What changed in this filing

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Item 1. Financial Statements

2023-02-08 compared with 2022-11-09 · 199 added, 191 removed, 683 unchanged (36% of the section changed)

35 unchanged sentences

650,000,000 shares authorized;

223,706,873 shares issued and 131,088,991 outstanding at October 1, 2022;

223,781,728 shares issued and 125,398,217 outstanding at December 31, 2022;

221,967,599 shares issued and 142,806,269 outstanding at April 2, 2022

Treasury shares, at cost ( 92,617,882 shares at October 1, 2022 and 79,161,330 shares at April 2, 2022)

Treasury shares, at cost ( 98,383,511 shares at December 31, 2022 and 79,161,330 shares at April 2, 2022)

( 4,951 ) ( 3,987 )

Additional paid-in capital 1,327 1,260

Accumulated other comprehensive (loss) income ( 35 ) 194

Accumulated other comprehensive income 105 194

Retained earnings 5,742 5,092

7 unchanged sentences

(In millions, except share and per share data)

Three Months Ended Six Months Ended

2022 September 25,

2021 October 1,

2022 September 25,

Three Months Ended Nine Months Ended

2022 December 25,

2021 December 31,

2022 December 25,

Total revenue $ 1,512 $ 1,609 $ 4,284 $ 4,162

11 unchanged sentences

Income before income taxes 228 342 718 796

Provision (benefit) for income taxes 35 ( 2 ) 63 35

Provision for income taxes 3 19 66 54

Net income 225 323 652 742

10 unchanged sentences

Foreign currency translation adjustments 145 34 ( 87 ) 147

Net gain on derivatives 1 4 3 4

Net (loss) gain on derivatives ( 5 ) 5 ( 2 ) 9

Comprehensive income 365 362 563 898

7 unchanged sentences

Ordinary Shares Additional

Capital Treasury Shares Accumulated Other Comprehensive Income (Loss) Retained

Capital Treasury Shares Accumulated Other Comprehensive (Loss) Income Retained

Earnings Total Equity of Capri Non-controlling Interest Total Equity

Shares Amounts Shares Amounts

Balance at July 2, 2022 223,504 $ — $ 1,294 ( 85,547 ) $ ( 4,299 ) $ 89 $ 5,293 $ 2,377 $ 1 $ 2,378

Balance at October 1, 2022 223,707 $ — $ 1,311 ( 92,618 ) $ ( 4,650 ) $ ( 35 ) $ 5,517 $ 2,143 $ — $ 2,143

Net income — — — — — — 225 225 — 225

Other comprehensive loss — — — — — ( 124 ) — ( 124 ) — ( 124 )

Other comprehensive income — — — — — 140 — 140 — 140

Total comprehensive income — — — — — — — 365 — 365

1 unchanged sentence

75 — — — — — — — — —

Exercise of employee share options

4 — — — — — — — — —

Share-based compensation expense — — 16 — — — — 16 — 16

Repurchase of ordinary shares — — — ( 5,766 ) ( 301 ) — — ( 301 ) — ( 301 )

Other — — 1 — — — — 1 ( 1 ) —

Balance at October 1, 2022 223,707 $ — $ 1,311 ( 92,618 ) $ ( 4,650 ) $ ( 35 ) $ 5,517 $ 2,143 $ — $ 2,143

Balance at December 31, 2022 223,782 $ — $ 1,327 ( 98,384 ) $ ( 4,951 ) $ 105 $ 5,742 $ 2,223 $ — $ 2,223

Ordinary Shares Additional

12 unchanged sentences

Other — — 1 — — — — 1 ( 1 ) —

Balance at October 1, 2022 223,707 $ — $ 1,311 ( 92,618 ) $ ( 4,650 ) $ ( 35 ) $ 5,517 $ 2,143 $ — $ 2,143

Balance at December 31, 2022 223,782 $ — $ 1,327 ( 98,384 ) $ ( 4,951 ) $ 105 $ 5,742 $ 2,223 $ — $ 2,223

CAPRI HOLDINGS LIMITED AND SUBSIDIARIES

5 unchanged sentences

Shares Amounts Shares Amounts

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

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

Net income — — — — — — 322 322 1 323

7 unchanged sentences

Repurchase of ordinary shares — — — ( 3,222 ) ( 200 ) — — ( 200 ) — ( 200 )

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

Balance at December 25, 2021 221,323 $ — $ 1,238 ( 74,071 ) $ ( 3,686 ) $ 213 $ 5,011 $ 2,776 $ ( 1 ) $ 2,775

Ordinary Shares Additional

6 unchanged sentences

Other comprehensive income (loss) — — — — — 157 — 157 ( 1 ) 156

Total comprehensive income (loss) — — — — — — — 537 ( 1 ) 536

Total comprehensive income — — — — — — — 898 — 898

Vesting of restricted awards, net of forfeitures

4 unchanged sentences

Repurchase of ordinary shares — — — ( 6,128 ) ( 360 ) — — ( 360 ) — ( 360 )

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

Balance at December 25, 2021 221,323 $ — $ 1,238 ( 74,071 ) $ ( 3,686 ) $ 213 $ 5,011 $ 2,776 $ ( 1 ) $ 2,775

See accompanying notes to consolidated financial statements.

2 unchanged sentences

(In millions)

Six Months Ended

2022 September 25,

Nine Months Ended

2022 December 25,

Cash flows from operating activities

49 unchanged sentences

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

The interim consolidated financial statements as of October 1, 2022 and for the three and six months ended October 1, 2022 and September 25, 2021 are unaudited.

The interim consolidated financial statements as of December 31, 2022 and for the three and nine months ended December 31, 2022 and December 25, 2021 are unaudited.

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

5 unchanged sentences

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

The results for the three and six months ended October 1, 2022 and September 25, 2021 are based on 13-week and 26-week periods, respectively.

The results for the three and nine months ended December 31, 2022 and December 25, 2021 are based on 13-week and 39-week periods, respectively.

The Company’s Fiscal Year 2023 is a 52-week period ending April 1, 2023.

10 unchanged sentences

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 October 1, 2022 and April 2, 2022 are credit card receivables of $ 25 million and $ 18 million, respectively, which generally settle within two to three business days.

A reconciliation of cash, cash equivalents and restricted cash as of October 1, 2022 and April 2, 2022 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):

Included in the Company’s cash and cash equivalents as of December 31, 2022 and April 2, 2022 are credit card receivables of $ 31 million and $ 18 million, respectively, which generally settle within two to three business days.

A reconciliation of cash, cash equivalents and restricted cash as of December 31, 2022 and April 2, 2022 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):

2022 April 2,

5 unchanged sentences

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, net, recorded on the Company’s consolidated balance sheets was $ 39 million and $ 31 million as of October 1, 2022 and April 2, 2022, respectively.

The combined total of raw materials and work in process inventory, net, recorded on the Company’s consolidated balance sheets was $ 46 million and $ 31 million as of December 31, 2022 and April 2, 2022, respectively.

Derivative Financial Instruments

7 unchanged sentences

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 (loss) 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 (loss) income are recognized within cost of goods sold.

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.

11 unchanged sentences

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 (loss) income on the Company’s consolidated balance sheets.

Interest accruals and coupon payments are recognized directly in interest expense (income), net, in the Company’s

consolidated statements of operations and comprehensive income.

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 (income), net, in the Company’s consolidated

statements of operations and comprehensive income.

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

1 unchanged sentence

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

Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through September 2026.

Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through May 2027.

The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores from previous restructuring activities.

17 unchanged sentences

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

Six Months Ended

2022 September 25, 2021

Nine Months Ended

2022 December 25, 2021

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

Operating cash flows used in operating leases

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

During the three and six months ended October 1, 2022, the Company recorded sublease income of $ 3 million and $ 5 million, respectively, within selling, general and administrative expenses.

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

During the three and six months ended October 1, 2022, the Company recorded $ 3 million and $ 5 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract.

During the three and six months ended September 25, 2021, the Company recorded $ 3 million and $ 10 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract.

During the three and nine months ended December 31, 2022, the Company recorded sublease income of $ 2 million and $ 7 million, respectively, within selling, general and administrative expenses.

During the three and nine months ended December 25, 2021, the Company recorded $ 2 million and $ 6 million, respectively, within restructuring and other charges for stores relating to our restructuring plan and selling, general and administrative expenses for all other locations.

During the three and nine months ended December 31, 2022, the Company recorded $ 3 million and $ 8 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract.

During the three and nine months ended December 25, 2021, the Company recorded $ 3 million and $ 13 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract.

The aforementioned rent concessions were recorded as a reduction to variable lease expense within selling, general and administrative expenses.

5 unchanged sentences

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

Three Months Ended Six Months Ended

2022 September 25,

2021 October 1,

2022 September 25,

Three Months Ended Nine Months Ended

2022 December 25,

2021 December 31,

2022 December 25,

Net income attributable to Capri $ 225 $ 322 $ 650 $ 741

9 unchanged sentences

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

During the three and six months ended October 1, 2022, share equivalents of 794,933 shares and 726,136 shares, respectively, have been excluded from the above calculations due to their anti-dilutive effect.

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

During the three and nine months ended December 31, 2022, share equivalents of 187,547 shares and 546,607 shares, respectively, have been excluded from the above calculations due to their anti-dilutive effect.

Share equivalents of 208,168 shares and 411,394 shares have been excluded from the above calculations for the three and nine months ended December 25, 2021, respectively, due to their anti-dilutive effect.

See Note 2 in the Company’s Annual Report on Form 10-K for the fiscal year ended April 2, 2022 for a complete disclosure of the Company’s significant accounting policies.

Recently Issued Accounting Pronouncements

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board (“FASB”) 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:

Both of these updates aim to ease the potential burden in accounting for reference rate reform.

These updates provide optional expedients and exceptions, if certain criteria are met, for applying accounting principles generally accepted in the United States to 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 allowed companies to adopt the amendments on a prospective basis through December 31, 2022.

The Company does not expect the adoption of this standard to have a material impact on the Company’s results of operations, financial condition or cash flows based on current information.

Supplier Finance Programs

16 unchanged sentences

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

The contract liability related to gift cards, net of estimated “breakage”, of $ 14 million and $ 13 million as of October 1, 2022 and April 2, 2022, respectively, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet.

The contract liability related to gift cards, net of estimated “breakage”, of $ 15 million and $ 13 million as of December 31, 2022 and April 2, 2022, respectively, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet.

Loyalty Program .

5 unchanged sentences

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 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.

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.

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

As of October 1, 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):

As of December 31, 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

6 unchanged sentences

Sales Returns

The refund liability recorded as of October 1, 2022 was $ 45 million, and the related asset for the right to recover returned product as of October 1, 2022 was $ 11 million.

The refund liability recorded as of December 31, 2022 was $ 64 million, and the related asset for the right to recover returned product as of December 31, 2022 was $ 15 million.

The refund liability recorded as of April 2, 2022 was $ 52 million, and the related asset for the right to recover returned product as of April 2, 2022 was $ 15 million.

Contract Balances

Total contract liabilities were $ 20 million and $ 30 million as of October 1, 2022 and April 2, 2022, respectively.

For the three and six months ended October 1, 2022, the Company recognized $ 3 million and $ 8 million respectively, in revenue which related to contract liabilities that existed at April 2, 2022.

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

There were no material contract assets recorded as of October 1, 2022 and April 2, 2022.

Total contract liabilities were $ 20 million and $ 30 million as of December 31, 2022 and April 2, 2022, respectively.

For the three and nine months ended December 31, 2022, the Company recognized $ 3 million and $ 11 million respectively, in revenue which related to contract liabilities that existed at April 2, 2022.

For the three and nine months ended December 25, 2021, the Company recognized $ 1 million and $ 9 million, respectively, in revenue which related to contract liabilities that existed at March 27, 2021.

There were no material contract assets recorded as of December 31, 2022 and April 2, 2022.

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

1 unchanged sentence

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

Three Months Ended Six Months Ended

2022 September 25,

2021 October 1,

2022 September 25,

Three Months Ended Nine Months Ended

2022 December 25,

2021 December 31,

2022 December 25,

Versace revenue - the Americas $ 85 $ 89 $ 320 $ 283

22 unchanged sentences

Total receivables, net $ 372 $ 434

(1) As of October 1, 2022 and April 2, 2022, $ 84 million and $ 83 million, respectively, of trade receivables were insured.

(1) As of December 31, 2022 and April 2, 2022, $ 92 million and $ 83 million, respectively, of trade receivables were insured.

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

6 unchanged sentences

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

Allowance for credit losses was $ 9 million and $ 10 million as of October 1, 2022 and April 2, 2022, respectively.

The Company had credit losses of $ 1 million and $ 2 million for the three and six months ended October 1, 2022, respectively.

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

Allowance for credit losses was $ 6 million and $ 10 million as of December 31, 2022 and April 2, 2022, respectively.

The Company had immaterial credit losses for the three months ended December 31, 2022 and $ 2 million for the nine months ended December 31, 2022.

The Company had $ 3 million of credit losses for the three months ended December 25, 2021 and $ 2 million for the nine months ended December 25, 2021.

Property and Equipment, net

5 unchanged sentences

Equipment 100 81

In-store shops 47 47

Building 47 48

In-store shops 41 47

Total property and equipment, gross 1,211 1,200

3 unchanged sentences

Total property and equipment, net $ 546 $ 476

Depreciation and amortization of property and equipment for the three and six months ended October 1, 2022 was $ 31 million and $ 65 million, respectively.

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

During the three and six months ended October 1, 2022, the Company recorded $ 2 million in property and equipment impairment charges.

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

Depreciation and amortization of property and equipment for the three and nine months ended December 31, 2022 was $ 32 million and $ 97 million, respectively.

Depreciation and amortization of property and equipment was $ 34 million and $ 109 million for the three and nine months ended December 25, 2021, respectively.

The Company recorded no property and equipment impairment charges for the three months ended December 31, 2022 and $ 2 million in property and equipment impairment charges for the nine months ended December 31, 2022.

The Company recorded no property and equipment impairment charges for the three months ended December 25, 2021 and $ 3 million for the nine months ended December 25, 2021.

Intangible Assets and Goodwill

15 unchanged sentences

(1) The change in the carrying value since April 2, 2022 reflects the impact of foreign currency translation.

(2) Includes accumulated impairment of $ 249 million as of October 1, 2022 and April 2, 2022.

(2) Includes accumulated impairment of $ 249 million as of December 31, 2022 and April 2, 2022.

The change in the carrying value since April 2, 2022 reflects the impact of foreign currency translation.

(3) Includes accumulated impairment of $ 265 million related to the Jimmy Choo reporting units as of October 1, 2022 and April 2, 2022.

(3) Includes accumulated impairment of $ 265 million related to the Jimmy Choo reporting units as of December 31, 2022 and April 2, 2022.

The change in the carrying value since April 2, 2022 reflects the impact of foreign currency translation.

Amortization expense for the Company’s definite-lived intangible assets for the three and six months ended October 1, 2022 was $ 12 million and $ 23 million, respectively.

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

Amortization expense for the Company’s definite-lived intangible assets for the three and nine months ended December 31, 2022 was $ 11 million and $ 34 million, respectively.

Amortization expense for the Company’s definite-lived intangible assets for the three and nine months ended December 25, 2021 was $ 13 million and $ 37 million, respectively.

Current Assets and Current Liabilities

4 unchanged sentences

Other accounts receivables 9 17

Prepaid insurance 10 2

Interest receivable related to net investment hedges 3 13

7 unchanged sentences

Accrued rent (1)

Gift cards and retail store credits 15 17

Professional services 19 15

Gift cards and retail store credits 15 17

Accrued litigation 11 13

Charitable donations (2)

Accrued interest 8 10

Accrued purchases and samples 7 11

Charitable donations (2)

Total accrued expenses and other current liabilities $ 413 $ 351

(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 October 1, 2022 and April 2, 2022.

(2) The charitable donations balance relates to a $ 10 million unconditional pledge to The Versace Foundation as of April 2, 2022 which was paid during the third quarter ended December 31, 2022.

Restructuring and Other Charges

1 unchanged sentence

During Fiscal 2022, the Company completed its plan to close certain retail stores as part of its Capri Retail Store Optimization Program.

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

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

During the three and nine months ended December 25, 2021, the Company closed 13 and 39 of its retail stores, respectively, which were incorporated into the Capri Retail Store Optimization Program.

Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during the three and nine months ended December 25, 2021 were $ 10 million and $ 6 million, respectively.

Other Charges

During the three and six months ended October 1, 2022, the Company recorded costs of $ 3 million and $ 6 million, respectively, primarily related to equity awards associated with the acquisition of Versace.

During the three and six months ended September 25, 2021, the Company recorded costs of $ 9 million and $ 15 million, respectively, primarily related to equity awards associated with the acquisition of Versace.

During the three and nine months ended December 31, 2022, the Company recorded costs of $ 5 million and $ 11 million, respectively, primarily related to equity awards associated with the acquisition of Versace.

During the three and nine months ended December 25, 2021, the Company recorded costs of $ 4 million and $ 19 million, respectively, primarily related to equity awards associated with the acquisition of Versace.

Debt Obligations

2 unchanged sentences

Revolving Credit Facilities $ 580 $ 175

Versace Term Loan 482 —

Senior Notes due 2024 450 450

18 unchanged sentences

• For loans denominated in U.S.

Dollars, (A) 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 term SOFR for an interest period of one month plus 10 basis points and zero , plus 100 basis points, (B) the greater of term SOFR for the applicable interest period plus 10 basis points (“Adjusted Term SOFR”) and zero or (C) the greater of daily simple SOFR plus 10 basis points and zero ;

Dollars, (A) 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 term Secured Overnight Financing Rate (“SOFR”) for an interest period of one month plus 10 basis points and zero , plus 100 basis points, (B) the greater of term SOFR for the applicable interest period plus 10 basis points (“Adjusted Term SOFR”) and zero or (C) the greater of daily simple SOFR plus 10 basis points and zero ;

• For loans denominated in Pounds Sterling, the greater of Secured Overnight Index Average (“SONIA”) and zero ;

4 unchanged sentences

in each case, plus an applicable margin based on the Company’s public debt ratings and/or net leverage ratio.

The 2022 Credit Facility provides for an annual administration fee and a commitment fee equal to 7.5 basis points to 17.5 basis points per annum, which was 15.0 basis points as of October 1, 2022.

The 2022 Credit Facility provides for an annual administration fee and a commitment fee equal to 7.5 basis points to 17.5 basis points per annum, which was 15.0 basis points as of December 31, 2022.

The fees are based on the Company’s public debt ratings and/or net leverage ratio, applied to the average daily unused amount of the 2022 Credit Facility.

6 unchanged sentences

If such an event of default occurs and is continuing, the lenders under the 2022 Credit Facility would be entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2022 Credit Facility.

As of October 1, 2022, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2022 Credit Facility.

As of October 1, 2022, the Company had $ 1.126 billion of borrowings outstanding under the 2022 Revolving Credit Facility.

On December 5, 2022, Gianni Versace S.r.l., a wholly owned subsidiary of Capri Holdings Limited, entered into a credit facility with Intesa Sanpaolo S.p.A., Banco Nazionale del Lavoro S.p.A., and UniCredit S.p.A., as arrangers and lenders, and Intesa Sanpaolo S.p.A., as agent, which provides a senior unsecured term loan (the “Versace Term Loan”) in an aggregate principal amount of € 450 million (approximately $ 482 million).

The Versace Term Loan is not subject to required amortization and matures on December 5, 2025.

The Company provides an unsecured guaranty of the Versace Term Loan.

The Versace Term Loan bears interest at a rate per annum equal to the greater of EURIBOR for the applicable interest period and zero, plus a margin of 1.35 %.

The Versace Term Loan may be prepaid without premium or penalty other than customary “breakage” costs.

The Versace Term Loan requires the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1.0.

Such net leverage ratio is calculated as the ratio of the sum of total indebtedness as of the date of the measurement plus the capitalized amount of all operating lease obligations, minus unrestricted cash and cash equivalents not to exceed $ 200 million, to Consolidated EBITDAR for the last four consecutive fiscal quarters.

Consolidated EBITDAR is defined as consolidated net income plus provision for taxes based on income, profits or capital, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash losses, charge and expenses, subject to certain additions and deductions.

The Versace Term Loan also includes covenants that limit additional financial indebtedness, liens, acquisitions, loans and guarantees, restricted payments and mergers of GIVI Holding S.r.l., Gianni Versace S.r.l.

and their respective subsidiaries.

The Versace Term Loan contains events of default customary for financings of this type, including, but not limited to payment defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to material financial indebtedness, certain events of bankruptcy or insolvency, illegality or repudiation of any loan document under the Versace Term Loan or any failure thereof to be in full force and effect, and changes of control.

If such an event of default occurs and is continuing, the lenders under the Versace Term Loan would be entitled to take various actions, including, but not limited to, accelerating amounts outstanding under the Versace Term Loan.

As of December 31, 2022, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2022 Credit Facility and the Versace Term Loan.

As of December 31, 2022, the Company had $ 580 million of borrowings outstanding under the 2022 Revolving Credit Facility.

The Company had $ 175 million of borrowings outstanding under revolver in the 2018 Credit Facility as of April 2, 2022.

In addition, stand-by letters of credit of $ 22 million and $ 21 million were outstanding as of both October 1, 2022 and April 2, 2022, respectively.

At October 1, 2022, the amount available for future borrowings under the 2022 Revolving Credit Facility was $ 352 million.

In addition, stand-by letters of credit of $ 15 million and $ 21 million were outstanding as of both December 31, 2022 and April 2, 2022, respectively.

At December 31, 2022, the amount available for future borrowings under the 2022 Revolving Credit Facility was $ 905 million.

The amount available for future borrowings under the revolver in the 2018 Credit Facility was $ 804 million as of April 2, 2022.

As of October 1, 2022, the Company no longer had a term loan facility outstanding.

As of April 2, 2022, the carrying value of term loan outstanding under the 2018 Credit Facility was $ 495 million, which was recorded within long-term debt in the Company’s consolidated balance sheets.

The Company had $ 7 million and $ 3 million of deferred financing fees related to Revolving Credit Facilities as of October 1, 2022 and April 2, 2022, respectively, and are recorded within other assets in the Company’s consolidated balance sheets.

As of December 31, 2022, the carrying value of the Versace Term Loan was $ 481 million, which was recorded within long-term debt in the Company’s consolidated balance sheets.

As of December 31, 2022, the Company no longer had an outstanding balance related to the 2018 Term Loan.

As of April 2, 2022, the carrying value of the 2018 Term Loan was $ 495 million, which was recorded within long-term debt in the Company’s consolidated balance sheets.

The Company had $ 6 million and $ 3 million of deferred financing fees related to Revolving Credit Facilities as of December 31, 2022 and April 2, 2022, respectively, and are recorded within other assets in the Company’s consolidated balance sheets.

The Company had $ 1 million of deferred financing fees related to the Versace Term Loan and $ 2 million of deferred financing fees related to the 2018 Term Loan as of December 31, 2022 and April 2, 2022, respectively, which are both recorded within long-term debt in the Company’s consolidated balance sheets.

The Company offers a supplier financing program which 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.

1 unchanged sentence

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 October 1, 2022 and April 2, 2022 was $ 14 million and $ 21 million, respectively, and is presented as short-term debt in the Company’s consolidated balance sheets.

The amount outstanding under this program as of December 31, 2022 and April 2, 2022 was $ 18 million and $ 21 million, respectively, and is presented as short-term debt in the Company’s consolidated balance sheets.

During 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 as the de-recognition criteria for the receivables was not met at the time of the cash receipt from the Bank.

As of October 1, 2022, the outstanding balance was $ 10 million, with $ 1 million and $ 9 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively.

As of December 31, 2022, the outstanding balance was $ 11 million, with $ 1 million and $ 10 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively.

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.

13 unchanged sentences

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

At October 1, 2022 and April 2, 2022, the fair values of the Company’s derivative contracts were determined using broker quotations, which were calculations derived from observable market information:

At December 31, 2022 and April 2, 2022, 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.

4 unchanged sentences

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

Fair value at October 1, 2022 using:

Fair value at December 31, 2022 using:

Fair value at April 2, 2022 using:

25 unchanged sentences

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

October 1, 2022 April 2, 2022

December 31, 2022 April 2, 2022

Value Estimated

1 unchanged sentence

Value Estimated

Revolving Credit Facilities $ 580 $ 580 $ 175 $ 175

Versace Term Loan $ 481 $ 481 $ — $ —

Senior Notes due 2024 $ 448 $ 429 $ 448 $ 451

2018 Term Loan — — $ 495 $ 490

Revolving Credit Facilities $ 1,126 $ 1,126 $ 175 $ 175

The Company’s cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value.

4 unchanged sentences

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

The Company recorded $ 11 million of impairment charges during the three and six months ended October 1, 2022.

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

The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and six months ended October 1, 2022 and the three and six months ended September 25, 2021 (in millions):

Three and Six Months Ended

October 2, 2022 Three and Six Months Ended

September 25, 2021

The Company recorded $ 1 million and $ 12 million in impairment charges during the three and nine months ended December 31, 2022, respectively.

The Company recorded $ 10 million and $ 43 million in impairment charges during the three and nine months ended December 25, 2021, respectively.

The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and nine months ended December 31, 2022 and the three and nine months ended December 25, 2021 (in millions):

Three Months Ended

December 31, 2022

Nine Months Ended

December 31, 2022

Carrying Value Prior to Impairment Fair Value Impairment Charge Carrying Value Prior to Impairment Fair Value Impairment Charge

1 unchanged sentence

$ 27 $ 17 $ 10

Property and Equipment — — — 3 1 2

Total $ 2 $ 1 $ 1 $ 30 $ 18 $ 12

Three Months Ended

December 25, 2021

Nine Months Ended

December 25, 2021

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

Operating Lease Right-of-Use Assets

$ 10 $ — $ 10

$ 93 $ 53 $ 40

Property and Equipment — — — 4 1 3

Total $ 10 $ — $ 10 $ 97 $ 54 $ 43

(1) Includes $ 10 million of impairment charges that were recorded within restructuring and other charges related to the Capri Retail Store Optimization Program for both the three and nine months ended December 25, 2021.

Derivative Financial Instruments

16 unchanged sentences

These contracts have been designated as net investment hedges.

During the second quarter of Fiscal 2023, the Company received $ 343 million from termination of Euro Net Investment Hedges and modification of Japanese Yen Net Investment Hedges.

As of October 1, 2022, the Company had Japanese Yen Net Investment Hedges with aggregate notional amounts of $ 294 million.

During the second quarter of Fiscal 2023, the Company received $ 343 million from the termination of Euro Net Investment Hedges and the modification of Japanese Yen Net Investment Hedges.

During the third quarter of Fiscal 2023, the Company entered into multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of € 1 billion (approximately $ 1.07 billion) to hedge its net investment in GBP denominated subsidiaries (the “GBP Net Investment Hedges”).

Under the terms of these contracts, the Company will exchange the semi-annual fixed rate payments on GBP denominated debt for fixed rate payments of 0 % in Euro.

These contracts have maturity dates between November 2024 and November 2027 and are designated as net investment hedges.

As of December 31, 2022, the Company had Japanese Yen Net Investment Hedges with aggregate notional amounts of $ 294 million.

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

1 unchanged sentence

These contracts have maturity dates between May 2027 and February 2051 and are designated as net investment hedges.

As of October 1, 2022, the Company did not have any notional amounts hedged in relation to its net investment in Euro denominated subsidiaries.

Certain of these contracts are supported by a credit support annex (“CSA”) which provides for collateral exchange with the earliest effective date being September 2027.

1 unchanged sentence

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

Accordingly, the Company recorded interest income of $ 11 million and $ 28 million during the three and six months ended October 1, 2022, respectively.

Additionally, the Company recorded interest expense of $ 15 million and $ 27 million during the three and six months ended September 25, 2021, respectively.

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 October 1, 2022 and April 2, 2022 (in millions):

Accordingly, the Company recorded interest income of $ 4 million and $ 32 million during the three and nine months ended December 31, 2022, respectively.

Additionally, the Company recorded interest income of $ 17 million and $ 44 million during the three and nine months ended December 25, 2021, respectively.

The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of December 31, 2022 and April 2, 2022 (in millions):

Notional Amounts Assets Liabilities

2022 April 2,

2022 October 1,

2022 December 31,

2022 April 2,

2022 October 1,

2022 December 31,

2022 April 2,

9 unchanged sentences

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

However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies, the resulting impact as of October 1, 2022 and April 2, 2022 would be as follows (in millions):

However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to set-off amounts for similar transactions denominated in the same currencies, the resulting impact as of December 31, 2022 and April 2, 2022 would be as follows (in millions):

Forward Currency

1 unchanged sentence

2022 April 2,

2022 October 1,

2022 December 31,

2022 April 2,

6 unchanged sentences

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 (loss) income and are reclassified from accumulated other comprehensive (loss) 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.

The net gain or loss on net investment hedges are reported within CTA as a component of accumulated other comprehensive (loss) income on the Company’s consolidated balance sheets.

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.

The net gain or loss on net investment hedges are reported within 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 investment is sold or liquidated.

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

Three Months Ended Six Months Ended

October 1, 2022 September 25, 2021 October 1, 2022 September 25, 2021

Pre-Tax Gains

Three Months Ended Nine Months Ended

December 31, 2022 December 25, 2021 December 31, 2022 December 25, 2021

Pre-Tax Losses

Recognized in OCI Pre-Tax Gains

5 unchanged sentences

Designated net investment hedges $ ( 33 ) $ 155 $ 332 $ 327

The following tables summarize the pre-tax impact of the gains and losses within the consolidated statements of operations and comprehensive income related to the designated forward foreign currency exchange contracts for the three and six months ended October 1, 2022 and September 25, 2021 (in millions):

Designated interest rate swaps $ — $ 1 $ — $ 1

The following tables summarize the pre-tax impact of the gains and losses within the consolidated statements of operations and comprehensive income related to the designated forward foreign currency exchange contracts for the three and nine months ended December 31, 2022 and December 25, 2021 (in millions):

Three Months Ended

1 unchanged sentence

Accumulated OCI Location of (Gain) Loss Recognized

2022 September 25, 2021

2022 December 25, 2021

Designated forward foreign currency exchange contracts

$ ( 3 ) $ — Cost of goods sold

Six Months Ended

Nine Months Ended

Pre-Tax (Gain) Loss Reclassified from

Accumulated OCI Location of (Gain) Loss Recognized

2022 September 25, 2021

2022 December 25, 2021

Designated forward foreign currency exchange contracts

$ ( 10 ) $ 2 Cost of goods sold

The Company expects that substantially all of the amounts currently recorded in accumulated other comprehensive (loss) 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.

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

Undesignated Hedges

During the three months ended October 1, 2022, there was no gain recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income, while during the six months ended October 1, 2022, a $ 2 million gain was recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income as a result of the changes in the fair value of undesignated forward foreign currency exchange contracts.

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

During the three months ended December 31, 2022, there was no gain recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income, while during the nine months ended December 31, 2022, a $ 2 million gain was recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income as a result of the changes in the fair value of undesignated forward foreign currency exchange contracts.

During the three and nine months ended December 25, 2021, a $ 1 million gain was recognized within foreign currency (gain) loss in the Company’s consolidated statements of operations and comprehensive income as a result of the changes in the fair value of undesignated forward foreign currency exchange contracts.

Shareholders’ Equity

1 unchanged sentence

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

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.

On June 1, 2022, the Company announced that its Board of Directors had terminated the Fiscal 2022 Plan, with $ 500 million of availability remaining, and authorized a new share repurchase program (the “Existing Share Repurchase 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.

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 was permitted, from time to time, to repurchase up to $ 1.0 billion of its outstanding ordinary shares within a period of two years from the effective date of the program.

On June 1, 2022, the Company announced that its Board of Directors had terminated the Fiscal 2022 Plan, with $ 500 million of availability remaining, and authorized a new share repurchase program (the “Fiscal 2023 Plan”) pursuant to which the Company was permitted, from time to time, to repurchase up to $ 1.0 billion of its outstanding ordinary shares within a period of two years from the effective date of the program.

On November 9, 2022, the Company announced that its Board of Directors approved a new share repurchase program (the “Existing Share Repurchase Plan”) of up to $ 1 billion of its outstanding ordinary shares, providing additional capacity to return cash to shareholders over the longer term.

This new two-year program replaced the Fiscal 2023 Plan which had $ 250 million of availability remaining.

Share repurchases may be made in open market or privately negotiated transactions and/or pursuant to Rule 10b5-1 trading plans, 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.

During the six months ended October 1, 2022, the Company purchased 13,183,355 shares for a total cost of approximately $ 650 million, including commissions, under the Existing Share Repurchase Plan.

As of October 1, 2022, the remaining availability under the Company’s existing share repurchase program was $ 350 million.

On November 9, 2022, the Company terminated the Existing Share Repurchase Plan and implemented a new share repurchase plan.

See Note 17 for additional information.

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

During the nine months ended December 31, 2022, the Company purchased 18,921,459 shares for a total cost of approximately $ 950 million, including commissions, through open market transactions, with 15,479,200 shares purchased for a total cost of $ 750 million including commissions under the Fiscal 2023 plan and 3,442,259 shares purchased for a total cost of $ 200 million under the Existing Share Repurchase Plan.

As of December 31, 2022, the remaining availability under the Company’s Existing Share Repurchase Plan was $ 800 million.

During the nine months ended December 25, 2021, the Company purchased 5,934,244 shares for a total cost of approximately $ 350 million including commissions, through open market transactions, with 2,712,275 shares purchased for a total cost of $ 150 million including commissions under the Prior Plan and 3,221,969 shares purchased for a total cost of $ 200 million including commissions under the Fiscal 2022 Plan.

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

During the six month periods ended October 1, 2022 and September 25, 2021, the Company withheld 273,197 shares and 193,322 shares, respectively, with a fair value of $ 13 million and $ 10 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards.

Accumulated Other Comprehensive (Loss) Income

The following table details changes in the components of accumulated other comprehensive (loss) income (“AOCI”), net of taxes, for the six months ended October 1, 2022 and September 25, 2021, respectively (in millions):

During the nine month periods ended December 31, 2022 and December 25, 2021, the Company withheld 300,722 shares and 193,322 shares, respectively, with a fair value of $ 14 million and $ 10 million, respectively, in satisfaction of minimum tax withholding obligations relating to the vesting of restricted share awards.

Accumulated Other Comprehensive Income

The following table details changes in the components of accumulated other comprehensive income (“AOCI”), net of taxes, for the nine months ended December 31, 2022 and December 25, 2021, respectively (in millions):

Foreign Currency Adjustments (1)

Net Gains (Losses) on Derivatives (2)

Net Gain (Loss) on Derivatives (2)

Other Comprehensive Income (Loss) Attributable to Capri

3 unchanged sentences

Other comprehensive (loss) income, net of tax ( 87 ) ( 2 ) ( 89 )

Balance at October 1, 2022 $ ( 48 ) $ 13 $ ( 35 )

Balance at December 31, 2022 $ 97 $ 8 $ 105

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

3 unchanged sentences

Other comprehensive income, net of tax 148 9 157

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

(1) Foreign currency translation adjustments for the six months ended October 1, 2022 primarily include a net $ 486 million translation loss partially offset by a $ 247 million gain, net of taxes of $ 118 million, relating to the Company’s net investment hedges.

Foreign currency translation adjustments for the six months ended September 25, 2021 primarily include a $ 132 million gain, net of taxes of $ 40 million, relating to the Company’s net investment hedges, partially offset by a net $ 23 million translation loss.

Balance at December 25, 2021 $ 205 $ 8 $ 213

(1) Foreign currency translation adjustments for the nine months ended December 31, 2022 primarily include a net $ 310 million translation loss partially offset by a $ 219 million gain, net of taxes of $ 113 million, relating to the Company’s net investment hedges.

Foreign currency translation adjustments for the nine months ended December 25, 2021 primarily include a $ 249 million gain, net of taxes of $ 78 million, relating to the Company’s net investment hedges, and a net $ 102 million translation loss.

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

2 unchanged sentences

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, one stock option plan adopted in Fiscal 2008 (as amended and restated, the “2008 Plan”), and the 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 Company has two equity plans, 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 October 1, 2022, there were no shares available to grant equity awards under the 2008 Plan.

As of December 31, 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 RSUs, and other equity awards, and authorizes a total issuance of up to 22,471,000 ordinary shares after amendments in August 2022.

At October 1, 2022, there were 6,434,269 ordinary shares available for future grants of equity awards under the Incentive Plan.

At December 31, 2022, there were 6,151,690 ordinary shares available for future grants of equity awards under the Incentive Plan.

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

The following table summarizes the Company’s share-based compensation activity during the six months ended October 1, 2022:

The following table summarizes the Company’s share-based compensation activity during the nine months ended December 31, 2022:

Options Service-Based RSUs Performance-Based RSUs

4 unchanged sentences

Canceled/Forfeited ( 4,900 ) ( 395,951 ) —

Outstanding/Unvested at October 1, 2022

Outstanding/Unvested at December 31, 2022

229,675 3,687,385 165,239

The weighted average grant date fair value of service-based and performance-based RSUs granted during the six months ended October 1, 2022 was $ 49.80 and $ 47.41 , respectively.

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

The weighted average grant date fair value of service-based and performance-based RSUs granted during the nine months ended December 31, 2022 was $ 48.39 and $ 47.41 , respectively.

The weighted average grant date fair value of service-based RSUs granted during the nine months ended December 25, 2021 was $ 51.75 .

Share-Based Compensation Expense

The following table summarizes compensation expense attributable to share-based compensation for the three and six months ended October 1, 2022 and September 25, 2021 (in millions):

Three Months Ended Six Months Ended

2022 September 25,

2021 October 1,

2022 September 25,

The following table summarizes compensation expense attributable to share-based compensation for the three and nine months ended December 31, 2022 and December 25, 2021 (in millions):

Three Months Ended Nine Months Ended

2022 December 25,

2021 December 31,

2022 December 25,

Share-based compensation expense $ 16 $ 13 $ 60 $ 69

2 unchanged sentences

The Company estimates forfeitures based on historical forfeiture rates.

The estimated value of future forfeitures for equity grants as of October 1, 2022 is approximately $ 11 million.

The estimated value of future forfeitures for equity awards as of December 31, 2022 is approximately $ 12 million.

See Note 16 in the Company’s Fiscal 2022 Annual Report on Form 10-K for additional information relating to the Company’s share-based compensation awards.

The Company’s effective tax rate for the three and six months ended October 1, 2022 was 13.5 % and 12.9 %, respectively.

Such rates differ from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to the impact of global financing activities.

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

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

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

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

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

The Company’s effective tax rate for the three and nine months ended December 31, 2022 was 1.3 % and 9.2 %, respectively.

For both periods, such rates differ from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to the impact of global financing activities and the release of a valuation allowance on UK deferred tax assets.

The Company’s effective tax rate for the three and nine months ended December 25, 2021 was 5.6 % and 6.8 %, respectively.

Such rates differ from the United Kingdom (“U.K.”) federal statutory rate of 19% primarily due to the favorable effect of a net operating loss carryback claim made in the United States as a result of COVID-19 related losses generated in the prior fiscal year and the impact of global financing activities partially offset by the increases in uncertain tax positions during the three and nine months ended December 25, 2021.

The tax rate for the nine months ended December 25, 2021 also benefited from enacted tax legislation in Italy which allowed the Company to reduce its deferred tax liabilities by allowing a step up of certain intangible assets resulting in lower future cash taxes partially offset by the impact of tax rate changes in the United Kingdom on the Company’s net deferred tax liabilities.

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

4 unchanged sentences

and Hungarian subsidiaries.

Due to the difference in the statutory income tax rates between these jurisdictions, the Company realized lower effective tax rates for the three and six months ended October 1, 2022.

Due to the difference in the statutory income tax rates between these jurisdictions, the Company realized lower effective tax rates for the three and nine months ended December 31, 2022.

Segment Information

18 unchanged sentences

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

Three Months Ended Six Months Ended

2022 September 25,

2021 October 1,

2022 September 25,

Three Months Ended Nine Months Ended

2022 December 25,

2021 December 31,

2022 December 25,

Total revenue:

14 unchanged sentences

COVID-19 related charges 2 ( 1 ) 6 7

Impact of war in Ukraine 3 — 3 —

Total income from operations $ 236 $ 331 $ 719 $ 784

(1) Impairment of assets during the three and six months ended October 1, 2022 and September 25, 2021 primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

(1) Impairment of assets during the nine months ended December 31, 2022 and December 25, 2021, respectively, primarily related to operating lease right-of-use assets at certain Michael Kors store locations.

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

Three Months Ended Six Months Ended

2022 September 25,

2021 October 1,

2022 September 25,

Three Months Ended Nine Months Ended

2022 December 25,

2021 December 31,

2022 December 25,

Depreciation and amortization:

5 unchanged sentences

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

Three Months Ended Six Months Ended

2022 September 25,

2021 October 1,

2022 September 25,

Three Months Ended Nine Months Ended

2022 December 25,

2021 December 31,

2022 December 25,

The Americas (United States, Canada and Latin America) (1)

4 unchanged sentences

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

was $ 739 million and $ 1.472 billion, respectively, for the three and six months ended October 1, 2022.

was $ 840 million and $ 2.312 billion, respectively, for the three and nine months ended December 31, 2022.

Total revenue earned in the U.S.

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

Subsequent Events

Share Repurchase Plan

Subsequent to October 1, 2022, the Company purchased 2,295,845 shares for a total cost of approximately $ 100 million, including commissions, under the Existing Share Repurchase Plan pursuant to a Rule 10b5-1 trading plan, bringing the remaining availability under the Company’s existing share repurchase program to $ 250 million.

The program may be suspended or discontinued at any time.

On November 9, 2022, the Company announced that its Board of Directors approved a new share repurchase program of up to $ 1 billion of its outstanding ordinary shares, providing additional capacity to return cash to shareholders over the longer term.

This new two-year program will replace the Company’s existing $ 1 billion share repurchase program which had $ 250 million of availability remaining.

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.

was $ 885 million and $ 2.207 billion, respectively, for the three and nine months ended December 25, 2021.

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

What changed 10-Q

Item 1. Financial Statements