What changed in this filing

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Item 1. Financial Statements

2021-11-03 compared with 2021-07-30 · 267 added, 155 removed, 604 unchanged (41% of the section changed)

3 unchanged sentences

(In millions, except share data)

September 25,

2021 March 27,

26 unchanged sentences

Total liabilities 4,893 5,324

Commitments and contingencies

Commitments and contingencies (Note 10)

Shareholders’ equity

1 unchanged sentence

650,000,000 shares authorized;

220,973,560 shares issued and 151,942,484 outstanding at June 26, 2021;

221,295,985 shares issued and 150,447,462 outstanding at September 25, 2021;

219,222,937 shares issued and 151,280,011 outstanding at March 27, 2021

Treasury shares, at cost ( 69,031,076 shares at June 26, 2021 and 67,942,926 shares at March 27, 2021)

Treasury shares, at cost ( 70,848,523 shares at September 25, 2021 and 67,942,926 shares at March 27, 2021)

( 3,486 ) ( 3,326 )

10 unchanged sentences

(In millions, except share and per share data)

Three Months Ended

2021 June 27,

Three Months Ended Six Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Total revenue $ 1,300 $ 1,110 $ 2,553 $ 1,561

Cost of goods sold 416 400 813 549

884 710 1,740 1,012

Selling, general and administrative expenses 599 474 1,144 876

Depreciation and amortization 49 54 99 108

Impairment of assets 33 20 33 20

Restructuring and other charges 8 9 11 17

2 unchanged sentences

Other income, net ( 2 ) — ( 2 ) ( 1 )

Interest expense, net 1 17

Interest (income) expense, net ( 5 ) 12 ( 4 ) 29

Foreign currency loss (gain) 4 — 5 ( 3 )

Income (loss) before provision for income taxes 256 ( 175 )

Provision for income taxes 37 5

Income (loss) before (benefit) provision for income taxes 198 141 454 ( 34 )

(Benefit) provision for income taxes ( 2 ) 20 35 25

Net income (loss) 200 121 419 ( 59 )

Net income attributable to noncontrolling interest — —

Net loss attributable to noncontrolling interest — ( 1 ) — ( 1 )

Net income (loss) attributable to Capri $ 200 $ 122 $ 419 $ ( 58 )

8 unchanged sentences

Foreign currency translation adjustments 23 56 113 53

Net loss on derivatives — ( 1 )

Net gain (loss) on derivatives 4 ( 2 ) 4 ( 3 )

Comprehensive income (loss) 227 175 536 ( 9 )

Net loss attributable to noncontrolling interest — ( 1 ) — ( 1 )

Foreign currency translation adjustments attributable to noncontrolling interest — — ( 1 ) —

5 unchanged sentences

Ordinary Shares Additional

Capital Treasury Shares Accumulated

Comprehensive

Income Retained

Capital Treasury Shares Accumulated Other Comprehensive Income Retained

Earnings Total Equity of Capri Non-controlling Interests Total Equity

Shares Amounts Shares Amounts

Balance at June 26, 2021 220,974 $ — $ 1,201 ( 69,031 ) $ ( 3,385 ) $ 147 $ 4,489 $ 2,452 $ ( 2 ) $ 2,450

Net income — — — — — — 200 200 — 200

Other comprehensive income — — — — — 27 — 27 — 27

Total comprehensive income — — — — — — — 227 — 227

Vesting of restricted awards, net of forfeitures

199 — — — — — — — — —

Exercise of employee share options

123 — 4 — — — — 4 — 4

Share based compensation expense — — 20 — — — — 20 — 20

Repurchase of ordinary shares — — — ( 1,818 ) ( 101 ) — — ( 101 ) — ( 101 )

Balance at September 25, 2021 221,296 $ — $ 1,225 ( 70,849 ) $ ( 3,486 ) $ 174 $ 4,689 $ 2,602 $ ( 2 ) $ 2,600

Ordinary Shares Additional

Capital Treasury Shares Accumulated Other Comprehensive Income Retained

Earnings Total Equity of Capri Non-controlling Interests Total Equity

Shares Amounts Shares Amounts

Balance at March 27, 2021 219,223 $ — $ 1,158 ( 67,943 ) $ ( 3,326 ) $ 56 $ 4,270 $ 2,158 $ ( 1 ) $ 2,157

7 unchanged sentences

Share based compensation expense — — 56 — — — — 56 — 56

Repurchase of common stock — — — ( 1,088 ) ( 59 ) — — ( 59 ) — ( 59 )

Repurchase of ordinary shares — — — ( 2,906 ) ( 160 ) — — ( 160 ) — ( 160 )

Balance at September 25, 2021 221,296 $ — $ 1,225 ( 70,849 ) $ ( 3,486 ) $ 174 $ 4,689 $ 2,602 $ ( 2 ) $ 2,600

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions, except share data which is in thousands)

Ordinary Shares Additional

Capital Treasury Shares Accumulated Other Comprehensive Income Retained

Earnings Total Equity of Capri Non-controlling Interests Total Equity

Shares Amounts Shares Amounts

Balance at June 27, 2020 218,273 $ — $ 1,109 ( 67,932 ) $ ( 3,326 ) $ 71 $ 4,152 $ 2,006 $ 1 $ 2,007

Net income (loss) — — — — — — 122 122 ( 1 ) 121

Other comprehensive income — — — — — 54 — 54 — 54

Total comprehensive income (loss) — — — — — — — 176 ( 1 ) 175

Vesting of restricted awards, net of forfeitures

43 — — — — — — — — —

Exercise of employee share options

247 — — — — — — — — —

Share based compensation expense — — 17 — — — — 17 — 17

Repurchase of ordinary shares — — — ( 10 ) — — — — — —

Balance at September 26, 2020 218,563 $ — $ 1,126 ( 67,942 ) $ ( 3,326 ) $ 125 $ 4,274 $ 2,199 $ — $ 2,199

Ordinary Shares Additional

Capital Treasury Shares Accumulated Other Comprehensive Income (Loss) Retained

Capital Treasury Shares Accumulated Other Comprehensive Income Retained

Earnings Total Equity of Capri Non-controlling Interests Total Equity

3 unchanged sentences

Net loss — — — — — — ( 58 ) ( 58 ) ( 1 ) ( 59 )

Other comprehensive loss — — — — — ( 4 ) — ( 4 ) — ( 4 )

Other comprehensive income — — — — — 50 — 50 — 50

Total comprehensive loss — — — — — — — ( 8 ) ( 1 ) ( 9 )

1 unchanged sentence

996 — — — — — — — — —

Exercise of employee share options

247 — — — — — — — — —

Share based compensation expense — — 41 — — — — 41 — 41

Repurchase of common stock — — — ( 38 ) ( 1 ) — — ( 1 ) — ( 1 )

Balance at June 27, 2020 218,273 $ — $ 1,109 ( 67,932 ) $ ( 3,326 ) $ 71 $ 4,152 $ 2,006 $ 1 $ 2,007

Repurchase of ordinary shares — — — ( 48 ) ( 1 ) — — ( 1 ) — ( 1 )

Balance at September 26, 2020 218,563 $ — $ 1,126 ( 67,942 ) $ ( 3,326 ) $ 125 $ 4,274 $ 2,199 $ — $ 2,199

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In millions)

Three Months Ended

2021 June 27,

Six Months Ended

September 25,

2021 September 26,

Cash flows from operating activities

4 unchanged sentences

Deferred income taxes ( 27 ) 15

Impairment of assets 33 22

Changes to lease related balances, net ( 67 ) ( 58 )

Tax (benefit) deficit on exercise of share options ( 3 ) 5

Tax (benefit) expense on exercise of share options ( 3 ) 5

Amortization of deferred financing costs 3 2

11 unchanged sentences

Capital expenditures ( 48 ) ( 59 )

Cash paid for asset acquisitions — ( 12 )

Net cash used in investing activities ( 48 ) ( 71 )

3 unchanged sentences

Debt issuance costs — ( 4 )

Repurchase of common stock ( 59 ) ( 1 )

Repurchase of ordinary shares ( 160 ) ( 1 )

Exercise of employee share options 11 —

15 unchanged sentences

Capri Holdings Limited ("Capri", and together with its subsidiaries, the "Company") was incorporated in the British Virgin Islands (“BVI”) on December 13, 2002.

The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women’s and men’s accessories, ready-to-wear and footwear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos.

The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women’s and men’s accessories, footwear and ready-to-wear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos.

The Company operates in three reportable segments:

4 unchanged sentences

All significant intercompany balances and transactions have been eliminated in consolidation.

The interim consolidated financial statements as of June 26, 2021 and for the three months ended June 26, 2021 and June 27, 2020 are unaudited.

The interim consolidated financial statements as of September 25, 2021 and for the three and six months ended September 25, 2021 and September 26, 2020 are unaudited.

The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods.

4 unchanged sentences

The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.

The Company utilizes a 52 to 53-week fiscal year and the term “Fiscal Year” or “Fiscal” refers to that 52-week or 53-week period.

The results for the three months ended June 26, 2021 and June 27, 2020 are based on 13-week periods.

The Company utilizes a 52- to 53-week fiscal year and the term “Fiscal Year” or “Fiscal” refers to that 52- or 53-week period.

The results for the three and six months ended September 25, 2021 and September 26, 2020 are based on 13-week and 26-week periods, respectively.

The Company’s Fiscal Year 2022 is a 53-week period ending April 2, 2022.

12 unchanged sentences

The Company has elected to follow the income approach under IAS 20 and recognize these funds as a reduction to the related expense in the Company’s consolidated statements of operations and comprehensive income (loss).

During the three months ended June 26, 2021 and June 27, 2020, the Company recognized $ 4 million and $ 14 million, respectively, related to government assistance and subsidies.

The Company recognized $ 3 million and $ 9 million for the three months ended September 25, 2021 and September 26, 2020, respectively, and $ 7 million

and $ 23 million for the six months ended September 25, 2021 and September 26, 2020, respectively, related to government assistance and subsidies.

Cash, Cash Equivalents and Restricted Cash

All highly liquid investments with original maturities of three months or less are considered to be cash equivalents.

Included in the Company’s cash and cash equivalents as of June 26, 2021 and March 27, 2021 are credit card receivables of $ 27 million and $ 25 million, respectively, which generally settle within two to three business days.

A reconciliation of cash, cash equivalents and restricted cash as of June 26, 2021 and March 27, 2021 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):

Included in the Company’s cash and cash equivalents as of September 25, 2021 and March 27, 2021 are credit card receivables of $ 24 million and $ 25 million, respectively, which generally settle within two to three business days.

A reconciliation of cash, cash equivalents and restricted cash as of September 25, 2021 and March 27, 2021 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):

September 25,

2021 March 27,

2 unchanged sentences

Restricted cash included within prepaid expenses and other current assets 3 2

Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows $ 358 $ 234

Total cash, cash equivalents and restricted cash shown in the consolidated statements of

Inventories, net

Inventories primarily consist of finished goods with the exception of raw materials and work in process inventory.

The combined total of raw materials and work in process inventory recorded on the Company’s consolidated balance sheets was $ 25 million and $ 28 million as of June 26, 2021 and March 27, 2021, respectively.

The net realizable value of the Company’s inventory as of June 26, 2021 and March 27, 2021 includes the adverse impacts associated with the COVID-19 pandemic.

This includes the impact from temporary retail store closures, wholesale customer store closures, reductions in retail store traffic, a decline in international tourism and a decrease in consumer consumption.

The combined total of raw materials and work in process inventory, net, recorded on the Company’s consolidated balance sheets was $ 30 million and $ 28 million as of September 25, 2021 and March 27, 2021, respectively.

The net realizable value of the Company’s inventory as of September 25, 2021 and March 27, 2021 includes the adverse impacts associated with the COVID-19 pandemic.

Derivative Financial Instruments

14 unchanged sentences

The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations.

In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure.

The aforementioned forward contracts generally have a term of no more than 12 months.

6 unchanged sentences

The net gain or loss on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets.

Interest accruals and coupon payments are recognized directly in interest expense in the Company’s consolidated statements of operations and comprehensive income (loss).

Interest accruals and coupon payments are recognized directly in interest (income) expense, net, in the Company’s consolidated statements of operations and comprehensive income (loss).

Upon discontinuation of a hedge, all previously recognized amounts remain in CTA until the net investment is sold, diluted or liquidated.

1 unchanged sentence

The Company also uses interest rate swap agreements to hedge the variability of its cash flows resulting from floating interest rates on the Company’s borrowings.

When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest expense in the same period during which the hedged transactions affect earnings.

When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest (income) expense, net, in the same period during which the hedged transactions affect earnings.

The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through September 2043.

The Company’s leases generally have terms of up to 10 years, generally require a fixed annual rent and may require the payment of additional rent if store sales exceed a negotiated amount.

Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through May 2025.

Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through August 2025.

The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its restructuring activities, as discussed in Note 8.

14 unchanged sentences

The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases.

Variable lease payments, such as percentage rentals based on location sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet.

Variable lease payments, such as percentage rentals based on sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictions or covenants.

The following table presents the Company’s supplemental cash flow information related to leases (in millions):

Three Months Ended Three Months Ended

June 26, 2021 June 27, 2020

Six Months Ended

September 25, 2021 September 26, 2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used in operating leases (1)

(1) Operating cash flows used in operating leases for the three months ended June 26, 2021 and June 27, 2020 excluded $ 4 million and $ 85 million, respectively, of rent payments that have been deferred due to the COVID-19 pandemic.

During the three months ended June 26, 2021 and June 27, 2020, the Company recorded sublease income of $ 2 million during both periods within restructuring and other charges for stores relating to our restructuring plan and selling, general and administrative expenses for all other locations.

During the three months ended June 26, 2021 and June 27, 2020, the Company recorded $ 7 million and $ 15 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract, and these concessions are recorded as a reduction to variable lease expense within selling, general and administrative expenses.

(1) Operating cash flows used in operating leases for the six months ended September 25, 2021 and September 26, 2020 excluded $ 5 million and $ 60 million, respectively, of rent payments that have been deferred due to the COVID-19 pandemic.

During the three and six months ended September 25, 2021, the Company recorded sublease income of $ 2 million and $ 4 million, respectively, and $ 1 million and $ 3 million, respectively, for the three and six months ended September 26, 2020, within restructuring and other charges for stores relating to our restructuring plan and selling, general and administrative expenses for all other locations.

During the three and six months ended September 25, 2021, the Company recorded $ 3 million and $ 10 million, respectively, and $ 9 million and $ 24 million for the three and six months ended September 26, 2020, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract, and these concessions are recorded as a reduction to variable lease expense within selling, general and administrative expenses.

Net Income (Loss) per Share

4 unchanged sentences

The components of the calculation of basic net income (loss) per ordinary share and diluted net income (loss) per ordinary share are as follows (in millions, except share and per share data):

Three Months Ended

2021 June 27,

Three Months Ended Six Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Net income (loss) attributable to Capri $ 200 $ 122 $ 419 $ ( 58 )

2 unchanged sentences

Share options and restricted shares/units, and performance restricted share units

2,359,489 1,184,967 2,958,616 —

Diluted weighted average shares 154,219,249 151,677,242 154,563,532 150,024,293

4 unchanged sentences

(1) Basic and diluted net income (loss) per share are calculated using unrounded numbers.

During the three months ended June 26, 2021, share equivalents of 610,684 shares have been excluded from the above calculations due to their anti-dilutive effect.

Share equivalents of 5,388,905 shares have been excluded from the above calculations for the three months ended June 27, 2020.

Diluted net loss per share attributable to Capri for the three months ended June 27, 2020 excluded all potentially dilutive securities because there was a net loss attributable to Capri for the period and, as such, the inclusion of these securities would have been anti-dilutive.

During the three and six months ended September 25, 2021, share equivalents of 415,331 shares and 513,088 shares, respectively, have been excluded from the above calculations due to their anti-dilutive effect.

Share equivalents of 3,961,838 shares and 4,675,372 shares have been excluded from the above calculations for the three and six months ended September 26, 2020, respectively.

Diluted net loss per share attributable to Capri for the six months ended September 26, 2020 excluded all

potentially dilutive securities because there was a net loss attributable to Capri for the period and, as such, the inclusion of these securities would have been anti-dilutive.

See Note 2 in the Company’s Annual Report on Form 10-K for the fiscal year ended March 27, 2021 for a complete disclosure of the Company’s significant accounting policies.

Recently Issued Accounting Pronouncements

The Company has considered all new accounting pronouncements and, other than the recent pronouncement discussed below, have concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information.

The Company has considered all new accounting pronouncements and, other than the recent pronouncement discussed below, has concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information.

Reference Rate Reform

3 unchanged sentences

The amendments were effective upon issuance and allow companies to adopt the amendments on a prospective basis through December 31, 2022.

The Company is currently evaluating the impact of these updates on its consolidated financial statements.

The Company has not applied the ASUs to any contract modifications or new hedging relationships in the current year.

Revenue Recognition

9 unchanged sentences

“Breakage” revenue is calculated under the proportional redemption methodology, which considers the historical patterns of redemption in jurisdictions where the Company is not required to remit the value of the unredeemed gift cards as unclaimed property.

The contract liability related to gift cards, net of estimated “breakage”, of $ 12 million and $ 12 million as of June 26, 2021 and March 27, 2021, respectively, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet.

The contract liability related to gift cards, net of estimated “breakage”, of $ 12 million and $ 12 million as of September 25, 2021 and March 27, 2021, respectively, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet.

Loyalty Program .

9 unchanged sentences

Generally, the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, certain guaranteed minimums for Versace are multi-year based.

As of June 26, 2021, contractually guaranteed minimum fees from the Company’s license agreements expected to be recognized as revenue during future periods were as follows (in millions):

As of September 25, 2021, contractually guaranteed minimum fees from the Company’s license agreements expected to be recognized as revenue during future periods were as follows (in millions):

Contractually Guaranteed Minimum Fees

6 unchanged sentences

Sales Returns

The refund liability recorded as of June 26, 2021 and March 27, 2021 was $ 48 million and $ 46 million, respectively, and the related asset for the right to recover returned product as of June 26, 2021 and March 27, 2021 was $ 14 million and $ 14 million, respectively.

The refund liability recorded as of September 25, 2021 and March 27, 2021 was $ 48 million and $ 46 million, respectively, and the related asset for the right to recover returned product as of September 25, 2021 and March 27, 2021 was $ 15 million and $ 14 million, respectively.

Contract Balances

Total contract liabilities were $ 19 million and $ 18 million as of June 26, 2021 and March 27, 2021, respectively.

For the three months ended June 26, 2021, the Company recognized $ 6 million in revenue which related to contract liabilities that existed at March 27, 2021.

For the three months ended June 27, 2020, the Company recognized $ 3 million, in revenue which related to contract liabilities that existed at March 28, 2020.

There were no material contract assets recorded as of June 26, 2021 and March 27, 2021.

Total contract liabilities were $ 17 million and $ 18 million as of September 25, 2021 and March 27, 2021, respectively.

For the three and six months ended September 25, 2021, the Company recognized $ 2 million and $ 8 million, respectively, in revenue which related to contract liabilities that existed at March 27, 2021.

For the three and six months ended September 26, 2020, the Company recognized $ 2 million and $ 5 million, respectively, in revenue which related to contract liabilities that existed at March 28, 2020.

There were no material contract assets recorded as of September 25, 2021 and March 27, 2021.

There were no changes in historical variable consideration estimates that were materially different from actual results.

1 unchanged sentence

The following table presents the Company’s segment revenue disaggregated by geographic location (in millions):

Three Months Ended

2021 June 27,

Three Months Ended Six Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Versace revenue - the Americas $ 107 $ 60 $ 194 $ 75

2 unchanged sentences

Total Versace

282 195 522 288

Jimmy Choo revenue - the Americas 38 33 76 39

6 unchanged sentences

Total Michael Kors

881 793 1,752 1,100

Total revenue - the Americas 701 587 1,416 764

5 unchanged sentences

Receivables, net, consist of (in millions):

September 25,

2021 March 27,

2 unchanged sentences

allowances ( 46 ) ( 59 )

(1) As of June 26, 2021 and March 27, 2021, $ 72 million and $ 81 million, respectively, of trade receivables were insured.

(1) As of September 25, 2021 and March 27, 2021, $ 67 million and $ 81 million, respectively, of trade receivables were insured.

Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and credit losses.

6 unchanged sentences

Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered.

Allowance for credit losses was $ 22 million and $ 25 million as of June 26, 2021 and March 27, 2021, respectively, including the impact related to COVID-19.

The Company had credit losses of $( 1 ) million and $( 6 ) million for the three months ended June 26, 2021 and June 27, 2020, respectively.

Allowance for credit losses was $ 16 million and $ 25 million as of September 25, 2021 and March 27, 2021, respectively, including the impact related to COVID-19.

The Company had immaterial credit losses for the three months ended September 25, 2021 and $( 1 ) million for the six months ended September 25, 2021.

The Company had credit losses of $ 4 million and $( 2 ) million for the three and six months ended September 26, 2020, respectively.

Property and Equipment, net

Property and equipment, net, consists of (in millions):

September 25,

2021 March 27,

7 unchanged sentences

Construction-in-progress 41 47

Depreciation and amortization of property and equipment for the three months ended June 26, 2021 and June 27, 2020 was $ 38 million and $ 43 million, respectively.

During the three months ended June 26, 2021 and June 27, 2020, the Company did no t record any property and equipment impairment charges.

Depreciation and amortization of property and equipment for the three months ended September 25, 2021 and September 26, 2020 was $ 37 million and $ 41 million, respectively, and was $ 75 million and $ 84 million for the six months ended September 25, 2021 and September 26, 2020, respectively.

During the three and six months ended September 25, 2021, the Company recorded $ 3 million of property and equipment impairment charges.

During the three and six months ended September 26, 2020, the Company recorded $ 2 million in property and equipment impairment charges.

Intangible Assets and Goodwill

The following table details the carrying values of the Company’s intangible assets and goodwill (in millions):

September 25,

2021 March 27,

3 unchanged sentences

Customer relationships (1)

Total definite-lived intangible assets 865 860

Gross definite-lived intangible assets 858 860

accumulated amortization ( 208 ) ( 184 )

5 unchanged sentences

$ 1,488 $ 1,498

(1) Includes accumulated impairment of $ 249 million as of June 26, 2021 and March 27, 2021.

(1) The change in the carrying value since March 27, 2021 reflects the impact of foreign currency translation.

(2) Includes accumulated impairment of $ 249 million as of September 25, 2021 and March 27, 2021.

The change in the carrying value since March 27, 2021 reflects the impact of foreign currency translation.

(3) Includes accumulated impairment of $ 265 million related to the Jimmy Choo reporting units as of June 26, 2021 and March 27, 2021.

(3) Includes accumulated impairment of $ 265 million related to the Jimmy Choo reporting units as of September 25, 2021 and March 27, 2021.

The change in the carrying value since March 27, 2021 reflects the impact of foreign currency translation.

Amortization expense for the Company’s definite-lived intangible assets for the three months ended June 26, 2021 and June 27, 2020 was $ 12 million and $ 11 million, respectively.

Amortization expense for the Company’s definite-lived intangible assets for the three months ended September 25, 2021 and September 26, 2020 was $ 12 million, and was $ 24 million and $ 23 million for the six months ended September 25, 2021 and September 26, 2020, respectively.

Current Assets and Current Liabilities

Prepaid expenses and other current assets consist of the following (in millions):

September 25,

2021 March 27,

Prepaid taxes $ 116 $ 133

Other accounts receivables 16 13

Prepaid contracts 11 11

Interest receivable related to net investment hedges 21 12

Prepaid contracts 17 11

Other accounts receivables 16 13

Accrued expenses and other current liabilities consist of the following (in millions):

September 25,

2021 March 27,

1 unchanged sentence

Return liabilities 48 46

Accrued advertising and marketing 18 11

Accrued rent (1)

1 unchanged sentence

Professional services 14 13

Gift cards and retail store credits 12 12

Accrued litigation 14 12

Accrued purchases and samples 13 8

Accrued advertising and marketing 7 11

Gift cards and retail store credits 13 12

Accrued interest 9 10

2 unchanged sentences

(1) The accrued rent balance relates to variable lease payments.

(2) Relates to a $ 20 million unconditional pledge to The Capri Holdings Foundation for the Advancement of Diversity in Fashion as of June 26, 2021 and March 27, 2021.

(2) Relates to a $ 20 million unconditional pledge to The Capri Holdings Foundation for the Advancement of Diversity in Fashion as of March 27, 2021 which was funded during the quarter ended September 25, 2021.

Restructuring and Other Charges

1 unchanged sentence

As previously announced, the Company intends to close approximately 170 of its retail stores over two fiscal years, which began during Fiscal 2021 and will continue into Fiscal 2022, in connection with its Capri Retail Store Optimization Program in order to improve the profitability of its retail store fleet.

In addition, the Company expects to incur approximately $ 75 million of one-time costs related to this program, including lease termination and other store closure costs, the majority of which are expected to result in future cash expenditures.

During the three months ended June 26, 2021, the Company closed 10 of its retail stores which have been incorporated into the Capri Retail Store Optimization Program.

Net restructuring charges (gains) recorded in connection with the Capri Retail Store Optimization Program during the three months ended June 26, 2021 and June 27, 2020 were $( 3 ) million and $ 3 million, respectively.

In addition, the Company has reassessed the total cost of the plan and now expects to incur approximately $ 25 million of one-time costs related to this program, including lease termination and other store closure costs, the majority of which are expected to result in future cash expenditures.

During the three and six months ended September 25, 2021, the Company closed 16 and 26 of its retail stores, respectively, which have been incorporated into the Capri Retail Store Optimization Program.

Net restructuring (gains) charges recorded in connection with the Capri Retail Store Optimization Program during the three and six months ended September 25, 2021 were $( 1 ) million and $( 4 ) million, respectively, and $ 2 million and $ 5 million, during the three and six months ended September 26, 2020, respectively.

The below table presents a roll forward of the Company's restructuring liability related to its Capri Retail Store Optimization Program (in millions):

3 unchanged sentences

Payments ( 1 ) ( 3 ) ( 4 )

Balance at June 26, 2021 $ — $ 2 $ 2

(1) Excludes a net credit of $ 3 million related to gains on certain lease terminations partially offset by store operating costs for previously closed stores during the three months ended June 26, 2021.

Balance at September 25, 2021 $ — $ 2 $ 2

(1) Excludes a net credit of $ 7 million related to gains on certain lease terminations partially offset by store operating costs for previously closed stores during the six months ended September 25, 2021.

Other Restructuring Charges

In addition to the restructuring charges related to the Capri Retail Store Optimization Program, the Company incurred charges of $ 1 million during the three months ended June 26, 2021, primarily relating to closures of corporate locations.

There were no charges for the three months ended June 27, 2020.

During the three months ended June 26, 2021 and June 27, 2020, the Company recorded costs of $ 5 million for both periods, primarily related to equity awards associated with the acquisition of Versace.

In addition to the restructuring charges related to the Capri Retail Store Optimization Program, the Company incurred charges of $ 2 million and $ 3 million during the three and six months ended September 25, 2021, respectively, primarily relating to closures of corporate locations.

There were no charges for the three and six months ended September 26, 2020.

During both the three and six months ended September 25, 2021 and September 26, 2020, the Company recorded costs of $ 7 million and $ 12 million, respectively, primarily related to equity awards associated with the acquisition of Versace.

Debt Obligations

The following table presents the Company’s debt obligations (in millions):

September 25,

2021 March 27,

18 unchanged sentences

Effective as of the Election Date, the Company will be required to comply with the quarterly maximum net leverage ratio test of 4.00 to 1.00.

As of June 26, 2021, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2018 Credit Facility.

As of June 26, 2021 and March 27, 2021, the Company had no borrowings outstanding under the 2018 Revolving Credit Facility.

In addition, stand-by letters of credit of $ 28 million and $ 27 million were outstanding as of June 26, 2021 and March 27, 2021, respectively.

At June 26, 2021 and March 27, 2021, the amount available for future borrowings under the 2018 Revolving Credit Facility were $ 972 million and $ 973 million, respectively.

As of June 26, 2021 and March 27, 2021, the carrying value of borrowings outstanding under the 2018 Term Loan Facility was $ 842 million and $ 865 million, respectively, of which $ 97 million for both June 26, 2021 and March 27, 2021 was recorded within short-term debt and $ 745 million and $ 768 million, respectively, and was recorded within long-term debt in its consolidated balance sheets.

On September 23, 2021, the Company agreed to suspend its rights to borrow in all non-U.S.

Pounds Sterling, Euro, Swiss Francs and Japanese Yen) currency LIBOR rate tenors under the 2018 Credit Facility after December 31, 2021 given that non-U.S.

Dollar LIBOR will no longer be published after that date.

As of September 25, 2021, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2018 Credit Facility.

As of September 25, 2021 and March 27, 2021, the Company had no borrowings outstanding under the 2018 Revolving Credit Facility.

In addition, stand-by letters of credit of $ 28 million and $ 27 million were outstanding as of September 25, 2021 and March 27, 2021, respectively.

At September 25, 2021 and March 27, 2021, the amount available for future borrowings under the 2018 Revolving Credit Facility were $ 972 million and $ 973 million, respectively.

As of September 25, 2021 and March 27, 2021, the carrying value of borrowings outstanding under the 2018 Term Loan Facility was $ 644 million and $ 865 million, respectively, of which there was no amount recorded within short-term debt as of September 25, 2021 and $ 97 million recorded within short-term debt as of March 27, 2021 and $ 644 million and $ 768 million, respectively, was recorded within long-term debt in its consolidated balance sheets.

During Fiscal 2021, the Company began offering a supplier financing program to certain suppliers as the Company continues to identify opportunities to improve liquidity.

2 unchanged sentences

The Company does not reimburse suppliers for any costs they incur to participate in the program and their participation is voluntary.

The amount outstanding under this program as of June 26, 2021 and March 27, 2021 was $ 21 million and $ 17 million, respectively, and was recorded within short-term debt in the Company’s consolidated balance sheets.

The amount outstanding under this program as of September 25, 2021 and March 27, 2021 was $ 31 million and $ 17 million, respectively, and was recorded within short-term debt in the Company’s consolidated balance sheets.

During the first quarter of Fiscal 2022, the Company's subsidiary, Versace, entered into an agreement with Banco BPM Banking Group ("the Bank") to sell certain tax receivables to the Bank in exchange for cash.

As of June 26, 2021, the outstanding balance was $ 20 million, with $ 9 million and $ 11 million respectively, recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets.

As of September 25, 2021, the outstanding balance was $ 19 million, with $ 9 million and $ 10 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively.

See Note 12 to the Company’s Fiscal 2021 Annual Report on Form 10-K for additional information regarding the Company’s credit facilities and debt obligations.

1 unchanged sentence

In the ordinary course of business, the Company is party to various legal proceedings and claims.

Although the outcome of such claims cannot be determined with certainty, the Company does not believe that the outcome of all pending legal proceedings in the aggregate will have a material adverse effect on its cash flow, results of operations or financial position.

Although the outcome of such claims cannot be determined with certainty, the Company believes that the outcome of all pending legal proceedings in the aggregate will not have a material adverse effect on its cash flow, results of operations or financial position.

Please refer to the Contractual Obligations and Commercial Commitments disclosure within the Liquidity and Capital Resources section of the Company’s Annual Report on Form 10-K for the fiscal year ended March 27, 2021 for a detailed disclosure of other commitments and contractual obligations as of March 27, 2021.

8 unchanged sentences

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

At June 26, 2021 and March 27, 2021, the fair values of the Company’s forward foreign currency exchange contracts, interest rate swaps and net investment hedges were determined using broker quotations, which were calculations derived from observable market information:

At September 25, 2021 and March 27, 2021, the fair values of the Company’s forward foreign currency exchange contracts, interest rate swaps and net investment hedges were determined using broker quotations, which were calculations derived from observable market information:

the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception.

4 unchanged sentences

All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions):

Fair value at June 26, 2021 using:

Fair value at September 25, 2021 using:

Fair value at March 27, 2021 using:

28 unchanged sentences

The following table summarizes the carrying values and estimated fair values of the Company’s short- and long-term debt, based on Level 2 measurements (in millions):

June 26, 2021 March 27, 2021

September 25, 2021 March 27, 2021

Value Estimated

10 unchanged sentences

The Company determines the fair values of these assets based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations.

The Company recorded no impairment charges during the three months ended June 26, 2021 and June 27, 2020.

The Company recorded $ 33 million of impairment charges during the three and six months ended September 25, 2021.

The Company recorded $ 22 million in impairment charges during the three and six months ended September 26, 2020.

The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and six months ended September 25, 2021 and three and six months ended September 26, 2020 (in millions):

Three and Six Months Ended

September 25, 2021 Three and Six Months Ended

September 26, 2020

Carrying Value Prior to Impairment Fair Value Impairment Charge Carrying Value Prior to Impairment Fair Value Impairment Charge (1)

Operating Lease Right-of-Use Assets

$ 83 $ 53 $ 30

$ 46 $ 26 $ 20

Property and Equipment 4 1 3 5 3 2

Total $ 87 $ 54 $ 33 $ 51 $ 29 $ 22

(1) Includes $ 2 million of impairment charges that were recorded within restructuring and other charges related to the Capri Retail Store Optimization Program for both the three and six months ended September 26, 2020.

Derivative Financial Instruments

5 unchanged sentences

Net Investment Hedges

During the three months ended June 26, 2021, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $ 2.875 billion to hedge its net investment in Euro denominated subsidiaries.

During the first quarter of Fiscal 2022, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $ 2.875 billion to hedge its net investment in Euro denominated subsidiaries.

Certain of these contracts are supported by a credit support annex ("CSA") which provides for collateral exchange with the earliest effective date being May 2023.

If the outstanding position of a contract exceeds a certain threshold governed by the aforementioned CSA's, either party is required to post cash collateral.

Due to an-other-than-insignificant financing element on certain of these modified contracts, the net interest cash inflows of $ 8 million related to these contracts are classified as financing activities in the Company’s consolidated statements of cash flows.

As of June 26, 2021, the Company had multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $ 4 billion to hedge its net investment in Euro denominated subsidiaries and $ 194 million to hedge its net investment in Japanese Yen denominated subsidiaries against future volatility in the exchange rates between the U.S.

Due to an-other-than-insignificant financing element on certain of these modified contracts, the net interest cash inflows of $ 8 million during the six months ended September 25, 2021 related to these contracts are classified as financing activities in the Company’s consolidated statements of cash flows.

As of September 25, 2021, the Company had multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $ 4 billion to hedge its net investment in Euro denominated subsidiaries and $ 194 million to hedge its net investment in Japanese Yen denominated subsidiaries against future volatility in the exchange rates between the U.S.

Dollar and these currencies.

Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on U.S.

denominated debt for fixed rate payments of 0 % to 4.457 % in Euros and 3.588 % in Japanese Yen.

denominated debt for fixed rate payments of 0 % to 4.457 % in Euros and 0 % to 3.588 % in Japanese Yen.

Certain of these contracts include mandatory early termination dates between February 2024 and February 2026, while the remaining contracts have maturity dates between March 2024 and August 2050.

1 unchanged sentence

When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest expense in the Company’s consolidated statements of operations and comprehensive income (loss).

Accordingly, the Company recorded a reduction in interest expense of $ 12 million during the three months ended June 26, 2021, and an immaterial amount during the three months ended June 27, 2020.

Accordingly, the Company recorded a reduction in interest expense of $ 15 million and $ 27 million during the three and six months ended September 25, 2021, respectively, and $ 2 million during both the three and six months ended September 26, 2020.

This increase from prior year is primarily due to the Company having higher average notional amounts outstanding on these hedges.

Interest Rate Swap

As of June 26, 2021, the Company had an interest rate swap with an initial notional amount of $ 500 million that will decrease to $ 350 million in April 2022.

As of September 25, 2021, the Company had an interest rate swap with an initial notional amount of $ 500 million that will decrease to $ 350 million in April 2022.

The swap was designated as a cash flow hedge designed to mitigate the impact of adverse interest rate fluctuations for a portion of the Company’s variable-rate debt equal to the notional amount of the swap.

1 unchanged sentence

During the three months ended June 26, 2021 and June 27, 2020, the Company recorded an immaterial amount of interest expense related to this agreement for both periods.

The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of June 26, 2021 and March 27, 2021 (in millions):

During the three and six months ended September 25, 2021 and September 26, 2020, the Company recorded an immaterial amount of net interest expense related to this agreement.

The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of September 25, 2021 and March 27, 2021 (in millions):

Notional Amounts Assets Liabilities

September 25,

2021 March 27,

2021 June 26,

2021 September 25,

2021 March 27,

2021 June 26,

2021 September 25,

2021 March 27,

12 unchanged sentences

The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, as shown in the previous table.

However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies, the resulting impact as of June 26, 2021 and March 27, 2021 would be as follows (in millions):

Forward Currency Exchange Contracts Net Investment

However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies, the resulting impact as of September 25, 2021 and March 27, 2021 would be as follows (in millions):

Forward Currency

Exchange Contracts Net Investment

Hedges Interest Rate

September 25,

2021 March 27,

2021 June 26,

2021 September 25,

2021 March 27,

2021 June 26,

2021 September 25,

2021 March 27,

9 unchanged sentences

Upon discontinuation of the hedge, such amounts remain in CTA until the related investment is sold or liquidated.

when the items underlying the hedged transactions are recognized into earnings, as a component of interest expense within the Company’s consolidated statements of operations and comprehensive income (loss).

Changes in the fair value of the Company’s interest rate swaps that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of interest expense within the Company’s consolidated statements of operations and comprehensive income (loss).

The following table summarizes the pre-tax impact of the gains and losses on the Company’s designated forward foreign currency exchange contracts, net investment hedges and interest rate swaps (in millions):

Three Months Ended

June 26, 2021 June 27, 2020

Pre-Tax Gains (Losses)

Three Months Ended Six Months Ended

September 25, 2021 September 26, 2020 September 25, 2021 September 26, 2020

Pre-Tax Gains

Recognized in OCI Pre-Tax Losses

Recognized in OCI Pre-Tax Gains

Recognized in OCI Pre-Tax Losses

Recognized in OCI

Designated forward foreign currency exchange contracts

$ 3 $ — $ 2 $ —

Designated net investment hedges $ 89 $ ( 42 ) $ 172 $ ( 42 )

Designated interest rate swaps $ — $ — $ — $ ( 1 )

The following tables summarize the pre-tax impact of the gains and losses within the consolidated statements of operations and comprehensive income (loss) related to the designated forward foreign currency exchange contracts for the three months ended June 26, 2021 and June 27, 2020 (in millions):

The following tables summarize the pre-tax impact of the gains and losses within the consolidated statements of operations and comprehensive income (loss) related to the designated forward foreign currency exchange contracts for the three and six months ended September 25, 2021 and September 26, 2020 (in millions):

Three Months Ended

1 unchanged sentence

Accumulated OCI Location of Gain Recognized

June 26, 2021 June 27, 2020

September 25, 2021 September 26, 2020

Designated forward foreign currency exchange contracts

$ 1 $ ( 2 ) Cost of goods sold

Six Months Ended

Pre-Tax Loss (Gain) Reclassified from

Accumulated OCI Location of Gain recognized

September 25, 2021 September 26, 2020

Designated forward foreign currency exchange contracts

$ 2 $ ( 3 ) Cost of goods sold

The Company expects that substantially all of the amounts currently recorded in accumulated other comprehensive income for its forward foreign currency exchange contracts will be reclassified into earnings during the next 12 months, based upon the timing of inventory purchases and turnover.

Undesignated Hedges

During the three months ended June 26, 2021 and June 27, 2020, the net impact of changes in the fair value of undesignated forward foreign currency exchange contracts recognized within foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive income (loss) was immaterial.

During the three and six months ended September 25, 2021 and September 26, 2020, the net impact of changes in the fair value of undesignated forward foreign currency exchange contracts recognized within foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive income (loss) was immaterial.

Shareholders’ Equity

1 unchanged sentence

During the first quarter of Fiscal 2022, the Company reinstated its $ 500 million share repurchase program, which was previously suspended during the first quarter of Fiscal 2021 in response to the impact of the COVID-19 pandemic and the provisions of the Second Amendment of the 2018 Credit Facility.

During the three months ended June 26, 2021, the Company purchased 921,080 shares for a total cost of approximately $ 50 million including commission, through open market transactions under the current plan.

As of June 26, 2021, the remaining availability under the Company’s share repurchase program was $ 350 million.

During the three months ended June 27, 2020, the Company did no t purchase any shares through open market transactions under the current plan, as the Company's share-repurchase plan was suspended at that time.

During the six months ended September 25, 2021, the Company purchased 2,712,275 shares for a total cost of approximately $ 150 million including commissions, through open market transactions under the current plan.

As of September 25, 2021, the remaining availability under the Company’s share repurchase program was $ 250 million.

During the six months ended September 26, 2020, the Company did no t purchase any shares through open market transactions under the current plan, as the Company's share repurchase plan was suspended at that time.

Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading transactions under the Company’s insider trading policy and other relevant factors.

1 unchanged sentence

The Company also has in place a “withhold to cover” repurchase program, which allows the Company to withhold ordinary shares from certain executive officers and directors to satisfy minimum tax withholding obligations relating to the vesting of their restricted share awards.

During the three month periods ended June 26, 2021 and June 27, 2020, the Company

withheld 167,070 shares and 38,119 shares, respectively, with a fair value of $ 9 million and $ 1 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards.

Accumulated Other Comprehensive Income (Loss)

The following table details changes in the components of accumulated other comprehensive income (loss) (“AOCI”), net of taxes, for the three months ended June 26, 2021 and June 27, 2020, respectively (in millions):

Gains (Losses) (1)

During the six month periods ended September 25, 2021 and September 26, 2020, the Company withheld 193,322 shares and 47,635 shares, respectively, with a fair value of $ 10 million and $ 1 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards.

Accumulated Other Comprehensive Income

The following table details changes in the components of accumulated other comprehensive income (“AOCI”), net of taxes, for the six months ended September 25, 2021 and September 26, 2020, respectively (in millions):

Foreign Currency Adjustments (1)

Net (Losses) Gains on Derivatives (2)

Other Comprehensive Income (Loss) Attributable to Capri

Other Comprehensive Income Attributable to Capri

Balance at March 27, 2021 $ 57 $ ( 1 ) $ 56

Other comprehensive income (loss) before reclassifications 91 ( 1 ) 90

Other comprehensive income before reclassifications 114 2 116

amounts reclassified from AOCI to earnings

1 unchanged sentence

Other comprehensive income, net of tax 114 4 118

Balance at June 26, 2021 $ 148 $ ( 1 ) $ 147

Balance at September 25, 2021 $ 171 $ 3 $ 174

Balance at March 28, 2020 $ 72 $ 3 $ 75

Other comprehensive loss before reclassifications ( 3 ) — ( 3 )

Other comprehensive income before reclassifications 53 — 53

amounts reclassified from AOCI to earnings

Other comprehensive loss, net of tax ( 3 ) ( 1 ) ( 4 )

Balance at June 27, 2020 $ 69 $ 2 $ 71

(1) Foreign currency translation gains and losses for the three months ended June 26, 2021 primarily include a net loss of $ 1 million on intra-entity transactions that are of a long-term investment nature, and a $ 64 million gain, net of taxes of $ 19 million, relating to the Company's net investment hedges, in addition to a net $ 27 million translation gain.

Foreign currency translation gains and losses for the three months ended June 27, 2020 primarily include net gains of $ 1 million on intra-entity transactions that are of a long-term investment nature.

Other comprehensive income (loss), net of tax 53 ( 3 ) 50

Balance at September 26, 2020 $ 125 $ — $ 125

(1) Foreign currency translation adjustments for the six months ended September 25, 2021 primarily include a $ 132 million gain, net of taxes of $ 40 million, relating to the Company's net investment hedges, and a net $ 23 million translation loss.

Foreign currency translation adjustments for the six months ended September 26, 2020 primarily include a net $ 88 million translation gain partially offset by a $ 35 million loss, net of taxes of $ 7 million, relating to the Company's net investment hedges.

(2) Reclassified amounts primarily relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations and comprehensive income (loss).

4 unchanged sentences

The 2008 Plan only provided for grants of share options and was authorized to issue up to 23,980,823 ordinary shares.

As of June 26, 2021, there were no shares available to grant equity awards under the 2008 Plan.

As of September 25, 2021, there were no shares available to grant equity awards under the 2008 Plan.

The Incentive Plan allows for grants of share options, restricted shares and RSUs, and other equity awards, and authorizes a total issuance of up to 18,846,000 ordinary shares after amendments in June 2020.

At June 26, 2021, there were 4,064,983 ordinary shares available for future grants of equity awards under the Incentive Plan.

At September 25, 2021, there were 3,932,474 ordinary shares available for future grants of equity awards under the Incentive Plan.

Option grants issued from the 2008 Plan generally expire ten years from the date of the grant, and those issued under the Incentive Plan generally expire seven years from the date of the grant.

The following table summarizes the Company’s share-based compensation activity during the three months ended June 26, 2021:

The following table summarizes the Company’s share-based compensation activity during the six months ended September 25, 2021:

Options Service-Based RSUs Performance-Based RSUs

5 unchanged sentences

Canceled/Forfeited ( 360,750 ) ( 225,692 ) —

Outstanding/Unvested at June 26, 2021

Outstanding/Unvested at September 25, 2021

506,434 4,518,749 260,207

The weighted average grant date fair value of service-based RSUs granted during the three months ended June 26, 2021 was $ 54.67 .

The weighted average grant date fair value of service-based RSUs granted during the three months ended June 27, 2020 was $ 16.24 .

The weighted average grant date fair value of service-based RSUs granted during the six months ended September 25, 2021 was $ 51.64 .

The weighted average grant date fair value of service-based RSUs granted during the six months ended September 26, 2020 was $ 15.98 .

Share-Based Compensation Expense

The following table summarizes compensation expense attributable to share-based compensation for the three months ended June 26, 2021 and June 27, 2020 (in millions):

Three Months Ended

2021 June 27,

The following table summarizes compensation expense attributable to share-based compensation for the three and six months ended September 25, 2021 and September 26, 2020 (in millions):

Three Months Ended Six Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Share-based compensation expense $ 20 $ 17 $ 56 $ 41

2 unchanged sentences

The Company estimates forfeitures based on its historical forfeiture rates.

The estimated value of future forfeitures for equity grants as of June 26, 2021 is approximately $ 16 million.

The estimated value of future forfeitures for equity grants as of September 25, 2021 is approximately $ 17 million.

See Note 17 in the Company’s Fiscal 2021 Annual Report on Form 10-K for additional information relating to the Company’s share-based compensation awards.

The Company’s effective tax rate for the three months ended June 26, 2021 was 14.5 %.

Such rates differs from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to the favorable impact of global financing activities, and the impact of the variation of the proportionate geographical mix of earnings, particularly jurisdictions for which a valuation allowance is maintained.

The favorable impacts are partially offset by the impact of the tax rate change in the United Kingdom on the Company's net deferred tax liabilities recorded for the three months ended June 26, 2021.

The Company’s effective tax rate for the three and six months ended September 25, 2021 was ( 1.0 )% and 7.7 %, respectively.

Such rates differ from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to a benefit recognized as a result of recently enacted tax legislation in Italy which allowed the Company to reduce its deferred tax liabilities.

Specifically, this change allowed the Company to step up certain intangible assets which will result in lower future cash taxes.

In addition, the tax rate for each period was further reduced by the favorable impact of global financing activities, partially offset by the increases in uncertain tax positions for the three months ended September 25, 2021.

For the six months ended September 25, 2021, the tax rate was also negatively impacted by the tax rate change in the United Kingdom on the Company's net deferred tax liabilities.

The global financing activities are related to the Company’s 2014 move of its principal executive office from Hong Kong to the U.K.

4 unchanged sentences

and Hungarian subsidiaries.

Due to the difference in the statutory income tax rates between these jurisdictions, the Company realizes a lower effective tax rate.

Due to the difference in the statutory income tax rates between these jurisdictions, the Company realized lower effective tax rates for the three and six months ended September 25, 2021.

Segment Information

4 unchanged sentences

The Company’s three reportable segments are as follows:

• Versace — segment includes revenue generated through the sale of Versace luxury ready-to-wear, accessories and footwear through directly operated Versace boutiques throughout North America (United States and Canada), certain parts of EMEA and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites.

• Versace — segment includes revenue generated through the sale of Versace luxury accessories, ready-to-wear and footwear through directly operated Versace boutiques throughout North America (United States and Canada), certain parts of EMEA and certain parts of Asia, as well as through Versace outlet stores and e-commerce sites.

In addition, revenue is generated through wholesale sales to distribution partners (including geographic licensing arrangements that allow third parties to use the Versace trademarks in connection with retail and/or wholesale sales of Versace branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of jeans, fragrances, watches, jewelry, eyewear and home furnishings.

11 unchanged sentences

The following table presents the key performance information of the Company’s reportable segments (in millions):

Three Months Ended

2021 June 27,

Three Months Ended Six Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Total revenue:

7 unchanged sentences

Michael Kors 220 190 460 142

Total segment income (loss) from operations 299 ( 118 )

Total segment income from operations 276 210 575 92

Corporate expenses

1 unchanged sentence

Restructuring and other charges ( 8 ) ( 9 ) ( 11 ) ( 17 )

Impairment of assets (1)

( 33 ) ( 20 ) ( 33 ) ( 20 )

COVID-19 related charges 5 2 8 ( 3 )

Total income (loss) from operations $ 195 $ 153 $ 453 $ ( 9 )

(1) Impairment of assets during the three and six months ended September 25, 2021 and September 26, 2020 primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

Depreciation and amortization expense for each segment are as follows (in millions):

Three Months Ended

2021 June 27,

Three Months Ended Six Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

Depreciation and amortization:

4 unchanged sentences

Total revenue (based on country of origin) by geographic location are as follows (in millions):

Three Months Ended

2021 June 27,

The Americas (U.S., Canada and Latin America) (1)

Three Months Ended Six Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

(U.S., Canada and Latin America) (1)

$ 701 $ 587 $ 1,416 $ 764

EMEA 388 311 690 433

Asia 211 212 447 364

Total revenue $ 1,300 $ 1,110 $ 2,553 $ 1,561

(1) Total revenue earned in the U.S.

was $ 671 million and $ 161 million for the three months ended June 26, 2021 and June 27, 2020, respectively.

was $ 651 million and $ 1.322 billion, respectively, for the three and six months ended September 25, 2021 and $ 531 million and $ 692 million, respectively, for the three and six months ended September 26, 2020.

Subsequent Events

Share Repurchase Program

On November 3, 2021, the Company announced that its Board of Directors has terminated the Company’s existing $ 500 million share repurchase program, with $ 250 million of availability remaining, and authorized a new share repurchase program pursuant to which the Company may, from time to time, repurchase up to $ 1.0 billion of its outstanding ordinary shares within a period of two years from the effective date of the program.

Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements, trading restrictions under the Company’s insider trading policy and other relevant factors.

The program may be suspended or discontinued at any time.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements