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Derivative Financial Instruments | 12 Months Ended
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Mar. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | Derivative Financial Instruments During the first quarter of Fiscal 2019, the Company early-adopted the new hedge accounting guidance prescribed by ASU 2017-12. The cumulative impact of adoption, which related to elimination of ineffectiveness for the Company’s designated forward foreign currency exchange contracts, was recorded within retained earnings as of the beginning of Fiscal 2019. See Note 2 for additional information. Forward Foreign Currency Exchange Contracts The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain of its transactions. The Company, in its normal course of business, enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes. On September 24, 2018, in connection with the acquisition of Versace, the Company entered into forward foreign currency exchange contracts with a total notional amount of €1.680 billion (approximately $2.001 billion) to mitigate its foreign currency exchange risk through the expected closing date of the acquisition. These derivative contracts were not designated as accounting hedges and were settled on December 21, 2018 as a result of the debt issued in connection with the acquisition of Versace (see Note 11 for further information). Changes in fair value were recorded to foreign currency (gain) loss in the Company’s consolidated statement of operations and comprehensive income for Fiscal 2019. On July 25, 2017, in connection with the acquisition of Jimmy Choo, which closed on November 1, 2017, the Company entered into a forward foreign currency exchange contract with a notional amount of £1.115 billion (approximately $1.469 billion) to mitigate its foreign currency exchange risk through the date of the acquisition. This derivative contract was not designated as an accounting hedge and was settled on October 30, 2017. Changes in fair value were recorded to foreign currency (gain) loss in the Company’s consolidated statement of operations and comprehensive income for the Fiscal 2018. Net Investment Hedges During Fiscal 2019, the Company entered into fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $2.190 billion to hedge its net investment in Euro-denominated subsidiaries and $44 million to hedge its net investment in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between U.S. Dollar and these currencies. Under the terms of these contracts, which have maturity dates between January 2022 and November 2024, the Company will exchange the semi-annual fixed rate payments made under its Senior Notes for fixed rate payments of 0% to 1.718% in Euros and 0.89% in Japanese Yen. These contracts have been designated as net investment hedges. When a cross-currency swap is used as a hedging instrument in a net investment hedge assessed under the spot method, the cross-currency basis spread is excluded from the assessment of hedge effectiveness and is recognized as a reduction in interest expense in the Company’s consolidated statements of operations and comprehensive income. Accordingly, the Company recorded a reduction in interest expense of $17 million during Fiscal 2019. The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of March 30, 2019 and March 31, 2018 (in millions):
|  |  |  |  | Fair Values
| Notional Amounts |  | Assets |  | Liabilities (2)
| March 30, 2019 |  | March 31, 2018 |  | March 30, 2019 |  | March 31, 2018 |  | March 30, 2019 |  | March 31, 2018
Designated forward foreign currency exchange contracts | $ | 166 |  |  | $ | 162 |  |  | $ | 5 |  | (1) | $ | — |  |  | $ | — |  |  | $ | 8 |
Designated net investment hedge | 2,234 |  |  | — |  |  | 37 |  | (3) | — |  |  | — |  |  | — |
Total designated hedges | $ | 2,400 |  |  | $ | 162 |  |  | $ | 42 |  |  | $ | — |  |  | $ | — |  |  | $ | 8 |
Undesignated derivative contracts (4) | 199 |  |  | — |  |  | — |  |  | — |  |  | 5 |  |  | — |
Total | $ | 2,599 |  |  | $ | 162 |  |  | $ | 42 |  |  | $ | — |  |  | $ | 5 |  |  | $ | 8 |
(1) | Recorded within prepaid expenses and other current assets in the Company’s audited consolidated balance sheets.
(2) | Recorded within accrued expenses and other current liabilities in the Company’s audited consolidated balance sheets.
(3) | Recorded within other assets in the Company’s audited consolidated balance sheets.
(4) | Primarily includes undesignated hedges of foreign currency denominated intercompany balances and inventory purchases.
The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheets on a gross basis, as shown in the above table. However, if the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to setoff amounts for similar transactions denominated in the same currencies, the resulting impact as of March 30, 2019 and March 31, 2018 would be as follows (in millions):
| Forward Currency Exchange Contracts |  | Net Investment Hedges
| March 30, 2019 |  | March 31, 2018 |  | March 30, 2019 |  | March 31, 2018
Assets subject to master netting arrangements | $ | 5 |  |  | $ | — |  |  | $ | 37 |  |  | $ | — |
Liabilities subject to master netting arrangements | $ | 5 |  |  | $ | 8 |  |  | $ | — |  |  | $ | — |
Derivative assets, net | $ | 5 |  |  | $ | — |  |  | $ | 37 |  |  | $ | — |
Derivative liabilities, net | $ | 5 |  |  | $ | 8 |  |  | $ | — |  |  | $ | — |
The Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. Changes in the fair value of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income (loss), and are reclassified from accumulated other comprehensive income (loss) into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of sales within the Company’s consolidated statements of operations and comprehensive income (loss). The net gain or loss on net investment hedges are reported within foreign currency translation gains and losses (“CTA”) as a component of accumulated other comprehensive income (loss) on the Company’s consolidated balance sheets. Upon discontinuation of the hedge, such amounts remain in CTA until the related investment is sold or liquidated. The following table summarizes the pre-tax impact of the gains and losses on the Company's designated forward foreign currency exchange contracts and net investment hedges (in millions):
| Fiscal Year Ended March 30, 2019 |  | Fiscal Year Ended March 31, 2018 |  | Fiscal Year Ended April 1, 2017
| Pre-Tax Gains Recognized in OCI |  | Pre-Tax Loss Recognized in OCI |  | Pre-Tax Gain Recognized in OCI
Designated forward foreign currency exchange contracts | $ | 16 |  |  | $ | (22 | ) |  | $ | 10 |
Designated net investment hedges | $ | 47 |  |  | $ | — |  |  | $ | — |
The following tables summarize the impact of the gains and losses within the consolidated statements of operations and comprehensive income related to the designated forward foreign currency exchange contracts for Fiscal 2019 and Fiscal 2018 (in millions):
| Fiscal Year Ended
| Pre-Tax Loss Reclassified from Accumulated OCI |  | Location of Loss recognized |  | Total Cost of Sales
| March 30, 2019 |  | March 31, 2018 |  | April 1, 2017 |  |  | March 30, 2019 |  | March 31, 2018 |  | April 1, 2017
Designated forward currency exchange contracts | $ | 4 |  |  | $ | 4 |  |  | $ | — |  |  | Cost of Sales |  | $ | 2,058 |  |  | $ | 1,860 |  |  | $ | 1,833 |
The Company expects that substantially all of the amounts recorded in accumulated other comprehensive income (loss) for its forward foreign currency exchange contracts will be reclassified into earnings during the next 12 months, based upon the timing of inventory purchases and turnover. Undesignated Hedges During Fiscal 2019, Fiscal 2018 and Fiscal 2017, the Company recognized net losses of $78 million, net gains of $3 million and net gains of $3 million respectively, related to changes in the fair value of undesignated forward foreign currency exchange contracts within foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive income. The Fiscal 2019 amount was primarily comprised of a $77 million loss related to the derivative contracts entered into on September 25, 2018 to mitigate foreign currency exchange risk associated with the Versace acquisition that were settled on December 21, 2018. The Fiscal 2018 amount included a $5 million gain related to the derivative contract entered into on July 25, 2017 to mitigate foreign currency exchange risk associated with the Jimmy Choo acquisition that was settled on October 30, 2017.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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