What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-02-02 compared with 2021-11-03 · 177 added, 186 removed, 347 unchanged (51% of the section changed)

33 unchanged sentences

Versace’s design team is led by Donatella Versace, who has been the brand’s artistic director for over 20 years.

Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most glamorous cities, its e-commerce site, as well as through the most prestigious department and specialty stores worldwide.

Versace distributes its products through a worldwide distribution network, which includes boutiques in some of the world’s most glamorous cities, its e-commerce sites, as well as through the most prestigious department and specialty stores worldwide.

Our Jimmy Choo brand offers a distinctive, glamorous and fashion-forward product range, enabling it to develop into a leading global luxury accessories brand, whose core product offering is women’s luxury shoes, complemented by accessories, including handbags, small leather goods, scarves and belts, as well as a growing men’s luxury shoes and accessory business.

19 unchanged sentences

Through 2019, the personal luxury goods market grew at a 5% rate over the past 20 years, with more recent growth driven by stronger Chinese demand from both international and local consumers and demographic and socioeconomic shifts resulting in younger consumers purchasing more luxury goods.

Then, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined 23%.

Market studies indicate that the personal luxury goods market is predicted to increase at a 10% compound annual growth rate between 2020 and 2025, and will return to 2019 levels by the end of 2021 or in 2022.

However, in 2020, due to the impact of the COVID-19 crisis, the personal luxury goods market declined 23%.

Market studies indicate that the personal luxury goods market is predicted to increase at a 10% compound annual growth rate between 2020 and 2025, and is expected to have returned to 2019 levels by the end of 2021 or in 2022.

Future growth is expected to be driven by e-commerce, Chinese consumers and younger generations.

2 unchanged sentences

We also continue to adjust our retail operating strategy to the changing business environment.

Last year, we announced our Capri Retail Store Optimization Program to close approximately 170 of our retail stores over two fiscal years, which began during Fiscal 2021 and will continue into Fiscal 2022, in order to improve the profitability of our retail store fleet.

Last year, we announced our Capri Retail Store Optimization Program to close approximately 170 of our retail stores throughout Fiscal 2021 and Fiscal 2022, in order to improve the profitability of our retail store fleet.

Over this time period, we initially expected to incur approximately $75 million of one-time costs associated with these store closures, however, based on a reassessment, we expect these costs to be approximately $25 million.

As of September 25, 2021, we have closed a total of 127 stores and recorded net restructuring charges of $1 million relating to the program since its inception.

As of December 25, 2021, we have closed a total of 140 stores and recorded net restructuring charges of $11 million relating to the program since its inception.

Collectively, we continue to anticipate ongoing savings as a result of the store closures and lower depreciation associated with the impairment charges being recorded.

7 unchanged sentences

Disruptions or delays in shipping and distribution and other supply chain constraints .

We have been experiencing global logistics challenges, including delays as a result of port congestion, vessel availability, container shortages and temporary

factory closures which are expected to continue for the duration of Fiscal 2022.

Our freight costs have increased as carrier rates for ocean and air shipments have increased significantly, and the supply chain disruptions have caused us to increase our use of air freight with greater frequency than in the past.

We have been experiencing global logistics challenges, including delays as a result of port congestion, vessel availability, container shortages and temporary factory closures which are expected to continue for the duration of Fiscal 2022 and into Fiscal 2023.

Our freight costs have

increased as carrier rates for ocean and air shipments have increased significantly, and the supply chain disruptions have caused us to increase our use of air freight with greater frequency than in the past.

Any future disruptions in our shipping and distribution network, including impacts on our supply chain due to temporary closures of our manufacturing partners and shipping and fulfillment constraints, could have a negative impact on our results of operations.

26 unchanged sentences

Our Michael Kors e-commerce business includes e-commerce sites in the U.S., Canada and EMEA and Asia.

We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA,

to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of EMEA, Asia and Brazil.

We also sell Michael Kors products directly to department stores, primarily located across the Americas and EMEA, to specialty stores and travel retail shops in the Americas, Europe and Asia, and to our geographic licensees in certain parts of

EMEA, Asia and Brazil.

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

4 unchanged sentences

The segment structure is consistent with how our chief operating decision maker plans and allocates resources, manages the business and assesses performance.

The following table presents our total revenue and income (loss) from operations by segment for the three and 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,

The following table presents our total revenue and income (loss) from operations by segment for the three and nine months ended December 25, 2021 and December 26, 2020 (in millions):

Three Months Ended Nine Months Ended

2021 December 26,

2020 December 25,

2021 December 26,

Total revenue:

9 unchanged sentences

Corporate expenses

(37) (29) (123) (90)

Restructuring and other charges (14) (1) (25) (18)

1 unchanged sentence

COVID-19 related charges (1) 1 7 (2)

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

Total income from operations $ 331 $ 167 $ 784 $ 158

The following table presents our global network of retail stores and wholesale doors by brand:

September 25,

2021 September 26,

2021 December 26,

Number of full price retail stores (including concessions):

12 unchanged sentences

The following table presents our retail stores by geographic location:

September 25, 2021 September 26, 2020

December 25, 2021 December 26, 2020

Versace Jimmy Choo Michael Kors Versace Jimmy Choo Michael Kors

6 unchanged sentences

We use a number of key indicators of operating results to evaluate our performance, including the following (dollars in millions):

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

December 25, 2021 December 26, 2020 December 25, 2021 December 26, 2020

Total revenue $ 1,609 $ 1,302 $ 4,162 $ 2,863

Gross profit as a percent of total revenue 65.1 % 65.1 % 67.0 % 65.0 %

Income (loss) from operations $ 195 $ 153 $ 453 $ (9)

Income (loss) from operations as a percent of total revenue 15.0 % 13.8 % 17.7 % (0.6) %

Income from operations $ 331 $ 167 $ 784 $ 158

Income from operations as a percent of total revenue 20.6 % 12.8 % 18.8 % 5.5 %

We experience certain effects of seasonality with respect to our business.

10 unchanged sentences

Results of Operations

Comparison of the three months ended September 25, 2021 with the three months ended September 26, 2020

The following table details the results of our operations for the three months ended September 25, 2021 and September 26, 2020, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):

Comparison of the three months ended December 25, 2021 with the three months ended December 26, 2020

The following table details the results of our operations for the three months ended December 25, 2021 and December 26, 2020, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):

Three Months Ended $ Change % Change % of Total Revenue for

the Three Months Ended

September 25,

2021 September 26,

2020 September 25,

2021 September 26,

2021 December 26,

2020 December 25,

2021 December 26,

Statements of Operations Data:

5 unchanged sentences

Impairment of assets — 90 (90) (100.0) % — % 6.9 %

Restructuring and other charges 8 9 (1) (11.1) % 0.6 % 0.8 %

Restructuring and other charges 14 1 13 NM 0.9 % 0.1 %

Total operating expenses 717 681 36 5.3 % 44.6 % 52.3 %

Income from operations 331 167 164 98.2 % 20.6 % 12.8 %

Other income, net (2) — (2) NM (0.2) % — %

Other income, net — (3) 3 (100.0) % — % (0.2) %

Interest (income) expense, net (7) 10 (17) NM (0.4) % 0.8 %

Foreign currency loss 4 — 4 NM 0.3 % — %

Income before (benefit) provision for income taxes 198 141 57 40.4 % 15.2 % 12.7 %

(Benefit) provision for income taxes (2) 20 (22) NM (0.2) % 1.8 %

Foreign currency gain (4) (13) 9 (69.2) % (0.2) % (1.0) %

Income before income taxes 342 173 169 97.7 % 21.3 % 13.3 %

Provision for (benefit from) income taxes 19 (5) 24 NM 1.2 % (0.4) %

Net income 323 178 145 81.5 %

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

Net income (loss) attributable to noncontrolling interest 1 (1) 2 NM

Net income attributable to Capri $ 322 $ 179 $ 143 79.9 %

1 unchanged sentence

Total Revenue

Total revenue increased $190 million, or 17.1%, to $1.300 billion for the three months ended September 25, 2021, compared to $1.110 billion for the three months ended September 26, 2020, which included net favorable foreign currency effects of approximately $23 million, primarily related to the strengthening of the Euro, British Pound, Chinese Renminbi and Canadian Dollar against the U.S.

Dollar during the three months ended September 25, 2021.

Total revenue increased $307 million, or 23.6%, to $1.609 billion for the three months ended December 25, 2021, compared to $1.302 billion for the three months ended December 26, 2020, which included net unfavorable foreign currency effects of approximately $15 million, primarily related to the weakening of the Euro and Japanese Yen against the U.S.

Dollar for the three months ended December 25, 2021.

On a constant currency basis, our total revenue increased $322 million, or 24.7%.

The increase is attributable to the continued recovery from the COVID-19 pandemic.

In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.

Gross profit increased $174 million, or 24.5%, to $884 million for the three months ended September 25, 2021, compared to $710 million for the three months ended September 26, 2020, which included net favorable foreign currency effects of $15 million.

Gross profit as a percentage of total revenue increased 400 basis points to 68.0% during the three months ended September 25, 2021, compared to 64.0% during the three months ended September 26, 2020.

The increase in our gross profit margin was primarily attributable to a higher average unit price and lower promotional activity, partially offset by increases in supply chain costs during the three months ended September 25, 2021, as compared to the three months ended September 26, 2020.

The increase is attributable to the continued recovery from the COVID-19 pandemic and the adverse impacts related to COVID-19 in the prior fiscal year.

Gross profit increased $200 million, or 23.6%, to $1.048 billion for the three months ended December 25, 2021, compared to $848 million for the three months ended December 26, 2020, which included net unfavorable foreign currency effects of $10 million.

Gross profit as a percentage of total revenue was 65.1% for the three months ended December 25, 2021 and December 26, 2020.

Our gross profit margin remained flat primarily due to a higher average unit price and lower promotional activity, offset by increases in supply chain costs for the three months ended December 25, 2021, as compared to the three months ended December 26, 2020.

Total Operating Expenses

Total operating expenses increased $132 million, or 23.7%, to $689 million during the three months ended September 25, 2021, compared to $557 million for the three months ended September 26, 2020.

Our operating expenses included a net unfavorable foreign currency impact of approximately $13 million.

Total operating expenses increased to 53.0% as a percentage of total revenue for the three months ended September 25, 2021, compared to 50.2% for the three months ended September 26, 2020.

Total operating expenses increased $36 million, or 5.3%, to $717 million for the three months ended December 25, 2021, compared to $681 million for the three months ended December 26, 2020.

Our operating expenses included a net favorable foreign currency impact of approximately $2 million.

Total operating expenses decreased to 44.6% as a percentage of total revenue for the three months ended December 25, 2021, compared to 52.3% for the three months ended December 26, 2020.

The components that comprise total operating expenses are explained below.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $125 million, or 26.4%, to $599 million during the three months ended September 25, 2021, compared to $474 million for the three months ended September 26, 2020, primarily due to increased retail store, corporate, advertising, and e-commerce costs during the three months ended September 25, 2021.

Selling, general, and administrative expenses as a percentage of total revenue increased to 46.1% for the three months ended September 25, 2021, compared to 42.7% for the three months ended September 26, 2020, primarily due to an increase in advertising, e-commerce and corporate costs during the three months ended September 25, 2021, as compared to the three months ended September 26, 2020.

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $15 million, or 50.0%, to $45 million during the three months ended September 25, 2021 as compared to $30 million for the three months ended September 26, 2020, primarily due to an increase in compensation expense and professional fees.

Selling, general and administrative expenses increased $118 million, or 21.9%, to $656 million for the three months ended December 25, 2021, compared to $538 million for the three months ended December 26, 2020, primarily due to increased retail store, e-commerce and corporate costs for the three months ended December 25, 2021.

Selling, general, and administrative expenses as a percentage of total revenue decreased to 40.8% for the three months ended December 25, 2021, compared to 41.3% for the three months ended December 26, 2020, primarily due to leveraging of operating expenses as a result of higher revenue, partially offset by an increase in marketing expenses as a percentage of revenue for the three months ended December 25, 2021, as compared to the three months ended December 26, 2020.

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $8 million, or 27.6%, to $37 million for the three months ended December 25, 2021 as compared to $29 million for the three months ended December 26, 2020, primarily due to an increase in compensation expense and ERP system implementation expenses.

Depreciation and Amortization

Depreciation and amortization decreased $5 million, or 9.3%, to $49 million during the three months ended September 25, 2021, compared to $54 million for the three months ended September 26, 2020.

Depreciation and amortization decreased $5 million, or 9.6%, to $47 million for the three months ended December 25, 2021, compared to $52 million for the three months ended December 26, 2020.

The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to lower capital expenditures in Fiscal 2022 and Fiscal 2021.

Depreciation and amortization decreased to 3.8% as a percentage of total revenue during the three months ended September 25, 2021, compared to 4.9% for the three months ended September 26, 2020 primarily due to lower revenues during the prior year due to COVID-19.

Depreciation and amortization decreased to 2.9% as a percentage of total revenue for the three months ended December 25, 2021, compared to 4.0% for the three months ended December 26, 2020 primarily due to lower revenues during the prior year due to COVID-19.

Impairment of Assets

During the three months ended September 25, 2021, we recognized asset impairment charges of $33 million, which primarily related to operating lease right-of-use assets at certain Michael Kors store locations (see Note 11 to the accompanying consolidated financial statements for additional information).

During the three months ended September 26, 2020, we recognized asset impairment charges of approximately $20 million, primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

For the three months ended December 25, 2021, we did not recognize any asset impairment charges except for the amount recorded within restructuring and other charges (see Note 8 to the accompanying consolidated financial statements for additional information).

For the three months ended December 26, 2020, we recognized asset impairment charges of approximately $90 million, primarily related to operating lease right-of-use assets across our brands.

See Note 11 to the accompanying consolidated financial statements for additional information.

Restructuring and Other Charges

During the three months ended September 25, 2021, we recognized restructuring and other charges of $8 million, which included other costs of $9 million primarily related to equity awards associated with the acquisition of Versace and partially offset by $1 million of gains related to our Capri Retail Store Optimization Program (see Note 8 to the accompanying consolidated financial statements for additional information).

During the three months ended September 26, 2020, we recognized restructuring and other charges of $9 million, which included other costs of $7 million primarily related to equity awards associated with the acquisition of Versace and $2 million related to our Capri Retail Store Optimization Program.

Restructuring and other charges are not evaluated as part of our reportable segments’ results (See Segment Information below for additional information).

For the three months ended December 25, 2021, we recognized restructuring and other charges of $14 million, which included $10 million related to our Capri Retail Store Optimization Program and other costs of $4 million primarily related to equity awards associated with the acquisition of Versace.

See Note 8 to the accompanying consolidated financial statements for additional information.

For the three months ended December 26, 2020, we recognized restructuring and other charges of $1 million, which included other costs of $5 million primarily related to equity awards associated with the acquisition of Versace and closures of certain corporate locations, partially offset by $4 million of gains related to our Capri Retail Store Optimization Program.

Restructuring and other charges are not evaluated as part of our reportable segments’ results (See Segment Information above for additional information).

Income from Operations

As a result of the foregoing, income from operations increased $42 million, to $195 million during three months ended September 25, 2021, compared to $153 million for the three months ended September 26, 2020.

Income from operations as a percentage of total revenue increased to 15.0% during the three months ended September 25, 2021, compared to 13.8% for the three months ended September 26, 2020.

See Segment Information below for a reconciliation of our segment operating income to total operating income.

As a result of the foregoing, income from operations increased $164 million, to $331 million for three months ended December 25, 2021, compared to $167 million for the three months ended December 26, 2020.

Income from operations as a percentage of total revenue increased to 20.6% for the three months ended December 25, 2021, compared to 12.8% for the three months ended December 26, 2020.

See Segment Information above for a reconciliation of our segment operating income (loss) to total operating income.

Interest (Income) Expense, net

During the three months ended September 25, 2021, we recognized $5 million of interest income compared to $12 million of interest expense for the three months ended September 26, 2020.

For the three months ended December 25, 2021, we recognized $7 million of interest income compared to $10 million of interest expense for the three months ended December 26, 2020.

The $17 million improvement in interest (income) expense, net, is primarily due to an increase of interest income from higher average notional amounts outstanding and more favorable interest rates on our net investment hedges in the current year and a decrease in interest expense attributable to lower average borrowings outstanding (see Note 9 and Note 12 to the accompanying consolidated financial statements for additional information).

Foreign Currency Loss

During the three months ended September 25, 2021, we recognized a net foreign currency loss of $4 million, primarily attributable to the revaluation and settlement of certain of our accounts payable in currencies other than the functional currency, as well as the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.

During the three months ended September 26, 2020, we recognized an immaterial net foreign currency loss.

(Benefit) Provision for Income Taxes

The benefit for income taxes was $2 million for the three months ended September 25, 2021, compared to a provision of $20 million for the three months ended September 26, 2020.

Our effective tax rate was (1.0)% and 14.2% for the three months ended September 25, 2021 and September 26, 2020, respectively.

The decrease in our effective tax rate was primarily due to recently enacted tax legislation in Italy which allowed us to reduce our deferred tax liabilities.

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

Foreign Currency Gain

For the three months ended December 25, 2021 and December 26, 2020, we recognized a net foreign currency gain of $4 million and $13 million, respectively, primarily attributable to the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.

Provision for (Benefit from) Income Taxes

The provision for income taxes was $19 million for the three months ended December 25, 2021, compared to a benefit of $5 million for the three months ended December 26, 2020.

Our effective tax rate was 5.6% and (2.9)% for the three months ended December 25, 2021 and December 26, 2020, respectively.

The change in our effective tax rate was primarily related to increases in uncertain tax positions and release of certain valuation allowances in the prior year which were not recurring, partially offset by the favorable effect of a net operating loss carryback claim made in the United States as a result of COVID-19 related losses.

See Note 15 to the accompanying consolidated financial statements for additional information regarding the effective tax rate for the current fiscal year quarter.

Our effective tax rate may fluctuate from time to time due to the effects of changes in U.S.

1 unchanged sentence

In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.

Net Loss Attributable to Noncontrolling Interest

During the three months ended September 25, 2021, we recorded an immaterial net loss and during the three months ended September 26, 2020, we recorded a net loss of $1 million, attributable to the noncontrolling interest in our joint ventures.

These losses represent the share of income that is not attributable to the Company.

Net Income (Loss) Attributable to Noncontrolling Interest

For the three months ended December 25, 2021, we recorded net income of $1 million and for the three months ended December 26, 2020, we recorded a net loss of $1 million, attributable to the noncontrolling interest in our joint ventures.

These amounts represent the share of income (loss) that is not attributable to the Company.

Net Income Attributable to Capri

As a result of the foregoing, our net income increased $78 million to $200 million during the three months ended September 25, 2021, compared to a net income of $122 million for the three months ended September 26, 2020.

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

Segment Information

Three Months Ended % Change

(dollars in millions) September 25,

2021 September 26,

(dollars in millions) December 25,

2021 December 26,

2020 $ Change As

1 unchanged sentence

Revenues $ 251 $ 195 $ 56 28.7 % 33.8 %

Income from operations 55 20 35 175.0 %

Income from operations 32 13 19 NM

Operating margin 12.7 % 6.7 %

Versace revenues increased $87 million, or 44.6% to $282 million during the three months ended September 25, 2021, compared to $195 million for the three months ended September 26, 2020, which included favorable foreign currency effects of $4 million.

On a constant currency basis, revenue increased $83 million, or 42.6%, primarily attributable to the continued recovery from the COVID-19 pandemic.

In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.

NM Not meaningful

Versace revenues increased $56 million, or 28.7%, to $251 million for the three months ended December 25, 2021, compared to $195 million for the three months ended December 26, 2020, which included unfavorable foreign currency effects of $10 million.

On a constant currency basis, revenue increased $66 million, or 33.8%, primarily attributable to the continued recovery from the COVID-19 pandemic and the adverse impacts related to COVID-19 in the prior fiscal year.

Income from Operations

During the three months ended September 25, 2021, Versace recorded income from operations of $55 million, compared to $20 million for the three months ended September 26, 2020.

Operating margin increased from 10.3% for the three months ended September 26, 2020, to 19.5% during the three months ended September 25, 2021, primarily due to higher average unit price and leveraging of operating expenses due to higher revenue.

For the three months ended December 25, 2021, Versace recorded income from operations of $32 million, compared to $13 million for the three months ended December 26, 2020.

Operating margin increased from 6.7% for the three months ended December 26, 2020, to 12.7% for the three months ended December 25, 2021, primarily due to higher average unit price and leveraging of operating expenses due to higher revenue.

Three Months Ended % Change

(dollars in millions) September 25,

2021 September 26,

(dollars in millions) December 25,

2021 December 26,

2020 $ Change As

1 unchanged sentence

Revenues $ 178 $ 121 $ 57 47.1 % 43.0 %

Income from operations 1 — 1 NM

Income (loss) from operations 16 (8) 24 NM

Operating margin 9.0 % (6.6) %

NM Not meaningful

Jimmy Choo revenues increased $15 million, or 12.3%, to $137 million during the three months ended September 25, 2021, compared to $122 million for the three months ended September 26, 2020, which included favorable foreign currency effects of $9 million.

On a constant currency basis, revenue increased $6 million, or 4.9%, primarily attributable to the continued recovery from the COVID-19 pandemic.

In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.

Income from Operations

During the three months ended September 25, 2021, Jimmy Choo recorded income from operations of $1 million, compared to immaterial income from operations for the three months ended September 26, 2020.

Operating margin increased from 0.0% for the three months ended September 26, 2020 to 0.7% during the three months ended September 25, 2021, primarily due to lower promotional activity, partially offset by increases in store operating costs and investments in marketing and advertising.

Jimmy Choo revenues increased $57 million, or 47.1%, to $178 million for the three months ended December 25, 2021, compared to $121 million for the three months ended December 26, 2020, which included favorable foreign currency effects of $5 million.

On a constant currency basis, revenue increased $52 million, or 43.0%, primarily attributable to the continued recovery from the COVID-19 pandemic and the adverse impacts related to COVID-19 in the prior fiscal year.

Income (Loss) from Operations

For the three months ended December 25, 2021, Jimmy Choo recorded income from operations of $16 million, compared to a loss from operations of $8 million for the three months ended December 26, 2020.

Operating margin improved from (6.6)% for the three months ended December 26, 2020 to 9.0% for the three months ended December 25, 2021, primarily due to lower promotional activity and leveraging of operating expenses due to higher revenue.

Three Months Ended % Change

(dollars in millions) September 25,

2021 September 26,

(dollars in millions) December 25,

2021 December 26,

2020 $ Change As

3 unchanged sentences

Operating margin 28.4 % 28.5 %

Michael Kors revenues increased $88 million, or 11.1%, to $881 million during the three months ended September 25, 2021, compared to $793 million for the three months ended September 26, 2020, which included favorable foreign currency effects of $10 million.

On a constant currency basis, revenue increased $78 million, or 9.8%, primarily attributable to the continued recovery from the COVID-19 pandemic.

In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.

Michael Kors revenues increased $194 million, or 19.7%, to $1.180 billion for the three months ended December 25, 2021, compared to $986 million for the three months ended December 26, 2020, which included unfavorable foreign currency effects of $10 million.

On a constant currency basis, revenue increased $204 million, or 20.7%, primarily attributable to the continued recovery from the COVID-19 pandemic and the adverse impacts related to COVID-19 in the prior fiscal year.

Income from Operations

During the three months ended September 25, 2021, Michael Kors recorded income from operations of $220 million, compared to $190 million for the three months ended September 26, 2020.

Operating margin increased from 24.0% for the three months ended September 26, 2020, to 25.0% during the three months ended September 25, 2021, primarily due to a higher average unit price, partially offset by increases in our supply chain costs and an increase in marketing and advertising as a percentage of revenue.

For the three months ended December 25, 2021, Michael Kors recorded income from operations of $335 million, compared to $281 million for the three months ended December 26, 2020.

Operating margin decreased slightly from 28.5% for the three months ended December 26, 2020, to 28.4% for the three months ended December 25, 2021, primarily due to increases in supply chain costs, mostly offset by higher average unit price and leveraging of expenses due to higher revenue.

Results of Operations

Comparison of the six months ended September 25, 2021 with the six months ended September 26, 2020

The following table details the results of our operations for the six months ended September 25, 2021 and September 26, 2020, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):

Six Months Ended $ Change % Change % of Total Revenue for

the Six Months Ended

September 25,

2021 September 26,

2020 September 25, 2021 September 26, 2020

Comparison of the nine months ended December 25, 2021 with the nine months ended December 26, 2020

The following table details the results of our operations for the nine months ended December 25, 2021 and December 26, 2020, and expresses the relationship of certain line items to total revenue as a percentage (dollars in millions):

Nine Months Ended $ Change % Change % of Total Revenue for the Nine Months Ended

2021 December 26,

2020 December 25, 2021 December 26, 2020

Statements of Operations Data:

7 unchanged sentences

Total operating expenses 2,004 1,702 302 17.7 % 48.1 % 59.4 %

Income (loss) from operations 453 (9) 462 NM 17.7 % (0.6) %

Income from operations 784 158 626 NM 18.8 % 5.5 %

Other income, net (2) (4) 2 (50.0) % — % (0.1) %

1 unchanged sentence

Foreign currency loss (gain) 1 (16) 17 NM — % (0.6) %

Income (loss) before provision for income taxes 454 (34) 488 NM 17.8 % (2.2) %

Income before income taxes 796 139 657 NM 19.1 % 4.9 %

Provision for income taxes

35 25 10 40.0 % 1.4 % 1.6 %

Net income (loss) 419 (59) 478 NM

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

Net income (loss) attributable to Capri $ 419 $ (58) $ 477 NM

54 20 34 NM 1.3 % 0.7 %

Net income 742 119 623 NM

Net income (loss) attributable to noncontrolling interest 1 (2) 3 NM

Net income attributable to Capri $ 741 $ 121 $ 620 NM

NM Not meaningful

Total Revenue

Total revenue increased $992 million, or 63.5%, to $2.553 billion for the six months ended September 25, 2021, compared to $1.561 billion for the six months ended September 26, 2020, which included net favorable foreign currency effects of approximately $86 million, primarily related to the strengthening of the Euro, British Pound, Chinese Renminbi and Canadian Dollar against the U.S.

Dollar during the six months ended September 25, 2021.

On a constant currency basis, our total revenue increased $906 million, or 58.0%.

Total revenue increased $1.299 billion, or 45.4%, to $4.162 billion for the nine months ended December 25, 2021, compared to $2.863 billion for the nine months ended December 26, 2020, which included net favorable foreign currency effects of approximately $71 million, primarily related to the strengthening of the British Pound, Euro, Chinese Renminbi and Canadian Dollar against the U.S.

Dollar for the nine months ended December 25, 2021.

On a constant currency basis, our total revenue increased $1.228 billion, or 42.9%.

The increase is attributable to the continued recovery from the COVID-19 pandemic.

In the prior fiscal year, the Company experienced widespread, temporary store closures and a significant decline in store traffic.

Gross profit increased $728 million, or 71.9%, to $1.740 billion for the six months ended September 25, 2021, compared to $1.012 billion for the six months ended September 26, 2020, which included net favorable foreign currency effects of $58 million.

Gross profit as a percentage of total revenue increased 340 basis points to 68.2% during the six months ended September 25, 2021, compared to 64.8% during the six months ended September 26, 2020.

The increase in gross profit margin was primarily attributable to a higher average unit price and lower promotional activity, partially offset by increases in our supply chain costs during the six months ended September 25, 2021, as compared to the six months ended September 26, 2020.

Gross profit increased $928 million, or 49.9%, to $2.788 billion for the nine months ended December 25, 2021, compared to $1.860 billion for the nine months ended December 26, 2020, which included net favorable foreign currency effects of $48 million.

Gross profit as a percentage of total revenue increased 200 basis points to 67.0% for the nine months ended December 25, 2021, compared to 65.0% for the nine months ended December 26, 2020.

The increase in gross profit margin was primarily attributable to a higher average unit price and lower promotional activity, partially offset by increases in supply chain costs and unfavorable channel mix.

Total Operating Expenses

Total operating expenses increased $266 million, or 26.1%, to $1.287 billion during the six months ended September 25, 2021, compared to $1.021 billion for the six months ended September 26, 2020.

Total operating expenses increased $302 million, or 17.7%, to $2.004 billion for the nine months ended December 25, 2021, compared to $1.702 billion for the nine months ended December 26, 2020.

Our operating expenses included a net unfavorable foreign currency impact of approximately $49 million.

Total operating expenses decreased to 50.4% as a percentage of total revenue for the six months ended September 25, 2021, compared to 65.4% for the six months ended September 26, 2020.

Total operating expenses decreased to 48.1% as a percentage of total revenue for the nine months ended December 25, 2021, compared to 59.4% for the nine months ended December 26, 2020.

The components that comprise total operating expenses are explained below.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $268 million, or 30.6%, to $1.144 billion during the six months ended September 25, 2021, compared to $876 million for the six months ended September 26, 2020, primarily due to increased retail store, corporate, e-commerce, and advertising costs during the six months ended September 25, 2021.

Selling, general and administrative expenses as a percentage of total revenue decreased to 44.8% during the six months ended September 25, 2021, compared to 56.1% for the six months ended September 26, 2020, primarily due to leveraging of operating expenses as a result of higher revenue during the six months ended September 25, 2021, as compared to the six months ended September 26, 2020.

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $25 million, or 41.0%, to $86 million during the six months ended September 25, 2021 as compared to $61 million for the six months ended September 26, 2020, primarily due to an increase in compensation expense and professional fees.

Selling, general and administrative expenses increased $386 million, or 27.3%, to $1.800 billion for the nine months ended December 25, 2021, compared to $1.414 billion for the nine months ended December 26, 2020, primarily due to increased retail store, e-commerce, corporate costs and marketing expenses for the nine months ended December 25, 2021.

Selling, general and administrative expenses as a percentage of total revenue decreased to 43.2% for the nine months ended December 25, 2021, compared to 49.4% for the nine months ended December 26, 2020, primarily due to leveraging of operating expenses as a result of higher revenue.

Unallocated corporate expenses, which are included within selling, general and administrative expenses discussed above, but are not directly attributable to a reportable segment, increased $33 million, or 36.7%, to $123 million for the nine months ended December 25, 2021 as compared to $90 million for the nine months ended December 26, 2020, primarily due to an increase in compensation expense and professional fees.

Depreciation and Amortization

Depreciation and amortization decreased $9 million, or 8.3%, to $99 million during the six months ended September 25, 2021, compared to $108 million for the six months ended September 26, 2020.

Depreciation and amortization decreased $14 million, or 8.8%, to $146 million for the nine months ended December 25, 2021, compared to $160 million for the nine months ended December 26, 2020.

The decrease in depreciation and amortization expense was primarily attributable to lower depreciation due to lower capital expenditures in Fiscal 2022 and Fiscal 2021.

Depreciation and amortization decreased to 3.9% as a percentage of total revenue during the six months ended September 25, 2021, compared to 6.9% for the six months ended September 26, 2020 primarily due to higher revenues during the six months ended September 25, 2021 as a result of COVID-19.

Depreciation and amortization decreased to 3.5% as a percentage of total revenue for the nine months ended December 25, 2021, compared to 5.6% for the nine months ended December 26, 2020 primarily due to higher revenues for the nine months ended December 25, 2021.

Impairment of Assets

During the six months ended September 25, 2021, we recognized asset impairment charges of $33 million, which primarily related to operating lease right-of-use assets at certain Michael Kors store locations (see Note 11 to the accompanying consolidated financial statements for additional information).

During the six months ended September 26, 2020, we recognized asset impairment charges of approximately $20 million, which primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

For the nine months ended December 25, 2021 and December 26, 2020, we recognized asset impairment charges of $33 million and $110 million, respectively, which primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

See Note 11 to the accompanying consolidated financial statements for additional information.

Restructuring and Other Charges

During the six months ended September 25, 2021, we recognized restructuring and other charges of $11 million, which included other costs of $15 million primarily related to equity awards associated with the acquisition of Versace and partially offset by $4 million of gains related to our Capri Retail Store Optimization Program (see Note 8 to the accompanying consolidated financial statements for additional information).

During the six months ended September 26, 2020, we recognized restructuring and other charges of $17 million, which were primarily comprised of $12 million primarily related to equity awards associated with the acquisition of Versace and $5 million related to our Capri Retail Store Optimization Program.

Income (loss) from Operations

As a result of the foregoing, income from operations increased $462 million, to $453 million during the six months ended September 25, 2021, compared to a loss from operations of $9 million for the six months ended September 26, 2020.

Income from operations as a percentage of total revenue increased to 17.7% during the six months ended September 25, 2021, compared to a loss from operations of (0.6)% for the six months ended September 26, 2020.

See Segment Information below for a reconciliation of our segment operating income to total operating income.

For the nine months ended December 25, 2021, we recognized restructuring and other charges of $25 million, which included other costs of $19 million primarily related to equity awards associated with the acquisition of Versace and $6 million related to our Capri Retail Store Optimization Program (see Note 8 to the accompanying consolidated financial statements for additional information).

For the nine months ended December 26, 2020, we recognized restructuring and other charges of $18 million, which included other costs of $17 million primarily related to equity awards associated with the acquisition of Versace and $1 million related to our Capri Retail Store Optimization Program.

Restructuring and other charges are not evaluated as part of our reportable segments’ results (see Segment Information above for additional information).

Income from Operations

As a result of the foregoing, income from operations increased $626 million, to $784 million for the nine months ended December 25, 2021, compared to $158 million for the nine months ended December 26, 2020.

Income from operations as a percentage of total revenue increased to 18.8% for the nine months ended December 25, 2021, compared to 5.5% for the nine months ended December 26, 2020.

See Segment Information above for a reconciliation of our segment operating income to total operating income.

Interest (Income) Expense, net

During the six months ended September 25, 2021, we recognized $4 million of interest income compared to $29 million of interest expense for the six months ended September 26, 2020.

For the nine months ended December 25, 2021, we recognized $11 million of interest income compared to $39 million of interest expense for the nine months ended December 26, 2020.

The $50 million improvement in interest (income) expense, net, is primarily due to an increase of interest income from higher average notional amounts outstanding and more favorable interest rates on our net investment hedges in the current year and a decrease in interest expense attributable to lower average borrowings outstanding (see Note 9 and Note 12 to the accompanying consolidated financial statements for additional information).

Foreign Currency Loss (Gain)

During the six months ended September 25, 2021 and September 26, 2020, we recognized a net foreign currency loss of $5 million and a net foreign currency gains of $3 million, respectively, primarily attributable to the revaluation and settlement of certain of our accounts payable in currencies other than the functional currency, as well as the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.

For the nine months ended December 25, 2021 and December 26, 2020, we recognized a net foreign currency loss of $1 million and a net foreign currency gain of $16 million, respectively, primarily attributable to the remeasurement of dollar-denominated intercompany loans with certain of our subsidiaries.

Provision for Income Taxes

We recognized $35 million of income tax expense during the six months ended September 25, 2021, compared to $25 million for the six months ended September 26, 2020.

Our effective tax rate was 7.7% and (73.5)% for the six months ended September 25, 2021 and September 26, 2020, respectively.

Our effective tax rate for the six months ended September 25, 2021 was significantly higher than our effective tax rate for the six months ended September 26, 2020 and not a meaningful or comparable metric, primarily due to the relationship between income tax expense and pre-tax loss in the prior period.

The increase in income tax expense primarily related to the increase in earnings during the six months ended September 25, 2021 compared to the six months ended September 26, 2020.

This increase was partially offset by the favorable effects of recently enacted tax legislation in Italy which allowed us to reduce our deferred tax liabilities.

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

For the nine months ended December 25, 2021, we recognized $54 million of income tax expense compared to $20 million for the nine months ended December 26, 2020.

Our effective tax rate was 6.8% and 14.4% for the nine months ended December 25, 2021 and December 26, 2020, respectively.

The decrease in our effective rate was primarily due to the favorable effect of a net operating loss carryback claim made in the United States as a result of COVID-19 related losses and a benefit recognized as a result of recently enacted tax legislation in Italy which allowed the Company to reduce its deferred tax liabilities.

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

Our effective tax rate may fluctuate from time to time due to the effects of changes in U.S.

1 unchanged sentence

In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.

Net Loss Attributable to Noncontrolling Interest

During the six months ended September 25, 2021, we recorded an immaterial net loss and during the six months ended September 26, 2020, we recorded a net loss of $1 million, attributable to the noncontrolling interest in our joint ventures.

These losses represent the share of income that is not attributable to the Company.

Net Income (Loss) Attributable to Capri

As a result of the foregoing, our net income increased $477 million to a net income of $419 million during the six months ended September 25, 2021, compared to net loss of $58 million for the six months ended September 26, 2020.

Net Income (Loss) Attributable to Noncontrolling Interest

For the nine months ended December 25, 2021, we recorded net income of $1 million and for the nine months ended December 26, 2020, we recorded a net loss of $2 million, attributable to the noncontrolling interest in our joint ventures.

These amounts represent the share of income (loss) that is not attributable to the Company.

Net Income Attributable to Capri

As a result of the foregoing, our net income increased $620 million to a net income of $741 million for the nine months ended December 25, 2021, compared to a net income of $121 million for the nine months ended December 26, 2020.

Segment Information

Six Months Ended % Change

(dollars in millions) September 25,

2021 September 26,

Nine Months Ended % Change

(dollars in millions) December 25,

2021 December 26,

2020 $ Change As

1 unchanged sentence

Revenues $ 773 $ 483 $ 290 60.0 % 56.9 %

Income (loss) from operations 103 (21) 124 590.5 %

Income (loss) from operations 135 (8) 143 NM

Operating margin 17.5 % (1.7) %

Versace revenues increased $234 million, or 81.3%, to $522 million during the six months ended September 25, 2021, compared to $288 million for the six months ended September 26, 2020, which included favorable foreign currency effects of $25 million.

NM Not meaningful

Versace revenues increased $290 million, or 60.0%, to $773 million for the nine months ended December 25, 2021, compared to $483 million for the nine months ended December 26, 2020, which included favorable foreign currency effects of $15 million.

On a constant currency basis, revenue increased $275 million, or 56.9%, primarily attributable to the continued recovery from the COVID-19 pandemic.

1 unchanged sentence

Income (Loss) from Operations

During the six months ended September 25, 2021, Versace recorded income from operations of $103 million, compared to a loss from operations of $21 million for the six months ended September 26, 2020.

Operating margin improved from (7.3)% for the six months ended September 26, 2020, to 19.7% during the six months ended September 25, 2021, primarily due to lower promotional activity and leveraging of operating expenses due to higher revenue.

Six Months Ended % Change

(dollars in millions) September 25,

2021 September 26,

For the nine months ended December 25, 2021, Versace recorded income from operations of $135 million, compared to a loss from operations of $8 million for the nine months ended December 26, 2020.

Operating margin improved from (1.7)% for the nine months ended December 26, 2020, to 17.5% for the nine months ended December 25, 2021, primarily due to a higher average unit price and lower promotional activity, as well as leveraging of operating expenses due to higher revenue.

Nine Months Ended % Change

(dollars in millions) December 25,

2021 December 26,

2020 $ Change As

1 unchanged sentence

Revenues $ 457 $ 294 $ 163 55.4 % 45.2 %

Income (loss) from operations 12 (29) 41 141.4 %

Income (loss) from operations 28 (37) 65 NM

Operating margin 6.1 % (12.6) %

Jimmy Choo revenues increased $106 million, or 61.3%, to $279 million during the six months ended September 25, 2021, compared to $173 million for the six months ended September 26, 2020, which included favorable foreign currency effects of $25 million.

NM Not meaningful

Jimmy Choo revenues increased $163 million, or 55.4%, to $457 million for the nine months ended December 25, 2021, compared to $294 million for the nine months ended December 26, 2020, which included favorable foreign currency effects of $30 million.

On a constant currency basis, revenue increased $133 million, or 45.2%, primarily attributable to the continued recovery from the COVID-19 pandemic.

1 unchanged sentence

Income (Loss) from Operations

During the six months ended September 25, 2021, Jimmy Choo recorded income from operations of $12 million, compared to a loss from operations of $29 million for the six months ended September 26, 2020.

Operating margin improved from (16.8)% for the six months ended September 26, 2020, to 4.3% during the six months ended September 25, 2021, primarily due to lower promotional activity and leveraging of operating expenses due to higher revenue.

Six Months Ended % Change

For the nine months ended December 25, 2021, Jimmy Choo recorded income from operations of $28 million, compared to a loss from operations of $37 million for the nine months ended December 26, 2020.

Operating margin improved from (12.6)% for the nine months ended December 26, 2020, to 6.1% for the nine months ended December 25, 2021, primarily due to lower promotional activity and leveraging of operating expenses due to higher revenue.

Nine Months Ended % Change

(dollars in millions)

September 25,

2021 September 26,

2021 December 26,

2020 $ Change As

3 unchanged sentences

Operating margin 27.1 % 20.3 %

Michael Kors revenues increased $652 million, or 59.3%, to $1.752 billion during the six months ended September 25, 2021, compared to $1.100 billion for the six months ended September 26, 2020, which included favorable foreign currency effects of $36 million.

Michael Kors revenues increased $846 million, or 40.6%, to $2.932 billion for the nine months ended December 25, 2021, compared to $2.086 billion for the nine months ended December 26, 2020, which included favorable foreign currency effects of $26 million.

On a constant currency basis, revenue increased $820 million, or 39.3%, primarily attributable to the continued recovery from the COVID-19 pandemic.

1 unchanged sentence

Income from Operations

During the six months ended September 25, 2021, Michael Kors recorded income from operations of $460 million, compared to $142 million for the six months ended September 26, 2020.

Operating margin improved from 12.9% for the six months ended September 26, 2020, to 26.3% during the six months ended September 25, 2021, primarily due to a higher average unit price and leveraging of operating expenses due to higher revenue, partially offset by increases in our supply chain costs.

For the nine months ended December 25, 2021, Michael Kors recorded income from operations of $795 million, compared to $423 million for the nine months ended December 26, 2020.

Operating margin improved from 20.3% for the nine months ended December 26, 2020, to 27.1% for the nine months ended December 25, 2021, primarily due to a higher average unit price and leveraging of operating expenses due to higher revenue, partially offset by increases in supply chain costs.

Liquidity and Capital Resources

1 unchanged sentence

Our primary use of this liquidity is to fund the ongoing cash requirements, including our working capital needs and capital investments in our business, debt repayments, acquisitions, returns of capital, including share repurchases and other corporate activities.

We believe that the cash generated from operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store growth plans, shop-in-shop growth, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives.

We spent $48 million on capital expenditures during the six months ended September 25, 2021.

We believe that the cash generated from operations, together with borrowings available under our revolving credit facilities and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months and beyond, including investments made and expenses incurred in connection with our store growth plans, investments in corporate and distribution facilities, continued systems development, e-commerce and marketing initiatives.

We spent $85 million on capital expenditures during the nine months ended December 25, 2021.

The following table sets forth key indicators of our liquidity and capital resources (in millions):

September 25,

2021 March 27,

5 unchanged sentences

Long-term debt $ 976 $ 1,219

Six Months Ended

September 25,

2021 September 26,

Nine Months Ended

2021 December 26,

Cash Flows Provided By (Used In):

5 unchanged sentences

Cash Provided by Operating Activities

Net cash provided by operating activities increased $259 million to $396 million during the six months ended September 25, 2021, as compared to $137 million for the six months ended September 26, 2020, as a result of an increase in our net income after non-cash adjustments, partially offset by decreases related to changes in our working capital.

The decreases related to the changes in our working capital are primarily attributable to fluctuations in the timing of payments and receipts and an increase in our inventory levels when compared to the prior year.

Net cash provided by operating activities increased $168 million to $713 million during the nine months ended December 25, 2021, as compared to $545 million for the nine months ended December 26, 2020, as a result of an increase in our net income after non-cash adjustments, partially offset by decreases related to changes in our working capital.

The decreases related to the changes in our working capital are primarily attributable to an increase in our inventory levels, an increase in income tax receivables and fluctuations in the timing of payments and receipts when compared to the prior year.

Cash Used in Investing Activities

Net cash used in investing activities was $48 million during the six months ended September 25, 2021, as compared to $71 million during the six months ended September 26, 2020, which was primarily attributable to lower cash paid for asset acquisitions and lower capital expenditures compared to prior year.

Net cash used in investing activities was $26 million during the nine months ended December 25, 2021, as compared to $97 million during the nine months ended December 26, 2020, which was primarily attributable to the settlement of certain net investment hedges of $59 million during the nine months ended December 25, 2021.

Cash Used in Financing Activities

Net cash used in financing activities was $342 million during the six months ended September 25, 2021, as compared to $421 million during the six months ended September 26, 2020.

Net cash used in financing activities was $663 million during the nine months ended December 25, 2021, as compared to $803 million during the nine months ended December 26, 2020.

The decrease of cash used in financing activities of $140 million was primarily attributable to a decrease in net debt repayments of $453 million, partially offset by a $359 million increase in cash payments to repurchase our ordinary shares compared to prior year.

Debt Facilities

The following table presents a summary of our borrowing capacity and amounts outstanding as of September 25, 2021 and March 27, 2021 (in millions):

September 25,

The following table presents a summary of our borrowing capacity and amounts outstanding as of December 25, 2021 and March 27, 2021 (in millions):

2021 March 27,

36 unchanged sentences

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

As of September 25, 2021 and March 27, 2021, we were in compliance with all covenants related to our agreements then in effect governing our debt.

As of December 25, 2021 and March 27, 2021, we were in compliance with all covenants related to our agreements then in effect governing our debt.

See Note 9 to the accompanying consolidated financial statements for additional information.

(2) Recorded as long-term debt in our consolidated balance sheets as of September 25, 2021 and March 27, 2021, except for the current portion of $97 million outstanding under the 2018 Term Loan Facility, which was recorded within short-term debt in our consolidated balance sheets at March 27, 2021.

(3) The balance as of September 25, 2021 consists of $31 million related to our supplier financing program recorded within short-term debt in our consolidated balance sheets, $19 million related to the sale of certain Versace tax receivables, with $9 million and $10 million, respectively, was recorded within short-term debt and long-term debt in our consolidated balance sheets and $3 million of other loans recorded as long-term debt in our consolidated balance sheets.

(2) As of December 25, 2021, all amounts are recorded as long-term debt in our consolidated balance sheets.

As of March 27, 2021, all amounts are recorded as long-term debt, except for the current portion of $97 million outstanding under the 2018 Term Loan Facility, which was recorded within short-term debt in our consolidated balance sheets.

(3) The balance as of December 25, 2021 consists of $18 million related to our supplier financing program recorded within short-term debt in our consolidated balance sheets, $18 million related to the sale of certain Versace tax receivables, with $8 million and $10 million, respectively, recorded within short-term debt and long-term debt in our consolidated balance sheets and $3 million of other loans recorded as long-term debt in our consolidated balance sheets.

The balance as of March 27, 2021 consists of $17 million related to our supplier finance program recorded within short-term debt in our consolidated balance sheets and $4 million of other loans recorded as long-term debt in our consolidated balance sheets.

1 unchanged sentence

We believe that our 2018 Credit Facility is adequately diversified with no undue concentration in any one financial institution.

As of September 25, 2021, there were 25 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%.

As of December 25, 2021, there were 25 financial institutions participating in the facility, with none maintaining a maximum commitment percentage in excess of 10%.

We have no reason to believe that the participating institutions will be unable to fulfill their obligations to provide financing in accordance with the terms of the 2018 Credit Facility.

1 unchanged sentence

Share Repurchase Program

The following table presents our ordinary share repurchases during the six months ended September 25, 2021 and September 26, 2020 (dollars in millions):

Six Months Ended

September 25,

2021 September 26,

The following table presents our ordinary share repurchases during the nine months ended December 25, 2021 and December 26, 2020 (dollars in millions):

Nine Months Ended

2021 December 26,

Cost of shares repurchased under share repurchase program $ 350 $ —

6 unchanged sentences

See Note 9 in the accompanying financial statements for additional information.

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

On November 3, 2021, we announced that our Board of Directors had terminated our existing $500 million share repurchase program (the “Prior Plan”), with $250 million of availability remaining, and authorized a new share repurchase program (the “Fiscal 2022 Plan”) pursuant to which we may, from time to time, repurchase up to $1.0 billion of our outstanding ordinary shares within a period of two years from the effective date of the program.

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

5 unchanged sentences

We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business.

Our off-balance sheet commitments relating to our outstanding letters of credit were $34 million at September 25, 2021, including $6 million in letters of credit issued outside of the 2018 Credit Facility.

In addition, as of September 25, 2021, bank guarantees of approximately $35 million were supported by our various credit facilities.

Our off-balance sheet commitments relating to our outstanding letters of credit were $35 million at December 25, 2021, including $6 million in letters of credit issued outside of the 2018 Credit Facility.

In addition, as of December 25, 2021, bank guarantees of approximately $34 million were supported by our various credit facilities.

We do not have any other off-balance sheet arrangements or relationships with entities that are not consolidated into our financial statements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources.

2 unchanged sentences

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 2. Management’s Discussion and Analysis