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 March 31, 2018 and April 1, 2017 (in millions):



					Fair Values
	Notional Amounts				Current Assets ⁽¹⁾				Current Liabilities ⁽²⁾
	March 31, 2018		April 1, 2017		March 31, 2018		April 1, 2017		March 31, 2018		April 1, 2017
Designated forward foreign currency exchange contracts	$	161.7	$	167.5	$	—	$	4.7	$	7.7	$	0.4
Total	$	161.7	$	167.5	$	—	$	4.7	$	7.7	$	0.4


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


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

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, the Company has derivative liabilities of $7.7 million as of March 31, 2018 and derivative assets and liabilities of $4.7 million and $0.3 million, respectively, as of April 1, 2017, which are 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, the March 31, 2018 liability would remain unchanged and derivative net assets and net liabilities as of April 1, 2017 would be $4.5 million and $0.2 million, respectively. The Company’s master netting arrangements do not require cash collateral to be pledged by the Company or its counterparties. The Company’s derivative financial instruments were not subject to master netting arrangements in prior fiscal years.

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 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. The following table summarizes the impact of the effective portion of gains and losses on the forward contracts designated as hedges (in millions):



	Fiscal Year Ended March 31, 2018						Fiscal Year Ended April 1, 2017				Fiscal Year Ended April 2, 2016
	Pre-Tax Loss Recognized in OCI			Pre-tax Loss Reclassified from Accumulated OCI into Earnings			Pre-Tax Gain Recognized in OCI		Pre-tax Gain Reclassified from Accumulated OCI into Earnings		Pre-Tax Loss Recognized in OCI			Pre-tax Gain Reclassified from Accumulated OCI into Earnings
Designated hedges	$	(22.4	)	$	(4.0	)	$	10.2	$	0.4	$	(25.2	)	$	10.9

Amounts related to ineffectiveness were not material during all periods presented. The Company expects that substantially all of the amounts recorded in accumulated other comprehensive loss at March 31, 2018 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 Fiscal 2018, Fiscal 2017 and Fiscal 2016, the Company recognized net gains of $3.4 million, net gains of $2.6 million and net losses of $2.1 million respectively, related to the change in the fair value of undesignated forward foreign currency exchange contracts within foreign currency loss (gain) in the Company’s consolidated statements of operations and comprehensive income. The Fiscal 2018 amount included a $4.7 million gain related to the derivative contract entered into on July 25, 2017 to mitigate foreign currency exchange risk associated with the Jimmy Choo acquisition that was settled on October 30, 2017.