Derivative Financial Instruments

The Company uses forward foreign currency exchange contracts to manage its exposure to fluctuations in foreign currency for certain of its transactions. The Company in its normal course of business enters into transactions with foreign suppliers and seeks to minimize risks related to certain forecasted inventory purchases by using forward foreign currency exchange contracts. The Company only enters into derivative instruments with highly credit-rated counterparties. The Company does not enter into derivative contracts for trading or speculative purposes.

The following table details the fair value of the Company’s derivative contracts, which are recorded on a gross basis in the consolidated balance sheets as of September 30, 2017 and April 1, 2017 (in millions):



					Fair Values
	Notional Amounts				Current Assets ⁽¹⁾				Current Liabilities ⁽²⁾
	September 30, 2017		April 1, 2017		September 30, 2017		April 1, 2017		September 30, 2017		April 1, 2017
Designated forward foreign currency exchange contracts	$	176.6	$	167.5	$	0.1	$	4.7	$	11.3	$	0.4
Undesignated forward foreign currency exchange contracts⁽³⁾	1,468.6		—		36.7		—		—		—
Total	$	1,645.2	$	167.5	$	36.8	$	4.7	$	11.3	$	0.4


⁽¹⁾	Recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets.


⁽²⁾	Recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets.

⁽³⁾

On July 25, 2017, in connection with the intended acquisition of Jimmy Choo, the Company entered into a forward foreign currency exchange contract with a notional amount of £1.115 billion to mitigate its foreign currency exchange risk through the expected closing date of the acquisition. This derivative contract was not designated as an accounting hedge. Therefore, changes in fair value are recorded to foreign currency (gain) loss in the Company's consolidated statement of operations.

The Company records and presents the fair values of all of its derivative assets and liabilities in its consolidated balance sheet on a gross basis as shown in the above table. However, as of September 30, 2017 and April 1, 2017, the Company had derivative assets of $0.1 million and $4.7 million, respectively, and derivative liabilities of $11.3 million and $0.3 million, respectively, that were subject to master netting arrangements. If the Company were to offset and record the asset and liability balances for its derivative instruments on a net basis in accordance with the terms of its master netting arrangements, which provide for the right to setoff amounts for similar transactions denominated in the same currencies, its net derivative liabilities as of September 30, 2017 and April 1, 2017 would be $11.2 million and $0.2 million, respectively, and it would have derivative net assets of $4.5 million as of April 1, 2017. The Company's master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties.

Changes in the fair value of the effective portion of the Company’s forward foreign currency exchange contracts that are designated as accounting hedges are recorded in equity as a component of accumulated other comprehensive income, and are reclassified from accumulated other comprehensive income (loss) into earnings when the items underlying the hedged transactions are recognized into earnings, as a component of cost of sales within the Company’s consolidated statements of operations and comprehensive income (loss). The following table summarizes the impact of the effective portion of gains and losses on the forward contracts designated as hedges (in millions):



	Three Months Ended
	September 30, 2017					October 1, 2016
	Pre-Tax Loss Recognized in OCI (Effective Portion)			Pre-Tax Gain Reclassified from Accumulated OCI into Earnings (Effective Portion)		Pre-Tax Loss Recognized in OCI (Effective Portion)			Pre-Tax Gain Reclassified from Accumulated OCI into Earnings (Effective Portion)
Forward foreign currency exchange contracts	$	(6.0	)	$	1.3	$	(1.2	)	$	0.3



	Six Months Ended
	September 30, 2017					October 1, 2016
	Pre-Tax Loss Recognized in OCI (Effective Portion)			Pre-Tax Gain Reclassified from Accumulated OCI into Earnings (Effective Portion)		Pre-Tax Gain Recognized in OCI (Effective Portion)		Pre-Tax Gain Reclassified from Accumulated OCI into Earnings (Effective Portion)
Forward foreign currency exchange contracts	$	(15.3	)	$	3.2	$	2.1	$	0.2

Amounts related to ineffectiveness were not material during all periods presented. The Company expects that substantially all of the amounts currently recorded in accumulated other comprehensive loss will be reclassified into earnings during the next twelve months, based upon the timing of inventory purchases and turnover. These amounts are subject to fluctuations in the applicable currency exchange rates.

During the three and six months ended September 30, 2017, the Company recognized net gains of $36.6 million and $35.2 million, respectively, related to changes in the fair value of undesignated forward currency exchange contracts within foreign currency (gain) loss in the Company’s consolidated statement of operations, $36.7 million of which related to the derivative contract entered into during the three months ended September 30, 2017 to mitigate foreign currency exchange risk through the expected closing date of the Jimmy Choo acquisition. During the three and six months ended October 1, 2016, the Company recognized net gains of $0.1 million and $0.3 million, respectively.