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1. Principal accounting policies and basis of preparation
Basis of preparation
Signet Jewelers Limited (“Signet” or the “Company”), including its subsidiaries, is a leading retailer of jewelry, watches and associated services. Signet manages its business as two geographical segments, the United States of America (the “US”) and the United Kingdom (the “UK”). The US division operates retail stores under brands including Kay Jewelers, Jared The Galleria Of Jewelry and various regional brands, while the UK division’s retail stores operate under brands including H.Samuel and Ernest Jones.
These condensed consolidated financial statements included herein have been 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 year ended January 28, 2012.
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 receivables, inventory and deferred revenue, fair value of derivatives, depreciation and asset impairment, the valuation of employee benefits, income taxes and contingencies.
Fiscal year
The Company’s fiscal year ends on the Saturday nearest to January 31st. Fiscal 2013 is the year ending February 2, 2013 and Fiscal 2012 is the year ended January 28, 2012. Within these financial statements, the second quarter and the year to date of the relevant fiscal years 2013 and 2012 refers to the 13 and 26 weeks ended July 28, 2012 and July 30, 2011, respectively.
Seasonality
Signet’s sales are seasonal, with the first and second quarters each normally accounting for slightly more than 20% of annual sales, the third quarter a little under 20% and the fourth quarter for about 40% of sales, with December being by far the most important month of the year. Sales made in November and December are known as the “Holiday Season.” Due to sales leverage, Signet’s operating income is even more seasonal; about 45% to 50% of operating income normally occurs in the fourth quarter, comprised of nearly all of the UK division’s and about 40% to 50% of the US division’s operating income.
New accounting pronouncements adopted during the period
Presentation of comprehensive income
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income” (ASU 2011-05). ASU 2011-05 eliminates the option to present components of other comprehensive income (“OCI”) as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under either method, adjustments must be displayed for items that are reclassified from OCI to net income, in either the other comprehensive income section of the comprehensive income statement or in the notes as US GAAP currently requires for annual reporting. The standard does not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements. Additionally, the standard does not affect the calculation or reporting of earnings per share. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and is to be applied retrospectively, with early adoption permitted. Signet adopted this guidance effective for the first quarter ended April 28, 2012 and the implementation of this accounting pronouncement did not have any impact on Signet’s financial position or results of operations.
Fair value measurements and disclosures
In May 2011, the FASB issued ASU 2011-04, “Fair Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and International Financial Reporting Standards (“IFRS”).” FASB intends the new guidance to achieve common fair value measurement and disclosure requirements in US GAAP and IFRS. The amended guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 assets and liabilities for which Signet will be required to disclose quantitative information about the unobservable inputs used in fair value measurements. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Signet adopted this guidance effective for the first quarter ended April 28, 2012 and the adoption of this amendment did not have did not have any impact on Signet’s financial position or results of operations.
Reclassification
Signet has reclassified the presentation of certain prior year information to conform to the current year presentation.
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2. Segment information
Signet’s sales are derived from the retailing of jewelry, watches, other products and services. Signet is managed as two geographical operating segments, being the US and UK divisions. These segments represent channels of distribution that offer similar merchandise and services and have similar marketing and distribution strategies. Both divisions are managed by executive committees, which report through a divisional Chief Executive to Signet’s Chief Executive Officer, who in turn reports to the Board. Each divisional executive committee is responsible for operating decisions within parameters set by the Board. The performance of each segment is regularly evaluated based on sales and operating income. The operating segments do not include certain central costs. There are no material transactions between the operating segments.
13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
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Sales: |
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US |
701.9 | 643.0 | 1,453.4 | 1,381.0 | ||||||||||||
UK |
152.0 | 154.6 | 300.5 | 303.9 | ||||||||||||
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Total sales |
853.9 | 797.6 | 1,753.9 | 1,684.9 | ||||||||||||
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Operating income/(loss): |
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US |
117.3 | 104.4 | 255.0 | 230.6 | ||||||||||||
UK |
(0.3 | ) | 2.8 | (3.3 | ) | 2.6 | ||||||||||
Unallocated(1) |
(6.1 | ) | (4.9 | ) | (11.4 | ) | (12.2 | ) | ||||||||
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Total operating income |
110.9 | 102.3 | 240.3 | 221.0 | ||||||||||||
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July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
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Total assets: |
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US |
2,683.8 | 2,747.5 | 2,506.8 | |||||||||
UK |
437.3 | 427.3 | 410.6 | |||||||||
Unallocated(1) |
197.9 | 436.6 | 330.1 | |||||||||
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Total assets |
3,319.0 | 3,611.4 | 3,247.5 | |||||||||
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(1) | Unallocated principally relates to central costs and assets, which include corporate and general administrative functions. |
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3. Foreign currency translation
The exchange rates used in these financial statements for the translation of UK pound sterling transactions and balances into US dollars are as follows:
26 weeks ended July 28, 2012 |
52 weeks ended January 28, 2012 |
26 weeks ended July 30, 2011 |
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Income statement (average rate) |
1.58 | 1.60 | 1.62 | |||||||||
Balance sheet (period end rate) |
1.58 | 1.57 | 1.64 |
The year to date average exchange rate is used to prepare the income statement for the 26 weeks ended July 28, 2012 and is calculated from the weekly average exchange rates weighted by sales of the UK division. The income statement for the 13 weeks ended July 28, 2012 is calculated as the difference between the income statement for the 26 weeks ended July 28, 2012 and the previously reported income statement for the 13 weeks ended April 28, 2012. Therefore, the second quarter’s income statement includes the impact of the change in the year-to-date exchange rates between these quarter ends.
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4. 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 and certain other foreign jurisdictions. Signet is subject to US federal and state examinations by tax authorities for tax years ending after November 1, 2008 and is subject to examination by the UK tax authority for tax years ending after January 31, 2010.
As of January 28, 2012, Signet had approximately $4.8 million of unrecognized tax benefits in respect of uncertain tax positions, all of which would favorably affect the effective income tax rate if resolved in Signet’s favor. These unrecognized tax benefits relate to financing arrangements and intra-group charges which are subject to different and changing interpretations of tax law.
There has been no material change in the amount of unrecognized tax benefits in respect of uncertain tax positions during the 26 weeks ended July 28, 2012.
Signet recognizes accrued interest and, where appropriate, penalties related to unrecognized tax benefits within income tax expense. As of January 28, 2012, Signet had accrued interest of $0.4 million and there has been no material change in the amount of accrued interest as of July 28, 2012.
Over the next twelve months management believes that it is reasonably possible that there could be a reduction of substantially all of the unrecognized tax benefits as of January 28, 2012, due to settlement of the uncertain tax positions with the tax authorities.
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6. 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. The allowance is an estimate of the losses as of the balance sheet date, and is calculated using a proprietary model that analyzes factors such as delinquency rates and recovery rates. A 100% allowance is made for any amount that is more than 90 days aged on a recency basis, as well as an allowance for those amounts 90 days aged and under based on historical loss information and payment performance. The calculation is reviewed by management to assess whether, based on economic events, additional analyses are required to appropriately estimate losses inherent in the portfolio.
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
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Accounts receivable by portfolio segment, net: |
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US customer in-house finance receivables |
1,024.2 | 1,077.4 | 901.2 | |||||||||
Other accounts receivable |
8.0 | 10.8 | 5.6 | |||||||||
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Total accounts receivable, net |
1,032.2 | 1,088.2 | 906.8 | |||||||||
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Signet grants credit to customers based on a variety of credit quality indicators, including customer 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.
Other accounts receivable is comprised of gross accounts receivable relating to the insurance loss replacement business in the UK division of $8.7 million (January 28, 2012 and July 30, 2011: $11.3 million and $6.2 million, respectively) with a corresponding valuation allowance of $0.7 million (January 28, 2012 and July 30, 2011: $0.5 million and $0.6 million, respectively).
Allowance for Credit Losses on US Customer In-House Finance Receivables:
26 weeks ended July 28, 2012 $million |
52 weeks ended January 28, 2012 $million |
26 weeks ended July 30, 2011 $million |
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Beginning balance |
(78.1 | ) | (67.8 | ) | (67.8 | ) | ||||||
Charge-offs |
49.5 | 92.8 | 40.3 | |||||||||
Recoveries |
11.1 | 19.3 | 9.9 | |||||||||
Provision |
(61.1 | ) | (122.4 | ) | (50.2 | ) | ||||||
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Ending balance |
(78.6 | ) | (78.1 | ) | (67.8 | ) | ||||||
Ending receivable balance evaluated for impairment |
1,102.8 | 1,155.5 | 969.0 | |||||||||
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US customer in-house finance receivables, net |
1,024.2 | 1,077.4 | 901.2 | |||||||||
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Credit Quality Indicator and Age Analysis of Past Due US Customer In-House Finance Receivables:
July 28, 2012 |
January 28, 2012 |
July 30, 2011 |
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Gross $million |
Valuation allowance $million |
Gross $million |
Valuation allowance $million |
Gross $million |
Valuation allowance $million |
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Performing: |
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Current, aged 0-30 days |
874.8 | (27.0 | ) | 932.6 | (28.9 | ) | 774.3 | (23.2 | ) | |||||||||||||||
Past due, aged 31-90 days |
183.1 | (6.7 | ) | 180.2 | (6.5 | ) | 154.7 | (4.6 | ) | |||||||||||||||
Non Performing: |
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Past due, aged more than 90 days |
44.9 | (44.9 | ) | 42.7 | (42.7 | ) | 40.0 | (40.0 | ) | |||||||||||||||
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1,102.8 | (78.6 | ) | 1,155.5 | (78.1 | ) | 969.0 | (67.8 | ) | ||||||||||||||||
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7. Deferred revenue and warranty reserve
Deferred revenue
Deferred revenue is comprised primarily of extended service plans (“ESP”) and voucher promotions as follows:
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
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ESP deferred revenue |
523.7 | 511.7 | 490.5 | |||||||||
Voucher promotions |
3.5 | 16.4 | 4.9 | |||||||||
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Total deferred revenue |
527.2 | 528.1 | 495.4 | |||||||||
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Disclosed as: |
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Current liabilities |
145.3 | 154.1 | 135.9 | |||||||||
Non-current liabilities |
381.9 | 374.0 | 359.5 | |||||||||
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Total deferred revenue |
527.2 | 528.1 | 495.4 | |||||||||
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In addition, other current assets include deferred direct costs in relation to the sale of ESP of $21.2 million as of July 28, 2012 (January 28, 2012 and July 30, 2011: $20.2 million and $19.3 million, respectively). Other assets include the long-term portion of these deferred direct costs of $53.7 million as of July 28, 2012 (January 28, 2012 and July 30, 2011: $52.8 million and $50.4 million, respectively).
13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
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ESP deferred revenue, beginning of period |
520.7 | 491.0 | 511.7 | 481.1 | ||||||||||||
Plans sold |
44.4 | 38.4 | 94.2 | 86.6 | ||||||||||||
Revenues recognized |
(41.4 | ) | (38.9 | ) | (82.2 | ) | (77.2 | ) | ||||||||
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ESP deferred revenue, end of period |
523.7 | 490.5 | 523.7 | 490.5 | ||||||||||||
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Warranty reserve
The warranty reserve for diamond and gemstone guarantees provided by the US division, included in accrued expenses and other current liabilities, is as follows:
13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
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Warranty reserve, beginning of period |
15.1 | 13.1 | 15.1 | 13.0 | ||||||||||||
Warranty expense |
4.6 | 0.8 | 6.1 | 2.4 | ||||||||||||
Utilized |
(2.1 | ) | (1.2 | ) | (3.6 | ) | (2.7 | ) | ||||||||
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Warranty reserve, end of period |
17.6 | 12.7 | 17.6 | 12.7 | ||||||||||||
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July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
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Disclosed as: |
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Current liabilities |
6.7 | 5.9 | 5.0 | |||||||||
Non-current liabilities |
10.9 | 9.2 | 7.7 | |||||||||
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Total warranty reserve |
17.6 | 15.1 | 12.7 | |||||||||
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8. Financial instruments and fair value
Signet’s principal financial instruments are comprised of cash, cash deposits/investments and overdrafts, accounts receivable and payable, derivatives and a revolving credit facility. Signet does not enter into derivative transactions for trading purposes. Derivative transactions are used by Signet for risk management purposes to address risks inherent in Signet’s business operations and sources of finance. The main risks arising from Signet’s operations are market risk including foreign currency risk and commodity risk, liquidity risk and interest rate risk. Signet uses these financial instruments to manage and mitigate these risks under policies reviewed and approved by the Board.
Market risk
Signet generates revenues and incurs expenses in US dollars and pounds sterling. As a portion of Signet’s UK division purchases are denominated in US dollars, Signet enters into foreign currency forward exchange contracts, foreign currency option contracts and foreign currency swaps to manage this exposure to the US dollar. The fair value of these contracts is recorded in other assets and other liabilities.
Signet holds a fluctuating amount of pounds sterling cash reflecting the cash generative characteristics of the UK division. Signet’s objective is to minimize net foreign exchange exposure to the income statement on pound sterling denominated items through managing this level of cash, pound sterling denominated intercompany balances and US dollar to pound sterling swaps. In order to manage the foreign exchange exposure and minimize the level of pound sterling cash held by Signet, the pound sterling denominated subsidiaries pay dividends regularly to their immediate holding companies and excess pounds sterling 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. In particular, Signet undertakes some hedging of its requirement for gold through the use of options, 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. Cash generated from operations and external financing are the main sources of funding supplementing Signet’s resources in meeting liquidity requirements.
The main external source of funding is a $400 million senior unsecured multi-currency five year revolving credit facility, under which there were no borrowings as of July 28, 2012, January 28, 2012, or July 30, 2011.
Interest rate risk
Signet may enter into various interest rate protection agreements in order to limit the impact of movements in interest rates on its cash or borrowings. There were no interest rate protection agreements outstanding as of July 28, 2012, January 28, 2012 or July 30, 2011.
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 6. 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.
Derivatives
Signet enters into forward foreign currency exchange contracts and foreign currency option contracts, principally in US dollars, in order to limit the impact of movements in foreign exchange rates on its forecast foreign currency purchases. The total notional amount of these foreign currency contracts outstanding as of July 28, 2012 was $52.3 million (January 28, 2012 and July 30, 2011: $48.9 million and $51.0 million, respectively). These contracts have been designated as cash flow hedges and will be settled over the next 17 months (January 28, 2012 and July 30, 2011: 13 months and 20 months, respectively).
Signet enters into forward purchase contracts and option purchase contracts for commodities in order to reduce its exposure to significant movements in the price of the underlying precious metal raw material. The total notional amount of commodity contracts outstanding as of July 28, 2012 was $197.5 million (January 28, 2012 and July 30, 2011: $211.2 million and $195.5 million, respectively). These contracts have been designated as cash flow hedges and will be settled over the next 16 months (January 28, 2012 and July 30, 2011: 12 months and 18 months, respectively).
For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings in the same period in which the hedged item affects net income or loss. Gains and losses on derivatives that do not qualify for hedge accounting, together with any hedge ineffectiveness, are recognized immediately in other operating income, net.
Foreign currency contracts not designated as cash flow hedges are used 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 bank counterparties to the derivative contracts 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 July 28, 2012, 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:
Derivative assets | ||||||||||||||||
Fair value | ||||||||||||||||
Balance sheet location |
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
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Derivatives designated as hedging instruments: |
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Foreign currency contracts |
Other current assets | 1.0 | 1.1 | — | ||||||||||||
Foreign currency contracts |
Other assets | 0.2 | 0.1 | — | ||||||||||||
Commodity contracts |
Other current assets | 3.1 | 16.1 | 20.8 | ||||||||||||
Commodity contracts |
Other assets | 0.1 | — | 1.9 | ||||||||||||
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Total derivative assets |
4.4 | 17.3 | 22.7 | |||||||||||||
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Derivative liabilities | ||||||||||||||||
Fair value | ||||||||||||||||
Balance sheet location |
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
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Derivatives designated as hedging instruments: |
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Foreign currency contracts |
Other current liabilities | (0.2 | ) | (0.2 | ) | (1.4 | ) | |||||||||
Foreign currency contracts |
Other liabilities | — | — | (0.1 | ) | |||||||||||
Commodity contracts |
Other current liabilities | (6.3 | ) | (1.0 | ) | — | ||||||||||
Commodity contracts |
Other liabilities | — | — | — | ||||||||||||
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(6.5 | ) | (1.2 | ) | (1.5 | ) | |||||||||||
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Derivatives not designated as hedging instruments: |
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Foreign currency contracts |
Other current liabilities | (1.3 | ) | — | (0.3 | ) | ||||||||||
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(1.3 | ) | — | (0.3 | ) | ||||||||||||
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Total derivative liabilities |
(7.8 | ) | (1.2 | ) | (1.8 | ) | ||||||||||
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The following tables summarize the effect of derivative instruments on the condensed consolidated income statements:
Amount of
gain/(loss) recognized in OCI on derivatives (Effective portion) |
Location of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
Amount of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
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July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
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Derivatives in cash flow hedging relationships: |
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Foreign currency contracts |
0.9 | 1.1 | Cost of sales | 0.1 | — | |||||||||||||||
Commodity contracts |
(2.1 | ) | 14.3 | Cost of sales | 5.8 | 3.4 | ||||||||||||||
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Total |
(1.2 | ) | 15.4 | 5.9 | 3.4 | |||||||||||||||
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Amount of gain/(loss) recognized in OCI on derivatives (Effective portion) |
Location of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
Amount of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
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26 weeks ended | 26 weeks ended | |||||||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
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Derivatives in cash flow hedging relationships: |
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Foreign currency contracts |
0.1 | (0.7 | ) | Cost of sales | 0.2 | (0.1 | ) | |||||||||||||
Commodity contracts |
(14.2 | ) | 33.1 | Cost of sales | 14.3 | 6.4 | ||||||||||||||
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Total |
(14.1 | ) | 32.4 | 14.5 | 6.3 | |||||||||||||||
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The ineffective portion of hedging instruments taken into other operating income, net in the 13 and 26 weeks ended July 28, 2012 was $0.0 million (13 and 26 weeks ended July 30, 2011: $0.4 million gain).
Amount of gain/(loss) recognized in income on derivatives |
Location of
gain/(loss) recognized in income on derivatives |
Amount of gain/(loss) recognized in income on derivatives |
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13 weeks ended | 26 weeks ended | |||||||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
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Derivatives not designated as hedging instruments: |
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Foreign currency contracts |
1.1 | 0.3 | Other operating income, net | 1.1 | 0.7 | |||||||||||||||
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Total |
1.1 | 0.3 | 1.1 | 0.7 | ||||||||||||||||
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Fair value
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:
July 28, 2012 $million |
January 28,
2012 $million |
July 30, 2011 $million |
||||||||||||||||||||||
Carrying Value |
Fair Value (Level 2) |
Carrying Value |
Fair Value (Level 2) |
Carrying Value |
Fair Value (Level 2) |
|||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Forward foreign currency contracts and swaps |
1.2 | 1.2 | 1.2 | 1.2 | 0.1 | 0.1 | ||||||||||||||||||
Forward commodity contracts |
3.2 | 3.2 | 16.1 | 16.1 | 22.7 | 22.7 | ||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||
Forward foreign currency contracts and swaps |
(1.5 | ) | (1.5 | ) | (0.2 | ) | (0.2 | ) | (1.8 | ) | (1.8 | ) | ||||||||||||
Forward commodity contracts |
(6.3 | ) | (6.3 | ) | (1.0 | ) | (1.0 | ) | — | — |
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, current foreign currency forward rates or current commodity forward rates. The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities approximate fair value because of the short-term maturity of these amounts.
|
9. Pensions
Signet operates a defined benefit pension plan in the UK (the “UK Plan”). The components of net periodic pension cost were as follows:
13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||
Components of net periodic pension cost: |
||||||||||||||||
Service cost |
0.9 | 1.1 | 1.8 | 2.5 | ||||||||||||
Interest cost |
2.3 | 2.7 | 4.7 | 5.4 | ||||||||||||
Expected return on UK Plan assets |
(2.8 | ) | (3.5 | ) | (5.7 | ) | (7.0 | ) | ||||||||
Amortization of unrecognized prior service credit |
(0.4 | ) | (0.3 | ) | (0.8 | ) | (0.5 | ) | ||||||||
Amortization of unrecognized actuarial loss |
0.8 | 0.7 | 1.6 | 1.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net periodic pension cost |
0.8 | 0.7 | 1.6 | 1.7 | ||||||||||||
|
|
|
|
|
|
|
|
In the 26 weeks ended July 28, 2012, Signet contributed $7.0 million to the UK Plan and expects to contribute a minimum aggregate of $13.7 million at current exchange rates to the UK Plan in Fiscal 2013. These contributions are in accordance with a deficit recovery plan that was in response to the funding deficit indicated by the April 5, 2009 actuarial valuation.
|
10. Commitments and contingencies
Legal proceedings
In March 2008, a group of private plaintiffs filed a class action lawsuit for an unspecified amount against Sterling Jewelers Inc. (“Sterling”), a subsidiary of Signet, in the U.S. District Court for the Southern District of New York alleging that US store-level employment practices are discriminatory as to compensation and promotional activities. In June 2008, the District Court referred the matter to private arbitration where the plaintiffs sought to proceed on a class-wide basis. In June 2009, the arbitrator ruled that the arbitration agreements allowed the plaintiff to proceed on a class-wide basis and attempt to seek class certification. Sterling challenged the ruling and the District Court vacated the arbitrator’s decision in July 2010. The plaintiffs appealed that order to the U.S. Court of Appeals for the Second Circuit. In July 2011, the Second Circuit reversed the District Court’s decision and instructed the District Court to confirm the Arbitrator’s Award (i.e., to allow the private plaintiff to move forward with a proposed class claim in arbitration). Sterling filed a petition for rehearing en banc of the Second Circuit panel’s decision, which was denied on September 6, 2011. Sterling appealed the Second Circuit’s decision to the U.S. Supreme Court on December 15, 2011, which was denied on March 19, 2012. The arbitration proceeding is in the early stages, and discovery is ongoing.
On September 23, 2008, the U.S. Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against Sterling in the U.S. District Court for the Western District of New York. The EEOC’s lawsuit alleges that Sterling engaged in a pattern or practice of 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. Discovery is now ongoing in the case.
Sterling denies the allegations of both parties and intends to defend these cases vigorously. At this point, no outcome or amount of loss is able to be estimated.
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 or not significant to Signet’s consolidated financial position.
|
12. Loans, overdrafts and long-term debt
In May 2011, Signet entered into a $400 million senior unsecured multi-currency five year revolving credit facility agreement (the “Credit Facility”). The Credit Facility replaced Signet’s previous revolving credit facility (the “2008 Facility”), which was due to expire in June 2013. The Credit Facility contains an expansion option that, with the consent of the lenders or the addition of new lenders, and subject to certain conditions, availability under the Credit Facility may be increased by an additional $200 million at the request of Signet. The Credit Facility has a five year term and matures in May 2016, at which time all amounts outstanding under the Credit Facility will be due and payable. The Credit Facility also contains various customary representations and warranties, financial reporting requirements and other affirmative and negative covenants. The Credit Facility requires that Signet maintain at all times a “Leverage Ratio” (as defined in the Credit Facility) to be no greater than 2.50 to 1.00 and a “Fixed Charge Coverage Ratio” (as defined in the Credit Facility) to be no less than 1.40 to 1.00, both determined as of the end of each fiscal quarter of Signet for the trailing twelve months.
At July 28, 2012, January 28, 2012, and July 30, 2011, there were no amounts outstanding under the Credit Facility, with no intra-period borrowings. Signet had stand-by letters of credit of $8.2 million, $8.2 million and $5.5 million as of July 28, 2012, January 28, 2012 and July 30, 2011, respectively.
|
Basis of preparation
Signet Jewelers Limited (“Signet” or the “Company”), including its subsidiaries, is a leading retailer of jewelry, watches and associated services. Signet manages its business as two geographical segments, the United States of America (the “US”) and the United Kingdom (the “UK”). The US division operates retail stores under brands including Kay Jewelers, Jared The Galleria Of Jewelry and various regional brands, while the UK division’s retail stores operate under brands including H.Samuel and Ernest Jones.
These condensed consolidated financial statements included herein have been 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 year ended January 28, 2012.
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 receivables, inventory and deferred revenue, fair value of derivatives, depreciation and asset impairment, the valuation of employee benefits, income taxes and contingencies.
Fiscal year
The Company’s fiscal year ends on the Saturday nearest to January 31st. Fiscal 2013 is the year ending February 2, 2013 and Fiscal 2012 is the year ended January 28, 2012. Within these financial statements, the second quarter and the year to date of the relevant fiscal years 2013 and 2012 refers to the 13 and 26 weeks ended July 28, 2012 and July 30, 2011, respectively.
Seasonality
Signet’s sales are seasonal, with the first and second quarters each normally accounting for slightly more than 20% of annual sales, the third quarter a little under 20% and the fourth quarter for about 40% of sales, with December being by far the most important month of the year. Sales made in November and December are known as the “Holiday Season.” Due to sales leverage, Signet’s operating income is even more seasonal; about 45% to 50% of operating income normally occurs in the fourth quarter, comprised of nearly all of the UK division’s and about 40% to 50% of the US division’s operating income.
New accounting pronouncements adopted during the period
Presentation of comprehensive income
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income” (ASU 2011-05). ASU 2011-05 eliminates the option to present components of other comprehensive income (“OCI”) as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under either method, adjustments must be displayed for items that are reclassified from OCI to net income, in either the other comprehensive income section of the comprehensive income statement or in the notes as US GAAP currently requires for annual reporting. The standard does not change the current option for presenting components of OCI gross or net of the effect of income taxes, provided that such tax effects are presented in the statement in which OCI is presented or disclosed in the notes to the financial statements. Additionally, the standard does not affect the calculation or reporting of earnings per share. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and is to be applied retrospectively, with early adoption permitted. Signet adopted this guidance effective for the first quarter ended April 28, 2012 and the implementation of this accounting pronouncement did not have any impact on Signet’s financial position or results of operations.
Fair value measurements and disclosures
In May 2011, the FASB issued ASU 2011-04, “Fair Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in US GAAP and International Financial Reporting Standards (“IFRS”).” FASB intends the new guidance to achieve common fair value measurement and disclosure requirements in US GAAP and IFRS. The amended guidance changes certain fair value measurement principles and enhances the disclosure requirements, particularly for Level 3 assets and liabilities for which Signet will be required to disclose quantitative information about the unobservable inputs used in fair value measurements. The amendments are to be applied prospectively and are effective for annual periods beginning after December 15, 2011. Signet adopted this guidance effective for the first quarter ended April 28, 2012 and the adoption of this amendment did not have did not have any impact on Signet’s financial position or results of operations.
Reclassification
Signet has reclassified the presentation of certain prior year information to conform to the current year presentation.
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13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||
Sales: |
||||||||||||||||
US |
701.9 | 643.0 | 1,453.4 | 1,381.0 | ||||||||||||
UK |
152.0 | 154.6 | 300.5 | 303.9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total sales |
853.9 | 797.6 | 1,753.9 | 1,684.9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating income/(loss): |
||||||||||||||||
US |
117.3 | 104.4 | 255.0 | 230.6 | ||||||||||||
UK |
(0.3 | ) | 2.8 | (3.3 | ) | 2.6 | ||||||||||
Unallocated(1) |
(6.1 | ) | (4.9 | ) | (11.4 | ) | (12.2 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating income |
110.9 | 102.3 | 240.3 | 221.0 | ||||||||||||
|
|
|
|
|
|
|
|
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
||||||||||
Total assets: |
||||||||||||
US |
2,683.8 | 2,747.5 | 2,506.8 | |||||||||
UK |
437.3 | 427.3 | 410.6 | |||||||||
Unallocated(1) |
197.9 | 436.6 | 330.1 | |||||||||
|
|
|
|
|
|
|||||||
Total assets |
3,319.0 | 3,611.4 | 3,247.5 | |||||||||
|
|
|
|
|
|
(1) | Unallocated principally relates to central costs and assets, which include corporate and general administrative functions. |
|
The exchange rates used in these financial statements for the translation of UK pound sterling transactions and balances into US dollars are as follows:
26 weeks ended July 28, 2012 |
52 weeks ended January 28, 2012 |
26 weeks ended July 30, 2011 |
||||||||||
Income statement (average rate) |
1.58 | 1.60 | 1.62 | |||||||||
Balance sheet (period end rate) |
1.58 | 1.57 | 1.64 |
|
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
||||||||||
Accounts receivable by portfolio segment, net: |
||||||||||||
US customer in-house finance receivables |
1,024.2 | 1,077.4 | 901.2 | |||||||||
Other accounts receivable |
8.0 | 10.8 | 5.6 | |||||||||
|
|
|
|
|
|
|||||||
Total accounts receivable, net |
1,032.2 | 1,088.2 | 906.8 | |||||||||
|
|
|
|
|
|
Allowance for Credit Losses on US Customer In-House Finance Receivables:
26 weeks ended July 28, 2012 $million |
52 weeks ended January 28, 2012 $million |
26 weeks ended July 30, 2011 $million |
||||||||||
Beginning balance |
(78.1 | ) | (67.8 | ) | (67.8 | ) | ||||||
Charge-offs |
49.5 | 92.8 | 40.3 | |||||||||
Recoveries |
11.1 | 19.3 | 9.9 | |||||||||
Provision |
(61.1 | ) | (122.4 | ) | (50.2 | ) | ||||||
|
|
|
|
|
|
|||||||
Ending balance |
(78.6 | ) | (78.1 | ) | (67.8 | ) | ||||||
Ending receivable balance evaluated for impairment |
1,102.8 | 1,155.5 | 969.0 | |||||||||
|
|
|
|
|
|
|||||||
US customer in-house finance receivables, net |
1,024.2 | 1,077.4 | 901.2 | |||||||||
|
|
|
|
|
|
Credit Quality Indicator and Age Analysis of Past Due US Customer In-House Finance Receivables:
July 28, 2012 |
January 28, 2012 |
July 30, 2011 |
||||||||||||||||||||||
Gross $million |
Valuation allowance $million |
Gross $million |
Valuation allowance $million |
Gross $million |
Valuation allowance $million |
|||||||||||||||||||
Performing: |
||||||||||||||||||||||||
Current, aged 0-30 days |
874.8 | (27.0 | ) | 932.6 | (28.9 | ) | 774.3 | (23.2 | ) | |||||||||||||||
Past due, aged 31-90 days |
183.1 | (6.7 | ) | 180.2 | (6.5 | ) | 154.7 | (4.6 | ) | |||||||||||||||
Non Performing: |
||||||||||||||||||||||||
Past due, aged more than 90 days |
44.9 | (44.9 | ) | 42.7 | (42.7 | ) | 40.0 | (40.0 | ) | |||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||
1,102.8 | (78.6 | ) | 1,155.5 | (78.1 | ) | 969.0 | (67.8 | ) | ||||||||||||||||
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|
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|
Deferred revenue is comprised primarily of extended service plans (“ESP”) and voucher promotions as follows:
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
||||||||||
ESP deferred revenue |
523.7 | 511.7 | 490.5 | |||||||||
Voucher promotions |
3.5 | 16.4 | 4.9 | |||||||||
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|
|||||||
Total deferred revenue |
527.2 | 528.1 | 495.4 | |||||||||
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|||||||
Disclosed as: |
||||||||||||
Current liabilities |
145.3 | 154.1 | 135.9 | |||||||||
Non-current liabilities |
381.9 | 374.0 | 359.5 | |||||||||
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|
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|
|
|
|||||||
Total deferred revenue |
527.2 | 528.1 | 495.4 | |||||||||
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|
|
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|
13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||
ESP deferred revenue, beginning of period |
520.7 | 491.0 | 511.7 | 481.1 | ||||||||||||
Plans sold |
44.4 | 38.4 | 94.2 | 86.6 | ||||||||||||
Revenues recognized |
(41.4 | ) | (38.9 | ) | (82.2 | ) | (77.2 | ) | ||||||||
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|
|
|
|
|
|
|||||||||
ESP deferred revenue, end of period |
523.7 | 490.5 | 523.7 | 490.5 | ||||||||||||
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|
The warranty reserve for diamond and gemstone guarantees provided by the US division, included in accrued expenses and other current liabilities, is as follows:
13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||
Warranty reserve, beginning of period |
15.1 | 13.1 | 15.1 | 13.0 | ||||||||||||
Warranty expense |
4.6 | 0.8 | 6.1 | 2.4 | ||||||||||||
Utilized |
(2.1 | ) | (1.2 | ) | (3.6 | ) | (2.7 | ) | ||||||||
|
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|
|
|
|
|
|||||||||
Warranty reserve, end of period |
17.6 | 12.7 | 17.6 | 12.7 | ||||||||||||
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|
|
|
|
|
|
|
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
||||||||||
Disclosed as: |
||||||||||||
Current liabilities |
6.7 | 5.9 | 5.0 | |||||||||
Non-current liabilities |
10.9 | 9.2 | 7.7 | |||||||||
|
|
|
|
|
|
|||||||
Total warranty reserve |
17.6 | 15.1 | 12.7 | |||||||||
|
|
|
|
|
|
|
The following table summarizes the fair value and presentation of derivative instruments in the condensed consolidated balance sheets:
Derivative assets | ||||||||||||||||
Fair value | ||||||||||||||||
Balance sheet location |
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||
Derivatives designated as hedging instruments: |
||||||||||||||||
Foreign currency contracts |
Other current assets | 1.0 | 1.1 | — | ||||||||||||
Foreign currency contracts |
Other assets | 0.2 | 0.1 | — | ||||||||||||
Commodity contracts |
Other current assets | 3.1 | 16.1 | 20.8 | ||||||||||||
Commodity contracts |
Other assets | 0.1 | — | 1.9 | ||||||||||||
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|
|
|
|
|
|||||||||||
Total derivative assets |
4.4 | 17.3 | 22.7 | |||||||||||||
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|||||||||||
Derivative liabilities | ||||||||||||||||
Fair value | ||||||||||||||||
Balance sheet location |
July 28, 2012 $million |
January 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||
Derivatives designated as hedging instruments: |
||||||||||||||||
Foreign currency contracts |
Other current liabilities | (0.2 | ) | (0.2 | ) | (1.4 | ) | |||||||||
Foreign currency contracts |
Other liabilities | — | — | (0.1 | ) | |||||||||||
Commodity contracts |
Other current liabilities | (6.3 | ) | (1.0 | ) | — | ||||||||||
Commodity contracts |
Other liabilities | — | — | — | ||||||||||||
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|
|
|
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|||||||||||
(6.5 | ) | (1.2 | ) | (1.5 | ) | |||||||||||
|
|
|
|
|
|
|||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||||||
Foreign currency contracts |
Other current liabilities | (1.3 | ) | — | (0.3 | ) | ||||||||||
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|
|
|
|
|
|||||||||||
(1.3 | ) | — | (0.3 | ) | ||||||||||||
|
|
|
|
|
|
|||||||||||
Total derivative liabilities |
(7.8 | ) | (1.2 | ) | (1.8 | ) | ||||||||||
|
|
|
|
|
|
The methods Signet uses to determine fair value on an instrument-specific basis are detailed below:
July 28, 2012 $million |
January 28,
2012 $million |
July 30, 2011 $million |
||||||||||||||||||||||
Carrying Value |
Fair Value (Level 2) |
Carrying Value |
Fair Value (Level 2) |
Carrying Value |
Fair Value (Level 2) |
|||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Forward foreign currency contracts and swaps |
1.2 | 1.2 | 1.2 | 1.2 | 0.1 | 0.1 | ||||||||||||||||||
Forward commodity contracts |
3.2 | 3.2 | 16.1 | 16.1 | 22.7 | 22.7 | ||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||
Forward foreign currency contracts and swaps |
(1.5 | ) | (1.5 | ) | (0.2 | ) | (0.2 | ) | (1.8 | ) | (1.8 | ) | ||||||||||||
Forward commodity contracts |
(6.3 | ) | (6.3 | ) | (1.0 | ) | (1.0 | ) | — | — |
The following tables summarize the effect of derivative instruments on the condensed consolidated income statements:
Amount of
gain/(loss) recognized in OCI on derivatives (Effective portion) |
Location of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
Amount of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
||||||||||||||||||
13 weeks ended | 13 weeks ended | |||||||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||||||
Derivatives in cash flow hedging relationships: |
||||||||||||||||||||
Foreign currency contracts |
0.9 | 1.1 | Cost of sales | 0.1 | — | |||||||||||||||
Commodity contracts |
(2.1 | ) | 14.3 | Cost of sales | 5.8 | 3.4 | ||||||||||||||
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|
|
|
|
|
|
|
|||||||||||||
Total |
(1.2 | ) | 15.4 | 5.9 | 3.4 | |||||||||||||||
|
|
|
|
|
|
|
|
Amount of gain/(loss) recognized in OCI on derivatives (Effective portion) |
Location of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
Amount of gain/(loss) reclassified from accumulated OCI into income (Effective portion) |
||||||||||||||||||
26 weeks ended | 26 weeks ended | |||||||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||||||
Derivatives in cash flow hedging relationships: |
||||||||||||||||||||
Foreign currency contracts |
0.1 | (0.7 | ) | Cost of sales | 0.2 | (0.1 | ) | |||||||||||||
Commodity contracts |
(14.2 | ) | 33.1 | Cost of sales | 14.3 | 6.4 | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
(14.1 | ) | 32.4 | 14.5 | 6.3 | |||||||||||||||
|
|
|
|
|
|
|
|
The ineffective portion of hedging instruments taken into other operating income, net in the 13 and 26 weeks ended July 28, 2012 was $0.0 million (13 and 26 weeks ended July 30, 2011: $0.4 million gain).
Amount of gain/(loss) recognized in income on derivatives |
Location of
gain/(loss) recognized in income on derivatives |
Amount of gain/(loss) recognized in income on derivatives |
||||||||||||||||||
13 weeks ended | 26 weeks ended | |||||||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||||||
Derivatives not designated as hedging instruments: |
||||||||||||||||||||
Foreign currency contracts |
1.1 | 0.3 | Other operating income, net | 1.1 | 0.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total |
1.1 | 0.3 | 1.1 | 0.7 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
The components of net periodic pension cost were as follows:
13 weeks ended | 26 weeks ended | |||||||||||||||
July 28, 2012 $million |
July 30, 2011 $million |
July 28, 2012 $million |
July 30, 2011 $million |
|||||||||||||
Components of net periodic pension cost: |
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Service cost |
0.9 | 1.1 | 1.8 | 2.5 | ||||||||||||
Interest cost |
2.3 | 2.7 | 4.7 | 5.4 | ||||||||||||
Expected return on UK Plan assets |
(2.8 | ) | (3.5 | ) | (5.7 | ) | (7.0 | ) | ||||||||
Amortization of unrecognized prior service credit |
(0.4 | ) | (0.3 | ) | (0.8 | ) | (0.5 | ) | ||||||||
Amortization of unrecognized actuarial loss |
0.8 | 0.7 | 1.6 | 1.3 | ||||||||||||
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Net periodic pension cost |
0.8 | 0.7 | 1.6 | 1.7 | ||||||||||||
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