PART I – FINANCIAL INFORMATION

~~Item 1.~~

Item 1. Financial Statements.

G-III APPAREL GROUP, LTD. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


	April 30,		April 30,		January 31,
	2020		2019		2020
	(Unaudited)		(Unaudited)
	(In thousands, except per share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	616,183	$	48,312	$	197,372
Accounts receivable, net of allowance for doubtful accounts of $10.4 million, $0.9 million and $0.7 million, respectively		421,143		478,371		530,137
Inventories		500,410		538,955		551,918
Prepaid income taxes		9,724		9,369		8,566
Prepaid expenses and other current assets		66,594		96,545		80,695
Total current assets		1,614,054		1,171,552		1,368,688
Investments in unconsolidated affiliates		58,299		63,361		61,987
Property and equipment, net		72,918		89,848		76,023
Operating lease assets		251,565		320,169		270,032
Other assets, net		32,691		35,663		32,629
Other intangibles, net		37,321		41,486		38,363
Deferred income tax assets, net		34,548		25,212		18,135
Trademarks		437,643		438,675		438,658
Goodwill		259,922		260,578		260,622
Total assets	$	2,798,961	$	2,446,544	$	2,565,137
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of notes payable	$	512	$	—	$	673
Accounts payable		114,750		172,806		204,786
Accrued expenses		60,523		78,619		101,838
Customer refund liabilities		157,886		210,310		233,418
Current operating lease liabilities		63,632		74,761		63,166
Income tax payable		9,115		3,588		8,468
Other current liabilities		116		147		1,611
Total current liabilities		406,534		540,231		613,960
Notes payable, net of discount and unamortized issuance costs		900,682		411,087		396,794
Deferred income tax liabilities, net		7,797		14,777		7,952
Noncurrent operating lease liabilities		231,323		286,663		249,040
Other noncurrent liabilities		6,391		6,960		6,719
Total liabilities		1,552,727		1,259,718		1,274,465

Stockholders' Equity
Preferred stock; 1,000 shares authorized; 0 shares issued		—		—		—
Common stock - $0.01 par value; 120,000 shares authorized; 48,052, 49,393 and, 49,396 shares issued, respectively		264		264		264
Additional paid-in capital		449,840		456,835		452,142
Accumulated other comprehensive loss		(22,034)		(18,421)		(18,008)
Retained earnings		853,843		761,344		893,138
Common stock held in treasury, at cost - 1,344, 470 and 1,386 shares, respectively		(35,679)		(13,196)		(36,864)
Total stockholders' equity		1,246,234		1,186,826		1,290,672
Total liabilities and stockholders' equity	$	2,798,961	$	2,446,544	$	2,565,137

October 31,
2017 October 31,
2016 January 31,
2017
(Unaudited) (Unaudited)
(In thousands, except per share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 68,229 $ 44,996 $ 79,957
Accounts receivable, net of allowances for doubtful accounts and sales discounts 601,179 537,073 263,881
Inventories 592,822 490,555 483,269
Prepaid income taxes — — 8,885
Deferred income taxes, net — 17,571 —
Prepaid expenses and other current assets 34,841 16,326 46,946
Total current assets 1,297,071 1,106,521 882,938
INVESTMENTS IN UNCONSOLIDATED AFFILIATES 60,642 61,456 61,171
PROPERTY AND EQUIPMENT, NET 98,522 101,579 102,571
OTHER ASSETS 33,883 25,244 36,181
OTHER INTANGIBLES, NET 47,076 9,910 48,558
DEFERRED INCOME TAX ASSETS, NET 16,169 — 15,849
TRADEMARKS, NET 441,490 68,637 435,414
GOODWILL 264,200 50,094 269,262
TOTAL ASSETS $ 2,259,053 $ 1,423,441 $ 1,851,944
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Notes payable $ — $ 91,334 $ —
Accounts payable 216,860 181,653 217,902
Accrued expenses 128,891 103,844 95,275
Income tax payable 22,949 25,184 2,242
Total current liabilities 368,700 402,015 315,419
NOTES PAYABLE, net of note discount and unamortized issuance costs 726,608 — 461,756
DEFERRED INCOME TAXES, NET 16,325 21,575 14,300
OTHER NON-CURRENT LIABILITIES 40,488 29,949 39,233
TOTAL LIABILITIES 1,152,121 453,539 830,708
STOCKHOLDERS’ EQUITY
Preferred stock; 1,000 shares authorized; No shares issued and outstanding
Common stock - $0.01 par value; 120,000 shares authorized; 49,196, 46,407 and 49,016 shares issued, respectively 247 235 253
Additional paid-in capital 447,555 359,149 437,777
Accumulated other comprehensive loss (15,499 ) (20,526 ) (27,722 )
Retained earnings 675,084 632,534 612,418
Common stock held in treasury, at cost – 115, 376 and 376 shares, respectively (455 ) (1,490 ) (1,490 )
TOTAL STOCKHOLDERS’ EQUITY 1,106,932 969,902 1,021,236
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 2,259,053 $ 1,423,441 $ 1,851,944

The accompanying notes are an integral part of these ~~statements.~~statements.

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Contract Liabilities

The Company’s contract liabilities, which are recorded within accrued expenses in the accompanying condensed consolidated balance sheets, primarily consist of gift card liabilities and advance payments from licensees. In some of its retail concepts, the Company also offers a limited loyalty program where customers accumulate points redeemable for cash discount certificates that expire 90 days after issuance. Total contract liabilities were $4.1 million, $6.3 million and $5.9 million at April 30, 2020, April 30, 2019 and January 31, 2020, respectively. The Company recognized $3.5 million in revenue for the three months ended April 30, 2020 related to contract liabilities that existed at January 31, 2020. The Company recognized $4.3 million in revenue for the three months ended April 30, 2019 related to contract liabilities that existed at January 31, 2019. There were 0 contract assets recorded as of April 30, 2020, April 30, 2019 and January 31, 2019. Substantially all of the advance payments from licensees as of April 30, 2020 are expected to be recognized as revenue within the next twelve months.

Note 10 – Segments

The Company’s reportable segments are business units that offer products through different channels of distribution. The Company has ~~two~~2 reportable segments: wholesale operations and retail operations. The wholesale operations segment includes sales of products under ~~brands~~the Company’s owned, licensed ~~by the Company from third parties,~~and private label brands, as well as sales ~~of products under~~related to the ~~Company’s own brands and private label brands.~~Vilebrequin business. Wholesale ~~sales and~~revenues also include revenues from license agreements related to ~~the~~our owned trademarks including DKNY, Donna Karan, Vilebrequin, G.H. Bass and ~~DKNY business are included in the wholesale operations segment.~~Andrew Marc. The retail operations segment consists primarily of ~~the~~direct sales to consumers through Company-operated stores, consisting primarily of Wilsons Leather, G.H. Bass and DKNY stores, substantially all of which are operated as ~~well as a limited number~~outlet stores. Sales through Company-owned websites, with the exception of ~~Calvin Klein Performance and Karl Lagerfeld Paris stores.~~Vilebrequin, are also included in the retail operations segment.

The following segment information ~~in thousands,~~ is presented for the ~~three and nine-month~~three-month periods indicated below:

	Three Months Ended October 31, 2017
	Wholesale		Retail			Elimination⁽¹⁾			Total

											Three Months Ended April 30, 2020
											Wholesale		Retail		Elimination ⁽¹⁾		Total
											(In thousands)
Net sales	$	966,820	$	118,709		$	(60,536	)	$	1,024,993	$	378,871	$	33,908	$	(7,648)	$	405,131
Cost of goods sold		636,878		57,786			(60,536	)		634,128		266,639		21,739		(7,648)		280,730
Gross profit		329,942		60,923			—			390,865		112,232		12,169		—		124,401
Selling, general and administrative		174,679		68,061			—			242,740
Selling, general and administrative expenses												112,600		42,020		—		154,620
Depreciation and amortization		6,790		116			—			6,906		8,292		1,575		—		9,867
(Gain) loss on lease terminations												(5)		3,192		—		3,187
Operating profit (loss)	$	148,473	$	(7,254	)	$	—		$	141,219	$	(8,655)	$	(34,618)	$	—	$	(43,273)

	Three Months Ended October 31, 2016
	Wholesale		Retail			Elimination⁽¹⁾			Total

											Three Months Ended April 30, 2019
											Wholesale		Retail		Elimination ⁽¹⁾		Total
											(In thousands)
Net sales	$	794,382	$	107,238		$	(18,144	)	$	883,476	$	570,639	$	81,904	$	(18,991)	$	633,552
Cost of goods sold		521,359		58,809			(18,144	)		562,024		371,580		44,899		(18,991)		397,488
Gross profit		273,023		48,429			—			321,452		199,059		37,005		—		236,064
Selling, general and administrative		140,356		57,918			—			198,274
Selling, general and administrative expenses												147,258		54,601		—		201,859
Depreciation and amortization		5,169		2,864			—			8,033		7,522		1,951		—		9,473
Gain on lease terminations												—		(829)		—		(829)
Operating profit (loss)	$	127,498	$	(12,353	)	$	—		$	115,145	$	44,279	$	(18,718)	$	—	$	25,561

Nine Months Ended October 31, 2017
Wholesale Retail Elimination⁽¹⁾ Total
Net sales $ 1,887,902 $ 324,329 $ (120,191 ) $ 2,092,040
Cost of goods sold 1,251,368 165,251 (120,191 ) 1,296,428
Gross profit 636,534 159,078 — 795,612
Selling, general and administrative 433,324 202,676 — 636,000
Depreciation and amortization 20,403 7,077 — 27,480
Operating profit (loss) $ 182,807 $ (50,675 ) $ — $ 132,132

Nine Months Ended October 31, 2016
Wholesale Retail Elimination⁽¹⁾ Total
Net sales $ 1,538,096 $ 302,188 $ (57,139 ) $ 1,783,145
Cost of goods sold 1,029,829 167,691 (57,139 ) 1,140,381
Gross profit 508,267 134,497 — 642,764
Selling, general and administrative 333,906 170,641 — 504,547
Depreciation and amortization 15,539 7,359 — 22,898
Operating profit (loss) $ 158,822 $ (43,503 ) $ — $ 115,319

(1)Represents intersegment sales to the Company’s retail operations segment.

⁽¹⁾

~~Represents intersegment sales to the Company’s retail operations.~~

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The total assets for each of the Company’s reportable segments, as well as assets not allocated to a segment, are as follows:


	April 30, 2020		April 30, 2019		January 31, 2020
	(In thousands)
Wholesale	$	1,754,052	$	1,813,238	$	1,912,175
Retail		232,626		376,619		272,832
Corporate		812,283		256,687		380,130
Total assets	$	2,798,961	$	2,446,544	$	2,565,137

October 31, 2017 October 31, 2016 January 31, 2017
(In thousands)
Wholesale $ 1,871,373 $ 1,072,994 $ 1,477,259
Retail 251,649 227,743 228,352
Corporate⁽¹⁾ 136,031 122,704 146,333
Total Assets $ 2,259,053 $ 1,423,441 $ 1,851,944

⁽¹⁾

~~Includes assets not allocated to either reportable segment.~~

Note 11 – Stockholders’ Equity

For the three months ended April 30, 2020, the Company issued 0 shares of common stock and utilized 42,195 shares of treasury stock in connection with the vesting of equity awards. For the three months ended April 30, 2019, the Company issued 0 shares of common stock and utilized 207,325 shares of treasury stock in connection with the vesting of equity awards.

Note 12 – Income Taxes

The Company recorded an income tax benefit of $16.4 million for the three months ended April 30, 2020. The Company recorded income tax expense of $2.6 million for the three months ended April 30, 2019. Historically, the Company has calculated its provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full fiscal year to pre-tax income or loss, excluding discrete items, for the reporting period. Due to the uncertainty related to the impact of the COVID-19 pandemic on our operations, the Company used a discrete effective tax rate method to calculate taxes for the three-month period ended April 30, 2020. The Company will continue to evaluate income tax estimates under the historical method in subsequent quarters and employ a discrete effective tax rate method if warranted.

Note 813 – Canadian Customs Duty Examination

In October 2017, the Canada Border Service Agency (“CBSA”) issued a final audit report to G-III Apparel Canada ULC (“G-III Canada”), a wholly-owned subsidiary of the Company. The report challenged the valuation used by G-III Canada for certain goods imported into Canada. The period covered by the examination is February 1, 2014 through October 27, 2017, the date of the final ~~report, October 27, 2017.~~report. The CBSA has requested G-III Canada to reassess its customs entries for that period using the price paid or payable by the Canadian retail customers for certain imported goods rather than the price paid by G-III Canada to the vendor. The CBSA has also requested that G-III Canada change the valuation method used to pay duties with respect to ~~future~~goods imported ~~goods.~~in the future.

In March 2018, G-III Canada ~~is required~~provided a bond to ~~make a pre-payment~~guarantee payment to the CBSA ~~of the~~for additional duties payable as a result of the reassessment ~~within 90 days of the date~~required by the final ~~report was issued even though G-III Canada intends to appeal this reassessment.~~audit report. The Company ~~has estimated~~secured a bond in the amount of ~~additional duties~~CAD$26.9 million ($20.9 million) representing customs duty and interest through December 31, 2017 that ~~could~~is claimed to be ~~payable~~owed to the ~~CBSA~~CBSA. In March 2018, the Company amended the duties filed for the month of January 2018 based on the new valuation method. This amount was paid to ~~be between $9~~the CBSA. Beginning February 1, 2018, the Company began paying duties based on the new valuation method. There were no amounts paid and deferred for the three months ended April 30, 2020, related to the higher dutiable values. Cumulative amounts paid and deferred through April 30, 2020, related to the higher dutiable values, were CAD$13.5 million ($9.7 million).

Effective June 1, 2019, G-III commenced paying based on the dutiable value of G-III Canada’s imports based on the pre-audit levels. G-III continued to ~~$15 million, plus interest.~~ defer the additional duty paid through the month of May 2019 pending the final outcome of the appeal.

G-III Canada, based on the advice of counsel, believes it has positions that support its ability to receive a refund of ~~this amount~~amounts claimed to be owed to the CBSA on appeal and intends to vigorously contest the findings of the CBSA. G-III Canada filed its appeal with the CBSA in May 2018.

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Note 914 – Recent Adopted and Issued Accounting Pronouncements

Recently Adopted Accounting Guidance

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This pronouncement changed how entities account for credit impairment for trade and other receivables, as well as for certain financial assets and other instruments. ASU 2016-13 replaced the “incurred loss” model with an “expected loss” model. Under the “incurred loss” model, a loss (or allowance) was recognized only when an event had occurred (such as a payment delinquency) that caused the entity to believe that a loss was probable (i.e., that it had been “incurred”). Under the “expected loss” model, an entity recognizes a loss (or allowance) upon initial recognition of the asset that reflects all future events that may lead to a loss being realized, regardless of whether it is probable that the future event will occur. The “incurred loss” model considered past events and current conditions, while the “expected loss” model includes expectations for the future which have yet to occur. The Company adopted ASU 2016-16 as of February 1, 2020. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which made a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement among or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in ASU 2018-13 modified the disclosure requirements with respect to fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments to changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty have been applied prospectively in the initial fiscal year of adoption. All other amendments have been applied retrospectively to all periods presented in the initial year of adoption. The Company adopted the standard effective February 1, 2020. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is A Service Contract which addresses the accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU 2018-15 aligned the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, ASU 2018-15 amended ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract. The Company adopted the standard effective February 1, 2020. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The standard is intended to provide optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The guidance was effective upon issuance, and may be applied prospectively through December 31, 2022. The adoption of this standard did not result in a material change to the Company’s condensed consolidated financial statements.

Issued Accounting Guidance Being Evaluated for Adoption

~~In May 2017, the Financial Accounting Standard Board (“FASB”)~~The Company has reviewed all recently issued ~~Accounting Standards Update (“ASU”) ASU 2017-09, “~~~~Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting~~~~.” ASU 2017-09 provides clarification on when modification~~ accounting ~~should be used for changes to the terms~~pronouncements and concluded that they were either not applicable or conditions of a share-based payment award. ASU 2017-09 does not change the accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive. The amendments of ASU 2017-09 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of ASU 2017-09 is not expected to have ana significant impact ~~on the Company’s consolidated financial statements.~~

~~In January 2017, the FASB issued ASU 2017-04, “~~~~Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~.” The purpose of ASU 2017-04 is to simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment should be applied on a prospective basis. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within that year. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company does not expect ASU 2017-04 to have an impact on its consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-01, “~~~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~.” The purpose of ASU 2017-01 is to clarify the definition of a business to assist entities with evaluating 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 that year. The amendments in ASU 2017-01 should be applied prospectively on or after the effective date. Early adoption is permitted. The Company does not expect ASU 2017-01 to have an impact on its consolidated financial statements.

~~In October 2016, the FASB issued ASU 2016-16, “~~~~Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory~~.” The update requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset upon transfer other than inventory, eliminating the current recognition exception. Prior to the update, GAAP prohibited the recognition of current and deferred income taxes for intra-entity asset transfers until the asset was sold to an outside party. The amendments in this update do not include new disclosure requirements; however, existing disclosure requirements might be applicable when accounting for the current and deferred income taxes for an intra-entity transfer of an asset other than inventory. For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those fiscal years. The Company does not expect ASU 2016-16 to have a material impact on its consolidated financial statements.

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~~In August 2016, the FASB issued ASU 2016-15, “~~~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~,” which clarifies guidance with respect to the classification of eight specific cash flow issues. ASU 2016-15 was issued to reduce diversity in practice and prevent financial statement restatements. Cash flow issues include: debt prepayment or debt extinguishment costs, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies and bank-owned life insurance policies, distributions received from equity method investees, beneficial interests in securitization transactions and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Under the provision, entities must apply the guidance retrospectively to all periods presented but may apply it prospectively if retrospective application would be impracticable. The Company does not believe that adoption of this new guidance will have a material effect on its condensed consolidated financial statements.

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Note 15 – Subsequent Events

~~In February 2016, the FASB issued ASU 2016-02, “~~~~Leases (Topic 842)~~.” The primary difference between the current requirement under GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The FASB has continued to clarify this guidance and most recently issued ASU 2017-13 “~~Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments~~.” ASU 2016-02 requires that a lessee recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). Classification will be based on criteria that are for the most part similar to those applied in current lease accounting. ASU 2016-02 may be adopted using a modified retrospective transition, and provides for certain practical expedients. Transactions will require application of the new guidance at the beginning of the earliest comparative period presented. The guidance is effective for public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the potential impact of ASU 2016-02 on its consolidated financial statements. Given the Company’s significant number of leases, the Company expects this standard will result in a significant increase to its long-term assets and liabilities but does not expect it to have a material impact on its statements of operations. The Company is required to adopt the new standard in the first quarter of fiscal 2020 and does not expect to early adopt this new standard.

~~In January 2016, the FASB issued ASU 2016-01, “~~~~Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~.” This standard (i) modifies how entities measure equity investments and present changes in the fair value of financial liabilities, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) changes presentation and disclosure requirements and (iv) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early application is permitted. The Company does not expect that the adoption of this ASU will have a material impact on its statement of operations.

In May ~~2014,~~and June 2020, the ~~FASB issued ASU 2014-09, "~~~~Revenue from Contracts with Customers (Topic 606)~~~~." This update will replace the existing revenue recognition guidance in GAAP and requires~~Company repaid an ~~entity to recognize the amount~~aggregate of ~~revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The FASB has continued to clarify this guidance and has issued ASU 2017-13 “~~~~Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments~~~~”; ASU 2016-08, “~~~~Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~~~”; ASU 2016-10, “~~~~Identifying Performance Obligations and Licensing~~~~”; ASU 2016-12, “~~~~Narrow-Scope Improvements and Practical Expedients~~~~”; and ASU 2016-20, “~~~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~.” The amendments to ASU 2014-09 are intended to render more detailed implementation guidance with the expectation of reducing the degree of judgment necessary to comply with Topic 606. These new standards have the same effective date as ASU 2014-09 and will be effective for public entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). The Company has decided to adopt the pronouncement using a modified retrospective approach. The Company performed an analysis$500 million of its ~~current revenue streams worldwide and identified potential changes that will result from~~borrowings under its revolving credit facility as financial markets stabilized.

On June 5, 2020, the ~~adoption~~Company announced the restructuring of ~~the new guidance. The Company is currently identifying and preparing to implement changes to~~ its ~~accounting processes and controls to support the new revenue recognition and disclosure requirements. The Company currently believes that the adoption of Topic 606 will primarily affect its wholesale~~retail operations segment inincluding the ~~timing~~closing of ~~recognition of certain adjustments that are currently recorded in net sales. For example, the Company is currently recording markdowns~~all Wilsons Leather and ~~certain customer allowances when the liability is known or incurred. Under the new guidance,~~G.H. Bass stores. Additionally, the Company will ~~have to estimate a liability for future anticipated markdowns and allowances related to~~close all ~~shipments that have taken place. The Company also expects that reclassifications~~Calvin Klein Performance stores. In connection with the restructuring of certain operating expenses that are considered customer assistance, such as cooperative advertising, which aggregated approximately $26.0 million in fiscal 2017 and are currently recorded in selling, general and administrative expenses, will be recorded as an offset to net sales under the new guidance. The Company believes that the retail operations segment, ~~will not be materially impacted by~~ the ~~new guidance, as its retail stores do not currently offer significant loyalty programs~~Company expects to ~~customers. Under~~incur an aggregate charge of approximately $100 million related to landlord termination fees, severance costs, store liquidation and closing costs, write-offs related to right-of-use assets and legal and professional fees. The Company expects the ~~new standard, the transition adjustment as~~cash portion of ~~February 1, 2018 to retained earnings is estimated~~this charge to be ~~between~~ approximately ~~$23 million and $30~~$65 million. ~~This estimate may change as the Company continues the evaluation of the new guidance.~~

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~~Item 2.~~

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

Unless the context otherwise requires, ~~“G-III”, “us”,~~“G-III,” “us,” “we” and “our” refer to G-III Apparel Group, Ltd. and its subsidiaries. References to fiscal years refer to the year ended or ending on January 31 of that year. For example, our fiscal year ending January 31, ~~2018~~2021 is referred to as “fiscal ~~2018”.~~2021.” Vilebrequin, KLH, KLNA and ~~KLNA~~Fabco report results on a calendar year basis rather than on the January 31 fiscal year basis used by G-III. Accordingly, the results of Vilebrequin, KLH, KLNA and ~~KLNA~~Fabco are, and will be, included in our financial statements for the quarter ended or ending closest to G-III’s fiscal ~~quarter.~~quarter end. For example, ~~in this Form 10-Q~~with respect to our results for the ~~nine-month~~three-month period ended ~~October 31, 2017,~~April 30, 2020, the results of Vilebrequin, KLH, KLNA and ~~KLNA~~Fabco are included for the ~~nine-month~~three-month period ended ~~September 30, 2017.~~March 31, 2020. We account for our investment in each of KLH, KLNA and ~~KLNA~~Fabco using the equity method of accounting. The Company’s retail ~~stores report results on~~operations segment uses a 52/53-week fiscal year. The Company’s three-month period ended April 30, 2020 and 2019 were both a 13-week fiscal quarter for the retail operations segment. For fiscal 2021 and 2020, the retail operations segment three-month periods ended on May 2, 2020 and May 4, 2019 respectively.

~~The operating results of DKI have been included in our financial statements since December 1, 2016, the date of acquisition.~~

Various statements contained in this Form 10-Q, in future filings by us with the SEC, in our press releases and in oral statements made from time to time by us or on our behalf constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations and are indicated by words or phrases such as “anticipate,” “estimate,” “expect,” “will,” “project,” “we believe,” “is or remains optimistic,” “currently envisions,” “forecasts,” “goal” and similar words or phrases and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from the future results, performance or achievements expressed in or implied by such forward-looking statements. Forward-looking statements also include representations of our expectations or beliefs concerning future events that involve risks and uncertainties, including, but not limited ~~to:~~to, the following:

~~our dependence on licensed products;~~

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the outbreak of COVID-19 and its numerous adverse effects, including the closing of stores and shopping malls, the reduction of consumer purchases of the types of products we sell, the impact on our supply chain, restrictions on travel and group gatherings and the general material adverse effect on the economy in the U.S. and around the world, all of which negatively impact our business, sales and results of operations;

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our dependence on licensed products;

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our dependence on the strategies and reputation of our licensors;

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costs and uncertainties with respect to expansion of our product offerings;

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the performance of our products at retail and customer acceptance of new products;

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retail customer concentration;

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risks of doing business abroad;

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risks related to the proposal to implement a national security law in Hong Kong;

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price, availability and quality of materials used in our products;

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the need to protect our trademarks and other intellectual property;

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risks relating to our retail operations segment;

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our ability to achieve operating enhancements and cost reductions from the restructuring of our retail operations, as well as the impact on our business and financial statements resulting from any related costs and charges which may be dilutive to our earnings;

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the impact on our business and financial statements related to the early closure of stores or the termination of long-term leases;

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dependence on existing management;

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our ability to make strategic acquisitions and possible disruptions from acquisitions;

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need for additional financing;

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seasonal nature of our business;

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our reliance on foreign manufacturers;

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the need to successfully upgrade, maintain and secure our information systems;

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data security or privacy breaches;

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the impact of the current economic and credit environment on us, our customers, suppliers and vendors;

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the effects of competition in the markets in which we operate, including from e-commerce retailers;

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the redefinition of the retail store landscape in light of widespread retail store closings, the bankruptcy of a number of prominent retailers and the impact of online apparel purchases and innovations by e-commerce retailers;

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consolidation of our retail customers;

Table of ~~our licensors;~~Contents

~~costs and uncertainties with respect to expansion of our product offerings;~~

~~the performance of our products at retail and customer acceptance of new products;~~

~~retail customer concentration;~~

~~risks of doing business abroad;~~

~~price, availability and quality of materials used in our products;~~

~~the need to protect our trademarks and other intellectual property;~~

~~risks relating to our retail business;~~

~~dependence on existing management;~~

~~our ability to make strategic acquisitions and possible disruptions from acquisitions;~~

~~need for additional financing;~~

~~seasonal nature of our business;~~

~~our reliance on foreign manufacturers;~~

~~the need to successfully upgrade, maintain and secure our information systems;~~

~~data security or privacy breaches;~~

~~the impact of the current economic and credit environment on us, our customers, suppliers and vendors;~~

~~the effects of competition in the markets in which we operate, including from e-commerce retailers;~~

~~consolidation of our retail customers;~~

~~additional legislation and/or regulation in the United States or around the world;~~

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the impact on our business of the imposition of tariffs by the United States government and the escalation of trade tensions between countries;

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additional legislation and/or regulation in the United States or around the world;

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our ability to import products ~~in a timely and cost effective manner;~~

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~~our ability to continue to maintain our reputation;~~

~~fluctuations in the price of our common stock;~~

~~potential effect on the price of our common stock if actual results are worse than financial forecasts;~~

~~the effect of regulations applicable to us as a U.S. public company; and~~

~~matters relating to the acquisition of DKI, including:~~

~~our ability to combine our business with the DKNY/Donna Karan business successfully or~~ in a timely and ~~cost-efficient~~cost effective manner;

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our ability to continue to maintain our reputation;

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fluctuations in the ~~increase in~~price of our ~~indebtedness~~common stock;

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potential effect on the price of our common stock if actual results are worse than financial forecasts; and

	●	the effect of regulations applicable to us as a ~~result of the acquisition;~~
	-	~~the significant costs we incurred as a result of the acquisition;~~
	-	~~the significant increase in the amount of our goodwill and other intangibles; and~~
	-	~~the degree of business disruption relating to the acquisition.~~U.S. public company.

Any forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. A detailed discussion of significant risk factors that have the potential to cause our actual results to differ materially from our expectations is described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended January 31, ~~2017.~~2020 and in Part II-Other Information, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Recent Developments

Restructuring of Our Retail Operations Segment

On June 5, 2020, we announced a restructuring of our retail operations segment, including the closing of all Wilsons Leather and G.H. Bass stores. Additionally, we will close all Calvin Klein Performance stores. We have hired Hilco Global to assist in the liquidation of these stores, which will begin immediately or as stores reopen.

After completion of the restructuring, our retail operations segment will consist of 41 DKNY stores and 13 Karl Lagerfeld Paris stores, as well as the e-commerce sites for DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and G.H. Bass. Part of our restructuring plan includes making significant changes to our DKNY and Karl Lagerfeld store operations. In addition to the stores operated as part of our retail operations segment, as of April 30, 2020, Vilebrequin products were distributed through 104 company-operated stores, as well as through 63 franchised locations and e-commerce stores in Europe and the United States.

In connection with the restructuring of our retail operations, we expect to incur an aggregate charge of approximately $100 million related to landlord termination fees, severance costs, store liquidation and closing costs, write-offs related to right-of-use assets and legal and professional fees. A significant portion of these charges will be incurred during our second fiscal quarter ending July 31, 2020. We expect the cash portion of this charge to be approximately $65 million. We believe that this restructuring plan will enable us to greatly reduce our retail losses and to ultimately have this segment become profitable.

Impact of COVID-19 Pandemic

Outbreaks of COVID-19 were detected beginning in December 2019 and, in March 2020, the World Health Organization declared COVID-19 a pandemic. The President of the United States has declared a national emergency as a result of the COVID-19 pandemic. Federal, state and local governments and private entities mandated various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus. The response to the COVID-19 pandemic has negatively affected the global economy, disrupted global supply chains, and created significant disruption of the financial and retail markets, including a disruption in consumer demand for apparel and accessories.

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The COVID-19 pandemic has had multiple impacts on our business, including, but not limited to, the temporary closure of our customers’ stores and closures of our own stores in North America, a mandate to require our employees who work in our headquarters to work remotely and temporary disruption of our global supply chain. The COVID-19 pandemic has impacted our business operations and results of operations for the first quarter of fiscal 2021 resulting in lower sales, lower liquidity and higher leverage. COVID-19 could continue to have an adverse impact on our results of operations and liquidity, the operations of our suppliers, vendors and customers, and on our employees as a result of quarantines, facility closures, and travel and logistics restrictions. Even as businesses slowly begin to reopen as governmental restrictions are loosened with respect to stay at home orders and previously closed businesses, the ultimate economic impact of the COVID-19 pandemic is highly uncertain. We expect that our business operations and results of operations, including our net sales, earnings and cash flows, will be materially adversely impacted for at least the balance of fiscal 2021.

During this crisis we are focused on protecting the health and safety of our employees, our customers, and our communities. We have taken precautionary measures intended to help minimize the risk of COVID-19 to our employees, including temporarily requiring employees to work remotely and temporarily closing all of our retail stores. Requiring our employees to work remotely may disrupt our operations or increase the risk of a cybersecurity incident.

Most of our retail partners have closed their stores in North America, including our largest customer, Macy’s. Some of our customers, such as Costco and Sam’s Club, remain open for business. Our retail partners that have closed stores have asked to extend their payment terms with us. We continue to negotiate resolutions with our retail partners that are equitable and fiscally responsible for each of us. Certain of our retail partners have publicized actual or potential bankruptcy filings or other liquidity issues that could impact our anticipated income and cash flows, as well as require us to record additional accounts receivable reserves. In addition, we could be required to record increased excess and obsolete inventory reserves due to decreased sales or noncash impairment charges related to our intangible assets or goodwill due to reduced market values and cash flows.

There is significant uncertainty around the breadth and duration of store closures and other business disruptions related to the COVID-19 pandemic, as well as its impact on the U.S. and global economies and on consumer willingness to visit stores once they re-open. Recently, consumer businesses have begun to re-open in many areas of the United States under governmental social distancing and other restrictions that are expected to limit the scope of operations compared to pre-COVID-19 business operations for an unknown period of time. These restrictions are expected to adversely impact sales even as retail stores continue to reopen. The extent to which COVID-19 impacts our results will depend on continued developments in the public and private responses to the pandemic. The continued impact of COVID-19 remains highly uncertain and cannot be predicted. New information may emerge concerning the severity of the outbreak and the actions taken to contain COVID-19 or treat its impact may change or become more restrictive if a second wave of infections occurs as a result of the loosening of governmental restrictions.

In response to these challenges, we have taken measures to contain costs that include, but are not limited to, employee furloughs, temporary salary reductions, reduced advertising and other promotional spending and deferral of capital projects. We are also reviewing our inventory needs and working with suppliers to curtail, or cancel, production of product which we believe will not be able to be sold in season. We have also been working with our suppliers, landlords and licensors to renegotiate related agreements and extend payment terms in order to preserve capital.

Due to the impact of the COVID-19 pandemic on our operations, we performed a quantitative test of our goodwill as of April 30, 2020 using an income approach through a discounted cash flow analysis methodology. The discounted cash flow approach requires that certain assumptions and estimates be made regarding industry economic factors and future profitability. We also performed quantitative tests of each of our indefinite-lived intangible assets using a relief from royalty method, another form of the income approach. The relief from royalty method requires assumptions regarding industry economic factors and future profitability. While no impairment was identified as of April 30, 2020 as a result of these tests, $370.0 million of our indefinite-lived trademarks could be deemed to have a risk of future impairment as there is limited excess fair value over the carrying value of the assets at April 30, 2020. The continued impact of the COVID-19 pandemic could give rise to global and regional macroeconomic factors that could impact our assumptions relating to net sales growth rates, discount rates, tax rates or royalty rates and may result in future impairment charges for indefinite-lived intangible assets.

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We believe that we have sufficient cash and available capacity under our revolving credit facility to meet our liquidity needs. As of April 30, 2020, we had cash of approximately $616.2 million. Our cash balance included draw downs in March 2020 of $500 million under our revolving credit facility taken as a precautionary measure to provide us with additional financial flexibility to manage our business. In May and June 2020, we repaid an aggregate of $500 million of our borrowings under our revolving credit facility as the financial markets stabilized.

Overview

G-III designs, ~~manufactures~~sources and markets an extensive range of apparel, including outerwear, dresses, sportswear, swimwear, women’s suits and women’s performance wear, as well as women’s handbags, footwear, small leather goods, cold weather accessories and luggage. G-III has a substantial portfolio of more than 30 licensed and proprietary brands, anchored by five global power brands: DKNY, Donna Karan, Calvin Klein, Tommy Hilfiger and Karl Lagerfeld Paris. We ~~sell~~are not only licensees, but also brand owners, and we distribute our products ~~under our~~through multiple brick and mortar and online channels.

Our own proprietary brands ~~which~~ include DKNY, Donna Karan, Vilebrequin, G.H. Bass, Eliza J, Jessica Howard, ~~G.H. Bass, Weejuns,~~ Andrew Marc and Marc New ~~York, as well as under licensed brands and private retail labels.~~

York. We sell products under an extensive portfolio of well-known licensed brands, including Calvin Klein, Tommy Hilfiger, Karl Lagerfeld Paris, ~~Levi’s, Docker’s, Ivanka Trump,~~ Kenneth Cole, Cole Haan, Guess?, Vince Camuto, Levi’s and ~~Guess?. In~~Dockers. Through our team sports business, we have licenses with the National Football League, National Basketball Association, Major League Baseball, National Hockey League ~~Hands High, Touch by Alyssa Milano~~ and over ~~140~~150 U.S. colleges and universities. We also source and sell products to major retailers under their private retail labels.

We believe that the international sales and profit opportunity is quite significant for our DKNY and Donna Karan businesses. We are also expanding our DKNY business globally through our distribution partners in key regions. The key markets in which our DKNY merchandise is currently distributed include the Middle East, Russia, Indonesia, the Philippines, South East Asia and Korea, as well as in China where we operate through a joint venture. Continued growth, brand development and marketing in these key markets is critical to driving global brand recognition.

We operate in fashion markets that are intensely competitive. Our ability to continuously evaluate and respond to changing consumer demands and tastes, across multiple market segments, distribution channels and geographic areas is critical to our success. Although our portfolio of brands is aimed at diversifying our risks in this regard, misjudging shifts in consumer preferences could have a negative effect on our business. Our success in the future will depend on our ability to design products that are accepted in the marketplace, source the manufacture of our products on a competitive basis, and continue to diversify our product portfolio and the markets we serve.

Segments

We report based on two ~~reportable~~ segments: wholesale operations and retail operations.

~~The~~Our wholesale operations segment includes sales of products to retailers under ~~brands~~owned, licensed ~~by us from third parties,~~and private label brands, as well as sales ~~of products under our own brands and private label brands.~~related to the Vilebrequin business. Wholesale ~~sales and~~revenues also include royalty revenues from license agreements related to ~~the DKI business are included in the wholesale operations segment.~~our owned trademarks including DKNY, Donna Karan, Vilebrequin, G.H. Bass and Andrew Marc.

~~The~~Our retail operations segment ~~consists~~historically consisted primarily of direct sales to consumers through our company-operated stores. Prior to our restructuring of this segment, it was composed primarily of Wilsons Leather, G.H. Bass and DKNY ~~retail~~ stores, substantially all of which are operated as outlet stores, as well as a smaller number of Karl Lagerfeld Paris and Calvin Klein Performance stores. AsAfter completion of ~~October 31, 2017, we operated 169 Wilsons Leather stores, 145 G.H. Bass stores, 52~~the restructuring, our retail operations segment will initially consist of 41 DKNY ~~stores, 8~~and 13 Karl Lagerfeld Paris stores, ~~and 4 Calvin Klein Performance stores. We also operate online stores for Wilsons Leather, G.H. Bass and DKNY.~~

~~Recent Transactions~~

We have expanded our portfolio of proprietary and licensed brands through acquisitions and by entering into license agreements for new brands or for additional products under previously licensed brands. Acquisitions are part of our strategy to expand our product offerings and increase the portfolio of proprietary and licensed brands that we offer through different tiers of retail distribution.

In August 2017, we entered into a joint venture with Amlon Capital B.V., a private company incorporated in the Netherlands, to produce and market women’s and men’s apparel and accessories pursuant to a long-term license for DKNY and Donna Karan in the People’s Republic of China, including Macau, Hong Kong and Taiwan. We own 49% of the joint venture, with Amlon owning the remaining 51%. The joint venture will be funded with $25 million of equity that will be used to strengthen the DKNY and Donna Karan brands and accelerate the growth of the business in the region. Of this amount, we are required to contribute $10.0 million by August 2018. As of January 1, 2018, this joint venture will be the exclusive seller of women’s and men’s apparel, handbags, luggage and certain accessories under the DKNY and Donna Karan brands in the territory. We expect to start generating revenue from this joint venture in the beginning of fiscal 2019.

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In March 2017, we entered into an agreement with Macy’s under which Macy’s will serve, beginning February 2018, as the exclusive U.S. department store for sales of DKNY women’s apparel and accessories. Under the agreement, Macy’s will have the exclusive rights to sell DKNY women’s apparel, including women’s sportswear, dresses, suit separates, sport, denim, swimwear and outerwear, as well as ~~handbags and women’s shoes in all Macy’s locations and Macys.com. The agreement also plans~~the e-commerce sites for ~~increased and enhanced~~ DKNY, ~~shop-in-shops in many Macy’s stores. G-III and Macy’s are committed to making DKNY the premier fashion and lifestyle brand.~~

~~In December 2016, we acquired all of the outstanding capital stock of DKI from LVMH Moet Hennessy Louis Vuitton Inc. for a total purchase price of approximately $669.8 million. DKI owns~~ Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and ~~DKNY, two of the world’s most iconic and recognizable power brands. The acquisition of Donna Karan fits squarely into~~G.H. Bass. Our ongoing plan for our ~~strategy to diversify and expand our~~retail business ~~and to increase our ownership of brands. We intend to focus~~focuses on the ~~expansion~~operations and growth of ~~the~~our DKNY ~~brand, while also re-establishing DKNY Jeans, Donna Karan~~ and ~~other associated brands. We believe that we can also capitalize on significant, untapped global licensing potential in a number of men’s categories,~~Karl Lagerfeld Paris stores, as well as ~~in home and jewelry. We believe~~ our ~~strong track record of driving organic growth, identifying and integrating acquisitions and developing talent throughout~~e-commerce business. Our plan is based on the ~~organization makes the potential~~assumed continued strength of the DKNY and ~~Donna Karan~~Karl Lagerfeld brands, ~~especially appealing.~~improved store productivity, changes in planning and allocation and improvements in gross margin and payroll leverage.

In addition to the agreement with Macy’s with respect to DKNY referred to above, we re-launched Donna Karan as an aspirational luxury brand that will be priced above DKNY and targeted to fine department stores nationwide. We sell DKNY products through department stores, specialty retailers and online retailers worldwide, as well as through company-operated retail stores, e-commerce sites and distribution agreements. We also will maintain DKNY’s agreements with international license partners and distributors outside of the United States. Products outside the exclusive categories and products distributed by DKNY’s various licensees under other categories will continue to be sold to department stores, including Macy’s. Sales of DKNY and Donna Karan product in the first half of fiscal 2018 were primarily of product produced by the prior owner of DKI.

~~Licensed Products~~

~~The sale of licensed products is a key element of our strategy and we have continually expanded our offerings of licensed products for more than 20 years.~~

In September 2017, we renewed our license agreements with Levi’s and Dockers for an additional four-year term. We also recently extended our license agreements with the National Basketball Association and for Vince Camuto dresses. Both of these license agreements were extended to 2020.

In July 2016, we signed a three-year extension through March 2020 of our license agreement with the National Football League. This agreement includes men’s and women’s outerwear, Starter men’s and women’s outerwear, men’s and women’s lifestyle apparel, Hands High men’s and women’s lifestyle apparel and Touch by Alyssa Milano women’s lifestyle apparel.

In February 2016, we expanded our relationship with Tommy Hilfiger through a license agreement for Tommy Hilfiger womenswear in the United States and Canada. This license for women’s sportswear, dresses, suit separates, performance and denim is in addition to our existing Tommy Hilfiger licenses for men’s and women’s outerwear and luggage. This Tommy Hilfiger womenswear license agreement has an initial term of five years and a renewal term of four years. Macy’s will continue to be the principal retailer of Tommy Hilfiger in the United States and women’s sportswear will continue to be a Macy’s exclusive offering. We believe Tommy Hilfiger is a classic American lifestyle brand. We intend to leverage our market expertise to help build sales of Tommy Hilfiger women’s apparel. We increased the distribution of our Tommy Hilfiger product in the first half of fiscal 2018 and are expanding sales of this product in the second half of fiscal 2018.

We believe that consumers prefer to buy brands they know. We have continually sought licenses that would increase the portfolio of name brands we can offer through different tiers of retail distribution and for a wide array of products at a variety of price points. We believe that brand owners will look to consolidate the number of licensees they engage to develop product and they will seek licensees with a successful track record of expanding brands into new categories. It is our objective to continue to expand our product offerings and we are continually discussing new licensing opportunities with brand owners.

~~Licensing of Proprietary Brands~~

As we have increased our portfolio of proprietary brands, we have licensed these brands in categories outside our core competencies. We began licensing Andrew Marc, Vilebrequin and G.H. Bass in selected categories after acquiring these brands in 2008, 2012 and 2013, respectively. Our licensing program is expected to significantly increase as a result of owning the Donna Karan and DKNY brands.

The DKNY brand is currently licensed for a broad array of products including fragrance, watches, hosiery, intimates, eyewear, children’s clothing, home furnishings, sleepwear, men’s tailored clothing and men’s suits. We recently licensed DKNY and Donna Karan men’s and women’s apparel and accessories in China pursuant to a long-term license agreement with a joint venture of which we are a 49% owner. We also recently signed license agreements for the DKNY brand in North America for menswear, fashion jewelry and children’s apparel, and a license agreement for the DKNY brand and the Donna Karan brand in North America for women’s belts. We intend to focus on the expansion of licensing opportunities for the DKNY brand, while also re-establishing DKNY Jeans, Donna Karan and other associated brands. We believe that we can capitalize on significant, untapped global licensing potential in a number of categories.

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G.H. Bass is licensed for the wholesale distribution of men’s and women’s footwear, men’s sportswear, men’s and boy’s tailored clothing, men’s socks, men’s accessories and women’s hosiery.

~~Vilebrequin has entered into licenses for watches and sunglasses, which commenced shipping in April 2017.~~

~~The Andrew Marc brand is currently licensed for men’s tailored clothing and men’s footwear.~~

~~Retail Operations~~

We experienced substantial losses in our retail operations segment in fiscal 2017 and the first three quarters of fiscal 2018. We are focusing on turning around our retail business by terminating or renegotiating long-term leases as they come up for renewal, implementing cost-cutting initiatives, revising our merchandising strategy and repurposing certain Wilsons Leather and G.H. Bass stores for the Karl Lagerfeld Paris or DKNY brands. We intend to continue our program of door count reduction of Wilsons Leather and G.H. Bass stores and increase the efficiency and productivity of our retail operations. At the beginning of our current fiscal year, we operated 353 Wilsons Leather and G.H. Bass stores. At October 31, 2017, the store count for these two brands had decreased to 314 locations and we expect to further reduce the number of Wilsons Leather and G.H. Bass stores to approximately 285 locations by the end of this fiscal year.

Sales of apparel over the Internet continue to increase. Our e-commerce business consists of our own web platforms at www.dkny.com, www.donnakaran.com, www.wilsonsleather.com, www.ghbass.com, www.vilebrequin.com and www.andrewmarc.com. We are building an e-commerce team to help us expand our online opportunities going forward. We also sell our Karl Lagerfeld Paris products on its website, www.karllagerfeldparis.com. We sell our licensed products over the web through retail partners such as Macys.com and Nordstrom.com, each of which has a significant online business. We have also increased sales to pure play online retail partners such as Amazon and Fanatics. We continue to develop additional marketing initiatives over the Internet, our web sites and social media to increase our e-commerce presence.

Trends

Industry Trends

Significant trends that affect the apparel industry include retail chains closing unprofitable stores, an increased focus by retail chains and others on expanding ~~their~~ e-commerce sales and providing convenience-driven fulfillment options, the continued consolidation of retail chains and the desire on the part of retailers to consolidate vendors supplying them.

~~Retailers are seeking~~ In addition, consumer shopping preferences have continued to ~~expand the differentiation~~shift from physical stores to online shopping and retail traffic remains under pressure. All of ~~their offerings by devoting~~these factors have led to a more ~~resources~~promotional retail environment that includes aggressive markdowns in an attempt to ~~the development of exclusive products, whether by focusing on their own private label products or on products produced exclusively for a retailer~~offset declines caused by a ~~national brand manufacturer. Retailers~~reduction in physical store traffic. The effects of the COVID-19 pandemic have accelerated these trends.

We sell our products over the web through retail partners such as macys.com and nordstrom.com, each of which has a substantial online business. As e-commerce sales of apparel continue to increase, we are ~~placing more emphasis~~developing additional digital marketing initiatives on ~~building strong images for their private label~~our web sites and ~~exclusive merchandise. Exclusive brands~~through social media. We are ~~only made available~~investing in digital personnel, marketing, logistics, planning and distribution to ~~a specific retailer,~~help us expand our online opportunities going forward. Our e-commerce business consists of our own web platforms at www.dkny.com, www.donnakaran.com, www.wilsonsleather.com, www.ghbass.com, www.vilebrequin.com and ~~thus customers loyal~~www.andrewmarc.com. We also sell Karl Lagerfeld Paris products on our website, www.karllagerfeldparis.com. In addition, we sell to ~~their brands can only find them in the stores of that retailer.~~pure play online retail partners such as Amazon and Fanatics.

A number of retailers are experiencing financial difficulties, which in some cases ~~has~~have resulted in bankruptcies, liquidations and/or store ~~closings.~~closings, such as the announced store closing plans for Macy’s and Lord & Taylor, the announced bankruptcy filings of JCPenney, Neiman Marcus and other retailers and the potential bankruptcy of other retailers. The financial difficulties of a retail customer of ours could result in reduced business with that customer. We may also assume higher credit risk relating to receivables of a retail customer experiencing financial difficulty that could result in higher reserves for doubtful accounts or increased write-offs of accounts receivable. We attempt to mitigate credit risk from our customers by closely monitoring accounts receivable balances and shipping levels, as well as the ongoing financial performance and credit standing of customers.

~~Sales~~Retailers are seeking to differentiate their offerings by devoting more resources to the development of ~~apparel over~~exclusive products, whether by focusing on their own private label products or on products produced exclusively for a retailer by a national brand manufacturer. Exclusive brands are only made available to a specific retailer, and thus customers loyal to their brands can only find them in the ~~Internet continue to increase. We are addressing the increase in online shopping by developing additional marketing initiatives over the Internet, our web sites and social media.~~stores of that retailer.

We have attempted to respond to trends in our industry by continuing to focus on selling products with recognized brand equity, by attention to design, quality and value and by improving our sourcing capabilities. We have also responded with the strategic acquisitions made by us and new license agreements entered into by us that added to our portfolio of licensed and proprietary brands and helped diversify our business by adding new product lines and expanding distribution ~~channels and developing the retail component of our business.~~channels. We believe that our broad distribution capabilities help us to respond to the various shifts by consumers between distribution channels and that our operational capabilities will enable us to continue to be a vendor of choice for our retail partners.

~~Proposed Tax Legislation~~Tariffs

~~Each~~The apparel and accessories industry has been impacted by tariffs implemented by the United States government on goods imported from China. Tariffs on handbags and leather outerwear imported from China were effective beginning in September 2018, and were initially in the amount of 10% of the ~~House~~merchandise cost to us. The level of ~~Representatives and~~tariffs on these product categories was increased to 25% beginning May 10, 2019.

On August 1, 2019, the ~~Senate have passed legislation~~United States government announced new 10% tariffs that cover the remaining estimated $300 billion of inbound trade from China, including most of our apparel products. On August 23, 2019, the United States government announced that the new tariffs to go into effect would increase from 10% to 15%. The new 15% tariffs went into effect on September 1, 2019, although the additional tariffs on certain categories of products were delayed until December 15, 2019. The announcement followed an earlier proposal by the United States government that would revise the Internal Revenue Code. Matters addressed in each of the House and Senate versions of a tax bill include, among other things, changes to U.S. federal corporate and individual tax rates, imposing limitationshave imposed 25% tariffs on the ~~deductibility~~balance of ~~interest, allowing for~~inbound trade from China, but that were suspended pending trade negotiations with

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China. In January 2020, the ~~accelerated expensing of capital expenditures,~~U.S. and China signed their Phase One Deal that rolled back certain tariffs and postponed certain tariffs that had been scheduled to go into effect on December 15, 2020.

It is difficult to accurately estimate the migration from a “worldwide” system of taxation to a territorial system, a global minimum tax on corporate earnings and a one-time tax on overseas earnings. The details of any tax legislation that may ultimately be adopted are not clear. The impact ~~of any potential tax legislation~~ on our business from these tariff actions or similar actions or when additional tariffs may become effective. For fiscal 2019, approximately 61% of the products that we sold were manufactured in China. For fiscal 2020, approximately 50% of the products that we sold were manufactured in China.

Notwithstanding the Phase One Deal, the United States government continues to negotiate with China with respect to a trade deal, which could lead to the removal or postponement of additional tariffs. If the U.S. and China are not able to resolve their differences, additional tariffs may be put in place and additional products may become subject to tariffs. Tariffs on additional products imported by us from China would increase our costs, could require us to increase prices to our customers and would cause us to seek price concessions from our vendors. If we are unable to increase prices to offset an increase in tariffs, this would result in our realizing lower gross margins on the products sold by us and will negatively impact our operating results. We have engaged in a number of efforts to mitigate the effect on our results of ~~operation is uncertain.~~operations of increases in tariffs on products imported by us from China, including accelerating the receipt of inventory, diversifying our sourcing network by arranging to move production out of China, negotiating with our vendors in China to receive vendor support to lessen the impact of increased tariffs on our cost of goods sold, and discussing with our customers the implementation of price increases that we believe our products can absorb because of the strength of our portfolio of brands.

Results of Operations

Three months ended ~~October 31 2017~~April 30, 2020 compared to three months ended ~~October 31, 2016~~April 30, 2019

Net sales for the three months ended ~~October 31, 2017 increased~~April 30, 2020 decreased to ~~$1.02 billion~~$405.1 million from ~~$883.5~~$633.6 million in the same period last year. Net sales of our segments are reported before intercompany eliminations.

Net sales of our wholesale operations segment ~~increased~~decreased to ~~$966.8~~$378.9 million for the three months ended April 30, 2020 from ~~$794.4~~$570.6 million in the comparable period last year. ~~Net sales from our acquired DKNY and Donna Karan brands accounted for $87.0 million of the increase. The increase in net sales of our wholesale operations segment was also~~We experienced a result of a $42.0 million increase in net sales of Tommy Hilfiger licensed products, primarily from our denim and men’s and women’s outerwear licensed products, a $28.5 million increase in net sales of Calvin Klein licensed products, primarily from women’s sportswear and dresses, a $15.6 million increase in net sales of our Andrew Marc line of products and a $14.1 million increase in net sales of our Karl Lagerfeld Paris licensed products. These increases were offset, in part, by a $27.7 millionsignificant decrease in net sales across substantially all of ~~private label products.~~our brands due to the effects of restrictions on business and personal activities imposed by governments in connection with the COVID-19 pandemic. As a result, most of our retail partners closed their stores in North America beginning in mid-March, 2020, including our largest customer, Macy’s. These closures were still in effect as of April 30, 2020, the end of our first fiscal quarter. The governmental restrictions imposed in connection with the COVID-19 pandemic have resulted in significant increases in unemployment, a reduction in business activity and a reduction in consumer spending on apparel and accessories, all of which contributed to the reduction of our net sales which occurred during the second half of the three month period.

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Net sales of our retail operations segment ~~increased to $118.7~~were $33.9 million for the three months ended ~~October 31, 2017 from $107.2~~April 30, 2020 compared to $81.9 million in the same period last year. ~~The increase~~This decrease primarily reflected the closure of our retail stores in ~~net sales was the~~March 2020 and reduced demand as a result of ~~$17.6 million~~disruptions related to COVID-19. Same store sales decreased across all store brands due to the COVID-19 related store closures. Net sales of our retail operations segment were also negatively affected by the decrease in ~~net sales~~the number of stores operated by us from ~~our DKNY~~296 at April 30, 2019 to 257 at April 30, 2020. The number of retail stores ~~acquired in December 2016, offset, in part,~~operated by us and, as a ~~decrease in~~result, the net sales of ~~$6.9 million in~~ our ~~G.H. Bass stores. We operated 35 fewer stores~~retail operations segment will be reduced significantly as a result of ~~October 31, 2017 compared to October 31, 2016. Wilsons Leather same store sales increased by 2.4% compared to~~ the ~~same period in the prior year. G.H. Bass same store sales decreased by 2.6% compared to the same period in the prior year.~~restructuring of our retail operations segment.

Gross profit ~~increased to $390.9~~was $124.4 million, or ~~38.1%~~30.7% of net sales, for the three months ended ~~October 31, 2017, from $321.5~~April 30, 2020, compared to $236.1 million, or ~~36.4%~~37.3% of net sales, in the same period last year. The gross profit percentage in our wholesale operations segment was ~~34.1%~~29.6% in the three months ended ~~October 31, 2017~~April 30, 2020 compared to ~~34.4%~~34.8% in the same period last year. The gross profit percentage in our retail operations segment was ~~51.3%~~35.9% for the three months ended ~~October 31, 2017~~April 30, 2020 compared to 45.2% for the same period last year. ~~This increase in~~Gross profit for both our wholesale and retail segment were negatively impacted by the negative effects of the COVID-19 pandemic on our net sales caused by closures of our retail stores and the stores of most of our retail partners. In addition, our wholesale gross profit percentage ~~of our retail operations segment is due to an increase in gross profit of our G.H. Bass and Wilsons Leather retail store chains~~was negatively impacted as a result of recognizing certain fixed costs, primarily higher effective royalty rates, over a ~~reduction in promotional activities, as well as the addition~~reduced sales base.

Table of ~~our DKNY retail stores, which had a higher gross profit percentage than our other retail stores.~~Contents

Selling, general and administrative expenses ~~increased~~decreased to ~~$242.7~~$154.6 million in the three months ended ~~October 31, 2017~~April 30, 2020 from ~~$198.3~~$201.9 million in the same period last year. ~~Expenses related~~The decrease in expenses was primarily due to ~~our Donna Karan business represented $40.4~~a decrease of $36.1 million ~~of this increase. The remainder of the increase is primarily~~in personnel costs including salaries, bonus, share-based compensation and payroll taxes as a result of anemployee furloughs and salary reductions implemented by us in response to the COVID-19. In addition, there were decreases of $10.2 million in advertising, $3.2 million in rent and facility costs and $2.8 million in third-party warehouse expenses. These decreases were offset, in part, by a $9.7 million increase in ~~advertising costs ($5.8 million)~~bad debt expense primarily related to allowances recorded against the outstanding receivables of certain department store customers that ~~consists~~have publicly announced bankruptcy filings or potential bankruptcy filings. Selling, general and administrative expenses will be further reduced as a result of ~~higher advertising fees paid to our licensors in connection with~~ the ~~increase in net sales~~restructuring of our ~~licensed products and~~retail operations segment, but will increase ~~in cooperative advertising related~~as we bring back furloughed employees as we respond to the ~~increase in net sales~~re-opening of ~~our wholesale operations segment.~~the U.S. economy.

Depreciation and amortization ~~decreased to $6.9~~was $9.9 million infor the three months ended ~~October 31, 2017 from $8.0~~April 30, 2020 compared to $9.5 million in the same period last year. ~~These expenses decreased primarily~~The increase in expense is due to ~~lower depreciation and amortization~~capital expenditures during the last twelve months.

Other loss was $2.1 million in the ~~current quarter~~three months ended April 30, 2020 compared to $0.6 million for the ~~additional depreciation expense~~same period last year. This increase is primarily the result of recording $1.5 million of foreign currency losses during the three months ended April 30, 2020 compared to $0.1 million during the three months ended April 30, 2019. In addition, we recorded $0.6 million in losses from unconsolidated affiliates during the three months ended April 30, 2020 compared to $0.1 million of losses in the ~~first and second quarters of fiscal 2018 with respect to the fixed assets acquired in connection with the acquisition of DKI.~~same period last year.

Interest and financing charges, net, for the three months ended ~~October 31, 2017~~April 30, 2020 were ~~$13.9~~$10.4 million compared to ~~$1.7~~$10.3 million for the same period last year. ~~The increase~~Borrowings were greater in the three months ended April 30, 2020 due to our borrowing of $500 million under our revolving credit facility during March 2020 as a precautionary measure to maintain our financial liquidity during the COVID-19 pandemic. However, interest ~~and financing charges is a result of~~expense was only slightly higher for the ~~additional debt incurred in connection with~~three month period because interest rates were lower during the ~~acquisition of DKI,~~three months ended April 30, 2020 as ~~well as~~compared to the ~~amortization of capitalized debt issuance costs.~~same period last year.

Income tax ~~expense~~benefit was $16.4 million for the three months ended ~~October 31, 2017 was $46.3 million~~April 30, 2020 compared to ~~$41.4~~income tax expense of $2.6 million for the same period last ~~year.~~year primarily due to our net loss position resulting from the significant decrease in net sales due to the effects of the COVID-19 pandemic. Our effective tax rate ~~remained the same for both periods at 37.0% before the effect of an income tax benefit of $1.4 million~~increased to 29.5% in the ~~three months ended October 31, 2017 and $682,000~~current year’s quarter from 17.5% in last year’s comparable quarter primarily due to a U.S. federal net operating loss carryback to a tax year with a 35% federal tax rate compared to the ~~three months ended October 31, 2016~~current federal tax rate of 21% as well as a decrease in excess tax benefits in connection with the vesting of equity ~~awards as provided~~awards.

Historically, we calculated our provision for ~~in ASU 2016-09.~~

~~Nine months ended October 31, 2017 compared to nine months ended October 31, 2016~~

~~Net sales~~income taxes during interim reporting periods by applying the estimated annual effective tax rate for the ~~nine months ended October 31, 2017 increased~~full fiscal year to $2.09 billion from $1.78 billion in the same period last year. Net sales of our segments are reported before intercompany eliminations. Net sales of our wholesale operations segment increased to $1.89 billion from $1.54 billion in the comparable period last year. Net sales from our acquired DKNY and Donna Karan product lines accounted for $161.7 million of the increase. The increase in net sales of our wholesale operations segment was also a result of a $108.8 million increase in net sales of Tommy Hilfiger licensed products primarily from our denim, women’s sportswear and women’s outerwear product categories, which,pre-tax income or loss, excluding discrete items, for the most part, were launched in the second half of fiscal 2017, as well as an increase in net sales in Tommy Hilfiger men’s outerwear and women’s dresses. The increase in net sales is also a result of a $54.0 million increase in net sales of Calvin Klein licensed products, primarily from women’s performance wear and dresses, a $27.0 million increase in net sales of Karl Lagerfeld Paris licensed products, which commenced shipping during fiscal year 2017, and a $15.6 million increase in net sales of our Andrew Marc line of products. These increases were are offset, in part, by a $29.7 million decrease in net sales of private label products.

Net sales of our retail operations segment increased to $324.3 million for the nine months ended October 31 2017 from $302.2 million in the same period last year. The increase in net sales of our retail operations segment was the result of $47.4 million in net sales from our DKNY retail stores offset, in part, by a decrease in net sales of $17.7 million in our G.H. Bass stores and $8.5 million in our Wilsons Leather stores. We operated 35 fewer stores as of October 31, 2017 compared to October 31, 2016. In addition, G.H. Bass same store sales decreased by 5.4% comparedreporting period. Due to the ~~same period in the prior year and Wilsons Leather same store sales decreased by 4.4% compared to the same period in the prior year.~~

Gross profit increased to $795.6 million, or 38.0% of net sales, for the nine months ended October 31, 2017, from $642.8 million, or 36.0% of net sales, in the same period last year. The gross profit percentage in our wholesale operations segment was 33.7% in the nine months ended October 31, 2017 compared to 33.0% in the same period last year. The gross profit percentage in our retail operations segment was 49.0% for the nine months ended October 31, 2017 compared to 44.5% for the same period last year. This increase in gross profit percentage of our retail operations segment is due to an increase in gross profit of our G.H. Bass and Wilsons retail store chains as a result of a reduction in promotional activities, as well as the addition of our DKNY retail stores, which had a higher gross profit percentage than our other retail stores.

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Selling, general and administrative expenses increased to $636.0 million in the nine months ended October 31, 2017 from $504.5 million in the same period last year. Expenses related to our Donna Karan business represented $115.4 million of this increase. The remainder of the increase is primarily due to increased facility costs ($11.4 million) and advertising costs ($8.4 million). Facility costs increased because of increased shipping, storage and processing costs incurred at our third party warehouses. Advertising costs increased due to higher advertising fees paid to our licensors in connection with the increase in net sales of our licensed products, and an increase in cooperative advertisinguncertainty related to the increase in net sales of our wholesales operations segment. These increases were offset, in part, by a decrease in professional fees ($3.0 million) related to fees incurred in connection with the acquisition of DKI in the same period last year.

Depreciation and amortization increased to $27.5 million in the nine months ended October 31, 2017 from $22.9 million in the same period last year. These expenses increased primarily because of additional depreciation and amortization expense incurred as a resultimpact of the ~~acquisition of DKI.~~

Interest and financing charges, net, for the nine months ended October 31, 2017 were $33.5 million compared to $4.0 million for the same period last year. The increase in interest and financing charges isCOVID-19 pandemic on our operations, we have used a ~~result of the additional debt incurred in connection with the acquisition of DKI, as well as the amortization of capitalized debt issuance costs.~~

~~Income tax expense for the nine months ended October 31, 2017 was $35.5 million compared to $38.4 million for the same period last year. Our~~discrete effective tax rate ~~remained~~method to calculate taxes for the ~~same for both periods at 37.0% before the effect of an~~three-month period ended April 30, 2020. We will continue to evaluate income tax ~~benefit of $1.3 million~~estimates under the historical method in ~~the nine months ended October 31, 2017~~subsequent quarters and ~~$3.1 million in the nine months ended October 31, 2016 in connection with the vesting of equity awards as provided for in ASU 2016-09.~~employ a discrete effective tax rate method if warranted.

Liquidity and Capital Resources

Cash Requirements and Trends and Uncertainties Affecting Liquidity

We rely on our cash flows generated from operations and the borrowing capacity under our revolving credit facility to meet the cash requirements of our business. The primary cash requirements of our business are the seasonal buildup in inventories, compensation paid to employees, payments to vendors in the normal course of business, capital expenditures, maturities of debt and related interest payments and income tax payments. The rapid expansion of the COVID-19 pandemic resulted in a sharp decline in net sales and earnings in the first quarter of fiscal 2021, which has a corresponding impact on our liquidity. We are focused on preserving our liquidity and managing our cash flow during these unprecedented conditions. We have taken preemptive actions to enhance our ability to meet our short-term liquidity needs including, but not limited to, reducing payroll costs through employee furloughs and salary reductions, deferring certain lease payments, deferral of capital projects and drawing down on our revolving credit facility. In addition, we are closely monitoring our inventory needs and we are working with our suppliers to curtail, or cancel, production of product that we believe will not be able to be sold in season. We have also been working with our suppliers, landlords and licensors to renegotiate related agreements and extend payment terms in order to preserve capital.

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In March 2020, in response to the uncertainty surrounding the COVID-19 pandemic, we borrowed an aggregate of $500 million under our revolving credit facility as a precautionary measure to provide us with additional financial flexibility to manage our business during the unknown duration and impact of the COVID-19 pandemic. In May and June 2020, we repaid an aggregate of $500 million of our borrowings under the revolving credit facility. As of April 30, 2020, we were in compliance with all covenants under our term loan and revolving credit facility.

We cannot be sure that our assumptions used to estimate our liquidity requirements will remain accurate due to the unprecedented nature of the disruption to our operations and the unpredictability of the COVID-19 outbreak. As a result, the impact of COVID-19 on our future earnings and cash flows could continue to have a material impact on our results of operations and financial condition depending on the duration of the COVID-19 pandemic. We believe we have sufficient cash and available borrowings for our foreseeable liquidity needs.

Revolving Credit Facility

We are party to a five-year senior secured credit facility providing for borrowings in the aggregate principal amount of up to $650 million (the “revolving credit facility”).

Amounts available under the revolving credit facility are subject to borrowing base formulas and over advances as specified in the revolving credit facility. Borrowings bear interest, at our option, at LIBOR plus a margin of 1.25% to 1.75% or an alternate base rate (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A. from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus a margin of 0.25% to 0.75%, with the applicable margin determined based on Borrowers’ availability under the revolving credit facility . As of April 30, 2020, interest under the revolving credit facility was being paid at the weighted average rate of 2.13% per annum. The revolving credit facility is secured by specified assets of us and certain of our subsidiaries.

In addition to paying interest on any outstanding borrowings under the revolving credit facility, we are required to pay a commitment fee to the lenders under the revolving credit facility with respect to the unutilized commitments. The commitment fee shall accrue at a rate equal to 0.25% per annum on the average daily amount of the available commitment.

The revolving credit facility contains covenants that, among other things, restrict our ability, subject to specified exceptions, to incur additional debt; incur liens; sell or dispose of certain assets; merge with other companies; liquidate or dissolve G-III; acquire other companies; make loans, advances, or guarantees; and make certain investments. In certain circumstances, the revolving credit facility also requires us to maintain a fixed charge coverage ratio, as defined in the agreement, which may not be less than 1.00 to 1.00 for each period of twelve consecutive fiscal months. As of April 30, 2020, we were in compliance with these covenants.

As of April 30, 2020, we had $500 million of borrowings outstanding under the revolving credit facility that had been borrowed in March 2020 as a precautionary measure in response to the uncertainty of the circumstances surrounding the COVID-19 pandemic outbreak. In May and June 2020, we repaid an aggregate of $500 million of our borrowings under the revolving credit facility.

Term Loan

~~In connection with the acquisition of DKI,~~On December 1, 2016, we borrowed $350 million under a senior secured term loan facility (the “Term Loan”). Additionally, on December 1, 2016, we entered into a credit agreement with the lenders party thereto and Barclays Bank PLC, as administrative and collateral agent (the “Term Loan Credit Agreement”). The Term Loan Credit Agreement provided for term loans in the aggregate amount of $350.0 million (the “Term Loans”) that we used to fund a portion of the purchase price with respect to the acquisition of DKI. The Term Loans were subject to amortization payments of 0.625% of the original aggregate principal amount of the Term Loans per quarter, with the balance due at maturity. On December 1, 2016, we refinancedprepaid $50 million in principal amount of the Term ~~Loans,~~Loan, reducing the principal balance of the Term ~~Loans~~Loan to $300 million. ~~This prepayment relieved us of our obligation to make quarterly amortization payments for the remainder of the term.~~

The Term ~~Loans~~Loan will mature in December 2022.

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Interest on the outstanding principal amount of the Term ~~Loans~~Loan accrues at a rate equal to ~~LIBOR,~~the London Interbank Offered Rate (“LIBOR”), subject to a 1% floor, plus an applicable margin of 5.25% or an alternate base rate (defined as the greatest of (i) the “prime rate” as published by the Wall Street Journal from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 4.25%, per annum, payable in cash. As of ~~October 31, 2017,~~April 30, 2020, interest under the Term ~~Loans~~Loan was being paid at anthe average rate of ~~6.47%~~6.66% per annum.

The Term ~~Loans are~~Loan is secured (i) on a first-priority basis by a lien on, among other things, our real estate assets, equipment and fixtures, equity interests and intellectual property and certain related rights owned by us and by certain of our subsidiaries and (ii) by a second-priority security interest in ~~other of~~ our ~~assets~~ and certain of our subsidiaries other assets, which will secure on a first-priority basis our ~~asset-based loan facility described below under the caption “Amended and Restated Credit Agreement”.~~revolving credit facility.

The Term ~~Loans are~~Loan is required to be prepaid with the proceeds of certain asset sales if such proceeds are not applied as required by the ~~Term Loan Credit Agreement~~agreement within ~~certain~~ specified deadlines. The Term ~~Loans are~~Loan is also required to be prepaid in an amount equal to 75% of our Excess Cash Flow (as defined in the ~~Term Loan Credit Agreement)~~agreement) with respect to each fiscal year ending on or after January 31, 2018. The percentage of Excess Cash Flow that must be so applied is reduced to 50% if our senior secured leverage ratio is less than 3.00 to 1.00, to 25% if our senior secured leverage ratio is less than 2.75 to 1.00 and to 0% if our senior secured leverage ratio is less than 2.25 to 1.00.

The Term Loan ~~Credit Agreement~~ contains covenants that restrict our ability to, among other things, incur additional debt, sell or dispose certain assets, make certain investments, incur liens and enter into acquisitions. This Agreement also includes a mandatory prepayment provision from Excess Cash Flow as defined in the Agreement. A first lien leverage covenant requires us to maintain a level of debt to EBITDA at a ratio as defined over the term of the Term Loan Credit Agreement. As of October 31, 2017, we were in compliance with these covenants.

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~~Amended and Restated Credit Agreement~~

In connection with the acquisition of DKI, on December 1, 2016, we entered into an amended and restated credit agreement (the “ABL Credit Agreement”) with JPMorgan Chase Bank, N.A., as Administrative Agent. The ABL Credit Agreement is a five-year senior secured revolving credit facility providing for borrowings in the aggregate principal amount of up to $650 million. The ABL Credit Agreement replaced our prior credit agreement that provided for borrowings of up to $450 million and was due to expire in August 2017.

Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and over advances as specified in the ABL Credit Agreement. Borrowings bear interest, at the Borrowers’ option, at LIBOR plus a margin of 1.25% to 1.75% or an alternate base rate (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A. from time to time, (ii) the federal funds rate plus 0.5% and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus a margin of 0.25% to 0.75%, with the applicable margin determined based on the Borrowers’ availability under the ABL Credit Agreement. As of October 31, 2017, interest under the ABL Credit Agreement was being paid at the average rate of 2.42% per annum. The ABL Credit Agreement is secured by specified assets of us and certain of our subsidiaries.

In addition to paying interest on any outstanding borrowings under the ABL Credit Agreement, we are required to pay a commitment fee to the lenders under the ABL Credit Agreement with respect to the unutilized commitments. The commitment fee accrues at a rate equal to 0.25% per annum on the average daily amount of the available commitment.

~~The ABL Credit Agreement contains a number of~~ covenants that, among other things, restrict our ability, subject to ~~specified~~certain exceptions, to incur additional debt; incur liens; sell or dispose of certain assets; merge with other companies; liquidate or dissolve G-III; acquire other companies; make loans, advances, or guarantees; and make certain investments. ~~In certain circumstances,~~As described above, the ~~credit agreement~~Term Loan also includes a mandatory prepayment provision with respect to Excess Cash Flow. A first lien leverage covenant requires usthe Company to maintain a ~~minimum fixed charge coverage~~level of debt to EBITDA at a ratio as defined ~~that may not exceed 1.00 to 1.00 for each period of twelve consecutive fiscal months of holdings.~~in the term loan agreement. As of ~~October 31, 2017,~~April 30, 2020, we were in compliance with these covenants.

LVMH Note

~~On December 1, 2016,~~We issued to LVMH, as a portion of the consideration for the acquisition of DKI, ~~we issued to LVMH~~ a junior lien secured promissory note in favor of LVMH in the principal amount of ~~$125.0~~$125 million (the “LVMH Note”) that bears interest at the rate of 2% per year. ~~$75.0~~$75 million of the principal amount of the LVMH Note is due and payable on June 1, 2023 and ~~$50.0~~$50 million of such principal amount is due and payable on December 1, 2023.

Based on an independent valuation, it was determined that the LVMH Note should be treated as having been issued at a discount of $40 million in accordance with ASC 820 — Fair Value Measurements. This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note.

In connection with the issuance of the LVMH Note, LVMH entered into (i) a subordination agreement with Barclays Bank PLC, as administrative agent for the lender parties to the Term Loans and collateral agent for the senior secured parties thereunder and JPMorgan Chase Bank, N.A., as administrative agent for the lenders and other senior secured parties under the ABL Credit Agreement, providing that our obligations under the LVMH Note are subordinate and junior to our obligations under the ~~ABL Credit Agreement~~revolving credit facility and ~~the~~ Term ~~Loans,~~Loan and (ii) a pledge and security agreement with us and our subsidiary, G-III Leather, ~~Fashions, Inc.,~~ pursuant to which we and G-III Leather granted to LVMH a security interest in specified collateral to secure our payment and performance of our obligations under the LVMH Note that is subordinate and junior to the security interest granted by us with respect to our obligations under the ~~ABL Credit Agreement~~revolving credit facility and Term ~~Loans.~~Loan.

~~ASC 820 - Fair Value Measurements requires the note to be recorded at fair value. As~~Unsecured Loans

On April 15, 2019, T.R.B. International SA (“TRB”), a ~~result, we recorded a debt discount in the amount~~subsidiary of ~~$40.0~~Vilebrequin, borrowed €3.0 million ~~in connection with the issuance of the LVMH Note. This discount is being amortized as interest expense using the effective interest rate method over~~under an unsecured loan (the “2019 Unsecured Loan”). During the term of the ~~LVMH Note.~~2019 Unsecured Loan, TRB is required to make quarterly installment payments of €0.2 million. Interest on the outstanding principal amount of the 2019 Unsecured Loan accrues at a fixed rate equal to 1.50% per annum, payable quarterly. The 2019 Unsecured Loan originally matured on April 15, 2024. Due to the COVID-19 pandemic, the bank agreed to amend the 2019 Unsecured Loan to suspend the March and June 2020 quarterly installment payments and add these payments to the balance due at the end of the loan term. The 2019 Unsecured Loan now matures on September 15, 2024.

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On February 3, 2020, TRB borrowed €1.7 million under another unsecured loan (the “2020 Unsecured Loan”). During the term of the 2020 Unsecured Loan, TRB is required to make quarterly installment payments of €0.1 million. Interest on the outstanding principal amount of the 2020 Unsecured Loan accrues at a fixed rate equal to 1.50% per annum, payable quarterly. The 2020 Unsecured Loan originally matured on March 31, 2025. Due to the COVID-19 pandemic, the bank agreed to amend the 2020 Unsecured Loan to suspend the June 2020 quarterly installment payment and add this payment to the balance due at the end of the loan term. The 2020 Unsecured Loan now matures on June 30, 2025.

Outstanding Borrowings

Our primary operating cash requirements are to fund our seasonal buildup in inventories and accounts receivable, primarily during the second and third fiscal quarters each year. Due to the seasonality of our business, we generally reach our peak borrowings under our ~~asset-based~~revolving credit facility during our third fiscal quarter. The primary sources to meet our operating cash requirements have been borrowings under ~~our~~this credit facility and, in prior years, cash generated from ~~operations and the sale of our common stock.~~operations.

We incurred significant additional debt in connection with our acquisition of DKI. ~~At October 31, 2017, we~~We had ~~$349.6 million in~~ borrowings outstanding under our revolving credit facility of $500 million and $22.5 million at April 30, 2020 and 2019, respectively. We borrowed $500 million in March 2020 as a precautionary measure in connection with disruptions caused by the ~~ABL Credit Agreement~~COVID-19 pandemic and ~~$300.0~~repaid an aggregate of $500 million of those borrowings in May and June 2020. In addition, we had $300 million in borrowings outstanding under the Term ~~Loans.~~Loan at both April 30, 2020 and 2019. Our contingent liability under open letters of credit was approximately $15.8 million and $18.1 million at April 30, 2020 and 2019, respectively. In addition to the amounts outstanding under these two loan agreements, at ~~October 31, 2017,~~April 30, 2020 and 2019, we had ~~$125.0~~$125 million of face value principal amount outstanding under the LVMH Note. ~~At October 31, 2016,~~As of April 30, 2020, we also had ~~$91.3~~€4.1 million ($4.5 million) outstanding under ~~our prior revolving credit facility.~~the 2019 and 2020 Unsecured Loans.

~~Our contingent liability under open letters of credit at October 31, 2017 was approximately $7.9 million compared to $9.8 million at October 31, 2016.~~

~~On October 31, 2017, we~~We had cash and cash equivalents of ~~$68.2 million compared to $45.0~~$616.2 million on ~~October 31, 2016.~~April 30, 2020 and $48.3 million on April 30, 2019.

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Share Repurchase Program

Our Board of Directors has authorized a share repurchase program of 5,000,000 shares. The timing and actual number of shares repurchased, if any, will depend on a number of factors, including market conditions and prevailing stock prices, and are subject to compliance with certain covenants contained in our loan agreement. Share repurchases may take place on the open market, in privately negotiated transactions or by other means, and would be made in accordance with applicable securities laws. No shares were ~~purchased under the program~~repurchased during the ~~nine~~three months ended ~~October 31, 2017.~~April 30, 2020. We have 2,949,362 authorized shares remaining under this program. As of ~~October 31, 2017,~~June 4, 2020, we had ~~approximately 49.1 million~~48,052,834 shares of common stock outstanding.

Cash from Operating Activities

We used ~~$245.6~~$73.1 million of cash in operating activities during ~~the nine~~three months ended ~~October 31, 2017~~April 30, 2020, primarily asdue to our net loss of $39.3 million, and decreases of $136.8 million in accounts payable, accrued expenses and other liabilities, $75.5 million in customer refund liabilities and $13.1 million in operating lease liabilities. In addition, we had a ~~result~~non-cash charge of ~~an increase~~$16.4 million in deferred income taxes. These items were offset, in part, by decreases of ~~$336.8~~$109.0 million in accounts receivable, ~~and $108.3~~$51.5 million in inventories ~~offset,~~and $13.9 million in ~~part, by our net income~~prepaid expenses and other current assets and non-cash charges relating primarily to operating lease costs of ~~$62.7~~$17.4 million ~~an increase in accounts payable~~ and ~~accrued expenses of $32.1 million, an increase in income taxes payable of $29.6 million, non-cash~~ depreciation and amortization of ~~$27.5 million and non-cash equity-based compensation of $15.4~~$9.9 million.

The changes in ~~these~~ operating cash flow items are generally consistent with our ~~seasonal pattern~~seasonable pattern. The decrease in accounts payable, accrued expenses and other liabilities is primarily attributable to vendor payments related to inventory purchases and the payment of ~~building up~~year-end bonuses in our first quarter. Our accounts receivable, customer refund liabilities and inventory decreased because we experience lower sales levels in our first and second quarters than in our third and fourth quarters. The COVID-19 pandemic exacerbated these trends in the first quarter. Our reported net loss for the ~~fall shipping season resulting in the increases in accounts payable. The fall shipping season begins during the latter half of our second~~ quarter ~~resulting in~~also contributed to the increase in ~~accounts receivable during the third quarter. The increase in income taxes payable is a result~~use of ~~the change~~cash in our ~~pretax book income.~~operating activities.

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Cash from Investing Activities

We used ~~$21.5~~$8.3 million of cash in investing activities during three months ended April 30, 2020 for capital expenditures and initial direct costs of operating lease assets. Capital expenditures in the ~~nine months ended October 31, 2017. The cash used in investing activities consisted of capital~~period primarily related to infrastructure and information technology expenditures ~~related to~~and additional fixturing costs at department stores ~~as well as renovating, repurposing and relocating G.H. Bass and Wilsons Leather stores.~~

~~We currently expect capital expenditures for fiscal 2018~~prior to ~~be approximately $35 million. Capital expenditures in fiscal 2018 have been and will continue to be primarily used for~~ the addition of in-store fixtures at department stores, as well as the renovation and repurposing of some of our G.H. Bass and Wilsons Leather stores. We also anticipate investing approximately $10.0 million by August 2018 to fund our portiononset of the ~~equity for~~COVID-19 pandemic. Operating lease assets initial direct costs in the ~~joint venture with Amlon~~period primarily related to ~~produce~~payments of key money and ~~market DKNY and Donna Karan products in China.~~broker fees.

Cash from Financing Activities

~~Cash from~~Net cash provided by financing activities ~~of $253.9~~was $501.4 million ~~in the nine~~during three months ended ~~October 31, 2017 was~~April 30, 2020 primarily ~~provided by~~as a result of the net proceeds ~~from~~of $500 million in borrowings in March 2020 under our revolving credit ~~facility.~~facility that were drawn down a precautionary measure in response to the uncertainty of the circumstances surrounding the COVID-19 pandemic. In May and June 2020, we repaid an aggregate of $500 million of these borrowings.

~~Financing Needs~~

We believe that our cash on hand and cash generated from operations for the year as a whole, together with funds available under the ABL Credit Agreement, are sufficient to meet our expected operating and capital expenditure requirements. We may seek to acquire other businesses in order to expand our product offerings. We may need additional financing in order to complete one or more acquisitions. We cannot be certain that we will be able to obtain additional financing, if required, on acceptable terms or at all.

Critical Accounting Policies

Our discussion of results of operations and financial condition relies on our consolidated financial statements that are prepared based on certain critical accounting policies that require management to make judgments and estimates that are subject to varying degrees of uncertainty. We believe that investors need to be aware of these policies and how they impact our financial statements as a whole, as well as our related discussion and analysis presented herein. While we believe that these accounting policies are based on sound measurement criteria, actual future events can, and often do, result in outcomes that can be materially different from these estimates or forecasts.

The accounting policies and related estimates described in our Annual Report on Form 10-K for the year ended January 31, ~~2017~~2020 are those that depend most heavily on these judgments and estimates. As of ~~October 31 2017,~~April 30, 2020, there have been no material changes to our critical accounting ~~policies.~~policies, other than the adoption ASU 2016-13 as discussed in Note 2 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There are no material changes to the disclosure made with respect to these matters in our Annual Report on Form 10-K for the year ended January 31, ~~2017.~~2020.

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~~Item 4.~~

~~Controls and Procedures.~~

Item 4. Controls and Procedures.

As of the end of the period covered by this report, our management, including our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure, and thus, are effective in making known to them material information relating to G-III required to be included in this report.

Changes in Internal Control over Financial Reporting

During our last fiscal quarter, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings.~~

In October 2017, the Canada Border Service Agency (“CBSA”) issued a final audit report to G-III Apparel Canada ULC (“G-III Canada”), a wholly-owned subsidiary of the G-III. The report challenged the valuation used by G-III Canada for certain goods imported into Canada. The period covered by the examination is February 1, 2014 through the date of the final report, October 27, 2017. The CBSA has requested G-III Canada to reassess its customs entries for that period using the price paid or payable by the Canadian retail customers for certain imported goods rather than the price paid by G-III Canada to the vendor. The CBSA has also requested that G-III Canada change the valuation method used to pay duties with respect to future imported goods. G-III Canada is required to make a pre-payment to the CBSA of the additional duties as a result of the reassessment within 90 days of the date the final report was issued even though G-III Canada intends to appeal this reassessment. We have estimated the amount of additional duties that could be payable to the CBSA to be between $9 million to $15 million, plus interest. G-III Canada, based on the advice of counsel, believes it has positions that support its ability to receive a refund of this amount on appeal and intends to vigorously contest the findings of the CBSA.

~~Item 1A.~~

~~Risk Factors.~~

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 January 31, ~~2017,~~2020 (the “Annual Report”), which could materially affect our business, financial condition and/or future results. There have been no material changes ~~to these~~in our risk factors from those set forth in our Annual Report, except for the risk factors set forth below, which serve as ~~of October 31, 2017.~~an update to our risk factors contained in our Annual Report. The risks described in our Annual Report on Form 10-K and in this Quarterly Report on Form 10-Q are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or ~~operating~~future results.

The global health crisis caused by the COVID-19 pandemic has had, and the current and uncertain future outlook of the outbreak will likely continue to have, a significant adverse effect on our business, financial condition and results of operations.

Outbreaks of COVID-19 were detected beginning in December 2019 and, in March 2020, the World Health Organization declared COVID-19 a pandemic. The President of the United States has declared a national emergency as a result of the COVID-19 pandemic. Federal, state and local governments and private entities mandated various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus. The response to the COVID-19 pandemic has negatively affected the global economy, disrupted global supply chains and created significant disruption of the financial and retail markets, including a disruption in consumer demand for apparel and accessories.

The COVID-19 pandemic has had, and will likely continue to have, a significant adverse effect on our business, financial condition, and results of operations. The effects of COVID-19 could affect our ability to successfully operate in many ways, including, but not limited to, the following factors:

●

the impact of the pandemic on the economies and financial markets of the countries and regions in which we operate, including a potential global recession, a decline in consumer confidence and spending, or a further increase in unemployment levels, has resulted, and could continue to result, in consumers having less disposable income and, in turn, decreased sales of our products;

●

“shelter in place” and other similar mandated or suggested isolation protocols, which have disrupted, and could continue to disrupt, brick-and-mortar retailers, including stores operated by us, as a result of store closures or reduced operating hours and decreased retail traffic;

●

difficulty accessing debt and equity on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our ability to access capital necessary to operate our business;

●

a prolonged disruption of our business may impact our ability to satisfy the terms of our revolving credit facility and Term Loan ,including the covenants contained in those agreements, which could constitute an event of default under the terms of the revolving credit facility and Term Loan, which may result in an acceleration of payment under those agreements;

●

our success in attempting to reduce operating costs and conserve cash;

●

our inability to obtain rent and other relief from our landlords with respect to closed retail stores, which may involve litigation or other disruptions;

●

the failure of our wholesale customers to whom we extend credit to pay amounts owed to us on time, or at all, particularly if such customers are significantly impacted by COVID-19;

●

the risk that even after the pandemic has initially subsided, social distancing measures and general consumer behaviors due to the COVID-19 pandemic may continue to impact mall and store traffic and the fear of COVID-19 re-occurrence could cause customers to avoid public places, such as malls and outlets, where the retail stores of our wholesale customers and our stores are located;

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●

obstacles and delays in re-opening company-owned stores as we may have to hire and train a substantial number of new employees as a result of the temporary furlough of our retail employees in the United States and the risk that some of those employees may seek employment elsewhere during the furlough; and

●

we may be required to revise certain accounting estimates and judgments such as, but not limited to, those related to the valuation of goodwill, indefinite-lived intangible assets, long-lived assets and deferred tax assets, which could have a material adverse effect on our financial position and results of operations.

As stated, COVID-19 has had and is continuing to have a material adverse impact on our business, operating results and financial condition. The COVID-19 outbreak has impacted our worldwide sourcing operations in China and elsewhere. There is hardly anywhere in the world that is not being impacted by the effects of COVID-19. Travel within and between many countries has been restricted. The length of these travel restrictions is not certain at this time. Travel restrictions may impact our suppliers’ ability to obtain necessary materials and inhibit travel by our employees and our suppliers’ employees. As a result of any travel restrictions, potential factory closures, inability to obtain materials, disruptions in the supply chain and potential disruption of transportation of goods produced for us in China and other countries adversely impacted by the coronavirus outbreak, or threat or perceived threat of such outbreak, we may be unable to obtain adequate inventory from these regions, which could adversely affect our business, results of operations and financial condition. Potential financial impacts associated with the outbreak include, but are not limited to, lower net sales in markets affected by the outbreak, the delay of inventory production and fulfillment, potentially impacting net sales, and potential incremental costs associated with mitigating the effects of the outbreak. As our suppliers open their factories for production, we will need to balance the production orders given to these factories against the demand for our products in the United States.

Restrictions on travel and group gatherings, the closing of restaurants, sports leagues and all forms of communal entertainment and the fear of contracting COVID-19 has materially adversely affected store traffic and retail sales. Many retail store chains and shopping malls closed their store operations beginning in March 2020 and have only recently begun to reopen on a limited basis. The restrictions imposed as a result of the COVID-19 outbreak and the closing of retail stores in connection with the outbreak are causing a significant adverse effect on the economy in the United States and around the world. If the retail economy continues to weaken and/or consumers continue to reduce purchases in the near or long-term as a result of the negative effects of on the U.S. and worldwide economies caused by COVID-19, retailers may need to further reduce or limit store operations, close additional stores and be more cautious with orders. A slowing or changing economy as a result of the coronavirus outbreak and the governmental restrictions imposed in the United States and around the world as a result thereof would adversely affect the financial health of our retail, distributor and joint venture partners, which in turn could have an adverse effect on our business, results of operations and financial condition.

If economic conditions caused by the COVID-19 outbreak worsen and our earnings and operating cash flows do not begin to recover, this could impact our ability to maintain compliance with our debt covenants and could require us to seek modifications to our term loan and revolving credit facility. In the unlikely event we are not able to obtain such modifications on acceptable terms, this would lead to an event of default and, if not cured timely, our lenders could require us to repay our outstanding debt. In that situation, we may not be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay lenders.

The COVID-19 pandemic is ongoing, and its dynamic nature, including uncertainties relating to the geographic spread of the virus, the severity of the disease, the duration of the outbreak, and the restrictive actions that are being taken by governmental authorities in the United States and around the world to contain the outbreak or to treat its impact makes it difficult to forecast its effects on our fiscal 2021 results. Our results of operations for the first quarter of fiscal 2021 reflected some of the impacts of the COVID-19 pandemic and we expect that the results for our second quarter of fiscal 2021, and potentially for the balance of fiscal 2021, will likely reflect further impacts. It is difficult, if not impossible, at this time to predict the magnitude of the effect of the COVID-19 outbreak on our business and results of operations. However, we expect our results for fiscal 2021 to be materially adversely affected compared to fiscal 2020 as a result of the impact of COVID-19.

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There are risks associated with the restructuring of our retail operations segment.

In June 2020, we announced a restructuring of our retail operations segment, including the closing of all Wilsons Leather, and G.H. Bass stores. Additionally, we will close all Calvin Klein Performance stores. We have hired Hilco Global to assist in the liquidation of these stores, which will begin immediately or as stores reopen. After completion of the restructuring, our retail operations segment will initially consist of 41 DKNY stores and 13 Karl Lagerfeld Paris stores, as well as the e-commerce sites for DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and G.H. Bass. Part of our restructuring plan includes making significant changes to our DKNY and Karl Lagerfeld store operations.

In connection with this restructuring of our retail operations segment, we anticipate incurring an aggregate charge of approximately $100 million relating primarily to landlord termination fees, severance costs, store liquidation and closing costs, write-offs relating to right-of-use assets and professional fees. A significant portion of these charges will be incurred during our second fiscal quarter ending July 31, 2020. We expect the cash portion of this charge to be approximately $65 million. We may incur additional costs during fiscal 2021 until the restructuring is completed which may include, among other costs, additional severance, lease termination, inventory liquidation or non-cash asset impairment costs. Additional costs and impairment charges could materially exceed our estimates. In connection with the restructuring of our retail business, we negotiated the termination of leases for a majority of our retail stores in return for certain cash payments made to lessors. There can be no assurance that we would be able to negotiate termination of any other leases if we should desire to do so.

As indicated, part of our restructuring plan includes the liquidation of our retail inventory. The ability to liquidate our retail inventory is currently severely limited by COVID-19 restrictions on retail businesses. Even as these restrictions continue to be loosened, our ability to liquidate retail inventory will still be adversely affected by the reduction in the disposable income of consumers, the reduced desire and ability of consumers to spend on apparel and accessories and the general turbulent environment caused by the COVID-19 pandemic and its aftereffects. In addition, we will face significant competition in the marketplace as retailers are opening their stores and are expected to reduce prices significantly in order to sell their excess inventory resulting from store closures and other COVID-19 related restrictions that were put in place in mid-March and have only recently begun to be modified. All of these factors may result in the reduction in the net proceeds we receive from the liquidation of our inventory and in the increase in the time period we need to close our stores, both of which would have an adverse effect on our financial condition and results of operation.

We may not be able to complete the restructuring of our retail operations segment, including the closing of the substantial majority of the stores we currently operate,in the timeframe, on the terms or in the manner we expect. Any of the foregoing could also result in the cost of the restructuring exceeding our estimates. If the actual restructuring costs or impairment charges exceed our estimates, this could adversely impact our business, operating results, financial position and cash flows.

In addition, the announced restructuring involves numerous risks including, but not limited to:

●

the inability to bring back from furlough, hire or retain qualified personnel necessary for the orderly liquidation of inventory and closing of retail stores;

●

attrition beyond any planned reduction in workforce and/or a decrease in employee morale;

●

higher than anticipated write-offs of assets or lease termination, store closing and severance costs;

●

potential disruption of the operations of the rest of our businesses and diversion of management’s attention away from our other businesses and operations;

●

exposure to unknown, contingent or other liabilities, including litigation arising in connection with the restructuring;

●

a negative impact on our business relationships or reputation including, but not limited to, potential relationships with customers, suppliers, vendors, lessors, licensors, licensees and employees; and

●

unintended negative consequences from changes to our business.

If any of these or other factors impair our ability to successfully implement the restructuring, we may not be able to realize other business opportunities as we may be required to spend additional time and incur additional expenses relating to the restructuring that otherwise would be used on the development and expansion of our other businesses, which could adversely impact our business, operating results, financial position and cash flows.

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The recently approved proposal to implement a national security law in Hong Kong may result in disruptions to our business operations in Hong Kong and additional tariffs and trade restrictions.

On May 28, 2020, China’s legislature approved a proposal to implement a national security law that would change the way Hong Kong has been governed since the territory was handed over by England to China in 1997. This proposal would increase the power of the central government in Beijing over Hong Kong, limit the civil liberties of residents of Hong Kong and could restrict their ability to conduct business in the same way as in the past on a go forward basis. A legislative committee will draft the law, a process that is expected to take a couple of months. The U.S. State Department has announced the U.S. would no longer consider Hong Kong to have significant autonomy from China which could end some or all of the U.S. government’s special trade and economic relations with Hong Kong. This may result in disruption to our offices and employees located in Hong Kong, as well as the shipment of our products from Hong Kong to the United States. Further, the U.S. may impose the same tariffs and other trade restrictions on exports from Hong Kong that it places on goods from mainland China. The potential disruption to our business operations in Hong Kong and additional tariffs and trade restrictions could have an adverse impact on our results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to the Company’s common stock that the Company repurchased during the three months ended April 30, 2020. Included in this table are shares withheld during March and April 2020 in connection with the settlement of vested restricted stock units to satisfy tax withholding requirements.


Date Purchased	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share ⁽¹⁾		Total Number of Share Purchased as Part of Publicly Announced Program ⁽²⁾	Maximum Number of Shares that may yet be Purchased Under the Program ⁽²⁾
February 1 - February 29, 2020	—	$	—	—		2,949,362
March 1 - March 31, 2020	39,285		7.75	—		2,949,362
April 1 - April 30, 2020	165		9.75	—		2,949,362
	39,450	$	7.76	—		2,949,362


⁽¹⁾	Included in this table are 39,450 shares withheld during March and April 2020 in connection with the settlement of vested restricted stock units to satisfy tax withholding requirements. Our 2015 Long-Term Incentive Plan provides that shares withheld are valued at the closing price per share on the date withheld.
⁽²⁾	In December 2015, our Board of Directors reapproved and increased a previously authorized share repurchase program from the 3,750,000 shares remaining under that plan to 5,000,000 shares. This program has no expiration date. Repurchases under the program may be made from time to time over the period through open market purchases, accelerated share repurchase programs, privately negotiated transactions or other methods, as we deem appropriate.

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~~Item 6.~~

Item 6. Exhibits.

~~31.1~~
10.1	Form of Restricted Stock Unit Agreement for April 27, 2020 restricted stock unit grants.
31.1	Certification by Morris Goldfarb, Chief Executive Officer of G-III Apparel Group, Ltd., pursuant to Rule 13a - 14(a) or Rule 15d - 14(a) of the Securities Exchange Act of 1934, as amended, in connection with G-III Apparel Group, Ltd.’s Quarterly Report on Form 10-Q for the ~~third~~fiscal quarter ended ~~October 31, 2017.~~April 30, 2020.

31.2		Certification by Neal S. Nackman, Chief Financial Officer of G-III Apparel Group, Ltd., pursuant to Rule 13a - 14(a) or Rule 15d - 14(a) of the Securities Exchange Act of 1934, as amended, in connection with G-III Apparel Group, Ltd.’s Quarterly Report on Form 10-Q for the ~~third~~fiscal quarter ended ~~October 31, 2017.~~April 30, 2020.

32.1		Certification by Morris Goldfarb, Chief Executive Officer of G-III Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Quarterly Report on Form 10-Q for the ~~third~~fiscal quarter ended ~~October 31, 2017.~~April 30, 2020.

32.2		Certification by Neal S. Nackman, Chief Financial Officer of G-III Apparel Group, Ltd., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Quarterly Report on Form 10-Q for the ~~third~~fiscal quarter ended ~~October 31, 2017.~~April 30, 2020.

101.INS		~~XBRL~~ iXBRL Instance Document.
101.SCH		iXBRL Schema Document.
~~101.SCH~~ 101.CAL		~~XBRL Schema Document.~~

~~101.CAL~~		~~XBRL~~ iXBRL Calculation Linkbase Document.
101.DEF		iXBRL Extension Definition.
~~101.DEF~~ 101.LAB		~~XBRL Extension Definition.~~

~~101.LAB~~		~~XBRL~~ iXBRL Label Linkbase Document.
101.PRE
~~101.PRE~~		~~XBRL~~ iXBRL Presentation Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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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.

	G-III APPAREL GROUP, LTD. (Registrant)

Date: ~~December 8, 2017~~June 9, 2020	By:	/s/ Morris Goldfarb
		Morris Goldfarb
		Chief Executive Officer

Date: ~~December 8, 2017~~June 9, 2020	By:	/s/ Neal S. Nackman
		Neal S. Nackman
		Chief Financial Officer

~~Delaware~~		~~41-1590959~~
Delaware		41-1590959
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

512 Seventh Avenue, New York, New York		10018
(Address of ~~Principal Executive Offices)~~principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	GIII	The Nasdaq Stock Market


Large accelerated filer	x ☒	Accelerated filer	¨ ☐
Non-accelerated filer	¨ ☐	Smaller reporting company	¨ ☐
Emerging growth company	¨ ☐


	Three Months Ended April 30,
	2020		2019
	(Unaudited)
	(In thousands, except per share amounts)
Net sales	$	405,131	$	633,552
Cost of goods sold		280,730		397,488
Gross profit		124,401		236,064
Selling, general and administrative expenses		154,620		201,859
Depreciation and amortization		9,867		9,473
Loss (gain) on lease terminations		3,187		(829)
Operating profit (loss)		(43,273)		25,561
Other loss		(2,056)		(648)
Interest and financing charges, net		(10,379)		(10,320)
Income (loss) before income taxes		(55,708)		14,593
Income tax expense (benefit)		(16,413)		2,550
Net income (loss)	$	(39,295)	$	12,043

NET INCOME (LOSS) PER COMMON SHARE:
Basic:
Net income (loss) per common share	$	(0.82)	$	0.25
Weighted average number of shares outstanding		48,025		48,781

Diluted:
Net income (loss) per common share	$	(0.82)	$	0.24
Weighted average number of shares outstanding		48,025		49,774

Net income (loss)	$	(39,295)	$	12,043
Other comprehensive income:
Foreign currency translation adjustments		(4,026)		(3,227)
Other comprehensive loss		(4,026)		(3,227)
Comprehensive income (loss)	$	(43,321)	$	8,816

	Three Months Ended October 31,
	2017			2016
	(Unaudited)
	(In thousands, except per share amounts)

Net sales	$	1,024,993		$	883,476
Cost of goods sold		634,128			562,024
Gross profit		390,865			321,452
Selling, general and administrative expenses		242,740			198,274
Depreciation and amortization		6,906			8,033
Operating profit		141,219			115,145
Equity earnings (loss) in unconsolidated affiliates		612			(1,437	)
Interest and financing charges, net		(13,884	)		(1,701	)
Income before income taxes		127,947			112,007
Income tax expense		46,322			41,443
Net income	$	81,625		$	70,564

NET INCOME PER COMMON SHARE:
Basic:
Net income per common share	$	1.67		$	1.54
Weighted average number of shares outstanding		48,846			45,918

Diluted:
Net income per common share	$	1.65		$	1.50
Weighted average number of shares outstanding		49,528			46,902

Net income	$	81,625		$	70,564
Other comprehensive income:
Foreign currency translation adjustments		4,182			(59	)
Other comprehensive income (loss)		4,182			(59	)
Comprehensive income	$	85,807		$	70,505

	x
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	¨
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

			Page No.
Part I	FINANCIAL INFORMATION
~~Part I~~Item 1.	~~FINANCIAL INFORMATION~~Financial Statements
~~Item 1.~~	~~Financial Statements~~
	Condensed Consolidated Balance Sheets – ~~October 31, 2017, October 31, 2016~~April 30, 2020, April 30, 2019 and January 31, ~~2017~~2020		3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - For the Three Months Ended ~~October 31, 2017~~April 30, 2020 and ~~2016~~2019 (Unaudited)		4
	Condensed Consolidated Statements of ~~Operations~~Stockholders’ Equity – April 30, 2020 and ~~Comprehensive Income - For the Nine Months Ended October 31, 2017 and 2016~~April 30, 2019 (Unaudited)		5
	Condensed Consolidated Statements of Cash Flows - For the ~~Nine~~Three Months Ended ~~October 31, 2017~~April 30, 2020 and ~~2016~~2019 (Unaudited)		6
	Notes to Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21	29
Item 4.	Controls and Procedures	22	29
~~Part II~~	~~OTHER INFORMATION~~
~~Item 1~~Part II	~~Legal Proceedings~~OTHER INFORMATION	23
Item 1A.	Risk Factors	23	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		33
Item 6.	Exhibits	23	34

	October 31, 2017			October 31, 2016			January 31, 2017
	(Unaudited)			(Unaudited)
	(In thousands, except per share amounts)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	68,229		$	44,996		$	79,957
Accounts receivable, net of allowances for doubtful accounts and sales discounts		601,179			537,073			263,881
Inventories		592,822			490,555			483,269
Prepaid income taxes		—			—			8,885
Deferred income taxes, net		—			17,571			—
Prepaid expenses and other current assets		34,841			16,326			46,946
Total current assets		1,297,071			1,106,521			882,938
INVESTMENTS IN UNCONSOLIDATED AFFILIATES		60,642			61,456			61,171
PROPERTY AND EQUIPMENT, NET		98,522			101,579			102,571
OTHER ASSETS		33,883			25,244			36,181
OTHER INTANGIBLES, NET		47,076			9,910			48,558
DEFERRED INCOME TAX ASSETS, NET		16,169			—			15,849
TRADEMARKS, NET		441,490			68,637			435,414
GOODWILL		264,200			50,094			269,262
TOTAL ASSETS	$	2,259,053		$	1,423,441		$	1,851,944
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Notes payable	$	—		$	91,334		$	—
Accounts payable		216,860			181,653			217,902
Accrued expenses		128,891			103,844			95,275
Income tax payable		22,949			25,184			2,242
Total current liabilities		368,700			402,015			315,419
NOTES PAYABLE, net of note discount and unamortized issuance costs		726,608			—			461,756
DEFERRED INCOME TAXES, NET		16,325			21,575			14,300
OTHER NON-CURRENT LIABILITIES		40,488			29,949			39,233
TOTAL LIABILITIES		1,152,121			453,539			830,708
STOCKHOLDERS’ EQUITY
Preferred stock; 1,000 shares authorized; No shares issued and outstanding
Common stock - $0.01 par value; 120,000 shares authorized; 49,196, 46,407 and 49,016 shares issued, respectively		247			235			253
Additional paid-in capital		447,555			359,149			437,777
Accumulated other comprehensive loss		(15,499	)		(20,526	)		(27,722	)
Retained earnings		675,084			632,534			612,418
Common stock held in treasury, at cost – 115, 376 and 376 shares, respectively		(455	)		(1,490	)		(1,490	)
TOTAL STOCKHOLDERS’ EQUITY		1,106,932			969,902			1,021,236
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,259,053		$	1,423,441		$	1,851,944

	Nine Months Ended October 31,
	2017			2016
	(Unaudited)
	(In thousands, except per share amounts)

Net sales	$	2,092,040		$	1,783,145
Cost of goods sold		1,296,428			1,140,381
Gross profit		795,612			642,764
Selling, general and administrative expenses		636,000			504,547
Depreciation and amortization		27,480			22,898
Operating profit		132,132			115,319
Loss in unconsolidated affiliates		(540	)		(820	)
Interest and financing charges, net		(33,472	)		(3,999	)
Income before income taxes		98,120			110,500
Income tax expense		35,454			38,458
Net income	$	62,666		$	72,042

NET INCOME PER COMMON SHARE:
Basic:
Net income per common share	$	1.29		$	1.58
Weighted average number of shares outstanding		48,729			45,713

Diluted:
Net income per common share	$	1.27		$	1.53
Weighted average number of shares outstanding		49,410			46,947

Net income	$	62,666		$	72,042
Other comprehensive income:
Foreign currency translation adjustments		12,223			3,163
Other comprehensive income		12,223			3,163
Comprehensive income	$	74,889		$	75,205



					Accumulated				Common
			Additional		Other				Stock
	Common		Paid-In		Comprehensive		Retained		Held In
	Stock		Capital		Loss		Earnings		Treasury		Total
	(Unaudited)
	(In thousands)
Balance as of January 31, 2020	$	264	$	452,142	$	(18,008)	$	893,138	$	(36,864)	$	1,290,672
Equity awards exercised/vested, net		—		(1,185)		—		—		1,185		—
Share-based compensation expense		—		(811)		—		—		—		(811)
Taxes paid for net share settlements		—		(306)		—		—		—		(306)
Other comprehensive loss, net		—		—		(4,026)		—		—		(4,026)
Net loss		—		—		—		(39,295)		—		(39,295)
Balance as of April 30, 2020	$	264	$	449,840	$	(22,034)	$	853,843	$	(35,679)	$	1,246,234

Balance as of January 31, 2019	$	264	$	464,112	$	(15,194)	$	758,881	$	(19,054)	$	1,189,009
Equity awards exercised/vested, net		—		(5,818)		—		—		5,858		40
Share-based compensation expense		—		4,227		—		—		—		4,227
Taxes paid for net share settlements		—		(5,686)		—		—		—		(5,686)
Other comprehensive loss, net		—		—		(3,227)		—		—		(3,227)
Cumulative effect of adoption of ASC 842		—		—		—		(9,580)		—		(9,580)
Net income		—		—		—		12,043		—		12,043
Balance as of April 30, 2019	$	264	$	456,835	$	(18,421)	$	761,344	$	(13,196)	$	1,186,826

(In thousands)	Preliminary Purchase Price Allocation at October 31, 2017
Cash and cash equivalents	$	44,375
Accounts receivable		16,129	*
Inventories		13,716	*
Prepaid expenses & other current assets		22,235	*
Property, plant and equipment		15,414	*
Goodwill		212,803	*
Tradenames		370,000
Other intangibles		40,000
Other long-term assets		2,703
Total assets acquired		737,375
Accounts payable		(21,436	)
Accrued expense		(39,087	)*
Income taxes payable		(3,443	)
Other long-term liabilities		(3,631	)
Total liabilities assumed		(67,597	)
Total fair value of acquisition consideration (net of $40 million imputed debt discount)	$	669,778


		Carrying Value						Fair Value
		April 30,		April 30,		January 31,		April 30,		April 30,		January 31,
Financial Instrument	Level	2020		2019		2020		2020		2019		2020
		(In thousands)
Term loan	2	$	300,000	$	300,000	$	300,000	$	300,000	$	300,000	$	300,000
Revolving credit facility	2		500,000		22,509		—		500,000		22,509		—
Note issued to LVMH	3		103,438		97,938		102,009		109,910		90,065		95,126
Unsecured loans	2		4,504		—		2,860		4,504		—		2,860



Leases	Classification	April 30, 2020		April 30, 2019		January 31, 2020
		(In thousands)
Assets
Operating	Operating lease assets	$	251,565	$	320,169	$	270,032
Total lease assets		$	251,565	$	320,169	$	270,032

Liabilities
Current operating	Current operating lease liabilities	$	63,632	$	74,761	$	63,166
Noncurrent operating	Noncurrent operating lease liabilities		231,323		286,663		249,040
Total lease liabilities		$	294,955	$	361,424	$	312,206


Year Ending January 31,	Amount
	(In thousands)
2021	$	63,890
2022		76,088
2023		66,758
2024		52,732
2025		42,709
After 2025		58,068
Total lease payments	$	360,245
Less: Interest		65,290
Present value of lease liabilities	$	294,955

	Three Months Ended				Nine Months Ended
	October 31,				October 31,
	2017		2016		2017		2016
	(In thousands, except per share amounts)
Net income attributable to G-III	$	81,625	$	70,564	$	62,666	$	72,042
Basic net income per share:
Basic common shares		48,846		45,918		48,729		45,713

Basic net income per share	$	1.67	$	1.54	$	1.29	$	1.58

Diluted net income per share:
Basic common shares		48,846		45,918		48,729		45,713
Diluted restricted stock awards and stock options		682		984		681		1,234
Diluted common shares		49,528		46,902		49,410		46,947

Diluted net income per share	$	1.65	$	1.50	$	1.27	$	1.53

	October 31, 2017			October 31, 2016		January 31, 2017

Prior revolving credit facility	$	—		$	91,334	$	—
Term loan		300,000			—		300,000
New revolving credit facility		349,648			—		91,121
Note issued to LVMH		125,000			—		125,000
Subtotal		774,648			91,334		516,121
Less: Net debt issuance costs and debt discount⁽¹⁾		(48,040	)		—		(54,365	)
Total	$	726,608		$	91,334	$	461,756

	Nine Months Ended October 31, 2017
	Wholesale		Retail			Elimination⁽¹⁾			Total
Net sales	$	1,887,902	$	324,329		$	(120,191	)	$	2,092,040
Cost of goods sold		1,251,368		165,251			(120,191	)		1,296,428
Gross profit		636,534		159,078			—			795,612
Selling, general and administrative		433,324		202,676			—			636,000
Depreciation and amortization		20,403		7,077			—			27,480
Operating profit (loss)	$	182,807	$	(50,675	)	$	—		$	132,132

	Nine Months Ended October 31, 2016
	Wholesale		Retail			Elimination⁽¹⁾			Total
Net sales	$	1,538,096	$	302,188		$	(57,139	)	$	1,783,145
Cost of goods sold		1,029,829		167,691			(57,139	)		1,140,381
Gross profit		508,267		134,497			—			642,764
Selling, general and administrative		333,906		170,641			—			504,547
Depreciation and amortization		15,539		7,359			—			22,898
Operating profit (loss)	$	158,822	$	(43,503	)	$	—		$	115,319