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Derivative Financial Instruments | 12 Months Ended
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Mar. 27, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments | 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 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. This derivative contract was not designated as an accounting hedge and was 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 (loss) income for Fiscal 2019. Net Investment Hedges As of March 27, 2021, the Company had multiple fixed-to-fixed cross-currency swap agreements with aggregate notional amounts of $3 billion to hedge its net investment in Euro-denominated subsidiaries and $194 million to hedge its net investment in Japanese Yen-denominated subsidiaries against future volatility in the exchange rates between the U.S. Dollar and these currencies. Under the term of these contracts, the Company will exchange the semi-annual fixed rate payments on U.S. denominated debt for fixed rate payments of 0% to 4.508% in Euros and 0% to 3.588% in Japanese Yen. Certain of these contracts include mandatory early termination dates between November 2022 and February 2026, while the remaining contracts have maturity dates between July 2022 and August 2027. These contracts have been designated as net investment hedges 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 other comprehensive income (loss) ("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 (loss) income. Accordingly, the Company recorded a reduction in interest expense of $16 million, $71 million and $17 million, respectively, during Fiscal 2021, Fiscal 2020 and Fiscal 2019. Interest Rate Swap As of March 27, 2021, the Company had an interest rate swap with an initial notional amount of $500 million that will decrease to $350 million in April 2022. The swap was designated as a cash flow hedge designed to mitigate the impact of adverse interest rate fluctuations for a portion of the Company’s variable-rate debt equal to the notional amount of the swap. The interest rate swap converts the one-month Adjusted LIBOR interest rate on these borrowings to a fixed interest rate of 0.237% through December 2022. When an interest rate swap agreement qualifies for hedge accounting as a cash flow hedge, the changes in the fair value are recorded in equity as a component of accumulated other comprehensive income (loss) and are reclassified into interest expense in the same period during which the hedged transactions affect earnings. During Fiscal 2021, the Company recorded an immaterial amount of interest expense related to this agreement. 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 27, 2021 and March 28, 2020 (in millions):
|  |  |  |  | Fair Values
| Notional Amounts |  | Assets |  | Liabilities
| March 27, 2021 |  | March 28, 2020 |  | March 27, 2021 |  | March 28, 2020 |  | March 27, 2021 |  | March 28, 2020
Designated forward foreign currency exchange contracts | $ | 155 |  |  | $ | 161 |  |  | $ | 2 |  | (1) | $ | 1 |  | (1) | $ | 1 |  | (2) | $ | — |
Designated net investment hedge | 3,194 |  |  | 44 |  |  | 3 |  | (3) | 3 |  | (3) | 263 |  | (4) | — |
Designated interest rate swap | 500 |  |  | — |  |  | — |  |  | — |  |  | 1 |  | (4) | — |
Total designated hedges | 3,849 |  |  | 205 |  |  | 5 |  |  | 4 |  |  | 265 |  |  | — |
Undesignated derivative contracts (5) | 13 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 3,862 |  |  | $ | 205 |  |  | $ | 5 |  |  | $ | 4 |  |  | $ | 265 |  |  | $ | — |
(1)Recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets. (2)Recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets. (3)Recorded within other assets in the Company’s consolidated balance sheets. (4)Recorded within other long-term liabilities in the Company’s consolidated balance sheets. (5)Primarily includes undesignated hedges of 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 set-off amounts for similar transactions denominated in the same currencies, the resulting impact as of March 27, 2021 and March 28, 2020 would be as follows (in millions):
| Forward Currency Exchange Contracts |  | Net Investment Hedges |  | Interest Rate Swap
| March 27, 2021 |  | March 28, 2020 |  | March 27, 2021 |  | March 28, 2020 |  | March 27, 2021 |  | March 28, 2020
Assets subject to master netting arrangements | $ | 2 |  |  | $ | 1 |  |  | $ | 3 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
Liabilities subject to master netting arrangements | $ | 1 |  |  | $ | — |  |  | $ | 263 |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |
Derivative assets, net | $ | 1 |  |  | $ | 1 |  |  | $ | 3 |  |  | $ | 3 |  |  | $ | — |  |  | $ | — |
Derivative liabilities, net | $ | — |  |  | $ | — |  |  | $ | 263 |  |  | $ | — |  |  | $ | 1 |  |  | $ | — |
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 (loss) income. 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. Changes in the fair value of the Company’s interest rate swaps 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 interest expense within the Company’s consolidated statements of operations and comprehensive (loss) income. The following table summarizes the pre-tax impact of the gains and losses on the Company's designated forward foreign currency exchange contracts, net investment hedges and interest rate swaps (in millions):
| Fiscal Year Ended March 27, 2021 |  | Fiscal Year Ended March 28, 2020 |  | Fiscal Year Ended March 30, 2019
| Pre-Tax Losses Recognized in OCI |  | Pre-Tax Gains Recognized in OCI |  | Pre-Tax Gains Recognized in OCI
Designated forward foreign currency exchange contracts | $ | (2) |  |  | $ | 6 |  |  | $ | 16 |
Designated net investment hedges | $ | (263) |  |  | $ | 264 |  |  | $ | 47 |
Designated interest rate swaps | $ | (1) |  |  | $ | — |  |  | $ | — |
The following tables summarize the impact of the gains and losses within the consolidated statements of operations and comprehensive (loss) income related to the designated forward foreign currency exchange contracts (in millions):
| Fiscal Year Ended
| Pre-Tax (Gains) Losses Reclassified from Accumulated OCI |  | Location of (Gains) Losses Recognized |
| March 27, 2021 |  | March 28, 2020 |  | March 30, 2019 |  |
Designated forward currency exchange contracts | $ | (2) |  |  | $ | (10) |  |  | $ | 4 |  |  | Cost of Sales |
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 2021 and Fiscal 2020, the Company recognized an immaterial amount of net gains and losses and during Fiscal 2019, the Company recognized a net loss of $78 million within foreign currency (gain) loss in the Company’s consolidated statement of operations and comprehensive (loss) income as a result of the changes in the fair value of undesignated forward foreign currency contracts. 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.

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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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