What changed in this filing

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Item 1. Financial Statements

2020-12-10 compared with 2020-09-09 · 201 added, 216 removed, 427 unchanged (49% of the section changed)

47 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended July 31,

Six Months Ended July 31,

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands, except per share amounts)

2 unchanged sentences

Depreciation and amortization

Asset impairments, net of gain on lease modifications

Operating profit (loss)

Asset impairments, net of loss (gain) on lease modifications

Operating profit

Other income (loss)

Interest and financing charges, net

Income (loss) before income taxes

Income tax expense (benefit)

Net income (loss)

NET INCOME (LOSS) PER COMMON SHARE:

Net income (loss) per common share

Income before income taxes

Income tax expense

NET INCOME PER COMMON SHARE:

Net income per common share

Weighted average number of shares outstanding

Net income (loss) per common share

Net income per common share

Weighted average number of shares outstanding

Net income (loss)

Other comprehensive income:

1 unchanged sentence

Other comprehensive income (loss)

Comprehensive income (loss)

Comprehensive income

The accompanying notes are an integral part of these statements.

4 unchanged sentences

(In thousands)

Balance as of April 30, 2020

Equity awards exercised/vested, net

Balance as of July 31, 2020

Share-based compensation expense

Taxes paid for net share settlements

Other comprehensive income, net

Balance as of October 31, 2020

Balance as of July 31, 2019

Balance as of April 30, 2019

Equity awards exercised/vested, net

2 unchanged sentences

Other comprehensive income, net

Repurchases of common stock

Balance as of July 31, 2019

Balance as of October 31, 2019

Balance as of January 31, 2020

2 unchanged sentences

Taxes paid for net share settlements

Other comprehensive loss, net

Balance as of July 31, 2020

Other comprehensive income, net

Balance as of October 31, 2020

Balance as of January 31, 2019

5 unchanged sentences

Cumulative effect of adoption of ASC 842

Balance as of July 31, 2019

Balance as of October 31, 2019

The accompanying notes are an integral part of these statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended July 31,

Nine Months Ended October 31,

(In thousands)

Cash flows from operating activities

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

4 unchanged sentences

Dividend received from unconsolidated affiliate

Equity (gain) loss in unconsolidated affiliates

Equity gain in unconsolidated affiliates

Share-based compensation

Deferred financing charges and debt discount amortization

Extinguishment of deferred financing costs

Deferred income taxes

7 unchanged sentences

Accounts payable, accrued expenses and other liabilities

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities

4 unchanged sentences

Repayment of borrowings - revolving facility

( 1,536,448 )

Proceeds from borrowings - revolving facility

1 unchanged sentence

Proceeds from borrowings - unsecured term loan

Proceeds from borrowings - senior secured notes

Payment of financing costs

Proceeds from exercise of equity awards

3 unchanged sentences

Foreign currency translation adjustments

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

16 unchanged sentences

(“KLNA”) and Fabco Holding B.V.

(“Fabco”) are Dutch joint venture limited liability companies that are 49 % owned by the Company.

(“Fabco”) are Dutch joint venture limited liability companies, each of which is 49% owned by the Company.

See Note 16 – Subsequent Events with respect to an increase in the ownership of Fabco by the Company.

Karl Lagerfeld Holding B.V.

4 unchanged sentences

Accordingly, the results of Vilebrequin, KLH, KLNA and Fabco are, and will be, included in the financial statements for the quarter ended or ending closest to the Company’s fiscal quarter end.

For example, with respect to the Company’s results for the six-month period ended July 31, 2020, the results of Vilebrequin, KLH, KLNA and Fabco are included for the six-month period ended June 30, 2020.

For example, with respect to the Company’s results for the nine-month period ended October 31, 2020, the results of Vilebrequin, KLH, KLNA and Fabco are included for the nine-month period ended September 30, 2020.

The Company’s retail operations segment reports on a 52/53-week fiscal year.

The Company’s three and six-month periods ended July 31, 2020 and 2019 were each 13-week and 26-week periods, respectively, for the retail operations segment.

For fiscal 2021 and 2020, the three and six-month periods for the retail operations segment ended on August 1, 2020 and August 3, 2019, respectively.

The results for the three and six months ended July 31, 2020 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of the Company’s business and the significant effects of the COVID-19 pandemic on the Company’s business.

The Company’s three and nine-month periods ended October 31, 2020 and 2019 were each 13-week and 39-week periods, respectively, for the retail operations segment.

For fiscal 2021 and 2020, the three and nine-month periods for the retail operations segment ended on October 31, 2020 and November 2, 2019, respectively.

The results for the three and nine months ended October 31, 2020 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of the Company’s business and the significant effects of the COVID-19 pandemic on the Company’s business.

The accompanying financial statements included herein are unaudited.

10 unchanged sentences

The Company has elected to not apply the lease modification guidance for contracts with COVID-19 related rent concessions.

As of July 31, 2020, the Company has $ 8.0 million of deferred lease payments recorded within accounts payable on its condensed consolidated balance sheets.

As of October 31, 2020, the Company has $ 11.0 million of deferred lease payments recorded within accounts payable on its condensed consolidated balance sheets.

Liquidity and Impact of COVID-19

1 unchanged sentence

The primary cash requirements of its business are the seasonal buildup in inventory, compensation paid to employees, payments to suppliers in the normal course of business, capital expenditures, maturities of debt and related interest payments and income tax payments.

The rapid expansion of the COVID-19 pandemic resulted in a sharp decline in net sales and earnings in the first and second quarters of fiscal 2021.

The rapid expansion of the COVID-19 pandemic resulted in a sharp decline in net sales in the first, second and, to a lesser extent, third quarters of fiscal 2021.

It also resulted in the Company recognizing a net loss in the first and second quarters and a significant reduction in net income in the third quarter.

The Company is focused on preserving its liquidity and managing its cash flow during these unprecedented conditions.

The Company has taken preemptive actions to enhance its ability to meet its short-term liquidity needs, including, but not limited to, reducing payroll costs through employee furloughs, job eliminations, salary reductions, reductions in discretionary spending, deferring certain lease payments and deferral of capital projects.

In addition, the Company is closely monitoring its inventory needs and is working with its suppliers to curtail, or cancel, production of product that the Company believes will not be able to be sold in season.

The Company has also been working with its suppliers and licensors to negotiate extended payment terms in order to preserve capital.

As of July 31, 2020, the Company had cash and cash equivalents of $ 252.8 million.

The Company had taken preemptive actions to enhance its ability to meet its short-term liquidity needs, including, but not limited to, reducing payroll costs through employee furloughs, job eliminations, salary reductions, reductions in marketing and other discretionary spending, deferring certain lease payments and deferral of capital projects.

During the quarter ended October 31, 2020, certain furloughed employees were reinstated and salaries that had been reduced were increased to their pre-pandemic levels.

The Company has received royalty relief from certain licensors and continues to negotiate with licensors for additional relief.

As of October 31, 2020, the Company had cash and cash equivalents of $ 149.7 million and availability under its revolving credit facility in excess of $ 600.0 million.

The Company believes it has adequate cash flows to meet the cash requirements of its business.

As of July 31, 2020, the Company was in compliance with all covenants under its term loan and revolving credit facility.

As of October 31, 2020, the Company was in compliance with all covenants under its senior secured notes and revolving credit facility.

On August 7, 2020, the Company refinanced its term loan and revolving credit facility.

See Note 16 – Subsequent Events.

See Note 9 – Notes Payable.

Note 2 – Retail Restructuring

On June 5, 2020, the Company announced the restructuring of its retail operations segment including the closing of all Wilsons Leather and G.H.

Additionally, the Company will close its Calvin Klein Performance stores.

In June 2020, the Company announced the restructuring of its retail operations segment including the closing of all Wilsons Leather and G.H.

Additionally, the Company is also closing its Calvin Klein Performance stores.

In connection with the restructuring of the retail operations segment, the Company expects to incur an aggregate charge of approximately $ 100 million related to store operating costs, landlord termination fees, severance costs, store liquidation and closing costs, write-offs related to right-of-use assets and legal and professional fees.

The Company expects the net cash outflow from the retail restructuring to be approximately $ 65 million.

As a result of the restructuring of the Company’s retail operations, the Company recorded a charge of $ 1.2 million during the three months ended July 31, 2020.

As a result of the restructuring of the Company’s retail operations, the Company recorded an aggregate charge of $ 2.2 million during the nine months ended October 31, 2020.

The charge consisted primarily of severance payments, benefit continuation costs and store closing costs.

Restructuring charges are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income (loss).

The following is a reconciliation of the accrual for the quarter ended July 31, 2020:

Restructuring charges are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of income and comprehensive income.

The following is a reconciliation of the accrual for the quarter ended October 31, 2020:

Severance and Benefit Costs

5 unchanged sentences

Balance at July 31, 2020

Amounts charged to expense

Cash payments

Balance at October 31, 2020

The Company has accounted for the remaining rent and termination payments under Accounting Standards Codification (“ASC”) 842 – Leases.

As of July 31, 2020, the total operating lease liability related to Wilsons Leather, G.H Bass, and Calvin Klein Performance stores is $ 54.5 million and will be paid by the end of fiscal 2021.

As of October 31, 2020, the total operating lease liability related to Wilsons Leather, G.H Bass, and Calvin Klein Performance stores is $ 28.0 million and will be paid during the fiscal quarter ending January 31, 2021.

Note 3 – Allowance for Doubtful Accounts

6 unchanged sentences

Retail trade receivables primarily relate to amounts due from third-party credit card processors for the settlement of debit and credit card transactions and are typically collected within 3 to 5 days.

The Company’s accounts receivable and allowance for doubtful accounts as of July 31, 2020 were:

July 31, 2020

The Company’s accounts receivable and allowance for doubtful accounts as of October 31, 2020 were:

October 31, 2020

(In thousands)

3 unchanged sentences

The allowance for doubtful accounts for wholesale trade receivables is estimated based on several factors.

In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligation (such as in the case of bankruptcy filings (including potential bankruptcy filings), extensive delay in payment or substantial downgrading by credit rating agencies), a specific reserve for bad debts is recorded against amounts due from that customer to reduce the net recognized receivable to the amount reasonably expected to be collected.

In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations (such as in the case of bankruptcy filings (including potential bankruptcy filings), extensive delay in payment or substantial downgrading by credit rating agencies), a specific reserve for bad debts is recorded against amounts due from that customer to reduce the net recognized receivable to the amount reasonably expected to be collected.

For all other wholesale customers, an allowance for doubtful accounts is determined through analysis of the aging of accounts receivable at the end of the reporting period for financial statements, assessments of collectability based on historical trends and an evaluation of the impact of economic conditions.

The Company considers both current and forecasted future economic conditions in determining the adequacy of its allowance for doubtful accounts.

The allowance for doubtful accounts for retail trade receivables is estimated as the credit card chargeback rate applied to the previous 90 days of credit card sales.

The allowance for doubtful accounts for retail trade receivables is estimated at the credit card chargeback rate applied to the previous 90 days of credit card sales.

In addition, the Company considers both current and forecasted future economic conditions in determining the adequacy of its allowance for doubtful accounts.

During the three and six months ended July 31, 2020, the Company recorded a $ 0.8 million and $ 10.5 million increase in its allowance for doubtful accounts primarily due to allowances recorded against the outstanding receivables of certain department store customers that have publicly announced bankruptcy filings or possible bankruptcy filings.

The Company had the following activity in its allowance for credit losses for the six months ended July 31, 2020:

July 31, 2020

During the three and nine months ended October 31, 2020, the Company recorded a $ 4.3 million and $ 14.9 million increase in its allowance for doubtful accounts primarily due to allowances recorded against the outstanding receivables of certain department store customers that have publicly announced bankruptcy filings or possible bankruptcy filings.

The Company had the following activity in its allowance for credit losses for the nine months ended October 31, 2020:

October 31, 2020

(In thousands)

2 unchanged sentences

Accounts written off as uncollectible

Balance as of July 31, 2020

Balance as of October 31, 2020

Note 4 – Inventories

3 unchanged sentences

Substantially all of the Company’s inventories consist of finished goods.

The inventory return asset, which consists of the amount of goods that are anticipated to be returned by customers, represented $ 15.1 million, $ 24.8 million and $ 31.0 million as of July 31, 2020, July 31, 2019 and January 31, 2020 respectively.

The inventory return asset, which consists of the amount of goods that are anticipated to be returned by customers, represented $ 20.6 million, $ 41.9 million and $ 31.0 million as of October 31, 2020, October 31, 2019 and January 31, 2020, respectively.

The inventory return asset is recorded within prepaid expenses and other current assets on the condensed consolidated balance sheets.

Inventory held on consignment by the Company’s customers totaled $ 6.3 million, $ 3.9 million and $ 9.1 million at July 31, 2020, July 31, 2019 and January 31, 2020, respectively.

Inventory held on consignment by the Company’s customers totaled $ 4.8 million, $ 11.0 million and $ 9.1 million at October 31, 2020, October 31, 2019 and January 31, 2020, respectively.

Consignment inventory is stored at the facilities of the Company’s customers.

14 unchanged sentences

(In thousands)

Secured notes

Revolving credit facility

6 unchanged sentences

On August 7, 2020, the Company refinanced its term loan and revolving credit facility.

See Note 16 – Subsequent Events.

The 2 % note in the principal amount of $ 125 million issued to LVMH Moet Hennessy Louis Vuitton Inc.

See Note 9 – Notes Payable.

The 2 % note in the principal amount of $ 125 million (the “LVMH Note”) issued to LVMH Moet Hennessy Louis Vuitton Inc.

(“LVMH”) in connection with the acquisition of Donna Karan International (“DKI”) was recorded on the balance sheet at a discount of $ 40.0 million in accordance with ASC 820 – Fair Value Measurements .

For purposes of this fair value disclosure, the Company based its fair value estimate for the note issued to LVMH on the initial fair value as determined at the date of the acquisition of DKI and records the amortization using the effective interest method over the term of the note.

The fair value of the note issued to LVMH was considered a Level 3 valuation in the fair value hierarchy.

For purposes of this fair value disclosure, the Company based its fair value estimate for the LVMH Note on the initial fair value as determined at the date of the acquisition of DKI and records the amortization using the effective interest method over the term of the LVMH Note.

The fair value of the LVMH Note was considered a Level 3 valuation in the fair value hierarchy.

Non-Financial Assets and Liabilities

18 unchanged sentences

The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company’s lease assets and liabilities as of July 31, 2020, July 31, 2019 and January 31, 2020 consist of the following:

The Company’s lease assets and liabilities as of October 31, 2020, October 31, 2019 and January 31, 2020 consist of the following:

Classification

July 31, 2020

July 31, 2019

October 31, 2020

October 31, 2019

January 31, 2020

7 unchanged sentences

Total lease liabilities

The Company’s operating lease assets and operating lease liabilities significantly declined during the second quarter of fiscal 2021 due to the restructuring of the retail operations segment.

The Company’s operating lease assets and operating lease liabilities significantly declined during fiscal 2021 due to the restructuring of the retail operations segment, partially offset by other leasing activity.

As a result of this restructuring, the Company expects to close all of its Wilsons Leather, G.H.

2 unchanged sentences

Bass, DKNY and Vilebrequin stores as a result of the performance at these stores.

The Company recorded lease costs of $ 36.0 million and $ 58.4 million during the three and six months ended July 31, 2020, respectively.

The Company recorded lease costs of $ 24.9 million and $ 49.9 million during the three and six months ended July 31, 2019, respectively.

Lease costs are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations and comprehensive income (loss).

The Company recorded negative variable lease costs and short-term lease costs of ($ 4.3 ) million and ($ 0.9 ) million for the three and six months ended July 31, 2020, respectively.

The negative variable lease costs were primarily due to rent forgiveness received by the Company’s retail operations segment that was recorded as negative variable lease costs in accordance with the Staff Q&A issued by the FASB on April 10, 2020.

The Company recorded variable leases costs and short-term lease costs of $ 2.7 million and $ 5.0 million for the three and six months ended July 31, 2019, respectively.

The Company recorded lease costs of $ 18.7 million and $ 77.1 million during the three and nine months ended October 31, 2020, respectively.

The Company recorded lease costs of $ 24.4 million and $ 74.3 million during the three and nine months ended October 31, 2019, respectively.

Lease costs are recorded within selling, general and administrative expenses in the Company’s condensed consolidated statements of income and comprehensive income.

The Company recorded variable

lease costs and short-term lease costs of $ 6.2 million and $ 5.3 million for the three and nine months ended October 31, 2020, respectively.

The Company recorded variable leases costs and short-term lease costs of $ 4.4 million and $ 11.9 million for the three and nine months ended October 31, 2019, respectively.

Short-term lease costs are immaterial.

As of July 31, 2020, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2025 and thereafter are as follows:

As of October 31, 2020, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2025 and thereafter are as follows:

Year Ending January 31,

2 unchanged sentences

Present value of lease liabilities

As of July 31, 2020, there are no material leases that are legally binding but have not yet commenced.

As of July 31, 2020, the weighted average remaining lease term related to operating leases is 4.1 years.

As of October 31, 2020, there are no material leases that are legally binding but have not yet commenced.

As of October 31, 2020, the weighted average remaining lease term related to operating leases is 4.9 years.

The weighted average discount rate related to operating leases is 8.2 %.

Cash paid for amounts included in the measurement of operating lease liabilities is $ 51.0 million and $ 51.9 million during the six months ended July 31, 2020 and July 31, 2019, respectively.

Right-of-use assets obtained in exchange for lease obligations were $ 10.8 million and $ 15.6 million as of July 31, 2020 and July 31, 2019, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities is $ 79.7 million and $ 75.9 million during the nine months ended October 31, 2020 and October 31, 2019, respectively.

Right-of-use assets obtained in exchange for lease obligations were $ 41.3 million and $ 21.3 million as of October 31, 2020 and October 31, 2019, respectively.

Note 7 – Goodwill and Intangible Assets

As of July 31, 2020, there is $ 260.7 million of goodwill and $ 438.7 million of indefinite-lived trademarks recorded on the Company’s condensed consolidated balance sheet.

As of October 31, 2020, there is $ 261.7 million of goodwill and $ 441.1 million of indefinite-lived trademarks recorded on the Company’s condensed consolidated balance sheet.

The Company reviews and tests its goodwill and intangible assets with indefinite lives for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount of such assets may be impaired.

4 unchanged sentences

There were no impairments identified as of April 30, 2020 as a result of these tests.

While no impairment was identified as of April 30, 2020, $ 370.0 million of the Company’s indefinite-lived trademarks could be deemed to have a risk of future impairment as there is limited excess fair value over the carrying value of these assets at July 31, 2020.

During the second quarter of 2020, the Company conducted a review to assess whether indicators of impairment existed.

During the third quarter of 2020, the Company conducted a review to assess whether indicators of impairment existed.

As a result of this review, the Company concluded that no indicators existed that would make management believe it is more likely than not that the fair value of its goodwill or indefinite-lived trademarks is less than its carrying value.

1 unchanged sentence

The fair value of the Company’s goodwill and indefinite-lived intangible assets are considered a Level 3 valuation in the fair value hierarchy.

Note 8 – Net Income (Loss) per Common Share

Basic net income (loss) per common share has been computed using the weighted average number of common shares outstanding during each period.

Diluted net income per share, when applicable, is computed using the weighted average number of common shares and potential dilutive common shares, consisting of unvested restricted stock unit awards and stock options outstanding during the period.

All unvested restricted stock unit awards and stock options have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2020 as a result of the Company recording a net loss during each of those periods.

Approximately 794,400 and 606,500 shares of common stock have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2019, respectively.

Note 8 – Net Income per Common Share

Basic net income per common share has been computed using the weighted average number of common shares outstanding during each period.

Diluted net income per share is computed using the weighted average number of common shares and potential dilutive common shares, consisting of unvested restricted stock unit awards and stock options outstanding during the period.

Approximately 262,100 and 215,600 shares of common stock have been excluded from the diluted net income per share calculation for the three and nine months ended October 31, 2020, respectively.

Approximately 846,200 and 680,700 shares of common stock were excluded from the diluted net income per share calculation for the three and nine months ended October 31, 2019, respectively.

All share-based payments outstanding that vest based on the achievement of performance and/or market price conditions, and for which the respective performance and/or market price conditions have not been achieved, have been excluded from the diluted per share calculation.

The following table reconciles the numerators and denominators used in the calculation of basic and diluted net income (loss) per share:

Three Months Ended July 31,

Six Months Ended July 31,

The following table reconciles the numerators and denominators used in the calculation of basic and diluted net income per share:

Three Months Ended October 31,

Nine Months Ended October 31,

(In thousands, except per share amounts)

Net income (loss)

Basic net income (loss) per share:

Basic net income per share:

Basic common shares

Basic net income (loss) per share

Diluted net income (loss) per share:

Basic net income per share

Diluted net income per share:

Basic common shares

1 unchanged sentence

Diluted common shares

Diluted net income (loss) per share

Diluted net income per share

Note 9 – Notes Payable

Long-term debt consists of the following:

July 31, 2020

July 31, 2019

October 31, 2020

October 31, 2019

January 31, 2020

(In thousands)

Secured Notes

Revolving credit facility

Note issued to LVMH

Unsecured loans

3 unchanged sentences

Current portion of long-term debt

(1) Does not include debt issuance costs, net of amortization, totaling $ 3.3 million, $ 5.8 million and $ 4.6 million as of July 31, 2020, July 31, 2019 and January 31, 2020, respectively, related to the revolving credit facility.

(1) Does not include debt issuance costs, net of amortization, totaling $ 7.3 million, $ 5.2 million and $ 4.6 million as of October 31, 2020, October 31, 2019 and January 31, 2020, respectively, related to the revolving credit facility.

These debt issuance costs have been deferred and are classified in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets in accordance with ASU 2015-15.

On August 7, 2020, the Company refinanced its term loan and revolving credit facility.

See Note 16 – Subsequent Events.

The Company borrowed $ 350.0 million under a senior secured term loan facility (the “Term Loan”) that matures in December 2022.

Senior Secured Notes

On August 7, 2020, the Company completed a private debt offering of $ 400 million aggregate principal amount of its 7.875 % Senior Secured Notes due 2025 (the “Notes”).

The terms of the Notes are governed by an indenture (the “Indenture”), among the Company, the guarantors party thereto and U.S.

Bank, National Association, as trustee and

collateral agent (the “Collateral Agent”).

The net proceeds of the Notes have been used (i) to repay the Company’s prior term loan facility due 2022, (ii) to pay related fees and expenses and (iii) for general corporate purposes.

The Notes bear interest at a rate of 7.875 % per year payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2021 .

The Notes are unconditionally guaranteed on a senior-priority secured basis by the Company’s current and future wholly-owned domestic subsidiaries that guarantee any of the Company’s credit facilities, including the Company’s ABL facility (the “ABL Facility”) pursuant to the ABL Credit Agreement, or certain future capital markets indebtedness of the Company or guarantors.

The Notes and the related guarantees are secured by (i) first priority liens on the Company’s Cash Flow Priority Collateral (as defined in the Indenture), and (ii) a second-priority lien on the Company’s ABL Priority Collateral (as defined in the Indenture), in each case subject to permitted liens described in the Indenture.

In connection with the issuance of the Notes and execution of the Indenture, the Company and the Guarantors entered into a pledge and security agreement (the “Pledge and Security Agreement”), among the Company, the Guarantors and the Collateral Agent.

The Notes are subject to the terms of the intercreditor agreement which governs the relative rights of the secured parties in respect of the ABL Facility and the Notes (the “Intercreditor Agreement”).

The Intercreditor Agreement restricts the actions permitted to be taken by the Collateral Agent with respect to the Collateral on behalf of the holders of the Notes.

The Notes are also subject to the terms of the seller note subordination agreement which governs the relative rights of the secured parties in respect of the Seller Note (as defined therein), the ABL Facility and the Notes.

At any time prior to August 15, 2022, the Company may redeem some or all of the Notes at a price equal to 100 % of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date plus a “make-whole” premium, as described in the Indenture.

On or after August 15, 2022, the Company may redeem some or all of the Notes at any time and from time to time at the redemption prices set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, at any time prior to August 15, 2022, the Company may redeem up to 40 % of the aggregate principal amount of the Notes with the proceeds of certain equity offerings at the redemption price set forth in the Indenture, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

In addition, at any time prior to August 15, 2022, during any twelve month period, the Company may redeem up to 10 % of the aggregate principal amount of the Notes at a redemption price equal to 103 % of the principal amount of the Notes redeemed plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date.

If the Company experiences a Change of Control (as defined in the Indenture), the Company is required to offer to repurchase the Notes at 101 % of the principal amount of such Notes plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

The Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries to incur or guarantee additional indebtedness, pay dividends or make other restricted payments, make certain investments, incur restrictions on the ability of the Company’s restricted subsidiaries that are not guarantors to pay dividends or make certain other payments, create or incur certain liens, sell assets and subsidiary stock, impair the security interests, transfer all or substantially all of the Company’s assets or enter into merger or consolidation transactions, and enter into transactions with affiliates.

The Indenture provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, nonpayment of principal or interest, breach of other agreements in the Indenture, failure to pay certain other indebtedness, failure of certain guarantees to be enforceable, failure to perfect certain collateral securing the Notes failure to pay certain final judgments, and certain events of bankruptcy or insolvency.

The Company incurred debt issuance costs totaling $ 8.5 million related to the Notes that will be amortized over the term of the Notes.

In accordance with ASU 2015-15, the debt issuance costs have been deferred and are presented as a contra-liability, offsetting the outstanding balance of the Notes, and are amortized using the effective interest method over the remaining life of the Notes.

The Company had previously borrowed $ 350.0 million under a senior secured term loan facility (the “Term Loan”) that was scheduled to mature in December 2022.

The Company prepaid $ 50.0 million in principal amount of the Term Loan, reducing the principal balance of the Term Loan to $ 300.0 million.

The Term Loan is guaranteed by certain of the Company’s subsidiaries.

Interest on the outstanding principal amount of the Term Loan accrues at a rate equal to the London Interbank Offered Rate (“LIBOR”), subject to a 1 % floor, plus an applicable margin of 5.25 % or an alternate base rate (defined as the greatest of (i) the “prime rate” as published by the Wall Street Journal from time to time, (ii) the federal funds rate plus 0.5 % or (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 4.25 %, per annum, payable in cash.

As of July 31, 2020, interest under the Term Loan was being paid at a weighted average rate of 6.45 % per annum.

The Term Loan is secured by certain assets of the Company and certain of its subsidiaries.

The Term Loan is required to be prepaid with the proceeds of certain asset sales if such proceeds are not applied as required by the Term Loan within specified deadlines.

The Term Loan contains covenants that, among other things, restrict the Company’s ability, subject to certain exceptions, to incur additional debt;

sell or dispose of certain assets;

merge with other companies;

liquidate or dissolve the Company;

acquire other companies;

make loans, advances, or guarantees;

and make certain investments.

This loan also includes a mandatory prepayment provision based on excess cash flow as defined in the term loan agreement.

A first lien leverage covenant requires the Company to maintain a level of debt to EBITDA at a ratio as defined in the term loan agreement.

As of July 31, 2020, the Company was in compliance with these covenants.

Revolving Credit Facility

The Company has a $ 650 million credit agreement (the “revolving credit facility”) under which amounts available are subject to borrowing base formulas and over advances as specified in the revolving credit facility agreement.

Borrowings bear interest, at the Company’s option, at LIBOR plus a margin of 1.25 % to 1.75 % or an alternate base rate (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A.

from time to time, (ii) the federal funds rate plus 0.5 % or (iii) the LIBOR rate for a borrowing with an interest period of one month) plus a margin of 0.25 % to 0.75 %, with the applicable margin determined based on the availability under the revolving credit facility agreement.

The revolving credit facility has a five-year term ending December 1, 2021 .

In addition to paying interest on any outstanding borrowings under the revolving credit facility, the Company is required to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments.

The commitment fee accrues at a rate equal to 0.25 % per annum on the average daily amount of the available commitments.

The revolving credit facility is secured by specified assets of the Company and certain of its subsidiaries.

On August 7, 2020, the Company used a portion of the proceeds from the issuance of the Notes to repay the outstanding principal balance of $ 300.0 million under the Term Loan facility.

At the date of repayment, the Company had unamortized debt issuance costs of $ 6.1 million associated with the Term Loan.

These debt issuance costs were fully extinguished and charged to interest expense in the Company’s results of operations.

Second Amended and Restated ABL Credit Agreement

On August 7, 2020, the Company’s subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc.

and The Donna Karan Company Store LLC (collectively, the “Borrowers”), entered into the second amended and restated credit agreement (the “ABL Credit Agreement”) with the Lenders named therein and with JPMorgan Chase Bank, N.A., as Administrative Agent.

The ABL Credit Agreement is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, certain material indebtedness is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder.

The ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to $ 650 million.

The Company and its subsidiaries, G-III Apparel Canada ULC, Gabrielle Studio, Inc., Donna Karan International Inc.

and Donna Karan Studio LLC (the “Guarantors”), are Loan Guarantors under the ABL Credit Agreement

The ABL Credit Agreement refinances, amends and restates the Amended Credit Agreement, dated as of December 1, 2016 (as amended, supplemented or otherwise modified from time to time prior to August 7, 2020, the “Prior Credit Agreement”), by and among the Borrowers and the Loan Guarantors (each as defined therein) party thereto, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., in its capacity as the administrative agent thereunder.

The Prior Credit Agreement provided for borrowings of up to $ 650 million and was due to expire in December 2021.

The ABL Credit Agreement extends the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, certain material indebtedness is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder.

Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the ABL Credit Agreement.

Borrowings bear interest, at the Borrowers’ option, at LIBOR plus a margin of 1.75 % to 2.25 % or an alternate base rate margin of 0.75 % to 1.25 % (defined as the greatest of (i) the “prime rate” of JPMorgan Chase Bank, N.A.

from time to time, (ii) the federal funds rate plus 0.5 % and (iii) the LIBOR rate for a borrowing with an interest period of one month) plus 1.00 %, with the applicable margin determined based on Borrowers’ availability under the ABL Credit Agreement.

The ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors.

In addition to paying interest on any outstanding borrowings under the ABL Credit Agreement, the Company is required to pay a commitment fee to the lenders under the credit agreement with respect to the unutilized commitments.

The commitment fee accrues at a tiered rate equal to 0.50 % per annum on the average daily amount of the available commitments when the average usage is less than 50% of the total available commitments and decreases to 0.35 % per annum on the average daily amount of the available commitments when the average usage is greater than or equal to 50% of the total available commitments.

The revolving credit facility contains covenants that, among other things, restrict the Company’s ability, subject to specified exceptions, to incur additional debt;

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In certain circumstances, the revolving credit facility also requires the Company to maintain a fixed charge coverage ratio, as defined in the agreement, not less than 1.00 to 1.00 for each period of twelve consecutive fiscal months of the Company.

As of July 31, 2020, the Company was in compliance with these covenants.

As of July 31, 2020, the Company had no borrowings outstanding under the revolving credit facility.

As of July 31, 2020, interest under the revolving credit agreement was being paid at an average rate of 2.06 % per annum.

The revolving credit facility also includes amounts available for letters of credit.

As of July 31, 2020, there were outstanding trade and standby letters of credit amounting to $ 7.0 million and $ 3.4 million, respectively.

As a portion of the consideration for the acquisition of DKI, the Company issued to LVMH a junior lien secured promissory note in the principal amount of $ 125.0 million (the “LVMH Note”) that bears interest at the rate of 2 % per year.

As of October 31, 2020, the Company was in compliance with these covenants.

As of October 31, 2020, the Company had no borrowings outstanding under the ABL Credit Agreement.

As of October 31, 2020, interest under the ABL Credit Agreement was being paid at an average rate of 2.05 % per annum.

The ABL credit agreement also includes amounts available for letters of credit.

As of October 31, 2020, there were outstanding trade and standby letters of credit amounting to $ 5.8 million and $ 3.9 million, respectively.

At the date of the refinancing of the Prior Credit Agreement, the Company had $ 3.3 million of unamortized debt issuance costs remaining from the Prior Credit Agreement.

The Company extinguished and charged to interest expense $ 0.4 million of the prior debt issuance costs and incurred new debt issuance costs totaling $ 4.8 million related to the ABL Credit Agreement.

The Company has a total of $ 7.7 million debt issuance costs related to its ABL Credit Agreement.

As permitted under ASC 2015-15, the debt issuance costs have been deferred and are presented as an asset which is to be subsequently amortized ratably over the term of the ABL Credit Agreement.

As a portion of the consideration for the acquisition of DKI, the Company issued to LVMH a junior lien secured promissory note in the principal amount of $ 125.0 million that bears interest at the rate of 2 % per year.

$ 75.0 million of the principal amount of the LVMH Note is due and payable on June 1, 2023 and $ 50.0 million of such principal amount is due and payable on December 1, 2023 .

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Unsecured Loans

On April 15, 2019, T.R.B.

International SA (“TRB”), a subsidiary of Vilebrequin, borrowed € 3.0 million under an unsecured loan (the “2019 Unsecured Loan”).

During the term of the 2019 Unsecured Loan, TRB is required to make quarterly installment payments of € 0.2 million.

Interest on the outstanding principal amount of the 2019 Unsecured Loan accrues at a fixed rate equal to 1.50 % per annum, payable quarterly.

The 2019 Unsecured Loan originally matured on April 15, 2024.

Due to the COVID-19 outbreak, the bank agreed to amend the 2019 Unsecured Loan to suspend the March and June 2020 quarterly installment payments and add these payments to the balance due at the end of the loan term.

The 2019 Unsecured Loan now matures on September 15, 2024 .

On February 3, 2020, TRB borrowed € 1.7 million under another unsecured loan (the “February 2020 Unsecured Loan”).

During the term of the February 2020 Unsecured Loan, TRB is required to make quarterly installment payments of € 0.1 million.

Interest on the outstanding principal amount of the February 2020 Unsecured Loan accrues at a fixed rate equal to 1.50 % per annum, payable quarterly.

The February 2020 Unsecured Loan originally matured on March 31, 2025.

Due to the COVID-19 outbreak, the bank agreed to amend the 2020 Unsecured Loan to suspend the June 2020 quarterly installment payment and add this payment to the balance due at the end of the loan term.

The February 2020 Unsecured Loan now matures on June 30, 2025 .

On June 12, 2020, a subsidiary of TRB borrowed € 1.5 million under a French state backed loan provided by UBS Bank (the “June 2020 Unsecured Loan”) as part of a COVID-19 relief program.

The June 2020 Unsecured Loan provides for an initial one year term with the option to extend the term by an additional one to five years at the end of the initial term.

The June 2020 Unsecured Loan requires no interest or principal payments during the initial term of the agreement.

During fiscal 2020 and fiscal 2021, T.R.B International SA (“TRB”), a subsidiary of Vilebrequin, borrowed funds under several unsecured loans.

A portion of the unsecured loans were to provide funding for operations in the normal course of business, while other unsecured loans were various European state backed loans as part of COVID-19 relief programs.

In the aggregate, TRB is currently required to make quarterly installment payments of € 0.2 million under these loans.

Interest on the outstanding principal amount of the unsecured loans accrues at a fixed rate equal to 0 % to 2.0 % per annum, payable on either a quarterly or monthly basis.

Certain unsecured loans will require monthly installment payments beginning in fiscal 2022.

The unsecured loans have maturity dates ranging from September 15, 2024 through August 30, 2025.

As of October 31, 2020, TRB had an aggregate outstanding balance of € 6.2 million under these various unsecured loans.

Overdraft Facilities

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As part of a COVID-19 relief program, TRB and its subsidiaries have also entered into several state backed overdraft facilities with UBS Bank in Switzerland for an aggregate of CHF 4.7 million at varying interest rates of 0 % to 0.5 %.

As of July 31, 2020, TRB had an aggregate € 3.1 million drawn across these various facilities.

As of October 31, 2020, TRB had an aggregate of € 2.5 million drawn under these various facilities.

Note 10 – Revenue Recognition

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The Company considers control to have been transferred when the Company has transferred physical possession of the product, the Company has a right to payment for the product, the customer has legal title to the product and the customer has the significant risks and rewards of the product.

Wholesale revenues are adjusted by variable considerations arising from implicit or explicit obligations.

Wholesale revenues are adjusted by variable consideration arising from implicit or explicit obligations.

Wholesale revenues also include revenues from license agreements related to the DKNY, Donna Karan, G.H.

Bass, Andrew Marc and Vilebrequin trademarks owned by the Company.

As of July 31, 2020, revenues from license agreements represented an insignificant portion of wholesale revenues.

Bass, Andrew Marc and Vilebrequin

trademarks owned by the Company.

As of October 31, 2020, revenues from license agreements represented an insignificant portion of wholesale revenues.

Retail Operations Segment.

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As a result of the restructuring of the Company’s retail operations, the Company is in the process of closing all of its Wilsons Leather and G.H.

Bass retail stores.

Bass retail stores which is expected to be completed by the end of fiscal 2021.

After completion of the restructuring, the Company’s retail operations segment will consist of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, Andrew Marc, Wilsons Leather and G.H.

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In some of its retail concepts, the Company also offers a limited loyalty program where customers accumulate points redeemable for cash discount certificates that expire 90 days after issuance.

Total contract liabilities were $ 5.1 million, $ 6.6 million and $ 5.9 million at July 31, 2020, July 31, 2019 and January 31, 2020, respectively.

The Company recognized $ 1.3 million in revenue for the three months ended July 31, 2020 related to contract liabilities that existed at April 30, 2020.

The Company recognized $ 4.0 million in revenue for the six months ended July 31, 2020 related to contract liabilities that existed at January 31, 2020.

There were no contract assets recorded as of July 31, 2020, July 31, 2019 and January 31, 2020.

Substantially all of the advance payments from licensees as of July 31, 2020 are expected to be recognized as revenue within the next twelve months.

Total contract liabilities were $ 4.1 million, $ 5.4 million and $ 5.9 million at October 31, 2020, October 31, 2019 and January 31, 2020, respectively.

The Company recognized $ 2.1 million in revenue for the three months ended October 31, 2020 related to contract liabilities that existed at July 31, 2020.

The Company recognized $ 4.3 million in revenue for the nine months ended October 31, 2020 related to contract liabilities that existed at January 31, 2020.

There were no contract assets recorded as of October 31, 2020, October 31, 2019 and January 31, 2020.

Substantially all of the advance payments from licensees as of October 31, 2020 are expected to be recognized as revenue within the next twelve months.

Note 11 – Segments

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As a result of the restructuring of the Company’s retail operations, the Company is in the process of closing all of its Wilsons Leather and G.H.

Bass retail stores.

Bass retail stores which is expected to be completed by the end of fiscal 2021.

The following segment information is presented for the three and six-month periods indicated below:

Three Months Ended July 31, 2020

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

Three Months Ended October 31, 2020

Elimination (1)

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Operating profit (loss)

Three Months Ended July 31, 2019

Three Months Ended October 31, 2019

Elimination (1)

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Operating profit (loss)

Six Months Ended July 31, 2020

Nine Months Ended October 31, 2020

Elimination (1)

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Operating profit (loss)

Six Months Ended July 31, 2019

Nine Months Ended October 31, 2019

Elimination (1)

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

July 31, 2020

July 31, 2019

October 31, 2020

October 31, 2019

January 31, 2020

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Note 12 – Stockholders’ Equity

For the three months ended July 31, 2020, the Company issued no shares of common stock and utilized 307,147 shares of treasury stock in connection with the vesting of equity awards.

For the three months ended July 31, 2019, the Company issued 1,651 shares of common stock and utilized 148,025 shares of treasury stock in connection with the vesting of equity awards.

For the six months ended July 31, 2020, the Company issued no shares of common stock and utilized 349,342 shares of treasury stock in connection with the vesting of equity awards.

For the six months ended July 31, 2019, the Company issued 7,651 shares of common stock and utilized 356,550 shares of treasury stock in connection with the vesting of equity awards.

For the three months ended October 31, 2020, the Company issued no shares of common stock and utilized no shares of treasury stock in connection with the vesting of equity awards.

For the three months ended October 31, 2019, the Company issued no shares of common stock and utilized 80,353 shares of treasury stock in connection with the vesting of equity awards.

For the nine months ended October 31, 2020, the Company issued no shares of common stock and utilized 349,342 shares of treasury stock in connection with the vesting of equity awards.

For the nine months ended October 31, 2019, the Company issued 8,851 shares of common stock and utilized 435,703 shares of treasury stock in connection with the vesting of equity awards.

Note 13 – Income Taxes

The Company recorded an income tax benefit of $ 3.7 million and $ 20.1 million for the three and six months ended July 31, 2020, respectively.

The Company recorded income tax expense of $ 4.3 million and $ 6.8 million for the three and six months ended July 31, 2019, respectively.

Historically, the Company has calculated its provision for income taxes during interim reporting periods by applying the estimated annual effective tax rate for the full fiscal year to pre-tax income or loss, excluding discrete items, for the reporting period.

Due to the uncertainty related to the impact of the COVID-19 pandemic on our operations, the Company used a discrete effective tax rate method to calculate taxes for the three- and six-month periods ended July 31, 2020.

The Company will continue to evaluate income tax estimates under the historical method in subsequent quarters and employ a discrete effective tax rate method if warranted.

The Company recorded income tax expense of $ 28.4 million and $ 8.4 million for the three and nine months ended October 31, 2020, respectively.

The Company recorded income tax expense of $ 35.6 million and $ 42.5 million for the three and nine months ended October 31, 2019, respectively.

The Company’s effective tax rate increased this quarter compared to the prior year’s comparable quarter primarily due to a substantial decrease in the Company’s worldwide income and an increase in the valuation allowance related to the stand-alone net operating losses of the Company’s retail operations.

In addition, the effective tax rate increased due to a discrete income tax charge in connection with the vesting of equity awards.

Historically, the Company calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for income for the entire year, excluding unusual or discrete items, to the reporting period.

Due to the uncertainty related to the impact of the COVID-19 pandemic on the Company’s operations, the Company used a discrete effective tax rate method to calculate income taxes for the first and second quarters of fiscal 2021.

However, due to the change in pre-tax income in the third quarter of fiscal 2021, the Company has an equitable projection of the full year income and returned to the historical practice of using an annual effective tax rate based on full year fiscal year income.

Note 14 – Canadian Customs Duty Examination

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Beginning February 1, 2018, the Company began paying duties based on the new valuation method.

There were no amounts paid and deferred for the three and six months ended July 31, 2020, related to the higher dutiable values.

Cumulative amounts paid and deferred through July 31, 2020, related to the higher dutiable values, were CAD$ 13.0 million ($ 9.7 million).

There were no amounts paid and deferred for the three and nine months ended October 31, 2020, related to the higher dutiable values.

Cumulative amounts paid and deferred through October 31, 2020, related to the higher dutiable values, were CAD$ 12.9 million ($ 9.7 million).

Effective June 1, 2019, G-III commenced paying based on the dutiable value of G-III Canada’s imports based on the pre-audit levels.

G-III continued to defer the additional duty paid through the month of May 2019 pending the final outcome of the appeal.

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

G-III Canada filed its appeal with the CBSA in May 2018.

The CBSA has issued its preliminary decision expressing its intention to deny the appeal filed by G-III Canada.

G-III Canada has responded to the CBSA’s preliminary decision letter to correct facts in the letter that G-III Canada believes to be inaccurate.

G-III Canada is awaiting the final decision of the CBSA and is evaluating prospects for a further appeal should the final decision remain unfavorable.

G-III Canada, based on the advice of counsel, believes it has positions that support its valuations for duty as declared and therefore its ability to receive a refund of amounts claimed to be owed to the CBSA on appeal and intends to vigorously contest the findings of the CBSA.

Note 15 – Recent Adopted and Issued Accounting Pronouncements

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ASU 2016-13 replaced the “incurred loss” model with an “expected loss” model.

Under the “incurred loss” model, a loss (or allowance) was recognized only when an event had occurred (such as a payment delinquency) that caused the entity to believe that a loss was probable (i.e., that it had been “incurred”).

Under the “incurred loss” model, a loss (or allowance) was recognized only when

an event had occurred (such as a payment delinquency) that caused the entity to believe that a loss was probable (i.e., that it had been “incurred”).

Under the “expected loss” model, an entity recognizes a loss (or allowance) upon initial recognition of the asset that reflects all future events that may lead to a loss being realized, regardless of whether it is probable that the future event will occur.

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Note 16 – Subsequent Events

Secured Notes

On August 7, 2020, the Company completed a private debt offering of $ 400 million aggregate principal amount of its 7.875 % Senior Secured Notes due 2025 (the “Notes”).

The terms of the Notes are governed by an indenture (the “Indenture”), among the Company, the guarantors party thereto and U.S.

Bank, National Association, as trustee and collateral agent (the “Collateral Agent”).

The net proceeds of the Notes have been used (i) to repay the Company’s existing term loan facility due 2022, (ii) to pay related fees and expenses and (iii) for general corporate purposes.

The Notes bear interest at a rate of 7.875 % per year payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2021.

The Intercreditor Agreement restricts the actions permitted to be taken by the Collateral Agent with respect to the Collateral on behalf of the holders of the Notes.

Second Amended and Restated ABL Credit Agreement

On August 7, 2020, the Company’s subsidiaries, G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc.

The ABL Credit Agreement provides for borrowings in the aggregate principal amount of up to $ 650 million.

The Company and its subsidiaries, G-III Apparel Canada ULC, Gabrielle Studio, Inc., Donna Karan International Inc.

and Donna Karan Studio LLC (the “Guarantors”), are Loan Guarantors under the ABL Credit Agreement.

The Prior Credit Agreement provided for borrowings of up to $ 650 million and was due to expire in December 2021.

The ABL Credit Agreement extends the maturity date, subject to a springing maturity date if, subject to certain conditions, certain material indebtedness is not refinanced or repaid prior to the date that is 91 days prior to the date of any relevant payment thereunder.

Amounts available under the ABL Credit Agreement are subject to borrowing base formulas and overadvances as specified in the ABL Credit Agreement.

The ABL Credit Agreement is secured by specified assets of the Borrowers and the Guarantors.

Fabco Holding B.V.

On August 31, 2020, the Company and Amlon Capital B.V.

(“Amlon”) amended, effective October 1, 2020, their joint venture agreement for Fabco Holding B.V.

Fabco operates the DKNY/Donna Karan business in China.

Pursuant to this amended agreement, the Company, through a wholly-owned subsidiary, will own 75 % of the joint venture and Amlon will own 25 %.

Prior to the effectiveness of this amended agreement, the Company owns 49 % of the joint venture with Amlon owning the remaining 51 % interest.

Beginning on October 1, 2020, the Company will consolidate Fabco’s results of operations into its consolidated financial statements.

Fabco was 49 % owned by the Company through November 30, 2020.

Effective December 1, 2020, the Company acquired an additional ownership interest in Fabco for nominal consideration, resulting in an increase of its ownership interest in Fabco to 75 %.

Effective December 1, 2020, Fabco is a consolidated majority-owned subsidiary of the Company.

Prior to December 1, 2020, the Company accounted for its investment in Fabco using the equity method of accounting.

Fabco operates the Company’s DKNY business in China.

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