What changed in this filing

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Item 1. Financial Statements

2021-09-08 compared with 2021-06-08 · 128 added, 90 removed, 440 unchanged (33% of the section changed)

48 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three Months Ended April 30,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended July 31,

Six Months Ended July 31,

(In thousands, except per share amounts)

2 unchanged sentences

Depreciation and amortization

Loss on lease modifications

Asset impairments, net of gain on lease modifications

Operating profit (loss)

4 unchanged sentences

Net income (loss)

Income attributable to noncontrolling interests

Loss attributable to noncontrolling interests

Net income (loss) attributable to G-III Apparel Group, Ltd.

5 unchanged sentences

Net income (loss)

Other comprehensive loss:

Other comprehensive income (loss):

Foreign currency translation adjustments

Other comprehensive loss

Other comprehensive income (loss):

Comprehensive income (loss)

1 unchanged sentence

Foreign currency translation adjustments

Comprehensive income attributable to noncontrolling interests

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive income (loss) attributable to G-III Apparel Group, Ltd.

5 unchanged sentences

(In thousands)

Balance as of April 30, 2021

Equity awards exercised/vested, net

Share-based compensation expense

Taxes paid for net share settlements

Other comprehensive loss, net

Net income attributable to G-III Apparel Group, Ltd.

Balance as of July 31, 2021

Balance as of April 30, 2020

Equity awards exercised/vested, net

Share-based compensation expense

Taxes paid for net share settlements

Other comprehensive loss, net

Net loss attributable to G-III Apparel Group, Ltd.

Balance as of July 31, 2020

Balance as of January 31, 2021

1 unchanged sentence

Share-based compensation expense

Other comprehensive income, net

Taxes paid for net share settlements

Cumulative effect of change in accounting principle

Other comprehensive income, net

Net income attributable to G-III Apparel Group, Ltd.

Balance as of April 30, 2021

Balance as of July 31, 2021

Balance as of January 31, 2020

3 unchanged sentences

Other comprehensive income, net

Balance as of April 30, 2020

Net loss attributable to G-III Apparel Group, Ltd.

Balance as of July 31, 2020

The accompanying notes are an integral part of these statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended April 30,

Six Months Ended July 31,

(In thousands)

1 unchanged sentence

Net income (loss) attributable to G-III Apparel Group, Ltd.

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

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

2 unchanged sentences

Gain on lease modifications

Asset impairments

Dividend received from unconsolidated affiliate

11 unchanged sentences

Accounts payable, accrued expenses and other liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities

Operating lease assets initial direct costs

Minority investment in e-commerce retailer

Capital expenditures

3 unchanged sentences

Proceeds from borrowings - revolving facility

Repayment of borrowings - foreign facilities

Proceeds from borrowings - foreign facilities

Proceeds from borrowings - unsecured term loan

Proceeds from exercise of equity awards

Taxes paid for net share settlements

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Foreign currency translation adjustments

16 unchanged sentences

The Company consolidates the accounts of its wholly-owned and majority-owned subsidiaries.

Fabco Holding B.V (“Fabco”) is a Dutch joint venture limited liability company that was 49 % owned by the Company through November 30, 2020.

Fabco Holding B.V (“Fabco”) is a Dutch joint venture limited liability company that was 49 % owned by the Company through November 30, 2020 and was accounted for using the equity method of accounting.

Effective December 1, 2020, the Company increased its ownership interest in Fabco to 75 % and Fabco is treated as a consolidated majority-owned subsidiary.

7 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 three-month period ended April 30, 2021, the results of Vilebrequin, KLH, KLNA and Fabco are included for the three-month period ended March 31, 2021.

For example, with respect to the Company’s results for the six-month period ended July 31, 2021, the results of Vilebrequin, KLH, KLNA and Fabco are included for the six-month period ended June 30, 2021.

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

The Company’s three -month periods ended April 30, 2021 and 2020 were each 13-week periods for the retail operations segment.

For fiscal 2022 and 2021, the three-month periods for the retail operations segment ended on May 1, 2021 and May 2, 2020, respectively.

The results for the three months ended April 30, 2021 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.

For fiscal 2022 and 2021, the three and six-month periods for the retail operations segment were each 13-week and 26-week periods, respectively, and ended on July 31, 2021 and August 1, 2020, respectively.

The results for the three and six months ended July 31, 2021 are not necessarily indicative of the results expected for the entire fiscal year, given the seasonal nature of the Company’s business and the effects of the COVID-19 pandemic on the Company’s business.

The accompanying financial statements included herein are unaudited.

9 unchanged sentences

In addition, the change in inventory valuation better aligns with the way the Company manages its business with a focus on the actual margin realized.

The Company has determined that it is impractical to apply this change in accounting principle retrospectively due to a lack of available information.

The Company has instead applied the change prospectively as of February 1, 2021.

The Company determined that it was impractical to apply this change in accounting principle retrospectively due to a lack of available information.

As a result, the Company applied the change prospectively as of February 1, 2021.

The cumulative adjustment as of February 1, 2021 was a decrease in both inventories and retained earnings of $ 0.3 million.

The change in accounting principle did not have a material effect on the Company’s condensed consolidated financial statements as of and for the three-month period ended April 30, 2021.

The change in accounting principle did not have a material effect on the Company’s condensed consolidated financial statements as of and for the three and six-month periods ended July 31, 2021.

Note 2 – Retail Restructuring

2 unchanged sentences

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

The following is a reconciliation of the accrual for the quarter ended April 30, 2021:

Severance and Benefit Costs

Store Closing Costs

(In thousands)

Balance at January 31, 2021

Amounts charged to expense

Cash payments

Balance at April 30, 2021

The remaining severance and benefit costs and store closing costs are expected to be paid during the second quarter of fiscal 2022.

As of July 31, 2021, the Company had a remaining restructuring accrual of $ 46,000 related to store closing costs.

The remaining store closing costs are expected to be paid during the third quarter of fiscal 2022.

Note 3 – Allowance for Doubtful Accounts

4 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 April 30, 2021, April 30, 2020 and January 31, 2021 were:

April 30, 2021

The Company’s accounts receivable and allowance for doubtful accounts as of July 31, 2021, July 31, 2020 and January 31, 2021 were:

July 31, 2021

(In thousands)

2 unchanged sentences

Accounts receivable, net

April 30, 2020

July 31, 2020

(In thousands)

18 unchanged sentences

Accounts written off as uncollectible

Balance as of April 30, 2021

Balance as of July 31, 2021

Balance as of January 31, 2020

Provision for credit losses

Balance as of April 30, 2020

Accounts written off as uncollectible

Balance as of July 31, 2020

Balance as of January 31, 2020

9 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 $ 16.9 million, $ 21.3 million and $ 22.5 million as of April 30, 2021, April 30, 2020 and January 31, 2021, respectively.

The inventory return asset, which consists of the amount of goods that are anticipated to be returned by customers, represented $ 11.2 million, $ 15.1 million and $ 22.5 million as of July 31, 2021, July 31, 2020 and January 31, 2021, 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 $ 4.6 million, $ 6.6 million and $ 3.5 million at April 30, 2021, April 30, 2020 and January 31, 2021, respectively.

Inventory held on consignment by the Company’s customers totaled $ 4.7 million, $ 6.3 million and $ 3.5 million at July 31, 2021, July 31, 2020 and January 31, 2021, respectively.

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

15 unchanged sentences

Secured notes

Revolving credit facility

Note issued to LVMH

14 unchanged sentences

These fair value measurements are considered level 3 measurements in the fair value hierarchy.

During the second quarter of fiscal 2021, the Company recorded a $ 20 million impairment charge primarily related to operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather, G.H.

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

Note 6 – Leases

5 unchanged sentences

Several of the Company’s retail store leases include an option to terminate the lease based on failure to achieve a specified sales volume.

The exercise of lease renewal options is generally at the Company’s sole discretion.

The exercise of lease renewal options is generally at the

Company’s sole discretion.

The exercise of lease termination options is generally by mutual agreement between the Company and the lessor.

1 unchanged sentence

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 April 30, 2021, April 30, 2020 and January 31, 2021 consist of the following:

The Company’s lease assets and liabilities as of July 31, 2021, July 31, 2020 and January 31, 2021 consist of the following:

Classification

April 30, 2021

April 30, 2020

July 31, 2021

July 31, 2020

January 31, 2021

7 unchanged sentences

Total lease liabilities

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.

The Company’s 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 closed its Wilsons Leather, G.H.

Bass and Calvin Klein Performance stores during fiscal 2021.

The Company recorded lease costs of $ 13.6 million and $ 22.4 million during the three months ended April 30, 2021 and 2020, respectively.

The Company recorded lease costs of $ 13.5 million and $ 27.1 million during the three and six months ended July 31, 2021, respectively.

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

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

The Company recorded variable lease costs and short-term lease costs of $ 1.5 million and $ 3.4 million for the three months ended April 30, 2021 and 2020, respectively.

The Company recorded variable lease costs and short-term lease costs of $ 1.9 million and $ 3.3 million for the three and six months ended July 31, 2021, respectively.

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.

Short-term lease costs are immaterial.

As of April 30, 2021, the Company has $ 2.3 million of deferred lease payments recorded within accounts payable on its condensed consolidated balance sheets.

As of April 30, 2021, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2026 and thereafter are as follows:

As of July 31, 2021, the Company has $ 1.0 million of deferred lease payments recorded within accounts payable on its condensed consolidated balance sheets.

As of July 31, 2021, the Company’s maturity of operating lease liabilities in the years ending up to January 31, 2026 and thereafter are as follows:

Year Ending January 31,

2 unchanged sentences

Present value of lease liabilities

As of April 30, 2021, there are no material leases that are legally binding but have not yet commenced.

As of April 30, 2021, the weighted average remaining lease term related to operating leases is 5.6 years.

As of July 31, 2021, there are no material leases that are legally binding but have not yet commenced.

As of July 31, 2021, the weighted average remaining lease term related to operating leases is 5.5 years.

The weighted average discount rate related to operating leases is 8.4 %.

Cash paid for amounts included in the measurement of operating lease liabilities is $ 14.8 million and $ 23.4 million during the three months ended April 30, 2021 and April 30, 2020, respectively.

Right-of-use assets obtained in exchange for lease obligations were $ 6.5 million and $ 4.6 million as of April 30, 2021 and April 30, 2020, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities is $ 29.4 million and $ 51.0 million during the six months ended July 31, 2021 and July 31, 2020, respectively.

Right-of-use assets obtained in exchange for lease obligations were $ 8.6 million and $ 10.8 million during the six months ended July 31, 2021 and July 31, 2020, respectively.

Note 7 – Net Income (Loss) per Common Share

1 unchanged sentence

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.

Approximately 238,500 shares of common stock have been excluded from the diluted net income per share calculation for the three months ended April 30, 2021.

Approximately 15,100 and 8,200 shares of common stock have been excluded from the diluted net income per share calculation for the three and six months ended July 31, 2021, respectively.

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.

All share-based payments outstanding that vest based on the achievement of performance conditions, and for which the respective performance 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 April 30,

(In thousands, except per share amounts)

Three Months Ended July 31,

Six Months Ended July 31,

(In thousands, except share and per share amounts)

Net income (loss) attributable to G-III Apparel Group, Ltd.

9 unchanged sentences

Long-term debt consists of the following:

April 30, 2021

April 30, 2020

July 31, 2021

July 31, 2020

January 31, 2021

7 unchanged sentences

Current portion of long-term debt

(1) Does not include debt issuance costs, net of amortization, totaling $ 6.8 million, $ 3.9 million and $ 7.2 million as of April 30, 2021, April 30, 2020 and January 31, 2021, respectively, related to the revolving credit facility.

(1) Does not include debt issuance costs, net of amortization, totaling $ 6.4 million, $ 3.3 million and $ 7.2 million as of July 31, 2021, July 31, 2020 and January 31, 2021, respectively, related to the revolving credit facility.

These debt issuance costs have been deferred and are classified in assets in the accompanying condensed consolidated balance sheets in accordance with ASC 835.

10 unchanged sentences

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.

The Notes are also subject to the terms of the LVMH Note subordination agreement which governs the relative rights of the secured parties in respect of the LVMH Note, 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.

17 unchanged sentences

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 ABL Credit Agreement refinanced, amended and restated 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, the LVMH Note 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 extended the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, the LVMH Note 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.

12 unchanged sentences

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 April 30, 2021, the Company was in compliance with these covenants.

As of April 30, 2021, the Company had no borrowings outstanding under the ABL Credit Agreement.

There were no borrowings under the ABL Credit Agreement during the three months ended April 30, 2021.

As of July 31, 2021, the Company was in compliance with these covenants.

As of July 31, 2021, the Company had no borrowings outstanding under the ABL Credit Agreement.

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

As of April 30, 2021, there were outstanding trade and standby letters of credit amounting to $ 10.9 million and $ 4.0 million, respectively.

As of July 31, 2021, there were outstanding trade and standby letters of credit amounting to $ 9.2 million and $ 4.0 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 $ 5.1 million related to the ABL Credit Agreement.

The Company has a total of $ 8.0 million debt issuance costs related to its ABL Credit Agreement.

The Company has a total of $ 8.0 million debt issuance costs related to the ABL Credit Agreement.

As permitted under ASC 835, 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.

9 unchanged sentences

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.

As of April 30, 2021, TRB had an aggregate outstanding balance of € 7.5 million under these various unsecured loans.

As of July 31, 2021, TRB had an aggregate outstanding balance of € 7.5 million under these unsecured loans.

Overdraft Facilities

4 unchanged sentences

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 April 30, 2021, TRB had an aggregate of € 3.3 million drawn under these various facilities.

As of July 31, 2021, TRB had an aggregate of € 3.8 million drawn under these facilities.

Note 9 – Revenue Recognition

12 unchanged sentences

trademarks owned by the Company.

As of April 30, 2021, revenues from license agreements represented an insignificant portion of wholesale revenues.

As of July 31, 2021, revenues from license agreements represented an insignificant portion of wholesale revenues.

Retail Operations Segment.

3 unchanged sentences

Bass, DKNY and Karl Lagerfeld Paris retail stores, substantially all of which are operated as outlet stores.

The Company’s Wilsons Leather and G.H.

Bass stores were closed in fiscal 2021 as a result of the restructuring.

The Company’s Wilsons Leather, G.H.

Bass and Calvin Klein Performance stores were closed in fiscal 2021 as a result of the restructuring.

Retail operations segment revenues are recognized at the point of sale when the customer takes possession of the goods and tenders payment.

5 unchanged sentences

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 $ 4.1 million, $ 4.1 million and $ 5.9 million at April 30, 2021, April 30, 2020 and January 31, 2021, respectively.

The Company recognized $ 3.2 million in revenue for the three months ended April 30, 2021 related to contract liabilities that existed at January 31, 2021.

The Company recognized $ 3.5 million in revenue for the three months ended April 30, 2020 related to contract liabilities that existed at January 31, 2020.

There were no contract assets recorded as of April 30, 2021, April 30, 2020 and January 31, 2021.

Substantially all of the advance payments from licensees as of April 30, 2021 are expected to be recognized as revenue within the next twelve months.

Total contract liabilities were $ 4.3 million, $ 5.1 million and $ 5.9 million at July 31, 2021, July 31, 2020 and January 31, 2021, respectively.

The Company recognized $ 2.9 million in revenue for the three months ended July 31, 2021 related to contract liabilities that existed at April 30, 2021.

The Company recognized $ 3.8 million in revenue for the six months ended July 31, 2021 related to contract liabilities that existed at January 31, 2021.

There were no contract assets recorded as of July 31, 2021, July 31, 2020 and January 31, 2021.

Substantially all of the advance payments from licensees as of July 31, 2021 are expected to be recognized as revenue within the next twelve months.

Note 10 – Segments

13 unchanged sentences

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

Three Months Ended April 30, 2021

Three Months Ended July 31, 2021

Elimination (1)

4 unchanged sentences

Operating profit (loss)

Three Months Ended April 30, 2020

Three Months Ended July 31, 2020

Elimination (1)

5 unchanged sentences

Operating loss

Six Months Ended July 31, 2021

Elimination (1)

(In thousands)

Cost of goods sold

Selling, general and administrative expenses

Depreciation and amortization

Asset impairments, net of gain on lease modifications

Operating profit (loss)

Six Months Ended July 31, 2020

Elimination (1)

(In thousands)

Cost of goods sold

Selling, general and administrative expenses

Depreciation and amortization

Gain on lease modifications

Operating profit (loss)

(1) Represents intersegment sales to the Company’s retail operations segment.

Note 11 – Stockholders’ Equity

For the three months ended April 30, 2021, the Company issued no shares of common stock and utilized 158 shares of treasury stock in connection with the vesting of equity awards.

For the three months ended April 30, 2020, the Company issued no shares of common stock and utilized 42,195 shares of treasury stock in connection with the vesting of equity awards.

For the three months ended July 31, 2021, the Company issued no shares of common stock and utilized 189,313 shares of treasury stock in connection with the vesting of equity awards.

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 six months ended July 31, 2021, the Company issued no shares of common stock and utilized 189,471 shares of treasury stoc k 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.

Note 12 – Income Taxes

For the three months ended April 30, 2021 and April 30, 2020, the Company recorded a $ 10.3 million income tax expense and a $ 16.4 million income tax benefit, 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 month period ended April 30, 2020.

Due to the change in pre-tax income for the current fiscal year, the Company has an equitable projection for the current fiscal year, and has returned to the historical practice of using an annual effective tax rate based on full fiscal year pre-tax income.

For the three months ended July 31, 2021 and July 31, 2020, the Company recorded a $ 9.2 million income tax expense and a $ 3.7 million income tax benefit, respectively.

For the six months ended July 31, 2021 and July 31, 2020, the Company recorded a $ 19.5 million income tax expense and a $ 20.1 million income tax benefit, respectively.

Historically, the Company 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 the Company’s operations, the Company used a discrete effective tax rate method to calculate taxes for the six-month period ended July 31, 2020.

For the six-month period ended July 31, 2021, the Company returned to the historical practice of applying an estimated annual effective tax rate based on full fiscal year income to pre-tax income for the reporting period.

Note 13 – Canadian Customs Duty Examination

9 unchanged sentences

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 months ended April 30, 2021, related to the higher dutiable values, however, the Company paid interest in the amount of CAD$1.0 million ($0.8 million) on the additional duties for the period January 15, 2018 through November 25, 2020, the date of the CBSA’s final decision as discussed below.

Cumulative amounts paid and deferred through April 30, 2021, related to the higher dutiable values, were CAD$ 14.4 million ($ 11.6 million).

There were no amounts paid and deferred for the three and six months ended July 31, 2021, related to the higher dutiable values, however, the Company paid interest in the amount of CAD$ 1.0 million (US$ 0.8 million) on the additional duties for the period January 15, 2018 through November 25, 2020, the date of the CBSA’s final decision as discussed below.

Cumulative amounts paid and deferred through July 31, 2021, related to the higher dutiable values, were CAD$ 14.4 million (US$ 11.6 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.

4 unchanged sentences

G-III Canada filed its case brief and evidence on April 13, 2021.

The CBSA has until June 14, 2021 to file their brief.

The hearing date, originally scheduled for August 10, 2021, has been set for September 1, 2021.

The CBSA filed its brief on June 14, 2021.

The hearing date, originally scheduled for August 10, 2021, was rescheduled for September 1, 2021 but has been postponed by the Tribunal.

A new hearing date has not yet been set.

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.

1 unchanged sentence

Recently Adopted Accounting Guidance

There was no accounting guidance adopted during the three months ended April 30, 2021.

There was no accounting guidance adopted during the three months ended July 31, 2021.

Issued Accounting Guidance Being Evaluated for Adoption

1 unchanged sentence

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