Location | Use | Approximate Square Footage | ||||
Whittier, CA | U.S. Distribution Center | 1,284,400 | ||||
| Venlo, Holland | European Distribution Center (1) | 1,076,390 | ||||
New York, NY | Corporate Offices | 262,450 | ||||
Montreal, Quebec | Canadian Corporate Office and Distribution | 205,500 | ||||
East Rutherford, NJ | Corporate Offices | 53,476 | ||||
|
| 25,403 | ||||
| Secaucus, NJ | Distribution | 22,760 | ||||
| London, England | Corporate Offices | 17,221 | ||||
| Paris, France | Corporate Offices | 16,033 | ||||
(1) | In May 2015, we acquired land in Venlo, Holland and are currently in the process of building our own distribution facility, which will support all of our European operations. The new facility is expected to begin operating in Fiscal 2017. |
Fiscal 2013 Quarter Ended: June 30, 2012 September 29, 2012 December 29, 2012 March 30, 2013 Fiscal 2014 Quarter Ended: June 29, 2013 September 28, 2013 December 28, 2013 March 29, 2014 Statement of Operations Data: Net sales Licensing revenue Total revenue Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Impairment of long-lived assets Total operating expenses Income from operations Interest expense, net Foreign currency loss (gain) Income before provision for income taxes Provision for income taxes Net income Net income applicable to preference shareholders Net income available for ordinary shareholders Weighted average ordinary shares outstanding(1): Basic Diluted Net income per ordinary share(2): Basic Diluted Operating Data: Comparable retail store sales growth Retail stores, including concessions, at end of period Balance Sheet Data (as of the end of period dated above): Working capital Total assets Revolving line of credit Note payable to parent Shareholders’ equity Number of ordinary shares Number of preference shares Operations see Note 3 to the accompanying consolidated financial statements for additional information). In addition, on January 1, 2016, we assumed direct control over the previously licensed business in South Korea. During the first quarter of Fiscal 2017, we plan to further expand our global presence by acquiring certain of our currently licensed operations in the Greater China region (see Note 21 to the accompanying consolidated financial statements for additional information). flows to the extent they occur. We use commercially reasonable efforts to mitigate these effects by sourcing our products as efficiently as possible. In addition, manufacturing labor costs are also subject to degrees of volatility based on local and global economic conditions. We use commercially reasonable efforts to source from localities that suit our manufacturing standards and result in more favorable labor driven costs to our products. While our significant accounting policies are detailed in Note 2 to the accompanying financial statements, our critical accounting policies are discussed below and include revenue recognition, inventories, impairment of long-lived assets, goodwill, share-based compensation, derivatives and income taxes. forecasted performance, and market conditions, which are reviewed by management on a quarterly basis. Our historical estimates of these costs were not materially different from actual results. See Note 6 to the accompanying consolidated audited financial statements for additional information. time for those grants which have only time-based vesting requirements. Prepaid expenses and other current assets Accrued expenses and other current liabilities credit exposure. Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes," which eliminated the prior requirement to present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. ASU 2015-17 will require all deferred tax assets and liabilities to be classified as noncurrent. ASU 2015-17 is effective beginning with our Fiscal 2018, with earlier application permitted. We elected to early adopt ASU 2015-17 during the third quarter of Fiscal 2016 on a retrospective basis. As of March 28, 2015, previously recorded current deferred tax assets and liabilities of $27.7 million and $3.7 million, respectively, were subject to reclassification to noncurrent. Our balance sheet as of March 28, 2015 also reflects a $7.3 million reclassification between total deferred tax assets and deferred tax liabilities due to the fact that jurisdictional netting is not impacted by ASU 2015-17. 2017, or beginning with our fiscal year 2019. This standard may be applied retrospectively to all prior periods presented, or retrospectively with a cumulative adjustment to retained earnings in the year of adoption. We are currently evaluating the adoption method and the impact that ASU 2014-09 will have on our consolidated financial statements and related disclosures. Revenue: Net sales: Retail Wholesale Licensing Total revenue Income from operations: Retail Wholesale Licensing Income from operations Full price retail stores including concessions: Number of stores Increase during period Percentage increase vs. prior year Total gross square footage Average square footage per store Outlet stores: Number of stores Increase during period Percentage increase vs. prior year Total gross square footage Average square footage per store 2014: Number of full-price wholesale doors Increase during period Percentage increase vs. prior year 2014: On January 1, 2016, our licensing agreement in South Korea expired and we acquired direct control of the related retail and wholesale operations. In addition, we plan to acquire certain of our licensed operations in the Greater China region during the first quarter of Fiscal 2017. Total revenue Gross profit as a percent of total revenue Income from operations Retail net sales - North America Retail net sales - Europe Retail net sales - Japan Increase in comparable store net sales - North America Increase in comparable store net sales - Europe Increase in comparable store net sales - Japan Wholesale net sales - North America Wholesale net sales - Europe 2015 Statements of Operations Data: Net sales Licensing revenue Total revenue Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Impairment of long-lived assets Total operating expenses Income from operations Interest expense, net Foreign currency loss Income before provision for income taxes Provision for income taxes Net income partially offset by lower comparable retail store sales. Revenue: Net sales: Retail Wholesale Licensing Total revenue 28, 2015 (including 14 stores included as a result of obtaining controlling interest in MK Panama and 36 stores acquired in connection with the MK Korea acquisition) and approximately 14% was attributable to non-comparable sales from our e-commerce sites in the Americas, which included our U.S. e-commerce store sales through the second quarter of Fiscal 2016. Fiscal 2016 included approximately $33.7 million of incremental net retail sales attributable to the inclusion of the 53rd week. 2015. sales outside the U.S. than in prior year. detailed below. 2015. 2015. that were still in operation. 2015. Income from Operations: Retail Wholesale Licensing Income from operations stores. previously discussed. 2016 was primarily comprised of a $3.7 million gain on acquisition of MK Korea (see Note 3 to the accompanying consolidated financial statements) and $1.0 million in income related to our anti-counterfeiting efforts, partially offset by $1.0 million of losses related to our joint venture, which were recorded under the equity method of accounting prior to obtaining controlling interest in MK Panama during the second quarter of Fiscal 2016. During Fiscal 2015, other income of $1.6 million was primarily comprised of $1.5 million in income related to our anti-counterfeiting efforts. 2016. subsidiaries. 2015 effective tax rate was also favorably impacted by the settlement of certain financial instruments in connection with our international income tax structuring. Attributable to Noncontrolling Interest 2015, which included unfavorable foreign currency effects of $38.1 million. 2014 Statements of Operations Data: Net sales Licensing revenue Total revenue Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Impairment of long-lived assets Total operating expenses Income from operations Interest expense, net Foreign currency loss (gain) Income before provision for income taxes Provision for income taxes Net income Revenue: Net sales: Retail Wholesale Licensing Total revenue 29, 2014 and sales from our e-commerce site. 2014. watches, jewelry and winter outerwear. 2014. revenue. 2014. 2015 and three retail locations in Fiscal 2014. 2014. % of Net Sales/ % of Net Sales/ Income from Operations: Retail Wholesale Licensing Income from operations doors. a gain of $0.1 million earned on our joint venture. applicable reporting units. MKHL 2014. Balance Sheet Data: Cash and cash equivalents Working capital Total assets Cash Flows Provided By (Used In): Operating activities Investing activities Financing activities Effect of exchange rate changes Net increase in cash and cash equivalents 2015. option arrangements. minimum tax withholding obligations relating to the vesting of restricted share awards. Fiscal year ending Operating leases these contracts. Procedures 3.1 4.1 4.3 10.2 10.3 10.5 10.9 21.1 23.2 31.1 31.2 32.1 32.2 101.1 /s/ John D. Idol Chairman, Chief Executive Officer and Director (Principal Executive Officer) /s/ Joseph B. Parsons Chief Financial /s/ M. William Benedetto /s/ Stephen F. Reitman /s/ Ann McLaughlin Korologos /s/ Jean Tomlin /s/ Judy Gibbons audits. thereon. Current assets Cash and cash equivalents Receivables, net Inventories Deferred tax assets Prepaid expenses and other current assets Total current assets Property and equipment, net Intangible assets, net Goodwill Deferred tax assets Other assets Total assets Current liabilities Accounts payable Accrued payroll and payroll related expenses Accrued income taxes Accrued expenses and other current liabilities Total current liabilities Deferred rent Deferred tax liabilities Other long-term liabilities Total liabilities Commitments and contingencies Shareholders’ equity Ordinary shares, no par value; 650,000,000 shares authorized, and 204,291,345 shares issued and outstanding at March 29, 2014, and 201,454,408 shares issued and outstanding at March 30, 2013 Treasury shares, at cost (29,765 shares at March 29, 2014) Additional paid-in capital Accumulated other comprehensive loss Retained earnings Total shareholders’ equity Total liabilities and shareholders’ equity Net sales Licensing revenue Total revenue Cost of goods sold Gross profit Selling, general and administrative expenses Depreciation and amortization Impairment of long-lived assets Total operating expenses Income from operations Interest expense, net Foreign currency loss (gain) Income before provision for income taxes Provision for income taxes Net income Net income applicable to preference shareholders Net income available for ordinary shareholders Weighted average ordinary shares outstanding: Basic Diluted Net income per ordinary share: Basic Diluted Statements of Comprehensive Income: Net income Foreign currency translation adjustments Net realized and unrealized (losses) gains on derivatives Comprehensive income Balance at April 2, 2011 Net income Foreign currency translation adjustment Total comprehensive income Issuance of shares in exchange for note Elimination of contingent redemption on ordinary shares Issuance of convertible preference shares Issuance of restricted shares Exercise of employee share options Equity compensation expense Tax benefits on exercise of share options Contributed capital-services provided by former parent Conversion of convertible preference shares Balance at March 31, 2012 Net income Foreign currency translation adjustment Net unrealized gain on derivatives (net of taxes of $0.1 million) Total comprehensive income Issuance of restricted shares Exercise of employee share options Equity compensation expense Tax benefits on exercise of share options Contributed capital-services provided by former parent Balance at March 30, 2013 Net income Foreign currency translation adjustment Net unrealized loss on derivatives (net of taxes of $0.4 million) Total comprehensive income Issuance of restricted shares Exercise of employee share options Equity compensation expense Tax benefits on exercise of share options Purchase of Treasury Shares Balance at March 29, 2014 data which is in thousands) Cash flows from operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Impairment and write-off of property and equipment Loss on disposal of fixed assets Unrealized foreign exchange loss (gain) Income earned on joint venture Amortization of deferred financing costs Amortization of deferred rent Deferred income taxes Equity compensation expense Tax benefits on exercise of share options Non-cash charges for services provided by former parent Change in assets and liabilities: Receivables, net Inventories Prepaid expenses and other current assets Other assets Accounts payable Accrued expenses and other current liabilities Other long-term liabilities Net cash provided by operating activities Cash flows from investing activities Capital expenditures Equity method investments Loans receivable-joint venture Purchase of intangible assets Net cash used in investing activities Cash flows from financing activities Repayments of borrowings under revolving credit agreement Borrowings under revolving credit agreement Proceeds from private placement Exercise of employee share options Purchase of Treasury Shares Tax benefits on exercise of share options Payment of deferred financing costs Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Beginning of period End of period Supplemental disclosures of cash flow information Cash paid for interest Cash paid for income taxes Supplemental disclosure of noncash investing and financing activities Accrued capital expenditures through geographic licenses. eliminated in consolidation. These estimates are based on such factors as historical trends, actual and forecasted performance, and market conditions, which are reviewed by management on a quarterly basis. Retail Return Reserves: Year ended March 29, 2014 Year ended March 30, 2013 Year ended March 31, 2012 Wholesale Total Sales Reserves: Year ended March 29, 2014 Year ended March 30, 2013 Year ended March 31, 2012 Included in the Company’s cash and cash equivalents as of April 2, 2016 and March 28, 2015 are credit card receivables of $14.5 million and $15.8 million, respectively, which generally settle within two to three business days. have not differed materially from actual results. Maintenance and repairs are charged to expense in the year incurred. four years. all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying value of the reporting unit goodwill exceeded the implied fair value of the reporting unit goodwill, the Company would record an impairment loss to write down such goodwill to its implied fair value. The valuation of goodwill is affected by, among other things, the Company’s business plan for the future and estimated results of future operations. Fiscal 2016. Prepaid expenses and other current assets Accrued expenses and other current liabilities hedged item, within cash from operating activities. period. Diluted net income per ordinary share reflects the potential dilution that would occur if share option grants or any other potentially dilutive treasury stock method. Numerator: Net Income Net income applicable to preference shareholders Denominator: Basic weighted average ordinary shares Weighted average dilutive share equivalents: Share options and restricted shares/units Convertible preference shares Diluted weighted average ordinary shares Basic net income per ordinary share Diluted net income per ordinary share 2017, or beginning with the Company’s fiscal year 2019. This standard may be applied retrospectively to all prior periods presented, or retrospectively with a cumulative adjustment to retained earnings in the year of adoption. The Company is currently evaluating the adoption method and the impact that ASU 2014-09 will have on its consolidated financial statements and related disclosures. Trade receivables: Credit risk assumed by factors/insured Credit risk retained by Company Receivables due from licensees Less allowances: 28, 2015. No other customer accounted for 10% or more of the Company’s total revenues during Fiscal 2016, Fiscal 2015, or Fiscal 2014. Furniture and fixtures Equipment Computer equipment and software In-store shops Leasehold improvements Less: accumulated depreciation and amortization Construction-in-progress operation. Trademarks Lease Rights Goodwill Fiscal 2015 Fiscal 2016 Fiscal 2017 Fiscal 2018 Fiscal 2019 Thereafter Professional services Advance royalty Inventory purchases Sales tax payable Unrealized loss on foreign exchange contracts Advertising Accrued rent Other expires on October 29, 2020. April 2, 2016 are as follows (in millions): Minimum rentals Contingent rent Total rent expense Fiscal year ending 2015 2016 2017 2018 2019 Thereafter April 2, 2016, including $10.0 million in letters of credit issued under the 2015 Credit Facility. Foreign currency forward contracts - Euro to U.S. Dollar Foreign currency forward contracts - U.S. Dollar to Euro Total table (in millions): March 28, 2015 (in millions): The following table summarizes the impact of the effective portion of Forward currency exchange contracts to grant equity awards under the 2008 Plan. The 2012 Plan allows for Outstanding at March 30, 2013 Granted Exercised Canceled/forfeited Outstanding at March 29, 2014 Vested or expected to vest at March 29, 2014 Vested and exercisable at March 29, 2014 April 2, 2016: $19.8 million, which is expected to be recognized over the related weighted-average period of approximately 2.19 years. Expected dividend yield Volatility factor Weighted average risk-free interest rate Expected life of option pre-determined maximum achievement level. Unvested at March 30, 2013 Granted Vested Canceled/forfeited Unvested at March 29, 2014 Fiscal 2016: Unvested at March 30, 2013 Granted Vested Canceled/forfeited Unvested at March 29, 2014 Fiscal 2016: 3.13 years and 1.58 years, respectively. United States Non-U.S. Total income before provision for income taxes Current U.S. Federal U.S. State Non-U.S. Total current Deferred U.S. Federal U.S. State Non-U.S. Total deferred Total provision for income taxes Federal tax at 35% statutory rate State and local income taxes, net of federal benefit Differences in tax effects on foreign income Foreign tax credit Liability for uncertain tax positions Effect of changes in valuation allowances on deferred tax assets Other Deferred tax assets Inventories Payroll related accruals Deferred rent Deferred Revenue Net operating loss carryforwards Stock compensation Sales allowances Other Valuation allowance Total deferred tax assets Deferred tax liabilities Goodwill and intangibles Depreciation Other Total deferred tax liabilities Net deferred tax (liability) assets 2024. Unrecognized tax benefits beginning balance Additions related to prior period tax positions Additions related to current period tax positions Decreases from prior period positions Unrecognized tax benefits ending balance March 30, 2013. the Wholesale segment include accessories (which include handbags and small leather goods such as wallets), footwear and women’s and men’s apparel. We also have wholesale arrangements pursuant to which we sell products to certain of our licensees, including our licensees in Asia (which were previously reported within our Americas wholesale operations). The Licensing segment includes royalties earned on licensed products and use of the Company’s trademarks, and rights granted to third parties for the right to sell the Company’s products in certain Revenue: Net sales: Retail Wholesale Licensing Total revenue Income from operations: Retail Wholesale Licensing Income from operations Depreciation: Retail(1) Wholesale Licensing Total depreciation Net revenues: North America (U.S. and Canada) Europe Other regions Total net revenues Long-lived assets: North America (U.S. and Canada) Europe Other regions Total Long-lived assets: operating expenses. The Company Year Ended March 29, 2014 Total Revenue Gross profit Income from operations Net income Weighted average ordinary shares outstanding: Basic Diluted Year Ended March 30, 2013 Total Revenue Gross profit Income from operations Net income Weighted average ordinary shares outstanding: Basic DilutedItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities March 29, 2014,April 2, 2016, there were 204,291,345176,441,891 ordinary shares outstanding, and the closing sale price of our ordinary shares was $92.75.$56.97. Also as of that date, we had approximately 178273 ordinary shareholders of record. The table below sets forth the high and low closing sale prices of our ordinary shares for the periods indicated: High Low $ 49.50 $ 35.50 $ 57.35 $ 37.77 $ 58.62 $ 46.66 $ 65.10 $ 49.00 $ 66.18 $ 51.63 $ 78.62 $ 60.08 $ 84.58 $ 70.59 $ 101.04 $ 74.11 High Low Fiscal 2015 Quarter Ended: June 28, 2014 $ 98.96 $ 85.71 September 27, 2014 $ 91.79 $ 71.25 December 27, 2014 $ 79.70 $ 68.25 March 28, 2015 $ 76.05 $ 63.31 Fiscal 2016 Quarter Ended: June 27, 2015 $ 66.26 $ 44.91 September 26, 2015 $ 45.37 $ 38.06 December 26, 2015 $ 43.89 $ 38.53 April 2, 2016 $ 58.54 $ 35.57 March 29, 2014,April 1, 2016, the last business day of the our fiscal year. The graph assumes an investment of $100 made at the closing of trading on December 15, 2011, in (i) our ordinary shares, (ii) the shares comprising the RUI, (iii) the shares comprising the GSPC, (iv) the shares comprising the RLX and (v) the shares comprising the NYA. The peer group consists of the following: Coach, Inc., Guess, Inc., PVH Corp., Limited Brands, Inc., and Ralph Lauren Corporation. All values assume reinvestment of the full amount of all dividends, if any, into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable time period.
has not purchased any of its ordinary shares during the fourth quarter of the fiscal 2014 year, nor has it made any plans or established any additional programs to purchase any of its ordinary shares during the same quarter. The Companyalso has in place a “withhold to cover” repurchase program, which is applicable on an ongoing basis, and allows the Company to repurchase itswithhold ordinary shares as afrom certain executive officers to satisfy minimum tax payment method forwithholding obligations relating to the vesting of their restricted share awards forawards.executive officers, none of which occurredordinary share repurchases during the fourth fiscal quarter of the Company’s fiscal 2014 year.three months ended April 2, 2016: Total Number of Shares Purchased Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs December 27 – January 23 — $ — — $ 558,054,655 January 24 – February 20 1,553,900 51.96 1,553,900 477,316,788 February 21 – April 2 2,136,785 55.81 2,136,785 358,054,655 Item 6.Selected Financial Data2014, 20132016, Fiscal 2015 and 2012Fiscal 2014 and the balance sheet data as of the end of Fiscal 20142016 and 2013Fiscal 2015 have been derived from our audited consolidated financial statements included elsewhere in this report. The statements of operations data for Fiscal 20112013 and Fiscal 20102012 and the balance sheet data as of the end of Fiscal 2012,2014, Fiscal 20112013 and Fiscal 20102012 have been derived from our prior audited consolidated financial statements, which are not included in this report. Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 April 2,
2011 April 3,
2010 (data presented in thousands, except for shares and per share data) $ 3,170,522 $ 2,094,757 $ 1,237,100 $ 757,800 $ 483,452 140,321 86,975 65,154 45,539 24,647 3,310,843 2,181,732 1,302,254 803,339 508,099 1,294,773 875,166 549,158 357,274 241,365 2,016,070 1,306,566 753,096 446,065 266,734 926,913 621,536 464,568 279,822 191,717 79,654 54,291 37,554 25,543 18,843 1,332 725 3,292 3,834 — 1,007,899 676,552 505,414 309,199 210,560 1,008,171 630,014 247,682 136,866 56,174 393 1,524 1,495 1,861 2,057 131 1,363 (2,629 ) 1,786 (830 ) 1,007,647 627,127 248,816 133,219 54,947 346,162 229,525 101,452 60,713 15,699 661,485 397,602 147,364 72,506 39,248 — — 21,227 15,629 8,460 $ 661,485 $ 397,602 $ 126,137 $ 56,877 $ 30,788 202,582,945 196,615,054 158,258,126 140,554,377 140,554,377 205,638,107 201,540,144 189,299,197 179,177,268 179,177,268 $ 3.27 $ 2.02 $ 0.80 $ 0.40 $ 0.22 $ 3.22 $ 1.97 $ 0.78 $ 0.40 $ 0.22 Fiscal Years Ended March 28,
2015 March 29,
2014 March 30,
2013 March 31,
2012 (data presented in millions, except for shares and per share data) Statement of Operations Data: Net sales $ 4,538.8 $ 4,199.7 $ 3,170.5 $ 2,094.7 $ 1,237.1 Licensing revenue 173.3 171.8 140.3 87.0 65.2 Total revenue 4,712.1 4,371.5 3,310.8 2,181.7 1,302.3 Cost of goods sold 1,914.9 1,723.8 1,294.7 875.1 549.2 Gross profit 2,797.2 2,647.7 2,016.1 1,306.6 753.1 Selling, general and administrative expenses 1,428.0 1,251.5 926.9 621.6 464.6 Depreciation and amortization 183.2 138.4 79.7 54.3 37.5 Impairment of long-lived assets 10.9 0.8 1.3 0.7 3.3 Total operating expenses 1,622.1 1,390.7 1,007.9 676.6 505.4 Income from operations 1,175.1 1,257.0 1,008.2 630.0 247.7 Other income (3.7 ) (1.6 ) — — — Interest expense, net 1.7 0.2 0.4 1.5 1.5 Foreign currency loss (gain) 4.8 2.6 0.1 1.4 (2.6 ) Income before provision for income taxes 1,172.3 1,255.8 1,007.7 627.1 248.8 Provision for income taxes 334.6 374.8 346.2 229.5 101.5 Net income 837.7 881.0 661.5 397.6 147.3 Less: net income applicable to preference shareholders — — — — 21.2 Less: Net loss attributable to noncontrolling interest (1.4 ) — — — — Net income available for ordinary shareholders of MKHL $ 839.1 $ 881.0 $ 661.5 $ 397.6 $ 126.1 Basic 186,293,295 202,680,572 202,582,945 196,615,054 158,258,126 Diluted 189,054,289 205,865,769 205,638,107 201,540,144 189,299,197 Basic $ 4.50 $ 4.35 $ 3.27 $ 2.02 $ 0.80 Diluted $ 4.44 $ 4.28 $ 3.22 $ 1.97 $ 0.78 Fiscal year ended April 2, 2016 contains 53 weeks, whereas all other fiscal years presented are based on 52-week periods. Gives effect to the corporate reorganization completed by the Company and certain of its affiliates in July 2011 (the “Reorganization”) and the 3.8-to-1 split of our ordinary shares (the “Share Split”) that occurred on November 30, 2011. See Note 1 to the financial statements—Business and Basis of Presentation.(2)Basic net income per ordinary share is computed by dividing net income available forto ordinary shareholders of MKHL by basic weighted average ordinary shares outstanding. Diluted net income per ordinary share assumes the conversion of preference shares to ordinary shares and is computed by dividing net income attributable to ordinary shareholders of MKHL by diluted weighted average ordinary shares outstanding. Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 April 2,
2011 April 3,
2010 (data presented in thousands, except for share and store data) 26.2 % 40.1 % 39.2 % 48.2 % 19.2 % 405 304 237 166 106 $ 1,468,799 $ 824,941 $ 299,057 $ 117,673 $ 51,263 $ 2,216,973 $ 1,289,565 $ 674,425 $ 399,495 $ 281,852 $ — $ — $ 22,674 $ 12,765 $ 43,980 $ — $ — $ — $ 101,650 $ 103,500 $ 1,806,131 $ 1,047,246 $ 456,237 $ 125,320 $ 49,011 204,291,345 201,454,408 192,731,390 140,554,377 140,554,377 — — — 10,163,920 10,163,920 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014 March 30,
2013 March 31,
2012 (data presented in millions, except for share and store data) Operating Data: Comparable retail store sales (decline) growth (4.2 )% 10.3 % 26.2 % 40.1 % 39.2 % Retail stores, including concessions, end of period 668 526 405 304 237 Balance Sheet Data: $ 1,234.3 $ 1,663.4 $ 1,438.3 $ 816.5 $ 287.9 $ 2,566.8 $ 2,684.6 $ 2,211.2 $ 1,280.1 $ 668.2 Revolving line of credit $ — $ — $ — $ — $ 22.7 Long-term debt $ 2.3 $ — $ — $ — $ — Shareholders' equity of MKHL $ 1,995.7 $ 2,241.0 $ 1,806.1 $ 1,047.2 $ 456.2 Number of ordinary shares issued 208,084,175 206,486,699 204,291,345 201,454,408 192,731,390 All prior period deferred tax-related amounts have been reclassified in connection with Company's adoption of ASU 2015-14, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes" on a retrospective basis. 1A—1A – Risk Factors.” rapidly growing global luxury lifestyle brand led by a world-class management team and a renowned, award-winning designer. Since launching his namesake brand over 3035 years ago, Michael Kors has featured distinctive designs, materials and craftsmanship with a jet-set aesthetic that combines stylish elegance and a sporty attitude. Mr. Kors’ vision has taken the Company from its beginnings as an American luxury sportswear house to a global accessories, footwear and apparel company with a presence in over 85100 countries. As a highly recognized luxury lifestyle brand in North America,the Americas, with accelerating awareness in targeted international markets, we have experienced exceptional sales momentum and intend to continue along this course as we grow our business.March 29, 2014,April 2, 2016, our retail segment included 288 North American390 retail stores including concessions, and 117in the Americas (including concessions), 278 international retail stores including concessions, in(including concessions) throughout Europe and Japan.Asia and our e-commerce sites in the United States ("U.S.") and Canada. As of March 29, 2014,April 2, 2016, our wholesale segment included wholesale sales through approximately 2,4961,532 department store doors and 929 specialty store doors in North Americathe Americas and wholesale sales through approximately 1,2321,222 specialty store doors and 206 department store and specialty store doors internationally. Our remaining revenue is generated through our licensing segment, through which we license to third parties certain production, sales and/or distribution rights. During Fiscal 2014,2016, our licensing segment accounted for approximately 4.2%3.7% of our total revenue and consisted of royalties earned on licensed products and our geographic licenses.twothree primary collections: theMichael Kors Collection luxury collection andline, theMICHAEL Michael Korsaccessible luxury collection. Theline and the Michael Kors collection Mens line. The Michael KorsCollection establishes the aesthetic authority of our entire brand and is carried inby many of our retail stores, our e-commerce sites, as well as in the finest luxury department stores in the world. In 2004, we introduced theMICHAEL Michael Kors collection,, which has a strong focus on accessories, in addition to offering footwear and apparel, and addresses the significant demand opportunity in accessible luxury goods. More recently, we have begun to grow our men's business in recognition of the significant opportunity afforded by our brand's established fashion authority and the expanding men's market. Taken together, our twoprimary collections target a broad customer base while retaining aour premium luxury image.TrendsUncertaintiesDisruptions in shipping and distribution. Our operations are subject to the impactResults of shipping disruptions as a result of changes, or damage, to our distribution infrastructure. During the quarter ended September 28, 2013, we experienced disruptions to the shipping of our products within the U.S. as a result of implementing new material handling equipment and systems for purposes of automating our California distribution facility. The disruption related to this implementation impacted our ability to ship at full capacity during the quarter ended September 28, 2013 through the end of the quarter ended December 28, 2013. In addition, incremental expenses related to this implementation were incurred throughout this time period, however, we do not expect to incur additional expenses related to this issue beyond this fiscal year. Accordingly, these disruptions to our shipping have had an impact on our earnings for this fiscal year, with regards to the effects on both our net sales and operating expenses, and any future disruptions of this nature may have a similar impact in the periods affected.Demand for Our Accessories and Related Merchandise. Our performance is affected by trends in the luxury goods industry, as well as shifts in demographics and changes in lifestyle preferences. Currently, demand for our products is predicted to grow. According to theAltagamma Studies, demand for the worldwide luxury goods industry is predicted to grow from approximately $251.5 billion in 2011 to between $295.6 billion and $301.3 billion in 2014. The accessories product category represented 28% of total sales for the worldwide luxury goods industry in 2012 and was the fastest growing product category between 2005 and 2012, growing at a compound annual rate of 9.9%. We believe that we are well positioned to capitalize on the continued growth of the accessories product category, as it is one of our primary product category focuses.of America("U.S. GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Critical accounting policies are those that are the most important to the portrayal of our financial condition and results of operations and that require our most difficult, subjective and complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. While our significant accounting policies are described in more detail in the notes to our financial statements, our most critical accounting policies, discussed below, pertain to revenue recognition, impairment of long-lived assets, goodwill, share-based compensation, derivatives and income taxes. In applying such policies, we must use some amounts that aremake certain assumptions based uponon our informed judgments, assessments of probability and best estimates. Estimates, by their nature, are based upon judgmentssubjective and available information. The estimates that we make are based uponon analysis of available information, including current and historical factors current circumstances and the experience and judgment of management. We evaluate our assumptions and estimates on an ongoing basis.andas well as by a provision for estimated future customer returns, which is based on management’s review of historical and current customer returns. The amounts reserved for retail sales returns were $4.7 million, $2.5 million and $2.3 million $3.1 million,at April 2, 2016, March 28, 2015 and $1.7 million at March 29, 2014, March 30, 2013 and March 31, 2012, respectively. To arrive at net sales for wholesale, gross sales are reduced by provisions for estimated future returns based on current expectations, as well as trade discounts, markdowns, allowances, operational chargebacks, as well as forand certain cooperative selling expenses. Total sales reserves for wholesale were $110.9 million, $87.5 million and $65.9 million $43.0 millionat April 2, 2016, March 28, 2015 and $30.4 million at March 29, 2014, March 30, 2013respectively. These estimates are based on such factors as historical trends, actual and March 31, 2012, respectively.trademarks,tradenames at rates specified in the license agreements. These agreements are also subject to contractual minimum levels. Royalty revenue generated by geography-specific licensing agreements is recognized as it is earned under the licensing agreements based on reported sales byof licensees applicable to specified periods, as outlined in the agreements. These agreements allow for the use of our trademarkstradenames to sell our branded products in certainspecific geographic regions.Allare recorded at cost less accumulated amortizationincluding fixed assets and finite-lived intangible assets, for impairment whenever events or depreciation.changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. For the purposes of impairment testing, we group our long-lived assets according to their lowest level of use, such as aggregating and capitalizing all construction costs related to a retail store into leasehold improvements and those related to our wholesale business into shop-in-shops. Our leasehold improvements are typically amortized over the life of the store lease, including highly probable renewals, and our shop-in-shops are amortized over a useful life of three year period. Allor four years. Our impairment testing is based on our best estimate of our amortization and depreciation expense is included as a component of totalthe future operating expenses as the underlying long-lived assets are not directly or indirectly related to bringing our products to their existing location and condition.We evaluate all long-lived assets, including fixed assets and intangible assets with finite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable.cash flows. If the sum of our estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, we recognize an impairment loss,charge, which is measured as the amount by which the carrying value exceeds the fair value of the asset. These estimates of cash flow require significant management judgment and certain assumptions about future volume, sales and expense growth rates, devaluation and inflation. As such, these estimates may differ from actual cash flows.flows and future impairments may result if actual cash flows are lower than our expectations. For Fiscal 2014,2016, Fiscal 2013,2015, and Fiscal 2012,2014, we recorded charges for impairments on fixed assets, and intangible assetsprimarily related to our retail segment, of $10.9 million, $0.8 million and $1.3 million, $0.7 million and $3.3 million, respectively.Onexist, we perform an impairment assessment of goodwill.exist. In the absence of any impairment indicators, goodwill is assessed during the fourth quarter of each fiscal year. These assessments are made with regards to reporting units within our wholesale, retail and licensing segments whichwhere our goodwill is recorded, and are based on our current operating projections. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business. Future events could cause us to conclude thatindicators exist and therefore that goodwill is impaired. Prior to Fiscal 2012, we performed our impairment testing for goodwillinitially using the fair value approach, employing both the discounted cash flow method and market multiples method to determine the fair value of our reporting units (“step one”). These methods utilized both our historical results and projected future results. During Fiscal 2012, we adopted a new accounting pronouncement related to goodwill impairment analysis, which allows entities to initially perform a qualitative analysisapproach (“step zero”) of the fair value of its reporting units to determine whether it is necessary to undertake a quantitative (“two step”) goodwill analysis. In the fourth quarter of Fiscal 2014, we used this new guidance in our annual impairment analysis for goodwill, and concludedmore likely than not that the fair value of goodwill is greater than its carrying amounts of all reporting units did not exceed their respective fair values.We will continue to perform this initial qualitative analysis in future years. Shouldvalue. If the results of thisthe qualitative assessment result in either ambiguous or unfavorable conclusion we will perform additional quantitative testing consistent withindicate that it is not more likely than not that the fair value approach mentioned above.of goodwill exceeds its carrying value, a quantitative goodwill analysis would be performed to determine if impairment is required. We may also elect to perform a quantitative analysis of goodwill initially rather than using a qualitative approach. The valuation methods used in the quantitative fair value approach,assessment, discounted cash flow and market multiples methods, require our management to make certain assumptions and estimates regarding certain industry trends and future profitability of our reporting units. If the carrying amount of a reporting unit exceeds its fair value, we would compare the implied fair value of the reporting unit goodwill withto its carrying value. To compute the implied fair value, we would assign the fair value of the reporting unit to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The excess of the fair value of a reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying value of the reporting unitunit’s goodwill exceeded the implied fair value of the reporting unitunit’s goodwill, we would record an impairment loss to write down such goodwill to its implied fair value. The valuation of goodwill is affected by, among other things, our business plan for the future and estimated results of future operations.We have assessed our Future events could cause us to conclude the impairment indicators exist and, therefore, that goodwill for impairment in ourmay be impaired.forof Fiscal 2016, we elected to bypass the periods presented.initial qualitative assessment and performed our annual impairment analysis using a quantitative approach, using the discounted cash flow method to estimate fair value. Based on the results of this assessment, we concluded that the fair values of all reporting units significantly exceeded the related carrying amounts and there were no reporting units at risk of impairment. There arewere no impairment charges related to goodwill forin any of the fiscal periods presented.Awards are measured at theThe grant date based on the fair value asof share options is calculated using the Black-Scholes option pricing model, for share options, or thewhich requires us to use subjective assumptions. The closing market price at the grant date foris used to determine the grant date fair value of restricted shares, restricted share units, and performance restricted share units. These values are recognized as expense over the requisite service period, and in the instancenet of performanceestimated forfeitures, based grants, theon expected attainment of certain vesting requirements in addition topre-established performance goals for performance grants, or the passage of time. Determining the fair value of share option awards at the grant date requires considerable judgment, including estimating expected volatility, expected term and risk-free rate.a performance based optionperformance-based options is based on the period to expiration, which is generally 9-10 years. This approach was chosen as it directly correlates to our service period. The expected holding period for time-based vesting options is based on thecalculated using a simplified method, usingwhich uses the vesting term of the options, generally 4 years, and the contractual term of 7 years, resulting in a holding periods ranging fromof 4.5-4.75 years. The simplified method was chosen as a means to determine the Company’s estimated holding period, as prior to December 2011, the Company was privately held and, as such, there was nois insufficient historical option exercise experience due to the Company being privately held.experience. The risk-free rate is derived from the zero-coupon U.S. Treasury Strips yield curve the period of which relates tobased on the grant’s estimated holding period. Determining the grant date fair value of share-based awards requires considerable judgment, including estimating expected volatility, expected term, risk-free rate, and forfeitures. If factors change and we employ different assumptions, the fair value of future awards and resulting share-based compensation expense may differ significantly from what we have estimated in the past.Expense related to equity compensation during Fiscal 2014, 2013 and 2012 was approximately $29.1 million, $20.9 million and $27.0 million, respectively. The weighted average grant date fair value of share options granted during Fiscal 2014, Fiscal 2013, and Fiscal 2012 was $24.95, $20.66, and $8.01, respectively.subsidiariessubsidiaries’ local currency relative to the currency requirement of the supplier on the date of the commitment. As such, we enter into forward currency contracts that generally mature in 12 months or less, and arewhich is consistent with the related purchase commitments. TheseWe designate certain contracts related to the purchase of inventory that qualify for hedge accounting as cash flow hedges, while others remain undesignated. All of our derivative instruments are recorded at fair value in our consolidated balance sheets as either an asset or liability, and are derivative contracts toat fair value on a gross basis, regardless of their hedge cash flow risks. Certaindesignation. The effective portion of these contracts, are designated as hedges for accounting purposes, while the balance of these contracts are undesignated. Accordingly, the changes in the fair value for contracts designated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive income (loss) until the hedged item effects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income (loss) are recognized within cost of goods sold. We use regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. Effectiveness is assessed on a quarterly basis and any portion of the designated hedge contracts deemed ineffective is recorded to foreign currency gain (loss). If the hedge is no longer expected to be highly effective in the future, future changes in the fair value are recognized in earnings. For those contracts that are not designated as hedges, for accountingpurposes,changes in the fair value are at the balance sheet date and upon maturity (settlement), recorded in our cost of sales or operating expenses,foreign currency gain (loss) in our consolidated statements of operations, as applicableoperations.transactionsrisk that counterparties to derivative contracts will fail to meet their contractual obligations. In order to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for which the forward exchange contracts were established. Regarding those contracts which are designated as hedges for accounting purposes, any portion of those contracts deemed ineffective would be charged to earnings, in the same manner as those contracts charged to earnings above, in the period the ineffectiveness was determined.For Fiscal 2014 the loss charged to operations relating to these contracts was de minimis. For fiscal years ended 2013 and 2012, respectively, amounts representing gains of $1.4 million and $2.6 million were charged to operations. The following table details the fair value of these contracts as of March 29, 2014 and March 30, 2013 (in thousands): March 29,
2014 March 30,
2013 $ 12 $ 1,367 $ (1,875 ) $ (71 ) Recentpronouncementpronouncements discussed below, have concluded that there are no new pronouncements that have a material impact on our results of operations, financial condition or cash flows based on current information.During the fiscal quarter ended June 29, 2013, we adopted the provisions of Accounting Standard Update 2013-02 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”) which(“FASB”("FASB") issued in February 2013.Accounting Standards Update ("ASU")No. 2014-09, “Revenue from Contracts with Customers,” which provides new guidance for revenues recognized from contracts with customers, and will replace the existing revenue recognition guidance. ASU 2013-02No. 2014-09 requires that revenue is recognized at an entityamount the company is entitled to provide information aboutupon transferring control of goods or services to customers, as opposed to when risks and rewards transfer to a customer. In July 2015, the amounts reclassified outFASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of accumulated other comprehensive incomethe Effective Date," which deferred the effective date of ASU No. 2014-09 by component. The ASU isone year, making it effective for annual periods andthe interim reporting periods within those periodsthe annual reporting period beginning after December 15, 2012.the fiscal years then endedFiscal 2016, Fiscal 2015 and Fiscal 2014 (in thousands)millions): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 1,593,005 $ 1,062,642 $ 626,940 1,577,517 1,032,115 610,160 140,321 86,975 65,154 $ 3,310,843 $ 2,181,732 $ 1,302,254 $ 467,248 $ 315,654 $ 121,851 459,774 269,323 85,000 81,149 45,037 40,831 $ 1,008,171 $ 630,014 $ 247,682 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Revenue: Net sales: Retail $ 2,394.9 $ 2,134.6 $ 1,593.0 Wholesale 2,143.9 2,065.1 1,577.5 Licensing 173.3 171.8 140.3 Total revenue $ 4,712.1 $ 4,371.5 $ 3,310.8 Income from operations: Retail $ 501.4 $ 557.2 $ 467.3 Wholesale 584.1 610.9 459.8 Licensing 89.6 88.9 81.1 Income from operations $ 1,175.1 $ 1,257.0 $ 1,008.2 North America,the Americas, Europe, Japan and Japan.South Korea, as well as through our e-commerce sites, including our e-commerce platform in the U.S. launched in September 2014 and our e-commerce site in Canada launched in April 2015. We have threefour primary retail store formats: collection stores, lifestyle stores, outlet stores and outlet stores.e-commerce. Our collection stores are located in highly prestigious shopping areas, while our lifestyle stores are located in well-populated commercial shopping locations and leading regional shopping centers. Our outlet stores, which are generally in shopping malls,outlet centers, extend our reach to additional consumer groups. In addition to these threefour retail store formats, we operate concessions in a select number of department stores in North America,the Americas, Europe and Japan. Asia.2014,2016, Fiscal 20132015, and Fiscal 2012: Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 �� 279 201 158 78 43 45 38.8 % 27.2 % 39.8 % 562,773 410,681 316,649 2,017 2,043 2,004 126 103 79 23 24 26 22.3 % 30.4 % 49.1 % 381,567 291,407 219,407 3,028 2,829 2,777 April 2,
2016 March 28,
2015 March 29,
2014Full price retail stores including concessions: Number of stores 492 373 279 Increase during period 119 94 78 Percentage increase vs. prior year 31.9 % 33.7 % 38.8 % Total gross square footage 1,140,025 859,352 562,773 Average square footage per store 2,317 2,304 2,017 Outlet stores: Number of stores 176 153 126 Increase during period 23 27 23 Percentage increase vs. prior year 15.0 % 21.4 % 22.3 % Total gross square footage 637,325 517,308 381,567 Average square footage per store 3,621 3,381 3,028 April 2,
2016 March 28,
2015 March 29,
2014Store count by region: The Americas (U.S., Canada and Latin America) 390 343 288 Europe 177 133 80 Asia (Japan and South Korea) 101 50 37 Total 668 526 405 North Americathe Americas and Europe to accommodate consumers who prefer to shop at major department stores. In addition, we sell to specialty stores for those consumers who enjoy the boutique experience afforded by such stores.stores, as well as to travel retail shops in the Americas, Europe and Asia. We also have wholesale arrangements pursuant to which we sell products to certain of our licensees, including our licensees in Asia (which were previously reported within our Americas wholesale operations). We continue to focus our sales efforts and drive sales in existing locations by enhancing presentation, primarily through the creation of more shop-in-shops with our proprietary fixtures that effectively communicate our brand and create a more personalized shopping experience for consumers. We tailor our assortments through wholesale product planning and allocation processes to better match the demands of our department store customers in each local market.growthincrease (decrease) in our network of wholesale doors during Fiscal 2014,2016, Fiscal 20132015 and Fiscal 2012: Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 3,728 3,249 2,677 479 572 645 14.7 % 21.4 % 31.7 % Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Number of full-price wholesale doors 3,889 4,038 3,728 (Decrease) increase during period (149 ) 310 479 Percentage (decrease) increase vs. prior year (3.7 )% 8.3 % 14.7 % thousands)millions): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 3,310,843 $ 2,181,732 $ 1,302,254 60.9 % 59.9 % 57.8 % $ 1,008,171 $ 630,014 $ 247,682 $ 1,318,887 $ 938,515 $ 573,394 $ 235,571 $ 101,754 $ 43,316 $ 38,547 $ 22,373 $ 10,230 22.5 % 39.6 % 39.8 % 60.0 % 51.3 % 21.8 % 29.0 % 14.7 % 35.1 % $ 1,335,545 $ 913,145 $ 544,686 $ 241,972 $ 118,970 $ 65,474 Fiscal years ended April 2,
2016 March 28,
2015 March 29,
2014Total revenue $ 4,712.1 $ 4,371.5 $ 3,310.8 Gross profit as a percent of total revenue 59.4 % 60.6 % 60.9 % Income from operations $ 1,175.1 $ 1,257.0 $ 1,008.2 Retail net sales - The Americas $ 1,779.0 $ 1,656.1 $ 1,318.9 Retail net sales - Europe $ 509.6 $ 412.1 $ 235.6 Retail net sales - Asia $ 106.3 $ 66.4 $ 38.5 (Decrease) increase in comparable store net sales (4.2 )% 10.3 % 26.2 % Wholesale net sales - The Americas $ 1,628.6 $ 1,662.5 $ 1,335.5 Wholesale net sales - Europe $ 406.4 $ 401.1 $ 242.0 Wholesale net sales - Asia $ 108.9 $ 1.5 $ — openedoperating for one full year after the end of the first month of its operations. For stores that are closed, sales that were made in the final month of their operations (assuming closure prior to the fiscal month's end), are excluded from the calculation of comparable store sales. Additionally, sales for stores that are either relocated, or expanded by a square footage of 25% or greater, in any given fiscal year, are also excluded from the calculation of comparable store sales at the time of their move or interruption, until such stores have been in their new location, or are operating under their new size/capacity, for at least one full year after the end of the first month of their relocation or expansion. All comparable store sales are presented on a 52-week basis. Beginning with the first quarter of Fiscal 2016, comparable store sales are reported on a global basis, which better represents management’s view of our Company as an expanding global business.toby our licensees as well as contractual royalty rates for the use of our trademarks in certain geographic territories.both fixed and intangible assets to fair value., as well as interest income earned on the loan to our joint venture. For all periods presented, amounts.interest income are immaterial.Foreignthe mark-to-market (fair value) on our forward currency loss (gain) representscontracts not designated as accounting hedges and unrealized income or loss from the re-measurement of monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries.20142016 with Fiscal 201320142016 and Fiscal 20132015 and expresses the relationship of certain line items to total revenue as a percentage (dollars in thousands)millions): Fiscal Years Ended % of Total % of Total March 29,
2014 March 30,
2013 $ Change % Change Revenue for
Fiscal 2014 Revenue for
Fiscal 2013 $ 3,170,522 $ 2,094,757 $ 1,075,765 51.4 % 140,321 86,975 53,346 61.3 % 3,310,843 2,181,732 1,129,111 51.8 % 1,294,773 875,166 419,607 47.9 % 39.1 % 40.1 % 2,016,070 1,306,566 709,504 54.3 % 60.9 % 59.9 % 926,913 621,536 305,377 49.1 % 28.0 % 28.5 % 79,654 54,291 25,363 46.7 % 2.4 % 2.5 % 1,332 725 607 83.7 % 0.0 % 0.0 % 1,007,899 676,552 331,347 49.0 % 30.4 % 31.0 % 1,008,171 630,014 378,157 60.0 % 30.5 % 28.9 % 393 1,524 (1,131 ) -74.2 % 0.0 % 0.1 % 131 1,363 (1,232 ) -90.4 % 0.0 % 0.1 % 1,007,647 627,127 380,520 60.7 % 30.4 % 28.7 % 346,162 229,525 116,637 50.8 % 10.5 % 10.5 % $ 661,485 $ 397,602 $ 263,883 66.4 % Fiscal Years Ended $ Change % Change April 2,
2016 March 28,
2015 Statements of Operations Data: Net sales $ 4,538.8 $ 4,199.7 $ 339.1 8.1 % Licensing revenue 173.3 171.8 1.5 0.9 % Total revenue 4,712.1 4,371.5 340.6 7.8 % Cost of goods sold 1,914.9 1,723.8 191.1 11.1 % 40.6 % 39.4 % Gross profit 2,797.2 2,647.7 149.5 5.6 % 59.4 % 60.6 % Selling, general and administrative expenses 1,428.0 1,251.5 176.5 14.1 % 30.3 % 28.6 % Depreciation and amortization 183.2 138.4 44.8 32.4 % 3.9 % 3.2 % Impairment of long-lived assets 10.9 0.8 10.1 NM 0.2 % — % Total operating expenses 1,622.1 1,390.7 231.4 16.6 % 34.4 % 31.8 % Income from operations 1,175.1 1,257.0 (81.9 ) (6.5 )% 24.9 % 28.8 % Other income (3.7 ) (1.6 ) (2.1 ) 131.3 % (0.1 )% (0.1 )% Interest expense, net 1.7 0.2 1.5 750.0 % — % — % Foreign currency loss 4.8 2.6 2.2 84.6 % 0.1 % 0.1 % Income before provision for income taxes 1,172.3 1,255.8 (83.5 ) (6.6 )% 24.9 % 28.7 % Provision for income taxes 334.6 374.8 (40.2 ) (10.7 )% 7.1 % 8.6 % Net income 837.7 881.0 (43.3 ) (4.9 )% Less: Net loss attributable to noncontrolling interest (1.4 ) — (1.4 ) NM Net income attributable to MKHL $ 839.1 $ 881.0 $ (41.9 ) (4.8 )% NM Not meaningful. $1,129.1$340.6 million, or 51.8%7.8%, to $3,310.8 million$4.712 billion for the fiscal year ended April 2, 2016, compared to $4.372 billion for the fiscal year ended March 29, 2014,28, 2015, which included unfavorable foreign currency effects of $168.7 million primarily related to the weakening of the Euro, the Canadian Dollar, and the Japanese Yen against the U.S. Dollar in Fiscal 2016, as compared to $2,181.7Fiscal 2015. On a constant currency basis, our total revenue increased by $509.3 million, foror 11.7%. Fiscal 2016 also included approximately $33.7 million of incremental net retail sales attributable to the fiscal year ended March 30, 2013.inclusion of the 53rd week, as well as $28.9 million of incremental revenue recorded as a result of consolidating MK Panama and acquiring MK Korea during Fiscal 2016. The increase in our revenues was the result ofprimarily due to an increase in our comparable and non-comparable retail store sales and wholesale sales, as well as increases in our licensing revenue.thousands)millions): % of total % of total Fiscal Years Ended Revenue Revenue March 29, March 30, for Fiscal for Fiscal 2014 2013 $ Change % Change 2014 2013 $ 1,593,005 $ 1,062,642 $ 530,363 49.9 % 48.1 % 48.7 % 1,577,517 1,032,115 545,402 52.8 % 47.6 % 47.3 % 140,321 86,975 53,346 61.3 % 4.2 % 4.0 % $ 3,310,843 $ 2,181,732 $ 1,129,111 51.8 % Fiscal Years Ended % Change April 2,
2016 March 28,
2015 $ Change As Reported Revenue: Net sales: Retail $ 2,394.9 $ 2,134.6 $ 260.3 12.2 % 17.2 % 50.8 % 48.8 % Wholesale 2,143.9 2,065.1 78.8 3.8 % 6.8 % 45.5 % 47.3 % Licensing 173.3 171.8 1.5 0.9 % 0.9 % 3.7 % 3.9 % Total revenue $ 4,712.1 $ 4,371.5 $ 340.6 7.8 % 11.7 % $530.4$260.3 million, or 49.9%12.2%, to $1,593.0 million$2.395 billion for Fiscal 2014,2016, compared to $1,062.6 million$2.135 billion for Fiscal 2013.2015, which included unfavorable foreign currency effects of $107.2 million. On a constant currency basis, net sales from our retail stores increased $367.5 million, or 17.2%. We operated 405668 retail stores, including concessions, as of April 2, 2016, compared to 526 retail stores, including concessions, as of March 29, 2014, compared to 304 retail stores, including concessions, as28, 2015.March 30, 2013. During$61.3 million. Our comparable store sales benefited 194 basis points from the inclusion of the U.S. e-commerce sales in comparable store sales beginning with the third quarter of Fiscal 2014,2016. On a constant currency basis, our comparable store sales growth increased $275.1declined $15.8 million, or 26.2%0.9%, primarily driven by lower comparable store sales from Fiscal 2013.our retail business in the Americas, partially offset by increased comparable store sales from our international businesses. The growthdecline in our comparable store sales was primarily due to an increase inreflected lower sales of ourwatches, apparel and jewelry, partially offset by increased sales of accessories line and watches during Fiscal 2014. In addition, the change2016 compared to Fiscal 2015.were $255.3 million during Fiscal 2014, whichincreased $383.3 million. Approximately 86% of this sales growth was primarily the result of opening 101 newattributable to operating 142 additional stores since March 30, 2013.$545.4$78.8 million, or 52.8%3.8%, to $1,577.5 million$2.144 billion for Fiscal 2014,2016, compared to $1,032.1 million$2.065 billion for Fiscal 2013.2015, which included unfavorable foreign currency effects of $61.5 million. On a constant currency basis, our wholesale net sales increased $140.3 million, or 6.8%. The increase in our wholesale net sales occurredwas primarily as a result ofattributable to increased sales of our accessories line during Fiscal 2014, as we continue to enhance our presence in department and specialty stores by converting more doors to shop-in-shops, and in continuing our expansion of our European operations. Net wholesale sales from our European operations increased approximately 103.4%accessories and footwear product lines during Fiscal 20142016 as compared to Fiscal 2013, due largely to an increase in full-price doors to 1,232 from 1,034 in the same period last year.$53.3$1.5 million, or 61.3%0.9%, to $140.3$173.3 million for Fiscal 2014,2016, compared to $87.0$171.8 million for Fiscal 2013.2015. The increase in royalties was primarily dueattributable to royaltieshigher revenues earned on licensing agreements related to the sales of jewelry, eyewear and outerwear, as well as higher revenues from our geographic licensing arrangements in Asia, partially offset by lower licensing revenues related to the sale of watches.$709.5$149.5 million, or 54.3%5.6%, to $2,106.1 million$2.797 billion during Fiscal 2014,2016, compared to $1,306.6 million$2.648 billion for Fiscal 2013.2015, which included unfavorable foreign currency effects of $113.5 million. Gross profit as a percentage of total revenue increaseddeclined 120 basis points to 60.9%59.4% during Fiscal 2014,2016, compared to 59.9%60.6% during Fiscal 2013.2015. The increase in profit margin resulted from increasesdecline in gross profit margin was attributable to gross profit margin declines of 25 basis points and 188230 basis points from our retail segment and 80 basis points from our wholesale segments, respectively.segment. The decrease in gross profit margin from our retail segment was primarily due to an increase in profit margin on both our retail and wholesale segments resulted primarily from a more favorable product sales mixpromotional activity during Fiscal 2014,2016, as compared to Fiscal 2013. In addition, we achieved a more favorable purchase cost2015. The decrease in gross profit margin from our wholesale segment was primarily due to selling price relationshipan increase in wholesale allowances during Fiscal 2014,2016, as compared to Fiscal 2013, as we experienced reductions2015. These declines were partially offset by a favorable geographic mix in cost on certainFiscal 2016, which was driven by a higher proportion of our inventory items.$331.3$231.4 million, or 49.0%16.6%, to $1,007.9 million$1.622 billion during Fiscal 2014,2016, compared to $676.6 million$1.391 billion for Fiscal 2013.2015. Our operating expenses included a net favorable foreign currency impact of approximately $71.5 million. Total operating expenses decreased to 30.4% as a percentage of total revenue forincreased to 34.4% in Fiscal 2014,2016, compared to 31.0% for31.8% in Fiscal 2013.2015. The components that comprise total operating expenses are explained below:$305.4$176.5 million, or 49.1%14.1%, to $926.9 million$1.428 billion during Fiscal 2014,2016, compared to $621.5 million$1.252 billion for Fiscal 2013.2015. The increase in selling, general and administrative expenses was primarily due to the following: increasesoccupancystores from 526 in the prior year and salary costs of $167.3operating our e-commerce sites in the United States for the full year in Fiscal 2016; an increase in corporate employee-related costs, of $57.6 million, an increase in distribution expenses of $49.5 million, as well as increases in promotional costs (which consist of advertising, marketing and various promotional costs) of $24.2 million. The increase in our retail occupancy and payroll costs wasprimarily due to operating 405 retail stores versus 304 retail stores in the prior period. The increase in our corporate employee-related costs was dueprimarily to an increase in our corporate staff to accommodatesupport our North American and international growth. Advertising costs increased primarily due to our continuing expansion into new markets, including domestic and international, as well as social media during Fiscal 2014. The increases to our distribution expenses were primarily the result of the aforementioned disruption to our warehouse facilityglobal growth;California during the second and third 2014 fiscal quarters, as a result of implementation of certain material handling equipment and systems to automate the facility. The expenseswrite-offs related to this disruption included, shippingfixed assets; handling, and consulting fees. decreasedincreased to 28.0%30.3% during Fiscal 2014,2016, compared to 28.5%28.6% for Fiscal 2013.2015. The decreaseincrease as a percentage of total revenue was primarily due to achieving economies of scalethe increase in our retail store costs during Fiscal 2014,2016, as compared to Fiscal 2013, as our revenue is increasing at a greater rate relative to our fixed costs.$25.4$44.8 million, or 46.7%32.4%, to $79.7$183.2 million during Fiscal 2014,2016, compared to $54.3$138.4 million for Fiscal 2013. Dollar increases in depreciation and amortization were2015, primarily due to an increase in the build-out of 101our new retail locations during this fiscal year,stores, new shop-in-shop locations, increase in lease rights related to our new European stores, and investments made in our information systems infrastructure as well as forto accommodate our new U.S. material handling and distribution systems.growth. Depreciation and amortization decreasedincreased to 2.4%3.9% as a percentage of total revenue during Fiscal 2014,2016, compared to 2.5%3.2% for Fiscal 2013.onof Long-Lived AssetsWeanfixed asset impairment chargecharges of approximately $1.3$10.9 million, on fixed assets$8.6 million of which primarily related to threeseven retail locations that are still in operation, $0.4 million related to our wholesale operations and $1.9 million related to a corporate fixed asset that is no longer in service. During Fiscal 2015, fixed asset impairment charges of $0.8 million related to two of our retail locations during Fiscal 2014. During Fiscal 2013, we recognized an impairment charge of approximately $0.7 million on fixed assets related to one of our retail locations.increased $378.2decreased $81.9 million, or 60.0%6.5%, to $1,008.2 million$1.175 billion during Fiscal 2014,2016, compared to $630.0 million$1.257 billion for Fiscal 2013.2015, which included unfavorable foreign currency effects of $42.0 million. Income from operations as a percentage of total revenue increaseddeclined to 30.5% during24.9% in Fiscal 2014,2016, compared to 28.9% for28.8% in Fiscal 2013.thousands)millions): % of Net % of Net Fiscal Years Sales/ Sales/ March 29, March 30, Revenue for Revenue for 2014 2013 $ Change % Change Fiscal 2014 Fiscal 2013 $ 467,248 $ 315,654 $ 151,594 48.0 % 29.3 % 29.7 % 459,774 269,323 190,451 70.7 % 29.1 % 26.1 % 81,149 45,037 36,112 80.2 % 57.8 % 51.8 % $ 1,008,171 $ 630,014 $ 378,157 60.0 % 30.5 % 28.9 % Fiscal Years Ended $ Change % Change % of Net
Sales/
Revenue for
Fiscal 2015 April 2,
2016 March 28,
2015 Income from operations: Retail $ 501.4 $ 557.2 $ (55.8 ) (10.0 )% 20.9 % 26.1 % Wholesale 584.1 610.9 (26.8 ) (4.4 )% 27.2 % 29.6 % Licensing 89.6 88.9 0.7 0.8 % 51.7 % 51.8 % Income from operations $ 1,175.1 $ 1,257.0 $ (81.9 ) (6.5 )% 24.9 % 28.8 % increased $151.6declined $55.8 million, or 48.0%10.0%, to $467.3$501.4 million during Fiscal 2014,2016, compared to $315.7$557.2 million for Fiscal 2013.2015. Income from operations as a percentage of net retail sales for the retail segment decreaseddeclined by approximately 0.4%520 basis points to 20.9% during Fiscal 2016. The decrease in retail income from operations as a percentage of net retail sales to 29.3% during Fiscal 2014. The decrease as a percentage of net sales was primarily due to an approximately 0.6% increase in operating expenses as a percentage of net retail sales offset, in part, byof approximately 290 basis points, as well as due to the aforementioned increasedecrease in gross profit margin, as a percentage of net retail sales,previously discussed above.above, during Fiscal 2016, as compared to Fiscal 2015. The increase in operating expenses as a percentage of net retail sales was largely due to increased retail store-related costs and higher depreciation expense primarily from an increase in rent onattributable to new store openings, as well as fixed asset impairment charges recorded for certain of our stores as a percentage of net retail sales during Fiscal 2014, as compared to Fiscal 2013.increased $190.5declined $26.8 million, or 70.7%4.4%, to $459.8$584.1 million during Fiscal 2014,2016, compared to $269.3$610.9 million for Fiscal 2013.2015. Income from operations as a percentage of net wholesale sales for thedecreased approximately 240 basis points to 27.2%. This decrease in wholesale segment increased approximately 3.0%income from operations as a percentage of wholesale net wholesale sales to 29.1%. This increase was primarily due to the aforementioneda net increase in gross profit margin as a percentage of net wholesale sales during Fiscal 2014 compared to Fiscal 2013. In addition, there was a decrease in operating expenses of approximately 1.2% as a percent of net wholesale sales during Fiscal 2014.The decrease in operating expenses as a percentage of net wholesale sales resulted from theof approximately 160 basis points during Fiscal 2016 as compared to Fiscal 2015, which was largely attributable to higher depreciation expenses, distribution costs, write-offs related to fixed assets and corporate allocated expenses. The increase in ourwholesale income from operations as a percentage of net wholesale sales during Fiscal 2014, which grew atwas also attributable to a greater rate relative to expenses and more than offset the additional expenses incurred during the period suchlower gross profit margin, as those discussed above in selling, general and administrative expenses.$36.1$0.7 million, or 80.2%0.8%, to $81.1$89.6 million during Fiscal 2014,2016, compared to $45.0$88.9 million for Fiscal 2013.2015. Income from operations as a percentage of licensing revenue for thedeclined approximately 10 basis points to 51.7%. The decline in licensing segment increased approximately 6%income from operations as a percentage of licensing revenue was due to 57.8%.an increase in operating expenses as a percentage of licensing revenues during Fiscal 2016, as compared to Fiscal 2015. This increase is primarily the resultwas largely due to increased costs related to protection of the aforementioned increase in salesour intellectual property and higher depreciation expenses, partially offset by lower advertising costs as a percentage of licensing revenue, which grew at a greater rate relative to operating expensesrevenue.2014.Expense,expense, netdecreased $1.1increased $1.5 million or 74.2%, to $0.4$1.7 million for Fiscal 2014,2016, as compared to $1.5$0.2 million for Fiscal 2013,2015, primarily due primarily to a an increase inlower interest income earned on our short-term investments (cash equivalents) during Fiscal 2014,, as well as a decrease in borrowinghigher interest expense on borrowings during Fiscal 2014 as compared to Fiscal 2013. The primary components of interest expense during both Fiscal 2014 and 2013 were commitment fees and amortization of deferred financing fees.losslosses of $0.1$4.8 million and $2.6 million, respectively, during Fiscal 2014, as compared to a2016 and Fiscal 2015. These foreign currency loss of $1.4 million during Fiscal 2013. The decrease inlosses included mark-to-market adjustments related to our forward foreign currency loss during Fiscal 2014, was primarily due to a decrease incontracts not designated as accounting hedges, as well as gains and losses on the balancesrevaluation and settlement of certain of our U.S. dollar denominatedaccounts payable in currencies other than the functional currency of the applicable reporting units, and the remeasurement of intercompany loan balancesloans with certain of our non-U.S. subsidiaries (whose functional currency was other than the U.S. dollar), which yield translation gains or losses during their re-measurement. During Fiscal 2013 the larger balances of these U.S. dollar denominated intercompany loans were impacted by the U.S. dollar’s strengthening against the Yen during that period.$346.2$334.6 million of income tax expense during Fiscal 2014,2016, compared with $229.5$374.8 million for Fiscal 2013.2015. Our effective tax rate for Fiscal 20142016 was 34.4%28.5%, compared to 36.6%29.8% for Fiscal 2013.2015. The decrease in our effective tax rate resultedwas primarily due to a decreasethe increase in our U.S. blended statetaxable income tax rate, as well as a greater portionin certain of our income being recognized in jurisdictions withnon-U.S. subsidiaries (predominantly European operations) during Fiscal 2016, which are subject to lower statutory income tax rates, as well as state tax benefits recognized during Fiscal 2014 as compared2016. Given that certain of our non-U.S. operations have become consistently profitable, we expect this decrease on our combined consolidated effective rate to continue. The Fiscal 2013.jurisdictions, and certain other nondeductible expenses (such as fees related to a public offering) and income earned in certain non-U.S. entities with significant net operating loss carryforwards.jurisdictions. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.increased $263.9declined $41.9 million, or 66.4%4.8%, to $661.5$839.1 million during Fiscal 2014,2016, compared to $397.6$881.0 million for Fiscal 2013.20132015 with Fiscal 201220132015 and Fiscal 20122014 and expresses the relationship of certain line items to total revenue as a percentage (dollars in thousands)millions and all percentages calculated based on unrounded numbers): Fiscal Years Ended % of Total % of Total March 30, March 31, Revenue for Revenue for 2013 2012 $ Change % Change Fiscal 2013 Fiscal 2012 $ 2,094,757 $ 1,237,100 $ 857,657 69.3 % 86,975 65,154 21,821 33.5 % 2,181,732 1,302,254 879,478 67.5 % 875,166 549,158 326,008 59.4 % 40.1 % 42.2 % 1,306,566 753,096 553,470 73.5 % 59.9 % 57.8 % 621,536 464,568 156,968 33.8 % 28.5 % 35.7 % 54,291 37,554 16,737 44.6 % 2.5 % 2.9 % 725 3,292 (2,567 ) -78.0 % 0.0 % 0.3 % 676,552 505,414 171,138 33.9 % 31.0 % 38.8 % 630,014 247,682 382,332 154.4 % 28.9 % 19.0 % 1,524 1,495 29 1.9 % 0.1 % 0.1 % 1,363 (2,629 ) 3,992 -151.8 % 0.1 % -0.2 % 627,127 248,816 378,311 152.0 % 28.7 % 19.1 % 229,525 101,452 128,073 126.2 % 10.5 % 7.8 % $ 397,602 $ 147,364 $ 250,238 169.8 % Fiscal Years Ended $ Change % Change March 28,
2015 March 29,
2014 Statements of Operations Data: Net sales $ 4,199.7 $ 3,170.5 $ 1,029.2 32.5 % Licensing revenue 171.8 140.3 31.5 22.4 % Total revenue 4,371.5 3,310.8 1,060.7 32.0 % Cost of goods sold 1,723.8 1,294.7 429.1 33.1 % 39.4 % 39.1 % Gross profit 2,647.7 2,016.1 631.6 31.3 % 60.6 % 60.9 % Selling, general and administrative expenses 1,251.5 926.9 324.6 35.0 % 28.6 % 28.0 % Depreciation and amortization 138.4 79.7 58.7 73.8 % 3.2 % 2.4 % Impairment of long-lived assets 0.8 1.3 (0.5 ) (38.3 )% — % — % Total operating expenses 1,390.7 1,007.9 382.8 38.0 % 31.8 % 30.4 % Income from operations 1,257.0 1,008.2 248.8 24.7 % 28.8 % 30.5 % Other income (1.6 ) — (1.6 ) NM (0.1 )% — % Interest expense, net 0.2 0.4 (0.2 ) (45.3 )% — % — % Foreign currency loss 2.6 0.1 2.5 NM 0.1 % — % Income before provision for income taxes 1,255.8 1,007.7 248.1 24.6 % 28.7 % 30.4 % Provision for income taxes 374.8 346.2 28.6 8.3 % 8.6 % 10.5 % Net income attributable to MKHL $ 881.0 $ 661.5 $ 219.5 33.2 % NM Not meaningful. $879.5 million,$1.061 billion, or 67.5%32.0%, to $2,181.7 million$4.372 billion for the fiscal year ended March 30, 2013,28, 2015, compared to $1,302.3 million$3.311 billion for the fiscal year ended March 31, 2012.29, 2014, which included unfavorable foreign currency effects of $76.5 million primarily related to the weakening of the Euro and the Canadian Dollar against the U.S. Dollar in Fiscal 2015 as compared to Fiscal 2014. On a constant currency basis, our total revenue increased by $1.137 billion, or 34.3%. The increase in our revenues was the result ofdue to an increase in our comparable and non-comparable retail store sales and wholesale sales, as well as increases in our licensing revenue.thousands)millions): % of total % of��total Fiscal Years Ended Revenue Revenue March 30, March 31, for Fiscal for Fiscal 2013 2012 $ Change % Change 2013 2012 $ 1,062,642 $ 626,940 $ 435,702 69.5 % 48.7 % 48.1 % 1,032,115 610,160 421,955 69.2 % 47.3 % 46.9 % 86,975 65,154 21,821 33.5 % 4.0 % 5.0 % $ 2,181,732 $ 1,302,254 $ 879,478 67.5 % Fiscal Years Ended % Change March 28,
2015 March 29,
2014 $ Change As Reported Revenue: Net sales: Retail $ 2,134.6 $ 1,593.0 $ 541.6 34.0 % 36.7 % 48.8 % 48.1 % Wholesale 2,065.1 1,577.5 487.6 30.9 % 33.0 % 47.3 % 47.7 % Licensing 171.8 140.3 31.5 22.4 % 22.4 % 3.9 % 4.2 % Total revenue $ 4,371.5 $ 3,310.8 $ 1,060.7 32.0 % 34.3 % $435.7$541.6 million, or 69.5%34.0%, to $1,062.6 million$2.135 billion for Fiscal 2013,2015, compared to $626.9 million$1.593 billion for Fiscal 2012.2014, which included unfavorable foreign currency effects of $43.0 million. On a constant currency basis, net sales from our retail stores increased $584.6 million, or 36.7%. We operated 304526 retail stores, including concessions, as of March 30, 2013,28, 2015, compared to 237405 retail stores, including concessions, as of March 31, 2012. During29, 2014.2013,2015, which included unfavorable foreign currency effects of $22.5 million. On a constant currency basis, our comparable store sales growth increased $246.6$166.4 million, or 40.1%, from Fiscal 2012.11.9%. The growth in our comparable store sales was primarily due to an increase in sales offrom our accessories product line and watches during Fiscal 2013. In addition,2015.were $189.1 million during Fiscal 2013, whichincreased $418.2 million. This sales growth was primarily the result of opening 67 newattributable to operating 121 additional stores since March 31, 2012.$422.0$487.6 million, or 69.2%30.9%, to $1,032.1 million$2.065 billion for Fiscal 2013,2015, compared to $610.2 million$1.578 billion for Fiscal 2012.2014, which included unfavorable foreign currency effects of $33.5 million. On a constant currency basis, our wholesale net sales increased $521.1 million, or 33.0%. The increase in our wholesale net sales occurredwas primarily as a result ofattributable to increased sales offrom our accessories lineand footwear product lines during Fiscal 2013,2015, as we continue to enhance our presence in department and specialty stores by converting more doors to shop-in-shops, and inshop-in-shops. In addition, wholesale net sales increased due to the continuing our expansion of our European operations. Net wholesaleoperations, whose net sales grew by 65.7% from our European operations increased approximately 81.7% during Fiscal 2013 compared2015 to Fiscal 2012, due largely to an increase in full-price doors to 1,034 from 650 in the same period last year.$21.8$31.5 million, or 33.5%22.4%, to $87.0$171.8 million for Fiscal 2013,2015, compared to $65.2$140.3 million for Fiscal 2012.2014. The increase in royaltieslicensing revenue was primarily due to royalties earned on licensing agreements related to the sales of watches.$553.5$631.6 million, or 73.5%31.3%, to $1,306.6 million$2.648 billion during Fiscal 2013,2015, compared to $753.1 million$2.016 billion for Fiscal 2012.2014, which included unfavorable foreign currency effects of $51.2 million. Gross profit as a percentage of total revenue increaseddeclined to 59.9%60.6% during Fiscal 2013,2015, compared to 57.8%60.9% during Fiscal 2012. This increase2014. The decline in gross profit margin resulted from a decrease of 66 basis points in the aggregategross profit margin from our retail segment, which represents nearly half of our business. The decrease in gross profit margin from our retail segment was primarily due to a decreasean increase in sales allowancesmarkdowns and markdowns, as well as experiencingdiscounts, partially offset by a more favorable product mix experienced during Fiscal 20132015 as compared to Fiscal 2012. This contributed2014. Wholesale gross margin remained flat, as the favorable impact resulting from the increase on our European wholesale sales in proportion to an increasetotal wholesale sales was offset by higher allowances in gross profit margin in our retail and wholesale segments individually by approximately 220 basis points and 300 basis points, respectively. The increase in gross profit margin in our retail segment was due primarily to sales of higher margin product as well as a decrease in markdowns given during Fiscal 20132015, as compared to Fiscal 2012. The increase in gross profit margin in our wholesale segment resulted largely from a decrease in discounts and allowances given during Fiscal 2013 as compared to Fiscal 2012.$171.1$382.8 million, or 33.9%38.0%, to $676.6 million$1.391 billion during Fiscal 2013,2015, compared to $505.4 million$1.008 billion for Fiscal 2012.2014. Our operating expenses included a net favorable foreign currency impact of approximately $30.3 million. Total operating expenses decreased to 31.0% as a percentage of total revenue forincreased to 31.8% in Fiscal 2013,2015, as compared to 38.8% for30.4% in Fiscal 2012.2014. The components that comprise totalchanges in our operating expenses are explainedfurther described below:$157.0$324.6 million, or 33.8%35.0%, to $621.5 million$1.252 billion during Fiscal 2013,2015, compared to $464.6$926.9 million for Fiscal 2012.2014. The dollar increase in selling, general and administrative expenses was primarily due to increasesthe following:retail occupancycorporate staff to support our North American and salary costs of $101.8 million, increasesinternational growth;$20.0$25.9 million, and increases in corporate employee-related costs of $25.5 million. The increase in our retail occupancy and payroll costs was primarily due to the opening of an additional 67 retail stores during Fiscal 2013. Advertising costs increased primarily dueto our continuing expansion into new markets, as well as social media during Fiscal 2013, including domestic and international. The increase in our corporate employee-related costs was due primarily to 2015;corporate staffprincipal executive offices, as well as fees related to accommodate our North Americannew customer service call center in Fiscal 2015; international growth. decreasedincreased to 28.5%28.6% during Fiscal 2013,2015, compared to 35.7%28.0% for Fiscal 2012. The decrease2014, primarily due to the aforementioned retail store and overhead costs, as well as corporate operating expenses during Fiscal 2015, as compared to Fiscal 2014. These increases were partially offset by our operating leverage achieved on other operating expenses, including selling and distribution costs as a percentage of total revenue was primarily due to achieving economies of scale during Fiscal 2013, as compared to Fiscal 2012, as our revenue increased at a greater rate relative to our fixed costs.$16.7$58.7 million, or 44.6%73.8%, to $54.3$138.4 million during Fiscal 2013,2015, compared to $37.6$79.7 million for Fiscal 2012. Dollar increases in depreciation and amortization were2014, primarily due to an increase in the build-out of 67our new retail locations during this fiscal year,stores, new shop-in-shop locations, increase in lease rights related to our new European stores, and investments made in our information systems infrastructure to accommodate our growth. Depreciation and amortization decreasedincreased to 2.5%3.2% as a percentage of total revenue during Fiscal 2013,2015, compared to 2.9%2.4% for Fiscal 2012.onof Long-Lived AssetsWean impairment chargecharges of approximately $0.7$0.8 million on fixed assets related to one of our retail locations during Fiscal 2013. We recognized an impairment charge of approximately $3.3and $1.3 million, respectively, on fixed assets related to two of our retail locations duringin Fiscal 2012.$382.3$248.8 million, or 154.4%24.7%, to $630.0 million$1.257 billion during Fiscal 2013,2015, compared to $247.7 million$1.008 billion for Fiscal 2012.2014, which included unfavorable foreign currency effects of $20.9 million. Income from operations as a percentage of total revenue increaseddeclined to 28.9%28.8% during Fiscal 2013,2015, compared to 19.0%30.5% for Fiscal 2012.thousands)millions): Fiscal Years March 30,
2013 March 31,
2012 $ Change % Change Revenue for
Fiscal 2013 Revenue for
Fiscal 2012 $ 315,654 $ 121,851 $ 193,803 159.0 % 29.7 % 19.4 % 269,323 85,000 184,323 216.9 % 26.1 % 13.9 % 45,037 40,831 4,206 10.3 % 51.8 % 62.7 % $ 630,014 $ 247,682 $ 382,332 154.4 % 28.9 % 19.0 % Fiscal Years Ended $ Change % Change % of Net
Sales/
Revenue for
Fiscal 2014 Income from Operations: Retail $ 557.2 $ 467.3 $ 89.9 19.2 % 26.1 % 29.3 % Wholesale 610.9 459.8 151.1 32.9 % 29.6 % 29.1 % Licensing 88.9 81.1 7.8 9.6 % 51.8 % 57.8 % Income from operations $ 1,257.0 $ 1,008.2 $ 248.8 24.7 % 28.8 % 30.5 % $193.8$89.9 million, or 159.0%19.2%, to $315.7$557.2 million during Fiscal 2013,2015, compared to $121.9$467.3 million for Fiscal 2012.2014. Income from operations as a percentage of net retail sales for the retail segment increaseddeclined by approximately 10.3%320 basis points to 26.1% during Fiscal 2015. The decrease in retail income from operations as a percentage of net sales was primarily due to an increase in operating costs as a percentage of net retail sales of approximately 2.6%, as well as due to 29.7%the decrease in gross profit margin, as previously discussed above, during Fiscal 2013.2015 as compared to Fiscal 2014. The increase in operating expenses as a percentage of net retail sales was largely due to an increase in depreciation and amortization expense, primarily related to new stores and lease rights (key money), as well as increased retail store and overhead costs, and distribution expenses.an approximately 7.0% decrease in operating expenses as a percentage of net retail sales, as well as to the increase in gross profit margin as a percentage of net retail sales, discussed above. The decrease in operating expenses as a percentage of net retail sales resulted from the increase in our net retail sales during Fiscal 2013, which grew at a greater rate relative to expenses and more than offset the additional expenses incurred during the period such as those discussed above in selling, general and administrative expenses.WholesaleIncome from operations for our wholesale segment increased $184.3 million, or 216.9%, to $269.3 million during Fiscal 2013, compared to $85.0 million for Fiscal 2012. Income from operations as a percentage of net wholesale sales for the wholesale segment increased approximately 12.2% as a percentage of net wholesale sales to 26.1%. This increase was primarily due to an approximately 9.0% decrease in operating expenses as a percentage of wholesale sales, as well as to the result of the aforementioned increase in gross profit margin as a percentage of net wholesale sales during Fiscal 2013 compared to Fiscal 2012. The decrease in operating expenses as a percentage of net wholesale sales resulted fromduring Fiscal 2015 as compared to Fiscal 2014, which was primarily due to lower selling and distribution costs, reflecting our operating expense leverage, partially offset by increased depreciation and amortization expenses as a result of the increasegrowth in our net wholesale sales during Fiscal 2013, which grew at a greater rate relative to expenses and more than offset the additional expenses incurred during the period such as those discussed above in selling, general and administrative expenses.$4.2$7.8 million, or 10.3%9.6%, to $45.0$88.9 million during Fiscal 2013,2015, compared to $40.8$81.1 million for Fiscal 2012.2014. Income from operations as a percentage of licensing revenue for the licensing segment decreased approximately 10.9%600 basis points to 51.8%. This decrease as a percentage of licensing revenue was due to 51.8%. This decrease is primarily the result of an increase in advertising expenseoperating expenses as a percentage of licensing revenues during Fiscal 20132015, as compared to Fiscal 2012, as we launched several new advertising initiatives, including social media and other web-based mediums for increasing brand awareness, during the year. The2014. This increase inwas largely due to increased advertising expenses, as well as certain administrative expenses incurred in connection with the formation of our new licensing operations in Europe during Fiscal 2015.offset in part by the aforementioned increase in sales licensing revenue.Interest Expense, netInterest expense$1.6 million during Fiscal 2015, and was approximatelycomprised of $1.5 million for both Fiscal 2013in income related to our anti-counterfeiting efforts and Fiscal 2012, as average daily balance were not significantly differently year over year. (Gain)$1.4$2.6 million during Fiscal 2013,2015, as compared to a foreign currency gainloss of $2.6$0.1 million during Fiscal 2012.2014. The foreign currencyFiscal 2015 loss during Fiscal 2013, relativewas primarily related to the foreignrevaluation and settlement of certain of our accounts payable in currencies other than the functional currency gain during Fiscal 2012, was primarily due toof the applicable reporting units, as well as the strengthening of the U.S. dollarDollar relative to the Japanese Yen,Euro and the Canadian Dollar, which impacted the re-measurement of Yen-denominateddollar-denominated intercompany loans with certain of our subsidiaries. Conversely, duringSuch loss was partially offset by net gains of $1.5 million related to mark-to-market of our forward foreign currency contracts not designated as accounting hedges. The $0.1 million loss for Fiscal 2012 there were larger U.S. dollar denominated intercompany loan balances with2014 was primarily related to the revaluation and settlement of certain of our non-U.S. subsidiaries (whoseaccounts payable in currencies other than the functional currency wasof the Euro), which were impacted by the U.S. dollar’s strengthening against the Euro during that period.$229.5$374.8 million of income tax expense during Fiscal 2013,2015, compared with $101.5$346.2 million for Fiscal 2012.2014. Our effective tax rate for Fiscal 20132015 was 36.6%29.8%, compared to 40.8%34.4% for Fiscal 2012.2014. The decrease in our effective tax rate resultedwas primarily due to a decreasethe increase in our U.S. blended statetaxable income tax rate, as well as a greater portionin certain of our income being recognized in jurisdictions withnon-U.S. subsidiaries (predominantly European operations) during Fiscal 2015, which are subject to lower statutory income tax rates duringrates. The Fiscal 2013 as compared to Fiscal 2012.Our2015 effective tax rate may fluctuate from timewas also favorably impacted by the settlement of certain financial instruments in connection with our international income tax structuring.time due to the effects of changes in U.S. state and local taxes, tax rates in foreign jurisdictions, and certain other nondeductible expenses (such as fees related to a public offering) and income earned in certain non-U.S. entities with significant net operating loss carryforwards. In addition, factors such as the geographic mix of earnings, enacted tax legislation and the results of various global tax strategies, may also impact our effective tax rate in future periods.Net Income$250.2$219.5 million, or 169.8%33.2%, to $397.6$881.0 million during Fiscal 2013,2015, compared to $147.4$661.5 million for Fiscal 2012.2013 Credit Facilitycredit facility (see below discussion regarding “Senior Unsecured Revolving Credit Facility”) and available cash and cash equivalents. Our primary use of this liquidity is to fund our ongoing cash requirements, including working capital requirements, global retail store construction, expansion and renovation, expansion of our distribution and corporate facilities, construction and renovation of shop-in-shops, investment in information systems infrastructure, share repurchases and expansion of our distribution andother corporate facilities.activities. We believe that the cash generated from our operations, together with borrowings available under our revolving credit facility and available cash and cash equivalents, will be sufficient to meet our working capital needs for the next 12 months, including investments made and expenses incurred in connection with our store growth plans, shop-in shopshop-in-shop growth, investments in corporate and distribution facilities, continued systems development, as well as web based salese-commerce and marketing initiatives.initiatives and acquisition of certain currently licensed operations in Asia. We spent approximately $184.7$369.2 million on capital expenditures during Fiscal 2014.2016, and expect to spend approximately $250.0 million during Fiscal 2017. The majority of these expenditures related to the retail store openings which occurred during the year, with the remainder being used on investments made in connection with new shop-in-shops, the build-out of our corporate offices and enhancements to our distribution, e-commerce, and other information systems infrastructure. In addition, we spent approximately $28.8 million during Fiscal 2014, on intangible assets related to our European retail store expansion.thousands)millions): As of March 2 9 , March 3 0 , 2014 2013 $ 955,145 $ 472,511 $ 1,468,799 $ 824,941 $ 2,216,973 $ 1,289,565 Fiscal Year Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 631,779 $ 356,336 $ 115,290 (215,520 ) (139,099 ) (88,187 ) 71,058 150,561 58,639 (4,683 ) (1,641 ) (453 ) $ 482,634 $ 366,157 $ 85,289 As of April 2,
2016 March 28,
2015Balance Sheet Data: Cash and cash equivalents $ 702.0 $ 978.9 $ 1,234.3 $ 1,663.4 Total assets $ 2,566.8 $ 2,684.6 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Cash Flows Provided By (Used In): Operating activities $ 1,228.4 $ 857.9 $ 633.0 Investing activities (381.1 ) (388.4 ) (215.5 ) Financing activities (1,128.3 ) (434.7 ) 71.1 Effect of exchange rate changes 4.1 (27.1 ) (4.7 ) Net (decrease) increase in cash and cash equivalents $ (276.9 ) $ 7.7 $ 483.9 $275.4$370.5 million to $631.8$1.228 billion during Fiscal 2016, as compared to $857.9 million for Fiscal 2015. The increase in cash flows from operating activities was primarily due to favorable changes in working capital, as well as an increase in our net income after non-cash adjustments. The increase in working capital was largely attributable to: a favorable change in accounts receivable due to higher shipments at the end of Fiscal 2015, as well as improved cash collections; a favorable change in inventories also reflecting higher shipments at the end of Fiscal 2015, partially offset by increased inventory related to new retail stores and wholesale locations (including inventory to support our operations in Panama and South Korea); and increases in accounts payable and accrued expenses and other current liabilities primarily due to the timing of payments, in part due to the inclusion of the 53rd week in Fiscal 2016.2014,2015, as compared to $356.3$633.0 million for Fiscal 2013.2014. The increase in cash flows from operating activities was primarily due to an increase in our net income after non-cash adjustments, as well as an increase in changesa favorable change on our inventory primarily attributable to the sell through of our accounts payableinventory relative to purchases made during Fiscal 20142015. These increases were partially offset by decreases related to changes in our accrued expenses and other current liabilities and accounts payable, as compared to Fiscal 2013. These increases were offset, in part, by a decrease in changes to our accounts receivable and an increase in cash outflows on our inventory during Fiscal 2014, as compared to Fiscal 2013. The increase in changes to our accounts payable was largely related to the increases in our inventory purchases. The increase in cash outflows on our inventory occurred primarily due to timing of payments. The decline related to accrued expenses and other current liabilities was also due to the increase in our inventory requirements driven by our increased salespayment of certain non-U.S. current income tax liabilities during Fiscal 2014, as compared to Fiscal 2013. The decrease in changes to our accounts receivable was directly related to the increase in our sales which drove the increase to our accounts receivable balances during Fiscal 2014.Cash provided by operating activities increased $241.0 million to $356.3 million during Fiscal 2013, as compared to $115.3 million for Fiscal 2012. The increase in cash flows from operating activities is primarily due to an increase in our net income, offset, in part, by a decrease in changes to our accounts receivable and an increase in cash outflows on our inventory during Fiscal 2013 as compared to Fiscal 2012. The decrease in the change to our accounts receivable was attributable to our increasing sales during Fiscal 2013, which resulted in higher accounts receivable balances relative to the prior fiscal year. The increase in cash outflows on our inventory occurred primarily to accommodate the increase to our net sales during Fiscal 2013. In addition, as we continue to open more retail stores we expect our expenditures on inventory to increase at a greater rate than the increase in our sales as inventory related to retail sales typically experiences slower inventory turnover than that of wholesale.$215.5$381.1 million during Fiscal 2014,2016, compared to net cash used in investing activities of $139.1$388.4 million during Fiscal 2013.2015. The favorable change in cash from investing activities was primarily due to a $17.8 million decline in cash used in connection with lease rights (key money) for new stores, which was partially offset by a $13.0 million increase in capital expenditures, largely attributable to the build-out of our new retail stores and shop-in-shops, as well as investments in new information technology, distribution system enhancements, corporate offices and various other improvements in our infrastructure.wasis primarily the result of the build-out of our new retail stores, which were constructed during Fiscal 2014,2015, shop-in-shops we installed during Fiscal 2014,2015, as well as certain technology initiatives undertaken during the year,Fiscal 2015, which related to distribution system enhancements and various other improvements to our infrastructure. In addition, we purchased approximately $28.8 million of intangible assets related to certain of our stores opened during Fiscal 2014, as well as made an investment in our joint venture for approximately $2.0 million during Fiscal 2014.investingfinancing activities was $139.1 million$1.128 billion during Fiscal 2013,2016, compared to net cash used in investingfinancing activities of $88.2$434.7 million during Fiscal 2012. The increase2015. This decline in cash from financing activities was primarily attributable to increased cash payments of $657.1 million in connection with the repurchase of our ordinary shares, as well a $26.8 million decrease in proceeds from our share option arrangements.investing activities was primarily the result of the build-out of our new retail stores, which were constructed during Fiscal 2013, shop-in-shops we installed during Fiscal 2013, as well as certain technology initiatives undertaken during the year, which related to distribution system enhancements and various other improvements to our infrastructure. In addition, we purchased approximately $8.5 million of intangible assets related to certain of our stores opened during Fiscal 2013, as well as made an investment in, and loan to, a joint venture, for approximately $3.2 million and $6.0 million, respectively, during Fiscal 2013.Cash Provided by Financing ActivitiesNet cash provided by financing activities was $71.1$434.7 million during Fiscal 2014,2015, compared to net cash provided by financing activities of $150.6$71.1 million during Fiscal 2013. After excluding the non-cash effects of tax benefits from the exercise of share options, cash provided by financing activities increased by $10.3 million.2014. This increase was primarily due to the net repayments on our revolving credit facility of $22.7 million during Fiscal 2013. This increase was offset, in part, by a decrease of $11.4 milliondecline in cash received from the exercise of employee share options during Fiscal 2014 as compared to Fiscal 2013.Net cash provided by financing activities was $150.6primarily attributable to increased cash payments of $492.9 million during Fiscal 2013, compared to net cash provided by financing activitiesin connection with the repurchase of $58.6our ordinary shares, as well a $13.1 million during Fiscal 2012. After excluding the non-cash effects of tax benefitsdecrease in proceeds from the exercise ofour share options, cash provided by financing activities decreased by $20.3 million. This decrease was primarily due to the net repayments on our revolving credit facility of $22.7 million during Fiscal 2013, as compared to net borrowings of $9.9 million during Fiscal 2012. This decrease was offset, in part, by an increase in cash received from the exercise of employee share options during Fiscal 2013 as compared to Fiscal 2012.February 8,October 29, 2015, we entered into an amended and restated senior unsecured revolving credit facility ("2015 Credit Facility") with, among others, JPMorgan Chase Bank, N.A. ("JPMorgan Chase"), as administrative agent, which replaced our prior 2013 we terminatedsenior unsecured revolving credit facility ("2013 Credit Facility"). The Company and a U.S., Canadian, Dutch and Swiss subsidiary are the provisionsborrowers under the 2015 Credit Facility. The borrowers and certain of our existing 2011material subsidiaries provide unsecured guarantees of the 2015 Credit Facility and entered into a senior unsecured credit facility (“2013 Credit Facility”). Pursuant to the agreement the 2013Facility. The 2015 Credit Facility provides for up to $200.0 million of$1.0 billion in borrowings, which may be denominated in U.S. Dollars and expires on February 8, 2018.other currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs. The agreement2015 Credit Facility also provides for loans andthe issuance of letters of credit to our European subsidiaries of up to $100.0$75.0 million and swing line loans of up to $50.0 million. The 2013We have the ability to expand its borrowing availability under the 2015 Credit Facility contains financial covenants such as requiringby up to an additional $500.0 million, subject to the agreement of the participating lenders and certain other customary conditions. The 2015 Credit Facility expires on October 29, 2020.1.0 (with1. Such leverage ratio is calculated as the ratio beingof the sum of total consolidated indebtedness as of the date of the measurement plus 8.06.0 times the consolidated rent expense for the last four consecutive fiscal quarters, to EBITDAConsolidated EBITDAR for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus consolidated rent expense)income tax expense, net interest expense, depreciation and a fixed charge coverage ratio of 2.0 to 1.0 (with the ratio being EBITDA plusamortization expense, consolidated rent expense and other non-cash charges, subject to the sum of fixed charges plus consolidated rent expense), restricts and limitscertain deductions. The 2015 Credit Facility also includes covenants that limit additional indebtedness, guarantees, liens, acquisitions and restricts the incurrence of additional liensother investments and cash dividends.dividends that are customary for financings of this type. As of March 29, 2014,April 2, 2016, we were in compliance with all of our covenants covered underrelated to this agreement.Borrowings20132015 Credit Facility accrue interest atwould be entitled to take various actions, including terminating the rate per annum announced from time to time by the agent a rate based on the rates applicable for deposits in the London interbank market for U.S. dollars or the applicable currency in which the loans are made (the “Adjusted LIBOR”) plus an applicable margin. The applicable margin may range from 1.25% to 1.75%,commitments and is based, or dependent upon, a particular threshold related to the adjusted leverage ratio calculated during the period of borrowing. For Fiscal 2014, the weighted average interest rate for the revolving credit facility was 1.6%. The 2013 Credit Facility requires an annual facility fee of $0.1 million, and an annual commitment fee of 0.25% to 0.35% on the unused portion of the available credit under the facility.As of March 29, 2014, there were noaccelerating amounts outstanding under the 2015 Credit Facility.Facility, andFacility. At April 2, 2016, stand-by letters of credit of $10.0 million were outstanding under the 2015 Credit Facility. At April 2, 2016, the amount available for future borrowings was $188.5$990.0 million.largest amount borrowedASR program also contained a forward contract indexed to our ordinary shares whereby additional shares would be delivered to us by January 29, 2015 (the settlement date) if the share price declined from the initial share price, limited to a stated share price “floor.” The total number of shares repurchased/acquired was determined on final settlement, with the additional shares reacquired based on the volume-weighted average price of our ordinary shares, less a discount, during the repurchase period, subject to aforementioned price floor. In January 2015, 280,819 additional shares were delivered to us pursuant to these provisions, which did not require any additional cash outlay. The ASR program was accounted for as a treasury stock repurchase, reducing the number of ordinary shares outstanding by 4,718,335 shares.2014, was $6.6 million. At March 29, 2014, there were stand-by letters2016 and Fiscal 2015, we withheld 54,875 shares and 40,787 shares, respectively, at a cost of credit$2.4 million and $3.4 million, respectively, in satisfaction of $11.5 million.March 29, 2014,April 2, 2016, our lease commitments and contractual obligations were as follows (in thousands)millions): Fiscal Fiscal Fiscal Fiscal 2020 and 2015 2016-2017 2018-2019 Thereafter Total $ 134,673 $ 265,259 $ 244,781 $ 436,718 $ 1,081,431 Fiscal Years Ending Total Operating leases $ 220.7 $ 438.5 $ 420.0 $ 746.7 $ 1,825.9 Inventory Purchase Obligations 549.0 — — — 549.0 Other commitments 45.4 3.8 — — 49.2 Long-term debt — 0.1 1.2 1.0 2.3 Total $ 815.1 $ 442.4 $ 421.2 $ 747.7 $ 2,426.4 $19.0$18.5 million of long-term liabilities related to uncertain tax positions, due to the uncertainty of the time and nature of resolution.March 29, 2014,April 2, 2016, as these items will be paid within one year, and non-current liabilities that have no cash outflows associated with them (e.g., deferred taxes).We do not have any long-term purchase obligations that represent firm commitments at March 29, 2014.Item 7A.Quantitative and Qualitative Disclosures About Market RiskCurrently weWe enter into foreign currency forward contracts to manage our foreign currency exposure to the fluctuations of certain foreign currencies. The use of these instruments primarily helps to manage our exposure to our foreign purchase commitments and better control our product costs. Other than these purchase commitments, we do not use these foreign exchange contracts for any other purposes. In addition, weWe do not use derivatives for trading or speculative purposes.RegardingFor those contracts which are designated as hedges for accounting purposes, any portion of those contracts deemed ineffective would be charged to earnings, in the same manner as those contracts charged to earnings above, in the period the ineffectiveness was determined.thoseour forward currency contracts, both designated and not designated as hedges for accounting purposes, to determine the effects of fluctuations in foreign currency exchange rates. For this sensitivity analysis, we assume a hypothetical change in U.S. dollarDollar against foreign exchange rates. Based on all foreign currency exchange contracts outstanding as of March 29, 2014,April 2, 2016, a 10% appreciation or devaluation of the U.S. dollarDollar compared to the level of foreign currency exchange rates for currencies under contract as of March 29, 2014April 2, 2016, would result in a net increase and decrease, respectively, of approximately $2.1$20 million in the fair value of net unrealized foreign currency loss. Conversely, a 10% appreciation of the U.S. dollar would result in an increase approximately of $1.6 million of net unrealized gains.29, 2014,28, 2015, there waswere no balances outstanding balance on our Credit Facility. The balance of our2015 Credit Facility at March 29, 2014or our prior 2013 Credit Facility, which is not indicative of future balances under the 2015 Credit Facility that may be subject to fluctuations in interest rates. Any increases in either the prime rate or LIBORapplicable interest rate(s) would cause an increase to the interest expense on our 2015 Credit Facility relative to any outstanding balance at that date.Item 8.Financial Statements and Supplementary Data15Exhibits15. “Exhibits and Financial Statement ScheduleSchedule” and is incorporated herein by reference.Item 9. in and Disagreements with Accountants on Accounting and Financial DisclosureOn December 14, 2012, the Company notified PricewaterhouseCoopers LLP (“PwC”) that it was dismissing PwC as the Company’s principal independent accountants. PwC had served in that role since 2004. The dismissal became effective upon PwC’s completion of the audit of the Company’s financial statements as of and for the fiscal year ended March 30, 2013Disagreements with Accountants on Accounting and the issuance of PwC’s report thereon.The decision to change principal independent accountants was approved by the Audit Committee of the Company’s Board of Directors.The audit reports of PwC on the consolidated financial statements of the Company as ofFinancial Disclosurefor the years ended March 30, 2013 and March 31, 2012 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.During the two fiscal years ended March 30, 2013 there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to the satisfaction of PwC would have caused them to make reference in connection with their opinion to the subject matter of the disagreement.During the two fiscal years ended March 30, 2013, there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K).On December 14, 2012, the Company engaged Ernst & Young LLP (“EY”) as its new principal independent accountants. EY’s appointment took effect for the fiscal year ended March 29, 2014, and for all interim periods therein. During the Company’s 2012 and 2013 fiscal years the Company did not consult with EY regarding either:(i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, nor did EY provide written or oral advice to the Company that EY concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or(ii) any matter that was either the subject of a “disagreement” (as defined in Regulation S-K 304(a)(1)(iv) and the related instructions), or a “reportable event” (as defined in Item 304(a)(1)(v) of Regulation S-K).Item 9A.Controls and Procedures13a-15 (e)13a - 15(e) and 15d—15(d) - 15(e) under the Securities and Exchange Act of 1934 (the “Exchange Act”)) as of March 29, 2014.April 2, 2016. Based on the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures as of March 29, 2014April 2, 2016 are effective.preparation ofconsolidated financial statements for external purposeshave been prepared in accordance with accounting principles generally accepted accounting principles (“GAAP”in the United States ("U.S. GAAP"). Such internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance (A) that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors; and (B) regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.March 29, 2014.April 2, 2016. In making this assessment, it used the criteria set forth inInternal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)., the 2013 Framework. Based on this assessment, management has determined that, as of March 29, 2014,April 2, 2016, our internal control over financial reporting is effective based on those criteria.March 29, 2014,April 2, 2016, as well as the consolidated financial statements, have been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which appears herein. The audit report related to internal controls over financial reporting, appears on page 4955 of this report.March 29, 2014,April 2, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 9B.Other InformationNone.Item 10.Directors, Executive Officers and Corporate Governance2014,2016, which is incorporated herein by reference.Item 11.Executive Compensation2014,2016, which is incorporated herein by reference.Equity Compensation Plan Information (a) (b) (c) Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) 5,115,065 $ 52.40 9,211,143 2,746,409 $ 5.61 — Total 7,861,474 $ 36.05 9,211,143 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersReflects share options, restricted shares and restricted share units issued under the Michael Kors Holdings Limited Omnibus Incentive Plan. Represents the weighted average exercise price of outstanding share awards only. Reflects share options issued under the Amended and Restated Michael Kors (USA), Inc. Stock Option Plan (the “Option Plan”). Prior to our initial public offering, we granted share options to purchase ordinary shares to our executive officers and other eligible employees pursuant to the terms of the Option Plan. All of the share options granted under the Option Plan are ten-year share options and vest in full at the end of the ten-year term if our shareholder net equity has increased by at least 20% per annum during such ten-year period. However, a portion of each share option is eligible to vest on an accelerated basis over the course of five years with 20% vesting each year if the pre-established annual performance goal for the year has been met, in each case, subject to the grantee’s continued employment through the vesting date. The annual performance goals are tied to annual divisional pre-tax profit as determined by the Board. As of April 2, 2016, there were no shares available for future issuance under the 2008 Plan. 2014,2016, which is incorporated herein by reference.Item 13.Certain Relationships, Related Transactions and Director Independence2014,2016, which is incorporated herein by reference.Item 14.Principal Accountant Fees and ServicesInformation with respect to this Item is included in the Company’s Proxy Statement to be filed in June 2014, which is incorporated herein by reference.Item 15.Exhibits and Financial Statement Schedules(a) The following documents are filed as part of this annual report on Form 10-K: 1. The following consolidated financial statements listed below are filed as a separate section of this annual reportAnnual Report on Form 10-K:2. Exhibits: ExhibitNo.Document Description 2.1
No.Restructuring Agreement, dated as of July 7, 2011, by and among Michael Kors Holdings Limited, John Idol, SHL-Kors Limited, Michael Kors, SHL Fashion Limited, Michael Kors (USA), Inc., Michael Kors Far East Holdings Limited, Sportswear Holdings Limited, Littlestone, Northcroft Trading Inc., Vax Trading, Inc., OB Kors LLC, John Muse, Muse Children’s GS Trust, JRM Interim Investors, LP and Muse Family Enterprises (included as Exhibit 2.1 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference).Document DescriptionAmended and Restated Memorandum and Articles of Association of Michael Kors Holdings Limited (included as Exhibit 99.3 to the Company’s Current Report on Form 6-K filed on February 14, 2012, and incorporated herein by reference). Specimen of Ordinary Share Certificate of Michael Kors Holdings Limited (included as Exhibit 4.1 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference). 4.2 4.2Amended and Restated Credit Agreement, dated as of February 8, 2013,October 29, 2015, by and among Michael Kors (USA), Inc., as borrower and guarantor, Michael Kors Holdings Limited, as borrower and guarantor, the foreign subsidiary borrowersForeign Subsidiary Borrowers from time to time party thereto, the lenderscertain other subsidiaries of Michael Kors Holdings Limited from time to time party thereto as Guarantors, the guarantorsLenders party thereto, J.P. MorganJPMorgan Chase Bank, N.A., as Administrative Agent and Co-Syndication Agent, Citibank, N.A., as Co-Syndication Agent, Bank of America, N.A., HSBC Bank USA, National Association, Wells Fargoas Co-Documentation Agent, and U.S. Bank National Association, as Co-Documentation Agent. (included as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 26, 2015 filed on February 3, 2016, and J.P. Morgan Securities L.L.C.*incorporated herein by reference).Shareholders Agreement, dated as of July 11, 2011, among Michael Kors Holdings Limited and certain shareholders of Michael Kors Holdings Limited (included as Exhibit 10.2 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference). 4.4Subscription Agreement, dated as of July 7, 2011, among Michael Kors Holdings Limited and certain shareholders of Michael Kors Holdings Limited (included as Exhibit 10.1 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference). 10.1Form of Indemnification Agreement between Michael Kors Holdings Limited and its directors and executive officers (included as Exhibit 10.5 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference). Licensing Agreement, dated as of April 1, 2011, between Michael Kors, L.L.C. and Michael Kors (HK) Limited (included as Exhibit 10.6 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference). (Certain portions of this exhibit were omitted pursuant to a confidential treatment request. Omitted information was filed separately with the Securities and Exchange Commission.) Licensing Agreement, dated as of April 1, 2011, between Michael Kors, L.L.C. and Michael Kors Trading Shanghai Limited (included as Exhibit 10.7 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference). (Certain portions of this exhibit were omitted pursuant to a confidential treatment request. Omitted information was filed separately with the Securities and Exchange Commission). 10.4Document Description 10.4 Amended and Restated Michael Kors (USA), Inc. Stock Option Plan (included as Exhibit 10.4 to the Company’s Registration Statement on Form F-1, as amended (File No. 333-178282), filed on December 2, 2011, and incorporated herein by reference). Amended No. 1 to the Amended and Restated Michael Kors (USA), Inc. Share Option Plan. (included as Exhibit 4.9 to the Company’s Annual Report on Form 20-F for the fiscal year ended March 31, 2012, filed on June 12, 2012, and incorporated herein by reference). 10.6 10.6Exhibit 10.8Appendix A to the Company’s RegistrationDefinitive Proxy Statement on Form F-1, as amendedSchedule 14A (File No. 333-178282)001-35368), filed on December 2, 2011,June 16, 2015, and incorporated herein by reference).10.7 10.7Second Amended and Restated Employment Agreement, dated as of May 23, 2013,20, 2015, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited and Michael Kors.*Kors (included as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference).10.8 10.8Second Amended and Restated Employment Agreement, dated as of May 23, 2013,20, 2015, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited and John D. Idol.*Idol (included as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference).Amended and Restated Employment Agreement, dated as of May 23, 2013, by and among Michael Kors (USA), Inc., Michael Kors Holdings Limited and Joseph B. Parsons.*Parsons (included as Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2013 filed on May 29, 2013, and incorporated herein by reference).10.10 Michael Kors Holdings Limited Executive Bonus Program (included as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 29, 2013 filed on August 6, 2013, and incorporated herein by reference). 10.10Amended and Restated Employment Agreement, dated as of May 23, 2013,12, 2014, by and amongbetween Michael Kors (USA), Inc., Michael Kors Holdings Limited and Lee S. Sporn.*Cathy Marie Robison (included as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2014 filed on May 28, 2014, and incorporated herein by reference).10.12 10.11Offer Letter,Employment Agreement, dated as of August 21, 2012,July 14, 2014, by and between Pascale Meyran and Michael Kors (USA), Inc. (included as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference).10.13 Form of Employee Non-Qualified Option Award Agreement (included as Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference). 10.14 Form of Employee Restricted Share Unit Award Agreement (included as Exhibit 10.16 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference). 10.15 Form of Performance-Based Restricted Share Unit Award Agreement (included as Exhibit 10.17 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference). 10.16 Form of Independent Director Restricted Share Unit Award Agreement (included as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference). 10.17 Aircraft Time Sharing Agreement, dated November 24, 2014, by and between Michael Kors (USA), Inc. and Britton Russell.*John Idol (included as Exhibit 10.19 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference).10.18 10.12Form of Performance-Based Restricted Share Unit Award Agreement.* 10.13Michael Kors Holdings Limited Executive Bonus Program.** 10.14EmploymentAircraft Time Sharing Agreement, effective as of Maydated December 12, 2014, by and amongbetween Michael Kors (USA), Inc., and Cathy Marie Robinson.Michael Kors (included as Exhibit 10.20 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2015, filed on May 27, 2015, and incorporated herein by reference).List of subsidiaries of Michael Kors Holdings Limited. 23.1Consent of PricewaterhouseCoopers LLP.Consent of Ernst & Young LLP. Certification of Chief Executive Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002. Certification of Chief Financial Officer pursuant to Section 302 of Sarbanes Oxley Act of 2002. Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Interactive Data Files. *Incorporated by reference to the Exhibits to the Annual Report on Form 10-K for the fiscal year ended March 30, 2013, as filed with the Securities and Exchange Commission on May 29, 2013.**Incorporated by reference to the Exhibits to the Quarterly report on Form 10-Q for the fiscal quarter June 29, 2013, as filed with the Securities and Exchange Commission on August 8, 2013.May 28, 2014June 1, 2016MICHAEL KORS HOLDINGS LIMITED By: Name:Name: John D. Idol Title:Title: Chairman & Chief Executive Officer By:/s/ Michael Kors Honorary Chairman, Chief Creative Officer and DirectorMay 28, 2014Michael KorsBy: By: /s/ Michael Kors Honorary Chairman, Chief Creative Officer and Director June 1, 2016 Michael Kors By: /s/ John D. Idol May 28, 2014June 1, 2016 John D. Idol By: By:Officer.Officer, Chief Operating Officer and Treasurer (Principal Financial and Accounting Officer)May 28, 2014June 1, 2016 Joseph B. Parsons By: By:/s/ Silas K.F. Chou DirectorMay 28, 2014Silas K.F. ChouBy:/s/ Lawrence S. Stroll DirectorMay 28, 2014Lawrence S. StrollBy:Director DirectorMay 28, 2014June 1, 2016 M. William Benedetto By: By:Director DirectorMay 28, 2014June 1, 2016 Stephen F. Reitman By: By:Director DirectorMay 28, 2014June 1, 2016 Ann McLaughlin Korologos By: By:Director DirectorMay 28, 2014June 1, 2016 Jean Tomlin By: By:Director DirectorMay 28, 2014June 1, 2016 Judy Gibbons By: /s/ Jane Thompson Director June 1, 2016 Jane Thompson sheetsheets of Michael Kors Holdings Limited and subsidiaries (“the Company”) as of April 2, 2016 and March 29, 2014,28, 2015, and the related consolidated statementstatements of operations and comprehensive income, shareholders’shareholders' equity and cash flows for each of the three years in the period ended March 29, 2014.April 2, 2016. These financial statements are the responsibility of the Company’sCompany's management. Our responsibility is to express an opinion on these financial statements based on our audit.auditaudits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit providesaudits provide a reasonable basis for our opinion.29, 201428, 2015, and the consolidated results of their operations and their cash flows for each of the three years in the period ended March 29, 2014April 2, 2016, in conformity with U.S. generally accepted accounting principles.LimitedLimited’s internal control over financial reporting as of March 29, 2014,April 2, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992(2013 framework) and our report dated May 28, 2014,June 1, 2016 expressed an unqualified opinion thereon./s/ ERNST & YOUNG LLPNew York, New YorkMay 28, 2014March 29, 2014,April 2, 2016, based on criteria established in Internal Control—IntegratedControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992(2013 framework) (the COSO criteria). Michael Kors Holdings Limited and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’sCompany’s internal control over financial reporting based on our audit.March 29, 2014,April 2, 2016, based on the COSO criteria.sheet of Michael Kors Holdings Limited and subsidiariessheets as of April 2, 2016 and March 29, 2014, and the related consolidated statement of operations and comprehensive income, changes in shareholders’ equity and cash flows for the period ended March 29, 2014 and our report dated May 28, 2014 expressed an unqualified opinion thereon./s/ ERNST & YOUNG LLPNew York, New YorkMay 28, 2014REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Board of Directors and Shareholders of Michael Kors Holdings LimitedIn our opinion, the consolidated balance sheet as of March 30, 20132015, and the related consolidated statements of operations and comprehensive income, of shareholders’ equity and of cash flows for each of the twothree years in the period ended March 30, 2013 present fairly, in all material respects, the financial positionApril 2, 2016 of Michael Kors Holdings Limited and its subsidiaries at March 30, 2013, and the results of their operations and their cash flows for each of the two years in the period ended March 30, 2013, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to expressour report dated June 1, 2016 expressed an unqualified opinion on these financial statements based on our audits.We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion./s/ PricewaterhouseCoopers LLPNew York, New YorkMay 29, 2013thousands,millions, except share data) March 29,
2014 March 30,
2013 Assets $ 955,145 $ 472,511 314,055 206,454 426,938 266,894 30,539 8,480 50,492 34,850 1,777,169 989,189 350,678 242,113 48,034 20,980 14,005 14,005 3,662 4,389 23,425 18,889 $ 2,216,973 $ 1,289,565 Liabilities and Shareholders’ Equity $ 131,953 $ 82,977 54,703 38,642 47,385 9,074 74,329 33,555 308,370 164,248 76,785 56,986 5,887 13,163 19,800 7,922 410,842 242,319 — — (2,447 ) — 527,213 424,454 (6,373 ) (3,461 ) 1,287,738 626,253 1,806,131 1,047,246 $ 2,216,973 $ 1,289,565 April 2,
2016 March 28,
2015Assets Current assets Cash and cash equivalents $ 702.0 $ 978.9 Receivables, net 307.9 363.4 Inventories 546.8 519.9 Prepaid expenses and other current assets 113.1 127.5 Total current assets 1,669.8 1,989.7 Property and equipment, net 758.2 562.9 Intangible assets, net 67.4 61.5 Goodwill 23.2 14.0 Deferred tax assets 24.5 23.0 Other assets 23.7 33.5 Total assets $ 2,566.8 $ 2,684.6 Liabilities and Shareholders’ Equity Current liabilities Accounts payable $ 131.4 $ 114.1 Accrued payroll and payroll related expenses 59.7 62.9 Accrued income taxes 51.6 25.5 Accrued expenses and other current liabilities 192.8 123.8 Total current liabilities 435.5 326.3 Deferred rent 106.4 88.3 Deferred tax liabilities 3.5 7.0 Long-term debt 2.3 — Other long-term liabilities 19.6 22.0 Total liabilities 567.3 443.6 Commitments and contingencies Shareholders’ equity Ordinary shares, no par value; 650,000,000 shares authorized; 208,084,175 shares issued and 176,441,891 outstanding at April 2, 2016; 206,486,699 shares issued and 199,656,833 outstanding at March 28, 2015 — — Treasury shares, at cost (31,642,284 shares at April 2, 2016 and 6,829,866 shares at March 28, 2015) (1,650.1 ) (497.7 ) Additional paid-in capital 718.9 636.7 Accumulated other comprehensive loss (80.9 ) (66.8 ) Retained earnings 3,007.8 2,168.8 Total shareholders' equity of MKHL 1,995.7 2,241.0 Noncontrolling interest 3.8 — Total equity 1,999.5 2,241.0 Total liabilities and shareholders’ equity $ 2,566.8 $ 2,684.6 thousands,millions, except share and per share data) Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 3,170,522 $ 2,094,757 $ 1,237,100 140,321 86,975 65,154 3,310,843 2,181,732 1,302,254 1,294,773 875,166 549,158 2,016,070 1,306,566 753,096 926,913 621,536 464,568 79,654 54,291 37,554 1,332 725 3,292 1,007,899 676,552 505,414 1,008,171 630,014 247,682 393 1,524 1,495 131 1,363 (2,629 ) 1,007,647 627,127 248,816 346,162 229,525 101,452 661,485 397,602 147,364 — — 21,227 $ 661,485 $ 397,602 $ 126,137 202,582,945 196,615,054 158,258,126 205,638,107 201,540,144 189,299,197 $ 3.27 $ 2.02 $ 0.80 $ 3.22 $ 1.97 $ 0.78 $ 661,485 $ 397,602 $ 147,364 (34 ) (4,006 ) (4,768 ) (2,878 ) 1,280 — $ 658,573 $ 394,876 $ 142,596 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Net sales $ 4,538.8 $ 4,199.7 $ 3,170.5 Licensing revenue 173.3 171.8 140.3 Total revenue 4,712.1 4,371.5 3,310.8 Cost of goods sold 1,914.9 1,723.8 1,294.7 Gross profit 2,797.2 2,647.7 2,016.1 Selling, general and administrative expenses 1,428.0 1,251.5 926.9 Depreciation and amortization 183.2 138.4 79.7 Impairment of long-lived assets 10.9 0.8 1.3 Total operating expenses 1,622.1 1,390.7 1,007.9 Income from operations 1,175.1 1,257.0 1,008.2 Other income, net (3.7 ) (1.6 ) — Interest expense, net 1.7 0.2 0.4 Foreign currency loss 4.8 2.6 0.1 Income before provision for income taxes 1,172.3 1,255.8 1,007.7 Provision for income taxes 334.6 374.8 346.2 Net income 837.7 881.0 661.5 Less: Net loss attributable to noncontrolling interest (1.4 ) — — Net income attributable to MKHL $ 839.1 $ 881.0 $ 661.5 Weighted average ordinary shares outstanding: Basic 186,293,295 202,680,572 202,582,945 Diluted 189,054,289 205,865,769 205,638,107 Net income per ordinary share attributable to MKHL: Basic $ 4.50 $ 4.35 $ 3.27 Diluted $ 4.44 $ 4.28 $ 3.22 Statements of Comprehensive Income: Net income $ 837.7 $ 881.0 $ 661.5 Foreign currency translation adjustments 18.5 (91.3 ) — Net (losses) gains on derivatives (32.5 ) 30.9 (2.9 ) Comprehensive income 823.7 820.6 658.6 Less: Net loss attributable to noncontrolling interest (1.4 ) — — Less: Other comprehensive income attributable to noncontrolling interest 0.1 — — Comprehensive income attributable to MKHL $ 825.0 $ 820.6 $ 658.6 thousandsmillions, except share data) Accumulated Convertible Additional Other Preference Shares Ordinary Shares Paid-in Treasury Comprehensive Retained Shares Amounts Shares Amounts Capital Shares Gain (Loss) Earnings Total 10,163,920 $ — 140,554,377 $ — $ 40,000 $ — $ 4,033 $ 81,287 $ 125,320 — — — — — — 147,364 147,364 — — — — — (4,768 ) — (4,768 ) — — — — — — — 142,596 475,796 6,579,656 — 101,650 — — — 101,650 — — — 6,706 — — — 6,706 217,137 — — 9,550 — — — 9,550 — 820,074 — — — — — — — 3,521,258 — 9,672 — — — 9,672 — — — 27,020 — — — 27,020 — — — 32,281 — — — 32,281 — — — 1,442 — — — 1,442 (10,856,853 ) 41,256,025 — — — — — — — $ — 192,731,390 $ — $ 228,321 $ — $ (735 ) $ 228,651 $ 456,237 — — — — — — 397,602 397,602 — — — — — — (4,006 ) — (4,006 ) — — — — — — 1,280 — 1,280 — — — — — — — — 394,876 — — 18,541 — — — — — — — — 8,704,477 — 30,435 — — — 30,435 — — — — 20,932 — — — 20,932 — — — — 144,508 — — — 144,508 — — — — 258 — — 258 — $ — 201,454,408 $ — $ 424,454 $ — $ (3,461 ) $ 626,253 $ 1,047,246 — — — — — — — 661,485 661,485 — — — — — — (34 ) — (34 ) — — — — — — (2,878 ) — (2,878 ) — — — — — — — — 658,573 — — 250,654 — — — — — — — — 2,586,283 — 18,988 — — — 18,988 — — — — 29,078 — — — 29,078 — — — — 54,693 — — — 54,693 — — (29,765 ) — — (2,447 ) — — (2,447 ) — $ — 204,261,580 $ — $ 527,213 $ (2,447 ) $ (6,373 ) $ 1,287,738 $ 1,806,131 Ordinary Shares Additional
Paid-in
Capital Treasury Shares Accumulated
Other
Comprehensive
Loss Retained
Earnings Total Equity of MKHL Non-controlling Interest Total Equity Shares Amounts Shares Amounts Balance at March 30, 2013 201,454 $ — $ 424.4 — $ — $ (3.5 ) $ 626.3 $ 1,047.2 $ — $ 1,047.2 Net income — — — — — 661.5 661.5 — 661.5 Other comprehensive loss — — — — — (2.9 ) — (2.9 ) — (2.9 ) Total comprehensive income — — — — — — — 658.6 — 658.6 Issuance of restricted shares 251 — — — — — — — — — Exercise of employee share options 2,586 — 19.0 — — — — 19.0 — 19.0 Equity compensation expense — — 29.1 — — — — 29.1 — 29.1 Tax benefits on exercise of share options — — 54.7 — — — — 54.7 — 54.7 Purchase of treasury shares — — — (30 ) (2.4 ) — — (2.4 ) — (2.4 ) Balance at March 29, 2014 204,291 $ — $ 527.2 (30 ) $ (2.4 ) $ (6.4 ) $ 1,287.8 $ 1,806.2 $ — $ 1,806.2 Net income — — — — — — 881.0 881.0 — 881.0 Other comprehensive loss — — — — — (60.4 ) — (60.4 ) — (60.4 ) Total comprehensive income — — — — — — — 820.6 — 820.6 Issuance of restricted shares 413 — — — — — — — — — Exercise of employee share options 1,783 — 15.3 — — — — 15.3 — 15.3 Equity compensation expense — — 48.9 — — — — 48.9 — 48.9 Tax benefits on exercise of share options — — 45.3 — — — — 45.3 — 45.3 Purchase of treasury shares — — — (6,800 ) (495.3 ) — — (495.3 ) — (495.3 ) Balance at March 28, 2015 206,487 $ — $ 636.7 (6,830 ) $ (497.7 ) $ (66.8 ) $ 2,168.8 $ 2,241.0 $ — $ 2,241.0 Net income — — — — — — 839.1 839.1 (1.4 ) 837.7 Other comprehensive loss — — — — — (14.1 ) — (14.1 ) 0.1 (14.0 ) Total comprehensive income (loss) — — — — — — — 825.0 (1.3 ) 823.7 Fair value of noncontrolling interest in MK Panama — — — — — — — — 5.1 5.1 Forfeitures of restricted awards, net (35 ) — — — — — — — — — Exercise of employee share options 1,632 — 12.7 — — — — 12.7 — 12.7 Equity compensation expense — — 48.4 — — — — 48.4 — 48.4 Tax benefits on exercise of share options — — 21.1 — — — — 21.1 — 21.1 Purchase of treasury shares — — — (24,812 ) (1,152.4 ) — — (1,152.4 ) — (1,152.4 ) Other — — — — — — (0.1 ) (0.1 ) — (0.1 ) Balance at April 2, 2016 208,084 $ — $ 718.9 (31,642 ) $ (1,650.1 ) $ (80.9 ) $ 3,007.8 $ 1,995.7 $ 3.8 $ 1,999.5 thousands)millions) Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 661,485 $ 397,602 $ 147,364 79,654 54,291 37,554 1,332 725 3,292 3,758 229 — 131 1,363 (2,629 ) (354 ) — — 746 703 498 6,333 3,245 4,214 (29,905 ) 3,222 (7,729 ) 29,078 20,932 27,020 (54,693 ) (144,508 ) (32,281 ) — 258 1,442 (105,648 ) (80,581 ) (48,399 ) (158,243 ) (81,108 ) (71,151 ) (5,222 ) (3,866 ) (12,647 ) (4,274 ) 6 (2,284 ) 49,034 16,299 14,888 133,208 152,630 46,419 25,359 14,894 9,719 631,779 356,336 115,290 (184,738 ) (121,321 ) (88,187 ) (1,960 ) (3,232 ) — — (6,000 ) — (28,822 ) (8,546 ) — (215,520 ) (139,099 ) (88,187 ) (21,120 ) (38,954 ) (100,855 ) 21,120 16,280 110,764 — — 9,550 18,988 30,435 9,672 (2,447 ) — — 54,693 144,508 32,281 (176 ) (1,708 ) (2,773 ) 71,058 150,561 58,639 (4,683 ) (1,641 ) (453 ) 482,634 366,157 85,289 472,511 106,354 21,065 $ 955,145 $ 472,511 $ 106,354 $ 699 $ 484 $ 1,266 $ 280,667 $ 70,500 $ 84,389 $ 16,324 $ 12,289 $ 6,869 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Cash flows from operating activities Net income $ 837.7 $ 881.0 $ 661.5 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 183.2 138.4 79.7 Equity compensation expense 48.4 48.9 29.1 Deferred income taxes (1.9 ) 6.2 (29.9 ) Non-cash litigation related costs 1.9 5.7 2.0 Amortization of deferred rent 2.6 5.1 6.3 Loss on disposal of fixed assets 2.8 1.9 3.8 Impairment and write-off of property and equipment 10.9 0.8 1.3 Amortization of deferred financing costs 0.9 0.7 0.7 Tax benefits on exercise of share options (21.1 ) (45.3 ) (54.7 ) Foreign currency (gains) losses 4.8 (1.5 ) 0.1 Gain on acquisition of MK Korea (3.7 ) — — Loss (income) earned on joint venture 1.0 (0.1 ) (0.4 ) Change in assets and liabilities: Receivables, net 52.5 (83.3 ) (104.4 ) Inventories (16.3 ) (112.4 ) (158.2 ) Prepaid expenses and other current assets (5.3 ) (20.1 ) (5.2 ) Other assets (0.4 ) (6.3 ) (4.3 ) Accounts payable 14.2 (8.6 ) 53.7 Accrued expenses and other current liabilities 104.5 36.3 126.5 Other long-term liabilities 11.7 10.5 25.4 Net cash provided by operating activities 1,228.4 857.9 633.0 Cash flows from investing activities Capital expenditures (369.2 ) (356.2 ) (184.7 ) Purchase of intangible assets (11.4 ) (29.2 ) (28.8 ) Investment in joint venture (1.0 ) (3.0 ) — Equity method investments — — (2.0 ) Cash received, net of cash paid for acquired businesses 0.5 — — Net cash used in investing activities (381.1 ) (388.4 ) (215.5 ) Cash flows from financing activities Repurchase of treasury shares (1,152.4 ) (495.3 ) (2.4 ) Tax benefits on exercise of share options 21.1 45.3 54.7 Exercise of employee share options 12.7 15.3 19.0 Repayments of borrowings under revolving credit agreement (199.8 ) — (21.1 ) Borrowings under revolving credit agreement 192.6 — 21.1 Payment of deferred financing costs (2.4 ) — (0.2 ) Other financing activities (0.1 ) — — Net cash (used in) provided by financing activities (1,128.3 ) (434.7 ) 71.1 Effect of exchange rate changes on cash and cash equivalents 4.1 (27.1 ) (4.7 ) Net (decrease) increase in cash and cash equivalents (276.9 ) 7.7 483.9 Beginning of period 978.9 971.2 487.3 End of period $ 702.0 $ 978.9 $ 971.2 Supplemental disclosures of cash flow information Cash paid for interest $ 1.5 $ 0.7 $ 0.7 Cash paid for income taxes $ 273.0 $ 373.3 $ 280.7 Supplemental disclosure of noncash investing and financing activities Accrued capital expenditures $ 33.6 $ 32.9 $ 16.3 UnitedAmericas (United States, Canada and Latin America), Europe and Japan.Asia, as well as e-commerce. Wholesale revenues are principally derived from major department and specialty stores located throughout the United States, CanadaAmericas, Europe and Europe.Asia. The Company licenses its trademarks on products such as fragrances, cosmetics,beauty, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties.For all periods presented, all ordinary share and per share amounts in these consolidated financial statements and the notes hereto have been adjusted retroactively to reflect the effects of a 3.8-to-1 share split, which was completed on November 30, 2011,ties, as well as the effects of the July 2011 reorganization discussed in Note 2 below, as if such reorganization and share split had occurred at the beginning of the periods presented.arehave been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accountsbalances and transactions have been eliminated.March 30, 2013, and March 31, 2012 (“Fiscal 2014,” “Fiscal 2013”2015” and “Fiscal 2012,”2014”, respectively) consistconsisted of 52 weeks. Reorganization and Initial Public OfferingPrior to July 2011, the Company was owned 85% by SHL-Kors Limited, a BVI corporation, and 15% by Mr. Kors. SHL-Kors Limited was owned 100% by SHL Fashion Limited.In July 2011, the Company underwent a corporate reorganization whereby the Company completed a merger with its former parent, SHL-Kors Limited, which merged with and into the Company, with the Company as the surviving corporation (the “First Merger”). Subsequent to the completion of the First Merger, SHL Fashion Limited, the former parent company of SHL-Kors Limited, merged with and into the Company (the “Second Merger”), with the Company as the surviving corporation. Upon completion of the Second Merger, the previous shareholders of SHL Fashion Limited (which include Sportswear Holdings Limited and the Company’s chief executive officer, John Idol), and Mr. Kors became direct shareholders in the Company. Immediately prior to the Second Merger, the Company issued 475,796 preference shares and 6,579,656 ordinary shares to SHL Fashion Limited in consideration for the extinguishment of the Company’s $101.7 million note payable to SHL Fashion Limited. This exchange was based on the fair value of the Company at the time of exchange. In the Second Merger, Mr. Kors and the shareholders of SHL Fashion Limited received 147,134,033 newly issued ordinary shares and 10,639,716 newly issued convertible preference shares of the Company in proportion to their ownership interests held prior to the Second Merger. The Company considered this transaction to be the acquisition of the non-controlling interest in the Company held by Mr. Kors, and, accordingly, the Company accounted for this transaction as an equity transaction.Following the reorganization, in a private placement in July 2011, a group of investors purchased (i) all 10,639,716 convertible preference shares issued in the reorganization from the previous SHL Fashion Limited shareholders and Mr. Kors for $490 million, and (ii) 217,137 newly issued convertible preference shares from the Company for $10.0 million, of which $9.5 million in proceeds, net of placement fees of $0.5 million, were received by the Company. As a result of the aforementioned transactions, the capital structure of the Company increased from 4,351 issued and outstanding ordinary shares to 147,134,033 issued and outstanding ordinary shares (650,000,000 authorized) and 10,856,853 authorized, issued and outstanding convertible preference shares.In addition to the above, immediately prior to the reorganization, the redemption feature related to the contingently redeemable ordinary shares was eliminated, thereby, resulting in the reclassification of $6.7 million from temporary equity, which was classified as “contingently redeemable ordinary shares” in the Company’s consolidated balance sheets, to permanent equity as additional paid-in capital (see Note 17).On December 20, 2011, the Company completed an initial public offering (“IPO”), which resulted in the sale of 54,280,000 shares at a price of $20 per share, all of which were sold by selling shareholders. The Company did not receive any of the proceeds related to the sale of these shares. On December 20, 2011, in connection with the consummation of the IPO, 10,856,853 convertible preference shares were converted into 41,256,025 ordinary shares at a ratio of 3.8-to-1 resulting in no preference shares issued and outstanding at March 31, 2012.During March 2012, the Company completed a secondary offering of 25,000,000 ordinary shares at a price of $47.00 per share. Subsequent to this offering and in connection with it, the underwriters exercised their additional share purchase option during April 2012, where an additional 3,750,000 shares were offered at $47.00 per share. Similar to the IPO the Company did not receive any of the proceeds related to the sale of these shares and incurred approximately $0.7 million in fees related to the secondary offering which were charged to selling, general and administrative expenses during the fourth quarter of Fiscal 2012. As a result of the secondary offering, Sportswear Holdings Limited ownership decreased to 25.0% of the Company’s ordinary shares whereby the Company ceased to be a “controlled company” under New York Stock Exchange listing rules.During September 2012, the Company completed a secondary offering of 23,000,000 ordinary shares at a price of $53.00 per share. Subsequent to this offering, and in connection with it, the underwriters exercised their additional share purchase option during October 2012, where an additional 3,450,000 shares were offered at $53.00 per share. Similar to the prior public offerings the Company did not receive any of the proceeds related to the sale of these shares and incurred approximately $0.9 million in fees related to the secondary offering, which were charged to selling, general and administrative expenses.During February 2013, the Company completed a secondary offering of 25,000,000 ordinary shares at a price of $61.50 per share. Similar to the prior public offerings the Company did not receive any of the proceeds related to the sale of these shares and incurred approximately $0.8 million in fees related to the secondary offering, which were charged to selling, general and administrative expenses.3. Summary of Significant Accounting Policiesaccounting principles generally accepted in the United StatesU.S. GAAP requires management to use judgment and make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The level of uncertainty in estimates and assumptions increases with the length of time until the underlying transactions are completed. The most significant assumptions and estimates involved in preparing the financial statements include allowances for customer deductions, sales returns, sales discounts and doubtful accounts, estimates of inventory recovery, the valuation of share-based compensation, valuation of deferred taxes and the estimated useful lives used for amortization and depreciation of intangible assets and property and equipment. Actual results could differ from those estimates.isare transferred to theand operational chargebacks, as well as forand certain cooperative selling expenses.March 30, 2013, and March 31, 2012 (in thousands)millions): Balance
Beginning
of Year Amounts
Charged to
Revenue Write-offs
Against
Reserves Balance
at
Year End $ 3,146 $ 45,632 $ (46,458 ) $ 2,320 $ 1,659 $ 35,448 $ (33,961 ) $ 3,146 $ 2,313 $ 23,580 $ (24,234 ) $ 1,659 Balance
Beginning
of Year Amounts
Charged to
Revenue Write-offs
Against
Reserves Balance
at
Year End $ 43,009 $ 203,465 $ (180,553 ) $ 65,921 $ 30,381 $ 135,450 $ (122,822 ) $ 43,009 $ 25,180 $ 114,577 $ (109,376 ) $ 30,381 Retail Return Reserves: Fiscal year ended April 2, 2016 $ 2.5 $ 71.7 $ (69.5 ) $ 4.7 Fiscal year ended March 28, 2015 2.3 57.0 (56.8 ) 2.5 Fiscal year ended March 29, 2014 3.2 45.6 (46.5 ) 2.3 Wholesale Total Sales Reserves: Fiscal year ended April 2, 2016 $ 87.5 $ 348.4 $ (325.0 ) $ 110.9 Fiscal year ended March 28, 2015 65.9 281.0 (259.4 ) 87.5 Fiscal year ended March 29, 2014 43.0 203.5 (180.6 ) 65.9 geographic specificgeography-specific licensing agreements is recognized as it is earned under the licensing agreements based on reported sales of licensees applicable to specified periods, as outlined in the agreements. These agreements allow for the use of the Company’s tradenames to sell its branded products in specific geographic regions.charged to expenseexpensed when incurred and are reflected in general and administrative expenses. For the years ended March 29, 2014, March 30, 2013,Advertising and March 31, 2012, advertisingmarketing expense was $103.9 million, $103.6 million and $65.7 million $41.9 millionin Fiscal 2016, Fiscal 2015 and $31.4 million,Fiscal 2014, respectively.2014,2016, Fiscal 2013,2015 and Fiscal 2012,2014, were $7.4 million, $8.0 million and $7.3 million, $5.1 million and $4.3 million, respectively.amounting to $78.6were $98.6 million, $29.1$92.6 million and $19.7$78.6 million for Fiscal 2014,2016, Fiscal 2013,2015 and Fiscal 2012,2014, respectively, and are included in selling, general and administrative expenses in the consolidated statements of operations.weighted averageweighted-average cost method. Costs include amounts paid to independent manufacturers, plus duties and freight to bring the goods to the Company’s warehouses, which are located in the United States, Holland, Canada, Japan, Hong Kong and Hong Kong.South Korea. The Company adjustscontinuously evaluates the composition of its inventory to reflect situations in whichand makes adjustments when the cost of inventory is not expected to be fully recovered. These adjustmentsrecoverable. The net realizable value of the Company’s inventory is estimated based on historical experience, current and forecasted demand, and market conditions. In addition, reserves for inventory loss are estimated based on historical experience and physical inventory counts. The Company’s inventory reserves are estimates, which could vary significantly from actual results if future economic conditions, customer demand or competition differ from expectations. For the periods presented, there were no significantOur historical estimates of these adjustments related to unsalable inventory.providedrecorded on a straight-line basis over the expected remaining useful lives of the related assets. Equipment, furniture and fixtures, are depreciated over five to seven years, and computer hardware and software are depreciated over three to five years and in-store shops are amortized over three to four years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated remaining useful lives of the related assets or the remaining lease term.term, including highly probable renewal periods. The Company includes all itsdepreciation and amortization and depreciation expense as a component of total operating expenses, as the underlying long-lived assets are not directly or indirectly related to bringing the Company’s products to their existing location and condition.years.Maintenance and repairs are charged to expense in the year incurred. Cost and related accumulated depreciation for property and equipment are removed from the accounts upon their sale or disposition and the resulting gain or loss is reflected in the results of operations.Internal-use SoftwareIntangibleand lease rights and customer relationships and are stated at cost less accumulated amortization. Trademarks are amortized over twenty years, customer relationships are amortized over five years to ten years, and lease rights are amortized over the termterms of the related lease agreements, including highly probable renewal periods, on a straight-line basis. with finite useful lives, for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. The Company’s impairment testing is based on its best estimate of its future operating cash flows. If the sum of estimated undiscounted future cash flows associated with the asset is less than the asset’s carrying value, an impairment charge is recognized, which is measured as the amount by which the carrying value exceeds the fair value of the asset. These estimates of cash flow require significant management judgment and certain assumptions about future volume, sales and expense growth rates, devaluation and inflation. As such, these estimates may differ from actual cash flows.On the Company evaluates goodwill for impairment during the Company’s fourth quarter of its fiscal year or whenever impairment indicators exist. In the absence of any impairment indicators, goodwill is assessed during the fourth quarter of each fiscal year. Judgments regarding the existence of impairment indicators are based on market conditions and operational performance of the business. Future events could cause theto conclude that impairment indicators exist, and, therefore, that goodwill may be impaired. To the extent that the fair value associated with the goodwill is less thanassess its carrying amount, the Company writes down the carrying amount of the goodwill to its fair value.Prior to Fiscal 2012 the Company assessed goodwill for impairment by calculating the fair value of the Company’s reporting units to which goodwill has been allocatedinitially using the discounted cash flow method along with the market multiples method. During Fiscal 2012, the Company adopted a new accounting pronouncement related to goodwill impairment analysis, which allows entities to initially perform a qualitative analysisapproach (“step zero”) of the fair value of its reporting units to determine whether it is necessary to undertake a quantitative (“two step”) goodwill analysis. In the fourth quarter of Fiscal 2014, the Company continued to follow this guidance with respect to its annual impairment analysis for goodwill, and concludedmore likely than not that the fair value of goodwill is greater than its carrying amounts of all reporting units were significantly exceeded by their respective fair values, and thus performing any further analysis (e.g. two step) was unnecessary.The Company will continue to perform the aforementioned qualitative analysis (step zero) in future fiscal years as its first step in goodwill impairment assessment. Shouldvalue. If the results of thisthe qualitative assessment result in either an ambiguous or unfavorable conclusion the Company will perform additional quantitative testing consistent withindicate that it is not more likely than not that the fair value approach mentioned above.of goodwill exceeds its carrying value, a quantitative goodwill analysis would be performed to determine if impairment is required. The Company may also elect to perform a quantitative analysis of goodwill initially rather than using a qualitative approach. The valuation methods used in the quantitative fair value approach,assessment, discounted cash flow and market multiples method, require the Company’s management to make certain assumptions and estimates regarding certain industry trends and future profitability of the Company’s reporting units. If the carrying amount of a reporting unit exceeds its fair value, the Company would compare the implied fair value of the reporting unit goodwill withto its carrying value. To compute the implied fair value, the Company would assign the fair value of the reporting unit toJoint Venture InvestmentsThe Company accounts for investments in joint ventures as equity investments and records them in other assets in the Company’s consolidated balance sheets. During Fiscal 2013, Future events could cause the Company made a non-recourse loanto conclude that impairment indicators exist, and, therefore, that goodwill may be impaired.Company’s sole joint venture (which resides in Latin America), for approximately $6.0 million, which accrues at a 5%Company's annual rate. The purposeimpairment analysis performed during the fourth quarter of the loan was to provide working capital for the joint venture’s operations. The $6.0 million loan is repayable at the time of the expiration of the joint venture agreement, along with accrued interest payable at the expiration date. The loan, along with accrued interest, are recorded in other assets in the Company’s consolidated balance sheets.Awards are measured at theThe grant date based on the fair value asof share options is calculated using the Black-Scholes option pricing model, for share options, or themodel. The closing market price at the grant date foris used to determine the grant date fair value of restricted shares, restricted shares units (RSUs) and units.performance RSUs. These fair values are recognized as expense over the requisite service period, net of estimated forfeitures, based on expected attainment of certain vesting requirementspre-established performance goals for performance grants, or the passage of time for those grants which have only time-based vesting requirements. Determining the fair value of share-based awards at the grant date requires considerable judgment, including estimating expected volatility, expected term and risk-free rate.past 4.5-9.5 years, which is the Company’s range of estimated expected holding periods. The expected holding period for performance-based options which vest based on performance requirements areis based on the period to expiration, which is generally 9-10 years, which directly correlates to the Company’s service period requirement for such options. Generally, theThe expected holding period for time-based vesting options (no performance requirements) areis calculated using the simplified method, which uses the vesting term of the options, generally 4 years, and the contractual term of 7 years, resulting in a holding period of 4.5-4.75 years. The simplified method was chosen as a means to determine the Company’s estimated holding period, as prior to December 2011, the Company was privately held and, as such, there is insufficient historical option exercise experience. The risk-free interest rate is derived from the zero-coupon U.S. Treasury Strips yield curve the period of which relates tobased on the grant’s estimated holding period. Determining the grant date fair value of share-based awards requires considerable judgment, including estimating expected volatility, expected term and risk-free rate. If factors change and the Company employs different assumptions, the fair value of future awards and the resulting share-based compensation expense may differ significantly from what the Company has estimated in the past.dollarDollar (“USD”) for MKHL and its United States based subsidiaries. Assets and liabilities have beenare translated using period-end exchange rates, andwhile revenues and expenses have beenare translated using average exchange rates over the reporting period. The resulting translation adjustments resulting from translation have beenare recorded separately in shareholders’ equity as a component of accumulated other comprehensive loss.income (loss). Foreign currency transaction income and losses resulting from the re-measuring of transactions denominated in a currency other than the functional currency of a particular entity are included in foreign currency loss on the Company’s consolidated statements of operations. of its transactions. The Company in its normal course of business enters into transactions with foreign suppliers and seeks to minimize risks related to these transactions. The Company employs these forward currency contracts to hedge the Company’s cash flows, as they relate to foreign currency transactions, of which certaintransactions. Certain of these contracts are designated as hedges for accounting purposes, while others are undesignated hedges for hedge accounting purposes. Theseremain undesignated. All of the Company’s derivative instruments are recorded in the Company’s consolidated balance sheets at fair value on a gross basis, regardless of if they are designated or undesignated as hedges.Prior to the Company’s third fiscal 2013 quarter ended December 29, 2012, thetheir hedge designation.did not designate these instruments as hedges for hedge accounting purposes. During the third Fiscal 2013 quarter, the Company elected to designate contracts entered into during and subsequent to that quarter as hedges for hedge accounting purposes, fordesignates certain contracts related to the purchase of inventory. Accordingly,inventory that qualify for hedge accounting as cash flow hedges. Formal hedge documentation is prepared for all derivative instruments designated as hedges, including description of the hedged item and the hedging instrument, the risk being hedged, and the manner in which hedge effectiveness will be assessed prospectively and retrospectively. The effective portion of changes in the fair value for contracts entered into during Fiscal 2014, aredesignated as cash flow hedges is recorded in equity as a component of accumulated other comprehensive loss, andincome (loss) until the hedged item effects earnings. When the inventory related to forecasted inventory purchases that are being hedged is sold to a third party, the gains or losses deferred in accumulated other comprehensive income (loss) are recognized within cost of sales forgoods sold. The Company uses regression analysis to assess effectiveness of derivative instruments that are designated as hedges, which compares the change in the fair value of the derivative instrument to the change in the related hedged item. Effectiveness is assessed on a quarterly basis and any portion of thosethe designated hedge contracts deemed ineffective. The Company will continueineffective is recorded to recordforeign currency gain (loss). If the hedge is no longer expected to be highly effective in the future, future changes in the fair value of hedge designated contractsare recognized in this manner until their maturity, where the unrealized gain or loss will be recognized into earnings in that period.earnings. For those contracts entered into,currently and in the future, that are not and will not be designated as hedges, changes in the fair value as of each balance sheet date and upon maturity, are recorded to foreign currency gain (loss) in cost of sales or operating expenses, within the Company’s consolidated statements of operations, as applicableoperations. The Company classifies cash flows relating to its derivative instruments consistently with the transactions for whichclassification of the forward exchange contracts were intended to hedge. During Fiscal 2014, a net realized loss related to the change in fair value of those contracts not designated as hedges, were de minimis. In addition, the net unrealized loss related to those contracts designated as hedges during Fiscal 2014 of $2.9 million, was charged to equity as a component of accumulated other comprehensive loss. During Fiscal 2014, amounts related to the ineffectiveness of these contracts were de minimis. The company expects that substantially all the amounts currently residing in accumulated other comprehensive loss to be reclassified into earnings during the next twelve months, based upon the timing of inventory purchases and turns. These amounts are subject to fluctuations in the applicable currency exchange rates.The following table details the fair value of these contracts as of March 29, 2014, and March 30, 2013 (in thousands): March 29,
2014 March 30,
2013 $ 12 $ 1,367 $ (1,875 ) $ (71 ) attemptsorder to mitigate counterparty credit risk, the Company only enters into contracts with carefully selected financial institutions based upon their credit ratings and certain other financial factors, adhering to established limits for credit exposure. The aforementioned forward contracts generally have a term of no more than 12 months. The period of these contracts is directly related to the foreign transaction they are intended to hedge. The notional amount of these contracts outstanding at March 29, 2014 was approximately $155.1 million, which was comprised predominately of those designated as hedges., on a straight-line basis over the lease term. Accordingly,The difference between straight-line rent expense charged to operations differs fromand rent paid resulting in the Company recordingis recorded as deferred rent, which is classified as awithin short-term and long-term liabilityliabilities in the Company’s consolidated balance sheets. The recognition of rent expense for a given operating lease commences on the earlier of the lease commencement date or the date of possession of the property. The Company accounts for landlord allowances and incentives as a component of deferred rent, which is amortized over the lease term as a reduction of rent expense. The Company records rent expense as a component of selling, general and administrative expenses.March 29, 2014,April 2, 2016, deferred financing costs were $2.9$3.9 million, net of accumulated amortization of $2.8 million, and as$0.4 million. As of March 30, 2013,28, 2015 deferred financing costs were $3.4$2.1 million, net of accumulated amortization of $2.0$3.6 million. Deferred financing costs are included in other assets on the consolidated balance sheets.Perper ShareCompany reported earnings per share in conformity with the two-class method for calculating and presenting earnings per share for fiscal years prior to Fiscal 2013, due to the existence of both ordinary and convertible preference securities in those periods. Under the two-class method,Company’s basic net income per ordinary share is computedcalculated by dividing the net income available to ordinary shareholders by the weighted-average number of ordinary shares outstanding during the period. Net income available to shareholders is determined by allocating undistributed earnings between holders of ordinary and convertible preference shares, based on the participation rights of the preference shares. Diluted net income per share is computed by dividing the net income available to both ordinary and preference shareholders by the weighted-average number of dilutive shares outstanding during the period.The Company’s basic net income per share excludes the dilutive effect of share options and unvested restricted shares. It is based upon the weighted average number of ordinary shares outstanding during the period divided into net income.equity instruments, including restricted shares and units (“RSUs”), were exercised or converted into ordinary shares. These equity instrumentspotentially dilutive securities are included as potential dilutive securitiesin diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods.For Performance-based RSUs are included in diluted shares if the purposes of basic and diluted net income per share,related performance conditions are considered satisfied as a result of the reorganization and exchange during July 2011, weighted average shares outstanding for fiscal year 2012 reflect the exchange of ordinary shares for the newly issued ordinary and convertible preference shares as described in Note 2, as if such reorganization and exchange had occurred at the beginning of that fiscal year. In addition, as a resultend of the 3.8-to-1 share split, which was completed on November 30, 2011, weighted average shares outstanding for Fiscal 2012 reflectreporting period and to the split as if it had occurred atextent they are dilutive under the beginning of that fiscal year.thousandsmillions, except share and per share data): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 661,485 $ 397,602 $ 147,364 — — 21,227 $ 661,485 $ 397,602 $ 126,137 202,582,945 196,615,054 158,258,126 3,055,162 4,925,090 2,628,650 — — 28,412,421 205,638,107 201,540,144 189,299,197 $ 3.27 $ 2.02 $ 0.80 $ 3.22 $ 1.97 $ 0.78 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Numerator: Net income attributable to MKHL $ 839.1 $ 881.0 $ 661.5 Denominator: Basic weighted average shares 186,293,295 202,680,572 202,582,945 Weighted average dilutive share equivalents: Share options and restricted shares/units, and performance restricted share units 2,760,994 3,185,197 3,055,162 Diluted weighted average shares 189,054,289 205,865,769 205,638,107 Basic net income per share $ 4.50 $ 4.35 $ 3.27 Diluted net income per share $ 4.44 $ 4.28 $ 3.22 44,2562,255,271 shares, 7,341699,321 shares and 343,78744,256 shares, for fiscal years ending April 2, 2016, March 28, 2015 and March 29, 2014, March 30, 2013, and March 31, 2012,respectively, have been excluded from the above calculation due to their anti-dilutive effect.Recent—other than the new pronouncement described below, has concluded that, with the exception of the below, there are no new pronouncements that are currently expected to have a material impact on results of operations, financial condition, or cash flows, based on current information.During the fiscal quarter ended June 29, 2013, the Company adopted the provisions of Accounting Standard Update 2013-02 “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”) whichflows.(“FASB”("FASB") issued in February 2013.Accounting Standards Update ("ASU")No. 2014-09, “Revenue from Contracts with Customers,” which provides new guidance for revenues recognized from contracts with customers, and will replace the existing revenue recognition guidance. ASU 2013-02No. 2014-09 requires that revenue is recognized at an entityamount the company is entitled to provide information aboutupon transferring control of goods or services to customers, as opposed to when risks and rewards transfer to a customer. In July 2015, the amounts reclassified outFASB issued ASU No. 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of accumulated other comprehensive incomethe Effective Date," which deferred the effective date of ASU No. 2014-09 by component. The ASU isone year, making it effective for annual periods andthe interim reporting periods within those periodsthe annual reporting period beginning after December 15, 2012. January 1, 2016 Inventory $ 3.0 Fixed assets 2.1 Customer relationship intangible assets 2.2 Fair value of assets acquired 7.3 Less: consideration paid 3.6 Gain on acquisition of MK Korea $ 3.7 June 28, 2015 Current assets $ 25.9 Fixed assets 6.4 Customer relationship intangible assets 2.0 Goodwill 9.2 Debt obligations (9.5 ) Other liabilities (2.3 ) Total fair value of net assets of MK Panama 31.7 Fair value of preexisting interest in MK Panama 8.1 Non-controlling interest 5.1 Fair value of consideration provided $ 18.5 thousands)millions): March 29,
2014 March 30,
2013 $ 261,900 $ 199,677 109,094 45,588 11,302 7,344 382,296 252,609 (68,241 ) (46,155 ) $ 314,055 $ 206,454 The Company has historically assigned a substantial portion of its trade receivables to factors in the United States and Europe whereby the factors assumed credit risk with respect to such receivables assigned. Under the factor agreements, factors bear the risk of loss from the financial inability of the customer to pay the trade receivable when due, up to such amounts as accepted by the factor; but not the risk of non-payment of such trade receivable for any other reason. Beginning in July 2012, the Company assumed responsibility for a large portion of previously factored accounts receivable balances the majority of which were insured at March 29, 2014. The Company provides an allowance for such non-payment risk at the time of sale, which is recorded as an offset to revenue. April 2,
2016 March 28,
2015Trade receivables: Credit risk assumed by insured/factors $ 353.7 $ 374.1 Credit risk retained by Company 61.8 67.5 Receivables due from licensees 9.5 11.8 425.0 453.4 Less allowances: (117.1 ) (90.0 ) $ 307.9 $ 363.4 retailwholesale customers' sales performance, seasonal negotiations with customers, historical deduction trends and an evaluation of current market conditions. Operational chargebacks are based on deductions taken by customers, net of expected recoveries. Such provisions, and related recoveries, are reflected in net sales.underby insurance, and assessments of collectability based on an evaluation of historic and anticipated trends, the financial conditions of the Company’s customers and the impact of general economic conditions. The past due status of a receivable is based on its contractual terms. Amounts deemed uncollectible are written off against the allowance when it is probable the amounts will not be recovered. AllowancesAllowance for doubtful accounts were $1.5was $0.7 million and $1.1 million, at March 29, 2014as of April 2, 2016 and March 30, 2013, respectively.With respect to certain of its receivables, theThe Company also mitigates its credit risk through the assignment of receivables to a factor, as well asby obtaining insurance coverage for a substantial portion of non-factoredits receivables (as demonstrated in the above table in “Credit risk assumed by insured/factors”). For the fiscal years ended April 2, 2016, March 28, 2015 and March 29, 2014, March 30, 2013, and March 31, 2012, net sales related to oneour largest wholesale customer, within the Company’s wholesale segment,Macy's, accounted for approximately 14.4%12.7%, 14%,13.7% and 13%14.4%, respectively, of total revenue. The accounts receivable related to this customer were fullyeither factored or substantially insured for all three fiscal years. March 30, 2013, and March 31, 2012, one agent sourced approximately 12.6%14.9%, 14.0%,11.7% and 17.0%12.6%, respectively, and one contractor accounted for approximately 30.4%26.7%, 31.8%,29.1% and 31.0%30.4%, respectively, of the Company’s finished goods purchases.thousands)millions): March 29,
2014 March 30,
2013 $ 108,757 $ 76,336 31,683 13,276 50,646 29,429 123,637 78,809 216,451 168,306 531,174 366,156 (234,381 ) (165,340 ) 296,793 200,816 53,885 41,297 $ 350,678 $ 242,113 April 2,
2016 March 28,
2015Leasehold improvements $ 414.6 $ 294.2 In-store shops 242.9 189.3 Furniture and fixtures 212.7 160.2 Computer equipment and software 167.9 104.4 Equipment 79.1 73.6 Land 15.1 — 1,132.3 821.7 Less: accumulated depreciation and amortization (490.9 ) (337.8 ) 641.4 483.9 Construction-in-progress 116.8 79.0 $ 758.2 $ 562.9 March 30, 2013, and March 31, 2012, was $76.6$172.2 million, $52.7$131.4 million, and $36.0$76.6 million, respectively. During Fiscalthe fiscal years ended April 2, 2016, March 28, 2015, and March 29, 2014, Fiscal 2013 and Fiscal 2012, the Company recorded fixed asset impairment charges of $10.9 million, $0.8 million and $1.3 million, $0.7respectively. Approximately $8.6 million and $3.3 million, respectively,of the Company's Fiscal 2016 impairment charges primarily related to certainseven retail locations still in operation. The impairmentsoperation, $0.4 million related to its wholesale operations and $1.9 million related to a corporate fixed asset that is no longer in service. Fiscal 2015 impairment charges related to two retail locations and Fiscal 2014 impairment charges related to three retail locations, all of which were still in Fiscal 2014, one in Fiscal 2013, and two in Fiscal 2012.disclosesdetails the carrying values of the Company's intangible assets and goodwillthat are subject to amortization (in thousands)millions): March 29, 2014 March 30, 2013 Gross
Carrying
Amount Accumulated
Amortization Net Gross
Carrying
Amount Accumulated
Amortization Net $ 23,000 $ 12,845 $ 10,155 $ 23,000 $ 11,693 $ 11,307 41,748 3,869 37,879 11,548 1,875 9,673 14,005 — 14,005 14,005 — 14,005 $ 78,753 $ 16,714 $ 62,039 $ 48,553 $ 13,568 $ 34,985 April 2, 2016 March 28, 2015 Net Net Trademarks $ 23.0 $ 15.1 $ 7.9 $ 23.0 $ 14.0 $ 9.0 Lease Rights 73.3 17.8 55.5 61.1 8.6 52.5 Customer Relationships 4.2 0.2 4.0 — — — $ 100.5 $ 33.1 $ 67.4 $ 84.1 $ 22.6 $ 61.5 lease.lease, including highly probable renewal periods. Amortization expense was $3.1$11.0 million, $1.5$7.0 million and $1.5$3.1 million, respectively, for each of the fiscal years ended April 2, 2016, March 28, 2015 and March 29, 2014, March 30, 2013,2014.Fiscal 2017 $ 8.7 Fiscal 2018 8.7 Fiscal 2019 8.6 Fiscal 2020 8.6 Fiscal 2021 8.4 Thereafter 24.4 $ 67.4 March 31, 2012.Goodwill6.9 years for customer lists. There were no impairment charges related to the Company’s lease rights, trademarks or customer lists during any of the periods presented. Retail Wholesale Licensing Total Balance at March 28, 2015 $ — $ 12.1 $ 1.9 $ 14.0 Acquisition of controlling interest in MK Panama (Note 3) 8.0 1.2 — 9.2 Balance at April 2, 2016 $ 8.0 $ 13.3 $ 1.9 $ 23.2 amortizedsubject to amortization but is evaluated annually for impairment annually in the last quarter orof each fiscal year, or whenever impairment indicators exist. The Company evaluated goodwill during the fourth fiscal quarter of Fiscal 2014,2016, and determined that there was no impairment.impairment (See Note 11 for additional information). As of March 29, 2014,April 2, 2016, cumulative impairment related to goodwill totaled $5.4 million. There were no charges related to the impairment of goodwill in any of the periods presented.Estimated amortization expense for eachnext five years is as followsfollowing (in thousands)millions): $ 6,606 6,779 6,774 6,740 6,646 14,489 $ 48,034 There were no impairments to lease rights related to the retail locations which were impaired during Fiscal 2014, Fiscal 2013, and Fiscal 2012.8. Accrued Expenses and Other Current Liabilities April 2,
2016 March 28,
2015Prepaid taxes $ 57.8 $ 60.8 Prepaid rent 27.3 16.8 Leasehold incentive receivable 8.9 12.3 Unrealized gains on forward foreign exchange contracts 0.1 25.0 Other 19.0 12.6 $ 113.1 $ 127.5 thousands)millions): March 29,
2014 March 30,
2013 $ 6,319 $ 4,041 2,097 1,094 12,408 5,040 17,321 7,635 1,813 334 4,810 3,013 14,159 3,787 15,402 8,611 $ 74,329 $ 33,555 April 2,
2016 March 28,
2015Accrued capital expenditures $ 33.6 $ 32.9 Advance royalties 30.2 5.1 Other taxes payable 38.2 20.2 Accrued rent 30.5 27.1 Gift cards and retail store credits 13.1 8.2 Professional services 7.0 7.3 Unrealized loss on forward foreign exchange contracts 5.5 0.6 Accrued advertising 5.2 5.7 Accrued litigation 1.8 6.2 Other 27.7 10.5 $ 192.8 $ 123.8 Credit FacilitiesSecuredDebt ObligationsThehad aentered into an amended and restated senior unsecured revolving credit facility ("2015 Credit Facility") with, a maturity date of September 15, 2015,among others, JPMorgan Chase Bank, N.A. ("JPMorgan Chase"), as administrative agent, which it terminated during Februaryreplaced its prior 2013 (the “2011senior unsecured revolving credit facility ("2013 Credit Facility”Facility"). The 2011Company and a U.S., Canadian, Dutch and Swiss subsidiary are the borrowers under the 2015 Credit Facility. The borrowers and certain material subsidiaries of the Company provide unsecured guarantees of the 2015 Credit Facility. The 2015 Credit Facility was originally entered into during Fiscal 2007provides for up to $1.0 billion in borrowings, which may be denominated in U.S. Dollars and was amended on September 15, 2011. Pursuant to such amendment, theother currencies, including Euros, Canadian Dollars, Pounds Sterling, Japanese Yen and Swiss Francs. The 2015 Credit Facility provided up to $100.0 millionalso provides for the issuance of borrowings, and was originally set to expire on September 15, 2015. The agreement also provided for loans and letters of credit to the Company’s European subsidiaries of up to $35.0$75.0 million and swing line loans of up to $50.0 million. All other terms and conditionsThe Company has the ability to expand its borrowing availability under the 20112015 Credit Facility remained consistent withby up to an additional $500.0 million, subject to the original agreement.agreement of the participating lenders and certain other customary conditions. The 20112015 Credit Facility provided for aggregate credit available equal to the lesser of (i) $100.0 million, or (ii) the sum of specified percentages of eligible receivables and eligible inventory, as defined, plus $30.0 million. The terms of the 2011 Credit Facility required all amounts outstanding under the agreement to be collateralized by substantially all the Company’s assets throughout the duration of the agreement. The 2011 Credit Facility contained financial covenants which limited capital expenditures to $110.0 million for any one fiscal year plus additional amounts as permitted, and a minimum fixed charge coverage ratio of 2.0 to 1.0 (with the ratio being EBITDA plus consolidated rent expense to the sum of fixed charges plus consolidated rent expense), restricted and limited additional indebtedness, and restricted the incurrence of additional liens and cash dividends. During Fiscal 2013, and prior to its termination, the Company was in compliance with all of the covenants covered under the agreement.20112015 Credit Facility accruedbear interest, at the Company's option, at (i) for loans denominated in U.S. Dollars, an alternative base rate, per annumwhich is the greater of the prime rate publicly announced from time to time by JPMorgan Chase, the agentgreater of 1.25% above the prevailingfederal funds effective rate or Federal Reserve Bank of New York overnight bank funding rate plus 50 basis points or the one-month London Interbank Offered Rate adjusted for statutory reserve requirements for Eurocurrency liabilities ("Adjusted LIBOR") plus 100 basis points, in each case, plus an applicable margin based on the Company's leverage ratio; (ii) Adjusted LIBOR for the applicable interest period, plus an applicable margin based on the Company's leverage ratio; (iii) for Canadian borrowings, the Canadian prime rate, which is the greater of the PRIMCAN Index rate or at a per annumthe rate equalapplicable to 2.25% aboveone-month Canadian Dollar banker's acceptances quoted on Reuters ("CDOR") plus 100 basis points, plus an applicable margin based on the prevailing LIBOR rate. The weightedCompany's leverage ratio; or (iv) for Canadian borrowings, the average interestCDOR rate for the revolving credit facility was 2.72% during Fiscal 2013. applicable interest period, plus an applicable margin based on the Company's leverage ratio. required an annual facility fee of $0.1 million, and an annual commitment fee of 0.35% on the unused portion of the available credit under the Credit Facility, which was payable quarterly.At March 30, 2013 there were no amounts outstanding or available related to this agreement. The largest amount borrowed from the 2011 Credit Facility during Fiscal 2013 was $31.7 million.Senior Unsecured Revolving Credit FacilityOn February 8, 2013, the Company terminated the provisions of its existing 2011 Credit Facility and entered into a senior unsecured credit facility (“2013 Credit Facility”). Pursuant to the agreement the 2013 Credit Facility provides for up to $200.0 million of borrowings, and expires on February 8, 2018. The agreement also provides for loansan annual administration fee and letters of credita commitment fee equal to 0.10% to 0.175% per annum, based on the Company's leverage ratio, applied to the Company’s European subsidiariesaverage daily unused amount of up to $100.0 million. The 2013the facility. Loans under the 2015 Credit Facility contains financial covenants such as requiring an adjustedmay be prepaid and commitments may be terminated or reduced by the borrowers without premium or penalty other than customary "breakage" costs with respect to loans bearing interest based upon Adjusted LIBOR or the CDOR rate.1.0 (with1. Such leverage ratio is calculated as the ratio beingof the sum of total consolidated indebtedness as of the date of the measurement plus 8.06.0 times the consolidated rent expense for the last four consecutive fiscal quarters, to EBITDAConsolidated EBITDAR for the last four consecutive fiscal quarters. Consolidated EBITDAR is defined as consolidated net income plus consolidated rent expense)income tax expense, net interest expense, depreciation and a fixed charge coverage ratio of 2.0 to 1.0 (with the ratio being EBITDA plusamortization expense, consolidated rent expense and other non-cash charges, subject to the sum of fixed charges plus consolidated rent expense), restricts and limitscertain deductions. The 2015 Credit Facility also includes covenants that limit additional indebtedness, guarantees, liens, acquisitions and restricts the incurrence of additional liensother investments and cash dividends.dividends that are customary for financings of this type. As of March 29, 2014,April 2, 2016, the Company was in compliance with all covenants related to this agreement.Borrowings20132015 Credit Facility accrue interest atwould be entitled to take various actions, including terminating the rate per annum announced from time to time by the agent a rate based on the rates applicable for deposits in the London interbank market for U.S. dollars or the applicable currency in which the loans are made (the “Adjusted LIBOR”) plus an applicable margin. The applicable margin may range from 1.25% to 1.75%,commitments and is based, or dependent upon, a particular threshold related to the adjusted leverage ratio calculated during the period of borrowing. For the Fiscal 2014, the weighted average interest rate for the revolving credit facility was 1.6%. The 2013 Credit Facility requires an annual facility fee of $0.1 million, and an annual commitment fee of 0.25% to 0.35% on the unused portion of the available credit under the facility.As of March 29, 2014, there were noaccelerating amounts outstanding under the 2015 Credit Facility.Facility, andFacility. At April 2, 2016, stand-by letters of credit of $10.0 million were outstanding under the 2015 Credit Facility. At April 2, 2016, the amount available for future borrowings was $188.5$990.0 million.20142016, the largest amount borrowed under this agreement was $6.6 million. At March 29, 2014, there were stand-by lettersCompany obtained controlling interest in MK Panama and began consolidating its financial results into its operations (see Note 3 for additional information). MK Panama's debt obligations included on the Company's consolidated balance sheet as of credit of $11.5 million outstanding. April 2,
20164.75% loan, due April 6, 2020 from Banco General de Panama $ 1.2 5.0% loan (see Note 19) 1.0 Other 0.1 Total long-term debt $ 2.3 November 2028.August 2033. In addition to minimum rental payments, the leases require payment of increases in real estate taxes and other expenses incidental to the use of the property.for the fiscal years then ended consistconsists of the following (in thousands)millions): March 29,
2014 March 30,
2013 March 31,
2012 $ 107,071 $ 74,708 $ 61,364 56,299 29,871 11,209 $ 163,370 $ 104,579 $ 72,573 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Minimum rentals $ 193.5 $ 151.0 $ 107.1 Contingent rent 64.4 65.8 56.3 Total rent expense $ 257.9 $ 216.8 $ 163.4 thousands)millions): $ 133,892 133,191 131,619 128,228 116,553 436,718 $ 1,080,201 Fiscal years ending: 2017 $ 220.7 2018 223.4 2019 215.1 2020 213.1 2021 206.9 Thereafter 746.7 $ 1,825.9 $11.5$10.6 million at March 29, 2014.Thehashad an employment agreement with one of its officers that providesprovided for continuous employment through the date of the officer’s death or permanent disability at a current salary of $2.5$1.0 million. In addition to salary, the agreement providesprovided for an annual bonus and other employee related benefits.athe 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 developed based on market data obtained from independent sources. Unobservable inputs are inputs based on a company’s own assumptions about market participant assumptions developed 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:1—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.2—2 – Valuations based on quoted inputs other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly through corroboration with observable market data.3—3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.The Company has historically entered into forward exchange contracts to hedge the foreign currency exposure for certain inventory purchases from its manufacturers in EuropeAsia, as well as commitments for certain services. The forward contracts that are used in the program mature in twelve months or less, consistent with the related planned purchases or services. The Company attempts to hedge the majority of its total anticipated European and Asian purchase and service contracts. Realized gains and losses applicable to derivatives used for inventory purchases are recognized in cost of sales, and those applicable to other services are recognized in selling, general and administrative expenses (see Note 3 Summary of Significant Accounting Policies—DerivativeFinancial Instruments,for further detail regarding hedge accounting treatment as it relates to gains and losses). At March 29, 2014,28, 2015, the fair valuevalues of the Company’s foreign currency forward contracts, the Company’s only derivatives,derivative instruments, were valueddetermined using broker quotations, which were calculations derived from observable market information: the applicable currency forward 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 does assessassesses the credit risk of the counterparty andvaluevalues 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.Company, as detailed in Note 12. 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: Fair value at March 29, 2014, using: (In thousands) Total Quoted prices in
active markets for
identical assets
(Level 1) Significant other
observable inputs
(Level 2) Significant
unobservable
inputs
(Level 3) $ (1,875 ) $ — $ (1,875 ) $ — 12 — 12 — $ (1,863 ) $ — $ (1,863 ) $ — Fair value at April 2, 2016, using: Fair value at March 28, 2015, using: Foreign currency forward contracts: Euro $ — $ (5.5 ) $ — $ — $ 23.6 $ — Canadian Dollar — — — — 1.4 — U.S. Dollar — 0.1 — — (0.6 ) — Total $ — $ (5.4 ) $ — $ — $ 24.4 $ — the Credit Facilityrevolving credit agreements, if outstanding, are recorded at facecarrying value, aswhich resembles fair value due to the short-term nature of such borrowings.Credit Facility is synonymous with itsCompany’s derivative contracts, which are recorded valueon a gross basis in the consolidated balance sheets as it is a short-term debt facility due to its revolving nature.12. Other Comprehensive Income- Hedging InstrumentsThe Company designates certain forward currency exchange contracts as hedges for hedge accounting purposes (see Note 3, Summary of Significant Accounting Policies—Derivative Financial Instruments). The Company employs forward currency contracts to hedge the Company’s exposures, as they relate to certain forecasted inventory purchases in foreign currencies,April 2, 2016 and as such are regarded as cash flow hedges up to such time the forecasted transaction occurs. Fair Values Notional Amounts April 2,
2016 March 28,
2015 April 2,
2016 March 28,
2015 April 2,
2016 March 28,
2015Designated forward currency exchange contracts $ 174.1 $ 226.1 $ 0.1 $ 23.6 $ 5.1 $ 0.5 Undesignated forward currency exchange contracts 30.0 25.8 — 1.4 0.4 0.1 Total $ 204.1 $ 251.9 $ 0.1 $ 25.0 $ 5.5 $ 0.6 Recorded within prepaid expenses and other current assets in the Company’s audited consolidated balance sheets. Recorded within accrued expenses and other current liabilities in the Company’s audited consolidated balance sheets. thesethe 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, as of each balance sheet date, and are reclassified from accumulated other comprehensive income 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.thegains and losses of the forward contracts designated as hedges for the fiscal yearyears ended April 2, 2016 and March 28, 2015 (in millions): Fiscal Year Ended April 2, 2016 Fiscal Year Ended March 28, 2015 Fiscal Year Ended March 29, 2014 Pre-Tax
Loss
Recognized
in OCI Pre-tax Loss
Reclassified from
Accumulated OCI
into EarningsDesignated hedges $ (25.2 ) $ 10.9 $ 36.6 $ 2.1 $ (3.8 ) $ (0.5 ) thousands)millions): Fiscal Year Ended March 29, 2014 Pre-Tax
(Loss)
Recognized
in OCI
(Effective Portion) Loss
Reclassified from
Accumulated OCI
into Earnings
(Effective Portion) $ (3,257 ) $ (540 ) Contracts designated as hedging for hedge accounting purposes during Fiscal 2013, as well as the related activity, were de minimis, as the Company had adopted the provisions of hedge accounting late in the fiscal 2013 year.13. Balance at March 30, 2013 $ (4.8 ) $ 1.3 $ (3.5 ) Other comprehensive loss before reclassifications — (3.4 ) (3.4 ) Less: amounts reclassified from AOCI to earnings — (0.5 ) (0.5 ) Other comprehensive loss net of tax — (2.9 ) (2.9 ) Balance at March 29, 2014 (4.8 ) (1.6 ) (6.4 ) Other comprehensive (loss) income before reclassifications (91.3 ) 32.8 (58.5 ) Less: amounts reclassified from AOCI to earnings — 1.9 1.9 Other comprehensive (loss) income net of tax (91.3 ) 30.9 (60.4 ) Balance at March 28, 2015 (96.1 ) 29.3 (66.8 ) Other comprehensive income (loss) before reclassifications 18.5 (22.6 ) (4.1 ) Less: amounts reclassified from AOCI to earnings — 9.9 9.9 Other comprehensive income (loss) net of tax 18.5 (32.5 ) (14.0 ) Balance at April 2, 2016 $ (77.6 ) $ (3.2 ) $ (80.8 ) Less: other comprehensive income attributable to noncontrolling interest $ 0.1 $ — $ 0.1 Other comprehensive loss attributable to MKHL $ (77.7 ) $ (3.2 ) $ (80.9 ) Accumulated other comprehensive income related to net gains (losses) on derivative financial instruments is net of a tax benefit of $0.3 million as of April 2, 2016 and a tax provision of $3.3 million as of March 28, 2015. Other comprehensive income (loss) before reclassifications related to derivative instruments for Fiscal 2016 and Fiscal 2015 is net of a tax benefit of $2.6 million and a tax provision of $3.7 million, respectively. The tax effect related to all other amounts was not material. Reclassified amounts relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations. The amount reclassified from other comprehensive income for Fiscal 2016 is net of a tax provision of $1.0 million. The tax effects related to prior period amounts were not material. the grantinggrants of share options only and was authorized to issue up to 23,980,823 ordinary shares. As of March 29, 2014,April 2, 2016, there arewere no shares available for the granting ofthe grantinggrants of share options, restricted shares and restricted share units, and other equity awards, and authorizes a total issuance of up to 15,246,000 ordinary shares. At March 29, 2014,April 2, 2016, there were 11,897,6589,211,143 ordinary shares available for the grantingfuture grants of equity awards under the 2012 Plan. Option grants issued from the 2008 Plan generally expire ten years from the date of the grant, and those issued under the 2012 Plan generally expire seven years from the date of the grant.Performance basedPerformance-based share options may vest based upon the attainment of one of two performance measures. One performance measure is an individual performance target, which is based upon certain performance targets unique to the individual grantee, and the other measure is a company-wide performance target, which is based on a cumulative minimum growth requirement in consolidated net equity. The individual performance target vests 20% of the total option grant each year the target is satisfied. The individual has ten years in which to achieve five5 individual performance vesting tranches. The company-wide performance target must be achieved over the ten-year term. Performance is measured at the end of the term, and any unvested options under the grant vest if the target is achieved. The Company-wide performance target is established at the time of the grant. The target metrics underlying individual performance vesting requirements are established for each recipient each year up until such time as the grant is fully vested. Options subject to time basedtime-based vesting requirements become vested in four equal increments on each of the first, second, third and fourth anniversaries of the date on which such options were awarded.2014,2016, and information about options outstanding at March 29, 2014: Number of
Options Weighted
Average
Exercise price Weighted
Average
Remaining
Contractual
Life (years) Aggregate
Intrinsic
Value
(in thousands) 10,381,342 $ 9.21 623,098 $ 62.70 (2,586,283 ) $ 7.36 (40,229 ) $ 24.35 8,377,928 $ 13.69 6.18 $ 662,388 8,210,369 $ 13.69 6.18 2,295,526 $ 9.57 5.49 $ 190,945 Outstanding at March 28, 2015 7,187,003 $ 23.14 Granted 515,430 $ 47.07 Exercised (1,632,461 ) $ 7.72 Canceled/forfeited (249,559 ) $ 52.18 Outstanding at April 2, 2016 5,820,413 $ 28.34 4.36 $ 193.0 Vested or expected to vest at April 2, 2016 5,781,360 $ 28.34 4.36 Vested and exercisable at April 2, 2016 4,081,064 $ 17.72 3.95 $ 167.5 20142016 and Fiscal 2015 was $163.2 million.$70.3 million and $131.6 million, respectively. The cash received from options exercised during Fiscal 2014,2016 and Fiscal 2015 was $19.0 million. The total intrinsic value$12.7 million and $15.3 million, respectively. As of April 2, 2016, the remaining unrecognized share-based compensation expense for nonvested share options exercised during Fiscal 2013 was $415.1 million. The cash received from options exercised during Fiscal 2013, was $30.4 million.2014,2016, Fiscal 2013,2015 and Fiscal 2012,2014, was $24.95, $20.66,$14.35, $27.96 and $8.01,$24.95, respectively. The following table represents assumptions used to estimate the fair value of options: Fiscal Year Ended March 29,
2014 March 30,
2013 March 31,
2012 0.0 % 0.0 % 0.0 % 46.0 % 48.5 % 46.5 % 1.0 % 0.6 % 1.8 % 4.75 years 4.75 years 7.8 years Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Expected dividend yield 0.0 % 0.0 % 0.0 % Volatility factor 31.1 % 33.2 % 46.0 % Weighted average risk-free interest rate 1.6 % 1.5 % 1.0 % Expected life of option 4.75 years 4.75 years 4.75 years aton the date of the grant. Expense for restricted share grantsawards is calculated based on the intrinsic valueclosing market price of the Company’s shares on the date of grant which is the difference between the cost to the recipient and the fair market value of the underlying share (grants are generally issued at no cost to the recipient). Expense is recognized ratably over the vesting period, which is generally three to four years from the date of the grant. Similar to share options, restrictedgrant, net of expected forfeitures. four equal increments on each of the first, second, third and fourthfour anniversaries of the date on which suchof grant. In addition, the Company grants were awarded. With respect totwo types of restricted share units, there are two types: performance based vesting grantsunit (“RSU”) awards: time-based RSUs and time based vesting grants. Share units whose vesting is based on meeting certain performance criteria,performance-based RSUs. Time-based RSUs generally vest in full three years from theireither on the first anniversary of the date of the grant, or in equal increments on each of the four anniversaries of the date of grant. Performance-based RSUs vest in full on the three-year anniversary of the date of grant, subject to the employee’s continued employment during the vesting period and only if certain pre-established cumulative performance targets are met at the end of the three yearthree-year performance period. Expense related to these grantsperformance-based RSUs is recognized ratably over the three yearthree-year performance period, subject tonet of forfeitures, based on the probability of the attainment of the related performance targets. Share unitsThe potential number of shares that vest based on time generally vest in full either onmay be earned ranges between 0%, if the firstminimum level of performance is not attained, and 150%, if the level of performance is at or fourth anniversary ofabove the date of the grant, and are expensed accordingly.sharesshare activity under the 2012 Plan as of March 29, 2014 and changes during the fiscal period then ended: Number of Unvested
Restricted Shares Weighted
Average Grant
Date Fair Value 617,468 $ 23.66 255,850 $ 62.89 (208,283 ) $ 23.32 (7,182 ) $ 39.60 657,853 $ 38.38 Restricted Shares Unvested at March 28, 2015 770,592 $ 68.77 Granted — $ — Vested (326,988 ) $ 50.59 Canceled/forfeited (53,375 ) $ 80.55 Unvested at April 2, 2016 390,229 $ 82.38 and $10.5 million during Fiscal 2013. There were no restricted shares that vested prior to Fiscal 2013.respectively. As of March 29, 2014,April 2, 2016, the remaining unrecognized share-based compensation expense for non-vested restricted share grants to be expensed in future periods is $20.4was $22.3 million, and the related weighted-average period over which it is expected to be recognized isover the related weighted-average period of approximately 2.611.99 years.restricted share unitsthe RSU activity under the 2012 Plan as of March 29, 2014 and changes during the fiscal period then ended: Number of Unvested
Restricted Units Weighted
Average Grant
Date Fair Value 27,763 $ 31.12 174,002 $ 62.64 (1,986 ) $ 58.10 — $ — 199,779 $ 58.31 Service-based Performance-based Unvested at March 28, 2015 35,940 $ 66.26 317,201 $ 76.69 Granted 1,104,983 $ 46.76 287,476 $ 47.10 Vested (18,537 ) $ 59.69 — $ — Canceled/forfeited (51,328 ) $ 47.87 (24,903 ) $ 80.72 Unvested at April 2, 2016 1,071,058 $ 47.13 579,774 $ 61.84 restricted share unitsservice-based RSUs vested during Fiscal 2016, Fiscal 2015 and Fiscal 2014 was $1.1 million, $0.4 million and $0.2 million. The total fair value of restricted share units vested during Fiscal 2013 was $0.8 million.million, respectively. As of March 29, 2014,April 2, 2016, the remaining unrecognized share-based compensation expense for non-vested restricted share unitservice-based and performance-based RSU grants to be expensed in future periods is $7.6was $38.3 million and the related weighted-average period over$15.4 million, respectively, which it is expected to be recognized isover the related weighted-average periods of approximately 2.12 years.2014,2016, Fiscal 2013,2015 and Fiscal 2012 was approximately $29.1 million, $20.9 million, and $27.0 million, respectively. There were 2,295,526 and 6,082,402 vested and non-vested outstanding options, respectively, at March 29, 2014. There were 657,853 unvested restricted share grants and 199,779 unvested restricted share units at March 29, 2014. 2014 (in millions): Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Share-based compensation expense $ 48.4 $ 48.9 $ 29.1 Tax benefits related to share-based compensation expense $ 15.7 $ 17.5 $ 11.5 since the inception of share option granting.to date. The estimated value of future forfeitures for equity grants as of MarchApril 2, 2016 is approximately $2.8 million.is approximately $0.8 million.14. TaxesMKHL isthe Company's Board of Directors approved a proposal to move the Company’s principal executive office from Hong Kong to the United Kingdom and to become a U.K. tax resident. The Company will remain incorporated in the British Virgin IslandsIslands. The Company has achieved tremendous international growth over the past several years and is generally not subjectbelieves that moving its principal executive office to taxation. the U.K. will better position it for further expansion in Europe and internationally, and allow it to compete more effectively with other international luxury brands.United StatesU.S. and various other foreign jurisdictions, which are aggregated in the “Non-U.S,”“Non-U.S” information captioned below.thousands)millions): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 792,899 $ 538,607 $ 227,514 214,748 88,520 21,302 $ 1,007,647 $ 627,127 $ 248,816 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014U.S. $ 737.5 $ 814.3 $ 792.9 Non-U.S. 434.8 441.5 214.8 Total income before provision for income taxes $ 1,172.3 $ 1,255.8 $ 1,007.7 thousands)millions): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 295,159 $ 179,014 $ 79,690 50,348 32,249 20,916 30,560 15,040 8,575 376,067 226,303 109,181 (24,847 ) 1,246 (4,128 ) (3,594 ) 2,088 (3,595 ) (1,464 ) (112 ) (6 ) (29,905 ) 3,222 (7,729 ) $ 346,162 $ 229,525 $ 101,452 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Current U.S. Federal $ 268.0 $ 277.0 $ 295.2 U.S. State 14.3 49.7 50.3 Non-U.S. 54.2 41.9 30.6 Total current 336.5 368.6 376.1 Deferred U.S. Federal 0.3 5.0 (24.8 ) U.S. State 1.0 0.3 (3.6 ) Non-U.S. (3.2 ) 0.9 (1.5 ) Total deferred (1.9 ) 6.2 (29.9 ) Total provision for income taxes $ 334.6 $ 374.8 $ 346.2 United States FederalU.S. federal statutory tax rate and the Company’s effective tax rate for financial statement purposes: Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 35.0 % 35.0 % 35.0 % 2.3 % 3.6 % 4.8 % -3.9 % -3.1 % -1.3 % -0.2 % -0.2 % -0.6 % 0.8 % 0.5 % 0.2 % -0.2 % 0.3 % 1.8 % 0.6 % 0.5 % 0.9 % 34.4 % 36.6 % 40.8 % Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Federal tax at 35% statutory rate 35.0 % 35.0 % 35.0 % State and local income taxes, net of federal benefit 1.2 % 2.4 % 2.3 % Differences in tax effects on foreign income (7.9 )% (8.2 )% (3.9 )% Foreign tax credit (0.2 )% (0.4 )% (0.2 )% Liability for uncertain tax positions — % 0.2 % 0.8 % Effect of changes in valuation allowances on deferred tax assets (0.2 )% (0.1 )% (0.2 )% Other 0.6 % 0.9 % 0.6 % Effective tax rate 28.5 % 29.8 % 34.4 % thousands)millions): March 29,
2014 March 30,
2013 $ 11,380 $ 8,469 4,722 1,188 24,281 16,209 2,389 — 7,743 8,508 14,117 8,909 7,654 — 9,589 2,331 81,875 45,614 (8,020 ) (8,746 ) 73,855 36,868 (24,324 ) (14,780 ) (20,691 ) (20,927 ) (526 ) (1,455 ) (45,541 ) (37,162 ) $ 28,314 $ (294 ) Fiscal Years Ended April 2,
2016 March 28,
2015Deferred tax assets Inventories $ 10.5 $ 11.2 Payroll related accruals 2.2 0.4 Deferred rent 37.1 30.4 Net operating loss carryforwards 3.4 5.9 Stock compensation 30.0 23.8 Sales allowances 13.4 10.1 Other 12.1 11.1 108.7 92.9 Valuation allowance (3.4 ) (5.7 ) Total deferred tax assets 105.3 87.2 Deferred tax liabilities Goodwill and intangibles (32.9 ) (32.7 ) Depreciation (48.0 ) (34.6 ) Other (3.4 ) (3.9 ) Total deferred tax liabilities (84.3 ) (71.2 ) Net deferred tax assets $ 21.0 $ 16.0 were increased by approximately $3.3 million, $0.2 million and $0.9 million in Fiscal 2016, Fiscal 2015, and Fiscal 2014, $1.6 million in Fiscal 2013, and $4.4 million in Fiscal 2012.respectively. As a result of the attainment and expectation of achieving profitable operations in certain countries comprising the Company’s European operations and certain state jurisdictions in the United States,U.S., for which deferred tax valuation allowances had been previously established, the Company released valuation allowances amounting to approximately $5.6 million, $2.6 million, and $1.6 million in Fiscal 2016, Fiscal 2015, and Fiscal 2014, $1.1 million in Fiscal 2013, and $0.2 million in Fiscal 2012.Therespectively.hashad non-U.S. net operating loss carryforwards of approximately $27.4$11.5 million that will begin to expire in 2017.29, 2014,28, 2015, the Company has accrued a liability of approximately $19.0 millionliabilities related to its uncertain tax positions, which includesincluding accrued interest, of approximately $18.5 million and $21.2 million, respectively, which isare included in other long-term liabilities in the Company’s audited consolidated balance sheets.approximatelyapproximately$16.8 million, $19.9 million and $18.1 million atas of April 2, 2016, March 28, 2015, and March 29, 2014, approximately $6.6 million at March 30, 2013, and approximately $1.8 million at March 31, 2012.respectively. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding accrued interest, for Fiscal 2014,2016, Fiscal 2013,2015, and Fiscal 2012,2014, are presented below (in thousands)millions): March 29,
2014 March 30,
2013 March 31,
2012 $ 6,628 $ 1,758 $ 939 2,515 3,318 246 9,312 2,482 573 (368 ) (930 ) — $ 18,087 $ 6,628 $ 1,758 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Unrecognized tax benefits beginning balance $ 19.9 $ 18.1 $ 6.6 Additions related to prior period tax positions — 0.4 2.5 Additions related to current period tax positions 5.8 5.2 9.3 Decreases from prior period positions (5.7 ) (3.8 ) (0.3 ) Decreases related to audit settlements (3.2 ) — — Unrecognized tax benefits ending balance $ 16.8 $ 19.9 $ 18.1 2014,2016, Fiscal 2013,2015, and Fiscal 20122014 was approximately $1.7 million, $1.3 million and $0.9 million, $0.3 million, and $0.1 million, respectively.and/orand 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 approximately $1.8 million during the next twelve months. 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.United States,U.S., for federal, state, and local purposes, and in certain foreign jurisdictions. With few exceptions, the Company is no longer subject to examinations by the relevant tax authorities for years prior to its fiscal year ended April 3, 2010.total amount of undistributed earnings of United States and other non-U.S. subsidiaries as of March 29, 2014 was approximately $1,317.0 million. With the exception of one of the Company’s non-U.S. subsidiaries, it is the Company’s intentionpolicy with respect to permanently reinvestits undistributed earnings of the remainder of its United StatesU.S. and non-U.S. subsidiaries and therebyis to consider those earnings to be either indefinitely postpone their remittance. Deferred taxes are not provided on undistributedreinvested or able to be repatriated tax-neutral. Undistributed earnings of subsidiaries considered to be either indefinitely reinvested or able to be repatriated tax-neutral amounted to $2.638 billion at April 2, 2016. Determination of the amount of unrecognized deferred U.S. and non-U.S. income tax liability on those subsidiaries thatearnings which are indefinitely reinvested and as such, no provision has been made for withholding taxes or income taxes for those subsidiaries. For the non-U.S. subsidiary whose earnings the Company doesis not intend to permanently reinvest, a deferred tax liability related to its undistributed earnings has been established, reflecting the potential future income tax liability upon distribution.For the remainder of the Company’s undistributed earnings not currently provided for, income taxes may become payable if undistributed earnings of those subsidiaries are paid as dividends, and as such, deferred liabilities would be recognized upon contemplation of the distribution of those earnings.15.practicable.Company. For the years ended March 29,Company, which vary by country. During Fiscal 2016, Fiscal 2015, and Fiscal 2014, March 30, 2013, and March 31, 2012, the Company recognized expenseexpenses of approximately $3.5 million. $2.2$10.1 million, $5.8 million, and $1.6$3.5 million, respectively, related to these retirement plans.16.executive managementthe Company's chief operating decision maker in deciding how to allocate resources, as well as in assessing performance. The primary key performance indicators are net sales or revenue (in the case of Licensing) and operating income for each segment. The Company’s reportable segments represent channels of distribution that offer similar merchandise, customer experience and sales/marketing strategies. Sales ofThe Company’s Retail segment includes sales through the Company’s products through Company owned stores, for the Retail segment includeincluding “Collection,” “Lifestyle” including “concessions,” and outlet stores located throughout North America,the Americas (U.S., Canada and Latin America), Europe, and Japan.Asia, as well as the Company’s e-commerce sales. Products sold through the Retail segment include women’s apparel, accessories (which include handbags and small leather goods such as wallets), men's apparel, footwear and licensed products, such as watches, jewelry, fragrances and beauty, and eyewear. The Wholesale segment includes sales primarily to major department stores and specialty shops throughout North Americathe Americas, Europe and Europe.Asia. Products sold throughgeographicalgeographic regions such as South Korea, the Philippines, Singapore, Malaysia, Indonesia, Australia, the Middle East, Russia, Turkey, China, Hong Kong, Macau, Taiwan, Latin America and the Caribbean, and India.Eastern Europe, throughout all of Asia (excluding Japan), as well as Australia. All intercompany revenues are eliminated in consolidation and are not reviewed when evaluating segment performance. Corporate overhead expenses are allocated to the segments based upon specific usage or other allocation methods.$12.1$13.3 million, $8.0 million and $1.9 million of its recorded $23.2 million goodwill as of April 2, 2016 to its Wholesale, Retail and Licensing segments, respectively. See Note 3 for goodwill recorded upon the Company's acquisition of controlling interest in MK Panama during the second quarter of Fiscal 2016. As of March 28, 2015, the Company's goodwill balance of $14.0 million was allocated $12.1 million and $1.9 million to its Wholesale and Licensing segments, respectively. The Company does not have identifiable assets separated by segment.thousands)millions): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 1,593,005 $ 1,062,642 $ 626,940 1,577,517 1,032,115 610,160 140,321 86,975 65,154 $ 3,310,843 $ 2,181,732 $ 1,302,254 $ 467,248 $ 315,654 $ 121,851 459,774 269,323 85,000 81,149 45,037 40,831 $ 1,008,171 $ 630,014 $ 247,682 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Revenue: Net sales: Retail $ 2,394.9 $ 2,134.6 $ 1,593.0 Wholesale 2,143.9 2,065.1 1,577.5 Licensing 173.3 171.8 140.3 Total revenue $ 4,712.1 $ 4,371.5 $ 3,310.8 Income from operations: Retail $ 501.4 $ 557.2 $ 467.3 Wholesale 584.1 610.9 459.8 Licensing 89.6 88.9 81.1 Income from operations $ 1,175.1 $ 1,257.0 $ 1,008.2 thousands)millions): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 46,679 $ 35,388 $ 25,293 32,364 18,531 12,012 611 372 249 $ 79,654 $ 54,291 $ 37,554 Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014 Retail $ 114.5 $ 84.5 $ 46.7 Wholesale 67.3 53.0 32.4 Licensing 1.4 0.9 0.6 Total depreciation and amortization $ 183.2 $ 138.4 $ 79.7 Excluded infrom the above table are fixed asset impairment charges related to the Company's retail segment foroperations of $8.6 million, $0.8 million and $1.3 million, $0.7during Fiscal 2016, Fiscal 2015 and Fiscal 2014, respectively. During Fiscal 2016, the Company also recorded fixed asset impairment charges of $0.4 million relating to its wholesale operations and $3.3$1.9 million during the fiscal years ended March 29, 2014, March 30, 2013, and March 31, 2012, respectively.relating to a corporate fixed asset.(as recognized based(based on country of origin), and long-lived assets by geographic location of the consolidated Company are as follows (in thousands)millions): Fiscal Years Ended March 29,
2014 March 30,
2013 March 31,
2012 $ 2,771,818 $ 1,938,635 $ 1,183,234 500,478 220,724 108,790 38,547 22,373 10,230 $ 3,310,843 $ 2,181,732 $ 1,302,254 As of March 29,
2014 March 30,
2013 $ 283,162 $ 209,973 108,074 46,154 7,476 6,966 $ 398,712 $ 263,093 17. Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014Revenue: $ 3,506.6 $ 3,418.9 $ 2,771.8 Europe 990.3 884.7 500.5 Asia 215.2 67.9 38.5 Total revenue $ 4,712.1 $ 4,371.5 $ 3,310.8 As of April 2,
2016 March 28,
2015Long-lived assets: $ 507.7 $ 443.8 Europe 284.2 169.2 Asia 33.7 11.4 Total Long-lived assets: $ 825.6 $ 624.4 Net revenues earned in the U.S. during Fiscal 2016, Fiscal 2015, and Fiscal 2014 were $3.304 billion, $3.228 billion and $2.600 billion, respectively. Long-lived assets located in the U.S. as of April 2, 2016 and March 28, 2015 were $472.2 million and $418.8 million, respectively. Fiscal Years Ended April 2,
2016 March 28,
2015 March 29,
2014 Accessories $ 3,179.7 70.1% $ 2,872.2 68.4 % $ 2,060.8 65.0 % Apparel 543.7 12.0% 549.4 13.1 % 482.4 15.2 % Footwear 491.0 10.8% 444.1 10.5 % 338.0 10.7 % Licensed product 324.4 7.1% 334.0 8.0 % 289.3 9.1 % Net sales $ 4,538.8 $ 4,199.7 $ 3,170.5 During July 2011, the note payable to the Company’s former parent, for $101.7 million, was exchanged for 475,796 preference shares and 6,579,662 ordinary shares, after taking into effect the impact of the share exchange that resulted from the reorganization discussed in Note 2. Accordingly, there are no outstanding balances related to the note, subsequent to the aforementioned transaction.From time to time, Sportswear Holdings Limited or its affiliates have provided a plane for purposes of business travel to the directors and senior management of the Company at no charge to the Company. During Fiscal 2013, $0.3 million, representing the estimated costs of these services, which are based on allocated or incremental cost, was charged to selling, general and administrative expenses as an offset to contributed capital (additional paid-in capital). There were no amounts recorded to contributed capital related to these services during Fiscal 2014. The Company or its chief executive officer may arrange a plane owned by Sportswear Holdings Limited or its affiliates to be used for the Company’s directors and senior management for purposes of business travel on terms and conditions not less favorable to the Company than it would receive in an arm’s-length transaction with a third party. To the extent the Company’s chief executive officer enters into such an arrangement for business travel, the Company will reimburse him for the actual market price paid for the use of such plane. During Fiscal 2014, the Company chartered this plane from Sportswear Holdings Limited for business purposes, the amounts of which were paid in cash and charged to operating expenses. Amounts charged to the Company in connection with these services were approximately $1.4 million during this period.currentformer shareholders, including Sportswear Holdings Limited, jointly own Michael Kors Far East Holdings Limited, a BVI company. During Fiscal 2012,On April 1, 2011, the Company entered into certain licensing agreements with certain subsidiaries of Michael Kors Far East Holdings Limited, including Michael Kors (HK) Limited, (the “Licensees”), which provide the Licensees with certain exclusive rights for use of the Company’s trademarks within China, Hong Kong, Macau and Taiwan, and to import, sell, advertise and promote certain of the Company’s products in these regions, as well as to own and operate stores which bear the Company’s tradenames. The agreements between the Company and subsidiaries of Michael Kors Far East Holdings Limitedthe Licensees expire on March 31, 2041, and may be terminated by the Company at certain intervals if certain minimum salesales benchmarks are not met. During Fiscal 2016, Fiscal 2015 and Fiscal 2014, there were approximately $7.6 million, $4.7 million and $1.6 million, respectively, of royalties earned under these agreements, whichagreements. These royalties were driven by Licensee adjusted net sales of our goods(of the Company’s goods) to their customers of approximately $169.8 million, $103.7 million and $36.5 million. There were no royalties earned duringmillion in Fiscal 2013,2016, Fiscal 2015 and Fiscal 2014, respectively, as defined in the Company was not entitled to royalties under this agreement until the start of its fiscal 2014 year.licensing agreement. In addition, the Company sells certain inventory items to the Licensees through its wholesale segment at terms consistent with those of similar licensees in the region. During Fiscal 2016, Fiscal 2015 and Fiscal 2014, amounts recognized as net sales in the Company’s consolidated statements of operations and other comprehensive income, related to these sales, were approximately $62.8 million, $35.3 million and $12.9 million. Amountsmillion, respectively. As of April 2, 2016 and March 28, 2015, the Company’s total accounts receivable from this related to salesparty were $16.1 million and $6.5 million, respectively. See Note 21 for information relating to the LicenseesCompany's acquisition of Michael Kors (HK) Limited on May 31, 2016.20132016, the Company’s balance sheet as of April 2, 2016 reflects a $1.0 million long-term loan between EBISA, the Company’s partner in the MK Panama joint venture, and Rosales Development Corp. There is a family relationship between EBISA and Rosales Development Corp. The loan was initiated on November 25, 2014 and bears interest at an annual rate of interest of 5%.de minimis.$3.4 million, $1.5 million and $1.0 million respectively. As of April 2, 2016 and March 28, 2015, the accounts payable to this supplier were immaterial.Company also providespurchase price was the Licensees with certain services, including, but not limited to, supply chain and logistics support, and management information system supportfair market value of the aircraft at the request of the Licensees, for which the Company charges a service fee based on allocated internalcosts employed in delivering the services,purchase date and includes a contractually agreed upon markup. These services were discontinued during Fiscal 2014, where a nominal amount of fees were charged. During Fiscal 2013, amounts charged to the Licensees for these services totaled $0.3 million, which was recorded in other selling, general and administrative expenses. As of March 29, 2014, amounts in the aggregate, owedno less favorable to the Company than it would have received in an arm’s-length transaction. The aircraft was purchased for purposes of business travel for the Company’s executives, and was recorded as a fixed asset in the Company’s consolidated balance sheets. Prior to the purchase of this plane, the Company or its Chief Executive Officer arranged for a plane owned by Sportswear Holdings Limited or its affiliates, which was used for the Licensees, totaled approximately $4.5 million; allCompany’s directors and senior management for purposes of business travel on terms and conditions not less favorable to the Company than it would receive in an arm’s-length transaction with a third party. To the extent the Company’s Chief Executive Officer entered into such an arrangement for business travel, the Company reimbursed him for the actual market price paid for the use of such plane. The Company chartered this plane from Sportswear Holdings Limited for business purposes, the amounts of which relatedwere paid in cash and charged to the above transactions and services.routinelywas charged $1.4 million in connection with these services during each of Fiscal 2015 and Fiscal 2014.directors.former directors (who resigned on September 10, 2014). Amounts purchased from this manufacturer during Fiscal 2014, Fiscal 20132015 and Fiscal 2012,2014, were approximately $9.1 million and $8.1 million, $5.7 million and $2.7 million, respectively.18.20142016 and 2013Fiscal 2015 quarterly results (dollars in thousands)millions): Fiscal Quarter Ended June September December March $ 640,859 $ 740,303 $ 1,012,229 $ 917,452 $ 397,271 $ 449,875 $ 619,498 $ 549,426 $ 197,562 $ 221,460 $ 343,240 $ 245,909 $ 124,996 $ 145,808 $ 229,643 $ 161,038 201,208,189 202,560,870 203,175,380 203,387,343 204,336,124 205,154,692 206,088,062 206,973,550 $ 414,865 $ 532,935 $ 636,778 $ 597,154 $ 251,000 $ 315,900 $ 383,451 $ 356,215 $ 111,943 $ 157,928 $ 204,839 $ 155,304 $ 68,645 $ 97,828 $ 130,028 $ 101,101 192,790,454 194,323,935 199,291,480 200,080,126 199,391,127 200,192,291 202,817,811 �� 203,785,123 75 Fiscal Quarter Ended June 27,
2015 September 26,
2015 December 26,
2015 April 2,
2016(1) Fiscal 2016 Total revenue $ 986.0 $ 1,130.0 $ 1,397.4 $ 1,198.7 Gross profit $ 603.6 $ 664.4 $ 832.0 $ 697.2 Income from operations $ 248.6 $ 273.1 $ 409.3 $ 244.1 Net income $ 174.4 $ 192.8 $ 294.2 $ 176.3 Net income attributable to MKHL $ 174.4 $ 193.1 $ 294.6 $ 177.0 (2) Weighted average ordinary shares outstanding: Basic 196,977,021 188,857,398 182,176,452 177,814,521 Diluted 200,054,494 191,524,156 184,851,616 180,439,102 Fiscal Quarter Ended June 28,
2014 September 27,
2014 December 27,
2014 March 28,
2015 Fiscal 2015 Total revenue $ 919.2 $ 1,056.6 $ 1,314.7 $ 1,081.0 Gross profit $ 571.6 $ 645.1 $ 800.1 $ 630.9 Income from operations $ 276.8 $ 305.5 $ 418.5 $ 256.2 Net income $ 187.7 $ 207.0 $ 303.7 $ 182.6 Net income attributable to MKHL $ 187.7 $ 207.0 $ 303.7 $ 182.6 Weighted average ordinary shares outstanding: Basic 203,749,572 204,464,952 202,668,541 199,828,293 Diluted 207,176,243 207,432,250 205,647,816 203,195,838 The fiscal quarter ended April 2, 2016 contains 14 weeks, whereas all other fiscal quarters presented contain 13 weeks.