NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1
. Organization and principal accounting policies
Signet Jewelers Limited (“Signet” or the “Company”), a holding company incorporated in Bermuda, is the world's largest retailer of diamond jewelry. The Company operates through its 100% owned subsidiaries with sales primarily in the US, UK and Canada. Signet manages its business as
five
reportable segments: the Sterling Jewelers division, the Zale division, which consists of the Zale Jewelry and Piercing Pagoda segments, the UK Jewelry division and Other. The “Other” reportable segment consists of all non-reportable segments, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones and unallocated corporate administrative functions. See Note
3
for additional discussion of the Company’s segments.
Signet’s sales are seasonal, with the first quarter slightly exceeding
20%
of annual sales, the second and third quarters each approximating
20%
and the fourth quarter accounting for almost
40%
of annual sales, with December being by far the most important month of the year. The “Holiday Season” consists of results for the months of November and December. As a result, approximately
45%
to
55%
of Signet’s annual operating income normally occurs in the fourth quarter, comprised of nearly all of the UK Jewelry and Zale divisions’ annual operating income and about
40%
to
45%
of the Sterling Jewelers division’s annual operating income.
Basis of preparation
These condensed consolidated financial statements are prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of the results for the interim periods. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes included in Signet’s Annual Report on Form 10-K for the fiscal year ended
January 30, 2016
filed with the SEC on
March 24, 2016
.
Preferred shares
On
October 5, 2016
, the Company issued
625,000
shares of Series A Convertible Preference Shares (“preferred shares”) for an aggregate price of
$625.0 million
, or
$1,000
per share (the “Stated Value”). The preferred shares were issued under an effective registration statement filed with the SEC. The accounting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 480, "Distinguishing Liabilities from Equity," requires preferred securities that are redeemable for cash or other assets to be classified outside of permanent equity if redeemable at a fixed or determinable price on a fixed or determinable date, at the option of the holder, or upon the occurrence of an event that is not solely within the control of the issuer. The Company's preferred shares were classified as temporary equity and recorded in the condensed consolidated balance sheets at fair value upon issuance.
See Note
4
for additional information regarding the Company's preferred shares.
Use of estimates
The preparation of these condensed consolidated financial statements, in conformity with US GAAP and SEC regulations for interim reporting, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are primarily made in relation to the valuation of accounts receivables, inventories, deferred revenue, derivatives, employee benefits, income taxes, contingencies, asset impairments, indefinite-lived intangible assets, as well as depreciation and amortization of long-lived assets.
Fiscal year
The Company’s fiscal year ends on the Saturday nearest to January 31
st
.
Fiscal 2017
and
Fiscal 2016
refer to the 52 week periods ending
January 28, 2017
and
January 30, 2016
, respectively. Within these condensed consolidated financial statements, the third quarter of the relevant fiscal years 2017 and 2016 refer to the 13 and 39 weeks ended
October 29, 2016
and
October 31, 2015
, respectively.
Foreign currency translation
The financial position and operating results of certain foreign operations, including the UK Jewelry division and the Canadian operations of the Zale Jewelry segment, are consolidated using the local currency as the functional currency. Assets and liabilities are translated at the rates of exchange on the balance sheet date, and revenues and expenses are translated at the monthly average rates of exchange during the period. Resulting translation gains or losses are included in the accompanying condensed consolidated statements of equity as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains or losses resulting from foreign currency transactions are included within the condensed consolidated income statements, whereas translation adjustments and gains or losses related to intercompany loans of a long-term investment nature are recognized as a component of AOCI.
See Note
7
for additional information regarding the Company's foreign currency translation.
Reclassification
The Company has reclassified the presentation of certain prior year amounts to conform to the current year presentation. During the fourth quarter of Fiscal 2016, the Company adopted FASB Accounting Standards Update ("ASU") No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." As a result, the Company adjusted the presentation of deferred taxes in the condensed consolidated balance sheet as of
October 31, 2015
to reflect a reduction in current assets of
$3.6 million
, a reduction in non-current assets of
$130.3 million
, a reduction in current liabilities of
$170.5 million
and an increase in non-current liabilities of
$36.6 million
. See Note
2
for additional information regarding new accounting guidance adopted in Fiscal 2017.
2
. New accounting pronouncements
New accounting pronouncements adopted during the period
Share-based compensation
In June 2014, the FASB issued ASU No. 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” The new guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. ASU No. 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. Signet adopted this guidance during the first quarter of Fiscal 2017. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations.
Debt issuance costs
In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The new guidance requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. In August 2015, the FASB issued ASU No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The new guidance provides clarity that the SEC would not object to the deferral and presentation of debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU Nos. 2015-03 and 2015-15 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. Signet adopted this guidance during the first quarter of Fiscal 2017. Accordingly, the Company adjusted the condensed consolidated balance sheets as of
January 30, 2016
and
October 31, 2015
by reducing total assets and debt for amounts classified as deferred debt issuance costs of
$9.5 million
and
$9.9 million
, respectively. Signet continues to present debt issuance costs relating to its revolving credit facility and asset-backed securitization facility as assets in the condensed consolidated balance sheets.
See Note
17
for additional discussion of the Company's debt issuance costs.
New accounting pronouncements to be adopted in future periods
Credit Losses
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The new guidance requires entities to measure and recognize expected credit losses for financial assets measured at amortized cost basis. The estimate of expected credit losses should consider historical information, current information, and reasonable and supportable forecasts of expected losses over the remaining contractual life that affect collectibility. ASU No. 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, with early adoption permitted. Signet is currently assessing the impact the adoption of this guidance will have on the Company's financial position or results of operations.
Revenue recognition
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The new guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU No. 2014-09 provides alternative methods of retrospective adoption. In August 2015, the FASB issued an update (ASU No. 2015-14) that defers the effective date by one year. As a result, ASU No. 2014-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016, including interim periods within that annual period.
There are many aspects of this new accounting guidance that are still being interpreted. The FASB has recently issued updates to certain aspects of the guidance to address implementation issues. In March 2016, the FASB issued additional guidance concerning "Principal versus Agent" considerations (reporting revenue gross versus net); in April 2016, the FASB issued additional guidance on identifying performance obligations and licensing; and in May 2016, the FASB issued additional guidance on collectibility, noncash consideration, presentation of sales tax, and transition. These updates are intended to improve the operability and understandability of the implementation guidance and have the same effective date and transition requirements as ASU No. 2014-09 guidance discussed above.
Signet continues to assess the impact, as well as the available methods of implementation, the adoption of this guidance will have on the Company’s financial position or results of operations.
Inventory
In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” The new guidance states that inventory will be measured at the lower of cost and net realizable value. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU No. 2015-11 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted and is to be applied prospectively. Signet does not expect the adoption of this guidance to have a material impact on the Company’s financial position or results of operations.
Financial instruments
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The new guidance primarily impacts accounting for equity investments and financial liabilities under the fair value option, as well as, the presentation and disclosure requirements for financial instruments. Under the new guidance, equity investments will generally be measured at fair value, with subsequent changes in fair value recognized in net income. ASU No. 2016-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Signet does not expect the adoption of this guidance to have a material impact on the Company’s financial position or results of operations.
Leases
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The new guidance primarily impacts lessee accounting by requiring the recognition of a right-of-use asset and a corresponding lease liability on the balance sheet for long-term lease agreements. The lease liability will be equal to the present value of all reasonably certain lease payments. The right-of-use asset will be based on the liability, subject to adjustment for initial direct costs. Lease agreements that are 12 months or less are permitted to be excluded from the balance sheet. In general, leases will be amortized on a straight-line basis with the exception of finance lease agreements. ASU No. 2016-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. Signet is currently assessing the impact the adoption of this guidance will have on the Company’s financial position or results of operations.
Liabilities
In March 2016, the FASB issued ASU No. 2016-04, “Liabilities - Extinguishments of Liabilities (Subtopic 405-20).” The new guidance addresses diversity in practice related to the derecognition of a prepaid stored-value product liability. Liabilities related to the sale of prepaid stored-value products within the scope of this update are financial liabilities. ASU No. 2016-04 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. Signet does not expect the adoption of this guidance to have a material impact on the Company’s financial position or results of operations.
Share-based compensation
In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.” The new guidance simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU No. 2016-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016, with early adoption permitted. Signet is currently assessing the impact the adoption of this guidance will have on the Company’s results of operations.
3
. Segment information
Financial information for each of Signet’s reportable segments is presented in the tables below. Signet’s chief operating decision maker utilizes sales and operating income, after the elimination of any inter-segment transactions, to determine resource allocations and performance assessment measures. Signet’s sales are derived from the retailing of jewelry, watches, other products and services as generated through the management of its
five
reportable segments: the Sterling Jewelers division, the Zale division, which consists of the Zale Jewelry and Piercing Pagoda segments, the UK Jewelry division and Other.
The Sterling Jewelers division operates in all 50 US states. Its stores operate nationally in malls and off-mall locations principally as Kay Jewelers (“Kay”), Kay Jewelers Outlet, Jared The Galleria Of Jewelry (“Jared”) and Jared Vault. The division also operates a variety of mall-based regional brands.
The Zale division operates jewelry stores (Zale Jewelry) and kiosks (Piercing Pagoda), located primarily in shopping malls throughout the US, Canada and Puerto Rico. Zale Jewelry includes the US store brand Zales (Zales Jewelers and Zales Outlet), which operates in all 50 US states, and the Canadian store brand Peoples Jewellers, which operates in nine provinces. The division also operates regional brands Gordon’s Jewelers and Mappins. Piercing Pagoda operates through mall-based kiosks.
The UK Jewelry division operates stores in the UK, Republic of Ireland and Channel Islands. Its stores operate in shopping malls and off-mall locations (i.e. high street) principally as H.Samuel and Ernest Jones.
The Other reportable segment consists of all non-reportable segments, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones, that are below the quantifiable threshold for separate disclosure as a reportable segment and unallocated corporate administrative functions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Sales:
|
|
|
|
|
|
|
|
Sterling Jewelers
|
$
|
712.5
|
|
|
$
|
733.5
|
|
|
$
|
2,532.3
|
|
|
$
|
2,536.2
|
|
Zale Jewelry
|
282.4
|
|
|
281.9
|
|
|
994.8
|
|
|
991.2
|
|
Piercing Pagoda
|
53.4
|
|
|
48.0
|
|
|
179.4
|
|
|
165.1
|
|
UK Jewelry
|
130.3
|
|
|
149.4
|
|
|
419.5
|
|
|
455.0
|
|
Other
|
7.6
|
|
|
3.6
|
|
|
12.5
|
|
|
10.1
|
|
Total sales
|
$
|
1,186.2
|
|
|
$
|
1,216.4
|
|
|
$
|
4,138.5
|
|
|
$
|
4,157.6
|
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
Sterling Jewelers
|
$
|
78.6
|
|
|
$
|
77.2
|
|
|
$
|
417.8
|
|
|
$
|
413.2
|
|
Zale Jewelry
(1)
|
(19.3
|
)
|
|
(18.3
|
)
|
|
(0.5
|
)
|
|
(9.9
|
)
|
Piercing Pagoda
(2)
|
(5.4
|
)
|
|
(6.0
|
)
|
|
2.2
|
|
|
(1.0
|
)
|
UK Jewelry
|
—
|
|
|
—
|
|
|
3.0
|
|
|
3.7
|
|
Other
(3)
|
(21.8
|
)
|
|
(19.3
|
)
|
|
(58.5
|
)
|
|
(95.4
|
)
|
Total operating income
|
$
|
32.1
|
|
|
$
|
33.6
|
|
|
$
|
364.0
|
|
|
$
|
310.6
|
|
|
|
(1)
|
Includes net operating loss of
$3.7 million
and
$13.2 million
related to the effects of purchase accounting associated with the acquisition of Zale Corporation for the 13 and 39 weeks ended
October 29, 2016
and
$3.6 million
and
$17.1 million
for the 13 and 39 weeks ended
October 31, 2015
, respectively.
|
|
|
(2)
|
Includes net operating loss of
$0.1 million
and
$0.3 million
related to the effects of purchase accounting associated with the acquisition of Zale Corporation for the 13 and 39 weeks ended
October 29, 2016
and
$0.1 million
and
$3.1 million
for the 13 and 39 weeks ended
October 31, 2015
, respectively.
|
|
|
(3)
|
Includes
$7.9 million
and
$18.5 million
for the 13 and 39 weeks ended
October 29, 2016
of integration costs for consulting services associated with IT implementations and severance related to organizational changes. Includes
$9.8 million
and
$59.8 million
for the 13 and 39 weeks ended
October 31, 2015
of transaction and integration expenses primarily attributable to the legal settlement over appraisal rights and expenses associated with legal, tax, accounting and consulting services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Total assets:
|
|
|
|
|
|
Sterling Jewelers
|
$
|
3,715.6
|
|
|
$
|
3,788.0
|
|
|
$
|
3,586.7
|
|
Zale Jewelry
|
2,061.7
|
|
|
1,955.1
|
|
|
1,977.6
|
|
Piercing Pagoda
|
136.1
|
|
|
141.8
|
|
|
135.4
|
|
UK Jewelry
|
407.1
|
|
|
427.8
|
|
|
470.5
|
|
Other
|
167.0
|
|
|
152.2
|
|
|
155.7
|
|
Total assets
|
$
|
6,487.5
|
|
|
$
|
6,464.9
|
|
|
$
|
6,325.9
|
|
4
. Redeemable preferred shares
On
October 5, 2016
, the Company issued
625,000
preferred shares to Green Equity Investors VI, L.P., Green Equity Investors Side VI, L.P., LGP Associates VI-A LLC and LGP Associates VI-B LLC, all affiliates of Leonard Green & Partners, L.P., (together, the “Investors”) for an aggregate purchase price of
$625.0 million
, or
$1,000
per share pursuant to the investment agreement dated August 24, 2016. In connection with the issuance of the preferred shares, the Company incurred direct and incremental expenses of
$13.4 million
, including financial advisory fees, closing costs, legal expenses and other offering-related expenses. These direct and incremental expenses originally reduced the preferred shares carrying value, and will be accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date, November 2024. Accretion relating to these fees of
$0.1 million
was recorded in the condensed consolidated balance sheets as of
October 29, 2016
.
Dividend rights:
The preferred shares rank senior to the Company’s common shares, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The liquidation preference for preferred shares is equal to the greater of (a) the Stated Value per share, plus all accrued but unpaid dividends and (b) the consideration holders would have received if preferred shares were converted into common shares immediately prior to the liquidation. As of
October 29, 2016
, the liquidation preference was
$627.2 million
. Preferred shareholders are entitled to a cumulative dividend at the rate of
5%
per annum, payable quarterly in arrears, commencing on February 15, 2017, either in cash or by increasing the Stated Value at the option of the Company. In addition, preferred shareholders were entitled to receive dividends or distributions declared or paid on common shares on an as-converted basis, other than the Company’s regularly declared quarterly cash dividends not in excess of
130%
of the arithmetic average of the regular, quarterly cash dividends per common share, if any, declared by the Company during the preceding
four
calendar quarters.
On November 2, 2016, the Board of Directors approved certain changes to the rights of the preferred shareholders, including the following: (a) elimination of the right of preferred shareholders to receive dividends or other distributions declared on the Company’s common shares and inclusion of adjustments to the conversion rate in the event of any dividend, distribution, spin-off or certain other events or transactions in respect of the common shares; and (b) addition of a requirement for approval by the holders of the majority of the issued preferred shares for the declaration or payment by the Company of any dividends or other distributions on the common shares other than (i) regularly declared quarterly cash dividends paid on the issued common shares in any calendar quarter in an amount per share that is not more than
130%
of the arithmetic average of the regular, quarterly cash dividends per common share, if any, declared by the Company during the preceding
four
calendar quarters for such quarter and (ii) any dividends or other distributions which are paid or distributed at the same time on the common shares and the preferred shares, provided that the amount paid or distributed to the preferred shares is based on the number of common shares into which such preferred shares could be converted on the applicable record date for such dividends or other distributions.
Conversion features:
Preferred shares are convertible at the option of the holders at any time into common shares at the then applicable conversion rate. The initial conversion rate of
10.6529
common shares per preferred share was established as the Stated Value divided by the defined conversion price of
$93.8712
. As of
October 29, 2016
, the maximum number of common shares that could be required to be issued if converted was
6.7 million
shares. The conversion rate is subject to certain anti-dilution and other adjustments, including stock split / reverse stock split transactions, regular dividends declared on common shares, share repurchases (excluding amounts through open market transactions or accelerated share repurchases) and issuances of common shares or other securities convertible into common shares. The initial issuance did not include a beneficial conversion feature as the conversion price used to set the conversion ratio at the time of issuance was greater than the Company's common stock price.
At any time on or after October 5, 2018, all or a portion of outstanding preferred shares are convertible at the option of the Company if the closing price of common shares exceeds
175%
of the then applicable conversion price for at least
20
consecutive trading days.
Redemption rights:
At any time after November 15, 2024, the Company will have the right to redeem any or all, and the holders of the preferred shares will have the right to require the Company to repurchase any or all, of the preferred shares for cash at a price equal to the Stated Value plus all accrued but unpaid dividends. Upon certain change of control or delisting events involving the Company, preferred shareholders can require the Company to repurchase, subject to certain exceptions, all or any portion of its preferred shares at (a) an amount in cash equal to
101%
of the Stated Value plus all accrued but unpaid dividends or (b) the consideration the holders would have received if they had converted their preferred shares into common shares immediately prior to the change of control event.
Voting rights:
Preferred shareholders are entitled to vote with the holders of common shares on an as-converted basis. Holders of preferred shares are entitled to a separate class vote with respect to certain designee(s) for election to the Company's Board of Directors, amendments to the Company’s organizational documents that have an adverse effect on the preferred shareholders and issuances by the Company of securities that are senior to, or equal in priority with, the preferred shares.
Registration rights:
Preferred shareholders have certain customary registration rights with respect to the preferred shares and the shares of common shares into which they are converted, pursuant to the terms of a registration rights agreement.
5
. Shareholders' equity
Share repurchases
In February 2016, the Board of Directors authorized the repurchase of Signet's common shares up to
$750.0 million
(the "2016 Program"). In August 2016, the Board of Directors increased its authorized share repurchase program by
$625.0 million
, bringing the total authorization for the 2016 Program to
$1,375.0 million
. The 2016 Program may be suspended or discontinued at any time without notice.
To facilitate the share repurchase program, the Company periodically repurchases shares in the open market. On October 5, 2016, the Company entered into an accelerated share repurchase agreement (“ASR”) with a large financial institution to repurchase
$525.0 million
of the Company’s common shares. At inception, the Company paid
$525.0 million
to the financial institution and took delivery of
4.7 million
shares with an initial estimated cost of
$367.5 million
.
The total number of shares to be delivered upon settlement will be calculated using the volume-weighted average price of the Company's common shares traded during the pricing period, less an agreed discount. If the total number of shares to be delivered exceeds the number of shares initially delivered, the Company will receive the remaining balance of shares from the financial institution. Based on the current trading prices of the Company’s common stock, additional shares are expected to be received. If the total number of shares to be delivered is less than the number of shares initially delivered, the Company has the contractual right to deliver either shares of the Company’s common stock or cash equal to the value of those shares to the financial institution. The pricing period is scheduled to end in December 2016, but may conclude sooner at the election of the financial institution.
The Company reflected shares delivered as treasury shares as of the date the shares were physically delivered in computing the weighted average common shares outstanding for both basic and diluted earnings per share. The ASR agreement was accounted for as a treasury stock transaction and a forward stock purchase contract. The forward stock purchase contract was determined to be indexed to the Company’s own stock and met all of the applicable criteria for equity classification. As of
October 29, 2016
, the Company recorded the
$525.0 million
payment to JPMorgan Chase Bank as a decrease to equity in the condensed consolidated balance sheets, consisting of decreases in treasury shares and additional paid-in capital.
During the 39 weeks ended
October 29, 2016
, the Company also repurchased
5.2 million
common shares through open market transactions for a total cost of
$475.0 million
.
Common shares repurchased during the 39 weeks ended
October 29, 2016
and
October 31, 2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39 weeks ended October 29, 2016
|
|
39 weeks ended October 31, 2015
|
(in millions, except per share amounts)
|
Amount
authorized
|
|
Shares
repurchased
|
|
Amount
repurchased
|
|
Average
repurchase
price per
share
|
|
Shares
repurchased
|
|
Amount
repurchased
|
|
Average
repurchase
price per
share
|
2016 Program
(1)
|
$
|
1,375.0
|
|
|
8.7
|
|
|
$
|
706.9
|
|
|
$
|
81.32
|
|
|
n/a
|
|
|
n/a
|
|
|
n/a
|
|
2013 Program
(2)
|
$
|
350.0
|
|
|
1.2
|
|
|
135.6
|
|
|
$
|
111.26
|
|
|
0.9
|
|
|
$
|
111.9
|
|
|
$
|
128.91
|
|
Total
|
|
|
9.9
|
|
|
$
|
842.5
|
|
|
$
|
85.00
|
|
|
0.9
|
|
|
$
|
111.9
|
|
|
$
|
128.91
|
|
|
|
(1)
|
The 2016 Program had
$510.6 million
remaining as of
October 29, 2016
.
|
|
|
(2)
|
The 2013 Program was completed in May 2016.
|
Dividends on common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2017
|
|
Fiscal 2016
|
(in millions, except per share amounts)
|
Cash dividend per share
|
|
Total
dividends
|
|
Cash dividend
per share
|
|
Total
dividends
|
First quarter
|
$
|
0.26
|
|
|
$
|
20.4
|
|
|
$
|
0.22
|
|
|
$
|
17.6
|
|
Second quarter
|
0.26
|
|
|
19.7
|
|
|
0.22
|
|
|
17.6
|
|
Third quarter
(1)
|
0.26
|
|
|
18.1
|
|
|
0.22
|
|
|
17.5
|
|
Total
|
$
|
0.78
|
|
|
$
|
58.2
|
|
|
$
|
0.66
|
|
|
$
|
52.7
|
|
|
|
(1)
|
Signet’s dividend policy for common shares results in the dividend payment date being a quarter in arrears from the declaration date. As a result, as of
October 29, 2016
and
October 31, 2015
,
$18.1 million
and
$17.5 million
, respectively, has been recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets reflecting the cash dividends on common shares declared for the third quarter of
Fiscal 2017
and
Fiscal 2016
, respectively.
|
Dividends on preferred shares
As of
October 29, 2016
,
no
dividends were declared by the Company on preferred shares. As disclosed in the condensed consolidated income statement, cumulative undeclared dividends on the preferred shares since the date of issuance totaled
$2.2 million
and reduced net income attributable to common shareholders.
6
. Earnings per share
In calculating basic earnings per share ("EPS"), the Company follows the two-class method, which distinguishes between classes of securities based on the proportionate participation rights of each security type in the Company's undistributed income. The preferred shares issued on
October 5, 2016
are considered participating securities as of
October 29, 2016
. Under the two-class method, income available to common shareholders is reduced by (a) the cumulative dividend on the Company’s preferred shares whether or not declared or paid during the period, (b) accretion relating to issuance costs of preferred shares and (c) the hypothetical distribution of undistributed earnings to preferred shareholders in accordance with contractual rights. For the
13 and 39 weeks ended October 29, 2016
, the two-class method did not impact EPS as
no
hypothetical distribution of undistributed earnings were allocable to preferred shareholders. See Note
4
for additional discussion of the Company's preferred shares, including changes to the rights of preferred shareholders as of November 2, 2016 which will result in the preferred shares no longer being considered participating securities, and consequently, the two-class method will no longer apply.
The dilutive effect of share awards represents the potential impact of outstanding awards issued under the Company’s share-based compensation plans, including restricted shares and restricted stock units issued under the Omnibus Plan and stock options issued under the Share Saving Plans and the Executive Plans. The dilutive effect of preferred shares represents the potential impact for common shares that would be issued upon conversion. In computing diluted EPS, the Company also adjusts the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the preferred shares. Potential common share dilution related to share awards and preferred shares is determined using the treasury stock and if-converted methods, respectively.
The following table sets forth the computation of EPS for the
13 and 39 weeks ended October 29, 2016
and
October 31, 2015
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions, except per share amounts)
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Net income
|
$
|
17.0
|
|
|
$
|
15.0
|
|
|
$
|
245.7
|
|
|
$
|
196.0
|
|
Less: Dividends on preferred shares
|
(2.2
|
)
|
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
Net income attributable to common shareholders
|
$
|
14.8
|
|
|
$
|
15.0
|
|
|
$
|
243.5
|
|
|
$
|
196.0
|
|
|
|
|
|
|
|
|
|
Basic weighted average number of shares outstanding
|
73.5
|
|
|
79.3
|
|
|
76.4
|
|
|
79.7
|
|
Plus: Dilutive effect of share awards
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
Plus: Dilutive effect of preferred shares
|
—
|
|
|
n/a
|
|
|
—
|
|
|
n/a
|
|
Diluted weighted average number of shares outstanding
|
73.6
|
|
|
79.5
|
|
|
76.5
|
|
|
79.9
|
|
|
|
|
|
|
|
|
|
Earnings per share – basic
|
$
|
0.20
|
|
|
$
|
0.19
|
|
|
$
|
3.19
|
|
|
$
|
2.46
|
|
Earnings per share – diluted
|
$
|
0.20
|
|
|
$
|
0.19
|
|
|
$
|
3.18
|
|
|
$
|
2.45
|
|
The calculation of diluted EPS for the
13 and 39 weeks ended October 29, 2016
and
October 31, 2015
excludes the following share awards and potential impact of preferred shares on the basis that their effect would be anti-dilutive.
|
|
|
|
|
|
|
|
(in millions)
|
|
October 29, 2016
|
|
October 31, 2015
|
Share awards
|
|
0.3
|
|
|
0.1
|
|
Preferred shares
|
|
6.7
|
|
|
—
|
|
Total anti-dilutive shares
|
|
7.0
|
|
|
0.1
|
|
7
. Accumulated other comprehensive income (loss)
The following tables present the changes in AOCI by component and the reclassifications out of AOCI, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension plan
|
|
|
(in millions)
|
Foreign
currency
translation
|
|
Losses on available-for-sale securities, net
|
|
Gains (losses)
on cash flow
hedges
|
|
Actuarial
losses
|
|
Prior
service
credits
|
|
Accumulated
other
comprehensive
loss
|
Balance at January 30, 2016
|
$
|
(237.8
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
(3.9
|
)
|
|
$
|
(43.1
|
)
|
|
$
|
11.1
|
|
|
$
|
(274.1
|
)
|
Other comprehensive income (loss) ("OCI") before reclassifications
|
(38.0
|
)
|
|
0.2
|
|
|
8.2
|
|
|
—
|
|
|
—
|
|
|
(29.6
|
)
|
Amounts reclassified from AOCI to net income
|
—
|
|
|
—
|
|
|
1.6
|
|
|
1.0
|
|
|
(1.2
|
)
|
|
1.4
|
|
Net current period OCI
|
(38.0
|
)
|
|
0.2
|
|
|
9.8
|
|
|
1.0
|
|
|
(1.2
|
)
|
|
(28.2
|
)
|
Balance at October 29, 2016
|
$
|
(275.8
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
5.9
|
|
|
$
|
(42.1
|
)
|
|
$
|
9.9
|
|
|
$
|
(302.3
|
)
|
The amounts reclassified from AOCI were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from AOCI
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
|
|
(in millions)
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
|
Income statement caption
|
(Gains) losses on cash flow hedges:
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
(0.4
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
—
|
|
|
Cost of sales (see Note 14)
|
Interest rate swaps
|
0.5
|
|
|
0.8
|
|
|
1.7
|
|
|
1.9
|
|
|
Interest expense, net (see Note 14)
|
Commodity contracts
|
(0.3
|
)
|
|
0.4
|
|
|
1.7
|
|
|
1.0
|
|
|
Cost of sales (see Note 14)
|
Total before income tax
|
(0.2
|
)
|
|
1.1
|
|
|
2.4
|
|
|
2.9
|
|
|
|
Income taxes
|
0.1
|
|
|
(0.2
|
)
|
|
(0.8
|
)
|
|
(0.7
|
)
|
|
|
Net of tax
|
(0.1
|
)
|
|
0.9
|
|
|
1.6
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defined benefit pension plan items:
|
|
|
|
|
|
|
|
|
|
Amortization of unrecognized actuarial losses
|
0.4
|
|
|
0.9
|
|
|
1.2
|
|
|
2.6
|
|
|
Selling, general and administrative expenses
(1)
|
Amortization of unrecognized net prior service credits
|
(0.5
|
)
|
|
(0.6
|
)
|
|
(1.5
|
)
|
|
(1.7
|
)
|
|
Selling, general and administrative expenses
(1)
|
Total before income tax
|
(0.1
|
)
|
|
0.3
|
|
|
(0.3
|
)
|
|
0.9
|
|
|
|
Income taxes
|
0.1
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(0.2
|
)
|
|
|
Net of tax
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassifications, net of tax
|
$
|
(0.1
|
)
|
|
$
|
1.1
|
|
|
$
|
1.4
|
|
|
$
|
2.9
|
|
|
|
|
|
(1)
|
These items are included in the computation of net periodic pension benefit. See Note
16
for additional information.
|
8
. Income taxes
Signet has business activity in all states within the US and files income tax returns for the US federal jurisdiction and all applicable states. Signet also files income tax returns in the UK, Canada and certain other foreign jurisdictions. The provision for income taxes is based on the current estimate of the consolidated annual effective tax rate. As of
October 29, 2016
, the effective tax rate for the Company was
25.0%
compared to
28.9%
in
Fiscal 2016
. The effective tax rate as of
October 29, 2016
excludes the effects of any discrete items that may be recognized in future periods.
During the third quarter of
Fiscal 2017
, there has been no material change in the amounts of unrecognized tax benefits, or the related accrued interest and penalties (where appropriate), in respect of uncertain tax positions identified as of
January 30, 2016
.
9
. Accounts receivable, net
Signet’s accounts receivable primarily consist of US customer in-house financing receivables. The accounts receivable portfolio consists of a population that is of similar characteristics and is evaluated collectively for impairment.
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Accounts receivable by portfolio segment, net:
|
|
|
|
|
|
Sterling Jewelers customer in-house finance receivables
|
$
|
1,546.3
|
|
|
$
|
1,725.9
|
|
|
$
|
1,437.2
|
|
Zale customer in-house finance receivables
|
26.4
|
|
|
13.6
|
|
|
—
|
|
Other accounts receivable
|
8.4
|
|
|
16.9
|
|
|
14.3
|
|
Total accounts receivable, net
|
$
|
1,581.1
|
|
|
$
|
1,756.4
|
|
|
$
|
1,451.5
|
|
Signet grants credit to customers based on a variety of credit quality indicators, including consumer financial information and prior payment experience. On an ongoing basis, management monitors the credit exposure based on past due status and collection experience, as it has found a meaningful correlation between the past due status of customers and the risk of loss.
During the third quarter of Fiscal 2016, Signet implemented a program to provide in-house credit to customers in the Zale division’s US locations (“second look”). The allowance for credit losses associated with Zale customer in-house finance receivables was immaterial as of
October 29, 2016
,
January 30, 2016
and
October 31, 2015
.
Other accounts receivable is comprised primarily of accounts receivable relating to the insurance loss replacement business in the UK Jewelry division of
$7.7 million
(
January 30, 2016
and
October 31, 2015
:
$13.6 million
and
$9.3 million
, respectively).
The allowance for credit losses on Sterling Jewelers customer in-house finance receivables is shown below:
|
|
|
|
|
|
|
|
|
|
39 weeks ended
|
(in millions)
|
October 29, 2016
|
|
October 31, 2015
|
Beginning balance:
|
$
|
(130.0
|
)
|
|
$
|
(113.1
|
)
|
Charge-offs, net
|
143.1
|
|
|
121.5
|
|
Recoveries
|
26.8
|
|
|
27.0
|
|
Provision
|
(172.9
|
)
|
|
(157.6
|
)
|
Ending balance
|
$
|
(133.0
|
)
|
|
$
|
(122.2
|
)
|
Ending receivable balance evaluated for impairment
|
1,679.3
|
|
|
1,559.4
|
|
Sterling Jewelers customer in-house finance receivables, net
|
$
|
1,546.3
|
|
|
$
|
1,437.2
|
|
Net bad debt expense is defined as the provision expense less recoveries.
The credit quality indicator and age analysis of Sterling Jewelers customer in-house finance receivables are shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
(in millions)
|
Gross
|
|
Valuation
allowance
|
|
Gross
|
|
Valuation
allowance
|
|
Gross
|
|
Valuation
allowance
|
Performing:
|
|
|
|
|
|
|
|
|
|
|
|
Current, aged 0 – 30 days
|
$
|
1,294.9
|
|
|
$
|
(39.3
|
)
|
|
$
|
1,473.0
|
|
|
$
|
(45.4
|
)
|
|
$
|
1,212.2
|
|
|
$
|
(36.8
|
)
|
Past due, aged 31 – 60 days
|
250.6
|
|
|
(8.1
|
)
|
|
259.6
|
|
|
(8.3
|
)
|
|
226.0
|
|
|
(7.3
|
)
|
Past due, aged 61 – 90 days
|
50.7
|
|
|
(2.5
|
)
|
|
49.2
|
|
|
(2.2
|
)
|
|
45.2
|
|
|
(2.1
|
)
|
Non Performing:
|
|
|
|
|
|
|
|
|
|
|
|
Past due, aged more than 90 days
|
83.1
|
|
|
(83.1
|
)
|
|
74.1
|
|
|
(74.1
|
)
|
|
76.0
|
|
|
(76.0
|
)
|
|
$
|
1,679.3
|
|
|
$
|
(133.0
|
)
|
|
$
|
1,855.9
|
|
|
$
|
(130.0
|
)
|
|
$
|
1,559.4
|
|
|
$
|
(122.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
(as a % of the ending receivable balance)
|
Gross
|
|
Valuation
allowance
|
|
Gross
|
|
Valuation
allowance
|
|
Gross
|
|
Valuation
allowance
|
Performing
|
|
|
|
|
|
|
|
|
|
|
|
Current, aged 0 – 30 days
|
77.2
|
%
|
|
3.0
|
%
|
|
79.4
|
%
|
|
3.1
|
%
|
|
77.7
|
%
|
|
3.0
|
%
|
Past due, aged 31 – 60 days
|
14.9
|
%
|
|
3.2
|
%
|
|
14.0
|
%
|
|
3.2
|
%
|
|
14.5
|
%
|
|
3.2
|
%
|
Past due, aged 61 – 90 days
|
3.0
|
%
|
|
4.9
|
%
|
|
2.6
|
%
|
|
4.5
|
%
|
|
2.9
|
%
|
|
4.6
|
%
|
Non Performing
|
|
|
|
|
|
|
|
|
|
|
|
Past due, aged more than 90 days
|
4.9
|
%
|
|
100.0
|
%
|
|
4.0
|
%
|
|
100.0
|
%
|
|
4.9
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
7.9
|
%
|
|
100.0
|
%
|
|
7.0
|
%
|
|
100.0
|
%
|
|
7.8
|
%
|
Securitized credit card receivables
The Sterling Jewelers division securitizes its credit card receivables through its Sterling Jewelers Receivables Master Note Trust. See Note
17
for additional information regarding this asset-backed securitization facility.
10
. Inventories
The following table summarizes the Company's inventory by classification:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Raw materials
|
$
|
71.2
|
|
|
$
|
81.8
|
|
|
$
|
101.6
|
|
Finished goods
|
2,578.2
|
|
|
2,372.1
|
|
|
2,625.4
|
|
Total inventories
|
$
|
2,649.4
|
|
|
$
|
2,453.9
|
|
|
$
|
2,727.0
|
|
11
. Goodwill and intangibles
Goodwill
The following table summarizes the Company’s goodwill by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Sterling
Jewelers
|
|
Zale
Jewelry
|
|
Piercing
Pagoda
|
|
UK Jewelry
|
|
Other
|
|
Total
|
Balance at January 31, 2015
|
$
|
23.2
|
|
|
$
|
492.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
|
$
|
519.2
|
|
Impact of foreign exchange
|
—
|
|
|
(3.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.7
|
)
|
Balance at January 30, 2016
|
23.2
|
|
|
488.7
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
515.5
|
|
Impact of foreign exchange
|
—
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
Balance at October 29, 2016
|
$
|
23.2
|
|
|
$
|
490.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.6
|
|
|
$
|
517.0
|
|
There have been no goodwill impairment losses recognized during the fiscal periods presented in the condensed consolidated income statements.
If future economic conditions are different than those projected by management, future impairment charges may occur.
Intangibles
The following table provides detail regarding the composition of intangible assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
(in millions)
|
Balance sheet location
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
|
Gross
carrying
amount
|
|
Accumulated
amortization
|
|
Net
carrying
amount
|
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade names
|
Intangible assets, net
|
|
$
|
1.4
|
|
|
$
|
(0.7
|
)
|
|
$
|
0.7
|
|
|
$
|
1.4
|
|
|
$
|
(0.5
|
)
|
|
$
|
0.9
|
|
|
$
|
1.5
|
|
|
$
|
(0.4
|
)
|
|
$
|
1.1
|
|
Favorable leases
|
Intangible assets, net
|
|
47.5
|
|
|
(32.6
|
)
|
|
14.9
|
|
|
47.0
|
|
|
(22.3
|
)
|
|
24.7
|
|
|
47.6
|
|
|
(19.2
|
)
|
|
28.4
|
|
Total definite-lived intangible assets
|
|
48.9
|
|
|
(33.3
|
)
|
|
15.6
|
|
|
48.4
|
|
|
(22.8
|
)
|
|
25.6
|
|
|
49.1
|
|
|
(19.6
|
)
|
|
29.5
|
|
Indefinite-lived trade names
|
Intangible assets, net
|
|
404.2
|
|
|
—
|
|
|
404.2
|
|
|
402.2
|
|
|
—
|
|
|
402.2
|
|
|
404.8
|
|
|
—
|
|
|
404.8
|
|
Total intangible assets, net
|
|
|
$
|
453.1
|
|
|
$
|
(33.3
|
)
|
|
$
|
419.8
|
|
|
$
|
450.6
|
|
|
$
|
(22.8
|
)
|
|
$
|
427.8
|
|
|
$
|
453.9
|
|
|
$
|
(19.6
|
)
|
|
$
|
434.3
|
|
Definite-lived intangible liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unfavorable leases
|
Other liabilities
|
|
$
|
(48.1
|
)
|
|
$
|
34.7
|
|
|
$
|
(13.4
|
)
|
|
$
|
(47.7
|
)
|
|
$
|
23.7
|
|
|
$
|
(24.0
|
)
|
|
$
|
(48.3
|
)
|
|
$
|
20.4
|
|
|
$
|
(27.9
|
)
|
Unfavorable contracts
|
Other liabilities
|
|
(65.6
|
)
|
|
32.1
|
|
|
(33.5
|
)
|
|
(65.6
|
)
|
|
28.1
|
|
|
(37.5
|
)
|
|
(65.6
|
)
|
|
27.6
|
|
|
(38.0
|
)
|
Total intangible liabilities, net
|
|
$
|
(113.7
|
)
|
|
$
|
66.8
|
|
|
$
|
(46.9
|
)
|
|
$
|
(113.3
|
)
|
|
$
|
51.8
|
|
|
$
|
(61.5
|
)
|
|
$
|
(113.9
|
)
|
|
$
|
48.0
|
|
|
$
|
(65.9
|
)
|
12
. Other assets
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Deferred ESP selling costs
|
$
|
81.8
|
|
|
$
|
79.4
|
|
|
$
|
74.6
|
|
Investments
(1)
|
27.5
|
|
|
26.8
|
|
|
25.0
|
|
Other assets
(2)
|
48.2
|
|
|
48.4
|
|
|
36.8
|
|
Total other assets
|
$
|
157.5
|
|
|
$
|
154.6
|
|
|
$
|
136.4
|
|
|
|
(1)
|
See Note
13
for additional information.
|
|
|
(2)
|
Amounts adjusted to reflect the reclassification of capitalized debt issuance costs in accordance with Signet's adoption of FASB ASU 2015-03 during the first quarter of Fiscal 2017. See Note
2
for additional information.
|
In addition, other current assets include deferred direct selling costs in relation to the sale of ESP of
$27.6 million
as of
October 29, 2016
(
January 30, 2016
and
October 31, 2015
:
$26.4 million
and
$24.0 million
, respectively).
13
. Investments
Investments in debt and equity securities are held by certain insurance subsidiaries and are reported at fair value as other assets in the accompanying condensed consolidated balance sheets. All investments are classified as available-for-sale and include the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
(in millions)
|
Cost
|
|
Unrealized gain (loss)
|
|
Fair Value
|
|
Cost
|
|
Unrealized gain (loss)
|
|
Fair Value
|
|
Cost
|
|
Unrealized gain (loss)
|
|
Fair Value
|
US Treasury securities
|
$
|
8.8
|
|
|
$
|
(0.5
|
)
|
|
$
|
8.3
|
|
|
$
|
9.2
|
|
|
$
|
(0.4
|
)
|
|
$
|
8.8
|
|
|
$
|
9.2
|
|
|
$
|
(0.4
|
)
|
|
$
|
8.8
|
|
US government agency securities
|
4.6
|
|
|
(0.1
|
)
|
|
4.5
|
|
|
4.0
|
|
|
—
|
|
|
4.0
|
|
|
2.3
|
|
|
—
|
|
|
2.3
|
|
Corporate bonds and notes
|
11.0
|
|
|
0.1
|
|
|
11.1
|
|
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
10.5
|
|
|
—
|
|
|
10.5
|
|
Corporate equity securities
|
3.5
|
|
|
0.1
|
|
|
3.6
|
|
|
3.5
|
|
|
(0.3
|
)
|
|
3.2
|
|
|
3.4
|
|
|
—
|
|
|
3.4
|
|
Total investments
|
$
|
27.9
|
|
|
$
|
(0.4
|
)
|
|
$
|
27.5
|
|
|
$
|
27.5
|
|
|
$
|
(0.7
|
)
|
|
$
|
26.8
|
|
|
$
|
25.4
|
|
|
$
|
(0.4
|
)
|
|
$
|
25.0
|
|
Realized gains and losses on investments are determined on the specific identification basis. There were no material net realized gains or losses during the 13 and 39 weeks ended
October 29, 2016
and
October 31, 2015
. Investments with a carrying value of
$6.6 million
were on deposit with various state insurance departments at
October 29, 2016
(
January 30, 2016
and
October 31, 2015
:
$7.1 million
and
$7.2 million
, respectively), as required by law.
Investments in debt securities outstanding as of
October 29, 2016
mature as follows:
|
|
|
|
|
|
|
|
|
(in millions)
|
Cost
|
|
Fair Value
|
Less than one year
|
$
|
1.3
|
|
|
$
|
0.8
|
|
Year two through year five
|
12.6
|
|
|
12.6
|
|
Year six through year ten
|
10.5
|
|
|
10.5
|
|
After ten years
|
—
|
|
|
—
|
|
Total investment in debt securities
|
$
|
24.4
|
|
|
$
|
23.9
|
|
14
. Derivatives
Derivative transactions are used by Signet for risk management purposes to address risks inherent in Signet’s business operations and sources of financing. The main risks arising from Signet’s operations are market risk including foreign currency risk, commodity risk, liquidity risk and interest rate risk. Signet uses derivative financial instruments to manage and mitigate certain of these risks under policies reviewed and approved by the Board of Directors. Signet does not enter into derivative transactions for speculative purposes.
Market risk
Signet generates revenues and incurs expenses in US dollars, Canadian dollars and British pounds. As a portion of UK Jewelry purchases and purchases made by the Canadian operations of the Zale division are denominated in US dollars, Signet enters into forward foreign currency exchange contracts and foreign currency swaps to manage this exposure to the US dollar.
Signet holds a fluctuating amount of British pounds and Canadian dollars reflecting the cash generative characteristics of operations. Signet’s objective is to minimize net foreign exchange exposure to the income statement on non-US dollar denominated items through managing cash levels, non-US dollar denominated intra-entity balances and foreign currency swaps. In order to manage the foreign exchange exposure and minimize the level of funds denominated in British pounds and Canadian dollars, dividends are paid regularly by subsidiaries to their immediate holding companies and excess British pounds and Canadian dollars are sold in exchange for US dollars.
Signet’s policy is to minimize the impact of precious metal commodity price volatility on operating results through the use of outright forward purchases of, or by entering into options to purchase, precious metals within treasury guidelines approved by the Board of Directors. In particular, Signet undertakes some hedging of its requirements for gold through the use of options, net zero-cost collar arrangements (a combination of call and put option contracts), forward contracts and commodity purchasing, while fluctuations in the cost of diamonds are not hedged.
Liquidity risk
Signet’s objective is to ensure that it has access to, or the ability to generate, sufficient cash from either internal or external sources in a timely and cost-effective manner to meet its commitments as they become due and payable. Signet manages liquidity risks as part of its overall risk management policy. Management produces forecasting and budgeting information that is reviewed and monitored by the Board of Directors. Cash generated from operations and external financing are the main sources of funding, which supplement Signet’s resources in meeting liquidity requirements.
The main external sources of funding are a senior unsecured credit facility, senior unsecured notes and securitized credit card receivables, as described in Note
17
.
Interest rate risk
Signet has exposure to movements in interest rates associated with cash and borrowings. Signet may enter into various interest rate protection agreements in order to limit the impact of movements in interest rates.
Interest rate swap (designated)
— The Company entered into an interest rate swap in March 2015 with an aggregate notional amount of
$300.0 million
that is scheduled to mature through
April 2019
. Under this contract, the Company agrees to exchange, at specified intervals, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional amounts. This contract was entered into to reduce the consolidated interest rate risk associated with variable rate, long-term debt. The Company designated this derivative as a cash flow hedge of the variability in expected cash outflows for interest payments. The Company has effectively converted a portion of its variable-rate senior unsecured term loan into fixed-rate debt.
The fair value of the swap is presented within the condensed consolidated balance sheets, and the Company recognizes any changes in the fair value as an adjustment of AOCI within equity to the extent the swap is effective. The ineffective portion, if any, is recognized in current period earnings. As interest expense is accrued on the debt obligation, amounts in AOCI related to the interest rate swap are reclassified into income resulting in a net interest expense on the hedged amount of the underlying debt obligation equal to the effective yield of the fixed rate of the swap. In the event that the interest rate swap is dedesignated prior to maturity, gains or losses in AOCI remain deferred and are reclassified into earnings in the periods in which the hedged forecasted transaction affects earnings.
Credit risk and concentrations of credit risk
Credit risk represents the loss that would be recognized at the reporting date if counterparties failed to perform as contracted. Signet does not anticipate non-performance by counterparties of its financial instruments, except for customer in-house financing receivables as disclosed in Note
9
of which no single customer represents a significant portion of the Company’s receivable balance. Signet does not require collateral or other security to support cash investments or financial instruments with credit risk; however, it is Signet’s policy to only hold cash and cash equivalent investments and to transact financial instruments with financial institutions with a certain minimum credit rating. Management does not believe Signet is exposed to any significant concentrations of credit risk that arise from cash and cash equivalent investments, derivatives or accounts receivable.
Commodity and foreign currency risks
The following types of derivative financial instruments are utilized by Signet to mitigate certain risk exposures related to changes in commodity prices and foreign exchange rates:
Forward foreign currency exchange contracts (designated)
— These contracts, which are principally in US dollars, are entered into to limit the impact of movements in foreign exchange rates on forecasted foreign currency purchases. The total notional amount of these foreign currency contracts outstanding as of
October 29, 2016
was
$27.8 million
(
January 30, 2016
and
October 31, 2015
:
$10.7 million
and
$20.9 million
, respectively). These contracts have been designated as cash flow hedges and will be settled over the next
15 months
(
January 30, 2016
and
October 31, 2015
:
6 months
and
9 months
, respectively).
Forward foreign currency exchange contracts (undesignated)
— Foreign currency contracts not designated as cash flow hedges are used to limit the impact of movements in foreign exchange rates on recognized foreign currency payables and to hedge currency flows through Signet’s bank accounts to mitigate Signet’s exposure to foreign currency exchange risk in its cash and borrowings. The total notional amount of these foreign currency contracts outstanding as of
October 29, 2016
was
$53.2 million
(
January 30, 2016
and
October 31, 2015
:
$32.0 million
and
$35.5 million
, respectively).
Commodity forward purchase contracts and net zero-cost collar arrangements (designated)
— These contracts are entered into to reduce Signet’s exposure to significant movements in the price of the underlying precious metal raw material. The total notional amount of these commodity derivative contracts outstanding as of
October 29, 2016
was
57,000 ounces
of gold (
January 30, 2016
and
October 31, 2015
:
76,000 ounces
and
73,000 ounces
, respectively). These contracts have been designated as cash flow hedges and will be settled over the next
15 months
(
January 30, 2016
and
October 31, 2015
:
12 months
and
14 months
, respectively).
The bank counterparties to the derivative instruments expose Signet to credit-related losses in the event of their non-performance. However, to mitigate that risk, Signet only contracts with counterparties that meet certain minimum requirements under its counterparty risk assessment process. As of
October 29, 2016
, Signet believes that this credit risk did not materially change the fair value of the foreign currency or commodity contracts.
The following table summarizes the fair value and presentation of derivative instruments in the condensed consolidated balance sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of derivative assets
|
(in millions)
|
Balance sheet location
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
Other current assets
|
|
$
|
3.5
|
|
|
$
|
0.8
|
|
|
$
|
0.1
|
|
Commodity contracts
|
Other current assets
|
|
0.6
|
|
|
0.6
|
|
|
0.3
|
|
Commodity contracts
|
Other assets
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Total derivative assets
|
|
|
$
|
4.1
|
|
|
$
|
1.4
|
|
|
$
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of derivative liabilities
|
(in millions)
|
Balance sheet location
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
Commodity contracts
|
Other current liabilities
|
|
(0.7
|
)
|
|
(0.8
|
)
|
|
(1.1
|
)
|
Interest rate swaps
|
Other liabilities
|
|
(2.3
|
)
|
|
(3.4
|
)
|
|
(2.1
|
)
|
|
|
|
(3.0
|
)
|
|
(4.2
|
)
|
|
(3.3
|
)
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
Foreign currency contracts
|
Other current liabilities
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
—
|
|
Total derivative liabilities
|
|
|
$
|
(3.1
|
)
|
|
$
|
(4.4
|
)
|
|
$
|
(3.3
|
)
|
Derivatives designated as cash flow hedges
The following table summarizes the pre-tax gains (losses) recorded in AOCI for derivatives designated in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Foreign currency contracts
|
$
|
6.4
|
|
|
$
|
1.4
|
|
|
$
|
0.5
|
|
Commodity contracts
|
3.8
|
|
|
(3.7
|
)
|
|
(3.9
|
)
|
Interest rate swaps
|
(2.3
|
)
|
|
(3.4
|
)
|
|
(2.1
|
)
|
Gains (losses) recorded in AOCI
|
$
|
7.9
|
|
|
$
|
(5.7
|
)
|
|
$
|
(5.5
|
)
|
The following tables summarize the effect of derivative instruments designated as cash flow hedges in OCI and the condensed consolidated income statements:
Foreign currency contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
Income statement caption
|
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Gains recorded in AOCI, beginning of period
|
|
|
$
|
3.8
|
|
|
$
|
0.4
|
|
|
$
|
1.4
|
|
|
$
|
0.9
|
|
Current period gains (losses) recognized in OCI
|
|
|
3.0
|
|
|
0.2
|
|
|
6.0
|
|
|
(0.4
|
)
|
(Gains) losses reclassified from AOCI to net income
|
Cost of sales
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
(1.0
|
)
|
|
—
|
|
Gains recorded in AOCI, end of period
|
|
|
$
|
6.4
|
|
|
$
|
0.5
|
|
|
$
|
6.4
|
|
|
$
|
0.5
|
|
Commodity contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
Income statement caption
|
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Gains (losses) recorded in AOCI, beginning of period
|
|
|
$
|
6.2
|
|
|
$
|
(8.3
|
)
|
|
$
|
(3.7
|
)
|
|
$
|
5.7
|
|
Current period gains (losses) recognized in OCI
|
|
|
(2.1
|
)
|
|
4.0
|
|
|
5.8
|
|
|
(10.6
|
)
|
(Gains) losses reclassified from AOCI to net income
|
Cost of sales
|
|
(0.3
|
)
|
|
0.4
|
|
|
1.7
|
|
|
1.0
|
|
Gains (losses) recorded in AOCI, end of period
|
|
|
$
|
3.8
|
|
|
$
|
(3.9
|
)
|
|
$
|
3.8
|
|
|
$
|
(3.9
|
)
|
Interest rate swaps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
Income statement caption
|
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Losses recorded in AOCI, beginning of period
|
|
|
$
|
(3.8
|
)
|
|
$
|
(0.9
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
—
|
|
Current period gains (losses) recognized in OCI
|
|
|
1.0
|
|
|
(2.0
|
)
|
|
(0.6
|
)
|
|
(4.0
|
)
|
Losses reclassified from AOCI to net income
|
Interest expense, net
|
|
0.5
|
|
|
0.8
|
|
|
1.7
|
|
|
1.9
|
|
Losses recorded in AOCI, end of period
|
|
|
$
|
(2.3
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
(2.3
|
)
|
|
$
|
(2.1
|
)
|
There was no material ineffectiveness related to the Company’s derivative instruments designated in cash flow hedging relationships for the 13 and 39 weeks ended
October 29, 2016
and
October 31, 2015
. Based on current valuations, the Company expects approximately
$7.6 million
of net pre-tax derivative gains to be reclassified out of AOCI into earnings within the next
12 months
.
Derivatives not designated as hedging instruments
The following table presents the effects of the Company’s derivatives instruments not designated as cash flow hedges in the condensed consolidated income statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
Income statement caption
|
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
Other operating income, net
|
|
$
|
1.6
|
|
|
$
|
(1.4
|
)
|
|
$
|
3.2
|
|
|
$
|
(1.0
|
)
|
15
. Fair value measurement
The estimated fair value of Signet’s financial instruments held or issued to finance Signet’s operations is summarized below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that Signet would realize upon disposition nor do they indicate Signet’s intent or ability to dispose of the financial instrument. Assets and liabilities that are carried at fair value are required to be classified and disclosed in one of the following three categories:
Level 1—quoted market prices in active markets for identical assets and liabilities
Level 2—observable market based inputs or unobservable inputs that are corroborated by market data
Level 3—unobservable inputs that are not corroborated by market data
Signet determines fair value based upon quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The methods Signet uses to determine fair value on an instrument-specific basis are detailed below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
(in millions)
|
Carrying Value
|
|
Quoted prices in
active
markets for
identical assets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|
Carrying Value
|
|
Quoted prices in
active
markets for
identical assets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|
Carrying Value
|
|
Quoted prices in
active
markets for
identical assets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
Assets:
|
|
|
|
|
|
|
|
|
|
US Treasury securities
|
$
|
8.3
|
|
|
$
|
8.3
|
|
|
$
|
—
|
|
|
$
|
8.8
|
|
|
$
|
8.8
|
|
|
$
|
—
|
|
|
$
|
8.8
|
|
|
$
|
8.8
|
|
|
$
|
—
|
|
Corporate equity securities
|
3.6
|
|
|
3.6
|
|
|
—
|
|
|
3.2
|
|
|
3.2
|
|
|
—
|
|
|
3.4
|
|
|
3.4
|
|
|
—
|
|
Foreign currency contracts
|
3.5
|
|
|
—
|
|
|
3.5
|
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
Commodity contracts
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
0.4
|
|
|
—
|
|
|
0.4
|
|
US government agency securities
|
4.5
|
|
|
—
|
|
|
4.5
|
|
|
4.0
|
|
|
—
|
|
|
4.0
|
|
|
2.3
|
|
|
—
|
|
|
2.3
|
|
Corporate bonds and notes
|
11.1
|
|
|
—
|
|
|
11.1
|
|
|
10.8
|
|
|
—
|
|
|
10.8
|
|
|
10.5
|
|
|
—
|
|
|
10.5
|
|
Total assets
|
$
|
31.6
|
|
|
$
|
11.9
|
|
|
$
|
19.7
|
|
|
$
|
28.2
|
|
|
$
|
12.0
|
|
|
$
|
16.2
|
|
|
$
|
25.5
|
|
|
$
|
12.2
|
|
|
$
|
13.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
Commodity contracts
|
(0.7
|
)
|
|
—
|
|
|
(0.7
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
(0.8
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
(1.1
|
)
|
Interest rate swaps
|
(2.3
|
)
|
|
—
|
|
|
(2.3
|
)
|
|
(3.4
|
)
|
|
—
|
|
|
(3.4
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
(2.1
|
)
|
Total liabilities
|
$
|
(3.1
|
)
|
|
$
|
—
|
|
|
$
|
(3.1
|
)
|
|
$
|
(4.4
|
)
|
|
$
|
—
|
|
|
$
|
(4.4
|
)
|
|
$
|
(3.3
|
)
|
|
$
|
—
|
|
|
$
|
(3.3
|
)
|
Investments in US Treasury securities and corporate equity securities are based on quoted market prices for identical instruments in active markets, and therefore were classified as Level 1 measurements in the fair value hierarchy. Investments in US government agency securities and corporate bonds and notes are based on quoted prices for similar instruments in active markets, and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note
13
for additional information related to the Company’s available-for-sale investments. The fair value of derivative financial instruments has been determined based on market value equivalents at the balance sheet date, taking into account the current interest rate environment, foreign currency forward rates or commodity forward rates, and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note
14
for additional information related to the Company’s derivatives.
The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, accounts payable, accrued expenses, other liabilities, income taxes and the revolving credit facility approximate fair value because of the short-term maturity of these amounts.
The fair values of long-term debt instruments were determined using quoted market prices in inactive markets or discounted cash flows based upon current observable market interest rates and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note
17
for classification between current and long-term debt. The carrying amount and fair value of outstanding debt at
October 29, 2016
,
January 30, 2016
and
October 31, 2015
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
(in millions)
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
Long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes (Level 2)
|
$
|
393.4
|
|
|
$
|
390.5
|
|
|
$
|
392.8
|
|
|
$
|
405.9
|
|
|
$
|
392.6
|
|
|
$
|
398.5
|
|
Securitization facility (Level 2)
|
599.6
|
|
|
600.0
|
|
|
599.6
|
|
|
600.0
|
|
|
599.1
|
|
|
600.0
|
|
Term loan (Level 2)
|
349.3
|
|
|
353.0
|
|
|
361.3
|
|
|
365.0
|
|
|
368.6
|
|
|
372.5
|
|
Capital lease obligations (Level 2)
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|
0.3
|
|
|
0.3
|
|
Total
|
$
|
1,342.3
|
|
|
$
|
1,343.5
|
|
|
$
|
1,353.9
|
|
|
$
|
1,371.1
|
|
|
$
|
1,360.6
|
|
|
$
|
1,371.3
|
|
16
.
Pension plans
Signet operates a defined benefit pension plan in the UK (the “UK Plan”) for participating eligible employees of the UK Jewelry division. The components of net periodic pension benefit for the UK Plan are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Components of net periodic pension benefit (cost):
|
|
|
|
|
|
|
|
Service cost
|
$
|
(0.5
|
)
|
|
$
|
(0.7
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(2.0
|
)
|
Interest cost
|
(1.7
|
)
|
|
(1.9
|
)
|
|
(5.5
|
)
|
|
(5.8
|
)
|
Expected return on UK Plan assets
|
2.5
|
|
|
2.9
|
|
|
8.0
|
|
|
8.7
|
|
Amortization of unrecognized actuarial losses
|
(0.4
|
)
|
|
(0.9
|
)
|
|
(1.2
|
)
|
|
(2.6
|
)
|
Amortization of unrecognized net prior service credits
|
0.5
|
|
|
0.6
|
|
|
1.5
|
|
|
1.7
|
|
Net periodic pension benefit
|
$
|
0.4
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
—
|
|
In the
39 weeks ended October 29, 2016
, Signet contributed
$2.5 million
to the UK Plan and expects to contribute a minimum of
$3.5 million
at current exchange rates to the UK Plan in
Fiscal 2017
. The level of contributions is in accordance with an agreed upon deficit recovery plan and based on the results of the actuarial valuation as of April 5, 2015.
17
. Loans, overdrafts and long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Debt:
|
|
|
|
|
|
Senior unsecured notes due 2024, net of unamortized discount
|
$
|
398.7
|
|
|
$
|
398.6
|
|
|
$
|
398.6
|
|
Securitization facility
|
600.0
|
|
|
600.0
|
|
|
600.0
|
|
Senior unsecured term loan
|
353.0
|
|
|
365.0
|
|
|
372.5
|
|
Revolving credit facility
|
259.0
|
|
|
—
|
|
|
147.0
|
|
Bank overdrafts
|
11.1
|
|
|
24.4
|
|
|
70.1
|
|
Capital lease obligations
|
—
|
|
|
0.2
|
|
|
0.3
|
|
Total debt
|
$
|
1,621.8
|
|
|
$
|
1,388.2
|
|
|
$
|
1,588.5
|
|
Less: Current portion of loans and overdrafts
|
(288.8
|
)
|
|
(57.7
|
)
|
|
(248.0
|
)
|
Less: Unamortized capitalized debt issuance fees
(1)
|
(8.8
|
)
|
|
(9.5
|
)
|
|
(9.9
|
)
|
Total long-term debt
|
$
|
1,324.2
|
|
|
$
|
1,321.0
|
|
|
$
|
1,330.6
|
|
|
|
(1)
|
Presentation of capitalized debt issuance costs was revised during the first quarter of Fiscal 2017 upon adoption of ASU 2015-03. See Note 2 for additional information.
|
Revolving credit facility and term loan (the "Credit Facility")
During the second quarter of
Fiscal 2017
, Signet amended and restated its Credit Facility agreement to (i) increase the borrowing capacity under the revolving credit facility from
$400 million
to
$700 million
and extend the maturity date to July 2021 and (ii) extend the maturity date of the term loan facility to July 2021 and revise the scheduled quarterly principal repayments to align with the July 2021 maturity date. The amendment of the Credit Facility was accounted for as a modification of existing debt in accordance with ASC Topic 470-50, "Debt Modifications and Extinguishments."
In connection with the amendment of the revolving credit facility, incremental fees of
$1.4 million
were incurred and capitalized. Capitalized fees associated with the amended revolving credit facility as of
October 29, 2016
total
$2.6 million
with the unamortized balance recorded as an asset within the condensed consolidated balance sheets. Accumulated amortization related to these capitalized fees as of
October 29, 2016
was
$0.7 million
(
January 30, 2016
and
October 31, 2015
:
$0.4 million
and
$0.3 million
, respectively). Amortization relating to these fees of
$0.1 million
and
$0.3 million
was recorded as interest expense in the condensed consolidated income statements for the 13 and 39 weeks ended
October 29, 2016
, respectively (
$0.0 million
and
$0.2 million
for the 13 and 39 weeks ended
October 31, 2015
, respectively). As of
October 29, 2016
,
January 30, 2016
and
October 31, 2015
, the Company had stand-by letters of credit outstanding of
$14.8 million
,
$28.8 million
and
$21.3 million
, respectively, that reduce remaining borrowing availability. The revolving credit facility had a weighted average interest rate of
1.68%
and
1.18%
during the 39 weeks ended
October 29, 2016
and
October 31, 2015
, respectively.
The senior unsecured term loan had an outstanding principal balance of
$357.5 million
as of the amendment date. Beginning in October 2016, the Company is required to make scheduled quarterly principal payments equal to the amounts per annum of the outstanding principal balance as follows:
5%
in the first year,
7.5%
in the second year,
10%
in the third year,
12.5%
in the fourth year and
15%
in the fifth year after the initial payment date, with the balance due in July 2021. Excluding the impact of the interest rate swap designated as a cash flow hedge discussed in Note
14
, the term loan had a weighted average interest rate of
1.74%
and
1.46%
during the 39 weeks ended
October 29, 2016
and
October 31, 2015
, respectively. In connection with the amendment of the term loan facility, incremental fees of
$0.7 million
were incurred and capitalized. Capitalized fees associated with the amended term loan facility as of
October 29, 2016
total
$6.2 million
with the unamortized balance recorded as a direct deduction from the outstanding liability within the condensed consolidated balance sheets. Accumulated amortization related to these capitalized fees as of
October 29, 2016
was
$2.5 million
(
January 30, 2016
and
October 31, 2015
:
$1.8 million
and
$1.6 million
, respectively). Amortization relating to these fees of
$0.2 million
and
$0.7 million
was recorded as interest expense in the condensed consolidated income statements for the 13 and 39 weeks ended
October 29, 2016
, respectively (
$0.4 million
and
$0.8 million
for the 13 and 39 weeks ended
October 31, 2015
, respectively).
Senior unsecured notes due 2024
Signet UK Finance plc (“Signet UK Finance”), a wholly owned subsidiary of the Company, issued
$400 million
aggregate principal amount of its
4.700%
senior unsecured notes due in 2024 (the “Notes”). The Notes were issued under an effective registration statement previously filed with the SEC. The Notes are jointly and severally guaranteed, on a full and unconditional basis, by the Company and by certain of the Company’s wholly owned subsidiaries (such subsidiaries, the “Guarantors”). See Note
22
for additional information.
Capitalized fees relating to the senior unsecured notes total
$7.0 million
. Accumulated amortization related to these capitalized fees as of
October 29, 2016
was
$1.7 million
(
January 30, 2016
and
October 31, 2015
:
$1.2 million
and
$1.0 million
, respectively). The remaining unamortized capitalized fees are recorded as a direct deduction from the outstanding liability within the condensed consolidated balance sheets. Amortization relating to these fees of
$0.2 million
and
$0.5 million
was recorded as interest expense in the condensed consolidated income statements for the 13 and 39 weeks ended
October 29, 2016
, respectively (
$0.2 million
and
$0.5 million
for the 13 and 39 weeks ended
October 31, 2015
, respectively).
Asset-backed securitization facility
The Company sold an undivided interest in certain credit card receivables to Sterling Jewelers Receivables Master Note Trust (the “Issuer”) and issued
two
-year revolving asset-backed variable funding notes. During the second quarter of
Fiscal 2017
, Signet amended the note purchase agreement associated with the asset-backed securitization facility to extend the term of the facility by one year to May 2018 with remaining terms substantially consistent with the existing agreement. The amendment was accounted for as a modification of existing debt in accordance with ASC 470-50. In connection with the amendment of the note purchase agreement, incremental fees of
$0.6 million
were incurred and capitalized. Capitalized fees associated with the existing and amended asset-backed securitization facility as of
October 29, 2016
total
$3.4 million
with the unamortized balance recorded as an asset within the condensed consolidated balance sheets. Accumulated amortization related to these capitalized fees as of
October 29, 2016
was
$3.0 million
(
January 30, 2016
and
October 31, 2015
:
$2.4 million
and
$1.9 million
, respectively). Amortization relating to these fees of
$0.1 million
and
$0.6 million
was recorded as interest expense in the condensed consolidated income statements for the 13 and 39 weeks ended
October 29, 2016
, respectively (
$0.3 million
and
$1.0 million
for the 13 and 39 weeks ended
October 31, 2015
, respectively). The asset-backed securitization facility had a weighted average interest rate of
1.98%
and
1.56%
during the 39 weeks ended
October 29, 2016
and
October 31, 2015
, respectively.
Other
As of
October 29, 2016
,
January 30, 2016
and
October 31, 2015
, the Company was in compliance with all debt covenants.
18
. Deferred revenue
Deferred revenue is comprised primarily of ESP and voucher promotions and other as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Sterling Jewelers ESP deferred revenue
|
$
|
710.2
|
|
|
$
|
715.1
|
|
|
$
|
684.7
|
|
Zale ESP deferred revenue
|
155.2
|
|
|
146.1
|
|
|
132.6
|
|
Voucher promotions and other
|
23.4
|
|
|
28.2
|
|
|
21.6
|
|
Total deferred revenue
|
$
|
888.8
|
|
|
$
|
889.4
|
|
|
$
|
838.9
|
|
|
|
|
|
|
|
Disclosed as:
|
|
|
|
|
|
Current liabilities
|
$
|
256.7
|
|
|
$
|
260.3
|
|
|
$
|
241.4
|
|
Non-current liabilities
|
632.1
|
|
|
629.1
|
|
|
597.5
|
|
Total deferred revenue
|
$
|
888.8
|
|
|
$
|
889.4
|
|
|
$
|
838.9
|
|
ESP deferred revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Sterling Jewelers ESP deferred revenue, beginning of period
|
$
|
720.3
|
|
|
$
|
691.4
|
|
|
$
|
715.1
|
|
|
$
|
668.9
|
|
Plans sold
|
52.8
|
|
|
51.8
|
|
|
190.4
|
|
|
180.2
|
|
Revenue recognized
|
(62.9
|
)
|
|
(58.5
|
)
|
|
(195.3
|
)
|
|
(164.4
|
)
|
Sterling Jewelers ESP deferred revenue, end of period
|
$
|
710.2
|
|
|
$
|
684.7
|
|
|
$
|
710.2
|
|
|
$
|
684.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Zale ESP deferred revenue, beginning of period
|
$
|
156.2
|
|
|
$
|
132.3
|
|
|
$
|
146.1
|
|
|
$
|
120.3
|
|
Plans sold
(1)
|
28.3
|
|
|
26.7
|
|
|
100.8
|
|
|
91.3
|
|
Revenue recognized
|
(29.3
|
)
|
|
(26.4
|
)
|
|
(91.7
|
)
|
|
(79.0
|
)
|
Zale ESP deferred revenue, end of period
|
$
|
155.2
|
|
|
$
|
132.6
|
|
|
$
|
155.2
|
|
|
$
|
132.6
|
|
|
|
(1)
|
Includes impact of foreign exchange translation.
|
19. Warranty reserve
Sterling Jewelers and Zale Jewelry segments provide a product lifetime diamond guarantee as long as six-month inspections are performed and certified by an authorized store representative. Provided the customer has complied with the six-month inspection policy, the Company will replace, at no cost to the customer, any stone that chips, breaks or is lost from its original setting during normal wear. Management estimates the warranty accrual based on the lag of actual claims experience and the costs of such claims, inclusive of labor and material. Sterling Jewelers also provides a similar product lifetime guarantee on color gemstones. The warranty reserve for diamond and gemstone guarantee, included in accrued expenses and other current liabilities, and other non-current liabilities, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13 weeks ended
|
|
39 weeks ended
|
(in millions)
|
October 29, 2016
|
|
October 31, 2015
|
|
October 29, 2016
|
|
October 31, 2015
|
Warranty reserve, beginning of period
|
$
|
40.4
|
|
|
$
|
43.1
|
|
|
$
|
41.9
|
|
|
$
|
44.9
|
|
Warranty expense
|
3.7
|
|
|
3.0
|
|
|
9.4
|
|
|
7.9
|
|
Utilized
(1)
|
(3.6
|
)
|
|
(3.6
|
)
|
|
(10.8
|
)
|
|
(10.3
|
)
|
Warranty reserve, end of period
|
$
|
40.5
|
|
|
$
|
42.5
|
|
|
$
|
40.5
|
|
|
$
|
42.5
|
|
|
|
(1)
|
Includes impact of foreign exchange translation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
October 29, 2016
|
|
January 30, 2016
|
|
October 31, 2015
|
Disclosed as:
|
|
|
|
|
|
Current liabilities
|
$
|
12.9
|
|
|
$
|
12.3
|
|
|
$
|
17.8
|
|
Non-current liabilities
|
27.6
|
|
|
29.6
|
|
|
24.7
|
|
Total warranty reserve
|
$
|
40.5
|
|
|
$
|
41.9
|
|
|
$
|
42.5
|
|
20. Share-based compensation
Signet recorded share-based compensation expense of
$5.2 million
and
$14.0 million
for the 13 and 39 weeks ended
October 29, 2016
, respectively, related to the Omnibus Plan and Share Saving Plans (13 and 39 weeks ended
October 31, 2015
:
$4.7 million
and
$11.8 million
, respectively).
21
. Commitments and contingencies
Legal proceedings
Employment practices
As previously reported, in March 2008, a group of private plaintiffs (the “Claimants”) filed a class action lawsuit for an unspecified amount against SJI, a subsidiary of Signet, in the US District Court for the Southern District of New York alleging that US store-level employment practices are discriminatory as to compensation and promotional activities with respect to gender. In June 2008, the District Court referred the matter to private arbitration where the Claimants sought to proceed on a class-wide basis. The Claimants filed a motion for class certification and SJI opposed the motion. A hearing on the class certification motion was held in late February 2014. On February 2, 2015, the arbitrator issued a Class Determination Award in which she certified for a class-wide hearing Claimants’ disparate impact declaratory and injunctive relief class claim under Title VII, with a class period of July 22, 2004 through date of trial for the Claimants’ compensation claims and December 7, 2004 through date of trial for Claimants’ promotion claims. The arbitrator otherwise denied Claimants’ motion to certify a disparate treatment class alleged under Title VII, denied a disparate impact monetary damages class alleged under Title VII, and denied an opt-out monetary damages class under the Equal Pay Act. On February 9, 2015, Claimants filed an Emergency Motion To Restrict Communications With The Certified Class And For Corrective Notice. SJI filed its opposition to Claimants’ emergency motion on February 17, 2015, and a hearing was held on February 18, 2015. Claimants' motion was granted in part and denied in part in an order issued on March 16, 2015. Claimants filed a Motion for Reconsideration Regarding Title VII Claims for Disparate Treatment in Compensation on February 11, 2015. SJI filed its opposition to Claimants’ Motion for Reconsideration on March 4, 2015. Claimants’ reply was filed on March 16, 2015. Claimants’ Motion was denied in an order issued April 27, 2015. SJI filed with the US District Court for the Southern District of New York a Motion to Vacate the Arbitrator’s Class Certification Award on March 3, 2015. Claimants’ opposition was filed on March 23, 2015 and SJI’s reply was filed on April 3, 2015. SJI’s motion was heard on May 4, 2015. On November 16, 2015, the US District Court for the Southern District of New York granted SJI’s Motion to Vacate the Arbitrator’s Class Certification Award in part and denied it in part. On November 25, 2015, SJI filed a Motion to Stay the AAA Proceedings while SJI appeals the decision of the US District Court for the Southern District of New York to the United States Court of Appeals for the Second Circuit. Claimants filed their opposition on December 2, 2015. On December 3, 2015, SJI filed with the United States Court of Appeals for the Second Circuit SJI’s Notice of Appeal of the Southern District’s November 16, 2015 Opinion and Order. The arbitrator issued an order denying SJI’s Motion to Stay on February 22, 2016. SJI filed its Brief and Special Appendix with the Second Circuit on March 16, 2016. The matter was fully briefed and oral argument was heard by the U.S. Court of Appeals for the Second Circuit on November 2, 2016. On April 6, 2015, Claimants filed in the AAA Claimants’ Motion for Clarification or in the Alternative Motion for Stay of the Effect of the Class Certification Award as to the Individual Intentional Discrimination Claims. SJI filed its opposition on May 12, 2015. Claimants’ reply was filed on May 22, 2015. Claimants’ motion was granted on June 15, 2015. Claimants filed Claimants’ Motion for Conditional Certification of Claimants’ Equal Pay Act Claims and Authorization of Notice on March 6, 2015. SJI’s opposition was filed on May 1, 2015. Claimants filed their reply on June 5, 2015. The arbitrator heard oral argument on Claimants’ Motion on December 18, 2015 and, on February 29, 2016, issued an Equal Pay Act Collective Action Conditional Certification Award and Order Re Claimants’ Motion For Tolling Of EPA Limitations Period, conditionally certifying Claimants’ Equal Pay Act claims as a collective action, and tolling the statute of limitations on EPA claims to October 16, 2003 to ninety days after notice issues to the putative members of the collective action. SJI filed in the AAA a Motion To Stay Arbitration Pending The District Court’s Consideration Of Respondent’s Motion To Vacate Arbitrator’s Equal Pay Act Collective Action Conditional Certification Award And Order Re Claimants’ Motion For Tolling Of EPA Limitations Period on March 10, 2016. SJI filed in the AAA a Renewed Motion To Stay Arbitration Pending The District Court’s Resolution Of Sterling’s Motion To Vacate Arbitrator’s Equal Pay Act Collective Action Conditional Certification Award And Order Re Claimants’ Motion For Tolling Of EPA Limitations Period on March 31, 2016. Claimants filed their opposition on April 4, 2016. The arbitrator denied SJI’s Motion on April 5, 2016. On March 23, 2016 SJI filed with the US District Court for the Southern District of New York a Motion To Vacate The Arbitrator’s Equal Pay Act Collective Action Conditional Certification Award And Order Re Claimants’ Motion For Tolling Of EPA Limitations Period. Claimants filed their opposition brief on April 11, 2016, SJI filed its reply on April 20, 2016, and oral argument was heard on SJI’s Motion on May 11, 2016. SJI's Motion was denied on May 22, 2016. On May 31, 2016, SJI filed a Notice Of Appeal of Judge Rakoff’s opinion and order to the Second Circuit Court of Appeals. SJI’s brief was filed September 13, 2016, and Claimants’ brief is due on December 15, 2016. Claimants filed a Motion For Amended
Class Determination Award on November 18, 2015, and on March 31, 2016 the arbitrator entered an order amending the Title VII class certification award to preclude class members from requesting exclusion from the injunctive and declaratory relief class certified in the arbitration. The arbitrator issued a Bifurcated Case Management Plan on April 5, 2016, and ordered into effect the parties’ Stipulation Regarding Notice Of Equal Pay Act Collective Action And Related Notice Administrative Procedures on April 7, 2016. SJI filed in the AAA a Motion For Protective Order on May 2, 2016. Claimants’ opposition was filed on June 3, 2016. The matter was fully briefed and oral argument was heard on July 22, 2016. The parties await a ruling on the motion. Notice to EPA collective action members was issued on May 3, 2016, and the opt-in period for these notice recipients closed on August 1, 2016. At this time,
10,345
current and former employees have submitted consent forms to opt in to the collective action.
Also, as previously reported, on September 23, 2008, the US Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against SJI in the US District Court for the Western District of New York. The EEOC’s lawsuit alleges that SJI engaged in intentional and disparate impact gender discrimination with respect to pay and promotions of female retail store employees from January 1, 2003 to the present. The EEOC asserts claims for unspecified monetary relief and non-monetary relief against the Company on behalf of a class of female employees subjected to these alleged practices. Non-expert fact discovery closed in mid-May 2013. In September 2013, SJI made a motion for partial summary judgment on procedural grounds, which was referred to a Magistrate Judge. The Magistrate Judge heard oral arguments on the summary judgment motion in December 2013. On January 2, 2014, the Magistrate Judge issued his Report, Recommendation and Order, recommending that the Court grant SJI’s motion for partial summary judgment and dismiss the EEOC’s claims in their entirety. The EEOC filed its objections to the Magistrate Judge’s ruling and SJI filed its response thereto. The District Court Judge heard oral arguments on the EEOC’s objections to the Magistrate Judge’s ruling on March 7, 2014 and on March 11, 2014 entered an order dismissing the action with prejudice. On May 12, 2014, the EEOC filed its Notice of Appeal of the District Court Judge’s dismissal of the action to United States Court of Appeals for the Second Circuit. The parties fully briefed the appeal and oral argument occurred on May 5, 2015. On September 9, 2015, the United States Court of Appeals for the Second Circuit issued a decision vacating the District Court’s order and remanding the case back to the District Court for further proceedings. SJI filed a Petition for Panel Rehearing and En Banc Review with the United States Court of Appeals for the Second Circuit, which was denied on December 1, 2015. On December 4, 2015, SJI filed in the United States Court of Appeals for the Second Circuit a Motion Of Appellee Sterling Jewelers Inc. For Stay Of Mandate Pending Petition For Writ Of Certiorari. The Motion was granted by the Second Circuit on December 10, 2015. SJI filed a Petition For Writ Of Certiorari in the Supreme Court of the United States on April 29, 2016, which was denied. The case has now been remanded to the Western District of New York.
SJI denies the allegations of the Claimants and EEOC and has been defending these cases vigorously. At this point, no outcome or possible loss or range of losses, if any, arising from the litigation is able to be estimated.
Prior to the Acquisition, Zale Corporation was a defendant in
three
purported class action lawsuits, Tessa Hodge v. Zale Delaware, Inc., d/b/a Piercing Pagoda which was filed on April 23, 2013 in the Superior Court of the State of California, County of San Bernardino; Naomi Tapia v. Zale Corporation which was filed on July 3, 2013 in the US District Court, Southern District of California; and Melissa Roberts v. Zale Delaware, Inc. which was filed on October 7, 2013 in the Superior Court of the State of California, County of Los Angeles. All
three
cases include allegations that Zale Corporation violated various wage and hour labor laws. Relief is sought on behalf of current and former Piercing Pagoda and Zale Corporation’s employees. The lawsuits seek to recover damages, penalties and attorneys’ fees as a result of the alleged violations. Without admitting or conceding any liability, the Company reached an agreement to settle the Hodge and Roberts matters for an immaterial amount. Final approval of the settlement was granted on March 9, 2015 and the settlement was implemented.
On April 1, 2015, Plaintiff filed Plaintiff’s Notice of Motion and Motion for Class Certification in the Naomi Tapia v. Zale Corporation litigation. On May 22, 2015, the Company filed Defendants’ Opposition to Plaintiff’s Motion for Class Certification under Fed.R.Civ.Proc. 23 and Collective Action Certification under 29 U.SC. §216(b). Plaintiff filed her Reply Memorandum in Support of Plaintiff’s Motion for Class Certification on June 3, 2015. On April 6, 2016, the Court conditionally certified an opt-in collective action under the Fair Labor Standards Act of all current and former hourly employees of Zale Delaware Inc. d/b/a Zale Corporation who were designated by Zale as nonexempt and who worked in a Zale retail store in the United States at any time from July 3, 2010 to the present. Additionally, the court certified an opt-out class action of the remaining claims on behalf of all current and former hourly employees of Zale Delaware Inc. d/b/a Zale Corporation who were designated by Zale as nonexempt, and worked in a Zale retail store in the State of California at any time from July 3, 2009 through the present. At this time, the class has not yet received notice of the ruling and has not yet been provided the opportunity to opt in or opt out. The Company intends to vigorously defend its position in this litigation. At this point, no outcome or possible loss or range of losses, if any, arising from the litigation is able to be estimated.
Litigation Challenging the Company’s Acquisition of Zale Corporation
Five
putative stockholder class action lawsuits challenging the Company’s acquisition of Zale Corporation were filed in the Court of Chancery of the State of Delaware: Breyer v. Zale Corp. et al., C.A. No. 9388-VCP, filed February 24, 2014; Stein v. Zale Corp. et al., C.A. No. 9408-VCP, filed March 3, 2014; Singh v. Zale Corp. et al., C.A. No. 9409-VCP, filed March 3, 2014; Smart v. Zale Corp. et al., C.A. No. 9420-VCP, filed March 6, 2014; and Pill v. Zale Corp. et al., C.A. No. 9440-VCP, filed March 12, 2014 (collectively, the “Actions”). Each of these Actions was brought by a purported former holder of Zale Corporation common stock, both individually and on behalf of a putative class of former Zale Corporation stockholders.
The Court of Chancery consolidated the Actions on March 25, 2014 (the “Consolidated Action”), and the plaintiffs filed a consolidated amended complaint on April 23, 2014, which named as defendants Zale Corporation, the members of the board of directors of Zale Corporation, the Company, and a merger-related subsidiary of the Company, and alleged that the Zale Corporation directors breached their fiduciary duties to Zale Corporation stockholders in connection with their consideration and approval of the merger agreement by failing to maximize stockholder value and agreeing to an inadequate merger price and to deal terms that deter higher bids. That complaint also alleged that the Zale Corporation directors issued a materially misleading and incomplete proxy statement regarding the merger and that Zale Corporation and the Company aided and abetted the Zale Corporation directors’ breaches of fiduciary duty. On May 23, 2014, the Court of Chancery denied plaintiffs’ motion for a preliminary injunction to prevent the consummation of the merger.
On September 30, 2014, the plaintiffs filed an amended complaint asserting substantially similar claims and allegations as the prior complaint. The amended complaint added Zale Corporation’s former financial advisor, Bank of America Merrill Lynch, as a defendant for allegedly aiding and abetting the Zale Corporation directors’ breaches of fiduciary duty. The amended complaint no longer named as defendants Zale Corporation or the Company’s merger-related subsidiary. The amended complaint sought, among other things, rescission of the merger or damages, as well as attorneys’ and experts’ fees. The defendant's motion to dismiss was heard by the Court of Chancery on May 20, 2015. On October 1, 2015, the Court dismissed the claims against the Zale Corporation directors and the Company. On October 29, 2015, the Court dismissed the claims against Bank of America Merrill Lynch. On November 30, 2015, plaintiffs filed an appeal of the October 1, 2015 and October 29, 2015 decisions of the Court of Chancery with the Supreme Court of the State of Delaware. On May 6, 2016, the Supreme Court of the State of Delaware affirmed the Court of Chancery’s dismissal of the entirety of the amended complaint.
Appraisal Litigation
Following the consummation of the acquisition of Zale Corporation by the Company, former Zale Corporation stockholders sought appraisal pursuant to 8 Del. C. § 262 in the Court of Chancery of the State of Delaware, in consolidated proceedings captioned Merion Capital L.P. et al. v. Zale Corp., C.A. No. 9731-VCP,TIG Arbitrage Opportunity Fund I, L.P. v. Zale Corp., C.A. No. 10070-VCP,and The Gabelli ABC Fund et al. v. Zale Corp., C.A. No. 10162-VCP(the “Appraisal Action”). The total number of shares of Zale Corporation’s common stock for which appraisal had been demanded was approximately
8.8 million
.
On August 12, 2015, the parties in the Appraisal Action entered into a settlement agreement (the “Settlement Agreement”). The terms of the Settlement Agreement provided for the payment to petitioners in the Appraisal Action of
$21.00
per share of Zale Corporation common stock (the consideration offered in the Company’s acquisition of Zale Corporation) plus a total sum of
$34.2 million
to be allocated among petitioners, which proceeds are inclusive of and in satisfaction of any statutory interest that may have accrued on petitioners’ shares pursuant to 8 Del. C. § 262. On August 12, 2015, the Court of Chancery dismissed the Appraisal Action pursuant to the Settlement Agreement as to all former Zale Corporation stockholders who have submitted and not withdrawn a demand for appraisal. The Company recorded an accrual for the Settlement Agreement of
$34.2 million
during the second quarter of Fiscal 2016. This amount was paid to petitioners during the third quarter of Fiscal 2016.
Shareholder Action
On August 25, 2016, Susan Dube filed a putative class action complaint in the United States District Court for the Southern District of New York against the Company and its Chief Executive Officer and Chief Financial Officer, purportedly on behalf of stockholders that acquired the Company’s securities between January 7, 2016, and June 3, 2016, inclusive (Dube v. Signet Jewelers Limited, et al., Civ. No. 16-6728 (S.D.N.Y.)). On August 31, 2016, Lyubomir Spasov filed a putative class action complaint in the United States District Court for the Southern District of New York alleging identical claims against the Company and its Chief Executive Officer and Chief Financial Officer (Spasov v. Signet Jewelers Limited, et al., Civ. No. 16-06861 (S.D.N.Y.)). On September 16, 2016, the two complaints were consolidated under case number 16-CV-6728. The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by, among other things, misrepresenting the Company’s business and earnings by failing to disclose that the Company was allegedly experiencing difficulty ensuring the safety of customer’s jewelry while in Signet’s custody for repairs, a drop-off in customer confidence, and increased competitive pressures. Plaintiffs claim that as a result of the alleged misrepresentations, the Company’s share price was artificially inflated. The action seeks unspecified compensatory damages and costs and expenses, including attorneys’ and experts’ fees. The Company believes that the allegations in the complaints are without merit and cannot estimate a range of potential liability, if any, at this time.
In the ordinary course of business, Signet may be subject, from time to time, to various other proceedings, lawsuits, disputes or claims incidental to its business, which the Company believes are not significant to Signet’s consolidated financial position, results of operations or cash flows.
22
. Condensed consolidating financial information
The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” We and certain of our subsidiaries have guaranteed the obligations under certain debt securities that have been issued by Signet UK Finance plc. The following presents the condensed consolidating financial information for: (i) the indirect Parent Company (Signet Jewelers Limited); (ii) the Issuer of the guaranteed obligations (Signet UK Finance plc); (iii) the Guarantor subsidiaries, on a combined basis; (iv) the non-guarantor subsidiaries, on a combined basis; (v) consolidating eliminations and (vi) Signet Jewelers Limited and Subsidiaries on a consolidated basis. Each Guarantor subsidiary is
100%
owned by the Parent Company at the date of each balance sheet presented. The Guarantor subsidiaries, along with Signet Jewelers Limited, will fully and unconditionally guarantee the obligations of Signet UK Finance plc under any such debt securities. Each entity in the consolidating financial information follows the same accounting policies as described in the condensed consolidated financial statements.
The accompanying condensed consolidating financial information has been presented on the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the subsidiaries’ cumulative results of operations, capital contributions and distributions and other changes in equity. Elimination entries include consolidating and eliminating entries for investments in subsidiaries, and intra-entity activity and balances.
Condensed Consolidated Income Statement
For the 13 weeks ended
October 29, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,121.8
|
|
|
$
|
64.4
|
|
|
$
|
—
|
|
|
$
|
1,186.2
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
(821.7
|
)
|
|
(14.5
|
)
|
|
—
|
|
|
(836.2
|
)
|
Gross margin
|
—
|
|
|
—
|
|
|
300.1
|
|
|
49.9
|
|
|
—
|
|
|
350.0
|
|
Selling, general and administrative expenses
|
(0.3
|
)
|
|
—
|
|
|
(362.0
|
)
|
|
(24.2
|
)
|
|
—
|
|
|
(386.5
|
)
|
Other operating income, net
|
—
|
|
|
—
|
|
|
75.6
|
|
|
(7.0
|
)
|
|
—
|
|
|
68.6
|
|
Operating (loss) income
|
(0.3
|
)
|
|
—
|
|
|
13.7
|
|
|
18.7
|
|
|
—
|
|
|
32.1
|
|
Intra-entity interest income (expense)
|
—
|
|
|
4.7
|
|
|
(47.8
|
)
|
|
43.1
|
|
|
—
|
|
|
—
|
|
Interest expense, net
|
—
|
|
|
(5.0
|
)
|
|
(4.5
|
)
|
|
(3.2
|
)
|
|
—
|
|
|
(12.7
|
)
|
(Loss) income before income taxes
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(38.6
|
)
|
|
58.6
|
|
|
—
|
|
|
19.4
|
|
Income taxes
|
—
|
|
|
—
|
|
|
15.1
|
|
|
(17.5
|
)
|
|
—
|
|
|
(2.4
|
)
|
Equity in income of subsidiaries
|
17.3
|
|
|
—
|
|
|
(51.9
|
)
|
|
(23.6
|
)
|
|
58.2
|
|
|
—
|
|
Net income (loss)
|
$
|
17.0
|
|
|
$
|
(0.3
|
)
|
|
$
|
(75.4
|
)
|
|
$
|
17.5
|
|
|
$
|
58.2
|
|
|
$
|
17.0
|
|
Dividends on redeemable convertible preferred shares
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
Net income (loss) attributable to common shareholders
|
$
|
14.8
|
|
|
$
|
(0.3
|
)
|
|
$
|
(75.4
|
)
|
|
$
|
17.5
|
|
|
$
|
58.2
|
|
|
$
|
14.8
|
|
Condensed Consolidated Income Statement
For the 13 weeks ended
October 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,197.4
|
|
|
$
|
19.0
|
|
|
$
|
—
|
|
|
$
|
1,216.4
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
(844.4
|
)
|
|
(4.3
|
)
|
|
—
|
|
|
(848.7
|
)
|
Gross margin
|
—
|
|
|
—
|
|
|
353.0
|
|
|
14.7
|
|
|
—
|
|
|
367.7
|
|
Selling, general and administrative expenses
|
(0.4
|
)
|
|
—
|
|
|
(387.1
|
)
|
|
(7.5
|
)
|
|
—
|
|
|
(395.0
|
)
|
Other operating income, net
|
—
|
|
|
—
|
|
|
61.8
|
|
|
(0.9
|
)
|
|
—
|
|
|
60.9
|
|
Operating (loss) income
|
(0.4
|
)
|
|
—
|
|
|
27.7
|
|
|
6.3
|
|
|
—
|
|
|
33.6
|
|
Intra-entity interest income (expense)
|
—
|
|
|
4.7
|
|
|
(46.7
|
)
|
|
42.0
|
|
|
—
|
|
|
—
|
|
Interest expense, net
|
—
|
|
|
(5.2
|
)
|
|
(3.8
|
)
|
|
(2.7
|
)
|
|
—
|
|
|
(11.7
|
)
|
(Loss) income before income taxes
|
(0.4
|
)
|
|
(0.5
|
)
|
|
(22.8
|
)
|
|
45.6
|
|
|
—
|
|
|
21.9
|
|
Income taxes
|
—
|
|
|
0.1
|
|
|
9.3
|
|
|
(16.3
|
)
|
|
—
|
|
|
(6.9
|
)
|
Equity in income of subsidiaries
|
15.4
|
|
|
—
|
|
|
(30.8
|
)
|
|
(11.9
|
)
|
|
27.3
|
|
|
—
|
|
Net income (loss)
|
$
|
15.0
|
|
|
$
|
(0.4
|
)
|
|
$
|
(44.3
|
)
|
|
$
|
17.4
|
|
|
$
|
27.3
|
|
|
$
|
15.0
|
|
Dividends on redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income (loss) attributable to common shareholders
|
$
|
15.0
|
|
|
$
|
(0.4
|
)
|
|
$
|
(44.3
|
)
|
|
$
|
17.4
|
|
|
$
|
27.3
|
|
|
$
|
15.0
|
|
Condensed Consolidated Income Statement
For the 39 weeks ended
October 29, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,955.0
|
|
|
$
|
183.5
|
|
|
$
|
—
|
|
|
$
|
4,138.5
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
(2,688.0
|
)
|
|
(35.2
|
)
|
|
—
|
|
|
(2,723.2
|
)
|
Gross margin
|
—
|
|
|
—
|
|
|
1,267.0
|
|
|
148.3
|
|
|
—
|
|
|
1,415.3
|
|
Selling, general and administrative expenses
|
(0.9
|
)
|
|
—
|
|
|
(1,190.9
|
)
|
|
(73.1
|
)
|
|
—
|
|
|
(1,264.9
|
)
|
Other operating income, net
|
—
|
|
|
—
|
|
|
227.6
|
|
|
(14.0
|
)
|
|
—
|
|
|
213.6
|
|
Operating (loss) income
|
(0.9
|
)
|
|
—
|
|
|
303.7
|
|
|
61.2
|
|
|
—
|
|
|
364.0
|
|
Intra-entity interest income (expense)
|
—
|
|
|
14.1
|
|
|
(142.2
|
)
|
|
128.1
|
|
|
—
|
|
|
—
|
|
Interest expense, net
|
—
|
|
|
(14.8
|
)
|
|
(12.1
|
)
|
|
(9.5
|
)
|
|
—
|
|
|
(36.4
|
)
|
(Loss) income before income taxes
|
(0.9
|
)
|
|
(0.7
|
)
|
|
149.4
|
|
|
179.8
|
|
|
—
|
|
|
327.6
|
|
Income taxes
|
—
|
|
|
0.1
|
|
|
(61.5
|
)
|
|
(20.5
|
)
|
|
—
|
|
|
(81.9
|
)
|
Equity in income of subsidiaries
|
246.6
|
|
|
—
|
|
|
48.8
|
|
|
93.1
|
|
|
(388.5
|
)
|
|
—
|
|
Net income (loss)
|
$
|
245.7
|
|
|
$
|
(0.6
|
)
|
|
$
|
136.7
|
|
|
$
|
252.4
|
|
|
$
|
(388.5
|
)
|
|
$
|
245.7
|
|
Dividends on redeemable convertible preferred shares
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
Net income (loss) attributable to common shareholders
|
$
|
243.5
|
|
|
$
|
(0.6
|
)
|
|
$
|
136.7
|
|
|
$
|
252.4
|
|
|
$
|
(388.5
|
)
|
|
$
|
243.5
|
|
Condensed Consolidated Income Statement
For the 39 weeks ended
October 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,099.7
|
|
|
$
|
57.9
|
|
|
$
|
—
|
|
|
$
|
4,157.6
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
(2,719.6
|
)
|
|
(13.6
|
)
|
|
—
|
|
|
(2,733.2
|
)
|
Gross margin
|
—
|
|
|
—
|
|
|
1,380.1
|
|
|
44.3
|
|
|
—
|
|
|
1,424.4
|
|
Selling, general and administrative expenses
|
(1.6
|
)
|
|
—
|
|
|
(1,276.2
|
)
|
|
(23.2
|
)
|
|
—
|
|
|
(1,301.0
|
)
|
Other operating income, net
|
—
|
|
|
—
|
|
|
186.0
|
|
|
1.2
|
|
|
—
|
|
|
187.2
|
|
Operating (loss) income
|
(1.6
|
)
|
|
—
|
|
|
289.9
|
|
|
22.3
|
|
|
—
|
|
|
310.6
|
|
Intra-entity interest income (expense)
|
—
|
|
|
14.1
|
|
|
(139.8
|
)
|
|
125.7
|
|
|
—
|
|
|
—
|
|
Interest expense, net
|
—
|
|
|
(15.0
|
)
|
|
(10.7
|
)
|
|
(8.1
|
)
|
|
—
|
|
|
(33.8
|
)
|
(Loss) income before income taxes
|
(1.6
|
)
|
|
(0.9
|
)
|
|
139.4
|
|
|
139.9
|
|
|
—
|
|
|
276.8
|
|
Income taxes
|
—
|
|
|
0.2
|
|
|
(65.4
|
)
|
|
(15.6
|
)
|
|
—
|
|
|
(80.8
|
)
|
Equity in income of subsidiaries
|
197.6
|
|
|
—
|
|
|
69.9
|
|
|
92.3
|
|
|
(359.8
|
)
|
|
—
|
|
Net income (loss)
|
$
|
196.0
|
|
|
$
|
(0.7
|
)
|
|
$
|
143.9
|
|
|
$
|
216.6
|
|
|
$
|
(359.8
|
)
|
|
$
|
196.0
|
|
Dividends on redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income (loss) attributable to common shareholders
|
$
|
196.0
|
|
|
$
|
(0.7
|
)
|
|
$
|
143.9
|
|
|
$
|
216.6
|
|
|
$
|
(359.8
|
)
|
|
$
|
196.0
|
|
Condensed Consolidated Statement of Comprehensive Income (Loss)
For the 13 weeks ended
October 29, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net income (loss)
|
$
|
17.0
|
|
|
$
|
(0.3
|
)
|
|
$
|
(75.4
|
)
|
|
$
|
17.5
|
|
|
$
|
58.2
|
|
|
$
|
17.0
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(28.9
|
)
|
|
—
|
|
|
(32.5
|
)
|
|
3.6
|
|
|
28.9
|
|
|
(28.9
|
)
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
0.2
|
|
|
(0.2
|
)
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
1.9
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
(1.9
|
)
|
|
1.9
|
|
Reclassification adjustment for losses to net income
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
Pension plan:
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment to net income for amortization of actuarial losses
|
0.4
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
(0.4
|
)
|
|
0.4
|
|
Reclassification adjustment to net income for amortization of net prior service credits
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
0.4
|
|
|
(0.4
|
)
|
Total other comprehensive income (loss)
|
(27.3
|
)
|
|
—
|
|
|
(30.7
|
)
|
|
3.4
|
|
|
27.3
|
|
|
(27.3
|
)
|
Total comprehensive income (loss)
|
$
|
(10.3
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(106.1
|
)
|
|
$
|
20.9
|
|
|
$
|
85.5
|
|
|
$
|
(10.3
|
)
|
Condensed Consolidated Statement of Comprehensive Income (Loss)
For the 13 weeks ended
October 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net income (loss)
|
$
|
15.0
|
|
|
$
|
(0.4
|
)
|
|
$
|
(44.3
|
)
|
|
$
|
17.4
|
|
|
$
|
27.3
|
|
|
$
|
15.0
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(4.2
|
)
|
|
—
|
|
|
(6.4
|
)
|
|
2.2
|
|
|
4.2
|
|
|
(4.2
|
)
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
0.1
|
|
|
(0.1
|
)
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
(1.1
|
)
|
|
1.1
|
|
Reclassification adjustment for losses to net income
|
0.9
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
(0.9
|
)
|
|
0.9
|
|
Pension plan:
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment to net income for amortization of actuarial losses
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
(0.7
|
)
|
|
0.7
|
|
Reclassification adjustment to net income for amortization of net prior service credits
|
(0.5
|
)
|
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
0.5
|
|
|
(0.5
|
)
|
Total other comprehensive income (loss)
|
(2.1
|
)
|
|
—
|
|
|
(4.2
|
)
|
|
2.1
|
|
|
2.1
|
|
|
(2.1
|
)
|
Total comprehensive income (loss)
|
$
|
12.9
|
|
|
$
|
(0.4
|
)
|
|
$
|
(48.5
|
)
|
|
$
|
19.5
|
|
|
$
|
29.4
|
|
|
$
|
12.9
|
|
Condensed Consolidated Statement of Comprehensive Income (Loss)
For the 39 weeks ended
October 29, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net income (loss)
|
$
|
245.7
|
|
|
$
|
(0.6
|
)
|
|
$
|
136.7
|
|
|
$
|
252.4
|
|
|
$
|
(388.5
|
)
|
|
$
|
245.7
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(38.0
|
)
|
|
—
|
|
|
(45.2
|
)
|
|
7.2
|
|
|
38.0
|
|
|
(38.0
|
)
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
(0.2
|
)
|
|
0.2
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
8.2
|
|
|
—
|
|
|
8.2
|
|
|
—
|
|
|
(8.2
|
)
|
|
8.2
|
|
Reclassification adjustment for losses to net income
|
1.6
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
(1.6
|
)
|
|
1.6
|
|
Pension plan:
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment to net income for amortization of actuarial losses
|
1.0
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
(1.0
|
)
|
|
1.0
|
|
Reclassification adjustment to net income for amortization of net prior service credits
|
(1.2
|
)
|
|
—
|
|
|
(1.2
|
)
|
|
—
|
|
|
1.2
|
|
|
(1.2
|
)
|
Total other comprehensive income (loss)
|
(28.2
|
)
|
|
—
|
|
|
(35.6
|
)
|
|
7.4
|
|
|
28.2
|
|
|
(28.2
|
)
|
Total comprehensive income (loss)
|
$
|
217.5
|
|
|
$
|
(0.6
|
)
|
|
$
|
101.1
|
|
|
$
|
259.8
|
|
|
$
|
(360.3
|
)
|
|
$
|
217.5
|
|
Condensed Consolidated Statement of Comprehensive Income (Loss)
For the 39 weeks ended
October 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net income (loss)
|
$
|
196.0
|
|
|
$
|
(0.7
|
)
|
|
$
|
143.9
|
|
|
$
|
216.6
|
|
|
$
|
(359.8
|
)
|
|
$
|
196.0
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
(1.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
(1.0
|
)
|
|
1.4
|
|
|
(1.4
|
)
|
Available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
0.4
|
|
|
(0.4
|
)
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss)
|
(10.3
|
)
|
|
—
|
|
|
(10.3
|
)
|
|
—
|
|
|
10.3
|
|
|
(10.3
|
)
|
Reclassification adjustment for losses to net income
|
2.2
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
(2.2
|
)
|
|
2.2
|
|
Pension plan:
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification adjustment to net income for amortization of actuarial losses
|
2.1
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
(2.1
|
)
|
|
2.1
|
|
Reclassification adjustment to net income for amortization of net prior service credits
|
(1.4
|
)
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
1.4
|
|
|
(1.4
|
)
|
Total other comprehensive income (loss)
|
(9.2
|
)
|
|
—
|
|
|
(7.8
|
)
|
|
(1.4
|
)
|
|
9.2
|
|
|
(9.2
|
)
|
Total comprehensive income (loss)
|
$
|
186.8
|
|
|
$
|
(0.7
|
)
|
|
$
|
136.1
|
|
|
$
|
215.2
|
|
|
$
|
(350.6
|
)
|
|
$
|
186.8
|
|
Condensed Consolidated Balance Sheet
October 29, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
0.2
|
|
|
$
|
0.1
|
|
|
$
|
55.7
|
|
|
$
|
26.7
|
|
|
$
|
—
|
|
|
$
|
82.7
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,581.1
|
|
|
—
|
|
|
—
|
|
|
1,581.1
|
|
Intra-entity receivables, net
|
50.4
|
|
|
—
|
|
|
—
|
|
|
278.9
|
|
|
(329.3
|
)
|
|
—
|
|
Other receivables
|
—
|
|
|
—
|
|
|
52.0
|
|
|
22.2
|
|
|
—
|
|
|
74.2
|
|
Other current assets
|
—
|
|
|
—
|
|
|
140.3
|
|
|
6.5
|
|
|
—
|
|
|
146.8
|
|
Income taxes
|
—
|
|
|
0.1
|
|
|
35.6
|
|
|
(14.9
|
)
|
|
—
|
|
|
20.8
|
|
Inventories
|
—
|
|
|
—
|
|
|
2,578.3
|
|
|
71.1
|
|
|
—
|
|
|
2,649.4
|
|
Total current assets
|
50.6
|
|
|
0.2
|
|
|
4,443.0
|
|
|
390.5
|
|
|
(329.3
|
)
|
|
4,555.0
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
786.4
|
|
|
4.7
|
|
|
—
|
|
|
791.1
|
|
Goodwill
|
—
|
|
|
—
|
|
|
513.4
|
|
|
3.6
|
|
|
—
|
|
|
517.0
|
|
Intangible assets, net
|
—
|
|
|
—
|
|
|
419.8
|
|
|
—
|
|
|
—
|
|
|
419.8
|
|
Investment in subsidiaries
|
2,812.5
|
|
|
—
|
|
|
586.7
|
|
|
474.4
|
|
|
(3,873.6
|
)
|
|
—
|
|
Intra-entity receivables, net
|
—
|
|
|
407.6
|
|
|
—
|
|
|
3,647.4
|
|
|
(4,055.0
|
)
|
|
—
|
|
Other assets
|
—
|
|
|
—
|
|
|
126.2
|
|
|
31.3
|
|
|
—
|
|
|
157.5
|
|
Deferred tax assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Retirement benefit asset
|
—
|
|
|
—
|
|
|
47.1
|
|
|
—
|
|
|
—
|
|
|
47.1
|
|
Total assets
|
$
|
2,863.1
|
|
|
$
|
407.8
|
|
|
$
|
6,922.6
|
|
|
$
|
4,551.9
|
|
|
$
|
(8,257.9
|
)
|
|
$
|
6,487.5
|
|
Liabilities and Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Loans and overdrafts
|
$
|
—
|
|
|
$
|
(0.7
|
)
|
|
$
|
289.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
288.8
|
|
Accounts payable
|
—
|
|
|
—
|
|
|
376.4
|
|
|
5.8
|
|
|
—
|
|
|
382.2
|
|
Intra-entity payables, net
|
—
|
|
|
—
|
|
|
329.3
|
|
|
—
|
|
|
(329.3
|
)
|
|
—
|
|
Accrued expenses and other current liabilities
|
20.2
|
|
|
7.1
|
|
|
360.1
|
|
|
15.5
|
|
|
—
|
|
|
402.9
|
|
Deferred revenue
|
—
|
|
|
—
|
|
|
256.7
|
|
|
—
|
|
|
—
|
|
|
256.7
|
|
Income taxes
|
—
|
|
|
—
|
|
|
3.9
|
|
|
0.5
|
|
|
—
|
|
|
4.4
|
|
Total current liabilities
|
20.2
|
|
|
6.4
|
|
|
1,615.9
|
|
|
21.8
|
|
|
(329.3
|
)
|
|
1,335.0
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
—
|
|
|
394.1
|
|
|
330.1
|
|
|
600.0
|
|
|
—
|
|
|
1,324.2
|
|
Intra-entity payables, net
|
—
|
|
|
—
|
|
|
4,055.0
|
|
|
—
|
|
|
(4,055.0
|
)
|
|
—
|
|
Other liabilities
|
—
|
|
|
—
|
|
|
213.7
|
|
|
6.2
|
|
|
—
|
|
|
219.9
|
|
Deferred revenue
|
—
|
|
|
—
|
|
|
632.1
|
|
|
—
|
|
|
—
|
|
|
632.1
|
|
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
133.5
|
|
|
(0.1
|
)
|
|
—
|
|
|
133.4
|
|
Total liabilities
|
20.2
|
|
|
400.5
|
|
|
6,980.3
|
|
|
627.9
|
|
|
(4,384.3
|
)
|
|
3,644.6
|
|
Series A redeemable convertible preferred shares
|
611.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
611.7
|
|
Total shareholders’ equity (deficit)
|
2,231.2
|
|
|
7.3
|
|
|
(57.7
|
)
|
|
3,924.0
|
|
|
(3,873.6
|
)
|
|
2,231.2
|
|
Total liabilities and shareholders’ equity
|
$
|
2,863.1
|
|
|
$
|
407.8
|
|
|
$
|
6,922.6
|
|
|
$
|
4,551.9
|
|
|
$
|
(8,257.9
|
)
|
|
$
|
6,487.5
|
|
Condensed Consolidated Balance Sheet
January 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
1.9
|
|
|
$
|
0.1
|
|
|
$
|
102.0
|
|
|
$
|
33.7
|
|
|
$
|
—
|
|
|
$
|
137.7
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,753.0
|
|
|
3.4
|
|
|
—
|
|
|
1,756.4
|
|
Intra-entity receivables, net
|
28.7
|
|
|
—
|
|
|
—
|
|
|
380.1
|
|
|
(408.8
|
)
|
|
—
|
|
Other receivables
|
—
|
|
|
—
|
|
|
68.8
|
|
|
15.2
|
|
|
—
|
|
|
84.0
|
|
Other current assets
|
0.1
|
|
|
—
|
|
|
144.2
|
|
|
8.3
|
|
|
—
|
|
|
152.6
|
|
Income taxes
|
—
|
|
|
0.2
|
|
|
2.3
|
|
|
1.0
|
|
|
—
|
|
|
3.5
|
|
Inventories
|
—
|
|
|
—
|
|
|
2,372.7
|
|
|
81.2
|
|
|
—
|
|
|
2,453.9
|
|
Total current assets
|
30.7
|
|
|
0.3
|
|
|
4,443.0
|
|
|
522.9
|
|
|
(408.8
|
)
|
|
4,588.1
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
722.3
|
|
|
5.3
|
|
|
—
|
|
|
727.6
|
|
Goodwill
|
—
|
|
|
—
|
|
|
511.9
|
|
|
3.6
|
|
|
—
|
|
|
515.5
|
|
Intangible assets, net
|
—
|
|
|
—
|
|
|
427.8
|
|
|
—
|
|
|
—
|
|
|
427.8
|
|
Investment in subsidiaries
|
3,047.8
|
|
|
—
|
|
|
762.9
|
|
|
600.0
|
|
|
(4,410.7
|
)
|
|
—
|
|
Intra-entity receivables, net
|
—
|
|
|
402.6
|
|
|
—
|
|
|
3,467.4
|
|
|
(3,870.0
|
)
|
|
—
|
|
Other assets
|
—
|
|
|
—
|
|
|
124.5
|
|
|
30.1
|
|
|
—
|
|
|
154.6
|
|
Deferred tax assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Retirement benefit asset
|
—
|
|
|
—
|
|
|
51.3
|
|
|
—
|
|
|
—
|
|
|
51.3
|
|
Total assets
|
$
|
3,078.5
|
|
|
$
|
402.9
|
|
|
$
|
7,043.7
|
|
|
$
|
4,629.3
|
|
|
$
|
(8,689.5
|
)
|
|
$
|
6,464.9
|
|
Liabilities and Shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Loans and overdrafts
|
$
|
—
|
|
|
$
|
(0.7
|
)
|
|
$
|
58.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
57.7
|
|
Accounts payable
|
—
|
|
|
—
|
|
|
260.3
|
|
|
8.8
|
|
|
—
|
|
|
269.1
|
|
Intra-entity payables, net
|
—
|
|
|
—
|
|
|
408.8
|
|
|
—
|
|
|
(408.8
|
)
|
|
—
|
|
Accrued expenses and other current liabilities
|
17.8
|
|
|
2.4
|
|
|
467.0
|
|
|
11.1
|
|
|
—
|
|
|
498.3
|
|
Deferred revenue
|
—
|
|
|
—
|
|
|
260.3
|
|
|
—
|
|
|
—
|
|
|
260.3
|
|
Income taxes
|
—
|
|
|
—
|
|
|
68.4
|
|
|
(2.7
|
)
|
|
—
|
|
|
65.7
|
|
Total current liabilities
|
17.8
|
|
|
1.7
|
|
|
1,523.2
|
|
|
17.2
|
|
|
(408.8
|
)
|
|
1,151.1
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
—
|
|
|
393.5
|
|
|
327.5
|
|
|
600.0
|
|
|
—
|
|
|
1,321.0
|
|
Intra-entity payables, net
|
—
|
|
|
—
|
|
|
3,870.0
|
|
|
—
|
|
|
(3,870.0
|
)
|
|
—
|
|
Other liabilities
|
—
|
|
|
—
|
|
|
223.6
|
|
|
6.9
|
|
|
—
|
|
|
230.5
|
|
Deferred revenue
|
—
|
|
|
—
|
|
|
629.1
|
|
|
—
|
|
|
—
|
|
|
629.1
|
|
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
73.0
|
|
|
(0.5
|
)
|
|
—
|
|
|
72.5
|
|
Total liabilities
|
17.8
|
|
|
395.2
|
|
|
6,646.4
|
|
|
623.6
|
|
|
(4,278.8
|
)
|
|
3,404.2
|
|
Series A redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total shareholders’ equity
|
3,060.7
|
|
|
7.7
|
|
|
397.3
|
|
|
4,005.7
|
|
|
(4,410.7
|
)
|
|
3,060.7
|
|
Total liabilities and shareholders’ equity
|
$
|
3,078.5
|
|
|
$
|
402.9
|
|
|
$
|
7,043.7
|
|
|
$
|
4,629.3
|
|
|
$
|
(8,689.5
|
)
|
|
$
|
6,464.9
|
|
Condensed Consolidated Balance Sheet
October 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
3.1
|
|
|
$
|
0.1
|
|
|
$
|
61.0
|
|
|
$
|
13.0
|
|
|
$
|
—
|
|
|
$
|
77.2
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,447.1
|
|
|
4.4
|
|
|
—
|
|
|
1,451.5
|
|
Intra-entity receivables, net
|
61.9
|
|
|
—
|
|
|
—
|
|
|
182.1
|
|
|
(244.0
|
)
|
|
—
|
|
Other receivables
|
—
|
|
|
—
|
|
|
45.4
|
|
|
10.0
|
|
|
—
|
|
|
55.4
|
|
Other current assets
|
0.2
|
|
|
—
|
|
|
135.4
|
|
|
5.8
|
|
|
—
|
|
|
141.4
|
|
Income taxes
|
—
|
|
|
—
|
|
|
24.6
|
|
|
—
|
|
|
—
|
|
|
24.6
|
|
Inventories
|
—
|
|
|
—
|
|
|
2,643.1
|
|
|
83.9
|
|
|
—
|
|
|
2,727.0
|
|
Total current assets
|
65.2
|
|
|
0.1
|
|
|
4,356.6
|
|
|
299.2
|
|
|
(244.0
|
)
|
|
4,477.1
|
|
Non-current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
712.5
|
|
|
5.5
|
|
|
—
|
|
|
718.0
|
|
Goodwill
|
—
|
|
|
—
|
|
|
514.0
|
|
|
3.6
|
|
|
—
|
|
|
517.6
|
|
Intangible assets, net
|
—
|
|
|
—
|
|
|
434.3
|
|
|
—
|
|
|
—
|
|
|
434.3
|
|
Investment in subsidiaries
|
2,797.6
|
|
|
—
|
|
|
532.4
|
|
|
537.1
|
|
|
(3,867.1
|
)
|
|
—
|
|
Intra-entity receivables, net
|
—
|
|
|
407.2
|
|
|
—
|
|
|
3,475.0
|
|
|
(3,882.2
|
)
|
|
—
|
|
Other assets
|
—
|
|
|
—
|
|
|
108.0
|
|
|
28.4
|
|
|
—
|
|
|
136.4
|
|
Deferred tax assets
|
—
|
|
|
—
|
|
|
1.1
|
|
|
0.7
|
|
|
—
|
|
|
1.8
|
|
Retirement benefit asset
|
—
|
|
|
—
|
|
|
40.7
|
|
|
—
|
|
|
—
|
|
|
40.7
|
|
Total assets
|
$
|
2,862.8
|
|
|
$
|
407.3
|
|
|
$
|
6,699.6
|
|
|
$
|
4,349.5
|
|
|
$
|
(7,993.3
|
)
|
|
$
|
6,325.9
|
|
Liabilities and Shareholders’ equity
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Loans and overdrafts
|
$
|
—
|
|
|
$
|
(0.7
|
)
|
|
$
|
248.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
248.0
|
|
Accounts payable
|
—
|
|
|
—
|
|
|
367.4
|
|
|
4.0
|
|
|
—
|
|
|
371.4
|
|
Intra-entity payables, net
|
—
|
|
|
—
|
|
|
244.0
|
|
|
—
|
|
|
(244.0
|
)
|
|
—
|
|
Accrued expenses and other current liabilities
|
17.8
|
|
|
7.1
|
|
|
372.8
|
|
|
10.3
|
|
|
—
|
|
|
408.0
|
|
Deferred revenue
|
—
|
|
|
—
|
|
|
241.4
|
|
|
—
|
|
|
—
|
|
|
241.4
|
|
Income taxes
|
—
|
|
|
(0.2
|
)
|
|
(14.9
|
)
|
|
15.8
|
|
|
—
|
|
|
0.7
|
|
Total current liabilities
|
17.8
|
|
|
6.2
|
|
|
1,459.4
|
|
|
30.1
|
|
|
(244.0
|
)
|
|
1,269.5
|
|
Non-current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
—
|
|
|
393.3
|
|
|
337.3
|
|
|
600.0
|
|
|
—
|
|
|
1,330.6
|
|
Intra-entity payables, net
|
—
|
|
|
—
|
|
|
3,882.2
|
|
|
—
|
|
|
(3,882.2
|
)
|
|
—
|
|
Other liabilities
|
—
|
|
|
—
|
|
|
219.5
|
|
|
7.1
|
|
|
—
|
|
|
226.6
|
|
Deferred revenue
|
—
|
|
|
—
|
|
|
597.5
|
|
|
—
|
|
|
—
|
|
|
597.5
|
|
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
56.7
|
|
|
—
|
|
|
—
|
|
|
56.7
|
|
Total liabilities
|
17.8
|
|
|
399.5
|
|
|
6,552.6
|
|
|
637.2
|
|
|
(4,126.2
|
)
|
|
3,480.9
|
|
Series A redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total shareholders’ equity
|
2,845.0
|
|
|
7.8
|
|
|
147.0
|
|
|
3,712.3
|
|
|
(3,867.1
|
)
|
|
2,845.0
|
|
Total liabilities and shareholders’ equity
|
$
|
2,862.8
|
|
|
$
|
407.3
|
|
|
$
|
6,699.6
|
|
|
$
|
4,349.5
|
|
|
$
|
(7,993.3
|
)
|
|
$
|
6,325.9
|
|
Condensed Consolidated Statement of Cash Flows
For the 39 weeks ended
October 29, 2016
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net cash provided by (used in) operating activities
|
$
|
558.7
|
|
|
$
|
4.9
|
|
|
$
|
385.1
|
|
|
$
|
391.4
|
|
|
$
|
(979.2
|
)
|
|
$
|
360.9
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
—
|
|
|
—
|
|
|
(195.6
|
)
|
|
—
|
|
|
—
|
|
|
(195.6
|
)
|
Investment in subsidiaries
|
(91.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
91.0
|
|
|
—
|
|
Purchase of available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.4
|
)
|
|
—
|
|
|
(10.4
|
)
|
Proceeds from available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
10.0
|
|
|
—
|
|
|
10.0
|
|
Net cash used in investing activities
|
(91.0
|
)
|
|
—
|
|
|
(195.6
|
)
|
|
(0.4
|
)
|
|
91.0
|
|
|
(196.0
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid on common shares
|
(57.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57.5
|
)
|
Intra-entity dividends paid
|
—
|
|
|
—
|
|
|
(650.0
|
)
|
|
(329.2
|
)
|
|
979.2
|
|
|
—
|
|
Proceeds from issuance of common shares
|
0.4
|
|
|
—
|
|
|
91.0
|
|
|
—
|
|
|
(91.0
|
)
|
|
0.4
|
|
Proceeds from issuance of redeemable convertible preferred shares, net of issuance costs
|
611.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
611.6
|
|
Excess tax benefit from exercise of share awards
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
Repayments of term loan
|
—
|
|
|
—
|
|
|
(12.0
|
)
|
|
—
|
|
|
—
|
|
|
(12.0
|
)
|
Proceeds from securitization facility
|
—
|
|
|
—
|
|
|
—
|
|
|
1,837.1
|
|
|
—
|
|
|
1,837.1
|
|
Repayment of securitization facility
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,837.1
|
)
|
|
—
|
|
|
(1,837.1
|
)
|
Proceeds from revolving credit facility
|
—
|
|
|
—
|
|
|
598.0
|
|
|
—
|
|
|
—
|
|
|
598.0
|
|
Repayments of revolving credit facility
|
—
|
|
|
—
|
|
|
(339.0
|
)
|
|
—
|
|
|
—
|
|
|
(339.0
|
)
|
Payment of debt issuance costs
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(2.7
|
)
|
Repurchase of common shares
|
(1,000.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,000.0
|
)
|
Net settlement of equity based awards
|
(4.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.8
|
)
|
Capital lease payments
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
Proceeds from (repayment of) short-term borrowings
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
|
—
|
|
|
—
|
|
|
(13.3
|
)
|
Intra-entity activity, net
|
(19.1
|
)
|
|
(4.9
|
)
|
|
91.6
|
|
|
(67.6
|
)
|
|
—
|
|
|
—
|
|
Net cash (used in) provided by financing activities
|
(469.4
|
)
|
|
(4.9
|
)
|
|
(234.7
|
)
|
|
(397.4
|
)
|
|
888.2
|
|
|
(218.2
|
)
|
Cash and cash equivalents at beginning of period
|
1.9
|
|
|
0.1
|
|
|
102.0
|
|
|
33.7
|
|
|
—
|
|
|
137.7
|
|
Increase (decrease) in cash and cash equivalents
|
(1.7
|
)
|
|
—
|
|
|
(45.2
|
)
|
|
(6.4
|
)
|
|
—
|
|
|
(53.3
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(1.1
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
(1.7
|
)
|
Cash and cash equivalents at end of period
|
$
|
0.2
|
|
|
$
|
0.1
|
|
|
$
|
55.7
|
|
|
$
|
26.7
|
|
|
$
|
—
|
|
|
$
|
82.7
|
|
Condensed Consolidated Statement of Cash Flows
For the 39 weeks ended
October 31, 2015
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
Signet
Jewelers
Limited
|
|
Signet UK
Finance plc
|
|
Guarantor
Subsidiaries
|
|
Non-
Guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
Net cash provided by (used in) operating activities
|
$
|
98.4
|
|
|
$
|
4.6
|
|
|
$
|
(12.8
|
)
|
|
$
|
98.5
|
|
|
$
|
(100.0
|
)
|
|
$
|
88.7
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
—
|
|
|
—
|
|
|
(170.3
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
(170.8
|
)
|
Investment in subsidiaries
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Purchase of available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
(3.8
|
)
|
Proceeds from available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
Net cash used in investing activities
|
—
|
|
|
—
|
|
|
(170.3
|
)
|
|
(0.7
|
)
|
|
—
|
|
|
(171.0
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid on common shares
|
(49.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49.6
|
)
|
Dividends paid on redeemable convertible preferred shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Intra-entity dividends paid
|
—
|
|
|
—
|
|
|
(100.0
|
)
|
|
—
|
|
|
100.0
|
|
|
—
|
|
Proceeds from issuance of common shares
|
3.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.3
|
|
Proceeds from issuance of redeemable convertible preferred shares, net of issuance costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Excess tax benefit from exercise of share awards
|
—
|
|
|
—
|
|
|
5.1
|
|
|
—
|
|
|
—
|
|
|
5.1
|
|
Repayments of term loan
|
—
|
|
|
—
|
|
|
(17.5
|
)
|
|
—
|
|
|
—
|
|
|
(17.5
|
)
|
Proceeds from securitization facility
|
—
|
|
|
—
|
|
|
—
|
|
|
1,738.9
|
|
|
—
|
|
|
1,738.9
|
|
Repayment of securitization facility
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,738.9
|
)
|
|
—
|
|
|
(1,738.9
|
)
|
Proceeds from revolving credit facility
|
—
|
|
|
—
|
|
|
177.0
|
|
|
—
|
|
|
—
|
|
|
177.0
|
|
Repayments of revolving credit facility
|
—
|
|
|
—
|
|
|
(30.0
|
)
|
|
—
|
|
|
—
|
|
|
(30.0
|
)
|
Repurchase of common shares
|
(111.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(111.9
|
)
|
Net settlement of equity based awards
|
(8.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.3
|
)
|
Capital lease payments
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
Proceeds from (repayment of) short-term borrowings
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
Intra-entity activity, net
|
69.1
|
|
|
(4.6
|
)
|
|
45.2
|
|
|
(109.7
|
)
|
|
—
|
|
|
—
|
|
Net cash (used in) provided by financing activities
|
(97.4
|
)
|
|
(4.6
|
)
|
|
77.5
|
|
|
(109.7
|
)
|
|
100.0
|
|
|
(34.2
|
)
|
Cash and cash equivalents at beginning of period
|
2.1
|
|
|
0.1
|
|
|
166.5
|
|
|
24.9
|
|
|
—
|
|
|
193.6
|
|
Increase (decrease) in cash and cash equivalents
|
1.0
|
|
|
—
|
|
|
(105.6
|
)
|
|
(11.9
|
)
|
|
—
|
|
|
(116.5
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Cash and cash equivalents at end of period
|
$
|
3.1
|
|
|
$
|
0.1
|
|
|
$
|
61.0
|
|
|
$
|
13.0
|
|
|
$
|
—
|
|
|
$
|
77.2
|
|