Capri Holdings Ltd 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, our principal executive officer and principal financial officer, respectively, of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a - 15(e) and 15(d) - 15(e) under the Securities and Exchange Act of 1934, as amended, (the “Exchange Act”)) as of April 2, 2022. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures are effective as of April 2, 2022. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined under the Exchange Act Rule 13a-15 (f)) to provide reasonable assurance regarding the reliability of financial reporting and that the consolidated financial statements have been prepared in accordance with U.S. GAAP. Such internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance (A) that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors; and (B) regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Our management assessed the effectiveness of our internal control over financial reporting as of April 2, 2022. In making this assessment, it used the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the 2013 Framework. Based on this assessment, management has determined that, as of April 2, 2022, our internal control over financial reporting is effective based on those criteria. The Company’s internal control over financial reporting as of April 2, 2022, as well as the consolidated financial statements, have been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein. Changes in Internal Control over Financial Reporting Except as discussed below, there have been no changes in our internal control over financial reporting during the three months ended April 2, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We are currently undertaking a major, multi-year ERP implementation to upgrade our information technology platforms and systems worldwide. The implementation is occurring in phases over multiple years. We have launched the Michael Kors Finance functionality on the ERP system in North America in the first quarter of Fiscal 2023. 61 Table of Contents As a result of this multi-year implementation, we expect certain changes to our processes and procedures, which in turn, could result in changes to our internal control over financial reporting. While we expect this implementation to strengthen our internal control over financial reporting by automating certain manual processes and standardizing business processes and reporting across our organization, we will continue to evaluate and monitor our internal control over financial reporting as processes and procedures in the affected areas evolve. See Item 1A. “Risk Factors” — “A material delay or disruption in our information technology systems or e-commerce websites or our failure or inability to upgrade our information technology systems precisely and efficiently could have a material adverse effect on our business, results of operations and financial condition. ” Item 9B. Other Information As previously announced, the Board of Directors of the Company approved a retail store optimization program (the “Capri Retail Store Optimization Program”) to improve the profitability of its retail store fleet. During the fourth quarter of Fiscal 2022, the Company completed its plan to close certain retail stores as a part of Capri Retail Store Optimization Program. The Company closed a total of 167 of its retail stores, with 66 and 101 stores having closed during Fiscal 2022 and Fiscal 2021, respectively. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program was $14 million, of which $9 million and $5 million was recorded during Fiscal 2022 and Fiscal 2021, respectively. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program were $3 million during the three months ended April 2, 2022. This disclosure is intended to satisfy the requirements of Item 2.05 of Form 8-K. 62 Table of Contents Part III Item 10. Directors, Executive Officers and Corporate Governance Information with respect to this Item is included in the Company’s Proxy Statement to be filed in June 2022, which is incorporated herein by reference. Item 11. Executive Compensation Information with respect to this Item is included in the Company’s Proxy Statement to be filed in June 2022, which is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information as of April 2, 2022 regarding compensation plans under which the Company’s equity securities are authorized for issuance: Equity Compensation Plan Information (a) (b) (c) Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders (1) 4,393,340 $ 39.96 4,062,239 Equity compensation plans not approved by security holders — $ — — Total 4,393,340 $ 39.96 4,062,239 (1) Reflects share options and restricted stock units issued under the Company’s Amended and Restated Omnibus Incentive Plan. (2) Represents the weighted average exercise price of outstanding share awards only. Item 13. Certain Relationships, Related Transactions and Director Independence Information with respect to this Item is included in the Company’s Proxy Statement to be filed in June 2022, which is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information with respect to this Item is included in the Company’s Proxy Statement to be filed in June 2022, which is incorporated herein by reference. 63 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this annual report on Form 10-K: 1. The following consolidated financial statements listed below are filed as a separate section of this Annual Report on Form 10-K: Report of Independent Registered Public Accounting Firm - Ernst & Young LLP (PCAOB ID No. 42 ). Consolidated Balance Sheets as of April 2, 2022 and March 27, 2021. Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended April 2, 2022, March 27, 2021 and March 28, 2020. Consolidated Statements of Shareholders’ Equity for the fiscal years ended April 2, 2022, March 27, 2021 and March 28, 2020. Consolidated Statements of Cash Flows for the fiscal years ended April 2, 2022, March 27, 2021 and March 28, 2020. Notes to Consolidated Financial Statements for the fiscal years ended April 2, 2022, March 27, 2021 and March 28, 2020. 2. Exhibits: EXHIBIT INDEX Exhibit No. Document Description 2.1 Stock Purchase Agreement, dated as of September 24, 2018, by and among Allegra Donata Versace Beck, Donatella Versace, Santo Versace, Borgo Luxembourg S.À R.L., Blackstone GPV Capital Partners (Mauritius) VI-D FDI Ltd., Blackstone GPV Tactical Partners (Mauritius)-N Ltd. and Capri Holdings Limited (f/k/a Michael Kors Holdings Limited) (included as Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-35368), filed on September 25, 2018 and incorporated herein by reference). 3.1 Amended and Restated Memorandum and Articles of Association of Capri Holdings Limited (included as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 31, 2018 and incorporated herein by reference). 4.1 Specimen of Ordinary Share Certificate of Capri Holdings Limited (included as Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2019 (File No. 001-35368), filed on May 29, 2019 and incorporated herein by reference). 4.2 Shareholders Agreement, dated as of July 11, 2011, among Michael Kors Holdings Limited and certain shareholders of Michael Kors Holdings Limited (included as Exhibit 10.2 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011 and incorporated herein by reference). 4.3 Indenture, dated as of October 20, 2017, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (included as Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-35368), filed on October 20, 2017 and incorporated herein by reference). 10.1 Second Amendment, dated as of June 25, 2020, to the Third Amended and Restated Credit Agreement dated as of November 15, 2018 among Capri Holdings Limited, Michael Kors (USA), Inc., the foreign subsidiary borrowers party thereto, the guarantors party thereto, the financial institutions party thereto as lenders and issuing banks and JPMorgan Chase Bank, N.A., as administrative agent (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-35368), filed on July 1, 2020 and incorporated herein by reference). 10.2 Form of Indemnification Agreement between Michael Kors Holdings Limited and its directors and executive officers (included as Exhibit 10.5 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011 and incorporated herein by reference). 10.3 Amended and Restated Michael Kors (USA), Inc. Stock Option Plan (included as Exhibit 10.4 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011 and incorporated herein by reference). 10.4 Amendment No. 1 to the Amended and Restated Michael Kors (USA), Inc. Share Option Plan (included as Exhibit 4.9 to the Company’s Annual Report on Form 20-F for the fiscal year ended March 31, 2012, filed on June 12, 2012 and incorporated herein by reference). 64 Table of Contents Exhibit No. Document Description 10.5 Capri Holdings Limited Second Amended and Restated Omnibus Incentive Plan (included as Annex A to the Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-35368), filed on July 22, 2020 and incorporated herein by reference). 10.6 Fifth Amended and Restated Employment Agreement, dated as of March 7, 2022, by and among Michael Kors (USA), Inc., Capri Holdings Limited and John D. Idol. 10.7 Executive Bonus Program (included as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2013 filed on August 8, 2013 and incorporated herein by reference). 10.8 Form of Employee Non-Qualified Option Award Agreement (included as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference). 10.9 Form of Employee Restricted Stock Unit Award Agreement (included as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference). 10.10 Form of Performance-Based Restricted Stock Unit Award Agreement (included as Exhibit 10.17 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference). 10.11 Form of Independent Director Restricted Stock Unit Award Agreement (included as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference). 10.12 Aircraft Time Sharing Agreement, dated November 24, 2014, by and between Michael Kors (USA), Inc. and John Idol (included as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015 and incorporated herein by reference). 10.13 Employment Agreement, dated as of April 17, 2017, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited and Thomas J. Edwards, Jr. (included as Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended April 1, 2017, filed on May 31, 2017 and incorporated herein by reference). 10.14 Capri Holdings Limited Deferred Compensation Plan (included as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001.35368), filed on November 14, 2019 and incorporated herein by reference). 10.15 Employment Agreement between Michael Kors (USA), Inc. and Krista McDonough made as of October 1, 2016 (included as Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020 (File No 001-35368), filed on July 8, 2020 and incorporated herein by reference). 10.16 Employment Agreement, dated as of March 30, 2020, by and among Capri Holdings Limited, Michael Kors (USA), Inc. and Daniel Purefoy (included as Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 27, 2021, filed on May 26, 2021 and incorporated herein by reference). 10.17 Employment Agreement, dated as of August 24, 2021, by and among Capri Holdings Limited, Michael Kors (USA), Inc. and Joshua Schulman (included as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 25, 2021 filed on November 3, 2021 and incorporated herein by reference). 10.18 Separation Agreement (“ Agreement ”), by and between Joshua Schulman, Capri Holdings Limited (“ Capri ”), and Michael Kors (USA), Inc., dated March 7, 2022. 10.19 Employment Agreement, effective as of June 1, 2021, by and among Capri Holdings Limited, Michael Kors (USA), Inc. and Jenna Hendricks. 10.20 Suspension of Rights Agreement, dated as of September 23, 2021, to the Third Amended and Restated Credit Agreement, dated as of November 15, 2018 among, Michael Kors (USA), Inc., Capri Holdings Limited, the Foreign Subsidiary Borrowers party to the Credit Agreement, JPMorgan Chase Bank, N.A., as Administrative Agent, the Lenders thereto and the other parties party thereto (included as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 25, 2021 filed on November 3, 2021 and incorporated herein by reference). 21.1 List of subsidiaries of Capri Holdings Limited. 23.2 Consent of Ernst & Young LLP. 31.1 Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.1 Interactive Data Files. 65 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: June 1, 2022 CAPRI HOLDINGS LIMITED By: /s/ John D. Idol Name: John D. Idol Title: Chairman & Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ John D. Idol Chairman, Chief Executive Officer and Director (Principal Executive Officer) June 1, 2022 John D. Idol By: /s/ Thomas J. Edwards, Jr. Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer) June 1, 2022 Thomas J. Edwards Jr. By: /s/ Marilyn Crouther Director June 1, 2022 Marilyn Crouther By: /s/ Robin Freestone Director June 1, 2022 Robin Freestone By: /s/ Judy Gibbons Director June 1, 2022 Judy Gibbons By: /s/ Ann Korologos Director June 1, 2022 Ann Korologos By: /s/ Stephen F. Reitman Director June 1, 2022 Stephen F. Reitman By: /s/ Jane Thompson Director June 1, 2022 Jane Thompson By: /s/ Jean Tomlin Director June 1, 2022 Jean Tomlin 66 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Capri Holdings Limited Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Capri Holdings Limited and subsidiaries (“the Company”) as of April 2, 2022 and March 27, 2021, and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended April 2, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 2, 2022 and March 27, 2021, and the results of its operations and its cash flow for each of the three years in the period ended April 2, 2022, in conformity with the U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of April 2, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated June 1, 2022 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Valuation of Goodwill and Indefinite-lived Intangible Assets Description of the Matter At April 2, 2022, the Company’s goodwill and indefinite-lived intangible assets, consisting of brand names, totaled $1.4 billion and $1.2 billion, respectively. As discussed in Note 2 to the consolidated financial statements, goodwill and indefinite-lived intangible assets are assessed for impairment on an annual basis, or whenever impairment indicators exist. Auditing the Company’s annual impairment assessments was complex and highly judgmental due to the significant estimation required in determining the fair value of the reporting units for goodwill and the fair value of indefinite-lived brand name intangible assets. In particular, the fair value estimates were sensitive to significant assumptions, such as changes in the discount rate, revenue growth rate, margin and royalty rates, which are affected by expectations about future market or economic conditions. 67 Table of Contents How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill and indefinite-lived intangible assets impairment review process, including controls over management’s review of the significant assumptions described above. To test the estimated fair value of the Company’s reporting units and indefinite-lived intangible assets, we performed audit procedures that included, among others, assessing the valuation methodologies and testing the significant assumptions discussed above and the completeness and accuracy of the underlying data used by the Company in its analyses. We compared the significant assumptions used by management to current industry and economic trends and evaluated whether changes to the Company’s business environment would affect the significant assumptions. For example, we compared the royalty rates used in estimating the fair value of certain indefinite-lived brand name intangible assets to current industry licensing agreements. We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of the significant assumptions to evaluate the changes in the fair value of the reporting units and indefinite-lived brand name intangible assets that would result from changes in the assumptions. We also involved our internal valuation specialists to assist in our evaluation of the significant assumptions and methodologies used by the Company in developing the fair value estimates. In addition, we tested management’s reconciliation of the fair value of the reporting units to the market capitalization of the Company. Impairment of Retail Store Long-Lived assets Description of the Matter As discussed in Note 2 to the consolidated financial statements, the Company evaluates its long-lived assets, which primarily include property and equipment and operating lease right-of-use assets at retail stores, for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. During the year ended April 2, 2022, the Company recognized an impairment charge of $83 million related to the long-lived assets. Auditing the Company’s impairment assessment of retail store long-lived assets was complex and highly judgmental due to the significant estimation required in determining the future cash flows used to assess recoverability of each retail store long-lived asset group (undiscounted) and determining the fair value (discounted). The significant assumptions used include estimated future cash flows directly related to the future operation of the stores (including sales and expense growth rates) and the discount rate used to determine fair value. Significant assumptions used in determining the fair value of certain operating lease right-of-use assets include the current market rent and discount rate for the remaining lease term of the related stores. These assumptions are subjective in nature and are affected by expectations about future market or economic conditions. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the retail store long-lived assets impairment process, including, determining the undiscounted future cash flows of the stores and the fair value of the long-lived assets (including those related to operating leases) for the stores that were deemed to be impaired. We also tested controls over management’s review of the significant assumptions described above. Our testing of the Company’s impairment measurement included, among other procedures, evaluating the significant assumptions and operating data used to calculate the estimated future cash flows and to determine the fair value of the store long lived asset groups. For a sample of retail stores, we tested the completeness and accuracy of the data used by the Company in its analyses and we compared the significant assumptions used to determine the forecasted cash flows to historical results of the retail stores, current industry and economic trends and inquired of the Company’s executives to understand the business initiatives supporting the assumptions in the future cash flows. We involved our internal valuation specialists to assist in evaluating the fair value of certain operating lease right-of-use assets, which included assessing the estimated market rental rates of these leases by comparing them to rental rates for comparable leases and evaluating the applied discount rate. /s/ ERNST & YOUNG LLP We have served as the Company’s auditor since 2014. New York, New York June 1, 2022 68 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Capri Holdings Limited Opinion on Internal Control over Financial Reporting We have audited Capri Holdings Limited and subsidiaries’ internal control over financial reporting as of April 2, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Capri Holdings Limited and subsidiaries (“the Company”) maintained, in all material respects, effective internal control over financial reporting as of April 2, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of April 2, 2022 and March 27, 2021, the related consolidated statements of operations and comprehensive income (loss) , shareholders’ equity and cash flows for each of the three years in the period ended April 2, 2022, and the related notes and our report dated June 1, 2022 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ ERNST & YOUNG LLP New York, New York June 1, 2022 69 Table of Contents CAPRI HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except share data) April 2, 2022 March 27, 2021 Assets Current assets Cash and cash equivalents $ 169 $ 232 Receivables, net 434 373 Inventories, net 1,096 736 Prepaid expenses and other current assets 192 205 Total current assets 1,891 1,546 Property and equipment, net 476 485 Operating lease right-of-use assets 1,358 1,504 Intangible assets, net 1,847 1,992 Goodwill 1,418 1,498 Deferred tax assets 240 278 Other assets 250 178 Total assets $ 7,480 $ 7,481 Liabilities and Shareholders’ Equity Current liabilities Accounts payable $ 555 $ 512 Accrued payroll and payroll related expenses 165 116 Accrued income taxes 52 126 Short-term operating lease liabilities 414 447 Short-term debt 29 123 Accrued expenses and other current liabilities 351 297 Total current liabilities 1,566 1,621 Long-term operating lease liabilities 1,467 1,657 Deferred tax liabilities 432 397 Long-term debt 1,131 1,219 Other long-term liabilities 326 430 Total liabilities 4,922 5,324 Commitments and contingencies Shareholders’ equity Ordinary shares, no par value; 650,000,000 shares authorized; 221,967,599 shares issued and 142,806,269 outstanding at April 2, 2022; 219,222,937 shares issued and 151,280,011 outstanding at March 27, 2021 — — Treasury shares, at cost ( 79,161,330 shares at April 2, 2022 and 67,942,926 shares at March 27, 2021) ( 3,987 ) ( 3,326 ) Additional paid-in capital 1,260 1,158 Accumulated other comprehensive income 194 56 Retained earnings 5,092 4,270 Total shareholders’ equity of Capri 2,559 2,158 Noncontrolling interest ( 1 ) ( 1 ) Total shareholders’ equity 2,558 2,157 Total liabilities and shareholders’ equity $ 7,480 $ 7,481 See accompanying notes to consolidated financial statements. 70 Table of Contents CAPRI HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (In millions, except share and per share data) Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Total revenue $ 5,654 $ 4,060 $ 5,551 Cost of goods sold 1,910 1,463 2,280 Gross profit 3,744 2,597 3,271 Selling, general and administrative expenses 2,533 2,018 2,464 Depreciation and amortization 193 212 249 Impairment of assets 73 316 708 Restructuring and other charges 42 32 42 Total operating expenses 2,841 2,578 3,463 Income (loss) from operations 903 19 ( 192 ) Other income, net ( 2 ) ( 7 ) ( 6 ) Interest (income) expense, net ( 18 ) 43 18 Foreign currency loss (gain) 8 ( 20 ) 11 Income (loss) before provision for income taxes 915 3 ( 215 ) Provision for income taxes 92 66 10 Net income (loss) 823 ( 63 ) ( 225 ) Less: Net income (loss) attributable to noncontrolling interest 1 ( 1 ) ( 2 ) Net income (loss) attributable to Capri $ 822 $ ( 62 ) $ ( 223 ) Weighted average ordinary shares outstanding: Basic 149,724,675 150,453,568 150,714,598 Diluted 152,497,907 150,453,568 150,714,598 Net income (loss) per ordinary share attributable to Capri: Basic $ 5.49 $ ( 0.41 ) $ ( 1.48 ) Diluted $ 5.39 $ ( 0.41 ) $ ( 1.48 ) Statements of Comprehensive Income (Loss): Net income (loss) $ 823 $ ( 63 ) $ ( 225 ) Foreign currency translation adjustments 127 ( 15 ) 145 Net gain (loss) on derivatives 10 ( 4 ) ( 4 ) Comprehensive income (loss) 960 ( 82 ) ( 84 ) Less: Net income (loss) attributable to noncontrolling interest 1 ( 1 ) ( 2 ) Less: Foreign currency translation adjustments attributable to noncontrolling interest ( 1 ) — — Comprehensive income (loss) attributable to Capri $ 960 $ ( 81 ) $ ( 82 ) See accompanying notes to consolidated financial statements. 71 Table of Contents CAPRI HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in millions, except share data which is in thousands) Ordinary Shares Additional Paid-in Capital Treasury Shares Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Equity of Capri Non-controlling Interests Total Equity Shares Amounts Shares Amounts Balance at March 30, 2019, as previously reported 216,051 $ — $ 1,011 ( 65,119 ) $ ( 3,223 ) $ ( 66 ) $ 4,707 $ 2,429 $ 3 $ 2,432 Adoption of accounting standard (ASU 2106-02) — — — — — — ( 152 ) ( 152 ) — ( 152 ) Balance as of March 30, 2019 216,051 — 1,011 ( 65,119 ) ( 3,223 ) ( 66 ) 4,555 2,277 3 2,280 Net loss — — — — — — ( 223 ) ( 223 ) ( 2 ) ( 225 ) Other comprehensive income — — — — — 141 — 141 — 141 Total comprehensive loss — — — — — — — ( 82 ) ( 2 ) ( 84 ) Vesting of restricted awards, net of forfeitures 1,262 — — — — — — — — — Exercise of employee share options 7 — — — — — — — — — Share based compensation expense — — 70 — — — — 70 — 70 Repurchase of ordinary shares — — — ( 2,775 ) ( 102 ) — — ( 102 ) — ( 102 ) Adjustment of redeemable non-controlling interests to redemption value — — 4 — — — — 4 $ — 4 Balance as of March 28, 2020 217,320 — 1,085 ( 67,894 ) ( 3,325 ) 75 4,332 2,167 1 2,168 Net loss — — — — — — ( 62 ) ( 62 ) ( 1 ) ( 63 ) Other comprehensive loss — — — — — ( 19 ) — ( 19 ) — ( 19 ) Total comprehensive loss — — — — — — — ( 81 ) ( 1 ) ( 82 ) Vesting of restricted awards, net of forfeitures 1,456 — — — — — — — — — Exercise of employee share options 447 — 3 — — — — 3 — 3 Share based compensation expense — — 70 — — — — 70 — 70 Repurchase of ordinary shares — — — ( 49 ) ( 1 ) — — ( 1 ) — ( 1 ) Other — — — — — — — — ( 1 ) ( 1 ) Balance at March 27, 2021 219,223 — 1,158 ( 67,943 ) ( 3,326 ) $ 56 4,270 2,158 ( 1 ) 2,157 Net income — — — — — — 822 822 1 823 Other comprehensive income (loss) — — — — — 138 — 138 ( 1 ) 137 Total comprehensive income — — — — — — — 960 — 960 Vesting of restricted awards, net of forfeitures 2,336 — — — — — — — — — Exercise of employee share options 408 — 17 — — — — 17 — 17 Share based compensation expense — — 85 — — — — 85 — 85 Repurchase of ordinary shares — — — ( 11,218 ) ( 661 ) — — ( 661 ) — ( 661 ) Balance at April 2, 2022 221,967 — $ 1,260 ( 79,161 ) $ ( 3,987 ) $ 194 $ 5,092 $ 2,559 $ ( 1 ) $ 2,558 See accompanying notes to consolidated financial statements. 72 Table of Contents CAPRI HOLDINGS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Cash flows from operating activities Net income (loss) $ 823 $ ( 63 ) $ ( 225 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 193 212 249 Share-based compensation expense 85 71 70 Impairment of assets 83 316 708 Credit losses 7 ( 3 ) 29 Deferred income taxes ( 57 ) ( 70 ) ( 73 ) Changes to lease related balances, net ( 142 ) ( 112 ) ( 55 ) Amortization of deferred financing costs 6 6 8 Tax (benefit) deficit on exercise of share options ( 4 ) 4 2 Foreign currency (gains) losses — ( 15 ) 11 Other non-cash charges 1 — 3 Change in assets and liabilities: Receivables, net ( 78 ) ( 52 ) 42 Inventories, net ( 386 ) 145 115 Prepaid expenses and other current assets 14 ( 31 ) 20 Accounts payable 69 50 63 Accrued expenses and other current liabilities 30 153 ( 95 ) Other long-term assets and liabilities 60 13 ( 13 ) Net cash provided by operating activities 704 624 859 Cash flows from investing activities Capital expenditures ( 131 ) ( 111 ) ( 223 ) Cash paid for asset/business acquisitions, net of cash acquired — ( 13 ) ( 13 ) Settlement of net investment hedges 189 — 298 Net cash provided by (used in) investing activities 58 ( 124 ) 62 Cash flows from financing activities Debt borrowings 945 2,443 2,282 Debt repayments ( 1,132 ) ( 3,311 ) ( 2,676 ) Debt issuance costs — ( 4 ) ( 1 ) Repurchase of ordinary shares ( 661 ) ( 1 ) ( 102 ) Exercise of employee share options 17 3 — Other financing activities 31 — — Net cash used in financing activities ( 800 ) ( 870 ) ( 497 ) Effect of exchange rate changes on cash and cash equivalents ( 24 ) 12 ( 4 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 62 ) ( 358 ) 420 Beginning of period 234 592 172 End of period $ 172 $ 234 $ 592 Supplemental disclosures of cash flow information Cash paid for interest $ 37 $ 52 $ 80 Cash paid for income taxes $ 43 $ 45 $ 98 Supplemental disclosure of non-cash investing and financing activities Accrued capital expenditures $ 39 $ 17 $ 30 See accompanying notes to consolidated financial statements. 73 Table of Contents CAPRI HOLDINGS LIMITED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Business and Basis of Presentation The Company was incorporated in the British Virgin Islands on December 13, 2002 as Michael Kors Holdings Limited and changed its name to Capri Holdings Limited (“Capri,” and together with its subsidiaries, the “Company”) on December 31, 2018. 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, apparel and footwear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos. The Company operates in three reportable segments: Versace, Jimmy Choo and Michael Kors. See Note 19 for additional information. The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. 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 fiscal years ending on March 27, 2021 and March 28, 2020 (“Fiscal 2021” and “Fiscal 2020”, respectively) contain 52 weeks, whereas the fiscal year ending April 2, 2022 (“Fiscal 2022”) contain 53 weeks. The Company’s Fiscal 2023 is a 52-week period ending April 1, 2023. 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts, credit losses, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes, goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates. Seasonality The Company experiences certain effects of seasonality with respect to its business. The Company generally experiences greater sales during its third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during its first fiscal quarter. Revenue Recognition The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. The Company recognizes retail store revenues when control of the product is transferred at the point of sale at Company owned stores, including concessions, net of estimated returns. Revenue from sales through the Company’s e-commerce sites is recognized at the time of delivery to the customer, reduced by an estimate of returns. Wholesale revenue is recognized net of estimates for sales returns, discounts, markdowns and allowances, after merchandise is shipped and control of the underlying product is transferred to the Company’s wholesale customers. To arrive at net sales for retail revenue, gross sales are reduced by actual customer returns as well as by a provision for estimated future customer returns, which is based on management’s review of historical and future customer return expectations. Sales taxes collected from retail customers are presented on a net basis and, as such, are excluded from revenue. To arrive at net sales for wholesale revenue, gross sales are reduced by provisions for estimated future returns, based on current expectations, as well as trade discounts, markdowns, 74 Table of Contents allowances, operational chargebacks, and certain cooperative selling expenses. These estimates are based on such factors as historical trends, actual and forecasted performance and current market conditions, which are reviewed by management on a quarterly basis. The following table details the activity and balances of the Company’s sales reserves for the fiscal years ended April 2, 2022, March 27, 2021, and March 28, 2020 (in millions): Balance Beginning of Year Amounts Charged to Revenue Write-offs Against Reserves Balance at Year End Total Sales Reserves: Fiscal Year Ended April 2, 2022 $ 98 $ 333 $ ( 339 ) $ 92 Fiscal Year Ended March 27, 2021 166 313 ( 381 ) 98 Fiscal Year Ended March 28, 2020 127 497 ( 458 ) 166 Royalty revenue generated from product licenses, which includes contributions for advertising, is based on reported sales of licensed products bearing the Company’s trademarks at rates specified in the license agreements. These agreements are also subject to contractual minimum levels. Royalty revenue generated by geographic licensing agreements is recognized as it is earned under the licensing agreements based on reported sales of licensees applicable to specified periods, as outlined in the agreements. These agreements allow for the use of the Company’s tradenames to sell its branded products in specific geographic regions. Loyalty Program The Company offers a loyalty program, which allows its Michael Kors United States customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. The contract liability, net of an estimated “breakage,” is recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets and is expected to be recognized within the next 12 months. See Note 3 for additional information. Advertising and Marketing Costs Advertising and marketing costs are generally expensed when the advertisement is first exhibited and are recorded in selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income (loss). Advertising and marketing expense was $ 329 million, $ 137 million and $ 201 million in Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively. Cooperative advertising expense, which represents the Company’s participation in advertising expenses of its wholesale customers, is reflected as a reduction to revenue. Expenses related to cooperative advertising for Fiscal 2022, Fiscal 2021 and Fiscal 2020, were $ 4 million, $ 3 million and $ 7 million, respectively. Shipping and Handling Freight-in expenses are recorded as part of cost of goods sold, along with product costs and other costs to acquire inventory. The costs of preparing products for sale, including warehousing expenses, are included in selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income (loss). Selling, general and administrative expenses also include the costs of shipping products to the Company’s e-commerce customers. Shipping and handling costs included within selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income (loss) were $ 236 million, $ 160 million and $ 157 million for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively. Shipping and handling costs charged to customers are included in total revenue. COVID-19 Related Government Assistance and Subsidies During Fiscal 2022 and Fiscal 2021, the Company recorded $ 10 million and $ 37 million, respectively, related to government assistance and subsidies. There was no government assistance or subsidies recorded in Fiscal 2020. These amounts mostly relate to rent support and payroll expense and were recorded as a reduction of selling, general and administrative expenses. 75 Table of Contents 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 April 2, 2022 and March 27, 2021 are credit card receivables of $ 18 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 April 2, 2022 and March 27, 2021 from the consolidated balance sheets to the consolidated statements of cash flows is as follows: Fiscal Years Ended April 2, 2022 March 27, 2021 Reconciliation of cash, cash equivalents and restricted cash Cash and cash equivalents $ 169 $ 232 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 $ 172 $ 234 Inventories 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 as of April 2, 2022 and March 27, 2021 were $ 31 million and $ 28 million, respectively. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted-average cost method. Costs include amounts paid to independent manufacturers, plus duties and freight to bring the goods to the Company’s warehouses, as well as shipments to stores. The Company continuously evaluates the composition of its inventory and makes adjustments when the cost of inventory is not expected to be fully recoverable. The net realizable value of the Company’s inventory is estimated based on historical experience, current and forecasted demand and other market conditions. In addition, reserves for inventory losses are estimated based on historical experience and physical inventory counts. The Company’s inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations. Our historical estimates of these adjustments have not differed materially from actual results. Store Pre-opening Costs Costs associated with the opening of new retail stores and start up activities, are expensed as incurred. Property and Equipment Property and equipment is stated at cost less accumulated depreciation and amortization (carrying value). Depreciation is recorded on a straight-line basis over the expected remaining useful lives of the related assets. Equipment, furniture and fixtures are depreciated over five to seven years , computer hardware and software are depreciated over three to five years . The Company’s share of the cost of constructing in-store shop displays within its wholesale customers’ floor-space (“shop-in-shops”), which is paid directly to third-party suppliers, is capitalized as property and equipment and is generally amortized over a useful life of three to five years . Leasehold improvements are amortized using the straight-line method over the shorter of the estimated remaining useful lives of the related assets or the remaining lease term, including highly probable renewal periods. The Company includes all depreciation and amortization expense as a component of total operating expenses, as the underlying long-lived assets are not directly or indirectly related to bringing the Company’s products to their existing location and condition. Maintenance and repairs are charged to expense in the year incurred. The Company capitalizes, in property and equipment, direct costs incurred during the application development stage and the implementation stage for developing, purchasing or otherwise acquiring software for its internal use. These costs are amortized over the estimated useful lives of the software, generally five years , except for ERP systems which has an estimated useful life of ten years . All costs incurred during the preliminary project stage, including project scoping and identification and testing of alternatives, are expensed as incurred. 76 Table of Contents Definite-lived Intangible Assets The Company’s definite-lived intangible assets consist of trademarks and customer relationships which are stated at cost less accumulated amortization. The Company’s customer relationships are amortized over five to eighteen years . Reacquired rights recorded in connection with the acquisition of Michael Kors (HK) Limited and Subsidiaries (“MKHKL”) are amortized through March 31, 2041, the original expiration date of the Michael Kors license agreement in the Greater China region. The trademark for the Michael Kors brand is amortized over twenty years . Long-lived Assets The Company evaluates all long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. For the purposes of impairment testing, the Company groups long-lived assets at the lowest level of identifiable cash flow. Leasehold improvements are typically amortized over the term of the store lease, including reasonably assured renewals and the shop-in-shops are amortized over a useful life of three to five years . The Company’s impairment testing is based on its best estimate of the future operating cash flows. If the sum of our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, the Company would recognize an impairment charge, which is measured as the amount by which the carrying value exceeds the fair value of the asset. The fair values determined by management require significant judgment and include certain assumptions regarding future sales and expense growth rates, discount rates and estimates of real estate market fair values. As such, these estimates may differ from actual results and are affected by future market and economic conditions. During Fiscal 2022, Fiscal 2021 and Fiscal 2020, the Company recorded impairment charges of $ 83 million, $ 158 million and $ 357 million, respectively, which were primarily related to operating lease right-of-use assets and fixed assets of our retail store locations. Please refer to Note 7 and Note 13 for additional information. Goodwill and Other Indefinite-lived Intangible Assets The Company records intangible assets based on their fair value on the date of acquisition. Goodwill is recorded as the difference between the fair value of the purchase consideration and the fair value of the net identifiable tangible and intangible assets acquired. The brand intangible assets recorded in connection with the acquisitions of Versace and Jimmy Choo were determined to be indefinite-lived intangible assets, which are not subject to amortization. The Company performs an impairment assessment of goodwill, as well as the Versace brand and Jimmy Choo brand intangible assets on an annual basis, or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill, for the Versace brand and the Jimmy Choo brand are assessed for impairment during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business. The Company may assess its goodwill and its brand intangible assets for impairment initially using a qualitative approach to determine whether it is more likely than not that the fair value of these assets is greater than their carrying value. When performing a qualitative test, the Company assesses various factors, including industry and market conditions, macroeconomic conditions and performance of its businesses. If the results of the qualitative assessment indicate that it is more likely than not that our goodwill and other indefinite-lived intangible assets are impaired, a quantitative impairment analysis is performed to determine if impairment is required. The Company may also elect to perform a quantitative analysis of goodwill and its indefinite-lived intangible assets initially rather than using a qualitative approach. The impairment testing for goodwill is performed at the reporting unit level. The Company uses industry accepted valuation models and set criteria that are reviewed and approved by various levels of management and, in certain instances, it engages independent third-party valuation specialists. To determine the fair value of a reporting unit, the Company uses a combination of the income and market approaches, when applicable. The Company believes the blended use of both models, when applicable, compensates for the inherent risk associated with either model if used on a stand-alone basis, and this combination is indicative of the factors a market participant would consider when performing a similar valuation. If the fair value of a reporting unit exceeds the related carrying value, the reporting unit’s goodwill is considered not to be impaired and no further testing is performed. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recorded for the difference. These valuations are affected by certain estimates, including future revenue growth rates, future operating expense growth rates, gross margins and discount rates. Future events could cause us to conclude that impairment indicators exist and goodwill may be impaired. 77 Table of Contents When performing a quantitative impairment assessment of our brand intangible assets, the fair value of the Versace and the Jimmy Choo brands is estimated using a discounted cash flow analysis based on the “relief from royalty” method, assuming that a third party would be willing to pay a royalty in lieu of ownership for this intangible asset. This approach is dependent on many factors, including estimates of future revenue growth rates, royalty rates and discount rates. Actual future results may differ from these estimates. An impairment loss is recognized when the estimated fair value of the brand intangible assets is less than its carrying amount. During the fourth quarter of Fiscal 2022, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis for each brand. Based on qualitative impairment assessment of the Michael Kors reporting units, the Company concluded that it is more likely than not that the fair value of the Michael Kors reporting units exceeded its carrying value and, therefore, was not impaired. The Company elected to perform quantitative impairment analyses for the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair values of reporting units. The Company also elected to perform an impairment analysis for the Versace and Jimmy Choo brand intangible assets using an income approach to estimate the fair values. Based on the results of these assessments, the Company concluded that the fair values of the Jimmy Choo and Versace reporting units and the brand intangible assets exceeded the related carrying amounts and no impairment was required. In Fiscal 2021, the Company recorded impairment charges of $ 94 million related to the Jimmy Choo retail and Jimmy Choo licensing reporting units and $ 69 million related to the Jimmy Choo brand intangible assets. The Company recorded impairment charges of $ 171 million related to the Jimmy Choo retail and Jimmy Choo licensing reporting units and $ 180 million related to the Jimmy Choo brand intangible assets during Fiscal 2020. The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive income (loss) for the fiscal years ended March 27, 2021 and March 28, 2020. See Note 8 for information relating to the Company’s annual impairment analysis performed during the fourth quarter of Fiscal 2022, Fiscal 2021 and Fiscal 2020. It is possible that the Company’s conclusions regarding impairment or recoverability of goodwill or other indefinite intangible assets could change in future periods if, for example, (i) the Company’s businesses do not perform as projected, (ii) overall economic conditions in future years vary from current assumptions, (iii) business conditions or strategies change from our current assumptions, (iv) discount rates change, (v) market multiples change or (vi) the identification of the Company’s reporting units change, among other factors. Such changes could result in a future impairment charge of goodwill or other indefinite-lived intangible assets. Insurance The Company uses a combination of insurance and self-insurance programs, including a wholly-owned captive insurance entity, to provide for the potential liabilities for certain risks, including workers’ compensation and employee-related health care benefits. The Company also maintains stop-loss coverage with third-party insurers to limit its exposure arising from claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon management’s estimates of the discounted cost for self-insured claims incurred using actuarial assumptions, historical loss experience, actual payroll and other data. Although the Company believes that it can reasonably estimate losses related to these claims, actual results could differ from these estimates. The Company also maintains other types of customary business insurance policies, including general liability, directors and officers, marine transport and inventory and business interruption insurance. Insurance recoveries represent gain contingencies and are recorded upon actual settlement with the insurance carrier. Share-based Compensation The Company grants share-based awards to certain employees and directors of the Company. The grant date fair value of share options is calculated using the Black-Scholes option pricing model. The Company uses its own historical experience in determining the expected holding period and volatility of its time-based share option awards. The risk-free interest rate is derived from the zero-coupon United States (“U.S.”) Treasury Strips yield curve based on the grant’s estimated holding period. Determining the grant date fair value of share-based awards requires considerable judgment, including estimating expected volatility, expected term and risk-free rate. If factors change and the Company employs different assumptions, the fair value of future awards and the resulting share-based compensation expense may differ significantly from what the Company has estimated in the past. The closing market price of the Company’s shares on the date of grant is used to determine the grant date fair value of restricted shares, time-based restricted stock units (“RSUs”) and performance-based RSUs. These fair values are recognized as 78 Table of Contents expense over the requisite service period, net of estimated forfeitures, based on expected attainment of pre-established performance goals for performance grants, or the passage of time for those grants which have only time-based vesting requirements. Foreign Currency Translation and Transactions The financial statements of the majority of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. The Company’s functional currency is the United States Dollar (“USD”) for Capri and its United States based subsidiaries. Assets and liabilities are translated using period-end exchange rates, while revenues and expenses are translated using average exchange rates over the reporting period. The resulting translation adjustments are recorded separately in shareholders’ equity as a component of accumulated other comprehensive income. Foreign currency income and losses resulting from the re-measuring of transactions denominated in a currency other than the functional currency of a particular entity are included in foreign currency (gain) loss on the Company’s consolidated statements of operations and comprehensive income (loss). Derivative Financial Instruments Forward Foreign Currency Exchange Contracts The Company uses forward currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these forward currency contracts to hedge the Company’s cash flows, as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation. The Company designates certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income (loss). The Company classifies cash flows relating to its forward foreign currency exchange contracts related to purchase of inventory consistently with the classification of the hedged item, within cash flows from operating activities. The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge. Net Investment Hedges The Company also uses fixed-to-fixed cross currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between its United States dollar and these foreign currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12, “ Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, ” and has designated these contracts as net investment hedges. The net gain or (loss) on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest expense 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. 79 Table of Contents During the fourth quarter of Fiscal 2020, the Company terminated all of its net investment hedges related to its Euro-denominated subsidiaries. The early termination of these hedges resulted in the Company receiving $ 296 million in cash during the fourth quarter of Fiscal 2020. During Fiscal 2021, the Company resumed its normal hedging program and entered into multiple fixed-to-fixed cross-currency swap agreements to hedge its net investment in Euro-denominated and Japanese Yen-denominated subsidiaries against future volatility in the exchange rate between the United States dollar and these currencies. As of April 2, 2022, 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 United States dollar and these currencies. Interest Rate Swap Agreements The Company also uses interest rate swap agreements to hedge the variability of its cash flows resulting from floating interest rates on the Company’s borrowings. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. During the third quarter of Fiscal 2022, the Company terminated its only interest rate swap. As a result, the Company recognized a $ 1 million gain within interest (income) expense, net, in the Company’s consolidated statements of operations and comprehensive income (loss). Income Taxes Deferred income tax assets and liabilities provide for temporary differences between the tax bases and financial reporting bases of the Company’s assets and liabilities using the tax rates and laws in effect for the periods in which the differences are expected to reverse. The Company periodically assesses the realizability of deferred tax assets and the adequacy of deferred tax liabilities, based on the results of local, state, federal or foreign statutory tax audits or estimates and judgments used. Realization of deferred tax assets associated with net operating loss and tax credit carryforwards is dependent upon generating sufficient taxable income prior to their expiration in the applicable tax jurisdiction. The Company periodically reviews the recoverability of its deferred tax assets and provides valuation allowances, as deemed necessary, to reduce deferred tax assets to amounts that more-likely-than-not will be realized. The Company’s management considers many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings within various taxing jurisdictions, expectations of future taxable income, the carryforward periods remaining and other factors. Changes in the required valuation allowance are recorded in income in the period such determination is made. Deferred tax assets could be reduced in the future if the Company’s estimates of taxable income during the carryforward period are significantly reduced or alternative tax strategies are no longer viable. The Company recognizes the impact of an uncertain income tax position taken on its income tax returns at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will be recognized if it has less than a 50% likelihood of being sustained. The tax positions are analyzed periodically (at least quarterly) and adjustments are made as events occur that warrant adjustments for those positions. The Company records interest expense and penalties payable to relevant tax authorities as income tax expense. Leases On March 31, 2019, the Company adopted ASU 2016-02, “Leases (Topic 842),” which requires lessees to recognize a lease liability and a right-of-use asset on the balance sheet for all leases, except certain short-term leases. The Company adopted the new standard recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without restating the comparative prior year periods. 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 ten 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 January 2026. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores under its restructuring initiatives, as defined in Note 10. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease. 80 Table of Contents The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options, generally for the same period as the initial term of the lease. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term. The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on 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. The Company’s lease agreements do not contain any material residual value guarantees or material restrictions or covenants. Debt Issuance Costs and Unamortized Discounts The Company defers debt issuance costs directly associated with acquiring third party financing. These debt issuance costs and any discounts on issued debt are amortized on a straight-line basis, which approximates the effective interest method, as interest expense over the term of the related indebtedness. Deferred financing fees associated with the Company’s Revolving Credit Facilities are primarily recorded within other assets in the Company’s consolidated balance sheets. Deferred financing fees and unamortized discounts associated with the Company’s other borrowings are primarily recorded as an offset to long-term debt in the Company’s consolidated balance sheets. See Note 11 for additional information. Net Income (Loss) per Share The Company’s basic net income (loss) per ordinary share is calculated by dividing net income (loss) by the weighted average number of ordinary shares outstanding during the period. Diluted net income (loss) per ordinary share reflects the potential dilution that would occur if share option grants or any other potentially dilutive instruments, including restricted shares and RSUs, were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are included in diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method. 81 Table of Contents 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): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Numerator: Net income (loss) attributable to Capri $ 822 $ ( 62 ) $ ( 223 ) Denominator: Basic weighted average shares 149,724,675 150,453,568 150,714,598 Weighted average dilutive share equivalents: Share options and restricted stock units, and performance restricted stock units 2,773,232 — — Diluted weighted average shares 152,497,907 150,453,568 150,714,598 Basic net income (loss) per share (1) $ 5.49 $ ( 0.41 ) $ ( 1.48 ) Diluted net income (loss) per share (1) $ 5.39 $ ( 0.41 ) $ ( 1.48 ) (1) Basic and diluted net income (loss) per share are calculated using unrounded numbers. Share equivalents of 360,378 shares, 3,658,959 shares and 3,752,560 shares, for Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively, have been excluded from the above calculation due to their anti-dilutive effect. Diluted net loss per share attributable to Capri for Fiscal 2021 and Fiscal 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. Noncontrolling Interest The Company has an ownership interest in the Michael Kors Latin American joint venture, MK (Panama) Holdings, S.A. and subsidiaries of 75 %, an ownership interest in the Jimmy Choo EMEA joint venture JC Gulf Trading LLC of 49 %, an ownership interest in the Jimmy Choo Macau joint venture J. Choo (Macau) Co. Limited of 70 % and a 50 % ownership interest in J. Choo Russia J.V. Limited and its subsidiary. Recently Adopted Accounting Pronouncements Government Assistance Disclosures In November 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance”, which requires all businesses provide annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. These disclosures include providing the nature of the transactions and the related accounting policy used to account for the transactions, the amounts and financial statement line items impacted by these transactions, and the significant terms and conditions of these transactions, including commitments and contingencies related to such transactions. ASU 2021-10 is effective for the Company beginning in its Fiscal 2023 with early adoption permitted. The Company early adopted ASU 2021-10 during the third quarter of Fiscal 2022 and will continue to utilize the grant accounting model. Recently Issued Accounting Pronouncements The Company has considered all new accounting pronouncements and, other than the recent pronouncements 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. Reference Rate Reform In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and in January 2021, issued ASU 2021-01, “Reference Rate Reform: Scope”. Both of these updates aim to ease the potential burden in accounting for reference rate reform. These updates provide optional 82 Table of Contents expedients and exceptions, if certain criteria are met, for applying accounting principles generally accepted in the United States to contract modifications, hedging relationships and other transactions affected by the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The amendments were effective upon issuance and allow companies to adopt the amendments on a prospective basis through December 31, 2022. The Company has not applied this ASU to any contract modifications or new hedging relationships in the current year. As of April 2, 2022, the Company’s outstanding borrowings under the 2018 Term Loan Facility of $ 495 million and the total availability of $ 1 billion under the 2018 Revolving Credit Facility are both indexed to LIBOR. As such, these agreements are likely to be impacted by these ASUs upon adoption. 3. Revenue Recognition The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. The Company sells its products through three primary channels of distribution: retail, wholesale and licensing. Within the retail and wholesale channels, substantially all of the Company’s revenues consist of sales of products that represent a single performance obligation, where control transfers at a point in time to the customer. For licensing arrangements, royalty and advertising revenue is recognized over time based on access provided to the Company’s brands. The Company has chosen to apply the practical expedient allowing it not to disclose the amount of the transaction price allocated to the remaining performance obligations that have an expected duration of 12 months or less. Retail The Company generates sales through directly operated stores and e-commerce throughout the Americas (United States, Canada and Latin America), EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania). Retail revenue is recognized when control of the product is transferred at the point of sale at Company owned stores, including concessions. For e-commerce transactions, control is transferred and revenue is recognized when products are delivered to the customer, net of estimated returns. To arrive at net sales for retail, gross sales are reduced by actual customer returns, as well as by a provision for estimated future customer returns. Sales tax collected from retail customers are presented on a net basis and, as such, are excluded from revenue. Shipping and handling costs that are billed to customers are included in net sales, with the related costs recorded in cost of goods sold. Shipping and handling costs that are not billed to customers are accounted for as fulfillment costs. Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when the gift card is redeemed or upon “breakage” for the estimated portion of gift cards that are not expected to be redeemed. “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 Company anticipates that substantially all of its outstanding gift cards will be redeemed within the next 12 months. The contract liability related to gift cards, net of estimated “breakage,” was $ 13 million and $ 12 million as of April 2, 2022 and March 27, 2021, respectively, and is included in accrued expenses and other current liabilities in the Company’s consolidated balance sheets. Loyalty Program . The Company offers a loyalty program, which allows its Michael Kors United States customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed. Wholesale The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America. Wholesale revenue is recognized net of estimates for sales 83 Table of Contents returns, discounts, markdowns and allowances, when merchandise is shipped and control of the underlying product is transferred to the Company’s wholesale customers. To arrive at net sales for wholesale, gross sales are reduced by provisions for estimated future returns, as well as trade discounts, markdowns, allowances, operational chargebacks and certain cooperative selling expenses. These estimates are developed based on historical trends, actual and forecasted performance and market conditions, and are reviewed by management on a quarterly basis. Unfulfilled, non-cancelable purchase orders for products from wholesale customers (including the Company’s geographic licensees) are expected to be fulfilled within the next 12 months. Licensing The Company provides its third-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic licensing arrangements. Under product licensing arrangements, the Company allows third parties to manufacture and sell luxury goods, including watches and jewelry, fragrances, eyewear and home furnishings, using the Company’s trademarks. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of Asia. The Company recognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Advertising contributions are received to support the Company’s branded advertising and marketing campaigns and are viewed as part of a single performance obligation with the right to access the Company’s trademarks. Royalty revenue generated from licenses, which includes contributions for advertising, may be subject to contractual minimum levels, as defined in the contract. Such minimums are generally fixed annually, based on the previous year’s sales. Licensing revenue is based on reported current period sales of licensed products at rates that are specified in the license agreements for contracts that are expected to exceed the related guaranteed minimums. If the Company expects the minimum guaranteed amounts to exceed amounts calculated based on actual sales, the guaranteed minimums are recognized ratably over the contractual year to which they relate. Generally, the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, some of our guaranteed minimums for Versace are multi-year based. As of April 2, 2022, 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 Fiscal 2023 $ 29 Fiscal 2024 26 Fiscal 2025 23 Fiscal 2026 23 Fiscal 2027 22 Fiscal 2028 and thereafter 48 Total $ 171 Sales Returns For the sale of goods with a right of return, the Company recognizes revenue for the consideration to which it expects to be entitled and a refund liability for the amount it expects to refund to its customers within accrued expenses and other current liabilities. The refund liability is estimated based on management’s review of historical and current customer returns for its retail and wholesale customers, estimated future returns, adjusted for non-resalable products. The Company also considers its product strategies, as well as the financial condition of its customers, store closings by wholesale customers, changes in the retail environment and other macroeconomic factors. The Company recognizes an asset with a corresponding adjustment to cost of sales for the right to recover the products from its retail and wholesale customers. The refund liability recorded as of April 2, 2022 and March 27, 2021 was $ 52 million and $ 46 million, respectively, and the related asset for the right to recover returned product as of April 2, 2022 and March 27, 2021 was $ 15 million and $ 14 million, respectively. Contract Balances The Company’s contract liabilities are recorded within accrued expenses and other current liabilities and other long-term liabilities in its consolidated balance sheets depending on the short- or long-term nature of the payments to be recognized. The 84 Table of Contents Company’s contract liabilities primarily consist of gift card liabilities, advanced payments from product licensees and loyalty program liabilities. Total contract liabilities were $ 30 million and $ 18 million as of April 2, 2022 and March 27, 2021, respectively. During Fiscal 2022 and Fiscal 2021, the Company recognized $ 10 million and $ 9 million in revenue, respectively, relating to contract liabilities that existed at March 27, 2021 and March 28, 2020 , respectively. There were no material contract assets recorded as of April 2, 2022 and March 27, 2021. There were no changes in historical variable consideration estimates that were materially different from actual results. Disaggregation of Revenue The following table presents the Company’s segment revenues disaggregated by geographic location (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Versace revenue - the Americas $ 408 $ 201 $ 186 Versace revenue - EMEA 425 276 420 Versace revenue - Asia 255 241 237 Total Versace revenue 1,088 718 843 Jimmy Choo revenue - the Americas 175 102 107 Jimmy Choo revenue - EMEA 229 146 282 Jimmy Choo revenue - Asia 209 170 166 Total Jimmy Choo revenue 613 418 555 Michael Kors revenue - the Americas 2,627 1,869 2,822 Michael Kors revenue - EMEA 835 607 821 Michael Kors revenue - Asia 491 448 510 Total Michael Kors revenue 3,953 2,924 4,153 Total revenue - the Americas 3,210 2,172 3,115 Total revenue - EMEA 1,489 1,029 1,523 Total revenue - Asia 955 859 913 Total revenue $ 5,654 $ 4,060 $ 5,551 85 Table of Contents 4. Leases The following table presents the Company’s supplemental balance sheets information related to leases (in millions): Balance Sheet Location April 2, 2022 March 27, 2021 Assets Operating leases Operating lease right-of-use assets $ 1,358 $ 1,504 Liabilities Current: Operating leases Short-term portion of operating lease liabilities $ 414 $ 447 Non-current: Operating leases Long-term portion of operating lease liabilities $ 1,467 $ 1,657 The components of net lease costs for the fiscal year ended April 2, 2022 and March 27, 2021 were as follows (in millions): Consolidated Statement of Operations and Comprehensive Income (Loss) Location April 2, 2022 March 27, 2021 Operating lease cost Selling, general and administrative expenses $ 410 $ 432 Variable lease cost (1) Selling, general and administrative expenses 135 69 Short-term lease cost Selling, general and administrative expenses 16 15 Sublease income (2) Restructuring and other charges ( 5 ) ( 4 ) Sublease income Selling, general and administrative expenses ( 3 ) ( 2 ) Total lease cost, net $ 553 $ 510 (1) The Company elected to account for rent concessions negotiated in connection with COVID-19 as if it were contemplated as part of the existing contract and these concessions are recorded as variable lease expense. As of the fiscal year ended April 2, 2022 and March 27, 2021, rent concessions due to COVID-19 were $ 15 million and $ 52 million, respectively. (2) The Company recorded sublease income related to certain leases in connection with the Capri Retail Store Optimization plan. The following table presents the Company’s supplemental cash flow information related to leases (in millions): April 2, 2022 March 27, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used in operating leases $ 543 $ 488 Non-cash transactions: Lease assets obtained in exchange for new lease liabilities 332 348 Rent concessions due to COVID-19 15 52 86 Table of Contents The following tables summarizes the weighted average remaining lease term and weighted average discount rate related to the Company’s operating lease right-of-use assets and lease liabilities recorded on the balance sheets as of April 2, 2022 and March 27, 2021: April 2, 2022 March 27, 2021 Operating leases: Weighted average remaining lease term (years) 6.0 6.2 Weighted average discount rate 3.1 % 3.1 % At April 2, 2022, the future minimum lease payments under the terms of these noncancelable operating lease agreements are as follows (in millions): April 2, 2022 Fiscal 2023 $ 482 Fiscal 2024 409 Fiscal 2025 325 Fiscal 2026 248 Fiscal 2027 174 Thereafter 426 Total lease payments 2,064 Less: interest ( 183 ) Total lease liabilities $ 1,881 At April 2, 2022, the future minimum sublease income under the terms of these noncancelable operating lease agreements are as follows (in millions): April 2, 2022 Fiscal 2023 $ 7 Fiscal 2024 6 Fiscal 2025 6 Fiscal 2026 4 Fiscal 2027 4 Thereafter 10 Total sublease income $ 37 Additionally, the Company had approximately $ 49 million and $ 23 million of future payment obligations related to executed lease agreements for which the related lease has not yet commenced as of April 2, 2022 and March 27, 2021, respectively. See Note 2 for additional information on the Company’s accounting policies related to leases. 87 Table of Contents 5. Receivables, net Receivables, net consist of (in millions): April 2, 2022 March 27, 2021 Trade receivables (1) $ 461 $ 412 Receivables due from licensees 17 20 478 432 Less: allowances ( 44 ) ( 59 ) Total receivables, net $ 434 $ 373 (1) As of April 2, 2022 and March 27, 2021, $ 83 million and $ 81 million, respectively, of trade receivables were insured. Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues. The Company’s allowance for credit losses is determined through analysis of periodic aging of receivables and assessments of collectability based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowance for credit losses was $ 10 million and $ 25 million as of April 2, 2022 and March 27, 2021, respectively, including the impact related to COVID-19. The Company had credit loss of $ 7 million, $( 3 ) million and $ 29 million, respectively, for Fiscal 2022, Fiscal 2021 and Fiscal 2020. 6. Concentration of Credit Risk, Major Customers and Suppliers Financial instruments that subject the Company to concentration of credit risk are cash and cash equivalents and receivables. As part of its ongoing procedures, the Company monitors its concentration of deposits with various financial institutions in order to avoid any undue exposure. The Company mitigates its risk by depositing cash and cash equivalents in major financial institutions. The Company also mitigates its credit risk by obtaining insurance coverage for a portion of its receivables (see Note 5). No individual customer accounted for 10% or more of the Company’s total revenues during Fiscal 2022, Fiscal 2021 or Fiscal 2020. The Company contracts for the purchase of finished goods principally with independent third-party contractors, whereby the contractor is generally responsible for all manufacturing processes. Although the Company does not have any long-term agreements with any of its manufacturing contractors, the Company believes it has mutually satisfactory relationships with them. The Company allocates product manufacturing among agents and contractors based on their capabilities, the availability of production capacity, quality, pricing and delivery. The inability of certain contractors to provide needed services on a timely basis could adversely affect the Company’s operations and financial condition. For Fiscal 2022, Fiscal 2021 and Fiscal 2020, one contractor accounted for approximately 17 %, 18 % and 20 %, respectively, of the Company’s total finished goods purchases, based on dollar volume. The Company also has relationships with various agents who source finished goods with numerous contractors on behalf of its Michael Kors brand. For Fiscal 2022, Fiscal 2021 and Fiscal 2020, one agent sourced approximately 24 %, 26 % and 26 %, respectively, of Michael Kors finished goods, based on unit volume. 88 Table of Contents 7. Property and Equipment, net Property and equipment, net, consists of (in millions): April 2, 2022 March 27, 2021 Leasehold improvements $ 575 $ 737 Furniture and fixtures 218 350 Computer equipment and software 212 359 Equipment 81 139 Building 48 51 In-store shops 47 53 Land 19 20 Total property and equipment, gross (1) 1,200 1,709 Less: accumulated depreciation and amortization (1) ( 790 ) ( 1,271 ) Subtotal 410 438 Construction-in-progress 66 47 Total property and equipment, net $ 476 $ 485 (1) During the fiscal year ended April 2, 2022, the Company wrote off $ 552 million of fully depreciated assets and related accumulated depreciation for assets which were no longer in service. Depreciation and amortization of property and equipment for the fiscal years ended April 2, 2022, March 27, 2021, and March 28, 2020 totaled $ 144 million, $ 165 million and $ 200 million, respectively. During Fiscal 2022, Fiscal 2021 and Fiscal 2020, the Company recorded property and equipment impairment charges of $ 7 million, $ 23 million and $ 77 million, respectively, primarily related to the Company’s retail store locations. See Note 13 for additional information. 8. Intangible Assets and Goodwill The following table details the carrying values of the Company’s intangible assets other than goodwill (in millions): April 2, 2022 March 27, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carry Amount Definite-lived intangible assets: Reacquired rights $ 400 $ 94 $ 306 $ 400 $ 77 $ 323 Trademarks 23 22 1 23 21 2 Customer relationships 414 112 302 437 86 351 Total definite-lived intangible assets 837 228 609 860 184 676 Indefinite-lived intangible assets: Jimmy Choo brand (1) 570 249 321 587 249 338 Versace brand (1) 917 — 917 978 — 978 Total indefinite-lived intangible assets 1,487 249 1,238 1,565 249 1,316 Total intangible assets, excluding goodwill $ 2,324 $ 477 $ 1,847 $ 2,425 $ 433 $ 1,992 (1) The year-over-year change in net carrying amount reflects foreign currency translation for the fiscal year ended April 2, 2022. As of April 2, 2022, the Company had accumulated impairment charges of $ 249 million related to the Jimmy Choo brand intangible assets. 89 Table of Contents Reacquired rights relate to the Company’s reacquisition of the rights to use the Michael Kors trademarks and to import, sell, advertise and promote certain of its products in the previously licensed territories in the Greater China region and are being amortized through March 31, 2041, the expiration date of the former licensing agreement. The trademarks relate to the Michael Kors brand name and are amortized over twenty years . Customer relationships are generally amortized over five to eighteen years . Amortization expense for the Company’s definite-lived intangibles was $ 49 million, $ 47 million and $ 49 million, respectively, for each of the fiscal years ended April 2, 2022, March 27, 2021 and March 28, 2020. Indefinite-lived intangible assets other than goodwill included the Versace and Jimmy Choo brands, which were recorded in connection with the acquisitions of Versace and Jimmy Choo, and have an indefinite life due to being essential to the Company’s ability to operate the Versace and Jimmy Choo businesses for the foreseeable future. Estimated amortization expense for each of the next five years is as follows (in millions): Fiscal 2023 $ 45 Fiscal 2024 45 Fiscal 2025 45 Fiscal 2026 45 Fiscal 2027 45 Fiscal 2028 and thereafter 384 Total $ 609 The future amortization expense above reflects weighted-average estimated remaining useful lives of nineteen years for reacquired rights, one year for trademarks and eleven years for customer relationships. The following table details the changes in goodwill for each of the Company’s reportable segments (in millions): Versace Jimmy Choo Michael Kors Total Balance at March 28, 2020 881 487 120 $ 1,488 Impairment charges (1) — ( 94 ) — ( 94 ) Foreign currency translation 52 52 — 104 Balance at March 27, 2021 933 445 120 1,498 Foreign currency translation ( 59 ) ( 21 ) — ( 80 ) Balance at April 2, 2022 $ 874 $ 424 $ 120 $ 1,418 (1) The Company recorded impairment charges of $ 94 million during Fiscal 2021 related to the Jimmy Choo wholesale and licensing reporting units. The Company’s goodwill and the Versace and Jimmy Choo brands are not subject to amortization but are evaluated for impairment annually in the last quarter of each fiscal year, or whenever impairment indicators exist. During the fourth quarter of Fiscal 2022, the Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis. The Company performed its goodwill impairment assessment for its Michael Kors reporting units using a qualitative assessment. Based on the results of the Company’s qualitative impairment assessment, the Company concluded that it is more likely than not that the fair value of the Michael Kors’ reporting units exceeded their carrying value and, therefore, were not impaired. The Company performed its annual goodwill and indefinite-lived intangible assets impairment analysis for both the Versace and Jimmy Choo reporting units, using a combination of income and market approaches to estimate the fair value of each brands’ reporting units. The Company also elected to perform an impairment analysis for both the Versace and Jimmy Choo brand indefinite-lived intangible assets using an income approach to estimate the fair values. Based on the results of these assessments, the Company determined there was no impairment for the Jimmy Choo and Versace reporting units or brand intangible assets, as the fair values of the reporting units and the brand intangible assets exceeded the related carrying amounts. 90 Table of Contents In Fiscal 2021, the Company recorded goodwill impairment charges of $ 94 million related to the Jimmy Choo Wholesale and Jimmy Choo Licensing reporting units and impairment charges of $ 69 million related to the Jimmy Choo brand intangible assets. In Fiscal 2020, the Company recorded goodwill impairment charges of $ 171 million related to the Jimmy Choo Retail and Jimmy Choo Licensing reporting units and impairment charges of $ 180 million related to the Jimmy Choo brand intangible assets. The impairment charges were recorded within impairment of assets on our consolidated statement of operations and comprehensive income (loss) for the fiscal years ended March 27, 2021 and March 28, 2020. See Note 13 for additional information. 9. Current Assets and Current Liabilities Prepaid expenses and other current assets consist of the following (in millions): April 2, 2022 March 27, 2021 Prepaid taxes $ 86 $ 133 Other accounts receivables 17 13 Prepaid contracts 15 11 Interest receivable related to net investment hedges 13 12 Other 61 36 Total prepaid expenses and other current assets $ 192 $ 205 Accrued expenses and other current liabilities consist of the following (in millions): April 2, 2022 March 27, 2021 Other taxes payable $ 61 $ 46 Return liabilities 52 46 Accrued capital expenditures 39 17 Accrued advertising and marketing 21 11 Accrued rent (1) 20 20 Gift and retail store credits 17 12 Professional services 15 13 Accrued litigation 13 12 Accrued purchases and samples 11 8 Accrued interest 10 10 Charitable donations (2) 10 20 Restructuring liability 1 9 Other 81 73 Total accrued expenses and other current liabilities $ 351 $ 297 (1) The accrued rent balance relates to variable lease payments. (2) The charitable donations balance relates to a $ 10 million unconditional pledge to The Versace Foundation as of April 2, 2022 and a $ 20 million unconditional pledge to The Capri Holdings Foundation for the Advancement of Diversity in Fashion as of March 27, 2021 which was funded during the second quarter ended September 25, 2021. 10. Restructuring and Other Charges Capri Retail Store Optimization Program During Fiscal 2022, the Company completed its plan to close certain retail stores as a part of Capri Retail Store Optimization Program. The Company closed a total of 167 of its retail stores, with 66 and 101 stores having closed during Fiscal 2022 and Fiscal 2021, respectively. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program was $ 14 million, of which $ 9 million and $ 5 million was recorded during Fiscal 2022 and Fiscal 2021, 91 Table of Contents respectively. The below table presents a roll forward of the Company’s restructuring liability related to its Capri Retail Store Optimization Program (in millions): Severance and benefit costs Lease-related and other costs Total Balance at March 27, 2021 $ — $ 3 $ 3 Additions charged to expense (1) 1 3 4 Payments ( 1 ) ( 5 ) ( 6 ) Balance at April 2, 2022 $ — $ 1 $ 1 (1) Excludes $ 10 million of impairment charges related to operating lease right-of-use assets partially offset by a net credit of $ 5 million related to gains on certain lease terminations during Fiscal 2022. Other Restructuring Charges In addition to the restructuring charges related to the Capri Retail Store Optimization Plan, the Company incurred charges of $ 15 million primarily relating to severance for an executive officer and the closure of certain corporate locations during Fiscal 2022. In addition to the restructuring charges related to the Capri Retail Store Optimization Plan, the Company incurred charges of $ 8 million primarily relating to the closure of certain corporate locations during Fiscal 2021. Other Costs The Company recorded costs of $ 18 million and $ 19 million during Fiscal 2022 and Fiscal 2021, respectively, for equity awards associated with the acquisition of Versace. 11. Debt Obligations The following table presents the Company’s debt obligations (in millions): April 2, 2022 March 27, 2021 Term Loan $ 497 $ 870 Senior Notes due 2024 450 450 Revolving Credit Facility 175 — Other 42 30 Total debt 1,164 1,350 Less: Unamortized debt issuance costs 3 7 Less: Unamortized discount on senior notes 1 1 Total carrying value of debt 1,160 1,342 Less: Short-term debt 29 123 Total long-term debt $ 1,131 $ 1,219 Senior Revolving Credit Facility The Company’s credit facility (the “2018 Credit Facility”) provides for a $ 1 billion revolving credit facility (the “Revolving Credit Facility”), which may be denominated in United States dollars. The Revolving Credit Facility also provides sub-facilities for the issuance of letters of credit of up to $ 75 million and swing loans of up to $ 75 million. The 2018 Credit Facility also provides for a $ 1.6 billion term loan facility (the “2018 Term Loan Facility”). The 2018 Term Loan Facility is divided into two tranches, with the second tranche maturing in December 2023, which requires a quarterly payment of $ 24 million. As of March 27, 2021, the Company has fully paid off the first tranche of the 2018 Term Loan Facility. Borrowings under the Revolving Credit Facility bear interest, at the Company’s option, for loans denominated in United States dollars, an alternate base rate, which is the greatest of: (a) the prime rate publicly announced from time to time by JPMorgan Chase, (b) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate and zero, plus 50 basis points, and (c) the greater of the one-month London Interbank Offered Rate adjusted for 92 Table of Contents statutory reserve requirements for Eurocurrency liabilities (“Adjusted LIBOR”) and zero, plus 100 basis points, in each case, plus an applicable margin based on the Company’s public debt ratings; Borrowings under the 2018 Term Loan Facility bear interest, at the Company’s option, at (a) the alternate base rate plus an applicable margin based on the Company’s public debt ratings; or (b) the greater of Adjusted LIBOR for the applicable interest period and zero, plus an applicable margin based on the Company’s public debt ratings. On June 25, 2020, the Company entered into the second amendment (the “Second Amendment”) to its third amended and restated 2018 Credit Facility, dated as of November 15, 2018, with, among others, JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”). Pursuant to the Second Amendment, the financial covenant in the Company’s 2018 Credit Facility required it to maintain a ratio of the sum of total indebtedness plus the capitalized amount of all operating lease obligations for the last four fiscal quarters to Consolidated EBITDAR of no greater than 3.75 to 1.0 had been waived through the fiscal quarter ending June 26, 2021. In addition, the Second Amendment added a new $ 230 million revolving line of credit with a maturity date of June 24, 2021 (the “ 364 Day Facility”). The Second Amendment also permitted certain working capital facilities between the Company or any of its subsidiaries with a lender or an affiliate of a lender under the 2018 Credit Facility to be guaranteed under the 2018 Credit Facility guarantees and certain supply chain financings with, and up to $ 50 million outstanding principal amount of bilateral letters of credit and bilateral bank guarantees issued by a lender or an affiliate of a lender to be guaranteed and secured under the 2018 Credit Facility guarantees and collateral documents. The Second Amendment, among other things, also temporarily suspended the quarterly maximum leverage ratio covenant and imposed a minimum liquidity test during the period from June 25, 2020 until the earlier of (x) the date on which the Company delivers its financial statements for the fiscal quarter ending June 26, 2021 and (y) the date on which the Company certifies that its net leverage ratio as of the last day of the most recently ended fiscal quarter was no greater than 4.00 to 1.00 (the “Applicable Period”). On May 20, 2021, the Company determined it no longer desired to maintain this additional line of credit and consequently delivered a notice to the Administrative Agent terminating the 364 Day Facility, and the 364 Day Facility terminated on May 25, 2021. The remainder of the 2018 Credit Facility remains in full force and effect. On May 26, 2021 (the “Election Date”), the Company delivered to the Administrative Agent the certificate required to terminate the Applicable Period. Effective as of the Election Date, the Company will be required to comply with the quarterly maximum net leverage ratio test of 4.00 to 1.00. On September 23, 2021, the Company agreed to suspend its rights to borrow in all non-United States dollar (i.e. Pounds Sterling, Euro, Swiss Francs and Japanese Yen) currency LIBOR rate tenors under the 2018 Credit Facility after December 31, 2021 given that non-United States dollar LIBOR will no longer be published after that date. The Revolving Credit Facility also provides for an annual administration fee and a commitment fee equal to 0.10 % to 0.25 % per annum, based on the Company’s public debt ratings, applied to the average daily unused amount of the Revolving Credit Facility. The 2018 Term Loan Facility provides for a commitment fee equal to 0.10 % to 0.25 % per annum, based on the Company’s public debt ratings, applied to the undrawn amount of the 2018 Term Loan Facility, from January 6, 2019 until the term loans are fully drawn or the commitments under the 2018 Term Loan Facility terminate or expire. Loans under the 2018 Credit Facility may be repaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than the customary breakage costs with respect to loans bearing interest based on Adjusted LIBOR or the Canadian Dollar Offered Rate. As per the reinstatement election date of May 27, 2021, the Company will be required to comply with the quarterly maximum net leverage ratio test of 4.00 to 1.00. Such leverage ratio is calculated based on the ratio of consolidated total indebtedness plus the capitalized amount of all operating lease liabilities presented on our consolidated balance sheets to Consolidated EBITDAR (as defined below) for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus income tax expense, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash charges, subject to certain additions and deductions. The 2018 Credit Facility also includes covenants that limit additional indebtedness, guarantees, liens, acquisitions and other investments and cash dividends that are customary for financings of this type. As of April 2, 2022 and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2018 Credit Facility. 93 Table of Contents The 2018 Credit Facility contains events of default customary for financings of this type, including, but not limited to, payment of defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events under The Employee Retirement Income Security Act, material judgments, actual or asserted failure of any guaranty supporting the 2018 Credit Facility to be in full force and effect, and changes of control. If such an event of default occurs, the lenders under the 2018 Credit Facility would be entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2018 Credit Facility, subject to “certain funds” limitations in connection with the transaction governing the 2018 Term Loan Facility. As of April 2, 2022, the Company had $ 175 million of borrowings outstanding under the Revolving Credit Facility, which were recorded within long-term debt in its consolidated balance sheets. As of March 27, 2021, the Company had no borrowings outstanding under the Revolving Credit Facility. In addition, stand-by letters of credit of $ 21 million and $ 27 million were outstanding as of April 2, 2022 and March 27, 2021, respectively. At April 2, 2022 and March 27, 2021, the amount available for future borrowings under the Revolving Credit Facility were $ 804 million and $ 973 million, respectively. As of March 27, 2021, the Company had $ 230 million available for future borrowings under the 364 Day Facility, which was terminated as of May 25, 2021. As of April 2, 2022, the carrying values of borrowings outstanding under the 2018 Term Loan Facility were $ 495 million, net of debt issuance costs of $ 2 million, which was all recorded within long-term debt in its consolidated balance sheets due to prepayments made on the Term Loan during Fiscal 2022. As of March 27, 2021, the carrying values of borrowings outstanding under the 2018 Term Loan Facility were $ 865 million, net of debt issuance costs of $ 5 million, $ 97 million of which was recorded within short-term debt while $ 768 million was recorded within long-term debt in the Company’s consolidated balance sheets. Senior Notes On October 20, 2017, Michael Kors (USA), Inc. (the “Issuer”), the Company’s wholly owned subsidiary, completed its offering of $ 450 million aggregate principal amount senior notes due in 2024 (the “Senior Notes”), pursuant to an exemption from registration under the Securities Act of 1933, as amended. The Senior Notes were issued under an indenture dated October 20, 2017, among the Issuer, the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee (the “Indenture”). The Senior Notes were issued to finance a portion of the Company’s acquisition of Jimmy Choo and certain related refinancing transactions. As of April 2, 2022, the Senior Notes bear interest at a rate of 4.500 % per year, subject to adjustments from time to time if either Moody’s or S&P (or a substitute rating agency therefore) downgrades (or downgrades and subsequently upgrades) the credit rating assigned to the Senior Notes. Interest on the Senior Notes is payable semi-annually on May 1 and November 1 of each year, beginning on May 1, 2018. See Note 20 for additional information. The Senior Notes are unsecured and are guaranteed by the Company and its existing and future subsidiaries that guarantee or are borrowers under the 2018 Credit Facility (subject to certain exceptions, including subsidiaries organized in China). The Senior Notes may be redeemed at the Company’s option at any time in whole or in part at a price equal to 100 % of the principal amount, plus accrued and unpaid interest, plus a “make-whole” amount calculated at the applicable Treasury Rate plus 30 basis points. The Senior Notes rank equally in right of payment with all of the Issuer’s and guarantors’ existing and future senior unsecured indebtedness, senior in right of payment to any future subordinated indebtedness, effectively subordinated in right of payment to any of the Company’s subsidiaries’ obligations and any of the Company’s secured obligations, to the extent of the assets securing such obligations. The Indenture contains covenants, including those that limit the Company’s ability to create certain liens and enter into certain sale and leaseback transactions. In the event of a “Change of Control Triggering Event,” as defined in the Indenture, the Issuer will be required to make an offer to repurchase the Senior Notes at a repurchase price in cash equal to 101 % of the aggregate principal amount of the Senior Notes being repurchased plus any unpaid interest. These covenants are subject to important limitations and exceptions, as per the Indenture. As of April 2, 2022 and March 27, 2021, the carrying value of the Senior Notes was $ 448 million and $ 447 million, respectively, net of issuance costs and unamortized discount, which were recorded within long-term debt in the Company’s consolidated balance sheets. 94 Table of Contents Supplier Financing Program During the third quarter of Fiscal 2021, the Company began offering a supplier financing program to certain suppliers as the Company continues to identify opportunities to improve liquidity. This program enables suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s payment obligations to suppliers) to a financial institution on a non-recourse basis in order to be paid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, are not impacted by a suppliers’ decision to participate in this program. 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 April 2, 2022 and March 27, 2021 was $ 21 million and $ 17 million, respectively and is presented as short-term debt in the Company’s consolidated balance sheets. Japan Credit Facility In Fiscal 2021, the Company’s subsidiary in Japan renewed a short term credit facility (“Japan Credit Facility”) with Mitsubishi UFJ Financial Group (“MUFJ”), which may be used to fund general working capital needs of Michael Kors Japan K.K., subject to the bank’s discretion. The Japan Credit Facility is in effect through November 2022. The Japan Credit Facility provides Michael Kors Japan K.K. with a revolving credit line of up to ¥ 1.0 billion (approximately $ 8 million). The Japan Credit Facility bears interest at a rate posted by the Bank plus 0.300 % two business days prior to the date of borrowing or the date of interest renewal. As of April 2, 2022 the Company had no borrowings outstanding under the Japan Credit Facility and $ 9 million borrowings outstanding as of March 27, 2021, which were recorded within short-term debt in the Company’s consolidated balance sheets. Hong Kong Credit Facility In May 2020, the Company’s Hong Kong subsidiary, MKHKL, renewed its uncommitted credit facility (“HK Credit Facility”) with HSBC, which may be used to fund general working capital needs of MKHKL through January 2023 subject to the bank’s discretion. The HK Credit Facility provides MKHKL with a revolving line of credit of up to 100 million Hong Kong dollar (approximately $ 13 million), which includes bank guarantees of up to 20 million HKD (approximately $ 3 million). Borrowings under the HK Credit Facility must be made in increments of at least 5 million Hong Kong dollar and bear interest at the Hong Kong Interbank Offered Rate (“HIBOR”) plus 200 basis points. As of April 2, 2022 and March 27, 2021, there were no borrowings outstanding under the HK Credit Fac ility. As of April 2, 2022, bank guarantees supported by this facility were 1 million Hong Kong dollar (less than $ 1 million). China Credit Facility In January 2019, the Company’s subsidiary in China, MKTSCL, entered into a short-term credit facility (“China Credit Facility”) with HSBC, which may be used to fund general working capital needs, not to exceed 12 months. The China Credit Facility is in effect through October 2022. The China Credit Facility provides MKTSCL with a Revolving Loan Facility of up to RMB 65 million (approximately $ 10 million), which includes a revolving loan of RMB 35 million (approximately $ 5 million), an overdraft facility with a credit line of RMB 10 million (approximately $ 2 million) and a non-financial bank guarantee facility of RMB 20 million (approximately $ 3 million) or its equivalent in another currency, at lender’s discretion. Borrowings under the China Credit Facility bear interest at plus 0.42 % of the applicable People’s Bank of China’s benchmark lending rate at the time of borrowing. As of April 2, 2022 and March 27, 2021, the Company had no borrowings outstanding under the China Credit Facility. Versace Facilities 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. The arrangement was determined to be a financing arrangement because the de-recognition criteria for the receivables was not met at the time of the cash receipt from the Bank. As of April 2, 2022, the outstanding balance was $ 18 million, with $ 8 million and $ 10 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively. In June 2019, the Company’s subsidiary, Versace, entered into two uncommitted short-term credit facilities, one with Unicredit and the other with Intesa (“Versace Credit Facilities”), which may be used for general working capital needs of Versace. The Versace Credit Facilities provide Versace with a swing line of credit of up to € 32 million (approximately $ 35 million), with interest set by the bank on the date of borrowing. As of April 2, 2022 and March 27, 2021, there were no borrowings outstanding under the Versace Credit Facility. 95 Table of Contents In November 2018, Versace entered into an overdraft facility (“Versace Overdraft Facility”), which may be used for general working capital needs of Versace. The overdraft facility provided Versace with a line of credit of up to € 5 million (approximately $ 6 million). During the second quarter of Fiscal 2022, the Versace Overdraft Facility was terminated. As of March 27, 2021, there were no borrowings outstanding under the Versace Overdraft Facility. In January 2018, Versace entered into an uncommitted short-term credit facility (“Versace Credit Facility”), which may be used for general working capital needs of Versace. The Versace Credit Facility provides Versace with a swing line of credit of up to € 20 million (approximately $ 22 million), which includes a bank guarantee of € 4 million (approximately $ 5 million), with interest set by the bank on the date of borrowing. As of April 2, 2022, bank guarantees outstanding under this facility were € 3 million (approximately $ 3 million). As of April 2, 2022 and March 27, 2021, there were no borrowings outstanding under the Versace Credit Facility. 12. Commitments and Contingencies Commitments The Company has issued stand-by letters of credit to guarantee certain of its retail and corporate operating lease commitments, aggregating $ 36 million at April 2, 2022, including $ 21 million in letters of credit issued under the Revolving Credit Facility. Other Commitments As of April 2, 2022, the Company also has other contractual commitments aggregating $ 2.288 billion, which consist of inventory purchase commitments of $ 1.016 billion, debt obligations of $ 1.164 billion and other contractual obligations of $ 108 million, which primarily relate to the Company’s marketing and advertising obligations, information technology agreements and supply agreements. Long-term Employment Contract The Company has an employment agreement with the Chief Creative Officer of the Michael Kors brand that provides for continuous employment through the date of the officer’s death or permanent disability at an annual salary of $ 1 million. In addition to salary, the agreement provides for an annual bonus and other employee related benefits. Contingencies In the ordinary course of business, the Company is party to various legal proceedings and claims. Although the outcome of such items 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. 13. Fair Value Measurements Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data. Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. 96 Table of Contents At April 2, 2022 and March 27, 2021, the fair values of the Company’s derivative contracts, were determined using broker quotations, which were calculations derived from observable market information: the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but assesses the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair values of the forward contracts are included in prepaid expenses and other current assets, and in accrued expenses and other current liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company. The fair values of net investment hedges and interest rate swaps are included in other assets, and in other long-term liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company. See Note 14 for further detail. All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions): Fair value at April 2, 2022, using: Fair value at March 27, 2021, using: Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs (Level 2) Significant unobservable inputs (Level 3) Derivative assets: Forward foreign currency exchange contracts $ — $ 4 $ — $ — $ 2 $ — Net investment hedges — 44 — — 3 — Undesignated derivative contracts — 4 — — — — Total derivative assets $ — $ 52 $ — $ — $ 5 $ — Derivative liabilities: Forward foreign currency exchange contracts $ — $ — $ — $ — $ 1 $ — Net investment hedges — 37 — — 263 — Interest rate swaps — — — — 1 — Total derivative liabilities $ — $ 37 $ — $ — $ 265 $ — The Company’s long-term debt obligations are recorded in its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company’s long-term debt is estimated using external pricing data, including any available quoted market prices and based on other debt instruments with similar characteristics. Borrowings under revolving credit agreements, if outstanding, are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. See Note 11 for detailed information related to carrying values of the Company’s outstanding debt. 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): April 2, 2022 March 27, 2021 Carrying Value Estimated Fair Value Carrying Value Estimated Fair Value Senior Notes due 2024 $ 448 $ 451 $ 447 $ 470 Term Loan $ 495 $ 490 $ 865 $ 866 Revolving Credit Facilities $ 175 $ 175 $ — $ — The Company’s cash and cash equivalents, accounts receivable and accounts payable, are recorded at carrying value, which approximates fair value. 97 Table of Contents Non-Financial Assets and Liabilities The Company’s non-financial assets include goodwill, intangible assets, operating lease right-of-use assets and property and equipment. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. The Company’s goodwill and its indefinite-lived intangible assets (Versace and Jimmy Choo brands) are assessed for impairment at least annually, while its other long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company determines the fair values of these assets 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 following table details the carrying values and fair values of the Company’s assets that have been impaired (in millions): Carrying Value Prior to Impairment Fair Value Impairment Charge (1) Fiscal 2022: Operating Lease Right-of-Use Assets $ 209 $ 133 $ 76 Property and Equipment 12 5 7 Total $ 221 $ 138 $ 83 Fiscal 2021: Operating Lease Right-of-Use Assets $ 326 $ 191 $ 135 Goodwill 319 225 94 Brands 407 338 69 Property and Equipment 30 7 23 Total $ 1,082 $ 761 $ 321 Fiscal 2020: Operating Lease Right-of-Use Assets $ 717 $ 437 $ 280 Brands 547 367 180 Goodwill 474 303 171 Property and Equipment 105 28 77 Total $ 1,843 $ 1,135 $ 708 (1) Includes $ 10 million and $ 5 million of impairment charges that were recorded within restructuring and other charges related to the Capri Retail Store Optimization Program during Fiscal 2022 and Fiscal 2021, respectively. There were no impairment charges related to goodwill or indefinite-lived intangible assets in Fiscal 2022. 14. Derivative Financial Instruments Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes. 98 Table of Contents Net Investment Hedges During the first quarter of Fiscal 2022, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $ 2.875 billion to hedge its net investment in Euro denominated subsidiaries. Due to an other-than-insignificant financing element for certain of these modifications, $ 31 million of net interest cash receipts during Fiscal 2022 related to these contracts were classified as financing activities in the Company’s consolidated statements of cash flows. During the third and fourth quarter of Fiscal 2022, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $ 1.5 billion and $ 2.475 billion, respectively. The modification of these hedges resulted in the Company receiving $ 59 million and $ 130 million in cash during the third and fourth quarter of Fiscal 2022, respectively. These amounts are classified within investing activities in the Company’s consolidated statements of cash flows. As of April 2, 2022, 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 United States dollar and these currencies. Under the term of these contracts, the Company will exchange the semi-annual fixed rate payments on United States denominated debt for fixed rate payments of 0 % to 3.565 % in Euros and 0 % to 3.408 % in Japanese Yen. Certain of these contracts include mandatory early termination dates between August 2025 and February 2026, while the remaining contracts have maturity dates between March 2024 and February 2051. These contracts have been designated as net investment hedges. Certain of these contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being May 2024. 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. 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 interest income of $ 63 million, $ 16 million and $ 71 million, respectively, during Fiscal 2022, Fiscal 2021 and Fiscal 2020. Interest Rate Swap The Company had an interest rate swap with an initial notional amount of $ 500 million that would have decreased to $ 350 million in April 2022. The swap was designated as a cash flow hedge to mitigate the impact of adverse interest rate fluctuations for a portion of the Company’s variable-rate debt equal to the notional amount of the swap. The interest rate converted the one-month Adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237 % through the date of termination. During the third quarter of Fiscal 2022, the Company terminated its only interest rate swap. As a result, the Company recognized a $ 1 million gain within interest (income) expense, net, within the Company’s consolidated statements of operations and comprehensive income (loss). When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. During Fiscal 2022 and Fiscal 2021, the Company recorded an immaterial amount of interest expense related to this agreement. 99 Table of Contents 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 April 2, 2022 and March 27, 2021 (in millions): Fair Values Notional Amounts Assets Liabilities April 2, 2022 March 27, 2021 April 2, 2022 March 27, 2021 April 2, 2022 March 27, 2021 Designated forward foreign currency exchange contracts $ 119 $ 155 $ 4 (1) $ 2 (1) $ — (2) $ 1 Designated net investment hedge 4,194 3,194 44 (3) 3 (3) 37 (4) 263 Designated interest rate swap — 500 — — — (4) 1 Total designated hedges 4,313 3,849 48 5 37 265 Undesignated derivative contracts (5) 38 13 4 — — — Total $ 4,351 $ 3,862 $ 52 $ 5 $ 37 $ 265 (1) Recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets. (2) Recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets. (3) Recorded within other assets in the Company’s consolidated balance sheets. (4) Recorded within other long-term liabilities in the Company’s consolidated balance sheets. (5) Primarily includes undesignated hedges of inventory purchases. 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 above 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 and with the same banks, the resulting impact as of April 2, 2022 and March 27, 2021 would be as follows (in millions): Forward Currency Exchange Contracts Net Investment Hedges Interest Rate Swap April 2, 2022 March 27, 2021 April 2, 2022 March 27, 2021 April 2, 2022 March 27, 2021 Assets subject to master netting arrangements $ 8 $ 2 $ 44 $ 3 $ — $ — Liabilities subject to master netting arrangements $ — $ 1 $ 37 $ 263 $ — $ 1 Derivative assets, net $ 8 $ 1 $ 42 $ 3 $ — $ — Derivative liabilities, net $ — $ — $ 35 $ 263 $ — $ 1 Currently, the Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. Changes in the fair value of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income, and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of goods sold within the Company’s consolidated statements of operations and comprehensive income (loss). The net gain or loss on net investment hedges are reported within foreign currency translation gains and losses (“CTA”) as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related net investment is sold or liquidated. Changes in the fair value of the Company’s interest rate swaps that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income and are reclassified from accumulated other comprehensive income into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of interest expense within the Company’s consolidated statements of operations and comprehensive income (loss). 100 Table of Contents 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): Fiscal Year Ended April 2, 2022 Fiscal Year Ended March 27, 2021 Fiscal Year Ended March 28, 2020 Pre-Tax Gains Recognized in OCI Pre-Tax Losses Recognized in OCI Pre-Tax Gains Recognized in OCI Designated forward foreign currency exchange contracts $ 11 $ ( 2 ) $ 6 Designated net investment hedges $ 435 $ ( 263 ) $ 264 Designated interest rate swaps $ — $ ( 1 ) $ — The following tables summarize the 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 (in millions): Fiscal Year Ended Pre-Tax Losses (Gains) Reclassified from Accumulated OCI Location of Losses (Gains) Recognized April 2, 2022 March 27, 2021 March 28, 2020 Designated forward currency exchange contracts $ 1 $ ( 2 ) $ ( 10 ) Cost of goods sold The Company expects that substantially all of the amounts 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 Fiscal 2022 and Fiscal 2021, a gain of $ 2 million and a loss of $ 1 million, respectively, were recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income (loss) as a result of the changes in the fair value of undesignated forward foreign currency exchange contracts. During Fiscal 2020, the Company recognized an immaterial amount of net gains. 15. Shareholders’ Equity Share Repurchase Program 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. Subsequently, on November 3, 2021, the Company announced that its Board of Directors had terminated the Company’s existing $ 500 million share repurchase program (the “Prior Plan”), which had $ 250 million of availability remaining at the time, and authorized a new share repurchase program (the “Fiscal 2022 Plan”) pursuant to which the Company may, from time to time, repurchase up to $ 1.0 billion of its outstanding ordinary shares within a period of two years from the effective date of the program. During Fiscal 2022, the Company purchased 11,014,541 shares with a fair value of $ 650 million through open market transactions. During Fiscal 2021, the Company did not purchase any shares through open market transactions. As of April 2, 2022, the remaining availability under the Company’s share repurchase program was $ 500 million. 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. The program may be suspended or discontinued at any time. 101 Table of Contents 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 Fiscal 2022 and Fiscal 2021, the Company withheld 203,863 shares and 48,528 shares, respectively, with a fair value of $ 11 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 Fiscal 2022, Fiscal 2021 and Fiscal 2020 (in millions): Foreign Currency Translation Income (Loss) (1) Net Income (Loss) on Derivatives (2) Other Comprehensive Income (Loss) Attributable to Capri Balance at March 30, 2019 $ ( 73 ) $ 7 $ ( 66 ) Other comprehensive income before reclassifications 145 5 150 Less: amounts reclassified from AOCI to earnings — 9 9 Other comprehensive income (loss), net of tax 145 ( 4 ) 141 Balance at March 28, 2020 72 3 75 Other comprehensive loss before reclassifications ( 15 ) ( 2 ) ( 17 ) Less: amounts reclassified from AOCI to earnings — 2 2 Other comprehensive loss, net of tax ( 15 ) ( 4 ) ( 19 ) Balance at March 27, 2021 57 ( 1 ) 56 Other comprehensive income before reclassifications 127 10 137 Less: amounts reclassified from AOCI to earnings — ( 1 ) ( 1 ) Other comprehensive income, net of tax 127 11 138 Balance at April 2, 2022 $ 184 $ 10 $ 194 (1) Foreign currency translation adjustments for Fiscal 2022 primarily include a $ 321 million gain, net of taxes of $ 114 million, primarily relating to the Company’s net investment hedges, and a net $ 210 million translation loss. Foreign currency translation adjustments for Fiscal 2021 include a $ 199 million loss, net of taxes of $ 63 million, primarily relating to the Company’s net investment hedges, a net $ 189 million translation gain and a net loss of $ 8 million on intra-entity transactions that are of a long-term investment nature. Foreign currency translation gains for Fiscal 2020 include a $ 219 million gain, net of taxes of $ 45 million, relating to the Company's net investment hedges, a $ 60 million translation loss relating to the Jimmy Choo business, a $ 10 million translation loss relating to the Versace business and a net gain of $ 6 million, on intra-entity transactions that are of a long-term investment nature. (2) Reclassified amounts relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations and comprehensive income (loss). All tax effects were not material for the periods presented. 16. Share-Based Compensation The Company grants equity awards to certain employees and directors of the Company at the discretion of the Company’s Compensation and Talent Committee. The Company has two equity plans which includes one stock option plan adopted in Fiscal 2008 (as amended and restated, the “2008 Plan”), and an Omnibus Incentive Plan adopted in the third fiscal quarter of Fiscal 2012 and amended and restated with shareholder approval in May 2015 and again in June 2020 (the “Incentive Plan”). The 2008 Plan only provided for grants of share options and was authorized to issue up to 23,980,823 ordinary shares. As of April 2, 2022, there were no shares available to grant equity awards under the 2008 Plan. The Incentive Plan allows for grants of share options, restricted shares and restricted stock units (“RSUs”), and other equity awards, and authorizes a total issuance of up to 18,846,000 ordinary shares. At April 2, 2022, there were 4,062,239 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 grant 102 Table of Contents date, and those issued under the Incentive Plan generally expire seven years from the grant date. See Note 20 for additional information. Share Options Share options are generally exercisable at the fair market value on the date of grant and vest on a pro-rata basis over a four year service period. The following table summarizes the share options activity during Fiscal 2022, and information about options outstanding at April 2, 2022: Number of Options Weighted Average Exercise price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in millions) Outstanding at March 27, 2021 1,150,260 $ 63.42 Granted — $ — Exercised ( 408,638 ) $ 41.48 Canceled/forfeited ( 386,174 ) $ 92.05 Outstanding at April 2, 2022 355,448 $ 57.54 2.00 $ 1 Vested or expected to vest at April 2, 2022 355,448 $ 57.54 2.00 Vested and exercisable at April 2, 2022 308,494 $ 56.02 1.82 $ 1 There were 46,954 unvested options and 308,494 vested options outstanding at April 2, 2022. The total intrinsic value of options exercised during Fiscal 2022 and Fiscal 2021 was $ 7 million and $ 10 million, respectively. The cash received from options exercised during Fiscal 2022 and Fiscal 2021 was $ 17 million and $ 3 million, respectively. As of April 2, 2022, the remaining unrecognized share-based compensation expense for unvested share options was less than $ 1 million, which is expected to be recognized over the related weighted-average period of approximately 0.2 years. There were no options granted during Fiscal 2022, Fiscal 2021 or Fiscal 2020. Restricted Awards The Company grants RSUs at the fair market value on the grant date. The expense related to RSUs is based on the closing market price of the Company’s shares on the date of grant and is recognized ratably over the vesting period, net of expected forfeitures. The Company grants two types of RSUs: time-based RSUs and performance-based RSUs. Time-based RSUs generally vest in full on the first anniversary of the date of grant for our independent directors, or in equal increments on each of the third or fourth anniversaries of the date of grant (unless the employee is retirement-eligible). Performance-based RSUs generally vest in full on the second or third anniversary of the date of grant, subject to the employee’s continued employment during the vesting period and only if certain pre-established cumulative performance targets are met. Expense related to performance-based RSUs is recognized ratably over the performance period, net of forfeitures, based on the probability of attainment of the related performance targets. The potential number of shares that may be earned ranges from 0 %, if the minimum level of performance is not attained, to 150 %, if the level of performance is at or above the predetermined maximum achievement level. 103 Table of Contents The following table summarizes the RSU activity during Fiscal 2022: Service-based Performance-based Number of Restricted Stock Units Weighted Average Grant Date Fair Value Number of Restricted Stock Units Weighted Average Grant Date Fair Value Unvested at March 27, 2021 4,895,517 $ 29.91 581,659 $ 49.17 Granted 1,729,215 $ 55.27 — $ — Change due to performance conditions, net — $ — 26,109 $ 7.82 Vested ( 2,327,165 ) $ 33.58 ( 347,561 ) $ 56.49 Canceled/forfeited ( 469,867 ) $ 33.85 ( 50,015 ) $ 39.36 Unvested at April 2, 2022 3,827,700 $ 38.65 210,192 $ 34.25 The total fair value of service-based RSUs vested during Fiscal 2022, Fiscal 2021 and Fiscal 2020 was $ 78 million, $ 56 million and $ 56 million, respectively. The total fair value of performance-based RSUs vested during Fiscal 2022, Fiscal 2021 and Fiscal 2020 was $ 18 million, $ 6 million and $ 3 million, respectively. As of April 2, 2022, the remaining unrecognized share-based compensation expense for unvested service-based and performance-based RSU grants was $ 77 million and $ 1 million, respectively, which is expected to be recognized over the related weighted-average periods of approximately 1.9 years and 1.3 years, respectively. Share-Based Compensation Expense The following table summarizes compensation expense attributable to share-based compensation for Fiscal 2022, Fiscal 2021 and Fiscal 2020 (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Share-based compensation expense $ 85 $ 70 $ 70 Tax benefits related to share-based compensation expense $ 14 $ 12 $ 7 Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its historical forfeiture rates. The estimated value of future forfeitures for equity awards as of April 2, 2022 is $ 25 million. 17. Taxes The Company is a United Kingdom tax resident and is incorporated in the British Virgin Islands. Capri’s subsidiaries are subject to taxation in the United States and various other foreign jurisdictions, which are aggregated in the “Non-United States” information captioned below. Income (loss) before provision for income taxes consisted of the following (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 United States $ 247 $ ( 56 ) $ ( 28 ) Non-United States 668 59 ( 187 ) Total income (loss) before provision for income taxes $ 915 $ 3 $ ( 215 ) 104 Table of Contents The provision for income taxes was as follows (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Current United States - Federal $ 36 $ 35 $ 4 (1) United States - State 16 20 19 Non-United States 98 81 60 Total current 150 136 83 Deferred United States - Federal 24 (2) ( 37 ) ( 22 ) United States - State 7 ( 4 ) ( 3 ) Non-United States ( 89 ) (3) ( 29 ) ( 48 ) Total deferred ( 58 ) ( 70 ) ( 73 ) Total provision for income taxes $ 92 $ 66 $ 10 (1) Includes a $ 35 million current tax benefit due to a release of income tax reserves in the United States. (2) Impact of United States tax accounting method change filed during Fiscal 2022 with respect to cost capitalization. (3) Includes an Italian valuation allowance reversal during Fiscal 2022. The Company’s provision for income taxes for the years ended April 2, 2022, March 27, 2021 and March 28, 2020 was different from the amount computed by applying the statutory U.K. income tax rates to the underlying income (loss) before provision for income taxes as a result of the following (amounts in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Amount % (1) Amount % (1) Amount % (1) Provision for income taxes at the U.K. statutory tax rate $ 174 19.0 % $ 1 19.0 % ( 41 ) 19.0 % Effect of changes in valuation allowances on deferred tax assets ( 67 ) ( 7.3 ) % 24 955.7 % 67 ( 30.9 ) % (2) Effects of global financing arrangements ( 56 ) ( 6.1 ) % ( 24 ) ( 953.4 ) % ( 41 ) 21.7 % (3) Brand tax basis step-up ( 46 ) ( 5.0 ) % — — % — — % CARES Act tax loss carryback ( 43 ) ( 4.6 ) % — — % — — % Liability for uncertain tax positions 91 9.9 % 11 414.2 % ( 12 ) 5.7 % Tax rate change impact on deferred items 21 2.1 % 9 351.3 % — — % State and local income taxes, net of federal benefit 12 1.3 % 5 201.5 % 4 ( 1.9 ) % Differences in tax effects on foreign income 10 1.1 % 13 522.4 % ( 7 ) 1.2 % Withholding tax 5 0.6 % 4 165.0 % 3 ( 1.6 ) % Share based compensation 3 0.4 % 6 247.7 % 9 ( 4.2 ) % Non-deductible goodwill impairment — — % 18 700.2 % (4) 32 ( 15.1 ) % (4) Other ( 12 ) ( 1.3 ) % ( 1 ) ( 33.1 ) % (5) ( 4 ) 1.4 % Effective tax rate $ 92 10.1 % $ 66 2,590.5 % $ 10 ( 4.7 ) % (1) Tax rates are calculated using unrounded numbers. (2) Mainly attributable to valuation allowances established on a portion of non-United States deferred tax assets. (3) Mainly attributable to pre-tax loss position in Fiscal 2020. (4) Attributable to goodwill impairment charges related to Jimmy Choo reporting units in Fiscal 2021 and Fiscal 2020. (5) Primarily relates to individually immaterial United States and foreign permanent adjustments. 105 Table of Contents Significant components of the Company’s deferred tax assets (liabilities) consist of the following (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 Deferred tax assets Operating lease liabilities $ 465 $ 501 Net operating loss carryforwards 108 139 Depreciation 53 54 Sales allowances 34 50 Inventories 26 25 Accrued interest 20 44 Stock compensation 7 12 Payroll related accruals 3 3 Derivative financial instruments — 32 Other 46 42 Total deferred tax assets 762 902 Valuation allowance ( 92 ) (1) ( 159 ) Net deferred tax assets 670 743 Deferred tax liabilities Goodwill and intangibles ( 449 ) (2) ( 495 ) Operating lease right-of-use-assets ( 340 ) ( 367 ) Derivative financial instruments ( 73 ) — Total deferred tax liabilities ( 862 ) ( 862 ) Net deferred tax liabilities $ ( 192 ) $ ( 119 ) (1) Includes an Italian valuation allowance reversal during Fiscal 2022. (2) Includes a reversal of a Italian brand intangible deferred tax liability. The Company maintains valuation allowances on deferred tax assets applicable to subsidiaries in jurisdictions for which separate income tax returns are filed and where realization of the related deferred tax assets from future profitable operations is not reasonably assured. The valuation allowance decreased $ 67 million in Fiscal 2022, and increased $ 24 million and $ 94 million in Fiscal 2021 and Fiscal 2020, respectively. In certain jurisdictions, the Company increased the valuation allowance by $ 34 million , $ 56 million and $ 113 million and released valuation allowances of $ 101 million, $ 32 million and $ 19 million in Fiscal 2022, Fiscal 2021 and Fiscal 2020, respectively. As of April 2, 2022, the Company had non-United States and United States net operating loss carryforwards of $ 463 million, a portion of which will begin to expire in Fiscal 2023. As of April 2, 2022 and March 27, 2021, the Company had liabilities related to its uncertain tax positions, including accrued interest, of $ 221 million and $ 121 million, respectively, which are included in other long-term liabilities in the Company’s consolidated balance sheets. 106 Table of Contents The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $ 206 million, $ 92 million and $ 82 million as of April 2, 2022, March 27, 2021 and March 28, 2020, respectively. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding accrued interest, for Fiscal 2022, Fiscal 2021 and Fiscal 2020, are presented below (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Unrecognized tax benefits beginning balance $ 107 $ 99 $ 192 Additions related to prior period tax positions 105 (1) 12 29 Additions related to current period tax positions 29 (2) 9 4 Decreases related to audit settlements ( 13 ) (3) ( 6 ) ( 24 ) (3) Decreases in prior period positions due to lapses in statute of limitations ( 3 ) ( 4 ) ( 3 ) Decreases related to prior period tax positions ( 4 ) ( 3 ) ( 99 ) (4) Unrecognized tax benefits ending balance $ 221 $ 107 $ 99 (1) Primarily relates to incremental reserves in North America and Europe. (2) Primarily relates to European tax reserves established in Fiscal 2022. (3) Primarily relates to the effective settlement of a United States audit. (4) Primarily relates to releases of North American and European tax reserves. The Company classifies interest and penalties related to unrecognized tax benefits as components of the provision for income taxes. Interest and penalties recognized in the consolidated statements of operations and comprehensive income (loss) for Fiscal 2022, Fiscal 2021 and Fiscal 2020 was $ 28 million, $ 15 million and $ 11 million, respectively. The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlement of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. The Company anticipates that the balance of gross unrecognized tax benefits, excluding interest and penalties, will be reduced by $ 52 million during the next 12 months, primarily due to the anticipated settlement of tax examinations as well as statute of limitation expirations. However, the outcomes and timing of such events are highly uncertain and changes in the occurrence, expected outcomes and timing of such events could cause the Company’s current estimate to change materially in the future. The Company files income tax returns in the United States and in various foreign, state and local jurisdictions. Most examinations have been completed by tax authorities or the statute of limitations has expired for United States federal, foreign, state and local income tax returns filed by the Company for years through Fiscal 2016. Prior to the enactment of the Tax Cuts and Jobs Act (“Tax Act”), the Company’s undistributed foreign earnings were considered permanently reinvested and, as such, United States federal and state income taxes were not previously recorded on these earnings. As a result of the Tax Act, substantially all of the Company’s earnings in foreign subsidiaries generated prior to the enactment of the Tax Act were deemed to have been repatriated. It remains the Company’s intent to either reinvest indefinitely substantially all of its foreign earnings outside of the United States or repatriate them tax neutrally. However, if future earnings are repatriated, the potential exists that the Company may be required to accrue and pay additional taxes, including any applicable foreign withholding tax and income taxes. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation. Cares Act On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in response to the COVID-19 pandemic. The CARES Act contains numerous income tax provisions, such as refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carrybacks, modifications to net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act requires the Company to make significant judgments and estimates in the interpretation of the law and in the calculation of the provision for income taxes. However, additional guidance may be issued by the Internal Revenue Service (“IRS”), the Department of the Treasury or other governing body that may significantly differ from our interpretation of the law, which may 107 Table of Contents result in a material effect on our business, cash flow, results of operations, or financial conditions. 18. Retirement Plans The Company maintains defined contribution retirement plans for its employees, who generally become eligible to participate after three months of service. Features of these plans allow participants to contribute a percentage of their compensation, up to statutory limits depending upon the country in which the employee resides, and provide for mandatory and/or discretionary matching contributions by the Company, which vary by country. During Fiscal 2022, Fiscal 2021, and Fiscal 2020, the Company recognized expenses of approximately $ 16 million, $ 20 million and $ 12 million, respectively, related to these retirement plans. 19. Segment Information The Company operates its business through three operating segments — Versace, Jimmy Choo and Michael Kors, which are based on its business activities and organization. The reportable segments are segments of the Company for which separate financial information is available and for which operating results are evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are revenue and operating income for each segment. The Company’s reportable segments represent components of the business that offer similar merchandise, customer experience and sales/marketing strategies. 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 the Americas, 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. • Jimmy Choo — segment includes revenue generated through the sale of Jimmy Choo luxury footwear, handbags and small leather goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas, certain parts of EMEA and certain parts of Asia, through its e-commerce sites, as well as through wholesale sales of luxury goods to distribution partners (including geographic licensing arrangements that allow third parties to use the Jimmy Choo trademarks in connection with retail and/or wholesale sales of Jimmy Choo branded products in specific geographic regions), multi-brand department stores and specialty stores worldwide. In addition, revenue is generated through product licensing agreements, which allow third parties to use the Jimmy Choo brand name and trademarks in connection with the manufacturing and sale of fragrances and eyewear. • Michael Kors — segment includes revenue generated through the sale of Michael Kors products through four primary Michael Kors retail store formats: “Collection” stores, “Lifestyle” stores (including concessions), outlet stores and e-commerce sites, through which the Company sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. The Company also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops, and to its geographic licensees. In addition, revenue is generated through product and geographic licensing arrangements, which allow third parties to use the Michael Kors brand name and trademarks in connection with the manufacturing and sale of products, including watches, jewelry, fragrances and eyewear. In addition to these reportable segments, the Company has certain corporate costs that are not directly attributable to its brands and, therefore, are not allocated to its segments. Such costs primarily include certain administrative, corporate occupancy, shared service and information systems expenses, including enterprise resource planning system implementation costs and Capri transformation program costs. In addition, certain other costs are not allocated to segments, including restructuring and other charges, impairment costs, COVID-19 related charges, charitable donations and the war in Ukraine. The segment structure is consistent with how the Company’s CODM plans and allocates resources, manages the business and assesses performance. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating 108 Table of Contents segment performance. The following table presents the key performance information of the Company’s reportable segments (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Total revenue: Versace $ 1,088 $ 718 $ 843 Jimmy Choo 613 418 555 Michael Kors 3,953 2,924 4,153 Total revenue $ 5,654 $ 4,060 $ 5,551 Income (loss) from operations: Versace $ 185 $ 21 $ ( 8 ) Jimmy Choo 13 ( 55 ) ( 13 ) Michael Kors 1,005 595 850 Total segment income from operations 1,203 561 829 Less: Corporate expenses ( 190 ) ( 152 ) ( 152 ) Impairment of assets (1) ( 73 ) ( 316 ) ( 708 ) COVID-19 related charges (2) 14 ( 42 ) ( 119 ) Impact of war in Ukraine (3) ( 9 ) — — Restructuring and other charges ( 42 ) ( 32 ) ( 42 ) Total income (loss) from operations $ 903 $ 19 $ ( 192 ) (1) Impairment of assets during Fiscal 2022 include $ 50 million, $ 19 million and $ 4 million of impairment charges related to the Michael Kors, Versace and Jimmy Choo reportable segments, respectively. Impairment of assets during Fiscal 2021 includes $ 191 million, $ 91 million and $ 34 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively. Impairment of assets during Fiscal 2020 includes $ 434 million, $ 187 million and $ 87 million of impairment charges related to the Jimmy Choo, Michael Kors and Versace reportable segments, respectively. (2) COVID-19 related charges during Fiscal 2022 primarily include net inventory credits of $ 16 million as a result of better than expected sell-through and severance expense of $ 2 million, respectively. Net inventory credits during Fiscal 2022 reflected a change in estimate resulting from better than expected sell-through. COVID-19 related charges during Fiscal 2021, primarily include net inventory reserves and severance expense of $ 10 million and $ 24 million, respectively. COVID-19 related charges during Fiscal 2020, primarily include additional inventory reserves and credit losses of $ 92 million and $ 25 million, respectively. Inventory related costs are recorded within costs of goods sold and severance expense and credit losses are recorded within selling, general and administrative expenses in the consolidated statements of operations and comprehensive income (loss). (3) These charges primarily relate to incremental credit losses and inventory reserves which are a direct impact of the war in Ukraine. Credit losses are recorded within selling, general and administrative expenses and inventory related costs are recorded within costs of goods sold in the consolidated statements of operations and comprehensive income (loss). 109 Table of Contents Depreciation and amortization expense for each segment are as follows (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Depreciation and amortization: Versace $ 52 $ 54 $ 61 Jimmy Choo 31 31 33 Michael Kors 110 127 155 Total depreciation and amortization $ 193 $ 212 $ 249 See Note 8 for the Company’s goodwill by reportable segment. Total revenue (based on country of origin) and long-lived assets by geographic location are as follows (in millions): Fiscal Years Ended April 2, 2022 March 27, 2021 March 28, 2020 Revenue: The Americas (1) $ 3,210 $ 2,172 $ 3,115 EMEA 1,489 1,029 1,523 Asia 955 859 913 Total revenue $ 5,654 $ 4,060 $ 5,551 As of April 2, 2022 March 27, 2021 March 28, 2020 Long-lived assets: The Americas (1) $ 450 $ 1,001 $ 1,132 EMEA 2,156 2,384 2,432 Asia 1,075 596 608 Total long-lived assets $ 3,681 $ 3,981 $ 4,172 (1) Net revenues earned in the United States during Fiscal 2022, Fiscal 2021 and Fiscal 2020 were $ 2.989 billion, $ 2.016 billion and $ 2.898 billion, respectively. Long-lived assets located in the United States as of April 2, 2022, March 27, 2021 and March 28, 2020 were $ 858 million, $ 942 million and $ 1.060 billion, respectively. As of April 2, 2022, the Company’s total long-lived assets on its consolidated balance sheet were $ 3.681 billion, of which, $ 1.633 billion related to Versace, $ 1.404 billion related to Michael Kors and $ 644 million related to Jimmy Choo. Total revenue by major product category are as follows (in millions): Fiscal Years Ended April 2, 2022 % of Total March 27, 2021 % of Total March 28, 2020 % of Total Accessories $ 2,901 51.3 % $ 2,158 53.2 % $ 2,933 52.8 % Footwear 1,208 21.4 % 796 19.6 % 1,100 19.8 % Apparel 1,027 18.2 % 720 17.7 % 1,069 19.3 % Licensed product 241 4.3 % 185 4.6 % 222 4.0 % Licensing revenue 212 3.7 % 155 3.8 % 201 3.6 % Other 65 1.1 % 46 1.1 % 26 0.5 % Total revenue $ 5,654 $ 4,060 $ 5,551 110 Table of Contents 20. Subsequent Events Release of Collateral Related to the 2018 Credit Facility On April 2, 2022, the Company’s senior long-term, unsecured debt was upgraded to investment grade by two of the three specified rating agencies for two consecutive full fiscal quarters, meeting the criteria for the release of the collateral securing the Company’s obligations under the 2018 Credit Facility. On April 3, 2022, the Company notified the Administrative Agent under its 2018 Credit Facility that it had met the conditions for the release of the collateral securing the Company’s obligations under the 2018 Credit Facility. The collateral, which consists of substantially all of the assets and certain registered intellectual property of the Company and certain of its subsidiaries, was released effective April 3, 2022. See Note 11 for additional details regarding the Company’s Credit Facility. Net Investment Hedges During the first quarter of Fiscal 2023, the Company modified multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $ 1 billion to hedge its net investment in Euro denominated subsidiaries and Japanese-Yen denominated subsidiaries. The modification of these hedges resulted in the Company receiving $ 59 million in cash during the first quarter of Fiscal 2023. These contracts have been designated as net investment hedges. Senior Notes Credit Rating Upgrade On April 21, 2022, Moody’s Investor Services upgraded the Company’s credit rating to Baa1 from Baa2 in relation to the Company’s senior unsecured notes. As a result, as of May 1, 2022 the Senior Notes now bear interest at a fixed rate equal to 4.25 % per year, payable semi-annually. See Note 11 for additional details regarding the Company’s Senior Notes. Share Repurchase Program On June 1, 2022, the Company announced that its Board of Directors has terminated the Company’s existing $ 1.0 billion share repurchase program, with $ 500 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. 111