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Fair Value Measurements | 9 Months Ended
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Dec. 31, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 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 December 31, 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 value of net investment hedges is 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. 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 December 31, 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 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 4 |  |  | $ | — |
Net investment hedges | — |  |  | — |  |  | — |  |  | — |  |  | 44 |  |  | — |
Undesignated derivative contracts | — |  |  | — |  |  | — |  |  | — |  |  | 4 |  |  | — |
Total derivative assets | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 52 |  |  | $ | — |
Derivative liabilities: |  |  |  |  |  |  |  |  |  |  |
Net investment hedges | $ | — |  |  | $ | 41 |  |  | $ | — |  |  | $ | — |  |  | $ | 37 |  |  | $ | — |
Total derivative liabilities | $ | — |  |  | $ | 41 |  |  | $ | — |  |  | $ | — |  |  | $ | 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):
| December 31, 2022 |  | April 2, 2022
| Carrying Value |  | Estimated Fair Value |  | Carrying Value |  | Estimated Fair Value
Revolving Credit Facilities | $ | 580 |  |  | $ | 580 |  |  | $ | 175 |  |  | $ | 175 |
Versace Term Loan | $ | 481 |  |  | $ | 481 |  |  | $ | — |  |  | $ | — |
Senior Notes due 2024 | $ | 448 |  |  | $ | 429 |  |  | $ | 448 |  |  | $ | 451 |
2018 Term Loan | — |  |  | — |  |  | $ | 495 |  |  | $ | 490 |
The Company’s cash and cash equivalents, accounts receivable and accounts payable are recorded at carrying value, which approximates fair value. Non-Financial Assets and Liabilities The Company’s non-financial assets include goodwill, intangible assets, operating lease right-of-use assets and property and equipment. Such assets are reported at their carrying values and are not subject to recurring fair value measurements. The Company’s goodwill and its indefinite-lived intangible assets (Versace and Jimmy Choo brands) are assessed for impairment at least annually, while its other long-lived assets, including operating lease right-of-use assets, property and equipment and definite-lived intangible assets, are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company determines the fair values of these assets based on Level 3 measurements using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations. The Company recorded $1 million and $12 million in impairment charges during the three and nine months ended December 31, 2022, respectively. The Company recorded $10 million and $43 million in impairment charges during the three and nine months ended December 25, 2021, respectively. The following table details the carrying values and fair values of the Company’s assets that have been impaired during the three and nine months ended December 31, 2022 and the three and nine months ended December 25, 2021 (in millions):
| Three Months Ended December 31, 2022 |  | Nine Months Ended December 31, 2022 |  |
| Carrying Value Prior to Impairment |  | Fair Value |  | Impairment Charge |  | Carrying Value Prior to Impairment |  | Fair Value |  | Impairment Charge |  |
Operating Lease Right-of-Use Assets | $ | 2 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 27 |  |  | $ | 17 |  |  | $ | 10 |  |  |
Property and Equipment | — |  |  | — |  |  | — |  |  | 3 |  |  | 1 |  |  | 2 |  |  |
Total | $ | 2 |  |  | $ | 1 |  |  | $ | 1 |  |  | $ | 30 |  |  | $ | 18 |  |  | $ | 12 |  |  |
| Three Months Ended December 25, 2021 |  | Nine Months Ended December 25, 2021 |  |
| Carrying Value Prior to Impairment |  | Fair Value |  | Impairment Charge(1) |  | Carrying Value Prior to Impairment |  | Fair Value |  | Impairment Charge(1) |  |
Operating Lease Right-of-Use Assets | $ | 10 |  |  | $ | — |  |  | $ | 10 |  |  | $ | 93 |  |  | $ | 53 |  |  | $ | 40 |  |  |
Property and Equipment | — |  |  | — |  |  | — |  |  | 4 |  |  | 1 |  |  | 3 |  |  |
Total | $ | 10 |  |  | $ | — |  |  | $ | 10 |  |  | $ | 97 |  |  | $ | 54 |  |  | $ | 43 |  |  |
(1) Includes $10 million of impairment charges that were recorded within restructuring and other charges related to the Capri Retail Store Optimization Program for both the three and nine months ended December 25, 2021.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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