What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-25 compared with 2023-03-27 · 317 added, 340 removed, 1197 unchanged (35% of the section changed)

4 unchanged sentences

During our last fiscal quarter, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On May 31, 2022, we acquired KLH.

See Note 15 – Karl Lagerfeld Acquisition in the accompanying Notes to our Consolidated Financial Statements in this Annual Report for further information on our acquisition of KLH.

The KLH acquisition represented a change in our internal control over financial reporting.

We have included the internal controls and procedures of KLH in our annual assessment of the effectiveness of our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

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Based on its assessment, management has concluded that we maintained effective internal control over financial reporting as of January 31, 2024, based on criteria in Internal Control — Integrated Framework (2013) , issued by the COSO.

On May 31, 2022, we completed our acquisition of KLH.

See Note 15 – Karl Lagerfeld Acquisition in the accompanying notes to our consolidated financial statements in this Annual Report for further information on our acquisition of KLH.

We have excluded the internal control over financial reporting of KLH for fiscal 2023 from our assessment of, and

conclusion on the effectiveness of, our internal control over financial reporting.

KLH’s assets, consisting primarily of trademark value, constituted approximately 13.7% of our consolidated assets at January 31, 2023 and net sales of KLH constituted approximately 4.0% of our net sales for the fiscal year ended January 31, 2023.

Our independent auditors, Ernst & Young LLP, a registered public accounting firm, have audited and reported on our consolidated financial statements and the effectiveness of our internal control over financial reporting.

1 unchanged sentence

OTHER INFORMATION.

Insider Adoption or Termination of Trading Agreements

During the three months ended January 31, 2024, no director or officer of the Company informed us of the adoption, modification or termination of a “ Rule 10b5-1 trading arrangement” or “ non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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Equity compensation plans not approved by security holders

(1) Includes outstanding awards of 2,402,774 shares of Common Stock issuable upon vesting of restricted stock units.

(1) Includes outstanding awards of 2,807,985 shares of Common Stock issuable upon vesting of restricted stock units under our 2015 Long-Term Incentive Plan and 2023 Long-Term Incentive Plan.

(2) Under our 2023 Long-Term Incentive Plan.

9 unchanged sentences

The following exhibits filed as part of this report or incorporated herein by reference are management contracts or compensatory plans or arrangements:

Exhibits 10.1, 10.1(a), 10.1(b), 10.1(c), 10.1(d), 10.1(e), 10.5, 10.5(a), 10.5(b), 10.6, 10.6(a), 10.6(b), 10.6(c), 10.6(d), 10.7, 10.8, 10.8(a), 10.8(b), 10.8(c), 10.8(d), 10.8(e), 10.11, 10.12, 10.13 and 10.14.

Exhibits 10.1, 10.5, 10.6, 10.6(a), 10.6(b), 10.6(c), 10.6(d), 10.7, 10.7(a) 10.8, 10.9, 10.12, 10.13, 10.14, 10.15 and 10.16.

Incorporated by Reference

Stock Purchase Agreement, dated as of July 22, 2016, by and between G-III Apparel Group, Ltd.

(“G-III”) and LVMH Moet Hennessy Louis Vuitton Inc.

(“LVMH”) (including the exhibits thereto).

Amendment No.

1 to Stock Purchase Agreement, dated November 30, 2016, by and between G-III and LVMH.

Certificate of Incorporation.

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By-Laws, as amended, of G-III.

Promissory Note, dated December 1, 2016, from G-III to LVMH.

Indenture, dated as of August 7, 2020, among G-III Apparel Group, Ltd., the guarantors party thereto and U.S.

1 unchanged sentence

Description of Securities

Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb.

10-K/A (2006)

Amendment, dated October 1, 1999, to the Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb.

10-K/A (2006)

Amendment, dated January 28, 2009, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb.

Letter Amendment, dated March 13, 2013, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb.

Letter Amendment, dated April 28, 2014, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb.

Letter Amendment, dated March 29, 2022, to Employment Agreement, dated February 1, 1994, between G-III and Morris Goldfarb.

Employment Agreement, dated August 9, 2023, between G-III Apparel Group, Ltd.

and Morris Goldfarb

Second Amended and Restated ABL Credit Agreement, dated as of August 7, 2020, among G-III Leather Fashions, Inc., Riviera Sun, Inc., CK Outerwear, LLC, AM Retail Group, Inc.

and The Donna Karan Company Store LLC, as Borrowers, the other Borrowers party thereto, the Loan Guarantors party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as the Administrative Agent.

Amendment No.

1, dated as of April 20, 2023, entered into among G-III Leather Fashions, Inc., JPMorgan Chase Bank, N.A.

as administrative agent and as collateral agent and the other Lenders party thereto.

Lease, dated June 1, 1993, between 512 Seventh Avenue Associates (“512”) and G-III Leather Fashions, Inc.

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10-Q (Q3 2011)

Incorporated by Reference

Sixth Amendment of Lease, dated May 23, 2013, by and between G-III Leather Fashions, Inc.

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as Tenant and 500-512 Seventh Avenue Limited Partnership as Landlord* (2nd Floor (including mezzanine), 3rd, 4th, 5th, 21st, 22nd, 23rd, 24th, 27th, 28th, 29th, 30th, 31st, 36th, 39th and 40th Floors)

Incorporated by Reference

Ninth Amendment of Lease, dated May 14, 2018, by and between G-III Leather Fashions, Inc.

2 unchanged sentences

G-III 2005 Amended and Restated Stock Incentive Plan, (the “2005 Plan”).

Form of Option Agreement for awards made pursuant to the 2005 Plan.

Form of Restricted Stock Agreement for restricted stock awards made pursuant to the 2005 Plan.

G-III 2015 Long-Term Incentive Plan, as amended.

Form of Performance Share Unit Agreement for April 17, 2019 performance share unit grants.

Form of Restricted Stock Unit Agreement for April 27, 2020 restricted stock unit grants.

10-Q (Q1 2021)

Form of Amended and Restated Restricted Stock Unit Agreement, dated June 28, 2021, with respect to revised awards under the 2015 Plan.

Form of Performance Share Unit Agreement for March 18, 2022 performance share unit awards.

Form of Executive Transition Agreement, as amended.

Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III.

Form of Performance Share Unit Agreement for April 27, 2023 performance share unit awards.

Performance Share Unit Agreement, dated August 9, 2023.

G-III 2023 Long-Term Incentive Plan.

Performance Share Unit Agreement, dated October 17, 2023

10-Q (Q3 2024)

Amendment, dated October 3, 2008, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III.

Amendment, dated January 28, 2009, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III.

Letter Amendment, dated March 13, 2013, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III.

Letter Amendment, dated April 28, 2014, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III.

Letter Amendment, dated March 29, 2022, to Employment Agreement, dated as of July 11, 2005, by and between Sammy Aaron and G-III.

Form of Executive Transition Agreement, as amended.

Employment Agreement, dated as of August 29, 2023, by and between Sammy Aaron and G-III.

Lease agreement dated June 29, 2006 between The Realty Associates Fund VI, LP and G-III.

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Employment Agreement, dated as of December 4, 2023, between G-III and Jeffrey D.

Incorporated by Reference

Amendment to Executive Transition Agreement, dated as of December 9, 2016, between G-III and Jeffrey D.

Executive Transition Agreement, dated as of December 4, 2023, between G-III and Jeffrey D.

Severance Agreement, dated as of December 9, 2016, between G-III and Neal Nackman.

Amended Employment Agreement, dated as of November 27, 2023, between G-III and Dana Perlman.

Lease, dated December 7, 2011, between 400 Commerce Boulevard LLC.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

Incorporated by Reference

Certification by Neal S.

1 unchanged sentence

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with G-III Apparel Group, Ltd.’s Annual Report on Form 10-K for the year ended January 31, 2024.

G-III Apparel Group, Ltd.

Clawback Policy

iXBRL Instance Document.

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G-III Apparel Group, Ltd.

Clawback Policy

iXBRL Instance Document.

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March 25, 2024

/s/ Alan Feller

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Laura Pomerantz

/s/ Michael Shaffer

March 25, 2024

Michael Shaffer

/s/ Cheryl Vitali

1 unchanged sentence

Cheryl Vitali

/s/ Lisa Warner Wardell

March 27, 2023

Lisa Warner Wardell

/s/ Richard White

1 unchanged sentence

Richard White

/s/ Andrew Yaeger

March 25, 2024

Andrew Yaeger

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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The reserves for variable consideration are recorded as customer refund liabilities and totaled $84.1 million as of January 31, 2024.

Auditing the Company's measurement of variable consideration related to non-contractual markdowns and returns from wholesale customers is especially challenging because the method of calculation involves subjective management assumptions about estimates of the expected markdowns and returns.

For example, in addition to historical experience, estimates of future markdown allowances and returns from wholesale customers are adjusted to reflect management’s assumptions about performance of the

Company’s merchandise, specific known events and industry trends.

Auditing the Company's measurement of variable consideration related to non-contractual markdowns is especially challenging because the method of calculation involves subjective management assumptions about estimates of the expected markdowns.

For example, in addition to historical experience, estimates of future markdown allowances are adjusted to reflect management’s assumptions about performance of the Company’s merchandise, specific known

events and industry trends.

Changes in the assumptions can have a material effect on the amount of variable consideration recognized.

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We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process for estimating variable consideration.

For example, we tested controls over management’s review of the significant assumptions underlying the estimates of the refund liabilities for markdown allowances and returns from wholesale customers.

To test the Company’s measurement of variable consideration related to non-contractual markdowns and returns from wholesale customers, our audit procedures included, among others, evaluating the Company’s methodologies, evaluating the significant assumptions described above and testing the completeness and accuracy of the underlying data used in management's analyses.

For example, we tested controls over management’s review of the significant assumptions underlying the estimates of the refund liabilities for markdown allowances.

To test the Company’s measurement of variable consideration related to non-contractual markdowns, our audit procedures included, among others, evaluating the Company’s methodologies, evaluating the significant assumptions described above and testing the completeness and accuracy of the underlying data used in management's analyses.

We compared the significant assumptions used by management to current market and economic trends, historical results and other relevant factors.

Further, we performed sensitivity analyses to evaluate the changes in variable consideration that would result from changes in the significant assumptions.

In addition, we performed a retrospective review of actual customer chargebacks for markdowns and returns to evaluate the historical accuracy of the Company’s estimates.

In addition, we performed a retrospective review of actual customer chargebacks for markdowns to evaluate the historical accuracy of the Company’s estimates.

/s/ Ernst & Young LLP

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Opinion on Internal Control Over Financial Reporting

We have audited G-III Apparel Group, Ltd and subsidiaries’ internal control over financial reporting as of January 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

We have audited G-III Apparel Group, Ltd.

and subsidiaries’ internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria).

In our opinion, G-III Apparel Group, Ltd.

and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of KLH, which is included in the 2023 consolidated financial statements of the Company and constituted 13.7% of total assets, as of January 31, 2023 and 4.0% of revenues, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of KLH.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), stockholders' equity and cash flows for each of the three years in the period ended January 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated March 25, 2024 expressed an unqualified opinion thereon.

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Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 18.3 million and $ 17.4 million, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 1,471 and $ 18,297 , respectively

Prepaid income taxes

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Depreciation and amortization

Asset impairments and gain on lease terminations

Asset impairments

Operating profit (loss)

Other income (loss)

Interest and financing charges, net

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Taxes paid for net share settlements

Other comprehensive gain, net

Other comprehensive loss, net

Repurchases of common stock

Cumulative effect of change in accounting principle

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

3 unchanged sentences

Taxes paid for net share settlements

Other comprehensive loss, net

Other comprehensive income, net

Repurchases of common stock

Cumulative effect of change in accounting principle

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

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

Balance as of January 31, 2023

2 unchanged sentences

Taxes paid for net share settlements

Other comprehensive loss, net

Other comprehensive income, net

Repurchases of common stock

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

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

Balance as of January 31, 2024

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Non-cash operating lease costs

Asset impairments and gain on lease terminations

Asset impairments

Dividend received from unconsolidated affiliate

3 unchanged sentences

Deferred financing charges and debt discount amortization

Extinguishment of deferred financing costs

Deferred income taxes

Non-cash gain on fair value of prior minority ownership of Karl Lagerfeld

Non-cash gain on fair value of prior minority ownership of Fabco

Changes in operating assets and liabilities:

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Repayment of borrowings - revolving credit facility

( 1,291,424 )

Proceeds from borrowings - revolving credit facility

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Proceeds from borrowings - unsecured term loan

Proceeds from borrowings - senior secured notes

Payment of financing costs

Proceeds from exercise of equity awards

Repayment of borrowings - LVMH Note

Purchase of treasury shares

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The results of KLH are included in the Company’s consolidated financial statements beginning May 31, 2022.

Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by the Company, KLH, Fabco and Sonia Rykiel, which the Company purchased in October 2021, report results on a calendar year basis rather than on the January 31 fiscal year basis used by the Company.

Accordingly, the results of Vilebrequin, KLH, Fabco and Sonia Rykiel are included in the financial statements for the year ended or ending closest to the Company’s fiscal year end.

KLH, Vilebrequin International SA (“Vilebrequin”), a Swiss corporation that is wholly-owned by the Company, Fabco and Sonia Rykiel report results on a calendar year basis rather than on the January 31 fiscal year basis used by the Company.

Accordingly, the results of KLH, Vilebrequin, Fabco and Sonia Rykiel are included in the financial statements for the year ended or ending closest to the Company’s fiscal year end.

For example, with respect to the Company’s results for the year ended January 31, 2024, the results of Vilebrequin, Fabco and Sonia Rykiel are included for the year ended December 31, 2023.

For the year ended December 31, 2022, the results of KLH, which includes KLNA, are included for the period from July 1, 2022 through December 31, 2022.

The results of the Company’s previous 49 % ownership interest in KLNA and 19 % ownership interest in KLH are included for the period from February 1, 2022 through May 30, 2022.

For the year ended January 31, 2023, the results of KLH, which includes KLNA, are included for the period from May 31, 2022 through December 31, 2022.

The results of the Company’s previous 49 % ownership interest in KLNA and 19 % ownership interest in KLH are included for the period from January 1, 2022 through May 30, 2022.

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

For fiscal 2023 and 2022, the retail operations segment reported based on a 52-week fiscal year.

The Company’s year ended January 31, 2024 was a 53-week fiscal year for the retail operations segment.

The Company’s year ended January 31, 2023 was a 52-week fiscal year for the retail operations segment.

Cash Equivalents

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Wholesale revenue is recognized when control transfers to the customer.

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.

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

G-III Apparel Group, Ltd.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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See Note 3 – Allowance for Doubtful Accounts.

Wholesale inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value, which comprises a significant portion of the Company’s inventory.

Wholesale inventories, which comprises a significant portion of the Company’s inventory, and KLH’s inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value.

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

Effective February 1, 2021, the Company elected to change its method of accounting for retail inventories from the lower of cost or market as determined by the retail inventory method to the lower of cost or net realizable value using the weighted average cost method.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

9 unchanged sentences

Impairment charges, if any, on intangible assets with finite lives are recorded when indicators of impairment are present and the discounted cash flows estimated to be derived from those assets are less than the carrying amounts of the assets.

During fiscal 2024, the Company recorded a $ 5.9 million non-cash impairment charge to partially impair the carrying value of our Sonia Rykiel trademark.

During fiscal 2023, the Company recorded a $ 347.2 million non-cash impairment charge to fully impair the carrying value of its goodwill.

21 unchanged sentences

A potential impairment has occurred if projected future undiscounted cash flows are less than the carrying value of the assets.

In fiscal 2024, the Company recorded a $ 1.3 million impairment charge related to leasehold improvements, furniture and fixtures, computer hardware and operating lease assets at certain DKNY, Karl Lagerfeld and Vilebrequin stores as a result of the performance at these stores.

In fiscal 2023, the Company recorded a $ 2.7 million impairment charge related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores.

In fiscal 2022, the Company recorded a $ 1.5 million impairment charge related to the leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores.

In fiscal 2021, the Company recorded a $ 20.1 million impairment charge related to the operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather and G.H.

Bass stores, primarily due to the retail restructuring, as well as at certain DKNY and Vilebrequin stores as a result of the performance at these stores.

The Company accounts for income taxes and uncertain tax positions in accordance with ASC Topic 740 — Income Taxes (“ASC 740”).

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To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established, or is required to pay amounts in excess of the liability, or when other facts and circumstances change, the Company's effective tax rate in a given financial statement period may be materially affected.

The United States government enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020, which includes various income tax provisions aimed at providing economic relief.

One of those provisions allows any loss generated in fiscal 2021 to be carried back to each of the 5 taxable years preceding the taxable year of such a loss.

The Company has elected to use this relief and carried back the fiscal 2021 tax loss to a tax year with a 35% federal rate.

Additionally, the CARES Act permits Qualified Improvement Property to qualify for 15-year depreciation and therefore be also eligible for 100 percent first-year bonus depreciation.

The Company has elected to take 100 % bonus depreciation for all qualified improvement property.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net Income (Loss) Per Common Share

3 unchanged sentences

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 Company issued no shares of common stock in connection with the exercise or vesting of equity awards during the years ended January 31, 2023, 2022 and 2021, respectively.

The Company issued no shares of common stock in connection with the exercise or vesting of equity awards during the years

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ended January 31, 2024, 2023 and 2022, respectively.

Instead, the Company re-issued 610,631 , 387,792 and 194,965 treasury shares in connection with the vesting of equity awards in fiscal 2024, 2023 and 2022, respectively.

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PRSU’s generally vest over a two to five year period.

Performance stock units (“PSU’s”) were granted to executives beginning in fiscal 2020 and vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur.

Performance stock units (“PSU’s”) granted to executives beginning in fiscal 2020 vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur.

The PSU’s granted in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer of shares for two years subsequent to the date of vesting.

Special performance stock units (“SPSU’s”) were granted to Morris Goldfarb, the Company’s Chairman and Chief Executive Officer, in fiscal 2024 under the terms of his new employment agreement and may be earned if certain stock price, relative Total Shareholder Return target and service conditions are achieved.

These awards may vest from time to time beginning on the third anniversary of the effective date of the award through the fifth anniversary of the effective date of the award.

RSU’s and employee stock options are expensed on a straight-line basis.

PRSU’s are expensed under the accelerated attribution method.

PRSU’s and SPSU’s are expensed under the accelerated attribution method.

PSU’s are expensed under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals.

Excess tax benefits arising from the lapse or exercise of an equity award are recognized in income tax expense.

The assumed proceeds from applying the treasury stock method when computing net income (loss) per share is amended to exclude the amount of excess tax benefits that would be recognized in additional paid-in capital.

G-III Apparel Group, Ltd.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Excess tax benefits arising from the lapse or exercise of an equity award are recognized in income tax expense.

Cost of Goods Sold

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GAAP establishes a three-level valuation hierarchy for disclosure of fair value measurements.

The determination of the applicable level within the hierarchy for a particular asset or liability depends on the inputs used in its valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally-derived

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(unobservable).

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

1 unchanged sentence

Level 1 — inputs to the valuation methodology based on quoted prices (unadjusted) for identical assets or liabilities in active markets.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Level 2 — inputs to the valuation methodology based on quoted prices for similar assets or liabilities in active markets for substantially the full term of the financial instrument;

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Furthermore, the carrying value of all other financial instruments potentially subject to valuation risk (principally consisting of cash, accounts receivable and accounts payable) also approximates fair value due to the short-term nature of these accounts.

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

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

(“LVMH”) in connection with the acquisition of DKNY and Donna Karan 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 LVMH Note on the initial fair value as determined at the date of the acquisition of DKNY and Donna Karan and records the amortization using the effective interest method over the term of the LVMH Note.

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

The Company repaid $ 75.0 million of the principal amount of the LVMH Note on June 1, 2023 and the remaining $ 50.0 million of such principal amount on December 1, 2023.

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

3 unchanged sentences

For assets that are not recoverable, an impairment loss is recognized equal to the difference between the carrying amount of the asset or asset group and its estimated fair value.

For operating lease assets, the Company determines the fair value

For operating lease assets, the Company determines the fair value of the assets by discounting the estimated market rental rates over the remaining term of the lease.

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

During fiscal 2024, the Company recorded a $ 1.3 million impairment charge primarily related to leasehold improvements, furniture and fixtures, computer hardware and operating lease assets at certain DKNY, Karl Lagerfeld and Vilebrequin stores as a result of the performance at these stores.

During fiscal 2023, the Company recorded a $ 2.7 million impairment charge related to leasehold improvements,

G-III Apparel Group, Ltd.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of the assets by discounting the estimated market rental rates over the remaining term of the lease.

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

During fiscal 2023, the Company recorded a $ 2.7 million impairment charge related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores.

furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores.

During fiscal 2022, the Company recorded a $ 1.5 million impairment charge primarily related to leasehold improvements, furniture and fixtures and operating lease assets at certain DKNY, Karl Lagerfeld Paris and Vilebrequin stores as a result of the performance at these stores.

During fiscal 2021, the Company recorded a $ 20.1 million impairment charge primarily related to operating lease assets, leasehold improvements and furniture and fixtures at certain Wilsons Leather and G.H.

Bass stores, primarily due to the Company’s retail restructuring, as well as at certain DKNY and Vilebrequin stores as a result of the performance at these stores.

Foreign Currency Translation

7 unchanged sentences

Accounting Guidance Issued Being Evaluated for Adoption

The Company has reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the consolidated financial statements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

The ASU expands the scope and frequency of segment disclosures and introduces the concept of a “significant expense principle,” which requires entities to disclose significant expense categories and amounts that are regularly provided to the chief operating decision maker (“CODM”) and included within the reported measure of a segment’s profit or loss.

The ASU also changes current disclosure requirements by allowing entities to report multiple measures of a segment’s profit or loss, provided the reported measures are used by the CODM to assess performance and allocate resources and that the measure closest to GAAP is also provided.

Finally, the ASU requires all segment profit or loss and assets disclosures to be provided on both an annual and interim basis and requires entities to disclose the title and position of the individual identified as the CODM.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 and shall be applied retrospectively to all periods presented in the financial statements.

The Company is currently evaluating the standard and determining the extent of additional interim and annual segment disclosures that may be required.

In December 2023, the FASB issued ASU 2023-09 , “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures.

The amendments of this update are related to the rate reconciliation and income taxes paid, requiring (i) consistent categories and greater disaggregation of information in the rate reconciliation and (ii) income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the standard and determining the extent of additional disclosures that may be required.

NOTE 2 — REVENUE RECOGNITION

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Variable consideration includes trade discounts, end of season markdowns, sales allowances, cooperative advertising, return liabilities and other customer allowances.

The Company estimates the anticipated variable consideration and records this estimate as a reduction of revenue in the period the related product revenue is recognized.

The Company estimates the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

anticipated variable consideration and records this estimate as a reduction of revenue in the period the related product revenue is recognized.

The liability recorded in connection with variable consideration, except for cooperative advertising, has been classified as a current liability under “customer refund liabilities” on the consolidated balance sheets.

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Each segment presents its own characteristics with respect to the timing of revenue recognition and the type of customer.

In addition, disaggregating revenues using a segment basis is consistent with how the Company’s Chief Operating Decision Maker manages the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition, disaggregating revenues using a segment basis is consistent with how the Company’s Chief Operating Decision Maker manages the Company.

The Company identified the wholesale operations segment and the retail operations segment as distinct sources of revenue.

Wholesale Operations Segment.

Wholesale revenues include sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, other than sales of product under the Karl Lagerfeld Paris brand from our retail stores and digital outlets.

Wholesale revenues include sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, including from retail stores operated by Vilebrequin and Karl Lagerfeld, other than sales of product under the Karl Lagerfeld Paris brand generated by the Company’s retail stores and digital outlets.

Wholesale revenues from sales of products are recognized when control transfers to the customer.

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

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

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

As of January 31, 2024, revenues from license agreements represented an insignificant portion of wholesale revenues.

Retail Operations Segment.

Retail store revenues are generated by direct sales to consumers through company-operated stores and product sales through the Company’s digital channels for the DKNY, Donna Karan, G.H.

Bass, Karl Lagerfeld Paris, Andrew Marc and Wilsons Leather businesses.

Prior to completion of the retail restructuring in fiscal 2021, retail stores primarily consisted of Wilsons Leather, G.H.

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 retail restructuring.

Retail store revenues are generated by direct sales to consumers through Company-operated stores and product sales through the Company’s digital channels for the DKNY, Donna Karan, Karl Lagerfeld Paris, G.H.

Bass, Andrew Marc and Wilsons Leather businesses.

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

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

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Term discounts represent a discount from the initial wholesale sales price to certain wholesale customers consistent with customary industry practice.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Sales Allowances .

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General allowances consist of price reductions granted to a wholesale customer and may relate to the Company’s participation in costs incurred by the customer during the sales process, as well as price differences, shortages and charges for operational non-compliance.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Return of Merchandise .

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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 at both January 31, 2023 and 2022.

Total contract liabilities were $ 5.2 million and $ 5.1 million at January 31, 2024 and 2023, respectively.

The Company recognized $ 4.7 million in revenue for the year ended January 31, 2024 which related to contract liabilities that existed at January 31, 2023.

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s accounts receivable and allowance for doubtful accounts as of January 31, 2024 and 2023 were:

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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

During the year ended January 31, 2024, accounts receivable balances of $ 16.7 million were deemed uncollectable and written off against the allowance primarily due to the bankruptcy of certain department store customers.

The Company had the following activity in its allowance for credit losses:

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Balance as of January 31, 2023

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 4 — INVENTORIES

Wholesale inventories, which comprise a significant portion of the Company’s inventory, are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value.

Wholesale inventories, which comprise a significant portion of the Company’s inventory, and KLH inventories are stated at the lower of cost (determined by the first-in, first-out method) or net realizable value.

Retail and Vilebrequin inventories are stated at the lower of cost (determined by the weighted average method) or net realizable value.

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The inventory return asset is recorded within prepaid expenses and other current assets on the consolidated balance sheets as of January 31, 2024 and 2023.

Inventory held on consignment by the Company’s customers totaled $ 6.6 million and $ 4.5 million at January 31, 2023 and 2022, respectively.

Inventory held on consignment by the Company’s customers totaled $ 6.6 million at both January 31, 2024 and 2023.

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

The Company reflects this inventory on its consolidated balance sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 5 — PROPERTY AND EQUIPMENT

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Depreciation expense was $ 22.0 million, $ 23.5 million and $ 23.6 million for the years ended January 31, 2024, 2023 and 2022, respectively.

For the year ended January 31, 2024, the Company recorded a $ 0.8 million impairment charge related to leasehold improvements, computer hardware and furniture and fixtures at certain Vilebrequin and Karl Lagerfeld stores as a result of the performance at these stores.

For the year ended January 31, 2023, the Company recorded a $ 1.8 million impairment charge related to leasehold improvements and furniture and fixtures at certain DKNY and Karl Lagerfeld Paris stores as a result of the performance of these stores.

For the year ended January 31, 2022, the Company recorded a $ 1.3 million impairment charge related to leasehold improvements and furniture and fixtures of certain DKNY and Karl Lagerfeld Paris stores as a result of the performance of these stores.

For the year ended January 31, 2021, the Company recorded an $ 0.8 million impairment charge related to leasehold improvements and furniture and fixtures of certain Wilsons Leather and G.H.

Bass stores, primarily due to the retail restructuring, as well as at certain DKNY stores as a result of the performance of these stores.

The Company evaluates long-lived assets, which consist primarily of property and equipment and operating lease assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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If the Company recognizes an impairment charge for a depreciable long-lived asset, the adjusted carrying amount of the asset becomes its new cost basis and will be depreciated (amortized) over the remaining useful life of that asset.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 6 — LEASES

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The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Total rent payable is recorded during the lease term, including rent escalations in which the amount of future rent is certain or fixed on the straight-line basis over the term of the lease (including any rent holiday periods beginning upon control of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the premises and any fixed payments stated in the lease).

For leases with an initial term greater than 12 months, a lease liability is recorded on the balance sheet at the present value of future payments discounted at the incremental borrowing rate (discount rate) corresponding with the lease term.

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

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And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s lease assets and liabilities as of January 31, 2024 and 2023 consist of the following:

10 unchanged sentences

Total lease liabilities

During fiscal 2024, the Company recorded a $ 0.3 million impairment charge related to the operating lease assets at certain DKNY, Karl Lagerfeld and Vilebrequin stores as a result of the performance at these stores.

During fiscal 2023, the Company recorded a $ 0.7 million impairment charge related to the operating lease assets at certain DKNY stores as a result of the performance at these stores.

During fiscal 2022, the Company recorded a $ 0.2 million impairment charge related to the operating lease assets at certain Vilebrequin and DKNY stores as a result of the performance at these stores.

During fiscal 2021, the Company recorded a $ 19.4 million impairment charge related to the operating lease assets at certain Wilsons Leather and G.H.

Bass stores, primarily due to the retail restructuring, as well as at certain DKNY and Vilebrequin stores as a result of the performance at these stores The Company determines the fair value of operating lease assets by discounting the estimated market rental rates over the remaining term of the lease.

The Company determines the fair value of operating lease assets by discounting the estimated market rental rates over the remaining term of the lease.

The Company’s leases do not provide the rate of interest implicit in the lease.

Therefore, the Company uses its incremental borrowing rate based on the information available at commencement date of each lease in determining the present value of lease payments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recorded lease costs of $ 73.5 million, $ 64.9 million and $ 55.7 million during the years ended January 31, 2024, 2023 and 2022, respectively.

10 unchanged sentences

The weighted average discount rate related to operating leases is 6.8 %.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Cash paid for amounts included in the measurement of operating lease liabilities is $ 76.7 million and $ 69.8 million as of January 31, 2024 and 2023, respectively.

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Total intangible assets, net

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 31, 2023

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(In thousands)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Intangible assets with finite lives are amortized over their estimated useful lives and measured for impairment when events or circumstances indicate that the carrying value may be impaired.

Change in Goodwill

Changes in the amounts of goodwill for each of the years ended January 31, 2023 and 2022 are summarized by reportable segment as follows (in thousands):

January 31, 2021

Acquisition of Sonia Rykiel

Currency translation

There was no goodwill recognized during the year ended January 31, 2024.

Changes in the amounts of goodwill for the year ended January 31, 2023 is summarized by reportable segment as follows (in thousands):

January 31, 2022

3 unchanged sentences

January 31, 2023

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Goodwill represents the excess of the purchase price and related costs over the value assigned to net tangible and identifiable intangible assets of businesses acquired and accounted for under the purchase method.

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

The Company performs its goodwill test as of January 31 of each year using a qualitative evaluation or a quantitative test using an income approach through a discounted cash flow analysis methodology.

The Company performs its goodwill test as of January 31 of each year, if applicable, using a qualitative evaluation or a quantitative test using an income approach through a discounted cash flow analysis methodology.

The discounted cash flow approach requires that certain assumptions and estimates be made regarding industry economic factors and future profitability.

1 unchanged sentence

The relief from royalty method requires assumptions regarding industry economic factors and future profitability.

The carrying value of the Company’s goodwill was fully impaired in fiscal 2023 as a result of our annual impairment test.

There was no new goodwill recognized in fiscal 2024.

Fiscal 2023 Annual Goodwill Impairment Test

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For the market approach, used to validate the results of the income approach method, the Company used the guideline company method, which analyzes market multiples of adjusted earnings before interest, taxes, depreciation and amortization for a group of comparable public companies.

As a result of the Company’s fiscal 2023 annual impairment test, the Company recorded a $ 347.2 million non-cash impairment charge during its fourth quarter of fiscal 2023 to fully impair the carrying value of its goodwill, which was included in assets impairments and gain on lease terminations in the Company’s consolidated statements of operations and comprehensive income (loss).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As a result of the Company’s fiscal 2023 annual impairment test, the Company recorded a $ 347.2 million non-cash impairment charge during its fourth quarter of fiscal 2023 to fully impair the carrying value of its goodwill, which was included in assets impairments in the Company’s consolidated statements of operations and comprehensive income (loss).

This impairment charge was recorded to the Company’s wholesale operations segment.

Fiscal 2022 and Fiscal 2021 Annual Goodwill Impairment Test

The Company performed its annual tests of its wholesale reporting unit using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates.

The results of the Company’s annual tests determined that the estimated fair values of its wholesale reporting unit were substantially in excess of its carrying value.

Fiscal 2022 Annual Goodwill Impairment Test

The Company performed its annual test of its wholesale reporting unit using a qualitative review as of January 31, 2022 and determined that no impairment existed at that date.

The result of the Company’s annual test determined that the estimated fair value of its wholesale reporting unit was substantially in excess of its carrying value.

Fiscal 2024 Annual Indefinite-Lived Intangible Assets Impairment Test

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The relief from royalty method requires assumptions regarding industry economic factors and future profitability.

The Company’s fiscal 2024 testing determined that the fair value of each of its indefinite-lived intangible assets substantially exceeded its carrying value except for its Sonia Rykiel trademark.

As a result of the fiscal 2024 annual impairment test, the Company recorded a $ 5.9 million non-cash impairment charge during its fourth quarter of fiscal 2024 to partially impair the carrying value of its Sonia Rykiel trademark, which was included in asset impairments in the Company’s consolidated statements of operations and comprehensive income (loss).

This impairment charge was recorded to the Company’s wholesale operations segment.

Fiscal 2023 Annual Indefinite-Lived Intangible Assets Impairment Test

The Company performed its annual test of its indefinite-lived trademarks as of January 31, 2023 using a qualitative evaluation or a quantitative impairment test using a relief from royalty method, another form of the income approach.

The relief from royalty method requires assumptions regarding industry economic factors and future profitability.

The Company determined that the fair values of each of its indefinite-lived intangible assets substantially exceeded its carrying value and, therefore, there were no impairments identified as of January 31, 2023 as a result of these tests.

Fiscal 2022 Annual Indefinite-Lived Intangible Assets Impairment Test

The Company performed its annual test of its indefinite-lived trademarks using a qualitative review as of January 31, 2022 and determined that no impairment existed at that date.

The result of the Company’s annual test determined that the estimated fair value of its indefinite-lived trademarks were substantially in excess of their carrying values.

The Company’s indefinite-lived trademark balance is primarily composed of the Donna Karan/DKNY trademarks that were acquired in fiscal 2017 and the Karl Lagerfeld trademark that was acquired in fiscal 2023.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fiscal 2022 and Fiscal 2021 Annual Indefinite-Lived Intangible Assets Impairment Test

The Company performed its annual test of its indefinite-lived trademarks using a qualitative review as of January 31, 2022 and 2021 and determined that no impairment existed at those dates.

The results of the Company’s annual tests determined that the estimated fair values of its indefinite-lived trademarks were substantially in excess of their carrying values.

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 — NOTES PAYABLE AND OTHER LIABILITIES

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Senior Secured Notes

In August 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”).

In August 2020, the Company completed a private debt offering of $ 400 million aggregate principal amount of its 7.875 % Senior Secured Notes due August 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 were used (i) to repay the $ 300 million that was outstanding under the Company’s prior term loan facility (the “Term Loan”), (ii) to pay related fees and expenses and (iii) for general corporate purposes.

The net proceeds of the Notes were used (i) to repay the $ 300 million that was outstanding under the Company’s prior term loan facility due 2022 (the “Term Loan”), (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.

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 the 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(the “ABL Facility”) pursuant to the ABL Credit Agreement, or certain future capital markets indebtedness of the Company or guarantors.

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 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.

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.

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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, 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 is a five year senior secured credit facility subject to a springing maturity date if, subject to certain conditions, the Notes are 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 certain of its subsidiaries (the “Guarantors”), are Loan Guarantors under the ABL Credit Agreement.

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And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 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.

The ABL Credit Agreement extended the maturity date to August 2025, subject to a springing maturity date if, subject to certain conditions, the Notes are 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.

Borrowings originally bore 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.

In April 2023, the Company amended the ABL Credit Agreement to replace

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

LIBOR with the Adjusted Term Secured Overnight Financing Rate (“SOFR”) as a successor rate.

All other material terms and conditions of the ABL Credit Agreement were unchanged.

Borrowings under the amended ABL Credit Agreement now bear interest, at the Borrower’s option, at the alternate base rate (defined as, for a given day, the greatest of (i) the “prime rate” in effect on such day, (ii) the NYFRB Rate (as defined in the amendment) in effect on such day plus 0.5 % and (iii) the Adjusted Term SOFR (defined as an interest rate per annum equal to the Term SOFR for such interest period plus 0.10 %) for a one-month interest period as published two business days prior to such day plus 1 %) plus an applicable spread or the Adjusted Term SOFR Rate plus an applicable spread.

The Company applied certain provisions and practical expedients of ASC 848 – Reference Rate Reform related to the transition from LIBOR to SOFR.

As of January 31, 2024, interest under the ABL Credit Agreement was being paid at an average rate of 6.62 % per annum.

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

1 unchanged sentence

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.

As of December 31, 2022, interest under the ABL Credit Agreement was being paid at an average rate of 5.31 % per annum.

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

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

sell or dispose of certain assets;

6 unchanged sentences

As of January 31, 2024, the Company was in compliance with these covenants.

As of January 31, 2023, the Company had $ 80.1 million borrowings outstanding under the ABL Credit Agreement.

As of January 31, 2024, the Company had no borrowings outstanding under the ABL Credit Agreement.

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

2 unchanged sentences

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 recorded $ 8.0 million of 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 amortized ratably over the term of the ABL Credit Agreement.

As a portion of the consideration for the acquisition of DKNY and Donna Karan, 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 .

The LVMH Note is classified in current portion of notes payable in the Company’s consolidated balance sheet as of January 31, 2023.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In connection with the issuance of the LVMH Note, LVMH entered into (i) a subordination agreement providing that the Company’s obligations under the LVMH Note are subordinate and junior to the Company’s obligations under the revolving credit facility and the Term Loan, and (ii) a pledge and security agreement with the Company and its subsidiary, G-III Leather Fashions, Inc., pursuant to which the Company and G-III Leather Fashions, Inc.

granted to LVMH a security interest in specified collateral to secure the Company’s payment and performance of the Company’s obligations under the LVMH Note that are subordinate and junior to the security interest granted by the Company with respect to the Company’s obligations under the revolving credit facility agreement and Term Loan.

$ 75.0 million of the principal amount of the LVMH Note was paid on June 1, 2023 and the remaining $ 50.0 million of such principal amount was paid on December 1, 2023 .

ASC 820 requires the note to be recorded at fair value at issuance.

As a result, the Company recorded a $ 40.0 million debt discount.

This discount is being amortized as interest expense using the effective interest method over the term of the LVMH Note.

This discount was amortized as interest expense using the effective interest method over the term of the LVMH Note.

Unsecured Loans

Several of the Company’s foreign entities borrow funds under various unsecured loans of which a portion is to provide funding for operations in the normal course of business while other loans are European state backed loans as part of COVID-19 relief programs.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

COVID-19 relief programs.

In the aggregate, the Company is currently required to make quarterly installment payments of principal in the amount of € 0.6 million under these loans.

18 unchanged sentences

2029 and thereafter

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued expenses

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Other accrued expenses

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9 — INCOME TAXES

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Non-United States

One of those provisions allows any loss generated in fiscal 2021 to be carried back to each of the 5 taxable years preceding the taxable year of such a loss.

The Company elected to use this relief and carried back the fiscal 2021 tax loss to a tax year with a 35% federal rate.

Additionally, the CARES Act permits Qualified Improvement Property to qualify for 15-year depreciation and therefore be also eligible for 100 percent first-year bonus depreciation.

The Company has elected to take 100 % bonus depreciation for all qualified improvement property.

Effective January 1, 2018, the Tax Cuts and Jobs Act (“TCJA”) subjects a U.S.

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The significant components of the Company’s net deferred tax asset at January 31, 2023 and 2022 are summarized as follows:

The significant components of the Company’s net deferred tax liabilities at January 31, 2024 and 2023 are summarized as follows:

(In thousands)

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Total deferred income tax liabilities

Net deferred tax liabilities

The total undistributed earnings of the Company’s foreign subsidiaries are approximately $ 155 million for the fiscal year ended January 31, 2023.

Upon distribution of those earnings in the form of dividends, the Company does not anticipate any material tax costs.

As such, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of undistributed foreign earnings.

Those earnings are considered indefinitely reinvested.

Even though the undistributed earnings could have been distributed back generally without U.S.

federal income tax as a result of the one-time transition tax under the TCJA regime, the Company does not expect to change its indefinite reinvestment categorization with respect to those earnings.

Net deferred income tax liabilities

The Company intends to indefinitely reinvest substantially all of the undistributed earnings of its foreign subsidiaries.

The total undistributed earnings of the Company’s foreign subsidiaries that are considered to be indefinitely reinvested were approximately $ 150 million as of January 31, 2024.

Upon distribution of these earnings in the form of dividends or otherwise, the Company does not anticipate any material tax costs.

As such, no deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of these undistributed foreign earnings.

On December 12, 2022, the Council of the European Union (“EU”) announced that EU member states reached an agreement to implement the minimum tax component of the Organization for Economic Co-operation and Development’s international tax reform initiative, known as Pillar Two.

The Pillar Two Model Rules provide for a global minimum tax of 15% for multinational enterprise groups, and is expected to be effective for our fiscal year ending January 31, 2025.

While the Company does not expect these rules to have a material impact on its effective tax rate or financial results, the Company continues to monitor evolving tax legislation in the jurisdictions in which it operates.

G-III Apparel Group, Ltd.

7 unchanged sentences

Foreign tax rate differential

Share-based payments

Foreign tax credit

Valuation allowance

Net operating loss carryback

Goodwill impairment

Non-taxable capital gain

Other, net (1)

Actual provision for income taxes

(1) Prior year U.S.

tax on foreign earnings has been reclassed for presentation purposes.

The Company’s effective tax rate decreased 23.5 % percent in fiscal 2023 compared to fiscal 2022.

(1) Prior year share-based payments have been reclassed to Other, net for presentation purposes.

The Company’s effective tax rate increased to 27.4 % in fiscal 2024 compared to 2.7 % in fiscal 2023.

This increase in the Company’s effective tax rate is primarily the result of the Company’s charges related to goodwill impairment of $ 347.2 million which significantly decreased pretax book income in relation to its tax expense in fiscal 2023, as well as operating losses generated in certain foreign jurisdictions during fiscal 2024 that are not expected to be realized.

The Company’s effective tax rate decreased to 2.7 % in fiscal 2023 compared to 26.2 % in fiscal 2022.

This decrease in the Company’s effective tax rate is primarily the result of the Company’s charges related to goodwill impairment of $ 347.2 million which significantly decreased pretax book income in relation to its tax expense.

The Company’s effective tax rate decreased 8.0 % percent in fiscal 2022 as compared to fiscal 2021.

The decrease in the Company’s fiscal 2022 effective tax rate compared to the fiscal 2021 effective tax rate is primarily the result of the Company’s significant increase in pretax book income in relation to its tax expense.

At January 31, 2023, the Company had state net operating loss carryforwards of $ 4.7 million that expire at various times beginning in 2023.

In addition, the Company had foreign net operating loss carryforwards of $ 28.9 million, some jurisdictions having indefinite expirations.

The Company also has federal foreign tax credit carryforwards of $ 3.9 million, which expire beginning in 2030.

At January 31, 2024, the Company had state net operating loss carryforwards of $ 3.9 million, of which $ 2.1 million carryforward indefinitely and the remainder primarily expires in 2036 through 2041.

In addition, the Company had foreign net operating loss carryforwards of $ 36.3 million, with most jurisdictions having indefinite carryforward periods.

At January 31, 2024, the Company also has federal foreign tax credit carryforwards of $ 5.6 million, which expire in 2029 through 2034.

Valuation allowances represent deferred tax benefits where management is uncertain if the Company will have the ability to recognize those benefits in the future.

During the year ended January 31, 2023, the Company recorded an additional valuation allowance of $ 18.6 million against its deferred tax assets, of which $ 14 million relates to opening balance sheet adjustments on the Karl Lagerfeld acquisition and $ 4.6 million relates to standalone state tax losses and foreign retail losses.

During the year ended January 31, 2024, the Company recorded an increase to its valuation allowance of $ 6.0 million against its deferred tax assets, of which $ 1.7 million related to an increase in the Company’s deferred tax assets and related valuation allowance for excess foreign tax credits, $ 6.7 million related to a net increase in the Company’s deferred tax assets and related valuation allowance for standalone state tax losses and foreign retail losses and $ 2.4 million related to a decrease in the Company’s valuation allowance for foreign losses expected to be utilized.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unrecognized Tax Benefits

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Additions for tax positions of prior years

Lapses of statues of limitations

Reductions for tax positions of prior years

Lapses of statutes of limitations

Balance at January 31,

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company accounts for uncertain income tax positions in accordance with ASC 740 — Income Taxes.

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federal jurisdiction and various state and foreign jurisdictions.

As of January 31, 2023, there was an increase in the unrecognized tax position reserve of $ 1.1 million related to state and local income tax return filings.

As of January 31, 2024, there was an increase in the unrecognized tax position reserve of $ 0.7 million related to state, local and foreign income tax return filings.

The Company’s policy on classification is to include interest in interest and financing charges, net and penalties in selling, general and administrative expenses in the accompanying consolidated statements of operations and comprehensive income (loss).

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Of the major jurisdictions, the Company and its subsidiaries are subject to examination in the United States and various foreign jurisdictions for fiscal year 2016 and forward.

The Company is currently under audit examination by New York, New Jersey and France for fiscal years 2016 through 2019.

The Company believes that it is reasonably possible there will be no change to its unrecognized income tax position reserves during the next twelve months due to the applicable statues of limitations.

The Company is currently under audit examination by New York for fiscal years 2016 through 2018, France for fiscal years 2019 through 2021 and the Netherlands for fiscal year 2021.

The Company believes that it is reasonably possible there will be a reduction in its unrecognized income tax benefits related to foreign exposures, prior to any annual increase, of $ 2.1 million during the next twelve months due to the expiration of applicable statues of limitations.

NOTE 10 — COMMITMENTS AND CONTINGENCIES

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The Company incurred royalty expense (included in cost of goods sold) of $ 154.2 million, $ 162.9 million and $ 145.1 million for the years ended January 31, 2024, 2023 and 2022, respectively.

Contractual advertising expense, which is included in selling, general and administrative expenses and is normally based on a percentage of net sales associated with certain license agreements, was $ 45.2 million, $ 41.2 million and $ 29.5 million for the years ended January 31, 2023, 2022 and 2021, respectively.

Contractual advertising expense, which is included in selling, general and administrative expenses and is normally based on a percentage of net sales associated with certain license agreements, was $ 36.7 million, $ 45.2 million and $ 41.2 million for the years ended January 31, 2024,

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2023 and 2022, respectively.

Based on minimum net sales requirements, future minimum royalty and advertising payments required under these agreements are:

5 unchanged sentences

Canadian Customs Duty Examination

In October 2017, the Canada Border Service Agency (“CBSA”) issued an audit report to G-III Apparel Canada ULC (“G-III Canada”), a wholly-owned subsidiary of the Company, challenging the valuation used by G-III Canada for certain goods imported into Canada between February 1, 2014 and October 27, 2017.

The CBSA requested that G-III Canada

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

reassess its customs entries for that period and change the valuation method used to pay duties with respect to goods imported in the future.

As a result of this reassessment, in March 2018, G-III Canada provided a bond to the CBSA in the amount of CAD$ 26.9 million ($ 20.9 million) representing customs duty and interest through December 31, 2017 that was claimed to be owed to the CBSA.

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

Cumulative amounts paid and deferred through January 31, 2023, related to the higher dutiable values, were CAD$ 15.5 million ($ 11.5 million).

G-III Canada filed a Notice of Appeal with the Canadian International Trade Tribunal (the “Tribunal”) appealing the CBSA decision.

A hearing on the appeal was held on December 7, 2021.

On August 22, 2022, the Tribunal ruled in favor of G-III Canada and G-III Canada’s appeal has been allowed by the Tribunal.

The decision was not appealed by the CBSA.

As a result, G-III Canada will continue to declare dutiable values utilizing its pre-audit methodology, with the addition of a dutiable design assist (“design assist”).

In accordance with the Tribunal ruling, G-III Canada has received a refund from the CBSA of CAD $ 1.5 million ( $ 1.1 million), including interest and net of the design assist, for amounts paid by G-III Canada between February 1, 2014 and January 31, 2018.

In accordance with a favorable ruling by the Canadian International Trade Tribunal, in fiscal 2023 and fiscal 2024, G-III Canada received refunds from the Canada Border Service Agency (“CBSA”) in the aggregate amount of CAD $ 6.5 million ( $ 4.8 million), including interest and net of a dutiable design assist, for amounts paid by G-III Canada to the CBSA between February 1, 2014 and January 31, 2018.

G-III Canada has filed adjustment requests with the CBSA for the period from February 1, 2018 to January 31, 2022 to amend declared dutiable values.

These amendments are expected to result in a refund of duty and interest of approximately CAD $ 13.2 million ( $ 9.8 million) after deductions for the design assist and related interest.

The bond issued by G-III Canada in March 2018 has been released back to the Company.

These amendments resulted in an additional refund of duty and interest, net of refunds already received, from the CBSA of approximately CAD $ 8.2 million ( $ 6.1 million) plus related interest.

G-III Canada received the remaining refund due from the CBSA in February 2024.

These amounts are recorded within prepaid expenses and other current assets in the consolidated balance sheets.

NOTE 11 — STOCKHOLDERS’ EQUITY

Share Repurchase Program

In March 2022, our Board of Directors authorized an increase in the number of shares covered by our share repurchase program to an aggregate amount of 10,000,000 shares.

In August 2023, our Board of Directors authorized an increase in the number of shares covered by the Company’s share repurchase program to an aggregate amount of 10,000,000 shares.

Prior to this increase, the Company had 6,813,851 authorized shares under this program.

The timing and actual number of shares repurchased, if any, will depend on a number of factors, including market conditions and prevailing stock prices, and are subject to compliance with certain covenants contained in the loan agreement.

2 unchanged sentences

During fiscal 2023, pursuant to this program, the Company acquired 1,587,581 shares of its common stock for an aggregate purchase price of $ 26.9 million.

No shares of common stock were acquired pursuant to this program during fiscal 2021.

During fiscal 2022, pursuant to this program, the Company acquired 656,213 shares of its common stock for an aggregate purchase price of $ 17.3 million.

As of January 31, 2024, we had 10,000,000 authorized shares remaining under this program.

Long-Term Incentive Plan

As of January 31, 2023, the Company had 2,214,053 shares available for grant under its long-term incentive plan.

The plan provides for the grant of equity and cash awards, including restricted stock awards, stock options and other stock unit awards to directors, officers and employees.

Restricted stock units (“RSU’s”) generally (i) cliff vest after three years or (ii) vest over a three year period.

Performance based restricted stock units (“PRSU’s”) granted to executives prior to fiscal 2020 include (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target.

Performance stock units (“PSU’s”) were granted to executives beginning in fiscal 2020 and generally vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance standards must be satisfied for vesting to occur.

PSU’s granted in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer of shares for two years subsequent to the date of vesting.

G-III Apparel Group, Ltd.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-Term Incentive Plan

On October 10, 2023, the Company’s shareholders approved the 2023 Long-Term Incentive Plan (the “2023 Plan”), which replaced the Company’s Amended and Restated 2015 Long-Term Incentive Plan (the “2015 Plan”).

The 2023 Plan authorizes the issuance of 2.8 million shares.

Shares available under the 2015 Plan, which would otherwise have expired on June 9, 2025, were not carried over into the 2023 Plan and no further grants will be made under the 2015 Plan.

Outstanding awards issued prior to August 18, 2023 will continue to remain subject to the terms of the 2015 Plan.

As of January 31, 2024, the Company had 2,404,510 shares available for grant under the 2023 Plan.

The plan provides for the grant of equity and cash awards, including restricted stock awards, stock options and other stock unit awards to directors, officers and employees.

Restricted stock units (“RSUs”) generally (i) cliff vest after three years or (ii) vest over a three year period.

Performance based restricted stock units (“PRSUs”) granted to executives prior to fiscal 2020 include (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target.

Performance stock units (“PSUs”) that were granted to executives generally vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance standards must be satisfied for vesting to occur.

Special performance stock units (“SPSUs”) were granted to Morris Goldfarb, the Company’s Chairman and Chief Executive Officer, in fiscal 2024 under the terms of his new employment agreement.

These SPSUs may be earned if certain stock price, relative Total Shareholder Return target and service conditions are achieved.

These awards may vest from time to time beginning on the third anniversary of the effective date of the award through the fifth anniversary of the effective date of the award.

Restricted Stock Units and Performance Based Restricted Stock Units

6 unchanged sentences

Unvested as of January 31, 2023

( 1,153,872 )

Unvested as of January 31, 2024

Restricted Stock Units

RSU’s are time based awards that do not have market or performance conditions and (i) cliff vest after three year s or (ii) vest over a three year period.

The grant date fair value for RSU’s are based on the quoted market price on the date of grant.

Compensation expense for RSU’s is recognized in the consolidated financial statements on a straight-line basis over the service period based on their grant date fair value.

RSUs are time based awards that do not have market or performance conditions and (i) cliff vest after three year s or (ii) vest over a three year period.

The grant date fair value for RSUs are based on the quoted market price on the date of grant.

Compensation expense for RSUs is recognized in the consolidated financial statements on a straight-line basis over the service period based on their grant date fair value.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Performance Based Restricted Stock Units

Performance based restricted stock units consist of both PRSU’s and PSU’s.

PRSU’s were granted to executives prior to fiscal 2020 and included (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target.

PRSU’s generally vest over a two to five year period.

Performance based restricted stock units consist of PRSUs, PSUs and SPSUs.

PRSUs were granted to executives prior to fiscal 2020 and included (i) market price performance conditions that provide for the award to vest only after the average closing price of the Company’s stock trades above a predetermined market level and (ii) another performance condition that requires the achievement of an operating performance target.

PRSUs generally vest over a two to five year period.

For restricted stock units with market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model.

1 unchanged sentence

This valuation is performed with the assistance of a third party valuation specialist.

PRSU’s are expensed over the service period under the accelerated attribution method.

The PSU’s granted to executives in fiscal 2020 are also subject to a lock up period that prevents the sale, contract to sell or transfer shares for two years subsequent to the date of vesting.

PSU’s are expensed over the service period under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals.

PRSUs are expensed over the service period under the accelerated attribution method.

Performance stock units (“PSUs”) were granted to executives beginning in fiscal 2020 and vest after a three year performance period during which certain earnings before interest and taxes and return on invested capital performance conditions must be satisfied for vesting to occur.

PSUs are expensed over the service period under the accelerated attribution method and based on an estimated percentage of achievement of certain pre-established goals.

Special performance stock units (“SPSUs”) were granted to Morris Goldfarb, the Company’s Chairman and Chief Executive Officer, in fiscal 2024 under the terms of his employment agreement entered into in August 2023.

These SPSUs may be earned if certain stock price, relative Total Shareholder Return target and service conditions are achieved.

These awards may vest from time to time beginning on the third anniversary of the effective date of the award through the fifth anniversary of the effective date of the award.

For restricted stock units with market conditions, the Company estimates the grant date fair value using a Monte Carlo simulation model.

This valuation methodology utilizes the closing price of the Company’s common stock on grant date and several key assumptions, including expected volatility of the Company’s stock price, and risk-free rates of return.

This valuation is performed with the assistance of a third party valuation specialist.

SPSUs are expensed over the service period under the accelerated attribution method.

The Company accounts for forfeited awards as they occur as permitted by ASC 718.

Ultimately, the actual expense recognized over the vesting period will be for those shares that vest.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recognized $ 17.2 million, $ 32.5 million and $ 17.4 million in share-based compensation expense for the years ended January 31, 2024, 2023 and 2022 respectively, related to restricted stock unit grants.

5 unchanged sentences

Stock options outstanding at end of year

Compensation expense for employee stock options is recognized in the consolidated financial statements over the service period (generally the vesting period) based on their fair value.

Stock options are valued using the Black-Scholes option pricing model.

The Black-Scholes model requires subjective assumptions regarding dividend yields, expected volatility, expected life of options and risk-free interest rates.

These assumptions reflect management’s best estimates.

Changes in these inputs and assumptions can materially affect the estimate of fair value and the amount of our compensation expense for stock options.

No stock options were granted during the years ended January 31, 2023, January 31, 2022 and January 31, 2021.

The Company accounts for forfeited awards as they occur as permitted by ASC 718.

Ultimately, the actual expense recognized over the vesting period will be for those shares that vest.

There were no stock options outstanding at January 31, 2023.

There were no stock options exercised during the years ended January 31, 2023 and January 31, 2022.

The Company did no t recognize compensation expense for year ended January 31, 2023 and January 31, 2022 related to stock options.

The Company recognized $ 0.1 million in compensation expense for the year ended January 31, 2021 related to stock options.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 12 — CONCENTRATION

Two customers in the wholesale operations segment accounted for approximately 21.6 % and 15.4 %, respectively, of the Company’s net sales for the year ended January 31, 2023.

Three customers in the wholesale operations segment accounted for approximately 19.2 %, 13.6 % and 10.1 %, respectively, of the Company’s net sales for the year ended January 31, 2024.

Two customers in the wholesale operations segment accounted for approximately 21.6 % and 15.4 %, respectively, of the Company’s net sales for the year ended January 31, 2023.

Four customers in the wholesale operations segment accounted for approximately 22.9 %, 13.2 %, 12.3 % and 11.5 %, respectively, of the Company’s net accounts receivable as of January 31, 2023.

Three customers in the wholesale operations segment accounted for approximately 23.9 %, 14.8 % and 12.7 %, respectively, of the Company’s net sales for the year ended January 31, 2022.

Three customers in the wholesale operations segment accounted for approximately 21.4 %, 13.3 %, and 12.2 %, respectively, of the Company’s net accounts receivable as of January 31, 2024.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Four customers in the wholesale operations segment accounted for approximately 22.9 %, 13.2 %, 12.3 % and 11.5 %, respectively, of the Company’s net accounts receivable as of January 31, 2023.

NOTE 13 — EMPLOYEE BENEFIT PLANS

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The Company made matching contributions of $ 4.3 million, $ 4.0 million and $ 0.3 million for the years ended January 31, 2024, 2023 and 2022, respectively.

Effective May 2020, the Company temporarily suspended 401(k) matching contributions due to the COVID-19 pandemic.

Effective May 2020, the Company temporarily suspended 401(k) matching contributions due to COVID-19.

The Company reinstated 401(k) matching contributions effective January 1, 2022.

3 unchanged sentences

wholesale operations and retail operations.

The wholesale operations segment includes sales of products under the Company’s owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, other than sales of the Karl Lagerfeld Paris brand from retail stores and digital outlets.

Wholesale revenues also include revenues from license agreements related to our owned trademarks including DKNY, Donna Karan, Karl Lagerfeld, Vilebrequin, G.H.

Bass and Andrew Marc and Sonia Rykiel.

The retail operations segment consists primarily of direct sales to consumers through Company-operated stores, which, prior to the completion of the retail restructuring in fiscal 2021, consisted primarily of Wilsons Leather, G.H.

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

Sales through Company-owned digital channels, with the exception of Vilebrequin, are also included in the retail operations segment.

As a result of the restructuring of the Company’s retail operations, the Company closed its Wilsons Leather, G.H.

Bass and Calvin Klein Performance retail stores during fiscal 2021.

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

The wholesale operations segment includes sales of products to retailers under owned, licensed and private label brands, as well as sales related to the Vilebrequin and Karl Lagerfeld businesses, including from retail stores operated by Vilebrequin and Karl Lagerfeld, other than sales of product under the Karl Lagerfeld Paris brand generated by the Company’s retail stores and digital outlets.

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

Bass, Andrew Marc and Sonia Rykiel trademarks owned by the Company.

The retail operations segment consists primarily of direct sales to consumers through Company-operated stores, which consists primarily of DKNY and Karl Lagerfeld Paris stores, as well as the digital channels for DKNY, Donna Karan, Karl Lagerfeld Paris, G.H.

Bass and Wilsons Leather.

Substantially all DKNY and Karl Lagerfeld Paris stores are operated as outlet stores.

The following segment information, in thousands, is presented for the fiscal years ended:

4 unchanged sentences

Depreciation and amortization

Asset impairments and gain on lease terminations

Asset impairments

Operating profit (loss)

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 31, 2023

3 unchanged sentences

Depreciation and amortization

Asset impairments and gain on lease terminations

Asset impairments

Operating profit (loss)

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

January 31, 2022

3 unchanged sentences

Depreciation and amortization

Asset impairments and gain on lease terminations

Asset impairments

Operating profit (loss)

8 unchanged sentences

Retail net sales

(1) As of May 31, 2022, the Company acquired the remaining interests in KLH (Karl Lagerfeld branded product) that it did not already own.

Net sales of Karl Lagerfeld product were included in licensed brands net sales of the wholesale operations segment through May 31, 2022.

Subsequent to May 31, 2022, net sales of Karl Lagerfeld product are included in proprietary brands net sales of the wholesale operations segment.

The Company allocates overhead to its business segments on various bases, which include units shipped, space utilization, inventory levels, and relative sales levels, among other factors.

The method of allocation has been applied consistently on a year-to-year basis.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

5 unchanged sentences

Capital expenditures for locations outside of the United States totaled $ 15.0 million, $ 10.5 million and $ 4.3 million for the years ended January 31, 2024, 2023 and 2022, respectively.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 15 — KARL LAGERFELD ACQUISITION

On April 29, 2022, the Company entered into a share purchase agreement (the “Purchase Agreement”) with a group of investors pursuant to which the Company agreed to acquire, on the terms set forth and subject to the conditions set forth in the Purchase Agreement, the remaining 81 % interest in KLH that it did not already own, for an aggregate consideration

of € 202.0 million (approximately $ 216.8 million) in cash, after taking into account certain adjustments.

On April 29, 2022, the Company entered into a share purchase agreement (the “Purchase Agreement”) pursuant to which the Company agreed to acquire the remaining 81 % interest in KLH that it did not already own, for an aggregate consideration of € 193.4 million (approximately $ 207.6 million) in cash, after taking into account certain adjustments.

The acquisition closed on May 31, 2022.

4 unchanged sentences

This acquisition offers additional opportunities to expand the Company’s international growth by further developing its European-based brands, which also include Vilebrequin and Sonia Rykiel.

The Company believes that KLH’s existing digital channel presence provides an opportunity for the Company to enhance its omni-channel business and further accelerate its digital initiatives.

The Company believes that Karl Lagerfeld’s existing digital channel presence provides an opportunity for the Company to enhance its omni-channel business and further accelerate its digital initiatives.

Purchase Price Consideration

1 unchanged sentence

The purchase price has been revised to include adjustments in accordance with the Purchase Agreement.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The initial purchase price and the valuation of the prior minority ownership for the acquisition of KLH is as follows (in thousands):

5 unchanged sentences

Total consideration

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Allocation of the Purchase Price Consideration

24 unchanged sentences

The goodwill was assigned to the Company’s wholesale operations reporting unit.

The Company intends to make an election under Internal Revenue Code Section 338(g) to amortize the total goodwill and intangible assets over a 15 year period for income tax purposes in the United States.

In fiscal 2023, as a result of the Company’s annual impairment test, the Company recorded a $ 347.2 million non-cash impairment charge to fully impair the carrying value of its goodwill.

This charge included all of the $ 84.3 million of goodwill previously recognized in connection with the acquisition of KLH.

The Company made an election under Internal Revenue Code Section 338(g) to amortize the total goodwill and intangible assets over a 15 year period for income tax purposes in the United States.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair values assigned to identifiable intangible assets acquired were based on assumptions and estimates made by management using unobservable inputs reflecting the Company’s own assumptions about the inputs that market participants would use in pricing the asset or liability based on the best information available.

5 unchanged sentences

Customer relationships

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recognized approximately $ 5.6 million of acquisition related costs that were expensed in fiscal 2023 and fiscal 2022.

The fiscal 2023 and fiscal 2022 acquisition and integration costs are recorded within selling, general and administrative expenses in the Company’s consolidated statements of operations and comprehensive income (loss) for the fiscal years ended January 31, 2023 and January 31, 2022, respectively.

The estimates of fair value of assets acquired and liabilities assumed are preliminary and subject to change based on completion of certain working capital adjustments and the tax implications of the Company’s purchase price allocation.

The purchase price allocation for acquired companies can be modified for up to one year from the date of acquisition.

Net Sales, Operating Income and Pro Forma Impact of the Transaction

The amount of net sales and operating loss of KLH since the acquisition date included in the consolidated statements of operations and comprehensive income (loss) for the year ended January 31, 2023 were $ 129.4 million and ($ 75.6 ) million, respectively.

The operating loss of KLH includes a $ 83.2 million non-cash impairment charge related to goodwill recognized during the fourth quarter of fiscal 2023.

The following table reflects the unaudited pro forma consolidated results of operations of the Company for the periods presented, as though the acquisition of KLH had occurred on February 1, 2021.

Year Ended January 31,

(unaudited, in thousands, except per share amounts)

Earnings per share:

The pro forma adjustments are based upon available information and certain assumptions that the Company considers reasonable.

The unaudited pro forma condensed combined financial data is based on preliminary estimates and assumptions set forth in the accompanying notes.

Pro forma adjustments are necessary to reflect (i) the changes in depreciation and amortization expense resulting from fair value adjustments to intangible assets, (ii) amortization of the inventory fair value adjustment, (iii) expenses for incentive compensation arrangements acquired as part of the acquisition agreement, (iv) elimination of royalty expenses related to the Company’s license agreement with KLNA, (v) the taxation of G-III’s and KLH’s combined income as a result of the acquisition, as well as the tax effects related to such pro forma adjustments, (vi) the $ 27.1 million gain recorded to remeasure to fair value the previously held investments in KLH and KLNA as though the gain was recorded on February 1, 2021 and (vii) adjustments for accounting policy changes to conform to G-III’s presentation.

The pro forma results do not include any realized or anticipated cost synergies or other effects of the integration of KLH.

Accordingly, such pro forma amounts are not indicative of the results that actually would have occurred had the acquisition been completed on February 1, 2021, nor are they indicative of the future operating results of the combined company.

The fair value of assets acquired and liabilities assumed were finalized as of May 31, 2023.

NOTE 16 — EQUITY INVESTMENTS

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This investment was intended to expand the partnership between the Company and the owners of Karl Lagerfeld brand and extend their business development opportunities on a global scale.

In May 2022, the Company

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acquired the remaining 81 % interest in KLH that it did not previously own, and, as a result, KLH began being treated as a consolidated wholly-owned subsidiary.

In May 2022, the Company acquired the remaining 81 % interest in KLH that it did not previously own, and, as a result, KLH began being treated as a consolidated wholly-owned subsidiary.

Prior to May 2022, the investment in KLH was accounted for under the equity method of accounting and was reflected in Investment in Unconsolidated Affiliates on the consolidated balance sheets at January 31, 2022.

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Prior to May 2022, the investment in KLNA was accounted for under the equity method of accounting and was reflected in Investment in Unconsolidated Affiliates on the consolidated balance sheets at January 31, 2022.

G-III Apparel Group, Ltd.

And Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 17 — RELATED PARTY TRANSACTIONS

Transactions with Employees

In June 2023, the Company entered into a stock sale and purchase agreement (the “Agreement”) with Sammy Aaron, the Company’s Vice Chairman and President and a Director of the Company.

Pursuant to the Agreement, the Company purchased from Mr.

Aaron 208,943 shares of its common stock for $ 4.1 million at a price equal to the closing price of the Company’s shares on the date of the Agreement.

Transactions with E-Commerce Retailer

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The Company’s Chief Executive Officer and Executive Vice President indirectly own 1.4 % of the e-commerce retailer through their ownership in a private investment partnership.

The Company had no material transactions with the e-commerce retailer during the year ended January 31, 2023.

Transactions with Fabco

Prior to December 1, 2020, G-III owned a 49 % ownership interest in Fabco and was considered a related party of Fabco.

The Company sells inventory to Fabco and granted Fabco’s subsidiary the right to use certain Donna Karan and DKNY trademarks.

In fiscal 2021, the Company sold $ 2.7 million in inventory to Fabco.

The Company recorded $ 0.9 million of licensing revenue from Fabco during the period of fiscal 2021 prior to Fabco becoming a consolidated majority-owned subsidiary of the Company.

The Company had no material transactions with the e-commerce retailer during the years ended January 31, 2024 and 2023.

Transactions with KL North America

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The Company incurred royalty and advertising expense of $ 3.6 million during the period of February 1, 2022 through May 30, 2022 prior to KLNA becoming a consolidated indirect wholly-owned subsidiary of the Company.

The Company incurred royalty and advertising expense of $ 8.1 million, $ 3.5 million for the years ended January 31, 2022 and 2021, respectively.

NOTE 18 — SUBSEQUENT EVENTS

In March 2023, the Company announced the signing of a long-term license with Authentic Brands Group for the Nautica brand in North America.

The Company will produce across a number of categories starting with a full women’s jeanswear collection and then expanding in a phased approach into additional categories including sportswear, suit separates and dresses.

The new five-year license agreement, effective beginning in January 2024, includes three extensions, for five years each.

First deliveries are expected to hit the floor in January 2024.

The product is expected to be distributed in better department stores, digital channels and Nautica’s stores and website in North America and franchised stores globally.

The Company incurred royalty and advertising expense of $ 8.1 million for the year ended January 31, 2022.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

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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-K

Item 9A. Controls and Procedures