreements. Jimmy Choo'sChoo’s design team is led by Sandra Choi, who has been the Creative Director for the brand since its inception in 1996. Jimmy Choo products are unique, instinctively seductive and chic. The brand offers classic and timeless luxury products, as well as innovative products that are intended to set and lead fashion trends. The Jimmy Choo brand is represented through its global store network, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.


Prior to the third quarter of Fiscal 2018, we had three reportable segments for ourOur Michael Kors (“MK”) brand: Retail, Wholesale and Licensing. With the acquisition of Jimmy Choo,brand was launched 40 years ago by Michael Kors, whose vision has taken the Company beganfrom its beginnings as an American luxury sportswear house to operatea global accessories, footwear and ready-to-wear company with a global distribution network that has presence in four reportable segments, which are as follows:
MK Retail — includes sales ofover 100 countries through Company-operated retail stores and e-commerce sites, leading department stores, specialty stores and select licensing partners. Michael Kors products from 395 retail stores in the Americas (including concessions) and 453 international retail stores (including concessions) throughout Europe and certain parts of Asia, as well as from Michael Kors e-commerce sites in the United States (“U.S.”), Canada, Europe, China, Japan and South Korea as of December 30, 2017.
MK Wholesale — includes wholesale sales of Michael Kors products through 1,391 department store doors and 889 specialty store doorsis a highly recognized luxury fashion brand in the Americas and through 1,034 specialty store doors and 217 department store doors internationally as of December 30, 2017. MK Wholesale also includes revenues from sales of products toEurope with growing brand awareness in other international markets. Michael Kors geographic licensees.
MK Licensing — includes royaltiesfeatures distinctive designs, materials and other contributions earned on licensed productscraftsmanship with a jet-set aesthetic that combines stylish elegance and usea sporty attitude. Michael Kors offers three primary collections: the Michael Kors Collection luxury line, the MICHAEL Michael Kors accessible luxury line and the Michael Kors Mens line. The Michael Kors Collection establishes the aesthetic authority of the Company’s trademarks,entire brand and rights granted to third parties for the right to operateis carried by select retail stores, and/or sellour e-commerce sites, as well as in the Company’s productsfinest luxury department stores in certain geographic regions.
Jimmy Choo — includes worldwide salesthe world. MICHAEL Michael Kors has a strong focus on accessories, in addition to offering footwear and ready-to-wear, and addresses the significant demand opportunity in accessible luxury goods. We have also been developing our men’s business in recognition of Jimmy Choo products from 179 retail stores (including concessions)the significant opportunity afforded by the Michael Kors brand’s established fashion authority and jimmychoo.com, through 619 wholesale doors and through product and geographic licensing arrangements, as of December 30, 2017.
the expanding men’s market. Taken together, our Michael Kors collections target a broad customer base while retaining our premium luxury image.
Certain Factors Affecting Financial Condition and Results of Operations
Establishing brand identityCOVID-19 Pandemic. See Item 1A — “The COVID-19 pandemic may continue to have a material adverse effect on our business and enhancing global presence. We intend to growresults of operations” of our international presence throughAnnual Report on Form 10-K for the formation of a global fashion luxury group, bringing together industry-leading fashion luxury brands. As mentioned above, on November 1, 2017, we completed our acquisition of Jimmy Choo for a total transaction value of $1.447 billion (see Note 3 to the accompanying consolidated financial statementsfiscal year ended March 27, 2021 for additional information). Jimmy Choo has a rich history as a leading global luxury house, renowned for its glamorous and fashion-forward footwear, and is an excellent complementdiscussion regarding risks to the Michael Kors brand. We believe this combination further strengthens our future growth opportunities, while also increasing both product and geographic diversification. However, there are risksbusiness associated with a new acquisitionthe COVID-19 pandemic.

Channel shift, macroeconomic factors, and the anticipated benefits of the acquisition ondemand for our financial results may not be in line with our expectations.
We intend to continue to increase our international presenceaccessories and global brand recognition by growing our existing international operations, through acquisitions, the formation of various joint ventures with international partners and continuing with our international licensing arrangements. We feel this is an efficient method for continued penetration into the global luxury goods market, especially for markets where we have yet to establish a substantial presence. In addition, our growth strategy includes assuming direct control of certain international operations to better manage our growth opportunities in the related regions. On May 31, 2016, we acquired the previously licensed business in the Greater China region ("MKHKL"), which has operations in China, Hong Kong, Macau and Taiwan.
See Note 3 to the accompanying consolidated financial statements for additional information regarding our recent acquisitions.
Channel Shift and Demand for Our Accessories and Related Merchandisemerchandise. Our performance is affected by trends in the luxury goods industry, global consumer spending, macroeconomic factors, overall levels of consumer travel and spending on discretionary items as well as shifts in demographics and changes in lifestyle preferences. Although consumer spending has recentlyThrough 2019, the personal luxury goods market grew at a 5% rate over the past 20 years, with more recent growth driven by stronger Chinese demand from both international and local consumers and demographic and socioeconomic shifts resulting in younger consumers purchasing more luxury goods. However, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined 23%. Market studies indicate that the personal luxury goods market is predicted to increase at a 10% compound annual growth rate between 2020 and 2025, and is expected to have returned to 2019 levels by the end of 2021 or in 2022. Future growth is expected to be driven by e-commerce, Chinese consumers and younger generations. As the personal luxury goods market continues to evolve, Capri is committed to creating engaging luxury experiences globally. In our view, increased consumercustomer engagement and tailoring merchandise to customer shopping and communication preferences have continuedare key to shift from luxury products to luxury experiences. In addition, consumer shopping preferences have continued to shift from physical stores to on-line shopping. growing market share.

We currently expect that this trend will continue in the foreseeable future. During Fiscal 2017, we began to strategically reduce shipments of Michael Kors products to decrease promotional activity within our wholesale channel, which we believe is necessary to appropriately position the Michael Kors brand long-term. In addition, we have been strategically reducing promotional activity within our full-price retail stores. Wealso continue to adjust our retail operating strategy to the changing business environment and on May 31, 2017,environment. Last year, we announced that we planour Capri Retail Store Optimization Program to close between 100 and 125approximately 170 of our Michael Kors full-price retail stores over the next two yearsthroughout Fiscal 2021 and Fiscal 2022, in order to improve the profitability of our Michael Kors retail store fleet (“Retail Fleet Optimization Plan”).fleet. Over this time period, we expectinitially expected to incur approximately $100 - $125$75 million of one-time costs associated with these store closures.closures, however, based on a reassessment, we expect these costs to be approximately $25 million. As of December 25, 2021, we have closed a total of 140 stores and recorded net restructuring charges of $11 million relating to the program since its inception. Collectively, we continue to anticipate ongoing annual savings of approximately $60 million as a result of the store closures and lower depreciation and amortization associated with the impairment charges recorded during Fiscal 2017 and Fiscal 2018. During the three months and nine months ended December 30, 2017, we closed 24 of our Michael Kors full-price retail stores under the Retail Fleet Optimization Plan, which resulted in restructuring charges of $2.4 million and $8.3 million, respectively, recorded within restructuring and other charges in our consolidated statements of operations and comprehensive income.being recorded.


Foreign currency fluctuation. Our consolidated operations are impacted by the relationships between our reporting currency, the U.S. dollar, and those of our non-U.S. subsidiaries whose functional/local currency is other than the U.S. dollar. During the three months ended December 30, 2017, our results have been positively impacted by the strengthening ofdollar, particularly the Euro, the British Pound, the Canadian Dollar and the Chinese Renminbi, relative to the U.S. Dollar of 9%, 7%, 5% and 3%, respectively, partially offset by a decline in the value of the Japanese Yen, relative to the U.S. Dollar of 4%, as compared to the three months ended December 31, 2016. During the nine months ended December 30, 2017, our results have been positively impacted by the strengthening of the EuroKorean Won and the Canadian Dollar, relative to the U.S. Dollar of 4% and 2%, respectively, partially offset by the declines in value of the Japanese Yen of 5%, as compared to the nine months ended December 31, 2016.among others. We continue to expect significant volatility in the global foreign currency exchange rates, which may have a negative impact on the reported results of certain of our non-U.S. subsidiaries in the future, when translated to U.S. Dollars.

Disruptions or delays in shipping and distribution and other supply chain constraints. Our operations are subject to the impact of shipping disruptionsWe have been experiencing global logistics challenges, including delays as a result of changes or damageport congestion, vessel availability, container shortages and temporary factory closures which are expected to continue for the duration of Fiscal 2022 and into Fiscal 2023. Our freight costs have
32

increased as carrier rates for ocean and air shipments have increased significantly, and the supply chain disruptions have caused us to increase our distribution infrastructure, as well as due to external factors.use of air freight with greater frequency than in the past. Any future disruptions in our shipping and distribution network, including impacts on our supply chain due to temporary closures of our manufacturing partners and shipping and fulfillment constraints, could have a negative impact on our results of operations. See Item 1A — “Risk Factors” — “We primarily use foreign manufacturing contractors and independent third-party agents to source our finished goods and our business is subject to risks inherent in global sourcing activities, including disruptions or delays in manufacturing or shipments” of our Annual Report on Form 10-K for the fiscal year ended March 27, 2021 for additional discussion.
Costs of Manufacturing.manufacturing, tariffs, and import regulations. Our industry is subject to volatility in costs related to certain raw materials used in the manufacturing of our products. This volatility applies primarily to costs driven by commodity prices, which can increase or decrease dramatically over a short period of time. These fluctuationsIn addition, our costs may be impacted by sanction tariffs imposed on our products due to changes in trade terms. For example, we have historically received benefits from duty-free imports on certain products from certain countries pursuant to the U.S. Generalized System of Preferences (“GSP”) program. The GSP program expired on December 31, 2020. If the GSP program is not renewed or otherwise made retroactive, we will continue to experience significant additional duties and our gross margin will continue to be negatively impacted. Additionally, we are subject to government import regulations, including U.S. Customs and Border Protection (“CBP”) withhold release orders. The imposition of taxes, duties and quotas, the withdrawal from or material modification to trade agreements, and/or if CBP detains shipments of our goods pursuant to a withhold release order could have a material adverse effect on our business, results of operations and financial condition. If additional tariffs or trade restrictions are implemented by the U.S. or other countries, the cost of our products could increase which could adversely affect our business. In addition, commodity prices and tariffs may have an impact on our sales,revenues, results of operations and cash flows to the extent they occur.flows. We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible.possible and diversifying the countries where we produce. In addition, manufacturing labor costs are also subject to degrees of volatility based on local and global economic conditions. We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our products.
U.S. Tax Reform. On December 22, 2017, the United States ("U.S.") government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including, among other things, lowering U.S. statutory federal tax rate and implementing a territorial tax system. As we have a March 31 fiscal year-end, the lower tax rate will be phased in, resulting in a U.S. statutory federal tax rate of approximately 32% for the fiscal year ended March 31, 2018 and a 21% U.S. statutory federal tax rate for fiscal years thereafter. The Tax Act also adds many new provisions, including changes to bonus depreciation, limits on the deductions for executive compensation and interest expense, a tax on global intangible low-taxed income ("GILTI"), the base erosion anti-abuse tax ("BEAT") and a deduction for foreign derived intangible income ("FDII"). We are still evaluating the impact of these provisions of the Tax Act, which do not apply until 2019, and thus, have not adjusted any net deferred tax assets of our foreign subsidiaries for the new tax.
As part of the transition to the new territorial tax system, the Tax Act imposes a tax on the mandatory deemed repatriation of earnings of our foreign subsidiaries. In addition, the reduction of the U.S. statutory federal tax rate will cause us to re-measure our U.S. deferred tax assets and liabilities.  In accordance with Accounting Standards Codification ("ASC") 740, we recorded the effects of the tax law change during the three months ended December 30, 2017, which resulted in a provisional charge of $12.4 million, comprised of an estimated deemed repatriation tax charge of $0.3 million and an estimated deferred tax charge of $12.1 million due to the re-measurement of our net U.S. deferred tax assets. Conversely, we realized a $2.0 million net benefit for the three and nine month periods ended December 30, 2017 due to the corporate tax rate reductions. While the Tax Act has negatively impacted our results of operations for the three and nine months ended December 30, 2017 by approximately 370 basis points and 160 basis points, respectively, the lower corporate rate is expected to to result in a benefit to our effective tax rate for the next fiscal year of 300 to 400 basis points, which we plan to reinvest in our business.
In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") 118 to provide guidance for companies that would allow for a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. The final transition impacts of the Tax Act may differ from the above estimate, possibly materially, due to, among other things, changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, or any changes in accounting standards for income taxes or related interpretations in response to the Tax Act. In addition, once we finalize certain tax positions when it files its 2017 U.S. tax return, we will be able to conclude whether any further adjustments are required to our deferred tax balances in the U.S., as well as to the total liability associated with the one-time mandatory tax. We believe that the analysis performed to date is sufficient to calculate a reasonable estimate of the impacts of the Tax Act.


Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“U.S. GAAP”) 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 financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our financial condition and results of operations, and that require our most difficult, subjective and complex judgments to make estimates about the effect of matters that are inherently uncertain. In applying such policies, we must use certain assumptions that are based upon our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based upon analysis of available information, including historical factors, current circumstances and the experience and judgment of management. Our critical accounting policies are disclosed in full in the MD&A section of our Annual Report on Form 10-K for the fiscal year ended April 1, 2017. There have been no significant changes in our critical accounting policies since April 1, 2017, other than described below.
Share-Based Compensation
We use the Black-Scholes valuation model to estimate the grant date fair value of its share option awards. Beginning in Fiscal 2018, we started using our own historical experience in determining the expected holding period and volatility of our time-based share option awards. In prior periods, we used the simplified method for determining the expected life of our options and average volatility rates of similar actively traded companies over the estimated holding period, due to insufficient historical option exercise experience as a public company.
Segment Information
We operate in three reportable segments, which are as follows:
Versace
We generate revenue through four business segments: MK Retail, MK Wholesale, MK Licensingthe sale of Versace luxury accessories, ready-to-wear and Jimmy Choo. The following table presents our total revenue and income from operations by segment for the three and nine months ended December 30, 2017 and December 31, 2016 (in millions):
  Three Months Ended Nine Months Ended
  December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Total revenue:       
MK Retail$846.3
 $836.7
 $2,111.2
 $1,996.8
MK Wholesale430.8
 473.1
 1,198.0
 1,319.7
MK Licensing48.3
 43.0
 115.2
 112.4
Michael Kors1,325.4
 1,352.8
 3,424.4
 3,428.9
Jimmy Choo114.7
 —
 114.7
 —
Total revenue$1,440.1
 $1,352.8
 $3,539.1
 $3,428.9
        
Income from operations:       
MK Retail$180.4
 $178.2
 $341.6
 $314.4
MK Wholesale100.5
 140.2
 263.6
 367.2
MK Licensing26.9
 23.5
 51.1
 50.9
Michael Kors307.8
 341.9
 656.3
 732.5
Jimmy Choo5.7
 —
 5.7
 —
Income from operations$313.5
 $341.9
 $662.0
 $732.5


MK Retail
We have four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores, outlet stores and e-commerce,footwear through which we sell our products, as well as licensed products bearing our name, directly to the end consumeroperated Versace boutiques throughout the AmericasNorth America (United States Canada and Latin America, excluding Brazil)Canada), Europe and certain parts of Asia. In addition to these four retail formats, we operate concessions in a select number of department stores. Michael Kors “Collection” stores are located in highly prestigious shopping areas, while Michael Kors “Lifestyle” stores are located in well-populated commercial shopping locations and leading regional shopping centers. Michael Kors outlet stores, which are generally in outlet centers, extend our reach to additional consumer groups. Michael Kors e-commerce business includes our existing Michael Kors e-commerce sites in the U.S., Canada, Europe, China and Japan. During Fiscal 2018, we further expanded our e-commerce presence to 14 additional countries in Europe and South Korea, increasing our total e-commerce site presence to 25 Michael Kors e-commerce sites as of December 30, 2017.
The following table presents the change in our global network of Michael Kors retail stores and revenue for the MK Retail segment by geographic location for the three and nine months ended December 30, 2017 and December 31, 2016 (dollars in millions):
 Three Months Ended Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Full price retail stores including concessions:       
Number of stores616
 606
 616
 606
(Decrease) increase during period(4) 23
 2
 114
Percentage increase vs. prior year1.7% 33.2% 1.7% 33.2%
Total gross square footage1,421,384
 1,393,457
 1,421,384
 1,393,457
Average square footage per store2,307
 2,299
 2,307
 2,299
        
Outlet stores:       
Number of stores232
 210
 232
 210
Increase during period9
 6
 19
 34
Percentage increase vs. prior year10.5% 25.0% 10.5% 25.0%
Total gross square footage943,895
 835,370
 943,895
 835,370
Average square footage per store4,069
 3,978
 4,069
 3,978
        
MK Retail revenue - the Americas$558.0
 $584.2
 $1,335.6
 $1,362.0
MK Retail revenue - Europe$168.0
 $150.9
 $444.3
 $401.2
MK Retail revenue - Asia$120.3
 $101.6
 $331.3
 $233.6
The following table presents our Michael Kors retail stores by geographic location:
 As of
 December 30,
2017		 December 31,
2016
Store count by region:   
The Americas395
 397
Europe202
 199
Asia251
 220
Total848
 816


MK Wholesale
We sell Michael Kors products directly to department stores primarily located across the Americas (excluding Brazil) and Europe to accommodate consumers who prefer to shop at major department stores. In addition, we sell to specialty stores for those consumers who enjoy the boutique experience afforded by such stores, as well as to travel retail shops in the Americas, Europe and Asia. We also have wholesale arrangements pursuant to which we sell Michael Kors products to our geographic licensees in certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (including Australia), as well as in Brazil. We continue to focus our sales effortsthrough Versace outlet stores and drive sales in existing locations by enhancing presentation with our specialized fixtures that effectively communicate our brand and create a more personalized shopping experience for consumers. We tailor our assortmentse-commerce sites. In addition, revenue is generated through wholesale product planningsales to distribution partners (including geographic licensing arrangements), multi-brand department stores and allocation processes to better match the demands of our department store customers in each local market.
The following table presents the change in our global network of Michael Kors wholesale doors,specialty stores worldwide, as well as the corresponding revenue for our MK Wholesale segment by geographic location during the three month and nine month periods ended December 30, 2017 and December 31, 2016 (dollars in millions):
 Three Months Ended Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Number of full-price wholesale doors3,531
 3,698
 3,531
 3,698
(Decrease) increase during period(87) 36
 (76) (191)
        
MK Wholesale revenue - the Americas$338.2
 $372.9
 $905.8
 $987.6
MK Wholesale revenue - EMEA$81.2
 $89.5
 $250.7
 $285.2
MK Wholesale revenue - Asia$11.4
 $10.7
 $41.5
 $46.9
MK Licensing
We generate licensing revenue through product and geographic licensing arrangements. Our product license agreements allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of a variety of products, including jeans, fragrances, watches, jewelry, fragranceseyewear and beauty, and eyewear. In Michael Kors product licensing arrangements, we take an active role in the design, marketing and distribution of products under the Michael Kors brand. Our geographic licensing arrangements allow third parties to use our Michael Kors tradenames in connection with the retail and/or wholesale sales of our Michael Kors branded products in specific geographic regions, such as Brazil, the Middle East, South Africa, Eastern Europe, certain parts of Asia and Australia. During Fiscal 2017, we acquired direct control of our licensed operations in the Greater China region on May 31, 2016. The results of the acquired business are now being reported as part of our MK Retail and MK Wholesale operations. During the second quarter of Fiscal 2017, the Company licensed the right to operate retail stores bearing the Michael Kors trademark to a third party in Brazil.home furnishings.
Jimmy Choo
The Jimmy Choo business was acquired and consolidated by the Company beginning on November 1, 2017. We generate revenue through the sale of Jimmy Choo luxury goods to end clients through directly operated Jimmy Choo retail and outlet stores throughout the Americas (United States, Canada and Latin America, excluding Brazil)America), certain parts of EMEA and certain parts of Asia, through jimmychoo.com andour e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo tradename in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licenselicensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of sunglasses,products, including fragrances and eyewear.
Michael Kors
We generate revenue through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce, through which we sell our products, as well as licensed products bearing our name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. Our Michael Kors e-commerce business includes e-commerce sites in the U.S., Canada and EMEA and Asia. We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of
33

EMEA, Asia and Brazil. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear, fragrance and soft accessories, as well as through geographic licensing arrangements, which allow third parties to use the Jimmy Choo tradenamesMichael Kors tradename in connectionsconnection with the retail and/or wholesale sales of our Jimmy ChooMichael Kors branded products in specific geographic regions.

Unallocated Corporate Expenses

In addition to the reportable segments discussed above, we have certain corporate costs that are not directly attributable to our brands and, therefore, are not allocated to segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including ERP system implementation costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges (including transaction and transition costs related to our acquisitions), impairment costs and COVID-19 related charges. The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance. The following table presents our total revenue and income (loss) from operations by segment for the three and nine months ended December 25, 2021 and December 26, 2020 (in millions):

 Three Months EndedNine Months Ended
 December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Total revenue:
Versace$251 $195 $773 $483 
Jimmy Choo178 121 457 294 
Michael Kors1,180 986 2,932 2,086 
Total revenue$1,609 $1,302 $4,162 $2,863 
Income (loss) from operations:
Versace$32 $13 $135 $(8)
Jimmy Choo16 (8)28 (37)
Michael Kors335 281 795 423 
Total segment income from operations383 286 958 378 
Less: Corporate expenses
(37)(29)(123)(90)
Restructuring and other charges(14)(1)(25)(18)
Impairment of assets— (90)(33)(110)
COVID-19 related charges(1)1 7 (2)
Total income from operations$331 $167 $784 $158 
34


The following table presents our global network of Jimmy Choo retail stores and wholesale doors as of December 30, 2017:by brand:
As of
December 25,
2021		December 26,
2020
Number of full price retail stores (including concessions):
Versace150 160 
Jimmy Choo184 180 
Michael Kors535 547 
869 887 
Number of outlet stores:
Versace62 57 
Jimmy Choo56 51 
Michael Kors299 284 
417 392 
Total number of retail stores1,286 1,279 
Total number of wholesale doors:
Versace803 790 
Jimmy Choo456 496 
Michael Kors2,931 2,763 
4,190 4,049 
December 30,
2017
Store count:
Full price retail stores including concessions158
Outlet stores21
Total stores179
Number of full-price wholesale doors619
The following table presents Jimmy Choo revenueour retail stores by geographic location, which has been included in the Company's results of operations from November 1, 2017 through December 30, 2017 (in millions):
 Revenue
The Americas$21.0
EMEA65.0
Asia28.7
Total$114.7
location:
As ofAs of
December 25, 2021December 26, 2020
VersaceJimmy ChooMichael KorsVersaceJimmy ChooMichael Kors
Store count by region:
The Americas39 46 346 3647364
EMEA55 74 176 5975177
Asia118 120 312 122109290
212 240 834 217231 831 
Key Consolidated Performance Indicators and Statistics
We use a number of key indicators of operating results to evaluate our Company's performance, including the following (dollars in millions):
 Three Months EndedNine Months Ended
 December 25, 2021December 26, 2020December 25, 2021December 26, 2020
Total revenue$1,609 $1,302 $4,162 $2,863 
Gross profit as a percent of total revenue65.1 %65.1 %67.0 %65.0 %
Income from operations$331 $167 $784 $158 
Income from operations as a percent of total revenue20.6 %12.8 %18.8 %5.5 %
35

 Three Months Ended Nine Months Ended
 December 30, 2017 December 31, 2016 December 30, 2017 December 31, 2016
Total revenue$1,440.1
 $1,352.8
 $3,539.1
 $3,428.9
Decreases in comparable store net sales(3.2)% (6.9)% (3.5)% (6.6)%
Gross profit as a percent of total revenue61.4 % 59.6 % 60.7 % 59.5 %
Income from operations$313.5
 $341.9
 $662.0
 $732.5
Income from operations as a percent of total revenue21.8 % 25.3 % 18.7 % 21.4 %
Seasonality
General Definitions for Operating ResultsWe experience certain effects of seasonality with respect to our business. We generally experience greater sales during our third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during our first fiscal quarter.
Total revenue consistsCritical Accounting Policies and Estimates
The preparation of sales from comparable retail storesfinancial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and e-commerce sitesassumptions that affect the reported amounts of assets and non-comparable retail storesliabilities and e-commerce sites, netdisclosure of returnscontingent assets and markdowns,liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those madethat are the most important to our wholesale customers, net of returns, discounts, markdowns and allowances. Additionally, revenue includes royalties and other contributions earned on sales of licensed products by our licensees as well as contractual royalty rates for the useportrayal of our trademarks in certain geographic territories.
Comparable store net sales include sales from a retail store or an e-commerce siteresults of operations and financial condition and that has been operating for one full year afterrequire our most difficult, subjective and complex judgments to make estimates about the endeffect of the first month of its operation under our ownership. For storesmatters that are closed, sales that were made in the final month of their operations (assuming closure prior to the fiscal month’s end), are excluded from the calculation of comparable store sales. Additionally, sales for storesinherently uncertain. In applying such policies, we must use certain assumptions that are either relocated, or expanded by a square footage of 25% or greater, in any given fiscal year, are also excluded from the calculation of comparable store sales at the time of their move or interruption, until such stores have been in their new location, or are operating under their new size/capacity, for at least one full year after the end of the first month of their relocation or expansion. All comparable store sales are presented on a 52-week basis. Comparable store sales are reported on a global basis, which represents management’s view of our Company as an expanding global business.


Constant currency effects are non-U.S. GAAP financial measures, which are provided to supplement our reported operating results to facilitate comparisons of our operating results and trends in our business, excluding the effects of foreign currency rate fluctuations. Because we are a global company, foreign currency exchange rates may have a significant effectbased on our reported results. We calculate constant currency measuresinformed judgments, assessments of probability and best estimates. Estimates, by their nature, are subjective and are based on analysis of available information, including current and historical factors and the related foreign currency impacts by translating the current-year’s reported amounts into comparable amounts using prior year’s foreign exchange rates for each currency. All constant currency performance measures discussed below should be considered a supplement toexperience and notjudgment of management. We evaluate our assumptions and estimates on an ongoing basis. While our significant accounting policies are detailed in lieu of our operating performance measures calculated in accordance with U.S. GAAP.
Cost of goods sold includes the cost of inventory sold, freight-in on merchandise and foreign currency exchange gains/losses related to designated forward contracts for purchase commitments. All retail operating and occupancy costs are included in Selling, general and administrative expenses (see below), and as a result our cost of goods sold may not be comparable to that of other entities that have chosen to include some or all of those expenses as a component of their cost of goods sold.
Gross profit is total revenue minus cost of goods sold. As a result of retail operating and occupancy costs being excluded from our cost of goods sold, our gross profit may not be comparable to that of other entities that have chosen to include some or all of those expenses as a component of their gross profit.
Selling, general and administrative expenses consist of warehousing and distribution costs, rent for our distribution centers, payroll, store occupancy costs (such as rent, common area maintenance, store pre-opening, real estate taxes and utilities), information technology and systems costs, corporate payroll and related benefits, advertising and promotion expense and other general expenses.
Depreciation and amortization includes depreciation and amortization of fixed and definite-lived intangible assets.
Impairment consists of charges to write-down fixed assets and finite-lived intangible assets to fair value.
Restructuring and other charges includes store closure costs recorded in connection with the Retail Fleet Optimization Plan, as well as transaction and transition costs recorded in connection with our acquisitions of Jimmy Choo and MKHKL businesses (please refer to Note 3 and Note 82 to the accompanying consolidated financial statements, for additional information).
Income from operations consists of gross profit minus total operating expenses.
Other (income) expense, net includes insurance settlements, proceeds received related to our anti-counterfeiting efforts and rental income from our owned distribution centercritical accounting policies are disclosed, in Europe. In future periods, it may include any other miscellaneous activities not directly related to our operations.
Interest expense, net represents interest and fees on our revolving credit facilities, senior notes, term loan facilities and letters of credit (see “Liquidity and Capital Resources” for further detail on our credit facilities), as well as amortization of deferred financing costs and original issue discount, offset by interest earned on highly liquid investments (investments purchased with an original maturity of three months or less, classified as cash equivalents).
Foreign currency loss/(gain) includes net gains or losses related tofull, in the mark-to-market (fair value) on our forward currency contracts not designated as accounting hedges and unrealized income or loss from the re-measurement of monetary assets and liabilities denominated in currencies other than the functional currenciesMD&A section of our subsidiaries.Annual Report on Form 10-K for the fiscal year ended March 27, 2021. There have been no significant changes in our critical accounting policies and estimates since March 27, 2021.
Noncontrolling interest represents the portion of the equity ownership in the Michael Kors Latin American joint venture, MK (Panama) Holdings, S.A. and subsidiaries (“MK Panama”), as well as the portion of the equity ownership in the Jimmy Choo Middle East Joint Venture, JC Industry S.r.L ("JCI"), and JC Gulf Trading LLC ("JC Gulf"), which is not attributable to our Company. During the three months ended July 1, 2017, we repurchased a portion of the non-controlling interest in MK Panama for approximately $0.5 million and have a 75% ownership interest in MK Panama. Additionally, on November 1, 2017 we acquired Jimmy Choo, which has controlling financial interests in JCI and JC Gulf.
36



Results of Operations
Comparison of the three months ended December 30, 201725, 2021 with the three months ended December 31, 201626, 2020
The following table details the results of our operations for the three months ended December 30, 201725, 2021 and for the three months ended December 31, 2016,26, 2020, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):
 Three Months Ended $ Change % Change % of Total Revenue for
the Three Months Ended
 December 30,
2017		 December 31,
2016		 December 30,
2017		 December 31,
2016
Statements of Operations Data:           
Total revenue$1,440.1
 $1,352.8
 $87.3
 6.5 %    
Cost of goods sold556.1
 547.1
 9.0
 1.6 % 38.6 % 40.4 %
Gross profit884.0
 805.7
 78.3
 9.7 % 61.4 % 59.6 %
Selling, general and administrative expenses485.9
 407.6
 78.3
 19.2 % 33.7 % 30.1 %
Depreciation and amortization54.0
 55.7
 (1.7) (3.1)% 3.7 % 4.1 %
Impairment of long-lived assets2.6
 0.5
 2.1
 NM
 0.2 % — %
Restructuring and other charges (1)
28.0
 —
 28.0
 NM
 1.9 % — %
Total operating expenses570.5
 463.8
 106.7
 23.0 % 39.6 % 34.3 %
Income from operations313.5
 341.9
 (28.4) (8.3)% 21.8 % 25.3 %
Other income, net(0.1) (4.1) 4.0
 (97.6)% — % (0.3)%
Interest expense, net8.3
 3.4
 4.9
 144.1 % 0.6 % 0.3 %
Foreign currency loss27.0
 0.9
 26.1
 NM
 1.9 % 0.1 %
Income before provision for income taxes278.3
 341.7
 (63.4) (18.6)% 19.3 % 25.3 %
Provision for income taxes58.9
 70.4
 (11.5) (16.3)% 4.1 % 5.2 %
Net income attributable to MKHL$219.4
 $271.3
 $(51.9) (19.1)%    
___________________
 Three Months Ended$ Change% Change% of Total Revenue for
the Three Months Ended
 December 25,
2021		December 26,
2020		December 25,
2021		December 26,
2020
Statements of Operations Data:
Total revenue$1,609 $1,302 $307 23.6 %
Cost of goods sold561 454 107 23.6 %34.9 %34.9 %
Gross profit1,048 848 200 23.6 %65.1 %65.1 %
Selling, general and administrative expenses656 538 118 21.9 %40.8 %41.3 %
Depreciation and amortization47 52 (5)(9.6)%2.9 %4.0 %
Impairment of assets— 90 (90)(100.0)%— %6.9 %
Restructuring and other charges14 1 13 NM0.9 %0.1 %
Total operating expenses717 681 36 5.3 %44.6 %52.3 %
Income from operations331 167 164 98.2 %20.6 %12.8 %
Other income, net— (3)3 (100.0)%— %(0.2)%
Interest (income) expense, net(7)10 (17)NM(0.4)%0.8 %
Foreign currency gain(4)(13)9 (69.2)%(0.2)%(1.0)%
Income before income taxes342 173 169 97.7 %21.3 %13.3 %
Provision for (benefit from) income taxes19 (5)24 NM1.2 %(0.4)%
Net income323 178 145 81.5 %
Less: Net income (loss) attributable to noncontrolling interest1 (1)2 NM
Net income attributable to Capri$322 $179 $143 79.9 %
NM Not meaningful
(1) Includes store closure costs recorded in connection with the Retail Fleet Optimization Plan, as well as transaction and transition costs recorded in connection with our acquisitions of Jimmy Choo and MKHKL businesses (see Note 3 and Note 8 to the accompanying consolidated financial statements).
Total Revenue
Total revenue increased $87.3$307 million, or 6.5%23.6%, to $1.440$1.609 billion for the three months ended December 30, 2017,25, 2021, compared to $1.353$1.302 billion for the three months ended December 31, 2016,26, 2020, which included net favorableunfavorable foreign currency effects of approximately $25.2$15 million, primarily related to the strengtheningweakening of the Euro the British Pound, the Canadian Dollar and the Chinese Renminbi, partially offset by the weakening of the Japanese Yen against the U.S. Dollar duringfor the three months ended December 30, 2017 as compared to the same prior year period.25, 2021. On a constant currency basis, our total revenue increased $62.1$322 million, or 4.6%24.7%. Total revenue for the three months ended December 30, 2017 includes approximately $114.7 million of incremental revenueThe increase is attributable to Jimmy Choo, which was acquired and consolidated into the Company’s results of operations effective November 1, 2017. The increase in revenue was also due to increased revenue from our Michael Kors retail business of $9.6 million, partially offset by a decrease in Michael Kors Wholesale revenues of $42.3 million.


The following table details revenues for our four business segments (dollars in millions):
 Three Months Ended   % Change % of Total Revenue for
the Three Months Ended
 December 30,
2017		 December 31,
2016		 $ Change As Reported Constant
Currency		 December 30,
2017		 December 31,
2016
Total revenue:             
MK Retail$846.3
 $836.7
 $9.6
 1.1 % (1.0)% 58.8% 61.8%
MK Wholesale430.8
 473.1
 (42.3) (8.9)% (10.5)% 29.9% 35.0%
MK Licensing48.3
 43.0
 5.3
 12.3 % 12.3 % 3.3% 3.2%
Michael Kors1,325.4
 1,352.8
 (27.4) (2.0)% (3.9)%    
Jimmy Choo114.7
 —
 114.7
 NM
 NM
 8.0% —%
Total revenue$1,440.1
 $1,352.8
 $87.3
 6.5 % 4.6 %    
MK Retail
Revenue from our Michael Kors retail stores increased $9.6 million, or 1.1%, to $846.3 million for the three months ended December 30, 2017, compared to $836.7 million for the three months ended December 31, 2016, which included net favorable foreign currency effects of $17.8 million. On a constant currency basis, revenue from our Michael Kors retail stores decreased $8.2 million, or 1.0%. We operated 848 Michael Kors retail stores, including concessions, as of December 30, 2017, compared to 816 Michael Kors retail stores, including concessions, as of December 31, 2016.
During the three months ended December 30, 2017, our comparable store sales decreased $24.2 million, or 3.2%, which included net favorable foreign currency effects of approximately $15.6 million. Our comparable store sales benefited approximately 170 basis pointscontinued recovery from the inclusion of e-commerce sales in comparable store sales. On a constant currency basis, our comparable store sales decreased $39.8 million, or 5.2%. The decrease in our comparable store sales was attributable to lower sales from our women’s accessoriesCOVID-19 pandemic and watches product categories, offset in part by higher sales from women's apparel, men’s product categories and women's footwear during the three months ended December 30, 2017, compared to the three months ended December 31, 2016.
Our non-comparable store sales increased $33.8 million during the three months ended December 30, 2017, which included net favorable foreign currency effects of $2.2 million. On a constant currency basis, our non-comparable store sales increased $31.6 million. The increase in non-comparable store sales was primarily attributable to operating an additional 32 stores since December 31, 2016.
MK Wholesale
Revenue from our Michael Kors wholesale customers decreased $42.3 million, or 8.9%, to $430.8 million for the three months ended December 30, 2017, compared to $473.1 million for the three months ended December 31, 2016, which included net favorable foreign currency effects of approximately $7.4 million. On a constant currency basis, our wholesale revenue decreased $49.7 million, or 10.5%. The decrease in our wholesale revenue was primarily attributable to our strategic reduction in shipments of Michael Kors products to decrease promotional activity within our wholesale channel, as previously described, which resulted in lower women's accessories and footwear sales, partially offset by higher sales from men's and women's apparel product lines during the three months ended December 30, 2017, compared to the three months ended December 31, 2016.
MK Licensing
Royalties earned on our Michael Kors licensing agreements increased $5.3 million, or 12.3%, to $48.3 million for the three months ended December 30, 2017, compared to $43.0 million for the three months ended December 31, 2016. This increase was primarily attributable to higher licensing revenuesadverse impacts related to Michael Kors ACCESS watches and eyewear, partially offset by lower licensing revenues related to sales of connected jewelry, which has been discontinued.
Jimmy Choo
The Jimmy Choo business acquired on November 1, 2017 contributed approximately $114.7 million to our total revenue forCOVID-19 in the three months ended December 30, 2017.prior fiscal year.


Gross Profit
Gross profit increased $78.3 million, or 9.7%, to $884.0 million for the three months ended December 30, 2017, compared to $805.7 million for the three months ended December 31, 2016, which included net favorable foreign currency effects of $16.1 million. Gross profit as a percentage of total revenue increased 180 basis points to 61.4% during the three months ended December 30, 2017, compared to 59.6% during the three months ended December 31, 2016, which was primarily attributable to an increase in gross profit margin from our retail segment of 310 basis points, primarily driven by lower cost of goods, decreased promotional activity and favorable geographic mix of sales. The increase in gross margin was partially offset by a decrease of 270 basis points in our wholesale segment gross margin, primarily driven by increased allowances and unfavorable geographic mix, partially offset by lower costs of goods during the three months ended December 30, 2017, as compared to the three months ended December 31, 2016.
Total Operating Expenses
Total operating expenses increased $106.7 million, or 23.0%, to $570.5 million during the three months ended December 30, 2017, compared to $463.8 million for the three months ended December 31, 2016. Our operating expenses included a net unfavorable foreign currency impact of approximately $12.7 million. Total operating expenses increased to 39.6% as a percentage of total revenue for the three months ended December 30, 2017, compared to 34.3% for the three months ended December 31, 2016. The components that comprise total operating expenses are explained below.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $78.3 million, or 19.2%, to $485.9 million during the three months ended December 30, 2017, compared to $407.6 million for the three months ended December 31, 2016. The increase in selling, general and administrative expenses was primarily due to the following:
incremental costs of $52.7 million associated with our newly acquired Jimmy Choo business, which has been consolidated in our operations beginning on November 1, 2017 and
an increase of $16.0 million in Michael Kors retail store and overhead costs, primarily comprised of increased occupancy costs of $6.6 million and increased advertising costs of $7.0 million.
Selling, general and administrative expenses as a percentage of total revenue increased to 33.7% for the three months ended December 30, 2017, compared to 30.1% for the three months ended December 31, 2016, primarily due to expenses associated with the newly acquired Jimmy Choo business as a percentage of total revenue for the three months ended December 30, 2017, as compared to the three months ended December 31, 2016.
Depreciation and Amortization
Depreciation and amortization decreased $1.7 million, or 3.1%, to $54.0 million during the three months ended December 30, 2017, compared to $55.7 million for the three months ended December 31, 2016. The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to fixed asset impairment charges recorded in Fiscal 2017 and Fiscal 2018, partially offset by incremental depreciation and amortization expense of $5.8 million attributable to the newly acquired Jimmy Choo business. Depreciation and amortization decreased to 3.7% as a percentage of total revenue during the three months ended December 30, 2017, compared to 4.1% for the three months ended December 31, 2016.
Impairment of Long-Lived Assets
During the three months ended December 30, 2017, we recognized long-lived asset impairment charges of $2.6 million, which were related to underperforming Michael Kors full-price retail store locations, some of which will be closed as part of our previously announced Retail Fleet Optimization Plan (see Note 8 to the accompanying consolidated financial statements for additional information). During the three months ended December 31, 2016, we recognized fixed asset impairment charges of approximately $0.5 million, which were related to our Michael Kors wholesale locations.
Restructuring and Other Charges
During the three months ended December 30, 2017, we recognized restructuring and other charges of $28.0 million, which were comprised of $22.2 million of transaction costs and $3.4 million of transition costs recorded in connection with the Jimmy Choo acquisition and restructuring charges of $2.4 million recorded in connection with the Retail Fleet Optimization Plan (see Note 8 to the accompanying consolidated financial statements for additional information).


Income from Operations
As a result of the foregoing, income from operations decreased $28.4 million, or 8.3%, to $313.5 million during the three months ended December 30, 2017, compared to $341.9 million for the three months ended December 31, 2016. Income from operations as a percentage of total revenue decreased to 21.8% during the three months ended December 30, 2017, compared to 25.3% for the three months ended December 31, 2016.
The following table details income from operations for our four business segments (dollars in millions):
 Three Months Ended     % of Total Revenue for
the Three Months Ended
 December 30,
2017		 December 31,
2016		 $ Change % Change December 30,
2017		 December 31,
2016
Income from operations:           
MK Retail$180.4
 $178.2
 $2.2
 1.2 % 21.3% 21.3%
MK Wholesale100.5
 140.2
 (39.7) (28.3)% 23.3% 29.6%
MK Licensing26.9
 23.5
 3.4
 14.5 % 55.7% 54.7%
Michael Kors307.8
 341.9
 (34.1) (10.0)% 23.2% 25.3%
Jimmy Choo5.7
 —
 5.7
 NM
 5.0% —%
Income from operations$313.5
 $341.9
 $(28.4) (8.3)% 21.8% 25.3%
MK Retail
Income from operations for our MK Retail segment increased $2.2 million, or 1.2%, to $180.4 million during the three months ended December 30, 2017, compared to $178.2 million for the three months ended December 31, 2016. Income from operations as a percentage of retail revenue remained flat at 21.3% in both periods, as the 310 basis point increase in gross profit margin, as previously discussed above, was completely offset by an increase in operating expenses, during the three months ended December 30, 2017, as compared to the three months ended December 31, 2016. The increase in operating expenses as a percentage of retail revenue was primarily attributable to increased retail store-related costs and restructuring and other charges, including transaction and transition costs related to the Jimmy Choo acquisition, partially offset by lower depreciation expenses during the three months ended December 30, 2017.
MK Wholesale
Income from operations for our MK Wholesale segment decreased $39.7 million, or 28.3%, to $100.5 million during the three months ended December 30, 2017, compared to $140.2 million for the three months ended December 31, 2016. Income from operations as a percentage of wholesale revenue decreased 630 basis points from 29.6% for the three months ended December 31, 2016 to 23.3% during the three months ended December 30, 2017, which was primarily attributable to a 360 basis point increase in operating expenses and a 270 basis point decrease in gross profit margin, as previously discussed above. The increase in operating expenses as a percentage of wholesale revenue was primarily attributable to increased corporate allocated expenses, including transaction and transition costs related to the Jimmy Choo acquisition and higher selling expenses.
MK Licensing
Income from operations for our MK Licensing segment increased $3.4 million, or 14.5%, to $26.9 million during the three months ended December 30, 2017, compared to $23.5 million for the three months ended December 31, 2016. Income from operations as a percentage of licensing revenue increased 100 basis points from 54.7% during the three months ended December 31, 2016 to 55.7% during the three months ended December 30, 2017, which was primarily due to lower advertising costs, partially offset by increased selling costs and allocated transaction and transition costs related to the Jimmy Choo acquisition as a percentage of licensing revenue during the three months ended December 30, 2017, as compared to the three months ended December 31, 2016.
Jimmy Choo
The Jimmy Choo business acquired on November 1, 2017 contributed approximately $5.7 million to our income from operations for the three months ended December 30, 2017 (after amortization of non-cash purchase accounting adjustments and transaction and transition related costs).


Other Income, net
During the three months ended December 31, 2016, other income of $4.1 million was primarily comprised of $3.8 million in insurance settlements related to the prior-year disruption to our former third party operated e-commerce fulfillment center.
Interest Expense, net
Interest expense, net increased $4.9 million to $8.3 million during the three months ended December 30, 2017, compared to $3.4 million for the three months ended December 31, 2016, primarily due to higher interest expense on long-term borrowings used to finance the acquisition of Jimmy Choo during the three months ended December 30, 2017 (see Note 9 for additional information).
Foreign Currency Loss
During the three month periods ended December 30, 2017, we recognized a net foreign currency loss of $27.0 million, which primarily included a $32.0 million loss related to a forward foreign currency exchange derivative contract to hedge the Jimmy Choo transaction price (please refer to Note 3 and Note 12 to the accompanying consolidated financial statements for additional information), partially offset by the remeasurement of intercompany loans with certain of our subsidiaries.
Provision for Income Taxes
We recognized $58.9 million of income tax expense during the three months ended December 30, 2017, compared to $70.4 million for the three months ended December 31, 2016. Our effective tax rate for the three months ended December 30, 2017, was 21.2%, compared to 20.6% for the three months ended December 31, 2016. The increase in our effective tax rate was primarily due to the impacts of the Tax Act enacted in the United States that were recorded during the three months ended December 30, 2017. This net increase is comprised of the write down of our deferred tax assets as a result of the Tax Act’s reduction in the base corporate tax rate from 35% to 21%, partially offset by the current tax benefit of the rate reduction on our annualized effective tax rate. Additionally this increase was offset due to the favorable effect of global financing activities. The global financing activities are related to our previously disclosed 2014 move of our principal executive office from Hong Kong to the United Kingdom ("U.K.") and decision to become a U.K. tax resident. In connection with this decision, we funded our international growth strategy through intercompany debt financing arrangements between our U.S., U.K. and Switzerland subsidiaries in December 2015. Accordingly, due to the difference in the statutory income tax rates between these jurisdictions, we realized a lower effective tax rate. The impact on our effective tax rate was higher in Fiscal 2018 than in Fiscal 2017 because the debt financing arrangement produced the same tax impact on reduced pre-tax income.
Our effective tax rate may fluctuate from time to time due to the effects of changes in U.S. state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.
Net Income Attributable to MKHL
As a result of the foregoing, our net income attributable to MKHL decreased $51.9 million, or 19.1%, to $219.4 million during the three months ended December 30, 2017, compared to $271.3 million for the three months ended December 31, 2016.


Results of Operations
Comparison of the nine months ended December 30, 2017 with the ninemonths ended December 31, 2016
The following table details the results of our operations for the nine months ended December 30, 2017 and for the nine months ended December 31, 2016, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):
 Nine Months Ended $ Change % Change % of Total Revenue for
the Nine Months Ended
 December 30,
2017		 December 31,
2016		 December 30, 2017 December 31, 2016
Statements of Operations Data:           
Total revenue$3,539.1
 $3,428.9
 $110.2
 3.2 %    
Cost of goods sold1,389.6
 1,387.2
 2.4
 0.2 % 39.3 % 40.5 %
Gross profit2,149.5
 2,041.7
 107.8
 5.3 % 60.7 % 59.5 %
Selling, general and administrative expenses1,267.4
 1,130.0
 137.4
 12.2 % 35.8 % 33.0 %
Depreciation and amortization149.9
 162.5
 (12.6) (7.8)% 4.2 % 4.7 %
Impairment of long-lived assets18.9
 5.4
 13.5
 NM
 0.5 % 0.2 %
Restructuring and other charges (1)
51.3
 11.3
 40.0
 NM

1.4 % 0.3 %
Total operating expenses1,487.5
 1,309.2
 178.3
 13.6 % 42.0 % 38.2 %
Income from operations662.0
 732.5
 (70.5) (9.6)% 18.7 % 21.4 %
Other income, net(1.0) (4.7) 3.7
 (78.7)% — % (0.1)%
Interest expense, net10.2
 5.1
 5.1
 100.0 % 0.3 % 0.1 %
Foreign currency (gain) loss(14.7) 2.2
 (16.9) NM
 (0.4)% 0.1 %
Income before provision for income taxes667.5
 729.9
 (62.4) (8.5)% 18.9 % 21.3 %
Provision for income taxes119.9
 151.6
 (31.7) (20.9)% 3.4 % 4.4 %
Net income547.6
 578.3
 (30.7) (5.3)%    
Less: Net loss attributable to noncontrolling interest(0.2) (1.0) 0.8
 80.0 %    
Net income attributable to MKHL$547.8
 $579.3
 $(31.5) (5.4)%    
___________________
NM Not meaningful
(1) Includes store closure costs recorded in connection with the Retail Fleet Optimization Plan, as well as transaction and transition costs recorded in connection with our acquisitions of Jimmy Choo and MKHKL businesses (see Note 3 and Note 8 to the accompanying consolidated financial statements).
Total Revenue
Total revenue increased $110.2 million, or 3.2%, to $3.539 billion for the nine months ended December 30, 2017, compared to $3.429 billion for the nine months ended December 31, 2016, which included net favorable foreign currency effects of $26.4 million primarily related to the strengthening of the Euro and the Canadian Dollar, partially offset by the weakening of the the Japanese Yen against the U.S. Dollar during the nine months ended December 30, 2017, as compared to the same prior year period. On a constant currency basis, our total revenue increased $83.8 million, or 2.4%. Total revenue for the nine months ended December 30, 2017 includes approximately $114.7 million of incremental revenue attributable to Jimmy Choo, which was acquired on November 1, 2017 and consolidated into the Company’s results of operations effective November 1, 2017. The increase in total revenue was also due to increased revenue from our Michael Kors retail business of $114.4 million, which was offset by a decrease in Michael Kors Wholesale revenues of $121.7 million.


The following table details revenues for our four business segments (dollars in millions):
 Nine Months Ended   % Change % of Total Revenue for
the Nine Months Ended
 December 30,
2017		 December 31,
2016		 $ Change As Reported Constant
Currency		 December 30,
2017		 December 31,
2016
Total revenue:             
MK Retail$2,111.2
 $1,996.8
 $114.4
 5.7 % 5.0 % 59.7% 58.2%
MK Wholesale1,198.0
 1,319.7
 (121.7) (9.2)% (10.1)% 33.8% 38.5%
MK Licensing115.2
 112.4
 2.8
 2.5 % 2.5 % 3.3% 3.3%
Michael Kors3,424.4
 3,428.9
 (4.5) (0.1)% (0.9)%    
Jimmy Choo114.7
 —
 114.7
 NM
 NM
 3.2% —%
Total revenue$3,539.1
 $3,428.9
 $110.2
 3.2 % 2.4 %    
MK Retail
Revenue from our Michael Kors retail stores increased $114.4 million, or 5.7%, to $2.111 billion for the nine months ended December 30, 2017, compared to $1.997 billion for the nine months ended December 31, 2016, which included net favorable foreign currency effects of $14.3 million. On a constant currency basis, revenue from our retail stores increased $100.1 million, or 5.0%. We operated 848 Michael Kors retail stores, including concessions, as of December 30, 2017, compared to 816 Michael Kors retail stores, including concessions, as of December 31, 2016.
During the nine months ended December 30, 2017, our comparable store sales decreased $62.1 million, or 3.5%, which included net favorable foreign currency effects of $14.6 million. Our comparable store sales benefited approximately 250 basis points from the inclusion of e-commerce sales in comparable store sales. On a constant currency basis, our comparable store sales decreased $76.7 million, or 4.3%. The decrease in our comparable store sales was primarily attributable to lower sales from our women’s accessories, watches and jewelry product categories, offset in part by higher sales from men’s apparel and women's apparel and footwear during the nine months ended December 30, 2017, compared to the nine months ended December 31, 2016.
Our non-comparable store sales increased $176.5 million during the nine months ended December 30, 2017, which included net unfavorable foreign currency effects of $0.3 million. On a constant currency basis, non-comparable store sales increased $176.8 million. The increase in non-comparable store sales was primarily attributable to operating 32 additional stores since December 31, 2016. Our Greater China business acquired on May 31, 2016 contributed incremental revenues of approximately $42.0 million to non-comparable store sales for the nine months ended December 30, 2017.
MK Wholesale
Revenue from our Michael Kors wholesale customers decreased $121.7 million, or 9.2%, to $1.198 billion for the nine months ended December 30, 2017, compared to $1.320 billion for the nine months ended December 31, 2016, which included net favorable foreign currency effects of approximately $12.1 million. On a constant currency basis, our wholesale revenue decreased $133.8 million, or 10.1%. The decrease in our wholesale revenue was primarily attributable to our strategic reduction in shipments of Michael Kors products to decrease promotional activity within our wholesale channel, as previously described,which resulted in lower women’s accessories and footwear sales during the nine months ended December 30, 2017, as compared to the nine months ended December 31, 2016. Approximately $7.9 million of the decrease in wholesale revenue was due to the absence of the prior period wholesale sales to our former licensee in Greater China.
MK Licensing
Royalties earned on our Michael Kors licensing agreements increased $2.8 million, or 2.5%, to $115.2 million for the nine months ended December 30, 2017, compared to $112.4 million for the nine months ended December 31, 2016. This increase was primarily attributable to higher licensing royalties related to Michael Kors ACCESS watches and eyewear, partially offset by lower licensing revenues related to sales of fashion watches, the absence of licensing revenues from our previously licensed business in Greater China due to our acquisition of the related operations, and lower licensing revenues related to sales of fragrance, jewelry and connected jewelry (which has been discontinued).
Jimmy Choo
The Jimmy Choo business acquired on November 1, 2017 contributed approximately $114.7 million to our total revenue for the nine months ended December 30, 2017.


Gross Profit
Gross profit increased $107.8$200 million, or 5.3%23.6%, to $2.150$1.048 billion for the ninethree months ended December 30, 2017,25, 2021, compared to $2.042 billion$848 million for the ninethree months ended December 31, 2016,26, 2020, which included net favorableunfavorable foreign currency effects of $16.7$10 million. Gross profit as a percentage of total revenue increased 120 basis points to 60.7% duringwas 65.1% for the ninethree months ended December 30, 2017, compared to 59.5% during the nine months ended25, 2021 and December 31, 2016. The increase in our26, 2020. Our gross profit margin wasremained flat primarily attributable to a favorable channel mix due to a higher proportion of retail sales than in the prior fiscal year period and an increase in gross profit margin from our retail segment of 210 basis points, primarily driven by favorable geographic mix of salesaverage unit price and lower cost of goods. The increase in gross profit margin was partiallypromotional activity, offset by a decrease of 230 basis pointsincreases in our wholesale segment gross margin, primarily driven by increased allowances and unfavorable geographic mix, partially offset by lowersupply chain costs of goods duringfor the ninethree months ended December 30, 2017,25, 2021, as compared to the ninethree months ended December 31, 2016.26, 2020.
37

Total Operating Expenses
Total operating expenses increased $178.3$36 million, or 13.6%5.3%, to $1.488 billion during$717 million for the ninethree months ended December 30, 2017,25, 2021, compared to $1.309 billion$681 million for the ninethree months ended December 31, 2016.26, 2020. Our operating expenses included a net unfavorablefavorable foreign currency impact of approximately $12.7$2 million. Total operating expenses increaseddecreased to 42.0%44.6% as a percentage of total revenue for the ninethree months ended December 30, 2017,25, 2021, compared to 38.2%52.3% for the ninethree months ended December 31, 2016.26, 2020. The components that comprise total operating expenses are explained below.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $137.4$118 million, or 12.2%21.9%, to $1.267 billion during$656 million for the ninethree months ended December 30, 2017,25, 2021, compared to $1.130 billion$538 million for the ninethree months ended December 31, 2016. The increase in selling, general and administrative expenses was26, 2020, primarily due to the following:
incremental costs of $52.7 million associated with our newly acquired Jimmy Choo business, which has been consolidated in our operations beginning on November 1, 2017;
an increase of $33.4 million inincreased retail store, e-commerce and overheadcorporate costs (excluding newly acquired businesses), primarily comprised of increased occupancy costs of $16.8 million and increased advertising costs of $12.2 million;
incremental expenses of approximately $22.3 million due to the inclusion of the Greater China business acquired on May 31, 2016 for the full period during the ninethree months ended December 30, 2017; and
an increase of $13.1 million in corporate allocated and corporate occupancy expenses.25, 2021.
Selling, general, and administrative expenses as a percentage of total revenue increaseddecreased to 35.8% during40.8% for the ninethree months ended December 30, 2017,25, 2021, compared to 33.0%41.3% for the ninethree months ended December 31, 2016,26, 2020, primarily due to leveraging of operating expenses associated with the newly acquired Jimmy Choo business, as well asa result of higher retail store relatedrevenue, partially offset by an increase in marketing expenses as a percentage of total revenue duringfor the ninethree months ended December 30, 2017,25, 2021, as compared to the ninethree months ended December 31, 2016.26, 2020.
Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $8 million, or 27.6%, to $37 million for the three months ended December 25, 2021 as compared to $29 million for the three months ended December 26, 2020, primarily due to an increase in compensation expense and ERP system implementation expenses.
Depreciation and Amortization
Depreciation and amortization decreased $12.6$5 million, or 7.8%9.6%, to $149.9$47 million duringfor the ninethree months ended December 30, 2017,25, 2021, compared to $162.5$52 million for the ninethree months ended December 31, 2016.26, 2020. The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to fixed asset impairment charges recordedlower capital expenditures in Fiscal 20172022 and Fiscal 2018. The depreciation and amortization expense for the nine months ended December 30, 2017 included incremental depreciation and amortization of $5.8 million related to the newly acquired Jimmy Choo business, as well as $5.7 million of incremental depreciation and amortization expenses due to the inclusion of the Greater China business for the full period during the nine months ended December 30, 2017, both including amortization of the respective purchase accounting adjustments.2021. Depreciation and amortization decreased to 4.2%2.9% as a percentage of total revenue duringfor the ninethree months ended December 30, 2017,25, 2021, compared to 4.7%4.0% for the ninethree months ended December 31, 2016.26, 2020 primarily due to lower revenues during the prior year due to COVID-19.
Impairment of Long-Lived Assets
DuringFor the ninethree months ended December 30, 2017,25, 2021, we recognized long-liveddid not recognize any asset impairment charges of $18.9 million, which were related to underperforming Michael Kors retail store locations, some of which will be closed as part of our previously announced Retail Fleet Optimization Planexcept for the amount recorded within restructuring and other charges (see Note 8 to the accompanying consolidated financial statements for additional information). DuringFor the ninethree months ended December 31, 2016,26, 2020, we recognized fixed asset impairment charges of approximately $5.4$90 million, $4.9 million of which wereprimarily related to underperforming Michael Kors retail store locations and $0.5 million relatedoperating lease right-of-use assets across our brands. See Note 11 to our Michael Kors wholesale locations.


the accompanying consolidated financial statements for additional information.
Restructuring and Other Charges
DuringFor the ninethree months ended December 30, 2017,25, 2021, we recognized restructuring and other charges of $51.3$14 million, which were comprisedincluded $10 million related to our Capri Retail Store Optimization Program and other costs of $39.6$4 million of transaction costs and $3.4 million of transition costs recorded in connectionprimarily related to equity awards associated with the Jimmy Choo acquisition and restructuring charges of $8.3 million recorded in connection with the Retail Fleet Optimization Plan (seeVersace. See Note 8 to the accompanying consolidated financial statements for additional information). Duringinformation.
For the ninethree months ended December 31, 2016,26, 2020, we recorded $11.3recognized restructuring and other charges of $1 million, which included other costs of transaction costs$5 million primarily related to equity awards associated with the acquisition of the Greater China business.Versace and closures of certain corporate locations, partially offset by $4 million of gains related to our Capri Retail Store Optimization Program.
Restructuring and other charges are not evaluated as part of our reportable segments’ results (See Segment Information above for additional information).
38

Income from Operations
As a result of the foregoing, income from operations decreased $70.5increased $164 million, or 9.6%, to $662.0$331 million during the ninefor three months ended December 30, 2017,25, 2021, compared to $732.5$167 million for the ninethree months ended December 31, 2016.26, 2020. Income from operations as a percentage of total revenue decreasedincreased to 18.7% during20.6% for the ninethree months ended December 30, 2017,25, 2021, compared to 21.4%12.8% for the ninethree months ended December 31, 2016.26, 2020. See Segment Information above for a reconciliation of our segment operating income (loss) to total operating income.
The following table details income from operations for our four business segments (dollars in millions):Interest (Income) Expense, net
 Nine Months Ended     % of Total Revenue for
the Nine Months Ended
 December 30,
2017		 December 31,
2016		 $ Change % Change December 30,
2017		 December 31,
2016
Income from operations:           
MK Retail$341.6
 $314.4
 $27.2
 8.7 % 16.2% 15.7%
MK Wholesale263.6
 367.2
 (103.6) (28.2)% 22.0% 27.8%
MK Licensing51.1
 50.9
 0.2
 0.4 % 44.4% 45.3%
Michael Kors656.3
 732.5
 (76.2) (10.4)% 19.2% 21.4%
Jimmy Choo5.7
 —
 5.7
 NM
 5.0% —%
Income from operations$662.0
 $732.5
 $(70.5) (9.6)% 18.7% 21.4%
MK Retail
Income from operations for our MK Retail segment increased $27.2 million, or 8.7%, to $341.6 million duringFor the ninethree months ended December 30, 2017,25, 2021, we recognized $7 million of interest income compared to $314.4$10 million of interest expense for the ninethree months ended December 31, 2016. Income from operations as a percentage of retail revenue increased 50 basis points from 15.7% for the nine months ended December 31, 2016 to 16.2% during the nine months ended December 30, 2017.26, 2020. The increase$17 million improvement in retail income from operations as a percentage ofinterest (income) expense, net, retail sales was primarily due to a 210 basis point increase in gross profit margin, as previously discussed, partially offset by increase in operating expenses as a percentage of retail revenue of approximately 170 basis points during the nine months ended December 30, 2017, as compared to the nine months ended December 31, 2016. The increase in operating expenses as a percentage of retail revenue was primarily due to increased fixed asset impairment charges, higher retail store related costs, restructuring charges and allocated transaction and transition costs in connection with the Jimmy Choo acquisition recorded during the nine months ended December 30, 2017, offset in part by lower depreciation expenses.
MK Wholesale
Income from operations for our MK Wholesale segment decreased $103.6 million, or 28.2%, to $263.6 million during the nine months ended December 30, 2017, compared to $367.2 million for the nine months ended December 31, 2016. Income from operations as a percentage of wholesale revenue decreased approximately 580 basis points from 27.8% during the nine months ended December 31, 2016 to 22.0% during the nine months ended December 30, 2017, which wasis primarily due to an increase of interest income from higher average notional amounts outstanding and more favorable interest rates on our net investment hedges in operating expenses asthe current year and a percentage of wholesale revenue of approximately 350 basis points, as well as a 230 basis point decrease in our wholesale gross profit margin, as previously discussed. The increase in operating expenses as a percentage of wholesale sales was primarilyinterest expense attributable to increased corporate allocated expenses, including transaction and transition costs associated with the Jimmy Choo acquisition, as well as a deleverage in other operating expenses due to lower wholesale revenue.


MK Licensing
Income from operations for our MK Licensing segment increased $0.2 million, or 0.4%, to $51.1 million during the nine months ended December 30, 2017, compared to $50.9 million for the nine months ended December 31, 2016. Income from operations as a percentage of licensing revenue decreased 90 basis points from 45.3% during the nine months ended December 31, 2016 to 44.4% during the nine months ended December 30, 2017. The decrease in licensing income from operations as a percentage of licensing revenue was attributable to increased operating expenses as a percentage of licensing revenue during the nine months ended December 30, 2017, as compared to the nine months ended December 31, 2016, primarily due to increased allocated transaction and transition expenses associated with the Jimmy Choo acquisition, partially offset by lower advertising costs as a percentage of licensing revenue.
Jimmy Choo
The Jimmy Choo business acquired on November 1, 2017 contributed approximately $5.7 million to our income from operations for the nine months ended December 30, 2017 (after amortization of non-cash purchase accounting adjustments and transaction and transition related costs).
Other Income, net
During the nine months ended December 31, 2016, other income of $4.7 million was primarily comprised of $3.8 million in insurance settlements related to the prior-year disruption to our former third party operated e-commerce fulfillment center, as well as $0.6 million of income related to our anti-counterfeiting efforts.
Interest Expense, net
Interest expense, net increased $5.1 million to $10.2 million during the nine months ended December 30, 2017, compared to $5.1 million for the nine months ended December 31, 2016, primarily due to higher interest expense on long-termaverage borrowings used to finance the acquisition of Jimmy Choo during the nine months ended December 30, 2017outstanding (see Note 9 for additional information).
Foreign Currency (Gain) Loss
We recognized a net foreign currency gain of $14.7 million during the nine months ended December 30, 2017, which primarily included a $4.7 million realized gain related to a forward foreign currency exchange derivative contract to hedge the transaction price (please refer to Note 3 and Note 12 to the accompanying consolidated financial statements for additional information), as well as.
Foreign Currency Gain
For the three months ended December 25, 2021 and December 26, 2020, we recognized a net gains on revaluationforeign currency gain of $4 million and settlement of certain of our accounts payable in currencies other than the functional currency of the applicable reporting units, and$13 million, respectively, primarily attributable to the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.
Provision for (Benefit from) Income Taxes
The foreign currency loss of $2.2provision for income taxes was $19 million recorded duringfor the ninethree months ended December 31, 2016 were primarily attributable25, 2021, compared to net losses on revaluation and settlementa benefit of certain of our accounts payable in currencies other than$5 million for the functional currency of the applicable reporting units, as well as the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries. These losses were partially offset by favorable mark-to-market adjustments on our forward foreign currency contracts not designated as accounting hedges.
Provision for Income Taxes
We recognized $119.9 million of income tax expense during the ninethree months ended December 30, 2017, compared with $151.6 million for the nine months ended December 31, 2016.26, 2020. Our effective tax rate was 5.6% and (2.9)% for the ninethree months ended December 30, 2017, was 18.0%, compared to 20.8% for the nine months ended25, 2021 and December 31, 2016.26, 2020, respectively. The decreasechange in our effective tax rate was primarily duerelated to increases in uncertain tax positions and release of certain valuation allowances in the prior year which were not recurring, partially offset by the favorable effect of global financing activities during the nine months ended December 30, 2017. The global financing activities are related to our previously disclosed 2014 move of our principal executive office from Hong Kong to the U.K. and decision to become a U.K. tax resident. In connection with this decision, we funded our international growth strategy through intercompany debt financing arrangements between our U.S., U.K. and Switzerland subsidiaries in December 2015. Accordingly, due to the differencenet operating loss carryback claim made in the statutory income tax rates between these jurisdictions, we realized a lower effective tax rate. The impact on our effective tax rate was higher in Fiscal 2018 than in Fiscal 2017 because the debt financing arrangement produced the same tax impact on a reduced pre-tax income. During the nine months ended December 30, 2017, our effective tax rate was increased by the impacts of the Tax Act, comprised of the write down of our deferred tax assetsUnited States as a result of COVID-19 related losses. See Note 15 to the Tax Act’s reduction inaccompanying consolidated financial statements for additional information regarding the base corporateeffective tax rate from 35% to 21%, partially offset byfor the current tax benefit of the rate reduction on our annualized effective tax rate.


fiscal year quarter.
Our effective tax rate may fluctuate from time to time due to the effects of changes in U.S. state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.
Net LossIncome (Loss) Attributable to Noncontrolling Interest
DuringFor the ninethree months ended December 30, 2017 and December 31, 2016,25, 2021, we recorded net lossesincome of $1 million and for the three months ended December 26, 2020, we recorded a net loss of $1 million, attributable to the noncontrolling interest in our joint ventures of $0.2 million and $1.0 million, respectively.ventures. These lossesamounts represent the share of income (loss) that is not attributable to the Company.

Net Income Attributable to Capri
As a result of the foregoing, our net income increased $143 million to $322 million for the three months ended December 25, 2021, compared to a net income of $179 million for the three months ended December 26, 2020.
39

Segment Information
Versace
 Three Months Ended % Change
(dollars in millions)December 25,
2021		December 26,
2020		$ ChangeAs
Reported		Constant
Currency
Revenues$251 $195 $56 28.7 %33.8 %
Income from operations32 13 19 NM
Operating margin12.7 %6.7 %
NM Not meaningful
Revenues
Versace revenues increased $56 million, or 28.7%, to $251 million for the three months ended December 25, 2021, compared to $195 million for the three months ended December 26, 2020, which included unfavorable foreign currency effects of $10 million. On a constant currency basis, revenue increased $66 million, or 33.8%, primarily attributable to the continued recovery from the COVID-19 pandemic and the adverse impacts related to COVID-19 in the prior fiscal year.
Income from Operations
For the three months ended December 25, 2021, Versace recorded income from operations of $32 million, compared to $13 million for the three months ended December 26, 2020. Operating margin increased from 6.7% for the three months ended December 26, 2020, to 12.7% for the three months ended December 25, 2021, primarily due to higher average unit price and leveraging of operating expenses due to higher revenue.
Jimmy Choo
 Three Months Ended % Change
(dollars in millions)December 25,
2021		December 26,
2020		$ ChangeAs 
Reported		Constant
Currency
Revenues$178 $121 $57 47.1 %43.0 %
Income (loss) from operations16 (8)24 NM
Operating margin9.0 %(6.6)%
NM Not meaningful
Revenues
Jimmy Choo revenues increased $57 million, or 47.1%, to $178 million for the three months ended December 25, 2021, compared to $121 million for the three months ended December 26, 2020, which included favorable foreign currency effects of $5 million. On a constant currency basis, revenue increased $52 million, or 43.0%, primarily attributable to the continued recovery from the COVID-19 pandemic and the adverse impacts related to COVID-19 in the prior fiscal year.
Income (Loss) from Operations
For the three months ended December 25, 2021, Jimmy Choo recorded income from operations of $16 million, compared to a loss from operations of $8 million for the three months ended December 26, 2020. Operating margin improved from (6.6)% for the three months ended December 26, 2020 to 9.0% for the three months ended December 25, 2021, primarily due to lower promotional activity and leveraging of operating expenses due to higher revenue.
40

Michael Kors
 Three Months Ended % Change
(dollars in millions)December 25,
2021		December 26,
2020		$ ChangeAs 
Reported		Constant
Currency
Revenues$1,180 $986 $194 19.7 %20.7 %
Income from operations335 281 54 19.2 %
Operating margin28.4 %28.5 %
Revenues
Michael Kors revenues increased $194 million, or 19.7%, to $1.180 billion for the three months ended December 25, 2021, compared to $986 million for the three months ended December 26, 2020, which included unfavorable foreign currency effects of $10 million. On a constant currency basis, revenue increased $204 million, or 20.7%, primarily attributable to the continued recovery from the COVID-19 pandemic and the adverse impacts related to COVID-19 in the prior fiscal year.
Income from Operations
For the three months ended December 25, 2021, Michael Kors recorded income from operations of $335 million, compared to $281 million for the three months ended December 26, 2020. Operating margin decreased slightly from 28.5% for the three months ended December 26, 2020, to 28.4% for the three months ended December 25, 2021, primarily due to increases in supply chain costs, mostly offset by higher average unit price and leveraging of expenses due to higher revenue.
41

Results of Operations
Comparison of the nine months ended December 25, 2021 with the ninemonths ended December 26, 2020
The following table details the results of our operations for the nine months ended December 25, 2021 and December 26, 2020, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):
 Nine Months Ended$ Change% Change% of Total Revenue for the Nine Months Ended
 December 25,
2021		December 26,
2020		December 25, 2021December 26, 2020
Statements of Operations Data:
Total revenue$4,162 $2,863 $1,299 45.4 %
Cost of goods sold1,374 1,003 371 37.0 %33.0 %35.0 %
Gross profit2,788 1,860 928 49.9 %67.0 %65.0 %
Selling, general and administrative expenses1,800 1,414 386 27.3 %43.2 %49.4 %
Depreciation and amortization146 160 (14)(8.8)%3.5 %5.6 %
Impairment of assets33 110 (77)(70.0)%0.8 %3.8 %
Restructuring and other charges25 18 7 38.9 %0.6 %0.6 %
Total operating expenses2,004 1,702 302 17.7 %48.1 %59.4 %
Income from operations784 158 626 NM18.8 %5.5 %
Other income, net(2)(4)2 (50.0)%— %(0.1)%
Interest (income) expense, net(11)39 (50)NM(0.3)%1.4 %
Foreign currency loss (gain)1 (16)17 NM— %(0.6)%
Income before income taxes796 139 657 NM19.1 %4.9 %
Provision for income taxes54 20 34 NM1.3 %0.7 %
Net income742 119 623 NM
Less: Net income (loss) attributable to noncontrolling interest1 (2)3 NM
Net income attributable to Capri$741 $121 $620 NM
NM Not meaningful
Total Revenue
Total revenue increased $1.299 billion, or 45.4%, to $4.162 billion for the nine months ended December 25, 2021, compared to $2.863 billion for the nine months ended December 26, 2020, which included net favorable foreign currency effects of approximately $71 million, primarily related to the strengthening of the British Pound, Euro, Chinese Renminbi and Canadian Dollar against the U.S. Dollar for the nine months ended December 25, 2021. On a constant currency basis, our total revenue increased $1.228 billion, or 42.9%. The increase is attributable to the continued recovery from the COVID-19 pandemic. In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
Gross Profit
Gross profit increased $928 million, or 49.9%, to $2.788 billion for the nine months ended December 25, 2021, compared to $1.860 billion for the nine months ended December 26, 2020, which included net favorable foreign currency effects of $48 million. Gross profit as a percentage of total revenue increased 200 basis points to 67.0% for the nine months ended December 25, 2021, compared to 65.0% for the nine months ended December 26, 2020. The increase in gross profit margin was primarily attributable to a higher average unit price and lower promotional activity, partially offset by increases in supply chain costs and unfavorable channel mix.
42

Total Operating Expenses
Total operating expenses increased $302 million, or 17.7%, to $2.004 billion for the nine months ended December 25, 2021, compared to $1.702 billion for the nine months ended December 26, 2020. Our operating expenses included a net unfavorable foreign currency impact of approximately $49 million. Total operating expenses decreased to 48.1% as a percentage of total revenue for the nine months ended December 25, 2021, compared to 59.4% for the nine months ended December 26, 2020. The components that comprise total operating expenses are explained below.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $386 million, or 27.3%, to $1.800 billion for the nine months ended December 25, 2021, compared to $1.414 billion for the nine months ended December 26, 2020, primarily due to increased retail store, e-commerce, corporate costs and marketing expenses for the nine months ended December 25, 2021.
Selling, general and administrative expenses as a percentage of total revenue decreased to 43.2% for the nine months ended December 25, 2021, compared to 49.4% for the nine months ended December 26, 2020, primarily due to leveraging of operating expenses as a result of higher revenue.
Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $33 million, or 36.7%, to $123 million for the nine months ended December 25, 2021 as compared to $90 million for the nine months ended December 26, 2020, primarily due to an increase in compensation expense and professional fees.
Depreciation and Amortization
Depreciation and amortization decreased $14 million, or 8.8%, to $146 million for the nine months ended December 25, 2021, compared to $160 million for the nine months ended December 26, 2020. The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to lower capital expenditures in Fiscal 2022 and Fiscal 2021. Depreciation and amortization decreased to 3.5% as a percentage of total revenue for the nine months ended December 25, 2021, compared to 5.6% for the nine months ended December 26, 2020 primarily due to higher revenues for the nine months ended December 25, 2021.
Impairment of Assets
For the nine months ended December 25, 2021 and December 26, 2020, we recognized asset impairment charges of $33 million and $110 million, respectively, which primarily related to operating lease right-of-use assets at certain Michael Kors store locations. See Note 11 to the accompanying consolidated financial statements for additional information.
Restructuring and Other Charges
For the nine months ended December 25, 2021, we recognized restructuring and other charges of $25 million, which included other costs of $19 million primarily related to equity awards associated with the acquisition of Versace and $6 million related to our Capri Retail Store Optimization Program (see Note 8 to the accompanying consolidated financial statements for additional information).
For the nine months ended December 26, 2020, we recognized restructuring and other charges of $18 million, which included other costs of $17 million primarily related to equity awards associated with the acquisition of Versace and $1 million related to our Capri Retail Store Optimization Program.
Restructuring and other charges are not evaluated as part of our reportable segments’ results (see Segment Information above for additional information).
Income from Operations
As a result of the foregoing, income from operations increased $626 million, to $784 million for the nine months ended December 25, 2021, compared to $158 million for the nine months ended December 26, 2020. Income from operations as a percentage of total revenue increased to 18.8% for the nine months ended December 25, 2021, compared to 5.5% for the nine months ended December 26, 2020. See Segment Information above for a reconciliation of our segment operating income to total operating income.
43

Interest (Income) Expense, net
For the nine months ended December 25, 2021, we recognized $11 million of interest income compared to $39 million of interest expense for the nine months ended December 26, 2020. The $50 million improvement in interest (income) expense, net, is primarily due to an increase of interest income from higher average notional amounts outstanding and more favorable interest rates on our net investment hedges in the current year and a decrease in interest expense attributable to lower average borrowings outstanding (see Note 9 and Note 12 to the accompanying consolidated financial statements for additional information).
Foreign Currency Loss (Gain)
For the nine months ended December 25, 2021 and December 26, 2020, we recognized a net foreign currency loss of $1 million and a net foreign currency gain of $16 million, respectively, primarily attributable to the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.
Provision for Income Taxes

For the nine months ended December 25, 2021, we recognized $54 million of income tax expense compared to $20 million for the nine months ended December 26, 2020. Our effective tax rate was 6.8% and 14.4% for the nine months ended December 25, 2021 and December 26, 2020, respectively. The decrease in our effective rate was primarily due to the favorable effect of a net operating loss carryback claim made in the United States as a result of COVID-19 related losses and a benefit recognized as a result of recently enacted tax legislation in Italy which allowed the Company to reduce its deferred tax liabilities. Specifically, this change allowed the Company to step up certain intangible assets which will result in lower future cash taxes.
Our effective tax rate may fluctuate from time to time due to the effects of changes in U.S. state and local taxes and tax rates in foreign jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.
Net Income (Loss) Attributable to Noncontrolling Interest
For the nine months ended December 25, 2021, we recorded net income of $1 million and for the nine months ended December 26, 2020, we recorded a net loss of $2 million, attributable to the noncontrolling interest in our joint ventures. These amounts represent the share of income (loss) that is not attributable to the Company.
Net Income Attributable to MKHLCapri
As a result of the foregoing, our net income decreased $31.5increased $620 million or 5.4%, to $547.8 million during the nine months ended December 30, 2017, compared to $579.3a net income of $741 million for the nine months ended December 31, 2016.25, 2021, compared to a net income of $121 million for the nine months ended December 26, 2020.
Segment Information
Versace
 Nine Months Ended % Change
(dollars in millions)December 25,
2021		December 26,
2020		$ ChangeAs 
Reported		Constant
Currency
Revenues$773 $483 $290 60.0 %56.9 %
Income (loss) from operations135 (8)143 NM
Operating margin17.5 %(1.7)%
NM Not meaningful

Revenues
Versace revenues increased $290 million, or 60.0%, to $773 million for the nine months ended December 25, 2021, compared to $483 million for the nine months ended December 26, 2020, which included favorable foreign currency effects of $15 million. On a constant currency basis, revenue increased $275 million, or 56.9%, primarily attributable to the continued recovery from the COVID-19 pandemic. In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
44

Income (Loss) from Operations
For the nine months ended December 25, 2021, Versace recorded income from operations of $135 million, compared to a loss from operations of $8 million for the nine months ended December 26, 2020. Operating margin improved from (1.7)% for the nine months ended December 26, 2020, to 17.5% for the nine months ended December 25, 2021, primarily due to a higher average unit price and lower promotional activity, as well as leveraging of operating expenses due to higher revenue.
Jimmy Choo
 Nine Months Ended % Change
(dollars in millions)December 25,
2021		December 26,
2020		$ ChangeAs 
Reported		Constant
Currency
Revenues$457 $294 $163 55.4 %45.2 %
Income (loss) from operations28 (37)65 NM
Operating margin6.1 %(12.6)%
NM Not meaningful

Revenues
Jimmy Choo revenues increased $163 million, or 55.4%, to $457 million for the nine months ended December 25, 2021, compared to $294 million for the nine months ended December 26, 2020, which included favorable foreign currency effects of $30 million. On a constant currency basis, revenue increased $133 million, or 45.2%, primarily attributable to the continued recovery from the COVID-19 pandemic. In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
Income (Loss) from Operations
For the nine months ended December 25, 2021, Jimmy Choo recorded income from operations of $28 million, compared to a loss from operations of $37 million for the nine months ended December 26, 2020. Operating margin improved from (12.6)% for the nine months ended December 26, 2020, to 6.1% for the nine months ended December 25, 2021, primarily due to lower promotional activity and leveraging of operating expenses due to higher revenue.
Michael Kors
 Nine Months Ended % Change
(dollars in millions)December 25,
2021		December 26,
2020		$ ChangeAs 
Reported		Constant
Currency
Revenues$2,932 $2,086 $846 40.6 %39.3 %
Income from operations795 423 372 87.9 %
Operating margin27.1 %20.3 %

Revenues
Michael Kors revenues increased $846 million, or 40.6%, to $2.932 billion for the nine months ended December 25, 2021, compared to $2.086 billion for the nine months ended December 26, 2020, which included favorable foreign currency effects of $26 million. On a constant currency basis, revenue increased $820 million, or 39.3%, primarily attributable to the continued recovery from the COVID-19 pandemic. In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.
Income from Operations

For the nine months ended December 25, 2021, Michael Kors recorded income from operations of $795 million, compared to $423 million for the nine months ended December 26, 2020. Operating margin improved from 20.3% for the nine months ended December 26, 2020, to 27.1% for the nine months ended December 25, 2021, primarily due to a higher average unit price and leveraging of operating expenses due to higher revenue, partially offset by increases in supply chain costs.


45


Liquidity and Capital Resources
Liquidity
Our primary sources of liquidity are the cash flows generated from our operations, along with borrowings available under our credit facilities (see below discussion regarding “Revolving Credit Facilities”) and available cash and cash equivalents. Our primary use of this liquidity is to fund ourthe ongoing cash requirements, including our working capital requirements, acquisitions,needs and capital investments in our business, debt repayments, global retail store construction, expansion and renovation, investment in information systems infrastructure, our distribution and corporate facilities, construction and renovationacquisitions, returns of shop-in-shops,capital, including share repurchases and other corporate activities. We believe that the cash generated from our operations, together with borrowings available under our revolving credit facilityfacilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store growth plans, shop-in-shop growth, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives. We spent $83.8$85 million on capital expenditures during the nine months ended December 30, 2017, and expect to spend approximately $90 million on capital expenditures during the remainder of Fiscal 2018.25, 2021.
The following table sets forth key indicators of our liquidity and capital resources (in millions):
 As of
 December 25,
2021		March 27,
2021
Balance Sheet Data:
Cash and cash equivalents$261 $232 
Working capital$320 $(75)
Total assets$7,680 $7,481 
Short-term debt$26 $123 
Long-term debt$976 $1,219 
 As of
 December 30,
2017		 April 1,
2017
Balance Sheet Data:   
Cash and cash equivalents$317.1
 $227.7
Working capital722.5
 598.9
Total assets4,216.8
 2,409.6
Short-term debt0.1
 133.1
Long-term debt992.4
 —
Nine Months EndedNine Months Ended
December 30,
2017		 December 31,
2016		December 25,
2021		December 26,
2020
Cash Flows Provided By (Used In):   Cash Flows Provided By (Used In):
Operating activities$873.3
 $895.7
Operating activities$713 $545 
Investing activities(1,496.8) (633.9)Investing activities$(26)$(97)
Financing activities701.0
 (584.6)Financing activities$(663)$(803)
Effect of exchange rate changes10.3
 (9.3)Effect of exchange rate changes$6 $(8)
Net increase (decrease) in cash and cash equivalents and restricted cash$87.8
 $(332.1)
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents$30 $(363)
Cash Provided by Operating Activities
CashNet cash provided by operating activities decreased $22.4increased $168 million to $873.3$713 million during the nine months ended December 30, 2017,25, 2021, as compared to $895.7$545 million for the nine months ended December 31, 2016, which was primarily due to26, 2020, as a decreaseresult of an increase in our net income after non-cash adjustments, partially offset by decreases related to changes in our working capital, as well as a decrease our net income after non-cash adjustments.capital. The net decreasedecreases related to the changes in our working capital wasare primarily attributable to lower accounts payable driven byan increase in our inventory levels, an increase in income tax receivables and fluctuations in the timing of payments and an unfavorable change in accounts receivable primarily duereceipts when compared to a lower balance in the beginning of Fiscal 2018 than in prior year. These declines were largely offset by increases related to prepaid expenses and other current assets and accrued expenses and other current liabilities, primarily due to timing, as well a decrease in Michael Kors wholesale inventory due to our strategic reduction in shipments in this channel.
Cash Used in Investing Activities
Net cash used in investing activities increased $862.9 million to $1,496.8was $26 million during the nine months ended December 30, 2017,25, 2021, as compared to net cash used of $633.9$97 million during the nine months ended December 31, 2016,26, 2020, which was primarily attributable to $1,414.5 millionthe settlement of cash paid,certain net investment hedges of cash acquired in connection with our acquisition of the Jimmy Choo business on November 1, 2017, as compared to $480.6 million in cash paid, net of cash acquired, attributable to our acquisition of the previously licensed business in Greater China during the nine months ended December 31, 2016. This decrease in cash from investing activities was partially offset by lower capital expenditures of $63.9$59 million during the nine months ended December 30, 2017, due to lower spending related to build-outs of new stores and shop-in-shops and lower corporate expenditures.25, 2021.
Cash Provided by (Used in)Used in Financing Activities
Net cash provided byused in financing activities was $701.0$663 million during the nine months ended December 30, 2017,25, 2021, as compared to net cash used in financing activities of $584.6$803 million during the nine months ended December 31, 2016.26, 2020. The increasedecrease of cash used in cash from financing activities was primarily due to increased net debt borrowings of $694.5$140 million which was primarily attributable to the Senior Notes and Term Loan borrowings to finance the acquisition of Jimmy Choo, net of cash repayments, as well as a decrease in net debt repayments of $593.8$453 million, partially offset by a $359 million increase in cash payments to repurchase our ordinary shares during the nine months ended December 30, 2017.compared to prior year.

46


Debt ObligationsFacilities
The following table presents a summary of our borrowing capacity and amounts outstanding as of December 30, 201725, 2021 and April 1, 2017 (dollarsMarch 27, 2021 (in millions):
As of
December 25,
2021		March 27,
2021
Senior Secured Revolving Credit Facility:
Revolving Credit Facility (excluding up to a $500 million accordion feature) (1)
Total availability$1,000 $1,000 
Borrowings outstanding (2)
20 — 
Letter of credit outstanding29 27 
Remaining availability$951 $973 
Term Loan Facility ($1.6 billion)
Borrowings outstanding, net of debt issuance costs (2)
$495 $865 
Remaining availability$— $— 
364 Credit Facility ($230 million)
Total availability$— $230 
Remaining availability$— $230 
Senior Notes due 2024
Borrowings outstanding, net of debt issuance costs and discount amortization (2)
$448 $447 
Other Borrowings (3)
$39 $21 
Hong Kong Uncommitted Credit Facility:
Total availability (80 million and 100 million Hong Kong Dollars)$10 $13 
Borrowings outstanding— — 
Remaining availability (80 million and 100 million Hong Kong Dollars)$10 $13 
China Uncommitted Credit Facility:
Total availability (45 million and 100 million Chinese Yuan)$7 $15 
Borrowings outstanding— — 
Total and remaining availability (45 million and 100 million Chinese Yuan)$7 $15 
Japan Credit Facility:
Total availability (1.0 billion Japanese Yen)$9 $9 
Borrowings outstanding (0.0 billion and 1.0 billion Japanese Yen) (4)
— 9 
Remaining availability (1.0 billion and 0.0 billion Japanese Yen)$9 $— 
Versace Uncommitted Credit Facilities:
Total availability (48 million and 57 million Euro)$54 $67 
Borrowings outstanding (0 million Euro)— — 
Remaining availability (48 million and 57 million Euro)$54 $67 
Total borrowings outstanding (1)
$1,002 $1,342 
Total remaining availability$1,031 $1,298 
47

(1)The financial covenant in million):
 As of
 December 30,
2017		 April 1,
2017
Senior Unsecured Revolving Credit Facility:   
Revolving Credit Facility (excluding up to a $500 million accordion feature) (1)
   
Total Availability$1,000.0
 $1,000.0
Borrowings outstanding (2)
—
 127.3
Letter of credit outstanding11.3
 10.6
Remaining availability$988.7
 $862.1
    
Term Loan Facility ($1.0 billion) (3)
   
Borrowings Outstanding, net of debt issuance costs (4)
$548.2
 $—
Remaining availability—
 —
    
4.000% Senior Notes   
       Borrowings Outstanding, net of debt issuance costs and discount amortization$444.2
��$—
    
Hong Kong Uncommitted Credit Facility:   
Total availability (100.0 million Hong Kong Dollars)$12.8
 $12.9
Borrowings outstanding (45.0 million Hong Kong Dollars) (2)
—
 5.8
Bank guarantees outstanding (11.8 million Hong Kong Dollars)1.5
 1.5
Remaining availability$11.3
 $5.6
    
Japan Credit Facility:   
Total and remaining availability (1.0 billion Japanese Yen)$8.9
 $—
_____________________________
(1) The Revolvingour 2018 Credit Facility contains customary events of default and requiresrequiring us to maintain a leverage ratio at the end of each fiscal quarter of no greater than 3.5 to 1, calculated as the ratio of the sum of total indebtedness asplus the capitalized amount of the date of the measurement plus 6.0 times the consolidated rent expenseall operating lease obligations for the last four consecutive fiscal quarters to Consolidated EBITDAR forof no greater than 3.75 to 1.00 had been waived through the last four consecutive fiscal quarters. Consolidated EBITDARquarter ending June 26, 2021. On May 26, 2021 (the “Election Date”), the company delivered to the administrative agent the certificate required to terminate the Applicable Period. Effective as of the Election Date, the Company is defined as consolidatedrequired to comply with the quarterly maximum net income plus income tax expense, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash charges, subjectleverage ratio test of 4.00 to certain deductions. The Revolving Credit facility also includes other customary covenants that limit additional indebtedness, guarantees, liens, acquisitions and other investments and cash dividends.1.00. As of December 30, 201725, 2021 and April 1, 2017,March 27, 2021, we were in compliance with all covenants related to this agreement.our agreements then in effect governing our debt. See Note 9 to the accompanying consolidated financial statements for additional information.
(2)As of December 25, 2021, all amounts are recorded as long-term debt in our consolidated balance sheets. As of March 27, 2021, all amounts are recorded as long-term debt, except for the current portion of $97 million outstanding under the 2018 Term Loan Facility, which was recorded within short-term debt in our consolidated balance sheets.
(3)The balance as of December 25, 2021 consists of $18 million related to our supplier financing program recorded within short-term debt in our consolidated balance sheets, $18 million related to the sale of certain Versace tax receivables, with $8 million and $10 million, respectively, recorded within short-term debt and long-term debt in our consolidated balance sheets and $3 million of other loans recorded as long-term debt in our consolidated balance sheets. The balance as of March 27, 2021 consists of $17 million related to our supplier finance program recorded within short-term debt in our consolidated balance sheets and $4 million of other loans recorded as long-term debt in our consolidated balance sheets.
(4)Recorded as short-term debt in our consolidated balance sheetsheets as of April 1, 2017.March 27, 2021.
(3) The $1.0 billionWe believe that our 2018 Credit Facility is adequately diversified with no undue concentration in any one financial institution. As of December 25, 2021, there were 25 financial institutions participating in the facility, was fully utilizedwith none maintaining a maximum commitment percentage in excess of 10%. We have no reason to finance a portionbelieve that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the purchase price of our acquisition of Jimmy Choo on November 1, 2017, a portion of which was repaid during2018 Credit Facility.
See Note 9 in the three months ended December 30, 2017. See accompanying financial statements and Note 3 for additional information.
(4) Recorded as long-term debt12 in our consolidated balance sheet as of December 30, 2017.
In January 2018, we repaid an additional $210.0 million principal amount of borrowings outstanding under the Term Loan FacilityFiscal 2021 Annual Report on a pro-rata basis (see Note 9 for additional information).
Please refer to Note 9 to the accompanying consolidated financial statementsForm 10-K for detailed information relating to our credit facilities and debt obligations.


Share Repurchase Program
The following table presents our treasuryordinary share repurchases during the nine months ended December 30, 201725, 2021 and December 31, 201626, 2020 (dollars in millions):
Nine Months Ended
 December 25,
2021		December 26,
2020
Cost of shares repurchased under share repurchase program$350 $— 
Fair value of shares withheld to cover tax obligations for vested restricted share awards10 1 
Total cost of treasury shares repurchased$360 $1 
Shares repurchased under share repurchase program5,934,244 — 
Shares withheld to cover tax withholding obligations193,322 48,147 
6,127,566 48,147 
 Nine Months Ended
 December 30,
2017		 December 31,
2016
Cost of shares repurchased under share repurchase program$157.8
 $750.0
Cost of shares withheld to cover tax withholding obligations3.2
 4.8
Total cost of treasury shares repurchased$161.0
 $754.8
    
Shares repurchased under share repurchase program4,543,500
 15,114,538
Shares withheld to cover tax withholding obligations92,536
 100,552
 4,636,036
 15,215,090

AsDuring the first quarter of December 30, 2017, the remaining availability underFiscal 2022, we reinstated our $1.0 billion$500 million share repurchase program, which was $842.2 million.previously suspended during the first quarter of Fiscal 2021 in response to the impact of the COVID-19 pandemic and the provisions of the Second Amendment of the 2018 Credit Facility. See Note 9 in the accompanying financial statements for additional information.

On November 3, 2021, we announced that our Board of Directors had terminated our existing $500 million share repurchase program (the “Prior Plan”), with $250 million of availability remaining, and authorized a new share repurchase program (the “Fiscal 2022 Plan”) pursuant to which we may, from time to time, repurchase up to $1.0 billion of our outstanding ordinary shares within a period of two years from the effective date of the program. Share repurchases aremay be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under our insider trading policy and our business priorities. Share repurchases are subject to market conditions and our business priorities.other relevant factors. The program may be suspended or discontinued at any time.
Please refer to
48

See Note 13 to the accompanying consolidated financial statements for additional information.
Contractual Obligations and Commercial Commitments
Please refer to Note 10 to the accompanying interim consolidated financial statements for our future minimum lease payments as of December 30, 2017 under the terms of our noncancelable operating lease agreements.
Please refer to the “Contractual Obligations and Commercial Commitments” disclosure within the “Liquidity and Capital Resources” section of our Fiscal 20172021 Form 10-K for a detailed disclosure of our other contractual obligations and commitments as of April 1, 2017.March 27, 2021.
Off-Balance Sheet Arrangements
We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. Our off-balance sheet commitments relating to our outstanding letters of credit were $15.7$35 million at December 30, 2017,25, 2021, including $4.4$6 million in letters of credit issued outside of the 20172018 Credit Facility. In addition, as of December 30, 2017,25, 2021, bank guarantees of approximately $1.5$34 million were supported by the Hong Kong Credit Facility.our various credit facilities. We do not have any other off-balance sheet arrangements or relationships with entities that are not consolidated into our financial statements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.
Recent Accounting Pronouncements
Please refer toSee Note 2 to the accompanying interim consolidated financial statements for recently issued accounting standards, which may have an impact on our financial statements and/or disclosures upon adoption.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to certain market risks during the normal course of our business, such as risk arising from fluctuations in foreign currency exchange rates, as well as fluctuations in interest rates. In attemptsorder to manage these risks, we employ certain strategies to mitigate the effect of these fluctuations. We enter into foreign currency forward contracts to manage our foreign currency exposure to the fluctuations of certain foreign currencies. The use of these instruments primarily helpshelp to manage our exposure to our foreign purchase commitments and better control our product costs. We do not use derivatives for trading or speculative purposes.
Foreign Currency Exchange Risk
Forward Foreign Currency Exchange Contracts
We are exposed to risks on certain purchase commitments to foreign suppliers based on the value of our purchasing subsidiariessubsidiaries’ local currency relative to the currency requirement of the supplier on the date of the commitment. As such, we enter into forward currency exchange contracts that generally mature in 12 months or less and are consistent with the related purchase commitments.commitments, to manage our exposure to the changes in the value of the Euro and the Canadian Dollar. These contracts are recorded at fair value in our consolidated balance sheets as either an asset or liability, and are derivative contracts to hedge cash flow risks. Certain of these contracts are designated as hedges for hedge accounting purposes, while certain of these contracts, currently a relatively small portion, are not designated as hedges for accounting purposes. Accordingly, the changes in the fair value of the majority of these contracts at the balance sheet date are recorded in our equity as a component of accumulated other comprehensive income, and upon maturity (settlement) are recorded in, or reclassified into, our cost of goods sold or operating expenses, in our
consolidated statement of operations and comprehensive income, as applicable to the transactions for which the forward currency exchange contracts were established. For those contracts which are designated as hedges for accounting purposes, any portion of those contracts deemed ineffective would be charged to earnings, in the period the ineffectiveness was determined.
We perform a sensitivity analysis on our forward currency contracts, both designated and not designated as hedges for accounting purposes, to determine the effects of fluctuations in foreign currency exchange rates. For this sensitivity analysis, we assume a hypothetical change in U.S. dollarDollar against foreign exchange rates. Based on all designated foreign currency exchange contracts relating to purchases of inventory outstanding as of December 30, 2017,25, 2021, a 10% appreciation or devaluation of the U.S. dollarDollar compared to the level of foreign currency exchange rates for currencies under contract as of December 30, 2017,25, 2021, would result in a net increase orand decrease, respectively, of $17.0approximately $14 million in the fair value of these contracts.
Net Investment Hedges
We are exposed to adverse foreign currency exchange rate movements related to our net investment hedges. As of December 25, 2021, we have multiple fixed to fixed cross-currency swap agreements with aggregate notional amounts of $4 billion to hedge our net investment in Euro-denominated subsidiaries and $194 million to hedge our net investments in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the U.S. Dollar and this currency. Under the term of these contracts, we will exchange the semi-annual fixed rate payments on U.S. denominated debt for fixed rate payments of 0% to 4.457% in Euros and 0% to 3.408% in Japanese Yen. Based on the net investment hedges outstanding as of December 25, 2021, a 10% appreciation or devaluation of the U.S. Dollar compared to the level of foreign currency exchange rates for currencies under contract as of December 25, 2021, would result in a potential net increase or decrease upon settlement of approximately $511 million in the fair value of this contract. Certain of these contracts include mandatory early termination dates between August 2025 and February 2026, while the remaining contracts have maturity dates between May 2024 and February 2051. In addition, certain other contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being November 2023. If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA’s, either party is required to post cash collateral.
Interest Rate Risk
We are exposed to interest rate risk in relation to borrowings outstanding under our 2018 Term Loan Facility, our 2017 Credit Facility, our Hong Kong Credit Facility, and our Japan Credit Facility.Facility and our Versace Credit Facilities. Our 2018 Term Loan Facility carries interest at a rate that is based on LIBOR. Our 20172018 Credit Facility carries interest rates that are tied to LIBOR and the prime rate, among other institutional lending rates (depending on the particular origination of borrowing), as further described in Note 9 to the accompanying consolidated financial statements. Our Hong Kong Credit Facility carries interest at a rate that is tied to the Hong Kong Interbank Offered Rate. Our China Credit Facility carries interest at a rate that is tied to the People’s Bank of China’s Benchmark lending rate. Our Japan Credit Facility carries interest at a rate posted by the Mitsubishi UFJ Financial Group. Our Versace Credit Facility carries interest at a rate set by the bank on the date of borrowing that is tied to the European Central Bank. Therefore, our statements of operations and comprehensive income and cash flows are exposed to changes in those interest rates. At December 30, 2017,25, 2021, we had $548.2$20 million borrowings outstanding under our Revolving Credit Facility, $495 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings
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outstanding under our Versace Credit Facilities. At March 27, 2021, we had no borrowings outstanding under our Revolving Credit Facility, $865 million, net of debt issuance costs, outstanding under our 2018 Term Loan Facility and no borrowings outstanding under our 2017Versace Credit Facility, our Hong Kong Credit Facility and our Japan Facility. These balances are not indicative of future balances that may be outstanding under our revolving credit facilities that may be subject to fluctuations in interest rates. Any increases in the applicable interest rate(s) would cause an increase to the interest expense relative to any outstanding balance at that date.
We have outstanding $450.0Credit Risk
Our $450 million aggregate principal amount of Senior Notes, due 2024. The Senior Notesin 2024, bear interest at a fixed rate equal to 4.000%4.500% per year, payable semi-annually. Our Senior Notes interest rate payable may be subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency), downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes.

On an overall basis, our exposure to market risk has not significantly changed from what we reported in our Annual Report on Form 10-K. The COVID-19 pandemic does present new and emerging uncertainty to the financial markets. See Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 27, 2021 for additional information.

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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”)) as of December 30, 2017.25, 2021. This evaluation was performed based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the 2013 Framework. Based on this assessment, our CEO and CFO concluded that our disclosure controls and procedures as of December 30, 201725, 2021 are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the three months ended December 30, 201725, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Acquisition of Jimmy Choo
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On November 1, 2017, we acquired Jimmy Choo (please refer to Note 3 to the accompanying consolidated financial statements for additional information). We are in the process of evaluating the internal controls of the acquired business and integrating it into our existing operations.



PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
We are involved in various routine legal proceedings incident to the ordinary course of our business. We believe that the outcome of all pending legal proceedings, in the aggregate, will not have a material adverse effect on our business, results of operations and financial condition.

ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April 1, 2017, as supplemented by the risk factor set forth in our Form 10-Q for the quarterly period ended July 1, 2017,March 27, 2021, which could materially and adversely affect our business, financial condition or future results. These risks are not the only risks that we face. Our business operations could also be affected by additional factors that are not presently known to us or that we currently consider to be immaterial to our operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer Purchases of Equity Securities
On May 25, 2017,The following table provides information of the Company’s ordinary shares repurchased or withheld during the three months ended December 25, 2021:
Total Number
of Shares		Average Price
Paid per Share
Total Number of
Shares
Purchased as Part of
Publicly Announced
Programs (1)
Remaining Dollar Value of Shares That May Be Purchased Under the Programs (in millions) (1)
September 26 – October 23— $— — $250 
October 24 – November 20598,066 $63.23 598,066 $962 
November 21 – December 252,623,903 $61.81 2,623,903 $800 
3,221,969 3,221,969 
(1)During the first quarter of Fiscal 2022, the Company reinstated its $500 million share repurchase program, which had been previously suspended in response to the impact of the COVID-19 pandemic. Subsequently, on November 3, 2021, the Company announced that its Board of Directors had terminated the Company’s existing $500 million share repurchase program, which had $250 million of availability remaining at the time, and authorized a new share repurchase program pursuant to which the Company may, from time to time, repurchase up to $1.0 billion share repurchaseof its outstanding ordinary shares within a period of two years from the effective date of the program. The Company also hascontinues to have in place a “withhold to cover” repurchase program, which allows the Company to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards.
The following table provides information
ITEM 5. OTHER INFORMATION

This Item 5 is being filed solely to update the Item 9B disclosure included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 27, 2021, filed with the SEC on May 26, 2021, in order to provide the amount of any material charges relating to the Capri Retail Store Optimization Program by major type of cost that the Company believes are now determinable.

As previously announced, the Board of Directors of the Company’s ordinary shares repurchasedCompany approved the Capri Retail Store Optimization Program to improve the profitability of its retail store fleet. As part of the Capri Retail Store Optimization Program, the Company intends to close approximately 170 of its retail stores throughout Fiscal 2021 and Fiscal 2022. The company initially expected to incur approximately $75 million of one-time costs related to this program, but now expects total one-time costs of approximately
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$25 million, including lease termination and other store closure costs, the majority of which are expected to result in future cash expenditures.

During the three and nine months ended December 25, 2021, the Company closed 13 and 39 of its retail stores, respectively, which have been incorporated into the Capri Retail Store Optimization Program. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during the three and nine months ended December 30, 2017:25, 2021 were $10 million and $6 million, respectively.
The exact amounts and timing of the remaining Capri Retail Optimization Program charges and future cash expenditures associated therewith are undeterminable at this time. The Company will either disclose in a Current Report on Form 8-K, or disclose in another periodic filing with the U.S. Securities and Exchange Commission, the amount of any material charges relating to the Capri Retail Optimization Program by major type of cost once such amounts or range of amounts are determinable.
 
Total Number
of Shares
Purchased
 
Average Price
Paid per Share
 
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
 
Maximum Number (or
Approximated Dollar Value)
of Shares (or Units) That
May Yet Be Purchased
Under the Plans or Programs (in millions)
October 1-October 28813
 $48.17
 —
 $842.2
October 29-November 25601
 $48.48
 —
 $842.2
November 26-December 30—
 $—
 —
 $842.2
 1,414
 

 —
 
This disclosure is intended to satisfy the requirements of Item 2.05 of Form 8-K.

ITEM 6. EXHIBITS
a. Exhibits
Please refer to the accompanying Exhibit Index included after the signature page of this report for a list of exhibits filed or furnished with this report.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on February 13, 2018.
2, 2022.
CAPRI HOLDINGS LIMITED
MICHAEL KORS HOLDINGS LIMITED
By:
By:/s/ John D. Idol
Name:John D. Idol
Title:Chairman & Chief Executive Officer
By:/s/ Thomas J. Edwards, Jr.
Name:Thomas J. Edwards, Jr.
Title:Executive Vice President, Chief Financial Officer and Chief Operating Officer and Treasurer




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INDEX TO EXHIBITS
Exhibit No.Description
4.131.1

Indenture, dated as of October 20, 2017, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (included as Exhibit 4.1 to the Company's Current Report on Form 8-K (File No. 001-35368), filed on October 20, 2017 and incorporated herein by reference).
10.1

First Amendment, dated as of October 4, 2017, to the Second Amended and Restated Credit Agreement dated as of August 22, 2017 among Michael Kors Holdings Limited, Michael Kors (USA), Inc., the foreign subsidiary borrowers party thereto, the guarantors party thereto, the financial institutions party thereto as lenders and issuing banks and JPMorgan Chase Bank, N.A., as administrative agent (included as Exhibit 10.2 to the Company's Current Report on Form 8-K (File No. 001-35368), filed on October 5, 2017 and incorporated herein by reference).
31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1
The following financial information from the Company’s Quarterly Report on Form 10-Q for the period ended December 30, 2017,25, 2021 formatted in Inline eXtensible Business Reporting Language: (i) Condensed Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.



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