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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 001-35368
 
cpri-20220702_g1.jpg
CAPRI HOLDINGS LTD
(Exact Name of Registrant as Specified in Its Charter)
British Virgin IslandsN/A
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
33 Kingsway
London, United Kingdom
WC2B 6UF
(Address of principal executive offices)
(Registrant’s telephone number, including area code: 44 207 632 8600)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on which Registered
Ordinary Shares, no par valueCPRINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
YesNo
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 
YesNo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
YesNo
As of August 3, 2022, Capri Holdings Limited had 138,032,677 ordinary shares outstanding.



TABLE OF CONTENTS
 
  Page
No.
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

2



PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
July 2,
2022
April 2,
2022
Assets
Current assets
Cash and cash equivalents$221 $169 
Receivables, net394 434 
Inventories, net1,265 1,096 
Prepaid expenses and other current assets201 192 
Total current assets2,081 1,891 
Property and equipment, net466 476 
Operating lease right-of-use assets1,388 1,358 
Intangible assets, net1,739 1,847 
Goodwill1,336 1,418 
Deferred tax assets231 240 
Other assets369 250 
Total assets$7,610 $7,480 
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable$540 $555 
Accrued payroll and payroll related expenses123 165 
Accrued income taxes136 52 
Short-term operating lease liabilities399 414 
Short-term debt37 29 
Accrued expenses and other current liabilities379 351 
Total current liabilities1,614 1,566 
Long-term operating lease liabilities1,465 1,467 
Deferred tax liabilities476 432 
Long-term debt1,382 1,131 
Other long-term liabilities295 326 
Total liabilities5,232 4,922 
Commitments and contingencies
Shareholders’ equity
Ordinary shares, no par value; 650,000,000 shares authorized; 223,503,792 shares issued and 137,956,977 outstanding at July 2, 2022; 221,967,599 shares issued and 142,806,269 outstanding at April 2, 2022
  
Treasury shares, at cost (85,546,815 shares at July 2, 2022 and 79,161,330 shares at April 2, 2022)
(4,299)(3,987)
Additional paid-in capital1,294 1,260 
Accumulated other comprehensive income89 194 
Retained earnings5,293 5,092 
Total shareholders’ equity of Capri2,377 2,559 
Noncontrolling interest1 (1)
Total shareholders’ equity2,378 2,558 
Total liabilities and shareholders’ equity$7,610 $7,480 

See accompanying notes to consolidated financial statements.
3


CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In millions, except share and per share data)
(Unaudited)

 Three Months Ended
 July 2,
2022
June 26,
2021
Total revenue$1,360 $1,253 
Cost of goods sold459 397 
Gross profit
901 856 
Selling, general and administrative expenses622 545 
Depreciation and amortization45 50 
Restructuring and other charges3 3 
Total operating expenses670 598 
Income from operations231 258 
Interest (income) expense, net(4)1 
Foreign currency loss4 1 
Income before income taxes231 256 
Provision for income taxes28 37 
Net income203 219 
Less: Net income attributable to noncontrolling interest2  
Net income attributable to Capri$201 $219 
Weighted average ordinary shares outstanding:
Basic141,913,586 151,312,103 
Diluted143,733,984 154,890,483 
Net income per ordinary share attributable to Capri:
Basic$1.42 $1.45 
Diluted$1.40 $1.41 
Statements of Comprehensive Income:
Net income$203 $219 
Foreign currency translation adjustments(107)90 
Net gain on derivatives2  
Comprehensive income98 309 
Less: Net income attributable to noncontrolling interest2  
Less: Foreign currency translation adjustments attributable to noncontrolling interest (1)
Comprehensive income attributable to Capri$96 $310 

See accompanying notes to consolidated financial statements.
4


CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions, except share data which is in thousands)
(Unaudited)
 Ordinary SharesAdditional
Paid-in
Capital
Treasury SharesAccumulated Other Comprehensive IncomeRetained
Earnings
Total Equity of CapriNon-controlling InterestTotal Equity
 SharesAmountsSharesAmounts
Balance at April 2, 2022221,967 $ $1,260 (79,161)$(3,987)$194 $5,092 $2,559 $(1)$2,558 
Net income— — — — — — 201 201 2 203 
Other comprehensive loss— — — — — (105)— (105) (105)
Total comprehensive income— — — — — — — 96 2 98 
Vesting of restricted awards, net of forfeitures
1,420 — — — — — — — — — 
Exercise of employee share options
117 — 6 — — — — 6 — 6 
Share based compensation expense— — 28 — — — — 28 — 28 
Repurchase of ordinary shares— — — (6,386)(312)— — (312)— (312)
Balance at July 2, 2022223,504 $ $1,294 (85,547)$(4,299)$89 $5,293 $2,377 $1 $2,378 


 Ordinary SharesAdditional
Paid-in
Capital
Treasury SharesAccumulated Other Comprehensive IncomeRetained
Earnings
Total Equity of CapriNon-controlling InterestTotal Equity
 SharesAmountsSharesAmounts
Balance at March 27, 2021
219,223 $ $1,158 (67,943)$(3,326)$56 $4,270 $2,158 $(1)$2,157 
Net income— — — — — — 219 219  219 
Other comprehensive income (loss)— — — — — 91 91 (1)90 
Total comprehensive income (loss)— — — — — — — 310 (1)309 
Vesting of restricted awards, net of forfeitures1,591 — — — — — — — — — 
Exercise of employee share options 160 — 7 — — — — 7 — 7 
Share based compensation expense— — 36 — — — — 36 — 36 
Repurchase of ordinary shares— — — (1,088)(59)— — (59)— (59)
Balance at June 26, 2021220,974 $ $1,201 (69,031)$(3,385)$147 $4,489 $2,452 $(2)$2,450 

See accompanying notes to consolidated financial statements.
5


CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Three Months Ended
 July 2,
2022
June 26,
2021
Cash flows from operating activities
Net income$203 $219 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization45 50 
Share based compensation expense28 36 
Deferred income taxes1 22 
Changes to lease related balances, net(33)(36)
Foreign currency loss (gain)1 (12)
Other non-cash adjustments1 (3)
Change in assets and liabilities:
Receivables, net26 (7)
Inventories, net(209)(17)
Prepaid expenses and other current assets(13)(9)
Accounts payable6 (40)
Accrued expenses and other current liabilities87 (6)
Other long-term assets and liabilities(6)7 
Net cash provided by operating activities137 204 
Cash flows from investing activities
Capital expenditures(36)(23)
Settlement of net investment hedges66  
Net cash provided by (used in) investing activities30 (23)
Cash flows from financing activities
Debt borrowings1,350 59 
Debt repayments(1,090)(70)
Debt issuance costs(4) 
Repurchase of ordinary shares(312)(59)
Exercise of employee share options6 7 
Other financing activities  8 
Net cash used in financing activities(50)(55)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(65)(2)
 Net increase in cash, cash equivalents and restricted cash 52 124 
Beginning of period172 234 
End of period$224 $358 
Supplemental disclosures of cash flow information
Cash paid for interest$18 $17 
Net cash (received) paid for income taxes $(72)$28 
Supplemental disclosure of non-cash investing and financing activities
Accrued capital expenditures$43 $14 
See accompanying notes to consolidated financial statements.
6


CAPRI HOLDINGS LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Business and Basis of Presentation
Capri Holdings Limited (“Capri”, and together with its subsidiaries, the “Company”) was incorporated in the British Virgin Islands on December 13, 2002. The Company is a holding company that owns brands that are leading designers, marketers, distributors and retailers of branded women’s and men’s accessories, footwear and ready-to-wear bearing the Versace, Jimmy Choo and Michael Kors tradenames and related trademarks and logos. The Company operates in three reportable segments: Versace, Jimmy Choo and Michael Kors. See Note 16 for additional information.
The interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned or controlled subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The interim consolidated financial statements as of July 2, 2022 and for the three months ended July 2, 2022 and June 26, 2021 are unaudited. The Company consolidates the results of its Versace business on a one-month lag, as consistent with prior periods. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation in conformity with U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended April 2, 2022, as filed with the Securities and Exchange Commission on June 1, 2022, in the Company’s Annual Report on Form 10-K. The results of operations for the interim periods should not be considered indicative of results to be expected for the full fiscal year.

The Company utilizes a 52- to 53-week fiscal year and the term “Fiscal Year” or “Fiscal” refers to that 52- or 53-week period. The results for the three months ended July 2, 2022 and June 26, 2021 are based on 13-week periods. The Company’s Fiscal Year 2023 is a 52-week period ending April 1, 2023.

2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts, credit losses, estimates of inventory net realizable value, the valuation of share-based compensation, the valuation of deferred taxes, goodwill, intangible assets, operating lease right-of-use assets and property and equipment, along with the estimated useful lives assigned to these assets. Actual results could differ from those estimates.
Seasonality
The Company experiences certain effects of seasonality with respect to its business. The Company generally experiences greater sales during its third fiscal quarter, primarily driven by holiday season sales, and the lowest sales during its first fiscal quarter.
Cash, Cash Equivalents and Restricted Cash
All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. Included in the Company’s cash and cash equivalents as of July 2, 2022 and April 2, 2022 are credit card receivables of $28 million and $18 million, respectively, which generally settle within two to three business days.
7


A reconciliation of cash, cash equivalents and restricted cash as of July 2, 2022 and April 2, 2022 from the consolidated balance sheets to the consolidated statements of cash flows is as follows (in millions):
 July 2,
2022
April 2,
2022
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents$221 $169 
Restricted cash included within prepaid expenses and other current assets3 3 
Total cash, cash equivalents and restricted cash shown on the consolidated statements of cash flows$224 $172 
Inventories, net
Inventories primarily consist of finished goods with the exception of raw materials and work in process inventory. The combined total of raw materials and work in process inventory, net, recorded on the Company’s consolidated balance sheets was $33 million and $31 million as of July 2, 2022 and April 2, 2022, respectively.
Derivative Financial Instruments
Forward Foreign Currency Exchange Contracts
The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these contracts to hedge the Company’s cash flows, as they relate to foreign currency transactions. Certain of these contracts are designated as hedges for accounting purposes, while others remain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of their hedge designation.
The Company designates certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including a description of the hedged item and the hedging instrument and the risk being hedged. The changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income until the hedged item affects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income are recognized within cost of goods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, changes in the fair value are recorded to foreign currency loss in the Company’s consolidated statements of operations and comprehensive income. The Company classifies cash flows relating to its forward foreign currency exchange contracts related to purchase of inventory consistently with the classification of the hedged item, within cash flows from operating activities.
The Company is exposed to the risk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge.
Net Investment Hedges
The Company also uses fixed-to-fixed cross currency swap agreements to hedge its net investments in foreign operations against future volatility in the exchange rates between the U.S. Dollars and the associated foreign currencies. The Company has elected the spot method of designating these contracts under ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”, and has designated these contracts as net investment hedges. The net gain or loss on the net investment hedge is reported within foreign currency translation gains and losses (“CTA”), as a component of accumulated other comprehensive income on the Company’s consolidated balance sheets. Interest accruals and coupon payments are recognized directly in interest (income) expense, net, in the Company’s consolidated statements of operations and
8


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

The Company leases retail stores, office space and warehouse space under operating lease agreements that expire at various dates through September 2043. The Company’s leases generally have terms of up to 10 years, generally require a fixed annual rent and may require the payment of additional rent if store sales exceed a negotiated amount. Although most of the Company’s equipment is owned, the Company has limited equipment leases that expire on various dates through May 2026. The Company acts as sublessor in certain leasing arrangements, primarily related to closed stores from previous restructuring activities. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. The Company determines the sublease term based on the date it provides possession to the subtenant through the expiration date of the sublease.

The Company recognizes operating lease right-of-use assets and lease liabilities at lease commencement date, based on the present value of fixed lease payments over the expected lease term. The Company uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the lease commencement date, as the rate implicit in the lease is not readily determinable for the Company’s leases. The Company’s incremental borrowing rates are based on the term of the leases, the economic environment of the leases and reflect the expected interest rate it would incur to borrow on a secured basis. Certain leases include one or more renewal options. The exercise of lease renewal options is generally at the Company’s sole discretion and as such, the Company typically determines that exercise of these renewal options is not reasonably certain. As a result, the Company generally does not include the renewal option period in the expected lease term and the associated lease payments are not included in the measurement of the operating lease right-of-use asset and lease liability. Certain leases also contain termination options with an associated penalty. Generally, the Company is reasonably certain not to exercise these options and as such, they are not included in the determination of the expected lease term. The Company recognizes operating lease expense on a straight-line basis over the lease term.

Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for its short-term leases on a straight-line basis over the lease term.

The Company’s leases generally provide for payments of non-lease components, such as common area maintenance, real estate taxes and other costs associated with the leased property. The Company accounts for lease and non-lease components of its real estate leases together as a single lease component and, as such, includes fixed payments of non-lease components in the measurement of the operating lease right-of-use assets and lease liabilities for its real estate leases. Variable lease payments, such as percentage rentals based on sales, periodic adjustments for inflation, reimbursement of real estate taxes, any variable common area maintenance and any other variable costs associated with the leased property are expensed as incurred as variable lease costs and are not recorded on the balance sheet. The Company’s lease agreements do not contain any material residual value guarantees, material restrictions or covenants.
The following table presents the Company’s supplemental cash flow information related to leases (in millions):
Three Months Ended
July 2, 2022June 26, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases (1)
$125 $149 
(1)Operating cash flows used in operating leases for the three months ended June 26, 2021 excluded $4 million of deferred rent payments due to the COVID-19 pandemic.
During each of the three months ended July 2, 2022 and June 26, 2021, the Company recorded sublease income of $2 million within selling, general and administrative expenses. During the three months ended July 2, 2022 and June 26, 2021, the Company recorded $2 million and $7 million, respectively, of rent concessions negotiated in connection with the impact of COVID-19 as if it were contemplated as part of the existing contract. The aforementioned rent concessions were recorded as a reduction to variable lease expense within selling, general and administrative expenses.
9


Net Income per Share
The Company’s basic net income per ordinary share is calculated by dividing net income by the weighted average number of ordinary shares outstanding during the period. Diluted net income per ordinary share reflects the potential dilution that would occur if share option grants or any other potentially dilutive instruments, including restricted shares and restricted share units (“RSUs”), were exercised or converted into ordinary shares. These potentially dilutive securities are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. Performance-based RSUs are included as diluted shares if the related performance conditions are considered satisfied as of the end of the reporting period and to the extent they are dilutive under the treasury stock method.
The components of the calculation of basic net income per ordinary share and diluted net income per ordinary share are as follows (in millions, except share and per share data):
 Three Months Ended
July 2,
2022
June 26,
2021
Numerator:
Net income attributable to Capri$201 $219 
Denominator:
Basic weighted average shares141,913,586 151,312,103 
Weighted average dilutive share equivalents:
Share options and restricted shares/units, and performance restricted share units
1,820,398 3,578,380 
Diluted weighted average shares143,733,984 154,890,483 
Basic net income per share (1)
$1.42 $1.45 
Diluted net income per share (1)
$1.40 $1.41 
(1)Basic and diluted net income per share are calculated using unrounded numbers.
During the three months ended July 2, 2022, share equivalents of 657,340 shares have been excluded from the above calculations due to their anti-dilutive effect. Share equivalents of 610,684 shares have been excluded from the above calculations for the three months ended June 26, 2021 due to their anti-dilutive effect.
See Note 2 in the Company’s Annual Report on Form 10-K for the fiscal year ended April 2, 2022 for a complete disclosure of the Company’s significant accounting policies.
Recently Issued Accounting Pronouncements
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting” and in January 2021, issued ASU 2021-01, “Reference Rate Reform: Scope”. Both of these updates aim to ease the potential burden in accounting for reference rate reform. These updates provide optional expedients and exceptions, if certain criteria are met, for applying accounting principles generally accepted in the United States to contract modifications, hedging relationships and other transactions affected by the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). The amendments were effective upon issuance and allowed companies to adopt the amendments on a prospective basis through December 31, 2022. The Company does not expect the adoption of this standard to have a material impact on the Company’s results of operations, financial condition or cash flows based on current information.
The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on the Company’s results of operations, financial condition or cash flows based on current information.

10


3. Revenue Recognition
The Company accounts for contracts with its customers when there is approval and commitment from both parties, the rights of the parties and payment terms have been identified, the contract has commercial substance and collectibility of consideration is probable. Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services.
The Company sells its products through three primary channels of distribution: retail, wholesale and licensing. Within the retail and wholesale channels, substantially all of the Company’s revenues consist of sales of products that represent a single performance obligation, where control transfers at a point in time to the customer. For licensing arrangements, royalty and advertising revenue is recognized over time based on access provided to the Company’s trademarks.
Retail
The Company generates sales through directly operated stores and e-commerce sites throughout the Americas (United States, Canada and Latin America), certain parts of EMEA (Europe, Middle East and Africa) and certain parts of Asia (Asia and Oceania).
Gift Cards. The Company sells gift cards that can be redeemed for merchandise, resulting in a contract liability upon issuance. Revenue is recognized when the gift card is redeemed or upon “breakage” for the estimated portion of gift cards that are not expected to be redeemed. “Breakage” revenue is calculated under the proportional redemption methodology, which considers the historical patterns of redemption in jurisdictions where the Company is not required to remit the value of the unredeemed gift cards as unclaimed property. The contract liability related to gift cards, net of estimated “breakage”, of $15 million and $13 million as of July 2, 2022 and April 2, 2022, respectively, is included within accrued expenses and other current liabilities in the Company’s consolidated balance sheet.
Loyalty Program. The Company offers a loyalty program, which allows its Michael Kors United States customers to earn points on qualifying purchases toward monetary and non-monetary rewards, which may be redeemed for purchases at Michael Kors retail stores and e-commerce sites. The Company defers a portion of the initial sales transaction based on the estimated relative fair value of the benefits based on projected timing of future redemptions and historical activity. These amounts include estimated “breakage” for points that are not expected to be redeemed.
Wholesale
The Company’s products are sold primarily to major department stores, specialty stores and travel retail shops throughout the Americas, EMEA and Asia. The Company also has arrangements where its products are sold to geographic licensees in certain parts of EMEA, Asia and South America.
Licensing
The Company provides its third-party licensees with the right to access its Versace, Jimmy Choo and Michael Kors trademarks under product and geographic licensing arrangements. Under geographic licensing arrangements, third party licensees receive the right to distribute and sell products bearing the Company’s trademarks in retail and/or wholesale channels within certain geographical areas, including Brazil, the Middle East, Eastern Europe, South Africa and certain parts of Asia.
The Company recognizes royalty revenue and advertising contributions based on the percentage of sales made by the licensees. Generally, the Company’s guaranteed minimum royalty amounts due from licensees relate to contractual periods that do not exceed 12 months, however, certain guaranteed minimums for Versace are multi-year based.
11


As of July 2, 2022, contractually guaranteed minimum fees from the Company’s license agreements expected to be recognized as revenue during future periods were as follows (in millions):
Contractually Guaranteed Minimum Fees
Remainder of Fiscal 2023$23 
Fiscal 202429 
Fiscal 202525 
Fiscal 202622 
Fiscal 202721 
Fiscal 2028 and thereafter46 
 Total$166 
Sales Returns
The refund liability recorded as of July 2, 2022 was $56 million, and the related asset for the right to recover returned product as of July 2, 2022 was $13 million. The refund liability recorded as of April 2, 2022 was $52 million, and the related asset for the right to recover returned product as of April 2, 2022 was $15 million.
Contract Balances
Total contract liabilities were $26 million and $30 million as of July 2, 2022 and April 2, 2022, respectively. For the three months ended July 2, 2022, the Company recognized $5 million in revenue which related to contract liabilities that existed at April 2, 2022. For the three months ended June 26, 2021, the Company recognized $6 million in revenue which related to contract liabilities that existed at March 27, 2021. There were no material contract assets recorded as of July 2, 2022 and April 2, 2022.
There were no changes in historical variable consideration estimates that were materially different from actual results.
12


Disaggregation of Revenue
The following table presents the Company’s segment revenue disaggregated by geographic location (in millions):
 Three Months Ended
 July 2,
2022
June 26,
2021
Versace revenue - the Americas$115 $87 
Versace revenue - EMEA107 87 
Versace revenue - Asia53 66 
 Total Versace275 240 
Jimmy Choo revenue - the Americas54 38 
Jimmy Choo revenue - EMEA66 50 
Jimmy Choo revenue - Asia52 54 
Total Jimmy Choo172 142 
Michael Kors revenue - the Americas625 590 
Michael Kors revenue - EMEA191 165 
Michael Kors revenue - Asia97 116 
 Total Michael Kors913 871 
Total revenue - the Americas794 715 
Total revenue - EMEA364 302 
Total revenue - Asia202 236 
Total revenue$1,360 $1,253 
See Note 3 in the Company’s Annual Report on Form 10-K for the fiscal year ended April 2, 2022 for a complete disclosure of the Company’s revenue recognition policy.

4. Receivables, net
Receivables, net, consist of (in millions):
July 2,
2022
April 2,
2022
Trade receivables (1)
$426 $461 
Receivables due from licensees21 17 
447 478 
Less: allowances(53)(44)
Total receivables, net$394 $434 
(1)As of July 2, 2022 and April 2, 2022, $89 million and $83 million, respectively, of trade receivables were insured.
Receivables are presented net of allowances for discounts, markdowns, operational chargebacks and credit losses. Discounts are based on open invoices where trade discounts have been extended to customers. Markdowns are based on wholesale customers’ sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in revenues.
The Company’s allowance for credit losses is determined through analysis of periodic aging of receivables and assessments of collectibility based on an evaluation of historic and anticipated trends, the financial condition of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. Allowance for credit losses was $10 million as of July 2, 2022 and April 2, 2022. The Company had credit losses of $1 million and $(1) million for the three months ended July 2, 2022 and June 26, 2021, respectively.
13



5. Property and Equipment, net
Property and equipment, net, consists of (in millions):
July 2,
2022
April 2,
2022
Leasehold improvements$553 $575 
Computer equipment and software229 212 
Furniture and fixtures211 218 
Equipment79 81 
Building46 48 
In-store shops46 47 
Land18 19 
Total property and equipment, gross1,182 1,200 
Less: accumulated depreciation and amortization(783)(790)
Subtotal399 410 
Construction-in-progress67 66 
Total property and equipment, net$466 $476 
Depreciation and amortization of property and equipment for the three months ended July 2, 2022 and June 26, 2021 was $34 million and $38 million, respectively. The Company did not record any property and equipment impairment charges for the three months ended July 2, 2022 and June 26, 2021.

6. Intangible Assets and Goodwill

The following table details the carrying values of the Company’s intangible assets and goodwill (in millions):
 July 2,
2022
April 2,
2022
Definite-lived intangible assets:
Reacquired rights$400 $400 
Trademarks23 23 
Customer relationships (1)
386 414 
Gross definite-lived intangible assets809 837 
Less: accumulated amortization(231)(228)
Net definite-lived intangible assets578 609 
Indefinite-lived intangible assets:
Jimmy Choo brand (2)
296 321 
Versace brand (1)
865 917 
Net indefinite-lived intangible assets1,161 1,238 
Total intangible assets, excluding goodwill$1,739 $1,847 
Goodwill (3)
$1,336 $1,418 
(1)The change in the carrying value since April 2, 2022 reflects the impact of foreign currency translation.
(2)Includes accumulated impairment of $249 million as of July 2, 2022 and April 2, 2022. The change in the carrying value since April 2, 2022 reflects the impact of foreign currency translation.
(3)Includes accumulated impairment of $265 million related to the Jimmy Choo reporting units as of July 2, 2022 and April 2, 2022. The change in the carrying value since April 2, 2022 reflects the impact of foreign currency translation.
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Amortization expense for the Company’s definite-lived intangible assets for the three months ended July 2, 2022 and June 26, 2021 was $11 million and $12 million, respectively.

7. Current Assets and Current Liabilities
Prepaid expenses and other current assets consist of the following (in millions):
July 2,
2022
April 2,
2022
Prepaid taxes$79 $86 
Prepaid contracts17 15 
Prepaid insurance12 2 
Interest receivable related to net investment hedges11 13 
Other accounts receivables9 17 
Other73 59 
Total prepaid expenses and other current assets$201 $192 

Accrued expenses and other current liabilities consist of the following (in millions):
July 2,
2022
April 2,
2022
Other taxes payable$71 $61 
Return liabilities56 52 
Accrued capital expenditures43 39 
Accrued advertising and marketing22 21 
Accrued rent (1)
21 20 
Gift cards and retail store credits15 17 
Professional services14 15 
Accrued litigation12 13 
Accrued purchases and samples12 11 
Charitable donations (2)
10 10 
Accrued interest3 10 
Other100 82 
Total accrued expenses and other current liabilities$379 $351 
(1)The accrued rent balance relates to variable lease payments.
(2)The charitable donations balance relates to a $10 million unconditional pledge to The Versace Foundation as of July 2, 2022 and April 2, 2022.

8. Restructuring and Other Charges
Capri Retail Store Optimization Program
During Fiscal 2022, the Company completed its plan to close certain retail stores as part of its Capri Retail Store Optimization Program.
During the three months ended June 26, 2021, the Company closed 10 of its retail stores, which have been incorporated into the Capri Retail Store Optimization Program. Net restructuring charges recorded in connection with the Capri Retail Store Optimization Program during the three months ended June 26, 2021 were $(3) million.

Other Restructuring Charges
In addition to the restructuring charges related to the completed Capri Retail Store Optimization Program, the Company did not record costs for the three months ended July 2, 2022. During the three months ended June 26, 2021, the Company recorded costs of $1 million, primarily relating to closures of certain corporate locations.
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Other Costs
The Company recorded costs of $3 million and $5 million during the three months ended July 2, 2022 and June 26, 2021, respectively, primarily related to equity awards associated with the acquisition of Versace.

9. Debt Obligations
The following table presents the Company’s debt obligations (in millions):
July 2,
2022
April 2,
2022
Revolving Credit Facilities$922 $175 
Senior Notes due 2024450 450 
Term Loan 497 
Other49 42 
Total debt 1,421 1,164 
Less: Unamortized debt issuance costs1 3 
Less: Unamortized discount on senior notes1 1 
Total carrying value of debt1,419 1,160 
Less: Short-term debt37 29 
Total long-term debt
$1,382 $1,131 
On July 1, 2022, the Company entered into a revolving credit facility (the “2022 Credit Facility”) with, among others, JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), as administrative agent (the “Administrative Agent”), which refinanced its existing senior unsecured revolving credit facility. The Company, a U.S. subsidiary of the Company, a Canadian subsidiary of the Company, a Dutch subsidiary of the Company and a Swiss subsidiary of the Company are the borrowers under the 2022 Credit Facility, and the borrowers and certain subsidiaries of the Company provide unsecured guaranties of the 2022 Credit Facility. The 2022 Credit Facility replaced the third amended and restated senior unsecured credit facility, dated as of November 15, 2018 (the “2018 Credit Facility”).
The 2022 Credit Facility provides for a $1.5 billion revolving credit facility (the “2022 Revolving Credit Facility”), which may be denominated in U.S. Dollars and other currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs. The 2022 Revolving Credit Facility also includes sub-facilities for the issuance of letters of credit of up to $125 million and swing line loans at the Administrative Agent’s discretion of up to $100 million. The Company has the ability to expand its borrowing availability under the 2022 Credit Facility in the form of increased revolving commitments or one or more tranches of term loans by up to an additional $500 million, subject to the agreement of the participating lenders and certain other customary conditions.
Borrowings under the 2022 Credit Facility bear interest, at the Company’s option, at the following rates:
For loans denominated in U.S. Dollars, (A) an alternate base rate, which is the greatest of (a) the prime rate publicly announced from time to time by JPMorgan Chase, (b) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate and zero, plus 50 basis points, and (c) the greater of term SOFR for an interest period of one month plus 10 basis points and zero, plus 100 basis points, (B) the greater of term SOFR for the applicable interest period plus 10 basis points (“Adjusted Term SOFR”) and zero or (C) the greater of daily simple SOFR plus 10 basis points and zero;
For loans denominated in Pounds Sterling, the greater of Secured Overnight Index Average (“SONIA”) and zero;
For loans denominated in Swiss Francs, the greater of Swiss Average Rate Overnight (“SARON”) and zero;
For loans denominated in Euro, the greater of Euro Interbank Offer Rate (“EURIBOR”) for the applicable interest period adjusted for statutory reserve requirements (“Adjusted EURIBOR Rate”) and zero;
For loans denominated in Canadian Dollars, the greater of the rate applicable to Canadian Dollar Canadian banker’s acceptances quoted on Reuters for the applicable interest period adjusted for statutory reserve requirements (“Adjusted CDOR Rate”) and zero; and
For loans denominated in Japanese Yen, the greater of Tokyo Interbank Offer Rate (“TIBOR”) for the applicable interest period adjusted for statutory reserve requirements (“Adjusted TIBOR Rate”) and zero; in each case, plus an applicable margin based on the Company’s public debt ratings and/or net leverage ratio.
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The 2022 Credit Facility provides for an annual administration fee and a commitment fee equal to 7.5 basis points to 17.5 basis points per annum, which was 15.0 basis points as of July 2, 2022. The fees are based on the Company’s public debt ratings and/or net leverage ratio, applied to the average daily unused amount of the 2022 Credit Facility.
Loans under the 2022 Credit Facility may be prepaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than customary “breakage” costs with respect to loans bearing interest based upon Adjusted Term SOFR, the Adjusted EURIBOR Rate, the Adjusted CDOR Rate and the Adjusted TIBOR Rate.

The 2022 Credit Facility requires the Company to maintain a net leverage ratio as of the end of each fiscal quarter of no greater than 4.0 to 1.0. Such net leverage ratio is calculated as the ratio of the sum of total indebtedness as of the date of the measurement plus the capitalized amount of all operating lease obligations, minus unrestricted cash and cash equivalents not to exceed $200 million, to Consolidated EBITDAR for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus provision for taxes based on income, profits or capital, net interest expense, depreciation and amortization expense, consolidated rent expense and other non-cash losses, charge and expenses, subject to certain additions and deductions. The 2022 Credit Facility also includes covenants that limit additional indebtedness, liens, acquisitions and other investments, restricted payments and affiliate transactions.

The 2022 Credit Facility also contains events of default customary for financings of this type, including, but not limited to, payment defaults, material inaccuracy of representations and warranties, covenant defaults, cross-defaults to certain indebtedness, certain events of bankruptcy or insolvency, certain events under the Employee Retirement Income Security Act, material judgments, actual or asserted failure of any guaranty supporting the 2022 Credit Facility to be in full force and effect, and changes of control. If such an event of default occurs and is continuing, the lenders under the 2022 Credit Facility would be entitled to take various actions, including, but not limited to, terminating the commitments and accelerating amounts outstanding under the 2022 Credit Facility.
As of July 2, 2022, and the date these financial statements were issued, the Company was in compliance with all covenants related to the 2022 Credit Facility.
As of July 2, 2022, the Company had $922 million of borrowings outstanding under the 2022 Revolving Credit Facility and $175 million of borrowings outstanding under revolver in the 2018 Credit Facility as of April 2, 2022. In addition, stand-by letters of credit of $21 million were outstanding as of both July 2, 2022 and April 2, 2022. At July 2, 2022, the amount available for future borrowings under the 2022 Revolving Credit Facility was $557 million and $804 million for future borrowings under the revolver in the 2018 Credit Facility as of April 2, 2022.
As of July 2, 2022, the Company no longer had a term loan facility outstanding. As of April 2, 2022, the carrying value of term loan outstanding under the 2018 Credit Facility was $495 million, which was recorded within long-term debt in the Company’s consolidated balance sheets.
As of July 2, 2022, the Company had $7 million of deferred financing fees associated with the 2022 Credit Facility and $3 million of deferred financing fees associated with the 2018 Credit Facility as of April 2, 2022, which were recorded within other assets in the Company’s consolidated balance sheets.
The Company offers a supplier financing program which enables suppliers, at their sole discretion, to sell their receivables (i.e., the Company’s payment obligations to suppliers) to a financial institution on a non-recourse basis in order to be paid earlier than current payment terms provide. The Company’s obligations, including the amount due and scheduled payment dates, are not impacted by a suppliers’ decision to participate in this program. The Company does not reimburse suppliers for any costs they incur to participate in the program and their participation is voluntary. The amount outstanding under this program as of July 2, 2022 and April 2, 2022 was $36 million and $21 million, respectively, and is presented as short-term debt in the Company’s consolidated balance sheets.
During Fiscal 2022, the Company's subsidiary, Versace, entered into an agreement with Banco BPM Banking Group (“the Bank”) to sell certain tax receivables to the Bank in exchange for cash. The arrangement was determined to be a financing arrangement because the de-recognition criteria for the receivables was not met at the time of the cash receipt from the Bank. As of July 2, 2022, the outstanding balance was $10 million, with $1 million and $9 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively. As of April 2, 2022, the outstanding balance was $18 million, with $8 million and $10 million recorded within short-term debt and long-term debt in the Company’s consolidated balance sheets, respectively.
See Note 11 to the Company’s Fiscal 2022 Annual Report on Form 10-K for additional information regarding the Company’s credit facilities and debt obligations.
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10. Commitments and Contingencies
In the ordinary course of business, the Company is party to various legal proceedings and claims. Although the outcome of such claims cannot be determined with certainty, the Company believes that the outcome of all pending legal proceedings, in the aggregate, will not have a material adverse effect on its cash flow, results of operations or financial position.
Please refer to the Contractual Obligations and Commercial Commitments disclosure within the Liquidity and Capital Resources section of the Company’s Annual Report on Form 10-K for the fiscal year ended April 2, 2022 for a detailed disclosure of other commitments and contractual obligations as of April 2, 2022.

11. Fair Value Measurements
Financial assets and liabilities are measured at fair value using the three-level valuation hierarchy for disclosure of fair value measurements. The determination of the applicable level within the hierarchy of a particular asset or liability depends on the inputs used in the valuation as of the measurement date, notably the extent to which the inputs are market-based (observable) or internally derived (unobservable). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date.
Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data.
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

At July 2, 2022 and April 2, 2022, the fair values of the Company’s derivative contracts were determined using broker quotations, which were calculations derived from observable market information: the applicable currency rates at the balance sheet date and those forward rates particular to the contract at inception. The Company makes no adjustments to these broker obtained quotes or prices, but assesses the credit risk of the counterparty and would adjust the provided valuations for counterparty credit risk when appropriate. The fair values of the forward contracts are included in prepaid expenses and other current assets, and in accrued expenses and other current liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities to the Company. The fair values of net investment hedges and interest rate swaps are included in other assets, and in other long-term liabilities in the consolidated balance sheets, depending on whether they represent assets or liabilities of the Company. See Note 12 for further detail.
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All contracts are measured and recorded at fair value on a recurring basis and are categorized in Level 2 of the fair value hierarchy, as shown in the following table (in millions):
 
Fair value at July 2, 2022 using:
Fair value at April 2, 2022 using:
 Quoted prices in
active markets for
identical assets
(Level 1)
Significant
other observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Quoted prices in
active markets for
identical assets
(Level 1)
Significant
other observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Derivative assets:
Forward foreign currency exchange contracts
$ $8 $ $ $4 $ 
Net investment hedges 166   44  
Undesignated derivative contracts 1   4  
Total derivative assets$ $175 $ $ $52 $ 
Derivative liabilities:
Net investment hedges$ $4 $ $ $37 $ 
Total derivative liabilities$ $4 $ $ $37 $ 
The Company’s long-term debt obligations are recorded in its consolidated balance sheets at carrying values, which may differ from the related fair values. The fair value of the Company’s long-term debt is estimated using external pricing data, including any available quoted market prices and based on other debt instruments with similar characteristics. Borrowings under revolving credit agreements, if outstanding, are recorded at carrying value, which approximates fair value due to the frequent nature of such borrowings and repayments. See Note 9 for detailed information related to carrying values of the Company’s outstanding debt. The following table summarizes the carrying values and estimated fair values of the Company’s short- and long-term debt, based on Level 2 measurements (in millions):
July 2, 2022April 2, 2022
Carrying
Value
Estimated
Fair Value