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v3.23.1

Taxes | 12 Months Ended
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Apr. 01, 2023
Income Tax Disclosure [Abstract] |
Taxes | Taxes The Company is a United Kingdom tax resident and is incorporated in the British Virgin Islands. Capri’s subsidiaries are subject to taxation in the United States and various other foreign jurisdictions are aggregated in the “Non-United States” information captioned below. Income (loss) before provision for income taxes consisted of the following (in millions):
| Fiscal Years Ended
| April 1, 2023 |  | April 2, 2022 |  | March 27, 2021
United States | $ | 85 |  |  | $ | 247 |  |  | $ | (56) |
Non-United States | 563 |  |  | 668 |  |  | 59 |
Total income before provision for income taxes | $ | 648 |  |  | $ | 915 |  |  | $ | 3 |
The provision for income taxes was as follows (in millions):
| Fiscal Years Ended |
| April 1, 2023 |  | April 2, 2022 |  | March 27, 2021 |
Current |  |  |  |  |  |
United States - Federal | $ | 62 |  |  | $ | 36 |  |  | $ | 35 |  |
United States - State | 22 |  |  | 16 |  |  | 20 |  |
Non-United States | 46 |  | (1) | 98 |  |  | 81 |  |
Total current provision for income taxes | 130 |  |  | 150 |  |  | 136 |  |
Deferred |  |  |  |  |  |
United States - Federal | (40) |  |  | 24 |  | (2) | (37) |  |
United States - State | (6) |  |  | 7 |  |  | (4) |  |
Non-United States | (55) |  |  | (89) |  | (3) | (29) |  |
Total deferred provision for income taxes | (101) |  |  | (58) |  |  | (70) |  |
Total provision for income taxes | $ | 29 |  |  | $ | 92 |  |  | $ | 66 |  |
(1)Primarily relates to the remeasurement of an Asia income tax reserve. (2)Reflects the impact of a United States tax accounting method change with respect to cost capitalization. (3)Includes an Italian valuation allowance reversal during Fiscal 2022. The Company’s provision for income taxes for the years ended April 1, 2023, April 2, 2022 and March 27, 2021 was different from the amount computed by applying the statutory U.K. income tax rates to the underlying income before provision for income taxes as a result of the following (amounts in millions):
| Fiscal Years Ended |
| April 1, 2023 |  | April 2, 2022 |  | March 27, 2021 |
| Amount |  | % (1) |  | Amount |  | % (1) |  | Amount |  | % (1) |
Provision for income taxes at the U.K. statutory tax rate | $ | 123 |  |  | 19.0 | % |  | $ | 174 |  |  | 19.0 | % |  | 1 |  |  | 19.0 | % |
Effects of global financing arrangements (2) | (78) |  |  | (12.1) | % |  | (61) |  |  | (6.7) | % |  | (24) |  |  | (953.4) | % |
Effect of changes in valuation allowances on deferred tax assets | (37) |  |  | (5.8) | % |  | (67) |  |  | (7.3) | % |  | 24 |  |  | 955.7 | % |
Liability for uncertain tax positions | (3) |  |  | (0.4) | % |  | 91 |  |  | 9.9 | % |  | 11 |  |  | 414.2 | % |
Differences in tax effects on foreign income | (1) |  |  | (0.2) | % |  | 10 |  |  | 1.1 | % |  | 13 |  |  | 522.4 | % |
Non-deductible goodwill impairment | 15 |  |  | 2.4 | % | (3) | — |  |  | — | % |  | 18 |  |  | 700.2 | % | (3)
State and local income taxes, net of federal benefit | 10 |  |  | 1.5 | % |  | 12 |  |  | 1.3 | % |  | 5 |  |  | 201.5 | % |
Share based compensation | 6 |  |  | 0.9 | % |  | 3 |  |  | 0.4 | % |  | 6 |  |  | 247.7 | % |
Withholding tax | 3 |  |  | 0.5 | % |  | 5 |  |  | 0.6 | % |  | 4 |  |  | 165.0 | % |
Brand tax basis step-up | — |  |  | — | % |  | (46) |  |  | (5.0) | % |  | — |  |  | — | % |
CARES Act tax loss carryback | — |  |  | — | % |  | (43) |  |  | (4.6) | % |  | — |  |  | — | % |
Tax rate change impact on deferred items | — |  |  | — | % |  | 21 |  |  | 2.1 | % |  | 9 |  |  | 351.3 | % |
Other (4) | (9) |  |  | (1.3) | % |  | (7) |  |  | (0.7) | % |  | (1) |  |  | (33.1) | % |
Effective tax rate | $ | 29 |  |  | 4.5 | % |  | $ | 92 |  |  | 10.1 | % |  | $ | 66 |  |  | 2,590.5 | % |
(1)Tax rates are calculated using unrounded numbers. (2)Includes the tax related impacts of hedge terminations in conjunction with global financing arrangements. (3)Attributable to goodwill impairment charges related to Jimmy Choo reporting units in Fiscal 2023 and Fiscal 2021. (4)Primarily relates to individually immaterial United States and foreign permanent adjustments. Significant components of the Company’s deferred tax assets (liabilities) consist of the following (in millions):
| Fiscal Years Ended |
| April 1, 2023 |  | April 2, 2022 |
Deferred tax assets |  |  |  |
Operating lease liabilities | $ | 442 |  |  | $ | 465 |  |
Net operating loss carryforwards | 115 |  |  | 108 |  |
Accrued interest | 70 |  |  | 20 |  |
Depreciation | 61 |  |  | 53 |  |
Sales allowances | 38 |  |  | 34 |  |
Inventories | 21 |  |  | 26 |  |
Stock compensation | 6 |  |  | 7 |  |
Payroll related accruals | 3 |  |  | 3 |  |
Other | 29 |  |  | 46 |  |
Total deferred tax assets | 785 |  |  | 762 |  |
Valuation allowance | (52) |  | (1) | (92) |  | (2)
Net deferred tax assets | 733 |  |  | 670 |  |
Deferred tax liabilities |  |  |  |
Goodwill and intangibles | (420) |  |  | (449) |  | (3)
Operating lease right-of-use-assets | (339) |  |  | (340) |  |
Derivative financial instruments | (186) |  |  | (73) |  |
Total deferred tax liabilities | (945) |  |  | (862) |  |
Net deferred tax liabilities | $ | (212) |  |  | $ | (192) |  |
(1)Includes a U.K. valuation allowance reversal during Fiscal 2023. (2)Includes an Italian valuation allowance reversal during Fiscal 2022. (3)Includes a reversal of an Italian brand intangible deferred tax liability. The Company maintains valuation allowances on deferred tax assets applicable to subsidiaries in jurisdictions for which separate income tax returns are filed and where realization of the related deferred tax assets from future profitable operations is not reasonably assured. The valuation allowance decreased $40 million and $67 million in Fiscal 2023 and Fiscal 2022, respectively, and increased $24 million in Fiscal 2021. In certain jurisdictions, the Company increased the valuation allowance by $6 million, $34 million and $56 million and released valuation allowances of $46 million, $101 million and $32 million in Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively. As of April 1, 2023, the Company had non-United States and United States net operating loss carryforwards of $581 million, a portion of which will begin to expire in Fiscal 2024. As of April 1, 2023 and April 2, 2022, the Company had liabilities related to its uncertain tax positions, including accrued interest, of $194 million and $221 million, respectively, which are included in other long-term liabilities in the Company’s consolidated balance sheets. The total amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate was $178 million, $206 million and $92 million as of April 1, 2023, April 2, 2022 and March 27, 2021, respectively. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding accrued interest, for Fiscal 2023, Fiscal 2022 and Fiscal 2021, are presented below (in millions):
| Fiscal Years Ended |
| April 1, 2023 |  | April 2, 2022 |  | March 27, 2021 |
Unrecognized tax benefits beginning balance | $ | 221 |  |  | $ | 107 |  |  | $ | 99 |  |
Additions related to prior period tax positions | 12 |  | (1) | 105 |  | (1) | 12 |  |
Additions related to current period tax positions | 14 |  | (2) | 29 |  |  | 9 |  |
Decreases related to audit settlements | (2) |  |  | (13) |  |  | (6) |  |
Decreases in prior period positions due to lapses in statute of limitations | (3) |  |  | (3) |  |  | (4) |  |
Decreases related to prior period tax positions | (42) |  | (3) | (4) |  |  | (3) |  |
Unrecognized tax benefits ending balance | $ | 200 |  |  | $ | 221 |  |  | $ | 107 |  |
(1)Primarily relates to incremental reserves in North America and Europe. (2)Primarily relates to North American and European tax reserves established in Fiscal 2023. (3)Primarily relates to Asia tax reserves. The Company classifies interest and penalties related to unrecognized tax benefits as components of the provision for income taxes. Interest and penalties recognized in the consolidated statements of operations and comprehensive income (loss) for Fiscal 2023, Fiscal 2022 and Fiscal 2021 was $42 million, $28 million and $15 million, respectively. The total amount of unrecognized tax benefits relating to the Company’s tax positions is subject to change based on future events including, but not limited to, the settlement of ongoing tax audits and assessments and the expiration of applicable statutes of limitations. The Company anticipates that the balance of gross unrecognized tax benefits, excluding interest and penalties, will be reduced by $85 million during the next 12 months, primarily due to the anticipated settlement of tax examinations as well as statute of limitation expirations. However, the outcomes and timing of such events are highly uncertain and changes in the occurrence, expected outcomes and timing of such events could cause the Company’s current estimate to change materially in the future. The Company files income tax returns in the United States and in various foreign, state and local jurisdictions. Most examinations have been completed by tax authorities or the statute of limitations has expired for United States federal, foreign, state and local income tax returns filed by the Company for years through Fiscal 2017. Prior to the enactment of the Tax Cuts and Jobs Act (“Tax Act”), the Company’s undistributed foreign earnings were considered permanently reinvested and, as such, United States federal and state income taxes were not previously recorded on these earnings. As a result of the Tax Act, substantially all of the Company’s earnings in foreign subsidiaries generated prior to the enactment of the Tax Act were deemed to have been repatriated. It remains the Company’s intent to either reinvest indefinitely substantially all of its foreign earnings outside of the United States or repatriate them tax neutrally. However, if future earnings are repatriated, the potential exists that the Company may be required to accrue and pay additional taxes, including any applicable foreign withholding tax and income taxes. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
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