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 12 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.

As of March 28, 2020, the Company had one fixed-to-fixed cross-currency swap agreement with a notional amount of $44 million to hedge its net investment in Japanese Yen-denominated subsidiaries against future volatility in the exchange rate between the U.S. Dollar and the Japanese Yen. Under the term of this contract, which has a maturity date of November 2024, the Company will exchange the semi-annual fixed rate payments on U.S. denominated debt for fixed rate payments of 0.89% in Japanese Yen. This contract has been designated as a net investment hedge.

During the fourth quarter of Fiscal 2020, the Company terminated all of its net investment hedges related to its Euro-denominated subsidiaries. The early termination of these hedges resulted in the Company receiving $296 million in cash during the fourth quarter of Fiscal 2020. This resulted in a pre-tax gain of $211 million being recognized in OCI during the fourth quarter of Fiscal 2020.

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 $71 million and $17 million, respectively, during Fiscal 2020 and 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 28, 2020 and March 30, 2019 (in millions):


					Fair Values
	Notional Amounts							Assets							Liabilities ⁽²⁾
	March 28, 2020		March 30, 2019		March 28, 2020			March 30, 2019			March 28, 2020		March 30, 2019
Designated forward foreign currency exchange contracts	$	161	$	166	$	1	⁽¹⁾	$	5	⁽¹⁾	$	—	$	—
Designated net investment hedge	44		2,234		3		⁽³⁾	37		⁽³⁾	—		—
Total designated hedges	205		2,400		4			42			—		—
Undesignated derivative contracts ⁽⁴⁾	—		199		—			—			—		5
Total	$	205	$	2,599	$	4		$	42		$	—	$	5

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 set-off amounts for similar transactions denominated in the same currencies, the resulting impact as of March 28, 2020 and March 30, 2019 would be as follows (in millions):


	Forward Currency Exchange Contracts						Net Investment Hedges
	March 28, 2020		March 30, 2019		March 28, 2020		March 30, 2019
Assets subject to master netting arrangements	$	1	$	5	$	3	$	37
Liabilities subject to master netting arrangements	$	—	$	5	$	—	$	—
Derivative assets, net	$	1	$	5	$	3	$	37
Derivative liabilities, net	$	—	$	5	$	—	$	—

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 net 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 28, 2020		Fiscal Year Ended March 30, 2019		Fiscal Year Ended March 31, 2018
	Pre-Tax Gains Recognized in OCI		Pre-Tax Gains Recognized in OCI		Pre-Tax Loss Recognized in OCI
Designated forward foreign currency exchange contracts	$	6	$	16	$	(22)
Designated net investment hedges	$	264	$	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 2020 and Fiscal 2019 (in millions):


	Fiscal Year Ended
	Pre-Tax Losses (Gains) Reclassified from Accumulated OCI							Location of Losses (Gains) Recognized							Total Cost of Sales
	March 28, 2020		March 30, 2019		March 31, 2018						March 28, 2020			March 30, 2019			March 31, 2018
Designated forward currency exchange contracts	$	(10)	$	4	$	4	Cost of Sales		$	2,280		$	2,058		$	1,860

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.

During Fiscal 2020, Fiscal 2019 and Fiscal 2018, the Company recognized an immaterial amount of net gains, net losses of $78 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.