(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.) (Check one). date August 28, 2015 Financial Statements (Unaudited) Condensed Consolidated Statement of Legal Proceedings Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating income Interest expense, net Income before income taxes Income taxes Net income Earnings per share: basic diluted Weighted average common shares outstanding: basic diluted Dividends declared per share Net income Other comprehensive income (loss): Foreign currency translation adjustments Available-for-sale securities: Unrealized loss Cash flow hedges: Unrealized (loss) gain Reclassification adjustment for losses (gains) to net income Pension plan: Reclassification adjustment to net income for amortization of actuarial loss Reclassification adjustment to net income for amortization of net prior service credits Total other comprehensive income (loss) Total comprehensive income Net income Other comprehensive income (loss): Foreign currency translation adjustments Available-for-sale securities: Unrealized loss Cash flow hedges: Unrealized gain (loss) Reclassification adjustment for losses (gains) to net income Pension plan: Reclassification adjustment to net income for amortization of actuarial loss Reclassification adjustment to net income for amortization of net prior service credits Total other comprehensive income (loss) Total comprehensive income Assets Current assets: Cash and cash equivalents Accounts receivable, net Other receivables Other current assets Deferred tax assets Income taxes Inventories Total current assets Non-current assets: Property, plant and equipment, net of accumulated depreciation of $831.7, $788.1, and $750.1, respectively Goodwill Intangible assets, net of accumulated amortization of $2.4 Other assets Deferred tax assets Retirement benefit asset Total assets Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts Accounts payable Accrued expenses and other current liabilities Deferred revenue Deferred tax liabilities Income taxes Total current liabilities Non-current liabilities: Long-term debt Other liabilities Deferred revenue Deferred tax liabilities Total liabilities Commitments and contingencies Shareholders’ equity: Common shares of $0.18 par value: authorized 500 shares, 80.2 shares outstanding (February 1, 2014: 80.2 shares outstanding; August 3, 2013: 80.5 shares outstanding) Additional paid-in capital Other reserves Treasury shares at cost: 7.0 shares (February 1, 2014: 7.0 shares; August 3, 2013: 6.7 shares) Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Total liabilities and shareholders’ equity Cash flows from operating activities Net income Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization Amortization of unfavorable leases and contracts Pension benefit Share-based compensation Deferred taxation Excess tax benefit from exercise of share awards Amortization of debt discount and issuance costs Other non-cash movements Changes in operating assets and liabilities: (Increase) decrease in accounts receivable Increase in other receivables and other assets (Increase) decrease in other current assets Decrease (increase) in inventories Decrease in accounts payable Increase (decrease) in accrued expenses and other liabilities Increase (decrease) in deferred revenue Increase (decrease) in income taxes payable Pension plan contributions Effect of exchange rate changes on currency swaps Net cash provided by operating activities Investing activities Purchase of property, plant and equipment Purchase of available-for-sale securities Proceeds from sale of available-for-sale securities Acquisition of Ultra Stores, Inc. Acquisition of Zale Corporation, net of cash acquired Net cash used in investing activities Financing activities Dividends paid Proceeds from issuance of common shares Excess tax benefit from exercise of share awards Proceeds from term loan Proceeds from senior notes Proceeds from securitization facility Repayments of securitization facility Payment of debt issuance costs Repurchase of common shares Net settlement of equity based awards Principal payments under capital lease obligations (Repayment of) proceeds from short-term borrowings Net cash provided by (used in) financing activities Cash and cash equivalents at beginning of period Decrease in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period Balance at February 1, 2014 Net income Other comprehensive income (loss) Dividends Repurchase of common shares Net settlement of equity based awards Share options exercised Share-based compensation expense Balance at August 2, 2014 stones and unallocated corporate administrative functions. See Note 4 for additional discussion of the Company’s segments. year-ended January 31, 2015. asset impairments, as well as estimates utilized for the depreciation and amortization of long-lived assets and the accounting for business combinations. 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. years for plans sold on or after May 2, 2015 and 42% of revenue recognized within the first two years for plans sold prior to May 2, 2015 (January 31, 2015: 45%; August 2, 2014: 45%). position or results of operations. operations. Sales: Sterling Jewelers UK Jewelry Zale Jewelry Piercing Pagoda Other Total sales Operating income (loss): Sterling Jewelers UK Jewelry Zale Jewelry Piercing Pagoda Other Total operating income Total assets: Sterling Jewelers UK Jewelry Zale Jewelry Piercing Pagoda Other Total assets Net income Basic weighted average number of shares outstanding Dilutive effect of share awards Diluted weighted average number of shares outstanding Earnings per share – basic Earnings per share – diluted Amount authorized 2013 Program(1) 2011 Program(2) Total First quarter(1) Second quarter Balance at February 1, 2014 OCI before reclassifications Amounts reclassified from accumulated OCI Net current-period OCI Balance at August 2, 2014 Income statement caption (Gains) losses on cash flow hedges: Foreign currency contracts Commodity contracts Total before income tax Net of tax Defined benefit pension plan items: Amortization of unrecognized net prior service credits Amortization of unrecognized actuarial loss Total before income tax Net of tax Total reclassifications Income statement caption (Gains) losses on cash flow hedges: Foreign currency contracts Commodity contracts Total before income tax Net of tax Defined benefit pension plan items: Amortization of unrecognized net prior service credits Amortization of unrecognized actuarial loss Total before income tax Net of tax Total reclassifications Accounts receivable by portfolio segment, net: Sterling Jewelers customer in-house finance receivables Other accounts receivable Total accounts receivable, net Beginning balance Charge-offs Recoveries Provision expense Ending balance Ending receivable balance evaluated for impairment Sterling Jewelers’ customer in-house finance receivables, net receivables is shown below: Performing: Current, aged 0-30 days Past due, aged 31-90 days Non Performing: Past due, aged more than 90 days Performing Non Performing Raw materials Finished goods Total inventories Balance at February 2, 2013 Acquisitions(1) Balance at February 1, 2014 Acquisitions(1) Balance at August 2, 2014 Definite-lived intangible assets Trade names Favorable leases Total definite-lived intangible assets Indefinite-lived trade names Total intangible assets, net Deferred extended service plan costs Investments(1) Other assets Total other assets Sterling Jewelers ESP deferred revenue Zale ESP deferred revenue Voucher promotions and other Total deferred revenue Presented as: Current liabilities Non-current liabilities Total deferred revenue Sterling Jewelers ESP deferred revenue, beginning of period Plans sold Revenues recognized Sterling Jewelers ESP deferred revenue, end of period Zale ESP deferred revenue, beginning of period Plans acquired Plans sold Revenues recognized Zale ESP deferred revenue, end of period Warranty reserve, beginning of period Warranty obligations acquired Warranty expense Utilized Warranty reserve, end of period Presented as: Current liabilities Non-current liabilities Total warranty reserve US Treasury securities US government agency securities Corporate bonds and notes Corporate equity securities Less than one year Year two through year five Year six through year ten After ten years Board. Signet does not enter into derivative transactions for trading purposes. 17. losses in AOCI remain deferred and are reclassified into earnings in the periods in which the hedged forecasted transaction affects earnings. Signet to mitigate certain risk exposures related to changes in commodity prices and foreign exchange rates: Derivatives designated as hedging instruments: Foreign currency contracts Foreign currency contracts Commodity contracts Commodity contracts Derivatives not designated as hedging instruments: Foreign currency contracts Total derivative assets Derivatives designated as hedging instruments: Foreign currency contracts Foreign currency contracts Commodity contracts Commodity contracts Derivatives not designated as hedging instruments: Foreign currency contracts Total derivative liabilities (in millions) Foreign currency contracts Commodity contracts Total (in millions) (Losses) gains recorded in accumulated OCI, beginning of period Current period gains (losses) recognized in OCI Losses (gains) reclassified from accumulated OCI to net income (Losses) gains recorded in accumulated OCI, end of period (in millions) (Losses) gains recorded in accumulated OCI, beginning of period Current period (losses) gains recognized in OCI Losses (gains) reclassified from accumulated OCI to net income (Losses) gains recorded in accumulated OCI, end of period months. Derivatives not designated as hedging instruments: Foreign currency contracts Total measurement Assets: US Treasury securities Corporate equity securities Foreign currency contracts Commodity contracts US government agency securities Corporate bonds and notes Liabilities: Foreign currency contracts Commodity contracts 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 Outstanding debt(1): Senior notes (Level 1) Securitization facility (Level 2) Term loan (Level 2) Capital lease obligations (Level 2) Total outstanding debt Pension plans Components of net periodic pension benefit (cost): Service cost Interest cost Expected return on UK Plan assets Amortization of unrecognized prior service credit Amortization of unrecognized actuarial loss Net periodic pension benefit (cost) Current liabilities – loans and overdrafts: Revolving credit facility Current portion of term loan Current portion of capital lease obligations Bank overdrafts Total loans and overdrafts Long-term debt: Senior notes, net of unamortized discount Securitization facility Term loan Capital lease obligations Total long-term debt Total loans, overdrafts and long-term debt facility. 2014, respectively). Payments received from customers for balances outstanding on securitized credit card receivables are utilized to repay amounts outstanding under the facility each period, while proceeds from the facility are received for incremental credit card receivables originated when the receivables are pledged to the Issuer. Such payments received from customers and proceeds from the facility are reflected on a gross basis in the condensed consolidated statements of cash flows. As of August 1, 2015, $600.0 million remained outstanding under the securitization facility with a weighted average interest rate of 1.54% through the second quarter of Fiscal 2016. 2014, respectively). (in millions except per share amounts) Cash consideration paid to Zale Corporation shareholders ($21 per share) Cash consideration paid for settlement of Zale Corporation stock options, restricted share awards and long term incentive plan awards Cash paid to extinguish Zale Corporation outstanding debt as of May 29, 2014 Total consideration transferred Cash and cash equivalents Inventories Other current assets Property, plant and equipment Intangible assets: Trade names Favorable leases Deferred tax assets Other assets Current liabilities(1) Deferred revenue Unfavorable leases Unfavorable contracts Deferred tax liabilities Other liabilities Fair value of net assets acquired Goodwill Total consideration transferred Pro forma sales Pro forma net income Pro forma earnings per share – basic Pro forma earnings per share – diluted 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 Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating (loss) income Intercompany interest income (expense) Interest expense, net (Loss) income before income taxes Income taxes Equity in income of subsidiaries Net income (loss) Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating (loss) income Intercompany interest income (expense) Interest expense, net (Loss) income before income taxes Income taxes Equity in income of subsidiaries Net income (loss) Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating (loss) income Intercompany interest (expense) income Interest expense, net (Loss) income before income taxes Income taxes Equity in income of subsidiaries Net income Condensed Consolidated Income Statement For the 26 week period ended August 3, 2013 (Unaudited) Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating (loss) income Intercompany interest (expense) income Interest expense, net (Loss) income before income taxes Income taxes Equity in income of subsidiaries Net income Net income Other comprehensive income (loss): Foreign currency translation adjustments Available-for-sale securities: Unrealized loss Cash flow hedges: Unrealized loss Reclassification adjustment for losses to net income Pension plan: Actuarial gain Reclassification adjustment to net income for amortization of actuarial loss Prior service benefit Reclassification adjustment to net income for amortization of prior service credits Total other comprehensive income Total comprehensive income (loss) Condensed Consolidated Statement of Comprehensive Income For the 26 week period ended August 2, 2014 (Unaudited) Net income Other comprehensive income (loss): Foreign currency translation adjustments Available-for-sale securities: Unrealized loss Cash flow hedges: Unrealized gain Reclassification adjustment for losses to net income Pension plan: Actuarial gain Reclassification adjustment to net income for amortization of actuarial loss Prior service benefit Reclassification adjustment to net income for amortization of prior service credits Total other comprehensive (loss) income Total comprehensive income (loss) Net income Other comprehensive income (loss): Foreign currency translation adjustments Cash flow hedges: Unrealized loss Reclassification adjustment for gains to net income Pension plan: Actuarial gain Reclassification adjustment to net income for amortization of actuarial loss Prior service benefit Reclassification adjustment to net income for amortization of prior service credits Total other comprehensive (loss) income Total comprehensive income Condensed Consolidated Statement of Comprehensive Income For the 26 week period ended August 3, 2013 (Unaudited) Net income Other comprehensive income (loss): Foreign currency translation adjustments Cash flow hedges: Unrealized loss Reclassification adjustment for gains to net income Pension plan: Actuarial gain Reclassification adjustment to net income for amortization of actuarial loss Prior service benefit Reclassification adjustment to net income for amortization of prior service credits Total other comprehensive (loss) income Total comprehensive income 1, 2015 Assets Current assets: Cash and cash equivalents Accounts receivable, net Intercompany receivables, net Other receivables Other current assets Deferred tax assets Income taxes Inventories Total current assets Non-current assets: Property, plant and equipment, net Goodwill Intangible assets, net Investment in subsidiaries Intercompany receivables, net Other assets Deferred tax assets Retirement benefit asset Total assets Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts Accounts payable Intercompany payables, net Accrued expenses and other current liabilities Deferred revenue Deferred tax liabilities Income taxes Total current liabilities Non-current liabilities: Long-term debt Intercompany payables, net Other liabilities Deferred revenue Deferred tax liabilities Total liabilities Total shareholders’ equity Total liabilities and shareholders’ equity Assets Current assets: Cash and cash equivalents Accounts receivable, net Intercompany receivables, net Other receivables Other current assets Deferred tax assets Income taxes Inventories Total current assets Non-current assets: Property, plant and equipment, net Investment in subsidiaries Intercompany receivables, net Other assets Deferred tax assets Retirement benefit asset Total assets Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts Accounts payable Intercompany payables, net Accrued expenses and other current liabilities Deferred revenue Deferred tax liabilities Income taxes Total current liabilities Non-current liabilities: Long-term debt Intercompany payables, net Other liabilities Deferred revenue Total liabilities Total shareholders’ equity Total liabilities and shareholders’ equity 2, 2014 Assets Current assets: Cash and cash equivalents Accounts receivable, net Intercompany receivables, net Other receivables Other current assets Deferred tax assets Income taxes Inventories Total current assets Non-current assets: Property, plant and equipment, net Investment in subsidiaries Intercompany receivables, net Other assets Deferred tax assets Retirement benefit asset Total assets Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts Accounts payable Intercompany payables, net Accrued expenses and other current liabilities Deferred revenue Deferred tax liabilities Income taxes Total current liabilities Non-current liabilities: Intercompany payables, net Deferred tax liabilities Other liabilities Deferred revenue Total liabilities Total shareholders’ equity Total liabilities and shareholders’ equity Cash flows from operating activities Other cash provided by operating activities Net cash provided by operating activities Investing activities Purchase of property, plant and equipment Investment in subsidiaries Purchase of available-for-sale securities Proceeds from available-for-sale securities Acquisition of Zale Corporation, net of cash acquired Net cash (used in) provided by investing activities Financing activities Dividends paid Intercompany dividends paid Proceeds from issuance of common shares Excess tax benefit from exercise of share awards Proceeds from long-term debt Payment of debt issuance costs Repurchase of common shares Net settlement of equity based awards Capital lease payments Repayment of short-term borrowings Intercompany activity, net Net cash (used in) provided by financing activities Cash and cash equivalents at beginning of period (Decrease) increase in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period Cash flows from operating activities Other cash provided by operating activities Net cash provided by operating activities Investing activities Purchase of property, plant and equipment Investment in subsidiaries Purchase of available-for-sale securities Proceeds from available-for-sale securities Acquisition of Zale Corporation, net of cash acquired Net cash (used in) provided by investing activities Financing activities Dividends paid Intercompany dividends paid Proceeds from issuance of common shares Excess tax benefit from exercise of share awards Proceeds from long-term debt Payment of debt issuance costs Repurchase of common shares Net settlement of equity based awards Capital lease payments Repayment of short-term borrowings Intercompany activity, net Net cash (used in) provided by financing activities Cash and cash equivalents at beginning of period (Decrease) increase in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period Cash flows from operating activities Other cash provided by (used in) operating activities Net cash provided by (used in) operating activities Investing activities Purchase of property, plant and equipment Investment in subsidiaries Acquisition of Ultra Stores, Inc. Net cash used in investing activities Financing activities Dividends paid Intercompany dividends paid Proceeds from issuance of common shares Excess tax benefit from exercise of share awards Repurchase of common shares Net settlement of equity based awards Repayment of short-term borrowings Intercompany activity, net Net cash used in financing activities Cash and cash equivalents at beginning of period Decrease in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period Cash flows from operating activities Other cash provided by operating activities Net cash provided by operating activities Investing activities Purchase of property, plant and equipment Investment in subsidiaries Acquisition of Ultra Stores, Inc. Net cash used in investing activities Financing activities Dividends paid Intercompany dividends paid Proceeds from issuance of common shares Excess tax benefit from exercise of share awards Repurchase of common shares Net settlement of equity based awards Proceeds from short-term borrowings Intercompany activity, net Net cash used in financing activities Cash and cash equivalents at beginning of period Decrease in cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period follows: The division also operates a variety of mall-based regional brands. consists of two reportable segments: additional information regarding the Company's operating segments. The Zale Acquisition that closed on May 29, 2014, as described in Note Certain Zale Acquisition financing as described in Certain non-recurring purchase accounting Sales by division: Sterling Jewelers division UK Jewelry division Zale division Other Total sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating income (loss): Sterling Jewelers division UK Jewelry division Zale division Other(2) Total operating income Interest expense, net Income before income taxes Income taxes Net income Earnings per share – basic Earnings per share – diluted Sales by division: Sterling Jewelers division UK Jewelry division Zale division Other Total sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating income (loss): Sterling Jewelers division UK Jewelry division Zale division Other(2) Total operating income Interest expense, net Income before income taxes Income taxes Net income Earnings per share – basic Earnings per share – diluted Cash and cash equivalents Loans and overdrafts Long-term debt Net (debt)/cash Net cash provided by operating activities Purchase of property, plant and equipment, net Free cash flow Operating income Depreciation and amortization on property, plant and equipment Amortization of definite lived intangibles Amortization of unfavorable leases and contracts Other non-cash accounting adjustments EBITDA one-time transaction and severance related costs. Second quarter of Fiscal 2015 (in millions, except per share amounts) Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating income (loss) Interest expense, net Income before income taxes Income taxes Net income (loss) Earnings per share – diluted Second quarter of Fiscal 2015 (% of sales) Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating income Interest expense, net Income before income taxes Income taxes Net income Year to date Fiscal 2015 (in millions, except per share amounts) Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating income (loss) Interest expense, net Income before income taxes Income taxes Net income (loss) Earnings per share – diluted Year to date Fiscal 2015 (% of sales) Sales Cost of sales Gross margin Selling, general and administrative expenses Other operating income, net Operating income Interest expense, net Income before income taxes Income taxes Net income FORM 10-QFORM 10-Q x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended August 2, 2014 orfor the quarterly period ended August 1, 2015 or ¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 File Numberfile number 1-32349Signet Jewelers Limited(Exact name of Registrant as specified in its charter)Bermuda Not Applicable Large accelerated filerxAccelerated filer¨Non-accelerated filer¨ Smaller reporting company¨Exchange Act). Yes ¨ No xdate.80,215,00379,592,007 shares as of September 5, 2014 PAGENUMBER PART I 1PAGE Item 1 1 1PART I FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Income Statements Condensed Consolidated Statements of Comprehensive Income 2 3 4 Shareholders’Shareholders' Equity 5 6 Item 2 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 39 Item 3 58 Item 4 58 PART II 59Item 1 59 Item 1A OTHER INFORMATION 59 Item 2 ITEM 1A. Risk Factors ITEM 2. Unregistered Sales of Equity and Securities and Use of Proceeds 62 Item 6 63 13 weeks ended 26 weeks ended (in millions, except per share amounts) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 Notes $ 1,225.9 $ 880.2 $ 2,282.0 $ 1,873.8 2 (816.9 ) (570.5 ) (1,465.8 ) (1,181.3 ) 409.0 309.7 816.2 692.5 (379.2 ) (250.5 ) (689.7 ) (537.5 ) 53.7 46.3 107.7 93.3 83.5 105.5 234.2 248.3 2 (13.7 ) (1.0 ) (15.5 ) (1.9 ) 69.8 104.5 218.7 246.4 (11.8 ) (37.1 ) (64.1 ) (87.2 ) 4 $ 58.0 $ 67.4 $ 154.6 $ 159.2 $ 0.73 $ 0.84 $ 1.93 $ 1.98 5 $ 0.72 $ 0.84 $ 1.93 $ 1.97 5 79.9 80.3 79.9 80.6 5 80.2 80.7 80.2 81.0 5 $ 0.18 $ 0.15 $ 0.36 $ 0.30 6 13 weeks ended 26 weeks ended (in millions, except per share amounts) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Notes Sales $ 1,410.6 $ 1,225.9 $ 2,941.2 $ 2,282.0 4 Cost of sales (919.8 ) (816.9 ) (1,884.5 ) (1,465.8 ) Gross margin 490.8 409.0 1,056.7 816.2 Selling, general and administrative expenses (452.8 ) (379.2 ) (906.0 ) (689.7 ) Other operating income, net 62.8 53.7 126.3 107.7 Operating income 100.8 83.5 277.0 234.2 4 Interest expense, net (11.1 ) (13.7 ) (22.1 ) (15.5 ) Income before income taxes 89.7 69.8 254.9 218.7 Income taxes (27.5 ) (11.8 ) (73.9 ) (64.1 ) 8 Net income $ 62.2 $ 58.0 $ 181.0 $ 154.6 Earnings per share: basic $ 0.78 $ 0.73 $ 2.27 $ 1.93 5 diluted $ 0.78 $ 0.72 $ 2.26 $ 1.93 5 Weighted average common shares outstanding: basic 79.7 79.9 79.8 79.9 5 �� diluted 79.9 80.2 80.0 80.2 5 Dividends declared per share $ 0.22 $ 0.18 $ 0.44 $ 0.36 6 13 weeks ended August 2, 2014 August 3, 2013 (in millions) Pre-tax
amount Tax
(Expense)
Benefit After-tax
amount Pre-tax
amount Tax
(Expense)
Benefit After-tax
amount $ 58.0 $ 67.4 $ (2.3 ) $ — (2.3 ) $ (5.2 ) $ — (5.2 ) (0.2 ) — (0.2 ) — — — (0.2 ) 0.1 (0.1 ) (8.6 ) 3.2 (5.4 ) 5.1 (1.7 ) 3.4 — (0.1 ) (0.1 ) 0.5 (0.1 ) 0.4 0.5 (0.1 ) 0.4 (0.5 ) 0.1 (0.4 ) (0.3 ) 0.1 (0.2 ) $ 2.4 $ (1.6 ) $ 0.8 $ (13.6 ) $ 3.1 $ (10.5 ) $ 58.8 $ 56.9 26 weeks ended August 2, 2014 August 3, 2013 (in millions) Pre-tax
amount Tax
(Expense)
Benefit After-tax
amount Pre-tax
amount Tax
(Expense)
Benefit After-tax
amount $ 154.6 $ 159.2 $ 7.3 $ — 7.3 $ (7.0 ) $ — (7.0 ) (0.2 ) — (0.2 ) — — — 0.5 (0.3 ) 0.2 (26.1 ) 9.3 (16.8 ) 12.5 (4.4 ) 8.1 (1.0 ) 0.3 (0.7 ) 1.0 (0.2 ) 0.8 1.1 (0.2 ) 0.9 (0.9 ) 0.2 (0.7 ) (0.7 ) 0.1 (0.6 ) $ 20.2 $ (4.7 ) $ 15.5 $ (33.7 ) $ 9.5 $ (24.2 ) $ 170.1 $ 135.0 13 weeks ended August 1, 2015 August 2, 2014 (in millions) Pre-tax
amount Tax
(expense)
benefit After-tax
amount Pre-tax
amount Tax
(expense)
benefit After-tax
amountNet income $ 62.2 $ 58.0 Other comprehensive income (loss): Foreign currency translation adjustments $ (4.7 ) $ — (4.7 ) $ (2.3 ) $ — (2.3 ) Available-for-sale securities: Unrealized loss on securities, net (0.2 ) — (0.2 ) (0.2 ) — (0.2 ) Cash flow hedges: Unrealized (loss) gain (8.1 ) 2.6 (5.5 ) (0.2 ) 0.1 (0.1 ) Reclassification adjustment of losses to net income 1.1 (0.3 ) 0.8 5.1 (1.7 ) 3.4 Pension plan: Reclassification adjustment to net income for amortization of actuarial loss 0.9 (0.2 ) 0.7 0.5 (0.1 ) 0.4 Reclassification adjustment to net income for amortization of prior service (credits) costs (0.6 ) 0.1 (0.5 ) (0.5 ) 0.1 (0.4 ) Total other comprehensive income (loss) $ (11.6 ) $ 2.2 $ (9.4 ) $ 2.4 $ (1.6 ) $ 0.8 Total comprehensive income $ 52.8 $ 58.8 26 weeks ended August 1, 2015 August 2, 2014 (in millions) Pre-tax
amount Tax
(expense)
benefit After-tax
amount Pre-tax
amount Tax
(expense)
benefit After-tax
amountNet income $ 181.0 $ 154.6 Other comprehensive income (loss): Foreign currency translation adjustments $ 2.8 $ — 2.8 $ 7.3 $ — 7.3 Available-for-sale securities: Unrealized loss on securities, net (0.3 ) — (0.3 ) (0.2 ) — (0.2 ) Cash flow hedges: Unrealized (loss) gain (17.2 ) 5.8 (11.4 ) 0.5 (0.3 ) 0.2 Reclassification adjustment of losses to net income 1.8 (0.5 ) 1.3 12.5 (4.4 ) 8.1 Pension plan: Reclassification adjustment to net income for amortization of actuarial loss 1.7 (0.3 ) 1.4 1.0 (0.2 ) 0.8 Reclassification adjustment to net income for amortization of prior service credits (1.1 ) 0.2 (0.9 ) (0.9 ) 0.2 (0.7 ) Total other comprehensive income (loss) $ (12.3 ) $ 5.2 $ (7.1 ) $ 20.2 $ (4.7 ) $ 15.5 Total comprehensive income $ 173.9 $ 170.1 (in millions, except per share data) August 2,
2014 February 1,
2014 August 3,
2013 Notes $ 215.0 $ 247.6 $ 212.9 1,316.0 1,374.0 1,152.1 8 54.1 51.5 43.0 120.5 87.0 79.2 11 2.3 3.0 2.3 15.5 6.5 12.8 2,345.3 1,488.0 1,417.7 9 4,068.7 3,257.6 2,920.0 627.8 487.6 434.9 551.9 26.8 23.2 10 467.6 — — 10 133.0 87.2 84.2 11 84.4 113.7 127.3 61.3 56.3 50.7 $ 5,994.7 $ 4,029.2 $ 3,640.3 2 $ 31.2 $ 19.3 $ 1.7 19 235.0 162.9 130.3 422.1 328.5 259.7 13 211.1 173.0 154.6 12 218.9 113.1 140.8 55.4 103.9 46.9 1,173.7 900.7 734.0 1,379.1 — — 19 235.4 121.7 114.6 520.4 443.7 418.4 12 2.2 — 0.7 3,310.8 1,466.1 1,267.7 17 15.7 15.7 15.7 262.5 258.8 249.3 0.4 0.4 0.4 6 (367.0 ) (346.2 ) (321.8 ) 6 2,935.3 2,812.9 2,628.9 (163.0 ) (178.5 ) (199.9 ) 7 2,683.9 2,563.1 2,372.6 $ 5,994.7 $ 4,029.2 $ 3,640.3 (in millions, except par value per share amount) August 1, 2015 January 31, 2015 August 2, 2014 Notes Assets Current assets: Cash and cash equivalents $ 159.8 $ 193.6 $ 215.0 Accounts receivable, net 1,493.2 1,567.6 1,316.0 9 Other receivables 55.2 63.6 54.1 Other current assets 126.8 137.2 120.5 Deferred tax assets 4.3 4.5 2.3 Income taxes 3.0 1.8 15.5 Inventories 2,414.2 2,439.0 2,345.3 10 Total current assets 4,256.5 4,407.3 4,068.7 Non-current assets: Property, plant and equipment, net of accumulated depreciation of $915.1, $852.1 and $831.7, respectively 685.1 665.9 627.8 Goodwill 517.6 519.2 551.9 11 Intangible assets, net 437.8 447.1 467.6 11 Other assets 145.4 140.0 133.0 12 Deferred tax assets 129.0 111.1 84.4 Retirement benefit asset 40.4 37.0 61.3 16 Total assets $ 6,211.8 $ 6,327.6 $ 5,994.7 Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts $ 82.0 $ 97.5 $ 31.2 17 Accounts payable 194.0 277.7 235.0 Accrued expenses and other current liabilities 453.1 482.4 422.1 Deferred revenue 230.2 248.0 211.1 18 Deferred tax liabilities 172.4 145.8 218.9 Income taxes 5.8 86.9 55.4 Total current liabilities 1,137.5 1,338.3 1,173.7 Non-current liabilities: Long-term debt 1,348.7 1,363.8 1,379.1 17 Other liabilities 226.2 230.2 235.4 Deferred revenue 607.0 563.9 520.4 18 Deferred tax liabilities 20.2 21.0 2.2 Total liabilities 3,339.6 3,517.2 3,310.8 Commitments and contingencies 21 Shareholders’ equity: Common shares of $0.18 par value: authorized 500 shares, 79.7 shares outstanding (January 31, 2015: 80.3 outstanding; August 2, 2014: 80.2 outstanding) 15.7 15.7 15.7 Additional paid-in capital 269.7 265.2 262.5 Other reserves 0.4 0.4 0.4 Treasury shares at cost: 7.5 shares (January 31, 2015: 6.9 shares; August 2, 2014: 7.0 shares) (452.7 ) (370.0 ) (367.0 ) 6 Retained earnings 3,282.8 3,135.7 2,935.3 Accumulated other comprehensive loss (243.7 ) (236.6 ) (163.0 ) 7 Total shareholders’ equity 2,872.2 2,810.4 2,683.9 Total liabilities and shareholders’ equity $ 6,211.8 $ 6,327.6 $ 5,994.7 13 weeks ended 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 58.0 $ 67.4 $ 154.6 $ 159.2 36.5 25.5 64.5 51.1 (5.9 ) — (5.9 ) — (0.6 ) (0.1 ) (1.2 ) (0.2 ) 4.0 3.5 7.2 6.5 (13.6 ) (4.4 ) (4.2 ) (2.5 ) — (4.5 ) (7.7 ) (4.5 ) 4.5 0.1 5.5 0.2 0.7 (0.7 ) 0.1 (0.9 ) (7.9 ) 5.2 58.3 52.8 (2.3 ) (4.4 ) (4.0 ) (9.9 ) (23.2 ) (0.5 ) (22.7 ) 4.0 37.0 (2.7 ) 17.1 (57.4 ) (24.7 ) (47.6 ) (28.9 ) (29.3 ) 23.9 (5.8 ) (19.0 ) (57.1 ) 6.1 (0.4 ) 21.0 7.6 19.5 (15.8 ) (48.5 ) (58.2 ) (1.1 ) (1.0 ) (2.2 ) (2.8 ) (0.5 ) (0.4 ) (0.1 ) (0.1 ) 110.4 13.4 183.9 58.5 (61.9 ) (30.4 ) (90.0 ) (53.6 ) (1.2 ) — (1.2 ) — 1.0 — 1.0 — — 1.4 — 1.4 (1,429.2 ) — (1,429.2 ) — (1,491.3 ) (29.0 ) (1,519.4 ) (52.2 ) (14.4 ) (12.1 ) (26.4 ) (21.9 ) 1.0 0.2 2.0 5.2 — 4.5 7.7 4.5 400.0 — 400.0 — 398.4 — 398.4 — 930.6 — 930.6 — (330.6 ) — (330.6 ) — (15.4 ) — (18.4 ) — (11.0 ) (25.0 ) (22.4 ) (75.1 ) 0.2 0.1 (15.1 ) (9.0 ) (0.2 ) — (0.2 ) — (11.7 ) (4.0 ) (22.2 ) 1.7 1,346.9 (36.3 ) 1,303.4 (94.6 ) 249.1 263.7 247.6 301.0 (34.0 ) (51.9 ) (32.1 ) (88.3 ) (0.1 ) 1.1 (0.5 ) 0.2 $ 215.0 $ 212.9 $ 215.0 $ 212.9 13 weeks ended 26 weeks ended (in millions) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Cash flows from operating activities: Net income $ 62.2 $ 58.0 $ 181.0 $ 154.6 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 42.7 36.5 84.5 64.5 Amortization of unfavorable leases and contracts (8.8 ) (5.9 ) (17.6 ) (5.9 ) Pension benefit — (0.6 ) — (1.2 ) Share-based compensation 3.8 4.0 7.1 7.2 Deferred taxation 7.0 (13.6 ) 13.9 (4.2 ) Excess tax benefit from exercise of share awards — — (5.1 ) (7.7 ) Amortization of debt discount and issuance costs 0.7 4.5 1.6 5.5 Other non-cash movements (0.2 ) 0.7 2.0 0.1 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 7.0 (7.9 ) 74.7 58.3 Increase in other receivables and other assets (6.3 ) (2.3 ) (0.5 ) (4.0 ) Decrease (increase) in other current assets 6.5 (23.5 ) 4.8 (22.8 ) Decrease in inventories 72.1 37.0 28.4 17.1 Decrease in accounts payable (61.8 ) (24.7 ) (80.8 ) (28.9 ) Increase (decrease) in accrued expenses and other liabilities 42.5 23.7 (28.6 ) (19.0 ) (Decrease) increase in deferred revenue (3.7 ) 6.1 24.0 21.0 (Decrease) increase in income taxes payable (19.4 ) 19.5 (77.3 ) (48.5 ) Pension plan contributions (0.7 ) (1.1 ) (1.5 ) (2.2 ) Net cash provided by operating activities 143.6 110.4 210.6 183.9 Investing activities Purchase of property, plant and equipment (56.0 ) (61.9 ) (98.9 ) (90.0 ) Purchase of available-for-sale securities (0.5 ) (1.2 ) (1.9 ) (1.2 ) Proceeds from sale of available-for-sale securities 0.1 1.0 3.6 1.0 Acquisition of Zale Corporation, net of cash acquired — (1,429.2 ) — (1,429.2 ) Net cash used in investing activities (56.4 ) (1,491.3 ) (97.2 ) (1,519.4 ) Financing activities Dividends paid (17.7 ) (14.4 ) (32.1 ) (26.4 ) Proceeds from issuance of common shares 0.1 1.0 0.2 2.0 Excess tax benefit from exercise of share awards — — 5.1 7.7 Proceeds from senior notes — 398.4 — 398.4 Proceeds from term loan — 400.0 — 400.0 Repayments of term loan (5.0 ) — (10.0 ) — Proceeds from securitization facility 558.1 930.6 1,196.3 930.6 Repayments of securitization facility (558.1 ) (330.6 ) (1,196.3 ) (330.6 ) Payment of debt issuance costs — (15.4 ) — (18.4 ) Repurchase of common shares (62.8 ) (11.0 ) (81.9 ) (22.4 ) Net settlement of equity based awards 0.4 0.2 (8.3 ) (15.1 ) Principal payments under capital lease obligations (0.3 ) (0.2 ) (0.6 ) (0.2 ) Repayment of short-term borrowings 35.0 (11.7 ) (20.0 ) (22.2 ) Net cash (used in) provided by financing activities (50.3 ) 1,346.9 (147.6 ) 1,303.4 Cash and cash equivalents at beginning of period 122.6 249.1 193.6 247.6 Increase (decrease) in cash and cash equivalents 36.9 (34.0 ) (34.2 ) (32.1 ) Effect of exchange rate changes on cash and cash equivalents 0.3 (0.1 ) 0.4 (0.5 ) Cash and cash equivalents at end of period $ 159.8 $ 215.0 $ 159.8 $ 215.0 STATEMENTSTATEMENTS OF SHAREHOLDERS’ EQUITY(in millions) Common
shares at
par value Additional
paid-in
capital Other
reserves Treasury
shares Retained
earnings Accumulated
other
comprehensive
loss Total
shareholders’
equity $ 15.7 $ 258.8 $ 0.4 $ (346.2 ) $ 2,812.9 $ (178.5 ) $ 2,563.1 — — — — 154.6 — 154.6 — — — — — 15.5 15.5 — — — — (28.8 ) — (28.8 ) — — — (22.4 ) — — (22.4 ) — (3.4 ) — (0.8 ) (3.2 ) — (7.4 ) — (0.1 ) — 2.4 (0.2 ) — 2.1 — 7.2 — — — — 7.2 $ 15.7 $ 262.5 $ 0.4 $ (367.0 ) $ 2,935.3 $ (163.0 ) $ 2,683.9 (in millions) Common
shares at
par value Additional
paid-in
capital Other
reserves Treasury
shares Retained
earnings Accumulated
other
comprehensive
(loss) income Total
shareholders’
equityBalance at January 31, 2015 $ 15.7 $ 265.2 $ 0.4 $ (370.0 ) $ 3,135.7 $ (236.6 ) $ 2,810.4 Net income — — — — 181.0 — 181.0 Other comprehensive income — — — — — (7.1 ) (7.1 ) Dividends — — — — (35.2 ) — (35.2 ) Repurchase of common shares — — — (81.9 ) — — (81.9 ) Net settlement of equity based awards — (2.6 ) — (1.1 ) 1.4 — (2.3 ) Share options exercised — — — 0.3 (0.1 ) — 0.2 Share-based compensation expense — 7.1 — — — — 7.1 Balance at August 1, 2015 $ 15.7 $ 269.7 $ 0.4 $ (452.7 ) $ 3,282.8 $ (243.7 ) $ 2,872.2 PrincipalOrganization and principal accounting policies and basis of preparationBasis of preparation, or the “Company”) is, a holding company incorporated in Bermuda, thatis the world's largest retailer of diamond jewelry. The Company operates through its subsidiaries.100% owned subsidiaries with sales primarily in the US, UK and Canada. Signet is a leading retailer whose results are principally derived from one business segment – the retailing of jewelry, watches and associated services.On May 29, 2014, the Company completed the acquisition of Zale Corporation (“the Acquisition”) (see Note 20 for further information). Prior to the Acquisition, the Company managedmanages its business as two geographicalfive reportable segments, beingsegments: the United StatesSterling Jewelers division, the Zale division, which consists of America (the “US”)Zale Jewelry and Piercing Pagoda, the UK Jewelry division and the United Kingdom (the “UK”) divisions. In connection with the Acquisition, the Company will no longer report its segments geographically, but by store brand grouping. Other reportable segment.former USSterling Jewelers division operates retail stores in all 50 US states in malls, outlets and off-mall locations under brands including Kay Jewelers, Kay Jewelers Outlet, Jared The Galleria Of Jewelry, Jared Vault and various mall-based regional brands. The Zale division primarily operates in shopping malls throughout the US, Canada and Puerto Rico. Zale Jewelry retail stores operate under brands including Zales Jewelers, Zales Outlet, Peoples Jewellers and various regional brands, and will be known as Sterling Jewelers division (“Sterling Jewelers”).while Piercing Pagoda operates through mall-based kiosks. The former UK division’sJewelry division's retail stores operate in major regional shopping malls and off-mall "high street" locations (main shopping thoroughfares with high pedestrian traffic) under brands including H.Samuel and Ernest Jones. In connection with the Acquisition, the former UK division will be known as UK Jewelry division (“UK Jewelry”).In connection with the Acquisition, the Zale division (“Zale”) was added, consisting of two newThe Other reportable segments: Zale Jewelry (“Zale Jewelry”) and Piercing Pagoda (“Piercing Pagoda”). Zale Jewelry is comprised of three core national brands, Zales Jewelers, Zales Outlet and Peoples Jewellers and two regional brands, Gordon’s Jewelers and Mappins Jewellers. Each brand specializes in fine jewelry and watches, with merchandise and marketing emphasis focused on diamond products. Zales Jewelers is the national brand in the US providing moderately priced jewelry to a broad range of customers. Zales Outlet operates in outlet malls and neighborhood power centers and capitalizes on Zales Jewelers’ national marketing and brand recognition. Gordon’s Jewelers is a value-oriented regional jeweler. Peoples Jewellers is Canada’s largest fine jewelry retailer. Mappins Jewellers offers customers classic fine jewelry also in Canada. Piercing Pagoda operates mall-based kiosks focused on the opening price point customer. Piercing Pagoda specializes in gold, silver and non-precious metal products that capitalize on the latest fashion trends.In the fourth quarter of Fiscal 2014, subsequent to the November 4, 2013 acquisition of a diamond polishing factory in Gaborone, Botswana, management established a separate operating segment (“Other”), which consists of all non-reportable segments, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones.year ended February 1, 2014.inventory andinventories, deferred revenue, fair value of derivatives, depreciation and asset impairment, the valuation of employee benefits, income taxes, contingencies, and contingencies.20152016 is the 52 week year ending January 31, 201530, 2016 and Fiscal 2014 is2015 was the 52 week year ended February 1, 2014.January 31, 2015. Within these condensed consolidated financial statements, the second quarter and year to date of the relevant fiscal years 20152016 and 20142015 refer to the 13 and 26 weeks ended August 1, 2015 and August 2, 2014, respectively.August 3, 2013, respectively.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)SeasonalitySignet’s sales are seasonal, with the first quarter slightly exceeding 20%operating results of annual sales, the second and third quarters 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. 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 55% of Signet’s operating income normally occurs in the fourth quarter, comprised of nearly all ofcertain foreign operations, including the UK Jewelry division and Zale divisions’ operating income and about 40% to 45%the Canadian operations of the Sterling Jewelers division’s operating income.Signetadverselymaterially impact revenues. All direct costs associated with the sale of these plans are deferred and amortized in proportion to the revenue recognized and disclosed as either other current assets or other assets. where it is obliged, subject to certain conditions, to perform repair work over the lifetimelife of the product. Revenue from the sale of these lifetime extended service plans is recognized consistent with the estimated pattern of claim costs expected to be incurred by the Company in connection with performing under the extended service plan obligations. Based on an evaluation of historical claims data, management currently estimates that substantially all claims will be incurred within 17 years of the sale of the warranty contract.1417 years for all plans, with approximately 45%57% of revenue recognized within the first two years.years.years, with approximately 69% of revenue recognized within the first two years (January 31, 2015: 69%). Revenues related to the optional theft protection are deferred and recognized over the two-year contract period on a straight-line basis. Zale Jewelry customers are also offered a two-year watch warranty and a one-year warranty that covers breakage. Piercing Pagoda customers are also offered a one-year warranty that covers breakage. Revenue from the two-year watch warranty and one-year breakage warranty is recognized on a straight-line basis over the respective contract terms.GoodwillGoodwill representsThe Sterling Jewelers division also sells a Jewelry Replacement Plan (“JRP”). The JRP is designed to protect customers from damage or defects of purchased merchandise for a period of three years. If the excess ofpurchased merchandise is defective or becomes damaged under normal use in that time period, the purchase price of acquisitionsitem will be replaced. JRP revenue is deferred and recognized on a straight-line basis over the Company’s interestperiod of expected claims costs. fair valuecapacity of an agent on behalf of a third-party. The commission that Signet receives from the identifiable assets and liabilities acquired. Goodwillthird-party is recorded byrecognized at the Company’s reporting unitstime of sale less an estimate of cancellations based on historical experience.acquisitions made by each. Goodwill is not amortized, but is reviewed for impairment and is requiredpresentation of certain prior year amounts in the statement of cash flows to be tested at least annually or whenever events or changes in circumstances indicate it is more likely than not that a reporting unit’s fair value is less than its carrying value. The annual testing date for goodwill allocatedconform to the Sterling Jewelers reporting unit is the last daycurrent year presentation. adopted during the periodPresentation of unrecognized tax benefitIn July 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The new guidance requires, unless certain conditions exist, an unrecognized tax benefit to be presented as a reduction to a deferred tax asset in the financial statements for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. Signet adopted this guidance effective for the first quarter ended May 3, 2014 and the implementation of this accounting pronouncement did not have an impact on Signet’s condensed consolidated financial statements.adoption andadoption. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers-Deferral of the Effective Date.” The new guidance defers the effective date of ASU No. 2014-09 by one year. As a result, ASU No. 2014-09 is effective for fiscal years,annual periods, and interim periods within those years,annual periods, beginning after December 15, 2016. Early2017, with early adoption is not permitted.permitted for annual periods beginning after December 15, 2016, including interim periods within that annual period. Signet is currently assessing the impact, if any, as well as the available methods of implementation, that the adoption of this accounting pronouncement will have on its consolidatedthe Company's financial statements.thethat adoption of this accounting pronouncementguidance will have on its consolidatedthe Company's financial statements.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)ReclassificationSignet has reclassified the presentationposition or results of certain prior year information to conform to the current year presentation.2. Segment informationcompletedacquired 100% of the outstanding shares of Zale Corporation, making the entity a wholly-owned consolidated subsidiary of Signet (the "Zale Acquisition" or "Acquisition"). Under the terms of the Agreement and Plan of Merger, Zale Corporation shareholders received $21 per share in cash for each outstanding share of common stock and the vesting, upon consummation of the Acquisition, (seeof certain outstanding Zale Corporation restricted stock units and stock options, which converted into the right to receive the merger consideration of $1,458.0 million, including $478.2 million to extinguish Zale Corporation’s existing debt. The Acquisition was funded by the Company through existing cash and the issuance of $1,400.0 million of long-term debt, including: (a) $400.0 million of senior unsecured notes due in 2024, (b) $600.0 million of two-year revolving asset-backed variable funding notes, and (c) a $400.0 million five-year senior unsecured term loan facility. See Note 2017 for further information). Prioradditional information related to the Company’s long-term debt instruments.Company managedCompany’s strategy to diversify businesses and expand its business as two geographical reportable segments, beingfootprint. The following table summarizes the US and UK divisions. In connectionconsideration transferred in conjunction with the Acquisition as of May 29, 2014:(in millions, except per share amounts) Amount Cash consideration paid to Zale Corporation shareholders ($21 per share) $ 910.2 Cash consideration paid for settlement of Zale Corporation stock options, restricted share awards and long term incentive plan awards 69.6 Cash paid to extinguish Zale Corporation outstanding debt as of May 29, 2014 478.2 Total consideration transferred $ 1,458.0 Company will no longer report its segments geographically, but by store brand grouping. The former US division operates retail stores under brands including Kay Jewelers, Jared The Galleria Of Jewelryacquisition method of accounting, the identifiable assets acquired and various regional brands and will be known as Sterling Jewelers division. The former UK division’s retail stores operate under brands including H.Samuel and Ernest Jones will be known as UK Jewelry division.In connection with the Acquisition, the Zale division was added, consisting of two new reportable segments: Zale Jewelry and Piercing Pagoda. Zale Jewelry is comprised of three core national brands, Zales Jewelers, Zales Outlet and Peoples Jewellers and two regional brands, Gordon’s Jewelers and Mappins Jewellers. Each brand specializes in fine jewelry and watches, with merchandise and marketing emphasis focused on diamond products. Zales Jewelers is the national brand in the US providing moderately priced jewelry to a broad range of customers. Zales Outlet operates in outlet malls and neighborhood power centers and capitalizes on Zales Jewelers’ national marketing and brand recognition. Gordon’s Jewelers is a value-oriented regional jeweler. Peoples Jewellers is Canada’s largest fine jewelry retailer. Mappins Jewellers offers customers classic fine jewelry also in Canada. Piercing Pagoda operates mall-based kiosks focused on the opening price point customer. Piercing Pagoda specializes in gold, silver and non-precious metal products that capitalize on the latest fashion trends.Inliabilities assumed are recorded at acquisition date fair values. During the fourth quarter of Fiscal 2014, subsequent2015, the Company finalized the valuation of net assets acquired. The following table summarizes the fair values identified for the assets acquired and liabilities assumed in the Acquisition as of May 29, 2014:(in millions) Fair values Cash and cash equivalents $ 28.8 Inventories 856.7 Other current assets 22.4 Property, plant and equipment 103.6 Intangible assets: Trade names 417.0 Favorable leases 50.2 Deferred tax assets 132.8 Other assets 25.4 (206.3 ) Deferred revenue (93.3 ) Unfavorable leases (50.5 ) Unfavorable contracts (65.6 ) Deferred tax liabilities (234.0 ) Other liabilities (28.6 ) Fair value of net assets acquired 958.6 Goodwill 499.4 Total consideration transferred $ 1,458.0 November 4, 2013Acquisition is not deductible for tax purposes. See Note 11. 13 weeks ended 26 weeks ended (in millions, except per share amounts) August 2, 2014 August 2, 2014 Pro forma sales $ 1,378.8 $ 2,858.2 Pro forma net income $ 83.7 $ 198.7 Pro forma earnings per share – basic $ 1.05 $ 2.49 Pro forma earnings per share – diluted $ 1.04 $ 2.48 diamond polishing factoryreasonable profit margin on the estimated costs. These adjustments also reflect the impact of deferring the revenue associated with the lifetime extended service plans over a 10-year period as disclosed in Gaborone, Botswana,Note 1.establishedof its five reportable segments: the Sterling Jewelers division, the Zale division, which consists of Zale Jewelry and Piercing Pagoda, the UK Jewelry division and a separate operatingreportable segment, "Other". Other which consists of all non-reportable segments, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones. This segment was determined to be non-reportablestones and will be aggregated withunallocated corporate administrative functions that are below the quantifiable threshold for segment reporting. Prior year results have been revised to reflect this change. All inter-segment sales and transfers are eliminated. 13 weeks ended 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 810.4 $ 741.1 $ 1,713.9 $ 1,598.3 162.9 139.1 314.6 274.1 215.0 — 215.0 — 32.5 — 32.5 — 5.1 — 6.0 1.4 $ 1,225.9 $ 880.2 $ 2,282.0 $ 1,873.8 $ 129.9 $ 111.9 $ 296.2 $ 264.7 1.1 (0.8 ) 1.1 (4.9 ) (8.0 ) — (8.0 ) — (1.8 ) — (1.8 ) — (37.7 )(1) (5.6 ) (53.3 )(1) (11.5 ) $ 83.5 $ 105.5 $ 234.2 $ 248.3 13 weeks ended 26 weeks ended (in millions) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Sales: Sterling Jewelers $ 858.5 $ 810.4 $ 1,802.7 $ 1,713.9 Zale Jewelry 336.4 215.0 709.3 215.0 Piercing Pagoda 52.9 32.5 117.1 32.5 UK Jewelry 159.1 162.9 305.6 314.6 Other 3.7 5.1 6.5 6.0 Total sales $ 1,410.6 $ 1,225.9 $ 2,941.2 $ 2,282.0 Operating income (loss): Sterling Jewelers $ 157.8 $ 129.9 $ 336.0 $ 296.2 (2.0 ) (8.0 ) 8.4 (8.0 ) (0.1 ) (1.8 ) 5.0 (1.8 ) UK Jewelry 3.2 1.1 3.7 1.1 (58.1 ) (37.7 ) (76.1 ) (53.3 ) Total operating income $ 100.8 $ 83.5 $ 277.0 $ 234.2 Includes $30.8net operating loss of $4.4 million and $39.2$13.5 million related to the effects of purchase accounting associated with the acquisition related costsof Zale Corporation for the 13 and 26 weeks ended August 1, 2015 and $9.4 million for the 13 and 26 weeks ended August 2, 2014, respectively. See Note 203 for additional information.(in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ 3,296.4 $ 3,311.0 $ 3,000.7 475.4 484.6 434.0 1,881.6 — — 123.9 — — 217.4 233.6 205.6 $ 5,994.7 $4,029.2 $ 3,640.3 SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)3. Foreign currency translationAssets and liabilities denominated in the British pound and the Canadian dollar are translated into the US dollar at the exchange rate prevailing at the balance sheet date. Equity accounts denominated in the British pound and Canadian dollar are translated into US dollars at historical exchange rates. Revenues and expenses denominated in the British pound and Canadian dollar are translated into the US dollar at the monthly average exchange rate for the period. Gains and losses resulting from foreign currency transactions are included within the condensed consolidated income statement, whereas translation adjustments and gains and losses related to intercompany loans of a long-term investment nature are recognized as a component of accumulated other comprehensive income (loss) (“OCI”). In addition, as the majority of the sales and expenses related to the factory in Gaborone, Botswana are transacted in US dollars, there is no related foreign currency translation as the US dollar is the functional currency.4. Income taxesSignet 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. Signet is subject to examination by the US federal and state and Canada 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, 2012.As of August 2, 2014, Signet had $6.3 million of unrecognized tax benefits related to uncertain tax positions, all of which would favorably affect the effective income tax rate if resolved in Signet’s favor. The unrecognized tax benefits increased by $1.7 million during the quarter related to positions taken by Zale Corporation prior to the Acquisition. The unrecognized tax benefits relate primarily to financing arrangements and intra-group charges which are subject to different and changing interpretations of tax law.Signet recognizes accrued interest and, where appropriate, penalties related to unrecognized tax benefits within income tax expense. As of August 2, 2014, Signet had accrued interest of $1.1 million. The accrued interest increased by $0.8 million during the quarter related to tax positions taken by Zale Corporation prior to the Acquisition. Signet also had $0.6 million of accrued penalties as of August 2, 2014. All of the accrued penalties were recorded during the three months ended August 2, 2014 related as well to the Acquisition.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 August 2, 2014, due to settlement of the uncertain tax positions with the tax authorities.Includes net operating loss of $0.7 million and $3.0 million related to the effects of purchase accounting associated with the acquisition of Zale Corporation for the 13 weeks ended August 1, 2015 and $2.1 million for the 13 and 26 weeks ended August 2, 2014, respectively. See Note 3 for additional information. Includes $43.6 million and $50.0 million of transaction-related and integration expenses, including the impact of the appraisal rights legal settlement discussed in Note 19, for the 13 and 26 weeks ended August 1, 2015 and $30.8 million and $39.2 million of transaction-related and integration expenses for the 13 and 26 weeks ended August 2, 2014, respectively. Transaction costs include expenses associated with advisor fees for legal, tax, accounting and consulting services. (in millions) August 1, 2015 January 31, 2015 August 2, 2014 Total assets: Sterling Jewelers $ 3,607.9 $ 3,647.3 $ 3,296.4 Zale Jewelry 1,831.9 1,903.6 1,881.6 Piercing Pagoda 116.9 132.8 123.9 UK Jewelry 432.2 413.5 475.4 Other 222.9 230.4 217.4 Total assets $ 6,211.8 $ 6,327.6 $ 5,994.7 13 weeks ended 26 weeks ended (in millions, except per share amounts) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 58.0 $ 67.4 $ 154.6 $ 159.2 79.9 80.3 79.9 80.6 0.3 0.4 0.3 0.4 80.2 80.7 80.2 81.0 $ 0.73 $ 0.84 $ 1.93 $ 1.98 $ 0.72 $ 0.84 $ 1.93 $ 1.97 13 weeks ended 26 weeks ended (in millions, except per share amounts) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Net income $ 62.2 $ 58.0 $ 181.0 $ 154.6 Basic weighted average number of shares outstanding 79.7 79.9 79.8 79.9 Dilutive effect of share awards 0.2 0.3 0.2 0.3 Diluted weighted average number of shares outstanding 79.9 80.2 80.0 80.2 Earnings per share – basic $ 0.78 $ 0.73 $ 2.27 $ 1.93 Earnings per share – diluted $ 0.78 $ 0.72 $ 2.26 $ 1.93 week periodsweeks ended August 2, 20141, 2015 by 7,299,7057,447,046 and 7,286,1607,327,100 shares, respectively (13 and 26 week periodsweeks ended August 3, 2013: 6,848,4282, 2014: 7,299,705 and 6,606,8827,286,160 shares, respectively). The calculation of fully diluted earnings per shareEPS for the 13 and 26 week periodsweeks ended August 2, 20141, 2015 excludes 5,128 and 2,564 non-vested time-based restrictedshare awards of 72,406 shares (13 and 26 week periodsweeks ended August 3, 2013: 1,0712, 2014: 5,128 and 53,421 shares,2,564 share awards, respectively) on the basis that their effect on earnings per share waswould be anti-dilutive.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)Shareholders’Shareholders' equity 26 weeks ended August 2, 2014 26 weeks ended August 3, 2013 Shares
repurchased Amount
repurchased Average
repurchase
price per
share Shares
repurchased Amount
repurchased Average
repurchase
price per
share (in millions) (in millions) (in millions) $ 350 220,132 $ 22.4 $ 101.57 374,613 $ 25.0 $ 66.74 $ 350 n/a n/a n/a 749,245 50.1 66.92 220,132 $ 22.4 1,123,858 $ 75.1 26 weeks ended August 1, 2015 26 weeks ended August 2, 2014 Amount
authorized Shares
repurchased Amount
repurchased Average
repurchase
price per
share Shares
repurchased Amount
repurchased Average
repurchase
price per
share (in millions) (in millions) (in millions) $ 350.0 628,955 $ 81.9 $ 130.27 220,132 $ 22.4 $ 101.57 (1)InOn June 14, 2013, the Board of Directors authorized the repurchase of up to $350 million of Signet’s common shares (the “2013 Program”). The 2013 Program may be suspended or discontinued at any time without notice. The 2013 Program had $273.0$183.7 million remaining as of August 2, 2014.1, 2015. Fiscal 2016 Fiscal 2015 (in millions, except per share amounts) Cash dividend
per share Total
dividends Cash dividend
per share Total
dividends $ 0.22 $ 17.6 $ 0.18 $ 14.4 Second quarter $ 0.22 $ 17.6 $ 0.18 $ 14.4 (2)In October 2011, the Board of Directors authorized the repurchase of up to $300 million of Signet’s common shares (the “2011 Program”), which authorization was subsequently increased to $350 million. The 2011 Program was completed as of May 4, 2013.n/aNot applicable.Dividends Fiscal 2015 Fiscal 2014 Cash dividend
per share Total
dividends Cash dividend
per share Total
dividends (in millions) (in millions) $ 0.18 $ 14.4 (2) $ 0.15 $ 12.1 $ 0.18 $ 14.4 (3) $ 0.15 $ 12.1 Signet’s dividend policy results in the dividend payment date being a quarter in arrears from the declaration date. As a result, the dividend declared in the fourth quarter of Fiscal 2014 $0.152015 of $0.18 per share cash dividend was paid on February 27, 201426, 2015 in the aggregate amount of $12.0$14.4 million.(2)2015 $0.182016 $0.22 per share cash dividend was paid on May 28, 201427, 2015 in the aggregate amount of $14.4 million.$17.6 million.As of August 1, 2015 and August 2, 2014, $17.6 million and $14.4 million, respectively, has been recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets reflecting the cash dividenddividends declared for the second quarter of Fiscal 2016 and Fiscal 2015, which has a record date of August 1, 2014 and a payment date of August 27, 2014.respectively.ReclassificationDuring the second quarter of Fiscal 2015, $234.8 million was reclassified from other reserves within Shareholders’ Equity to retained earnings as the restrictions related to this amount were released. The presentation in previous periods has been adjusted to conform to the current period presentation. income Pension plan (in millions) Foreign
currency
translation Losses on available-for-sale securities, net Gains (losses)
on cash flow
hedges Actuarial
gains
(losses) Prior
service
credit
(cost) Accumulated
other
comprehensive
(loss) incomeBalance at January 31, 2015 $ (197.6 ) $ — $ 4.4 $ (56.7 ) $ 13.3 $ (236.6 ) Other comprehensive income ("OCI") before reclassifications 2.8 (0.3 ) (11.4 ) — — (8.9 ) Amounts reclassified from AOCI to earnings — — 1.3 1.4 (0.9 ) 1.8 Net current-period OCI 2.8 (0.3 ) (10.1 ) 1.4 (0.9 ) (7.1 ) Balance at August 1, 2015 $ (194.8 ) $ (0.3 ) $ (5.7 ) $ (55.3 ) $ 12.4 $ (243.7 ) Pension plan (in millions) Foreign
currency
translation Losses on
available-for-
sale
securities, net Gains
(losses) on
cash flow
hedges Actuarial
(losses)
gains Prior
service
credit
(cost) Accumulated
other
comprehensive
(loss) income $ (137.0 ) $ — $ (14.3 ) $ (42.5 ) $ 15.3 $ (178.5 ) 7.3 (0.2 ) 0.2 — — 7.3 — — 8.1 0.8 (0.7 ) 8.2 7.3 (0.2 ) 8.3 0.8 (0.7 ) 15.5 $ (129.7 ) $ (0.2 ) $ (6.0 ) $ (41.7 ) $ 14.6 $ (163.0 ) SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)Reclassification activity by individual accumulated OCI component: Amounts
reclassified from
accumulated OCI Amounts
reclassified from
accumulated OCI 13 weeks ended
August 2, 2014 26 weeks ended
August 2, 2014 (in millions) $ 0.3 $ 0.3 Cost of sales (see Note 15) 4.8 12.2 Cost of sales (see Note 15) 5.1 12.5 (1.7 ) (4.4 ) Income taxes 3.4 8.1 (0.5 ) (0.9 ) Selling, general and administrative expenses(1) 0.5 1.0 Selling, general and administrative expenses(1) — 0.1 — — Income taxes — 0.1 $ 3.4 $ 8.2 Amounts reclassified from AOCI 13 weeks ended 26 weeks ended (in millions) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Income statement caption Losses on cash flow hedges: Foreign currency contracts $ — $ 0.3 $ 0.1 $ 0.3 Cost of sales (see Note 14) Interest rate swaps 0.8 — 1.1 — Interest expense, net (see Note 14) Commodity contracts 0.3 4.8 0.6 12.2 Cost of sales (see Note 14) Total before income tax 1.1 5.1 1.8 12.5 Income taxes (0.3 ) (1.7 ) (0.5 ) (4.4 ) Net of tax 0.8 3.4 1.3 8.1 Defined benefit pension plan items: Amortization of unrecognized net prior service credit (0.6 ) (0.5 ) (1.1 ) (0.9 ) Amortization of unrecognized actuarial loss 0.9 0.5 1.7 1.0 Total before income tax 0.3 — 0.6 0.1 Income taxes (0.1 ) — (0.1 ) — Net of tax 0.2 — 0.5 0.1 Total reclassifications, net of tax $ 1.0 $ 3.4 $ 1.8 $ 8.2 These items are included in the computation of net periodic pension benefit (cost). See Note 16 for additional information. Reclassification activity by individual accumulated OCI component: Amounts
reclassified from
accumulated OCI Amounts
reclassified from
accumulated OCI 13 weeks ended
August 3, 2013 26 weeks ended
August 3, 2013 (in millions) $ (0.2 ) $ (0.4 ) Cost of sales (see Note 15) 0.2 (0.6 ) Cost of sales (see Note 15) — (1.0 ) (0.1 ) 0.3 Income taxes (0.1 ) (0.7 ) (0.3 ) (0.7 ) Selling, general and administrative expenses(1) 0.5 1.1 Selling, general and administrative expenses(1) 0.2 0.4 — (0.1 ) Income taxes 0.2 0.3 $ 0.1 $ (0.4 ) (1)These items are included in the computation of net periodic pension benefit (cost). See Note 16 for additional information.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)is ofhas similar characteristics and is evaluated collectively for impairment. The allowance is an estimate of the expected 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 and any amount associated with an account the owner of which has filed for bankruptcy, 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.(in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ 1,305.1 $ 1,356.0 $ 1,142.0 10.9 18.0 10.1 $ 1,316.0 $ 1,374.0 $ 1,152.1 Sterling Jewelers(in millions) August 1, 2015 January 31, 2015 August 2, 2014 Accounts receivable by portfolio segment, net: Sterling Jewelers customer in-house finance receivables $ 1,483.1 $ 1,552.9 $ 1,305.1 Other accounts receivable 10.1 14.7 10.9 Total accounts receivable, net $ 1,493.2 $ 1,567.6 $ 1,316.0 customerconsumer 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.(February 1, 2014 and August 3, 2013: $12.8 million and $9.1 million, respectively), with a corresponding valuation allowance of $0.5 million (January 31, 2015 and August 2, 2014: $0.5 million and $0.6 million, (Februaryrespectively). The credit function for the Zale division is outsourced and, as such, no material accounts receivable exist as of August 1, 2014 and2015, January 31, 2015 or August 3, 2013: $0.3 million and $0.4 million, respectively).Allowance2, 2014.Jewelers’Jewelers' customer in-house finance receivables:(in millions) 26 weeks
ended
August 2,
2014 52 weeks
ended
February 1,
2014 26 weeks
ended
August 3,
2013 $ (97.8 ) $ (87.7 ) $ (87.7 ) 63.0 128.2 56.4 15.0 26.0 13.6 (79.1 ) (164.3 ) (71.4 ) $ (98.9 ) $ (97.8 ) $ (89.1 ) 1,404.0 1,453.8 1,231.1 $ 1,305.1 $ 1,356.0 $ 1,142.0 26 weeks ended (in millions) August 1, 2015 August 2, 2014 Beginning balance: $ (113.1 ) $ (97.8 ) Charge-offs 74.6 63.0 Recoveries 18.4 15.0 Provision (95.9 ) (79.1 ) Ending balance $ (116.0 ) $ (98.9 ) Ending receivable balance evaluated for impairment 1,599.1 1,404.0 Sterling Jewelers customer in-house finance receivables, net $ 1,483.1 $ 1,305.1 calculateddefined as the provision expense less recoveries.CreditThe following tables summarize the credit quality indicator and age analysis of past due Sterling Jewelers’Jewelers' customer in-house finance receivables: August 2,
2014 February 1,
2014 August 3,
2013 (in millions) Gross Valuation
allowance Gross Valuation
allowance Gross Valuation
allowance $ 1,110.6 $ (34.0 ) $ 1,170.4 $ (36.3 ) $ 973.2 $ (29.9 ) 236.8 (8.3 ) 229.9 (8.0 ) 206.1 (7.4 ) 56.6 (56.6 ) 53.5 (53.5 ) 51.8 (51.8 ) $ 1,404.0 $ (98.9 ) $ 1,453.8 $ (97.8 ) $ 1,231.1 $ (89.1 ) SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited) August 2,
2014 February 1,
2014 August 3,
2013 (as a percentage of the ending receivable balance) Gross Valuation
allowance Gross Valuation
allowance Gross Valuation
allowance 96.0 % 3.1 % 96.3 % 3.2 % 95.8 % 3.0 % 4.0 % 100.0 % 3.7 % 100.0 % 4.2 % 100.0 % 100.0 % 7.0 % 100.0 % 6.7 % 100.0 % 7.2 % August 1, 2015 January 31, 2015 August 2, 2014 (in millions) Gross Valuation
allowance Gross Valuation
allowance Gross Valuation
allowancePerforming: Current, aged 0 – 30 days $ 1,252.4 $ (38.1 ) $ 1,332.2 $ (41.1 ) $ 1,110.6 $ (34.0 ) Past due, aged 31 – 90 days 278.4 (9.6 ) 271.1 (9.3 ) 236.8 (8.3 ) Non Performing: Past due, aged more than 90 days 68.3 (68.3 ) 62.7 (62.7 ) 56.6 (56.6 ) $ 1,599.1 $ (116.0 ) $ 1,666.0 $ (113.1 ) $ 1,404.0 $ (98.9 ) August 1, 2015 January 31, 2015 August 2, 2014 (as a % of the ending receivable balance) Gross Valuation
allowance Gross Valuation
allowance Gross Valuation
allowancePerforming 95.7 % 3.1 % 96.2 % 3.1 % 96.0 % 3.1 % Non Performing 4.3 % 100.0 % 3.8 % 100.0 % 4.0 % 100.0 % 100.0 % 7.3 % 100.0 % 6.8 % 100.0 % 7.0 % 1917 for additional information onregarding this asset-backed securitization facility.9.(in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ 55.5 $ 41.8 $ 50.7 2,289.8 1,446.2 1,367.0 $ 2,345.3 $ 1,488.0 $ 1,417.7 10.(in millions) August 1, 2015 January 31, 2015 August 2, 2014 Raw materials $ 114.2 $ 75.2 $ 55.5 Finished goods 2,300.0 2,363.8 2,289.8 Total inventories $ 2,414.2 $ 2,439.0 $ 2,345.3 reporting unit:(in millions) Sterling
Jewelers UK
Jewelry Zale
Jewelry Piercing
Pagoda Other Total $ 24.6 $ — $ — $ — $ — $ 24.6 (1.4 ) — — — 3.6 2.2 23.2 — — — 3.6 26.8 — — 525.1 — — 525.1 $ 23.2 $ — $ 525.1 $ — $ 3.6 $ 551.9 (1)See Note 20 for additional discussion of the goodwill recorded by the Company during Fiscal 2014 and Fiscal 2015.The Company’s reporting units align with the operating segments disclosed in Note 2. reportable segment:(in millions) Sterling
Jewelers Zale
Jewelry Piercing
Pagoda UK Jewelry Other Total Balance at February 1, 2014 $ 23.2 $ — $ — $ — $ 3.6 $ 26.8 Acquisitions — 499.4 — — — 499.4 Impact of foreign exchange — (7.0 ) — — — (7.0 ) Balance at January 31, 2015 23.2 492.4 — — 3.6 519.2 Impact of foreign exchange — (1.6 ) — — — (1.6 ) Balance at August 1, 2015 $ 23.2 $ 490.8 $ — $ — $ 3.6 $ 517.6 recordedrecognized 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 be required.Intangible Assetsthe Zale trade names and favorable leases which are includedacquired, while intangible liabilities with definite lives represent unfavorable leases and contract rights acquired in the Zale Acquisition. No other intangible assets netor liabilities were recognized prior to the acquisition of Zale Corporation on the condensed consolidated balance sheets.May 29, 2014. The following table provides additional detail regarding the composition of intangible assets and liabilities as of August 2, 2014, February 1, 20142015, January 31, 2015 and August 3, 2013. August 2, 2014 February 1, 2014 August 3, 2013 Gross
carrying
amount Accumulated
amortization Net
carrying
amount Gross
carrying
amount Accumulated
amortization Net
carrying
amount Gross
carrying
amount Accumulated
amortization Net
carrying
amount (in millions) $ 1.6 $ — $ 1.6 $ — $ — $ — $ — $ — $ — 50.2 (2.4 ) 47.8 — — — — — — 51.8 (2.4 ) 49.4 — — — — — — 418.2 — 418.2 — — — — — — $ 470.0 $ (2.4 ) $ 467.6 $ — $ — $ — $ — $ — $ — SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)11.2, 2014: August 1, 2015 January 31, 2015 August 2, 2014 (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
amountDefinite-lived intangible assets: Trade names Intangible assets, net $ 1.5 $ (0.3 ) $ 1.2 $ 1.5 $ (0.2 ) $ 1.3 $ 1.6 $ — $ 1.6 Favorable leases Intangible assets, net 47.6 (15.8 ) 31.8 48.1 (9.1 ) 39.0 50.2 (2.4 ) 47.8 Total definite-lived intangible assets 49.1 (16.1 ) 33.0 49.6 (9.3 ) 40.3 51.8 (2.4 ) 49.4 Indefinite-lived trade names Intangible assets, net 404.8 — 404.8 406.8 — 406.8 418.2 — 418.2 Total intangible assets, net $ 453.9 $ (16.1 ) $ 437.8 $ 456.4 $ (9.3 ) $ 447.1 $ 470.0 $ (2.4 ) $ 467.6 Definite-lived intangible liabilities: Unfavorable leases Other liabilities $ (48.3 ) $ 16.8 $ (31.5 ) $ (48.7 ) $ 9.7 $ (39.0 ) $ (50.5 ) $ 2.4 $ (48.1 ) Unfavorable contracts Other liabilities (65.6 ) 24.2 (41.4 ) (65.6 ) 13.8 (51.8 ) (65.6 ) 3.5 (62.1 ) Total intangible liabilities, net $ (113.9 ) $ 41.0 $ (72.9 ) $ (114.3 ) $ 23.5 $ (90.8 ) $ (116.1 ) $ 5.9 $ (110.2 ) The following table summarizes the Company’s non-current other assets:(in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ 64.5 $ 61.9 $ 58.8 22.3 — — 46.2 25.3 25.4 $ 133.0 $ 87.2 $ 84.2 (1)See Note 14 for additional discussion of the investment balances.(in millions) August 1, 2015 January 31, 2015 August 2, 2014 Deferred extended service plan costs $ 75.2 $ 69.7 $ 64.5 Investments 23.2 25.2 22.3 Other assets 47.0 45.1 46.2 Total other assets $ 145.4 $ 140.0 $ 133.0 (“ESP”) of $22.9$23.9 million as of August 2, 2014 (February 1, 20142015 (January 31, 2015 and August 3, 2013: $21.92, 2014: $24.9 million and $20.8$22.9 million, respectively).12. Deferred revenueDeferred revenue is comprised primarily of ESP and voucher promotions as follows:(in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ 626.6 $ 601.2 $ 567.0 99.1 — — 5.8 15.5 6.0 $ 731.5 $ 616.7 $ 573.0 $ 211.1 $ 173.0 $ 154.6 520.4 443.7 418.4 $ 731.5 $ 616.7 $ 573.0 13 weeks ended 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 619.6 $ 563.4 $ 601.2 $ 549.7 53.9 46.1 118.1 101.4 (46.9 ) (42.5 ) (92.7 ) (84.1 ) $ 626.6 $ 567.0 $ 626.6 $ 567.0 13 weeks ended 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ — n/a $ — n/a 93.0 n/a 93.0 n/a 19.3 n/a 19.3 n/a (13.2 ) n/a (13.2 ) n/a $ 99.1 n/a $ 99.1 n/a n/aNot applicable as the Acquisition occurred during Fiscal 2015.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)Warranty reserveSterling Jewelers and Zale 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 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 19.4 $ 18.6 $ 19.1 $ 18.5 28.8 — 28.8 — 2.3 1.9 4.0 3.5 (2.4 ) (1.9 ) (3.8 ) (3.4 ) $ 48.1 $ 18.6 $ 48.1 $ 18.6 (in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ 17.6 $ 6.7 $ 6.6 30.5 12.4 12.0 $ 48.1 $ 19.1 $ 18.6 14. Investmentsacquired as part of the Acquisition,and are reported as other assets in the accompanying condensed consolidated balance sheets. Investments are recorded at fair value based on quoted market prices for identical or similar securities.securities in active markets. All investments are classified as available-for-sale.Investments consist ofavailable-for-sale and include the following: August 2, 2014 August 3, 2013 (in millions) Cost Fair Value Cost Fair Value $ 10.0 $ 9.9 $ n/a $ n/a 1.3 1.3 n/a n/a 8.7 8.6 n/a n/a 2.5 2.5 n/a n/a $ 22.5 $ 22.3 $ n/a $ n/a n/aNot applicable as all investments were acquired as part of the Acquisition that occurred during Fiscal 2015. August 1, 2015 January 31, 2015 August 2, 2014 (in millions) Cost Unrealized Gain (Loss) Fair Value Cost Unrealized Gain (Loss) Fair Value Cost Unrealized Gain (Loss) Fair Value US Treasury securities $ 9.2 $ (0.3 ) $ 8.9 $ 9.7 $ (0.1 ) $ 9.6 $ 10.0 $ (0.1 ) $ 9.9 US government agency securities 1.0 (0.1 ) 0.9 1.4 — 1.4 1.3 — 1.3 Corporate bonds and notes 9.9 — 9.9 10.6 0.2 10.8 8.7 (0.1 ) 8.6 Corporate equity securities 3.4 0.1 3.5 3.5 (0.1 ) 3.4 2.5 — 2.5 Total investments $ 23.5 $ (0.3 ) $ 23.2 $ 25.2 $ — $ 25.2 $ 22.5 $ (0.2 ) $ 22.3 2, 2014,1, 2015, the carrying value of investments included a net unrealized loss of $0.2$0.3 million, which is included in OCI.AOCI. 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 orand 26 weeks ended August 1, 2015 (13 and 26 weeks ended August 2, 2014.2014: none). Investments with a carrying value of $7.4$7.2 million were on deposit with various state insurance departments at August 1, 2015 (January 31, 2015 and August 2, 2014,2014: $7.2 million and $7.4 million, respectively), as required by law.Debt2, 20141, 2015 mature as follows:(in millions) Cost Fair Value $ 1.8 $ 1.8 11.1 11.0 7.0 6.9 0.1 0.1 $ 20.0 $ 19.8 SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)15. Financial instruments and fair valueSignet’s principal financial instruments are comprised of cash, cash deposits/investments and overdrafts, accounts receivable and payable, derivatives, US Treasury and government agency securities, corporate bonds and equity securities, a revolving credit facility and long-term debt. Signet does not enter into derivative transactions for trading purposes. (in millions) Cost Fair Value Less than one year $ 1.5 $ 1.5 Year two through year five 10.6 10.3 Year six through year ten 7.9 7.8 After ten years 0.1 0.1 Total investment in debt securities $ 20.1 $ 19.7 finance.financing. 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 thesederivative financial instruments to manage and mitigate these risks under policies reviewed and approved by the Board of Directors. cash reflecting the cash generative characteristics of the UK Jewelry division. Signet’s objective is to minimize net foreign exchange exposure to the income statement on British pound denominated items through managing this level of cash, British pound denominated intercompanyintra-entity balances and US dollar to British pound swaps. In order to manage the foreign exchange exposure and minimize the level of British pound cash held by Signet,funds denominated in the British pound, dividends are paid regularly by British pound denominated subsidiaries pay dividends regularly to their immediate holding companies and excess British pounds are sold in exchange for US dollars.Board of Directors.Board. In particular, Signet undertakes some hedging of its requirementrequirements 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.Board of Directors.Board. Cash generated from operations and external financing are the main sources of funding supplementing Signet’s resources in meeting liquidity requirements.sourcesources of funding isare an amended credit facility, senior unsecured notes and securitized credit card receivables, as described below in Note 19.rates on its cash or borrowings. There were norates.protection agreements outstandingrisk associated with variable rate, long-term debt. The Company designates this derivative as a cash flow hedge of the variability in expected cash outflows of interest payments. 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 August 2, 2014, February 1, 2014specified intervals, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional amounts. The Company has effectively converted a portion of its variable-rate senior unsecured term loan into fixed-rate debt. August 3, 2013.8.9 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.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)DerivativesSignet: in order 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 August 2, 20141, 2015 was $34.2$17.7 million (February 1, 2014(January 31, 2015 and August 3, 2013: $42.32, 2014: $23.5 million and $50.3$34.2 million, respectively). These contracts have been designated as cash flow hedges and will be settled over the next 129 months (February 1, 2014(January 31, 2015 and August 3, 2013:2, 2014: 12 months and 1812 months, respectively).2014 was2014: $40.3 million and $27.7 million, (February 1, 2014 and August 3, 2013: $22.1 million and $58.1 million, respectively). in order 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 August 2, 20141, 2015 was $27.1 million (February 1, 2014106,000 ounces of gold (January 31, 2015 and August 3, 2013: $63.0 million2, 2014: 81,000 ounces and $0.0 million,21,000 ounces, respectively). These contracts have been designated as cash flow hedges and will be settled over the next 717 months (February 1, 2014(January 31, 2015 and August 3, 2013: 122, 2014: 11 months and 07 months, respectively).2, 2014,1, 2015, Signet believes that this credit risk did not materially change the fair value of the foreign currency or commodity contracts. Derivative assets Fair value (in millions) Balance sheet location August 2,
2014 February 1,
2014 August 3,
2013 Other current assets $ — $ — $ 1.5 Other assets — — 0.1 Other current assets 0.7 0.8 — Other assets — — — $ 0.7 $ 0.8 $ 1.6 Other current assets 0.3 0.2 0.1 $ 1.0 $ 1.0 $ 1.7 Derivative liabilities Fair value (in millions) Balance sheet location August 2,
2014 February 1,
2014 August 3,
2013 Other current liabilities $ (1.9 ) $ (2.1 ) $ — Other liabilities — — — Other current liabilities (0.1 ) (0.8 ) — Other liabilities — — — $ (2.0 ) $ (2.9 ) $ — Other current liabilities — — — $ (2.0 ) $ (2.9 ) $ — SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited) Fair value of derivative assets (in millions) Balance sheet location August 1, 2015 January 31, 2015 August 2, 2014 Derivatives designated as hedging instruments: Foreign currency contracts Other current assets $ 0.1 $ 1.0 $ — Commodity contracts Other current assets — 6.3 0.7 0.1 7.3 0.7 Derivatives not designated as hedging instruments: Foreign currency contracts Other current assets — 0.1 0.3 Total derivative assets $ 0.1 $ 7.4 $ 1.0 Fair value of derivative liabilities (in millions) Balance sheet location August 1, 2015 January 31, 2015 August 2, 2014 Derivatives designated as hedging instruments: Foreign currency contracts Other current liabilities $ (0.3 ) $ — $ (1.9 ) Commodity contracts Other current liabilities (6.7 ) — (0.1 ) Commodity contracts Other liabilities (0.2 ) — — Interest rate swaps Other liabilities (0.9 ) — — (8.1 ) — (2.0 ) Derivatives not designated as hedging instruments: Foreign currency contracts Other current liabilities — — — Total derivative liabilities $ (8.1 ) $ — $ (2.0 ) accumulated OCIAOCI for derivatives designated in cash flow hedging relationships: August 2,
2014 February 1,
2014 August 3,
2013 $ (3.2 ) $ (2.3 ) $ 2.3 (4.9 )(1) (18.8 )(1) (28.6 )(1) $ (8.1 ) $ (21.1 ) $ (26.3 ) (1)As of August 2, 2014, losses recorded in accumulated OCI include $6.2 million related to commodity contracts terminated prior to contract maturity in Fiscal 2014 (February 1, 2014 and August 3, 2013: $18.2 million and $27.7 million, respectively).(in millions) August 1, 2015 January 31, 2015 August 2, 2014 Foreign currency contracts $ 0.4 $ 0.9 $ (3.2 ) Commodity contracts (8.3 ) 5.7 (4.9 ) Interest rate swaps (0.9 ) — — Total $ (8.8 ) $ 6.6 $ (8.1 ) 13 weeks ended 26 weeks ended Income statement caption August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ (3.6 ) $ 1.6 $ (2.3 ) $ 1.3 0.1 0.9 (1.2 ) 1.4 Cost of sales 0.3 (0.2 ) 0.3 (0.4 ) $ (3.2 ) $ 2.3 $ (3.2 ) $ 2.3 13 weeks ended 26 weeks ended (in millions) Income statement caption August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Gains (losses) recorded in AOCI, beginning of period $ 0.8 $ (3.6 ) $ 0.9 $ (2.3 ) Current period losses recognized in OCI (0.4 ) 0.1 (0.6 ) (1.2 ) Losses reclassified from AOCI to net income Cost of sales — 0.3 0.1 0.3 Gains (losses) recorded in AOCI, end of period $ 0.4 $ (3.2 ) $ 0.4 $ (3.2 ) 13 weeks ended 26 weeks ended Income statement caption August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ (9.4 ) $ (19.3 ) $ (18.8 ) $ (0.5 ) (0.3 ) (9.5 ) 1.7 (27.5 ) Cost of sales 4.8 0.2 12.2 (0.6 ) $ (4.9 ) $ (28.6 ) $ (4.9 ) $ (28.6 ) 13 weeks ended 26 weeks ended (in millions) Income statement caption August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 (Losses) gains recorded in AOCI, beginning of period $ (2.0 ) $ (9.4 ) $ 5.7 $ (18.8 ) Current period (losses) gains recognized in OCI (6.6 ) (0.3 ) (14.6 ) 1.7 Losses reclassified from AOCI to net income Cost of sales 0.3 4.8 0.6 12.2 Losses recorded in AOCI, end of period $ (8.3 ) $ (4.9 ) $ (8.3 ) $ (4.9 ) 13 weeks ended 26 weeks ended (in millions) Income statement caption August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 (Losses) gains recorded in AOCI, beginning of period $ (0.6 ) $ — $ — $ — Current period losses recognized in OCI (1.1 ) — (2.0 ) — Losses reclassified from AOCI to net income Interest expense, net 0.8 — 1.1 — Losses recorded in AOCI, end of period $ (0.9 ) $ — $ (0.9 ) $ — duringfor the 13 and 26 weeks ended August 2, 20141, 2015 and August 3, 2013, respectively.2, 2014. Based on current valuations, the Company expects approximately $7.3$7.8 million of net pre-tax derivative losses to be reclassified out of accumulated OCIAOCI into earnings within the next 12 months, of which $6.2 million will be recognized in the remaining six months of Fiscal 2015.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited) 13 weeks ended 26 weeks ended (in millions) Income statement caption August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 Other operating income, net $ — $ 3.0 $ (1.6 ) $ 2.8 $ — $ 3.0 $ (1.6 ) $ 2.8 Amount of gain (loss) recognized in income (in millions) Income statement caption 13 weeks ended 26 weeks ended Derivatives not designated as hedging instruments: August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Foreign currency contracts Other operating income, net $ 0.7 $ — $ 0.4 $ (1.6 ) Total $ 0.7 $ — $ 0.4 $ (1.6 ) August 2, 2014 February 1, 2014 August 3, 2013 (in millions) Carrying
Value Quoted
market
prices
for
identical
assets
(Level 1) Significant other
observable
inputs
(Level 2) Carrying
Value Quoted
market
prices
for
identical
assets
(Level 1) Significant other
observable
inputs
(Level 2) Carrying
Value Quoted
market
prices
for
identical
assets
(Level 1) Significant other
observable
inputs
(Level 2) $ 9.9 $ 9.9 $ — $ — $ — $ — $ — $ — $ — 2.5 2.5 — — — — — — — 0.3 — 0.3 0.2 — 0.2 1.7 — 1.7 0.7 — 0.7 0.8 — 0.8 — — — 1.3 — 1.3 — — — — — — 8.6 — 8.6 — — — — — — (1.9 ) — (1.9 ) (2.1 ) — (2.1 ) — — — (0.1 ) — (0.1 ) (0.8 ) — (0.8 ) — — — August 1, 2015 January 31, 2015 August 2, 2014 (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 $ 8.9 $ 8.9 $ — $ 9.6 $ 9.6 $ — $ 9.9 $ 9.9 $ — Corporate equity securities 3.5 3.5 — 3.4 3.4 — 2.5 2.5 — Foreign currency contracts 0.1 — 0.1 1.1 — 1.1 0.3 — 0.3 Commodity contracts — — — 6.3 — 6.3 0.7 — 0.7 US government agency securities 0.9 — 0.9 1.4 — 1.4 1.3 — 1.3 Corporate bonds and notes 9.9 — 9.9 10.8 — 10.8 8.6 — 8.6 Total assets $ 23.3 $ 12.4 $ 10.9 $ 32.6 $ 13.0 $ 19.6 $ 23.3 $ 12.4 $ 10.9 Liabilities: Foreign currency contracts $ (0.3 ) $ — $ (0.3 ) $ — $ — $ — $ (1.9 ) $ — $ (1.9 ) Commodity contracts (6.9 ) — (6.9 ) — — — (0.1 ) — (0.1 ) Interest rate swaps (0.9 ) — (0.9 ) — — — — — — Total liabilities $ (8.1 ) $ — $ (8.1 ) $ — $ — $ — $ (2.0 ) $ — $ (2.0 ) hierarchy (seehierarchy. See Note 1413 for additional information related to our investments).SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)rates. rates, and therefore were classified as a Level 2 measurement in the fair value hierarchy. See Note 14 for additional information related to the Company’s derivatives. August 2, 2014 February 1, 2014 August 3, 2013 (in millions) Carrying
Value Fair Value Carrying
Value Fair Value Carrying
Value Fair Value $ 398.4 $ 400.0 $ — $ — $ — $ — 600.0 600.0 — — — — 400.0 400.0 1.8 1.8 — — — — $ 1,400.2 $ 1,401.8 $ — $ — $ — $ — (1)See Note 19 – Loans, overdrafts and long-term debt for classification between current and long-term debt.The fair value of long-term debt was determined using quoted market prices or discounted cash flows based upon current borrowing rates. See Note 19 – Loans, overdrafts and long-term debt. August 1, 2015 January 31, 2015 August 2, 2014 (in millions) Carrying
Value Fair Value Carrying
Value Fair Value Carrying
Value Fair Value Outstanding debt: Senior notes (Level 2) $ 398.5 $ 409.0 $ 398.5 $ 415.3 $ 398.4 $ 400.0 Securitization facility (Level 2) 600.0 600.0 600.0 600.0 600.0 600.0 Term loan (Level 2) 380.0 380.0 390.0 390.0 400.0 400.0 Capital lease obligations (Level 2) 0.6 0.6 1.2 1.2 1.8 1.8 Total outstanding debt $ 1,379.1 $ 1,389.6 $ 1,389.7 $ 1,406.5 $ 1,400.2 $ 1,401.8 Pensionsbenefit werecost for the UK Plan are as follows: 13 weeks ended 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ (0.6 ) $ (0.6 ) $ (1.2 ) $ (1.2 ) (2.5 ) (2.3 ) (5.0 ) (4.6 ) 3.7 3.2 7.5 6.4 0.5 0.3 0.9 0.7 (0.5 ) (0.5 ) (1.0 ) (1.1 ) $ 0.6 $ 0.1 $ 1.2 $ 0.2 13 weeks ended 26 weeks ended (in millions) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Components of net periodic pension benefit (cost): Service cost $ (0.7 ) $ (0.6 ) $ (1.3 ) $ (1.2 ) Interest cost (2.0 ) (2.5 ) (3.9 ) (5.0 ) Expected return on UK Plan assets 3.0 3.7 5.8 7.5 Amortization of unrecognized net prior service credit 0.6 0.5 1.1 0.9 Amortization of unrecognized actuarial loss (0.9 ) (0.5 ) (1.7 ) (1.0 ) Net periodic pension benefit $ — $ 0.6 $ — $ 1.2 2, 2014,1, 2015, Signet contributed $2.2$1.5 million to the UK Plan and expects to contribute a minimum aggregate of $4.2$2.4 million at current exchange rates to the UK Plan in Fiscal 2015. These2016. The level of contributions areis in accordance with an agreed upon deficit recovery plan and based on the results of the actuarial valuation as of April 5, 2012.CommitmentsLoans, overdrafts and contingencieslong-term debtLegal proceedingsAs previously reported,(in millions) August 1, 2015 January 31, 2015 August 2, 2014 Current liabilities – loans and overdrafts: Revolving credit facility $ — $ — $ — Current portion of senior unsecured term loan 30.0 25.0 20.0 Current portion of capital lease obligations 0.4 0.9 1.1 Bank overdrafts 51.6 71.6 10.1 Total loans and overdrafts 82.0 97.5 31.2 Long-term debt: Senior unsecured notes due 2024, net of unamortized discount 398.5 398.5 398.4 Securitization facility 600.0 600.0 600.0 Senior unsecured term loan 350.0 365.0 380.0 Capital lease obligations 0.2 0.3 0.7 Total long-term debt $ 1,348.7 $ 1,363.8 $ 1,379.1 Total loans, overdrafts and long-term debt $ 1,430.7 $ 1,461.3 $ 1,410.3 March 2008,May 2011. The agreement was subsequently amended in May 2014 to extend the maturity date to 2019 and expand the agreement to include a groupnew $400 million term loan. The $400 million five-year senior unsecured term loan requires the Company to make scheduled quarterly principal payments commencing on November 1, 2014 equal to the amounts per annum of private plaintiffs (the “Claimants”) filed a class action lawsuit for an unspecifiedthe original principal amount against Sterling Jewelers Inc. (“Sterling”), a subsidiary of Signet,the term loan as follows: 5% in the US District Courtfirst 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 on May 27, 2019. As of August 1, 2015, $380.0 million remained outstanding on the term loan. Excluding impact of interest rate swaps designated as cash flow hedges discussed in Note 14, the term loan had a weighted average interest rate of 1.45% through the second quarter of Fiscal 2016.Southern Districttrailing twelve months.New York alleging that US store-level employment practices are discriminatoryAugust 1, 2015 was $1.5 million (January 31, 2015 and August 2, 2014: $0.9 million and $0.3 million, respectively). Amortization relating to these fees of $0.3 million and $0.6 million was recorded 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. Discovery has been completed. The Claimants filed a motion for class certification and Sterling opposed the motion. A hearing on the class certification motion was held in late February 2014. The motion is now pending before the Arbitrator.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)Also, as previously reported, on September 23, 2008, the US Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against Sterlinginterest expense in the US District Courtcondensed consolidated income statements for the Western District of New York. The EEOC’s lawsuit alleges that Sterling engaged in intentional13 and disparate impact gender discrimination with respect to pay and promotions of female retail store employees from January26 weeks ended August 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, Sterling 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 Sterling’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 Sterling 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 appeal is pending.Sterling denies the allegations of both parties and has been defending these cases vigorously. At this point, no outcome or amount of loss 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 has reached a tentative agreement to settle the Hodge and Roberts matters for an immaterial amount.There is no assurance that the settlement will become final or that the Court will approve the settlement. The Company is investigating the underlying allegations of the Naomi Tapia v. Zale Corporation matter and intends to vigorously defend its position against them. The Company cannot reasonably estimate the potential loss or range of loss, if any, for this matter.Litigation Challenging the Company’s Acquisition of Zale CorporationFive putative stockholder class action lawsuits challenging the Company’s acquisition of Zale Corporation have been 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 is 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. The Consolidated Action names as defendants Zale Corporation, the members of the board of directors of Zale Corporation, the Company, and a merger-related subsidiary of the Company. The Consolidated Action alleges 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. The Consolidated Action also alleges that the Zale Corporation directors issued a materially misleading and incomplete proxy statement regarding the merger. Further, the Consolidated Action alleges that Zale Corporation and the Company aided and abetted the Zale Corporation directors’ breaches of fiduciary duty. On May 23, 2014, the Chancery Court of Chancery denied plaintiffs’ motion for a preliminary injunction to prevent the consummation of the merger. The Consolidated Action seeks, among other things, rescission of the merger or damages, as well as attorneys’ and experts’ fees.At this point, plaintiffs have not filed an amended complaint or quantified their claim for damages or fees. As a result, we are unable to reasonably estimate the possible loss or range of losses, if any, arising from the litigation.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)Appraisal LitigationFollowing the consummation of the Company’s acquisition of Zale Corporation, on June 4, 2014, two former Zale Corporation stockholders, who, combined, allege ownership of approximately 3.904 million shares of Zale Corporation’s common stock, filed a petition for appraisal pursuant to 8 Del. C. § 262 in the Court of Chancery of the State of Delaware, captioned Merion Capital L.P. et al. v. Zale Corp., C.A. No. 9731-VCP (the “Merion Action”). On August 26, 2014, another former Zale Corporation stockholder, who alleges ownership of approximately 2.450 million shares of Zale Corporation’s common stock, filed a second petition for appraisal, captioned TIG Arbitrage Opportunity Fund I, L.P. v. Zale Corp., C.A. No. 10070-VCP (the “TIG Action” and, together with the Merion Action, the “Appraisal Actions”). Petitioners in the Appraisal Actions seek a judgment awarding them, among other things, the fair value of their Zale Corporation shares plus interest.On June 30, 2014, Zale Corporation filed its answer to the Merion Action petition and a verified list pursuant to 8 Del. C. § 262(f) naming, as of that filing, the persons that purported to demand appraisal of shares of Zale Corporation common stock. Since that filing, Zale Corporation has received a number of dissent withdrawals from stockholders who had previously demanded appraisal. At this point, the total number of shares of Zale Corporation’s common stock for which appraisal has been demanded and not requested to be withdrawn is approximately 9.0 million, inclusive of the shares allegedly held by petitioners in the Appraisal Actions. The parties in the Merion Action are currently engaged in discovery. The court has not yet set a hearing date for either of the petitions in the Appraisal Actions.At this point, discovery in the Merion Action has just commenced, and none of the petitioners in the Appraisal Actions has claimed an amount of fair value. As a result, we are unable to reasonably estimate the possible loss or range of losses, if any, arising from the litigation.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 believe are not significant to Signet’s consolidated financial position, results of operations or cash flows.18. Share-based compensation expenseSignet recorded share-based compensation expense of $4.0 million and $7.22015, respectively ($0.3 million for the 13 and 26 weeks ended August 2, 2014, respectively, related torespectively). In addition, capitalized fees associated with the Omnibus Plans and Saving Share Plans ($3.5May 2011 credit facility agreement of $0.7 million and $6.5$0.9 million forwere written-off in the 13 and 26 weeks ended August 3, 2013, respectively).19. Loans, overdrafts2, 2014 upon execution of the amended credit agreement in May 2014.long-term debt(in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ — $ — $ — 20.0 — — 1.1 — — 10.1 19.3 1.7 31.2 19.3 1.7 398.4 — — 600.0 — — 380.0 — — 0.7 — — 1,379.1 — — $ 1,410.3 $ 19.3 $ 1.7 Credit facilityIn May 2011, Signet entered into a $400 million senior unsecured multi-currency five yearAugust 2, 2014 there were no outstanding borrowings under the revolving credit facility agreement (the “Credit Facility”).SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)There were no amounts outstanding under this Credit Facility as of February 1, 2014 and August 3, 2013. Signetfacility. The Company had stand-by letters of credit on this Credit Facilitythe revolving credit facility of $10.1$21.9 million, $25.4 million and $9.5$20.3 million as of FebruaryAugust 1, 20142015, January 31, 2015 and August 3, 2013, respectively. As of February 1, 2014 and August 3, 2013, the Company was in compliance with all debt covenants.On May 27, 2014, the Credit Facility was amended in conjunction with the issuance of the new term loan. See “New term loan and amended revolving credit agreement” below. Capitalized amendment fees of $0.7 million relating to the Credit Facility agreement signed in May 2011 were written-off in the 13 week period ended August 2, 2014, upon executingrespectively, that reduce remaining availability under the amendedrevolving credit agreement in May 2014 (26 weeks ended August 2, 2014: $0.9 million).acquisitionAcquisition financing as described below in Note 20,3, replacing the bridge facility commitments in addition to amending its Credit Facility as outlined above, issuing senior unsecured notes and securitizing credit card receivables. No amounts were drawn on the bridge facility commitments prior to replacement and fees of $4.0 million were incurred and capitalized. This agreement was subsequently replaced by the issuances of the long-term debt listed below,below. Fees of $4.0 million relating to this unsecured bridge facility were incurred and thereforecapitalized during the 13 weeks ended August 2, 2014, the remaining $3.2Fiscal 2015. Amortization relating to these fees of $0.8 million was recorded as interest expense in the condensed consolidated income statement (26for the 13 weeks ended August 2, 2014: $4.0 million).IssuanceMay 3, 2014, with the remaining capitalized fees associated with the bridge facility of senior$3.2 million written off during the second quarter of Fiscal 2015.of $6.9 million were incurred, of which $5.7 million was paid and $1.2 million was accruedtotal $7.0 million. Accumulated amortization related to these capitalized fees as of August 1, 2015 was $0.8 million (January 31, 2015 and August 2, 2014.2014: $0.5 million and $0.1 million, respectively). Amortization expense 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 26 weeks ended August 1, 2015, respectively ($0.1 million for the 13 and 26 weeks ended August 2, 2014.an unrelated third party conduitconduits pursuant to a master indenture dated as of November 2, 2001, as supplemented by the Series 2014-A indenture supplement dated as of May 15, 2014 among the Issuer, Sterling Jewelers Inc. (“SJI”("SJI") and Deutsche Bank Trust Company Americas, the indenture trustee. Under terms of the notes, the Issuer has obtained $600 million of financing from the unrelated third party commercial paper conduits sponsored by JPMorgan Chase Bank, N.A., which indebtedness is secured by credit card receivables originated from time to time by SJI. The credit card receivables will ultimately be transferred to the Issuer and are serviced by SJI. Signet guarantees the performance by SJI of its obligations under the agreements associated with this financing arrangement. Borrowings under the asset-backed variable funding notes will bear interest at a rate per annum equal to LIBOR plus an applicable margin.oftotal $2.8 million were incurred, of which $2.3 million was paid and $0.5 million was accruedmillion. Accumulated amortization related to these capitalized fees as of August 1, 2015 was $1.6 million (January 31, 2015 and August 2, 2014.2014: $0.9 million and $0.2 million, respectively). Amortization expense relating to these fees of $0.2$0.3 million and $0.7 million was recorded as interest expense in the condensed consolidated income statements for the 13 and 26 weeks ended August 2, 2014.New term loan and amended revolving credit agreementOn May 27, 2014, Signet amended and restated its existing credit agreement to (i) add a new $4001, 2015, respectively ($0.2 million term loan facility and (ii) amend its existing revolving credit facility. The new term loan facility is a $400 million 5-year senior unsecured facility with JPMorgan Chase Bank, N.A., acting as administrative agent. Signet simultaneously amended and restated its existing revolving credit facility extending the maturity date to 2019. Borrowings under each of the term loan facility and the amended revolving credit facility will bear interest at a rate per annum equal to an applicable margin, plus, at Signet’s option, either (a) a base rate or (b) a LIBOR rate. The amended and restated credit agreement provides that Signet may voluntarily repay outstanding loans at any time without premium or penalty other than reimbursement of the lender’s redeployment and breakage costs in certain cases.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)Signet will be required to make scheduled quarterly payments commencing on November 1, 2014 equal to the amounts per annum of the original principal amount of the term loan 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 on May 27, 2019.The amended and restated credit agreement contains various customary representatives and warranties, financial reporting requirements and other affirmative and negative covenants. As with Signet’s prior credit facility, Signet will be required to maintain at all times a leverage ratio of no greater than 2.50 to 1.00 and a fixed charge coverage ratio of 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.As of August 2, 2014, $400 million was drawn on the new term loan facility. In addition, there were no borrowings drawn on the amended revolving credit facility, with no intra-period borrowings. Signet had stand-by letters of credit of $20.3 million as of August 2, 2014.Capitalized fees relating to the new term loan and amended revolving credit agreement of $6.6 million were incurred, of which $6.4 million was paid and $0.2 million was accrued as of August 2, 2014. Amortization expense relating to these fees of $0.3 million was recorded as interest expense in the condensed consolidated income statements for the 13 and 26 weeks ended August 2, 2014.OtherAtFebruary 1, 2014 and August 3, 2013, there were $10.1$51.6 million, $19.3$71.6 million and $1.7$10.1 million in overdrafts, respectively, which represent issued and outstanding checks where no bank balances exist with the right of offset.Capital Lease ObligationsIn(in millions) August 1, 2015 January 31, 2015 August 2, 2014 Sterling Jewelers ESP deferred revenue $ 691.4 $ 668.9 $ 626.6 Zale ESP deferred revenue 132.3 120.3 99.1 Voucher promotions and other 13.5 22.7 5.8 Total deferred revenue $ 837.2 $ 811.9 $ 731.5 Disclosed as: Current liabilities $ 230.2 $ 248.0 $ 211.1 Non-current liabilities 607.0 563.9 520.4 Total deferred revenue $ 837.2 $ 811.9 $ 731.5 13 weeks ended 26 weeks ended (in millions) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Sterling Jewelers ESP deferred revenue, beginning of period $ 690.7 $ 619.6 $ 668.9 $ 601.2 Plans sold 59.1 53.9 128.4 118.1 Revenue recognized (58.4 ) (46.9 ) (105.9 ) (92.7 ) Sterling Jewelers ESP deferred revenue, end of period $ 691.4 $ 626.6 $ 691.4 $ 626.6 13 weeks ended 26 weeks ended (in millions) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Zale ESP deferred revenue, beginning of period $ 129.3 $ — $ 120.3 $ — Plans acquired — 93.0 — 93.0 Plans sold 29.4 19.3 64.6 19.3 Revenue recognized (26.4 ) (13.2 ) (52.6 ) (13.2 ) Zale ESP deferred revenue, end of period $ 132.3 $ 99.1 $ 132.3 $ 99.1 Zale division, capital leases are entered into related to vehicles for field management. The vehicles are included in property, plant and equipment incustomer has complied with the accompanying condensed consolidated balance sheets and are depreciated over a four-year life. Capital leases, net of accumulated depreciation, included in property, plant and equipment as of August 2, 2014 totaled $1.7 million. The Acquisition occurred on May 29, 2014, and therefore amounts are not included as of February 1, 2014 or August 3, 2013.20. AcquisitionsBotswana diamond polishing factoryOn November 4, 2013, Signet acquired a diamond polishing factory in Gaborone, Botswana for $9.1 million. The acquisition expands the Company’s long-term diamond sourcing capabilities and provides resources forsix-month inspection policy, the Company to cut and polish stones.The transaction was accounted for as a business combination during the fourth quarter of Fiscal 2014. During the second quarter of Fiscal 2015, the Company finalized the valuation of net assets acquired. There werewill replace, at no material changescost to the valuation of net assets acquiredcustomer, any stone that chips, breaks or is lost from its original setting during normal wear. Management estimates the initial allocation reported during the fourth quarter of Fiscal 2014. The total consideration paid by the Company was funded through existing cash and allocated to the net assets acquiredwarranty accrual based on the final fair valueslag 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: property, plant and equipment 13 weeks ended 26 weeks ended (in millions) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 Warranty reserve, beginning of period $ 44.6 $ 19.4 $ 44.9 $ 19.1 Warranty obligations acquired — 28.8 — 28.8 1.9 2.3 4.9 4.0 Utilized (3.4 ) (2.4 ) (6.7 ) (3.8 ) Warranty reserve, end of period $ 43.1 $ 48.1 $ 43.1 $ 48.1 (in millions) August 1, 2015 January 31, 2015 August 2, 2014 Disclosed as: Current liabilities $ 17.6 $ 17.2 $ 17.6 Non-current liabilities 25.5 27.7 30.5 At end of period $ 43.1 $ 44.9 $ 48.1 $5.5$3.8 million and goodwill of $3.6 million. See Note 10 for additional information. None of the goodwill will be deductible for income tax purposes.The results of operations related to the acquired diamond polishing factory are reported within the Other operating segment of Signet’s consolidated results and included in Signet’s condensed consolidated financial statements commencing on the date of acquisition in the Other operating segment.Zale CorporationOn May 29, 2014, the Company acquired 100% of the outstanding shares of Zale Corporation and Zale Corporation became a wholly-owned consolidated subsidiary of Signet. The Acquisition reflects the Company’s strategy to diversify businesses and expand its footprint.Under the terms of the Agreement and Plan of Merger, Zale Corporation shareholders received $21 per share in cash for each outstanding share of common stock and the vesting, upon consummation of the Acquisition, of certain outstanding Zale Corporation restricted stock units and stock options, which converted into the right to receive the merger consideration. The consideration transferred in conjunction with the Acquisition was $1,458.0$7.1 million including $478.2 million to extinguish Zale Corporation’s existing debt. The Acquisition was funded by the Company through existing cash and the issuance of $1,400 million of long-term debt, including: (a) $400 million of senior unsecured notes due in 2024, (b) $600 million of two-year revolving asset-backed variable funding notes, and (c) a $400 million 5-year senior unsecured term loan facility. See Note 19 for additional information related to the Company’s long-term debt instruments.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited)The transaction was accounted for as a business combination during the second quarter of Fiscal 2015. The following table summarizes the consideration transferred in conjunction with the Acquisition.Calculation of consideration Amount $ 910.2 69.6 478.2 $ 1,458.0 Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed in the Acquisition are recorded at acquisition date fair values. The following table summarizes the preliminary fair values identified for the assets acquired and liabilities assumed in the Acquisition as of May 29, 2014:Recognized amounts of identifiable assets acquired and liabilities assumed(in millions) Amount $ 28.8 855.6 22.5 104.2 420.0 50.2 126.3 25.4 (202.8 ) (93.0 ) (50.5 ) (65.6 ) (263.6 ) (24.6 ) 932.9 525.1 $ 1,458.0 (1)Includes loans and overdrafts, accounts payable, income taxes payable, accrued expenses and other current liabilities.As the Acquisition occurred during the second quarter of Fiscal 2015, the fair value of all assets acquired and liabilities assumed was based upon a preliminary valuation, which the Company was still in the process of finalizing as of August 2, 2014. The estimates and assumptions utilized in the preliminary valuation are subject to change within the measurement period as additional information is obtained. The goodwill attributable to the Acquisition will not be amortizable or deductible for tax purposes. Goodwill represents the excess of the purchase price of acquisitions over the Company’s interest in fair value of the identifiable assets and liabilities acquired. As a result of the valuation of assets acquired and liabilities assumed being preliminary as of August 2, 2014, the Company has not yet allocated goodwill attributable to the Acquisition to the reporting units. See Note 10 for additional information regarding goodwill.The following unaudited consolidated pro forma information summarizes the results of operations for the 13 and 26 weeks ended August 2, 2014 and August 3, 2013, as if the Acquisition and1, 2015, respectively, related issuance of $1,400 million of long-term debt (see Note 19) had occurred as of February 2, 2013. The unaudited consolidated pro forma financial information was prepared in accordance with the acquisition method of accounting under existing standards and is not necessarily indicative of the results of operations that would have occurred if the Acquisition had been completed on the date indicated, nor is it indicative of the future operating results of the Company.SIGNET JEWELERS LIMITEDNOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)(Unaudited) Pro forma - unaudited 13 weeks ended 26 weeks ended (in millions, except per share amounts) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 1,379.5 $ 1,285.1 $ 2,859.7 $ 2,708.0 $ 83.5 $ 53.4 $ 198.5 $ 145.2 $ 1.05 $ 0.67 $ 2.48 $ 1.80 $ 1.04 $ 0.66 $ 2.48 $ 1.79 The unaudited consolidated pro forma financial information was prepared in accordance with the acquisition method of accounting under existing standards and is not necessarily indicative of the results of operations that would have occurred if the Acquisition had been completed on the date indicated, nor is it indicative of the future operating results of the Company.The unaudited pro forma information gives effect to actual operating results prior to the Acquisition. The unaudited pro forma information has been adjusted with respect to certain aspects of the Acquisition to reflect the following:Acquisition accounting adjustments to reset deferred revenue associated with extended service plans sold by Zale Corporation prior to the Acquisition to fair value as of the acquisition date. The fair value of deferred revenue is determined based on the estimated costs remaining to be incurred for future obligations associated with the outstanding plans at the time of the Acquisition, plus a reasonable profit margin on the estimated costs. Adjustment also reflects the impact of deferring the revenue associated with the lifetime extended service plans over a 10-year period as disclosed in Note 1.Additional depreciationOmnibus Plan and amortization expenses that would have been recognized assuming fair value adjustments to the existing Zale Corporation assets acquired and liabilities assumed, including inventory, intangible assets, favorable and unfavorable leases, and unfavorable contracts.Tax impact of the Company’s amended capital structure as a result of the Acquisition and related issuance of $1,400 million of long-term debt.Adjustment of valuation allowances associated with U.S. and Canadian deferred tax assets, including net operating loss carryforwards.Exclusion of acquisition-related costs of $30.8 million and $39.2, which were expensed during the 13Share Saving Plans (13 and 26 weeks ended August 2, 2014, respectively. Also excluded were costs associated2014: $4.0 million and $7.2 million, respectively).unsecured bridge facility discussedUS 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. The parties await a ruling. On April 6, 2015, Claimants filed Claimants’ Motion for Clarification or in Note 19the Alternative Motion for Stay of $0.8 millionthe 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.$4.0 million,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 were expensed duringwas referred to a Magistrate Judge. The Magistrate Judge heard oral arguments on the 13 and 26 weeks ended Augustsummary judgment motion in December 2013. On January 2, 2014, respectively. All amounts were reported within the Other segment.unaudited pro forma results do not reflect future events that either haveEEOC 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. The parties await a ruling.may occur afterpossible loss or range of losses, if any, arising from the litigation is able to be estimated.including, but not limitedZale 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 anticipated realizationalleged 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 expected operating synergiesthe settlement was granted on March 9, 2015 and the settlement was implemented.subsequent periods. They also do not give effectthe 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. 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.related costsof 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.Company expectsZale Corporation directors breached their fiduciary duties to incurZale Corporation stockholders in connection with their consideration and approval of the Acquisition, including, butmerger 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.limitedrequested to additional professional fees, employee integration, retentionbe withdrawn is approximately 8.8 million, inclusive of the shares allegedly held by petitioners in the Appraisal Action.severance costs.21.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. As of August 1, 2015, the Company has recorded an accrual for $34.2 million in the accrued expenses and other current liabilities line of the condensed consolidated balance sheet related to the Settlement Agreement. intercompanyintra-entity activity and balances.week periodweeks ended August 1, 2015(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Sales $ — $ — $ 1,391.3 $ 19.3 $ — $ 1,410.6 Cost of sales — — (914.2 ) (5.6 ) — (919.8 ) Gross margin — — 477.1 13.7 — 490.8 Selling, general and administrative expenses (0.9 ) — (444.9 ) (7.0 ) — (452.8 ) Other operating income, net — — 60.7 2.1 — 62.8 Operating (loss) income (0.9 ) — 92.9 8.8 — 100.8 Intra-entity interest income (expense) — 4.7 (47.0 ) 42.3 — — Interest expense, net — (4.9 ) (3.4 ) (2.8 ) — (11.1 ) (Loss) income before income taxes (0.9 ) (0.2 ) 42.5 48.3 — 89.7 Income taxes — 0.1 (26.2 ) (1.4 ) — (27.5 ) Equity in income of subsidiaries 63.1 — 24.7 27.0 (114.8 ) — Net income (loss) $ 62.2 $ (0.1 ) $ 41.0 $ 73.9 $ (114.8 ) $ 62.2 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Sales $ — $ — $ 2,902.3 $ 38.9 $ — $ 2,941.2 Cost of sales — — (1,875.2 ) (9.3 ) — (1,884.5 ) Gross margin — — 1,027.1 29.6 — 1,056.7 Selling, general and administrative expenses (1.2 ) — (889.1 ) (15.7 ) — (906.0 ) Other operating income, net — — 124.2 2.1 — 126.3 Operating (loss) income (1.2 ) — 262.2 16.0 — 277.0 Intra-entity interest income (expense) — 9.4 (93.1 ) 83.7 — — Interest expense, net — (9.8 ) (6.9 ) (5.4 ) — (22.1 ) (Loss) income before income taxes (1.2 ) (0.4 ) 162.2 94.3 — 254.9 Income taxes — 0.1 (74.7 ) 0.7 — (73.9 ) Equity in income of subsidiaries 182.2 — 100.7 104.2 (387.1 ) — Net income (loss) $ 181.0 $ (0.3 ) $ 188.2 $ 199.2 $ (387.1 ) $ 181.0 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ — $ — $ 1,207.5 $ 18.4 $ — $ 1,225.9 — — (811.4 ) (5.5 ) — (816.9 ) — — 396.1 12.9 — 409.0 (0.4 ) — (371.9 ) (6.9 ) — (379.2 ) — — 54.0 (0.3 ) — 53.7 (0.4 ) — 78.2 5.7 — 83.5 — 3.8 (34.8 ) 31.0 — — — (3.9 ) (7.8 ) (2.0 ) — (13.7 ) (0.4 ) (0.1 ) 35.6 34.7 — 69.8 — — (13.3 ) 1.5 — (11.8 ) 58.4 — 31.9 25.8 (116.1 ) —�� $ 58.0 $ (0.1 ) $ 54.2 $ 62.0 $ (116.1 ) $ 58.0 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Sales $ — $ — $ 1,207.5 $ 18.4 $ — $ 1,225.9 Cost of sales — — (811.4 ) (5.5 ) — (816.9 ) Gross margin — — 396.1 12.9 — 409.0 Selling, general and administrative expenses (0.4 ) — (371.9 ) (6.9 ) — (379.2 ) Other operating income, net — — 54.0 (0.3 ) — 53.7 Operating (loss) income (0.4 ) — 78.2 5.7 — 83.5 Intra-entity interest (expense) income — 3.8 (34.8 ) 31.0 — — Interest expense, net — (3.9 ) (7.8 ) (2.0 ) — (13.7 ) (Loss) income before income taxes (0.4 ) (0.1 ) 35.6 34.7 — 69.8 Income taxes — — (13.3 ) 1.5 — (11.8 ) Equity in income of subsidiaries 58.4 — 31.9 25.8 (116.1 ) — Net income (loss) $ 58.0 $ (0.1 ) $ 54.2 $ 62.0 $ (116.1 ) $ 58.0 week periodweeks ended August 2, 2014(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ — $ — $ 2,251.2 $ 30.8 $ — $ 2,282.0 — — (1,459.0 ) (6.8 ) — (1,465.8 ) — — 792.2 24.0 — 816.2 (0.8 ) — (675.7 ) (13.2 ) — (689.7 ) — — 106.0 1.7 — 107.7 (0.8 ) — 222.5 12.5 — 234.2 — 3.8 (41.8 ) 38.0 — — — (3.9 ) (9.6 ) (2.0 ) — (15.5 ) (0.8 ) (0.1 ) 171.1 48.5 — 218.7 — — (69.2 ) 5.1 — (64.1 ) 155.4 — 123.1 106.6 (385.1 ) — $ 154.6 $ (0.1 ) $ 225.0 $ 160.2 $ (385.1 ) $ 154.6 Condensed Consolidated Income StatementFor the 13 week period ended August 3, 2013(Unaudited)(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ — $ — $ 870.3 $ 9.9 $ — $ 880.2 — — (570.2 ) (0.3 ) — (570.5 ) — — 300.1 9.6 — 309.7 (0.7 ) — (250.6 ) 0.8 — (250.5 ) — — 47.6 (1.3 ) — 46.3 (0.7 ) — 97.1 9.1 — 105.5 — — (9.0 ) 9.0 — — — — (1.0 ) — — (1.0 ) (0.7 ) — 87.1 18.1 — 104.5 — — (33.1 ) (4.0 ) — (37.1 ) 68.1 — 59.9 54.0 (182.0 ) — $ 67.4 $ — $ 113.9 $ 68.1 $ (182.0 ) $ 67.4 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ — $ — $ 1,852.0 $ 21.8 $ — $ 1,873.8 — — (1,179.5 ) (1.8 ) — (1,181.3 ) — — 672.5 20.0 — 692.5 (1.1 ) — (536.2 ) (0.2 ) — (537.5 ) — — 95.0 (1.7 ) — 93.3 (1.1 ) — 231.3 18.1 — 248.3 — — (17.1 ) 17.1 — — — — (1.9 ) — — (1.9 ) (1.1 ) — 212.3 35.2 — 246.4 — — (81.9 ) (5.3 ) — �� (87.2 ) 160.3 — 143.6 130.0 (433.9 ) — $ 159.2 $ — $ 274.0 $ 159.9 $ (433.9 ) $ 159.2 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Sales $ — $ — $ 2,251.2 $ 30.8 $ — $ 2,282.0 Cost of sales — — (1,459.0 ) (6.8 ) — (1,465.8 ) Gross margin — — 792.2 24.0 — 816.2 Selling, general and administrative expenses (0.8 ) — (675.7 ) (13.2 ) — (689.7 ) Other operating income, net — — 106.0 1.7 — 107.7 Operating (loss) income (0.8 ) — 222.5 12.5 — 234.2 Intra-entity interest (expense) income — 3.8 (41.8 ) 38.0 — — Interest expense, net — (3.9 ) (9.6 ) (2.0 ) — (15.5 ) (Loss) income before income taxes (0.8 ) (0.1 ) 171.1 48.5 — 218.7 Income taxes — — (69.2 ) 5.1 — (64.1 ) Equity in income of subsidiaries 155.4 — 123.1 106.6 (385.1 ) — Net income (loss) $ 154.6 $ (0.1 ) $ 225.0 $ 160.2 $ (385.1 ) $ 154.6 week periodweeks ended August 2, 20141, 2015(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 58.0 $ (0.1 ) $ 54.2 $ 62.0 $ (116.1 ) $ 58.0 (2.3 ) — (2.6 ) 0.4 2.2 (2.3 ) (0.2 ) — — (0.2 ) 0.2 (0.2 ) (0.1 ) — (0.1 ) — 0.1 (0.1 ) 3.4 — 3.4 — (3.4 ) 3.4 — — — (0.4 ) — 0.4 — 0.4 — — 0.4 — — — — — (0.4 ) — (0.4 ) — 0.4 (0.4 ) 0.8 — 0.7 0.2 (0.9 ) 0.8 $ 58.8 $ (0.1 ) $ 54.9 $ 62.2 $ (117.0 ) $ 58.8 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 154.6 $ (0.1 ) $ 225.0 $ 160.2 $ (385.1 ) $ 154.6 7.3 — 8.3 (1.4 ) (6.9 ) 7.3 (0.2 ) — — (0.2 ) 0.2 (0.2 ) 0.2 — 0.2 — (0.2 ) 0.2 8.1 — 8.1 — (8.1 ) 8.1 — — — — — — 0.8 — 0.8 — (0.8 ) 0.8 — — — — — — (0.7 ) — (0.7 ) — 0.7 (0.7 ) 15.5 — (16.7 ) (1.6 ) (15.1 ) 15.5 $ 170.1 $ (0.1 ) $ 241.7 $ 158.6 $ (400.2 ) $ 170.1 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net income (loss) $ 62.2 $ (0.1 ) $ 41.0 $ 73.9 $ (114.8 ) $ 62.2 Other comprehensive income (loss): Foreign currency translation adjustments (4.7 ) — (1.5 ) (3.2 ) 4.7 (4.7 ) Available-for-sale securities: Unrealized loss (0.2 ) — — (0.2 ) 0.2 (0.2 ) Cash flow hedges: Unrealized gain (loss) (5.5 ) — (5.5 ) — 5.5 (5.5 ) Reclassification adjustment of losses to net income 0.8 — 0.8 — (0.8 ) 0.8 Pension plan: Reclassification adjustment to net income for amortization of actuarial loss 0.7 — 0.7 — (0.7 ) 0.7 Reclassification adjustment to net income for amortization of prior service credits (0.5 ) — (0.5 ) — 0.5 (0.5 ) Total other comprehensive income (9.4 ) — (6.0 ) (3.4 ) 9.4 (9.4 ) Total comprehensive income (loss) $ 52.8 $ (0.1 ) $ 35.0 $ 70.5 $ (105.4 ) $ 52.8 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net income (loss) $ 181.0 $ (0.3 ) $ 188.2 $ 199.2 $ (387.1 ) $ 181.0 Other comprehensive income (loss): Foreign currency translation adjustments 2.8 — 6.0 (3.2 ) (2.8 ) 2.8 Available-for-sale securities: Unrealized loss (0.3 ) — — (0.3 ) 0.3 (0.3 ) Cash flow hedges: Unrealized gain (loss) (11.4 ) — (11.4 ) — 11.4 (11.4 ) Reclassification adjustment of losses to net income 1.3 — 1.3 — (1.3 ) 1.3 Pension plan: Reclassification adjustment to net income for amortization of actuarial loss 1.4 — 1.4 — (1.4 ) 1.4 Reclassification adjustment to net income for amortization of prior service credits (0.9 ) — (0.9 ) — 0.9 (0.9 ) Total other comprehensive income (7.1 ) — (3.6 ) (3.5 ) 7.1 (7.1 ) Total comprehensive income (loss) $ 173.9 $ (0.3 ) $ 184.6 $ 195.7 $ (380.0 ) $ 173.9 week periodweeks ended August 3, 20132, 2014(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net income (loss) $ 58.0 $ (0.1 ) $ 54.2 $ 62.0 $ (116.1 ) $ 58.0 Other comprehensive income (loss): Foreign currency translation adjustments (2.3 ) — (2.6 ) 0.4 2.2 (2.3 ) Available-for-sale securities: Unrealized loss (0.2 ) — — (0.2 ) 0.2 (0.2 ) Cash flow hedges: Unrealized gain (0.1 ) — (0.1 ) — 0.1 (0.1 ) Reclassification adjustment of losses to net income 3.4 — 3.4 — (3.4 ) 3.4 Pension plan: Reclassification adjustment to net income for amortization of actuarial loss 0.4 — 0.4 — (0.4 ) 0.4 Reclassification adjustment to net income for amortization of prior service credits (0.4 ) — (0.4 ) — 0.4 (0.4 ) Total other comprehensive (loss) income 0.8 — 0.7 0.2 (0.9 ) 0.8 Total comprehensive income $ 58.8 $ (0.1 ) $ 54.9 $ 62.2 $ (117.0 ) $ 58.8 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 67.4 $ — $ 113.9 $ 68.1 $ (182.0 ) $ 67.4 (5.2 ) — (5.9 ) 1.2 4.7 (5.2 ) (5.4 ) — (5.4 ) — 5.4 (5.4 ) (0.1 ) — (0.1 ) — 0.1 (0.1 ) — — — — — — 0.4 — 0.4 — (0.4 ) 0.4 — — — — — — (0.2 ) — (0.2 ) — 0.2 (0.2 ) (10.5 ) — (11.2 ) 1.2 10.0 (10.5 ) $ 56.9 $ — $ 102.7 $ 69.3 $ (172.0 ) $ 56.9 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 159.2 $ — $ 274.0 $ 159.9 $ (433.9 ) $ 159.2 (7.0 ) — (8.0 ) 1.6 6.4 (7.0 ) (16.8 ) — (16.8 ) — 16.8 (16.8 ) (0.7 ) — (0.7 ) — 0.7 (0.7 ) — — — — — — 0.9 — 0.9 — (0.9 ) 0.9 — — — — — — (0.6 ) — (0.6 ) — 0.6 (0.6 ) (24.2 ) — (25.2 ) 1.6 23.6 (24.2 ) $ 135.0 $ — $ 248.8 $ 161.5 $ (410.3 ) $ 135.0 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net income (loss) $ 154.6 $ (0.1 ) $ 225.0 $ 160.2 $ (385.1 ) $ 154.6 Other comprehensive income (loss): Foreign currency translation adjustments 7.3 — 8.3 (1.4 ) (6.9 ) 7.3 Available-for-sale securities: Unrealized loss (0.2 ) — — (0.2 ) 0.2 (0.2 ) Cash flow hedges: Unrealized gain 0.2 — 0.2 — (0.2 ) 0.2 Reclassification adjustment of losses to net income 8.1 — 8.1 — (8.1 ) 8.1 Pension plan: Reclassification adjustment to net income for amortization of actuarial loss 0.8 — 0.8 — (0.8 ) 0.8 Reclassification adjustment to net income for amortization of prior service credits (0.7 ) — (0.7 ) — 0.7 (0.7 ) Total other comprehensive (loss) income 15.5 — 16.7 (1.6 ) (15.1 ) 15.5 Total comprehensive income $ 170.1 $ (0.1 ) $ 241.7 $ 158.6 $ (400.2 ) $ 170.1 2, 2014(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 1.4 $ — $ 191.1 $ 22.5 $ — $ 215.0 — — 1,306.9 9.1 — 1,316.0 50.9 — — — (50.9 ) — — — 52.3 1.8 — 54.1 0.1 0.7 115.2 4.5 — 120.5 — — 2.1 0.2 — 2.3 — — 14.9 0.6 — 15.5 — — 2,287.0 58.3 — 2,345.3 52.4 0.7 3,969.5 97.0 (50.9 ) 4,068.7 — — 621.6 6.2 — 627.8 — — 548.3 3.6 — 551.9 — — 467.6 — — 467.6 2,646.2 — 546.8 435.8 (3,628.8 ) — — 403.9 — 3,330.0 (3,733.9 ) — — 6.1 100.4 26.5 — 133.0 — — 84.4 — — 84.4 — — 61.3 — — 61.3 $ 2,698.6 $ 410.7 $ 6,399.9 $ 3,899.1 $ (7,413.6 ) $ 5,994.7 $ — $ — $ 31.2 $ — $ — $ 31.2 — — 234.7 0.3 — 235.0 — — 19.7 31.2 (50.9 ) — 14.7 5.0 392.4 10.0 — 422.1 — — 211.1 — — 211.1 — — 218.9 — — 218.9 — — 60.4 (5.0 ) — 55.4 14.7 5.0 1,168.4 36.5 (50.9 ) 1,173.7 — 398.4 380.7 600.0 — 1,379.1 — — 3,733.9 — (3,733.9 ) — — — 226.9 8.5 — 235.4 — — 520.4 — — 520.4 — — 2.2 — — 2.2 14.7 403.4 6,032.5 645.0 (3,784.8 ) 3,310.8 2,683.9 7.3 367.4 3,254.1 (3,628.8 ) 2,683.9 $ 2,698.6 $ 410.7 $ 6,399.9 $ 3,899.1 $ (7,413.6 ) $ 5,994.7 (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 $ 143.0 $ 16.5 $ — $ 159.8 Accounts receivable, net — — 1,490.4 2.8 — 1,493.2 Intra-entity receivables, net 10.0 — — 129.9 (139.9 ) — Other receivables — — 45.1 10.1 — 55.2 Other current assets 0.1 0.7 120.7 5.3 — 126.8 Deferred tax assets — — 3.9 0.4 — 4.3 Income taxes — — 3.0 — — 3.0 Inventories — — 2,318.9 95.3 — 2,414.2 Total current assets 10.3 0.8 4,125.0 260.3 (139.9 ) 4,256.5 Non-current assets: Property, plant and equipment, net — — 679.5 5.6 — 685.1 Goodwill — — 514.0 3.6 — 517.6 Intangible assets, net — — 437.8 — — 437.8 Investment in subsidiaries 2,879.9 — 554.9 535.9 (3,970.7 ) — Intra-entity receivables, net — 402.5 — 3,479.9 (3,882.4 ) — Other assets — 5.5 113.2 26.7 — 145.4 Deferred tax assets — — 128.9 0.1 — 129.0 Retirement benefit asset — — 40.4 — — 40.4 Total assets $ 2,890.2 $ 408.8 $ 6,593.7 $ 4,312.1 $ (7,993.0 ) $ 6,211.8 Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts $ — $ — $ 82.0 $ — $ — $ 82.0 Accounts payable — — 187.5 6.5 — 194.0 Intra-entity payables, net — — 139.9 — (139.9 ) — Accrued expenses and other current liabilities 18.0 2.4 422.2 10.5 — 453.1 Deferred revenue — — 230.2 — — 230.2 Deferred tax liabilities — — 172.4 — — 172.4 Income taxes — (0.1 ) 6.5 (0.6 ) — 5.8 Total current liabilities 18.0 2.3 1,240.7 16.4 (139.9 ) 1,137.5 Non-current liabilities: Long-term debt — 398.5 350.2 600.0 — 1,348.7 Intra-entity payables, net — — 3,882.4 — (3,882.4 ) — Other liabilities — — 218.7 7.5 — 226.2 Deferred revenue — — 607.0 — — 607.0 Deferred tax liabilities — — 20.2 — — 20.2 Total liabilities 18.0 400.8 6,319.2 623.9 (4,022.3 ) 3,339.6 Total shareholders’ equity 2,872.2 8.0 274.5 3,688.2 (3,970.7 ) 2,872.2 Total liabilities and shareholders’ equity $ 2,890.2 $ 408.8 $ 6,593.7 $ 4,312.1 $ (7,993.0 ) $ 6,211.8 February 1, 2014(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 1.4 $ — $ 237.0 $ 9.2 $ — $ 247.6 — — 1,361.3 12.7 — 1,374.0 47.7 — — 238.0 (285.7 ) — — — 51.1 0.4 — 51.5 — — 86.5 0.5 — 87.0 — — 2.8 0.2 — 3.0 — — 6.0 0.5 — 6.5 — — 1,434.5 53.5 — 1,488.0 49.1 — 3,179.2 315.0 (285.7 ) 3,257.6 — — 481.5 6.1 — 487.6 2,526.3 — 1,452.8 1,143.2 (5,122.3 ) — — — — 1,098.0 (1,098.0 ) — — — 110.4 3.6 — 114.0 — — 113.6 0.1 — 113.7 — — 56.3 — — 56.3 $ 2,575.4 $ — $ 5,393.8 $ 2,566.0 $ (6,506.0 ) $ 4,029.2 $ — $ — $ 19.3 $ — $ — $ 19.3 — — 160.5 2.4 — 162.9 — — 285.7 — (285.7 ) — 12.3 — 313.1 3.1 — 328.5 — — 173.0 — — 173.0 — — 113.1 — — 113.1 — — 101.3 2.6 — 103.9 12.3 — 1,166.0 8.1 (285.7 ) 900.7 — — — — — — — — 1,098.0 — (1,098.0 ) — — — 118.5 3.2 — 121.7 — — 443.7 — — 443.7 12.3 — 2,826.2 11.3 (1,383.7 ) 1,466.1 2,563.1 — 2,567.6 2,554.7 (5,122.3 ) 2,563.1 $ 2,575.4 $ — $ 5,393.8 $ 2,566.0 $ (6,506.0 ) $ 4,029.2 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 2.1 $ 0.1 $ 166.5 $ 24.9 $ — $ 193.6 Accounts receivable, net — — 1,566.2 1.4 — 1,567.6 Intra-entity receivables, net 121.6 — — 61.8 (183.4 ) — Other receivables — — 53.9 9.7 — 63.6 Other current assets 0.1 0.7 130.9 5.5 — 137.2 Deferred tax assets — — 4.3 0.2 — 4.5 Income taxes — — 1.8 — — 1.8 Inventories — — 2,376.6 62.4 — 2,439.0 Total current assets 123.8 0.8 4,300.2 165.9 (183.4 ) 4,407.3 Non-current assets: Property, plant and equipment, net — — 660.2 5.7 — 665.9 Goodwill — — 515.6 3.6 — 519.2 Intangible assets — — 447.1 — — 447.1 Investment in subsidiaries 2,701.3 — 462.8 421.7 (3,585.8 ) — Intra-entity receivables, net — 402.4 — 3,490.0 (3,892.4 ) — Other assets — 5.8 105.3 28.9 — 140.0 Deferred tax assets — — 111.0 0.1 — 111.1 Retirement benefit asset — — 37.0 — — 37.0 Total assets $ 2,825.1 $ 409.0 $ 6,639.2 $ 4,115.9 $ (7,661.6 ) $ 6,327.6 Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts $ — $ — $ 97.5 $ — $ — $ 97.5 Accounts payable — — 273.4 4.3 — 277.7 Intra-entity payables, net — — 183.4 — (183.4 ) — Accrued expenses and other current liabilities 14.7 2.4 456.7 8.6 — 482.4 Deferred revenue — — 248.0 — — 248.0 Deferred tax liabilities — — 145.8 — — 145.8 Income taxes — (0.2 ) 87.7 (0.6 ) — 86.9 Total current liabilities 14.7 2.2 1,492.5 12.3 (183.4 ) 1,338.3 Non-current liabilities: Long-term debt — 398.5 365.3 600.0 — 1,363.8 Intra-entity payables, net — — 3,892.4 — (3,892.4 ) — Other liabilities — — 222.0 8.2 — 230.2 Deferred revenue — — 563.9 — — 563.9 Deferred tax liabilities — — 21.0 — — 21.0 Total liabilities 14.7 400.7 6,557.1 620.5 (4,075.8 ) 3,517.2 Total shareholders’ equity 2,810.4 8.3 82.1 3,495.4 (3,585.8 ) 2,810.4 Total liabilities and shareholders’ equity $ 2,825.1 $ 409.0 $ 6,639.2 $ 4,115.9 $ (7,661.6 ) $ 6,327.6 3, 2013(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 0.9 $ — $ 203.1 $ 8.9 $ — $ 212.9 — — 1,144.1 8.0 — 1,152.1 48.1 — — 725.0 (773.1 ) — — — 42.6 0.4 — 43.0 0.1 — 79.0 0.1 — 79.2 — — 2.0 0.3 — 2.3 — — 12.8 — — 12.8 — — 1,367.5 50.2 — 1,417.7 49.1 — 2,851.1 792.9 (773.1 ) 2,920.0 — — 434.1 0.8 — 434.9 2,335.7 — 1,455.2 1,157.5 (4,948.4 ) — — — — 600.0 (600.0 ) — — — 107.4 — — 107.4 — — 127.3 — — 127.3 — — 50.7 — — 50.7 $ 2,384.8 $ — $ 5,025.8 $ 2,551.2 $ (6,321.5 ) $ 3,640.3 $ — $ — $ 1.7 $ — $ — $ 1.7 — — 129.6 0.7 — 130.3 — — 773.1 — (773.1 ) — 12.2 — 245.4 2.1 — 259.7 — — 154.6 — — 154.6 — — 140.8 — — 140.8 — — 45.2 1.7 — 46.9 12.2 — 1,490.4 4.5 (773.1 ) 734.0 — — 600.0 — (600.0 ) — — — 0.7 — — 0.7 — — 109.9 4.7 — 114.6 — — 418.4 — — 418.4 12.2 — 2,619.4 9.2 (1,373.1 ) 1,267.7 2,372.6 — 2,406.4 2,542.0 (4,948.4 ) 2,372.6 $ 2,384.8 $ — $ 5,025.8 $ 2,551.2 $ (6,321.5 ) $ 3,640.3 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 1.4 $ — $ 191.1 $ 22.5 $ — $ 215.0 Accounts receivable, net — — 1,306.9 9.1 — 1,316.0 Intra-entity receivables, net 50.9 — — — (50.9 ) — Other receivables — — 52.3 1.8 — 54.1 Other current assets 0.1 0.7 115.2 4.5 — 120.5 Deferred tax assets — — 2.1 0.2 — 2.3 Income taxes — — 14.9 0.6 — 15.5 Inventories — — 2,287.0 58.3 — 2,345.3 Total current assets 52.4 0.7 3,969.5 97.0 (50.9 ) 4,068.7 Non-current assets: Property, plant and equipment, net — — 621.6 6.2 — 627.8 Goodwill — — 548.3 3.6 — 551.9 Intangible assets, net 0.0 — 467.6 — — 467.6 Investment in subsidiaries 2,646.2 — 546.8 435.8 (3,628.8 ) — Intra-entity receivables, net — 403.9 — 3,330.0 (3,733.9 ) — Other assets — 6.1 100.4 26.5 — 133.0 Deferred tax assets — — 84.4 — — 84.4 Retirement benefit asset — — 61.3 — — 61.3 Total assets $ 2,698.6 $ 410.7 $ 6,399.9 $ 3,899.1 $ (7,413.6 ) $ 5,994.7 Liabilities and Shareholders’ equity Current liabilities: Loans and overdrafts $ — $ — $ 31.2 $ — $ — $ 31.2 Accounts payable — — 234.7 0.3 — 235.0 Intra-entity payables, net — — 19.7 31.2 (50.9 ) — Accrued expenses and other current liabilities 14.7 5.0 392.4 10.0 — 422.1 Deferred revenue — — 211.1 — — 211.1 Deferred tax liabilities — — 218.9 — — 218.9 Income taxes — — 60.4 (5.0 ) — 55.4 Total current liabilities 14.7 5.0 1,168.4 36.5 (50.9 ) 1,173.7 Non-current liabilities: Long-term debt — 398.4 380.7 600.0 — 1,379.1 Deferred tax liabilities — — 2.2 — — 2.2 Intra-entity payables, net — — 3,733.9 — (3,733.9 ) — Other liabilities — — 226.9 8.5 — 235.4 Deferred revenue — — 520.4 — — 520.4 Total liabilities 14.7 403.4 6,032.5 645.0 (3,784.8 ) 3,310.8 Total shareholders’ equity 2,683.9 7.3 367.4 3,254.1 (3,628.8 ) 2,683.9 Total liabilities and shareholders’ equity $ 2,698.6 $ 410.7 $ 6,399.9 $ 3,899.1 $ (7,413.6 ) $ 5,994.7 week periodweeks ended August 2, 20141, 2015(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 49.6 $ 3.8 $ 76.9 $ 30.1 $ (50.0 ) $ 110.4 49.6 3.8 76.9 30.1 (50.0 ) 110.4 — — (61.8 ) (0.1 ) — (61.9 ) — — (7.4 ) — 7.4 — — — — (1.2 ) — (1.2 ) — — — 1.0 — 1.0 — — (1,431.1 ) 1.9 — (1,429.2 ) — — (1,500.3 ) 1.6 7.4 (1,491.3 ) (14.4 ) — — — — (14.4 ) — — (850.2 ) 0.2 850.0 — 1.0 7.4 — 800.0 (807.4 ) 1.0 — — — — — — — 398.4 400.0 600.0 — 1,398.4 — (5.7 ) (7.4 ) (2.3 ) — (15.4 ) (11.0 ) — — — — (11.0 ) 0.2 — — — — 0.2 — — (0.2 ) — — (0.2 ) — — (11.7 ) — — (11.7 ) (25.7 ) (403.9 ) 1,857.9 (1,428.3 ) — — (49.9 ) (3.8 ) 1,388.4 (30.4 ) 42.6 1,346.9 1.7 — 226.7 20.7 — 249.1 (0.3 ) — (35.0 ) 1.3 — (34.0 ) — — (0.6 ) 0.5 — (0.1 ) $ 1.4 $ — $ 191.1 $ 22.5 $ — $ 215.0 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ 2.5 $ (4.7 ) $ 102.8 $ 43.0 $ — $ 143.6 Investing activities Purchase of property, plant and equipment — — (55.7 ) (0.3 ) — (56.0 ) Investment in subsidiaries — — — — — — Purchase of available-for-sale securities — — — (0.5 ) — (0.5 ) Proceeds from available-for-sale securities — — — 0.1 — 0.1 Net cash (used in) provided by investing activities — — (55.7 ) (0.7 ) — (56.4 ) Financing activities Dividends paid (17.7 ) — — — — (17.7 ) Proceeds from issuance of common shares 0.1 — — — — 0.1 Excess tax benefit from exercise of share awards — — — — — — Proceeds from long-term debt — — — 558.1 — 558.1 Repayments of long-term debt — — (5.0 ) (558.1 ) — (563.1 ) Repurchase of common shares (62.8 ) — — — — (62.8 ) Net settlement of equity based awards 0.4 — — — — 0.4 Capital lease payments — — (0.3 ) — — (0.3 ) Proceeds from (repayment of) short-term borrowings — — 35.0 — — 35.0 Intra-entity activity, net 76.8 4.7 (44.3 ) (37.2 ) — — Net cash (used in) provided by financing activities (3.2 ) 4.7 (14.6 ) (37.2 ) — (50.3 ) Cash and cash equivalents at beginning of period 0.9 0.1 110.4 11.2 — 122.6 (Decrease) increase in cash and cash equivalents (0.7 ) — 32.5 5.1 — 36.9 Effect of exchange rate changes on cash and cash equivalents — — 0.1 0.2 — 0.3 Cash and cash equivalents at end of period $ 0.2 $ 0.1 $ 143.0 $ 16.5 $ — $ 159.8 week periodweeks ended August 2, 20141, 2015(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 49.1 $ 3.8 $ 139.3 $ 41.7 $ (50.0 ) $ 183.9 49.1 3.8 139.3 41.7 (50.0 ) 183.9 — — (89.6 ) (0.4 ) — (90.0 ) — — (7.4 ) — 7.4 — — — — (1.2 ) — (1.2 ) — — — 1.0 — 1.0 — — (1,431.1 ) 1.9 — (1,429.2 ) — — (1,528.1 ) 1.3 7.4 (1,519.4 ) (26.4 ) — — — — (26.4 ) — — (849.1 ) (0.9 ) 850.0 — 2.0 7.4 — 800.0 (807.4 ) 2.0 — — 7.7 — — 7.7 — 398.4 400.0 600.0 — 1,398.4 — (5.7 ) (10.4 ) (2.3 ) — (18.4 ) (22.4 ) — — — — (22.4 ) (15.1 ) — — — — (15.1 ) — — (0.2 ) — — (0.2 ) — — (22.2 ) — — (22.2 ) 12.8 (403.9 ) 1,815.5 (1,424.4 ) — — (49.1 ) (3.8 ) 1,341.3 (27.6 ) 42.6 1,303.4 1.4 — 237.0 9.2 — 247.6 — — (47.5 ) 15.4 — (32.1 ) — — 1.6 (2.1 ) — (0.5 ) $ 1.4 $ — $ 191.1 $ 22.5 $ — $ 215.0 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net cash provided by (used in) operating activities $ (0.9 ) $ 0.2 $ 157.2 $ 54.1 $ — $ 210.6 Investing activities Purchase of property, plant and equipment — — (98.6 ) (0.3 ) — (98.9 ) Investment in subsidiaries — — — — — — Purchase of available-for-sale securities — — — (1.9 ) — (1.9 ) Proceeds from available-for-sale securities — — — 3.6 — 3.6 Acquisition of Zale Corporation, net of cash acquired — — — — — — Net cash (used in) provided by investing activities — — (98.6 ) 1.4 — (97.2 ) Financing activities Dividends paid (32.1 ) — — — — (32.1 ) Intra-entity dividends paid — — — — — — Proceeds from issuance of common shares 0.2 — — — — 0.2 Excess tax benefit from exercise of share awards — — 5.1 — — 5.1 Proceeds from long-term debt — — — 1,196.3 — 1,196.3 Repayments of long-term debt — — (10.0 ) (1,196.3 ) — (1,206.3 ) Payment of debt issuance costs — — — — — — Repurchase of common shares (81.9 ) — — — — (81.9 ) Net settlement of equity based awards (8.3 ) — — — — (8.3 ) Capital lease payments — — (0.6 ) — — (0.6 ) Proceeds from (repayment of) short-term borrowings — — (20.0 ) — — (20.0 ) Intra-entity activity, net 121.1 (0.2 ) (56.8 ) (64.1 ) — — Net cash (used in) provided by financing activities (1.0 ) (0.2 ) (82.3 ) (64.1 ) — (147.6 ) Cash and cash equivalents at beginning of period 2.1 0.1 166.5 24.9 — 193.6 (Decrease) increase in cash and cash equivalents (1.9 ) — (23.7 ) (8.6 ) — (34.2 ) Effect of exchange rate changes on cash and cash equivalents — — 0.2 0.2 — 0.4 Cash and cash equivalents at end of period $ 0.2 $ 0.1 $ 143.0 $ 16.5 $ — $ 159.8 week periodweeks ended August 3, 20132, 2014(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 49.4 $ — $ 14.1 $ (0.1 ) $ (50.0 ) $ 13.4 49.4 — 14.1 (0.1 ) (50.0 ) 13.4 — — (30.2 ) (0.2 ) — (30.4 ) (0.3 ) — — — 0.3 — — — 1.4 — — 1.4 (0.3 ) — (28.8 ) (0.2 ) 0.3 (29.0 ) (12.1 ) — — — — (12.1 ) — — (43.7 ) (6.3 ) 50.0 — 0.2 — 0.3 — (0.3 ) 0.2 — — 4.5 — — 4.5 (25.0 ) — — — — (25.0 ) 0.1 — — — — 0.1 — — (4.0 ) — — (4.0 ) (20.8 ) — 36.1 (15.3 ) — — (57.6 ) — (6.8 ) (21.6 ) 49.7 (36.3 ) 9.4 — 225.0 29.3 — 263.7 (8.5 ) — (21.5 ) (21.9 ) — (51.9 ) — — (0.4 ) 1.5 — 1.1 $ 0.9 $ — $ 203.1 $ 8.9 $ — $ 212.9 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net cash provided by operating activities $ 49.6 $ 3.8 $ 76.9 $ 30.1 $ (50.0 ) $ 110.4 Investing activities Purchase of property, plant and equipment — — (61.8 ) (0.1 ) — (61.9 ) Investment in subsidiaries $ — $ — $ (7.4 ) $ 0.0 $ 7.4 $ 0.0 Purchase of available-for-sale securities — — — (1.2 ) — (1.2 ) Proceeds from available-for-sale securities — — — 1.0 — 1.0 Acquisition of Zale Corporation, net of cash acquired — — (1,431.1 ) 1.9 — (1,429.2 ) Net cash (used in) provided by investing activities — — (1,500.3 ) 1.6 7.4 (1,491.3 ) Financing activities Dividends paid (14.4 ) — — — — (14.4 ) Intra-entity dividends paid — — (850.2 ) 0.2 850.0 — Proceeds from issuance of common shares 1.0 7.4 — 800.0 (807.4 ) 1.0 Repurchase of common shares (11.0 ) — 0.0 — — (11.0 ) Net settlement of equity based awards 0.2 — — — — 0.2 Proceeds from long-term debt — 398.4 400.0 600.0 — 1,398.4 Payment of debt issuance costs — (5.7 ) (7.4 ) (2.3 ) — (15.4 ) Capital lease payments — — (0.2 ) — — (0.2 ) Repayment of short-term borrowings — — (11.7 ) — — (11.7 ) Intra-entity activity, net (25.7 ) (403.9 ) 1,857.9 (1,428.3 ) — — Net cash (used in) provided by financing activities (49.9 ) (3.8 ) 1,388.4 (30.4 ) 42.6 1,346.9 Cash and cash equivalents at beginning of period 1.7 — 226.7 20.7 — 249.1 (Decrease) increase in cash and cash equivalents (0.3 ) — (35.0 ) 1.3 — (34.0 ) Effect of exchange rate changes on cash and cash equivalents — — (0.6 ) 0.5 — (0.1 ) Cash and cash equivalents at end of period $ 1.4 $ — $ 191.1 $ 22.5 $ — $ 215.0 week periodweeks ended August 3, 20132, 2014(in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated $ 88.9 $ — $ 45.2 $ 14.4 $ (90.0 ) $ 58.5 88.9 — 45.2 14.4 (90.0 ) 58.5 — — (53.4 ) (0.2 ) — (53.6 ) (0.3 ) — — — 0.3 — — — 1.4 — — 1.4 (0.3 ) — (52.0 ) (0.2 ) 0.3 (52.2 ) (21.9 ) — — — — (21.9 ) — — (77.0 ) (13.0 ) 90.0 — 5.2 — 0.3 — (0.3 ) 5.2 — — 4.5 — — 4.5 (75.1 ) — — — — (75.1 ) (9.0 ) — — — — (9.0 ) — — 1.7 — — 1.7 (0.3 ) — 10.9 (10.6 ) — — (101.1 ) — (59.6 ) (23.6 ) 89.7 (94.6 ) 13.4 — 271.3 16.3 — 301.0 (12.5 ) — (66.4 ) (9.4 ) — (88.3 ) — — (1.8 ) 2.0 — 0.2 $ 0.9 $ — $ 203.1 $ 8.9 $ — $ 212.9 (in millions) Signet
Jewelers
Limited Signet UK
Finance plc Guarantor
Subsidiaries Non-
Guarantor
Subsidiaries Eliminations Consolidated Net cash provided by operating activities $ 49.1 $ 3.8 $ 139.3 $ 41.7 $ (50.0 ) $ 183.9 Investing activities — — — — — Purchase of property, plant and equipment — — (89.6 ) (0.4 ) — (90.0 ) Investment in subsidiaries — — (7.4 ) — 7.4 — Purchase of available-for-sale securities — — — (1.2 ) — (1.2 ) Proceeds from available-for-sale securities — — — 1.0 — 1.0 Acquisition of Zale Corporation, net of cash acquired — — (1,431.1 ) 1.9 — (1,429.2 ) Net cash (used) provided by investing activities — — (1,528.1 ) 1.3 7.4 (1,519.4 ) Financing activities Dividends paid (26.4 ) — — — — (26.4 ) Intra-entity dividends paid — — (849.1 ) (0.9 ) 850.0 — Proceeds from issuance of common shares 2.0 7.4 — 800.0 (807.4 ) 2.0 Excess tax benefit from exercise of share awards — — 7.7 — — 7.7 Repurchase of common shares (22.4 ) — — — — (22.4 ) Net settlement of equity based awards (15.1 ) — — — — (15.1 ) Proceeds from long-term debt — 398.4 400.0 600.0 — 1,398.4 Payment of debt issuance costs — (5.7 ) (10.4 ) (2.3 ) — (18.4 ) Capital lease payments — — (0.2 ) — — (0.2 ) Repayment of short-term borrowings — — (22.2 ) — — (22.2 ) Intra-entity activity, net 12.8 (403.9 ) 1,815.5 (1,424.4 ) — — Net cash (used in) provided by financing activities (49.1 ) (3.8 ) 1,341.3 (27.6 ) 42.6 1,303.4 Cash and cash equivalents at beginning of period 1.4 — 237.0 9.2 — 247.6 (Decrease) increase in cash and cash equivalents — — (47.5 ) 15.4 — (32.1 ) Effect of exchange rate changes on cash and cash equivalents — — 1.6 (2.1 ) — (0.5 ) Cash and cash equivalents at end of period $ 1.4 $ — $ 191.1 $ 22.5 $ — $ 215.0 MANAGEMENT’SMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSrisks relating to Signet being a Bermuda corporation,decline in consumer spending, the merchandising, pricing and inventory policies followed by Signet, the reputation of Signet and its brands, the level of competition in the jewelry sector, the cost and availability of diamonds, gold and other precious metals, regulations relating to customer credit, seasonality of Signet’s business, financial market risks, deterioration in customers’ financial condition, exchange rate fluctuations, changes in Signet's credit rating, changes in consumer attitudes regarding jewelry, management of social, ethical and environmental risks, security breaches and other disruptions to Signet’s information technology infrastructure and databases, inadequacy in and disruptions to internal controls and systems, changes in assumptions used in making accounting estimates relating to items such as extended service plans and pensions, risks related to Signet being a Bermuda corporation, the impact of the acquisition of Zale Corporation on relationships, including with employees, suppliers, customers and competitors, the impact of stockholder litigation with respect to the acquisition of Zale Corporation, and our ability to successfully integrate Zale Corporation’sCorporation's operations and to realize synergies from the transaction.forward-lookingforward looking statement, see the “Risk Factors”"Risk Factors" section of Signet’sSignet's Fiscal 20142015 Annual Report on Form 10-K filed with the SEC on March 27, 201426, 2015 and Part II, Item 1A of this Form 10-Q. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.largest specialty retail jeweler by sales incover of this document. Its corporate website is www.signetjewelers.com, from where documents that the Company is required to file or furnish with the US CanadaSecurities and UK. SignetExchange Commission (“SEC”) may be viewed or downloaded free of charge.as four reportable segments, the Sterling Jewelers division, the UK Jewelry division and the Zale division,by store brand grouping, a description of which consists of the Zale Jewelry and the Piercing Pagoda segments. In addition, the Other operating segment consists of all non-reportable segments, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones.1,4871,530 stores in all 50 states at August 2, 2014.1, 2015. Its stores tradeoperate nationally in malls and off-mall locations principally as Kay Jewelers (“Kay”), and regionally under a number of well-established mall-based brands. Destination superstores trade nationwide as Jared The Galleria Of Jewelry (“Jared”).operated 998 fine jewelry (“Zale Jewelry”) stores and 611 kiosks (“Piercing Pagoda”) at August 2, 2014, located primarily in shopping malls throughout the US, Canada and Puerto Rico. Zale Jewelry includes national brands Zales Jewelers, Zales Outlet and Peoples Jewellers, along with regional brands Gordon’s Jewelers and Mappins Jewellers. Piercing Pagoda operates through mall-based kiosks.◦ Zale Jewelry, which operated 966 jewelry stores at August 1, 2015, is located primarily in shopping malls in North America. Zale Jewelry includes the US store brand Zales and the Canada store brand Peoples Jewellers. The division also operates regional brands Gordon’s Jewelers and Mappins Jewellers. ◦ Piercing Pagoda, which operated 599 mall-based kiosks at August 1, 2015, is located in shopping malls in the US and Puerto Rico. 493498 stores at August 2, 2014, including 14 stores in the Republic of Ireland and three in the Channel Islands.1, 2015. Its stores tradeoperate in major regional shopping malls and prime ‘High Street’ locations (main shopping thoroughfaresoff-mall (i.e. high street) principally as H.Samuel and Ernest Jones.high pedestrian traffic) as “H.Samuel,” “Ernest Jones,” and “Leslie Davis.”In addition, on November 4, 2013, Signet acquired aunallocated corporate administrative functions in the segment "Other" for financial reporting purposes. Our diamond sourcing function includes our diamond polishing factory in Gaborone, Botswana. This acquisition expanded Signet’s long-term diamond sourcing capabilities and provides resourcesSee Note 4 of Item 1 for Signet to cut and polish stones.week periodsweeks ended August 2, 20141, 2015 and August 3, 20132, 2014 presented herein has been affected by certain transactions, including:203 of Item 1 resulting in 26 incremental days of Zale operations in the second quarter of Fiscal 2016 compared to the accompanying unaudited condensed consolidated financial statements;acquisition relatedtransaction-related costs;Notes 19Note 3 and 20;costs. 13 weeks ended Change % Impact of
exchange
rate
movement 13 weeks
ended
August 3, 2013
at constant
exchange rates
(non-GAAP) Change at
constant
exchange
rates
(non-
GAAP)
% (in millions, except per share amounts) August 2,
2014(1) August 3,
2013 $ 810.4 $ 741.1 9.4 $ — $ 741.1 9.4 162.9 139.1 17.1 15.1 154.2 5.6 247.5 — — — — — 5.1 — — — — — 1,225.9 880.2 39.3 15.1 895.3 36.9 (816.9 ) (570.5 ) (43.2 ) (11.1 ) (581.6 ) (40.5 ) 409.0 309.7 32.1 4.0 313.7 30.4 (379.2 ) (250.5 ) (51.4 ) (4.0 ) (254.5 ) (49.0 ) 53.7 46.3 16.0 — 46.3 16.0 129.9 111.9 16.1 — 111.9 16.1 1.1 (0.8 ) 237.5 — (0.8 ) 237.5 (9.8 ) — — — — — (37.7 ) (5.6 ) (573.2 ) — (5.6 ) (573.2 ) 83.5 105.5 (20.9 ) — 105.5 (20.9 ) (13.7 ) (1.0 ) nm 0.1 (0.9 ) nm 69.8 104.5 (33.2 ) 0.1 104.6 (33.3 ) (11.8 ) (37.1 ) 68.2 (0.3 ) (37.4 ) 68.4 $ 58.0 $ 67.4 (13.9 ) $ (0.2 ) $ 67.2 (13.7 ) $ 0.73 $ 0.84 (13.1 ) $ — $ 0.84 (13.1 ) $ 0.72 $ 0.84 (14.3 ) $ (0.01 ) $ 0.83 (13.3 ) (1)Includes the 65-day results of Zale’s from acquisition date to end of second quarter.(2)Other includes $30.8 million of one-time transaction and severance related costs.nmNot meaningful. 26 weeks ended Change % Impact of
exchange
rate
movement 26 weeks
ended
August 3, 2013
at constant
exchange rates
(non-GAAP) Change at
constant
exchange
rates
(non-
GAAP)
% (in millions, except per share amounts) August 2,
2014(1) August 3,
2013 $ 1,713.9 $ 1,598.3 7.2 $ — $ 1,598.3 7.2 314.6 274.1 14.8 27.1 301.2 4.4 247.5 — — — — — 6.0 1.4 328.6 — 1.4 328.6 2,282.0 1,873.8 21.8 27.1 1,900.9 20.0 (1,465.8 ) (1,181.3 ) (24.1 ) (20.0 ) (1,201.3 ) (22.0 ) 816.2 692.5 17.9 7.1 699.6 16.7 (689.7 ) (537.5 ) (28.3 ) (7.6 ) (545.1 ) (26.5 ) 107.7 93.3 15.4 0.1 93.4 15.3 296.2 264.7 11.9 — 264.7 11.9 1.1 (4.9 ) 122.4 (0.4 ) (5.3 ) 120.8 (9.8 ) — — — — — (53.3 ) (11.5 ) (363.5 ) — (11.5 ) (363.5 ) 234.2 248.3 (5.7 ) (0.4 ) 247.9 (5.5 ) (15.5 ) (1.9 ) (715.8 ) — (1.9 ) (715.8 ) 218.7 246.4 (11.2 ) (0.4 ) 246.0 (11.1 ) (64.1 ) (87.2 ) 26.5 — (87.2 ) 26.5 $ 154.6 $ 159.2 (2.9 ) $ (0.4 ) $ 158.8 (2.6 ) $ 1.93 $ 1.98 (2.5 ) $ (0.01 ) $ 1.97 (2.0 ) $ 1.93 $ 1.97 (2.0 ) $ (0.01 ) $ 1.96 (1.5 ) (1)Includes the 65-day results of Zale’s from acquisition date to end of second quarter.(2)Other includes $39.2 million of one-time transaction and severance related costs.Net (debt)/cashNet (debt)/cash istotal of cashUS dollar to British pound and cash equivalents less loansCanadian dollar exchange rates have an impact on Signet’s results. The UK Jewelry division functions in British pounds and overdrafts, and long-term debt, and is helpful in providing a measurethe Canadian reporting unit of the total indebtednessZale Jewelry segment functions in Canadian dollars as sales and a majority of operating expenses are incurred in those foreign currencies. The results for each are then translated into US dollars for external reporting purposes. Management believes it assists in understanding the business.(in millions) August 2,
2014 February 1,
2014 August 3,
2013 $ 215.0 $ 247.6 $ 212.9 (31.2 ) (19.3 ) (1.7 ) (1,379.1 ) — — $ (1,195.3 ) $ 228.3 $ 211.2 Free cash flowFree cash flowperformance of Signet and its segments if constant currency figures are given. This is a non-GAAP measure defined asparticularly so in periods when exchange rates are volatile. The constant currency amounts are calculated by retranslating the net cash provided by operating activities less purchases of property, plant and equipment, net.prior year figures using the current year’s exchange rate. Management considers that it is helpfuluseful to exclude the impact of movements in understanding how the business is generating cash from itsUS dollar to British pound and Canadian dollar exchange rates to analyze and explain changes and trends in Signet’s sales and costs. (in millions, except per share amounts) 13 weeks ended Change % Impact of exchange rate movement 13 weeks ended August 2, 2014 at constant exchange rates (non-GAAP) Change at constant exchange rates (non-GAAP) % Sales by segments: August 1, 2015 August 2, 2014 Sterling Jewelers $ 858.5 $ 810.4 5.9 % $ — $ 810.4 5.9 % Zale Jewelry 336.4 215.0 56.5 % (6.1 ) 208.9 61.0 % Piercing Pagoda 52.9 32.5 62.8 % — 32.5 62.8 % UK Jewelry 159.1 162.9 (2.3 )% (13.3 ) 149.6 6.4 % Other 3.7 5.1 (27.5 )% — 5.1 (27.5 )% 1,410.6 1,225.9 15.1 % (19.4 ) 1,206.5 16.9 % Cost of sales (919.8 ) (816.9 ) (12.6 )% 14.4 (802.5 ) (14.6 )% Gross margin 490.8 409.0 20.0 % (5.0 ) 404.0 21.5 % Selling, general and administrative expenses (452.8 ) (379.2 ) (19.4 )% 5.1 (374.1 ) (21.0 )% Other operating income, net 62.8 53.7 16.9 % (0.1 ) 53.6 17.2 % Operating income (loss): Sterling Jewelers 157.8 129.9 21.5 % — 129.9 21.5 % (2.0 ) (8.0 ) 75.0 % — (8.0 ) 75.0 % (0.1 ) (1.8 ) 94.4 % — (1.8 ) 94.4 % UK Jewelry 3.2 1.1 190.9 % (0.1 ) 1.0 220.0 % (58.1 ) (37.7 ) (54.1 )% 0.1 (37.6 ) (54.5 )% 100.8 83.5 20.7 % — 83.5 20.7 % Interest expense, net (11.1 ) (13.7 ) 19.0 % — (13.7 ) 19.0 % Income before income taxes 89.7 69.8 28.5 % — 69.8 28.5 % Income taxes (27.5 ) (11.8 ) (133.1 )% — (11.8 ) (133.1 )% Net income $ 62.2 $ 58.0 7.2 % $ — $ 58.0 7.2 % Basic earnings per share $ 0.78 $ 0.73 6.8 % $ — $ 0.73 6.8 % Diluted earnings per share $ 0.78 $ 0.72 8.3 % $ — $ 0.72 8.3 % investing activities that can be used$9.4 million related to meet the financing needs of the business. Free cash flow does not represent the residual cash flow available for discretionary expenditure. 13 weeks ended 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 110.4 $ 13.4 $ 183.9 $ 58.5 (61.9 ) (30.4 ) (90.0 ) (53.6 ) $ 48.5 $ (17.0 ) $ 93.9 $ 4.9 Earnings before interest, income taxes, depreciation and amortization (“EBITDA”)EBITDA is a non-GAAP measure defined as earnings before interest and income taxes (operating income), depreciation and amortization, and non-cash acquisition related accounting adjustments. EBITDA is an important indicator of operating performance as it excludes the effects of financingpurchase accounting associated with the acquisition of Zale Corporation for the 13 weeks ended August 1, 2015 and investing activities by eliminatingAugust 2, 2014, respectively.interest, depreciationpurchase accounting associated with the acquisition of Zale Corporation for the 13 weeks ended August 1, 2015 and amortization costs,August 2, 2014, respectively.(in millions, except per share amounts) 26 weeks ended Change % Impact of exchange rate movement 26 weeks ended August 2, 2014 at constant exchange rates (non-GAAP) Change at constant exchange rates (non-GAAP) % Sales by segments: August 1, 2015 August 2, 2014 Sterling Jewelers $ 1,802.7 $ 1,713.9 5.2 % $ — $ 1,713.9 5.2 % Zale Jewelry 709.3 215.0 229.9 % (6.1 ) 208.9 239.5 % Piercing Pagoda 117.1 32.5 260.3 % — 32.5 260.3 % UK Jewelry 305.6 314.6 (2.9 )% (27.6 ) 287.0 6.5 % Other 6.5 6.0 8.3 % — 6.0 8.3 % 2,941.2 2,282.0 28.9 % (33.7 ) 2,248.3 30.8 % Cost of sales (1,884.5 ) (1,465.8 ) (28.6 )% 24.8 (1,441.0 ) (30.8 )% Gross margin 1,056.7 816.2 29.5 % (8.9 ) 807.3 30.9 % Selling, general and administrative expenses (906.0 ) (689.7 ) (31.4 )% 9.0 (680.7 ) (33.1 )% Other operating income, net 126.3 107.7 17.3 % — 107.7 17.3 % Operating income (loss): Sterling Jewelers 336.0 296.2 13.4 % — 296.2 13.4 % 8.4 (8.0 ) 205.0 % — (8.0 ) 205.0 % 5.0 (1.8 ) 377.8 % — (1.8 ) 377.8 % UK Jewelry 3.7 1.1 236.4 % (0.1 ) 1.0 270.0 % (76.1 ) (53.3 ) (42.8 )% 0.2 (53.1 ) (43.3 )% 277.0 234.2 18.3 % 0.1 234.3 18.2 % Interest expense, net (22.1 ) (15.5 ) (42.6 )% — (15.5 ) (42.6 )% Income before income taxes 254.9 218.7 16.6 % 0.1 218.8 16.5 % Income taxes (73.9 ) (64.1 ) (15.3 )% — (64.1 ) (15.3 )% Net income $ 181.0 $ 154.6 17.1 % $ 0.1 $ 154.7 17.0 % Basic earnings per share $ 2.27 $ 1.93 17.6 % $ 0.01 $ 1.94 17.0 % Diluted earnings per share $ 2.26 $ 1.93 17.1 % $ — $ 1.93 17.1 % adjustments. Management believes this financial measure is helpfulassociated with the acquisition of Zale Corporation for the 26 weeks ended August 1, 2015 and August 2, 2014, respectively.enhance investors’ abilitythe effect of purchase accounting associated with the acquisition of Zale Corporation for the 26 weeks ended August 1, 2015 and August 2, 2014, respectively.analyze trends in our businessthe legal settlement over appraisal rights and evaluate our performance relativeconsulting expenses.other companies. 13 weeks ended 26 weeks ended (in millions) August 2,
2014 August 3,
2013 August 2,
2014 August 3,
2013 $ 83.5 $ 105.5 $ 234.2 $ 248.3 34.3 (1) 25.5 62.3 (1) 51.1 2.2 (1)(2) — 2.2 (1)(2) — (5.9 )(2) — (5.9 )(2) — 15.2 (2) — 15.2 (2) — $ 129.3 $ 131.0 $ 308.0 $ 299.4 (1)Total amount of depreciation and amortization reflected on the condensed consolidated statements of cash flows reflects $36.5 million and $64.5 million for the 13 and 26 weeks ended August 2, 2014, respectively, which includes $2.2 million related to the amortization of definite lived intangibles, primarily favorable leases and trade names.(2)Total amount of operating loss relating to Acquisition accounting adjustments is $11.5 million for the 13 and 26 weeks ended August 2, 2014, as reflected in the non-GAAP tables below.acquisition relatedZale operations and acquisition-related costs and organic results table reflects the impact of the Zale operations, costs associated with the integration of the acquisition of Zale Corporation, along with certain other accounting adjustments made. Management finds the information useful to analyze the results of the business excluding these items in order to appropriately evaluate the performance of the business without the impact of significant and unusual items. Signet organic
results Zale
operations(1) Accounting
adjustments(2) Severance
costs(3) Transaction
costs(4) Capital
structure
&
financing(5) Signet
consolidated,
as reported $ 978.4 $ 256.8 $ (9.3 ) $ — $ — $ — $ 1,225.9 (638.4 ) (173.3 ) (5.2 ) — — — (816.9 ) 340.0 83.5 (14.5 ) — — — 409.0 (269.6 ) (81.8 ) 3.0 (13.7 ) (17.1 ) — (379.2 ) 53.7 — — — — — 53.7 124.1 1.7 (11.5 ) (13.7 ) (17.1 ) — 83.5 (0.7 ) (0.2 ) (1.2 ) — — (11.6 ) (13.7 ) 123.4 1.5 (12.7 ) (13.7 ) (17.1 ) (11.6 ) 69.8 (43.5 ) (0.6 ) 4.8 5.2 5.9 16.4 (11.8 ) 79.9 0.9 (7.9 ) (8.5 ) (11.2 ) 4.8 58.0 $ 1.00 $ 0.01 $ (0.10 ) $ (0.11 ) $ (0.14 ) $ 0.06 $ 0.72 Signet organic
results Zale
operations(1) Signet
consolidated,
as reported 100.0 % 100.0 % 100.0 % (65.2 ) (67.5 ) (66.6 ) 34.8 32.5 33.4 (27.6 ) (31.8 ) (31.0 ) 5.5 0.0 4.4 12.7 0.7 6.8 (0.1 ) (0.1 ) (1.1 ) 12.6 0.6 5.7 (4.4 ) (0.2 ) (1.0 ) 8.2 0.4 4.7 in millions Zale operations Adjusted Signet Signet consolidated, as reported Sales $ 1,021.3 $ 396.5 $ 1,417.8 $ (7.2 ) $ — $ 1,410.6 Cost of sales (657.0 ) (260.7 ) (917.7 ) (2.1 ) — (919.8 ) Gross margin 364.3 135.8 500.1 (9.3 ) — 490.8 Selling, general and administrative expenses (280.8 ) (132.6 ) (413.4 ) 4.2 (43.6 ) (452.8 ) Other operating income, net 63.0 (0.2 ) 62.8 — — 62.8 Operating income (loss) 146.5 3.0 149.5 (5.1 ) (43.6 ) 100.8 Interest expense, net (11.0 ) (0.1 ) (11.1 ) — — (11.1 ) Income before income taxes 135.5 2.9 138.4 (5.1 ) (43.6 ) 89.7 Income taxes (34.8 ) (1.0 ) (35.8 ) 1.8 6.5 (27.5 ) Net income (loss) 100.7 1.9 102.6 (3.3 ) (37.1 ) 62.2 Earnings per share – diluted $ 1.26 $ 0.02 $ 1.28 $ (0.04 ) $ (0.46 ) $ 0.78 Adjusted Signet excluding Zale Zale operations Adjusted Signet Signet consolidated, as reported Sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (64.3 )% (65.8 )% (64.7 )% (65.2 )% Gross margin 35.7 % 34.2 % 35.3 % 34.8 % Selling, general and administrative expenses (27.5 )% (33.4 )% (29.2 )% (32.1 )% Other operating income, net 6.2 % (0.1 )% 4.4 % 4.5 % Operating income (loss) 14.4 % 0.7 % 10.5 % 7.2 % Interest expense, net (1.1 )% — % (0.8 )% (0.8 )% Income before income taxes 13.3 % 0.7 % 9.7 % 6.4 % Income taxes (3.4 )% (0.2 )% (2.5 )% (2.0 )% Net income (loss) 9.9 % 0.5 % 7.2 % 4.4 % Includes the 65-day results of Zale’s from acquisition date to the end of second quarter.capital structure and financing costs.Includes deferred revenue adjustments related to acquisition accounting which resulted in a reset of deferred revenue associated with extended service plans previously sold by Zale Corporation. Similar to Signet’sthe Sterling Jewelers division, historically, Zale Corporation deferred the revenue generated by the sale of lifetime warranties and recognized revenue in relation to the pattern of costs expected to be incurred, which included a profit margin on activities related to the initial selling effort. In acquisition accounting, deferred revenue is only recognized when a legal performance obligation is assumed by the acquirer. The fair value of deferred revenue is determined based on the future obligations associated with the outstanding plans at the time of the Acquisition. The acquisition accounting adjustment results in a reduction to the deferred revenue balance from $183.8 million to $93.0$93.3 million as of May 29, 2014 as the fair value was determined through the estimation of costs remaining to be incurred, plus a reasonable profit margin on the estimated costs. Revenues generated from the sale of extended services plans subsequent to the Acquisition are recognized in revenue in a manner consistent with Signet’s methodology. Additionally, accounting adjustments include the recognition of a portion of the inventory fair value step-up of $31.3$32.2 million and amortization expense of acquired intangibles.(3)During the second quarter, Signet incurred $13.7 million of severance costs related to Zale and other management changes. These costs are included within Signet’s Other segment.(4)Transaction costs include transaction-related and integration expenses associated with advisor fees forare primarily attributed to the legal tax, accountingsettlement over appraisal rights and consulting expenses. These costs are included within Signet’s Other segment.in millions Zale operations Adjusted Signet Signet consolidated, as reported Sales $ 2,114.8 $ 842.2 $ 2,957.0 $ (15.8 ) $ — $ 2,941.2 Cost of sales (1,327.1 ) (548.4 ) (1,875.5 ) (9.0 ) — (1,884.5 ) Gross margin 787.7 293.8 1,081.5 (24.8 ) — 1,056.7 Selling, general and administrative expenses (601.3 ) (263.0 ) (864.3 ) 8.3 (50.0 ) (906.0 ) Other operating income, net 127.2 (0.9 ) 126.3 — — 126.3 Operating income (loss) 313.6 29.9 343.5 (16.5 ) (50.0 ) 277.0 Interest expense, net (21.2 ) (0.9 ) (22.1 ) — — (22.1 ) Income before income taxes 292.4 29.0 321.4 (16.5 ) (50.0 ) 254.9 Income taxes (77.4 ) (11.2 ) (88.6 ) 5.8 8.9 (73.9 ) Net income (loss) 215.0 17.8 232.8 (10.7 ) (41.1 ) 181.0 Earnings per share – diluted $ 2.69 $ 0.22 $ 2.91 $ (0.13 ) $ (0.52 ) $ 2.26 Adjusted Signet excluding Zale Zale operations Adjusted Signet Signet consolidated, as reported Sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (62.8 )% (65.1 )% (63.4 )% (64.1 )% Gross margin 37.2 % 34.9 % 36.6 % 35.9 % Selling, general and administrative expenses (28.4 )% (31.2 )% (29.2 )% (30.8 )% Other operating income, net 6.0 % (0.1 )% 4.2 % 4.3 % Operating income (loss) 14.8 % 3.6 % 11.6 % 9.4 % Interest expense, net (1.0 )% (0.2 )% (0.7 )% (0.7 )% Income before income taxes 13.8 % 3.4 % 10.9 % 8.7 % Income taxes (3.6 )% (1.3 )% (3.0 )% (2.5 )% Net income (loss) 10.2 % 2.1 % 7.9 % 6.2 % (5)Financing costs include those costs to support the new capital structure. Included within the second quarter expense is a one-time write-off of $0.7 million associated with Signet’s capitalized debt issuance costs associated with its prior credit facility agreement. These financing costs were offset by savings associated with Signet’s lower annual effective tax rate of 29.3%. The reduction in Signet’s forecasted annual effective tax rate primarily reflects the benefit of Signet’s amendedIncludes capital structure and financing arrangements utilized to fund the acquisition of Zale Corporation. Signet organic
results Zale
operations(1) Accounting
adjustments(2) Severance
costs(3) Transaction
costs(4) Capital
structure
&
financing(5) Signet
consolidated,
as reported $ 2,034.5 $ 256.8 $ (9.3 ) $ — $ — $ — $ 2,282.0 (1,287.3 ) (173.3 ) (5.2 ) — — — (1,465.8 ) 747.2 83.5 (14.5 ) — — — 816.2 (571.7 ) (81.8 ) 3.0 (13.7 ) (25.5 ) — (689.7 ) 107.7 — — — — — 107.7 283.2 1.7 (11.5 ) (13.7 ) (25.5 ) — 234.2 (1.7 ) (0.2 ) (1.2 ) — — (12.4 ) (15.5 ) 281.5 1.5 (12.7 ) (13.7 ) (25.5 ) (12.4 ) 218.7 (97.7 ) (0.6 ) 4.8 5.2 7.5 16.7 (64.1 ) 183.8 0.9 (7.9 ) (8.5 ) (18.0 ) 4.3 154.6 $ 2.29 $ 0.01 $ (0.10 ) $ (0.11 ) $ (0.22 ) $ 0.05 $ 1.93 Signet organic
results Zale
operations(1) Signet
consolidated,
as reported 100.0 % 100.0 % 100.0 % (63.3 ) (67.5 ) (64.2 ) 36.7 32.5 35.8 (28.1 ) (31.8 ) (30.2 ) 5.3 0.0 4.7 13.9 0.7 10.3 (0.1 ) (0.1 ) (0.7 ) 13.8 0.6 9.6 (4.8 ) (0.2 ) (2.8 ) 9.0 0.4 6.8 (1)Includes the 65-day results of Zale’s from acquisition date to the end of second quarter.costs.Includes deferred revenue adjustments related to acquisition accounting which resulted in a reset of deferred revenue associated with extended service plans previously sold by Zale Corporation. Similar to Signet’sthe Sterling Jewelers division, historically, Zale Corporation deferred the revenue generated by the sale of lifetime warranties and recognized revenue in relation to the pattern of costs expected to be incurred, which included a profit margin on activities related to the initial selling effort. In acquisition accounting, deferred revenue is only recognized when a legal performance obligation is assumed by the acquirer. The fair value of deferred revenue is determined based on the future obligations associated with the outstanding plans at the time of the Acquisition. The acquisition accounting adjustment results in a reduction to the deferred revenue balance from $183.8 million to $93.0$93.3 million as of May 29, 2014 as the fair value was determined through the estimation of costs remaining to be incurred, plus a reasonable profit margin on the estimated costs. Revenues generated from the sale of extended services plans subsequent to the Acquisition are recognized in revenue in a manner consistent with Signet’s methodology. Additionally, accounting adjustments include the recognition of a portion of the inventory fair value step-up of $32.2 million and amortization of acquired intangibles.Transaction costs are primarily attributed to the legal settlement over appraisal rights and consulting expenses. These costs are included within Signet’s Other segment. in millions Zale operations Adjusted Signet Signet consolidated, as reported Sales $ 978.4 $ 256.8 $ 1,235.2 $ (9.3 ) $ — $ 1,225.9 Cost of sales (638.4 ) (173.3 ) (811.7 ) (5.2 ) — (816.9 ) Gross margin 340.0 83.5 423.5 (14.5 ) — 409.0 Selling, general and administrative expenses (269.6 ) (81.8 ) (351.4 ) 3.0 (30.8 ) (379.2 ) Other operating income, net 53.7 — 53.7 — — 53.7 Operating income (loss) 124.1 1.7 125.8 (11.5 ) (30.8 ) 83.5 Interest expense, net (12.3 ) (0.2 ) (12.5 ) (1.2 ) — (13.7 ) Income before income taxes 111.8 1.5 113.3 (12.7 ) (30.8 ) 69.8 Income taxes (27.1 ) (0.6 ) (27.7 ) 4.8 11.1 (11.8 ) Net income (loss) 84.7 0.9 85.6 (7.9 ) (19.7 ) 58.0 Earnings per share – diluted $ 1.06 $ 0.01 $ 1.07 $ (0.10 ) $ (0.25 ) $ 0.72 Adjusted Signet excluding Zale Zale operations Adjusted Signet Signet consolidated, as reported Sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (65.2 )% (67.5 )% (65.7 )% (66.6 )% Gross margin 34.8 % 32.5 % 34.3 % 33.4 % Selling, general and administrative expenses (27.6 )% (31.8 )% (28.4 )% (31.0 )% Other operating income, net 5.5 % — % 4.3 % 4.4 % Operating income (loss) 12.7 % 0.7 % 10.2 % 6.8 % Interest expense, net (1.3 )% (0.1 )% (1.0 )% (1.1 )% Income before income taxes 11.4 % 0.6 % 9.2 % 5.7 % Income taxes (2.7 )% (0.2 )% (2.3 )% (1.0 )% Net income (loss) 8.7 % 0.4 % 6.9 % 4.7 % Includes Signet organic results and capital structure and financing costs to conform with the current year presentation. Includes deferred revenue adjustments related to acquisition accounting which resulted in a reset of deferred revenue associated with extended service plans previously sold by Zale Corporation. Similar to the Sterling Jewelers division, historically, Zale Corporation deferred the revenue generated by the sale of lifetime warranties and recognized revenue in relation to the pattern of costs expected to be incurred, which included a profit margin on activities related to the initial selling effort. In acquisition accounting, deferred revenue is only recognized when a legal performance obligation is assumed by the acquirer. The fair value of deferred revenue is determined based on the future obligations associated with the outstanding plans at the time of the Acquisition. The acquisition accounting adjustment results in a reduction to the deferred revenue balance from $183.8 million to $93.3 million as of May 29, 2014 as the fair value was determined through the estimation of costs remaining to be incurred, plus a reasonable profit margin on the estimated costs. Revenues generated from the sale of extended services plans subsequent to the Acquisition are recognized in revenue in a manner consistent with Signet’s methodology. Additionally, accounting adjustments include the recognition of a portion of the inventory fair value step-up of $31.3 million and amortization expense of acquired intangibles.(3)During the second quarter, Signet incurred $13.7 million of severanceTransaction costs include transaction-related and integration expenses associated with advisor fees for legal, tax, accounting and consulting expenses. Severance costs related to Zale and other management changes.changes are also included to conform with the current year presentation. These costs are included within Signet’s Other segment.in millions Zale operations Adjusted Signet Signet consolidated, as reported Sales $ 2,034.5 $ 256.8 $ 2,291.3 $ (9.3 ) $ — $ 2,282.0 Cost of sales (1,287.3 ) (173.3 ) (1,460.6 ) (5.2 ) — (1,465.8 ) Gross margin 747.2 83.5 830.7 (14.5 ) — 816.2 Selling, general and administrative expenses (571.7 ) (81.8 ) (653.5 ) 3.0 (39.2 ) (689.7 ) Other operating income, net 107.7 — 107.7 — — 107.7 Operating income (loss) 283.2 1.7 284.9 (11.5 ) (39.2 ) 234.2 Interest expense, net (14.1 ) (0.2 ) (14.3 ) (1.2 ) — (15.5 ) Income before income taxes 269.1 1.5 270.6 (12.7 ) (39.2 ) 218.7 Income taxes (81.0 ) (0.6 ) (81.6 ) 4.8 12.7 (64.1 ) Net income (loss) 188.1 0.9 189.0 (7.9 ) (26.5 ) 154.6 Earnings per share – diluted $ 2.35 $ 0.01 $ 2.36 $ (0.10 ) $ (0.33 ) $ 1.93 Adjusted Signet excluding Zale Zale operations Adjusted Signet Signet consolidated, as reported Sales 100.0 % 100.0 % 100.0 % 100.0 % Cost of sales (63.3 )% (67.5 )% (63.7 )% (64.2 )% Gross margin 36.7 % 32.5 % 36.3 % 35.8 % Selling, general and administrative expenses (28.1 )% (31.8 )% (28.6 )% (30.2 )% Other operating income, net 5.3 % — % 4.7 % 4.7 % Operating income (loss) 13.9 % 0.7 % 12.4 % 10.3 % Interest expense, net (0.7 )% (0.1 )% (0.6 )% (0.7 )% Income before income taxes 13.2 % 0.6 % 11.8 % 9.6 % Income taxes (4.0 )% (0.2 )% (3.6 )% (2.8 )% Net income (loss) 9.2 % 0.4 % 8.2 % 6.8 % (4)Includes capital structure and financing costs. Includes deferred revenue adjustments related to acquisition accounting which resulted in a reset of deferred revenue associated with extended service plans previously sold by Zale Corporation. Similar to the Sterling Jewelers division, historically, Zale Corporation deferred the revenue generated by the sale of lifetime warranties and recognized revenue in relation to the pattern of costs expected to be incurred, which included a profit margin on activities related to the initial selling effort. In acquisition accounting, deferred revenue is only recognized when a legal performance obligation is assumed by the acquirer. The fair value of deferred revenue is determined based on the future obligations associated with the outstanding plans at the time of the Acquisition. The acquisition accounting adjustment results in a reduction to the deferred revenue balance from $183.8 million to $93.3 million as of May 29, 2014 as the fair value was determined through the estimation of costs remaining to be incurred, plus a reasonable profit margin on the estimated costs. Revenues generated from the sale of extended services plans subsequent to the Acquisition are recognized in revenue in a manner consistent with Signet’s methodology. Additionally, accounting adjustments include the recognition of a portion of the inventory fair value step-up of $31.3 million and amortization of acquired intangibles. Transaction costs include transaction-related and integration expenses associated with advisor fees for legal, tax, accounting and consulting expenses. These costs are included within Signet’s Other segment. (5)Financing costs include those costs to support the new capital structure. Included within the second quarter expense is a one-time write-off of $0.7 million associated with Signet’s capitalized debt issuance costs associated with its prior credit facility agreement. These financing costs were offset by savings associated with Signet’s lower annual effective tax rate of 29.3%. The reduction in Signet’s forecasted annual effective tax rate primarily reflects the benefit of Signet’s amended capital structure and financing arrangements utilized to fund the acquisition of Zale Corporation.
| (in millions) | August 1, 2015 | January 31, 2015 | August 2, 2014 | ||||||||
| Cash and cash equivalents | $ | 159.8 | $ | 193.6 | $ | 215.0 | |||||
| Loans and overdrafts | (82.0 | ) | (97.5 | ) | (31.2 | ) | |||||
| Long-term debt | (1,348.7 | ) | (1,363.8 | ) | (1,379.1 | ) | |||||
| Net debt | $ | (1,270.9 | ) | $ | (1,267.7 | ) | $ | (1,195.3 | ) | ||
| 13 weeks ended | 26 weeks ended | ||||||||||||||
| (in millions) | August 1, 2015 | August 2, 2014 | August 1, 2015 | August 2, 2014 | |||||||||||
| Net cash provided by operating activities | $ | 143.6 | $ | 110.4 | $ | 210.6 | $ | 183.9 | |||||||
| Purchase of property, plant and equipment | (56.0 | ) | (61.9 | ) | (98.9 | ) | (90.0 | ) | |||||||
| Free cash flow | $ | 87.6 | $ | 48.5 | $ | 111.7 | $ | 93.9 | |||||||
| 13 weeks ended | 26 weeks ended | ||||||||||||||
| (in millions) | August 1, 2015 | August 2, 2014 | August 1, 2015 | August 2, 2014 | |||||||||||
| Operating income | $ | 100.8 | $ | 83.5 | $ | 277.0 | $ | 234.2 | |||||||
Depreciation and amortization on property, plant and equipment (1) | 39.3 | 34.3 | 77.6 | 62.3 | |||||||||||
Amortization of definite-lived intangibles (1) (2) | 3.4 | 2.2 | 6.9 | 2.2 | |||||||||||
Amortization of unfavorable leases and contracts (2) | (8.8 | ) | (5.9 | ) | (17.6 | ) | (5.9 | ) | |||||||
Other non-cash accounting adjustments (2) | 10.5 | 15.2 | 27.2 | 15.2 | |||||||||||
| Adjusted EBITDA | $ | 145.2 | $ | 129.3 | $ | 371.1 | $ | 308.0 | |||||||
| • |
| • | Diluted earnings per share: $0.78, up 8.3%. Adjusted(1) diluted earnings per share: $1.28, up 19.6% compared to $1.07 in second quarter Fiscal 2015. |
Operating income: $83.5 million, down $22.0 million, a decrease of 20.9%
Organic(2) operating income: $124.1 million, up $18.6 million, an increase of 17.6%
Diluted earnings per share: $0.72, down by 14.3%
Organic(2) diluted earnings per share: $1.00, up by 19.0%
Year to Date Highlights
| • |
Operating income: $234.2 million, down $14.1 million, a decrease of 5.7%
Organic(2) operating income: $283.2 million, up $34.9 million, an increase of 14.1%
Diluted earnings per share: $1.93, down by 2.0%
Organic(2) diluted earnings per share: $2.29, up by 16.2%
| • | Diluted earnings per share: $2.26, up 17.1%. Adjusted(1) diluted earnings per share: $2.91, up 23.3% compared to $2.36 in the |
(1) | Non-GAAP measure. The Company uses adjusted metrics, which adjust for purchase accounting |
Certain operating data as a percentage of sales were as follows:
Operating Data
| Second Quarter | Year To Date | |||||||||||||||
| (% of sales) | Fiscal 2015 | Fiscal 2014 | Fiscal 2015 | Fiscal 2014 | ||||||||||||
Sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of sales | (66.6 | ) | (64.8 | ) | (64.2 | ) | (63.0 | ) | ||||||||
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Gross margin | 33.4 | 35.2 | 35.8 | 37.0 | ||||||||||||
Selling, general and administrative expenses | (31.0 | ) | (28.5 | ) | (30.2 | ) | (28.7 | ) | ||||||||
Other operating income, net | 4.4 | 5.3 | 4.7 | 5.0 | ||||||||||||
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Operating income | 6.8 | 12.0 | 10.3 | 13.3 | ||||||||||||
Interest expense, net | (1.1 | ) | (0.1 | ) | (0.7 | ) | (0.1 | ) | ||||||||
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Income before income taxes | 5.7 | 11.9 | 9.6 | 13.2 | ||||||||||||
Income taxes | (1.0 | ) | (4.2 | ) | (2.8 | ) | (4.7 | ) | ||||||||
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Net income | 4.7 | 7.7 | 6.8 | 8.5 | ||||||||||||
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| Fiscal 2016 | Fiscal 2015 | Fiscal 2016 | Fiscal 2015 | ||||||||||||||||||||||||
| (in millions) | $ | % of sales | $ | % of sales | $ | % of sales | $ | % of sales | |||||||||||||||||||
| Sales | $ | 1,410.6 | 100.0 | % | $ | 1,225.9 | 100.0 | % | $ | 2,941.2 | 100.0 | % | $ | 2,282.0 | 100.0 | % | |||||||||||
| Cost of sales | (919.8 | ) | (65.2 | ) | (816.9 | ) | (66.6 | ) | (1,884.5 | ) | (64.1 | ) | (1,465.8 | ) | (64.2 | ) | |||||||||||
| Gross margin | 490.8 | 34.8 | 409.0 | 33.4 | 1,056.7 | 35.9 | 816.2 | 35.8 | |||||||||||||||||||
| Selling, general and administrative expenses | (452.8 | ) | (32.1 | ) | (379.2 | ) | (31.0 | ) | (906.0 | ) | (30.8 | ) | (689.7 | ) | (30.2 | ) | |||||||||||
| Other operating income, net | 62.8 | 4.5 | 53.7 | 4.4 | 126.3 | 4.3 | 107.7 | 4.7 | |||||||||||||||||||
| Operating income | 100.8 | 7.2 | 83.5 | 6.8 | 277.0 | 9.4 | 234.2 | 10.3 | |||||||||||||||||||
| Interest expense, net | (11.1 | ) | (0.8 | ) | (13.7 | ) | (1.1 | ) | (22.1 | ) | (0.7 | ) | (15.5 | ) | (0.7 | ) | |||||||||||
| Income before income taxes | 89.7 | 6.4 | 69.8 | 5.7 | 254.9 | 8.7 | 218.7 | 9.6 | |||||||||||||||||||
| Income taxes | (27.5 | ) | (2.0 | ) | (11.8 | ) | (1.0 | ) | (73.9 | ) | (2.5 | ) | (64.1 | ) | (2.8 | ) | |||||||||||
| Net income | $ | 62.2 | 4.4 | % | $ | 58.0 | 4.7 | % | $ | 181.0 | 6.2 | % | $ | 154.6 | 6.8 | % | |||||||||||
| Change from previous year | ||||||||||||||||||||||||
Second quarter of Fiscal 2015 | Same store sales(1) | Non-same store sales, net | Total sales at constant exchange rate(4) | Exchange translation impact(4) | Total sales as reported | Total sales (in millions) | ||||||||||||||||||
Sterling Jewelers division | 6.7 | % | 2.7 | %(2) | 9.4 | % | — | % | 9.4 | % | $ | 810.4 | ||||||||||||
UK Jewelry division | 4.4 | % | 1.2 | %(2) | 5.6 | % | 11.5 | % | 17.1 | % | $ | 162.9 | ||||||||||||
Zale Jewelry | (0.6 | )% | — | % | — | % | — | % | — | % | $ | 215.0 | ||||||||||||
Piercing Pagoda | (2.8 | )% | — | % | — | % | — | % | — | % | $ | 32.5 | ||||||||||||
Zale division | (0.9 | )% | — | % | — | % | — | % | — | % | $ | 247.5 | ||||||||||||
Other(5) | — | % | nm | nm | — | % | nm | $ | 5.1 | |||||||||||||||
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Signet | 4.8 | % | 32.1 | %(3) | 36.9 | % | 2.4 | % | 39.3 | % | $ | 1,225.9 | ||||||||||||
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Organic Signet | 6.3 | % | 3.0 | %(2) | 9.3 | % | 1.9 | % | 11.2 | % | $ | 978.4 | ||||||||||||
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| Change from previous year | ||||||||||||||||||||||
| Second quarter of Fiscal 2016 | Same store sales(1) | Non-same store sales, net(2) | Total sales at constant exchange rate(3) | Exchange translation impact(3) | Total sales as reported | Total sales (in millions) | ||||||||||||||||
| Sterling Jewelers division | 3.3 | % | 2.6 | % | 5.9 | % | — | % | 5.9 | % | $ | 858.5 | ||||||||||
| Zale Jewelry | 5.4 | % | 55.6 | % | 61.0 | % | (4.5 | )% | 56.5 | % | $ | 336.4 | ||||||||||
| Piercing Pagoda | 8.4 | % | 54.4 | % | 62.8 | % | — | % | 62.8 | % | $ | 52.9 | ||||||||||
Zale division(4) | 5.8 | % | 55.5 | % | 61.3 | % | (4.0 | )% | 57.3 | % | $ | 389.3 | ||||||||||
| UK Jewelry division | 5.1 | % | 1.3 | % | 6.4 | % | (8.7 | )% | (2.3 | )% | $ | 159.1 | ||||||||||
Other(5) | — | % | (27.5 | )% | (27.5 | )% | — | % | (27.5 | )% | $ | 3.7 | ||||||||||
| Signet | 4.2 | % | 12.7 | % | 16.9 | % | (1.8 | )% | 15.1 | % | $ | 1,410.6 | ||||||||||
Adjusted Signet(3) | $ | 1,417.8 | ||||||||||||||||||||
Adjusted Signet excluding Zale(3) | $ | 1,021.3 | ||||||||||||||||||||
| Change from previous year | |||||||||||||||||
| Second quarter of Fiscal 2016 | Same store sales(1) | Non-same store sales, net(2) | Total sales as reported | Total sales (in millions) | |||||||||||||
| Kay | 4.1 | % | 2.5 | % | 6.6 | % | $ | 530.0 | |||||||||
Jared(3) | 2.7 | % | 5.1 | % | 7.8 | % | $ | 285.4 | |||||||||
| Regional brands | (1.8 | )% | (9.5 | )% | (11.3 | )% | $ | 43.1 | |||||||||
| Sterling Jewelers division | 3.3 | % | 2.6 | % | 5.9 | % | $ | 858.5 | |||||||||
(1) | Based |
(2) | Includes all sales from stores not open |
(3) | Includes |
Average Merchandise Transaction Value(1)(2) | Merchandise Transactions | ||||||||||||||||||
| Average Value | Change from previous year | Change from previous year | |||||||||||||||||
| Second quarter | Fiscal 2016 | Fiscal 2015 | Fiscal 2016 | Fiscal 2015 | Fiscal 2016 | Fiscal 2015 | |||||||||||||
| Kay | $ | 441 | $ | 422 | 4.5 | % | 6.0 | % | (2.1 | )% | 2.8 | % | |||||||
| Jared | $ | 567 | $ | 547 | 3.7 | % | (0.4 | )% | (3.0 | )% | 6.0 | % | |||||||
| Regional brands | $ | 437 | $ | 426 | 2.6 | % | 3.4 | % | (5.7 | )% | (1.3 | )% | |||||||
| Sterling Jewelers division | $ | 476 | $ | 457 | 4.2 | % | 3.9 | % | (2.5 | )% | 3.4 | % | |||||||
Sterling Jewelers sales
In the second quarter of Fiscal 2015, Sterling Jewelers division’s total sales were $810.4 million compared to $741.1 million in the second quarter of Fiscal 2014, up $69.3 million or 9.4%. Same store sales increased 6.7% compared to an increase of 4.9% in the second quarter of Fiscal 2014. Sterling Jewelers’ sales increases in the second quarter were driven by particular strength in bridal brands, fashion diamonds and watches. In the quarter, Kay and Jared experienced increases in both transaction counts and average transaction value. In Kay, strong brand performance was the primary driver of the increase in both transactions and average transaction value. Strong non-branded performance and beads drove transactional increases in Jared with beads influencing the average transaction value. During the second quarter, the remaining 13 Ultra stores were converted to Jared Vault stores in outlet centers. eCommerce sales were $29.5 million compared to $25.3 million in the second quarter of Fiscal 2014, up $4.2 million or 16.6%. See the table below for further analysis of sales.
| Sales change from previous year | ||||||||||||||||
Second quarter of Fiscal 2015 | Same store sales | Non-same store sales, net(1) | Total sales as reported | Total sales (in millions) | ||||||||||||
Kay | 8.1 | % | 2.9 | % | 11.0 | % | $ | 496.5 | ||||||||
Jared(2) | 4.9 | % | 6.2 | % | 11.1 | % | $ | 264.7 | ||||||||
Regional brands | 1.9 | % | (13.6 | )% | (11.7 | )% | $ | 49.2 | ||||||||
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Sterling Jewelers division | 6.7 | % | 2.7 | % | 9.4 | % | $ | 810.4 | ||||||||
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(2) |
| Average Merchandise Transaction Value(1)(2) | Merchandise Transactions | |||||||||||||||||||||||
| Average Value | Change from previous year | Change from previous year | ||||||||||||||||||||||
Second quarter of Fiscal 2015 | Fiscal 2015 | Fiscal 2014 | Fiscal 2015 | Fiscal 2014 | Fiscal 2015 | Fiscal 2014 | ||||||||||||||||||
Kay | $ | 422 | $ | 399 | 5.8 | % | 4.7 | % | 4.5 | % | 2.2 | % | ||||||||||||
Jared | $ | 547 | $ | 545 | 0.3 | % | 3.0 | % | 14.0 | % | 1.4 | % | ||||||||||||
Regional brands | $ | 423 | $ | 404 | 4.7 | % | 3.3 | % | (10.8 | )% | (15.3 | )% | ||||||||||||
Sterling Jewelers division | $ | 457 | $ | 437 | 4.6 | % | 4.3 | % | 5.8 | % | 0.3 | % | ||||||||||||
| Net merchandise sales include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repairs, warranty, insurance, employee and other miscellaneous sales. |
| Change from previous year | ||||||||||||||||||
| Second quarter of Fiscal 2016 | Same store sales(1) | Non-same store sales, net(2) | Total sales at constant exchange rate(3) | Exchange translation impact(3) | Total sales as reported | Total sales (in millions) | ||||||||||||
| Zales | 6.2 | % | 59.3 | % | 65.5 | % | — | % | 65.5 | % | $ | 262.0 | ||||||
| Gordon’s | (7.6 | )% | 39.1 | % | 31.5 | % | — | % | 31.5 | % | $ | 16.7 | ||||||
| Zale US Jewelry | 5.3 | % | 57.7 | % | 63.0 | % | — | % | 63.0 | % | $ | 278.7 | ||||||
| Peoples | 6.7 | % | 49.1 | % | 55.8 | % | (21.5 | )% | 34.3 | % | $ | 49.7 | ||||||
| Mappins | — | % | 33.3 | % | 33.3 | % | (19.0 | )% | 14.3 | % | $ | 8.0 | ||||||
| Zale Canada Jewelry | 5.7 | % | 46.5 | % | 52.2 | % | (21.1 | )% | 31.1 | % | $ | 57.7 | ||||||
| Total Zale Jewelry | 5.4 | % | 55.6 | % | 61.0 | % | (4.5 | )% | 56.5 | % | $ | 336.4 | ||||||
| Piercing Pagoda | 8.4 | % | 54.4 | % | 62.8 | % | — | % | 62.8 | % | $ | 52.9 | ||||||
Zale division(4) | 5.8 | % | 55.5 | % | 61.3 | % | (4.0 | )% | 57.3 | % | $ | 389.3 | ||||||
(1) | Based on stores open for at least 12 months. eCommerce sales are included in the calculation of same store sales for the period and comparative figures from the anniversary of the launch of the relevant website. |
| Sales change from previous year | ||||||||||||||||||||||||
Second quarter of Fiscal 2015 | Same store sales | Non-same store sales, net(1) | Total sales at constant exchange rate(2) | Exchange translation impact(2) | Total sales as reported | Total sales (in millions) | ||||||||||||||||||
H.Samuel | 2.6 | % | (1.0 | )% | 1.6 | % | 11.1 | % | 12.7 | % | $ | 81.8 | ||||||||||||
Ernest Jones(3) | 6.4 | % | 3.6 | % | 10.0 | % | 12.0 | % | 22.0 | % | $ | 81.1 | ||||||||||||
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UK Jewelry division | 4.4 | % | 1.2 | % | 5.6 | % | 11.5 | % | 17.1 | % | $ | 162.9 | ||||||||||||
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| Average Merchandise Transaction Value(1)(2) | Merchandise Transactions | |||||||||||||||||||||||
| Average Value | Change from previous year | Change from previous year | ||||||||||||||||||||||
Second quarter of Fiscal 2015 | Fiscal 2015 | Fiscal 2014 | Fiscal 2015 | Fiscal 2014 | Fiscal 2015 | Fiscal 2014 | ||||||||||||||||||
H.Samuel | £ | 73 | £ | 75 | (2.7 | )% | 1.4 | % | 3.0 | % | (5.4 | )% | ||||||||||||
Ernest Jones(3) | £ | 268 | £ | 277 | (3.2 | )% | (8.9 | )% | 11.8 | % | 2.2 | % | ||||||||||||
UK Jewelry division | £ | 115 | £ | 116 | (0.9 | )% | (2.5 | )% | 4.8 | % | (4.0 | )% | ||||||||||||
Zale sales (as Zale Corporation was acquired during Fiscal 2015, there is no comparable period)
The Zale division’s total sales were $247.5 million second quarter of Fiscal 2015 including $11.5 million in eCommerce sales. Zale division consists of two operating segments: Zale Jewelry and Piercing Pagoda. In the second quarter, Zale Jewelry contributed $215.0 million of revenues and Piercing Pagoda contributed $32.5 million of revenues. Total Zale division included purchase accounting adjustments of $(9.3) million related to deferred revenue associated with extended warranty sales. The Zale division same store sales decreased 0.9%. Total Zale division sales were driven by branded salesstrong results in bridal and fashion in the Zale Jewelry operating segment offset by non-branded merchandise.watches. The overall sales performance was affected by disruptions due to the mergeraverage transaction value and management changes and a change in promotional cadencenumber of transactions increased in both bridalH.Samuel and fashion versus the prior year period. See the table below for further analysis of sales.
Second quarter of Fiscal 2015 | Same store sales | Total sales (in millions) | ||||||
Zales | (1.0 | )% | $ | 158.3 | ||||
Gordon’s | (5.7 | )% | $ | 12.7 | ||||
|
| |||||||
Zale US Jewelry | (1.3 | )% | $ | 171.0 | ||||
Peoples | 3.9 | % | $ | 37.0 | ||||
Mappins | (4.3 | )% | $ | 7.0 | ||||
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Zale Canada Jewelry | 2.5 | % | $ | 44.0 | ||||
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Total Zale Jewelry | (0.6 | )% | $ | 215.0 | ||||
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Piercing Pagoda | (2.8 | )% | $ | 32.5 | ||||
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Zale division(1) | (0.9 | )% | $ | 247.5 | ||||
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| Change from previous year | ||||||||||||||||||||||||
| Second quarter of Fiscal 2016 | Same store sales(1) | Non-same store sales, net(2) | Total sales at constant exchange rate(3) | Exchange translation impact(3) | Total sales as reported | Total sales (in millions) | ||||||||||||||||||
| H.Samuel | 1.9 | % | (0.3 | )% | 1.6 | % | (8.3 | )% | (6.7 | )% | $ | 76.3 | ||||||||||||
| Ernest Jones | 8.3 | % | 2.8 | % | 11.1 | % | (9.0 | )% | 2.1 | % | $ | 82.8 | ||||||||||||
| UK Jewelry division | 5.1 | % | 1.3 | % | 6.4 | % | (8.7 | )% | (2.3 | )% | $ | 159.1 | ||||||||||||
(1) | Based on stores open for at least 12 months. eCommerce sales are included in the calculation of same store sales |
Average Merchandise Transaction Value(1)(2) | Merchandise Transactions | ||||||||||||||||||
| Average Value | Change from previous year | Change from previous year | |||||||||||||||||
| Second quarter | Fiscal 2016 | Fiscal 2015 | Fiscal 2016 | Fiscal 2015 | Fiscal 2016 | Fiscal 2015 | |||||||||||||
| H.Samuel | £ | 74 | £ | 73 | 1.4 | % | (2.7 | )% | 0.4 | % | 4.2 | % | |||||||
| Ernest Jones | £ | 274 | £ | 267 | 2.6 | % | (6.2 | )% | 6.9 | % | 11.7 | % | |||||||
| UK Jewelry division | £ | 120 | £ | 115 | 4.3 | % | (2.6 | )% | 1.8 | % | 5.7 | % | |||||||
| Change from previous year | ||||||||||||||||||||||
| Year to date Fiscal 2016 | Same store sales(1) | Non-same store sales, net(2) | Total sales at constant exchange rate(3) | Exchange translation impact(3) | Total sales as reported | Total sales (in millions) | ||||||||||||||||
| Sterling Jewelers division | 2.8 | % | 2.4 | % | 5.2 | % | — | % | 5.2 | % | $ | 1,802.7 | ||||||||||
| Zale Jewelry | 5.5 | % | 234.0 | % | 239.5 | % | (9.6 | )% | 229.9 | % | $ | 709.3 | ||||||||||
| Piercing Pagoda | 7.1 | % | 253.2 | % | 260.3 | % | — | % | 260.3 | % | $ | 117.1 | ||||||||||
Zale division(4) | 5.7 | % | 236.6 | % | 242.3 | % | (8.4 | )% | 233.9 | % | $ | 826.4 | ||||||||||
| UK Jewelry division | 5.6 | % | 0.9 | % | 6.5 | % | (9.4 | )% | (2.9 | )% | $ | 305.6 | ||||||||||
Other(5) | — | % | 8.3 | % | 8.3 | % | — | % | 8.3 | % | $ | 6.5 | ||||||||||
| Signet | 3.8 | % | 27.0 | % | 30.8 | % | (1.9 | )% | 28.9 | % | $ | 2,941.2 | ||||||||||
Adjusted Signet(3) | $ | 2,957.0 | ||||||||||||||||||||
Adjusted Signet excluding Zale(3) | $ | 2,114.8 | ||||||||||||||||||||
| Change from previous year | ||||||||||||||||||||||||
Year to date Fiscal 2015 | Same store sales(1) | Non-same store sales, net | Total sales at constant exchange rate(4) | Exchange translation impact(4) | Total sales as reported | Total sales (in millions) | ||||||||||||||||||
Sterling Jewelers division | 4.8 | % | 2.4 | %(2) | 7.2 | % | — | % | 7.2 | % | $ | 1,713.9 | ||||||||||||
UK Jewelry division | 4.3 | % | 0.1 | %(2) | 4.4 | % | 10.4 | % | 14.8 | % | $ | 314.6 | ||||||||||||
Zale Jewelry | (0.6 | )% | — | % | — | % | — | % | — | % | $ | 215.0 | ||||||||||||
Piercing Pagoda | (2.8 | )% | — | % | — | % | — | % | — | % | $ | 32.5 | ||||||||||||
Zale division | (0.9 | )% | — | % | — | % | — | % | — | % | $ | 247.5 | ||||||||||||
Other(5) | — | % | nm | nm | — | % | nm | $ | 6.0 | |||||||||||||||
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| |||||||||||||||||||||||
Signet | 4.1 | % | 15.9 | %(3) | 20.0 | % | 1.8 | % | 21.8 | % | $ | 2,282.0 | ||||||||||||
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| |||||||||||||||||||||||
Organic Signet | 4.7 | % | 2.3 | %(2) | 7.0 | % | 1.6 | % | 8.6 | % | $ | 2,034.5 | ||||||||||||
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| |||||||||||||||||||||||
| Change from previous year | |||||||||||||||||
| Year to date Fiscal 2016 | Same store sales(1) | Non-same store sales, net(2) | Total sales as reported | Total sales (in millions) | |||||||||||||
| Kay | 3.8 | % | 2.5 | % | 6.3 | % | $ | 1,126.6 | |||||||||
Jared(3) | 1.4 | % | 4.6 | % | 6.0 | % | $ | 580.9 | |||||||||
| Regional brands | (1.3 | )% | (9.1 | )% | (10.4 | )% | $ | 95.2 | |||||||||
| Sterling Jewelers division | 2.8 | % | 2.4 | % | 5.2 | % | $ | 1,802.7 | |||||||||
(1) | Based |
(2) | Includes all sales from stores not open |
Sterling Jewelers sales
In the year to date, Sterling Jewelers division’s total sales were $1,713.9 million compared to $1,598.3 million in the prior year comparable period, up $115.6 million or 7.2%. Same store sales increased 4.8% compared to an increase of 6.6% in the comparable prior year period. Sterling Jewelers’ sales increases were driven by particular strength in bridal brands, fashion diamonds and watches. For the year to date, Kay and Jared experienced increases in both transaction counts and the average transaction value in Kay and declined in Jared. The decline in average merchandise transaction value was driven primarily by sales mix, including higher bead sales. eCommerce sales were $60.4 million compared to $50.9 million in the prior year period up $9.5 million or 18.7%. See the table below for further analysis of sales.
| Sales change from previous year | ||||||||||||||||
Year to date Fiscal 2015 | Same store sales | Non-same store sales, net(1) | Total sales as reported | Total sales (in millions) | ||||||||||||
Kay | 6.0 | % | 3.0 | % | 9.0 | % | $ | 1,058.9 | ||||||||
Jared(2) | 3.6 | % | 5.8 | % | 9.4 | % | $ | 544.7 | ||||||||
Regional brands | (0.4 | )% | (14.2 | )% | (14.6 | )% | $ | 110.3 | ||||||||
|
| |||||||||||||||
Sterling Jewelers division | 4.8 | % | 2.4 | % | 7.2 | % | $ | 1,713.9 | ||||||||
|
| |||||||||||||||
(3) | Includes |
| Average Merchandise Transaction Value(1)(2) | Merchandise Transactions | |||||||||||||||||||||||
| Average Value | Change from previous year | Change from previous year | ||||||||||||||||||||||
Year to date Fiscal 2015 | Fiscal 2015 | Fiscal 2014 | Fiscal 2015 | Fiscal 2014 | Fiscal 2015 | Fiscal 2014 | ||||||||||||||||||
Kay | $ | 402 | $ | 391 | 2.8 | % | 4.8 | % | 7.9 | % | 4.6 | % | ||||||||||||
Jared | $ | 545 | $ | 554 | (1.6 | )% | 2.0 | % | 14.6 | % | 5.8 | % | ||||||||||||
Regional brands | $ | 410 | $ | 400 | 2.5 | % | 3.4 | % | (8.6 | )% | (12.6 | )% | ||||||||||||
Sterling Jewelers division | $ | 439 | $ | 432 | 1.6 | % | 4.1 | % | 8.3 | % | 3.2 | % | ||||||||||||
Average Merchandise Transaction Value(1)(2) | Merchandise Transactions | ||||||||||||||||||
| Average Value | Change from previous year | Change from previous year | |||||||||||||||||
| Year to date Fiscal 2016 | Fiscal 2016 | Fiscal 2015 | Fiscal 2016 | Fiscal 2015 | Fiscal 2016 | Fiscal 2015 | |||||||||||||
| Kay | $ | 423 | $ | 401 | 5.5 | % | 2.8 | % | (2.4 | )% | 5.5 | % | |||||||
| Jared | $ | 562 | $ | 545 | 3.1 | % | (2.2 | )% | (3.1 | )% | 8.0 | % | |||||||
| Regional brands | $ | 424 | $ | 412 | 2.9 | % | 1.7 | % | (5.1 | )% | (0.6 | )% | |||||||
| Sterling Jewelers division | $ | 460 | $ | 440 | 4.5 | % | 1.2 | % | (2.8 | )% | 5.7 | % | |||||||
(2) | Net merchandise sales include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repairs, warranty, insurance, employee and other miscellaneous sales. |
Year to date Fiscal 2015 H.Samuel Ernest Jones(3) UK Jewelry division Year to date Fiscal 2015 H.Samuel Ernest Jones(3) UK Jewelry division returns. In the UK Jewelry division, gross margin dollars decreased $0.7 million but gross margin rate increased prior year to date period. Summary cash flow Net cash provided by operating activities Net cash used in investing activities Net cash provided by (used in) financing activities Decrease in cash and cash equivalents Cash and cash equivalents at beginning of period Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period 2015: information technology infrastructure and stores. Store count: Kay Jared Regional brands Sterling Jewelers division Zales Gordon’s Peoples Mappins Zale Jewelry Piercing Pagoda Zale division H. Samuel Ernest Jones(3) UK Jewelry division Signet Store count: Kay Jared Regional brands Sterling Jewelers division Zales Gordon’s Peoples Mappins Zale Jewelery Piercing Pagoda Zale division H. Samuel Ernest Jones(3) UK Jewelry division Signet 1, 2015 was $147.6 million, comprised primarily of First quarter(1) Second quarter 2013 Program(1) 2011 Program(2) Total Common Shares 2, 2014. facility. Long-term debt obligations (excluding capital Operating lease obligations(3) Capital lease obligations Operations services agreement(4) Other long-term liabilities(5) Total 26, 2015. Item 1. years for plans sold on or after May 2, 2015 and 42% of revenue recognized within the first two years for plans sold prior to May 2, 2015 (January 31, 2015: 45%; August 2, 2014: 45%). Contents 26, 2015. 1, 2015. equity securities Period May 4, 2014 to May 31, 2014 June 1, 2014 to June 28, 2014 June 29, 2014 to August 2, 2014 Total /s/ Michele L. Santana Change from previous year Year to date Fiscal 2016 Non-same
store sales,
net Total sales at
constant
exchange
rate Exchange
translation
impact Total
sales
as reported Total
sales
(in millions)Zales 6.1 % $ 559.3 Gordon’s (5.1 )% $ 37.5 Zale US Jewelry 5.4 % $ 596.8 Peoples 6.7 % $ 96.9 Mappins 1.4 % $ 15.6 Zale Canada Jewelry 5.9 % $ 112.5 Total Zale Jewelry 5.5 % $ 709.3 Piercing Pagoda 7.1 % $ 117.1 Zale division 5.7 % $ 826.4 Based on stores open for at least 12 months. eCommerce sales are included in the calculation of same store sales for the period and comparative figures from the anniversary of the launch of the relevant website. The Zale division same store sales includes merchandise and repair sales and excludes warranty and insurance revenues. were $314.6decreased 2.9% to $305.6 million compared to $274.1$314.6 million in the prior year comparable period up $40.5 million or 14.8% and up 4.4%increased 6.5% at constant exchange rates. Same store sales increased 4.3%5.6% compared to a decreasean increase of 2.3%4.3% in the comparable prior year comparable period. The totalincrease in sales increase was primarily driven by branded bridal, fashion diamond jewelry and fashion watches. Similar to the second quarter, the number of transactions on a year to date basisThe average transaction value increased primarily due to beads and gold jewelry in both H.Samuel and fashion watches in Ernest Jones. The decline in average merchandise transaction wasJones primarily driven by sales mix. eCommerce sales were $17.3 million comparedincreases in diamond sales. The number of merchandise transactions increased in both H.Samuel and Ernest Jones due to $11.4 millionstrong performance in the prior year comparable period, up $5.9 million or 51.8%. See the table below for further analysis ofdiamond, fashion jewelry and watch sales. Sales change from previous year Same
store
sales Non-same
store sales,
net(1) Total sales at
constant
exchange
rate(2) Exchange
translation
impact(2) Total
sales
as reported Total
sales
(in millions) 2.9 % (1.6 )% 1.3 % 10.0 % 11.3 % $ 160.6 5.7 % 2.3 % 8.0 % 10.6 % 18.6 % $ 154.0 4.3 % 0.1 % 4.4 % 10.4 % 14.8 % $ 314.6 Change from previous year Year to date Fiscal 2016
store
sales(1)
store sales,
net(2)
constant
exchange
rate(3)
translation
impact(3) Total
sales
as reported Total
sales
(in millions)H.Samuel 3.0 % 0.1 % 3.1 % (9.0 )% (5.9 )% $ 151.1 Ernest Jones 8.3 % 1.7 % 10.0 % (9.7 )% 0.3 % $ 154.5 UK Jewelry division 5.6 % 0.9 % 6.5 % (9.4 )% (2.9 )% $ 305.6 (1)Includes all sales fromBased on stores not open for at least 12 months.(2)Non-GAAP measure, discussed herein.(3)Includes stores selling under the Leslie Davis nameplate. Average Merchandise Transaction Value(1)(2) Merchandise Transactions Average Value Change from previous year Change from previous year Fiscal 2015 Fiscal 2014 Fiscal 2015 Fiscal 2014 Fiscal 2015 Fiscal 2014 £ 73 £ 75 (2.7 )% — 4.0 % (7.2 )% £ 264 £ 275 (4.0 )% (9.5 )% 11.2 % 3.8 % £ 113 £ 115 (1.7 )% (1.7 )% 5.4 % (5.2 )% (1)Average merchandise transaction value is defined as net merchandise sales divided by the total number of customer transactions.(2)Net merchandise sales include all merchandise product sales, including VAT, net of discounts and returns. In addition, excluded from net merchandise eCommerce sales are repairs, warranty, insurance, employeeincluded in the calculation of same store sales for the period and other miscellaneous sales.comparative figures from the anniversary of the launch of the relevant website.(3)Includes stores selling under the Leslie Davis nameplate.Zale(2) Includes all sales (as Zale Corporation was acquired during Fiscal 2015, therefrom stores not open for 12 months. Merchandise Transactions Average Value Change from previous year Change from previous year Year to date Fiscal 2016 Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015 H.Samuel £ 74 £ 73 1.4 % (2.7 )% 1.4 % 6.3 % Ernest Jones £ 270 £ 262 3.1 % (6.5 )% 5.3 % 11.6 % UK Jewelry division £ 117 £ 113 3.5 % (4.3 )% 2.2 % 7.4 % no comparable period)As Zale Corporation was acquireddefined as net merchandise sales on May 29, 2014, year to datea same store basis divided by the total number of customer transactions.second quarter sales are the same.$409.0$490.8 million or 33.4%34.8% of sales compared to $309.7$409.0 million or 35.2%33.4% of sales in the prior year second quarter. Of the $99.3 million increase in gross margin, $69.0 million was due to the addition of the Zale division. OrganicAdjusted gross margin was $340.0$500.1 million or 34.8%35.3% of sales. The gross margin rate decrease was primarily due to the lower gross margins associated with the Zale division and purchase accounting adjustments. Zale operates with a lower gross margin structure than Sterling Jewelers and represents an area of focus on applying best practices for improvement. The organic gross margin change was driven by the following:Gross margin dollars in the Sterling Jewelers division increased by $26.2 millionsales, compared to prior year and increased as percentage of sales by 10 basis points. The gross margin rate was favorably impacted by sales mix and lower commodity costs. These benefits were partially offset by the recognition of gold hedge losses incurred in Fiscal 2014 and lower gold spot prices that reduced the recovery on trade-ins and inventory. The net bad debt ratio as a percentage of the division’s total sales increased to 5.2% of sales from 4.9% of sales34.3% in the prior year second quarter. The increase in the ratioadjusted gross margin rate from prior year of 100 basis points was primarily due to improvement in gross merchandise margin through higher sales and favorable commodity costs. Excluding Zale, the growthadjusted gross margin rate was 35.7%, up 90 basis points.outstanding receivable balanceSterling Jewelers division increased $25.1 million compared to the prior year second quarter, reflecting higher sales and a gross margin rate increase of 90 basis points. The gross margin rate expansion was driven principally by an improvement in the merchandise margin due to favorable commodity costs partially offset by higher bad debt expense due to credit sales growth.penetration assales growth.credit portfolio continuesyear to perform strongly.date period for the Zale division is not comparable.$4.4 million50 basis points compared to the second quarter of Fiscal 2014 and decreasedprior year to date. The decrease in dollars was due to lower gross merchandise margin as a percentageresult of sales by 120 basis points.promotional activity. The gross margin rate increase was impacted primarily by higher sales associated with strategic initiatives around diamond and gold merchandise that, although reduced the divisional gross margin rate, successfully drove incremental gross margin dollars. In addition, the gross margin rate was also impacted by a shift in merchandise mix as a result of strong watch sales. Both of these factors were partially offset bydue to leverage on store occupancy.gross margin was $816.2of Fiscal 2016, SGA were $906.0 million or 35.8%30.8% of sales compared to $692.5$689.7 million or 37.0%30.2% of sales in prior year to date period. The $216.3 million increase was primarily due to owning Zale for the entire year to date period compared with 65 days in the prior year comparable period as well as higher transaction costs. Adjusted SGA was $864.3 million or 29.2% of sales compared to adjusted SGA of $653.5 million or 28.6% of sales in the prior year to date period. Organic gross margin was $747.2 million or 36.7% of sales. The organic gross margin change60 basis point increase was driven by higher store operation expenses as well as advertising investments related to Zale. Excluding Zale, the following:Gross margin dollars in the Sterling Jewelers division increased by $45.5 million compared to the prior year to date andadjusted SGA rate was flat as a percentage of sales. Benefits from sales mix and lower commodity costs were offset by the gold hedge losses and lower gold spot prices discussed previously. The net bad debt ratio as a percentage of the division’s total sales was 3.7% compared to 3.6% in prior year period.In the UK Jewelry division, gross margin dollars increased $9.8 million compared to the prior year and declined by28.4%, up 30 basis points, primarily fordriven by central costs associated principally with legal fees related to the reasons discussedappraisal rights litigation. the quarter to date period.Selling, general and administrative expenses (“SGA”)In the second quarter of Fiscal 2015, SGA expenses were $379.2 million compared to $250.5 million in the prior year second quarter, up $128.7 million. As a percentage of sales, SGA increased by 250 basis points to 31.0%. The $128.7 million SGA increase was primarily made up of: $81.8 million from the Zale division, $17.1 million from transaction costs, and $13.7 million from severance costs, partially offset by a $3.0 million SGA reduction from purchase accounting adjustments. Organic SGA was $269.6$62.8 million or 27.6%4.5% of sales compared to the prior year quarter SGA rate of 28.5%. The decrease in the organic SGA rate of 90 basis points was driven primarily by leverage in both the Sterling Jewelers and UK Jewelry division of store staff costs due to higher sales.In the year to date, SGA expenses were $689.7 million compared to $537.5 million in the prior year to date period, up $152.2 million, and as a percentage of sales increased by 150 basis points to 30.2%. Organic SGA was $571.7 million or 28.1% of sales compared to the prior year rate SGA rate of 28.7%. The decrease in the SGA rate of 60 basis points was primarily due to leverage on store staff costs previously discussed in the quarter to date period. Partially offsetting this benefit in rate was higher advertising expense of $13.5 million primarily due to timing of production costs between the fourth quarter of prior year and the first quarter of Fiscal 2015.Other operating income, netIn the second quarter of Fiscal 2015, other operating income, net was $53.7 million or 4.4% of sales compared to $46.3 million or 5.3% of sales in the prior year second quarter. Other operating income, net as percentage of organic sales was 5.5%. This increase was primarily due to higher interest income earned from higher outstanding receivable balances.net was $126.3 million or 4.3% of sales compared to $107.7 million or 4.7% of sales compared to $93.3 million or 5.0% of sales in the prior year to date period. Other operatingThis increase was primarily due to higher interest income net as percentageearned from higher outstanding receivable balances.Inof Fiscal 2015, operating income was $83.5$100.8 million, or 6.8%7.2% of sales compared to $105.5$83.5 million or 12.0%6.8% of sales in the prior year second quarter. OrganicThere were $48.7 million of unfavorable purchase accounting and transaction-related adjustments this year which reduced operating income in the second quarter compared with adjustments of $42.3 million in the prior year period. Adjusted operating income was $124.1$149.5 million, or 12.7% of sales. Operating income consisted of the following components:Sterling Jewelers division’s operating income was $129.9 million or 16.0%10.5% of sales compared to $111.9adjusted operating income of $125.8 million or 15.1%10.2% of sales in the prior year second quarter.UK Jewelry Second Quarter Fiscal 2016 Fiscal 2015 % of divisional sales $
(in millions) % of divisional sales Sterling Jewelers division $ 157.8 18.4 % $ 129.9 16.0 % (2.1 ) (0.5 )% (9.8 ) (4.0 )% UK Jewelry division 3.2 2.0 % 1.1 0.7 % (58.1 ) nm (37.7 ) nm Operating income $ 100.8 7.2 % $ 83.5 6.8 % (1) In the second quarter of Fiscal 2016, Zale division includes net operating loss impact of $5.1 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $3.0 million or 0.7% of sales. The Zale division operating income included $2.4 million from Zale Jewelry or 0.7% of sales and $0.6 million from Piercing Pagoda or 1.1% of sales. In the prior year second quarter, Zale division includes net operating loss impact of $11.5 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $1.7 million or 0.7% of sales. The Zale division operating income included $1.4 million from Zale Jewelry or 0.6% of sales and $0.3 million from Piercing Pagoda or 0.9% of sales. (2) Other includes $43.6 million of transaction-related and integration expenses in the second quarter of Fiscal 2016, which are primarily attributed to the legal settlement over appraisal rights and consulting expenses. In prior year second quarter, $30.8 million of transaction-related and integration expenses were incurred, primarily attributed to one-time transaction and severance related costs. $1.1$277.0 million, or 0.7%9.4% of sales compared to an operating loss of $0.8$234.2 million or (0.6)%10.3% of sales last year. Included in operating income were purchase accounting and transaction-related adjustments which reduced operating income by $66.5 million compared with adjustments of $50.7 million in the prior year to date period. Adjusted operating income was $343.5 million, or 11.6% of sales compared to adjusted operating income of $284.9 million or 12.4% of sales last year. The 80 basis point decrease in adjusted operating margins was due to the addition of the Zale division this year, which required incremental investment in SGA. Excluding the Zale division, the adjusted Signet operating margin would have been 14.8%, up 90 basis points compared to last year. Year to date operating income consisted of the following components: Year to date Fiscal 2016 Fiscal 2015 % of divisional sales $
(in millions) % of divisional sales Sterling Jewelers division $ 336.0 18.6 % $ 296.2 17.3 % 13.4 1.6 % (9.8 ) (4.0 )% UK Jewelry division 3.7 1.2 % 1.1 0.3 % (76.1 ) nm (53.3 ) nm Operating income $ 277.0 9.4 % $ 234.2 10.3 % (1) In the year to date period of Fiscal 2016, Zale division includes net operating loss impact of $16.5 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $29.9 million or 3.6% of sales. The Zale division operating income included $21.9 million from Zale Jewelry or 3.0% of sales and $8.0 million from Piercing Pagoda or 6.8% of sales. In the prior year to date period, Zale division includes net operating loss impact of $11.5 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $1.7 million or 0.7% of sales. The Zale division operating income included $1.4 million from Zale Jewelry or 0.6% of sales and $0.3 million from Piercing Pagoda or 0.9% of sales. (2) Other includes $50.0 million of transaction-related and integration expenses in the year to date period of Fiscal 2016, which are primarily attributed to the legal settlement over appraisal rights and consulting expenses. In prior year to date period, $39.2 million of transaction-related and integration expenses were incurred, primarily attributed to one-time transaction and severance related costs. Zale division’s operating lossFor the year to date, income before income taxes was $9.8up 16.6% to $254.9 million or (4.0)%8.7% of sales which includes a loss of $11.5 million relatedcompared to acquisition accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $1.7$218.7 million or 0.7% of sales. The Zale division operating income included $1.4 million from Zale Jewelry or 0.6%9.6% of sales and $0.3in the prior year to date period.from Piercing Pagoda or 0.9%an effective tax rate ("ETR") of sales.The Other operating segment was an operating loss of $37.7 million30.7%, compared to $5.6$11.8 million, an ETR of 16.9%, in the prior year second quarter. The second quarter ETR was unfavorably affected by the impact of the $34.2 million appraisal rights legal settlement, which included $30.8 million related to transaction and severance costs.operatingincome tax expense was $73.9 million, an ETR of 29.0% compared to $64.1 million, an ETR of 29.3%, in the prior year to date period.$234.2up 7.2% to $62.2 million or 10.3%4.4% of sales compared to $248.3$58.0 million or 13.3%4.7% of sales in the prior year second quarter. Adjusted net income was $102.6 million or 7.2% of adjusted sales compared to $85.6 million or 6.9% of adjusted sales in the prior year second quarter.Organic operatingAdjusted net income was $283.2$232.8 million or 13.9%7.9% of sales. Year to date operating income consisted of the following components:Sterling Jewelers division’s operating income was $296.2 million or 17.3% ofadjusted sales compared to $264.7$189.0 million or 16.6%8.2% of sales in the prior year period.UK Jewelry division’s operating income was $1.1 million or 0.3% of sales compared to an operating loss of $4.9 million or (1.8)% of sales in the prior year period.Zale division’s operating loss was $9.8 million or (4.0)% of sales which includes a loss of $11.5 million related to acquisition accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $1.7 million or 0.7% of sales. The Zale division operating income, excluding accounting adjustments, was comprised of $1.4 million or 0.6% of sales from Zale jewelry and $0.3 million or 0.9% of sales from Piercing Pagoda.The Other operating segment was an operating loss of $53.3 million compared to $11.5 million in the prior year period which included $39.2 million related to transaction and severance costs.Interest expense, netIn the second quarter of Fiscal 2015, net interest expense was $13.7 million compared to $1.0 million in the prior year second quarter. The increase in interest expense was driven by the addition of $1,400 million of debt financing at a weighted average interest cost of 2.6% related to the Zale acquisition. Included in interest expense was a write-off of fees of $3.2 million related to the $800 million bridge facility that was subsequently replaced with permanent financing instruments as well as $0.7 million associated with the previous credit facility. In the year to date, net interest expense was $15.5 million compared to $1.9 million in the prior year to date period with the increase driven by the same factors as those in the quarterly period in addition to $0.8 million of expense in the first quarter related to pre-acquisition financing costs.Income before income taxesIn the second quarter of Fiscal 2015, income before income taxes was $69.8 million or 5.7% of sales compared $104.5 million or 11.9% in the prior year second quarter. Organic income before income taxes was $123.4 million or 12.6% of sales. In the year to date, income before income taxes was $218.7 million or 9.6% of sales compared to $246.4 million or 13.2% ofadjusted sales in the prior year to date period. Year to date organic income before income taxes was $281.5 million or 13.8% of sales.Income taxesInof Fiscal 2015, income tax expense was $11.8 milliondiluted earnings per share were $0.78 compared to $37.1 million$0.72 in the prior year second quarter. The effective tax rate was 16.9% compared to 35.5% in the prior year second quarter. Organic income tax expense was $43.5 million with an effective tax rate of 35.2%quarter, up 8.3%. In the year to date period, income tax expense was $64.1 million, an effective tax rate 29.3% compared to $87.2 million, an effective tax rate of 35.4% in the prior year to date period. Organic income tax expense for the year to date period was $97.7 million with an effective tax rate of 34.7%.The forecast effective tax rate for the Fiscal 2015 full year is 29.3%, which is lower than the effective tax rate of 35.1% applied as of the first quarter of Fiscal 2015. This reduction of 5.8% in Signet’s effective tax rate primarily reflects the benefit of Signet’s amended capital structure and financing arrangements utilized to fund the acquisition of Zale Corporation.Net incomeIn the second quarter of Fiscal 2015, net income was $58.0 million or 4.7% of sales compared to $67.4 million or 7.7% of sales in the prior year second quarter. Organic net income in the second quarter was $79.9 million or 8.2% of sales. In the year to date period, net income was $154.6 million or 6.8% of sales compared to $159.2 million or 8.5% of sales in the prior year to date period. Organic net income in the year to date period was $183.8 million or 9.0% of sales.Earnings per shareIn the second quarter of Fiscal 2015,Adjusted diluted earnings per share were $0.72 compared$1.28, which included a contribution of $0.02 per share related to $0.84the Zale division, as well as the impact related to an operational change associated with extended service plans, which resulted in the prior year second quarter. Organica change in revenue recognition and impacted adjusted diluted earnings per share were $1.00, a 19.0% growth rate over the prior year second quarter.by $0.05. The weighted average diluted number of common shares outstanding was 80.279.9 million compared to 80.780.2 million in the prior year second quarter. Signet repurchased 93,664 shares in the second quarter of Fiscal 2015 under its share buyback program compared to 374,613 shares the prior year second quarter.In$1.93$2.26 compared to $1.97$1.93 in the prior year second quarter, up 17.1%. Adjusted diluted earnings per share were $2.91, which included a contribution of $0.22 per share related to date period.the Zale division. The weighted average diluted number of common shares outstanding was 80.280.0 million compared to 81.080.2 million in the prior year to date period. Organic diluted earnings per share were $2.29, a 16.2% growth rate over the prior year to date period. Signet repurchased 220,132 shares in the 26 weeks ended August 2, 2014 compared to 1,123,858 shares in the 26 weeks ended August 3, 2013.2015,2016, dividends of $0.18$0.22 per share were approved by the Board of Directors compared to $0.15$0.18 in the second quarter of Fiscal 2014.2015. In the year to date, dividends of $0.36$0.44 per share were approved by the Board of Directors compared to $0.30$0.36 in the 26 weeks ended August 3, 2013.Set out in thebelow isprovides a summary of Signet’s cash flow activity for the year to date forperiods of Fiscal 20152016 and Fiscal 2014. 26 weeks ended (in millions) August 2,
2014 August 3,
2013 $ 183.9 $ 58.5 (1,519.4 ) (52.2 ) 1,303.4 (94.6 ) (32.1 ) (88.3 ) 247.6 301.0 (0.5 ) 0.2 $ 215.0 $ 212.9 26 weeks ended (in millions) August 1, 2015 August 2, 2014 Net cash provided by operating activities $ 210.6 $ 183.9 Net cash used in investing activities (97.2 ) (1,519.4 ) Net cash used in financing activities (147.6 ) 1,303.4 Decrease in cash and cash equivalents (34.2 ) (32.1 ) Cash and cash equivalents at beginning of period 193.6 247.6 Decrease in cash and cash equivalents (34.2 ) (32.1 ) Effect of exchange rate changes on cash and cash equivalents 0.4 (0.5 ) Cash and cash equivalents at end of period $ 159.8 $ 215.0 $183.9$210.6 million compared to $58.5$183.9 million in the prior year comparable period. Net income decreasedincreased by $4.6$26.4 million to $181.0 million from $154.6 million from $159.2 million withand depreciation and amortization increasing $13.4increased $20.0 million to $64.5$84.5 million from $51.1$64.5 million in the prior year comparable period. The increase in depreciation and amortization was primarily due to the Zale Division. The primary drivers of cash provided byused in operating activities were as follows:InventoryCash provided by accounts receivable was $74.7 million as compared to $58.3 million in the prior year to date period. In the Sterling Jewelers division, credit participation was 61.6% and the average monthly collection rate was 12.0% compared to 60.0% and 12.4%, respectively, in the prior year comparable period. The decrease in the average monthly collection rate is primarily attributed to the continued shift of customers opting for regular credit terms which require lower monthly payments and no down payment as opposed to the 12-month interest free program.relatedand inventory-related items decreased by $17.1was $28.4 million compared to an increase of $57.4$17.1 million provided in the prior year comparable period. The change in inventory cash flowsinventories is primarily attributed to the prior year balance reflecting higher inventory levels to support outletnew stores expansion of bridal programs and Signet’s strategic sourcing initiative.Total inventory as of August 2, 2014 was $2,345.3 million compared to the year-end Fiscal 2014 balance of $1,488.0 million and prior year comparable quarter balance of $1,417.7 million. The increase in inventory from these periods is primarily attributed to acquisition of Zale division which increased inventory by $841.3. The remainder of the increase was driven in part by expansion of bridal and branded merchandise to support higher sales and new store growth.Accrued expenses and liabilities decreased by $19.0rough diamond purchases. Accounts payable used $80.8 million compared to a decreaseuse of $57.1$28.9 million in the prior year comparable period primarily driven by increased debt-relatedthe Zale Division and timing of payments.including interest, as well as increasedand other liabilities was $28.6 million compared to $19.0 million in the prior year comparable period primarily driven by salary and payroll-related liabilities, including severance.items paid in the second quarter related to incentive compensation.compared to $52.2 million in the prior year comparable period. Cash used for the Zale Corporation acquisition wasconsisting primarily of $1,429.2 million. Capital expenditures increased by $36.4 million to fund the Acquisition, net of cash acquired, and $90.0 million from $53.6 million. In the Sterling Jewelers division,related to capital additions were $76.2 million compared to $48.6 million in the prior year. This increase was primarily due to timing of capital spend in Fiscal 2014 associated with the integrationnew Kay and conversion of UltraJared stores, in which the timing of the capital spend primarily occurred in the second half of the year. In the UK Jewelrystore remodels and Zale division capital additions were $4.7 million compared to $5.0 million in the prior year comparable period. Zale had capital expenditures of $8.5 million as well as capital additions in the Other operating segment of $0.6 million.2, 2014: February 1,
2014 Acquired
stores Openings Logo
conversions(1) Closures August 2,
2014 1,055 — 31 — (10 ) 1,076 203 — 4 33 — 240 213 — — (33 ) (9 ) 171 1,471 (2) — 35 — (19 ) 1,487 — 722 3 — (2 ) 723 — 91 — — (7 ) 84 — 145 — — (1 ) 144 — 48 — — (1 ) 47 — 1,006 3 — (11 ) 998 — 613 — — (2 ) 611 — (2) 1,619 3 — (13 ) 1,609 304 — — — — 304 189 — — — — 189 493 (2) — — — — 493 1,964 1,619 38 — (32 ) 3,589 January 31, 2015 Openings Closures August 1, 2015 Store count: Kay 1,094 28 (4 ) 1,118 Jared 253 9 (1 ) 261 Regional brands 157 — (6 ) 151 Sterling Jewelers division 1,504 37 (11 ) 1,530 Zales 716 2 (6 ) 712 Peoples 144 1 — 145 Regional brands 112 — (3 ) 109 Total Zale Jewelry 972 3 (9 ) 966 Piercing Pagoda 605 — (6 ) 599 Zale division 1,577 3 (15 ) 1,565 H.Samuel 302 — (1 ) 301 Ernest Jones 196 2 (1 ) 197 UK Jewelry division 498 2 (2 ) 498 Signet 3,579 42 (28 ) 3,593 (1)Includes 33 stores that were converted from regional brands, which consist of 31 Jared Vaults, which operate in outlet centers, and two Jared concept test stores.(2)The annual net change in selling square footage for Fiscal 20142015 for Sterling Jewelers division and UK Jewelry division was 5% and (3)%2%, respectively. As the Acquisition was took placeoccurred during Fiscal 2015, the Zale division does not have a comparable prior period to show the net change in selling square footage.(3)Includes stores selling under the Leslie Davis nameplate.2015: August 2,
2014 Planned
openings Planned
closures Planned
January 31,
2015 1,076 28 (4 ) 1,100 240 13 (1) — 253 171 — (18 ) 153 1,487 (2) 41 (22 ) 1,506 723 7 (17 ) 713 84 ��� (22 ) 62 144 1 (1 ) 144 47 — (2 ) 45 998 8 (42 ) 964 611 1 (20 ) 592 1,609 (2) 9 (62 ) 1,556 304 — (4 ) 300 189 4 (1 ) 192 493 (2) 4 (5 ) 492 3,589 54 (89 ) 3,554 (1)Includes seven Jared The Galleria Of Jewelry store openings, as well as six Jared concept test store openings.(2)The expected annual net change in sellingGross locationsNet locations Net square footage for Fiscal 2015 for feetSterling Jewelers division up 55 to 65 up 30 to 35 up 3% to 4% Zale division and up 30 to 35 approximately flat approximately flat UK Jewelry division is 5%, (3)% and 0%, respectively.up 5 to 10 slight increase slight increase (3)Includes stores selling under the Leslie Davis nameplate.FreeNet cash flowFree cash flow is net cash provided by operatingused in financing activities less purchases of property and equipment, net; see non-GAAP measures discussed herein. Free cash flow was $48.5 million compared to $(17.0) million in the prior year second quarter. Year to date free cash flow was $93.9 million compared to $4.9 million for the 26 weeks ended August 3, 2013.Financing$81.9 million cash used to repurchase approximately 629,000 shares. Additionally, approximately $32 million was used for dividend payments. Net cash provided by financing activitiesDividendsDuring in the 26 weeks ended August 2, 2014 was $1,303.4 million, primarily due to $1,380.0 million in proceeds from debt issued (net of debt issuance costs) to fund the Company’sAcquisition, offset by $76.6 million of net cash outflows associated with dividend activity was as follows: Fiscal 2015 Fiscal 2014 Cash dividend
per share Total
dividends Cash dividend
per share Total
dividends (in millions) (in millions) $ 0.18 $ 14.4 (2) $ 0.15 $ 12.1 $ 0.18 $ 14.4 (3) $ 0.15 $ 12.1 August 1, 2015 August 2, 2014 (in millions, except per share amounts) Cash dividend
per share Total
dividends Cash dividend
per share Total
dividends $ 0.22 $ 17.6 $ 0.18 $ 14.4 Second quarter $ 0.22 $ 17.6 $ 0.18 $ 14.4 Signet’s dividend policy results in the dividend payment date being a quarter in arrears from the declaration date. As a result, the dividend declared in the fourth quarter of Fiscal 2014 $0.152015 of $0.18 per share cash dividend was paid on February 27, 201426, 2015 in the aggregate amount of $12.0$14.4 million.(2)2015 $0.182016 $0.22 per share cash dividend was paid on May 28, 201427, 2015 in the aggregate amount of $14.4 million.$17.6 million.As of August 1, 2015 and August 2, 2014, $17.6 million and $14.4 million, respectively, has been recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets reflecting the cash dividenddividends declared for the second quarter of Fiscal 2016 and Fiscal 2015, which has a record date of August 1, 2014 and a payment date of August 27, 2014.respectively.During the 26 weeks ended August 2, 2014, the 26 weeks ended August 2, 2014 26 weeks ended August 3, 2013 Amount
authorized Shares
repurchased Amount
repurchased Average
repurchase
price per
share Shares
repurchased Amount
repurchased Average
repurchase
price per
share (in millions) (in millions) (in millions) $ 350 220,132 $ 22.4 $ 101.57 374,613 $ 25.0 $ 66.74 $ 350 n/a n/a n/a 749,245 50.1 66.92 220,132 $ 22.4 1,123,858 $ 75.1 26 weeks ended August 1, 2015 26 weeks ended August 2, 2014 Amount
authorized Shares
repurchased Amount
repurchased Average
repurchase
price per
share Shares
repurchased Amount
repurchased Average
repurchase
price per
share (in millions) (in millions) (in millions) $ 350.0 628,955 $ 81.9 $ 130.27 220,132 $ 22.4 $ 101.57 (1)InOn June 14, 2013, the Board of Directors authorized the repurchase of up to $350 million of Signet’s common shares (the “2013 Program”). The 2013 Program may be suspended or discontinued at any time without notice. The 2013 Program had $273.0$183.7 million remaining as of August 2, 2014.1, 2015.(2)In October 2011, the Board of Directors authorized the repurchase of up to $300 million of Signet’s common shares (the “2011 Program”), which authorization was subsequently increased to $350 million. The 2011 Program was completed as of May 4, 2013.n/a Not applicable.exerciseissuance of share options2, 2014, $2.01, 2015, $0.2 million was received for the exercise of share options pursuant to Signet’sSignet's equity compensation programs comparedprograms. This compares to $5.2$2.0 million in the 26 weeks ended August 3, 2013. Other than equity based compensation awards granted to employees and directors, Signet has not issued common shares as a financing activity for over ten years.2014 compared to net cash of $211.2 million as of August 3, 2013;2014; see non-GAAP measures discussed herein.2, 20141, 2015 were $215.0$159.8 million compared to $212.9$215.0 million as of August 3, 2013.2, 2014. Signet has significant amounts of cash and cash equivalents invested in various ‘AAA’ rated liquidity funds and at a number of financial institutions. The amount invested in each liquidity fund or at each financial institution takes into account the credit rating and size of the liquidity fund or financial institution and is invested for short-term durations.acquisition of Zale Corporation.Acquisition. The debt iswas comprised of $400 million of senior unsecured notes, $600 million of an asset-backed securitization facility and a $400 million term loan facility. In connection with the issuance of the debt, Signet incurred and capitalized fees totaling $16.3 million, of which $14.4 million was paid and $1.9 million was accrued as of August 2, 2014. Additionally, the debt financing replaced commitments for an $800 million unsecured bridge facility extended to Signet to finance the transaction prior to the finalization of the current financing arrangements. Signet incurred and capitalized fees totaling $4.0 million related to this facility. During the 26 week period ended August 2, 2014, amortization expense related to capitalized fees associated with the debt and bridge facility was $0.6 million and $4.0 million, respectively. In conjunction with the financing activities,million. Signet also amended its existing $400 million revolving credit facility and extended the maturity date to 2019. AtAs of August 2, 2014, the credit facility was undrawn with no intra-period borrowings andupon. In addition, Signet entered into an $800 million 364-day unsecured bridge facility to finance the acquisition of Zale Corporation. No amounts were drawn on this bridge facility, which was replaced in the second quarter of Fiscal 2015 when the Company executed its acquisition financing described above.of $20.3 million. At August 3, 2013,on the Company’srevolving credit facility entered into in May 2011 was undrawn with no intra-period borrowingsof $21.9 million and stand-by letters$20.3 million as of August 1, 2015 and August 2, 2014, respectively, that reduce remaining availability under the revolving credit of $9.5 million. AND COMMITMENTSatas of August 2, 20141, 2015 and the effects such obligations and commitments are expected to have on Signet’s liquidity and cash flows in future periods have not changed materially outside the ordinary course from those disclosed in Signet’s Annual Report on Form 10-K for the year ended February 1, 2014,January 31, 2015, filed with the SEC on March 27, 2014. In addition to those previously disclosed on Form 10-K, in May 2014, the Company issued long-term debt in connection with its acquisition of Zale Corporation. Zale also has existing contractual obligations consisting of capital lease obligations, operating leases, an IT operations services agreement and other long-term liabilities. The following table provides the payments due by period for only these incremental obligations and commitments as of May 29, 2014.New contractual obligations as of May 29, 2014 Less than
one year(1) Between one and
three years Between three
and five years More than
five years Other Total (in millions)
leases)(2) $ 20.8 $ 637.6 $ 197.6 $ 733.4 $ — $ 1,589.4 124.1 259.8 150.0 163.0 — 696.9 0.7 1.2 — — — 1.9 4.9 10.6 — — — 15.5 — — — — 5.8 5.8 $ 150.5 $ 909.2 $ 347.6 $ 896.4 $ 5.8 $ 2,309.5 (1)Amounts included in this column represent obligations from the period May 29, 2014 through January 31, 2015.(2)Includes principal payments on all long-term obligations and interest payments on fixed-rate obligations only. Contractual interest payments on variable-rate obligations and commitment fees on the unused portion of the revolving credit facility have been excluded since the payments can fluctuate due to various circumstances.(3)Like the other Signet divisions, Zale operating lease obligations relate to minimum payments due under store lease arrangements. Most store operating leases require payment of real estate taxes, insurance and common area maintenance fees. Real estate taxes, insurance and common area maintenance fees were approximately 35% of base rentals for Fiscal 2014. These are not included in the table above. Some operating leases also require additional payments based on a percentage of sales.(4)The operations services agreement is with a third party for the management of client server systems, local area networks operations, wide area network management and technical support.(5)Other long-term liabilities reflect loss reserves related to credit insurance services provided by insurance subsidiaries. We have reflected these payments under “Other”, as the timing of the future payments is dependent on the actual processing of the claims.Not included in the table above are obligations under employment agreements and ordinary course purchase orders for merchandise.Sales made inThe “Holiday Season” consists of results for the months of November and December are known as the “Holiday Season.” Due to sales leverage, Signet’s operating income is even more seasonal; aboutDecember. 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. AND ESTIMATESThe preparationaccordance with US GAAP requires management to adopt accounting policies and make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. Management maintains a process to review the application of Signet’s accounting policies and to evaluate the appropriateness of the many estimates that are required to prepare the financial statements of a multinational organization. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information. There have been no material changes to the policies and estimates as discussed in Signet’s Annual Report on Form 10-K for the year ended February 1, 2014, filed with the SEC on March 27, 2014 except as noted below:Extended service plans and lifetime warranty agreementsSignetThe Company recognizes revenue related to lifetime warranty sales in proportion to when the expected costs will be incurred. The deferral period for lifetime warranty sales in each division is determined from patterns of claims costs, including estimates of future claims costs expected to be incurred. Management reviews the trends in claims to assess whether changes are required to the revenue and cost recognition rates utilized. A significant change in estimates related to the time period or pattern in which warranty-related costs are expected to be incurred could adverselymaterially impact revenues. All direct costs associated with the sale of these plans are deferred and amortized in proportion to the revenue recognized and disclosed as either other current assets or other assets. where it is obliged, subject to certain conditions, to perform repair work over the lifetimelife of the product. Revenue from the sale of these lifetime extended service plans is recognized consistent with the estimated pattern of claim costs expected to be incurred by the Company in connection with performing under the extended service plan obligations. Based on an evaluation of historical claims data, management currently estimates that substantially all claims will be incurred within 17 years of the sale of the warranty contract.1417 years for all plans, with approximately 45%57% of revenue recognized within the first two years.years.years, with approximately 69% of revenue recognized within the first two years (January 31, 2015: 69%). Revenues related to the optional theft protection are deferred and recognized over the two-year contract period on a straight-line basis. Zale Jewelry customers are also offered a two-year watch warranty and a one-year warranty that covers breakage. Piercing Pagoda customers are also offered a one-year warranty that covers breakage. Revenue from the two-year watch warranty and one-year breakage warranty is recognized on a straight-line basis over the respective contract terms.GoodwillGoodwill representsThe Sterling Jewelers division also sells a Jewelry Replacement Plan (“JRP”). The JRP is designed to protect customers from damage or defects of purchased merchandise for a period of three years. If the excess ofpurchased merchandise is defective or becomes damaged under normal use in that time period, the purchase price of acquisitionsitem will be replaced. JRP revenue is deferred and recognized on a straight-line basis over the Company’s interest in the fair valueperiod of the identifiable assets and liabilities acquired. Goodwill is recorded by the Company’s reporting units based on the acquisitions made by each. Goodwill is not amortized, but is reviewed for impairment and is required to be tested at least annually or whenever events or changes in circumstances indicate it is more likely than not that a reporting unit’s fair value is less than its carrying value. The annual testing date for goodwill allocated to the Sterling Jewelers reporting unit is the last dayexpected claims costs. the fourth quarter. The annual testing date for goodwill allocated to the reporting units associated with the Zale Corporation acquisition and the Other reporting unit is May 31.The Company may elect to perform a qualitative assessment for each reporting unit to determine whether it is more likely than not that the fair value of the reporting unit is greater than its carrying value. If a qualitative assessment is not performed, or if as a result of a qualitative assessment it is not more likely than not that the fair value of a reporting unit exceeds its carrying value, then the reporting unit’s fair value is compared to its carrying value. Fair value is determined through the income approach using discounted cash flow models or market-based methodologies. Significant estimates used in these discounted cash flow models include: the weighted average cost of capital; long-term growth rates; expected changes to selling prices, direct costs and profitability of the business; and working capital requirements. Management estimates discount rates using post-tax rates that reflect assessments of the time value of money and Company-specific risks. If the carrying value exceeds the estimated fair value, the Company determines the fair value of all assets and liabilities of the reporting unit, including the implied fair value of goodwill. If the carrying value of goodwill exceeds the implied fair value, the Company recognizes an impairment charge equal to the difference.See Note 20 of the Condensed Consolidated Financial Statements for additional discussion of the goodwill recorded by the Company during the second quarter of Fiscal 2015. There have been no goodwill impairment losses recorded 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 be required. See Note 10 of the Condensed Consolidated Financial Statements for additional information.Intangible assetsIntangible assets with definite lives are amortized and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the estimated undiscounted future cash flows related to the asset are less than the carrying amount, the Company recognizes an impairment loss equal to the difference between the carrying value and the estimated fair value, usually determined by the estimated discounted future cash flows of the asset.Intangible assets with indefinite lives are reviewed for impairment each year in the fourth quarter and may be reviewed more frequently if certain events occur or circumstances change. First, pursuant to ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment”, the Company performs a qualitative assessment to determine whether it is more likely than not that the indefinite-lived intangible asset is impaired. If the Company determines that it is more likely than not that the fair value of the asset is less than its carrying amount, the Company estimates the fair value, usually determined by the estimated discounted future cash flows of the asset, compares that value with its carrying amount and records an impairment charge, if any.If future economic conditions are different than those projected by management, future impairment charges may be required. See Note 10 for additional information on intangible assets.Capital Lease ObligationsIn the Zale division, capital leases are entered into related to vehicles for field management. The vehicles are included in property, plant and equipment in the accompanying condensed consolidated balance sheets and are depreciated over a four-year life. Capital leases, net of accumulated depreciation, included in property, plant and equipment as of August 2, 2014 totaled $1.7 million. The Acquisition occurred on May 29, 2014, and therefore amounts are not included as of February 1, 2014 or August 3, 2013.ITEM�� forward exchange contracts and foreign currency swaps to manage the exposure to the US dollar. Signet also hedges a significant portion of forecasted merchandise purchases using commodity forward contracts. Additionally, the Zale division occasionally enters into forward foreign currency exchange contracts to manage the currency fluctuations associated with purchases for our Canadian operations. These contracts are entered into with large, reputable financial institutions, thereby minimizing the credit exposure from our counterparties.2, 20141, 2015 has not materially changed since February 1, 2014.January 31, 2015. The market risk profile as of February 1, 2014January 31, 2015 is disclosed in Signet’s Fiscal 20142015 Annual Report on Form 10-K, filed with the SEC on March 27, 2014.2, 2014. Internal Control over Financial ReportingThe acquisition of Zale Corporation was significant to the Company and was consummated effective May 29, 2014. Upon consummation, Zale became a consolidated subsidiary. The Company currently expects to include Zale within management’s annual assessment of internal control over financial reporting foryear ending January 31, 2015; however,second quarter of Fiscal 2016, there were no changes in the Company intends to take a period of time to fully incorporate Zale’s operations into its evaluation ofCompany’s internal control over financial reporting. In connection with the foregoing evaluation by the Company’s Chief Executive Officer and its Chief Financial Officer, other than as noted above, no changes were identified in the Company’s “internal control over financial reporting” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(f) and 15d-15(f)) that occurred during the Company’s fiscal quarter ended August 2, 2014,reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.1721 of the Condensed Consolidated Financial Statements set forth in Part I Item 1 of this Quarterly Report on Form 10-Q.20142015 Annual Report on Form 10-K, filed with the SEC on March 27, 2014, except that the risk factors set forth below include any material changes to, and supersede, to the extent included below, the description of, the risk factors disclosed in Part I, Item 1A of Signet’s Fiscal 2014 Annual Report on Form 10-K. In addition, the risk factor entitled “If Signet’s financing for the transaction becomes unavailable, the transaction may not be completed and we may be in breach of the Merger Agreement” disclosed in Part I, Item 1A of Signet’s Fiscal 2014 Annual Report on Form 10-K is hereby deleted.Fluctuations in the availability and pricing of commodities, particularly polished diamonds and gold, which account for the majority of Signet’s merchandise costs, could adversely impact its earnings and cash availability.The jewelry industry generally is affected by fluctuations in the price and supply of diamonds, gold and, to a lesser extent, other precious and semi-precious metals and stones. In particular, diamonds account for about 47% of Signet’s merchandise costs, and gold about 15% in Fiscal 2014.In Fiscal 2014, polished diamond prices experienced a single digit percentage increase when compared to Fiscal 2013 levels, unlike as had occurred in prior years. Industry forecasts indicate that over the medium and longer term, the demand for diamonds will probably increase faster than the growth in supply, particularly as a result of growing demand in countries such as China and India. Therefore, the cost of diamonds is anticipated to rise over time, although fluctuations in price are likely to continue to occur. The mining, production and inventory policies followed by major producers of rough diamonds can have a significant impact on diamond prices, as can the inventory and buying patterns of jewelry retailers and other parties in the supply chain.While jewelry manufacturing is the major final demand for gold, management believes that the cost of gold is predominantly impacted by investment transactions which have resulted in significant volatility and overall increases in gold cost over the past several years followed by somewhat of a decline in Fiscal 2014. Signet’s cost of merchandise and potentially its earnings may be adversely impacted by investment market considerations that cause the price of gold to significantly escalate.The availability of diamonds is significantly influenced by the political situation in diamond producing countries, including the impact of current and potential new sanctions on Russia, and by the Kimberley Process, an inter-governmental agreement for the international trading of rough diamonds. Until acceptable alternative sources of diamonds can be developed, any sustained interruption in the supply of diamonds from significant producing countries, or to the trading in rough and polished diamonds which could occur as a result of disruption to the Kimberley Process, could adversely affect Signet, as well as the retail jewelry market as a whole. In 2012, the Kimberley Process, chaired by the United States, initiated a process to review ways to strengthen and reform the Kimberley Process, including reviewing the definition of a conflict diamond. In January 2013, South Africa became the chair, and the review process was expected to continue; however, no reform efforts were achieved. In 2014, the Kimberley Process is being chaired by China, which will be followed by Angola in26, 2015. In addition, the current Kimberley Process decision making procedure is dependent on reaching a consensus among member governments, which can result in the protracted resolution of issues, and there is little expectation of significant reform over the long-term. The impact of this review process on the supply of diamonds, and consumers’ perception of the diamond supply chain, is unknown. In addition to the Kimberley Process, the supply of diamonds to the US is also impacted by certain governmental trade sanctions imposed on Zimbabwe.The possibility of constraints in the supply of diamonds of a size and quality Signet requires to meet its merchandising requirements may result in changes in Signet’s supply chain practices, for example its rough sourcing initiative. In addition, Signet may from time to time choose to hold more inventory, to purchase raw materials at an earlier stage in the supply chain or enter into commercial agreements of a nature that it currently does not use. Such actions could require the investment of cash and/or additional management skills. Such actions may not result in the expected returns and other projected benefits anticipated by management.An inability to increase retail prices to reflect higher commodity costs would result in lower profitability. Historically jewelry retailers have been able, over time, to increase prices to reflect changes in commodity costs. However, in general, particularly sharp increases in commodity costs may result in a time lag before increased commodity costs are fully reflected in retail prices. As Signet uses an average cost inventory methodology, volatility in its commodity costs may also result in a time lag before cost increases are reflected in retail prices. There is no certainty that such price increases will be sustainable, so downward pressure on gross margins and earnings may occur. In addition, any sustained increases in the cost of commodities could result in the need to fund a higher level of inventory or changes in the merchandise available to the customer.In August 2012, the SEC, pursuant to the Dodd-Frank Act, issued final rules, which require annual disclosure and reporting on the source and use of certain minerals, including gold, from the Democratic Republic of Congo and adjoining countries. The gold supply chain is complex and, while management believes that the rules currently cover less than 1% of annual worldwide gold production (based upon recent estimates), the final rules require Signet and other jewelry retailers and manufacturers that file with the SEC to make specified country of origin inquiries of our suppliers, and otherwise to exercise reasonable due diligence in determining the country of origin and certain other information relating to any of the statutorily designated minerals (gold, tin, tantalum and tungsten), that are used in products sold by Signet in the US and elsewhere. On May 30, 2014, Signet filed with the SEC its Form Specialized Disclosure (SD) and accompanying Conflict Minerals Report in accordance with the SEC’s rules, which together describe our country of origin inquiries and due diligence measures relating to the source and chain of custody of those designated minerals Signet deemed necessary to the functionality or production of our products, the results of those activities and our related determinations with respect to the calendar year ended December 31, 2013.Compliance with the SEC’s conflict minerals disclosure rules to date has not and will not likely add significantly to Signet’s compliance costs, and management does not expect any potential future increase in such costs to be material. There may be reputational risks associated with the potential negative response of our customers and other stakeholders to future disclosures by Signet in the event that, due to the complexity of the global supply chain, Signet is unable to sufficiently verify the origin of the relevant metals. Also, if future responses to verification requests by suppliers of any of the covered minerals used in our products are inadequate or adverse, Signet’s ability to obtain merchandise may be impaired and our compliance costs may increase. The final rules also cover tungsten and tin, which are contained in a small proportion of items that are sold by Signet. It is possible that other minerals, such as diamonds, could be subject to similar rules.Additional indebtedness relating to the Zale Corporation Acquisition reduces the availability of cash to fund other business initiatives and the expected benefits from the acquisition may not be fully realized.Signet’s additional indebtedness to fund the acquisition of Zale Corporation has significantly increased Signet’s outstanding debt. This additional indebtedness requires us to dedicate a portion of our cash flow to servicing this debt, thereby reducing the availability of cash to fund other business initiatives, including dividends and share repurchases. Significant changes to Signet’s financial condition as a result of global economic changes or difficulties in the integration or execution of strategies of the newly acquired business, and the diversion of significant management time and resources towards integrating the business and operations of Zale Corporation may affect our ability to obtain the expected benefits from the transaction or to satisfy the financial covenants included in the terms of the financing arrangements.Signet has incurred transaction-related costs in connection with the transaction.We have incurred a number of substantial non-recurring transaction-related costs associated with completing the transaction, combining the operations of the two companies and achieving desired synergies. Non-recurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, regulatory filing fees and printing costs. Additional unanticipated costs may be incurred in the integration of our and Zale Corporation’s businesses. There can be no assurance that the realization of other efficiencies related to the integration of the two businesses, as well as the elimination of certain duplicative costs, will offset the incremental transaction-related costs over time. Thus, any net benefit may not be achieved in the near term, the long term, or at all.Although we anticipate that Zale will continue to operate as a separate brand within Signet, failure to successfully combine Signet’s and Zale Corporation’s businesses in the expected time frame may adversely affect the future results of the combined company.The success of the transaction will depend, in part, on our ability to realize the anticipated benefits and synergies from combining our and Zale Corporation’s businesses. To realize these anticipated benefits, the businesses must be successfully combined. If the combined company is not able to achieve these objectives, or is not able to achieve these objectives on a timely basis, the anticipated benefits of the transaction may not be realized fully or at all. In addition, the actual integration may result in additional and unforeseen expenses, which could reduce the anticipated benefits of the transaction. These integration difficulties could result in declines in the market value of our common stock.A consolidated lawsuit on behalf of a purported class of stockholders is pending against Zale Corporation, Signet, the members of Zale Corporation’s board of directors and Signet’s merger subsidiary, challenging the transaction, and an unfavorable judgment or ruling in this lawsuit could result in substantial costs.In connection with the Zale Corporation acquisition, a consolidated lawsuit on behalf of a purported class of former Zale Corporation stockholders is pending in the Delaware Court of Chancery. The lawsuit names as defendants Zale Corporation, Signet, the members of the board of directors of Zale Corporation, and Signet’s merger subsidiary. In addition, several former Zale Corporation stockholders have filed petitions for appraisal in the Delaware Court of Chancery. Additional lawsuits may be filed against Zale Corporation and Signet, our merger subsidiary and Zale Corporation’s directors related to the transaction. The defense or settlement of, or an unfavorable judgment in, any lawsuit or claim could result in substantial costs and could adversely affect the combined company’s business, financial condition or results of operations.If our goodwill becomes impaired, we may be required to record significant charges to earnings.We have a substantial amount of goodwill on our balance sheet as a result of the Zale Corporation acquisition. We review goodwill for impairment annually or whenever events or circumstances indicate impairment may have occurred. Application of the impairment test requires judgment, including the identification of reporting units, assignment of assets, liabilities and goodwill to reporting units and determination of fair value of each reporting unit. There is a risk that a significant deterioration in a key estimate or assumption or a less significant deterioration to a combination of assumptions or the sale of a part of a reporting unit could result in an impairment charge in the future, which could have a significant adverse impact on our reported earnings.For further information on our testing for goodwill impairment, see “Critical Accounting Policies and Estimates” under Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.Equity Securities2015: Total
number of
shares
purchased(1) Average
price paid
per share Total
number of
shares
purchased
as part of
publicly
announced
plans or
programs(2) Maximum
number (or
approximate
dollar value)
of shares that
may yet be
purchased
under the
plans or
programs 94,246 $ 100.88 93,664 $ 273,037,569 — $ — — $ 273,037,569 4,614 $ 103.11 — $ 273,037,569 98,860 $ 100.98 93,664 $ 273,037,569 Period Total number of shares
purchased Average price paid per share Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs May 3, 2015 to May 30, 2015 131,602 $ 134.93 131,602 $ 225,892,330 May 31, 2015 to June 27, 2015 93,350 $ 131.14 93,350 $ 213,650,075 June 28, 2015 to August 1, 2015 243,705 $ 123.10 243,705 $ 183,650,103 Total 468,657 $ 128.03 468,657 $ 183,650,103 (1)Includes 5,196 shares of restricted stock repurchased in connection with employee tax withholding obligations under the Company’s share-based compensation plans, which are not purchases under any publicly announced share repurchase program.(2)On June 14, 2013, the Board of Directors authorized the 2013 Program to repurchase of up to $350 million of Signet’s common shares.shares (the “2013 Program”). The 2013 Program may be suspended or discontinued at any time without notice.noticeNumber Number 3.1* Amended and Restated Bye-laws of Signet Jewelers Limited.4.1*Second Supplemental Indenture, dated as of June 30, 2014, among Signet UK Finance plc, the guarantors party thereto, and Deutsche Bank Trust Company Americas, as indenture trustee.10.1†Separation Agreement dated June 27, 2014 between Signet Jewelers Limited and Ronald W. Ristau (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed July 3, 2014).10.2*Amended and Restated Credit Agreement, dated September 9, 2014, by and among Signet Jewelers Limited, as Parent, Signet Group Limited, Signet Group Treasury Services Inc. and Sterling Jewelers Inc. as borrowers, the additional borrowers from time to time party thereto, the financial institutions from time to time party thereto as lenders, JPMorgan Chase Bank, N.A., as administrative agent and the other agents party thereto.31.1* Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS* XBRL Instance Document. 101.SCH* XBRL Taxonomy Extension Schema Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document. Signet hereby agrees to furnish to the U.S. Securities and Exchange Commission, upon request, a copy of each instrument that defines the rights of holders of long-term debt under which the total amount of securities authorized does not exceed 10% of the total assets of Signet and its subsidiaries on a consolidated basis that is not filed or incorporated by reference as an exhibit to our annual and quarterly reports. * Filed herewith. † Management contract or compensatory plan or arrangement. SIGNATURE and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SIGNET JEWELERS LIMITED (Registrant)Signet Jewelers Limited Date: September 10, 20143, 2015 By: Name: Michele L. Santana Title: Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)64