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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K

 
x 
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended January 30, 2016February 2, 2019
Commission file number 1-32349
 
SIGNET JEWELERS LIMITED
(Exact name of Registrant as specified in its charter)

 
   
Bermuda Not Applicable
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
Clarendon House
2 Church Street
Hamilton HM11
Bermuda
(441) 296 5872
(Address and telephone number including area code of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class Name of Each Exchange on which Registered
Common Shares of $0.18 each The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes   x     No   ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes   ¨     No   x
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate web site, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).    Yes   x     No   ¨
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b of the Exchange Act.
Large accelerated filer   x                          Accelerated filer   ¨
Non-accelerated filer   ¨                                    Smaller reporting company   ¨
Emerging growth company ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes   ¨     No   x
The aggregate market value of voting common shares held by non-affiliates of the Registrant (based upon the closing sales price quoted on the New York Stock Exchange) as of July 31, 2015August 4, 2018 was $9,644,661,044.$3,058,047,614.
Number of common shares outstanding on March 18, 2016: 78,384,48128, 2019: 51,891,985
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant will incorporate by reference information required in response to Part III, Items 10-14, from its definitive proxy statement for its annual meeting of shareholders, to be held on June 17, 2016.14, 2019.
 
 
 

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SIGNET JEWELERS LIMITED
FISCAL 20162019 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
       
    PAGE 
FORWARD-LOOKING STATEMENTS  
3
 
   
  PART I    
   
ITEM 1. BUSINESS  
45
 
ITEM 1A. RISK FACTORS  
2617
 
ITEM 1B. UNRESOLVED STAFF COMMENTS  
3326
��
ITEM 2. PROPERTIES  
3326
 
ITEM 3. LEGAL PROCEEDINGS  
3429
 
ITEM 4. MINE SAFETY DISCLOSURE  
3429
 
   
  PART II    
   
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  
3530
 
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA  
4032
 
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  
5136
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  
7961
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  
8164
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  
136129
 
ITEM 9A. CONTROLS AND PROCEDURES  
136129
 
ITEM 9B. OTHER INFORMATION  
136129
 
   
  PART III    
   
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  
137130
 
ITEM 11. EXECUTIVE COMPENSATION  
137130
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS  
137130
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE  
137130
 
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES  
137130
 
   
  PART IV    
   
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES  
138131
ITEM 16.FORM 10-K SUMMARY
135
 
 

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REFERENCES
Unless the context otherwise requires, references to “Signet” or the “Company,” refer to Signet Jewelers Limited (and before September 11, 2008 to Signet Group plc) and its consolidated subsidiaries. References to the “Parent Company” are to Signet Jewelers Limited.
PRESENTATION OF FINANCIAL INFORMATION
All references to “dollars,” “US dollars,” “$,” “cents”dollars” and “c”“$” are to the lawful currency of the United States of America.America (“US”). Signet prepares its financial statements in US dollars. All references to “British pound,pound(s),” “pounds,” “British pounds,” “£,” “pence” and “p”“£” are to the lawful currency of the United Kingdom.Kingdom (“UK”). All references to “Canadian dollar” or “C$” are to the lawful currency of Canada.
Percentages in tables have been rounded and accordingly may not add up to 100%. Certain financial data may have been rounded. As a result of such rounding, the totals of data presented in this document may vary slightly from the actual arithmetical totals of such data.
Throughout this Annual Report on Form 10-K, financial data has been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). However, Signet gives certain additional non-GAAP measures in order to provide increased insight into the underlying or relative performance of the business. An explanation of each non-GAAP measure used can be found in Item 6.
Fiscal year and fourth quarter
Signet’s fiscal year ends on the Saturday nearest to January 31. As used herein, “Fiscal 2020,” “Fiscal 2019,” “Fiscal 2018,” “Fiscal 2017,” “Fiscal 2016,” “Fiscal 2015,” “Fiscal 2014,” “Fiscal 2013”2016” and “Fiscal 2012”2015” refer to the 52 week periods ending February 1, 2020 and February 2, 2019, the 53 week period ending February 3, 2018, and the 52 week periods ending January 28, 2017, January 30, 2016 and January 31, 2015, February 1, 2014, the 53 week period ending February 2, 2013 and the 52 week period ending January 28, 2012, respectively. Fourth quarter references the 13 weeks ended January 30, 2016February 2, 2019 (“fourth quarter”) and the 1314 weeks ended January 31, 2015February 3, 2018 (“prior year fourth quarter”).
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, based upon management’s beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this Annual Report on Form 10-Kdocument and include statements regarding, among other things, Signet’s results of operation, financial condition, liquidity, prospects, growth, strategies and the industry in which Signet operates. The use of the words “expects,” “intends,” “anticipates,” “estimates,” “predicts,” “believes,” “should,” “potential,” “may,” “forecast,” “objective,” “plan,” or “target,” and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including, but not limited to: our ability to implement Signet's transformation initiative; the effect of US federal tax reform and adjustments relating to such impact on the completion of our quarterly and year-end financial statements; changes in interpretation or assumptions, and/or updated regulatory guidance regarding the US federal tax reform; the benefits and outsourcing of the credit portfolio sale including technology disruptions, future financial results and operating results; deterioration in the performance of individual businesses or of the company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences, including tax consequences related thereto, especially in view of the Company’s recent market valuation; our ability to successfully integrate Zale Corporation and R2Net’s operations and to realize synergies from the Zale and R2Net transactions; general economic conditions; potential regulatory changes, global economic conditions or other developments related to the United Kingdom’s announced intention to negotiate a formal exit from the European Union; a decline in consumer spending or deterioration in consumer financial position; the merchandising, pricing and inventory policies followed by Signet,Signet; Signet’s relationships with suppliers and ability to obtain merchandise that customers wish to purchase; the reputation of Signet and its brands,banners; the level of competition and promotional activity in the jewelry sector,sector; the cost and availability of diamonds, gold and other precious metals,metals; changes in the supply and consumer acceptance of gem quality lab created diamonds; regulations relating to customer credit,credit; seasonality of Signet’s business,business; the success of recent changes in Signet’s executive management team; the performance of and ability to recruit, train, motivate and retain qualified sales associates; the impact of weather-related incidents on Signet’s business; financial market risks, deterioration in customers’ financial condition,risks; exchange rate fluctuations,fluctuations; changes in Signet’s credit rating,rating; changes in consumer attitudes regarding jewelry,jewelry; management of social, ethical and environmental risks,risks; the development and maintenance of Signet’s omni-channel retailing; the ability to optimize Signet’s real estate footprint; security breaches and other disruptions to Signet’s information technology infrastructure and databases, inadequacy in and disruptions to internal controls and systems,systems; changes in assumptions used in making accounting estimates relating to items such as credit outsourcing fees, extended service plans and pensions,pensions; risks relatingrelated to Signet being a Bermuda corporation,corporation; the impact of the acquisition of Zale Corporation on relationships, including with employees, suppliers, customers and competitors,competitors; Signet’s ability to protect its intellectual property; changes in taxation benefits, rules or practices in the impact of stockholder litigation with respectUS and jurisdictions in which Signet’s subsidiaries are incorporated, including developments related to the acquisitiontax treatment of Zale Corporation,companies engaged in Internet commerce; and our ability to successfully integrate Zale Corporation’s operationsan adverse development in legal or regulatory proceedings or tax matters, any new regulatory initiatives or investigations, and to realize synergies from the transaction.ongoing compliance with regulations and any consent orders or other legal or regulatory decisions.

For a discussion of these risks and other risks and uncertainties which could cause actual results to differ materially from those expressed in any forward lookingforward-looking statement, see Item 1A and elsewhere in this Annual Report on Form 10-K. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

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PART I
ITEM 1. BUSINESS
OVERVIEW
Signet Jewelers Limited (“Signet” or the “Company”) is the world’s largest retailer of diamond jewelry. Signet is incorporated in Bermuda and its address and telephone number are shown on the cover of this document. Its corporate website is www.signetjewelers.com, from where documents thatDuring the first quarter of Fiscal 2019, the Company realigned its organizational structure. The new structure is requireddesigned to file or furnishfacilitate further integration of operational and product development processes and to support growth strategies. In accordance with the US Securities and Exchange Commission (“SEC”) may be viewed or downloaded free of charge.
On May 29, 2014,this organizational change, the Company, acquired 100%with 3,334 stores and kiosks as of the outstanding shares of Zale Corporation (the “Zale Acquisition” or “Acquisition”) for $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. The Acquisition aligned with each strategic pillar of the Company’s Vision 2020. See Notes 3and 19 of Item 8 for additional information related to the Acquisition and the issuance of long-term debt to finance the transaction, respectively.
The CompanyFebruary 2, 2019, now manages its business by store brand grouping,geography, a description of which follows:
The Sterling Jewelers division is one reportable segment. ItNorth America segment operated 1,540 stores2,729 locations in all 50the US states at January 30, 2016. Its stores operate nationallyand 128 locations in malls and off-mall locations principallyCanada as Kay Jewelers (“Kay”), Kay Jewelers Outlet, Jared The Galleria Of Jewelry (“Jared”) and Jared Vault. The division also operates a variety of mall-based regional brands.
The Zale division consists of two reportable segments:February 2, 2019.
◦Zale Jewelry, which operated 977 jewelry stores at January 30, 2016, is located primarily in shopping malls in North America. Zale Jewelry includesIn the US, store brandthe segment primarily operates in malls and off-mall locations under the following banners: Kay (Kay Jewelers and Kay Outlet); Zales (Zales Jewelers and Zales Outlet),; Jared (Jared The Galleria Of Jewelry and Jared Vault); a variety of mall-based regional banners; and James Allen, which was acquired in the R2Net acquisition in Fiscal 2018. Additionally, in the US, the segment operates in all 50 US states, andmall-based kiosks under the Canada store brand Peoples Jewellers, which operates in nine provinces. The division also operates regional brands Gordon’s Jewelers and Mappins.Piercing Pagoda banner.
◦Piercing Pagoda, which operated 605 mall-based kiosks at January 30, 2016,In Canada, the segment primarily operates under the Peoples banner (Peoples Jewellers), as well as the Mappins Jewellers regional banner.
◦The North America segment is located in shopping malls inentirely comprised of the USSterling Jewelers and Puerto Rico.Zale divisions reported under the Company’s previous reportable segment structure.
The UK Jewelry division is one reportable segment. ItInternational segment operated 503477 stores at January 30, 2016. Its stores operatein the United Kingdom, Republic of Ireland and Channel Islands as of February 2, 2019. The segment primarily operates in shopping malls and off-mall locations (i.e. high street) principally asunder the H.Samuel and Ernest Jones.Jones banners. The International segment is entirely comprised of the UK Jewelry division reported under the Company’s previous reportable segment structure.
Certain company activities (e.g. diamond sourcing) are managed as a separate operating segment and are aggregated with unallocated corporate administrative functions in the segment “Other” for financial reporting purposes. Signet’s diamond sourcing function includes our diamond polishing factory in Botswana. See Note 46 of Item 8 for additional information regarding the Company’s reportable segments.
MISSION & STRATEGY COMPETITIVE STRENGTHS AND OBJECTIVES
Signet’s mission is to help guestscustomers “Celebrate Life and Express Love.” Our Vision 2020 strategyvision is a road map for on-going take the lead and be the world’s premier jeweler by relentlessly connecting with customers, earning their trust with every interaction everywhere.
Signet success which includes five strategic pillars:
Maximize mid-market
Best in bridal
Best in class digital ecosystem
Expand footprint
People, purpose and passion
These strategic pillars guide Signet in building profitable market share. Maximizing the mid-market drives our competitive strengths focused on merchandising initiatives, marketing, store growth and productivity. We define the mid-market jewelry sector based on the value of products that consumers purchase. We consider this marketcontinues to be defined bythe market share leader in North America in a large, growing and fragmented category, with the opportunity for additional growth as we leverage our strengths and competitive advantages. However, Signet believes that to realize this opportunity, it must transform its business from that of a legacy mall retailer to a modern OmniChannel category leader.
As a result, in Fiscal 2019, Signet launched a three-year comprehensive transformation plan, “Signet’s Path to Brilliance,” to reposition the company to be the OmniChannel jewelry purchases with price points ranging from $100 to $10,000, which essentially excludes costume and luxury jewelry categories.category leader. The vast majority of Signet’s sales (95%) are in this range of price points. This subset of the total US jewelry market is $41.2 billion or over half the total US market. In pursuit of this strategic pillar, we continuously review our US national store brands performance and have concluded that our customer population has several distinct shopping and purchasing characteristics or customer identities. Consequently, we attempt to maximize our share of the mid-market by differentiating customers based on attitudes and behaviors, versus demographic information. This approach to customer segmentation results in distinct customer identities:
The “Sentimentalist” - a seeker of high-quality, timeless jewelry which invokes sentimental value.
The “Gifter” - a customer that is not highly knowledgeable of jewelry but purchases for others.

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The “Influencer” - a customer that uses jewelry to show status and is knowledgeable of brands. The Influencer is a customer focused on both self-purchase and gifting.
The “Stylish Shopper” - a customer that wears jewelry often and considers it an essential aspect of fashion.
The “Practical Shopper” - a customer that focuses on inexpensive, everyday jewelry.
Although eachgoal of our US national store brand customers share many of these five customer traits, each store brand attracts a heavier weighting of certain types of customers. This customer segmentation approach empowers Signettransformation plan is to define our highest-prioritydrive sustained growth opportunities within the mid-market (i.e., where Signet will play),by delivering inspiring products and ideal online and in-store shopping experiences to differentiate and optimize our store brands, including guest experience, merchandise brands and marketing.
Our brand discussion included within Item 1 includes alignment of these customer identities with our US national store brands.
Being the best in bridal is an ongoing journey, not a destination. In jewelry, bridal represents the closest thing to a necessity for our customers. We continuously look to develop differentiated bridal jewelry products, increasing targeted marketing programs, deliveringFunding for the best guest experience by our sales associates, advancing vertical integrationimprovements we need in our supply chainsystems, capabilities, product and offering credit financing. Our omni-channel approach to educating, selling and serving of customers is uniquely important in jewelry retail because the purchase of jewelry is personal, intimate and typically viewed as an important experience. The internet often represents the first interaction a customer or prospective guest will have with us when a jewelry-buying occasion arises. As trust is the most important factor in why people buy jewelry where they do, customers overwhelmingly complete their purchases in our stores with our trusted knowledgeable sales associates. Enhancing our digital eco-system and simplifying and accelerating our guest’s engagement with our brands is a crucial step of our omni-channel approach. Expanding our geographic footprint is expected to come from cost savings - driving out costs customers don’t see and care about, to invest in what they do. We believe this plan will enable cross-collaboration among and between our domestic and international teams and furtherthe Company to deliver long-term sustainable, profitable sales growth and diversification ofcreate value for shareholders.
To achieve our real estate portfolio. In orderPath to truly accomplish our core mission of helping our guests “Celebrate Life and Express Love,”Brilliance goals, we believe we must have people with high capabilityrelentlessly focus on the following three strategic pillars which define our key priorities and passion. We will continueinvestment focus areas:
Customer First: A resolute focus on our efforts to attract, develop and retain the best and the brightest individuals in the jewelry and watch industry.
The expression of romance and appreciation through bridal jewelry and gift giving are very important to our guests, as is self-reward. Guests associate Signet’s brands with high quality jewelry and an outstanding guest experience. As a result, the training of sales associates to understand the guests’ requirements, communicate the value of the merchandise selected and ensure guest needs are met remains a high priority. Signet increases the attraction of its store brands to guests through the use of branded differentiated and exclusive merchandise, while offering a compelling value proposition in more basic ranges. Signet accomplishes this by utilizing its supply chain and merchandising expertise, scale and balance sheet strength. The Company intends to further develop national television advertising, digital media and customer relationship marketing, which it believes are the most effective and cost efficient forms of marketing available to grow its market share. Management follows the operating principles of excellence in execution, testing before investing, continuous improvement and disciplined investment in all aspects of the business.business, including product assortment, targeted and personalized marketing, promotions and communications, through consumer‐inspired innovation and advanced data analytics.
OmniChannel: Become a leading OmniChannel retailer creating a seamless shopping experience by enhancing our digital and in-store capabilities, towards the vision of a seamless experience across all points of customer engagement.
Culture of Efficiency & Agility: Unleash the capabilities of Signet’s diverse workplace to be agile, innovative, deliver operational excellence and efficiency with increased resource productivity.

Over the last few months we have performed a detailed review of our Fiscal 2019 performance and the foundational capabilities developed in Year 1 of Path to Brilliance. Additionally, we have restructured parts of the organization and made leadership changes aimed to position us for success. We believe that Path to Brilliance is the right strategy, and that we must move faster and more aggressively to achieve our goals. The learnings from this last year have been incorporated into our forward plans to improve both execution and financial performance.
Our plan for Year 2 of Path to Brilliance is to build on the capabilities developed during Year 1, while accelerating growth initiatives to drive customer relevance, aggressively addressing our cost structure and bolstering our balance sheet. We have plans under each of our three strategic pillars to change the trajectory of our same store sales, stabilize and expand margins and improve our cash generation.
Key components of the transformation plan include:
Leading innovation and customer value. In early Fiscal 2019, Signet launched its innovation engine whose goal is to develop new solutions to customers’ jewelry needs to become an innovative disruptor in our category. In addition, we believe investments in data analytics and consumer insights including a system to track customer net promoter score, Signet’s “Voice of Customer” program, will allow us to better service our customers. The Company has begun reinvigorating its merchandise and value proposition focusing on 1) inspiring flagship brands, 2) right value and 3) on-trend product. Signet will continue to build on Fiscal 2019 key learnings and implement new programs designed to delight customers during their four key journeys (bridal, gifting, self-purchasing and repair). Combined with customer-inspired banner repositioning work, this is expected to allow the Company to make further progress in tailoring new product, marketing and promotional strategies unique to each store banner. In addition, investments will also focus on creating an in-store environment that resonates with today’s customer, better integrating technology to create a compelling, seamless OmniChannel experience.
Enhancing Signet's eCommerce and OmniChannel capabilities. Signet will continue to invest in platforms and becoming the leading jewelry retailer across channels. Building a best in class mobile experience and driving digital innovation is an important component of our Path to Brilliance. New initiatives aimed to drive increased digital traffic and improve conversion include a move to a more contemporary, dynamic platform for Jared and Kay that will be designed to enable better customer experience through faster speeds and high-quality imagery. In addition, we expect that investments in on-line jewelry customization tools, enhanced mobile experience, and continued greater personalization of content and product offering utilizing behavioral data management and machine learning will drive a better customer experience. This is also expected to enable and enhance digital marketing return on investments through greater visibility of customer's multi-touch journey. Signet aims to grow digital sales as a percentage of total revenues to 15% in Fiscal 2021, compared to 8% in Fiscal 2018.
Optimizing real estate footprint. Following an evaluation of its real estate footprint, utilization, and cost structure, Signet intends to optimize its portfolio to drive greater store productivity. We are working toward a portfolio of fewer, better stores, that provide a positive customer experience by delivering a fully connected OmniChannel journey. Our objective is to ensure our store base is located appropriately, providing sufficient returns to justify our investment and most importantly providing a delightful customer experience. Efforts include development and implementation of innovative store concepts to improve the in-store shopping experience, execution of opportunistic store relocations and store closures aimed at exiting under-performing stores, reducing the Company’s mall-based exposure and exiting regional brands. Store closing decisions are informed by strategic considerations and data analytics, including store performance, sales transference potential, mall grade and trend. In Fiscal 2019, Signet closed 262 stores, the majority of which were in malls where we operate another Signet banner store. Signet will continue to optimize its portfolio with more than 150 store closures expected in Fiscal 2020. At the end of the three-year transformation plan, Signet will have a leaner, more diversified footprint and more compelling and connected store experiences that we believe will be better aligned to our strategic banner positionings.
Reducing non-customer facing costs. In line with Signet’s goal of creating a Culture of Agility and Efficiency, the Company implemented initiatives across its operations, including strategic sourcing, distribution and warehousing, and corporate and support functions to drive cost savings and operational efficiencies. These include procurement savings with respect to merchandise and indirect spend, consolidating facilities and payroll savings as a result of implementing simplified organization structures with wider spans of control and fewer layers of management. The Company expects its transformation plan to deliver $200-$225 million net cost savings (excludes cost reductions associated with store closures) by the end of Fiscal 2021. In Fiscal 2019, Signet realized $85 million of net costs savings. The gross savings from these initiatives will be used to fund needed investments in technology, capabilities, and store experience.
Strengthening employee engagement and building capabilities. Our team and organization are key to accomplishing the company's transformation goals. Signet has hired and promoted several executives to fill key leadership roles, is investing in building e-commerce, analytics and innovation capabilities, and is focusing on reigniting employee engagement in our store operations and throughout the entire organization through cultural initiatives, leadership and skills training, and enhanced career development opportunities.

Competition and Signet Competitive Strengths
Jewelry retailing is highly fragmented and competitive. We compete against other specialty jewelers, as well as other retailers that sell jewelry, including department stores, mass merchandisers, discount stores, apparel and accessory fashion stores, brand retailers, online retail and auction sites, shopping clubs, home shopping television channels and direct home sellers, and online retailers and auction sites.sellers. The jewelry category competes for customers’ share-of-wallet with other consumer sectors such as electronics, clothing and furniture, as well as travel and restaurants. This competition for consumers’ discretionary spending is particularly relevant to gift giving.
We believe that Signet’s competitive strengths include: strong store brands,banner recognition, outstanding guestcustomer experience, branded differentiated and exclusive merchandise, sector-leading marketing and advertising, diversified real estate portfolio, supply chain leadership, and a full spectrum of services including financing and lease purchase options, extended service plans, repair and customer finance programs,design, and financial strength and flexibility.piercing.
Operational Strategy
In setting financial objectives for Fiscal 2017, consideration was given to several factors including the Zale integration, Signet’s Vision 2020 strategy and the economic environments in which the Company does business. The economies of the US, Canada and UK have improved slightly over the past year due to relatively low unemployment, inflation, interest rates and energy prices, offset by higher food and health care costs and higher consumer savings. Certain sectors of the U.S. and Canadian economies have declined during Fiscal 2016, including the Oil & Gas industry. We believe this decline has had a disproportionate impact within our Zale Jewelry segment due to the concentration of retail locations within affected regions such as Edmonton, Calgary, the “Dakota’s” region (Southern Saskatoon, North Dakota and Western Colorado), West Texas, and the Houston region.
Signet will execute on its strategic priorities and continue to make strategic investments for the future. The cost of diamonds, Signet’s most significant input cost, is currently expected to increase at low-to-mid single digit rates. Consumer credit is important for Signet. Signet takes a hybrid approach to credit by assuming the risk and reward of owning in-house accounts receivable for its Sterling Jewelers division while primarily using third party financing programs for its other divisions. Financing will continue to support sales growth and we expect the receivables portfolio to grow and perform strongly. Signet intends to improve results through realization of synergies associated with the Zale Acquisition and other initiatives around merchandising, real estate optimization, channel expansion and cost control.

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Signet’s goal in Fiscal 2017 is to deliver strong results building on our recent performance, while making strategic investments necessary for future growth. Financial objectives for the business in Fiscal 2017 are to position the Company for long-term growth by:
Expanding our gross margin rate through higher sales and realization of synergies.
Leveraging our selling, general and administrative expense to sales ratio, by executing effective multi-channel marketing programs, through implementing organizational design efficiencies and workforce management.
Gaining profitable market share through brand differentiation and market segmentation, product cost control and asset management.
Advancing our integration activities of Zale, including continued realization of cost and operating synergies. Signet anticipates realizing $225 million to $250 million in cumulative 3-year synergies through January 2018. Approximately 70% of that cumulative goal is expected to be realized by the end of Fiscal 2017.
Investing $315 to $365 million of capital in new stores, store remodels, enhancing information technology infrastructure to drive future growth and expanding our Akron-based store support center.
Signet has the opportunity to take advantage of its competitive position as one of the world’s largest and most profitable jewelry retailers. Signet’s ability to deliver sales growth allows the business to strengthen relationships with suppliers, facilitate the ability to develop further branded differentiated and exclusive merchandise, improve the efficiency of its supply chain, support marketing investments and improve operating margins. Signet’s financial flexibility and access to capital markets allow it to take advantage of investment opportunities, including space growth and strategic developments that meet investment criteria.
Capital Strategy
The tenets of Signet’s capital strategy allocation priorities continue to be as follows: 1) invest in its business to drive growth; 2) protect business from economic downturns by ensuring adequate liquidity; and 3) return excess cash to shareholders. Over time, Signet is committed to achieving an investment grade profile. Part of Signet’s capital strategy is to maintain the Company’s expected long-term adjusted debt(1)/ adjusted EBITDAR(1) (“adjusted leverage ratio”) of 3.0x to 3.5x. As previously announced, the Company exceeded the high end of its target leverage range in Fiscal 2019. The Company expects to exceed the high end of the target range in Fiscal 2020 but believes it will reach approximately 3.5x by the end of the three-year transformation plan.
Based on projected investments and liquidity needs, the Company expects to maintain a strong balance sheet that provides the flexibility to execute its strategic priorities, invest in its business, and then return excess cash to shareholders while ensuring adequate liquidity. Signet is committed to maintaining its investment grade rating because long-term, it intends to pursue value-enhancing strategic growth initiatives. Among the key tenetsquarterly dividend rate of Signet’s capital strategy:
•
Achieve adjusted debt1/ adjusted EBITDAR1 (“adjusted leverage ratio”) of 3.5x or below. This would allow the Company to utilize available sources of debt in Fiscal 2017 and beyond.
•
Distribute 70% to 80% of annual free cash flow1 in the form of stock repurchases or dividends assuming no other strategic uses of capital.
Consistently increase the dividend annually assuming no other strategic uses of capital.
$0.37 per share but does not anticipate share buybacks for Fiscal 2020. The Company has a remaining share repurchase authorization as of the end of Fiscal 20162019 of $135.6$165.6 million. In February 2016, the Company’s Board of Directors authorized an additional $750 million of share repurchases to be executed in a manner that aligns with leverage and free cash flow targets.
1(1)  
Adjusted debt, Adjusted EBITDAR, and free cash flow are non-GAAP measures. Signet believes they are useful measures to provide insight into how the Company intends to use capital. See Item 6 for reconciliation.
BACKGROUND
Operating segments
The business is currently managed as fivethree reportable segments: the Sterling Jewelers division (60.9%North America segment (90.3% of sales and 102.1%81.2% of operating income)loss), the Zale division, which is comprised of the Zale JewelryInternational segment (23.9%(9.2% of sales and 6.3%(1.7)% of operating income)loss) and the Piercing PagodaOther segment. The Other reportable segment (3.7%consists of salesall non-reportable segments, including subsidiaries involved in the purchasing and 1.1%conversion of operating income)rough diamonds to polished stones and the UK Jewelry division (11.3% of sales and 8.7% of operating income).unallocated corporate administrative functions. All divisionssegments are managed by an executive committee, which is chaired by Signet’s Chief Executive Officer, who reports to the Board of Directors of Signet (the “Board”). The executive committee is responsible for operating decisions within parameters established by the Board. Additionally, as a result of the acquisition of a diamond polishing factory in Gaborone, Botswana in Fiscal 2014, management established a separate reportable segment (“Other”) (0.2% of sales and (18.2)% of operating income). Other consists of all non-reportable segments, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones and unallocated corporate administrative function. See Note 46 of Item 8 for additional information regarding the Company’s segments.segments as well as disclosure detailing and reconciling the components of operating income.
Trademarks and trade names
Signet is not dependent on any material patents or licenses in any of its divisions.segments. Signet has several well-established trademarks and trade names which are significant in maintaining its reputation and competitive position in the jewelry retailing industry. Some of these registered trademarks and trade names include the following:
•
Kay Jewelers®; Kay Jewelers Outlet®; Jared The Galleria Of Jewelry®; Jared VaultTM®; Jared Jewelry BoutiqueTM®; JB Robinson® Jewelers; Marks & Morgan Jewelers®; Every kiss begins with Kay®; He went to Jared Eternity®TM; Celebrate Life. Express Love.®; the Leo® Diamond; Hearts Desire®; Artistry Diamonds®; Charmed Memories®; Diamonds in Rhythm®; Open Hearts by Jane Seymour®; Radiant Reflections®; Colors in Rhythm®; Chosen by JaredTM®; Now and Forever®; and Ever Us®; James Allen®; Tolkowsky®; Long Live LoveTM; Dare to be DevotedTM; Love + Be LovedTM; and Brilliant Moments®.

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•
Zales®; Zales JewelersTM; Zales the Diamond Store®; Zales Outlet®; Gordon’s Jewelers®; Peoples Jewellers®; Peoples the Diamond Store®; Peoples Outlet the Diamond Store®; Mappins®; Piercing Pagoda®; Arctic Brilliance Canadian Diamonds®; Candy Colored JewelryBrilliant Buy®; Brilliant Value®; Celebration Diamond®; Expressionist®; From This Moment®; Let Love Shine®; The Celebration Diamond Collection®; Unstoppable Love®; and Endless Brilliance®.
H.Samuel; Ernest Jones; Ernest Jones Outlet Collection; Leslie Davis; and Forever Diamonds.
•
H.Samuel®; Ernest Jones®; Ernest Jones Outlet CollectionTM; Commitment®; Forever Diamonds®; Kiss Collection®; Princessa Collection®; Radiance®; Secrets of the Sea®; Shades of Gold®; Viva Colour®; and Helps You Say It BetterTM.
Store locations
Signet operates retail jewelry stores in a variety of real estate formats including mall-based, free-standing, strip center and outlet store locations. As of January 30, 2016,February 2, 2019, Signet operated 3,6252,760 stores and 574 kiosks across 5.04.7 million square feet of retail space.space in the US, UK and Canada. This represented an increasea decrease of 1.3%6.2% and 3.3%a decrease of 5.7% in locations and retail space, respectively, due to new store growth. Duringfrom Fiscal 2016, Signet opened 108 stores and closed 62 stores.2018. Store locations by country and territory as of January 30, 2016,February 2, 2019 are as follows:disclosed in Item 2.

 Sterling Jewelers division Zale division UK Jewelry division Signet
 Kay Jared Regional brands Total Zales Peoples Regional
brands		 Total Zale
Jewelry		 Piercing Pagoda Total H.Samuel Ernest Jones Total Total
stores
US1,129
 270
 141
 1,540
 720
 —
 58
 778
 591
 1,369
 —
 —
 —
 2,909
Canada—
 —
 —
 —
 —
 145
 43
 188
 —
 188
 —
 —
 —
 188
Puerto Rico—
 —
 —
 —
 10
 —
 1
 11
 14
 25
 —
 —
 —
 25
United Kingdom—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 279
 195
 474
 474
Republic of Ireland—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 20
 6
 26
 26
Channel Islands—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 2
 1
 3
 3
Total1,129
 270
 141
 1,540
 730
 145
 102
 977
 605
 1,582
 301
 202
 503
 3,625

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Store locations by US state, Canadian province and Puerto Rico, as of January 30, 2016, are as follows:
 Sterling Jewelers division Zale division Signet
 Kay Jared Regional brands Total Zales Peoples Regional
brands		 Total Zale
Jewelry		 Piercing Pagoda Total 
 
Total Stores
Alabama23
 2
 4
 29
 12
 —
 —
 12
 2
 14
 43
Alaska3
 —
 1
 4
 2
 —
 —
 2
 —
 2
 6
Arizona19
 9
 1
 29
 15
 —
 —
 15
 12
 27
 56
Arkansas8
 1
 —
 9
 10
 —
 4
 14
 —
 14
 23
California79
 18
 3
 100
 59
 —
 —
 59
 34
 93
 193
Colorado16
 6
 2
 24
 16
 —
 —
 16
 4
 20
 44
Connecticut13
 2
 2
 17
 9
 —
 —
 9
 14
 23
 40
Delaware4
 2
 —
 6
 4
 —
 2
 6
 6
 12
 18
Florida81
 23
 9
 113
 56
 —
 5
 61
 70
 131
 244
Georgia48
 13
 4
 65
 19
 —
 —
 19
 8
 27
 92
Hawaii7
 —
 —
 7
 7
 —
 —
 7
 —
 7
 14
Idaho4
 1
 —
 5
 1
 —
 —
 1
 —
 1
 6
Illinois44
 12
 5
 61
 26
 —
 —
 26
 21
 47
 108
Indiana26
 6
 7
 39
 12
 —
 —
 12
 11
 23
 62
Iowa15
 1
 1
 17
 6
 —
 —
 6
 4
 10
 27
Kansas9
 2
 —
 11
 7
 —
 —
 7
 4
 11
 22
Kentucky19
 3
 6
 28
 8
 —
 —
 8
 7
 15
 43
Louisiana16
 3
 1
 20
 16
 —
 8
 24
 —
 24
 44
Maine6
 1
 1
 8
 1
 —
 —
 1
 2
 3
 11
Maryland30
 9
 7
 46
 14
 —
 —
 14
 22
 36
 82
Massachusetts24
 5
 3
 32
 10
 —
 —
 10
 26
 36
 68
Michigan39
 9
 8
 56
 21
 —
 —
 21
 10
 31
 87
Minnesota17
 5
 3
 25
 9
 —
 —
 9
 8
 17
 42
Mississippi13
 —
 —
 13
 8
 —
 —
 8
 —
 8
 21
Missouri18
 5
 —
 23
 12
 —
 1
 13
 6
 19
 42
Montana3
 —
 —
 3
 1
 —
 —
 1
 —
 1
 4
Nebraska7
 —
 —
 7
 3
 —
 —
 3
 1
 4
 11
Nevada11
 3
 1
 15
 6
 —
 2
 8
 5
 13
 28
New Hampshire11
 4
 2
 17
 6
 —
 —
 6
 8
 14
 31
New Jersey31
 7
 —
 38
 20
 —
 —
 20
 31
 51
 89
New Mexico5
 1
 —
 6
 9
 —
 4
 13
 4
 17
 23
New York65
 9
 4
 78
 40
 —
 —
 40
 65
 105
 183
North Carolina42
 12
 1
 55
 18
 —
 1
 19
 19
 38
 93
North Dakota4
 —
 —
 4
 4
 —
 —
 4
 —
 4
 8
Ohio57
 17
 27
 101
 13
 —
 —
 13
 23
 36
 137
Oklahoma8
 2
 —
 10
 10
 —
 5
 15
 —
 15
 25
Oregon15
 3
 1
 19
 5
 —
 —
 5
 4
 9
 28
Pennsylvania61
 11
 7
 79
 36
 —
 1
 37
 62
 99
 178
Rhode Island3
 1
 —
 4
 1
 —
 —
 1
 3
 4
 8
South Carolina25
 4
 2
 31
 9
 —
 —
 9
 6
 15
 46
South Dakota2
 —
 —
 2
 3
 —
 —
 3
 1
 4
 6
Tennessee25
 8
 4
 37
 17
 —
 1
 18
 3
 21
 58

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Texas71
 30
 —
 101
 97
 —
 24
 121
 21
 142
 243
Utah10
 3
 —
 13
 3
 —
 —
 3
 3
 6
 19
Vermont2
 —
 —
 2
 1
 —
 —
 1
 1
 2
 4
Virginia39
 10
 7
 56
 27
 —
 —
 27
 26
 53
 109
Washington19
 3
 7
 29
 14
 —
 —
 14
 10
 24
 53
West Virginia10
 —
 6
 16
 6
 —
 —
 6
 11
 17
 33
Wisconsin20
 4
 4
 28
 8
 —
 —
 8
 13
 21
 49
Wyoming2
 —
 —
 2
 3
 —
 —
 3
 —
 3
 5
US1,129
 270
 141
 1,540
 720
 —
 58
 778
 591
 1,369
 2,909
                      
Alberta—
 —
 —
 —
 —
 24
 8
 32
 —
 32
 32
British Columbia—
 —
 —
 —
 —
 23
 4
 27
 —
 27
 27
Manitoba—
 —
 —
 —
 —
 5
 1
 6
 —
 6
 6
New Brunswick—
 —
 —
 —
 —
 4
 —
 4
 —
 4
 4
Newfoundland—
 —
 —
 —
 —
 2
 —
 2
 —
 2
 2
Nova Scotia—
 —
 —
 —
 —
 8
 2
 10
 —
 10
 10
Ontario—
 —
 —
 —
 —
 68
 27
 95
 —
 95
 95
Prince Edward Island—
 —
 —
 —
 —
 2
 1
 3
 —
 3
 3
Saskatchewan—
 —
 —
 —
 —
 9
 —
 9
 —
 9
 9
Canada—
 —
 —
 —
 —
 145
 43
 188
 —
 188
 188
                      
Puerto Rico—
 —
 —
 —
 10
 —
 1
 11
 14
 25
 25
                      
Total North America1,129
 270
 141
 1,540
 730
 145
 102
 977
 605
 1,582
 3,122
GuestCustomer experience
The guestWe will strive at Signet to continue to be focused on driving an inspiring, full service, seamlessly connected customer experience, which is an essential element in the success of our business and Signet strives to continually improve the quality of the guest experience.business. Therefore, the ability to recruit, develop and retain qualified sales associatesjewelry consultants is an important element in enhancing guestcustomer satisfaction. We have in place comprehensive recruitment, training and incentive programs. We use employee and guest satisfaction metrics to monitor and improve performance, as well as conductingprograms in place, including an annual flagship training conference aheadin advance of the holiday season.
Digital ecosystemSignet continues to invest in technology to enhance the customer shopping experience to make it more personalized and journey specific. In Fiscal 2019, Signet implemented a multi-phase Voice of Customer program as a component of our Path to Brilliance and customer first strategies. The first phase focused on setting up the technology, establishing stable measurements for key customer journeys (net promoter score) and discovering how to effectively operationalize customer feedback.
OmniChannel
As a specialty jeweler, Signet’s business differs from many other retailers such that a purchase of merchandise from any of Signet’s stores is personal, intimate and typically viewed as an important experience. Due to this dynamic, guestscustomers often invest time on Signet websites and social media to experience the merchandise assortments prior to visiting brick-and-mortar stores to execute a purchase transaction. At times, particularlyParticularly related to high value transactions, guestscustomers will supplement their online experience with an in-store visit prior to finalizing a fashion or gift-giving decision. Distinguishing whether the Company’s performance is driven by the initial exposure to the on-line assortment versus the merchandising and experience with in-store professionals is not a primary focus of management, as electronic efforts are a support channel for all store brands.purchase.
Through Signet’s websites, we educate our customers and provide gueststhem with a source of information on products and brands, available merchandise, available, as well as the ability to buy online. Our websites are integrated with each division’ssegment’s stores, so that merchandise ordered online may be picked up at a store or delivered to the guest. Ourcustomer. Banner websites continue to make an important and growing contribution to the guestcustomer experience, as well as to each division’ssegment’s marketing programs. As in Fiscal 2019, the Company will continue to focus on:
Investments in technology, including eCommerce platforms, focused on improving the online journey. Customer journey enhancements include user generated content, enhanced personalization / behavioral targeting, creative execution and brand differentiation. In recent years, significant investmentsaddition, we are focused on OmniChannel wishlist, online merchandising, in-store appointment booking, bridal configuration and initiatives have been completed to drive sales growth. These investments include:much more.
Optimization of brand websites for both desktopmarketing through prioritizing dollars to digital spend and mobile devices with improved functionality in product search and navigation;targeted marketing through traditional media.
Increased merchandise assortment;
Investments in social media, including Facebook, Instagramuse of data analytics, clienteling and Twitter, as well asother key touch points to achieve a YouTube channel;more comprehensive view of the customer and
Improvements in store broadband allow us to enhance in-store eCommerce sales.anticipate their needs.
Signet’s supplier relationships allow it to display suppliers’ inventories on the brandbanner websites for sale to guestscustomers without holding the items in its inventory until the products are ordered by guests,customers, which are referred to as “virtual inventory.” Virtual inventory expands the choice of merchandise available to guestscustomers both online and in-store.

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Raw materials
The jewelry industry generally is affected by fluctuations in the price and supply of diamonds, gold and, to a much lesser extent, other precious and semi-precious metals and stones. Diamonds account for about 45%52%, and gold about 14%, of Signet’s cost of merchandise sold, respectively.
Signet undertakes hedging for a portion of its requirement for gold through the use of net zero-costzero premium cost collar arrangements, forward contracts and commodity purchasing.participating forwards or swaps. It is not possible to hedge against fluctuations in the cost of diamonds. The cost of raw materials is only part of the costs involved in determining the retail selling price of jewelry, with labor costs also being a significant factor.
Diamond sourcing
Signet procures its diamonds mostly as finished jewelry and, to a smaller extent, as loose cut-and-polished stonespolished diamonds and rough stones.diamonds which are in turn polished in Signet’s Botswana factory.
Finished jewelry
Merchandise is purchased asSignet purchases finished product where the items are relatively more complex, have less predictable sales patterns or where it ismanagement has identified compelling value based on product design, cost effective to do so. Thisand availability, among other factors. Under certain types of arrangements, this method of buying inventorypurchasing also provides the Company with the opportunity to reserve inventory held by vendors and to make returns or exchanges with suppliers, thereby reducingwhich reduces the risk of over- or under-purchasing. Signet’s scale, strong balance sheet and robust procurement systems enable it to purchase merchandise at advantageous prices and on favorable terms.

Loose diamonds
Signet purchases loose polished diamonds in global markets (e.g. India, Israel) from a variety of sources (e.g. polishers, traders). Signet mounts stones in settings purchased from manufacturers using third parties and in-house resources. By using these approaches, the cost of merchandise is reduced and the consistency of quality is maintained enabling Signet to provide better value to guests.customers. Buying loose diamonds helps allow Signet’s buyers to gain a detailed understanding of the manufacturing cost structures and, in turn, leverage that knowledge with regard to negotiating better prices for the supply of finished products.
Rough diamonds
Signet continues to take steps to advance its vertical integration, which includes rough diamond sourcing and manufacturing.processing. Signet’s objective with this initiative is to secure additional, reliable and consistent supplies of diamonds for guests of all divisionscustomers worldwide while achieving further efficiencies in the supply chain. In Fiscal 2014, Signet acquiredowns a diamond polishing factory in Gaborone, BotswanaBotswana. The Company is a DeBeers sightholder, and established a diamond buying office in India. In Fiscal 2015, Signet was appointed a sightholder by DeBeers, which further increased Signet’s supply of rough diamonds. As of Fiscal 2016, Signet hasreceives contracted allocations of rough diamonds withfrom Rio Tinto, DeBeers and Alrosa. These developmentsSignet has also established a diamond liaison office in Signet’s long-termIndia and a diamond trading office in New York to further support its sourcing capabilities allow Signet to buy roughinitiative.
Rough diamonds are purchased directly from the miners and then have the stones marked, cut and polished in itsSignet’s own polishing facility. Any stones deemed unsuitable for Signet’s needs are sold to third parties with the objective of recovering the original cost of the stones. Signet’s sourcing initiative is primarily focused on supplying the diamond needs of the Sterling Jewelers division and has since been expanded to include all Signet divisions.
Merchandising and purchasing
Management believes that a competitive strength is our industry-leading merchandising. Merchandise selection, innovation, availability and value are all critical success factors for its business.factors. The range of merchandise offered and the high level of inventory availability are supported centrally by extensive and continuous research and testing. Signet established aSignet’s jewelry design center in New York which evaluates global design trends, innovates, and helps our merchant teams develop new jewelry collections that resonate with guests. An example of the design center’s work was the launch of the Ever Us collection.customers.
Ever Us was the biggest product introduction in our history. It is an example of Signet creating a trend in the jewelry industry which is a unique advantage that we possess as the largest diamond retailer in the world. Led by our New York-based design office, we identified a need in the jewelry industry through market research and developed the Ever Us collection which continues to be consistently marketed and tagged with each of our national store banners. The two-stone diamond ring, positioned to be for one’s “best friend and true love,” serves a variety of gift-giving occasions in the lives of couples. Launched in October 2015, Ever Us was purchased for anniversaries, birthdays, special mother-daughter events, and even engagement in some cases.

Best-selling products are identified and replenished rapidly through analysis of sales by stock keeping unit. This approach enables Signet to deliver a focused assortment of merchandise to maximize sales and inventory turn, and minimize the need for discounting. Signet believes it is better able to offer greater value and consistency of merchandise than its competitors, due to its supply chain strengths. In addition, in recent years management has continued to develop, refine and execute a strategy to increase the proportion of branded differentiated and exclusive merchandise sold, in response to guest demand.
The scale and information systems available to management and the gradual evolution of jewelry fashion trends allow for the careful testing of new merchandise in a range of representative stores. This enables management to make more informed investment decisions about which merchandise to select, thereby increasing Signet’s ability to satisfy guests’ requirements while reducing the likelihood of having to discount merchandise.

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Merchandise mix
Details of merchandise mix (excluding repairs, warranty and other miscellaneous sales) are shown below:
 Sterling Jewelers division Zale division UK Jewelry division 
Total
Signet
Fiscal 2016       
   Diamonds and diamond jewelry77% 61% 34% 65%
   Gold and silver jewelry, including charm bracelets9% 27% 16% 9%
   Other jewelry8% 9% 18%
(1) 
17%
   Watches6% 3% 32% 9%
 100% 100% 100% 100%
Fiscal 2015       
   Diamonds and diamond jewelry76% 61% 31% 63%
   Gold and silver jewelry, including charm bracelets10% 26% 19% 14%
   Other jewelry8% 9% 17%
(1) 
11%
   Watches6% 4% 33% 12%
 100% 100% 100% 100%
Fiscal 2014       
   Diamonds and diamond jewelry75% n/a
 30% 64%
   Gold and silver jewelry, including charm bracelets11% n/a
 19% 15%
   Other jewelry8% n/a
 18%
(1) 
8%
   Watches6% n/a
 33% 13%
 100% n/a
 100% 100%
(1)     UK Jewelry division’s other jewelry sales include gift category sales.          
n/a    Not applicable as Zale division was acquired on May 29, 2014.
 North America International Consolidated
Fiscal 2019     
Bridal49% 42% 48%
Fashion44% 21% 42%
Watches5% 35% 8%
Other2% 2% 2%
 100% 100% 100%
Fiscal 2018     
Bridal48% 36% 46%
Fashion44% 28% 43%
Watches5% 34% 8%
Other3% 2% 3%
 100% 100% 100%
The bridal category, which includes engagement, wedding and anniversary purchases, is predominantly diamond jewelry. TheLike fashion jewelry and watches, bridal category experiences stable demand, but is stillto an extent dependent on the economic environment as guestscustomers can trade up or down price points depending on their available budget. In Fiscal 2016, bridal growth was driven primarily by the branded bridal portfolio and bridalBridal represented approximately 50% of Signet’s total merchandise sales. Customer financingIn Fiscal 2019 the Enchanted Disney Fine Jewelry® collection, Vera Wang Love® collection, Neil Lane® collection, and solitaires performed well while the Ever Us® collection declined.
The fashion category is an important elementsignificantly impacted by gift giving in enabling Signet’s bridal business.
Gift giving is particularly important during the Holiday Season, Valentine’s Day and Mother’s Day. In Fiscal 2016, Signet had several successful fashion jewelryDay time periods and represented 42% of Signet’s total merchandise sales.
The Other category primarily includes beads and represented 2% of Signet’s total merchandise versus 3% in the prior year primarily due to a strategic reduction of owned brand bead collections including Ever UsTM, Diamondsas well as declines in Rhythm® and Unstoppable Love® (not all collections are sold in every store brand).branded bead collections.
A further categorization of merchandise
Merchandise is categorized as non-branded, merchandise, third party branded, as well asand branded differentiated and exclusive. Non-branded merchandise includes items and styles such as bracelets, gold necklaces, solitaire diamond rings, and diamond stud earrings. Third party branded merchandise includes mostly watches, but also includes ranges of charm bracelets. Branded differentiated and exclusive merchandise are items that are branded and exclusive to Signet within its marketplaces, or that are not widely available in other jewelry retailers.retailers (e.g Vera Wang Love, Neil Lane, Disney Enchanted).
Branded differentiated and exclusive ranges
Management believes that the development of branded differentiated and exclusive merchandise raises the profile of Signet’s stores,banners, helps to drive sales and provides its well-trained sales associates with a powerful selling proposition. NationalDigital marketing and national television advertisements include elements that drive brand awareness and purchase intent of these ranges. Management believes that Signet’s scale and proven record of success in developing branded differentiated and exclusive merchandise attracts offers of such programs from jewelry manufacturers, designers and others ahead of competing retailers, and enables it to leverage its supply chain strengths. Management plans to develop additional branded differentiated and exclusive ranges as appropriate and to further expand and refine those already launched.
Branded differentiated and exclusive merchandise offered in our various store brands includes:
•
Artistry Diamonds®, genuine diamonds in an ultimate palette of colors;
•
Celebration Diamond® Collection, diamond jewelry that has been expertly cut to maximize its brilliance and beauty;
•
Charmed Memories®, a create your own charm bracelet collection;
•
Diamonds in Rhythm®, diamonds set at a precise angle to allow for continuous movement of the center diamond and amazing effect;
•
Ever UsTM, a collection of two stone rings, with one diamond for your best friend, one diamond for your true love;

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•
Jared Vivid® Diamonds, the brilliance of diamonds combined with the vitality of color;
•
Le Vian®exclusive collections of jewelry, famed for its handcrafted unique designs and colors;
•
Leo Diamond® collection, the first diamond to be independently and individually certified to be visibly brighter;
•
Lois Hill®, reaches back through the centuries and across the globe to create her collection of jewelry;
•
Miracle Links®, a collection designed with interlinking circles to symbolize the unique connection between a mother and her child;
•
Neil Lane Bridal®, a vintage-inspired bridal collection by the celebrated jewelry designer Neil Lane;
•
Neil Lane Designs®, hand-crafted diamond rings, earrings and necklaces inspired by Hollywood’s glamorous past;
•
Open Hearts by Jane Seymour®, a collection of jewelry designed by the actress and artist Jane Seymour;
•
Tolkowsky®, an ideal cut diamond “Invented by Tolkowsky, Perfected by Tolkowsky”®;
•
Unstoppable Love®, features shimmering diamonds in movable settings that sparkle with every turn;
•
Vera Wang LOVE® collection, bridal jewelry designed by the most recognizable name in the wedding business, Vera Wang.
Merchandise held on consignment
Merchandise held on consignment is used to enhance product selection and test new designs. This minimizes exposure to changes in fashion trends and obsolescence, and provides the flexibility to return non-performing merchandise. PrimarilyVirtually all of Signet’s consignment inventory is held in the US.
Suppliers
In Fiscal 2016,2019, the five largest suppliers collectively accounted for 16.5%19.7% of total purchases, with the largest supplier comprising 3.9%6.4%. Signet transacts business with suppliers on a worldwide basis at various stages of the supply chain with third party diamond cutting and jewelry manufacturing being predominantly carried out in Asia.
Marketing and advertising
Customers’ confidence in our retail brands, store brandbanner name recognition and advertising of branded differentiated and exclusive ranges are important factors in determining buying decisions in the jewelry industry where the majority of merchandise is unbranded. Therefore, Signet continues to strengthen and promote its store brandsbanners and merchandise brands by focusing on delivering superior customer service and building brand name recognition. The Company’s OmniChannel approach leverages marketing channels used includeinvestments in television, digital media (desktop, mobile and social), radio, print, catalog, direct mail, point of sale signage and in-store displays, as well as coupon books and outdoor signage for the Outlet channels, leading to an omni-channel approach.displays.
While marketingMarketing activities are undertaken throughout the year, digital capabilities provide insight into customer journeys enabling personalized journey-based communications at the levelmost appropriate moment through social media and digital marketing. We plan to transform and modernize our marketing model in Fiscal 2020 by re-balancing the timing and mix of activity is concentratedour media investments, leveraging a more personalized journey-based approach, and modernizing our content and messaging. In fact, Fiscal 2020 will be the first year that Signet spends more on digital and social marketing than on television advertising. Building on successful “Always On” bridal tests at periods when guests are expectedKay, we plan to be most receptive to marketing messages, which is aheadgrow our share of Christmas Day, Valentine’s Day and Mother’s Day. Recent efforts focused in the Fall seasongifting occasions with a targeted focus on bridal marketing (“Engagement Season”) have been successfulspecial occasion milestones like birthdays and an increased levelanniversaries.
We will also aim to significantly improve the effectiveness of sales activity has been generated during this period ofour creative campaigns, building on the year. A significant majority ofbanner differentiation work launched in Fiscal 2019. Within the expenditure is spentpast year, we’ve brought on national television advertising, which is usednew creative agencies for every North America banner as well as a new data savvy media agency. Together, we are evolving our campaigns with more sophisticated, journey specific content and using data science to promote the store brands. Within such advertisements, Signet also promotes certain merchandise ranges, in particular its branded differentiated and exclusive merchandise and other branded products. Statistical and technology-based systems are employed to support customer relationship marketing programs that use a proprietary database to build guest loyalty and strengthen the relationship with guests through mail, telephone, email and social media communications. The programsmore efficiently target current guests with special savings and merchandise offers during key sales periods. Our targeted marketing efforts are aligned with our customer segmentation approach which, as discussed previously, differentiates our brands by focusing on customer attitudes and behaviors, rather than demographic information. In addition, invitations to special in-store promotional events are extended throughout the year.spend.

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Details of gross advertising, advertising before vendor contributions, by divisionsegment is shown below:
  Fiscal 2016 Fiscal 2015 Fiscal 2014
  Gross advertising spendingas a % of divisional sales Gross advertising spendingas a % of divisional sales Gross advertising spendingas a % of divisional sales
  (in millions)  (in millions)  (in millions) 
Sterling Jewelers division $261.2
6.5% $246.6
6.6% $233.6
6.6%
Zale division 98.7
5.4% 64.6
5.3% n/a
n/a
UK Jewelry division 24.3
3.3% 21.8
2.9% 20.2
3.0%
Signet $384.2
5.9% $333.0
5.8% $253.8
6.0%
n/a Not applicable as Zale division was acquired on May 29, 2014.
  Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions) Gross advertising spending
as a % of segment
sales
 Gross advertising spendingas a % of segment
sales		 Gross advertising spendingas a % of segment
sales
North America $368.5
6.5% $340.4
6.1% $358.8
6.2%
International 19.3
3.3% 20.1
3.3% 21.8
3.4%
Signet $387.8
6.2% $360.5
5.8% $380.6
5.9%
Customer finance
In our North American markets, we sell ourSignet sells products for cash and for payment through major credit cards, online payment systems and third-party financing like PayPal.lease purchase options. In addition, we offer ourthe Company has partnerships with third-party providers who directly extend credit to its customers, financing through proprietaryand who also manage and service the customers’ accounts.
Comenity Bank provides credit programs that areand services to the Zales and Piercing Pagoda banners and to prime-only credit quality customers for Kay and Jared banners. Genesis Financial Solutions (“Genesis”) provides a second look program for applicants declined by Comenity Bank.

For Kay and Jared banners, Signet originates non-prime receivables and sells them subject to a contractually agreed upon discount rate to funds managed by CarVal Investors (“CarVal”), the majority investor and Castlelake, L.P. (“Castlelake”), the minority investor. Servicing of the non-prime receivables prior to sale to the investors, including operational interfaces and customer servicing, is provided either in-house or through outsourced relationships with selected major lenders.
Our consumer credit programs are an integral part of our business and enable incremental sales as well as building customer loyalty. We also generate revenues from finance charges and other fees on these credit programs. In addition, we save on interchange fees that Signet would incur if our customers used major credit cards only.by Genesis.
Real estate
Management has specific operating and financial criteria that have tomust be satisfied before investing in new stores or renewing leases on existing stores. Substantially all the stores operated by Signet are leased. In Fiscal 2016, global netSignet continues to, over time, reposition its portfolio in a manner that it believes will drive greater store space increased 3.3% as a resultproductivity. These efforts include development and implementation of newinnovative store growth. The greatest opportunity for newconcepts to improve the in-store shopping experience, execution of opportunistic store relocations and store closures aimed at exiting under-performing stores, is in locations outside traditional covered malls.reducing the Company’s mall-based exposure and exiting regional brands.
Recent investment in the store portfolio is set out below:
(in millions)Sterling Jewelers division Zale division UK Jewelry division 
Total
Signet
Fiscal 2016       
   New store capital investment$48.3
 $12.1
 $3.3
 $63.7
   Remodels and other store capital investment50.6
 25.0
 16.3
 91.9
   Total store capital investment$98.9
 $37.1

$19.6
 $155.6
        
Fiscal 2015       
   New store capital investment$52.6
 4.4
 $2.4
 $59.4
   Remodels and other store capital investment52.6
 15.1
 11.3
 79.0
   Total store capital investment$105.2
 $19.5
 $13.7
 $138.4
        
Fiscal 2014       
   New store capital investment$54.0
 n/a
 $1.5
 $55.5
   Remodels and other store capital investment46.3
 n/a
 10.3
 56.6
   Total store capital investment$100.3
 n/a
 $11.8
 $112.1
n/aNot applicable as Zale division was acquired on May 29, 2014. See Note 3 of Item 8 for additional information.
(in millions)North America International 
Total
Signet
Fiscal 2019     
   New store capital investment$15.3
 $1.8
 $17.1
   Remodels and other store capital investment50.1
 3.0
 53.1
   Total store capital investment$65.4
 $4.8
 $70.2
      
Fiscal 2018     
   New store capital investment$47.1
 $1.4
 $48.5
   Remodels and other store capital investment63.8
 10.7
 74.5
   Total store capital investment$110.9
 $12.1
 $123.0
      
Fiscal 2017     
   New store capital investment$65.1
 $2.5
 $67.6
   Remodels and other store capital investment83.0
 15.3
 $98.3
   Total store capital investment$148.1
 $17.8
 $165.9
Seasonality
Signet’s sales are seasonal, with the first quarter slightly exceeding 20% of annual sales, the second and third quarters each approximating 20% and the fourth quarter accounting for almost 40%approximately 35-40% of annual sales, with December being by far the most importanthighest volume month of the year. The “Holiday Season” consists of results for the months of November and December. As a result approximately 45% to 55% of Signet’s annualour transformation initiatives, we anticipate our operating income normally occursprofit will be almost entirely generated 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.quarter.


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Employees
In Fiscal 2016,2019, the average number of full-time equivalent persons employed was 29,057.22,989. In addition, Signet usually employs a limited number of temporary employees during its fourth quarter. None of Signet’s employees in the UK and less than 1% of Signet’s employees in the US and Canada are covered by collective bargaining agreements. Signet considers its relationship with its employees to be excellent.
Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Average number of employees:(1)
          
Sterling Jewelers16,140
 16,147
 14,829
Zale(2)
9,309
 9,241
 n/a
UK Jewelry3,370
 3,292
 3,104
North America(2)
19,689
 21,440
 25,944
International3,125
 3,265
 3,398
Other(3)
238
 269
 246
175
 183
 224
Total29,057
 28,949
 18,179
22,989
 24,888
 29,566
(1) 
Full-time equivalents (“FTEs”).
(2) 
Includes 1,585844 FTEs, 821 FTEs and 1,051 FTEs employed in Canada.Canada in Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively.
(3) 
Includes corporate employees and employees employed at the diamond polishing plant located in Botswana.
n/a    Not applicable as Zale division was acquired on May 29, 2014.
Regulation
Signet is required to comply with numerous laws and regulations covering areas such as consumer protection, consumer privacy, data protection, consumer credit, consumer credit insurance, health and safety, waste disposal, supply chain integrity, truth in advertising and employment. Management monitors changes in these laws to endeavor to comply with applicable requirements.

Markets
Signet operates in the US, Canada and UK markets.
In 2015, we concluded a market and customer segmentation study in the US and validated that Signet’s long-term growth opportunities should be directed to the mid-market. Instead of basing our view on the household income of consumers, we refined our mid-market thinking according to the value of the products they buy. From that perspective, mid-market jewelry represents products in the $100 to $10,000 range — essentially excluding costume and luxury. Ninety-five percent of Signet’s merchandise sales land within that range. In total, the mid-market in the US, which is a subset of the total US jewelry industry that excludes costume jewelry and luxury jewelry, is approximately $41 billion. Signet sees the mid-market of the industry as its core market.
US
According to the US Bureau of Economic Analysis, and Census Bureau, the total jewelry and watch market was approximately $75$83 billion at the end of 2015,2018, up approximately 2%nearly 8% from the prior year. This implies a Signet jewelry market share of more thanapproximately 7%. Since 2000,2008, the industry average annual growth rate is 3.2%2.5%. Nearly 85%Around 83% of the market is represented by jewelry, with the balance being attributable to watches. ThereAccording to the latest data from the US Labor Department, there were nearly 21,000close to 20,400 jewelry stores in the country, down approximately 1%0.9% from the prior year.
Canada
The jewelry market in Canada, according to Euromonitor, has grown steadily over the past five years, rising to an estimated C$7.28.2 billion in 2014, the latest data available to Signet.2018. This represents a compound annual growth ratean increase of 4.6%. Euromonitor estimates that 2014 was up 3% in dollars and 2% in units.2.9% from the prior year.
UK
In the UK, the jewelry and watch market standswas estimated at about £4.1£5.7 billion in 2018, up 2.9% from the prior year, according to Mintel. That market saw a recovery in 2015 with growth of 1.2%.Growth was driven by continued demand for luxury and high-ticket items. Self-purchasing among young women and gifting among men represent the largest parts of the precious jewelry market. The growth represents a slight slowdown from that achieved in 2014 due to a shift towards lighter-weight pieces and a decrease in average selling prices.


NORTH AMERICA SEGMENT
14
TableThe North America segmentoperates jewelry stores in malls, mall-based kiosks and off-mall locations throughout the US and Canada under national banners including Kay, Zales, Jared and Piercing Pagoda, as well as a variety of Contents

STERLING JEWELERS DIVISIONmall-based regional banners.
Sterling JewelersNorth America store brandbanner reviews
Store activity by brandbanner
 Fiscal 2016 Fiscal 2015 Fiscal 2014 
Kay42
 58
 63
 
Jared18
 17
 13
 
Regional brands—
 —
 35
(1) 
Total stores opened or acquired during the year60
 75
 111
 
       
Kay(7) (20) (22) 
Jared(1) —
 —
 
Regional brands(16) (22) (61)
(1) 
Total stores closed during the year(24) (42) (83) 
       
Kay—
 1
 65
 
Jared—
 33
 —
 
Regional brands—
 (34) (65) 
Total logo conversions—
 —
 —

       
Kay1,129
 1,094
 1,055
 
Jared270
 253
 203
 
Regional brands141
 157
 213
 
Total stores open at the end of the year1,540
 1,504
 1,471
 
       
Kay$2.178
 $2.112
 $2.033
 
Jared(2)
$4.650
 $4.794
 $5.299
 
Regional brands$1.333
 $1.318
 $1.243
 
Average sales per store (millions)(3)
$2.518
 $2.467
 $2.361
 
       
Kay1,697
 1,597
 1,489
 
Jared1,153
 1,089
 983
 
Regional brands175
 196
 276
 
Total net selling square feet (thousands)3,025
 2,882
 2,748
 
       
Increase in net store selling space5.0% 4.9% 4.8% 
  February 2, 2019 Openings Closures February 3, 2018 Openings Closures January 28, 2017
Mall              
Kay 690
 —
 (41) 731
 4
 (24) 751
Zales 510
 2
 (37) 545
 5
 (48) 588
Jared 3
 —
 (6) 9
 —
 (1) 10
Piercing Pagoda(1)
 574

—

(24)
598

13

(31) 616
Peoples 123
 2
 (8) 129
 2
 (16) 143
Regional banners(2)
 32
 1
 (69) 100
 —
 (97) 197
North America segment 1,932
 5
 (185) 2,112
 24
 (217) 2,305
               
Off-mall and outlet              
Kay 524
 36
 (28) 516
 80
 (5) 441
Zales 148
 —
 (11) 159
 6
 (10) 163
Jared 253
 1
 (13) 265
 3
 (3) 265
North America segment 925
 37
 (52) 940
 89
 (18) 869
               
Total              
Kay 1,214
 36
 (69) 1,247
 84
 (29) 1,192
Zales 658
 2
 (48) 704
 11
 (58) 751
Jared 256
 1
 (19) 274
 3
 (4) 275
Piercing Pagoda(1)
 574
 —
 (24) 598
 13
 (31) 616
Peoples 123
 2
 (8) 129
 2
 (16) 143
Regional banners(2)
 32
 1
 (69) 100
 —
 (97) 197
North America segment 2,857
 42
 (237) 3,052
 113
 (235) 3,174
               
  February 2, 2019     February 3, 2018     January 28, 2017
Kay 1,864
     1,931
     1,826
Zales 916
     977
     1,039
Jared 1,139
     1,181
     1,177
Piercing Pagoda 108
     112
     115
Peoples 166
     171
     190
Regional banners 38
     121
     233
Total net selling square feet (thousands)(3)
 4,231
     4,493
     4,580
               
Increase in net store selling space (5.8)%     (1.9)%     2.8%
(1)
Piercing Pagoda operates through mall-based kiosks.
(2)
Includes one James Allen location.
(3)    Includes the remaining 30 Ultra stores not converted to the Kay brand171 thousand, 191 thousand and 227 thousand square feet of net selling space in Canada in Fiscal 2014.2019, Fiscal 2018 and Fiscal 2017, respectively.



Average sales per store (millions) Fiscal 2019 Fiscal 2018 Fiscal 2017
Kay $1.905
 $1.908
 $2.124
Zales $1.519
 $1.408
 $1.327
Jared(1)
 $4.085
 $4.110
 $4.379
Piercing Pagoda $0.479
 $0.417
 $0.506
Peoples $1.467
 $1.444
 $1.267
Regional banners $1.332
 $1.182
 $1.242
North America segment(2)
 $1.692
 $1.673
 $1.739
(1)
Includes sales from all Jared store formats, including the smaller square footage and lower average sales per store concepts of Jared 4.0, Jared Jewelry Boutique and Jared Vault.
(2)Includes sales from all Jared store formats, including the smaller square footage and lower average sales per store concepts of Jared 4.0, Jared Jewelry Boutique and Jared Vault.
(3)     Based only upon stores operated for the full fiscal year and calculated on a 52-week basis.


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Sales data by brand
   
Change from
previous year
Fiscal 2016Sales
(millions)		 Total
sales		 Same store
sales
Kay$2,530.3
 7.8 % 5.7 %
Jared1,252.9
 5.0 % 0.6 %
Regional brands205.5
 (8.7)% (1.2)%
Sterling Jewelers$3,988.7
 5.9 % 3.7 %
Kay Jewelers (“Kay”)
Kay Jewelers
Kay accounted for 39% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 41%) and operated 1,129 stores in 50 states as of January 30, 2016 (January 31, 2015: 1,094 stores). Since 2004, Kay has beenis the largest specialty retail jewelry store brand in the US based on sales,sales. Kay operates in malls and has subsequently increased its leadership position. Like the rest of our store banners, Kay targets a mid-market jewelry customer. But where Kay differs is that it particularly targets a customer, we identify as a “gifter,” who knows they need to buy jewelry but does not enjoy shoppingoff-mall stores. Off-mall stores primarily are located in outlet malls and needs help to get it done right.
Details of Kay’s performance over the last three years is shown below:
 Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales (millions)$2,530.3
 $2,346.2
 $2,157.8
Average sales per store (millions)$2.178
 $2.112
 $2.033
Stores at year end1,129
 1,094
 1,055
Total net selling square feet (thousands)1,697
 1,597
 1,489
power centers. Kay mall stores typically occupy about 1,600 square feet and have approximately 1,300 square feet of selling space, whereas Kay off-mall stores typically occupy about 2,200 square feet and have approximately 1,800 square feet of selling space.
Kay accounted for 39% of Signet’s sales in Fiscal 2019 (Fiscal 2018: 39%).
Zales Jewelers (“Zales”)
Zales Jewelers operates primarily in shopping malls and off-mall stores. Off-mall stores primarily are locatedoffers a broad range of bridal, diamond solitaire and fashion jewelry. Zales Outlet operates in outlet malls and neighborhood power centers. Management believescenters and capitalizes on Zales Jewelers’ national marketing and brand recognition. Zales Jewelers and Zales Outlet are collectively referred to as “Zales.”
Zales is positioned as “The Diamond Store” given its emphasis on diamond jewelry, especially in bridal and fashion. Zales mall stores typically occupy about 1,700 square feet and have approximately 1,300 square feet of selling space, whereas Zales off-mall expansion is supported by the willingnessstores typically occupy about 2,400 square feet and have approximately 1,700 square feet of guests to shopselling space.
Zales accounted for jewelry at a variety 20%of real estate locations and that increased diversification is important for growth as increasing the store count further leverages the strong Kay brand, marketing support and the central overhead.
The following table summarizes the current composition of stores as of January 30, 2016 and net openings (closures)Signet’s sales in the past three years:
 Stores at Net openings (closures)
  January 30, 2016 Fiscal 2016 Fiscal 2015 Fiscal 2014
Mall755
 6
 2
 5
Off-mall and outlet374
 29
 37
 101
Total1,129
 35
 39
 106
Fiscal 2019 (Fiscal 2018: 20%).
Jared The Galleria Of Jewelry (“Jared”)
With 270 stores in 40 states asJared, which offers the broadest selection of January 30, 2016 (January 31, 2015: 253 stores), Jaredmerchandise, is the fourth largest US specialty retail jewelry brand by sales and is a leading off-mall destination specialty retail jewelry store chain, based on sales. Jared accounted for 19% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 21%). The first Jared store was opened in 1993, and since its roll-out began in 1998, it has grown to become the fourth largest US specialty retail jewelry brand by sales. Like the rest of our store banners, Jared targets a mid-market jewelry customer. But where Jared differs is that it particularly targets a customer, we identify as a “sentimentalist,” who enjoys shopping for jewelry and cares very much about the details of the product and shopping process.
Details of Jared’s performance over the last three years is shown below:
 Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales (millions)$1,252.9
 $1,188.8
 $1,064.7
Average sales per store (millions)(1)(2)
$4.650
 $4.794
 $5.299
Stores at year end270
 253
 203
Total net selling square feet (thousands)1,153
 1,089
 983
(1)     In Fiscal 2016 and Fiscal 2015, average sales per store reflect the impact of Jared outlet and mall store concepts.
(2)     Includes sales from all Jared store formats, including the smaller square footage and lower average sales per store concepts of Jared 4.0, Jared Jewelry Boutique and Jared Vault.

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Jared offers superior guest service and enhanced selection of merchandise.chain. Every Jared store has an on-site design and service center where most repairs are completed within the same day. Each store also has at least one diamond salon, a children’s play area, and complimentary refreshments.
The typical Jared store has about 4,800 square feet of selling space and approximately 6,000 square feet of total space. Jared locations are normally free-standing sites with high visibility and traffic flow, positioned close to major roads within shopping developments. Jared stores usually operate in retail centers that contain strong retail co-tenants, including big box, destination stores and some smaller specialty units.
Jared also operates Jared Jewelry Boutiques within malls. These mall stores have a smaller footprint than standard Jared locations and generally less than 2,000 square feet of selling space. In addition, a similar off-mall concept known as Jared 4.0, is being tested currently, which utilizes approximately 3,600 square feet of selling space, allows for more store openings in smaller markets, expands the Jared brand and increases the return on Jared advertising investment. Finally, Jared operates an outlet-mall concept known as Jared Vault.Vault which utilizes approximately 1,600 square feet of selling space. These stores converted from a previous outlet store acquisition, are smaller than off-mall Jareds and offer a mix of identical products as Jared, as well as different, outlet-specific products at lower prices.
The following table summarizes the current composition Jared accounted for 18%of stores as of January 30, 2016 and net openings (closures)Signet’s sales in Fiscal 2019 (Fiscal 2018: 19%).
Piercing Pagoda
Piercing Pagoda operates through mall-based kiosks in the past three years:US. Piercing Pagodas are generally located in high traffic areas that are easily accessible and visible within regional shopping malls. Piercing Pagoda offers a selection of gold, silver and diamond jewelry in basic styles at moderate prices.
Piercing Pagoda accounted for 5% of Signet’s sales in Fiscal 2019 (Fiscal 2018: 5%).
 Stores at Net openings (closures)
  January 30, 2016 Fiscal 2016 Fiscal 2015 Fiscal 2014
Mall11
 3
 8
 —
Off-mall and outlet259
 14
 42
 13
Total270
 17
 50
 13
JamesAllen.com (“James Allen”)
Sterling Jewelers regional brandsJames Allen is an online retailer that was acquired by the Company during Fiscal 2018 as part of the R2Net acquisition. Unlike the rest of our store banners, James Allen does not principally operate in physical retail stores. During Fiscal 2019, the first James Allen concept store and showroom was launched in Washington D.C. featuring advances in digital technology and a millennial-inspired shopping experience. This store is an opportunity to test new concepts and incorporate innovation in new store design plans for all of our banners.

James Allen accounted for 4% of Signet’s sales in Fiscal 2019 (Fiscal 2018: 1%).
Peoples Jewellers (“Peoples”)
Peoples is Canada’s largest jewelry retailer, offering jewelry at affordable prices. Peoples is positioned as “Canada’s #1 Diamond Store” emphasizing its diamond business while also offering a wide selection of gold jewelry, gemstone jewelry and watches. Peoples stores typically occupy about 1,600 square feet and have approximately 1,300 square feet of selling space.
Peoples accounted for 3%of Signet’s sales in Fiscal 2019 (Fiscal 2018: 3%).
Regional banners
The Sterling Jewelers divisionNorth America segment also operates 32 mall stores under a variety of established regional nameplates. Regional brands in the Sterling Jewelers division accounted for 3% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 4%) and as of January 30, 2016, include 141 regional brand stores in 31 states (January 31, 2015: 157 stores in 32 states). The leading brands include JB Robinson Jewelers, Marks & Morgan Jewelers, Belden Jewelers and Belden Jewelers.Gordon’s Jewelers, in the US, and Mappins Jewellers (“Mappins”), in Canada. Also included in the regional nameplates are Goodman Jewelers, LeRoy’s Jewelers, Osterman Jewelers, Rogers Jewelers, Shaw’s Jewelers and Weisfield Jewelers. The Company expects the number ofCompany’s strategy is to reduce regional brandsbrand locations to continue to decline through conversion to national store brands or through closure upon lease expiration.
Details Regional banners in the North America segment accounted for 1%of the regional brands’ performance over the last three years is shown below:Signet’s sales in Fiscal 2019 (Fiscal 2018:1%).
 Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales (millions)$205.5
 $230.0
 $295.1
Average sales per store (millions)$1.333
 $1.318
 $1.243
Stores at year end141
 157
 213
Total net selling square feet (thousands)175
 196
 276
Sterling JewelersNorth America operating review
Other sales
Custom design services represent less than 5% of sales but provide higher than average profitability. Our custom jewelry initiative has a proprietary computer selling system and in-store design capabilities. Design & Service Centers, located in Jared stores, are staffed with skilled artisans who support the custom business generated by other Sterling Jewelers divisionNorth America segment stores, as well as the Jared stores in which they are located. The custom design and repair function has its own field management and training structure.
Repair services represent less than 5% of sales, and approximately 30%20% of transactions and are an important opportunity to build customer loyalty. The Jared Design & Service Centers, open the same hours as the store, also support other Sterling Jewelers and approximately 200 Zale divisionNorth America segment stores’ repair business.
The Sterling Jewelers divisionNorth America segment sells extended service plans covering lifetime repair service for jewelry and jewelry replacement plans. The lifetime repair service plans cover services such as ring sizing, refinishing and polishing, rhodium plating of white gold, earring repair, chain soldering and the resetting of diamonds and gemstones that arise due to the normal usage of the merchandise.merchandise or a replacement option if the merchandise cannot be repaired. The extended service plans have a higher rate of profitability than merchandise sales and are a significant component of Signet’s operating income. Jewelry replacement plans require the issuance of new replacement merchandise if the original merchandise is determined to be defective or damaged within a defined period in accordance with the plan agreement. Any repair work is performed in-house.

17
Table The North America segment also offers customers a two-year fine watch warranty. Additionally, Zale and Piercing Pagoda offer a one-year jewelry replacement program, which requires the issuance of Contentsnew replacement merchandise if the original merchandise is determined to be defective or damaged in accordance with the plan agreement.

ConsumerCustomer finance
General
Our in-house consumer financing program provides Signet with a competitive advantage through the enabling of incremental profitable sales that would not occur without a consumer financing program. Several factors inherent in the US jewelry business support the circumstances through which we believe Signet is uniquely positioned to generate profitable incremental business through its partner supported consumer financing program.payment programs. These factors include a high average transaction value;value and a significant population of customers seeking to finance merchandise, primarily in the bridal category; and the minimum scale necessary to administer credit programs efficiently. In addition, our credit program provides other benefits to our business overall, including:
complementing our “Best in Bridal” strategy in that 50% of merchandise sales are bridal and 75% of Sterling Jewelers division bridal sales utilize our credit as form of tender;
retaining of control in establishing high levels of service in managing the accounts receivable portfolio;
providing a database of regular guests and spending habits; and
establishing collection policies designed to minimize risk and maximize future sales as opposed to a focus on maximizing earnings from outstanding balances.
The lifetime value of a customer obtained through the in-house credit program is estimated to be 3.5 times that of a customer not obtained through the in-house credit program. For our in-house credit program, as of January 30, 2016 and January 31, 2015, 52.7% and 50.5%, respectively, of balances due were from customers who were acquired as users of our credit program more than 12 months prior to their most recent purchase.
Our in-house consumer financing program has been centralized since 1990 and is fully integrated into the management of the Sterling Jewelers division. It is not a separate operating division nor does it report separate results. Investments are geared towards best in class technology, system support and strategy analytics with the objective of maximizing efficiency and effectiveness, resulting in continuous optimization of profitable sales enabled by the program. All assets and liabilities relating to consumer financing are shown on the balance sheet and there are no associated off-balance sheet arrangements. In addition to interest-bearing transactions that involve the use of in-house customer finance, a portion of credit sales are made using interest-free financing for one year, subject to certain conditions. In most US states, guests also are offered optional third-party credit insurance.
Underwriting
The majority of credit applications originate in one of our retail locations and are approved or denied automatically based on proprietary origination models. Origination and purchase authorization strategies are designed by a dedicated Risk Management team, which is separate and distinct from our retail sales organization ensuring that financing decisions are not influenced by sales driven objectives. Our underwriting process considers one or more of the following elements: credit bureau information; income and address verification; current income and debt levels. We have developed and refined proprietary statistical models that provide standardized credit decisions, and drive the optimization of credit limit assignment, down payment requirements and more significant debt service requirements as compared to general consumer lending standards. For certain credit applicants that may have past credit problems or lack credit history, we use stricter underwriting criteria. These additional requirements may include items such as verification of employment and minimum down payment levels. Part of our ability to control delinquency and net charge-offs is based on the level of required down payments, tailored credit limits and more significant debt service requirements as mentioned above. Underwriting risk tolerance has not been altered in the past 10 years. Several factors can influence portfolio risk outside of the initial origination and subsequent authorization decisions including macro-economic conditions, regulatory environment, operational system stability and strategy execution, store execution, and the ability of marketing and prospecting activities to attract a consistent risk weighed mix of new applicants to the receivable.
The scores of Fair Isaac Corporation (“FICO”), a widely-used financial metric for assessing a person’s credit rating are used to benchmark portfolio and origination risk over time. Ten to twenty point ranges tend to be grouped together to form tiers of risk and scores can range from a low of 0 to over 800. The following aggregate FICO metrics for the portfolio demonstrate the overall consistency of our financing strategy approach:
 Fiscal 2016 Fiscal 2015 Fiscal 2014
Balance weighted FICO score - New Additions684 685 690
Balance weighted FICO score - Portfolio662 663 665
Credit monitoring and collections
Our objective is to facilitate the sale of jewelry and to collect the outstanding credit balance as quickly as possible, minimizing risk and enabling the customer to make additional jewelry purchases using their credit facility. On average, our receivable portfolio turns every 9 months. We closely monitor the credit portfolio to identify delinquent accounts early, and dedicate resources to contacting customers concerning past due

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accounts when they are as few as 5 days in arrears. Collectors are focused on a quality customer experience using risk-based calling and strategic account segmentation.
The quality of our credit loan portfolio at any time reflects, among other factors: 1) the creditworthiness of our customers, 2) general economic conditions, 3) the success of our account management and collection activities, and 4) a variety of variables that change over time such as the proportion of new versus seasoned accounts or changes in the relative growth rate in sales between our various retail brands or formats. Cash flows associated with the granting of credit to guests of the individual store are included in the projections used when considering store investment proposals.
Portfolio aging
Since inception of its in-house financing, Signet measures delinquency and establishes loss allowances using a form of the recency method. This form of the recency method relies upon qualifying payments determined by management to measure delinquency. In general, an account will not remain current unless a qualifying payment is received. A customer is aged to the next delinquency level if they fail to make a qualifying payment by their monthly aging. A customer’s account ages each month five days after their due date listed on their statement, allowing for a grace period before collection efforts begin. A qualifying payment can be no less than 75% of the scheduled payment, increasing with the delinquency level. If an account holder is two payments behind, then they must make a full minimum payment to return to current status. If an account holder is three payments behind, then they must make three full payments before returning to a current status. If an account holder is more than three payments behind, then the entire past due amount is required to return to a current status. Establishing qualifying payment methods in accounting for delinquencies is appropriate considering the high minimum payments that are required of customers. The weighted average minimum payment required as a percentage of the outstanding balance was 9% at year end fiscal 2016. The minimum payment does not decline as the balance declines. These two facts combined (higher scheduled payment requirement and no decline in payment requirement as balance decreases) allow Signet to collect on the receivable significantly faster than other retail/bank card accounts, which require a 3%-5% minimum payment, reducing risk and more quickly freeing up customer open to buy for additional purchases. Of all payments received in the fiscal year, 97% were equal to or greater than the scheduled monthly payment compared to 97% last year. While guests can make payments through online or mobile channels, via telephone or through the mail, 25% of payments are made in one of our retail locations.
See Note 1 of Item 8 for additional information regarding qualifying payments.
Allowances for uncollectible amounts are recorded as a charge to cost of goods sold in the income statement. The allowance is calculated using a model that analyzes factors such as delinquency rates and recovery rates. An allowance for amounts 90 days aged and under on a recency basis is established based on historical loss experience and payment performance information. A 100% allowance is made for any amount aged more than 90 days on a recency basis and any amount associated with an account the owner of which has filed for bankruptcy. An account is 90 days aged on a recency basis when there has not been a qualifying payment made within 90 days of the billing date. The net bad debt expensed on the income statement is equal to the sum of the total change in the allowance for uncollectible accounts and the total amount of charged off balances less any recoveries for accounts previously charged off. The allowance calculation is reviewed by management to assess whether, based on economic events, additional analysis is required to appropriately estimate losses inherent in the portfolio.
We deem accounts to be uncollectible and charge off when the account is both more than 120 days aged on a recency basis and 240 days aged on a contractual basis at the end of a month. Over the last 12 months, we have recovered 18% of charged-off amounts through our collection activities and the sale of previously charged off accounts. We track our charge-offs both gross, before recoveries, and net, after recoveries.

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Customer financing statistics(1)
 Fiscal 2016 Fiscal 2015 Fiscal 2014
Total sales (millions)$3,988.7
 $3,765.0
 $3,517.6
Credit sales (millions)$2,451.2
 $2,277.1
 $2,028.0
Credit sales as % of total Sterling Jewelers sales(2)
61.5% 60.5% 57.7%
Net bad debt expense (millions)(3)
$190.5
 $160.0
 $138.3
Opening receivables (millions)$1,666.0
 $1,453.8
 $1,280.6
Closing receivables (millions)$1,855.9
 $1,666.0
 $1,453.8
Number of active credit accounts at year end(4)
1,423,619
 1,352,298
 1,256,003
Average outstanding account balance at year end$1,319
 $1,245
 $1,175
Average monthly collection rate11.5% 11.9% 12.1%
Ending bad debt allowance as a % of ending accounts receivable(1)
7.0% 6.8% 6.7%
Net charge-offs as a % of average gross accounts receivable(1)(5)
9.9% 9.3% 9.4%
Non performing receivables as a % of ending accounts receivable(1)
4.0% 3.8% 3.7%
      
Credit portfolio impact:     
Net bad debt expense (millions)(3)
$(190.5) $(160.0) $(138.3)
Late charge income (millions)$33.9
 $31.3
 $29.4
Interest income from in-house customer finance programs (millions)(6)
$252.5
 $217.9
 $186.4
 $95.9
 $89.2
 $77.5
(1)    See Note 10 of Item 8 for additional information.
(2)    Including any deposits taken at the time of sale.
(3)    Net bad expense is defined as the charge for the provision for bad debt less recoveries.
(4)    The number of active accounts is based on credit cycle end date closest to the fiscal year end date.
(5)    Net charge-offs calculated as gross charge-offs less recoveries. See Note 10 of Item 8 for additional information.
(6)    See Note 9 of Item 8. Primary component of other operating income, net, on the consolidated income statement.

ZALE DIVISION
The Zale division consists of two reportable segments: Zale Jewelry and Piercing Pagoda. Zale Jewelry operates jewelry stores located primarily in shopping malls throughout the US, Canada and Puerto Rico. Piercing Pagoda operates through mall-based kiosks throughout the US and Puerto Rico. In Fiscal 2016, approximately 9% of goods purchased in the Zale division were denominated in Canadian dollars.
On May 29, 2014, Signet acquired 100% of the outstanding shares of Zale Corporation and Zale Corporation became a wholly-owned consolidated subsidiary of Signet. As such, Fiscal 2016 reflects the first full year of results as Fiscal 2015 reflects only the results since the Acquisition.
Zale store brand reviews
Store activity by brand

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 Fiscal 2016 Fiscal 2015 
Zales24
 731
 
Peoples2
 146
 
Regional brands—
 139
 
Total Zale Jewelry26
 1,016
 
Piercing Pagoda12
 615
 
Total stores opened or acquired during the year38
 1,631
 
     
Zales(10) (15) 
Peoples(1) (2) 
Regional brands(10) (27) 
Total Zale Jewelry(21) (44) 
Piercing Pagoda(12) (10) 
Total stores closed during the year(33) (54) 
     
Zales730
 716
 
Peoples145
 144
 
Regional brands102
 112
 
Total Zale Jewelry977
 972
 
Piercing Pagoda605
 605
 
Total stores open at the end of the year1,582
 1,577
 
     
Zales$1.467
 $0.942
(2) 
Peoples$1.353
 $1.096
(2) 
Regional brands$0.942
 $0.682
(2) 
Total Zale Jewelry$1.394
 $0.934
(2) 
Piercing Pagoda$0.376
 $0.228
(2) 
Average sales per store (millions)(1)
$1.003
 $0.662
(2) 
     
Zales1,010
 990
 
Peoples193
 192
 
Regional brands112
 125
 
Total Zale Jewelry1,315
 1,307
 
Piercing Pagoda114
 115
 
Total net selling square feet (thousands)1,429
 1,422
 
     
Increase in net store selling space0.5% n/a
 
(1)     Based only upon stores operated for the full fiscal year and calculated on a 52-week basis.
(2)     Fiscal 2015 average sales per store calculated based on sales since date of the Acquisition.
Sales data by brand
Fiscal 2016Sales
(millions)		 Same store sales
Zales$1,241.0
 5.5%
Peoples214.8
 3.4%
Regional brands112.4
 (5.7)%
Total Zale Jewelry$1,568.2
 4.3%
Piercing Pagoda243.2
 7.5%
Zale division(1)
$1,811.4
 4.8%
(1)     The Zale division same store sales includes merchandise and repair sales and excludes warranty and insurance revenues.

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Zale Jewelry
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 jewelry and watches, with merchandise and marketing emphasis focused on diamond products.
Zales Jewelers, including Zales Outlet
Zales Jewelers operates primarily in shopping malls and offers a broad range of bridal, diamond solitaire and fashion jewelry. Zales Outlet operates in outlet malls and neighborhood power centers and capitalizes on Zales Jewelers’ national marketing and brand recognition. Like the rest of our store banners, Zales targets a mid-market jewelry customer. But where Zales differs is that it particularly targets a customer, we identify as a “stylish shopper,” for whom trend and leading styles are very important.
Zales Jewelers and Zales Outlet are collectively referred to as “Zales.”
Zales accounted for 19% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 14%) and operated a total of 730 stores, including 720 stores in the United States and 10 stores in Puerto Rico as of January 30, 2016 (January 31, 2015: 716 total stores). Zales is positioned as “The Diamond Store” given its emphasis on diamond jewelry, especially in bridal and fashion. The Zales brand complements its merchandise assortments with promotional strategies to increase sales during traditional gift-giving periods and throughout the year.
Details of Zales’ performance since the Acquisition in Fiscal 2015 is shown below:
 Fiscal 2016 Fiscal 2015
Sales (millions)$1,241.0
 $800.9
Average sales per store (millions)(1)
$1.467
 $0.942
Stores at year end730
 716
Total net selling square feet (thousands)1,010
 990
(1)    Fiscal 2015 average sales per store calculated based on sales since date of the Acquisition.
Zales mall stores typically occupy about 1,700 square feet and have approximately 1,300 square feet of selling space, whereas Zales off-mall stores typically occupy about 2,400 square feet and have approximately 1,700 square feet of selling space.
The following table summarizes the current composition of stores as of January 30, 2016 and net openings (closures) since the Acquisition:
  Stores at Net openings (closures)
  January 30, 2016 Fiscal 2016 Fiscal 2015
Mall 601
 9
 (6)
Off-mall and outlet 129
 5
 —
Total 730
 14
 (6)
Peoples Jewellers
Founded in 1919, Peoples Jewellers (“Peoples”) is Canada’s largest jewelry retailer, offering jewelry at affordable prices. Peoples accounted for 3% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 3%) and operated 145 stores in Canada as of January 30, 2016 (January 31, 2015: 144 stores). Peoples is positioned as “Canada’s #1 Diamond Store” emphasizing its diamond business while also offering a wide selection of gold jewelry, gemstone jewelry and watches.
Details of Peoples’ performance since the Acquisition in Fiscal 2015 is shown below:
 Fiscal 2016 Fiscal 2015
Sales (millions)$214.8
 $174.5
Average sales per store (millions)(1)
$1.353
 $1.096
Stores at year end145
 144
Total net selling square feet (thousands)193
 192
(1)    Fiscal 2015 average sales per store calculated based on sales since date of the Acquisition.
Peoples stores typically occupy about 1,600 square feet and have approximately 1,300 square feet of selling space.



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Zale Jewelry regional brands
The Zale division also operates the regional store brands Gordon’s Jewelers (“Gordon’s”), in the US and Mappins Jewellers (“Mappins”), in Canada. Regional brands in the Zale Jewelry segment accounted for 2% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 2%) and operated a total of 102 stores, including 58 stores in the US, 43 stores in Canada and 1 store in Puerto Rico as of January 30, 2016 (January 31, 2015: 112 total stores). The Company expects the number of regional brands locations to continue to decline through conversion to national store brands or through closure upon lease expiration.
Details of regional brands’ performance since the Acquisition is shown below:
 Fiscal 2016 Fiscal 2015
Sales (millions)$112.4
 $93.3
Average sales per store (millions)(1)
$0.942
 $0.682
Stores at year end102
 112
Total net selling square feet (thousands)112
 125
(1)    Fiscal 2015 average sales per store calculated based on sales since date of the Acquisition.
Piercing Pagoda
Piercing Pagoda operates through mall-based kiosks in the US and Puerto Rico. Piercing Pagoda accounted for 4% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 3%) and operated a total of 605 stores, including 591 stores in the United States and 14 stores in Puerto Rico as of January 30, 2016 (January 31, 2015: 605 total stores). Details of Piercing Pagoda’s performance since the Acquisition in Fiscal 2015 is shown below:
 Fiscal 2016 Fiscal 2015
Sales (millions)$243.2
 $146.9
Average sales per store (millions)(1)
$0.376
 $0.228
Stores at year end605
 605
Total net selling square feet (thousands)114
 115
(1)    Fiscal 2015 average sales per store calculated based on sales since date of the Acquisition.
Piercing Pagodas are generally located in high traffic areas that are easily accessible and visible within regional shopping malls. The typical customer is the female self-purchaser. Piercing Pagoda offers a selection of gold, silver and diamond jewelry in basic styles at moderate prices.
Zale operating review
Other sales
Repair services represent less than 3% of sales and are an important opportunity to build customer loyalty. During Fiscal 2016, Zale utilized the Jared Design & Service Centers to support its repair business for approximately 200 stores, with plans to fully in-source repairs in Fiscal 2017. The Zale division also sells lifetime extended service plans on certain products which cover ring sizing and breakage on fine jewelry. These plans also include an option to purchase theft protection for a two-year period. Other plans offered to guests of Zale Jewelry include two year watch warranties and credit insurance for private label credit card guests. Zale Jewelry and Piercing Pagoda also offer a one year breakage warranty program.
Customer finance
category. Our consumer credit program isand lease programs are an integral part of our business and is a major driver of customer loyalty. GuestsCustomers are offered revolving and interest freepromotional credit plans under our private label credit card programs offeredand a lease purchase option provided by Progressive Lease allowing Signet to offer payment options that meet each customer’s individual needs.
Below is a summary of the payment participation rate in conjunction with Comenity BankNorth America which reflects activity for in-house and TD Bank Services in Canada, in conjunction with other alternative finance vehicles including Signet’s in-house consumeroutsourced credit program customers in late Fiscal 2016, that allow theNorth America, including legacy Sterling Jewelers, Zale division to provide guests with a wide varietyJewelry and Piercing Pagoda customers, as well as lease purchase customers:
 Fiscal 2019 Fiscal 2018
Total North America sales (excluding James Allen)(1) (millions)
$5,418.0
 $5,527.0
Credit and lease purchase sales (millions)$2,799.5
 $2,889.0
Credit and lease purchase sales as % of total North America sales(1)
51.7% 52.3%
(1)    See Note 14 of financing options. Participation of the Zale division in Signet’s in-house consumer credit program was not material during Fiscal 2016. Approximately 42% of sales in the US were financed by private label customer credit in Fiscal 2016 (Fiscal 2015: 40%). Canadian private label credit card sales represented approximately 29% of Canadian sales in Fiscal 2016 (Fiscal 2015: 21%).Item 8 for additional information.


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UK JEWELRY DIVISIONINTERNATIONAL SEGMENT
The UK Jewelry divisionInternational segment transacts mainly in British pounds, as sales and the majority of operating expenses are incurred in that currency and its results are then translated into US dollars for external reporting purposes. In Fiscal 2016,2019, approximately 25%31% of goods purchased were made in US dollars (Fiscal 2015: 20%2018: 27%). The following information for the UK Jewelry divisionInternational segment is given in British pounds as management believes that this presentation assists in the understanding of the performance of the UK Jewelry division.International segment. Movements in the US dollar to British pound exchange rate therefore may have an impact on the results of Signet, particularly in periods of exchange rate volatility. See Item 6 for analysis of results at constant exchange rates; non-GAAP measures.
UKInternational market
Ernest Jones and H.Samuel compete with a large number of independent jewelry retailers, as well as catalog showroom operators, discount jewelry retailers, supermarkets,online retail and auction sites, apparel and accessory fashion stores, online retailerscatalog showroom operators and auction sites.supermarkets.
UK JewelryInternational store brandbanner reviews
Store activity by brand
 Fiscal 2016 Fiscal 2015 Fiscal 2014
H.Samuel2
 —
 —
Ernest Jones(1)
8
 8
 2
Total stores opened or acquired during the year10
 8
 2
      
H.Samuel(3) (2) (14)
Ernest Jones(1)
(2) (1) (6)
Total stores closed during the year(5) (3) (20)
      
H.Samuel301
 302
 304
Ernest Jones(1)
202
 196
 189
Total stores open at the end of the year503
 498
 493
      
H.Samuel£0.763
 £0.760
 £0.742
Ernest Jones(1)
£1.142
 £1.092
 £1.033
Average sales per store (millions)(2)
£0.910
 £0.887
 £0.853
      
H.Samuel326
 327
 328
Ernest Jones(1)
194
 185
 175
Total net selling square feet (thousands)520
 512
 503
      
Increase (decrease) in net store selling space1.5% 1.8% (2.5)%
  February 2, 2019 Openings Closures February 3, 2018 Openings Closures January 28, 2017
H.Samuel 288
 —
 (13) 301
 2
 (5) 304
Ernest Jones 189
 3
 (17) 203
 1
 (2) 204
International segment 477
 3
 (30) 504
 3
 (7) 508
               
H.Samuel 313
     327
     329
Ernest Jones 186
     197
     197
Total net selling square feet (thousands) 499
     524
     526
               
Increase in net store selling space (4.8)%     (0.4)%     1.0%
               
  Fiscal 2019     Fiscal 2018     Fiscal 2017
H.Samuel £0.651
     £0.698
     £0.748
Ernest Jones £1.061
     £1.066
     £1.114
Average sales per store (millions)(1)
 £0.811
     £0.847
     £0.894
(1)
Includes stores selling under the Leslie Davis nameplate.
(2) 
Based only upon stores operated for the full fiscal year and calculated on a 52-week basis.
Sales data by brand
   Change from previous year
Fiscal 2016Sales
(millions)		 Total
sales		 
Total sales at constant
exchange rates(1)(2)
 Same
store
sales
H.Samuel£247.4
 (3.5)% 3.0% 2.8%
Ernest Jones(3)
237.9
 2.2 % 9.2% 7.3%
UK Jewelry£485.3
 (0.8)% 5.9% 4.9%
(1)
Non-GAAP measure, see Item 6.
(2)
The exchange translation impact on total sales of H.Samuel was (6.5)% and on Ernest Jones was (7.0)%.
(3)
Includes stores selling under the Leslie Davis nameplate.

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H.Samuel
H.Samuel accounted for 6% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 7%), and is the largest specialty retail jewelry store brand in the UK by number of stores. H.Samuel has 150 years of jewelry heritage, and its customers typically have an annual household income of between £15,000 and £40,000.with a target customer focused on inexpensive fashion-trend oriented, everyday jewelry. H.Samuel continues to focus on larger store formats in regional shopping centers. The typical store selling space is 1,100 square feet.
H.Samuel continues to focus on larger store formatsaccounted for 5% of Signet’s sales in regional shopping centers, and the number of H.Samuel stand alone ‘High Street’ locations has therefore declined as leases expire. Details of H.Samuel’s performance over the last three years is shown below:
 Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales (millions)£247.4
 £240.3
 £233.1
Average sales per store (millions)£0.763
 £0.760
 £0.742
Stores at year end301
 302
 304
Total net selling square feet (thousands)326
 327
 328
Fiscal 2019 (Fiscal 2018: 5%).
Ernest Jones
Ernest Jones accounted for 6% of Signet’s sales in Fiscal 2016 (Fiscal 2015: 6%), and(including stores selling under the Leslie Davis nameplate) is the second largest specialty retail jewelry store brandbanner in the UK by number of stores. It serves the upper middle market, and its customers typically have an annual household income of between £30,000 and £65,000.with a target customer focused on high-quality, timeless jewelry. The typical store selling space is 900 square feet.
Ernest Jones had six store openings(including stores selling under the Leslie Davis nameplate) accounted for 5% of Signet’s sales in Fiscal 2016 with an emphasis on its new outlet concept, Ernest Jones The Outlet Collection. Details of Ernest Jones’ performance over the last three years is shown below:2019 (Fiscal 2018: 5%),
 Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales (millions)£237.9
 £217.8
 £200.3
Average sales per store (millions)£1.142
 £1.092
 £1.033
Stores at year end202
 196
 189
Total net selling square feet (thousands)194
 185
 175
UK JewelryInternational operating review
Customer finance
In Fiscal 2016,2019, approximately 7%8% of the division’ssegment’s sales were made through a customer finance program provided through a third party (Fiscal 2015: 5%2018: 9%). Signet does not provide this service itself in the UK due to low demand for customer finance.

OTHER
Other consists of all non-reportable operating segments, including activities related to the direct sourcing of rough diamonds, and is aggregated with unallocated corporate administrative functions.

IMPACT OF CLIMATE CHANGE
Signet recognizes that climate change is a major risk to society and therefore continues to take steps to reduce Signet’s climatic impact. Management believes that climate change has a limited influence on Signet’s performance and that it is of limited significance to the business.
AVAILABLE INFORMATION
Signet files annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and other information with the SEC. Prior to February 1, 2010, Signet filed annual reports on Form 20-FUS Securities and furnished other reports on Form 6-K with the SEC.Exchange Commission (“SEC”). Such information, and amendments to reports previously filed or furnished, is available free of charge from our corporate website, www.signetjewelers.com, as soon as reasonably practicable after such materials are filed with or furnished to the SEC. The SEC also maintains an internet site at www.sec.gov that contains the Company’s filings.


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ITEM 1A. RISK FACTORS
Spending on goods that are, or are perceived to be “luxuries,” such as jewelry, is discretionary and is affected by general economic conditions. Therefore, aA decline in consumer spending may unfavorably impact Signet’s future sales and earnings.
Jewelry purchases are discretionary and are dependent on consumers’ perceptions of general economic conditions, particularly as jewelry is often perceived to be a luxury purchase. Adverse changes in the economy and periods when discretionary spending by consumers may be under pressure could unfavorably impact sales and earnings. We may respond by increasing discounts or initiating marketing promotions to reduce excess inventory, which could have a material adverse effect on our margins and operating results.
The success of Signet’s operations depends to a significant extent upon a number of factors relating to discretionary consumer spending. These include economic conditions, and perceptions of such conditions by consumers, consumer confidence, level of customer traffic in shopping malls and other retail centers, employment, the level of consumers’ disposable income, business conditions, interest rates, consumer debt and asset values, availability of credit and levels of taxation for the economy as a whole and in regional and local markets where we operate.
As 11%10% of Signet’s sales are accounted for by its UK Jewelry division,International segment, economic conditions in the eurozone have a significant impact on the UK economy even though the UK is not a member of the eurozone. Therefore, developments ineurozone, including uncertainty regarding the eurozonetiming and terms of the planned withdrawal of the UK from the European Union, could adversely impact trading in the UK Jewelry division,International segment, as well as adversely impact the US economy. In addition, the UK may seek to leave the European Union (“EU”) and adopt an as yet unknown relationship with the EU. If this occurred, it could affect economic or market conditions throughout Europe and beyond and could contribute to instability in global credit markets. Any such exit by the UK from the EU could have a material adverse affect on Signet.
More than half of sales in the Sterling Jewelers division and approximately 40% of sales in the Zale division are made utilizing customer financing provided or facilitated by Signet. Therefore anyAny deterioration in consumers’ financial position or changes to the regulatory requirements regarding the granting of credit to customers could adversely impact the Company’s sales, earnings and the collectability of accounts receivable.
More thanApproximately half of Signet’s sales in the US and Canada utilize its in-house or third-party customer financing programs and an additional 25%36% of purchases are made using third party bank cards. Any significant deterioration in general economic conditions or increase in consumer debt levels may inhibit consumers’ use of credit and decrease consumers’ ability to satisfy Signet’s requirement for access to customer finance andwhich could in turn have an adverse effect on the Company’s sales. Furthermore, any downturn in general or local economic conditions, in particular an increase in unemployment in the markets in which the Signet operates, may adversely affect its collectionthe merchant discount rate paid by Signet related to the sale of outstanding accounts receivable, its net bad debt charge and hence earnings.the non-prime receivables, as well as the value of any assets contingent on the performance of the non-prime receivables.
Additionally, Signet’s ability to extend credit to customers and the terms on which it is achieved depends on many factors, including compliance with applicable laws and regulations in the US and Canada, any of which may change from time to time, and such changes could adversely affect sales and income. In addition, other restrictions arising from applicable law could cause limitations in credit terms currently offered or a reduction in the level of credit granted by the Company, or by third parties, and this could adversely impact sales, income or cash flow.
The US Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was signed into law in July 2010. Among other things,Any new regulatory initiatives or investigations by the Dodd-Frank Act created a Bureau of Consumer Financial Protection (“CFPB”) or other state authority, or ongoing compliance with broad rule-makingthe Consent Order entered into on January 16, 2019 with the CFPB and supervisory authoritythe Attorney General for a wide rangethe State of consumer financial services, including Signet’s customer financing programs. The Bureau’s authority became effective in July 2011. Any new regulatory initiatives byNew York relating to the BureauCompany’s in-store credit practices, promotions, and payment protection products could impose additional costs and/or restrictions on credit practices of the Sterling Jewelers and Zale divisions,North America segment, which could adversely affect their ability to conduct its business.
Signet’s share price may be volatile.
Signet’s share price has fluctuated and may fluctuate substantially as a result of variations in the actual or anticipated results and financial conditions of Signet and other companies in the retail industry and the stock market’s view of the acquisition of Zale Corporation.industry. In addition, the stock market has experienced price and volume fluctuations that have affected the market price of many retail and other stocks in a manner unrelated, or disproportionate, to the operating performance of these companies.

Signet provides public guidance on its expected operating and financial results for future periods. Although Signet believes that this guidance provides investors and analysts with a better understanding of management’s expectations for the future and is useful to its stockholders and potential stockholders, such guidance is comprised of forward-looking statements subject to the risks and uncertainties described in this report and in our other public filings and public statements. Signet’s actual results may not always be in line with or exceed the provided guidance or the expectations of our investors and analysts, especially in times of economic uncertainty. In the past, when the Company has reduced its previously provided guidance, the market price of Signet’s common stock has declined. If, in the future, Signet’s operating or financial results for a particular period do not meet our guidance or the expectations of our investors and analysts or if we reduce our guidance for future periods, the market price of our common stock may decline.
In addition, Signet may fail to meet the expectations of its stockholders or of analysts at some time in the future.analysts. If the analysts that regularly follow the Company’s stock lower their rating or lower their projections for future growth and financial performance, the Company’s stock price could decline.

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The concentration ofSignet’s sales, operating income, cash and inventory levels fluctuate on a significant proportion of salesseasonal basis and an even larger share of profits in the fourth quarter means results are dependent on performance during that period.can be adversely impacted by increased competition and promotional activity.
Signet’s business is highly seasonal, with a significant proportion of its sales and operating profit generated during its fourth quarter, which includes the Holiday Season. Management expects Signet to continue to experience a seasonal fluctuation in its sales and earnings. Therefore, there is limited ability for Signet to compensate for shortfalls in fourth quarter sales or earnings by changes in its operations and strategies in other quarters, or to recover from any extensive disruption, for example, due to sudden adverse changes in consumer confidence, inclement weather conditions having an impact on a significant number of stores in the last few days immediately before Christmas Day or disruption to warehousing and store replenishment systems. A significant shortfall in results for the fourth quarter of any fiscal year would therefore be expected to have a material adverse effect on the annual results of operations.operations as well as cash and inventory levels. Disruption at lesser peaks in sales at Valentine’s Day and Mother’s Day would also be expected to impact the results to a lesser extent.results. Additionally, in anticipation of increased sales activity in the Holiday Season, Signet incurs certain significant incremental expenses prior to and during peak selling seasons, including advertising and costs associated with hiring a substantial number of temporary employees to supplement our existing workforce. Increased competition and promotional activity during holiday periods has impacted and could in the future result in adverse impacts to Signet’s sales, profitability and market share.
Deterioration in ourthe Company’s capital structure or financial performance could result in constraints on capital or financial covenant breaches. In addition, a portion of the Company’s debt is variable rate and volatility in benchmark interest rates could adversely impact the Company’s financial results.
While Signet has a strong balance sheet with adequate liquidity to meet its operating requirements, the creditCredit ratings agencies periodically review our capital structure and the quality and stability of our earnings. A deterioration in Signet’s capital structure or the quality and stability of earnings could result in a downgrade of Signet’s credit rating. Any negative ratings actions could also constrain the capital available to the Company, could limit the Company’s access to funding for its operations, funding dividends and share repurchases, and increase the Company’s financing costs. Changes in general credit market conditions could also affect Signet’s ability to access capital rates at rates and on terms we determine to be attractive. If our ability to access capital becomes constrained, our interest costs will likely increase, which could have a material adverse effect on our results of operations, financial condition and cash flows. Additionally, as a result of the Company’s exposure to variable interest rate debt, volatility in benchmark interest rates could adversely impact the Company’s financial results.
Signet’s borrowing agreements include various financial covenants and operating restrictions. A material deterioration in its financial performance could result in a covenant being breached. If Signet were to breach, or believed it was going to breach, a financial covenant it would have to renegotiate its terms with current lenders or find alternative sources of financing if current lenders required cancellation of facilities or early repayment.
Movements
Global economic conditions and regulatory changes following the United Kingdom’s announced intention to exit from the European Union could adversely impact Signet’s business and results of operations located in, or closely associated with, the United Kingdom.
In June 2016, a majority of voters in the United Kingdom elected to withdraw from the European Union (often referred to as Brexit) in a national referendum. In March 2017, the United Kingdom invoked Article 50 of the Lisbon Treaty, which commenced a two-year negotiation period that culminated in an agreement upon the withdrawal terms, which was subject to approval by British Parliament. Parliament rejected the agreement and the British Prime Minister requested to extend the March 29, 2019 effective date for Brexit to June 30, 2019. On March 21, 2019, the leaders of the other member countries of the European Union agreed to extend the deadline for Brexit until April 12, 2019. However, if British Parliament approves the previously rejected terms of the withdrawal, then the deadline would be further extended to May 22, 2019. Additionally, if the United Kingdom agrees to hold elections for European Parliament that are scheduled for May 23, 2019, the deadline could be further extended. The referendum and ongoing negotiations have created significant uncertainty about the future relationship between the United Kingdom and the European Union. This includes uncertainty with respect to the laws and regulations, including regulations applicable to Signet’s business, that will apply in the United Kingdom in the event of a withdrawal. The referendum has also given rise to calls for the governments of other European Union member states to consider a referendum on withdrawal from the European Union for their territory. These developments, or the perception that any of them could occur, could adversely impact global economic conditions and the stability of global financial markets, and may significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these factors could depress economic activity, which could adversely impact our business, financial condition and results of operations especially those located in, or closely associated with, the United Kingdom. Brexit could lead to long-term volatility in the currency markets and there could be long-term detrimental effects on the value of the British pound. Brexit could also impact other currencies. Signet uses foreign currency derivative instruments to hedge certain exposures to currency exchange rate risks. The results of the Brexit referendum could increase Signet’s exposure to foreign currency rate exchange risks and reduce its ability to effectively use certain derivative instruments as a way to hedge risks.
Fluctuations in foreign exchange rates could adversely impact the Company’s results of operations and balance sheet of Signet.financial condition.
Signet publishes its consolidated annual financial statements in US dollars. At January 30, 2016,February 2, 2019, Signet held approximately 83%90% of its total assets in entities whose functional currency is the US dollar and generated approximately 85%87% of its sales and 92%substantially all of its operating income (loss) in US dollars for the fiscal year then ended. All the remaining assets, sales and operating income are in UK British pounds and Canadian dollars. Therefore, itsthe Company’s results of operations and balance sheet are subject to fluctuations in the exchange rates between the US dollar and both the British pound and Canadian dollar. Accordingly, any decrease in the weighted average value of the British pound or Canadian dollar against the US dollar, including due to Brexit as discussed above, would decrease reported sales and operating income.
The monthly average exchange rates are used to prepare the income statement and are calculated each month frombased on the weekly averagedaily exchange rates weightedexperienced by sales of the UK Jewelry divisionInternational segment and the Canadian subsidiaries of the Zale division.North America segment in the fiscal month.
Where British pounds or Canadian dollars are held or used to fund the cash flow requirements of the business, any decrease in the weighted average value of the British pound or Canadian dollar against the US dollar would reduce the amount of cash and cash equivalents.
In addition, the prices of certain materials and products bought on the international markets by Signet are denominated in foreign currencies. As a result, Signet and its subsidiaries have exposures to exchange rate fluctuations on its cost of goods sold, as well as volatility of input prices if foreign manufacturers and suppliers are impacted by exchange rate fluctuations.
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 natural diamonds, gold and, to a lesser extent, other precious and semi-precious metals and stones. In particular, diamonds accounted for about 45%52%, and gold about 14%, of Signet’s merchandise costs in Fiscal 2016.2019.
In Fiscal 2016,2019, prices for the assortment of polished diamonds utilized by Signet were relatively flat withdecreased slightly compared to prior year. 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.

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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 in the gold price in recent years, including a decline during Fiscal 2016.years. 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 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 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, 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.
Additionally, a material increase in the supply of gem quality lab created diamonds, combined with increased consumer acceptance thereof, could impact the supply and pricing in the natural diamond supply chain, as well as retail pricing.
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 affected companies 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 28, 2015,25, 2018, 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, 2014.2017.
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.
Price increasesSignet’s pricing compared to competitors, the increased price transparency in the market and the highly fragmented competitive nature of the retail jewelry industry, may have an adverse impact on Signet’s performance.
IfCritical to maintaining an optimal customer experience is a multi-faceted value proposition that focuses on customer service, attractive brand and category assortments, availability of financing, and deep customer service and relationship building with our guest service professionals, as well as competitive pricing. Although not a singular differentiator to our value proposition, if significant price increases are implemented by any divisionsegment or across a wide range of merchandise, the impact on earnings will depend on, among other factors, the pricing by competitors of similar products in the same geographic area and the response by customers to higher prices. Such price increases may result in lower sales and adversely impact earnings.
The retail jewelry industry is competitive. Signet’s competitors are specialty jewelry retailers, as well as other jewelry retailers, including department stores, mass merchandisers, discount stores, apparel and accessory fashion stores, brand retailers, shopping clubs, home shopping television channels, direct home sellers, online retailers and auction sites. In addition, other retail categories and other forms of expenditure, such as electronics and travel, also compete for consumers’ discretionary expenditure, particularly during the holiday gift giving season. Therefore, the price of jewelry relative to other products influences the proportion of consumers’ expenditure that is spent on jewelry. If the relative price of jewelry increases, or if Signet’s competitive position deteriorates. Signet’s sales and earnings may decline.

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TableAggressive discounting by competitors may adversely impact Signet’s performance in the short term. This is particularly the case for easily comparable pieces of Contentsjewelry, of similar quality, sold through stores that are situated near to those that Signet operates.
Signet faces significant competition from independent and regional specialty jewelry retailers that are able to adjust their competitive stance, for example on pricing, to local market conditions. This can put individual Signet stores at a competitive disadvantage as Signet segments have a national pricing strategy.

Consumers are increasingly shopping or starting their jewelry buying experience online, which makes it easier for them to compare prices with other jewelry retailers. If Signet’s brands do not offer the same or similar item at the lowest price, consumers may purchase their jewelry from competitors, which would adversely impact the Company’s sales and results of operations.
The failureCompany’s ability to satisfy the accounting requirements for “hedge accounting”,accounting,” or the default or insolvency of a counterparty to a hedging contract, could adversely impact results.
Signet hedges a portion of its purchases of gold for both its Sterling JewelersNorth America and UK Jewelry divisionsInternational segments and hedges the US dollar requirements of its UK Jewelry division.International segment. The failure to satisfy the requirements of the appropriate accounting requirements, or a default or insolvency of a counterparty to a contract, could increase the volatility of results and may impact the timing of recognition of gains and losses in the income statement.
The Company’s inability of Signet to obtain merchandise that customers wish to purchase particularly ahead of and during the fourth quarter, wouldcould adversely impact sales.sales and earnings.
The abrupt loss or disruption of any significant supplier during the three month period (August to October) leading up to the fourth quarter could result in a material adverse effect on Signet’s business.
Also, if management misjudges expected customer demand or fails to identify changes in customer demand and/or its supply chain does not respond in a timely manner, it could adversely impact Signet’s results by causing either a shortage of merchandise or an accumulation of excess inventory.inventory could occur, which could adversely impact Signet’s results.
Signet benefits from close commercial relationships with a number of suppliers. Damage to, or loss of, any of these relationships could have a detrimental effect on results. Management holds regular reviews with major suppliers. Signet’s most significant supplier accounts for 3.9%approximately 6% of merchandise. Government requirements regarding sources of commodities, such as those required by the Dodd-Frank Act, could result in Signet choosing to terminate relationships with suppliers in the future due to a change in a supplier’s sourcing practices or Signet’s compliance with laws and internal policies.
Luxury and prestige watch manufacturers and distributors normally grant agencies the right to sell their ranges on a store-by-store basis. The watch brands sold by Ernest Jones, and to a lesser extent Jared, help attract customers and build sales in all categories. Therefore, an inability to obtain or retain watch agencies for a location could harm the performance of that particular store. In the case of Ernest Jones, the inability to gain additional prestige watch agencies is an important factor in, and may reduce the likelihood of, opening new stores, which could adversely impact sales growth.
The growth in importance of branded merchandise within the jewelry market may adversely impact Signet’s sales and earnings if it is unable to obtain supplies of branded merchandise that the customer wishes to purchase. In addition, if Signet loses the distribution rights to an important branded jewelry range, it could adversely impact sales and earnings.
Signet has had success in recent years in the development of branded merchandise that is exclusive to its stores. If Signet is not able to further develop such branded merchandise or is unable to successfully develop further suchrelated initiatives, it may adversely impact sales and earnings.
An inabilityThe Company’s ability to recruit, train, motivate and retain suitably qualified sales associates could adversely impact sales and earnings.
Management regards the customer experience as an essential element in the success of its business. Competition for suitable individualssales associates or changes in labor and healthcare laws could require us to incur higher labor costs. ThereforeHigher labor costs and the execution of transformational initiatives, including those designed to improve the customer experience, could result in disruptions to the performance of sales associates and an inability to recruit, train, motivate and retain suitably qualified sales associates, which could adversely impact sales and earnings.
Loss of confidence by consumers in Signet’s brand names, poor execution of marketing programs and reduced marketing expenditure could have a detrimental impact on sales.
Primary factors in determining customer buying decisions in the jewelry sector include customer confidence in the retailer and in the brands it sells, together with the level and quality of customer service. The ability to differentiate Signet’s stores and merchandise from competitors by its branding, marketing and advertising programs is an important factor in attracting consumers. If these programs are poorly executed, the level of support for them is reduced, or the customer loses confidence in any of Signet’s brands for whateverany reason, it could unfavorably impact sales and earnings.

Long-term changes in consumer attitudes totoward jewelry could be unfavorable and harm jewelry sales.
Consumer attitudes totoward diamonds, gold and other precious metals and gemstones also influence the level of Signet’s sales. Attitudes could be affected by a variety of issues including concern over the source of raw materials; the impact of mining and refining of minerals on the environment, the local community and the political stability of the producing country; labor conditions in the supply chain; and the availability of and consumer attitudes toabout substitute products such as cubic zirconia, moissanite and laboratorylaboratory-created diamonds. An inability to effectively address a rapid and significant increase in consumer acceptance of lab created diamonds. Adiamonds as well as a negative change in consumer attitudes toward jewelry could adversely impact Signet’s sales and earnings.
The Company’s inability to jewelryoptimize its real estate footprint to support its OmniChannel strategy could adversely impact sales and earnings.
The retail jewelry industry is highly fragmented and competitive. Aggressive discounting by competitors may adversely impact Signet’s performance in the short term.
The retail jewelry industry is competitive. If Signet’s competitive position deteriorates, operating results or financial condition could be adversely affected.
Aggressive discounting by competitors may adversely impact Signet’s performance in the short term. This is particularly the case for easily comparable pieces of jewelry, of similar quality, sold through stores that are situated near to those that Signet operates.

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Signet faces significant competition from independent and regional specialty jewelry retailers that are able to adjust their competitive stance, for example on pricing, to local market conditions. This can put individual Signet stores at a competitive disadvantage as Signet division’s have a national pricing strategy.
The inability to rent stores that satisfy management’s operational and financial criteria could harm sales, as could changes in locations where customers shop.
Signet’s results are dependent on a number of factors relating to its stores. These include the availability of desirable property, the demographic characteristics of the area around the store, the design and maintenance of the stores, the availability of attractive locations within the shopping centermarkets/trade areas that also meet the operational and financial criteria of management, the terms of leases and Signet’s relationship with major landlords. If Signet is unable to rent storesmaintain a real estate portfolio that satisfysatisfies its strategic, operational and financial criteria, through cost-effective strategic store closings and targeted, limited store openings, or if there is a disruption in its relationship with its major landlords, sales could be adversely affected.
Given the length of property leases that Signet enters into, itSignet is dependent upon the continued popularity of particular retail locations. As Signet tests and develops new types of store locations and designs, there is no certainty as to their success. The majority of long-term space growth opportunities in the US are in new developments and therefore future store space is in part dependent on the investment by real estate developers in new projects. Limited new real estate development taking place would make it challenging to identify and secure suitable new store locations. The UK Jewelry division has a more diverse range of store locations than in the US or Canada, including some exposure to smaller retail centers which do not justify the investment required to refurbish the site to the current store format. Consequently, the UK Jewelry division is gradually closing stores in such locations as leases expire or satisfactory property transactions can be executed; however, the ability to secure such property transactions is not certain.
The rate of new store developmentfootprint optimization is dependent on a number of factors including obtaining suitable real estate, the capital resources of Signet, the availability of appropriate staff and management, estimated sales transference rate and the level of the financial return on investment required by management.
Signet’s success is dependent on the strength and effectiveness of its relationships with its various stakeholders whose behavior may be affected by its management of social, ethical and environmental risks.
Social, ethical and environmental matters influence Signet’s reputation, demand for merchandise by consumers, the ability to recruit staff, relations with suppliers and standing in the financial markets. Signet’s success is dependent on the strength and effectiveness of its relationships with its various stakeholders: customers, shareholders, employees and suppliers. In recent years, stakeholder expectations have increased and Signet’s success and reputation will depend on its ability to meet these higher expectations. Signet’s success also depends upon its reputation for integrity in sourcing its merchandise, which, if adversely affected could impact consumer sentiment and willingness to purchase Signet’s merchandise.
Inadequacies in and disruption to systems could result in lower sales and increased costs or adversely impact the reporting and control procedures.
Signet is dependent on the suitability, reliability and durability of its systems and procedures, including its accounting, information technology, data protection, warehousing and distribution systems, and those of our service providers. If support ceased for a critical externally supplied software package or system, management would have to implement an alternative software package or system or begin supporting the software internally. Disruption to parts of the business could result in lower sales and increased costs.
Signet is in the process of substantially modifying our enterprise resource planning systems and certain web platforms, which involves updating or replacing legacy systems with successor systems over the course of several years. These system changes and upgrades can require significant capital investments and dedication of resources. While Signet follows a disciplined methodology when evaluating and making such changes, there can be no assurances that the Company will successfully implement such changes, that such changes will occur without disruptions to its operations or that the new or upgraded systems will achieve the desired business objectives. Any damage, disruption or shutdown of the Company’s information systems, or the failure to successfully implement new or upgraded systems, could have a direct material adverse effect on Signet’s results of operations.
An inability to successfully develop and maintain a relevant OmniChannel experience for customers or a failure to comply with applicable regulations could adversely impact Signet’s business and results of operations.
Signet’s business has evolved from an in-store experience to interaction with customers across numerous channels, including in-store, online, mobile and social media, among others. OmniChannel retailing is rapidly evolving and Signet must keep pace with changing customer expectations and new developments by our competitors. Our customers are increasingly using computers, tablets, mobile phones and other devices to comparison shop, determine product availability and complete purchases online. Signet must compete by offering a consistent and convenient shopping experience for our customers regardless of the ultimate sales channel and by investing in, providing and maintaining digital tools for our customers that have the right features and are reliable and easy to use. If Signet is unable to make, improve, develop or acquire relevant customer-facing technology in a timely manner, the Company’s ability to compete and its results of operations could be materially and adversely affected. In addition, if Signet’s online activities or other customer-facing technology systems do not function as designed or deemed to not comply with applicable state and federal regulations concerning automated outbound contacts such as text messages and the sale, advertisement and promotion of the jewelry we sell, the Company may experience a loss of

customer confidence, data security breaches, regulatory fines, lawsuits, lost sales or be exposed to fraudulent purchases, any of which could materially and adversely affect our business operations, reputation and results of operations.
Security breaches and other disruptions to Signet’s information technology infrastructure and databases could interfere with Signet’s operations, and could compromise Signet’s and its customers’ and suppliers’ information, exposing Signet to liability which would cause Signet’s business and reputation to suffer.
Signet operates in multiple channels and, in the Sterling Jewelers division, maintains its own customer financing operation. Signet is also increasingly using mobile devices, social media and other online activities to connect with customers, staff and other stakeholders. Therefore, in the ordinary course of business, Signet relies upon information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities, including eCommerce sales, supply chain, merchandise distribution, customer invoicing and collection of payments. Signet uses information technology systems to record, process and summarize financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements. Additionally, Signet collects and stores sensitive data, including intellectual property, proprietary business information, the propriety business information of our customers and suppliers, as well as personally identifiable information of Signet’s customers and employees, in data centers and on information technology networks. The secure operation of these networks, and the processing and maintenance of this information is critical to Signet’s business operations and strategy. Despite security measures and business continuity plans, we may not timely anticipate evolving techniques used to effect security breaches that may result in damage, disruptions or shutdowns of Signet’s and our

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third-party vendors’ networks and infrastructure due to attacks by hackers, including phishing or other cyber-attacks, or breaches due to employee error or malfeasance, or other disruptions during the process of upgrading or replacing computer software or hardware, power outages, computer viruses, telecommunication or utility failures or natural disasters or other catastrophic events. The occurrence of any of these events could compromise Signet’s networks and the information stored there, including personal, proprietary or confidential information about Signet, our customers or our third-party vendors, and personally identifiable information of Signet’s customers and employees could be accessed, manipulated, publicly disclosed, lost or stolen, exposing our customers to the risk of identity theft and exposing Signet or our third-party vendors to a risk of loss or misuse of this information. ToSignet has experienced successful attacks and breaches from time to time, however to date, these attacks or breaches have not had a material impact on Signet’s business or operations; however, any such access, disclosure or other loss of information could result in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information, significant breach-notification costs, lost sales and a disruption to operations (including our ability to process consumer transactions and manage inventories), media attention, and damage to Signet’s reputation, which could adversely affect Signet’s business. In addition, it could harm Signet’s reputation and ability to execute its business through service and business interruptions, management distraction and/or damage to physical infrastructure, which could adversely impact sales, costs and earnings. If Signet is the target of a material cybersecurity attack resulting in unauthorized disclosure of our customer data, we may be required to undertake costly notification and credit monitoring procedures. Compliance with these laws will likely increase the costs of doing business.
The regulatory environment related to information security, data collection and privacy is becoming increasingly demanding, with new and changing requirements applicable to Signet’s business, and compliance with those requirements could result in additional costs, such as costs related to organizational changes, implementing additional protection technologies, training employees and engaging consultants.
These risks could have a material adverse effect on Signet’s results of operations, financial condition and cash flow.
An adverse decision in legal proceedings, and/or tax matters, and/or regulatory or other state investigations could reduce earnings.earnings and cash, as well as negatively impact debt covenants and leverage ratios.
Signet is involved in legal proceedings incidental to its business. Litigation is inherently unpredictable. Any actual or potential claims against us, whether meritorious or not, or regulatory or other state investigations, could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. In March 2008, private plaintiffs filed a class action lawsuit for an unspecified amount against Sterling Jewelers Inc. (“Sterling”), a subsidiary of Signet, in US District Court for the Southern District of New York, which has been referred to private arbitration. In September 2008, the US Equal Employment Opportunities Commission filed a lawsuit against Sterling in US District Court for the Western District of New York. Sterling denies the allegations from both parties and has been defending these cases vigorously. If, however, it is unsuccessful in either defense, Sterling could be required to pay substantial damages. At this point, no outcome or amount of loss is able to be estimated. See Note 24 in Item 8.
At any point in time, various tax years are subject to, or are in the process of, audit by various taxing authorities. To the extent that management’s estimates of settlements change or the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax in the period in which such determinations are made.
Additionally, new tax treatment of companies engaged in Internet commerce has and may continue to adversely affect the commercial use of JamesAllen.com, the online retailer we acquired during Fiscal 2018. Specifically, in June 2018, the U.S. Supreme Court decided the South Dakota v. Wayfair, Inc. sales tax nexus case. As a result of the Supreme Court ruling, some states have adopted laws and other states now have the ability to adopt laws requiring taxpayers to collect and remit sales tax on a basis of economic nexus, even in states in which the taxpayer has no presence. New taxes required to be collected by JamesAllen.com also has created significant increases in internal costs necessary to capture data and collect and remit taxes. These events has had and will continue to have an adverse effect on JamesAllen.com.
Failure to comply with labor regulations could harmadversely affect the Company’s business.
State, federal and global laws and regulations regarding employment change frequently and the ultimate cost of compliance cannot be precisely estimated. Failure by Signet to comply with labor regulations could result in fines and legal actions. In addition, the ability to recruit and retain staff could be harmed.

Collective bargaining activity could disrupt ourthe Company’s operations, increase our labor costs or interfere with the ability of our management to focus on executing our business strategies.
The employees of our diamond polishing factory in Garborone, Botswana are covered by a collective bargaining agreement. If relationships with these employees become adverse, operations at the factory could experience labor disruptions such as strikes, lockouts, boycotts and public demonstrations. Labor regulation and the negotiation of new or existing collective bargaining agreements could lead to higher wage and benefit costs, changes in work rules that raise operating expenses, legal costs and limitations on our ability to take cost saving measures during economic downturns.
FailureThe Company’s ability to comply with changes in lawlaws and regulations could adversely affect theour business.
Signet’s policies and procedures are designed to comply with all applicable laws and regulations. Changing legal and regulatory requirements in the US and other jurisdictions in which Signet operates have increased the complexity of the regulatory environment in which the business operates and the cost of compliance. Failure to comply with the various regulatory requirements may result in damage to Signet’s reputation, civil and criminal liability, fines and penalties, and further increase the cost of regulatory compliance.
Changes in existing taxation benefits, rules or practices may adversely affect the Company’s financial results.
The Company operates through various subsidiaries in numerous countries throughout the world. Consequently, Signet is subject to changes in tax laws, treaties or regulations or the interpretation or enforcement thereof in the United States or jurisdictions where any subsidiaries operate or are incorporated. Tax laws, treaties and regulations are highly complex and subject to interpretation. The Company’s income tax expense is based upon interpretation of the tax laws in effect in various countries at the time such expense was incurred. If these tax laws, treaties or regulations were to change or any tax authority were to successfully challenge our assessment of the effects of such laws, treaties and regulations in any country, this could result in a higher effective tax rate on the Company’s taxable earnings, which could have a material adverse effect on the Company’s results of operations.
In addition, the Organization for Economic Co-Operation and Development (“OECD”) has published an action plan seeking multilateral cooperation to reform the taxation of multinational companies. Countries already have begun to implement some of these action items, and likely will continue to adopt more of them over the next several years. This may result in unilateral or uncoordinated local country application of the action items. Any such inconsistencies in the tax laws of countries where the Company operates or is incorporated may lead to increased uncertainty with respect to tax positions or otherwise increase the potential for double taxation. Proposals for US tax reform also potentially could have a significant adverse effect on us. In addition, the European Commission has conducted investigations in multiple countries focusing on whether local country tax legislation or rulings provide preferential tax treatment in violation of European Union state aid rules. Any impacts of these actions could increase the Company’s tax liabilities, which in turn could have a material adverse effect on the Company’s results of operations and financial condition.
The Parent Company is incorporated in Bermuda. The directors intend to conduct the Parent Company’s affairs such that, based on current law and practice of the relevant tax authorities, the Parent Company will not becomeresident for tax purposes in any other territory. At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by the Parent Company or by its shareholders in respect of its common shares. The Parent Company has obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 31, 2035, be applicable to it or to any of its operations or to its shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or is payable by it in respect of real property owned or leased by it in Bermuda. Given the limited duration of the Minister of Finance’s assurance, the Parent Company cannot be certain that it will not be subject to Bermuda tax after March 31, 2035. In the event the Parent Company were to become subject to any Bermuda tax after such date, it could have a material adverse effect on the Parent Company’s results of operations and financial condition.
Likewise, Signet’s non-US subsidiaries operate in a manner that they should not be subject to US income tax because none of them should be treated as engaged in a trade or business in the US If, despite this, the IRS were to successfully contend that the Parent Company or any of its non-US subsidiaries are engaged in a trade or business in the US, such entity could be subject to U.S. corporate income and branch profits taxes on the portion of its earnings effectively connected to such US business, which could adversely impact Signet’s profitability and cash flows. Further, proposed tax changes that may be enacted inaffect the future could adversely impact Signet’s current or future tax structure and effective tax rates.Company’s results of operations.
Investors may face difficulties in enforcing proceedings against Signet Jewelers Limited as it is domiciled in Bermuda.
It is doubtful whether courts in Bermuda would enforce judgments obtained by investors in other jurisdictions, including the US, Canada and the UK, against the Parent Company or its directors or officers under the securities laws of those jurisdictions or entertain actions in Bermuda against the Parent Company or its directors or officers under the securities laws of other jurisdictions.

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Any difficulty executing or integrating an acquisition, a business combination or a major business initiative may result in expected returns and other projected benefits from such an exercise not being realized.
Any difficulty in executing or integrating an acquisition, a business combination, or a major business initiative including our direct diamond sourcing capabilities, or a transformation plan, such as our Path to Brilliance transformation plan, may result in expected returns and other projected benefits from such an exercise not being realized. The acquisition of companies with operating margins lower than that of Signet may cause an overall lower operating margin for Signet. A significant transaction could also disrupt the operation of our current activities and divert significant management time and resources. Signet’s current borrowing agreements place certain limited constraints on our ability to make an acquisition or enter into a business combination, and future borrowing agreements could place tighter constraints on such actions.
Additional indebtedness relating toA significant transaction could also disrupt the acquisition of Zale Corporation reduces the availability of cash to fund other business initiatives.
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 portionoperation of our cash flowcurrent activities and divert significant management time and resources. For example, Signet experienced disruptions in its information technology systems and processes during its credit outsourcing transition in 2017, including server interruptions and downtime, which resulted in calls to servicing this debt, which may impact the availability of cashcustomer service centers leading to fund otherlong wait times. In addition, Signet announced a new transformation plan in 2018. Any such difficulty in executing an acquisition, business initiatives, including dividends and share repurchases. Significant changes tocombination, a major business initiative or a transformation plan could have a direct material adverse effect on Signet’s financial condition as a result of global economic changes or difficulties in the integration or execution of strategies of the acquired business may affect our ability to satisfy the financial covenants included in the terms of the financing arrangements.
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, and there is no assurance that we will be able to fully achieve integration-related efficiencies or that those achieved will offset transaction-related costs.operations.
The success of the transaction will depend, in part, on ourCompany’s ability to successfully combine the Signet and Zale businesses in order to realize the anticipated benefits and synergies from combination. 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. In addition, we have incurred a number of substantial transaction and intergration-related costs associated with completing the transaction, combining the operations of the two companies and taking steps to achieve desired synergies. Transaction costs include, but are not limited to, fees paid to legal, financial, accounting and integration 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.
Additionally, these integration difficulties could result in declines in the market value of our common stock.
Litigation related to our acquisition of Zale Corporation if unfavorably decided could result in substantial cost to us.
In connection with the Zale Corporation acquisition, a consolidated lawsuit on behalf of a purported class of former Zale Corporation stockholders was filed in the Delaware Court of Chancery. The lawsuit names as defendants Signet and the members of the board of directors of Zale Corporation, among others. On October 29, 2015, the Court dismissed the lawsuit against all defendants and currently an appeal of that decision is pending in the Delaware Supreme Court. Additional lawsuits may be filed against Zale Corporation, Signet, Signet’s 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. At this point, no outcome or range of loss is able to be estimated.
Our inability or failure to protect intellectual property could have a negative impact on our brands, reputation and operating results.
Signet’s trade names, trademarks, copyrights, patents and other intellectual property are important assets and an essential element of the Company’s strategy. The unauthorized reproduction, theft or misappropriation of Signet’s intellectual property could diminish the value of its brands or reputation and cause a decline in sales. Protection of Signet’s intellectual property and maintenance of distinct branding are particularly important as they distinguish our products and services from those of our competitors. The costs of defending our intellectual property may adversely affect the Company’s operating results. In addition, any infringement or other intellectual property claim made against Signet, whether or not it has merit, could be time-consuming, result in costly litigation, cause product delays, or require the Company to enter into royalty or licensing agreements. As a result, any such claim could have a material adverse effect on Signet’s operating results.
If ourthe Company’s goodwill or indefinite-lived intangible assets become impaired, we may be required to record significant charges to earnings.
We have a substantial amount of goodwill and indefinite-lived intangible assets on our balance sheet as a result of the Zale Corporation acquisition.acquisitions. We review goodwill and indefinite-lived intangible assets 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 the 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. Additionally, a general decline in the market valuation of the Company’s common shares could impact the assumptions used to perform the evaluation of its indefinite-lived intangible assets, including goodwill and trade names.
For further information on our testing for goodwill impairment, see “Critical Accounting Policies” under Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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TableRecent changes in the Company’s executive management team or the loss of Contents

Loss of one or moreadditional key executive officers or employees could be disruptive to, or cause uncertainty in, its business or adversely impact performance, as could the appointment of an inappropriate successor or successors.performance.
Signet’s future success will partly depend upon the ability of senior management and other key employees to implement an appropriate business strategy. While Signet has entered into termination protection agreements with such key personnel, the retention of their services cannot be guaranteed and the loss of such services could have a material adverse effect on Signet’s ability to conduct its business. CompetitionIf the Company is not effective in succession planning, there may be a negative impact on the Company's ability to successfully hire for key personnelexecutive management roles in the retail industry is intense, and Signet’s future success will also depend on our ability to attract and retain talented personnel.a timely manner. In addition, any new executives may wish, subject to Board approval, to change the strategy of Signet. The appointment of new executives may therefore adversely impact performance.
Signet’s business could be affected by extreme weather conditions or natural disasters.
Extreme weather conditions in the areas in which the Company’s stores are located could negatively affect the Company’s business and results of operations. For example, frequent or unusually heavy snowfall, ice storms, or other extreme weather conditions, whether as a result of climate change or otherwise, over a prolonged period could make it difficult for the Company’s customers to travel to its stores and thereby reduce the Company’s sales and profitability.
In addition, natural disasters such as hurricanes, tornadoes, earthquakes, or wildfires, or a combination of these or other factors, could damage or destroy the Company’s facilities or make it difficult for customers to travel to its stores, thereby negatively affecting the Company’s business and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
The following table provides the location, use and size of our distribution, corporate and other non-retail facilities required to support the Company’s global operations as of February 2, 2019:
Location Function Approximate square footage Lease or Own Lease expiration
Akron, Ohio Corporate and distribution 460,000
 Lease 2048
Akron, Ohio 
Credit(1)
 86,000
 Lease 2048
Akron, Ohio Training 11,000
 Lease 2048
Akron, Ohio Repair facility 38,000
 Own N/A
Akron, Ohio Corporate 32,000
 Lease 2022
Barberton, Ohio Non-merchandise fulfillment 135,000
 Lease 2032
New York City, New York Design 4,600
 Lease 2021
New York City, New York Diamond trading 1,000
 Lease 2021
New York City, New York Corporate 10,000
 Lease 2023
New York City, New York Corporate 8,000
 Lease 2027
Dallas, Texas Repair facility 31,000
 Lease 2029
Dallas, Texas Corporate 190,000
 Lease 2029
Frederick, Maryland Customer service 7,716
 Lease 2021
Toronto, Ontario (Canada) Distribution and fulfillment 26,000
 Lease 2019
Birmingham, UK Corporate, distribution and e-commerce fulfillment 235,000
 Own N/A
Borehamwood, Hertfordshire (UK) Corporate 36,200
 Lease 2021
Gaborone, Botswana Diamond polishing 34,200
 Own N/A
Mumbai, India Diamond liaison 3,000
 Lease 2019
Mumbai, India Diamond liaison 2,936
 Lease 2019
Ramat-Gan, Israel Technology center 1,000
 Lease 2021
Herzelia, Israel Technology center 12,700
 Lease 2023
(1)
In October 2017, Signet, through its subsidiary Sterling, completed the sale of the prime-only credit quality portion of Sterling’s in-house finance receivable portfolio. In conjunction with this transaction, the indicated property has been subleased to multiple third party service providers. See Note 3 of Item 8 for further details.
Sufficient distribution exists in all geographies to meet the respective needs of the Company’s operations.
Global retail property
Signet attributes great importance to the location and appearance of its stores. Accordingly, in each of Signet’s divisions, which collectively operate in the US, Canada, Puerto Rico and UK, investment decisions on selecting sites and refurbishing stores are made centrally, and strict real estate and investment criteria are applied. Below is a summary of property details by geography for our retail operations.operations as of February 2, 2019:
 North America segment International segment Signet
 Kay Zales Peoples Jared Piercing Pagoda 
Regional banners(1)
 Total H.Samuel Ernest Jones Total Total
stores
US1,214
 658
 —
 256
 574
 27
 2,729
 —
 —
 —
 2,729
Canada—
 —
 123
 —
 —
 5
 128
 —
 —
 —
 128
United Kingdom—
 —
 —
 —
 —
 —
 —
 278
 186
 464
 464
Republic of Ireland—
 —
 —
 —
 —
 —
 —
 8
 2
 10
 10
Channel Islands—
 —
 —
 —
 —
 —
 —
 2
 1
 3
 3
Total1,214
 658
 123
 256
 574
 32
 2,857
 288
 189
 477
 3,334
(1)
Includes one James Allen location.

Store locations by US state and Canadian province, as of February 2, 2019, are as follows:
 North America segment Signet
 Kay Zales Peoples Jared Piercing Pagoda 
Regional brands(1)
 
 
Total Stores
Alabama27
 12
 —
 4
 4
 —
 47
Alaska3
 2
 —
 —
 —
 —
 5
Arizona19
 11
 —
 6
 9
 —
 45
Arkansas10
 9
 —
 1
 —
 —
 20
California81
 51
 —
 20
 39
 —
 191
Colorado16
 16
 —
 6
 4
 —
 42
Connecticut14
 10
 —
 1
 15
 —
 40
Delaware5
 4
 —
 2
 6
 —
 17
Florida86
 50
 —
 22
 70
 6
 234
Georgia51
 23
 —
 13
 12
 —
 99
Hawaii8
 6
 —
 —
 —
 —
 14
Idaho5
 1
 —
 1
 —
 —
 7
Illinois45
 20
 —
 11
 19
 —
 95
Indiana30
 13
 —
 6
 12
 2
 63
Iowa21
 4
 —
 2
 4
 —
 31
Kansas9
 7
 —
 2
 5
 —
 23
Kentucky21
 8
 —
 3
 5
 2
 39
Louisiana21
 14
 —
 3
 —
 1
 39
Maine6
 1
 —
 1
 2
 —
 10
Maryland27
 14
 —
 9
 23
 —
 73
Massachusetts25
 10
 —
 4
 20
 —
 59
Michigan42
 16
 —
 9
 9
 2
 78
Minnesota16
 7
 —
 4
 7
 —
 34
Mississippi15
 6
 —
 —
 —
 —
 21
Missouri22
 10
 —
 3
 5
 —
 40
Montana3
 —
 —
 —
 —
 —
 3
Nebraska7
 3
 —
 —
 1
 —
 11
Nevada10
 7
 —
 3
 5
 —
 25
New Hampshire12
 5
 —
 4
 7
 1
 29
New Jersey28
 17
 —
 7
 32
 —
 84
New Mexico5
 9
 —
 1
 3
 —
 18
New York67
 39
 —
 7
 59
 —
 172
North Carolina51
 19
 —
 11
 19
 —
 100
North Dakota4
 3
 —
 —
 1
 —
 8
Ohio70
 19
 —
 15
 22
 2
 128
Oklahoma14
 9
 —
 2
 2
 1
 28
Oregon15
 4
 —
 2
 5
 —
 26
Pennsylvania61
 30
 —
 9
 54
 —
 154
Rhode Island4
 2
 —
 1
 3
 —
 10
South Carolina25
 10
 —
 3
 7
 —
 45
South Dakota3
 3
 —
 —
 1
 —
 7
Tennessee30
 17
 —
 8
 5
 —
 60
Texas79
 91
 —
 31
 19
 6
 226

Utah9
 —
 —
 3
 3
 —
 15
Vermont2
 1
 —
 —
 1
 —
 4
Virginia34
 22
 —
 10
 24
 —
 90
Washington19
 11
 —
 3
 13
 1
 47
Washington D.C.(1)
—
 —
 —
 —
 —
 1
 1
West Virginia10
 4
 —
 —
 6
 2
 22
Wisconsin25
 7
 —
 3
 12
 —
 47
Wyoming2
 1
 —
 —
 —
 —
 3
US1,214
 658
 —
 256
 574
 27
 2,729
Alberta—
 —
 19
 —
 —
 —
 19
British Columbia—
 —
 19
 —
 —
 1
 20
Manitoba—
 —
 5
 —
 —
 —
 5
New Brunswick—
 —
 2
 —
 —
 —
 2
Newfoundland—
 —
 1
 —
 —
 —
 1
Nova Scotia—
 —
 4
 —
 —
 —
 4
Ontario—
 —
 65
 —
 —
 4
 69
Saskatchewan—
 —
 8
 —
 —
 —
 8
Canada—
 —
 123
 —
 —
 5
 128
Total North America1,214
 658
 123
 256
 574
 32
 2,857
(1)
Includes one James Allen location.
North America retail property
Signet’s Sterling Jewelers, Zale Jewelry and Piercing Pagoda segments operateNorth America segment operates stores and kiosks in the US and Canada, with substantially all of the locations being leased. In addition to a minimum annual rent cost, the majority of mall stores are also liable to pay rent based on sales above a specified base level. In Fiscal 2016,2019, most of the mall stores and kiosks only made base rental payments. Under the terms of a typical lease, the Company is required to conform and maintain its usage to agreed standards, including meeting required advertising expenditure as a percentage of sales, and are responsible for its proportionate share of expenses associated with common area maintenance, utilities and taxes of the mall.
The initial term of a mall store lease is generally ten years for Sterling Jewelers and Zale JewelryNorth America. Off-mall locations, excluding Jareds, typically have an initial term of ten years with a five year termination right and one to five years for Piercing Pagoda kiosks. Towards the end of a lease, management evaluates whether to renew a lease and refit the store, using similar operational and investment criteria as for a new store. Where management is uncertain whether the location will meet management’s required return on investment, but the store is profitable, the leases may be renewed for one to five years, during which time the store’s performance is further evaluated. There are typically about 250 to 300 such mall stores at any one time in the Sterling Jewelers segment, as well as the Zale JewelryNorth America segment. Jared stores are normally opened on 15fifteen to 20twenty year leases with options to extend the lease, and rents are not sales related. A refurbishment of a Jared store is normally undertaken every five to ten years. The Zale Jewelry segment operates stores in Canada and Puerto Rico, all under operating leases, with terms and characteristics similar to the US locations described above. The Piercing Pagoda segment operates kiosks in Puerto Rico, all under operating leases, with terms and characteristics similar to the US locations described above.
At January 30, 2016,February 2, 2019, the average unexpired lease term of US leased premises for the Sterling JewelersNorth America segment was 5.1approximately 4 years for Kay mall and over 54%6 years for off-mall Kay and Jared locations. Approximately 56% of these leases had terms expiring within five years. The average unexpired lease term of leased premises for Zales and Piercing Pagoda locations were 3 and 2 years, respectively. Approximately 85% of these leases had terms expiring within five years. The cost of remodeling a Kay mall store is similar to the cost of a new mall store, which is typically between $610,000$0.1 million and $1,000,000,$0.5 million, depending on the scope of the remodel project. Jared refurbishments typically cost on average $120,000. New Jared stores are typically ground leases which cost between $2,100,000 and $2,700,000. In Fiscal 2016, the level of store remodels increased with 95 locations being completed (Fiscal 2015: 77 locations). The investment was financed by cash flow from operating activities.
At January 30, 2016, the average unexpired lease term of leased premises for Zale Jewelry and Piercing Pagoda segments was 3 and 2 years, respectively, with approximately 70% of these leases having terms expiring within five years. The cost of remodeling a Zale Jewelry mall store is similar to the cost of a new mall store, which is typically between $325,000$0.3 million and $650,000.$0.7 million. The cost of a new Piercing Pagoda kiosk isapproximates $0.1 million. Jared refurbishments typically cost on average less than $0.1 million. New Jared stores typically cost between $90,000$2.1 million and $120,000.$3.3 million. In Fiscal 2016,2019, a total of 105store locations were remodeled (Fiscal 2018: 78 locations). In Fiscal 2019, store remodels were completed at 45 Zale Jewelry stores and 749 Piercing Pagoda kiosks. In Fiscal 2015, store remodels were completed at 31 Zale Jewelry stores and 63 Piercing Pagoda kiosks.kiosks (Fiscal 2018: 53 locations).
In the US, the Sterling Jewelers, Zale Jewelry and Piercing Pagoda segmentsNorth America segment collectively leaseleases approximately 20%15% of store and kiosk locations from a single lessor. In Canada, Zale Jewelryit leases approximately 50% of its store locations from four lessors, with no individual lessor relationship exceeding 15% of its store locations. The segmentssegment had no other relationship with any lessor relating to 10% or more of its locations. At January 30, 2016, the Sterling Jewelers segment had 3.03 million square feet of net selling space (January 31, 2015: 2.88 million), while the Zale Jewelry and Piercing Pagoda segments had 1.07 million and 0.11 million square feet, respectively, of net selling space in the US (January 31, 2015: 1.07 million and 0.11 million square feet, respectively). The Zale Jewelry segment also had 0.24 million square feet of net selling space in Canada (January 31, 2015: 0.24 million).
During the past five fiscal years, the Company generally has been successful in renewing its store leases as they expire and has not experienced difficulty in securing suitable locations for its stores. No store lease is individually material to Signet’s Sterling Jewelers, Zale Jewelry or Piercing PagodaNorth America operations.

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UKInternational retail property
At January 30, 2016, Signet’s UK Jewelry division operated from 6 freehold premises and 522 leasehold premises. The division’sInternational segment’s stores are generally leased under full repairing and insuring leases (equivalent to triple net leases in the US). Wherever possible, Signet is shortening the length of new leases that it enters into, or including break clauses in order to improve the flexibility of its lease commitments. At January 30, 2016,February 2, 2019, the average unexpired lease term of UK JewelryInternational premises was 6 years, and a majority of leases had either break clauses or terms expiring within five years. Rents are usually subject to upward review every five years if market conditions so warrant. An increasing proportion of rents also have an element related to the sales of a store, subject to a minimum annual value. For details of assigned leases and sublet premises, see Note 24 of Item 8.
At the end of the lease period, subject to certain limited exceptions, UK JewelryInternational leaseholders generally have statutory rights to enter into a new lease of the premises on negotiated terms. As current leases expire, Signet believes that it will be able to renew leases, if desired, for present store locations or to obtain leases in equivalent or improved locations in the same general area. Signet has not experienced difficulty in securing leases for suitable locations for its UK JewelryInternational stores. No store lease is individually material to Signet’s UK JewelryInternational operations.
A typical UK JewelryInternational store undergoes a major remodel every ten years and a less costly refurbishment every five years. It is intended that these investments will be financed by cash from operating activities. The cost of remodeling a regular store is typically between £150,000$0.2 million and £600,000$0.8 million for both H.Samuel and Ernest Jones, while remodels in prestigious locations typically doubles those costs.
The UK Jewelry divisionInternational segment has no relationship with any lessor relating to 10% or more of its store locations. At January 30, 2016, the UK Jewelry division has 0.52 million square feet of net selling space (January 31, 2015: 0.51 million).
Other
The following table provides the location, use and size of additional facilities requiredCompany has entered into agreements to support the Company’s global operationsassign or sublease certain premises as of January 30, 2016:February 2, 2019. See Note 26 of Item 8 for additional information.
Location Function Approximate square footage Lease or Own Lease expiration
Akron, Ohio Corporate and distribution 460,000
 Lease 2047
Akron, Ohio Credit 86,000
 Lease 2047
Akron, Ohio Training 12,000
 Lease 2047
Akron, Ohio Repair Center 38,000
 Own N/A
Akron, Ohio Corporate 34,900
 Lease 2019
Barberton, Ohio Non-merchandise fulfillment 135,000
 Lease 2031
New York City, New York Design office 4,600
 Lease 2020
New York City, New York Diamond trading 2,000
 Lease 2021
Irving, Texas(1)
 Corporate and distribution 414,000
 Lease 2018
Toronto, Ontario (Canada) Distribution and fulfillment 26,000
 Lease 2019
Birmingham, UK Corporate and eCommerce fulfillment 255,000
 Own N/A
Borehamwood, Hertfordshire (UK) Corporate and distribution 36,200
 Lease 2020
London, UK Corporate 3,350
 Lease 2023
Gaborone, Botswana Diamond polishing 34,200
 Own N/A
Mumbai, India Diamond trading 3,000
 Lease 2018
(1)
Signet will be relocating the Dallas headquarters to a new 250,000 square foot facility upon expiration of the existing lease for the facility in Irving, Texas. The lease for this new headquarters will expire in 2028. Additionally, Signet is currently building a 31,000 square foot freestanding repair facility in Dallas, Texas, similar to the repair center in Akron, Ohio. It is scheduled to open for operation in March 2017 with the new lease set to expire in 2028.
Sufficient distribution exists in all geographies to meet the respective needs of the Company’s operations.
ITEM 3. LEGAL PROCEEDINGS
See discussion of legal proceedings in Note 2426 of Item 8.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.

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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market and dividend information
The principal trading market for the Company’s common shares is(symbol: SIG) are traded on the New York Stock Exchange (symbol: SIG). The Company also maintained a standard listing of its common shares on the London Stock Exchange (symbol: SIG) during Fiscal 2016.Exchange.
The following table sets forth the high and low closing share price on each stock exchange for the periods indicated:
 New York
Stock Exchange
Price per share		 London
Stock Exchange
Price per share		 
 High Low High Low 
Fiscal 2015        
First quarter$107.11
 $75.28
 £64.48
 £46.05
 
Second quarter$112.55
 $97.56
 £65.66
 £57.96
 
Third quarter$120.01
 $102.10
 £75.04
 £60.76
 
Fourth quarter$132.12
 $119.62
 £86.38
 £74.34
 
Full year$132.12
 $75.28
 £86.38
 £46.05
 
         
Fiscal 2016        
First quarter$139.78
 $117.39
 £94.15
 £77.42
 
Second quarter$137.62
 $118.62
 £89.46
 £77.14
 
Third quarter$150.94
 $117.56
 £98.05
 £75.94
 
Fourth quarter$149.73
 $113.39
 £98.03
 £76.61
 
Full year$150.94
 $113.39
 £98.05
 £75.94
 
On February 16, 2016, the Company filed a voluntary application with the United Kingdom’s Financial Conduct Authority to delist its common shares from the London Stock Exchange (“LSE”). Signet took this action as a result of less than 1% of the Company’s annual trading volume being executed on the LSE. As a result, the benefit of LSE listing is outweighed by the monetary expense, regulatory burdens and time spent on LSE-driven activity. Common shares of the Company continued to trade on the LSE until close of business on March 15, 2016.
Number of holders
As of March 18, 2016, there were 7,576 stockholders of record.
Dividends
On February 26, 2016, the Board of Directors (the “Board”) declared an 18% increase in the first quarter dividend, resulting in an increase from $0.22 to $0.26 per Signet common share. The following table contains the Company’s dividends declared for Fiscal 2016, Fiscal 2015 and Fiscal 2014:
 Fiscal 2016 Fiscal 2015 Fiscal 2014
(in millions, except per share amounts)Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends
First quarter$0.22
 $17.6
 $0.18
 $14.4
 $0.15
 $12.1
Second quarter0.22
 17.6
 0.18
 14.4
 0.15
 12.1
Third quarter0.22
 17.5
 0.18
 14.5
 0.15
 12.0
Fourth quarter(1)
0.22
 17.5
 0.18
 14.4
 0.15
 12.0
Total$0.88
 $70.2
 $0.72
 $57.7
 $0.60
 $48.2
(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 each fiscal year is paid in the subsequent fiscal year. The dividends are reflected in the consolidated statement of cash flows upon payment.

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Future payments of quarterly dividends will be based on Signet’s ability to satisfy all applicable statutory and regulatory requirements and its continued financial strength. Any future payment of cash dividends will depend upon such factors as Signet’s earnings, capital requirements, financial condition, restrictions under Signet’s credit facility, legal restrictions and other factors deemed relevant by the Board.
Number of common shareholders
As of March 28, 2019, there were approximately 7,028 shareholders of record.
Repurchases of equity securities
The following table contains the Company’s repurchases of equity securitiescommon shares in the fourth quarter of Fiscal 2016:2019:
PeriodTotal number of shares purchased Average price paid per share 
Total number of shares purchased as part of publicly announced plans or programs(1)
 Approximate dollar value of shares that may yet be purchased under the plans or programs
November 1, 2015 to November 28, 2015—
 $—
 —
 $153,650,234
November 29, 2015 to December 26, 2015150,243
 $120.24
 150,243
 $135,585,319
December 27, 2015 to January 30, 2016—
 $—
 —
 $135,585,319
Total150,243
 $120.24
 150,243
 $135,585,319
Period
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)
 Approximate dollar value of shares that may yet be purchased under the plans or programs
November 4, 2018 to December 1, 2018415
 $52.06
 —
 $165,586,651
December 2, 2018 to December 29, 2018—
 $—
 —
 $165,586,651
December 30, 2018 to February 2, 2019—
 $—
 —
 $165,586,651
Total415
 $52.06
 —
 $165,586,651
(1)  
OnIncludes 415 shares delivered to Signet by employees to satisfy minimum tax withholding obligations due upon the vesting or payment of stock awards under share-based compensation programs. These are not repurchased in connection with any publicly announced share repurchase programs.
(2)
In June 14, 2013,2017, the Board of Directors authorized the repurchase of up to $350$600.0 million of Signet’s common shares (the “2013“2017 Program”). The 20132017 Program may be suspended or discontinued at any time without notice. See Note 9 of Item 8 for additional information.
In February 2016, the Board of Directors authorized an additional $750 million of share repurchases to be executed in a manner that aligns with the Company’s leverage and free cash flow targets.

Performance graph
The following performance graph and related information shall not be deemed “soliciting material” or to be filed with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that Signet specifically incorporates it by reference into such filing.
Historical share price performance should not be relied upon as an indication of future share price performance. The following graph compares the cumulative total return to holders of Signet’s common shares against the cumulative total return of the S&P 500 Index and the S&P 500 Specialty Retail Index for the five year period ended January 30, 2016.February 2, 2019. The comparison of the cumulative total returns for each investment assumes that $100 was invested in Signet’s common shares and the respective indices on January 29, 2011February 1, 2014 through January 30, 2016.February 2, 2019.
chart-0f8216670dc55785b41.jpg

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Exchange controlsRelated Shareholder Matters
The Parent Company is classified by the Bermuda Monetary Authority as a non-resident of Bermuda for exchange control purposes. The transferIssues and transfers of common shares betweeninvolving persons regarded as resident outsidenon-residents of Bermuda for exchange control purposes may be effected without specific consent under the Exchange Control Act 1972 Bermuda and regulations thereunder and the issuance of common shares to persons regarded as resident outside Bermuda for exchange control purposes may also be effected without specific consent under the Exchange Control Act 1972 and regulations thereunder. Issues and transfers of common shares involving any personpersons regarded as residentresidents in Bermuda for exchange control purposes may require specific prior approval under the Exchange Control Act 1972.1972 of Bermuda and regulations thereunder.
The owners of common shares who are ordinarily resident outsidenon-residents of Bermuda are not subject to any restrictions on their rights to hold or vote their shares. Because the Parent Company has been designatedis classified as a non-resident of Bermuda for Bermuda exchange control purposes, there are no restrictions on its ability to transfer funds into and out of Bermuda or to pay dividends, to US residents who are holders of common shares, other than in respect of local Bermuda currency.
Taxation
The following are briefThere is no reciprocal tax treaty between Bermuda and general summaries of the United States and United Kingdom taxation treatment of holding and disposing of common shares. The summaries are based onregarding withholding taxes. Under existing Bermuda law, including statutes, regulations, administrative rulings and court decisions, and whatthere is understood to be current Internal Revenue Service (“IRS”) and HM Revenue & Customs (“HMRC”) practice, all as in effect on the date of this document. Future legislative, judicialno Bermuda income or administrative changes or interpretations could alter or modify statements and conclusions set forth below, and these changes or interpretations could be retroactive and could affect the tax consequences of holding and disposing of common shares. The summaries do not consider the consequences of holding and disposing of common shares under tax laws of countries other than the US (or any US laws other than those pertaining to federal income tax), the UK and Bermuda, nor do the summaries consider any alternative minimum tax, state or local consequences of holding and disposing of common shares.
The summaries provide general guidance to US holders (as defined below) who hold common shares as capital assets (within the meaning of section 1221 of the US Internal Revenue Code of 1986, as amended (the “US Code”)) and to persons resident and domiciled for tax purposes in the UK who hold common shares as an investment, and not to any holders who are taxable in the UK on a remittance basis or who are subject to special tax rules, such as banks, financial institutions, broker-dealers, persons subject to mark-to-market treatment, UK resident individuals who hold their common shares under a personal equity plan, persons that hold their common shares as a position in part of a straddle, conversion transaction, constructive sale or other integrated investment, US holders whose “functional currency” is not the US dollar, persons who received their common shares by exercising employee share options or otherwise as compensation, persons who have acquired their common shares by virtue of any office or employment, S corporations or other pass-through entities (or investors in S corporations or other pass-through entities), mutual funds, insurance companies, tax-exempt organizations, US holders subject to the alternative minimum tax, certain expatriates or former long-term residents of the US, and US holders that directly or by attribution hold 10% or more of the voting power of the Parent Company’s shares. This summary does not address US federal estate tax, state or local taxes, or the 3.8% Medicare tax on net investment income.
The summaries are not intended to provide specific advice and no action should be taken or omitted to be taken in reliance upon it. If you are in any doubt about your taxation position, or if you are resident or domiciled outside the UK or resident or otherwise subject to taxation in a jurisdiction outside the UK or the US, you should consult your own professional advisers immediately.
The Parent Company is incorporated in Bermuda. The directors intend to conduct the Parent Company’s affairs such that, based on current law and practice of the relevant tax authorities, the Parent Company will not becomeresident for tax purposes in any other territory. This guidance is written on the basis that the Parent Company does not become resident in a territory other than Bermuda.
US taxation
As used in this discussion, the term “US holder” means a beneficial owner of common shares who is for US federal income tax purposes: (i) an individual US citizen or resident; (ii) a corporation, or entity treated as a corporation, created or organized in or under the laws of the United States; (iii) an estate whose income is subject to US federal income taxation regardless of its source; or (iv) a trust if either: (a) a court within the US is able to exercise primary supervision over the administration of such trust and one or more US persons have the authority to control all substantial decisions of such trust; or (b) the trust has a valid election in effect to be treated as a US resident for US federal income tax purposes.
If a partnership (or other entity classified as a partnership for US federal tax income purposes) holds common shares, the US federal income tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partnerships, and partners in partnerships, holding common shares are encouraged to consult their tax advisers.

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Dividends and other distributions upon common shares
Distributions made with respect to common shares will generally be includable in the income of a US holder as ordinary dividend income, to the extent paid out of current or accumulated earnings and profits of the Parent Company as determined in accordance with US federal income tax principles. The amount of such dividends will generally be treated partly as US-source and partly as foreign-source dividend income, for US foreign tax credit purposes, in proportion to the earnings from which they are considered paid for as long as 50% or more of the Parent Company’s shares are directly or indirectly owned by US persons. Dividend income received from the Parent Company will not be eligible for the “dividends received deduction” generally allowed to US corporations under the US Code. Subject to applicable limitations, including a requirement that the common shares be listed for trading on the NYSE, the NASDAQ Stock Market, or another qualifying US exchange, dividends with respect to common shares so listed that are paid to non-corporate US holders will generally be taxable at a current maximum tax rate of 20%.
Sale or exchange of common shares
Gain or loss realized by a US holder on the sale or exchange of common shares generally will be subject to US federal income tax as capital gain or loss in an amount equal to the difference between the US holder’s tax basis in the common shares and the amount realized on the disposition. Such gain or loss will be long-term capital gain or loss if the US holder held the common shares for more than one year. Gain or loss, if any, will generally be US source for foreign tax credit purposes. The deductibility of capital losses is subject to limitations. Non-corporate US holders are eligible for a current maximum 20% long-term capital gains taxation rate.
Information reporting and backup withholding
Payments of dividends on, and proceeds from a sale or other disposition of, common shares, may, under certain circumstances, be subject to information reporting and backup withholding at a rate of 28% of the cash payable to the holder, unless the holder provides proof of an applicable exemption or furnishes its taxpayer identification number, and otherwise complies with all applicable requirements of the backup withholding rules. Any amounts withheld from payments to a US holder under the backup withholding rules are not additional tax and should be allowed as a refund or credit against the US holder’s US federal income tax liability, provided the required information is timely furnished to the IRS.
Passive foreign investment company status
A non-US corporation will be classified as a passive foreign investment company (a “PFIC”) for any taxable year if at least 75% of its gross income consists of passive income (such as dividends, interest, rents, royalties or gains on the disposition of certain minority interests), or at least 50% of the average value of its assets consists of assets that produce, or are held for the production of, passive income. For the purposes of these rules, a non-US corporation is considered to hold and receive directly its proportionate share of the assets and income of any other corporation of whose shares it owns at least 25% by value. Consequently, the Parent Company’s classification under the PFIC rules will depend primarily upon the composition of its assets and income.
If the Parent Company is characterized as a PFIC, US holders would suffer adverse tax consequences, and US federal income tax consequences different from those described above may apply. These consequences may include having gains realized on the disposition of common shares treated as ordinary income rather than capital gain and being subject to punitive interest charges on certain distributions and on the proceeds of the sale or other disposition of common shares. The Parent Company believes that it is not a PFIC and that it will not be a PFIC for the foreseeable future. However, since the tests for PFIC status depend upon facts not entirely within the Parent Company’s control, such as the amounts and types of its income and values of its assets, no assurance can be provided that the Parent Company will not become a PFIC. US holders of PFIC shares are required to file IRS Form 8621 annually. US holders should consult their own tax advisers regarding the potential application of the PFIC rules to common shares.
Foreign financial asset reporting requirement
An individual that is a US holder, or is a specific type of nonresident alien, (each a “specified individual”) and holds certain foreign financial assets (including Signet’s common shares) must file IRS Form 8938 to report the ownership of such assets if the total value of those assets exceeds the applicable threshold amounts, generally $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. Certain domestic entities that are 80% owned, directly, indirectly or constructively, by a specified individual, or have specified individuals as beneficiaries (“specified domestic entities”), and that hold certain foreign financial assets also must file IRS Form 8938. Some specified individuals may be subject to a greater threshold before reporting is required and constructive ownership rules may apply to determine reporting thresholds relating to specified domestic entities. However, in general, such form is not required to be filed with respect to Signet’s common shares if they are held through a domestic financial institution.
Taxpayers who fail to make the required disclosure with respect to any taxable year are subject to a penalty of $10,000 for such taxable year, which may be increased up to $50,000 for a continuing failure to file the form after being notified by the IRS. In addition, the failure to file Form 8938 will extend the statute of limitations for a taxpayer’s entire related income tax return (and not just the portion of the return that relates to the omission) until at least three years after the date on which the Form 8938 is filed.
All specified individuals and specified domestic entities are urged to consult with their own tax advisors with respect to the application of this reporting requirement to their circumstances.

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UK taxation
Chargeable gains
A disposal of common shares by a shareholder who is resident in the UK may, depending on individual circumstances (including the availability of exemptions or allowable losses), give rise to a liability to (or an allowable loss for the purposes of) UK taxation of chargeable gains.
Any chargeable gain or allowable loss on a disposal of the common shares should be calculated taking into account the allowable cost to the holder of acquiring his common shares. In the case of corporate shareholders, to this should be added, when calculating a chargeable gain but not an allowable loss, indexation allowance on the allowable cost. (Indexation allowance is not available for non-corporate shareholders.)
Individuals who hold their common shares within an individual savings account (“ISA”) and are entitled to ISA-related tax relief in respect of the same, will generally not be subject to UK taxation of chargeable gains in respect of any gain arising on a disposal of common shares.
Taxation of dividends on common shares
Under current UK law and practice, UK withholding tax is not imposed on dividends.
Subject to anti-avoidance rules and the satisfaction of certain conditions, UK resident shareholders who are within the charge to UK corporation tax will in general not be subject to corporation tax on dividends paid by the Parent Company to its shareholders. Furthermore, under existing Bermuda law, no Bermuda tax is levied on the sale or transfer of Signet common shares.
A UK resident individual shareholder who is liable to UK income tax at no more than the basic rate will be liable to income tax on dividends paid by the Parent Company on the common shares at the dividend ordinary rate (10% in tax year 2015/16). A UK resident individual shareholder who is liable to UK income tax at the higher rate will be subject to income tax on the dividend income at the dividend upper rate (32.5% in 2015/16). A further rate of income tax (the “additional rate”) will apply to individuals with taxable income over a certain threshold, which is currently £150,000 for 2015/16. A UK resident individual shareholder subject to the additional rate will be liable to income tax on their dividend income at the dividend additional rate of 37.5% (in 2015/16, as from the start of this tax year on April 6, 2015) of the gross dividend to the extent that the gross dividend when treated as the top slice of the shareholder’s income falls above the current £150,000 threshold.
UK resident individuals in receipt of dividends from the Parent Company, if they own less than a 10% shareholding in the Parent Company, will be entitled to a non-payable dividend tax credit (currently at the rate of 1/9th of the cash dividend paid (or 10% of the aggregate of the net dividend and related tax credit)). Assuming that there is no withholding tax imposed on the dividend (as to which see the section on Bermuda taxation below), the individual is treated as receiving for UK tax purposes gross income equal to the cash dividend plus the tax credit. The tax credit is set against the individual’s tax liability on that gross income. The result is that a UK resident individual shareholder who is liable to UK income tax at no more than the basic rate will have no further UK income tax to pay on a Parent Company dividend. A UK resident individual shareholder who is liable to UK income tax at the higher rate will have further UK income tax to pay of 22.5% of the dividend plus the related tax credit (or 25% of the cash dividend, assuming that there is no withholding tax imposed on that dividend). A UK resident individual subject to income tax at the additional rate for 2015/16 will have further UK income tax to pay of 27.5% of the dividend plus the tax credit (or 30 5/9% of the cash dividend, assuming that there is no withholding tax imposed on that dividend), to the extent that the gross dividend falls above the threshold for the 45% rate of income tax.
Individual shareholders who hold their common shares in an ISA and are entitled to ISA-related tax relief in respect of the same will not be taxed on the dividends from those common shares but are not entitled to recover the tax credit on such dividends from HMRC.
Stamp duty/stamp duty reserve tax (“SDRT”)
In practice, stamp duty should generally not need to be paid on an instrument transferring common shares. No SDRT will generally be payable in respect of any agreement to transfer common shares or Depositary Interests. The statements in this paragraph summarize the current position on stamp duty and SDRT and are intended as a general guide only. They assume that the Parent Company will not be UK managed and controlled and that the common shares will not be registered in a register kept in the UK by or on behalf of the Parent Company. The Parent Company has confirmed that it does not intend to keep such a register in the UK.
Bermuda taxation
At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax, estate duty or inheritance tax payable by the Parent Company or by its shareholders in respect of its common shares. The Parent Company has obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax shall not, until March 31, 2035, be applicable to it or to any of its operations or to its shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or is payable by it in respect of real property owned or leased by it in Bermuda.


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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The financial data included below for Fiscal 2016,2019, Fiscal 20152018 and Fiscal 20142017 has been derived from the audited consolidated financial statements included in Item 8. The financial data for these periods should be read in conjunction with the financial statements, including the notes thereto, and Item 7. The financial data included below for Fiscal 20132016 and Fiscal 20122015 has been derived from the previously published consolidated audited financial statements not included in this document.
FINANCIAL DATA:Fiscal 2016 Fiscal 2015
(1) 
Fiscal 2014 Fiscal 2013
(2) 
Fiscal 2012
Income statement (in millions):         
Sales$6,550.2
 $5,736.3
 $4,209.2
 $3,983.4
 $3,749.2
Cost of sales(4,109.8) (3,662.1) (2,628.7) (2,446.0) (2,311.6)
Gross margin2,440.4
 2,074.2
 1,580.5
 1,537.4
 1,437.6
Selling, general and administrative expenses(1,987.6) (1,712.9) (1,196.7) (1,138.3) (1,056.7)
Other operating income, net250.9
 215.3
 186.7
 161.4
 126.5
Operating income703.7
 576.6
 570.5
 560.5
 507.4
Interest expense, net(45.9) (36.0) (4.0) (3.6) (5.3)
Income before income taxes657.8
 540.6
 566.5
 556.9
 502.1
Income taxes(189.9) (159.3) (198.5) (197.0) (177.7)
Net income$467.9
 $381.3
 $368.0
 $359.9
 $324.4
Adjusted EBITDA(3)
$891.5
 $762.9
 $680.7
 $659.9
 $599.8
          
Income statement (as a % of sales): 
Sales100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales(62.7) (63.8) (62.5) (61.4) (61.7)
Gross margin37.3
 36.2
 37.5
 38.6
 38.3
Selling, general and administrative expenses(30.4) (29.9) (28.4) (28.6) (28.2)
Other operating income, net3.8
 3.7
 4.4
 4.1
 3.4
Operating income10.7
(4) 
10.0
(4) 
13.5
(4) 
14.1
 13.5
Interest expense, net(0.7) (0.6) (0.1) (0.1) (0.1)
Income before income taxes10.0
 9.4
 13.4
 14.0
 13.4
Income taxes(2.9) (2.8) (4.7) (5.0) (4.7)
Net income7.1 % 6.6 % 8.7 % 9.0 % 8.7 %
Adjusted EBITDA(3)
13.6 % 13.3 % 16.2 % 16.6 % 16.0 %
          
Per share data:         
Earnings per share:         
Basic$5.89
 $4.77
 $4.59
 $4.37
 $3.76
Diluted$5.87
 $4.75
 $4.56
 $4.35
 $3.73
Weighted average common shares outstanding (in millions):         
Basic79.5
 79.9
 80.2
 82.3
 86.2
Diluted79.7
 80.2
 80.7
 82.8
 87.0
Dividends declared per share$0.88
 $0.72
 $0.60
 $0.48
 $0.20
FINANCIAL DATA:Fiscal 2019 
Fiscal 2018(1)
 Fiscal 2017 Fiscal 2016 
Fiscal 2015(2)
Income statement:(in millions)
Sales$6,247.1
 $6,253.0
 $6,408.4
 $6,550.2
 $5,736.3
Gross margin$2,160.8
 $2,190.0
 $2,360.8
 $2,440.4
 $2,074.2
Selling, general and administrative expenses$(1,985.1) $(1,872.2) $(1,880.2) $(1,987.6) $(1,712.9)
Operating income (loss)$(764.6)
(4) 
$579.9
 $763.2
 $703.7
 $576.6
Net income (loss) attributable to common shareholders$(690.3) $486.4
 $531.3
 $467.9
 $381.3
Adjusted EBITDA(3)
$393.5
 $770.3
 $955.0
 $891.5
 $762.9
Same store sales percentage increase (decrease)(0.1)% (5.3)% (1.9)% 4.1 % 4.1 %
          
 (Income statement as a % of sales)
Sales100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Gross margin34.6 % 35.0 % 36.8 % 37.3 % 36.2 %
Selling, general and administrative expenses(31.8)% (29.9)% (29.3)% (30.4)% (29.9)%
Operating income (loss)(12.2)% 9.3 % 11.9 % 10.7 % 10.0 %
Net income (loss) attributable to common shareholders(11.0)% 7.8 % 8.3 % 7.1 % 6.6 %
Adjusted EBITDA(3)
6.3 % 12.3 % 14.9 % 13.6 % 13.3 %
          
Per share data:         
Earnings (loss) per common share:         
Basic$(12.62) $7.72
 $7.13
 $5.89
 $4.77
Diluted$(12.62) $7.44
 $7.08
 $5.87
 $4.75
Dividends declared per common share$1.48
 $1.24
 $1.04
 $0.88
 $0.72
          
Weighted average common shares outstanding:(in millions)
Basic54.7
 63.0
 74.5
 79.5
 79.9
Diluted54.7
 69.8
 76.7
 79.7
 80.2
          
Balance sheet:(in millions)
Total assets$4,420.1
 $5,839.6
 $6,597.8
 $6,464.9
 $6,203.0
Total liabilities$2,603.2
 $2,726.2
 $3,495.7
 $3,404.2
 $3,392.6
Series A redeemable convertible preferred shares$615.3
 $613.6
 $611.9 n/a n/a
Net (debt) cash(3)
$(533.0) $(507.1) $(1,310.3) $(1,241.0) $(1,256.4)
Working capital$1,822.8
 $2,408.9
 $3,438.9
 $3,437.0
 $3,210.3
Common shares outstanding51.9
 60.5
 68.3
 79.4
 80.3
(1)
On September 12, 2017, the Company completed the acquisition of R2Net. Fiscal 2018 results include R2Net’s results since the date of acquisition. See Note 5 of Item 8 for additional information.
(2) 
On May 29, 2014, the Company completed the acquisition of Zale Corporation. Fiscal 2015 results include Zale Corporation’s results since the date of acquisition.
(3)    Adjusted EBITDA and net (debt) cash are non-GAAP measures; see “GAAP and non-GAAP Measures” below.
(4)
Fiscal 2019 operating loss includes goodwill and intangible impairments of $735.4 million, a loss of $167.4 million related to the sale of the non-prime in-house accounts receivable and $125.9 million in restructuring charges related to inventory write-downs, severance, professional fees and impairment of certain IT assets.
n/aNot applicable as Series A redeemable convertible preferred shares were issued in October 2016.




 Fiscal 2019 
Fiscal 2018(1)
 Fiscal 2017 Fiscal 2016 
Fiscal 2015(2)
Other financial data:         
Free cash flow (in millions)(3)
$564.2
 $1,703.1
 $400.3
 $62.8
 $82.8
Effective tax rate18.1% 1.5%
(4) 
23.9% 28.9% 29.5%
ROCE(3)
6.7%
(5) 
19.1% 21.4% 21.0% 19.5%
Adjusted leverage ratio(3)
4.3x
 3.1x
 3.6x
 3.3x
 3.5x
          
Store and employee data:         
Store locations (at end of period)3,334
 3,556
 3,682
 3,625
 3,579
Number of employees (full-time equivalents)(6)
22,989
 24,888
 29,566
 29,057
 28,949
          
(1)
On September 12, 2017, the Company completed the acquisition of R2Net. Fiscal 2018 results include R2Net’s results since the date of acquisition. See Note 35 of Item 8 for additional information.
(2)
Fiscal 2013 was a 53 week period. The 53rd week added $56.4 million in net sales and decreased diluted earnings per share by approximately $0.02 for fiscal period.
(3)    Adjusted EBITDA is a non-GAAP measure, see “GAAP and non-GAAP Measures” below.
(4)    The acquisition of Zale and Ultra Stores Inc., with operating margins lower than that of Signet, caused an overall lower operating margin for Signet.


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(in millions)Fiscal 2016
Fiscal 2015
(1) 
Fiscal 2014 Fiscal 2013 Fiscal 2012
Balance sheet:         
Total assets(2)
$6,474.4
 $6,214.3
 $3,916.1
 $3,616.5
 $3,506.6
Total liabilities(2)
3,413.7
 3,403.9
 1,353.0
 1,286.6
 1,227.5
Total shareholders’ equity3,060.7
 2,810.4
 2,563.1
 2,329.9
 2,279.1
Working capital3,437.0
 3,210.3
 2,467.0
 2,292.2
 2,292.4
Cash and cash equivalents137.7
 193.6
 247.6
 301.0
 486.8
Loans and overdrafts(59.5) (97.5) (19.3) —
 —
Long-term debt(1,328.7) (1,363.8) —
 —
 —
Net (debt) cash(3)
$(1,250.5) $(1,267.7) $228.3
 $301.0
 $486.8
Common shares outstanding79.4
 80.3
 80.2
 81.4
 86.9
Cash flow:         
Net cash provided by operating activities$443.3
 $283.0
 $235.5
 $312.7
 $325.2
Net cash used in investing activities(228.7) (1,652.6) (160.4) (190.9) (97.8)
Net cash (used in) provided by financing activities(266.6) 1,320.9
 (124.8) (308.1) (40.0)
(Decrease) increase in cash and cash equivalents$(52.0) $(48.7) $(49.7) $(186.3) $187.4
Free cash flow$216.8
 $62.8
 $82.8
 $178.5
 $227.4
          
Ratios:         
Operating margin10.7% 10.0% 13.5% 14.1% 13.5%
Effective tax rate28.9% 29.5% 35.0% 35.4% 35.4%
ROCE(3)
21.0% 19.5% 25.2% 28.1% 28.6%
Adjusted Leverage(3)
3.7x
 4.0x
 2.0x
 2.0x
 2.1x
Store data:Fiscal 2016 Fiscal 2015
(1) 
Fiscal 2014 Fiscal 2013 Fiscal 2012
Store locations (at end of period):         
Sterling Jewelers1,540
 1,504
 1,471
 1,443
 1,318
Zale Jewelry977
 972
 n/a
 n/a
 n/a
Piercing Pagoda605
 605
 n/a
 n/a
 n/a
UK Jewelry503
 498
 493
 511
 535
Signet3,625
 3,579
 1,964
 1,954
 1,853
Percentage increase (decrease) in same store sales:         
Sterling Jewelers3.7% 4.8% 5.2% 4.0% 11.1%
Zale Jewelry4.3% 1.7% n/a
 n/a
 n/a
Piercing Pagoda7.5% 0.2% n/a
 n/a
 n/a
UK Jewelry4.9% 5.3% 1.0% 0.3% 0.9%
Signet4.1% 4.1% 4.4% 3.3% 9.0%
Number of employees (full-time equivalents)29,057
(4) 
28,949
(5) 
18,179
(6) 
17,877
(7) 
16,555
(1) 
On May 29, 2014, the Company completed the acquisition of Zale Corporation. Fiscal 2015 includesresults include Zale Corporation’s results since the date of acquisition.
(3)    Free cash flow, ROCE and adjusted leverage ratio are non-GAAP measures; see “GAAP and non-GAAP Measures” below.
(4)
Effective tax rate in Fiscal 2018 includes favorable impact of the TCJ Act enacted by the US government in December 2017. See Note 312 of Item 8 for additional information.
(2)(5) 
Results reclassifiedROCE in accordanceFiscal 2019 was adjusted to exclude the impact of goodwill and intangible impairments totaling $735.4 million and $160.4 million of valuation losses associated with Signet’s adoptionsale of Accounting Standards Update 2015-17, which requires the classification of all deferred tax assets and liabilities as non-current.non-prime in-house accounts receivable portfolio recognized during the year. See Note 217 and Note 4 of Item 8 for additional information.
(3)    Net (debt) cash, ROCE and adjusted leverage are non-GAAP measures, see “GAAP and non-GAAP Measures” below.
(4)    Number of employees includes 194 full-time equivalents employed in the diamond polishing plant located in Botswana.
(5)    Number of employees includes 226 full-time equivalents employed in the diamond polishing plant located in Botswana.
(6)     Number of employees includes 211 full-time equivalents employed in the diamond polishing plant located in Botswana.
(7)    Number of employees includes 830 full-time equivalents employed by Ultra Stores, Inc.
n/a    Not applicable as Zale division was acquired on May 29, 2014.



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(6)
Number of employees includes 142, 127, 163, 194 and 226 full-time equivalents employed in the diamond polishing plant located in Botswana for Fiscal 2019, Fiscal 2018, Fiscal 2017, Fiscal 2016 and Fiscal 2015, respectively.
GAAP AND NON-GAAP MEASURES
The discussion and analysis of Signet’s results of operations, financial condition and liquidity contained in this Report are based upon the consolidated financial statements of Signet which are prepared in accordance with US GAAP and should be read in conjunction with Signet’s financial statements and the related notes included in Item 8. A number of non-GAAP measures are used by management to analyze and manage the performance of the business, and the required disclosures for these non-GAAP measures are shown below. In particular, the terms “at constant exchange rates,” “underlying” and “underlying at constant exchange rates” are used in a number of places. “At constant exchange rates” is used to indicate where items have been adjusted to eliminate the impact of exchange rate movements on translation of British pound and Canadian dollar amounts to US dollars. “Underlying” is used to indicate where adjustments for significant, unusual and non-recurring items have been made and “underlying at constant exchange rates” indicates where the underlying items have been further adjusted to eliminate the impact of exchange rate movements on translation of British pound and Canadian dollar amounts to US dollars.
Signet provides such non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations. Management does not, nor does it suggest investors should, consider such non-GAAP measures in isolation from, or in substitution for, financial information prepared in accordance with GAAP.
1. Income Statements at Constant Exchange Rates
Movements in the US dollar to British pound and Canadian dollar exchange rates have an impact on Signet’s results. The UK Jewelry division is managed in British pounds and the Canadian reporting unit of the Zale Jewelry segment 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 performance of Signet and its segments if constant currency figures are given. This is particularly so in periods when exchange rates are volatile. The constant currency amounts are calculated by retranslating the prior year figures using the current year’s exchange rate. Management considers it useful to exclude the impact of movements in the British pound and Canadian dollar to US dollar exchange rates to analyze and explain changes and trends in Signet’s underlying business, which is consistent with the manner in which management evaluates performance of its businesses which do not operate using the US dollar as their functional currency. Additionally, in connection with management’s evaluation of its attainment of performance goals, currency effects are excluded.

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(a) Fiscal 2016 percentage change in results at constant exchange rates
(in millions, except per share amounts)Fiscal 2016 Fiscal 2015 Change % Impact of exchange rate movement Fiscal 2015 at constant exchange rates (non-GAAP) Fiscal 2016 change at constant exchange rates (non-GAAP) %
Sales by segment:           
Sterling Jewelers$3,988.7
 $3,765.0
 5.9 % $—
 $3,765.0
 5.9 %
Zale Jewelry1,568.2
 1,068.7
 46.7
 (31.7) 1,037.0
 51.2
Piercing Pagoda243.2
 146.9
 65.6
 —
 146.9
 65.6
UK Jewelry737.6
 743.6
 (0.8) (47.3) 696.3
 5.9
Other12.5
 12.1
 3.3
 —
 12.1
 3.3
Total sales6,550.2
 5,736.3
 14.2
 (79.0) 5,657.3
 15.8
Cost of sales(4,109.8) (3,662.1) (12.2) 56.2
 (3,605.9) (14.0)
Gross margin2,440.4
 2,074.2
 17.7
 (22.8) 2,051.4
 19.0
Selling, general and administrative expenses(1,987.6) (1,712.9) (16.0) 21.2
 (1,691.7) (17.5)
Other operating income, net250.9
 215.3
 16.5
 0.2
 215.5
 16.4
Operating income (loss) by segment:           
Sterling Jewelers718.6
 624.3
 15.1
 —
 624.3
 15.1
Zale Jewelry(1)
44.3
 (1.9) nm
 0.3
 (1.6) nm
Piercing Pagoda(2)
7.8
 (6.3) nm
 —
 (6.3) nm
UK Jewelry61.5
 52.2
 17.8
 (2.0) 50.2
 22.5
Other(3)
(128.5) (91.7) (40.1) 0.3
 (91.4) (40.6)
Total operating income703.7
 576.6
 22.0
 (1.4) 575.2
 22.3
Interest expense, net(45.9) (36.0) (27.5) —
 (36.0) (27.5)
Income before income taxes657.8
 540.6
 21.7
 (1.4) 539.2
 22.0
Income taxes(189.9) (159.3) (19.2) 0.1
 (159.2) (19.3)
Net income$467.9
 $381.3
 22.7 % $(1.3) $380.0
 23.1 %
Basic earnings per share$5.89
 $4.77
 23.5 % $(0.01) $4.76
 23.7 %
Diluted earnings per share$5.87
 $4.75
 23.6 % $(0.01) $4.74
 23.8 %
(1)
Zale Jewelry includes net operating loss impact of $23.1 million and $35.1 million for purchase accounting adjustments in Fiscal 2016 and Fiscal 2015, respectively.
(2)    Piercing Pagoda includes net operating loss impact of $3.3 million and $10.8 million for purchase accounting adjustments in Fiscal 2016 and Fiscal 2015, respectively.
(3)
Other includes $78.9 million and $59.8 million of transaction and integration expenses in Fiscal 2016 and Fiscal 2015, respectively. Transaction and integration costs include expenses associated with advisor fees for legal, tax, accounting, information technology implementation, consulting, severance, as well as the legal settlement of $34.2 million over appraisal rights in Fiscal 2016.

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(b) Fourth quarter Fiscal 2016 percentage change in results at constant exchange rates
(in millions, except per share amounts)13 weeks 
ended
January 30,
2016		 13 weeks 
ended
January 31,
2015		 Change % Impact of
exchange
rate
movement		 13 weeks
ended
January 31,
2015
at constant
exchange
rates
(non-GAAP)		 13 weeks
ended
January 30,
2016
change
at constant
exchange rates
(non-GAAP) %
Sales by segment:           
Sterling Jewelers$1,452.5
 $1,358.3
 6.9 % $—
 $1,358.3
 6.9 %
Zale Jewelry577.0
 564.6
 2.2
 (16.3) 548.3
 5.2
Piercing Pagoda78.1
 72.1
 8.3
 —
 72.1
 8.3
UK Jewelry282.6
 278.0
 1.7
 (11.1) 266.9
 5.9
Other2.4
 3.4
 (29.4) —
 3.4
 (29.4)
Total sales2,392.6
 2,276.4
 5.1
 (27.4) 2,249.0
 6.4
Cost of sales(1,376.6) (1,364.3) (0.9) 18.0
 (1,346.3) (2.3)
Gross margin1,016.0
 912.1
 11.4
 (9.4) 902.7
 12.6
Selling, general and administrative expenses(686.6) (634.5) (8.2) 7.7
 (626.8) (9.5)
Other operating income, net63.7
 54.1
 17.7
 0.2
 54.3
 17.3
Operating income (loss) by segment:           
Sterling Jewelers305.4
 260.0
 17.5
 —
 260.0
 17.5
Zale Jewelry(1)
54.2
 32.8
 65.2
 0.4
 33.2
 63.3
Piercing Pagoda(2)
8.8
 3.3
 166.7
 —
 3.3
 166.7
UK Jewelry57.8
 53.8
 7.4
 (2.0) 51.8
 11.6
Other(3)
(33.1) (18.2) (81.9) 0.1
 (18.1) (82.9)
Total operating income393.1
 331.7
 18.5
 (1.5) 330.2
 19.0
Interest expense, net(12.1) (7.9) (53.2) (0.1) (8.0) (51.3)
Income before income taxes381.0
 323.8
 17.7
 (1.6) 322.2
 18.2
Income taxes(109.1) (95.8) (13.9) 0.2
 (95.6) (14.1)
Net income$271.9
 $228.0
 19.3 % $(1.4) $226.6
 20.0 %
Basic earnings per share$3.43
 $2.85
 20.4 % $(0.01) $2.84
 20.8 %
Diluted earnings per share$3.42
 $2.84
 20.4 % $(0.01) $2.83
 20.8 %
(1)
Zale Jewelry includes net operating loss impact of $6.0 million and $14.7 million for purchase accounting adjustments in Fiscal 2016 and Fiscal 2015, respectively.
(2)    Piercing Pagoda includes net operating loss impact of $0.2 million and $6.1 million for purchase accounting adjustments in Fiscal 2016 and Fiscal 2015, respectively.
(3)
Other includes $19.1 million and $9.2 million of transaction and integration expenses in Fiscal 2016 and Fiscal 2015, respectively. Transaction and integration costs include expenses associated with legal, tax, accounting, information technology implementation, consulting and severance.





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(c) Fiscal 2015 percentage change in results at constant exchange rates
(in millions, except per share amounts)Fiscal 2015 Fiscal 2014 Change % Impact of
exchange
rate
movement		 Fiscal 2014
at constant
exchange
rates
(non-GAAP)		 Fiscal 2015
change
at constant
exchange rates
(non-GAAP) %
Sales by segment:           
Sterling Jewelers$3,765.0
 $3,517.6
 7.0 % $—
 $3,517.6
 7.0 %
Zale Jewelry1,068.7
 n/a
 nm
 nm
 n/a
 nm
Piercing Pagoda146.9
 n/a
 nm
 nm
 n/a
 nm
UK Jewelry743.6
 685.6
 8.5
 18.0
 703.6
 5.7
Other12.1
 6.0
 101.7
 —
 6.0
 101.7
Total sales5,736.3
 4,209.2
 36.3
 18.0
 4,227.2
 35.7
Cost of sales(3,662.1) (2,628.7) (39.3) (14.9) (2,643.6) (38.5)
Gross margin2,074.2
 1,580.5
 31.2
 3.1
 1,583.6
 31.0
Selling, general and administrative expenses(1,712.9) (1,196.7) (43.1) (6.3) (1,203.0) (42.4)
Other operating income, net215.3
 186.7
 15.3
 —
 186.7
 15.3
Operating income (loss) by segment:           
Sterling Jewelers624.3
 553.2
 12.9
 —
 553.2
 12.9
Zale Jewelry(1)
(1.9) n/a
 nm
 nm
 n/a
 nm
Piercing Pagoda(2)
(6.3) n/a
 nm
 nm
 n/a
 nm
UK Jewelry52.2
 42.4
 23.1
 (3.2) 39.2
 33.2
Other(3)
(91.7) (25.1) (265.3) —
 (25.1) (265.3)
Total operating income576.6
 570.5
 1.1
 (3.2) 567.3
 1.6
Interest expense, net(36.0) (4.0) (800.0) —
 (4.0) (800.0)
Income before income taxes540.6
 566.5
 (4.6) (3.2) 563.3
 (4.0)
Income taxes(159.3) (198.5) 19.7
 0.8
 (197.7) 19.4
Net income$381.3
 $368.0
 3.6 % $(2.4) $365.6
 4.3 %
Basic earnings per share$4.77
 $4.59
 3.9 % $(0.03) $4.56
 4.6 %
Diluted earnings per share$4.75
 $4.56
 4.2 % $(0.03) $4.53
 4.9 %
(1)
Zale Jewelry includes net operating loss impact of $35.1 million for purchase accounting adjustments.
(2)    Piercing Pagoda includes net operating loss impact of $10.8 million for purchase accounting adjustments.
(3)
Other includes $59.8 million of transaction and integration expenses in Fiscal 2015. Transaction and integration costs include expenses associated with legal, tax, accounting, information technology implementation, consulting and severance.
nmNot meaningful. As the Company completed the acquisition of Zale Corporation on May 29, 2014, Fiscal 2015 includes Zale Corporation’s results since the date of acquisition.
n/a    Not applicable as Zale division was acquired on May 29, 2014.



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(d) Fourth quarter Fiscal 2015 percentage change in results at constant exchange rates
(in millions, except per share amounts)13 weeks ended
January 31,
2015		 13 weeks ended
February 1,
2014		 Change % Impact of
exchange
rate
movement		 13 weeks
ended
February 1,
2014
change
at constant
exchange rates
(non-GAAP)		 13 weeks
ended
January 31,
2015
change
at constant
exchange rates
(non-GAAP) %
Sales by segment:           
Sterling Jewelers$1,358.3
 $1,288.0
 5.5 % $—
 $1,288.0
 5.5 %
Zale Jewelry564.6
 n/a
 nm
 nm
 n/a
 nm
Piercing Pagoda72.1
 n/a
 nm
 nm
 n/a
 nm
UK Jewelry278.0
 272.2
 2.1
 (14.0) 258.2
 7.7
Other3.4
 3.8
 (10.5) —
 3.8
 (10.5)
Total sales2,276.4
 1,564.0
 45.5
 (14.0) 1,550.0
 46.9
Cost of sales(1,364.3) (915.2) (49.1) 8.8
 (906.4) (50.5)
Gross margin912.1
 648.8
 40.6
 (5.2) 643.6
 41.7
Selling, general and administrative expenses(634.5) (425.8) (49.0) 2.7
 (423.1) (50.0)
Other operating income, net54.1
 47.6
 13.7
 —
 47.6
 13.7
Operating income (loss) by segment:           
Sterling Jewelers260.0
 227.9
 14.1
 —
 227.9
 14.1
Zale Jewelry(1)
32.8
 n/a
 nm
 nm
 n/a
 nm
Piercing Pagoda(2)
3.3
 n/a
 nm
 nm
 n/a
 nm
UK Jewelry53.8
 51.7
 4.1
 (2.6) 49.1
 9.6
Other(3)
(18.2) (9.0) (102.2) 0.1
 (8.9) (104.5)
Total operating income331.7
 270.6
 22.6
 (2.5) 268.1
 23.7
Interest expense, net(7.9) (1.2) (558.3) (0.1) (1.3) (507.7)
Income before income taxes323.8
 269.4
 20.2
 (2.6) 266.8
 21.4
Income taxes(95.8) (94.2) (1.7) 0.7
 (93.5) (2.5)
Net income$228.0
 $175.2
 30.1 % $(1.9) $173.3
 31.6 %
Basic earnings per share$2.85
 $2.20
 29.5 % $(0.03) $2.17
 31.3 %
Diluted earnings per share$2.84
 $2.18
 30.3 % $(0.02) $2.16
 31.5 %
(1)
Zale Jewelry includes net operating loss impact of $14.7 million for purchase accounting adjustments in Fiscal 2015.
(2)    Piercing Pagoda includes net operating loss impact of $6.1 million for purchase accounting adjustments in Fiscal 2015.
(3)
Other includes $9.2 million of transaction and integration expenses in Fiscal 2015. Transaction and integration costs include expenses associated with legal, tax, accounting, information technology implementation, consulting and severance.
nmNot meaningful. As the Company completed the acquisition of Zale Corporation on May 29, 2014, Fiscal 2015 includes Zale Corporation’s results since the date of acquisition.
n/a    Not applicable as Zale division was acquired on May 29, 2014.

2. Operating data reflecting the impact of material acquisitions and acquisition-related costs
The below table reflects the impact of costs associated with 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. Management views acquisition-related impacts as events that are not necessarily reflective of operational performance during a period. In particular, management believes the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses.

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(a) Fiscal 2016 operating data reflecting the impact of acquisition-related costs and accounting adjustments
Fiscal 2016
(in millions, except per share amount and % of sales)		Adjusted Signet 
Accounting adjustments(1)
 
Transaction/Integration costs(2)
 Signet consolidated,
as reported
Sales$6,577.4
 100.0 % $(27.2) $—
 $6,550.2
 100.0 %
Cost of sales(4,101.4) (62.4)% (8.4) —
 (4,109.8) (62.7)%
Gross margin2,476.0
 37.6 % (35.6) —
 2,440.4
 37.3 %
Selling, general and administrative expenses(1,917.9) (29.1)% 9.2
 (78.9) (1,987.6) (30.4)%
Other operating income, net250.9
 3.8 % —
 —
 250.9
 3.8 %
Operating income (loss)809.0
 12.3 % (26.4) (78.9) 703.7
 10.7 %
Interest expense, net(45.9) (0.7)% —
 —
 (45.9) (0.7)%
Income before income taxes763.1
 11.6 % (26.4) (78.9) 657.8
 10.0 %
Income taxes(216.0) (3.3)% 9.3
 16.8
 (189.9) (2.9)%
Net income (loss)547.1
 8.3 % (17.1) (62.1) 467.9
 7.1 %
Diluted earnings per share$6.86
   $(0.21) $(0.78) $5.87
  
(1)
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’s 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 resulted 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 $32.2 million and amortization expense of intangibles.
(2)
Transaction and integration costs are primarily attributable to the legal settlement of $34.2 million over appraisal rights, expenses associated with advisor fees for legal, tax, accounting, information technology implementation, consulting, as well as severance costs. These costs are included within Signet’s Other segment.

(b) Fourth quarter Fiscal 2016 operating data reflecting the impact of acquisition-related costs and accounting adjustments
Fourth Quarter Fiscal 2016
(in millions, except per share amount and % of sales)		Adjusted Signet 
Accounting adjustments(1)
 
Transaction/Integration costs(2)
 Signet consolidated,
as reported
Sales$2,397.8
 100.0 % $(5.2) $—
 $2,392.6
 100.0 %
Cost of sales(1,377.1) (57.4)% 0.5
 —
 (1,376.6) (57.5)%
Gross margin1,020.7
 42.6 % (4.7) —
 1,016.0
 42.5 %
Selling, general and administrative expenses(666.0) (27.8)% (1.5) (19.1) (686.6) (28.7)%
Other operating income, net63.7
 2.6 % —
 —
 63.7
 2.6 %
Operating income (loss)418.4
 17.4 % (6.2) (19.1) 393.1
 16.4 %
Interest expense, net(12.1) (0.5)% —
 —
 (12.1) (0.5)%
Income before income taxes406.3
 16.9 % (6.2) (19.1) 381.0
 15.9 %
Income taxes(117.8) (4.9)% 1.8
 6.9
 (109.1) (4.5)%
Net income (loss)288.5
 12.0 % (4.4) (12.2) 271.9
 11.4 %
Diluted earnings per share$3.63
   $(0.06) $(0.15) $3.42
  
(1)
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’s 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 resulted 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 amortization of acquired intangibles.
(2)
Transaction and integration costs include expenses associated with information technology implementations and consulting as well as severance costs to drive synergies. These costs are included within Signet’s Other segment.




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(c) Fiscal 2015 operating data reflecting the impact of acquisition-related costs and accounting adjustments
Fiscal 2015
(in millions, except per share amount and % of sales)		Adjusted Signet 
Accounting adjustments(1)
 
Transaction/Integration costs(2)
 Signet consolidated,
as reported
Sales$5,769.9
 100.0 % $(33.6) $—
 $5,736.3
 100.0 %
Cost of sales(3,638.4) (63.1)% (23.7) —
 (3,662.1) (63.8)%
Gross margin2,131.5
 36.9 % (57.3) —
 2,074.2
 36.2 %
Selling, general and administrative expenses(1,664.5) (28.8)% 11.4
 (59.8) (1,712.9) (29.9)%
Other operating income, net215.3
 3.7 % —
 —
 215.3
 3.7 %
Operating income (loss)682.3
 11.8 % (45.9) (59.8) 576.6
 10.0 %
Interest expense, net(36.0) (0.6)% —
 —
 (36.0) (0.6)%
Income before income taxes646.3
 11.2 % (45.9) (59.8) 540.6
 9.4 %
Income taxes(195.2) (3.4)% 17.4
 18.5
 (159.3) (2.8)%
Net income (loss)451.1
 7.8 % (28.5) (41.3) 381.3
 6.6 %
Diluted earnings per share$5.63
   $(0.36) $(0.51) $4.75
  
(1)
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’s 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 resulted 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 $32.2 million and amortization expense of intangibles.
(2)
Transaction and integration costs include expenses associated with advisor fees for legal, tax, accounting, information technology implementation and consulting. Severance costs related to Zale and other management changes are also included to conform with current year presentation. These costs are included within Signet’s Other segment.

(d) Fourth quarter Fiscal 2015 operating data reflecting the impact of acquisition-related costs and accounting adjustments
Fourth Quarter Fiscal 2015
(in millions, except per share amount and % of sales)		Adjusted Signet 
Accounting adjustments(1)
 
Transaction/Integration costs(2)
 Signet consolidated,
as reported
Sales$2,289.2
 100.0 % $(12.8) $—
 $2,276.4
 100.0 %
Cost of sales(1,352.3) (59.1)% (12.0) —
 (1,364.3) (59.9)%
Gross margin936.9
 40.9 % (24.8) —
 912.1
 40.1 %
Selling, general and administrative expenses(629.3) (27.5)% 4.0
 (9.2) (634.5) (27.9)%
Other operating income, net54.1
 2.4 % —
 —
 54.1
 2.4 %
Operating income (loss)361.7
 15.8 % (20.8) (9.2) 331.7
 14.6 %
Interest expense, net(10.7) (0.5)% 2.8
 —
 (7.9) (0.4)%
Income before income taxes351.0
 15.3 % (18.0) (9.2) 323.8
 14.2 %
Income taxes(105.4) (4.6)% 6.8
 2.8
 (95.8) (4.2)%
Net income (loss)245.6
 10.7 % (11.2) (6.4) 228.0
 10.0 %
Diluted earnings per share$3.06
   $(0.14) $(0.08) $2.84
  
(1)
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’s 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 resulted 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 $32.2 million and amortization expense of intangibles.
(2)
Transaction and integration costs include expenses associated with advisor fees for legal, tax, accounting, information technology implementation and consulting. Severance costs related to Zale and other management changes are also included to conform with current year presentation. These costs are included within Signet’s Other segment.


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3. Net Cash (Debt)
Net cash (debt) is the total of cash and cash equivalents less loans, overdrafts and long-term debt. Management considers this metric to be helpful in understanding the total indebtedness of the Company after consideration of liquidity available from cash balances on-hand.
(in millions)January 30, 2016 January 31, 2015 February 1, 2014
Cash and cash equivalents$137.7
 $193.6
 $247.6
Loans and overdrafts(59.5) (97.5) (19.3)
Long-term debt(1,328.7) (1,363.8) —
Net (debt) cash$(1,250.5) $(1,267.7) $228.3

4. Return on Capital Employed Excluding Goodwill (“ROCE”)
ROCE is calculated by dividing the 52 week annual operating income by the average quarterly capital employed and is expressed as a percentage. Capital employed includes accounts and other receivables, inventories, property, plant and equipment, other assets, accounts payable, accrued expenses and other current liabilities, other liabilities, deferred revenue and retirement benefit asset/obligation. This is a key performance indicator used by management for assessing the effective operation of the business and is considered a useful disclosure for investors as it provides a measure of the return on Signet’s operating assets. Further, this metric is utilized in evaluating management performance and incorporated into management’s long-term incentive plan metrics.
 Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Fiscal 2012
ROCE21.0% 19.5% 25.2% 28.1% 28.6%

5. Free Cash Flow
Free cash flow is a non-GAAP measure defined as the net cash provided by operating activities less purchases of property, plant and equipment. Management considers that this is helpful in understanding how the business is generating cash from its operating and investing activities that can be used to meet the financing needs of the business. Free cash flow is an indicator used by management frequently in evaluating its overall liquidity and determining appropriate capital allocation strategies. Free cash flow does not represent the residual cash flow available for discretionary expenditure.
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014
Net cash provided by operating activities$443.3
 $283.0
 $235.5
Purchase of property, plant and equipment(226.5) (220.2) (152.7)
Free cash flow$216.8
 $62.8
 $82.8


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6. Leverage Ratio
The leverage ratio is a non-GAAP measure calculated by dividing Signet’s adjusted debt by adjusted EBITDAR. Adjusted debt is a non-GAAP measure defined as debt recorded in the consolidated balance sheet, plus an adjustment for operating leases (8x annual rent expense), less 70% of outstanding in-house finance receivables recorded in the consolidated balance sheet. Adjusted EBITDAR is a non-GAAP measure. Adjusted EBITDAR is defined as earnings before interest and income taxes (operating income), depreciation and amortization, and non-cash acquisition-related accounting adjustments (“Adjusted EBITDA”) and further excludes rent expense for properties occupied under operating leases, non-cash share-based compensation expense and income earned on receivable balances related to the in-house credit program. Adjusted EBITDA and Adjusted EBITDAR are considered important indicators of operating performance as they exclude the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization costs and accounting adjustments. Management believes these financial measures are helpful to enhancing investors’ ability to analyze trends in Signet’s business and evaluate Signet’s performance relative to other companies. Management also utilizes these metrics to evaluate its current credit profile, which is a view consistent with rating agency methodologies.
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Fiscal 2012
Adjusted Debt:         
Long-term debt$1,328.7
 $1,363.8
 $—
 $—
 $—
Loans and Overdrafts59.5
 97.5
 19.3
 —
 —
Adjustments:         
 8x rent expense4,205.6
 3,703.2
 2,589.6
 2,528.0
 2,473.0
   70% of financing receivables related to in-house credit program(1,217.7) (1,087.1) (949.2) (835.0) (754.2)
Adjusted Debt$4,376.1
 $4,077.4
 $1,659.7
 $1,693.0
 $1,718.8
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Fiscal 2012
Operating income$703.7
 $576.6
 $570.5
 $560.5
 $507.4
Depreciation and amortization on property, plant and equipment(1)
161.4
 140.4
 110.2
 99.4
 92.4
Amortization of definite-lived intangibles(1)(2)
13.9
 9.3
 —
 —
 —
Amortization of unfavorable leases and contracts(2)
(28.7) (23.7) —
 —
 —
Other non-cash accounting adjustments(2)
41.2
 60.3
 —
 —
 —
Adjusted EBITDA$891.5
 $762.9
 $680.7
 $659.9
 $599.8
Rent expense525.7
 462.9
 323.7
 316.0
 309.1
Share-based compensation expense16.4
 12.1
 14.4
 15.7
 17.0
Finance income from in-house credit program(252.6) (217.9) (186.4) (159.7) (125.4)
Adjusted EBITDAR$1,181.0
 $1,020.0
 $832.4
 $831.9
 $800.5
Adjusted Leverage ratio3.7x
 4.0x
 2.0x
 2.0x
 2.1x
(1)
Total amount of depreciation and amortization reflected on the consolidated statement of cash flows for Fiscal 2016 and Fiscal 2015 equals $175.3 million and $149.7 million, respectively which includes $13.9 million and $9.3 million, respectively, related to the amortization of definite-lived intangibles, primarily favorable leases and trade names.
(2)
Total net operating loss relating to Acquisition accounting adjustments is $26.4 million and $45.9 million for Fiscal 2016 and Fiscal 2015, respectively, as reflected in the non-GAAP tables above.




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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, based upon management’s beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this Annual Report on Form 10-K and include statements regarding, among other things, Signet’s results of operation, financial condition, liquidity, prospects, growth, strategies and the industry in which Signet operates. The use of the words “expects,” “intends,” “anticipates,” “estimates,” “predicts,” “believes,” “should,” “potential,” “may,” “forecast,” “objective,” “plan,” or “target,” and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including but not limited to general economic conditions, a 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’s operations and to realize synergies from the transaction.
For a discussion of these risks and other risks and uncertainties which could cause actual results to differ materially from those expressed in any forward looking statement, see Item 1A and elsewhere in this Annual Report on Form 10-K. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.
GAAP AND NON-GAAP MEASURES
The discussion and analysis of Signet’s results of operations, financial condition and liquidity contained in this Annual Report on Form 10-K are based upon the consolidated financial statements of Signet which are prepared in accordance with US GAAP and should be read in conjunction with Signet’s financial statements and the related notes included in Item 8. A number of non-GAAP measures are used by management to analyze and manage the performance of the business, and the required disclosures for these non-GAAP measures are shown below.
Signet provides such non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations. Management does not, nor does it suggest investors should, consider such non-GAAP measures in isolation from, or in substitution for, financial information prepared in accordance with GAAP.
1. Net Debt
Net debt is a non-GAAP measure defined as the total of cash and cash equivalents less loans, overdrafts and long-term debt. Management considers this metric to be helpful in understanding the total indebtedness of the Company after consideration of liquidity available from cash balances on-hand.
(in millions)February 2, 2019 February 3, 2018 January 28, 2017
Cash and cash equivalents$195.4
 $225.1
 $98.7
Loans and overdrafts(78.8) (44.0) (91.1)
Long-term debt(649.6) (688.2) (1,317.9)
Net debt$(533.0) $(507.1) $(1,310.3)

2. Return on Capital Employed Excluding Goodwill (“ROCE”)
ROCE is a non-GAAP measure calculated by dividing the 52 week annual operating income by the average quarterly capital employed and is expressed as a percentage. Capital employed includes accounts and other receivables, inventories, property, plant and equipment, other assets, accounts payable, accrued expenses and other current liabilities, other liabilities, deferred revenue and retirement benefit asset/obligation. This is a key performance indicator used by management for assessing the effective operation of the business and is considered a useful disclosure for investors as it provides a measure of the return on Signet’s operating assets. Further, this metric is utilized in evaluating management performance and incorporated into management’s long-term incentive plan metrics.
 Fiscal 2019 Fiscal 2018 Fiscal 2017 Fiscal 2016 Fiscal 2015
ROCE6.7%
(1) 
19.1% 21.4% 21.0% 19.5%
(1)
ROCE in Fiscal 2019 was adjusted to exclude the impact of goodwill and intangible impairments totaling $735.4 million and $160.4 million of valuation losses associated with sale of the non-prime in-house accounts receivable portfolio recognized during the year. See Note 17 and Note 4 of Item 8 for additional information.
3. Free Cash Flow
Free cash flow is a non-GAAP measure defined as the net cash provided by operating activities less purchases of property, plant and equipment. Management considers that this is helpful in understanding how the business is generating cash from its operating and investing activities that can be used to meet the financing needs of the business. Free cash flow is an indicator used by management frequently in evaluating its overall liquidity and determining appropriate capital allocation strategies. Free cash flow does not represent the residual cash flow available for discretionary expenditure. In Fiscal 2019, net cash provided by operating activities included $445.5 million in proceeds received in connection with the sale of the Company’s non-prime receivable portfolio. In Fiscal 2018, net cash provided by operating activities included $952.5 million in proceeds received in connection with the sale of the Company’s prime receivable portfolio. See Note 4 of Item 1 for additional information regarding the sale of the prime and non-prime receivable portfolios.
(in millions)Fiscal 2019 Fiscal 2018 Fiscal 2017
Net cash provided by operating activities$697.7
 $1,940.5
 $678.3
Purchase of property, plant and equipment(133.5) (237.4) (278.0)
Free cash flow$564.2
 $1,703.1
 $400.3
4. Leverage Ratio
The leverage ratio is a non-GAAP measure calculated by dividing Signet’s adjusted debt by adjusted EBITDAR. Adjusted debt is a non-GAAP measure defined as debt recorded in the consolidated balance sheet, plus Series A redeemable convertible preferred shares, plus an adjustment for operating leases (5x annual rent expense). Prior to the termination of the asset-backed securitization in Fiscal 2018, this measure was also reduced by 70% of outstanding in-house finance receivables recorded in the consolidated balance sheet. Adjusted EBITDAR is a non-GAAP measure. Adjusted EBITDAR is defined as earnings before interest and income taxes, depreciation and amortization, and non-cash accounting adjustments (“Adjusted EBITDA”) and further excludes rent expense for properties occupied under operating leases. Prior to Fiscal 2018, this measure also excluded non-cash share-based compensation expense and the income statement impact of the finance receivables related to the in-house credit program. Adjusted EBITDA and Adjusted EBITDAR are considered important indicators of operating performance as they exclude the effects of financing and investing activities by eliminating the effects of interest, depreciation and amortization costs and accounting adjustments. Management believes these financial measures are helpful to enhancing investors’ ability to analyze trends in Signet’s business and evaluate Signet’s performance relative to other companies. Management also utilizes these metrics to evaluate its current credit profile, which is similar to rating agency methodologies.

(in millions)Fiscal 2019 Fiscal 2018 Fiscal 2017 Fiscal 2016 Fiscal 2015
Adjusted debt:         
Long-term debt$649.6
 $688.2
 $1,317.9
 $1,321.0
 $1,354.3
Loans and overdrafts78.8
 44.0
 91.1
 57.7
 95.7
Series A redeemable convertible preferred shares(1)
615.3
 613.6
 611.9
 n/a
 n/a
Adjustments:         
5x Rent expense(3)
2,551.5
 2,640.5
 
 
 
8x Rent expense(3)
n/a
 n/a
 4,195.2
 4,205.6
 3,703.2
70% of in-house credit program financing receivablesn/a
 n/a
 (1,269.3) (1,208.2) (1,087.0)
Adjusted debt$3,895.2
 $3,986.3
 $4,946.8
 $4,376.1
 $4,066.2
          
Adjusted EBITDAR:         
Net income (loss)$(657.4) $519.3
 $543.2
 $467.9
 $381.3
Income taxes(145.2) 7.9
 170.6
 189.9
 159.3
Interest expense, net39.7
 52.7
 49.4
 45.9
 36.0
Depreciation and amortization on property, plant and equipment(2)
179.6
 194.1
 175.0
 161.4
 140.4
Amortization of definite-lived intangibles(2)
4.0
 9.3
 13.8
 13.9
 9.3
Amortization of unfavorable leases and contracts(7.9) (13.0) (19.7) (28.7) (23.7)
Other non-cash accounting adjustments(3)
980.7
 —
 22.7
 41.2
 60.3
Adjusted EBITDA$393.5
 $770.3
 $955.0
 $891.5
 $762.9
Rent expense510.3
 528.1
 524.4
 525.7
 462.9
Share-based compensation expense(4)
n/a
 n/a
 8.0
 16.4
 12.1
Finance income from in-house credit programn/a
 n/a
 (277.6) (252.5) (217.9)
Late charge incomen/a
 n/a
 (36.0) (33.9) (31.3)
Net bad debt expensen/a
 n/a
 212.1
 190.5
 160.0
Adjusted EBITDAR$903.8
 $1,298.4
 $1,385.9
 $1,337.7
 $1,148.7
 

        
Adjusted Leverage ratio(5)
4.3x
 3.1x
 3.6x
 3.3x
 3.5x
(1)
Series A redeemable convertible preferred shares were issued in October 2016.
(2)
Total amount of depreciation and amortization reflected on the consolidated statement of cash flows for Fiscal 2019, Fiscal 2018 and Fiscal 2017 equals $183.6 million, $203.4 million and $188.8 million, respectively, which includes $4.0 million, $9.3 million and $13.8 million, respectively, related to the amortization of definite-lived intangibles, primarily favorable leases and trade names.
(3)
Fiscal 2019 includes: 1) $735.4 million related to the goodwill and intangible impairments; 2) $160.4 million from the valuation losses related to the sale of eligible non-prime in-house accounts receivable; and 3) $84.9 million related to charges recorded in conjunction with the Company’s restructuring activities.
(4)
Adjusted debt and adjusted EBITDA have been recalculated to align with methodologies commonly utilized by credit rating agencies and others in evaluating leverage.
(5)
Adjusted leverage ratio would have been as follows in the comparable periods if adjusted debt reflected 5x rent expense: Fiscal 2017: 2.4x, Fiscal 2016: 2.1x and Fiscal 2015: 2.3x.
n/aNot applicable.




ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains statements which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, based upon management’s beliefs and expectations as well as on assumptions made by and data currently available to management, appear in a number of places throughout this document and include statements regarding, among other things, Signet’s results of operation, financial condition, liquidity, prospects, growth, strategies and the industry in which Signet operates. The use of the words “expects,” “intends,” “anticipates,” “estimates,” “predicts,” “believes,” “should,” “potential,” “may,” “forecast,” “objective,” “plan,” or “target,” and other similar expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including, but not limited to: our ability to implement Signet's transformation initiative; the effect of US federal tax reform and adjustments relating to such impact on the completion of our quarterly and year-end financial statements; changes in interpretation or assumptions, and/or updated regulatory guidance regarding the US federal tax reform; the benefits and outsourcing of the credit portfolio sale including technology disruptions, future financial results and operating results; deterioration in the performance of individual businesses or of the company's market value relative to its book value, resulting in impairments of fixed assets or intangible assets or other adverse financial consequences, including tax consequences related thereto, especially in view of the Company’s recent market valuation; our ability to successfully integrate Zale Corporation and R2Net’s operations and to realize synergies from the Zale and R2Net transactions; general economic conditions; potential regulatory changes, global economic conditions or other developments related to the United Kingdom’s announced intention to negotiate a formal exit from the European Union; a decline in consumer spending or deterioration in consumer financial position; the merchandising, pricing and inventory policies followed by Signet; Signet’s relationships with suppliers and ability to obtain merchandise that customers wish to purchase; the reputation of Signet and its banners; the level of competition and promotional activity in the jewelry sector; the cost and availability of diamonds, gold and other precious metals; changes in the supply and consumer acceptance of gem quality lab created diamonds; regulations relating to customer credit; seasonality of Signet’s business; the success of recent changes in Signet’s executive management team; the performance of and ability to recruit, train, motivate and retain qualified sales associates; the impact of weather-related incidents on Signet’s business; financial market risks; exchange rate fluctuations; changes in Signet’s credit rating; changes in consumer attitudes regarding jewelry; management of social, ethical and environmental risks; the development and maintenance of Signet’s omni-channel retailing; the ability to optimize Signet’s real estate footprint; 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 credit outsourcing fees, 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; Signet’s ability to protect its intellectual property; changes in taxation benefits, rules or practices in the US and jurisdictions in which Signet’s subsidiaries are incorporated, including developments related to the tax treatment of companies engaged in Internet commerce; and an adverse development in legal or regulatory proceedings or tax matters, any new regulatory initiatives or investigations, and ongoing compliance with regulations and any consent orders or other legal or regulatory decisions.
For a discussion of these and other risks and uncertainties which could cause actual results to differ materially from those expressed in any forward-looking statement, see Item 1A and elsewhere in this Annual Report on Form 10-K. Signet undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.
GAAP AND NON-GAAP MEASURES
The following discussion and analysis of the results of operations, financial condition and liquidity is based upon the consolidated financial statements of Signet which are prepared in accordance with US GAAP. The following information should be read in conjunction with Signet’s financial statements and the related notes included in Item 8.
A number of non-GAAP measures are used by management to analyze and manage the performance of the business. See Item 6 for the required disclosures related to these measures. Signet provides such non-GAAP information in reporting its financial results to give investors additional data to evaluate its operations. The Company’s management does not, nor does it suggest investors should, consider such non-GAAP measures in isolation from, or in substitution for, financial information prepared in accordance with GAAP.
Exchange Translation Impact
The monthly average exchange rates are used to prepare the income statement and are calculated each month from the weekly average exchange rates weighted by sales. In Fiscal 2017,2020, it is anticipated a five percent movement in the British pound to US dollar exchange rate would impact income before income taxes by approximately $3.2$1.1 million, while a five percent movement in the Canadian dollar to US dollar exchange rate would have a negligible impact on income before income taxes.taxes by approximately $0.3million.
Transactions Affecting Comparability
Market and Operating Conditions
We face a highly competitive and dynamic retail landscape throughout the geographies where we do business, as well as an uncertain macro-economic and political environment in our UK market. Fiscal 2019 holiday sales results did not meet our expectations, and as a result, we ended the year in an elevated inventory position and do expect inventory to be up year over year in the first quarter. As we continue to work through legacy product and engage in incremental clearance activity, we do expect to reduce our inventory position by year end Fiscal 2020. A key learning from Fiscal 2019 is the need to have a broader price focused assortment for the value-oriented gifting shopper in key weeks around major holidays, which could negatively impact profit. Additionally, a timing shift related to revenue recognition for extended service plan revenues, which have a higher margin rate, are expected to have a negative impact on profit in the first half of ResultsFiscal 2020. This timing shift of Operations and Liquidity and Capital Resources
The comparabilityservice plan revenue is the result of the Company’s operating results for historical claims experience shifting away from the earlier years of the service plans to later years of the coverage period.
Fiscal 2016, Fiscal 2015 and Fiscal 2014 presented herein has been affected by certain transactions, including:2019 Overview
The Zale Acquisition that closed on May 29, 2014, as describedSimilar to many other retailers, Signet follows the retail 4-4-5 reporting calendar, which included an extra week in Note 3 of Item 8, resulting in Zale contributing 247 days of performance during the year-to-date periodfourth quarter of Fiscal 2015 based on the timing of the acquisition;
Certain transaction and integration costs;
Zale Acquisition financing as described in Note 3 and Note 19 of Item 8, including global financing arrangements; and
Certain purchase accounting adjustments.
Fiscal 2016 Overview
Results reflect the addition of Zale Corporation from the date of the Acquisition on May 29, 2014. Same store sales increased 4.1% compared to an increase of 4.1% also in Fiscal 2015; total sales were up 14.2% to $6,550.2 million compared to $5,736.32018 (the “53rd week”). The 53rd week added $84.3 million in Fiscal 2015. The current yearnet sales results reflect a full year of Zale which added $1,811.4 million of sales, compared to a partial prior year of $1,215.6 million. Operating marginand increased 70 basis points to 10.7% compared to 10.0% in Fiscal 2015. Operating income increased 22.0% to $703.7 million compared to $576.6 million in Fiscal 2015. Diluteddiluted earnings per share increased 23.6% to $5.87 compared to $4.75 inby approximately $0.12 for both the quarter and Fiscal 2015. Higher profit dollars and

51

the increased operating margin rate were also driven by the continued integration of Zale and investments in field operational and support initiatives to improve efficiencies and leverage operating expense. See “GAAP and Non-GAAP Measures” section in Item 6 for additional information.
Signet’s long-term debt was $1,328.7 million at January 30, 2016 and $1,363.8 million at January 31, 2015. Cash and cash equivalents were $137.7 million and $193.6 million, as of January 30, 2016 and January 31, 2015, respectively. During Fiscal 2016, Signet repurchased approximately 1.0 million shares at an average cost of $127.63 per share, which represented 1.3% of the shares outstanding at the start of Fiscal 2016, as compared to 0.3 million shares repurchased in Fiscal 2015 at an average cost of $103.37.2018.
Drivers of Operating Profitability
The key measures and drivers of operating profitability are:
total sales - driven by the change in same store sales, and net store selling space;space and mix of product and services;
gross margin;margin - including the mix of results by store banner including brick-and-mortar locations and online; and
level of selling, general and administrative expenses.
Same Store Sales
Same store sales growth is calculated by comparison of sales in stores that were open in both the current and the prior fiscal year. Sales from stores that have been open for less than 12 months including acquisitions, are excluded from the comparison until their 12-month anniversary. Sales after the 12-month anniversary are compared against the equivalent prior period sales within the comparable store sales comparison. Stores closed in the current financial period are included up to the date of closure and the comparative period is correspondingly adjusted. Stores that have been relocated or expanded, but remain within the same local geographic area, are included within the comparison with no adjustment to either the current or comparative period. Stores that have been refurbished are also included within the comparison except for the period when the refurbishment was taking place, when those stores are excluded from the comparison both for the current year and for the comparative period. Sales to employees are also excluded. Comparisons at divisional level are made in local currency and consolidated comparisons are made at constant exchange rates and exclude the effect of exchange rate movements by recalculating the prior period results as if they had been generated at the weighted average exchange rate for the current period. eCommerce sales are included in the calculation of same store sales for the period and the comparative figures from the anniversary of the launch of the relevant website. Same store sales exclude the 53rd week in the fiscal year in which it occurs. Management considers same store sales useful as it is a major benchmark used by investors to judge performance within the retail industry.
Net Store Selling Space
Sterling Jewelers division Zale division UK Jewelry division Total
Signet		  North America International Total
Signet
Fiscal 2016        
Fiscal 2019      
Openings60
 38
 10
 108
  42
 3
 45
Closures(24) (33) (5) (62)  (237) (30) (267)
Net change in store selling space5.0% 0.5% 1.5 % 3.3%  (5.8)% (4.8)% (5.7)%
Fiscal 2015        
Fiscal 2018      
Openings75
 12
 8
 95
  113
 3
 116
Closures(42) (54) (3) (99)  (235) (7) (242)
Net change in store selling space4.9% n/a
 1.8 % 48.1%
(1) 
 (1.9)% (0.4)% (1.7)%
Fiscal 2014        
Fiscal 2017      
Openings81
 n/a
 2
 83
  153
 9
 162
Closures(53) n/a
 (20) (73)  (101) (4) (105)
Net change in store selling space4.8% n/a
 (2.5)% 3.6%  2.8 % 1.0 % 2.6 %
(1)    Excluding Zale division, net change in store selling space for Signet was 4% in Fiscal 2015.
n/aNot applicable as Zale division was acquired on May 29, 2014. See Note 3 of Item 8 for additional information.

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Cost of Sales and Gross Margin
Cost of sales is mostly composed of merchandise costs (net of discounts and allowances). Cost of sales also contains:
Occupancy costs such as rent, common area maintenance, depreciation and real estate tax.
Net bad debt expense and customers’ late payments primarily under the Sterling Jewelers customer finance program.
•
Net bad debt expense and customers’ late payments prior to Signet outsourcing credit.(1)
Store operating expenses such as utilities, displays and merchant credit costs.
Distribution and warehousing costs including freight, processing, inventory shrinkage and inventory shrinkage.related payroll.
(1)
Signet recognized two months of net bad debt expense, customer late payment and finance interest income (presented within other operating income) in the first quarter of Fiscal 2019 prior to the non-prime receivables being reclassified as receivables held for sale.
As the classification of cost of sales or selling, general and administrative expenses varies from retailer to retailer, and few retailers have in-house customer finance programs, Signet’s gross margin percentage may not be directly comparable to other retailers.
Factors that influence gross margin include pricing, promotional environment, changes in merchandise costs (principally diamonds), changes in non-merchandise components of cost of sales (as described above), changes in sales mix, foreign exchange, gold and currency hedges and the economics of services such as repairs and extended service plans. The price of diamonds varies depending on their size, cut, color and clarity. Demand for diamonds is primarily driven by the manufacture and sale of diamond jewelry and their future price is uncertain. At times, Signet uses gold and currency hedges to reduce its exposure to market volatility in the cost of gold and the pound sterling to the US dollar exchange rate, but it is not able to do so for diamonds. For gold and currencies, the hedging period can extend to 24 months, although the majority of hedge contracts will normally be for a maximum of 12 months.
The percentage mix of the merchandise cost component of cost of sales, based on US dollars, is as follows:
 Sterling Jewelers division Zale division UK Jewelry division Total
Signet		 North America International Total
Signet
Fiscal 2016        
Diamonds 53% 39% 15% 45%
Fiscal 2019      
Diamond 55% 19% 52%
Gold 14% 12% 14%
All Other(1)
 31% 69% 34%
Fiscal 2018      
Diamond 48% 16% 45%
Gold 14% 14% 16% 14% 14% 15% 14%
All Other 33% 47% 69% 41% 38% 69% 41%
Fiscal 2015        
Diamonds 52% 43% 10% 45%
Gold 15% 16% 15% 15%
All Other 33% 41% 75% 40%
(1)
Decrease in North America reflects the Company strategy to exit low-priced owned branded beads and increase investments in bridal and certain fashion collections.
Signet uses an average cost inventory methodology and, as jewelry inventory turns slowly, the impact of movements in the cost of diamonds and gold takes time to be fully reflected in the gross margin. Signet’s inventory turns faster in the fourth quarter than in the other three quarters, therefore, changes in the cost of merchandise areis more quickly reflected inimpactful on the gross margin in that quarter. Furthermore, Signet’s hedging activities result in movements in the purchase cost of merchandise taking some time before being reflected in the gross margin. An increase in inventory turn would accelerate the rate at which commodity costs impact gross margin.
Accounts receivable comprise a large volume of transactions with no one customer representing a significant balance. The net US bad debt expense includes an estimate of the allowance for losses as of the balance sheet date. The allowance 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 90 days aged and under based on historical loss information and payment performance. Near the end of the current year, a portion of sales under the Zale banners were financed through our in-house customer programs, however represented an immaterial amount of the Company’s credit sales, receivable balance or bad debt expense.
Selling, General and Administrative Expense (“SGA”)
SGA expense primarily includes store staff and store administrative costs as well as advertising and promotional costs. It also includes field support center expenses such as information technology, in-house credit operations prior to the Company’s outsourcing initiatives in the third quarter of Fiscal 2018 and third-party outsourcing fees and credit sales subsequent to the outsourcing initiative, finance, eCommerce and other operating expenses not specifically categorized elsewhere in the consolidated income statements.
The primary drivers of staffing costs are the number of full time equivalent employees employed and the level of compensation, taxes and other benefits paid. Management varies, on a store by store basis, the hours worked based on the expected level of selling activity, subject to minimum staffing levels required to operate the store. Non-store staffing levels are less variable. A significant element of compensation is performance based and is primarily dependent on sales and operating profit.
The level of advertising expenditure can vary. The largest element of advertising expenditure ishas historically been national television advertising and is determined by management’s judgment of the appropriate level of advertising impressions and the cost of purchasing media.

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Other Operating Income
OtherPrior to the third quarter of Fiscal 2018, other operating income iswas predominantly comprised of interest income arising from in-house customer finance provided to the customers of the Sterling Jewelers division. Its level is dependentNorth America segment. In the third quarter of Fiscal 2018, the Company completed the sale of the prime portion of the in-house finance receivables.In the second quarter of Fiscal 2019, the Company completed the sale of the non-prime in-house accounts receivable. Subsequent to these transactions, the Company experienced a material reduction in the amount of interest income it recognized. See Note 4 in Item 8 for further detail on the rate of interest charged, theCompany’s credit program selected by the customer and the level of outstanding balances. The level of outstanding balances is primarily dependent on the sales of the Sterling Jewelers division, the proportion of sales that use the in-house customer finance and the monthly collection rate.transactions.
Operating Income
To maintain current levels of operating income, Signet needs to achieve same store sales growth sufficient to offset any adverse movement in gross margin, any increase in operating costs, the impact of any immature selling space and any adverse changes in other operating income. Same store sales growth above the level required to offset the factors outlined above allows the business to achieve leverage of its cost base and improve operating income. Slower sales growth or a sales decline would normally result in reduced operating income. When foreseen, Signet may be able to reduce costs to help offset the impact of slow or negative sales growth. A key factor in driving operating income is the level of average sales per store, with higher productivity allowing leverage of expenses incurred in performing store and central functions. The acquisition of Zale, with operating margins lower than that of Signet, caused an overall lower operating margin for Signet.
The impact on operating income of a sharp, unexpected increase or decrease in same store sales performance can be significant. This is particularly so when it occurs in the fourth quarter due to the seasonality of the business. In the medium term, there is more opportunity to adjust costs to the changed sales level, but the time it takes varies depending on the type of cost. An example of where it can take a number of months to adjust costs is expenditure on national network television advertising in the US, where Signet makes most of its commitments for the year ahead during its second quarter. Additionally, while Signet has improved flexibility involving lease costs in recent years as off-mall locations have increased, Signet’s ability to adjust base lease costs is stll limited in the short term (and to a lesser extent the medium term), as leases in US malls are typically for one to ten years, Jared sites for 15-20 years and in the UK for a minimum of five years.expenses.
Results of Operations
Fiscal 2016 
Fiscal 2015(1)
 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions)$  % of sales $  % of sales $  % of sales$  % of sales $  % of sales $  % of sales
Sales$6,550.2
 100.0 % $5,736.3
 100.0 % $4,209.2
 100.0 %$6,247.1
 100.0 % $6,253.0
 100.0 % $6,408.4
 100.0 %
Cost of sales(4,109.8) (62.7) (3,662.1) (63.8) (2,628.7) (62.5)(4,024.1) (64.4) (4,063) (65.0) (4,047.6) (63.2)
Restructuring charges - cost of sales(62.2) (1.0) —
 —
 —
 —
Gross margin2,440.4
 37.3
 2,074.2
 36.2
 1,580.5
 37.5
2,160.8
 34.6
 2,190.0
 35.0
 2,360.8
 36.8
Selling, general and administrative expenses(1,987.6) (30.4) (1,712.9) (29.9) (1,196.7) (28.4)(1,985.1) (31.8) (1,872.2) (29.9) (1,880.2) (29.3)
Credit transaction, net(167.4) (2.7) 1.3
 —
 —
 —
Restructuring charges(63.7) (1.0) —
 —
 —
 —
Goodwill and intangible impairments(735.4) (11.8) —
 —
 —
 —
Other operating income, net250.9
 3.8
 215.3
 3.7
 186.7
 4.4
26.2
 0.4
 260.8
 4.2
 282.6
 4.4
Operating income703.7
 10.7
 576.6
 10.0
 570.5
 13.5
Operating income (loss)(764.6) (12.2) 579.9
 9.3
 763.2
 11.9
Interest expense, net(45.9) (0.7) (36.0) (0.6) (4.0) (0.1)(39.7) (0.6) (52.7) (0.9) (49.4) (0.8)
Income before income taxes657.8
 10.0
 540.6
 9.4
 566.5
 13.4
Income taxes(189.9) (2.9) (159.3) (2.8) (198.5) (4.7)
Net income$467.9
 7.1 % $381.3
 6.6 % $368.0
 8.7 %
Other non-operating income1.7
 —
 —
 —
 —
 —
Income (loss) before income taxes(802.6) (12.8) 527.2
 8.4
 713.8
 11.1
Income tax benefit (expense)145.2
 2.3
 (7.9) (0.1) (170.6) (2.6)
Net income (loss)$(657.4) (10.5)% $519.3
 8.3 % $543.2
 8.5 %
(1)    Fiscal 2015 results include Zale Corporation’s performance since the date of acquisition. See Note 3 of Item 8 for additional information.
COMPARISON OF FISCAL 20162019 TO FISCAL 20152018
Same store sales: up 4.1%down 0.1%.
•
Diluted earnings (loss) per share: $(12.62) compared to $7.44 in Fiscal 2018.
Operating income: up 22.0% to $703.7 million. Adjusted(1) operating income: up 18.6% to $809.0 million.
•
Operating margin: increased to 10.7%, up 70 basis points. Adjusted(1) operating margin: up 50 basis points to 12.3%.
•
Diluted earnings per share: up 23.6% to $5.87. Adjusted(1) diluted earnings per share: up 21.8% to $6.86.
(1)
Non-GAAP measure, see Item 6. The Company uses adjusted metrics, which adjust for purchase accounting and costs incurred principally in relation to the Zale Acquisition including transaction and integration expenses.
In Fiscal 2016,2019, Signet’s same store sales increaseddecreased by 4.1%0.1%, compared to an increasea decrease of 4.1%5.3% in Fiscal 2015.2018, which excluded the impact of the 53rd week from its calculation. Total sales were $6,550.2$6.25 billion, down $5.9 million or 0.1%, compared to $5,736.3 million$6.25 billion in Fiscal 2015, up $813.92018. The total sales decline was positively impacted by $111.2 million or 14.2% comparedattributable to an increasethe new US GAAP revenue recognition accounting standard and $135.6 million from the addition of 36.3%James Allen (acquired in Fiscal 2015. Bridal salesSeptember 2017). These factors were nearly halfoffset by net store closures of total merchandise sales, down 10 basis points versus$160.4 million and the negative impact of comparison against a 53rd week in the prior year due to strong sales of fashion jewelry collections such as Ever Us.$84.3 million. eCommerce sales were $359.6$682.4 million and 5.5%10.9% of sales compared to $283.6$497.7 million and 4.9%8.0% of sales in Fiscal 2015. 2018.

The breakdown of Signet’s sales performance is set out in the table below.

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 Change from previous year    
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 division3.7% 2.2% 5.9% — % 5.9% $3,988.7 
Zale Jewelry4.3%            $1,568.2 
Piercing Pagoda7.5%            $243.2 
Zale division(4)
4.8%            $1,811.4 
UK Jewelry division4.9% 1.0% 5.9% (6.7)% (0.8)% $737.6 
Other(5)
—  nm
 nm  — % nm  $12.5 
Signet4.1% 11.7% 15.8% (1.6)% 14.2% $6,550.2 
Adjusted Signet(3)
          $6,577.4 
(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.
(2)    Includes all sales from stores not open for 12 months.
(3)     Non-GAAP measure, see Item 6.
(4) Zale division results in the prior year reflect the 247 days of performance subsequent to the acquisition of Zale Corporation as of May 29, 2014.
(5)     Includes sales from Signet’s diamond sourcing initiative.
nm    Not meaningful.
Sterling Jewelers sales
In Fiscal 2016, Sterling Jewelers total sales were up 5.9% to $3,988.7 million compared to $3,765.0 million in Fiscal 2015, and same store sales increased 3.7% compared to an increase of 4.8% in Fiscal 2015. Sales increases were broad based and driven by a combination of factors primarily in Kay Jewelers stores. Growth was led by fashion jewelry such as Ever Us, Diamonds in Rhythm, and non-branded earrings and bracelets. Bridal also grew led by Neil Lane, Vera Wang Love, and non-branded rings. Branded, differentiated, and exclusive (“branded”) merchandise in Sterling Jewelers increased 30 basis points to 32.6% of Sterling Jeweler’s merchandise sales. The average merchandise transaction value increased driven by improved mix with particular strength in diamond jewelry coupled with declines in select lower average selling price point collections such as Charmed Memories. The number of merchandise transactions decreased due to the same dynamic. Mix of merchandise increased for higher-value, less-transactional collections (e.g. Ever Us) in lieu of higher-transactional, lower-value collections (e.g. Charmed Memories). This trend of higher average merchandise transaction value and lower transactions existed for Kay as well as for Sterling Jewelers overall. In Jared, the average merchandise transaction value was flat to prior year and the number of merchandise transactions decreased due to merchandise mix.below:
 Changes from previous year  
Fiscal 2016
Same
store
sales(1)
 
Non-same
store sales,
net(2)
 Total
sales
as reported		 Total
sales
(in millions)
Kay5.7 % 2.1 % 7.8% $2,530.3 
Jared(3)
0.6 % 4.4 % 5.0% $1,252.9 
Regional brands(1.2)% (7.5)% (8.7)% $205.5 
Sterling Jewelers division3.7 % 2.2 % 5.9% $3,988.7 
 Change from previous year  
Fiscal 2019
Same store sales(1)
 Non-same
store sales,
net		 
Impact of
53rd week on total sales
 Total sales at
constant
exchange rate		 Exchange
translation
impact		 Total sales
as reported		 Total sales
(in millions)
Kay(1.4)% 2.2 % (1.2)% (0.4)% na
 (0.4)% $2,417.8
Zales4.8 % (1.9)% (1.6)% 1.3 % na
 1.3 % $1,260.7
Jared(4.6)% 1.8 % (1.5)% (4.3)% na
 (4.3)% $1,141.4
Piercing Pagoda13.1 % (3.0)% (1.4)% 8.7 % na
 8.7 % $302.5
James Allen(2)
14.6 %           $223.7
Peoples1.8 % (1.9)% (1.6)% (1.7)% (1.5)% (3.2)% $208.5
Regional banners(12.7)% (34.7)% (0.9)% (48.3)% (0.1)% (48.4)% $87.1
North America segment0.5 % 1.3 % (1.3)% 0.5 % — % 0.5 % $5,641.7
H.Samuel(4.8)% (1.5)% (1.6)% (7.9)% 0.5 % (7.4)% $284.0
Ernest Jones(5.6)% 0.9 % (1.7)% (6.4)% 0.8 % (5.6)% $292.5
International segment(5.2)% (0.3)% (1.7)% (7.2)% 0.7 % (6.5)% $576.5
Other(3)
          37.0 % $28.9
Signet(0.1)% 1.4 % (1.4)% (0.1)% — % (0.1)% $6,247.1
(1) 
Based on stores open for at least 12 months. eCommerce sales are includedThe 53rd week in Fiscal 2018 has resulted in a shift in Fiscal 2019, as the calculation offiscal year began a week later than the previous fiscal year. As such, same store sales for Fiscal 2019 are being calculated by aligning the period and comparative figures from the anniversaryweeks of the launch ofquarter to the relevant website.same weeks in the prior year. Total reported sales continue to be calculated based on the reported fiscal periods.
(2) 
Includes allSame store sales from stores not openpresented for 12 months.James Allen to provide comparative performance measure.
(3) 
Includes smaller concept Jared stores such as Jared Vault and Jared Jewelry Boutique.sales from Signet’s diamond sourcing initiative.

 
Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal 2016Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015 Fiscal 2016  Fiscal 2015
Kay$429
 $401
 7.0% 4.7% (2.4)% 2.0%
Jared$553
 $553
 —% 0.7% (0.4)% 4.1%
Regional brands$425
 $407
 4.4% 2.2% (6.0)% (1.6)%
Sterling Jewelers division$462
 $441
 4.8% 3.3% (2.1)% 2.3%
(1)    Average merchandise transaction value (“ATV”) is defined as net merchandise sales on a same store basis divided by the total number of customer transactions. As such, changes from the prior year do not recompute within the table below.
 
Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal YearFiscal 2019 Fiscal 2018 Fiscal 2019 Fiscal 2018 Fiscal 2019 Fiscal 2018
Kay$506
 $466
 8.6 % 1.5 % (8.6)% (10.2)%
Zales$480
 $470
 1.9 % 2.0 % 3.5 % (4.3)%
Jared$659
 $594
 10.2 % 6.1 % (13.0)% (11.0)%
Piercing Pagoda$69
 $63
 9.5 % 8.6 % 3.2 % (5.0)%
James Allen(3)
$3,738
 $4,079
 (11.0)% (1.6)% 28.8 % 34.4 %
Peoples(4)
C$429
 C$429
 (0.9)% 5.4 % 2.8 % (3.7)%
Regional banners$477
 $447
 5.1 % 3.5 % (16.0)% (20.3)%
North America segment$386
 $364
 4.3 % 2.5 % (3.0)% (7.8)%
H.Samuel(5)
£83
 £84
 (4.6)% 9.1 % (0.3)% (14.4)%
Ernest Jones(5)
£359
 £349
 (2.2)% 12.2 % (3.4)% (15.8)%
International segment(5)
£137
 £136
 (4.2)% 9.7 % (0.9)% (14.7)%
(2)(1)  
Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repair, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(2)
Net merchandise sales within the International segment include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(3)
ATV presented for James Allen to provide comparative performance measure.
(4)
Amounts for Peoples stores are denominated in Canadian dollars.
(5)
Amounts for the International segment, including H.Samuel and Ernest Jones, are denominated in British pounds.


55
Table of Contents

Zale divisionNorth America sales
As Zale was acquired May 29, 2014, there is no comparable period presented. The Zale division’s Fiscal 2016North America segment’s total sales were $1,811.4 million. Zale Jewelry contributed $1,568.2 million and Piercing Pagoda contributed $243.2 million of revenues. Total Zale division sales included purchase accounting adjustments of $(27.2) million related$5.64 billion compared to a reduction of deferred revenue associated with extended warranty sales.$5.62 billion in the prior year, up 0.5%. Same store sales increased 4.8%. Similar0.5% compared to Sterling Jewelers, Zale sales growth was led by fashion jewelry particularlya decrease of 5.2% in collections that were cross-sold between divisions such as Ever Us and LeVian. Bridal alsothe prior year. North America’s ATV increased led by Vera Wang Love. Zale division average merchandise transaction value increased 4.6%4.3%, while the number of transactions decreased 3.0%.
Same store sales results were flat. Like Sterling, Zale had greaterpositively impacted by approximately 175 bps of incremental clearance sales productivitypartially offset by 20 bps of unfavorable impact related to the shift of service plan revenue. eCommerce sales increased 43.1% on a reported basis (inclusive of James Allen which was acquired in high-value, lower-transactional collections (e.g.September 2017) and brick and mortar sales declined 1.1% on a same store sales basis.
The percentage of sales from new merchandise increased during the year, but this performance was broadly offset by declines in legacy collections. Bridal and fashion sales each increased on a same store sales basis. Within bridal, The Enchanted Disney Fine Jewelry® collection, Vera Wang Love® collection, Neil Lane® collection, and solitaires performed well, while the Ever Us)Us® collection declined. In fashion, gold fashion jewelry performed well, offset by declines in LeVian® and other legacy collections. The Other product category declined driven by a strategic reduction of owned brand beads, as well as declines in Pandora®.
International sales
In Fiscal 2019, the International segment’s total sales were $576.5 million, down 6.5%, compared to $616.7 million in Fiscal 2018. The same store sales decline was driven by lower sales in bridal jewelry, fashion jewelry and fashion watches, partially offset by higher sales in prestige watches. Same store sales decreased by 5.2% compared to a decrease of 6.0% in Fiscal 2018. ATV decreased 4.2% while the number of transaction decreased 0.9%. ThiseCommerce sales increased 8.0% and brick and mortar sales declined 6.6% on a same store sales basis.
Fourth Quarter Sales
In the fourth quarter, Signet’s total sales were $2.15 billion, down $138.4 million or 6.0%, compared to an increase of 1.0% in the prior year fourth quarter. Same store sales were down 2.0% compared to a decrease of 5.2% in the prior year fourth quarter. The total sales decrease was especiallypositively impacted by $35.2 million attributable to the casenew US GAAP revenue recognition accounting standard offset by the comparison against a 14th week in Piercing Pagoda (average merchandise transaction value up 10.9%;Fiscal 2018 which contributed $84.3 million in sales in Fiscal 2018, $60.9 million from net store closures and $16.5 million of unfavorable foreign exchange translation. eCommerce sales in the fourth quarter were $260.6 million or 12.1% of total sales, compared to $253.8 million or 11.2% of total sales in the prior year fourth quarter. The breakdown of the sales performance is set out in the table below.

 Change from previous year  
Fourth Quarter of Fiscal 2019
Same store sales(1)
 Non-same
store sales,
net		 
Impact of
14th week on total sales
 Total sales at
constant
exchange rate		 Exchange
translation
impact		 Total sales
as reported		 Total sales
(in millions)
Kay(1.6)% 2.1 % (3.4)% (2.9)% na
 (2.9)% $837.4
Zales2.0 % (2.3)% (4.2)% (4.5)% na
 (4.5)% $461.4
Jared(8.4)% 2.8 % (4.4)% (10.0)% na
 (10.0)% $382.2
Piercing Pagoda17.1 % (3.7)% (4.5)% 8.9 % na
 8.9 % $99.1
James Allen(1.4)% — % — % (1.4)% na
 (1.4)% $63.5
Peoples2.1 % (0.9)% (4.6)% (3.4)% (4.8)% (8.2)% $74.3
Regional banners(15.4)% (31.4)% (3.1)% (49.9)% (0.3)% (50.2)% $25.0
North America segment(1.4)% (0.2)% (3.7)% (5.3)% (0.2)% (5.5)% $1,942.9
H.Samuel(5.8)% (1.1)% (4.5)% (11.4)% (4.5)% (15.9)% $102.8
Ernest Jones(8.9)% 1.3 % (5.2)% (12.8)% (4.6)% (17.4)% $92.2
International segment(7.3)% 0.1 % (4.8)% (12.0)% (4.6)% (16.6)% $195.0
Other(2)
          479.3 % $16.8
Signet(2.0)% 0.4 % (3.8)% (5.4)% (0.6)% (6.0)% $2,154.7
(1)
The 14th week in Fiscal 2018 has resulted in a shift in Fiscal 2019, as the fiscal year began a week later than the previous fiscal year. As such, same store sales for Fiscal 2019 are being calculated by aligning the weeks of the quarter to the same weeks in the prior year. Total reported sales continue to be calculated based on the reported fiscal periods.
(2)
Includes sales from Signet’s diamond sourcing initiative.
 
Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal YearFiscal 2019 Fiscal 2018 Fiscal 2019 Fiscal 2018 Fiscal 2019 Fiscal 2018
Kay$473
 $438
 8.2 % 1.2 % (9.3)% (13.8)%
Zales$435
 $436
 (0.5)% 3.6 % 2.3 % 2.4 %
Jared$607
 $546
 11.8 % 1.9 % (18.4)% (8.4)%
Piercing Pagoda$74
 $67
 10.4 % 8.1 % 5.3 % (2.6)%
James Allen$3,674
 $4,034
 (13.2)% (1.3)% 13.6 % 37.2 %
Peoples(3)
C$384
 C$395
 (3.3)% 5.9 % 6.0 % (1.7)%
Regional banners$430
 $418
 1.2 % 0.7 % (17.0)% (23.1)%
North America segment$374
 $369
 2.2 % 1.9 % (4.0)% (7.1)%
H.Samuel(4)
£80
 £84
 (4.8)% 7.7 % (0.8)% (15.6)%
Ernest Jones(4)
£314
 £315
 (1.6)% 4.7 % (8.5)% (13.5)%
International segment(4)
£123
 £129
 (5.4)% 6.6 % (2.3)% (15.2)%
(1)
Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repair, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(2)
Net merchandise sales within the International segment include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(3)
Amounts for Peoples stores are denominated in Canadian dollars.
(4)
Amounts for the International segment, including H.Samuel and Ernest Jones, are denominated in British pounds.
North America sales
The North America segment’s total sales were $1.94 billion compared to $2.06 billion in the prior year, down 5.5%. Same store sales decreased 1.4% compared to a decrease of 4.7% in the prior year. The North America segment’s ATV increased 2.2%, while the number of transactions down 1.2%) anddecreased 4.0%.
Same store sales results include a favorable impact of 65 bps of incremental clearance, a favorable impact of 40 bps due to a lesser degreeplanned shift in timing of promotions at Zales and Peoples and a 25 bps unfavorable impact related to a timing shift of service plan revenue recognized as discussed above. eCommerce sales increased 6.9% and brick and mortar sales declined 2.5% on a same store sales basis.

The percentage of sales from new merchandise increased during the Zale Jewelry segment (average merchandise transaction value up 2.8%;quarter, but this performance was more than offset by declines in legacy collections. Bridal sales were flat on a same store sales basis. Within bridal, engagement sales increased while anniversary sales declined. Anniversary sales were unfavorably impacted by declines in the Ever Us® collection. The Enchanted Disney Fine Jewelry® collection, Vera Wang Love® collection, Neil Lane® collection, and solitaires performed well. Fashion category sales decreased, with gold fashion jewelry, Disney fashion jewelry, and the Love + Be LovedTM collectionperforming well, offset by declines in the LeVian® and other legacy collections. The Other product category declined, driven by a strategic reduction of owned brand beads, as well as declines in Pandora®.
International sales
The International segment’s total sales decreased 16.6% to $195.0 million compared to $233.9 million in the prior year and decreased 12.0% at constant exchange rates. Same store sales decreased 7.3% compared to a decrease of 9.2% in the prior year. The same store sales decline was driven by lower sales in bridal jewelry, fashion jewelry and fashion watches, partially offset by higher sales in prestige watches. In the International segment’s ATV decreased 5.4%, while the number of transactions decreased 2.3%. eCommerce sales declined 6.9% and brick and mortar sales declined 7.3% on a same store sales basis.
Cost of Sales and Gross Margin
In Fiscal 2019, gross margin was $2.16 billion or 34.6% of sales compared to $2.19 billion or 35.0% of sales in Fiscal 2018. Gross margin was negatively impacted by $62.2 million, or 100 bps, in restructuring charges related to net inventory write-downs taken during the year.The write-downs relate to brands and collections that the Company is discontinuing as part of its transformation plan to increase newness across merchandise categories. Transformation cost savings related to direct sourcing and distribution were offset by sales deleverage and higher mix of clearance inventory sales and impact of promotional environment. In addition, lower store occupancy due to store closures also favorably impacted gross margin. Additional factors impacting gross margin rate include: 1) a positive 220 basis point impact related to discontinuing the recognition of bad debt expense and late charge income; 2) a negative 40 basis point impact related to James Allen, which carries a lower gross margin rate; and 3) a negative 40 basis point impact from the discontinuation of credit insurance.
In the fourth quarter, the consolidated gross margin was $877.8 million or 40.7% of sales compared to $919.8 million or 40.1% of sales in the prior year fourth quarter. Factors impacting gross margin rate include: 1) a positive 250 bps impact related to no longer recognizing bad debt expense and late charge income; 2) a negative 40 bps impact related to an inventory write-down; 3) a negative 30 bps impact related to adopting the new US GAAP revenue recognition accounting standard, including higher revenue share payments associated with the prime credit outsourcing arrangement; and 4) a negative 10 bps impact related to a timing shift of revenue recognized on service plans. The residual factors impacting gross margin rate include deleverage from lower sales and the impact of promotional and incremental clearance sales partially offset by transformation cost savings. See Note 7 of Item 8 for additional information regarding the Company’s restructuring activities.
Selling, General and Administrative Expenses (“SGA”)
Selling, general and administrative expenses for Fiscal 2019 were $1.99 billion or 31.8% of sales compared to $1.87 billion or 29.9% of sales in Fiscal 2018, up 1.6%). Branded merchandise$112.9 million. SGA increased primarily due to: 1) a $100 million increase in credit costs related to the transition to an outsourced credit model; 2) a $30 million increase in advertising expense; 3) a $20 million increase in incentive compensation expense, which included $6 million of one-time cash awards to non-managerial hourly team members; and an $11 million charge related to the resolution of a previously disclosed regulatory matter. Increases in SGA were partially offset by a $15 million decrease in store staff costs and transformation cost savings, net of investments. Prior year SGA included $30.5 million in expense related to the 53rd week.
In the fourth quarter, SGA expense was 42.9%$647.2 million or 30.0% of sales compared to $634.5 million or 27.7% of sales in the prior year fourth quarter. Factors impacting SGA include: 1) a $42 million, or 200 bps, increase in credit costs related to the transition to an outsourced credit model; 2) an $11 million, or 50 bps, charge related to the resolution of a previously disclosed regulatory matter; and 3) a $3 million, or 10 bps, decrease in incentive compensation. Increases in SGA were partially offset by transformation net cost savings and lower store staff costs primarily due to closed stores. Prior year SGA included $30.5 million in expense related to the 14th week.
Credit transaction, net
In June 2018, the Company completed the sale of all eligible non-prime in-house accounts receivable. During Fiscal 2019, the Company recognized charges of $167.4 million as a result of the sale of the non-prime in-house accounts receivable. This included total valuation losses of $160.4 million representing adjustments to the asset fair value and other transaction-related costs of $7.0 million. See Note 4 of Item 8 for additional information.

Restructuring charges
During the first quarter of Fiscal 2019, Signet launched a three-year comprehensive transformation plan, the “Signet Path to Brilliance” plan (the “Plan”), to reposition the Company to be a share gaining, OmniChannel jewelry category leader. During Fiscal 2019, restructuring charges of $63.7 million were recognized, $22.7 million of which were non-cash charges, primarily related to professional fees for legal and consulting services, severance and impairment of information technology assets related to the Plan. Additionally, during Fiscal 2019, the Company recorded charges of $62.2 million in non-cash restructuring charges related to inventory write-offs within cost of sales.
In the fourth quarter, restructuring charges of $28.1 million, of which $11.7 million were non-cash charges, were recognized primarily related to store closure costs, professional fees for legal and consulting services, and severance related to the Plan. Additionally, during the fourth quarter, the Company recorded a net non-cash adjustment of $(1.0) million to charges related to prior period inventory write-offs within cost of sales. See Note 7 of Item 8 for additional information.
Goodwill and intangible impairments
In Fiscal 2019, the Company recorded non-cash goodwill and intangible asset impairment pre-tax charges of $735.4 million, of which $448.7 million were recorded in the first quarter of Fiscal 2019 and $286.7 million were recorded in the fourth quarter of Fiscal 2019.
The first quarter charge was related to the write down of goodwill and intangible assets recognized in the North America segment as part of the Zale division’s merchandise sales.Corporation acquisition, as well as goodwill associated with the acquisition of Ultra Stores, Inc. The decline in the Company’s market capitalization during the first quarter created a triggering event for impairment assessment purposes. Revised long-term projections associated with finalizing certain initial aspects of our Path to Brilliance transformation plan in the first quarter combined with a higher discount rate driven by risk premium utilized in the valuation, resulted in lower than previously projected long-term future cash flows for these businesses, which required an adjustment to the goodwill and intangible asset balances.
The fourth quarter charge was related to the write down of goodwill and intangible assets recognized in the North America segment as part of the R2Net acquisition (James Allen) and intangible assets recognized as part of the Zale Corporation acquisition. The decline in the Company’s market capitalization during the fourth quarter created a triggering event for impairment assessment purposes. Revised long-term projections and a higher discount rate driven by risk premium utilized in the valuation associated with James Allen resulted in lower than previously projected long-term future cash flows for this business, which required a $261.4 million adjustment to the goodwill and intangible asset balances. The revised outlook for James Allen is a result of a higher than expected unfavorable impact related to sales tax implementation as well as a more competitive online jewelry marketplace. The remaining impairment charge of $25.3 million is attributable to intangibles associated with the Zale acquisition and goodwill recognized as part of the acquisition of the Company's diamond polishing factory in Botswana.
The impairment charges above did not have an impact on the Company’s day to day operations or liquidity. See Note 17 of Item 8 for additional information on the impairments.
Other Operating Income, Net
In Fiscal 2019, other operating income, net was $26.2 million or 0.4% of sales compared to $260.8 million or 4.2% of sales in Fiscal 2018. In the fourth quarter, other operating income, net was $0.7 million or 0.0% of sales compared to $39.5 million or 1.7% of sales in the prior year fourth quarter. The year-over-year decrease was primarily driven by $28.0 million in other expense related to the sale of the prime-only credit quality portion of Sterling’s in-house finance receivable portfolio during the third quarter of Fiscal 2018, partially offset by the 53rd week which added $1.3 million of other income in Fiscal 2018. See Note 4 of Item 8 for additional information regarding the Company’s credit transaction.
Operating Income (Loss)
In Fiscal 2019, operating income (loss) was $(764.6) million or (12.2)% of sales compared to $579.9 million or 9.3% of sales in Fiscal 2018. The prior year operating income includes a favorable impact from the 53rd week of $9.3 million. Excluding the 53rd week impact, the decline was driven by the following: 1) the $735.4 million goodwill and intangible impairment charge; 2) $125.9 million in restructuring charges related to inventory write-downs, severance, professional fees and impairment of certain IT assets related to the three year transformation plan; 3) $167.4 million loss related to marking the non-prime receivables to fair value that were sold in the second quarter; 4) $11.0 million charge related to the resolution of a previously disclosed regulatory matter; 6) the discontinuation of credit insurance; 7) $167.0 million net unfavorable impact related to the outsourcing of credit; and 8) impact of higher promotions and incremental clearance sales on gross margin and lastly higher SGA due primarily to advertising and higher incentive compensation. These declines were partially offset by transformation net cost savings of $85.0 million.

 Change from previous year  
Fiscal 2016
Same store sales(1)
 Non-same
store sales,
net		 Total sales at
constant
exchange rate		 Exchange
translation
impact		 Total sales
as reported		 Total sales
(in millions)
Zales5.5 %         $1,241.0
Gordon’s(7.0)%         $78.5
Zale US Jewelry4.7 %         $1,319.5
Peoples3.4 %         $214.8
Mappins(2.5)%         $33.9
Zale Canada Jewelry2.6 %         $248.7
Total Zale Jewelry4.3 %         $1,568.2
Piercing Pagoda7.5 %         $243.2
Zale division4.8 %         $1,811.4
 Fiscal 2019 Fiscal 2018
(in millions)$  % of sales $  % of sales
North America segment(1)
$(621.1) (11.0)% $656.1
 11.7%
International segment(2)
12.9
 2.2 % 33.1
 5.4%
Other(3)
(156.4) nm
 (109.3) nm
Operating income (loss)$(764.6) (12.2)% $579.9
 9.3%
(1)
For Fiscal 2019, includes: 1) $731.8 million related to the goodwill and intangible impairments; 2) $52.7 million related to inventory charges recorded in conjunction with the Company’s restructuring activities; and 3) $160.4 million from the valuation losses related to the sale of eligible non-prime in-house accounts receivable. See Note 17, Note 7 and Note 4, respectively, of Item 8 for additional information. Fiscal 2018 amount includes $20.7 million gain related to the reversal of the allowance for credit losses for the in-house receivables sold, as well as the $10.2 million gain upon recognition of beneficial interest in connection with the sale of the prime portion of in-house receivables. See Note 4 of Item 8 for additional information.
(2)
Fiscal 2019 includes $3.8 million related to inventory charges recorded in conjunction with the Company’s restructuring activities. See Note 7 of Item 8 for additional information.
(3)
For Fiscal 2019, includes: 1) $69.4 million related to charges recorded in conjunction with the Company’s restructuring activities including inventory charges; 2) $11.0 million related to the resolution of a previously disclosed regulatory matter; 3) $7.0 million representing transaction costs associated with the sale of the non-prime in-house accounts receivable; and 4) $3.6 million of goodwill and intangible impairments. See Note 7, Note 26, Note 4 and Note 17 of Item 8 for additional information. For Fiscal 2018, Other includes $29.6 million of transaction costs related to the credit transaction, $8.6 million of R2Net acquisition costs, and $3.4 million of CEO transition costs. See Note 4 and Note 5 of Item 8 for additional information regarding credit transaction and acquisition of R2Net, respectively.
nmNot meaningful.
In the fourth quarter, operating income (loss) was $(83.5) million or (3.9)% of sales compared to $323.5 million or 14.1% of sales in prior year fourth quarter. The prior year operating income includes a favorable impact from the 14th week of $9.3 million.  Excluding the 14th week impact, the decline was driven by the following: 1) $286.7 million goodwill and intangible impairment charge; 2) $27.1 million in restructuring charges related to store closures costs, severance and professional fees related to the three year transformation plan; 3) $11 million charge related to the resolution of a previously disclosed regulatory matter; 4) $13 million net unfavorable impact related to the outsourcing of credit; and 5) an $8.8 million inventory write-down. The residual factors impacting operating income include the impact of lower sales and higher promotions and clearance sales partially offset by transformation net cost savings.
 Fourth Quarter Fiscal 2019 Fourth Quarter Fiscal 2018
(in millions)$  % of sales $  % of sales
North America segment(1)
$(60.1) (3.1)% 305.9
 14.9%
International segment31.0
 15.9 % 35.0
 15.0%
Other(2)
(54.4) nm
 (17.4) nm
Operating income (loss)$(83.5) (3.9)% $323.5
 14.1%
(1)
Fiscal 2019 includes $286.7 million and $1.0 million related to the goodwill and intangible impairments recognized in the fourth quarter and net adjustment to to charges recorded in conjunction with the Company’s restructuring activities including inventory charges, respectively. See Note 15 and Note 7, respectively, of Item 8 for additional information.
(2)
Fiscal 2019 includes a $28.1 million and $11.0 million related to charges recorded in conjunction with the Company’s restructuring activities and the resolution of a previously disclosed regulatory matter, respectively. See Note 7 of Item 8 for additional information.
nmNot meaningful.
Interest Expense, Net
In Fiscal 2019, net interest expense was $39.7 million compared to $52.7 million in Fiscal 2018 driven primarily by the repayment of the $600 million asset-backed securitization facility in the third quarter of Fiscal 2018. The weighted average interest rate for the Company’s debt outstanding was 4.0% compared to 3.2% in the prior year.
In the fourth quarter, net interest expense was $10.8 million compared to $10.0 million in the prior year fourth quarter. The weighted average interest rate for the Company’s debt outstanding was 4.1% compared to 3.6% in the prior year fourth quarter.
Income (Loss) Before Income Taxes
In Fiscal 2019, income (loss) before income taxes decreased $1.33 billion to $(802.6) million or (12.8)% of sales compared to $527.2 million or 8.4% of sales in Fiscal 2018.
In the fourth quarter, income (loss) before income taxes decreased $(407.5) million to $(94.0) million or (4.4)% of sales compared to $313.5 million or 13.7% of sales in the prior year fourth quarter.

Income Taxes
Income tax benefit for Fiscal 2019 was $145.2 million compared to expense of $7.9 million in Fiscal 2018, with an effective tax rate of 18.1% for Fiscal 2019 compared to 1.5% in Fiscal 2018. In the fourth quarter, income tax benefit was $13.9 million compared to expense of $37.8 million in the prior year fourth quarter. The higher effective tax rates were driven primarily by 1) the impact of the non-deductible goodwill impairment charge; 2) pre-tax earnings mix by jurisdiction; and 3) an out of period correction related to a deferred tax liability associated with the Zale acquisition. The prior year fourth quarter tax benefit was driven by the favorable impact of the Tax Cuts and Jobs Act of 2017 together with pre-tax earnings mix by jurisdiction.
On December 22, 2017, the U.S. government enacted “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” which is commonly referred to as “The Tax Cuts and Jobs Act” (the “TCJ Act”). The TCJ Act provides for comprehensive tax legislation which significantly modifies the U.S. corporate income tax system. Due to the timing of the enactment and the complexity involved in applying the provisions of the TCJ Act, we made reasonable estimates of its effects and recorded provisional amounts in the consolidated financial statements for the year ended February 3, 2018, consistent with applicable SEC guidance. We have completed these analyses during the year ended February 2, 2019, and no material adjustment to the provisional estimate recorded in the prior year was required.
We anticipate that the effective tax rate in future years will be favorably impacted by the lower federal statutory corporate tax rate of 21.0 percent offset by limitations of certain deductions and the base broadening changes. See Note 12 of Item 8 for additional information regarding the Company’s income taxes and the impact of the TCJ Act.
Net Income (Loss)
Net income (loss) for Fiscal 2019 was down 226.6% to $(657.4) million or (10.5)% of sales compared to $519.3 million or 8.3% of sales in Fiscal 2018.
For the fourth quarter, net income (loss) was down 130.7% to $(107.9) million or (5.0)% of sales compared to $351.3 million or 15.3% of sales in the prior year fourth quarter.
Earnings (Loss) per Share (“EPS”)
For Fiscal 2019, diluted earnings (loss) per share were $(12.62) compared to $7.44 in Fiscal 2018. The weighted average diluted number of common shares outstanding was 54.7 million compared to 69.8 million in Fiscal 2018. Signet repurchased 8.8 million shares in Fiscal 2019 compared to 8.1 million shares in Fiscal 2018. Diluted EPS for Fiscal 2019 includes a loss of $12.26 related to the goodwill and intangible impairments, a loss of $2.11 related to the sale of non-prime receivables, a loss of $1.77 related to the Path to Brilliance transformation plan and a loss of $0.20 related to the resolution of a previously disclosed regulatory matter.
For the fourth quarter, diluted earnings (loss) per share were $(2.25) compared to $5.24 in the prior year fourth quarter, down 143.0%. The weighted average diluted number of common shares outstanding was 51.6 million compared to 67.0 million in the prior year fourth quarter. Diluted EPS in the fourth quarter of Fiscal 2019 includes a loss of $4.78 related to the goodwill and intangible impairments, a loss of $0.37 related to the Path to Brilliance transformation plan and a loss of $0.20 related to the resolution of a previously disclosed regulatory matter.
The Company issued preferred shares on October 5, 2016, which include a cumulative dividend right and may be converted into common shares. The Company’s computation of diluted earnings per share includes the effect of potential common shares for outstanding awards issued under the Company’s share-based compensation plans and preferred shares upon conversion, if dilutive. In computing diluted EPS, the Company also adjusts the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the preferred shares. For the fourth quarter and year to date Fiscal 2019 periods, the dilutive effect related to preferred shares was excluded from the earnings per share computation as the preferred shares were anti-dilutive. For the fourth quarter and year to date Fiscal 2018 periods, the preferred shares were more dilutive if conversion was assumed. See Item 8 for additional information related to the preferred shares (Note 8) or the calculation of earnings per share (Note 10).
Dividends per Common Share
In Fiscal 2019, total dividends of $1.48 were declared by the Board of Directors compared to $1.24 in Fiscal 2018.

COMPARISON OF FISCAL 2018 TO FISCAL 2017
Same store sales: down 5.3%.
Diluted earnings per share: up 5.1% to $7.44.
In Fiscal 2018, Signet’s same store sales, which excluded the impact of the 53rd week from its calculation, decreased by 5.3%, compared to a decrease of 1.9% in Fiscal 2017. Total sales were $6.25 billion compared to $6.41 billion in Fiscal 2017, down $155.4 million or 2.4% compared to a decrease of 2.2% in Fiscal 2017. Merchandise categories and collections were broadly lower, partially offset by eCommerce, Piercing Pagoda total sales increase, the benefit of the 53rd week which contributed $84.3 million of sales and the addition of R2Net (acquired in September 2017) which contributed $88.1 million in sales for the year. eCommerce sales were $497.7 million and 8.0% of sales compared to $363.1 million and 5.7% of sales in Fiscal 2017.
The breakdown of Signet’s sales performance is set out in the table below.
 Change from previous year  
Fiscal 2018
Same store sales(1)
 Non-same
store sales,
net		 
Impact of
53rd week on total sales
 Total sales at
constant
exchange rate		 Exchange
translation
impact		 Total sales
as reported		 Total sales
(in millions)
Kay(8.0)% 2.5 % 1.1% (4.4)% na
 (4.4)% $2,428.1
Zales(2.0)% (0.6)% 1.6% (1.0)% na
 (1.0)% $1,244.3
Jared(5.5)% 1.1 % 1.5% (2.9)% na
 (2.9)% $1,192.1
Piercing Pagoda3.0 % 1.4 % 1.5% 5.9 % na
 5.9 % $278.5
James Allen29.9 %           $88.1
Peoples2.6 % (1.7)% 1.7% 2.6 % 2.5 % 5.1 % $215.4
Regional banners(18.1)% (15.5)% 0.7% (32.9)% 0.2 % (32.7)% $168.7
North America segment(5.2)% 1.6 % 1.3% (2.3)% 0.1 % (2.2)% $5,615.2
H.Samuel(6.5)% 0.6 % 1.6% (4.3)% (0.9)% (5.2)% $306.7
Ernest Jones(5.6)% 1.1 % 1.6% (2.9)% (1.3)% (4.2)% $310.0
International segment(6.0)% 0.8 % 1.6% (3.6)% (1.1)% (4.7)% $616.7
Other(2)
          16.6 % $21.1
Signet(5.3)% 1.6 % 1.3% (2.4)% — % (2.4)% $6,253.0
(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. The North America segment includes James Allen sales for the 145 days since the date of acquisition.
UK Jewelry(2)     Includes sales from Signet’s diamond sourcing initiative.

ATV is defined as net merchandise sales on a same store basis divided by the total number of customer transactions. As such, changes from the prior year do not recompute within the table below.
 
Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal YearFiscal 2018 Fiscal 2017 Fiscal 2018 Fiscal 2017 Fiscal 2018 Fiscal 2017
Kay$466
 $458
 1.5% 6.5 % (10.2)% (8.4)%
Zales$470
 $460
 2.0% 2.0 % (4.3)% (3.2)%
Jared$594
 $556
 6.1% (0.4)% (11.0)% (5.1)%
Piercing Pagoda$63
 $58
 8.6% 13.7 % (5.0)% (6.2)%
Peoples(3)
C$429
 C$401
 5.4% 6.6 % (3.7)% (10.9)%
Regional banners$447
 $414
 3.5% 4.3 % (20.3)% (14.0)%
North America segment$364
 $347
 2.5% 4.2 % (7.8)% (6.8)%
H.Samuel(4)
£84
 £77
 9.1% 2.7 % (14.4)% (4.9)%
Ernest Jones(4)
£349
 £309
 12.2% 14.0 % (15.8)% (11.3)%
International segment(4)
£136
 £124
 9.7% 6.0 % (14.7)% (6.3)%
(1)
Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repair, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(2)
Net merchandise sales within the International segment include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(3)
Amounts for Peoples stores are denominated in Canadian dollars.
(4)
Amounts for the International segment, including H.Samuel and Ernest Jones, are denominated in British pounds.
North America sales
In Fiscal 2016,2018, the UK Jewelry division’sNorth America segment’s total sales were $5.62 billion, down 0.8% to $737.6 million2.2%, compared to $743.6$5.74 billion in Fiscal 2017, and same store sales decreased 5.2% compared to a decrease of 1.0% in Fiscal 2017. North America’s ATV increased 2.5%, while the number of transactions decreased 7.8%. Sales declines were driven by weakness in bridal in Kay and Jared, including lower year over year sales of the Ever Us collection. The decrease in bridal was disproportionately affected by systems and process disruptions associated with the outsourcing of credit services. These declines were partially offset by strength in diamond fashion jewelry, most notably in the Disney Enchanted and Vera Wang Love collections in Zales and improved performance of gold fashion jewelery in Piercing Pagoda.
International sales
In Fiscal 2018, the International segment’s total sales were $616.7 million, down 4.7%, compared to $647.1 million in Fiscal 20152017. Sales declines were due principally to bridal and up 5.9% at constant exchange rates (non-GAAP measure, see Item 6).diamond fashion jewelry partially offset by higher sales in select prestige watch brands and strength in eCommerce. Same store sales increaseddecreased by 4.9%6.0% compared to an increase of 5.3%0.1% in Fiscal 2015. Sales performance in the UK Jewelry division was driven2017. ATV increased 9.7%, offset by growth in average merchandise transaction value and number of transactions, 2.7% and 1.8% respectively, led by branded diamond jewelry and watches. In H.Samuel, average merchandise transaction value increased 1.4% driven by strong diamond sales. Increasesa 14.7% decrease in the number of transactionstransactions.
Fourth Quarter Sales
In the fourth quarter, Signet’s total sales were $2.29 billion, down $23.2 million or 1.0%, compared to a decrease of 1.9%5.1% in the prior year fourth quarter. Same store sales were influenced by higherdown 5.2% compared to a decrease of 4.5% in the prior year fourth quarter. The total sales of beads and Perfect Fit, the entry-level priced engagement ring collection. In Ernest Jones, the average merchandise transaction value and number of transactions increased 6.3% and 1.4%, respectively. The sales mix shifted toward jewelry brands and prestige watches. Transaction increases in Ernest Jones wereincrease was driven by strength across jewelry and watch categories duethe 14th week in partsales, which contributed $84.3 million of sales, as well as the addition of R2Net which contributed $64.4 million in sales in the quarter, offset by the year-over-year decline in base same store sales. eCommerce sales in the fourth quarter were $253.8 million or 11.1% of total sales, compared to new product assortment and new television advertising.$161.8 million or 7.1% of total sales in the prior year fourth quarter. The breakdown of the sales performance is set out in the table below.

Change from previous year  Change from previous year  
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)
Fourth quarter of Fiscal 2018
Same store sales(1)
 Non-same
store sales,
net		 
Impact of
14th week on total sales
 Total sales at
constant
exchange rate		 Exchange
translation
impact		 Total sales
as reported		 Total sales
(in millions)
Kay(11.0)% 2.1 % 3.1% (5.8)% na
 (5.8)% $862.0
Zales5.1 % (2.8)% 4.5% 6.8 % na
 6.8 % $483.2
Jared(6.4)% 0.8 % 4.2% (1.4)% na
 (1.4)% $424.5
Piercing Pagoda4.6 % (0.6)% 4.8% 8.8 % na
 8.8 % $91.1
James Allen(2)
35.0 %           $64.4
Peoples3.8 % (3.5)% 4.6% 4.9 % 5.6 % 10.5 % $80.9
Regional banners(22.8)% (18.6)% 2.5% (38.9)% (0.3)% (39.2)% $50.2
North America segment(4.7)% 1.8 % 3.6% 0.7 % 0.3 % 1.0 % $2,056.3
H.Samuel2.8% 0.2% 3.0% (6.5)% (3.5)% $375.8 (9.2)% (0.3)% 3.9% (5.6)% 7.8 % 2.2 % $122.3
Ernest Jones7.3% 1.9% 9.2% (7.0)% 2.2% $361.8 (9.3)% 0.2 % 4.5% (4.6)% 8.0 % 3.4 % $111.6
UK Jewelry division4.9% 1.0% 5.9% (6.7)% (0.8)% $737.6 
International segment(9.2)% (0.2)% 4.2% (5.2)% 8.0 % 2.8 % $233.9
Other(3)
          (48.2)% $2.9
Signet(5.2)% 1.5 % 3.7% — % 1.0 % 1.0 % $2,293.1
(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.
(2)     Includes allSame store sales from stores not openpresented for James Allen, acquired September 12, months.2017, to provide comparative performance measure.
(3)     Non-GAAP measure, see Item 6.Includes sales from Signet’s diamond sourcing initiative.

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Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal 2016Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015
H.Samuel£75
 £74
 1.4% 2.8 % 1.9% 1.3%
Ernest Jones£268
 £252
 6.3% (2.4)% 1.4% 9.2%
UK Jewelry division£115
 £112
 2.7% 1.9 % 1.8% 2.9%
(1)    Average merchandise transaction valueATV is defined as net merchandise sales on a same store basis divided by the total number of customer transactions. As such, changes from the prior year do not recompute within the table below.
 
Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal YearFiscal 2018 Fiscal 2017 Fiscal 2018 Fiscal 2017 Fiscal 2018 Fiscal 2017
Kay$438
 $429
 1.2% 6.5% (13.8)% (10.8)%
Zales$436
 $421
 3.6% 0.7% 2.4 % (5.1)%
Jared$546
 $530
 1.9% 7.7% (8.4)% (10.8)%
Piercing Pagoda$67
 $62
 8.1% 12.7% (2.6)% (5.6)%
Peoples(3)
C$395
 C$367
 5.9% 6.1% (1.7)% (13.4)%
Regional banners$418
 $388
 0.7% 7.5% (23.1)% (19.6)%
North America segment$369
 $346
 1.9% 4.8% (7.1)% (9.1)%
H.Samuel(4)
£84
 £78
 7.7% 4.0% (15.6)% (10.3)%
Ernest Jones(4)
£315
 £299
 4.7% 18.2% (13.5)% (17.5)%
International segment(4)
£129
 £121
 6.6% 8.0% (15.2)% (11.8)%
(1)
Net merchandise sales within the North America segment include all merchandise product sales, net of discounts and returns. In addition, excluded from net merchandise sales are sales tax in the US, repair, extended service plan, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(2) 
Net merchandise sales within the International segment include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales. As a result, the sum of the changes will not agree to change in same store sales.
(3)
Amounts for Peoples stores are denominated in Canadian dollars.
(4)
Amounts for the International segment, including H.Samuel and Ernest Jones, are denominated in British pounds.
Fourth Quarter Sales
North America sales
In the fourth quarter, Signet’sthe North America segment’s total sales were $2.06 billion, up 1%, compared to $2.04 billion in the prior year, due primarily to the current year quarter including 14 weeks whereas the prior year quarter included 13 weeks. Same store sales decreased 4.7% compared to a decrease of 4.6% in the prior year. The North America segment’s ATV increased 1.9%, while the number of transactions decreased 7.1%. Across banners, same store sales were up 4.9%, compared to an increasedriven by weakness in bridal and beads, including year over year lower sales of 4.2%Ever Us collection. The decrease in bridal in Kay and Jared was disproportionately affected by systems and process disruptions associated with the outsourcing of credit services that occurred at the end of the third quarter in the prior yearFiscal 2018. In Zales, diamond fashion jewelry, most notably Disney Enchanted and Vera Wang Love collections outperformed but more than offset by weakness across bridal and beads. Gold fashion was the primary driver in same store sales of Pagoda.
International sales
In the fourth quarter, andthe International segment’s total sales increasedwere up by 5.1%2.8% to $2,392.6$233.9 million compared to $2,276.4$227.6 million in the prior year fourth quarter. Growth was led bySame store sales decreased 9.2% compared to a decrease of 3.8% in the prior year fourth quarter due principally to diamond and fashion jewelry, such as Ever Us, diamond earrings, and diamond bracelets. Bridal sales also increased but at a lesser pace than fashion. eCommercepartially offset by higher sales in select prestige watch brands and strength in eCommerce. Average merchandise transaction value increased 6.6% and the fourth quarter were $166.3 millionnumber of transactions decreased 15.2%.
Cost of Sales and 7.0%Gross Margin
Fiscal 2018, gross margin was $2.19 billion or 35.0% of sales compared to $149.6$2.36 billion or 36.8% of sales in Fiscal 2017. The decrease in gross margin was attributable to a 1) decline in the gross merchandise margin rate in part due the inclusion of R2Net which carries a lower gross margin rate and in addition to higher promotions and unfavorable merchandise mix, 2) de-leverage on store occupancy and fixed costs as a result of lower sales and 3) higher costs associated with the disposition of inventory in part due to the distribution center consolidation in North America.
In the fourth quarter, gross margin was $919.8 million or 40.1% of sales compared to $945.5 million or 41.7% of sales in the prior year. The decrease in gross margin was attributable to 1) inclusion of R2Net which carries a lower gross margin rate which negatively impacted the rate by 70 bps, 2) unfavorable merchandise mix and 6.6%3) de-leverage on store occupancy and fixed costs as a result of lower sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for Fiscal 2018 were $1.87 billion or 29.9% of sales compared to $1.88 billion or 29.3% of sales in Fiscal 2017, down $8.0 million. The decrease was attributable to decreased store staff costs and advertising expense partially offset by increased central costs. The increase in central costs was primarily driven by the inclusion of the 53rd week which added $30.5 million of expense, an additional $16.2 million of selling, general and administrative expense related to R2Net and other one-time costs of $12.0 million related to CEO separation and the R2Net acquisition.
In the fourth quarter, SGA expense was $634.5 million or 27.7% of sales compared to $615.3 million or 27.1% of sales in the prior year fourth quarter. The breakdownincrease in expense was primarily driven by the inclusion of the sales performance is set out14th week in the table below.
 Change from previous year    
Fourth 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 division5.0% 1.9% 6.9% —% 6.9% $1,452.5 
Zale Jewelry4.4% 0.8% 5.2% (3.0)% 2.2% $577.0 
Piercing Pagoda6.4% 1.9% 8.3% —% 8.3% $78.1 
Zale division4.7% 0.9% 5.6% (2.7)% 2.9% $655.1 
UK Jewelry division4.7% 1.2% 5.9% (4.2)% 1.7% $282.6 
Other(4)
—% nm
 nm
 —% nm  $2.4 
Signet4.9% 1.5% 6.4% (1.3)% 5.1% $2,392.6 
Adjusted Signet(3)
          $2,397.8 
(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.
(2)     Includes all sales from stores not open for 12 months.quarter which added $30.5 million of expense and credit outsourcing costs of $21.0 million partially offset by savings of $25.0 million related to in-house credit operations, as well as lower advertising expense and store labor costs.
(3)     Non-GAAP measure, see Item 6.Other Operating Income, Net
(4)     IncludesIn Fiscal 2018, other operating income, net was $260.8 million or 4.2% of sales from Signet’s diamond sourcing initiative.
nm    Not meaningful.
Sterling Jewelerscompared to $282.6 million or 4.4% of sales
in Fiscal 2017. In the fourth quarter, the Sterling Jewelers division’s totalother operating income, net was $39.5 million or 1.7% of sales were $1,452.5 million compared to $1,358.3$69.0 million in the prior year fourth quarter, up 6.9% and same storeor 3.0% of sales increased 5.0%, compared to an increase of 3.7% in the prior year fourth quarter. Sales increasesThe year-over-year decrease was primarily attributable to the 53rd week which added $1.3 million of other income offset by $28.0 million in other expense related to the fourthsale of the prime-only credit quality portion of the Company’s in-house finance receivable portfolio during the third quarter were driven byof Fiscal 2018.
Operating Income
In Fiscal 2018, operating income was $579.9 million or 9.3% of sales compared to $763.2 million or 11.9% of sales in Fiscal 2017. The year-over-year decrease was primarily attributable to a combination of factors described below which drove results across our Kay and Jared brands. Sterling Jewelers' average merchandise transaction value increased 6.0%decrease in sales volumes and the numberimpact of transactions decreased 2.3%. This was driven principally by strong salesthe credit outsourcing transaction during the third quarter of diamond fashion jewelry and select bridal brands. This was the case at Kay in addition to Sterling Jewelers overall. Jared average merchandise transaction value decreased 3.4% and number of transactions increased 3.5% due to higher sales concentration of lower average merchandise transaction value in diamond fashion assortments. Additionally, several qualitative factors supported overall favorable results across the Sterling Jewelers division including, but not limited to, sales team execution, marketing and credit.Fiscal 2018.

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 Change from previous year  
Fourth quarter of Fiscal 2016
Same
store
sales(1)
 
Non-same
store sales,
net(2)
 Total
sales
as reported		 Total
sales
(in millions)
Kay7.4% 1.7% 9.1% $940.8 
Jared(3)
1.4% 3.9% 5.3% $439.5 
Regional brands(1.8)% (5.8)% (7.6)% $72.2 
Sterling Jewelers division5.0% 1.9% 6.9% $1,452.5 
 Fiscal 2018 Fiscal 2017
(in millions)$  % of sales $  % of sales
North America segment$656.1
 11.7% $789.2
 13.7%
International segment33.1
 5.4% 45.6
 7.0%
Other(1)
(109.3) nm
 (71.6) nm
Operating income$579.9
 9.3% $763.2
 11.9%
(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.
(2)    Includes all sales from stores not open or owned for 12 months.
(3)    Includes smaller concept Jared stores such as Jared Vault and Jared Jewelry Boutique.

 
Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fourth quarter of Fiscal 2016Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015
Kay$403
 $366
 10.1 % 5.8% (3.8)% (1.7)%
Jared$488
 $505
 (3.4)% 2.7% 3.5 % 0.1 %
Regional brands$392
 $366
 7.1 % 1.1% (8.9)% (2.4)%
Sterling Jewelers division$425
 $401
 6.0 % 4.7% (2.3)% (1.3)%
(1)     Average merchandise transaction value is defined as net merchandise sales on a same store basis divided by the total number of customer transactions.
(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.
Zale sales
In the fourth quarter, the Zale division’s total sales were $655.1 million compared to $636.7 million in the prior year fourth quarter, up 2.9% and same store sales increased 4.7%, compared to an increase of 1.5% in the prior year fourth quarter. Zale Jewelry contributed $577.0 million and Piercing Pagoda contributed $78.1 million of revenues, an increase of 2.2% and 8.3%, respectively. Total Zale division sales included purchase accounting adjustments of $(5.2) million and $(12.8) million related to a reduction of deferred revenue associated with extended warranty sales in the fourth quarter of Fiscal 2016 and Fiscal 2015, respectively.
In the Zale Jewelry segment, average merchandise transaction value increased 6.2%, while the number of transactions decreased 2.1%. This was driven principally by strong sales of diamond fashion jewelry and bridal. In the Piercing Pagoda segment, average merchandise transaction value increased 10.0%, while the number of transactions decreased 2.7%. This was driven principally by strong sales of gold and diamond jewelry.
 Change from previous year  
Fourth 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)
Zales6.3 % 1.7 % 8.0 % — % 8.0 % $461.2
Gordon’s(7.5)% (8.1)% (15.6)% — % (15.6)% $27.1
Zale US Jewelry5.4 % 0.9 % 6.3 % — % 6.3 % $488.3
Peoples0.3 % 0.9 % 1.2 % (15.6)% (14.4)% $77.0
Mappins(7.6)% (2.4)% (10.0)% (14.0)% (24.0)% $11.7
Zale Canada Jewelry(0.8)% 0.4 % (0.4)% (15.4)% (15.8)% $88.7
Total Zale Jewelry4.4 % 0.8 % 5.2 % (3.0)% 2.2 % $577.0
Piercing Pagoda6.4 % 1.9 % 8.3 % — % 8.3 % $78.1
Zale division(4)
4.7 % 0.9 % 5.6 % (2.7)% 2.9 % $655.1
(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.
(2)     Includes all sales from stores not open for 12 months.
(3)     Non-GAAP measure.
(4)     The Zale division same store sales includes merchandise and repair sales and excludes warranty and insurance revenues.


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Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value 
Change from 
previous year
 
Change from 
previous year
Fourth quarter of Fiscal 2016Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2016
Zales$418
 $394
 6.1 % (0.1)%
Gordon’s$398
 $399
 (0.3)% (7.9)%
Peoples(3)
$344
 $323
 6.5 % (6.7)%
Mappins(3)
$292
 $296
 (1.4)% (7.3)%
Total Zale Jewelry$376
 $354
 6.2 % (2.1)%
Piercing Pagoda$55
 $50
 10.0 % (2.7)%
Zale division$220
 $206
 6.8 % (2.4)%
(1)    Average merchandise transaction value is defined as net merchandise sales on a same store basis divided by the total number of customer transactions.
(2)
Net merchandise sales include all merchandise product sales net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales.
(3) Amounts for Zale Canada Jewelry stores are denominated in Canadian dollars.
UK Jewelry sales
In the fourth quarter, the UK Jewelry division’s total sales were up by 1.7% to $282.6 million compared to $278.0 million in the prior year fourth quarter and up 5.9% at constant exchange rates (non-GAAP measure, see Item 6). Same store sales increased 4.7% compared to an increase of 7.5% in the prior year fourth quarter. Average merchandise transaction value increased 3.7% and the number of transactions increased 1.1%. This was driven principally by strong sales of diamond jewelry and prestige watches in Ernest Jones.
Average merchandise transaction value and the number of transactions increased in H.Samuel 1.4% and 2.0%, respectively, due to strong sales of bridal, beads, and select watches. At Ernest Jones, average merchandise transaction value increased 9.1% and the number of transactions decreased 2.1% due to shift of merchandise mix toward diamond jewelry.
 Change from previous year  
Fourth 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.Samuel3.0% 0.6% 3.6% (4.2)% (0.6)% $151.2 
Ernest Jones(4)
6.6% 2.1% 8.7% (4.3)% 4.4% $131.4 
UK Jewelry division4.7% 1.2% 5.9% (4.2)% 1.7% $282.6 
(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.
(2)    Includes all sales from stores not open for 12 months.
(3)    Non-GAAP measure, see Item 6.
(4)    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
Fourth quarter of Fiscal 2016Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015 Fiscal 2016 Fiscal 2015
H.Samuel£75
 £74
 1.4% 7.2% 2.0 % (0.8)%
Ernest Jones(3)
£251
 £230
 9.1% 0.4% (2.1)% 10.7 %
UK Jewelry division£111
 £107
 3.7% 7.0% 1.1 % 1.5 %
(1)     Average merchandise transaction value is defined as net merchandise sales on a same store basis divided by the total number of customer transactions.
(2)
Net merchandise sales include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales.
(3)    Includes stores selling under the Leslie Davis nameplate.

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Cost of Sales and Gross Margin
In Fiscal 2016, gross margin was $2,440.4 million or 37.3% of sales compared to $2,074.2 million or 36.2% of sales in Fiscal 2015. Adjusted gross margin was $2,476.0 million or 37.6% of adjusted sales compared to 36.9% in the prior year (non-GAAP measure, see Item 6). The increase in the adjusted gross margin rate from prior year of 70 basis points was due to improved merchandise margin from commodity costs and synergies, as well as store occupancy cost leverage.
The Sterling Jewelers division gross margin dollars increased $107.7 million compared to Fiscal 2015, reflecting increased sales and a gross margin rate improvement of 50 basis points. The gross margin rate expansion was driven by an improvement in the merchandise margin due to favorable commodity costs and store occupancy cost leverage.
In the Zale division, gross margin dollars increased $255.6 million compared to Fiscal 2015. Included in gross margin were purchasing accounting adjustments totaling $35.6 million in Fiscal 2016 and $57.3 million in the prior year. Adjusted gross margin dollars increased $233.9 million compared to the prior year (prior year represents a partial year of ownership due to the acquisition date of May 29, 2014), reflecting an adjusted gross margin rate improvement of 170 basis points. Higher sales and synergies favorably affected merchandise margins, distribution costs, and store occupancy. This included initiatives focused on discount controls, vendor terms and allowances, supply chain cost efficiencies and rent savings.
In the UK Jewelry division, gross margin dollars increased $3.9 million compared to Fiscal 2015, reflecting gross margin rate improvement of 80 basis points. The increases in dollars and rate were driven principally by leverage on store occupancy.
In the fourth quarter, the consolidated gross margin was $1,016.0 million or 42.5% of sales compared to $912.1 million or 40.1% of sales in the prior year fourth quarter. Adjusted gross margin was $1,020.7 million or 42.6% of adjusted sales compared to 40.9% in the prior year fourth quarter (non-GAAP measure, see Item 6). The increase in the adjusted gross margin rate from prior year of 170 basis points was consistent with the full year, due primarily to gross margin synergies including sourcing and discount controls related mostly to the Zale division, as well as favorable commodity and leverage on store occupancy costs.
Gross margin dollars in the Sterling Jewelers division increased $57.4 million compared to the prior year fourth quarter, reflecting higher sales and a gross margin rate increase of 120 basis points. The gross margin rate expansion was driven by an improvement in the merchandise margin due primarily to favorable commodity costs and store occupancy cost leverage.
In the Zale division, gross margin dollars increased $41.8 million compared to prior year fourth quarter. Included in gross margin were purchase accounting adjustments totaling $4.7 million in current year fourth quarter compared to $24.8 million in prior year. Adjusted gross margin dollars in the Zale division increased $21.7 million compared to the prior year fourth quarter. The adjusted gross margin rate increased 270 basis points, as synergies favorably affected merchandise margins, distribution costs and store occupancy.
In the UK Jewelry division, gross margin dollars increased $4.0 million compared to Fiscal 2015, reflecting a gross margin rate improvement of 80 basis points. The increases in dollars and rate were driven principally by leverage on store occupancy.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for Fiscal 2016 were $1,987.6 million or 30.4% of sales compared to $1,712.9 million or 29.9% of sales in Fiscal 2015, up $274.7 million, which includes a full year of Zale SGA expense, compared to the partial year reported in the prior period due to the timing of the acquisition. In addition, included in SGA were favorable purchase accounting adjustments of $9.2 million offset by transaction and integration costs of $78.9 million, which includes the impact of the legal settlement of $34.2 million over appraisal rights, consulting and internal costs incurred in connection with the integration of Zale acquisition, severance costs and implementation costs incurred in connection with our IT modernization and standardization initiatives. Adjusted SGA was $1,917.9 million or 29.1% of adjusted sales compared to 28.8% in the prior year (non-GAAP measure, see Item 6). The increase in dollars and rate was driven primarily by central costs around product research and development, as well as incremental investments in advertising, IT support and employee benefits.
In the fourth quarter, SGA expense was $686.6 million or 28.7% of sales compared to $634.5 million or 27.9% of sales in the prior year fourth quarter. In addition, included in SGA were purchase accounting adjustments of $1.5 million and transaction and integration costs of $19.1 million, which includes consulting costs incurred in connection with the integration of Zale acquisition, severance costs and implementation costs associated with our IT modernization and standardization initiatives. Adjusted SGA was $666.0 million or 27.8% of adjusted sales compared to 27.5% in the prior year (non-GAAP measure, see Item 6). The 30 basis point increase in SGA rate was driven primarily by an increase in central costs associated with higher information technology recurring expense, product research and development, and harmonization of employee compensation among North America divisions. Partially offsetting these higher central costs was leverage on advertising and store payroll.
Other Operating Income, Net
In Fiscal 2016, other operating income was $250.9 million or 3.8% of sales compared to $215.3 million or 3.7% of sales in Fiscal 2015. This increase was primarily due to higher interest income earned from higher outstanding receivable balances.
Other operating income in the fourth quarter was $63.7 million or 2.6% of sales compared to $54.1 million or 2.4% of sales in the prior year fourth quarter. This increase was also primarily due to higher interest income earned from higher outstanding receivable balances.

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Operating Income
In Fiscal 2016, operating income was $703.7 million or 10.7% of sales compared to $576.6 million or 10.0% of sales in Fiscal 2015. Included in operating income were purchase accounting adjustments of $26.4 million and transaction and integration costs of $78.9 million. Adjusted operating income was $809.0 million or 12.3% of adjusted sales compared to 11.8% in the prior year (non-GAAP measure, see Item 6).
 Fiscal 2016 Fiscal 2015
(in millions)$  % of sales $  % of sales
Sterling Jewelers division$718.6
 18.0% $624.3
 16.6 %
Zale division(1)
52.1
 2.9% (8.2) (0.7)%
UK Jewelry division61.5
 8.3% 52.2
 7.0 %
Other(2)
(128.5) nm
 (91.7) nm
Operating income$703.7
 10.7% $576.6
 10.0 %
(1)
Zale division includes net operating loss impact of $26.4 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $78.5 million or 4.3% of sales. The Zale division operating income included $44.3 million from Zale Jewelry or 2.8% of sales and $7.8 million from Piercing Pagoda or 3.2% of sales. In the prior year, Zale division includes net operating loss impact of $45.9 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $37.7 million or 3.0% of sales. The Zale division operating loss included $1.9 million from Zale Jewelry or (0.2)% of sales and $6.3 million from Piercing Pagoda or (4.3)% of sales.
(2)
Fiscal 2018, Other includes $78.9 million and $59.8$29.6 million of transaction costs related to the credit transaction, $8.6 million of R2Net acquisition costs, and integration expenses in Fiscal 2016 and 2015, respectively. Transaction and integration costs include legal settlement$3.4 million of $34.2 million over appraisal rights, and expenses associated with legal, tax, accounting, information technology implementation, consulting and severance.CEO transition costs.
nmNot meaningful.
In the fourth quarter, operating income was $393.1$323.5 million or 16.4%14.1% of sales compared to $331.7$399.2 million or 14.6%17.6% of sales in prior year fourth quarter. Included in operating income were purchase accounting adjustments of $6.2 million and transaction and integration costs of $19.1 million. Adjusted operating income was $418.4 million or 17.4% of adjusted sales compared to 15.8% in the prior year (non-GAAP measure, see Item 6).
 Fourth Quarter Fiscal 2016 Fourth Quarter Fiscal 2015
(in millions)$  % of sales $  % of sales
Sterling Jewelers division$305.4
 21.0% $260.0
 19.1%
Zale division(1)
63.0
 9.6% 36.1
 5.7%
UK Jewelry division57.8
 20.5% 53.8
 19.4%
Other(2)
(33.1) nm
 (18.2) nm
Operating income$393.1
 16.4% $331.7
 14.6%
(1)
Zale division includes net operating loss impact of $6.2 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $69.2 million or 10.6% of sales. The Zale division operating income included $54.2 million from Zale Jewelry or 9.4% of sales and $8.8 million from Piercing Pagoda or 11.3% of sales. In the prior year fourth quarter, Zale division includes net operating loss impact of $20.8 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $56.9 million or 8.7% of sales. The Zale division operating income included $32.8 million from Zale Jewelry or 5.8% of sales and $3.3 million from Piercing Pagoda or 4.6% of sales.
(2)
Other includes $19.1 million and $9.2 million of transaction and integration expenses in Fiscal 2016 and 2015, respectively. Transaction and integration costs include expenses associated with legal, tax, information technology implementation, consulting and severance.
nmNot meaningful
Interest Expense, Net
In Fiscal 2016, net interest expense was $45.9 million compared to $36.0 million in Fiscal 2015. The increase in interest expensedecline was driven by de-leverage of fixed costs due to sales declines, the additionimpact of $1.4 billion of debt financing at a weighted average interest rate of 2.6%the credit outsourcing transaction and de-leverage related to R2Net, which carries a lower operating margin rate. The credit outsourcing transaction (excluding the Zale acquisition, which was outstanding for the full 12 monthssales impact of Fiscal 2016, versus only a partial year in the prior period.
In the fourth quarter, net interest expense was $12.1 million compared to $7.9credit transition) reduced operating income by $21.0 million in the prior year fourth quarter driven by the timing of repayments of our fourth quarter borrowings under our variable rate revolving credit facility, coupled with slightly higher interest rates. Further contributing to the increase was additional expense related to our interest rate hedging instrument which effectively converted a portion of variable-rate debt into fixed-rate debt during the first quarter of Fiscal 2016.
Income Before Income Taxes
For Fiscal 2016, income before income taxes was up 21.7% to $657.8 million or 10.0% of sales compared to $540.6 million or 9.4% of sales in Fiscal 2015.
For the fourth quarter, income before income taxes was up 17.7% to $381.0 million or 15.9% of sales compared to $323.8 million or 14.2% of sales in the prior year fourth quarter.

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Income Taxes
Income tax expense for Fiscal 2016 was $189.9 million compared to $159.3 million in Fiscal 2015, with an effective tax rate of 28.9% for Fiscal 2016 compared to 29.5% in Fiscal 2015. This reduction of 60 basis points in Signet’s effective tax rate primarily reflects the full year benefit of Signet’s amended capital structure and financing arrangements utilized to fund the acquisition of Zale Corporation.
In the fourth quarter, income tax expense was $109.1 million compared to $95.8 million in the prior year fourth quarter. The fourth quarter effective tax rate was 28.6% compared to 29.6% in the prior year fourth quarter also driven principally by income mix by jurisdiction and increased effect of Signet’s global financing arrangements.
Net Income
Net income for Fiscal 2016 was up 22.7% to $467.9 million or 7.1% of sales compared to $381.3 million or 6.6% of sales in Fiscal 2015.
For the fourth quarter, net income was up 19.3% to $271.9 million or 11.4% of sales compared to $228.0 million or 10.0% of sales in the prior year fourth quarter.
Earnings Per Share
For Fiscal 2016, diluted earnings per share were $5.87 compared to $4.75 in Fiscal 2015, an increase of 23.6%. Adjusted diluted earnings per share were $6.86 compared to $5.63 in the prior year. The weighted average diluted number of common shares outstanding was 79.7 million compared to 80.2 million in Fiscal 2015. Signet repurchased 1,018,568 shares in Fiscal 2016 compared to 288,393 shares in Fiscal 2015.
For the fourth quarter, diluted earnings per share were $3.42 compared to $2.84 in the prior year fourth quarter, up 20.4%. Adjusted diluted earnings per share were $3.63 compared to $3.06 in the prior year fourth quarter. The weighted average diluted number of common shares outstanding was 79.4 million compared to 80.2 million in the prior year fourth quarter.
Dividends Per Share
In Fiscal 2016, dividends of $0.88 were approved by the Board of Directors compared to $0.72 in Fiscal 2015.

COMPARISON OF FISCAL 2015 TO FISCAL 2014
Same store sales: up 4.1%.
•
Operating income: up 1.1% to $576.6 million. Adjusted(1) operating income: up 19.6% to $682.3 million.
•
Operating margin: decreased to 10.0%, down 350 basis points. Adjusted(1) operating margin: down 170 basis points to 11.8%.
•
Diluted earnings per share: up 4.2% to $4.75. Adjusted(1) diluted earnings per share: up 23.5% to $5.63.
(1) Non-GAAP measure, see Item 6. The Company uses adjusted metrics, which adjust for purchase accounting, transaction and integration costs principally in relation to the Zale acquisition to give investors information as to the Company’s results without regard to the expenses associated with the May 2014 acquisition of Zale Corporation and certain severance costs.
In Fiscal 2015, Signet’s same store sales increased by 4.1%, compared to an increase of 4.4% in Fiscal 2014. Total sales were $5,736.3 million compared to $4,209.2 million in Fiscal 2014, up $1,527.1 million or 36.3% compared to an increase of 5.7% in Fiscal 2014. The increase in sales was primarily driven by the addition of the Zale division which added $1,215.6 million of sales, including purchase accounting adjustments related to deferred revenue associated with extended warranty sales. eCommerce sales were $283.6 million, which included $82.0 million of Zale eCommerce sales, compared to $164.1 million in Fiscal 2014. The breakdown of Signet’s sales performance is set out in the table below.

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Table of Contents


 Change from previous year
Fiscal 2015
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 division4.8% 2.2% 7.0% —% 7.0% $3,765.0 
Zale Jewelry1.7%         $1,068.7 
Piercing Pagoda0.2%         $146.9 
Zale division1.5%         $1,215.6 
UK Jewelry division5.3% 0.4% 5.7% 2.8% 8.5% $743.6 
Other(5)
—  nm
 nm  —% nm  $12.1 
Signet4.1% 31.6% 35.7% 0.6% 36.3% $5,736.3 
Adjusted Signet(3)
          $5,769.9 
Adjusted Signet excluding Zale(3)
               $4,520.7 
(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.
(2)     Includes all sales from stores not open for 12 months.
(3)     Non-GAAP measure, see Item 6.
(4) Same store sales presented for Zale division to provide comparative performance measures. Year-over-year results not applicable because Signet did not own Zale division in prior year.
(5)     Includes sales from Signet’s diamond sourcing initiative.
nm    Not meaningful.
Sterling Jewelers sales
In Fiscal 2015, the Sterling Jewelers division’s total sales were up 7.0% to $3,765.0 million compared to $3,517.6 million in Fiscal 2014, and same store sales increased by 4.8% compared to an increase of 5.2% in Fiscal 2014. Sales increases were driven by a combination of factors which drove results at Kay and Jared. These factors included sales associate execution, compelling merchandise, marketing and credit. The average merchandise transaction value increased in Kay driven by particular strength in branded bridal as well as a decline in sales associated with lower average selling price units. The number of merchandise transactions increased in Kay due to branded bridal, branded fashion diamond collections and watches partially offset by a decline in units of lower average selling price points. In Jared, the average merchandise transaction value was relatively flat to prior year and the number of merchandise transactions increased. Strong branded and non-branded merchandise performance drove transactional increases in Jared. Branded differentiated and exclusive merchandise in Sterling Jewelers increased its participation by 120 basis points to 32.3% of Sterling Jeweler’s merchandise sales.
 Changes from previous year  
Fiscal 2015Same
store
sales		 
Non-same
store sales,
net(1)
 Total
sales
as reported		 Total
sales
(in millions)
Kay5.7% 2.9 % 8.6% $2,346.2 
Jared(2)
3.8% 5.1 % 8.9% $1,188.8 
Regional brands0.3% (13.7)% (13.4)% $230.0 
Sterling Jewelers division4.8% 2.2 % 7.0% $3,765.0 
(1)     Includes all sales from stores not open or owned for 12 months.
(2)
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. Reported sales in the prior year have been reclassified to align with current year presentation.
 
Average Merchandise Transaction Value(1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal 2015Fiscal 2015 
Fiscal 2014(3)
 Fiscal 2015 
Fiscal 2014(3)
 Fiscal 2015 
Fiscal 2014(3)
Kay$398
 $382
 4.2% 3.5 % 2.1 % 2.4%
Jared$540
 $539
 0.2% (1.1)% 4.2 % 6.3%
Regional brands$407
 $400
 1.8% 4.8 % (1.3)% (4.9)%
Sterling Jewelers division$435
 $422
 3.1% 2.4 % 2.4 % 2.7%
(1)    Average merchandise transaction value is defined as net merchandise sales on a same store basis divided by the total number of customer transactions.
(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.
(3)
The Fiscal 2014 average merchandise transaction value and merchandise transactions, including the change from previous year have been recalculated to conform to the current year presentation which is calculated on a same store sales basis.

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UK Jewelry sales
In Fiscal 2015, the UK Jewelry division’s total sales were up 8.5% to $743.6 million compared to $685.6 million in Fiscal 2014 and up 5.7% at constant exchange rates (non-GAAP measure, see Item 6). Same store sales increased by 5.3% compared to an increase of 1.0% in Fiscal 2014. Sales performance in the UK Jewelry division was primarily driven by an increase in same store sales performance of the business in the fourth quarter. The UK Jewelry division experienced sales growth primarily in bridal and fashion diamond jewelry and fashion watches. The average merchandise transaction value increase in H.Samuel was driven by strong diamond and bridal sales with increases in the number of transactions influenced by higher bead, gold jewelry and watches. The average transaction value declined in Ernest Jones while the number of transactions increased over prior year. Transaction increases in Ernest Jones were driven by broad strength across the merchandise portfolio but with particular strength in fashion watches that also impacted the average transaction value.
 Change from previous year  
Fiscal 2015Same
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.Samuel3.9% (0.9)% 3.0% 2.6% 5.6% $389.6 
Ernest Jones7.0% 1.8% 8.8% 3.0% 11.8% $354.0 
UK Jewelry division5.3% 0.4% 5.7% 2.8% 8.5% $743.6 
(1)     Includes all sales from stores not open for 12 months.
(2)     Non-GAAP measure, see Item 6.
 
Average Merchandise Transaction Value (1)(2)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fiscal 2015Fiscal 2015 
Fiscal 2014(3)
 Fiscal 2015 
Fiscal 2014(3)

 Fiscal 2015 
Fiscal 2014(3)
H.Samuel£74
 £72
 2.8% 0.0% 1.3% 0.2%
Ernest Jones£249
 £259
 (3.9)% (7.1)%
 10.9% 9.5%
UK Jewelry division£110
 £109
 0.9% (0.9)%
 3.2% 1.8%
(1)    Average merchandise transaction value is defined as net merchandise sales on a same store basis divided by the total number of customer transactions.
(2)
Net merchandise sales include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales.
(3)
The Fiscal 2014 average merchandise transaction value and merchandise transactions, including the change from previous year have been recalculated to conform to the current year presentation which is calculated on a same store sales basis.
Zale division sales
As Zale Corporation was acquired May 29, 2014, there is no comparable prior period. The Zale division’s Fiscal 2015 sales were $1,215.6 million. Zale Jewelry contributed $1,068.7 million and Piercing Pagoda contributed $146.9 million of revenues. Total Zale division sales included purchase accounting adjustments of $(33.6) million related to a reduction of deferred revenue associated with extended warranty sales. Same store sales increased 1.5% driven in part by initial synergy initiatives surrounding sales associate training, merchandise assortment and new marketing creative. Merchandise sales were particularly strong in branded bridal and branded diamond fashion in the Zale Jewelry reportable segment. Branded differentiated and exclusive merchandise represented 30.5% of the Zale division’s merchandise sales.
Fiscal 2015Same store sales Total sales
(in millions)
Zales1.6 % $800.9
Gordon’s(2.8)% $62.3
Zale US Jewelry1.3 % $863.2
Peoples4.6 % $174.5
Mappins(2.3)% $31.0
Zale Canada Jewelry3.5 % $205.5
Total Zale Jewelry1.7 % $1,068.7
Piercing Pagoda0.2 % $146.9
Zale division(1)
1.5 % $1,215.6
(1)     The Zale division same store sales reflect results since the date of acquisition and include merchandise and repair sales and excludes warranty and insurance revenues.

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Fourth Quarter Sales
In the fourth quarter, Signet’s same store sales were up 4.2%, compared to an increase of 4.3% in the prior year fourth quarter, and total sales increased by 45.5% to $2,276.4 million compared to $1,564.0 million in the prior year fourth quarter. The increase in sales was primarily driven by the addition of the Zale division which added $636.7 million of sales, including purchase accounting adjustments. eCommerce sales in the fourth quarter were $149.6 million, which included $54.8 million of Zale eCommerce sales, compared to $79.0 million in the prior year fourth quarter. The breakdown of the sales performance is set out in the table below.
 Change from previous year    
Fourth quarter of Fiscal 2015
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 division3.7% 1.8% 5.5% —% 5.5% $1,358.3 
Zale Jewelry3.8%         $564.6 
Piercing Pagoda2.7%         $72.1 
Zale division(4)
3.7%         $636.7 
UK Jewelry division7.5% 0.2% 7.7% (5.6)% 2.1% $278.0 
Other (5)
—% nm
 nm
 —% nm  $3.4 
Signet4.2% 42.7% 46.9% (1.4)% 45.5% $2,276.4 
Adjusted Signet(3)
          $2,289.2 
Adjusted Signet excluding Zale(3)
            $1,639.7 
(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.
(2)    Includes all sales from stores not open for 12 months.
(3)     Non-GAAP measure, see Item 6.
(4)
Same store sales presented for Zale division to provide comparative performance measures. Year-over-year results not applicable because Signet did not own Zale division in prior year.
(5)     Includes sales from Signet’s diamond sourcing initiative.
nm    Not meaningful.
Sterling Jewelers sales
In the fourth quarter, the Sterling Jewelers division’s total sales were $1,358.3 million compared to $1,288.0 million in the prior year fourth quarter, up 5.5% and same store sales increased 3.7%, compared to an increase of 4.0% in the prior year fourth quarter. Sales increases in the fourth quarter were driven by a combination of factors which drove results at Kay and Jared. These factors included sales team execution, compelling merchandise, marketing, and credit. The average merchandise transaction value increased in Kay driven by particular strength in bridal as well as a decline in sales associated with lower average selling price units. The number of merchandise transactions declined in Kay primarily due to a decline in units of lower average selling price points. In Jared, the average merchandise transaction value increased due to strong branded and non-branded merchandise performance. The number of merchandise transactions was relatively flat to prior year due to a decline in sales associated with lower average selling price units.
 Change from previous year  
Fourth quarter of Fiscal 2015Same
store
sales		 
Non-same
store sales,
net(1)
 Total
sales
as reported		 Total
sales
(in millions)
Kay4.6% 2.4% 7.0% $862.8 
Jared(2)
2.6% 3.6% 6.2% $416.7 
Regional brands0.0% (11.7)% (11.7)% $78.8 
Sterling Jewelers division3.7% 1.8% 5.5% $1,358.3 
(1)    Includes all sales from stores not open or owned for 12 months.
(2)
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. Reported sales in the prior year have been reclassified to align with current year presentation.

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 Average Merchandise Transaction Value Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fourth quarter of Fiscal 2015Fiscal 2015 
Fiscal 2014(3)
 Fiscal 2015 
Fiscal 2014 (3)
 Fiscal 2015
Fiscal 2014 (3)
Kay$364
 $344
 5.8% 2.4 % (1.6)% 1.2 %
Jared$495
 $484
 2.3% (4.2)% 0.1 % 9.0 %
Regional brands$369
 $366
 0.8% 6.8 % (2.2)% (4.5)%
Sterling Jewelers division$397
 $380
 4.5% 1.1 % (1.2)% 2.6 %
(1)    Average merchandise transaction value is defined as net merchandise sales on a same store basis divided by the total number of customer transactions.
(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.
(3)
The Fiscal 2014 average merchandise transaction value and merchandise transactions, including the change from previous year have been recalculated to conform to the current year presentation which is calculated on a same store sales basis.
UK Jewelry sales
In the fourth quarter, the UK Jewelry division’s total sales were up by 2.1% to $278.0 million compared to $272.2 million in the prior year fourth quarter and up 7.7% at constant exchange rates (non-GAAP measure, see Item 6). Same store sales increased 7.5% compared to an increase of 5.7% in the prior year fourth quarter.  Sales performance in the fourth quarter was primarily driven by branded bridal, fashion diamond jewelry and fashion watches. The average merchandise transaction value increase in H.Samuel was driven by strong diamond and bridal sales with a slight decline in the number of transactions. The average transaction value declined slightly in Ernest Jones while the number of transactions increased over prior year period. Transaction increases in Ernest Jones were driven by broad strength across the merchandise portfolio but with particular strength in fashion watches that also impacted the average transaction value.
 Change from previous year  
Fourth quarter of Fiscal 2015Same
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.Samuel6.0% (0.3)% 5.7% (5.3)% 0.4% $152.1 
Ernest Jones(3)
9.3% 0.8 % 10.1% (5.8)% 4.3% $125.9 
UK Jewelry division7.5% 0.2 % 7.7% (5.6)% 2.1% $278.0 
(1)    Includes all sales from stores not open for 12 months.
(2)     Non-GAAP measure, see Item 6.
(3)     Includes stores selling under the Leslie Davis nameplate.
 
Average Merchandise Transaction Value(1)
 Merchandise Transactions
 Average Value Change from previous year Change from previous year
Fourth quarter of Fiscal 2015Fiscal 2015 
Fiscal 2014(4)
 Fiscal 2015 
Fiscal 2014(4)
 Fiscal 2015 
Fiscal 2014(4)
H.Samuel£74
 £69
 7.2 % — % (0.8)% 3.6%
Ernest Jones(3)
£230
 £231
 (0.4)% (2.5)% 11.6 % 9.3%
UK Jewelry division£107
 £100
 7.0 % — % 1.6 % 4.6%
(1)     Average merchandise transaction value is defined as net merchandise sales on a same store basis divided by the total number of customer transactions.
(2)
Net merchandise sales include all merchandise product sales, including value added tax (“VAT”), net of discounts and returns. In addition, excluded from net merchandise sales are repairs, warranty, insurance, employee and other miscellaneous sales.
(3)     Includes stores selling under the Leslie Davis nameplate.
(4)
The Fiscal 2014 average merchandise transaction value and merchandise transactions, including the change from previous year have been recalculated to conform to the current year presentation which is calculated on a same store sales basis.
Zale sales
As Zale Corporation was acquired May 29, 2014, there is no comparable period presented. The Zale division’s fourth quarter sales were $636.7 million. Zale Jewelry contributed $564.6 million and Piercing Pagoda contributed $72.1 million of revenues. Total Zale division sales included purchase accounting adjustments of $(12.8) million related to a reduction of deferred revenue associated with extended warranty sales. Same store sales increased 3.7% driven in part by initial synergy initiatives surrounding sales associate training, merchandise assortment and new marketing creative. Merchandise sales were particularly strong in branded bridal and branded diamond fashion in the Zale Jewelry reportable segment. Total Zale division sales were driven by branded sales in bridal and fashion in the Zale Jewelry reportable segment.

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Fourth quarter of Fiscal 2015Same store sales Total
sales
(in millions)
Zales3.7 % $427.1
Gordon’s(2.3)% $32.1
Zale US Jewelry3.2 % $459.2
Peoples7.1 % $90.0
Mappins3.5 % $15.4
Zale Canada Jewelry6.6 % $105.4
Total Zale Jewelry3.8 % $564.6
Piercing Pagoda2.7 % $72.1
Zale division(1)
3.7 % $636.7
(1)     The Zale division same store sales includes merchandise and repair sales and excludes warranty and insurance revenues.
Cost of Sales and Gross Margin
In Fiscal 2015, gross margin was $2,074.2 million or 36.2% of sales compared to $1,580.5 million or 37.5% of sales in Fiscal 2014. Adjusted gross margin was $2,131.5 million or 36.9% of adjusted sales (non-GAAP measure, see Item 6). The decrease in the adjusted gross margin rate from prior year of 60 basis points was due to the lower gross margins associated with the Zale division which reduced Signet’s adjusted gross margin rate by 70 basis points. Zale operates with a lower gross margin structure than Sterling Jewelers and represents an area of focus on applying best practices for improvement. The impact of Zale on Signet’s adjusted gross margin rate was partially offset by a higher gross margin rate in the Sterling Jewelers division.
The Sterling Jewelers division gross margin dollars increased $107.5 million compared to Fiscal 2014, reflecting increased sales and a gross margin rate improvement of 30 basis points. The gross margin rate expansion was driven by an improvement in the merchandise margin, leverage on store occupancy expenses from higher sales as well as favorable commodity costs.
In the UK Jewelry division, gross margin dollars increased $15.5 million compared to Fiscal 2014, reflecting higher sales partially offset by a gross margin rate decrease of 30 basis points. The increase in gross margin dollars was driven by higher sales which leveraged store occupancy and distribution costs. The gross margin rate decline was driven principally by a lower merchandise margin, as the division strategically realigned assortments and prices to better drive sales and gross margin dollars.
In the fourth quarter, the consolidated gross margin was $912.1 million or 40.1% of sales compared to $648.8 million or 41.5% of sales in the prior year fourth quarter. Adjusted gross margin was $936.9 million or 40.9% of adjusted sales (non-GAAP measure, see Item 6). The decrease in the adjusted gross margin rate from prior year of 60 basis points was due to the lower gross margins associated with the Zale division which reduced Signet’s adjusted gross margin rate by 110 basis points.The impact of Zale on Signet’s adjusted gross margin rate was partially offset by a higher gross margin rate in the Sterling Jewelers division.
Gross margin dollars in the Sterling Jewelers division increased $38.8 million compared to the prior year fourth quarter, reflecting higher sales and a gross margin rate increase of 70 basis points. The gross margin rate expansion was driven by an improvement in the merchandise margin, leverage on store occupancy expenses from higher sales as well as favorable commodity costs.
In the UK Jewelry division, gross margin dollars increased $1.6 million compared to Fiscal 2014, reflecting higher sales partially offset by a gross margin rate decrease of 20 basis points. As with the full year, the fourth quarter increase in gross margin dollars was driven by higher sales which leveraged store occupancy and distribution costs. The gross margin rate decline was driven principally by a lower merchandise margin, as the division strategically realigned assortments and prices to better drive sales and gross margin dollars.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for Fiscal 2015 were $1,712.9 million or 29.9% of sales compared to $1,196.7 million or 28.4% of sales in Fiscal 2014, up $516.2 million. The increase was primarily due to the additionloss of Zale in the current year. In addition, included in SGA were purchase accounting adjustments and transaction and integration costs of $48.4 million, or 0.8% of sales. Adjusted SGA was $1,664.5 million or 28.8% of adjusted sales (non-GAAP measure, see Item 6). The 40 basis points increase in the adjusted SGA rate compared to the prior year comparable period was driven primarily by the Zale division which unfavorably affected Signet’s adjusted SGA rate by 60 basis points. In both Sterling Jewelers and UK Jewelry divisions, SGA in total and expenses associated with store staff costs were leveraged due to higher sales.
In the fourth quarter, SGA expense was $634.5 million or 27.9% of sales compared to $425.8 million or 27.2% of sales in the prior year fourth quarter. The increase was primarily due to the addition of Zale in the current year. In addition, included in SGA were purchase accounting adjustments and transaction and integration costs of $5.2 million, or 0.2% of sales. Adjusted SGA was $629.3 million or 27.5% of adjusted sales. The 30 basis points increase in the adjusted SGA rate compared to the prior year comparable period was driven primarily by the Zale division which unfavorably affected Signet’s adjusted SGA rate by 70 basis points. In both Sterling Jewelers and UK Jewelry divisions, higher sales leveraged SGA.

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Other Operating Income, Net
In Fiscal 2015, other operating income was $215.3 million or 3.7% of sales compared to $186.7 million or 4.4% of sales in Fiscal 2014. This increase was primarily due to higher interest income earned from higher outstanding receivable balances.
Other operating income in the fourth quarter was $54.1 million or 2.4% of sales compared to $47.6 million or 3.0% of sales in the prior year fourth quarter. This increase was also primarily due to higher interest income earned from higher outstanding receivable balances.
Operating Income
In Fiscal 2015, operating income was $576.6 million or 10.0% of sales compared to $570.5 million or 13.5% of sales in Fiscal 2014. Included in operating income were purchase accounting adjustments and transaction and integration costs of $105.7 million or (1.8)% of sales. Adjusted operating income was $682.3 million or 11.8% of adjusted sales (non-GAAP measure, see Item 6). The Zale division operating income was $37.7 million or 3.0% of Zale division sales excluding purchase accounting adjustments. Excluding Zale operations, operating income would have been $644.6 million or 14.3% of sales (non-GAAP measure, see Item 6).income. 
 Fiscal 2015 Fiscal 2014
(in millions)$  % of sales $  % of sales
Sterling Jewelers division$624.3
 16.6 % $553.2
 15.7%
UK Jewelry division52.2
 7.0 % 42.4
 6.2%
Zale division(1)
(8.2) (0.7)% n/a
 n/a
Other(2)
(91.7) nm
 (25.1) nm
Operating income$576.6
 10.0 % $570.5
 13.5%
 Fourth Quarter Fiscal 2018 Fourth Quarter Fiscal 2017
(in millions)$  % of sales $  % of sales
North America segment$305.9
 14.9% $369.7
 18.2%
International segment35.0
 15.0% 42.6
 18.7%
Other(17.4) nm
 (13.1) nm
Operating income$323.5
 14.1% $399.2
 17.6%
(1)
Zale division includes net operating loss impact of $45.9 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $37.7 million or 3.0% of sales. The Zale division operating loss included $1.9 million from Zale Jewelry or (0.2)% of sales and $6.3 million from Piercing Pagoda or (4.3)% of sales.
(2)
Other includes $59.8 million of transaction and integration expense. Transaction and integration costs include expenses associated with severance, advisor fees for legal, tax, accounting, information technology implementation and consulting expenses.
nmNot meaningful.
n/a    Not applicable as Zale division was acquired on May 29, 2014.
In the fourth quarter, operating income was $331.7 million or 14.6% of sales compared to $270.6 million or 17.3% of sales in prior year fourth quarter. Included in operating income were purchase accounting adjustments and transaction costs of $30.0 million or 1.3% of sales. Adjusted operating income was $361.7 million or 15.8% of adjusted sales (non-GAAP measure, see Item 6). The Zale division operating income was $56.9 million or 8.7% of Zale division sales excluding purchase accounting adjustments. Excluding Zale operations, operating income would have been $304.8 million or 18.6% of sales.
 Fourth Quarter Fiscal 2015 Fourth Quarter Fiscal 2014
(in millions)$  % of sales $  % of sales
Sterling Jewelers division$260.0
 19.1% $227.9
 17.7%
UK Jewelry division53.8
 19.4% 51.7
 19.0%
Zale division(1)
36.1
 5.7% n/a
 n/a
Other(2)
(18.2) nm
 (9.0) nm
Operating income$331.7
 14.6% $270.6
 17.3%
(1)
Zale division includes net operating loss impact of $20.8 million for purchase accounting adjustments. Excluding the impact from accounting adjustments, Zale division’s operating income was $56.9 million or 8.7% of sales. The Zale division operating income included $32.8 million from Zale Jewelry or 5.8% of sales and $3.3 million from Piercing Pagoda or 4.6% of sales.
(2)
Other includes $9.2 million of transaction and integration expense. Transaction costs include expenses associated with severance, advisor fees for legal, tax, accounting, information technology implementation and consulting expenses.
nm Not meaningful
n/a Not applicable as Zale division was acquired on May 29, 2014.


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Interest Expense, Net
In Fiscal 2015,2018, net interest expense was $36.0$52.7 million compared to $4.0$49.4 million in Fiscal 2014.2017. The increase in interest expense was driven by the addition of $1.4 billion of debt financing at a weighted average interest rate of 2.4%for the Company’s debt outstanding was 3.2% compared to 2.8% in the prior year. The increase in expense relates to additional interest incurred under the unsecured term loan entered into by Signet to finance the R2Net acquisition transaction (the “bridge loan”), partially offset by a reduction in interest related to the Zale Acquisition. Includedsettlement of the Company’s asset-backed securitization facility, which was terminated in interest expense was a write-offthe third quarter of fees of $3.2 millionFiscal 2018. See Item 8 for additional information 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.loans and long-term debt (Note 22).
In the fourth quarter, net interest expense was $7.9$10.0 million compared to $1.2$13.0 million in the prior year fourth quarter. The weighted average interest rate for the Company’s debt outstanding was 3.6% compared to 2.9% in the prior year fourth quarter. The decrease in expense relates to a reduction in interest related to the settlement of the Company’s asset-backed securitization facility, which was terminated in the third quarter driven by the $1.4 billion of debt.Fiscal 2018.
Income Before Income Taxes
ForIn Fiscal 2015,2018, income before income taxes was down 4.6%decreased $186.6 million to $540.6$527.2 million or 9.4%8.4% of sales compared to $566.5$713.8 million or 13.4%11.1% of sales in Fiscal 2014.2017.
ForIn the fourth quarter, income before income taxes was up 20.2%decreased $72.7 million to $323.8$313.5 million or 14.2%13.7% of sales compared to $269.4$386.2 million or 17.2%17.0% of sales in the prior year fourth quarter.
Income Taxes
Income tax expense for Fiscal 20152018 was $159.3$7.9 million compared to $198.5$170.6 million in Fiscal 2014,2017, with an effective tax rate of 29.5%1.5% for Fiscal 20152018 compared to 35.0%23.9% in Fiscal 2014. This reduction of 550 basis points 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.
2017. In the fourth quarter, income tax expensebenefit was $95.8$37.8 million compared to $94.2expense of $88.7 million in the prior year fourth quarter. The fourth quarterlower effective tax rate was 29.6% compared to 35.0% in the prior year fourth quarter alsoFiscal 2018 was driven principally by factors around the Zale Acquisition.favorable impact of the Tax Cuts and Jobs Act in the United States and the pre-tax earnings mix by jurisdiction. Revaluation of net deferred tax liabilities due to the Tax Cuts and Jobs Act resulted in a one-time non-cash benefit of $64.7 million in the quarter.
On December 22, 2017, the U.S. government enacted “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” which is commonly referred to as “The Tax Cuts and Jobs Act” (the “TCJ Act”). The TCJ Act provides for comprehensive tax legislation which significantly modifies the U.S. corporate income tax system. Due to the timing of the enactment and the complexity involved in applying the provisions of the TCJ Act, we have made reasonable estimates of its effects and recorded provisional amounts for the year ended February 3, 2018, consistent with applicable SEC guidance.

The results for the fourth quarter and full year Fiscal 2018 include a net benefit of $86.2 million related to provisional estimates resulting directly from the TCJ Act. Within our calculations of the income tax effects of the TCJ Act, we used assumptions and estimates that may change as a result of future guidance and interpretation from the Internal Revenue Service, the SEC, the Financial Accounting Standards Board and/or various other taxing jurisdictions. In particular, we anticipate that the U.S. state jurisdictions will continue to determine and announce their conformity or decoupling from the Act, either in its entirety or with respect to specific provisions. All of these potential legislative and interpretive actions could result in adjustments to any of the provisional estimates when the accounting for the income tax effects of the TCJ Act is completed.
We anticipate that the effective tax rate in 2019 and in future years will be favorably impacted by the lower federal statutory corporate tax rate of 21.0 percent offset by limitations of certain deductions and the base broadening changes. See Note 12 of Item 8 for additional information regarding the Company’s income taxes and the impact of the TCJ Act.
Net Income
Net income for Fiscal 20152018 was up 3.6%down 4.4% to $381.3$519.3 million or 6.6%8.3% of sales compared to $368.0$543.2 million or 8.7%8.5% of sales in Fiscal 2014.2017.
For the fourth quarter, net income was up 30.1%18.1% to $228.0$351.3 million or 10.0%15.3% of sales compared to $175.2$297.5 million or 11.2%13.1% of sales in the prior year fourth quarter.
Earnings Perper Share
For Fiscal 2015,2018, diluted earnings per shareEPS were $4.75$7.44 compared to $4.56$7.08 in Fiscal 2014,2017, an increase of 4.2%5.1%. Adjusted diluted earningsEarnings per share were $5.63, which included a contribution of $0.27 per sharein Fiscal 2018 includes $0.93 related to the Zale division and a contributionimpact of $0.12 per share related to Signet’s capital structure, net of incremental financing expense (non-GAAP measure, see Item 6).revaluation on deferred taxes under the TCJ Act. The weighted average diluted number of common shares outstanding was 80.269.8 million compared to 80.776.7 million in Fiscal 2014.2017. Signet repurchased 288,3938.1 million shares in Fiscal 20152018 compared to 1,557,67311.2 million shares in Fiscal 2014.2017.
For the fourth quarter, diluted earnings per share were $2.84$5.24 compared to $2.18$3.92 in the prior year fourth quarter, up 30.3%33.7%. Adjusted diluted earningsEarnings per share were $3.06, which included a contributionin the fourth quarter of $0.43 per shareFiscal 2018 includes $0.96 related to the Zale divisionimpact of revaluation on deferred taxes under the Tax Cuts and a contribution of $0.15 per share related to Signet’s capital structure, net of incremental financing expense (non-GAAP measure, see Item 6).Jobs Act. The weighted average diluted number of common shares outstanding was 80.267.0 million compared to 80.375.8 million in the prior year fourth quarter.
The Company issued preferred shares on October 5, 2016, which include a cumulative dividend right and may be converted into common shares. The Company’s computation of diluted earnings per share includes the effect of potential common shares for outstanding awards issued under the Company’s share-based compensation plans and preferred shares upon conversion, if dilutive. In computing diluted EPS, the Company also adjusts the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the preferred shares. For the fourth quarter and year to date periods, the preferred shares were more dilutive if conversion was assumed. See Item 8 for additional information related to the preferred shares (Note 8) or the calculation of earnings per share (Note 10).
Dividends Perper Common Share
In Fiscal 2015,2018, total dividends of $0.72$1.24 were approveddeclared by the Board of Directors compared to $0.60$1.04 in Fiscal 2014.2017.


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LIQUIDITY AND CAPITAL RESOURCES
Summary Cash Flow
The following table provides a summary of Signet’s cash flow activity for Fiscal 2016,2019, Fiscal 20152018 and Fiscal 2014:2017:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Net cash provided by operating activities$443.3
 $283.0
 $235.5
$697.7
 $1,940.5
��$678.3
Net cash used in investing activities(228.7) (1,652.6) (160.4)(119.0) (569.4) (278.4)
Net cash (used in) provided by financing activities(266.6) 1,320.9
 (124.8)
Decrease in cash and cash equivalents(52.0) (48.7) (49.7)
Net cash used in financing activities(602.7) (1,253.6) (438.2)
Increase (decrease) in cash and cash equivalents(24.0) 117.5
 (38.3)
          
Cash and cash equivalents at beginning of period193.6
 247.6
 301.0
225.1
 98.7
 137.7
Decrease in cash and cash equivalents(52.0) (48.7) (49.7)
Increase (decrease) in cash and cash equivalents(24.0) 117.5
 (38.3)
Effect of exchange rate changes on cash and cash equivalents(3.9) (5.3) (3.7)(5.7) 8.9
 (0.7)
Cash and cash equivalents at end of period$137.7
 $193.6
 $247.6
$195.4
 $225.1
 $98.7
     
Free cash flow(1)
$564.2
 $1,703.1
 $400.3
(1)
Non-GAAP measure. See Item 6 for additional information.
OVERVIEW
Operating activities provide the primary source of cash and are influenced by a number of factors, such as:
net income;
changes in the level of inventory as a result of sales and new store growth;
changes to accounts receivable driven by the in-house customer finance program metrics including average monthly collection rate and the mix of finance offer participation;
changes to accrued expenses including variable compensation; and
deferred revenue, reflective of the performance of extended service plan sales.
Other sources of cash include borrowings and issuance of common and preferred shares for cash and proceeds from the securitization facility relating to Signet’s Sterling Jewelers finance receivables.cash.
Net Cash Provided By Operating Activities
Signet derives most of its operating cash from net income through the sale of jewelry.jewelry and extended service plans. As a retail business, Signet receives cash when it makes a sale to a customer or when the payment has been processed by Signet or the relevant bank if the payment is made by third-party credit or debit card. Partially offsetting cash receipts via sales are payments of operating expenses. Signet’s largest operating expenses are cost of inventory, store occupancy costs, and payroll and related payrollpayroll-related benefits.
Working Capital
ChangesAccounts receivable
Prior to the outsourcing of credit, changes to accounts receivable arewere driven by the Sterling Jewelers divisionNorth America segment’s in-house credit program. If a customer makes use ofelected financing provided by the legacy Sterling Jewelers division, the cash iswas received over time based on terms of the agreement. In Fiscal 2016, 61.5%October 2017, Signet, through its subsidiary Sterling Jewelers Inc., completed the sale of the Sterling Jewelers division’s sales were made usingprime-only credit quality portion of Sterling’s in-house finance receivable portfolio to Comenity. In addition, during June 2018, the Company completed the sale of all eligible non-prime in-house accounts receivable to Carval and the appointed minority party, Castlelake.
For a five-year term ending in 2023, Signet will remain the issuer of non-prime credit with investment funds managed by CarVal and Castlelake (collectively, the “Investors”) purchasing forward receivables at a discount rate determined in accordance with their respective agreements. Signet will hold the newly issued non-prime credit receivables on its balance sheet for two business days prior to selling the receivables to the respective counter-party in accordance with the agreements. Servicing of the non-prime receivables, including operational interfaces and customer financingservicing, will continue to be provided by Signet, as compared to 60.5% in Fiscal 2015. The average monthly collection rate from the Sterling Jewelers customer in-house finance receivables was 11.5% as compared to 11.9% in Fiscal 2015. Changes in credit participation and the collection rate impact the level of receivables.
Changes to accounts payable are primarily driven by the timing and amount of merchandise purchased, the mix of merchandise purchased and the relevant payment terms. Signet typically pays for merchandise within 30 days of receipt. Due to the nature of specialty retail jewelry, it is usual for inventory to be held on average for approximately 12 months before it is sold.
Signet’s working capital requirements fluctuate during the year as a result of the seasonal nature of sales, and movements in the British pound and Canadian dollar to US dollar exchange rate. The working capital needs of the business normally decline from January to August, as inventory and accounts receivable decrease from seasonal peaks. As inventory is purchasedGenesis for the fourth quarter, there is a working capital outflow which reaches its highest levels in mid- to late-November. The peak level of working capital is typically $100 million to $150 million above the typical January to August level, and can be accentuated by new store openings. The working capital position then reverses over the Holiday Season.Investors.

70Inventory
Table of Contents

The change in inventory is primarily driven by the sales performance of the existing stores, the net change in store space and the seasonal pattern of sales. Other factors which drive changes to inventory include changes in new product launches, sourcing practices, commodity costs, foreign exchange and merchandise mix. To further enhance product selection, test new jewelry designs and working capital levels, Signet utilizesenters into consignment inventory.arrangements for merchandise. The majority of inventory held on consignment inventory is held in the US, which at January 30, 2016February 2, 2019 amounted to $441.9$726.8 million as compared to $434.6$606.4 million at January 31, 2015.February 3, 2018. The principal terms of the consignment agreements, which can generally be terminated by either party, are such that Signet can return any or all of the inventory to the relevant supplier without financial or commercial penalties. When Signet sells consignment inventory, it becomes liable to the supplier for the cost of the item. The sale of any such inventory is accounted for on a gross basis (see principal accounting policies, Item 8).
Accounts payable
Changes to accounts payable are primarily driven by the timing and amount of merchandise purchased, the mix of merchandise purchased and the relevant payment terms. Signet typically pays for merchandise within 30 days of receipt. Due to the nature of specialty retail jewelry, it is usual for inventory to turnover on average once approximately every 12 months.
Deferred revenue
Signet’s working capital is also impacted by movements in deferred revenue associated with the sales of extended service plans sold in Sterling Jewelers and Zale divisions.the North America segment. Movements in deferred revenue reflect the level of divisionalsegment sales and the attachment rate of service plan sales. Therefore if sales increase, working capital would be expected to increase. Similarly, a decrease in sales would be expected to result in a reduction in working capital.
Payroll and benefits
Signet’s largest class of operating expense relates to store and central payroll and benefits. These are typically paid on a weekly, biweekly or monthly basis, with annual bonus payments also being made. Operating lease payments in respect of stores occupied are normally paid on a monthly basis by the Sterling Jewelers and Zale divisionsNorth America segment and on a quarterly basis by the UK Jewelry division.International segment. Payment for advertising on television, radio or in newspapersprint is usually made between 30 and 60 days after the advertisement appears. Other expenses, none of which are material, have various payment terms.
Signet’s working capital requirements fluctuate during the year as a result of the seasonal nature of sales. The working capital needs of the business normally decline from January to August, as inventory decreases from seasonal peaks. As inventory is purchased for the fourth quarter, there is a working capital outflow which reaches its highest levels in mid- to late-November. The peak level of working capital is approximately $300 million above the typical January to August level, and can be accentuated by new store openings. The working capital position then reverses over the balance of the Holiday Season and fourth quarter.
Investment in new space requires significant investment in working capital, as well as fixed capital investment, due to the inventory turn, and the additional investment required to fund sales in the Sterling Jewelers and Zale divisions utilizing in-house customer finance.turn. Of the total investment required to open a new store in the US, between 50% and 60% is typically accounted for by working capital. New stores are usually opened in the third quarter or early in the fourth quarter of a fiscal year. A reduction in the number of store openings results in the difference between the level of funding required in the first half of a fiscal year and the peak level being lower, while an increase in the number of store openings would have the opposite impact.
Fiscal 20162019 Cash Flow Results
In Fiscal 2016,2019, net cash provided by operating activities was $443.3$697.7 million as compared to $283.0 million$1.94 billion in Fiscal 2015, an increase2018, a decrease of $160.3 million. $1.24 billion.
Net income increased by $86.6loss was $657.4 million to $467.9 million as compared to $381.3net income of $519.3 million, ina decrease of $1,176.7 million.
Non-cash goodwill and intangible impairment charges of $735.4 million were recorded related to interim impairment assessments performed during Fiscal 2015, with depreciation2019.
Non-cash restructuring charges of $84.9 million related to the Plan primarily related to inventory charges and amortization increasing by $25.6 million to $175.3 million as compared to $149.7 million in Fiscal 2015. The primary driversimpairment of cash provided by operating activities in Fiscal 2016 were as follows:information technology assets.
Cash used forprovided by accounts receivable was $189.8$491.2 million, including $445.5 million from the sale of eligible non-prime in-house finance receivables and $27.6 million related to the in-house finance receivable portfolio subsequent to the reclassification to held for sale. This compares to $1.19 billion, including $952.5 million from the sale of the prime portion of the in-house receivable portfolio and $242.1 million generated by receivables held for investment including in-house finance receivables prior to reclassification to held for sale. The changes in accounts receivable are primarily driven by the North America in-house credit program.

During Fiscal 2019, the payment plans participation rate in the North America segment, excluding James Allen, was 51.7% compared to $194.6 million52.3% in the prior year comparable period. The decline in participation rate was driven primarily by a continued trend of lower credit applications. The Company completed its transition to an outsourced credit structure during the second quarter of Fiscal 2015, reflecting higher2019. See Note 4 of Item 8 for additional information regarding the credit sales and a higher credit penetration rate of the Sterling Jewelers division’s in-house customer finance program. Additional drivers of the receivables increase were a slightly lower collection rate and higher mix of guests opting for regular credit terms, which require lower monthly payments and no down payment as opposed to the interest free programs.transactions.
 
Fiscal 2019(3)
 
Fiscal 2018(2)
 Fiscal 2017
Total North America sales (excluding James Allen)(1) (millions)
$5,418.0
 $5,527.1
 $5,743.2
Credit and lease purchase sales (millions)$2,799.5
 $2,889.0
 $3,142.0
Credit and lease purchase sales as % of total North America sales(1)
51.7% 52.3% 54.7%
(1)
Excludes James Allen sales totaling $223.7 million and $88.1 million during Fiscal 2019 and Fiscal 2018, respectively, as in-house credit was not available to James Allen customers during the period. Additionally, see Note 5 of Item 8 for additional information regarding the acquisition of R2Net in September 2017.
(2)
In third quarter of Fiscal 2018, the Company completed the sale of the prime-only credit quality portion of its in-house finance receivable portfolio.
(3)
In second quarter of Fiscal 2019, completed the sale of the non-prime in-house accounts receivable, thereby completing its credit outsourcing initiative.
Cash used for inventory and inventory-related items was $46.0$194.3 million compared to $121.6cash provided of $210.9 million in Fiscal 2015.2018. The change in inventory cash flows is attributed to the growthchange in total inventory on-hand to $2,453.9 million$2.39 billion in Fiscal 20162019 compared to $2,439.0 million$2.28 billion in Fiscal 2015, noting key drivers were new store growth2018, reflecting our strategy to exit low-priced owned branded beads and increased diamondincrease investments in bridal and certain fashion collections. In addition, other factors impacting inventory associated with management’s diamond sourcing initiative. Offsetting these increases were focused management effortsinclude non-cash inventory charges related to improve inventory turns, primarily in the Zale division,Plan and the impact of the US dollar strengthening against the British pound and Canadian dollar.foreign exchange.
Cash used for accounts payable was $6.4$78.5 million compared to $23.7$51.4 million of cash provided by accounts payable in Fiscal 20152018 primarily due to the timing of payments.payments and inventory purchases.
Cash used for other receivables and other assets was $70.6 million compared to $53.5 million in Fiscal 2015 primarily due to anThe increase in deferred extended service plan selling costs.
Cash provided by accrued expenses and other liabilities was $51.8$55.9 million compared to an increase of $3.9 million in Fiscal 2016 compared to $64.8 million in Fiscal 20152018 primarily due to increased payroll-related accrued expenses.expenses including incentive compensation and advertising.
Cash provided by deferred revenue was $76.3 million in Fiscal 2016 compared to $102.3 million in Fiscal 2015.
The increase in deferred revenueincome taxes payable was $10.9 million compared a decrease of $82.4 million in Fiscal 2018, primarily driven by higher extended service plan salesattributable to lower pre-tax earnings in the Sterling Jewelerscurrent year as well as the favorable impact of the Tax Cuts and Zale divisions.Jobs Act in the United States.
Cash used for income taxes was $25.7 million compared to $1.6 million in Fiscal 2015 due to higher estimated tax payments made in Fiscal 2016 reflecting Signet’s performance.

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Net Cash Used in Investing Activities
Net cash used in investing activities primarily reflectreflects the purchases of property, plant and equipment related to the:
rate of space expansion in the US;new store openings;
investment in existing stores, reflecting the level of investment in sales-enhancing technology, and the number of store remodels and relocations carried out; and
investmentinvestments in divisional head offices, systemsIT modernization and information technology software, which include distribution facilities in North America and the UK.digital ecosystem.
When evaluating new store investment, management uses an investment hurdle rate of a 20% internal rate of return on a pre-tax basis over a five year period, assuming the release of working capital at the end of the five years. Capital expenditure accounts for about 45% of the investment in a new store in the Sterling Jewelers division.North America segment. The balance is accounted for by investment in inventory and the funding of customer financing. Signet typically carries out a remodel of its stores every 10 years but does have some discretion as to the timing of such expenditure. A remodel is evaluated using the same investment procedures as for a new store. Minor store refurbishments are typically carried out every five years. In addition to store remodels, Signet carries out minor store refurbishments where stores are profitable but do not satisfy the investment hurdle rate required for a full remodel; this is usually associated with a short term lease renewal. Where possible, the investment appraisal approach is also used to evaluate other investment opportunities.
In Fiscal 2016,2019, net cash used in investing activities was $228.7$119.0 million, compared to $1,652.6 million. Excluding acquisition activity, capital expenditures$569.4 million in Fiscal 2015 were $223.4 million.2018 and $278.4 million in Fiscal 2017. The overall increasedecrease in capital additions was primarily due to new store and information technologythe acquisition of R2Net, as discussed in Note 5 of Item 8, in Fiscal 2018. Excluding the acquisition of R2Net in Fiscal 2018, cash used in each period was primarily for capital additions associated with remodels of existing stores, as well as capital investments in all divisions. In Fiscal 2016, capital expenditures in each division exceeded depreciation and amortization recognized.IT. See table below for additional information regarding capital additions.

 Fiscal 2016 Fiscal 2015 Fiscal 2014
(in millions)     
Capital additions in Sterling Jewelers$141.6
 $157.6
 $134.2
Capital additions in Zale division57.9
 42.0
 n/a
Capital additions in UK Jewelry26.4
 20.2
 18.4
Capital additions in Other0.6
 0.4
 0.1
Total purchases of property, plant and equipment$226.5
 $220.2
 $152.7
      
Ratio of capital additions to depreciation and amortization in Sterling Jewelers133.3% 164.7% 151.1%
Ratio of capital additions to depreciation and amortization in Zale division120.4% 135.5% n/a
Ratio of capital additions to depreciation and amortization in UK Jewelry131.3% 91.4% 86.0%
Ratio of capital additions to depreciation and amortization for Signet129.2% 147.1% 138.6%
n/a    Not applicable as Zale division was acquired on May 29, 2014.
 Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions)     
Capital additions in North America segment$123.9
 $219.7
 $252.2
Capital additions in International segment9.6
 17.6
 25.7
Capital additions in Other—
 0.1
 0.1
Total purchases of property, plant and equipment$133.5
 $237.4
 $278.0
      
Ratio of capital additions to depreciation and amortization in North America segment74.7% 119.7% 151.6%
Ratio of capital additions to depreciation and amortization in International segment54.9% 92.1% 119.0%
Ratio of capital additions to depreciation and amortization for Signet72.7% 116.7% 147.2%
Free Cash Flow
Free cash flow (non-GAAP measure, see Item 6) is defined as net cash provided by operating activities less purchases of property, plant and equipment; it is a non-GAAP measure, see Item 6.equipment. Free cash flow in Fiscal 20162019 was $216.8$564.2 million compared to $62.8 million$1.70 billion and $82.8$400.3 million in Fiscal 20152018 and Fiscal 2014,2017, respectively. The increaseFree cash flow in Fiscal 2018 included $952.5 million in proceeds received from the sale of prime receivables. In Fiscal 2019, $445.5 million in proceeds were received from the sale of non-prime receivables. Excluding these proceeds, the decrease in free cash flow inover Fiscal 2016 compared to Fiscal 20152018 was primarily due to growthlower net income and higher inventory levels due primarily to investment in profitabilitynew merchandise (see Note 4 of item 8 and working capital management, primarily through improvements in inventory planning.‘Working Capital’ section above).
Net Cash Provided By/Used in Financing Activities
The major items within financing activities are discussed below:

72
TableProceeds from issuance of Contentsequity shares
On October 5, 2016, the Company issued 625,000 preferred shares to Green Equity Investors VI, L.P., Green Equity Investors Side VI, L.P., LGP Associates VI-A LLC and LGP Associates VI-B LLC, all affiliates of Leonard Green & Partners, L.P., (together, the “Investors”) for an aggregate purchase price of $625.0 million, or $1,000 per share (the “Stated Value”) pursuant to the investment agreement dated August 24, 2016. In connection with the issuance of the preferred shares, the Company incurred direct and incremental expenses of $13.7 million, including financial advisory fees, closing costs, legal expenses and other offering-related expenses. The preferred shares rank senior to the Company’s common shares, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. Preferred shareholders are entitled to a cumulative dividend at the rate of 5% per annum, payable quarterly in arrears, commencing on February 15, 2017. See Note 8 of Item 8 for additional information related to preferred shareholder rights.

Dividends
Dividends on common shares
Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions, except per share amounts)Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends		Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends
First quarter$0.22
 $17.6
 $0.18
 $14.4
 $0.15
 $12.1
$0.37
 $21.8
 $0.31
 $21.3
 $0.26
 $20.4
Second quarter0.22
 17.6
 0.18
 14.4
 0.15
 12.1
0.37
 19.2
 0.31
 18.7
 0.26
 19.7
Third quarter0.22
 17.5
 0.18
 14.5
 0.15
 12.0
0.37
 19.2
 0.31
 18.7
 0.26
 18.1
Fourth quarter0.22
 17.5
(1) 
0.18
 14.4
(1) 
0.15
 12.0
0.37
 19.2
(1) 
0.31
 18.8
(1) 
0.26
 17.7
Total$0.88
 $70.2
 $0.72
 $57.7
 $0.60
 $48.2
$1.48
 $79.4
 $1.24
 $77.5
 $1.04
 $75.9
(1) 
Signet’s dividend policy results in the dividend payment date being a quarter in arrears from the declaration date. As a result, as of January 30, 2016February 2, 2019 and January 31, 2015, $17.5February 3, 2018, $19.2 million and $14.4$18.8 million, respectively, has been recorded in accrued expenses and other current liabilities in the consolidated balance sheets reflecting the cash dividends declared for the fourth quarter of Fiscal 20162019 and Fiscal 2015,2018, respectively.
In addition, on February 26, 2016,28, 2019, Signet’s Board of Directors declared a quarterly dividend of $0.26$0.37 per share on its common shares. This dividend will be payable on May 27, 201631, 2019 to shareholders of record on April 29, 2016,May 3, 2019, with an ex-dividend date of April 27, 2016.May 2, 2019.

Dividends on preferred shares
 Fiscal 2019 Fiscal 2018
(in millions)Total cash
dividends		 Total cash
dividends
First quarter$7.8
 $7.8
Second quarter7.8
 7.8
Third quarter7.8
 7.8
Fourth quarter(1)
7.8
 7.8
Total$31.2
 $31.2
(1)
Signet’s preferred shares dividends results in the dividend payment date being a quarter in arrears from the declaration date. As a result, as of February 2, 2019 and February 3, 2018, $7.8 million and $7.8 million, respectively, has been recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets reflecting the cash dividends on preferred shares declared for the fourth quarter of Fiscal 2019 and Fiscal 2018, respectively.
There were no cumulative undeclared dividends on the preferred shares as of February 2, 2019. In addition, deemed dividends of $1.7 million and $1.7 million related to accretion of issuance costs associated with the preferred shares were recognized in Fiscal 2019 and Fiscal 2018, respectively.
Restrictions on dividend payments
Signet has a $400 million senior unsecured multi-currency, multi-year revolving credit facility agreement (the “Credit Facility”) that was entered into in May 2011which provides the Company with a $700.0 million revolving credit facility and subsequently amended in May 2014 to extend the maturity date to 2019 and to add a new $400$357.5 million term loan facility. This credit facility agreement permits the making of dividend payments and stock repurchases so long as the Parent Company (i) is not in default under the agreement, or (ii) if in default at the time of making such dividend repayment or stock repurchase, has no loans outstanding under the agreement or more than $10$10.0 million in letters of credit issued under the agreement.
Under Bermuda law, a company may not declare or pay dividends if there are reasonable grounds for believing that the company is, or would after the payment be, unable to pay its liabilities as they become due or that the realizable value of its assets would thereby be less than its liabilities.
Share repurchaserepurchases
The Company’s share repurchase activity was as follows:
   Fiscal 2016 Fiscal 2015 Fiscal 2014
 Amount
authorized		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share
 (in millions)   (in millions)     (in millions)     (in millions)  
2013 Program(1)
$350.0
 1,018,568
 $130.0
 $127.63
 288,393
 $29.8
 $103.37
 808,428
 54.6
 $67.54
2011 Program(2)
$350.0
 n/a
 n/a
 n/a
 n/a
 n/a
 n/a
 749,245
 $50.1
 $66.92
Total  1,018,568
 $130.0
 $127.63
 288,393
 $29.8
 $103.37
 1,557,673
 $104.7
 $67.24
                    
   Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions, expect per share amounts)Amount
authorized		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share
2017 Program(1)
$600.0
 7.5
 $434.4
 $57.64
 n/a
 n/a
 n/a
 n/a
 n/a
 n/a
2016 Program(2)
$1,375.0
 1.3
 $50.6
 $39.76
 8.1
 460.0
 $56.91
 10.0
 $864.4
 $86.40
2013 Program(3)
$350.0
 n/a
 n/a
 n/a
 n/a
 n/a
 n/a
 1.2
 $135.6
 $111.26
Total  8.8
 $485.0
 $55.06
 8.1
 $460.0
 $56.91
 11.2
 $1,000.0
 $89.10
                    
(1) 
On June 14, 2013, the Board 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 20132017 Program had $135.6$165.6 million remaining as of January 30, 2016.February 2, 2019.
(2)
In October 2011, the Board 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 20112016 Program was completed as ofin March 2018.
(3)
The 2013 Program was completed in May 4, 2013.2016.
n/aNot applicable.
In June 2017, the Board of Directors authorized a new program to repurchase $600.0 million of Signet’s common shares (the “2017 Program”). The 2017 Program may be suspended or discontinued at any time without notice.
In February 2016, the Board authorized the repurchase of DirectorsSignet’s common shares up to $750.0 million (the “2016 Program”). In August 2016, the Board increased its authorized share repurchase program by $625.0 million, bringing the total authorization for the 2016 Program to $1.38 billion. The 2016 Program was completed in March 2018.
On October 5, 2016, the Company entered into an accelerated share repurchase agreement (“ASR”) with a large financial institution to repurchase $525.0 million of the Company’s common shares. At inception, the Company paid $525.0 million to the financial institution and took delivery of 4.7 million shares with an initial estimated cost of $367.5 million. In December 2016, the ASR was finalized and the Company received an additional $7501.3 million shares. Total shares repurchased under the ASR were 6.0 million shares at an average purchase price of $87.01per share repurchases to be executed in a manner that aligns withbased on the volume-weighted average price of the Company’s leverage and free cash flow targets.
Proceeds from issuance of common shares
In Fiscal 2016, $5.0 million was received from the issuance of common shares as compared to $6.1 million in Fiscal 2015. Other than equity based compensation awards granted to employees, Signet has not issued shares as a financing activity for more than 10 years.traded during the pricing period, less an agreed discount.

Movement in Cash and Indebtedness
Net debt was $1,250.5 million as of January 30, 2016 compared to net debt of $1,267.7 million as of January 31, 2015; see non-GAAP measures discussed herein.
Cash and cash equivalents at January 30, 2016February 2, 2019 were $137.7$195.4 million compared to $193.6$225.1 million as of January 31, 2015.February 3, 2018. 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.

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At January 30, 2016,February 2, 2019, Signet had $1,388.2$734.0 million of outstanding debt, comprised of $398.6$399.0 million of senior unsecured notes, $600.0 million of an asset-backed securitization facility, a $365.0$294.9 million term loan facility, and miscellaneous other items (bankbank overdrafts and capital leases) totaling $24.6$40.1 million. The term loan requires the Company to make scheduled quarterly principal payments over the five-year term. During Fiscal 2016, $25.02019, $31.3 million in principal payments were made. This
At February 3, 2018, Signet had $739.3 million of outstanding debt, was incurred during the second quartercomprised of $398.9 million of senior unsecured notes, a $326.2 million term loan facility, and bank overdrafts totaling $14.2 million. During Fiscal 2015 to fund the Acquisition. In addition,2018, the Company maintainsutilized the gross proceeds from the sale of the prime portion of the in-house receivables to repay the $600 million asset-backed securitization facility. The term loan requires the Company to make scheduled quarterly principal payments over the five-year term. During Fiscal 2018, $22.3 million in principal payments were made.
The Company’s Credit Facility contains a $400$700.0 million senior unsecured multi-currency multi-year revolving credit facility and a $357.5 million senior unsecured term loan facility. At January 30, 2016, there were no outstanding borrowings onThe maturity date for the revolving credit facility. During the second quarter of Fiscal 2016, Signet amended the note purchase agreement associated with the asset-backed securitization facility to extend the term of the facility by one year to May 2017 with all terms substantially the same as the original agreement.Credit Facility, including both individual facilities disclosed above, is July 2021.
The Company had stand-by letters of credit on the revolving credit facility of $28.8$14.6 million and $25.4$15.7 million as of January 30, 2016February 2, 2019 and January 31, 2015,February 3, 2018, respectively, that reduce remaining availability under the revolving credit facility.
Net debt (non-GAAP measure, see Item 6) was $533.0 million as of February 2, 2019 compared to net debt of $507.1 million as of February 3, 2018.
Capital availability
Signet’s level of borrowings and cash balances fluctuates during the year reflecting the seasonality of its cash flow requirements and business performance. Management believes that cash balances and the committed borrowing facilities (described(including the Credit Facility described more fully above)in Note 22 of Item 8) currently available to the business are sufficient for both its present and near term requirements. The following table provides a summary of these items as of February 2, 2019, February 3, 2018 and January 30, 2016, January 31, 2015 and February 1, 2014:28, 2017:
(in millions)January 30, 2016 January 31, 2015 February 1, 2014February 2, 2019 February 3, 2018 January 28, 2017
Working capital(1)
$3,437.0
 $3,210.3
 $2,467.0
$1,822.8
 $2,408.9
 $3,438.9
Capitalization:          
Long-term debt1,328.7
 1,363.8
 —
649.6
 688.2
 1,317.9
Series A redeemable convertible preferred shares615.3
 613.6
 611.9
Shareholder’s equity3,060.7
 2,810.4
 2,563.1
1,201.6
 2,499.8
 2,490.2
Total capitalization$4,389.4
 $4,174.2
 $2,563.1
$2,466.5
 $3,801.6
 $4,420.0
Additional amounts available under credit agreements$371.2
 $374.6
 $389.9
$685.4
 $684.3
 $628.7
(1)
Results reclassified in accordance with Signet’s adoption of Accounting Standards Update 2015-17, which requires the classification of all deferred tax assets and liabilities as non-current. See Note 2 of Item 8 for additional information.
In addition to cash generated from operating activities, during Fiscal 2016,2019, Fiscal 20152018 and Fiscal 2014,2017, Signet also had funds available from the credit facilities described below.above.
Signet has a $400 million senior unsecured multi-currency multi-year revolving credit facility agreement (the “Credit Facility”) that was entered into in May 2011 and subsequently amended in May 2014 to extend the maturity date to 2019 and to add a new $400 million term loan facility. TheSignet’s Credit Facility contains various customary representations and warranties, financial reporting requirements and other affirmative and negative covenants. The Credit Facility requires that Signet maintain at all times a “Leverage Ratio” (as defined in the agreement) to be no greater than 2.50 to 1.00 and a “Fixed Charge Coverage Ratio” (as defined in the agreement) to be no less than 1.40 to 1.00, both determined as of the end of each fiscal quarter of Signet for the trailing twelve months.
Credit Rating
The following table provides Signet’s credit ratings as of January 30, 2016:February 2, 2019:
Rating AgencyCorporateSenior Unsecured NotesOutlook
Standard & Poor’sBBB-BBBBB-BB
Moody’sStableBa1Ba1
FitchBBB-BB-BBB-Stable
Moody’sBaa3Baa3StableBB-

OFF-BALANCE SHEET ARRANGEMENTS
Merchandise held on consignment
Signet held $441.9$726.8 million of consignment inventory which is not recorded on the balance sheet at January 30, 2016,February 2, 2019, as compared to $434.6$606.4 million at January 31, 2015.February 3, 2018. The principal terms of the consignment agreements, which can generally be terminated by either party, are such that Signet can return any, or all of, the inventory to the relevant supplier without financial or commercial penalty.
Contingent property liabilities
At January 30, 2016,February 2, 2019, approximately 31 UK Jewelry18 property leases had been assigned by Signet to third parties (and remained unexpired and occupied by assignees at that date) and approximately 175 additional properties were sub-let at that date. Should the assignees or sub-tenants fail to fulfill any obligations in respect of those leases or any other leases which have at any other time been assigned or sub-let, Signet or one of its

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UK Jewelry subsidiaries may be liable for those defaults. The number of such claims arising to date has been small, and the liability, which is charged to the income statement as it arises, has not been material.
CONTRACTUAL OBLIGATIONS
A summary of operating lease obligations is set out below. These primarily relate to minimum payments due under store lease arrangements. The majority of the store operating leases provide for the payment of base rentals plus real estate taxes, insurance, common area maintenance fees and merchant association dues. Additional information regarding Signet’s operating leases is available in Item 2 and Note 2426 included in Item 8.
Long-term debt obligations comprise borrowings with an original maturity of greater than one year. It is expected that operating commitments will be funded from future operating cash flows and no additional facilities will be required to meet these obligations.
Contractual obligations as of January 30, 2016February 2, 2019
(in millions)Less than
one year		 Between one and
three years		 Between three
and five years		 More than
five years		 TotalLess than
one year		 Between one and
three years		 Between three
and five years		 More than
five years		 Total
Long-term debt obligations - Principal(1)
$35.0
 $700.0
 $230.0
 $400.0
 $1,365.0
$40.2
 $254.7
 $—
 $400.0
 $694.9
Long-term debt obligations - Interest(2)
36.2
 55.5
 38.6
 65.8
 196.1
30.9
 51.7
 37.6
 7.0
 127.2
Operating lease obligations(3)
463.6
 715.4
 549.1
 1,017.5
 2,745.6
450.4
 769.5
 559.4
 755.2
 2,534.5
Capital commitments28.9
 —
 —
 —
 28.9
52.5
 —
 —
 —
 52.5
Pensions2.6
 —
 —
 —
 2.6
5.4
 8.8
 2.1
 —
 16.3
Commitment fee payments0.8
 1.1
 —
 —
 1.9
2.0
 3.0
 —
 —
 5.0
Deferred compensation plan0.9
 6.6
 8.1
 21.8
 37.4
0.9
 8.7
 6.9
 17.9
 34.4
Current income tax65.7
 —
 —
 —
 65.7
27.7
 —
 —
 —
 27.7
Capital lease obligations0.1
 0.1
 —
 —
 0.2
Other long-term liabilities(4)
—
 —
 —
 5.1
 5.1
—
 —
 —
 4.7
 4.7
Total$633.8
 $1,478.7
 $825.8
 $1,510.2
 $4,448.5
$610.0
 $1,096.4
 $606.0
 $1,184.8
 $3,497.2
(1) 
Includes principal payments on all long-term debt obligations.
(2) 
Includes future interest payments on all long-term debt obligations, inclusive of both fixed- and variable-rate debt. Projected interest costs on variable rate debt were calculated using rates in effect at January 30, 2016.February 2, 2019. Amounts exclude the amortization of debt discounts, the amortization of loan fees and fees for lines of credit that would be included in interest expense in the consolidated income statements.
(3) 
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 30% of base rentals for Fiscal 2016.2019. These are not included in the table above. Some operating leases also require additional payments based on a percentage of sales.
(4) 
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.
IMPACT OF INFLATION
The impact of inflation on Signet’s results for the past three years has not been significant apart from the impact of the commodity costs changes, and in the UK, the impact on merchandise costs due to the currency translation of the British pound against the US dollar.
IMPACT OF CLIMATE CHANGE
Signet recognizes that climate change is a major risk to society and therefore continues to take steps to reduce Signet’s climatic impact. Management believes that climate change has a largely indirect influence on Signet’s performance and that it is of limited significance to the business.
CRITICAL ACCOUNTING POLICIES
Critical accounting policies covering areas of greater complexity that are subject to the exercise of judgment due to the reliance on key estimates are listed below. A comprehensive listing of Signet’s criticalsignificant accounting policies areis set forth in Note 1 of the consolidated financial statements in Item 8.

Revenue recognition for extended service plans and lifetime warranty agreements (“ESP”)
The Company recognizes revenue related to lifetime warrantyESP sales in proportion to when the expected costs will be incurred.incurred over the life of the warranty agreement.
The North America segment sells ESP, subject to certain conditions, to perform repair work over the life of the product. Revenue from the sale of the lifetime ESP is recognized consistent with the estimated pattern of claim costs expected to be incurred by the Company in connection with performing under the ESP obligations. The deferral period for lifetime warranty sales in each divisionbanner 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 materially impact revenues. The deferral period and recognition rates of deferred revenue related to lifetime warranty sales is determined based on multi-year patterns of claims costs; therefore, a shift in historical experience of claims cost and frequency over several periods would be required to alter the revenue recognition pattern materially. 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.

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The Sterling Jewelers division sells extended service plans, subject to certain conditions, to perform repair work over the life 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.recognized. 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.
In the second quarter Although claims experience varies between our national banners, thereby resulting in different recognition rates, approximately 55% of Fiscal 2016, an operational change related to the Sterling Jewelers division’s extended service plans associated with ring sizing was made to further align Zale and Sterling ESP policies. As a result, revenue from the sale of these lifetime extended service plans in the Sterling Jewelers division is deferred and recognized over 17 years for all plans, with approximately 57% of revenue recognized within the first two 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%; February 1, 2014: 45%a weighted average basis (February 3, 2018: 58%).
The Zale division also sells extended service plans. Zale Jewelry customers are offered lifetime warranties on certain products that cover sizing and breakage with an option to purchase theft protection for a two-year period. Revenue from the sale of lifetime extended service plans is deferred and recognized over 10 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 in proportion to when the expected claims costs will be incurred over the two-year contract period. 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.
The Sterling Jewelers division alsoNorth America segment 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 purchased merchandise is defective or becomes damaged under normal use in that time period, the item will be replaced. JRP revenue is deferred and recognized on a straight-line basis over the period of expected claims costs.
Signet also sells warranty agreements in the capacity of an agent on behalf of a third-party. The commission that Signet receives from the third-party is recognized at the time of sale less an estimate of cancellations based on historical experience.
Deferred revenue related to extended service plans, voucher promotions and other items at the end of Fiscal 2016 was $889.4 million as compared to $811.9 million in Fiscal 2015.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation, amortization and impairment charges. Maintenance and repair costs are expensed as incurred. Depreciation and amortization are recognized on the straight-line method over the estimated useful lives of the related assets as follows:
Buildings30 – 40 years when land is owned or the remaining term of lease, not to exceed 40 years
Leasehold improvementsRemaining term of lease, not to exceed 10 years
Furniture and fixturesRanging from 3 – 10 years
Equipment, including softwareRanging from 3 – 5 years
Property, plant and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Potentially impaired assets or asset groups are identified by reviewing the cash flows of individual stores. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the undiscounted cash flow is less than the asset’s carrying amount, the impairment charge recognized is determined by estimating the fair value of the assets and recording a loss for the amount that the carrying value exceeds the estimated fair value. Property and equipment at stores planned for closure are depreciated over a revised estimate of their useful lives. In Fiscal 2016, the income statement includes a charge of $0.7 million for impairment of assets as compared to $0.8 million in Fiscal 2015. Property, plant and equipment, net, totaled $727.6 million as of January 30, 2016 and $665.9 million as of January 31, 2015. Depreciation and amortization expense for Fiscal 2016 and Fiscal 2015 was $161.4 million and $140.1 million, respectively.
Goodwill and intangibles
In a business combination, the Company estimates and records the fair value of identifiable intangible assets and liabilities acquired. The fair value of these intangible assets and liabilities is estimated based on management’s assessment, including determination of appropriate valuation technique and consideration of any third party appraisals, when necessary. Significant estimates in valuing intangible assets and liabilities acquired include, but are not limited to, future expected cash flows associated with the acquired asset or liability, expected life and discount rates. The excess purchase price over the estimated fair values of the assets acquired and liabilities assumed is recognized as goodwill. Goodwill is recorded by the Company’s reporting units based on the acquisitions made by each. Goodwill is evaluated for impairment annually and more frequently if indicators of impairment arise. In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not (that is, likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying value (including goodwill). If the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then no further testing is required. However, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value,

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then the two-stepa goodwill impairment test is performed to identify a potential goodwill impairment and measure the amount of impairment to be recognized, if any. The impairment test involves estimating the fair value of all assets and liabilities of the reporting unit, including the implied fair value of goodwill, through either estimated discounted future cash flows or market-based methodologies.
The annual testing date for goodwillGoodwill allocated to reporting units in the Sterling JewelersNorth America segment are reviewed for impairment annually and may be reviewed more frequently if certain events occur or circumstances change. Due to a sustained decline in the Company’s market capitalization during Fiscal 2019, the Company determined triggering events had occurred that required interim impairment assessments for all of its reporting unit is the last dayunits. As a result of the fourth quarter. The annual testing date for goodwill allocated tointerim impairment assessments, the reporting units associated with the Zale division acquisition and the Other reporting unit is May 31. There have been noCompany recognized pre-tax goodwill impairment charges recordedtotaling $521.2 million during the fiscal periods presented in the consolidated financial statements.Fiscal 2019. If future economic conditions are different than those projected by management, future impairment charges may be required. Goodwill totaled $515.5$296.6 million as of January 30, 2016February 2, 2019 and $519.2$821.7 million as of January 31, 2015.
Intangible assets with definite lives are amortized and reviewed for impairment whenever events or 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 charge 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 definite lives, net of accumulated amortization, totaled $25.6 million as of January 30, 2016 and $40.3 million as of January 31, 2015.February 3, 2018.
Intangible assets with indefinite lives are reviewed for impairment each year in the second quarterannually and may be reviewed more frequently if certain events occur or circumstances change. The Company first 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. In conjunction with the interim goodwill impairment tests, the Company reviewed its indefinite-lived intangible assets for potential impairment by calculating the fair values of the assets using the relief from royalty method and comparing the fair value to their respective carrying amounts. The fair values were estimated using an income-based approach based on management's estimates of forecasted cash flows, with those cash flows discounted to present value using rates commensurate with the risks associated with those cash flows. The valuations include assumptions related to sales trends, discount rates, royalty rates and other assumptions that are judgmental in nature. If future economic conditions are different than those projected by management, future impairment charges may be required.
As a result of the interim impairment assessments, the Company recognized pre-tax intangible impairment charges totaling$214.2 millionduring Fiscal 2019. If future economic conditions are different than those projected by management, future impairment charges may be required. Intangible assets with indefinite lives totaled $402.2$261.8 million as of January 30, 2016February 2, 2019 and $406.8$478.4 million as of January 31, 2015.February 3, 2018.


Income taxes
Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are recognized by applying statutory tax rates in effect in the years in which the differences between the financial reporting and tax filing bases of existing assets and liabilities are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.realized, based on management’s evaluation of all available evidence, both positive and negative, including reversals of deferred tax liabilities, projected future taxable income and results of recent operations. The Company recorded a valuation allowance of $38.9 million and $37.0 million, as of February 2, 2019 and February 3, 2018, respectively, due to uncertainties related to the Company’s ability to utilize some of the deferred tax assets, primarily consisting of net operating losses, foreign tax credits and capital losses carried forward.
The annual effective tax rate is based on annual income, statutory tax rates and tax planning strategies available in the various jurisdictions in which the Company operates. The Company does not recognize tax benefits related to positions taken on certain tax matters unless the position is more likely than not to be sustained upon examination by tax authorities. At any point in time, various tax years are subject to or are in the process of being audited by various taxing authorities. The Company records a reserve for uncertain tax positions, including interest.interest and penalties. To the extent that management’s estimates of settlements change, or the final tax outcome of these matters is different than the amounts recorded, such differences will impact the income tax provision in the period in which such determinations are made.
Accounts receivable
Accounts receivable are stated at their nominal amounts and primarily include account balances outstanding from Sterling Jewelers division in-house customer finance programs. The finance receivables from the in-house customer finance programs are comprised of a large volume of transactions with no one customer representing a significant balance. The initial acceptance of customer finance arrangements is based on proprietary consumer credit model scores. Subsequent to the initial financed purchase, the Company monitors the credit quality of its customer finance receivable portfolio based on payment activity driving the aging of receivables as well as proprietary models assessing each account’s probability of default. Subsequent to the initial financed purchase, the Company monitors the credit quality of its customer finance receivable portfolio based on payment activity driving the aging of receivables as well as through the use of proprietary behavioral and collection models which assess each account’s probability of default based on performance on their account and regularly refreshed credit bureau attributes.
Accounts receivable under the customer finance programs are presented net of an allowanceSee Note 12 in Item 8 for uncollectible amounts. This allowance represents management’s estimate of the expected losses in the accounts receivable portfolio as of the balance sheet date, and is calculated using a model that analyzes factors such as delinquency rates and recovery rates. An allowance for amounts 90 days aged and under is established based on historical loss experience and payment performance information. A 100% allowance is made for any amount aged more than 90 days on a recency basis and any amount associated with an account the owner of which has filed for bankruptcy. The recency-aging methodology is based on receipt of qualifying payments which vary depending on the account status. A customer’s account ages each month five days after their due date listed on their statement, allowing for a grace period before collection efforts begin. A qualifying payment can be no less than 75% of the scheduled payment, increasing with the delinquency level. If an account holder is two payments behind, then they must make a full minimum payment to return to current status. If an account holder is three payments behind, then they must make three full payments before returning to a current status. If an account holder is more than three payments behind, then the entire past due amount is required to return to a current status. The allowance calculation is reviewed by management to assess whether, based on economic events, additional analysis is required to appropriately estimate losses inherent in the portfolio.

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Allowances for uncollectible amounts are recorded as a charge to cost of sales in the consolidated income statement. Receivables are charged off to the allowance when amounts become more than 120 days aged on the recency method and more than 240 days aged on the contractual method. The allowance at January 30, 2016 was $130.0 million against a gross accounts receivable balance of $1,855.9 million. This compares to an allowance of $113.1 million, or 7.0% of gross accounts receivable, against a gross accounts receivable balance of $1,666.0 million, or 6.8% of gross accounts receivable, at January 31, 2015.
Inventories
Inventories are primarily held for resale and are valued at the lower of cost or market value. Cost is determined using weighted-average cost for all inventories except for inventories held in the Company’s diamond sourcing operations where cost is determined using specific identification. Cost includes charges directly related to bringing inventory to its present location and condition. Such charges would include warehousing, security, distribution and certain buying costs. Market value is defined as estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. Inventory write-downs are recorded for obsolete, slow moving or defective items and shrinkage. Inventory write-downs are equal to the difference between the cost of inventory and its estimated market value based upon assumptions of targeted inventory turn rates, future demand, management strategy and market conditions. Shrinkage is estimated and recorded based on historical physical inventory results, expectations of future inventory losses and current inventory levels. Physical inventories are taken at least once annually for all store locations and distribution centers. The total inventory reserve at the end of Fiscal 2016 was $43.2 million as compared to $28.4 million at the end of Fiscal 2015. Total inventory at January 30, 2016 was $2,453.9 million as compared to $2,439.0 million at January 31, 2015.
Derivatives and hedge accounting
The Company enters into various types of derivative instruments to mitigate certain risk exposures related to changes in commodity costs and foreign exchange rates. Derivative instruments are recorded in the consolidated balance sheets at fair value, as either assets or liabilities, with an offset to net income or other comprehensive income (“OCI”), depending on whether the derivative qualifies as an effective hedge.
If a derivative instrument meets certain criteria, it may be designated as a cash flow hedge on the date it is entered into. For cash flow hedge transactions, the effective portion of the changes in fair value of the derivative instrument is recognized directly in equity as a component of AOCI and is recognized in the consolidated income statements in the same period(s) and on the same financial statement line in which the hedged item affects net income. Amounts excluded from the effectiveness calculation and any ineffective portions of the change in fair value of the derivatives are recognized immediately in other operating income, net in the consolidated income statements. In addition, gains and losses on derivatives that do not qualify for hedge accounting are recognized immediately in other operating income, net.
In the normal course of business, the Company may terminate cash flow hedges prior to the occurrence of the underlying forecasted transaction. For cash flow hedges terminated prior to the occurrence of the underlying forecasted transaction, management monitors the probability of the associated forecasted cash flow transactions to assess whether any gain or loss recorded in AOCI should be immediately recognized in net income. Cash flows from derivative contracts are included in net cash provided by operating activities.
Employee Benefits
Signet operates a defined benefit pension plan in the UK (the “UK Plan”) which ceased to admit new employees effective April 2004. The UK Plan provides benefits to participating eligible employees. Beginning in Fiscal 2014, a change to the benefit structure was implemented and members’ benefits that accumulate after that date are now based upon career average salaries, whereas previously, all benefits were based on salaries at retirement. The UK Plan’s assets are held by the UK Plan.
The net periodic pension cost of the UK Plan is measured on an actuarial basis using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and the expected long-term rate of return on plan assets. Other material assumptions include rates of participant mortality, the expected long-term rate of compensation and pension increases, and rates of employee attrition. Gains and losses occur when actual experience differs from actuarial assumptions. If such gains or losses exceed 10% of the greater of plan assets or plan liabilities, Signet amortizes those gains or losses over the average remaining service period of the employees. The net periodic pension cost is charged to selling, general and administrative expenses in the consolidated income statements.
The funded status of the UK Plan is recognized on the balance sheet, and is the difference between the fair value of planinformation regarding deferred tax assets and the benefit obligation measured at the balance sheet date. Gains or losses and prior service costs or credits that arise and not included as components of net periodic pension cost are recognized, net ofunrecognized tax in OCI. The funded status of the UK Plan at January 30, 2016 was a $51.3 million asset as compared to a $37.0 million asset at January 31, 2015.benefits.
Accounting changes and recent accounting standards
For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note 2 in Item 8 of this Annual Report on Form 10-K.




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Signet is exposed to market risk arising from fluctuations in foreign currency exchange rates, interest rates and precious metal prices, which could affect its consolidated financial position, earnings and cash flows. Signet monitors and manages these market exposures as a fundamental part of its overall risk management program, which recognizes the volatility of financial markets and seeks to reduce the potentially adverse effects of this volatility on Signet’s operating results. Signet manages its exposure to market risk through its regular operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Signet uses derivative financial instruments as risk management tools and not for trading purposes.
As certain of the UK Jewelry division’sInternational segment’s purchases are denominated in US dollars and its net cash flows are in British pounds, Signet’s policy is to enter into forward foreign currency 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.purchase contracts, options and net zero premium collar arrangements. Additionally, the Zale divisionNorth America segment 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.
Signet has significant amounts of cash and cash equivalents invested at several financial institutions. The amount invested at each financial institution takes into account the long-term credit rating and size of the financial institution. However, with the current financial environment and the possible instability of financial institutions, Signet cannot be assured that it will not experience any losses on these balances. The interest rates earned on cash and cash equivalents will fluctuate in line with short-term interest rates.
MARKET RISK MANAGEMENT POLICY
A committee of the Board is responsible for the implementation of market risk management policies within the treasury policies and guidelines framework, which are deemed to be appropriate by the Board for the management of market risk.
Signet’s exposure to market risk is managed by Signet’s Treasury Committee, consisting of Signet’s Chief Executive Officer, Chief Financial Officer, Controller and Treasurer.Committee. Where deemed necessary to achieve the objective of reducing market risk volatility on Signet’s operating results, certain derivative instruments are entered into after review and approval by the Treasury Committee. Signet uses derivative financial instruments for risk management purposes only.
A description of Signet’s accounting policies for derivative instruments is included in Note 1 of Item 8. Signet’s current portfolio of derivative financial instruments consists of an interest rate swap, forward foreign currency exchange contracts and commodity forward purchase contracts, options and net zero-costzero premium collar arrangements. An analysis quantifying the fair value change in derivative financial instruments held by Signet to manage its exposure to interest rates, foreign exchange rates and commodity prices is detailed in Note 1619 of Item 8.

Foreign Currency Exchange Rate Risk
Approximately 83%90% of Signet’s total assets were held in entities whose functional currency is the US dollar at January 30, 2016February 2, 2019 and generated approximately 85%87% of its sales and 92%94% of its operating income in US dollars in Fiscal 2016.2019. All remaining assets, sales and operating income are in UK British pounds and Canadian dollars.
In translating the results of the UK Jewelry divisionInternational segment and the Canadian subsidiary of the Zale JewelryNorth America segment, Signet’s results are subject to fluctuations in the exchange rates between the US dollar and both the British pound and Canadian dollar. Any depreciation in the weighted average value of the US dollar against the British pound or Canadian dollar could increase reported revenues and operating profit and any appreciation in the weighted average value of the US dollar against the British pound or Canadian dollar could decrease reported revenues and operating profit.
The UK Jewelry divisionInternational segment buys certain products and materials on international markets that are priced in US dollars, and therefore has an exposure to exchange rates on the cost of goods sold. Signet uses certain derivative financial instruments to hedge a portion of this exposure within treasury guidelines approved by the Board.
Signet holds a fluctuating amount of British pounds reflecting the cash generating characteristics of the UK Jewelry division.International segment. 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 intercompany 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, the British pound denominated subsidiaries pay dividends regularly to their immediate holding companies and excess British pounds are sold in exchange for US dollars.
Commodity Price Risk
Signet’s results are subject to fluctuations in the cost of diamonds, gold and certain other precious metals which are key raw material components of the products sold by Signet.
It is Signet’s policy to minimize the impact of precious metal commodity price volatility on operating results through the use of commodity forward purchases of,purchase contracts, or by entering into either purchase options or net zero-costzero premium collar arrangements, within treasury guidelines approved by the Board.

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Interest Rate Risk
Signet’s interest income or expense is exposed to volatility in interest rates. This exposure is driven by both the currency denomination of the cash or debt, the mix of fixed and floating rate debt used, the type of cash investments and the total amount of cash and debt outstanding. As of January 30, 2016,February 2, 2019, a hypothetical 100 basis point increase in interest rates would result in additional annual interest expense of approximately $6.7$0.7 million, including the effect of the interest rate swap designated as a cash flow hedge.
Sensitivity Analysis
Management has used a sensitivity analysis technique that measures the change in the fair value of Signet’s financial instruments from hypothetical changes in market rates as shown in the table below.
Fair value changes arising from:
(in millions)Fair Value
January 30,
2016		 10 basis point decrease in
interest rates		 10%
depreciation 
of
$ against £		 10%
depreciation 
of
$ against C$		 10%
depreciation 
of
gold prices		 Fair Value
January 31, 2015		Fair Value February 2, 2019 10 basis point decrease in
interest rates		 10%
depreciation 
of
$ against £		 10%
depreciation 
of
$ against C$		 10%
depreciation 
of
gold prices		 Fair Value
February 3, 2018
Foreign exchange contracts$0.6
 $—
 $(1.1) $(0.2) $—
 $1.1
$0.7
 $—
 $(3.2) $(5.7) $—
 $(2.3)
Commodity contracts(0.2) —
 —
 —
 (8.5) 6.3
5.7
 —
 —
 —
 (11.8) (0.1)
Interest rate swap(3.4) (0.3) —
 —
 —
 —
0.6
 (0.2) —
 —
 —
 2.2
The amounts generated from the sensitivity analysis quantify the impact of market risk assuming that certain adverse market conditions, specified in the table above, occur. They are not forward-looking estimates of market risk. Actual results in the future are likely to differ materially from those projected due to changes in the portfolio of financial instruments held and actual developments in the global financial markets.
Any changes in the portfolio of financial instruments held and developments in the global financial markets may cause fluctuations in interest rates, exchange rates and precious metal prices to exceed the hypothetical amounts disclosed in the table above. The sensitivity scenarios are intended to allow an expected risk measure to be applied to the scenarios, as opposed to the scenarios themselves being an indicator of the maximum expected risk.

The fair value of derivative financial instruments is determined based on market value equivalents at period end, taking into account the current interest rate environment, current foreign currency forward rates or current commodity forward rates.
The estimated changes in the fair value for foreign exchange rates are based on a 10% depreciation of the US dollar against British pound and Canadian dollar from the levels applicable at January 30, 2016February 2, 2019 with all other variables remaining constant.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm
The
To the Shareholders and Board of Directors and Shareholders
Signet Jewelers Limited:Limited

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Signet Jewelers Limited and subsidiaries (Signet)(the “Company”) as of January 30, 2016February 2, 2019 and January 31, 2015, andFebruary 3, 2018, the related consolidated income statements, statements of comprehensive income, statements of cash flows, and statements of shareholders’ equity for the 52 week periodsperiod ended February 2, 2019, the 53 week period ended February 3, 2018, and the 52 week period ended January 30, 2016, January 31, 201528, 2017, and February 1, 2014.the related notes (collectively, the “consolidated financial statements”). We also have audited Signet’sthe Company’s internal control over financial reporting as of January 30, 2016,February 2, 2019, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 2, 2019 and February 3, 2018, and the results of its operations and its cash flows for the 52 week period ended February 2, 2019, the 53 week period ended February 3, 2018, and the 52 week period ended January 28, 2017, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 2, 2019 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Change in Accounting Principle
As described in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for revenue recognition effective February 4, 2018 due to the adoption of ASU 2014-09, Revenue from Contracts with Customers. Signet’s
Basis for Opinion
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s annual report on internal control over financial reporting included in Item 9A. Our responsibility is to express an opinion on thesethe Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall presentation of the consolidated financial statement presentation.statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Signet Jewelers Limited and subsidiaries as of January 30, 2016 and January 31, 2015, and the results of their operations and their cash flows for the 52 week periods ended January 30, 2016, January 31, 2015 and February 1, 2014, in conformity with U.S. generally accepted accounting principles. Also in our opinion, Signet Jewelers Limited maintained, in all material respects, effective internal control over financial reporting as of January 30, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG LLP

We have served as the Company’s auditor since 2011.
Cleveland, Ohio
March 24, 2016April 3, 2019

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SIGNET JEWELERS LIMITED
CONSOLIDATED INCOME STATEMENTS
(in millions, except per share amounts)Fiscal 2016 Fiscal 2015 Fiscal 2014 NotesFiscal 2019 Fiscal 2018 Fiscal 2017 Notes
Sales$6,550.2
 $5,736.3
 $4,209.2
 4$6,247.1
 $6,253.0
 $6,408.4
 6
Cost of sales(4,109.8) (3,662.1) (2,628.7) (4,024.1) (4,063.0) (4,047.6) 
Restructuring charges - cost of sales(62.2) —
 —
 7
Gross margin2,440.4
 2,074.2
 1,580.5
 2,160.8
 2,190.0
 2,360.8
 
Selling, general and administrative expenses(1,987.6) (1,712.9) (1,196.7) (1,985.1) (1,872.2) (1,880.2) 
Credit transaction, net(167.4) 1.3
 —
 4
Restructuring charges(63.7) —
 —
 7
Goodwill and intangible impairments(735.4) —
 —
 17
Other operating income, net250.9
 215.3
 186.7
 926.2
 260.8
 282.6
 13
Operating income703.7
 576.6
 570.5
 4
Operating income (loss)(764.6) 579.9
 763.2
 6
Interest expense, net(45.9) (36.0) (4.0) (39.7) (52.7) (49.4) 
Income before income taxes657.8
 540.6
 566.5
 
Other non-operating income1.7
 —
 —
 
Income (loss) before income taxes(802.6) 527.2
 713.8
 
Income taxes(189.9) (159.3) (198.5) 8145.2
 (7.9) (170.6) 12
Net income$467.9
 $381.3
 $368.0
 
Basic earnings per share$5.89
 $4.77
 $4.59
 5
Diluted earnings per share$5.87
 $4.75
 $4.56
 5
Basic weighted average common shares outstanding79.5
 79.9
 80.2
 5
Diluted weighted average common shares outstanding79.7
 80.2
 80.7
 5
Dividends declared per share$0.88
 $0.72
 $0.60
 6
Net income (loss)(657.4) 519.3
 543.2
 
Dividends on redeemable convertible preferred shares(32.9) (32.9) (11.9) 9
Net income (loss) attributable to common shareholders$(690.3) $486.4
 $531.3
 
      
Earnings (loss) per common share:      
Basic$(12.62) $7.72
 $7.13
 10
Diluted$(12.62) $7.44
 $7.08
 10
Weighted average common shares outstanding:      
Basic54.7
 63.0
 74.5
 10
Diluted54.7
 69.8
 76.7
 10
      
Dividends declared per common share$1.48
 $1.24
 $1.04
 9
The accompanying notes are an integral part of these consolidated financial statements.

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SIGNET JEWELERS LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions)Pre-tax
amount		 Tax
(expense)
benefit		 After-tax
amount		 Pre-tax
amount		 Tax
(expense)
benefit		 After-tax
amount		 Pre-tax
amount		 Tax
(expense)
benefit		 After-tax
amount		 Pre-tax
amount		 Tax
(expense)
benefit		 After-tax
amount		 Pre-tax
amount		 Tax
(expense)
benefit		 After-tax
amount		 Pre-tax
amount		 Tax
(expense)
benefit		 After-tax
amount
Net income    $467.9
     $381.3      $368.0 
Net income (loss)     $(657.4)     $519.3
     $543.2
Other comprehensive income (loss):                                   
Foreign currency translation adjustments(40.2) —  (40.2) (60.6) —
 (60.6) 12.4  —  12.4  (35.9) —
 (35.9) 50.9
 —
 50.9
 (25.6) —
 (25.6)
Available-for-sale securities:                                   
Unrealized loss on securities, net(0.7) 0.3  (0.4) —  —
 —  —  —  — 
Unrealized gain (loss) (1)
 0.6
 (0.2) 0.4
 0.5
 (0.2) 0.3
 —
 —
 —
Impact from adoption of new accounting
pronouncements (2)
 (1.1) 0.3
 (0.8) —
 —
 —
 —
 —
 —
Cash flow hedges:                      

            
Unrealized gain (loss)(17.2) 5.4  (11.8) 9.1  (2.9) 6.2  (33.0) 11.0  (22.0) 6.2
 (1.4) 4.8
 3.4
 (1.6) 1.8
 8.8
 (1.9) 6.9
Reclassification adjustment for losses to net income4.9
 (1.4) 3.5
 18.6  (6.1) 12.5  11.1  (4.4) 6.7  (2.1) 0.6
 (1.5) (4.6) 1.1
 (3.5) (0.7) 0.1
 (0.6)
Pension plan:                                   
Actuarial gain (loss)13.8
 (2.9) 10.9
 (20.4) 4.6
 (15.8) 0.2  —  0.2  (4.1) 0.7
 (3.4) —
 —
 —
 (16.9) 3.3
 (13.6)
Reclassification adjustment to net income for amortization of actuarial losses3.4
 (0.7) 2.7
 2.0  (0.4) 1.6  2.3  (0.6) 1.7  0.9
 (0.2) 0.7
 2.8
 (0.6) 2.2
 1.5
 (0.3) 1.2
Prior service costs(0.6) 0.1  (0.5) (0.9) 0.2
 (0.7) (0.9) 0.2  (0.7) (8.1) 1.6
 (6.5) (0.6) 0.1
 (0.5) (0.5) 0.1
 (0.4)
Reclassification adjustment to net income for amortization of net prior service credits(2.2) 0.5  (1.7) (1.7) 0.4
 (1.3) (1.5) 0.4  (1.1) —
 —
 —
 (1.4) 0.3
 (1.1) (1.9) 0.4
 (1.5)
Net curtailment gain and settlement loss —
 —
 —
 (3.7) 0.7
 (3.0) —
 —
 —
Total other comprehensive (loss) income$(38.8) $1.3  $(37.5) $(53.9) $(4.2) $(58.1) $(9.4) $6.6  $(2.8) $(43.6) $1.4
 $(42.2) $47.3
 $(0.2) $47.1
 $(35.3) $1.7
 $(33.6)
Total comprehensive income    $430.4
     $323.2      $365.2      $(699.6)     $566.4
     $509.6
(1)
During Fiscal 2019, amounts represent unrealized gains related to the Company’s available-for-sale debt securities. During Fiscal 2018, amounts represent unrealized gains related to the Company’s available-for-sale debt and equity securities.
(2)
Adjustment reflects the reclassification of unrealized gains related to the Company’s available-for-sale equity securities as of February 3, 2018 from AOCI into retained earnings associated with the adoption of ASU 2016-01.
The accompanying notes are an integral part of these consolidated financial statements.

SIGNET JEWELERS LIMITED
CONSOLIDATED BALANCE SHEETS
(in millions, except par value per share amount)February 2, 2019 February 3, 2018 Notes
Assets    2
Current assets:     
Cash and cash equivalents$195.4
 $225.1
 1
Accounts receivable, held for sale4.2
 —
  
Accounts receivable, net19.5
 692.5
 14
Other receivables72.5
 87.2
  
Other current assets171.5
 158.2
  
Income taxes5.8
 2.6
  
Inventories2,386.9
 2,280.5
 15
Total current assets2,855.8
 3,446.1
  
Non-current assets:     
Property, plant and equipment, net800.5
 877.9
 16
Goodwill296.6
 821.7
 17
Intangible assets, net265.0
 481.5
 17
Other assets150.6
 171.2
  
Deferred tax assets21.0
 1.4
 12
Retirement benefit asset30.6
 39.8
 21
Total assets$4,420.1
 $5,839.6
  
Liabilities and Shareholders’ equity     
Current liabilities:     
Loans and overdrafts$78.8
 $44.0
 22
Accounts payable153.7
 237.0
  
Accrued expenses and other current liabilities502.8
 448.0
 23
Deferred revenue270.0
 288.6
 3
Income taxes27.7
 19.6
  
Total current liabilities1,033.0
 1,037.2
  
Non-current liabilities:     
Long-term debt649.6
 688.2
 22
Other liabilities224.1
 239.6
 24
Deferred revenue696.5
 668.9
 3
Deferred tax liabilities—
 92.3
 12
Total liabilities2,603.2
 2,726.2
  
Commitments and contingencies
 
 26
Series A redeemable convertible preferred shares of $0.01 par value: 500 shares authorized,
0.625 shares outstanding		615.3
 613.6
 8
Shareholders’ equity:     
Common shares of $0.18 par value: authorized 500 shares, 51.9 shares outstanding
(2018: 60.5 outstanding)		12.6
 15.7
 9
Additional paid-in capital236.5
 290.2
  
Other reserves0.4
 0.4
  
Treasury shares at cost: 18.1 shares (2018: 26.7 shares)(1,027.3) (1,942.1) 9
Retained earnings2,282.2
 4,396.2
 9
Accumulated other comprehensive loss(302.8) (260.6) 11
Total shareholders’ equity1,201.6
 2,499.8
  
Total liabilities, redeemable convertible preferred shares and shareholders’ equity$4,420.1
 $5,839.6
  
The accompanying notes are an integral part of these consolidated financial statements.

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SIGNET JEWELERS LIMITED
CONSOLIDATED BALANCE SHEETSSTATEMENTS OF CASH FLOWS
(in millions, except par value per share amount)January 30, 2016 January 31, 2015 Notes
Assets  As adjusted 2
Current assets:     
Cash and cash equivalents$137.7
 $193.6
 1
Accounts receivable, net1,756.4
 1,567.6
 10
Other receivables84.0
 63.6
  
Other current assets154.4
 137.2
  
Income taxes3.5
 1.8
  
Inventories2,453.9
 2,439.0
 11
Total current assets4,589.9
 4,402.8
  
Non-current assets:     
Property, plant and equipment, net727.6
 665.9
 12
Goodwill515.5
 519.2
 13
Intangible assets, net427.8
 447.1
 13
Other assets162.3
 140.0
 14
Deferred tax assets—
 2.3
 8
Retirement benefit asset51.3
 37.0
 18
Total assets$6,474.4
 $6,214.3
  
Liabilities and Shareholders’ equity     
Current liabilities:     
Loans and overdrafts$59.5
 $97.5
 19
Accounts payable269.1
 277.7
  
Accrued expenses and other current liabilities498.3
 482.4
 20
Deferred revenue260.3
 248.0
 21
Income taxes65.7
 86.9
  
Total current liabilities1,152.9
 1,192.5
  
Non-current liabilities:     
Long-term debt1,328.7
 1,363.8
 19
Other liabilities230.5
 230.2
 22
Deferred revenue629.1
 563.9
 21
Deferred tax liabilities72.5
 53.5
 8
Total liabilities3,413.7
 3,403.9
  
Commitments and contingencies
 
 24
Shareholders’ equity:     
Common shares of $0.18 par value: authorized 500 shares, 79.4 shares outstanding (2015: 80.3 outstanding)15.7
 15.7
 6
Additional paid-in capital279.9
 265.2
  
Other reserves0.4
 0.4
  
Treasury shares at cost: 7.8 shares (2015: 6.9 shares)(495.8) (370.0) 6
Retained earnings3,534.6
 3,135.7
 6
Accumulated other comprehensive loss(274.1) (236.6) 7
Total shareholders’ equity3,060.7
 2,810.4
  
Total liabilities and shareholders’ equity$6,474.4
 $6,214.3
  
(in millions)Fiscal 2019 Fiscal 2018 Fiscal 2017
Cash flows from operating activities:     
Net income (loss)$(657.4) $519.3
 $543.2
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization183.6
 203.4
 188.8
Amortization of unfavorable leases and contracts(7.9) (13.0) (19.7)
Pension benefit(0.8) (3.5) (1.6)
Share-based compensation16.5
 16.1
 8.0
Deferred taxation(105.6) (33.4) 27.7
Excess tax benefit from exercise of share awards—
 —
 (2.4)
Amortization of debt discount and issuance costs2.0
 3.7
 2.8
Credit transaction, net160.4
 (30.9) —
Goodwill and intangible impairments735.4
 —
 —
Restructuring charges84.9
 —
 —
Other non-cash movements(4.6) 2.4
 0.4
Changes in operating assets and liabilities:     
Decrease (increase) in accounts receivable18.1
 242.1
 (102.7)
Decrease in accounts receivable held for sale27.6
 —
 —
Proceeds from sale of in-house finance receivables445.5
 952.5
 —
Decrease (increase) in other assets and other receivables0.7
 (6.0) (6.9)
Decrease (increase) in inventories(194.3) 210.9
 (9.7)
Decrease in accounts payable(78.5) (51.4) (7.0)
Increase (decrease) in accrued expenses and other liabilities55.9
 3.9
 (21.8)
Increase in deferred revenue9.7
 10.0
 43.6
Increase (decrease) in income taxes payable10.9
 (82.4) 38.9
Pension plan contributions(4.4) (3.2) (3.3)
Net cash provided by operating activities697.7
 1,940.5
 678.3
Investing activities     
Purchase of property, plant and equipment(133.5) (237.4) (278.0)
Proceeds from sale of assets5.5
 —
 —
Purchase of available-for-sale securities(0.6) (2.4) (10.4)
Proceeds from sale of available-for-sale securities9.6
 2.2
 10.0
Acquisition of R2Net Inc., net of cash acquired—
 (331.8) —
Net cash used in investing activities(119.0) (569.4) (278.4)
Financing activities     
Dividends paid on common shares(79.0) (76.5) (75.6)
Dividends paid on redeemable convertible preferred shares(31.2) (34.7) —
Repurchase of common shares(485.0) (460.0) (1,000.0)
Proceeds from issuance of redeemable convertible preferred shares, net of issuance costs—
 —
 611.3
Proceeds from term and bridge loans—
 350.0
 —
Repayments of term and bridge loans(31.3) (372.3) (16.4)
Proceeds from securitization facility—
 1,745.9
 2,404.1
Repayments of securitization facility—
 (2,345.9) (2,404.1)
Proceeds from revolving credit facility787.0
 814.0
 1,270.0
Repayments of revolving credit facility(787.0) (870.0) (1,214.0)
Repayments of bank overdrafts25.9
 (0.1) (10.2)
Other financing activities(2.1) (4.0) (3.3)
Net cash used in financing activities(602.7) (1,253.6) (438.2)
Cash and cash equivalents at beginning of period225.1
 98.7
 137.7
Increase (decrease) in cash and cash equivalents(24.0) 117.5
 (38.3)
Effect of exchange rate changes on cash and cash equivalents(5.7) 8.9
 (0.7)
Cash and cash equivalents at end of period$195.4
 $225.1
 $98.7
      
Non-cash investing activities:     
Capital expenditures in accounts payable$5.6
 $7.0
 $9.2
Supplemental cash flow information:     
Interest paid$39.1
 $50.2
 $47.1
Income taxes paid$44.8
 $122.3
 $104.0
The accompanying notes are an integral part of these consolidated financial statements.

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SIGNET JEWELERS LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWSSHAREHOLDERS’ EQUITY
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014
Cash flows from operating activities:     
Net income$467.9
 $381.3
 $368.0
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization175.3
 149.7
 110.2
Amortization of unfavorable leases and contracts(28.7) (23.7) —
Pension benefit—
 (2.4) (0.5)
Share-based compensation16.4
 12.1
 14.4
Deferred taxation25.0
 (47.6) (20.4)
Excess tax benefit from exercise of share awards(6.9) (11.8) (6.5)
Amortization of debt discount and issuance costs3.6
 7.4
 0.4
Other non-cash movements3.6
 2.7
 (3.3)
Changes in operating assets and liabilities:     
Increase in accounts receivable(189.8) (194.6) (168.3)
Increase in other receivables and other assets(44.1) (18.0) (21.6)
Increase in other current assets(26.5) (35.5) (4.1)
Increase in inventories(46.0) (121.6) (98.4)
(Decrease) increase in accounts payable(6.4) 23.7
 3.2
Increase in accrued expenses and other liabilities51.8
 64.8
 8.6
Increase in deferred revenue76.3
 102.3
 50.8
(Decrease) increase in income taxes payable(25.7) (1.6) 7.9
Pension plan contributions(2.5) (4.2) (4.9)
Net cash provided by operating activities443.3
 283.0
 235.5
Investing activities     
Purchase of property, plant and equipment(226.5) (220.2) (152.7)
Purchase of available-for-sale securities(6.2) (5.7) —
Proceeds from sale of available-for-sale securities4.0
 2.5
 —
Acquisition of Ultra Stores, Inc., net of cash received—
 —
 1.4
Acquisition of Zale Corporation, net of cash acquired—
 (1,429.2) —
Acquisition of diamond polishing factory—
 —
 (9.1)
Net cash used in investing activities(228.7) (1,652.6) (160.4)
Financing activities     
Dividends paid(67.1) (55.3) (46.0)
Proceeds from issuance of common shares5.0
 6.1
 9.3
Excess tax benefit from exercise of share awards6.9
 11.8
 6.5
Proceeds from senior notes—
 398.4
 —
Proceeds from term loan—
 400.0
 —
Repayments of term loan(25.0) (10.0) —
Proceeds from securitization facility2,303.9
 1,941.9
 —
Repayments of securitization facility(2,303.9) (1,341.9) —
Proceeds from revolving credit facility316.0
 260.0
 57.0
Repayments of revolving credit facility(316.0) (260.0) (57.0)
Payment of debt issuance costs—
 (20.5) —
Repurchase of common shares(130.0) (29.8) (104.7)
Net settlement of equity based awards(8.3) (18.4) (9.2)
Principal payments under capital lease obligations(1.0) (0.8) —
Proceeds from (repayment of) short-term borrowings(47.1) 39.4
 19.3
Net cash (used in) provided by financing activities(266.6) 1,320.9
 (124.8)
Cash and cash equivalents at beginning of period193.6
 247.6
 301.0
Decrease in cash and cash equivalents(52.0) (48.7) (49.7)
Effect of exchange rate changes on cash and cash equivalents(3.9) (5.3) (3.7)
Cash and cash equivalents at end of period$137.7
 $193.6
 $247.6
      
Non-cash investing activities:     
Capital expenditures in accounts payable$9.3
 $6.2
 $2.0
Supplemental cash flow information:     
Interest paid$41.6
 $25.4
 $3.5
Income taxes paid$180.1
 $208.8
 $211.0
(in millions)Common
shares at
par value		 Additional
paid-in
capital		 Other
reserves		 Treasury
shares		 Retained
earnings		 Accumulated
other
comprehensive
(loss) income		 Total
shareholders’
equity
Balance at January 30, 2016$15.7
 $279.9
 $0.4
 $(495.8) $3,534.6
 $(274.1) $3,060.7
Net income (loss)—
 —
 —
 —
 543.2
 —
 543.2
Other comprehensive loss—
 —
 —
 —
 —
 (33.6) (33.6)
Dividends on common shares—
 —
 —
 —
 (75.9) —
 (75.9)
Dividends on redeemable convertible preferred shares—
 —
 —
 —
 (11.9) —
 (11.9)
Repurchase of common shares—
 —
 —
 (1,000.0) —
 —
 (1,000.0)
Net settlement of equity based awards—
 (7.2) —
 (1.1) 5.9
 —
 (2.4)
Share options exercised—
 —
 —
 2.1
 —
 —
 2.1
Share-based compensation expense—
 8.0
 —
 —
 —
 —
 8.0
Balance at January 28, 201715.7
 280.7
 0.4
 (1,494.8) 3,995.9
 (307.7) 2,490.2
Net income (loss)—
 —
 —
 —
 519.3
 —
 519.3
Other comprehensive income—
 —
 —
 —
 —
 47.1
 47.1
Dividends on common shares—
 —
 —
 —
 (77.5) —
 (77.5)
Dividends on redeemable convertible preferred shares—
 —
 —
 —
 (32.9) —
 (32.9)
Repurchase of common shares—
 —
 —
 (460.0) —
 —
 (460.0)
Net settlement of equity based awards—
 (6.5) —
 12.3
 (8.6) —
 (2.8)
Share options exercised—
 (0.1) —
 0.4
 —
 —
 0.3
Share-based compensation expense—
 16.1
 —
 —
 —
 —
 16.1
Balance at February 3, 201815.7
 290.2
 0.4
 (1,942.1) 4,396.2
 (260.6) 2,499.8
Impact from adoption of new accounting pronouncements (1)
—
 —
 —
 —
 (15.7) (0.8) (16.5)
Net income (loss)—
 —
 —
 —
 (657.4) —
 (657.4)
Other comprehensive loss—
 —
 —
 —
 —
 (41.4) (41.4)
Dividends on common shares—
 —
 —
 —
 (79.4) —
 (79.4)
Dividends on redeemable convertible preferred shares—
 —
 —
 —
 (32.9) —
 (32.9)
Repurchase of common shares—
 —
 —
 (485.0) —
 —
 (485.0)
Treasury share retirements(3.1) (58.4) —
 1,391.0
 (1,329.5) —
 —
Net settlement of equity based awards—
 (11.8) —
 8.8
 0.9
 —
 (2.1)
Share-based compensation expense—
 16.5
 —
 —
 —
 —
 16.5
Balance at February 2, 2019$12.6
 $236.5
 $0.4
 $(1,027.3) $2,282.2
 $(302.8) $1,201.6
(1)
Adjustments reflect reclassifications to retained earnings related to 1) deferred costs associated with the sale of extended service plans due to the adoption of ASU 2014-09 and 2) unrealized gains related to the Company’s equity security investments as of February 3, 2018 from AOCI associated with the adoption of ASU 2016-01. See Note 2 for additional details.
The accompanying notes are an integral part of these consolidated financial statements.

85

SIGNET JEWELERS LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in millions)Common
shares at
par value		 Additional
paid-in-
capital		 Other
reserves		 Treasury
shares		 Retained
earnings		 Accumulated
other
comprehensive
(loss) income		 Total
shareholders’
equity
Balance at February 2, 2013$15.7
 $246.3
 $0.4
 $(260.0) $2,503.2
 $(175.7) $2,329.9
Net income—
 —
 —
 —
 368.0
 —
 368.0
Other comprehensive loss—
 —
 —
 —
 —
 (2.8) (2.8)
Dividends—
 —
 —
 —
 (48.2) —
 (48.2)
Repurchase of common shares—
 —
 —
 (104.7) —
 —
 (104.7)
Net settlement of equity based awards—
 (1.7) —
 7.1
 (8.1) —
 (2.7)
Share options exercised—
 (0.2) —
 11.4
 (2.0) —
 9.2
Share-based compensation expense—
 14.4
 —
 —
 —
 —
 14.4
Balance at February 1, 201415.7
 258.8
 0.4
 (346.2) 2,812.9
 (178.5) 2,563.1
Net income—
 —
 —
 —
 381.3
 —
 381.3
Other comprehensive loss—
 —
 —
 —
 —
 (58.1) (58.1)
Dividends—
 —
 —
 —
 (57.7) —
 (57.7)
Repurchase of common shares—
 —
 —
 (29.8) —
 —
 (29.8)
Net settlement of equity based awards—
 (3.0) —
 (3.2) (0.4) —
 (6.6)
Share options exercised—
 (2.7) —
 9.2
 (0.4) —
 6.1
Share-based compensation expense—
 12.1
 —
 —
 —
 —
 12.1
Balance at January 31, 201515.7
 265.2
 0.4
 (370.0) 3,135.7
 (236.6) 2,810.4
Net income—
 —
 —
 —
 467.9
 —
 467.9
Other comprehensive loss—
 —
 —
 —
 —
 (37.5) (37.5)
Dividends—
 —
 —
 —
 (70.2) —
 (70.2)
Repurchase of common shares—
 —
 —
 (130.0) —
 —
 (130.0)
Net settlement of equity based awards—
 (1.5) —
 (1.1) 1.3
 —
 (1.3)
Share options exercised—
 (0.2) —
 5.3
 (0.1) —
 5.0
Share-based compensation expense—
 16.4
 —
 —
 —
 —
 16.4
Balance at January 30, 2016$15.7
 $279.9
 $0.4
 $(495.8) $3,534.6
 $(274.1) $3,060.7
The accompanying notes are an integral part of these consolidated financial statements.

86

SIGNET JEWELERS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and criticalsummary of significant accounting policies
Signet Jewelers Limited (“Signet” or the “Company”), a holding company incorporated in Bermuda, is the world’s largest retailer of diamond jewelry. The Company operates through its 100% owned subsidiaries with sales primarily in the US, UKUnited States (“US”), United Kingdom (“UK”) and Canada. Signet managesDuring the first quarter of Fiscal 2019, the Company realigned its businessorganizational structure. The new structure is expected to allow for further integration of operational and product development processes and support growth strategies. In accordance with this organizational change, beginning with quarterly reporting for the 13 weeks ended May 5, 2018, the Company identified three reportable segments as five reportable segments: the Sterling Jewelers division, the Zale division,follows: North America, which consists of the legacy Sterling Jewelers and Zale Jewelry and Piercing Pagoda segments,division; International, which consists of the legacy UK Jewelry divisiondivision; and Other. The “Other” reportable segment consists of all non-reportable segments, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones and unallocated corporate administrative functions. See Note 46 for additional discussion of the Company’s segments.
On September 12, 2017, the Company completed the acquisition of R2Net Inc., a Delaware corporation (“R2Net”). See Note 5 for additional information regarding the acquisition.
In October 2017, the Company, through its subsidiary Sterling Jewelers Inc. (“Sterling”), completed the sale of the prime-only quality portion of Sterling’s in-house finance receivable portfolio to Comenity Bank (“Comenity”). In June 2018, the Company, through its subsidiary Sterling, completed the sale of all eligible non-prime in-house accounts receivable to CarVal Investors (“CarVal”) and Castlelake, L.P. (“Castlelake”). See Note 4 for additional information regarding the transaction.
Signet’s sales are seasonal, with the first quarter slightly exceeding 20% of annual sales, the second and third quarters each approximating 20% and the fourth quarter accounting for almost 40%approximately 35-40% of annual sales, with December being by far the most importanthighest volume month of the year. The “Holiday Season” consists of results for the months of November and December. As a result approximately 45% to 55% of Signet’s annualour transformation initiatives, we anticipate our operating income normally occursprofit will be almost entirely generated 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.quarter.
The Company has evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. There are no material related party transactions. The following accounting policies have been applied consistently in the preparation of the Company’s financial statements.
(a) Basis of preparation
The consolidated financial statements of Signet are prepared in accordance with US generally accepted accounting principles (“US GAAP”) and include the results for the 52 week period ended January 30, 2016week period ended February 2, 2019 (“Fiscal 2016”2019”), as Signet’s fiscal year ends on the Saturday nearest to January 31. The comparative periods are for the 5253 week period ended January 31, 2015week period ended February 3, 2018 (“Fiscal 2015”2018”) and the 52 week period ended February 1, 2014week period ended January 28, 2017 (“Fiscal 2014”2017”). Intercompany transactions and balances have been eliminated in consolidation. CertainRelated to the adoption of new accounting pronouncements disclosed in Note 2 and the change in segments disclosed in Note 6, Signet has reclassified certain prior year amounts have been reclassified to conform to the current year presentation.
(b) Use of estimates
The preparation of these consolidated financial statements, in conformity with US GAAP and SECUS Securities and Exchange Commission (“SEC”) regulations, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. Estimates and assumptions are primarily made in relation to the valuation of accounts receivables,receivable, inventories, deferred revenue, derivatives, employee benefits, income taxes, contingencies, asset impairments, indefinite-lived intangible assets, depreciation and amortization of long-lived assets as well as accounting for business combinations.
The reported results of operations are not indicative of results expected in future periods.
(c) Foreign currency translation
The financial position and operating results of certain foreign operations, including the UK Jewelry divisionInternational segment and the Canadian operations of the Zale JewelryNorth America 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 consolidated statements of shareholders’ equity as a component of accumulated other comprehensive income (loss) (“AOCI”). Gains or losses resulting from foreign currency transactions are included within the consolidated income statements, whereas translation adjustments and gains or losses related to intercompany loans of a long-term investment nature are recognized as a component of AOCI.
See Note 711 for additional discussion of the Company’s foreign currency translation.

(d) Revenue recognition
The Company recognizesFor the majority of the Company’s transactions, revenue is recognized when there is persuasive evidence of an arrangement, delivery of products has occurredhave been delivered or services have been rendered, the sale price is fixed and determinable, and collectability is reasonably assured. The Company’s revenue streams and their respective accounting treatments are discussed below.
Merchandise sale and repairs
Store sales are recognized when the customer receives and pays for the merchandise at the store with cash, in-house customer finance, private label credit card programs, a third-party credit card or a third party credit card.lease purchase option. For online sales shipped to customers, sales are recognized at the estimated time the customer has received the merchandise. Amounts related to shipping and handling that are billed to customers are reflected in sales and the related costs are reflected in cost of sales. Revenues on the sale of merchandise are reported net of anticipated returns and sales tax collected. Returns are

87

estimated based on previous return rates experienced. Allowance for sales returns are recorded within accrued expenses and were $16.8 million as of February 2, 2019 (February 3, 2018: $13.5 million). Any deposits received from a customer for merchandise are deferred and recognized as revenue when the customer receives the merchandise. Revenues derived from providing replacement merchandise on behalf of insurance organizations are recognized upon receipt of the merchandise by the customer. Revenues on repair of merchandise are recognized when the service is complete and the customer collects the merchandise at the store.
Extended service plans and lifetime warranty agreements (“ESP”)
The Company recognizes revenue related to lifetime warrantyESP sales in proportion to when the expected costs will be incurred.incurred over the life of the warranty agreement.
The North America segment sells ESP, subject to certain conditions, to perform repair work over the life of the product. Revenue from the sale of the lifetime ESP is recognized consistent with the estimated pattern of claim costs expected to be incurred by the Company in connection with performing under the ESP obligations. The deferral period for lifetime warrantyESP 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 materially 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.
The Sterling Jewelers division sells extended service plans, subject to certain conditions, to perform repair work overassets in the life 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.consolidated balance sheets. 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.
In the second quarter Although claims experience varies between our national banners, thereby resulting in different recognition rates, approximately 55% of Fiscal 2016, an operational change related to the Sterling Jewelers division’s extended service plans associated with ring sizing was made to further align Zale and Sterling ESP policies. As a result, revenue from the sale of these lifetime extended service plans in the Sterling Jewelers division is deferred and recognized over 17 years for all plans, with approximately 57% of revenue recognized within the first two 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%; February 1, 2014: 45%a weighted average basis (February 3, 2018: 58%).
The Zale division also sells extended service plans. Zale Jewelry customers are offered lifetime warranties on certain products that cover sizing and breakage with an option to purchase theft protection for a two-year period. Revenue from the sale of lifetime extended service plans is deferred and recognized over 10 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 in proportion to when the expected claims costs will be incurred over the two-year contract period. 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.
The Sterling Jewelers division alsoNorth America segment 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 purchased merchandise is defective or becomes damaged under normal use in that time period, the item will be replaced. JRP revenue is deferred and recognized on a straight-line basis over the period of expected claims costs.
Signet also sells warranty agreements in the capacity of an agent on behalf of a third-party. The commission that Signet receives from the third-party is recognized at the time of sale less an estimate of cancellations based on historical experience.
Sale vouchers
Certain promotional offers award sale vouchers to customers who make purchases above a certain value, which grant a fixed discount on a future purchase within a stated time frame. The Company accounts for such vouchers by allocating the fair value of the voucher between the initial purchase and the future purchase using the relative-selling-price method. Sale vouchers are not sold on a stand-alone basis. The fair value of the voucher is determined based on the average sales transactions in which the vouchers were issued, when the vouchers are expected to be redeemed and the estimated voucher redemption rate. The fair value allocated to the future purchase is recorded as deferred revenue.
Consignment inventory sales
Sales of consignment inventory are accounted for on a gross sales basis as the Company is the primary obligor providing independent advice, guidance and after-sales service to customers. The products sold from consignment inventory are indistinguishable from other products that are sold to customers and are sold on the same terms. Supplier products are selected at the discretion of the Company. The Company is responsible for determining the selling price and physical security of the products and collectionsproducts.
See Note 3 for additional discussion of accounts receivable.the Company’s revenue recognition.

(e) Cost of sales and selling, general and administrative expenses
Cost of sales includes merchandise costs net of discounts and allowances, freight, processing and distribution costs of moving merchandise from suppliers to distribution centers and stores inclusive of payroll, inventory shrinkage, store operating and occupancy costs, net bad debts and charges for late payments under the in-house customer finance programs.prior to credit outsourcing. Store operating and occupancy costs include utilities, rent, real estate taxes, common area maintenance charges and depreciation. Selling, general and administrative expenses include store staff and store administrative costs; centralized administrative expenses, including information technology and cost of in-house credit prior to the Company’s outsourcing initiatives and eCommerce;subsequently third-party credit costs; advertising and promotional costs and other operating expenses not specifically categorized elsewhere in the consolidated income statements.

88

Compensation and benefits costs included within cost of sales and selling, general and administrative expenses were as follows:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2019 Fiscal 2018 Fiscal 2017
Wages and salaries$1,222.8
 $1,095.6
 $753.3
 $1,127.2
 $1,140.3
 $1,183.2
Payroll taxes101.1
 91.8
 65.8
 90.3
 93.8
 96.5
Employee benefit plans expense17.5
 9.6
 10.2
 
Share-based compensation expense16.4
 12.1
 14.4
 
Employee benefit plans17.2
 13.0
 19.3
Share-based compensation16.5
 16.1
 8.0
Total compensation and benefits$1,357.8
 $1,209.1
 $843.7
 $1,251.2
 $1,263.2
 $1,307.0
(f )(f) Store opening costs
The opening costs of new locations are expensed as incurred.
(g) Advertising and promotional costs
Advertising and promotional costs are expensed within selling, general and administrative expenses. Production costs are expensed at the first communication of the advertisements, while communication expenses are recognized each time the advertisement is communicated. For catalogs and circulars, costs are all expensed at the first date they can be viewed by the customer. Point of sale promotional material is expensed when first displayed in the stores. Gross advertising costs totaled $384.2$387.8 million in Fiscal 20162019 (Fiscal 2015: $333.02018: $360.5 million; Fiscal 2014: $253.82017: $380.6 million).
(h) In-house customer finance programs
Sterling Jewelers division operatesPrior to the second quarter of Fiscal 2019, the North America segment operated customer in-house finance programs that allowallowed customers to finance merchandise purchases from its stores. Finance charges arewere recognized in accordance with the contractual agreements. Gross interest earned iswas recorded as other operating income in the consolidated income statements. See Note 913 for additional discussion of the Company’s other operating income. In addition to interest-bearing accounts, a portion of credit sales arewere made using interest-free financing for one year or less, subject to certain conditions.
AccrualPrior to the credit transaction entered into in October 2017 (see Note 4), the accrual of interest iswas suspended when accounts becomebecame more than 90 days aged on a recency basis. Upon suspension of the accrual of interest, interest income iswas subsequently recognized to the extent cash payments are received. Accrual of interest iswas resumed when receivables are removed from the non-accrual status.
As a result of the credit transaction entered into in October 2017 (see Note 4), the Company revised its policy to suspend the accrual of interest when accounts became more than 120 days past due on a contractual basis to align with the processes utilized by the Company’s third party credit service provider for the Company’s remaining in-house finance receivable portfolio.
(i) Income taxes
Income taxes are accounted for using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are recognized by applying statutory tax rates in effect in the years in which the differences between the financial reporting and tax filing bases of existing assets and liabilities are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.realized, based on management’s evaluation of all available evidence, both positive and negative, including reversals of deferred tax liabilities, projected future taxable income and results of recent operations.
The Company does not recognize tax benefits related to positions taken on certain tax matters unless the position is more likely than not to be sustained upon examination by tax authorities. At any point in time, various tax years are subject to or are in the process of being audited by various taxing authorities. The Company records a reserve for uncertain tax positions, including interest.interest and penalties. To the extent that management’s estimates of settlements change, or the final tax outcome of these matters is different than the amounts recorded, such differences will impact the income tax provision in the period in which such determinations are made.

See Note 812 for additional discussion of the Company’s income taxes.
(j) Cash and cash equivalents
Cash and cash equivalents are comprised of cash on hand, money market deposits and amounts placed with external fund managers with an original maturity of three months or less. Cash and cash equivalents are carried at cost which approximates fair value. In addition, receivables from third-party credit card issuers typically converted to cash within 5 days of the original sales transaction are considered cash equivalents.
Additional detail regardingThe following table summarizes the compositiondetails of the Company’s cash and cash equivalents as of January 30, 2016 and January 31, 2015 follows:equivalents:
(in millions)January 30, 2016 January 31, 2015 February 2, 2019 February 3, 2018
Cash and cash equivalents held in money markets and other accounts$100.4
 $153.5
 $164.5
 $182.6
Cash equivalents from third-party credit card issuers35.4
 38.2
 29.1
 40.5
Cash on hand1.9
 1.9
 1.8
 2.0
Total cash and cash equivalents$137.7
 $193.6
 $195.4
 $225.1

89
Table of Contents

(k) Accounts receivable
Accounts receivable under the customer finance programs arewere presented net of an allowance for uncollectible amounts. This allowance representsrepresented management’s estimate of the expected losses in the accounts receivable portfolio as of the balance sheet date, and iswas calculated using a model that analyzesanalyzed factors such as delinquency rates and recovery rates. AnIn June 2018, the Company completed the sale of the remaining North America customer in-house finance receivables. Subsequent to the completion of the credit transaction, receivables issued by the Company but pending transfer are classified as “held for sale” and recorded at fair value in the consolidated balance sheet. See Note 20 for additional information regarding the assumptions utilized in the calculation of fair value of the finance receivables held for sale.
Prior to the credit transaction entered into in October 2017 (see Note 4), the Company calculated the allowance for uncollectible amounts as follows:
Record an allowance for amounts under 90 days aged and under on a recency basis is establishedmeasure of delinquency based on historical loss experience and payment performance information. AThe recency method measured the delinquency level by the number of days since the last qualifying payment was received, with the qualifying payment increasing with delinquency level.
Record a 100% allowance is made for any amount aged more than 90 days on a recency basismeasure of delinquency and any amount associated with an account the owner of which has filed for bankruptcy.
Signet’s recency method of aging hashad been in place and unchanged since the inception of the in-house consumer financing program. The delinquency level iswas measured by the number of days since the last qualifying payment was received, with the qualifying payment increasing with delinquency level. The average minimum scheduled payment on a customer account is 9%. The minimum payment does not decline as the balance declines. These two facts combined (higher scheduled
Subsequent to the sale of its prime portfolio and until the sale of its non-prime accounts receivable portfolio, the Company measured delinquency under the contractual basis which aligned with the processes and collection strategies utilized by the Company’s third party credit service provider for the remaining in-house finance receivable portfolio. Under this measure of delinquency, credit card accounts were considered delinquent if the minimum payment requirement and no decline in payment requirement as balance decreases) allow Signet to collectwas not received by the specified due date. The aging method was based on the number of completed billing cycles during which the customer failed to make a minimum payment. Management utilized the delinquency rates identified within the portfolio when calculating the overall allowance for the portfolio.
Subsequent to the reclassification of the non-prime accounts receivable significantly faster than other retail/bank card accounts, reducing risk and more quickly freeing up customer openportfolio to buy“held for additional purchases.sale” in the first quarter of Fiscal 2019, the Company no longer records allowances or bad debt expense.
See Note 1014 for additional discussion of the Company’s accounts receivables.

(l) Inventories
Inventories are primarily held for resale and are valued at the lower of cost or marketnet realizable value. Cost is determined using weighted-average cost for all inventories except for inventories held in the Company’s diamond sourcing operations, where cost is determined using specific identification. Cost includes charges directly related to bringing inventory to its present location and condition. Such charges would include warehousing, security, distribution and certain buying costs. MarketNet realizable value is defined as estimated selling price in the ordinary course of business, less all estimatedreasonably predictable costs of completion, disposal and costs to be incurred in marketing, selling and distribution.transportation. Inventory write-downsreserves are recorded for obsolete, slow moving or defective items and shrinkage. Inventory write-downsreserves for obsolete, slow moving or defective items are equal tocalculated as the difference between the cost of inventory and its estimated market value based upon assumptions ofon targeted inventory turn rates, future demand, management strategy and market conditions. Shrinkage isDue to the inventory being primarily comprised of precious stones and metals including gold, the age of the inventory has a limited impact on the estimated market value. Inventory reserves for shrinkage are estimated and recorded based on historical physical inventory results, expectations of future inventory losses and current inventory levels. Physical inventories are taken at least once annually for all store locations and distribution centers.
See Note 1115 for additional discussion of the Company’s inventories.
(m) Vendor contributions
Contributions are received from vendors through various programs and arrangements including cooperative advertising. Where vendor contributions related to identifiable promotional events are received, contributions are matched against the costs of promotions. Vendor contributions which are received as general contributions and not related to specific promotional events are recognized as a reduction of inventory costs.
(n) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation, amortization and impairment charges. Maintenance and repair costs are expensed as incurred. Depreciation and amortization are recognized on the straight-line method over the estimated useful lives of the related assets as follows:
Buildings 30 – 40 years when land is owned or the remaining term of lease, not to exceed 40 years
Leasehold improvements Remaining term of lease, not to exceed 10 years
Furniture and fixtures Ranging from 3 – 10 years
Equipment includingand software Ranging from 3 – 5 years
Equipment, which includes computerComputer software purchased or developed for internal use is stated at cost less accumulated amortization. Signet’s policy provides for the capitalization of external direct costs of materials and services associated with developing or obtaining internal use computer software. In addition, Signet also capitalizes certain payroll and payroll-related costs for employees directly associated with internal use computer projects. Amortization is charged on a straight-line basis over periods from three to five years.
Property, plant and equipment are reviewed for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Potentially impaired assets or asset groups are identified by reviewing the cash flows of individual stores. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset.asset, based on the Company’s internal business plans. If the undiscounted cash flow is less than the asset’s carrying amount, the impairment charge recognized is determined by estimating the fair value of the assets and recording a loss for the amount that the carrying value exceeds the estimated fair value. The Company utilizes historical experience, internal business plans and an appropriate discount rate to estimate the fair value. Property and equipment at stores planned for closure are depreciated over a revised estimate of their useful lives.
See Note 1216 for additional discussion of the Company’s property, plant and equipment.

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(o) Goodwill and intangibles
In a business combination, the Company estimates and records the fair value of identifiable intangible assets and liabilities acquired. The fair value of these intangible assets and liabilities is estimated based on management’s assessment, including determination of appropriate valuation technique and consideration of any third party appraisals, when necessary. Significant estimates in valuing intangible assets and liabilities acquired include, but are not limited to, future expected cash flows associated with the acquired asset or liability, expected life and discount rates. The excess purchase price over the estimated fair values of the assets acquired and liabilities assumed is recognized as goodwill. Goodwill is recorded by the Company’s reporting units based on the acquisitions made by each. Goodwill is evaluated for impairment annually and more frequently if indicators of impairment arise. In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not (that is, likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying value (including goodwill). If the Company concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then no further testing is required. However, if the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the two-stepa goodwill impairment test is performed to identify a potential goodwill impairment and measure the amount of impairment to be recognized, if any. The impairment test involves estimating the fair value of all assets and liabilities of the reporting unit, including the implied fair value of goodwill, through either estimated discounted future cash flows or market-based methodologies.
The annual testing date for goodwillGoodwill allocated to reporting units in the Sterling JewelersNorth America segment are reviewed for impairment annually and may be reviewed more frequently if certain events occur or circumstances change. Due to a sustained decline in the Company’s market capitalization during Fiscal 2019, the Company determined triggering events had occurred that required interim impairment assessments for all of its reporting unit is the last dayunits. As a result of the fourth quarter. The annual testing date for goodwill allocated tointerim impairment assessments, the reporting units associated with the Zale division acquisition and the Other reporting unit is May 31. There have been noCompany recognized pre-tax goodwill impairment charges recordedtotaling $521.2 million during the fiscal periods presented in the consolidated financial statements.Fiscal 2019. If future economic conditions are different than those projected by management, future impairment charges may be required.
Intangible assets with definite lives are amortized and reviewed for impairment whenever events or 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 charge 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 second quarterannually and may be reviewed more frequently if certain events occur or circumstances change. The Company first 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. In conjunction with the interim goodwill impairment tests, the Company reviewed its indefinite-lived intangible assets for potential impairment by calculating the fair values of the assets using the relief from royalty method and comparing the fair value to their respective carrying amounts. As a result of the interim impairment assessment, the Company recognized pre-tax intangible impairment charges totaling$214.2 millionduring Fiscal 2019. If future economic conditions are different than those projected by management, future impairment charges may be required.
See Note 1317 for additional discussion of the Company’s goodwill and intangibles.
(p) Derivatives and hedge accounting
The Company enters into various types of derivative instruments to mitigate certain risk exposures related to changes in commodity costs and foreign exchange rates. Derivative instruments are recorded in the consolidated balance sheets at fair value, as either assets or liabilities, with an offset to net income or other comprehensive income (“OCI”), depending on whether the derivative qualifies as an effective hedge.
If a derivative instrument meets certain criteria, it may be designated as a cash flow hedge on the date it is entered into. For cash flow hedge transactions, the effective portion of the changes in fair value of the derivative instrument is recognized directly in equity as a component of AOCI and is recognized in the consolidated income statements in the same period(s) and on the same financial statement line in which the hedged item affects net income. Amounts excluded from the effectiveness calculation and any ineffective portions of the change in fair value of the derivatives are recognized immediately in other operating income, net in the consolidated income statements. In addition, gains and losses on derivatives that do not qualify for hedge accounting are recognized immediately in other operating income, net.
In the normal course of business, the Company may terminate cash flow hedges prior to the occurrence of the underlying forecasted transaction. For cash flow hedges terminated prior to the occurrence of the underlying forecasted transaction, management monitors the probability of the associated forecasted cash flow transactions to assess whether any gain or loss recorded in AOCI should be immediately recognized in net income. Cash flows from derivative contracts are included in net cash provided by operating activities.
See Note 1619 for additional discussion of the Company’s derivatives and hedge activities.

(q) Employee Benefits
Signet operates a defined benefit pension plan in the UK (the “UK Plan”) which ceased to admit new employees effective April 2004. The UK Plan provides benefits to participating eligible employees. Beginning in Fiscal 2014, a change to the benefit structure was implemented and members’ benefits that accumulate after that date are now based upon career average salaries, whereas previously, all benefits were based on salaries at retirement. In September 2017, the Company approved an amendment to freeze benefit accruals under the UK Plan in an effort to reduce anticipated future pension expense. As a result of this amendment, the Company will freeze the pension plan for all participants with an effective date of either December 2017 or October 2019 as elected by the plan participants. The UK Plan’s assets are held by the UK Plan.
The net periodic pension cost of the UK Plan is measured on an actuarial basis using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and the expected long-term rate of return on plan assets. Other material assumptions include rates of participant mortality, the expected long-term rate of compensation and pension increases, and rates of employee attrition. Gains and losses occur when actual experience differs from actuarial assumptions. If such gains or losses exceed 10% of the greater of plan assets or

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plan liabilities, Signet amortizes those gains or losses over the average remaining service period of the employees. The net periodic pension cost is charged to selling, general and administrative expenses in the consolidated income statements.
The funded status of the UK Plan is recognized on the balance sheet, and is the difference between the fair value of plan assets and the projected benefit obligation measured at the balance sheet date. Gains or losses and prior service costs or credits that arise and are not included as components of net periodic pension cost are recognized, net of tax, in OCI.
Signet also operates a defined contribution plan in the UK and a defined contribution retirement savings plan in the US. Contributions made by Signet to these pension arrangements are charged primarily to selling, general and administrative expenses in the consolidated income statements as incurred.
See Note 1821 for additional discussion of the Company’s employee benefits.
(r) Borrowing costs
Borrowings include interest-bearing bank loans, accounts receivable securitization program and bank overdrafts. Borrowing costs are capitalized and amortized into interest expense over the contractual term of the related loan.
See Note 1922 for additional discussion of the Company’s borrowing costs.
(s) Share-based compensation
Signet measures share-based compensation cost for awards classified as equity at the grant date based on the estimated fair value of the award and recognizes the cost as an expense on a straight-line basis (net of estimated forfeitures) over the requisite service period of employees. Certain share plans include a condition whereby vesting is contingent on growth exceeding a given target, and therefore awards granted with this condition are considered to be performance-based awards.
Signet estimates fair value using a Black-Scholes model for awards granted under the Omnibus Plan and the binomial valuation model for awards granted under the Share Saving Plans. Deferred tax assets for awards that result in deductions on the income tax returns of subsidiaries are recorded by Signet based on the amount of compensation cost recognized and the subsidiaries’ statutory tax rate in the jurisdiction in which it will receive a deduction. Differences between the deferred tax assets recognized for financial reporting purposes and the actual tax deduction reported on the subsidiaries’ income tax return are recorded in additional paid-in-capital (if the tax deduction exceeds the deferred tax asset) or in the income statement (if the deferred tax asset exceeds the tax deduction and no additional paid-in-capital exists from previous awards).
Share-based compensation is primarily recorded in selling, general and administrative expenses in the consolidated income statements, along with the relevant salary cost.
See Note 2325 for additional discussion of the Company’s share-based compensation plans.
(t) Contingent liabilities
Provisions for contingent liabilities are recorded for probable losses when management is able to reasonably estimate the loss or range of loss. When it is reasonably possible that a contingent liability may result in a loss or additional loss, the range of the loss is disclosed.
See Note 2426 for additional discussion of the Company’s contingencies.
(u) Leases
Signet’s operating leases generally include retail store locations. Certain operating leases include predetermined rent increases, which are charged to the income statement on a straight-line basis over the lease term, including any construction period or other rental holiday. Other amounts paid under operating leases, such as contingent rentals, taxes and common area maintenance, are charged to the income statement as incurred. Premiums paid to acquire short-term leasehold properties and inducements to enter into a lease are recognized on a straight-line basis over the lease term. In addition, certain leases provide for contingent rentals that are not measurable at inception. These contingent rentals are primarily based on a percentage of sales in excess of a predetermined level. These amounts are excluded from minimum rent and are included in the determination of rent expense when it is probable that the expense has been incurred and the amount is reasonably estimable.

See Note 2426 for additional discussion of the Company’s leases.
(v)Common shares Dividends
New shares are recorded inDividends on common shares at their par value when issued. The excess of the issue price over the par value is recorded in additional paid-in capital.
(w) Dividends
Dividends are reflected as a reduction of retained earnings in the period in which they are formally declared by the Board of Directors (the “Board”). In addition, the cumulative dividends on preferred shares, whether or not declared, are reflected as a reduction of retained earnings.


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2. New accounting pronouncements
The following section provides a description of new accounting pronouncements ("Accounting Standard Update" or "ASU") issued by the Financial Accounting Standards Board ("FASB") that are applicable to the Company.
New accounting pronouncements adopted during the period
Income Taxes
In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-17, “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.” The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. ASU No. 2015-17 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016, with early adoption permitted. Signet adopted ASU 2015-17 during Fiscal 2016 and applied the standard retrospectively. Accordingly, Signet has adjusted the consolidated balance sheet as of January 31, 2015 to reflect the reclassifications required as follows:
 January 31, 2015  
(in millions)As previously reported As currently reported Reclassifications
Current assets$4.5
 $—
 $(4.5)
Current liabilities(145.8) —
 145.8
Non-current assets111.1
 2.3
 (108.8)
Non-current liabilities(21.0) (53.5) (32.5)
Deferred tax assets (liabilities)$(51.2) $(51.2) $—
New accounting pronouncements to be adopted in future periods
Revenue recognition
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The new guidance affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, insurance contracts or lease contracts). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The FASB has issued several updates to the standard that i) defer the original effective date; ii) clarify the application of principal versus agent guidance; iii) clarify the guidance on inconsequential and perfunctory promises and licensing; and iv) clarify the guidance on the de-recognition of non-financial assets. Signet adopted ASU No. 2014-09 provides alternative methods of2014‑09 and related updates effective February 4, 2018 using the modified retrospective adoption. In August 2015, the FASB issued ASU No. 2015-14, “Revenue from Contracts with Customers-Deferralapproach applied only to contracts not completed as of the Effective Date.” Thedate of adoption with no restatement of prior periods and by recognizing the cumulative effect of initially applying the new guidance defersstandard as an adjustment to the effective dateopening balance of equity.
As a result of the adoption, the Company identified that the new standard required the Company to adjust its presentation related to customer trade-ins, accounting for returns reserves, costs associated with selling extended service plans and treatment of the amortization of certain bonus and profit-sharing arrangements related to third-party credit card programs. After the adoption of ASU No. 2014-09, by one year. Asthe fair value of customer trade-ins will be considered non-cash consideration when determining the transaction price, and therefore classified as revenue rather than its previous classification as a result, ASU No. 2014-09 is effectivereduction to cost of goods sold. Also, the Company will record its current sales return reserve within separate refund liability and asset for annual periods,recovery accounts within other current asset and interim periodsliabilities, respectively. Further, the capitalization and subsequent amortization of certain costs associated with selling an extended service plan, will be discontinued and recognized as expense when incurred. The change in balance classification and change in amortization treatment of certain bonus and profit-sharing arrangements were immaterial to the Company’s consolidated financial statements. See additional disclosure within those annual periods,Note 3. During Fiscal 2019, an additional$111.2 million of revenue was recognized primarily for non-cash consideration from customer trade-ins and $16.5 million of previously capitalized contract acquisitions costs were reclassified to beginning after December 15, 2017, with early adoption 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, thatretained earnings due to the adoption of this accounting pronouncement will have on the Company’s financial position or results of operations.ASU No. 2014-09.
Share-based compensation
In June 2014,addition to the FASB issued ASU No. 2014-12, “Compensation - Stock Compensation (Topic 718): Accounting for Share-Based Payments Whenpronouncement above, the Termsfollowing ASUs were adopted as of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.”February 4, 2018. The new guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. ASU No. 2014-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The standard is effective for Signet in the first quarter of Fiscal 2017. Signet does not expect the adoption of this guidance to have a material impact on the Company’sCompany's consolidated financial position or results of operations.statements is described within the table below:
Debt issuance costs
In April 2015, the FASB issued ASU No. 2015-03, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The new guidance requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. In August 2015, the FASB issued ASU No. 2015-15, “Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The new guidance provides clarity that the SEC would
StandardDescription
ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, issued January 2016.Impacts accounting for equity investments and financial liabilities under the fair value option, as well as, the presentation and disclosure requirements for financial instruments. Under the new guidance, equity investments will generally be measured at fair value, with subsequent changes in fair value recognized in net income. The adoption of ASU 2016-01 did not object to the deferral and presentation of debt issuance costs related to line-of-credit arrangements as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement. ASU Nos. 2015-03 and 2015-15 are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015, with early adoption permitted. The standard is effective for Signet in the first quarter of Fiscal 2017. At January 30, 2016, Signet had unamortized debt issuance costs, excluding amounts related to the Company’s revolving credit facility agreement, of $9.9 million recorded as assets in the consolidated balance sheets. These amounts are expected to be reclassified as direct deductions from the related long-term debt upon adoption. The Company also expects to continue presenting debt issuance costs relating to its revolving credit facility as an asset.
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Inventory
In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” The new guidance states that inventory will be measured at the “lower of cost and net realizable value” and options that currently exist for “market value” will be eliminated. The ASU defines net realizable value as the “estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.” No other changes were made to the current guidance on inventory measurement. ASU 2015-11 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted and should be applied prospectively. Signet is currently assessing the impact, if any, the adoption of this guidance will have on the Company’s financial position or results of operations.
Financial instruments
In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” The new guidance primarily impacts accounting for equity investments and financial liabilities under the fair value option, as well as, the presentation and disclosure requirements for financial instruments. Under the new guidance, equity investments will generally be measured at fair value, with subsequent changes in fair value recognized in net income. ASU 2016-01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Signet does not expect the adoption of this guidance to have a material impact on the Company’s financial position or results of operations. See immaterial presentation changes on the consolidated balance sheet and income statements and adoption adjustment within Note 11.
ASU No. 2016-04, Liabilities - Extinguishments of Liabilities (Subtopic 405-20), issued March 2016.Addresses diversity in practice related to the derecognition of a prepaid stored-value product liability. Liabilities related to the sale of prepaid stored-value products within the scope of this update are financial liabilities. The adoption of ASU 2016-04 did not have a material impact on the Company’s financial position or results of operations.
ASU No. 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment, issued January 2017.Requires a single-step quantitative test to identify and measure goodwill impairment based on the excess of a reporting unit's carrying amount over its fair value. A qualitative assessment may still be completed first for an entity to determine if a quantitative impairment test is necessary. ASU No. 2017-04 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Signet early adopted this guidance in the first quarter of Fiscal 2019. The adoption of ASU 2017-04 did not have a material impact on the Company’s financial position or results of operations.
ASU No. 2017-07, Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, issued March 2017.Requires entities to present the service cost component of the net periodic pension cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. Entities will present the other components of net benefit cost separately from the service cost component and outside of operating profit within the income statement. In addition, only the service cost component will be eligible for capitalization in assets. The adoption of ASU 2017-07 did not have a material impact on the Company’s financial position or results of operations. See immaterial presentation changes on the consolidated income statements.
New accounting pronouncements to be adopted in future periods
Leases
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” The new guidance primarily impacts lessee accounting by requiring the recognition of a right-of-use asset and a corresponding lease liability on the balance sheet for long-term lease agreements. The lease liability will be equal to the present value of all reasonably certain lease payments. The right-of-use asset will be based on the liability, subject to adjustment for initial direct costs. Lease agreements that are 12 months or less are permitted to be excluded from the balance sheet. In general, leases will be amortized on a straight-line basis with the exception of finance lease agreements. ASU No. 2016-02 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted.
Signet is currently assessingwill adopt this guidance in the first quarter of our fiscal year ending February 1, 2020. Signet has established a cross-functional implementation team to evaluate and identify the impact of ASU No. 2016-02 on the Company’s consolidated financial position and results of operations. The Company currently anticipates using the additional transition method provided for in ASU No. 2018-11, “Leases (Topic 842): Targeted Improvements” which permits the Company as of the effective date of ASU No. 2016-02 to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company also currently expects to elect the practical expedient to not separate lease and non-lease components for the majority of our leases. Additionally, the Company intends to utilize the practical expedient relief package, as well as the short-term leases and portfolio approach practical expedients.
The Company is finalizing the evaluation of the the impacts that the adoption of ASU No. 2016-02 will have on the consolidated financial statements and currently expects approximately $1.8 billion - $2.2 billion of lease liabilities to be established and right-of-use assets approximating this to be recognized upon adoption, dependent upon the lease portfolio and discount rates used on the date of adoption. The discount rates used will reflect the interest rates that the Company estimates it would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments. The Company continues to work on the following items related to the adoption of this accounting guidance: (i) implementing software to meet the new reporting requirements, (ii) identifying potential changes to its business processes and controls to support adoption of the new guidance, will haveand (iii) finalizing the impact to the right of use asset for stores having historical impairments which would impact the effect of adoption for the right of use asset.

The Company is also currently evaluating the impact on its financial statements of the following ASUs:
StandardDescription
ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, issued August 2017.Expands the types of risk management strategies eligible for hedge accounting, refines the documentation and effectiveness assessment requirements and modifies the presentation and disclosure requirements for hedge accounting activities. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted.
ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, issued August 2018.Modifies the disclosure requirements on fair value measurements in Topic 820 and eliminates ‘at a minimum’ from the phrase ‘an entity shall disclose at a minimum’ to promote the appropriate exercise of discretion by entities when considering fair value disclosures and to clarify that materiality is an appropriate consideration. The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted.
ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, issued August 2018.Modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans and clarifies the disclosure requirements regarding projected benefit obligations and accumulated benefit obligations. The ASU is effective for fiscal years ending after December 15, 2020, with early adoption permitted.

3. Revenue recognition
The following tables provide the Company’s financial position or resultstotal sales, disaggregated by major product and channel, for Fiscal 2019, Fiscal 2018 and Fiscal 2017:
 Fiscal 2019
(in millions)North America International Other Consolidated
Sales by product:       
Bridal$2,478.6
 $234.0
 $—
 $2,712.6
Fashion2,128.1
 126.3
 —
 2,254.4
Watches238.2
 190.9
 —
 429.1
Other(1)
796.8
 25.3
 28.9
 851.0
Total sales$5,641.7
 $576.5
 $28.9
 $6,247.1
        
 Fiscal 2018
(in millions)North America International Other Consolidated
Sales by product:       
Bridal$2,407.3
 $247.3
 $—
 $2,654.6
Fashion2,168.2
 137.0
 —
 2,305.2
Watches243.6
 195.5
 —
 439.1
Other(1)
796.1
 36.9
 21.1
 854.1
Total sales$5,615.2
 $616.7
 $21.1
 $6,253.0
        
 Fiscal 2017
(in millions)North America International Other Consolidated
Sales by product:       
Bridal$2,429.0
 $266.6
 $—
 $2,695.6
Fashion2,190.8
 150.9
 —
 2,341.7
Watches263.0
 199.6
 —
 462.6
Other(1)
860.4
 30.0
 18.1
 908.5
Total sales$5,743.2
 $647.1
 $18.1
 $6,408.4
(1)
Other revenue primarily includes gift and other miscellaneous jewelery sales, repairs, warranty and other miscellaneous non-jewelry sales.

 Fiscal 2019
(in millions)North America International 
Other(2)
 Consolidated
Sales by channel:       
Store$5,022.4
 $513.4
 $—
 $5,535.8
eCommerce(1)
619.3
 63.1
 —
 682.4
Other—
 —
 28.9
 28.9
Total sales$5,641.7
 $576.5
 $28.9
 $6,247.1
        
 Fiscal 2018
(in millions)North America International 
Other(2)
 Consolidated
Sales by channel:       
Store$5,176.7
 $557.5
 $—
 $5,734.2
eCommerce(1)
438.5
 59.2
 —
 497.7
Other—
 —
 21.1
 21.1
Total sales$5,615.2
 $616.7
 $21.1
 $6,253.0
        
 Fiscal 2017
(in millions)North America International 
Other(2)
 Consolidated
Sales by channel:       
Store$5,432.0
 $595.2
 $—
 $6,027.2
eCommerce(1)
311.2
 51.9
 —
 363.1
Other—
 —
 18.1
 18.1
Total sales$5,743.2
 $647.1
 $18.1
 $6,408.4
(1)
North America includes $223.7 million and $88.1 million in Fiscal 2019 and Fiscal 2018, respectively, from James Allen which was acquired during the third quarter of Fiscal 2018. See Note 5 for additional information regarding the acquisition.
(2)
Other consists of all non-reportable segments that are below the quantifiable threshold for separate disclosure as a reportable segment, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones.
Extended service plans and lifetime warranty agreements (“ESP”)
Unamortized deferred selling costs as of operations.Fiscal 2019 and Fiscal 2018 were as follows:
Liabilities
(in millions)February 2, 2019 February 3, 2018
Deferred ESP selling costs   
Other current assets$23.8
 $30.9
Other assets75.4
 89.5
Total deferred ESP selling costs$99.2
 $120.4

Deferred revenue
Deferred revenue is comprised primarily of ESP and voucher promotions and other as follows:
(in millions)February 2, 2019 February 3, 2018
ESP deferred revenue$927.6
 $916.1
Voucher promotions and other38.9
 41.4
Total deferred revenue$966.5
 $957.5
    
Disclosed as:   
Current liabilities$270.0
 $288.6
Non-current liabilities696.5
 668.9
Total deferred revenue$966.5
 $957.5
(in millions)Fiscal 2019 Fiscal 2018
ESP deferred revenue, beginning of period$916.1
 $905.6
Plans sold(1)
395.0
 409.3
Revenue recognized(383.5) (398.8)
ESP deferred revenue, end of period$927.6
 $916.1
(1)
Includes impact of foreign exchange translation.
4. Credit transaction, net
During Fiscal 2018, Signet announced a strategic initiative to outsource its North America private label credit card programs and sell the existing in-house finance receivables. Below is a summary of the transactions the Company has entered into as a result of this strategic initiative:
Fiscal 2018
In March 2016,October 2017, Signet, through its subsidiary Sterling, completed the FASB issued ASU No. 2016-04, “Liabilities - Extinguishmentssale of Liabilities (Subtopic 405-20).”the prime-only credit quality portion of Sterling’s in-house finance receivable portfolio to Comenity. The new guidance addresses diversityfollowing events summarize this credit transaction:
Receivables reclassification: In the second quarter of Fiscal 2018, certain in-house finance receivables that met the criteria for sale to Comenity were reclassified from "held for investment" to "held for sale." Accordingly, the receivables were recorded at the lower of cost (par) or fair value, resulting in practicethe reversal of the related allowance for credit losses of $20.7 million. This reversal was recorded in credit transaction, net in the consolidated income statement during the second quarter of Fiscal 2018.
Proceeds received: In October 2017, the Company received $952.5 million in cash consideration reflecting the par value of the receivables sold. In addition, the Company recognized a beneficial interest asset of $10.2 million representing the present value of the cash flows the Company expects to receive under the economic profit sharing agreement related to the derecognitionreceivables sold. The gain upon recognition of the beneficial interest asset was recorded in credit transaction, net in the consolidated income statement during the third quarter of Fiscal 2018.
Expenses: During Fiscal 2018, the Company incurred $29.6 million of transaction-related costs. These costs were recorded in credit transaction, net in the consolidated income statement during Fiscal 2018.
Asset-backed securitization facility termination: In October 2017, the Company terminated the asset-backed securitization facility in order to transfer the receivables free and clear. The asset-backed securitization facility had a principal balance outstanding of $600.0 million at the time of termination. The payoff was funded through the proceeds received from the par value of receivables sold. See Note 22 for additional information regarding the asset-backed securitization facility.

Program agreement: Comenity provides credit to prime-only credit quality customers with an initial term of seven years and, unless terminated by either party, additional renewal terms of two years. Under the Program Agreement, Comenity established a program to issue Sterling credit cards to be serviced, marketed and promoted in accordance with the terms of the agreement. Subject to limited exceptions, Comenity is the exclusive issuer of private label credit cards or an installment or other closed end loan product in the United States bearing specified Company trademarks, including “Kay”, “Jared” and specified regional brands, but excluding “Zale”, during the term of the agreement. The pre-existing arrangement with Comenity for the issuing of Zale credit cards was unaffected by the execution of the Program Agreement. Upon expiration or termination by either party of the Program Agreement, Sterling retains the option to purchase, or arrange the purchase by a third party of, the program assets from Comenity on terms that are no more onerous to Sterling than those applicable to Comenity under the Purchase Agreement, or in the case of a prepaid stored-value product liability. Liabilitiespurchase by a third party, on customary terms. Additionally, the Company received a signing bonus, which may be repayable under certain conditions if the Program Agreement is terminated, and a right to receive future payments related to the performance of the credit program under an economic profit sharing agreement. The Program Agreement contains customary representations, warranties and covenants.
Additionally, Signet and Genesis Financial Solutions (“Genesis”) entered into a five-year servicing agreement in October 2017, under which Genesis will provide credit servicing functions for Signet’s non-prime accounts receivable portfolio prior to its sale, as well as future non-prime account originations.
Fiscal 2019
During March 2018, the Company, through its subsidiary Sterling, entered into a definitive agreement with CarVal to sell all eligible non-prime in-house accounts receivable. In May 2018, the Company exercised its option to appoint a minority party, Castlelake, to purchase 30% of the eligible receivables sold to CarVal under the Receivables Purchase Agreement. In June 2018, the Company completed the sale of prepaid stored-value products within the scopenon-prime in-house accounts receivable at a price expressed as 72% of this update are financial liabilities. ASU 2016-04the par value of the accounts receivable. The purchase price was settled with 95% received as cash upon closing. The remaining 5% of the purchase price was deferred until the second anniversary of the closing date. Final payment of the deferred purchase price is effectivecontingent upon the non-prime in-house finance receivable portfolio achieving a pre-defined yield. The agreement contains customary representations, warranties and covenants.
Receivables reclassification: In March 2018, the eligible non-prime in-house accounts receivables that met the criteria for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. Signet does not expect the adoption of this guidancesale were reclassified from "held for investment" to have a material impact"held for sale" on the Company’s financial positioncondensed consolidated balance sheet. Accordingly, the receivables were recorded at the lower of cost (par) or resultsfair value as of operations.the date of the reclassification with subsequent adjustments to the asset fair value as required through the closing date of the transaction. During Fiscal 2019, total valuation losses of $160.4 million were recorded within credit transaction, net in the consolidated income statement.

Proceeds received: In June 2018, the Company received $445.5 million in cash consideration for the receivables sold based on the terms of the agreements with CarVal and Castlelake described above. The Company also recorded a receivable related to the deferred purchase price payment within other assets and will adjust the asset to fair value in each period of the performance period. See Note 20 for additional information regarding the fair value of deferred purchase price.
Expenses: During Fiscal 2019, the Company incurred $7.0 million of transaction-related costs, which were recorded within credit transaction, net in the consolidated income statement.
In addition, for a five-year term, Signet will remain the issuer of non-prime credit with investment funds managed by CarVal and Castlelake purchasing forward receivables at a discount rate determined in accordance with their respective agreements. Signet will hold the newly issued non-prime credit receivables on its balance sheet for two business days prior to selling the receivables to the respective counterparty in accordance with the agreements. Servicing of the non-prime receivables, including operational interfaces and customer servicing, will continue to be provided by Genesis.
3. Acquisitions
Zale Corporation5. Acquisitions
On May 29, 2014,September 12, 2017, the Company acquired 100% of the outstanding shares of Zale Corporation, makingR2Net, the entityowner of online jewelry retailer JamesAllen.com and Segoma Imaging Technologies. The acquisition rapidly enhanced the Company’s digital capabilities and accelerated its OmniChannel strategy, while adding a wholly-owned consolidated subsidiarymillennial-focused online retail brand to the Company’s portfolio. The Company paid $331.7 million, net of Signet (the “Zale Acquisition” or “Acquisition”). Under the termsacquired cash of the Agreement and Plan of Merger, Zale Corporation shareholders received $21 per share in cash$47.3 million, 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 mergerR2Net. The total consideration of $1,458.0 million, including $478.2 million to extinguish Zale Corporation’s existing debt. The Acquisitionpaid was funded by the Company through existing cash and the issuance of $1,400.0with a $350.0 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.bridge loan. See Note 1922 for additional information related toregarding the Company’s long-term debt instruments.bridge loan.
The transaction was accounted for as a business combination during the secondthird quarter of Fiscal 2015.2018 with R2Net becoming a wholly-owned consolidated subsidiary of Signet. Prior to closing the acquisition, the Company incurred approximately $8.6 million of acquisition-related costs for professional services in Fiscal 2018. Acquisition-related costs were recorded as selling, general and administrative expenses in the consolidated income statement. The Acquisition aligns withresults of R2Net subsequent to the acquisition date are reported as a component of the results of the North America segment. See Note 6 for segment information. Pro forma results of operations have not been presented, as the impact on the Company’s strategy to expand its footprint. The following table summarizes the consideration transferred in conjunction with the Acquisition as of May 29, 2014:consolidated financial results was not material.

(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 awards69.6
Cash paid to extinguish Zale Corporation outstanding debt as of May 29, 2014478.2
Total consideration transferred$1,458.0

94

Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed are recorded at their estimated fair values on the acquisition date, fair values. Duringwith the fourth quarter of Fiscal 2015, the Company finalized the valuation ofremaining unallocated net assets acquired.purchase price recorded as goodwill. The following table summarizes the fair values identified for the assets acquired and liabilities assumed in the AcquisitionR2Net acquisition as of May 29, 2014:September 12, 2017:
(in millions)Fair valuesFair values
Cash and cash equivalents$28.8
$47.3
Inventories856.7
12.1
Other current assets22.4
9.7
Property, plant and equipment103.6
3.5
Intangible assets:  
Trade names417.0
Favorable leases50.2
Deferred tax assets132.8
Other assets25.4
Current liabilities(1)
(206.3)
Deferred revenue(93.3)
Unfavorable leases(50.5)
Unfavorable contracts(65.6)
Trade name70.6
Technology-related4.2
Current liabilities(42.4)
Deferred tax liabilities(234.0)(25.1)
Other liabilities(28.6)
Fair value of net assets acquired958.6
79.9
Goodwill499.4
299.1
Total consideration transferred$1,458.0
$379.0
(1) Includes loans and overdrafts, accounts payable, income taxes payable, accrued expenses and other current liabilities.
The excess of the purchase price over the fair value of identifiable assets acquired and liabilities assumed was recognized as goodwill. The goodwill attributable to the Acquisition is not deductible for tax purposes. See Note 13 for additional discussion of the Company’s goodwill.
The following unaudited consolidated pro forma information summarizes the results of operations of the Company as if the Acquisition and related issuance of $1,400.0 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.
(in millions, except per share amounts)Fiscal 2015 Fiscal 2014
Pro forma sales$6,325.1
 $6,039.9
Pro forma net income$462.1
 $361.9
Pro forma earnings per share – basic$5.78
 $4.51
Pro forma earnings per share – diluted$5.76
 $4.48
The unaudited pro forma information gives effect to actual operating results prior to the Acquisition and 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. 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 Note 1.
Additional depreciation and amortization expenses that would have been recognized assuming fair value adjustments to the existing Zale Corporation assets acquired and liabilities assumed, including intangible assets, favorable and unfavorable leases, and unfavorable contracts and expense associated with the fair value step-up of inventory acquired.
Tax impact of the Company’s amended capital structure as a result of the Acquisition and related issuance of $1,400.0 million of long-term debt.

95

Adjustment of valuation allowances associated with US and Canadian deferred tax assets, including net operating loss carryforwards.
Exclusion of acquisition-related costs of $58.0 million, which were included in the Company’s results of operations for the year ended January 31, 2015, respectively. Also excluded were costs associated with the unsecured bridge facility discussed in Note 19 of $4.0 million, which were expensed in Fiscal 2015. All amounts were reported within the Other segment.
The unaudited pro forma results do not reflect future events that either have occurred or may occur after the Acquisition, including, but not limited to, the anticipated realization of expected operating synergies in subsequent periods. They also do not give effect to acquisition-related costs that the Company expects to incur in connection with the Acquisition, including, but not limited to, additional professional fees, employee integration, retention and severance costs.
Botswana diamond polishing factory
On 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 for 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 2015,2019, the Company finalized the valuation of net assets acquired. There were no material changes to the valuation of net assets acquiredThe goodwill generated from the initial allocation reported during the fourth quarter of Fiscal 2014. The total consideration paid by the Company was funded through existing cashacquisition is primarily attributable to expected synergies and allocated to the net assets acquired based on the final fair values as follows: property, plant and equipment acquired of $5.5 million and goodwill of $3.6 million. will not be deductible for tax purposes.
See Note 1317 for additional information related to goodwill. None of the goodwill is deductible for income tax purposes.and intangible assets.
The results of operations related to the acquired diamond polishing factory are reported within the Other reportable segment of Signet’s consolidated results. Pro forma results of operations have not been presented, as the impact to the Company’s consolidated financial results was not material.

4.6. Segment information
Financial information for each of Signet’s reportable segments is presented in the tables below. Signet’s chief operating decision maker utilizes sales and operating income, after the elimination of any inter-segment transactions, to determine resource allocations and performance assessment measures. During the first quarter of Fiscal 2019, the Company realigned its organizational structure. The new structure will allow for further integration of operational and product development processes and support growth strategies. In accordance with this organizational change, beginning with quarterly reporting for the 13 weeks ended May 5, 2018, the Company reported three reportable segments as follows: North America, which consists of the legacy Sterling Jewelers and Zale division; International, which consists of the legacy UK Jewelry division; and Other. Signet’s sales are derived from the retailing of jewelry, watches, other products and services as generated through the management of its five reportable segments: the Sterling Jewelers division, the Zale division, which consists of the Zale Jewelry and Piercing Pagoda segments, the UK Jewelry division and Other.segments.
The Sterling Jewelers divisionNorth America reportable segment operates in all 50across the US states.and Canada. Its US stores operate nationally in malls and off-mall locations principally as Kay (Kay Jewelers and Kay Jewelers Outlet and regionally under a number of well-established mall-based brands. Destination superstores operate nationwide asOutlet), Jared (Jared The Galleria Of Jewelry (“Jared”) and Jared Vault.
The Zale division operates jewelry stores (Zale Jewelry) and kiosks (Piercing Pagoda)Vault), 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(Zales Jewelers and Mappins Jewellers.Zales Outlet) and Piercing Pagoda, which operates through mall-based kiosks. Its Canadian stores operate as the Peoples Jewellers store banner. The segment also operates a variety of mall-based regional banners, including Gordon’s Jewelers in the US and Mappins in Canada, and James Allen, which was acquired in the R2Net acquisition.
The UK Jewelry divisionInternational reportable segment operates stores in the UK, Republic of Ireland and Channel Islands. Its stores operate in major regional shopping malls and prime “high street”off-mall locations (main shopping thoroughfares with high pedestrian traffic) as “H.Samuel,” “Ernest Jones”principally under the H.Samuel and “Leslie Davis.”Ernest Jones banners.
The Other reportable segment consists of all non-reportable segments that are below the quantifiable threshold for separate disclosure as a reportable segment, including subsidiaries involved in the purchasing and conversion of rough diamonds to polished stones that are below the quantifiable threshold for separate disclosure as a reportable segment and unallocated corporate administrative functions.

96

(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales:     
Sterling Jewelers$3,988.7
 $3,765.0
 $3,517.6
Zale Jewelry(1)
1,568.2
 1,068.7
 n/a
Piercing Pagoda243.2
 146.9
 n/a
UK Jewelry737.6
 743.6
 685.6
Other12.5
 12.1
 6.0
Total sales$6,550.2
 $5,736.3
 $4,209.2
      
Operating income (loss):     
Sterling Jewelers$718.6
 $624.3
 $553.2
Zale Jewelry(2)
44.3
 (1.9) n/a
Piercing Pagoda(3)
7.8
 (6.3) n/a
UK Jewelry61.5
 52.2
 42.4
Other(4)
(128.5) (91.7) (25.1)
Total operating income$703.7
 $576.6
 $570.5
      
Depreciation and amortization:     
Sterling Jewelers$106.2
 $95.7
 $88.8
Zale Jewelry44.8
 29.4
 n/a
Piercing Pagoda3.3
 1.6
 n/a
UK Jewelry20.1
 22.1
 21.4
Other0.9
 0.9
 —
Total depreciation and amortization$175.3
 $149.7
 $110.2
      
Capital additions:     
Sterling Jewelers$141.6
 $157.6
 $134.2
Zale Jewelry47.7
 35.1
 n/a
Piercing Pagoda10.2
 6.9
 n/a
UK Jewelry26.4
 20.2
 18.4
Other0.6
 0.4
 0.1
Total capital additions$226.5
 $220.2
 $152.7
(in millions)Fiscal 2019 Fiscal 2018 Fiscal 2017
Sales:     
North America segment(1)
$5,641.7
 $5,615.2
 $5,743.2
International segment576.5
 616.7
 647.1
Other28.9
 21.1
 18.1
Total sales$6,247.1
 $6,253.0
 $6,408.4
      
Operating income (loss):     
North America segment(2)
$(621.1) $656.1
 $789.2
International segment(3)
12.9
 33.1
 45.6
Other(4)
(156.4) (109.3) (71.6)
Total operating income (loss)$(764.6) $579.9
 $763.2
      
Depreciation and amortization:     
North America segment$165.8
 $183.5
 $166.4
International segment17.5
 19.1
 21.6
Other0.3
 0.8
 0.8
Total depreciation and amortization$183.6
 $203.4
 $188.8
      
Capital additions:     
North America segment$123.9
 $219.7
 $252.2
International segment9.6
 17.6
 25.7
Other—
 0.1
 0.1
Total capital additions$133.5
 $237.4
 $278.0
(1)    Includes sales of $248.7 million and $205.5 million generated by Canadian operations in Fiscal 2016 and Fiscal 2015, respectively.
(1)
Includes sales of $218.3 million, $235.1 million and $234.6 million generated by Canadian operations in Fiscal 2019, Fiscal 2018 and Fiscal 2017, respectively.
(2) 
Includes net operating loss of $23.1 million and $35.1For Fiscal 2019, includes: 1) $731.8 million related to the effects of purchase accounting associatedgoodwill and intangible impairments; 2) $52.7 million related to inventory charges recorded in conjunction with the acquisitionCompany’s restructuring activities; and 3) $160.4 million from the valuation losses related to the sale of Zale Corporationeligible non-prime in-house accounts receivable. See Note 17, Note 7 and Note 4 for additional information. Fiscal 2018 amount includes $20.7 million gain related to the reversal of the allowance for credit losses for the years ended January 30, 2016 and January 31, 2015, respectively.in-house receivables sold, as well as the $10.2 million gain upon recognition of beneficial interest in connection with the sale of the prime portion of in-house receivables. See Note 34 for additional information.
(3) 
Includes net operating loss of $3.3 million and $10.8$3.8 million related to the effects of purchase accounting associatedinventory charges recorded in conjunction with the acquisition of Zale Corporation for the years ended January 30, 2016 and January 31, 2015, respectively.Company’s restructuring activities. See Note 37 for additional information.
(4)
Includes $78.9For Fiscal 2019, Other includes: 1) $69.4 million related to charges recorded in conjunction with the Company’s restructuring activities including inventory charges; 2) $11.0 million related to the resolution of a previously disclosed regulatory matter; 3) $7.0 million representing transaction costs associated with the sale of the non-prime in-house accounts receivable; and $59.84) $3.6 million of goodwill impairments. See Note 7, Note 26, Note 4 and Note 17 for additional information. For Fiscal 2018, Other includes $29.6 million of transaction costs related to the credit transaction, $8.6 million of R2Net acquisition costs, and integration expenses, including the impact$3.4 million of the appraisal rights legal settlement discussed inCEO transition costs. See Note 24,4 and Note 5 for the years ended January 30, 2016additional information regarding credit transaction and January 31, 2015,acquisition of R2Net, respectively. Transaction andFor Fiscal 2017, Other includes $28.4 million of integration costs includefor consulting expenses associated with advisor fees for legal, tax, accounting, information technology implementation and consulting services, as well asIT implementations, severance costs related to organizational changes and expenses associated with the settlement of miscellaneous legal matters pending as of the date of the Zale and other management changes.acquisition.
n/aNot applicable as Zale division was acquired on May 29, 2014. See Note 3 for additional information.

97

(in millions)January 30, 2016 January 31, 2015
Total assets:   
Sterling Jewelers$3,788.0
 $3,505.0
Zale Jewelry1,955.1
 1,932.6
Piercing Pagoda141.8
 132.8
UK Jewelry427.8
 413.5
Other161.7
 230.4
Total assets$6,474.4
 $6,214.3
    
Total long-lived assets:   
Sterling Jewelers$519.7
 $488.3
Zale Jewelry1,013.7
 1,014.4
Piercing Pagoda53.3
 46.5
UK Jewelry75.3
 73.8
Other8.9
 9.2
Total long-lived assets$1,670.9
 $1,632.2
    
Total liabilities:   
Sterling Jewelers$1,982.2
 $1,880.6
Zale Jewelry530.3
 543.6
Piercing Pagoda28.5
 47.1
UK Jewelry132.0
 128.1
Other740.7
 804.5
Total liabilities$3,413.7
 $3,403.9
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales by product:     
Diamonds and diamond jewelry$3,918.1
 $3,450.6
 $2,552.1
Gold, silver jewelry, other products and services2,116.4
 1,784.5
 1,236.9
Watches515.7
 501.2
 420.2
Total sales$6,550.2
 $5,736.3
 $4,209.2
(in millions)February 2, 2019 February 3, 2018
Total assets:   
North America segment$3,943.0
 $5,309.0
International segment367.4
 420.3
Other109.7
 110.3
Total assets$4,420.1
 $5,839.6
    
Total long-lived assets:   
North America segment$1,294.2
 $2,095.5
International segment64.5
 78.3
Other3.4
 7.3
Total long-lived assets$1,362.1
 $2,181.1
    
Total liabilities:   
North America segment$1,753.5
 $1,951.1
International segment76.9
 98.9
Other772.8
 676.2
Total liabilities$2,603.2
 $2,726.2

5. Earnings per share7. Restructuring Plans
Signet Path to Brilliance Plan
During the first quarter of Fiscal 2019, Signet launched a three-year comprehensive transformation plan, the “Signet Path to Brilliance” plan (the “Plan”) intended to reposition the Company to be the OmniChannel jewelry category leader. The Plan is expected to result in pre-tax charges in the range of $200 million - $220 million over the duration of the three-year plan of which $105 million - $115 million are expected to be cash charges.
During Fiscal 2019, restructuring charges of $125.9 million were recognized, primarily related to inventory charges associated with discontinued brands and collections, professional fees for legal and consulting services, severance, early lease termination costs and impairment of information technology assets related to the Plan. Plan liabilities of $12.6 million were recorded within accrued expenses and other liabilities in the consolidated balance sheets as of February 2, 2019. Plan liabilities primarily represent asset disposal liabilities associated with the early termination of leases.
Restructuring charges and other Plan related costs are classified in the consolidated income statements as follows:
(in millions, except per share amounts)Fiscal 2016 Fiscal 2015 Fiscal 2014
Net income$467.9
 $381.3
 $368.0
Basic weighted average number of shares outstanding79.5
 79.9
 80.2
Dilutive effect of share awards0.2
 0.3
 0.5
Diluted weighted average number of shares outstanding79.7
 80.2
 80.7
Earnings per share – basic$5.89
 $4.77
 $4.59
Earnings per share – diluted$5.87
 $4.75
 $4.56
(in millions)Income statement location Fiscal 2019
Inventory charges(1)
Restructuring charges - cost of sales $62.2
Other Plan related expenses(2)
Restructuring charges 63.7
Total Signet Path to Brilliance Plan expenses  $125.9
(1)
Inventory charges represent non-cash charges. See Note 15 for additional information related to inventory and inventory reserves.
(2)
Other Plan related expenses include $22.7 million of non-cash charges.
The following table summarizes the activity related to the Plan liabilities for Fiscal 2019:
(in millions) Consolidated
Balance at February 3, 2018 $—
Payments and other adjustments (113.3)
Charged to expense 125.9
Balance at February 2, 2019 $12.6

8. Redeemable preferred shares
On October 5, 2016, the Company issued 625,000 preferred shares to Green Equity Investors VI, L.P., Green Equity Investors Side VI, L.P., LGP Associates VI-A LLC and LGP Associates VI-B LLC, all affiliates of Leonard Green & Partners, L.P., (together, the “Investors”) for an aggregate purchase price of $625.0 million, or $1,000 per share (the “Stated Value”) pursuant to the investment agreement dated August 24, 2016. The Company's preferred shares are classified as temporary equity within the consolidated balance sheet.
In connection with the issuance of the preferred shares, the Company incurred direct and incremental expenses of $13.7 million, including financial advisory fees, closing costs, legal expenses and other offering-related expenses. These direct and incremental expenses originally reduced the preferred shares carrying value, and are accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date, November 2024. Accumulated accretion relating to these fees of $4.0 million was recorded in the consolidated balance sheet as of February 2, 2019 (February 3, 2018: $2.3 million).
Dividend rights: The preferred shares rank senior to the Company’s common shares, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The liquidation preference for preferred shares is equal to the greater of (a) the Stated Value per share, plus all accrued but unpaid dividends and (b) the consideration holders would have received if preferred shares were converted into common shares immediately prior to the liquidation. Preferred shareholders are entitled to a cumulative dividend at the rate of 5% per annum, payable quarterly in arrears, commencing on February 15, 2017, either in cash or by increasing the Stated Value at the option of the Company. In addition, preferred shareholders were entitled to receive dividends or distributions declared or paid on common shares on an as-converted basis, other than the Company’s regularly declared quarterly cash dividends not in excess of 130% of the arithmetic average of the regular, quarterly cash dividends per common share, if any, declared by the Company during the preceding four calendar quarters.
On November 2, 2016, the Board of Directors approved certain changes to the rights of the preferred shareholders, including the following: (a) elimination of the right of preferred shareholders to receive dividends or other distributions declared on the Company’s common shares and inclusion of adjustments to the conversion rate in the event of any dividend, distribution, spin-off or certain other events or transactions in respect of the common shares; and (b) addition of a requirement for approval by the holders of the majority of the issued preferred shares for the declaration or payment by the Company of any dividends or other distributions on the common shares other than (i) regularly declared quarterly cash dividends paid on the issued common shares in any calendar quarter in an amount per share that is not more than 130% of the arithmetic average of the regular, quarterly cash dividends per common share, if any, declared by the Company during the preceding four calendar quarters for such quarter and (ii) any dividends or other distributions which are paid or distributed at the same time on the common shares and the preferred shares, provided that the amount paid or distributed to the preferred shares is based on the number of common shares into which such preferred shares could be converted on the applicable record date for such dividends or other distributions.
Conversion features:Preferred shares are convertible at the option of the holders at any time into common shares at the then applicable conversion rate. The conversion rate is subject to certain anti-dilution and other adjustments, including stock split / reverse stock split transactions, regular dividends declared on common shares, share repurchases (excluding amounts through open market transactions or accelerated share repurchases) and issuances of common shares or other securities convertible into common shares. The initial issuance did not include a beneficial conversion feature as the conversion price used to set the conversion ratio at the time of issuance was greater than the Company’s common stock price.
At any time on or after October 5, 2018, all or a portion of outstanding preferred shares are convertible at the option of the Company if the closing price of common shares exceeds 175% of the then applicable conversion price for at least 20 consecutive trading days.
The dilutive effectfollowing table presents certain conversion measures as of share awards representsFebruary 2, 2019 and February 3, 2018:
(in millions, except conversion rate and conversion price)February 2, 2019 February 3, 2018
Conversion rate11.3660
 10.9409
Conversion price$87.9817
 $91.4002
Potential impact of preferred shares if-converted to common shares7.1
 6.8
Liquidation preference$632.8
 $632.8
Redemption rights: At any time after November 15, 2024, the potential impactCompany will have the right to redeem any or all, and the holders of outstanding awards issued underthe preferred shares will have the right to require the Company to repurchase any or all, of the preferred shares for cash at a price equal to the Stated Value plus all accrued but unpaid dividends. Upon certain change of control or delisting events involving the Company, preferred shareholders can require the Company to repurchase, subject to certain exceptions, all or any portion of its preferred shares at (a) an amount in cash equal to 101% of the Stated Value plus all accrued but unpaid dividends or (b) the consideration the holders would have received if they had converted their preferred shares into common shares immediately prior to the change of control event.

Voting rights: Preferred shareholders are entitled to vote with the holders of common shares on an as-converted basis. Holders of preferred shares are entitled to a separate class vote with respect to certain designee(s) for election to the Company’s share-based compensation plans, including restrictedBoard of Directors, amendments to the Company’s organizational documents that have an adverse effect on the preferred shareholders and issuances by the Company of securities that are senior to, or equal in priority with, the preferred shares.
Registration rights:  Preferred shareholders have certain customary registration rights with respect to the preferred shares and restricted stock units issued under the Omnibus Plan and stock options issued undershares of common shares into which they are converted, pursuant to the Share Saving Plans and the Executive Plans. The potential impact is calculated under the treasury stock method. The calculationterms of fully diluted EPS for Fiscal 2016 excludes share awards of 104,545 shares (Fiscal 2015: 24,378 share awards; Fiscal 2014: 70,447 share awards) on the basis that their effect would be anti-dilutive.a registration rights agreement.

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Table of Contents

6.9. Common shares, treasury shares, reserves and dividends
Common shares
The par value of each Common Share is 18 cents. The consideration received for common shares relating to options issued during the yearFiscal 2019 was $5.0$0.0 million (Fiscal 2015: $6.12018: $0.3 million; Fiscal 2014: $9.32017: $2.1 million).
Treasury shares
Signet may from time to time repurchase common shares under various share repurchase programs authorized by Signet’s Board. Repurchases may be made in the open market, through block trades, accelerated share repurchase agreements or otherwise. The timing, manner, price and amount of any repurchases will be determined by the Company at its discretion, and will be subject to economic and market conditions, stock prices, applicable legal requirements and other factors. The repurchase programs are funded through Signet’s existing cash reserves and liquidity sources. Repurchased shares aremay be held as treasury shares and may be used by Signet for general corporate purposes.
Treasury shares represent the cost of shares that the Company purchased in the market under the applicable authorized repurchase program, shares forfeited under the Omnibus Incentive Plan and those previously held by the Employee Stock Ownership Trust (“ESOT”) to satisfy options under the Company’s share option plans.
Shares held in treasuryIn February 2016, the Board authorized the repurchase of Signet’s common shares up to $750.0 million (the “2016 Program”). In August 2016, the Board increased its authorized share repurchase program by $625.0 million, bringing the total authorization for the 2016 Program to $1,375.0 million.
On October 5, 2016, the Company entered into an accelerated share repurchase agreement (“ASR”) with a large financial institution to repurchase $525.0 million of the Company’s common shares. At inception, the Company paid $525.0 million to the financial institution and took delivery of 4.7 million shares with an initial estimated cost of $367.5 million. In December 2016, the ASR was finalized and the Company received an additional 1.3 million shares. Total shares repurchased under the ASR were 7,746,5916.0 million shares at an average purchase price of $87.01per share based on the volume-weighted average price of the Company’s common shares traded during the pricing period, less an agreed discount.
In June 2017, the Board of Directors authorized a new program to repurchase $600.0 million of Signet’s common shares (the “2017 Program”). The 2017 Program may be suspended or discontinued at any time without notice.
The Company reflected shares delivered as treasury shares as of the date the shares were physically delivered in computing the weighted average common shares outstanding for both basic and 6,933,684diluted earnings per share. The ASR was accounted for Fiscal 2016as a treasury stock transaction and Fiscal 2015, respectively. Shares were reissued ina forward stock purchase contract. The forward stock purchase contract was determined to be indexed to the amountsCompany’s own stock and met all of 205,661 and 309,305, net of taxes and forfeitures, in Fiscal 2016 and Fiscal 2015, respectively, to satisfy awards outstanding under existing share-based compensation plans. the applicable criteria for equity classification.
The share repurchase activity is outlined in the table below:
   Fiscal 2016 Fiscal 2015 Fiscal 2014
 Amount
authorized		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share
 (in millions)   (in millions)     (in millions)     (in millions)  
2013 Program(1)
$350.0
 1,018,568
 $130.0
 $127.63
 288,393
 29.8
 $103.37
 808,428
 $54.6
 $67.54
2011 Program(2)
$350.0
 n/a
 n/a
 n/a
 n/a
 n/a
 n/a
 749,245
 $50.1
 $66.92
Total  1,018,568
 $130.0
 $127.63
 288,393
 29.8
 $103.37
 1,557,673
 $104.7
 $67.24
                    
   Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions, expect per share amounts)Amount
authorized		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share		 Shares
repurchased		 Amount
repurchased		 Average
repurchase
price per
share
2017 Program(1)
$600.0
 7.5
 $434.4
 $57.64
 n/a
 n/a
 n/a
 n/a
 n/a
 n/a
2016 Program(2)
$1,375.0
 1.3
 $50.6
 $39.76
 8.1
 $460.0
 $56.91
 10.0
 $864.4
 $86.40
2013 Program(3)
$350.0
 n/a
 n/a
 n/a
 n/a
 n/a
 n/a
 1.2
 $135.6
 $111.26
Total  8.8
 $485.0
 $55.06
 8.1
 $460.0
 $56.91
 11.2
 $1,000.0
 $89.10
(1) 
On June 14, 2013, the Board 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 20132017 Program had $135.6$165.6 million remaining as of January 30, 2016.February 2, 2019.
(2) 
In October 2011, the Board 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 20112016 Program was completed as ofin March 2018.
(3)
The 2013 Program was completed in May 4, 2013.2016.
n/aNot applicable.

In February 2016,Shares were reissued in the Board authorized a new programamounts of 0.2 million and 0.3 million, net of taxes and forfeitures, in Fiscal 2019 and Fiscal 2018, respectively, to repurchase up to $750satisfy awards outstanding under existing share-based compensation plans. During Fiscal 2019, the Company formally retired 17.2 million of Signet’s common shares (the “2016 Program”). The 2016 Program may be suspended or discontinued at any time without notice.previously held as treasury shares in the consolidated balance sheets.
Dividends on common shares
Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions, except per share amounts)Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends		Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends		 Cash dividend
per share		 Total
dividends
First quarter$0.22
 $17.6
 $0.18
 $14.4
 $0.15
 $12.1
$0.37
 $21.8
 $0.31
 $21.3
 $0.26
 $20.4
Second quarter0.22
 17.6
 0.18
 14.4
 0.15
 12.1
0.37
 19.2
 0.31
 18.7
 0.26
 19.7
Third quarter0.22
 17.5
 0.18
 14.5
 0.15
 12.0
0.37
 19.2
 0.31
 18.7
 0.26
 18.1
Fourth quarter(1)0.22
 17.5
(1) 
0.18
 14.4
(1) 
0.15
 12.0
0.37
 19.2
 0.31
 18.8
 0.26
 17.7
Total$0.88
 $70.2
 $0.72
 $57.7
 $0.60
 $48.2
$1.48
 $79.4
 $1.24
 $77.5
 $1.04
 $75.9
           
(1) 
Signet’s dividend policy results in the dividend payment date being a quarter in arrears from the declaration date. As a result, as of January 30, 2016February 2, 2019 and January 31, 2015, $17.5February 3, 2018, $19.2 million and $14.4$18.8 million, respectively, has been recorded in accrued expenses and other current liabilities in the consolidated balance sheets reflecting the cash dividends declared for the fourth quarter of Fiscal 20162019 and Fiscal 2015,2018, respectively.
In addition, on February 26, 2016,28, 2019, Signet’s Board declared a quarterly dividend of $0.26$0.37 per share on its common shares. This dividend will be payable on May 27, 201631, 2019 to shareholders of record on April 29, 2016,May 3, 2019, with an ex-dividend date of April 27, 2016.May 2, 2019.

Dividends on preferred shares
99
 Fiscal 2019 Fiscal 2018 Fiscal 2017
(in millions)Total cash
dividends		 Total cash
dividends		 Total cash
dividends
First quarter$7.8
 $7.8
 $—
Second quarter7.8
 7.8
 —
Third quarter7.8
 7.8
 —
Fourth quarter(1)
7.8
 7.8
 11.3
Total$31.2
 $31.2
 $11.3
(1)
Signet’s preferred shares dividends results in the dividend payment date being a quarter in arrears from the declaration date. As a result, as of February 2, 2019 and February 3, 2018, $7.8 million has been recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets reflecting the cash dividends on preferred shares declared for the fourth quarter of Fiscal 2019 and Fiscal 2018.
There were no cumulative undeclared dividends on the preferred shares that reduced net income attributable to common shareholders during Fiscal 2019. In addition, deemed dividends of $1.7 million related to accretion of issuance costs associated with the preferred shares were recognized in Fiscal 2019 and Fiscal 2018.
10. Earnings (loss) per common share (“EPS”)
Basic EPS is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding for the period. The computation of basic EPS is outlined in the table below:
Table of Contents
(in millions, except per share amounts)Fiscal 2019 Fiscal 2018 Fiscal 2017
Numerator:     
Net income (loss) attributable to common shareholders$(690.3) $486.4
 $531.3
Denominator:     
Weighted average common shares outstanding54.7
 63.0
 74.5
EPS – basic$(12.62) $7.72
 $7.13

Other
The principal trading marketdilutive effect of share awards represents the potential impact of outstanding awards issued under the Company’s share-based compensation plans, including restricted shares, restricted stock units and stock options issued under the Omnibus Plan and stock options issued under the Share Saving Plans. The dilutive effect of preferred shares represents the potential impact for common shares that would be issued upon conversion. Potential common share dilution related to share awards and preferred shares is determined using the treasury stock and if-converted methods, respectively. Under the if-converted method, the preferred shares are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the diluted EPS calculation for the entire period being presented. Additionally, cumulative dividends and accretion for issuance costs associated with the preferred shares are added back to net income attributable to common shareholders. See Note 8 for additional discussion of the Company’s common sharespreferred shares. The computation of diluted EPS is outlined in the New York Stock Exchange (symbol: SIG). table below:
(in millions, except per share amounts)Fiscal 2019 Fiscal 2018 Fiscal 2017
Numerator:     
Net income (loss) attributable to common shareholders$(690.3) $486.4
 $531.3
Add: Dividends on preferred shares—
 32.9
 11.9
Numerator for diluted EPS$(690.3) $519.3
 $543.2
      
Denominator:     
Weighted average common shares outstanding54.7
 63.0
 74.5
Plus: Dilutive effect of share awards—
 0.1
 0.1
Plus: Dilutive effect of preferred shares—
 6.7
 2.1
Diluted weighted average common shares outstanding54.7
 69.8
 76.7
    �� 
EPS – diluted$(12.62) $7.44
 $7.08
The Company also maintained a standard listingcalculation of its commondiluted EPS excludes the following awards and preferred shares on the London Stock Exchange (“LSE”) (symbol: SIG) during Fiscal 2016. On February 16, 2016, the Company filed a voluntary application with the United Kingdom’s Financial Conduct Authority to delist its common shares from the LSE. Common shares of the Company continued to trade on the LSE until close of business on March 15, 2016.basis that their effect would be anti-dilutive.
7.
(in millions)Fiscal 2019 Fiscal 2018 Fiscal 2017
Share awards1.1
 0.4
 0.1
Potential impact of preferred shares7.1
 —
 —
Total anti-dilutive shares8.2
 0.4
 0.1

11. Accumulated other comprehensive income (loss)
The following tables present the changes in AOCI by component and the reclassifications out of AOCI, net of tax:
      Pension plan        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
credits (costs)		 Accumulated
other
comprehensive
(loss) income		Foreign
currency
translation		 Losses on available-for-sale securities, net Gains (losses)
on cash flow
hedges		 Actuarial
gains
(losses)		 Prior
service
credits (costs)		 Accumulated
other
comprehensive
(loss) income
Balance at February 2, 2013$(149.4) $—
 $1.0
 $(44.4) $17.1
 $(175.7)
Balance at January 30, 2016$(237.8) $(0.4) $(3.9) $(43.1) $11.1
 $(274.1)
OCI before reclassifications12.4
 —
 (22.0) 0.2
 (0.7) (10.1)(25.6) —
 6.9
 (13.6) (0.4) (32.7)
Amounts reclassified from AOCI to net income—
 —
 6.7
 1.7
 (1.1) 7.3
—
 —
 (0.6) 1.2
 (1.5) (0.9)
Net current-period OCI12.4
 —
 (15.3) 1.9
 (1.8) (2.8)
Balance at February 1, 2014$(137.0) $—
 $(14.3) $(42.5) $15.3
 $(178.5)
Net current period OCI(25.6) —
 6.3
 (12.4) (1.9) (33.6)
Balance at January 28, 2017$(263.4) $(0.4) $2.4
 $(55.5) $9.2
 $(307.7)
OCI before reclassifications(60.6) —
 6.2
 (15.8) (0.7) (70.9)50.9
 0.3
 1.8
 —
 (0.5) 52.5
Amounts reclassified from AOCI to net income—
 —
 12.5
 1.6
 (1.3) 12.8
—
 —
 (3.5) 4.4
 (6.3) (5.4)
Net current-period OCI(60.6) —
 18.7
 (14.2) (2.0) (58.1)
Balance at January 31, 2015$(197.6) $—
 $4.4
 $(56.7) $13.3
 $(236.6)
Net current period OCI50.9
 0.3
 (1.7) 4.4
 (6.8) 47.1
Balance at February 3, 2018$(212.5) $(0.1) $0.7
 $(51.1) $2.4
 $(260.6)
OCI before reclassifications(40.2) (0.4) (11.8) 10.9
 (0.5) (42.0)(35.9) 0.4
 4.8
 (3.4) (6.5) (40.6)
Amounts reclassified from AOCI to net income—
 —
 3.5
 2.7
 (1.7) 4.5
—
 —
 (1.5) 0.7
 —
 (0.8)
Net current-period OCI(40.2) (0.4) (8.3) 13.6
 (2.2) (37.5)
Balance at January 30, 2016$(237.8) $(0.4) $(3.9) $(43.1) $11.1
 $(274.1)
Impacts from adoption of new accounting pronouncements(1)
—
 (0.8) —
 —
 —
 (0.8)
Net current period OCI(35.9) (0.4) 3.3
 (2.7) (6.5) (42.2)
Balance at February 2, 2019$(248.4) $(0.5) $4.0
 $(53.8) $(4.1) $(302.8)
(1)
Adjustment reflects the reclassification of unrealized gains related to the Company’s available-for-sale equity securities as of February 3, 2018 from AOCI into retained earnings associated with the adoption of ASU 2016-01.
 The amounts reclassified from AOCI were as follows:
 Amounts reclassified from AOCI   Amounts reclassified from AOCI  
(in millions) Fiscal 2016 Fiscal 2015 Fiscal 2014 Income statement caption Fiscal 2019 Fiscal 2018 Fiscal 2017 Income statement caption
(Gains) losses on cash flow hedges:                
Foreign currency contracts $(0.4) $1.3
 $(0.9) Cost of sales (see Note 16) $0.7
 $(3.2) $(2.7) Cost of sales (see Note 19)
Interest rate swaps 2.7
 —
 —
 Interest expense, net (see Note 16) (1.9) 0.3
 2.2
 Interest expense, net (see Note 19)
Commodity contracts 2.6
 17.3
 12.0
 Cost of sales (see Note 16) (0.9) (1.7) (0.2) Cost of sales (see Note 19)
Total before income tax 4.9
 18.6
 11.1
   (2.1) (4.6) (0.7)  
Income taxes (1.4) (6.1) (4.4)   0.6
 1.1
 0.1
  
Net of tax 3.5
 12.5
 6.7
   (1.5) (3.5) (0.6)  
                
Defined benefit pension plan items:                
Amortization of unrecognized actuarial losses 3.4
 2.0
 2.3
 
Selling, general and administrative expenses(1)
 0.9
 2.8
 1.5
 
Selling, general and administrative expenses(1)
Amortization of unrecognized net prior service credits (2.2) (1.7) (1.5) 
Selling, general and administrative expenses(1)
 —
 (1.4) (1.9) 
Selling, general and administrative expenses(1)
Net curtailment gain and settlement loss —
 (3.7) —
 
Selling, general and administrative expenses(1)
Total before income tax 1.2
 0.3
 0.8
   0.9
 (2.3) (0.4)  
Income taxes (0.2) —
 (0.2)   (0.2) 0.4
 0.1
  
Net of tax 1.0
 0.3
 0.6
   0.7
 (1.9) (0.3)  
                
Total reclassifications, net of tax $4.5
 $12.8
 $7.3
   $(0.8) $(5.4) $(0.9)  
(1)
These items are included in the computation of net periodic pension benefit (cost). See Note 21 for additional information.

(1) These items are included in the computation of net periodic pension benefit (cost). See Note 18 for additional information.

100

8.12. Income taxes
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Income before income taxes:     
Income (loss) before income taxes:     
– US$426.1
 $380.8
 $493.7
$(1,135.8) $202.2
 $424.0
– Foreign231.7
 159.8
 72.8
333.2
 325.0
 289.8
Total income before income taxes$657.8
 $540.6
 $566.5
Total income (loss) before income taxes$(802.6) $527.2
 $713.8
          
Current taxation:          
– US$161.7
 $199.5
 $211.8
$(55.2) $35.9
 $137.6
– Foreign3.5
 7.8
 7.1
15.8
 6.1
 3.9
Deferred taxation:          
– US22.3
 (47.9) (22.8)(85.8) (34.8) 28.1
– Foreign2.4
 (0.1) 2.4
(20.0) 0.7
 1.0
Total income taxes$189.9
 $159.3
 $198.5
Total income tax expense (benefit)$(145.2) $7.9
 $170.6
As the statutory rate of corporation tax in Bermuda is 0%, the differences between the US federal income tax rate and the effective tax rates for Signet have been presented below:
Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
US federal income tax rates35.0 % 35.0 % 35.0 %21.0 % 35.0 % 35.0 %
US state income taxes2.7 % 2.1 % 2.5 %2.3 % 1.9 % 1.9 %
Differences between US federal and foreign statutory income tax rates(0.5)% (0.8)% (0.9)%0.3 % (1.0)% (0.2)%
Expenditures permanently disallowable for tax purposes, net of permanent tax benefits0.5 % 0.8 % 0.6 %(0.8)% 1.0 % 0.4 %
Disallowable transaction costs2.1 % 0.7 % — %— % 0.4 % 0.1 %
Impact of global reinsurance arrangements(2.4)% (1.5)% (0.2)%3.1 % (8.1)% (5.4)%
Impact of global financing arrangements(8.7)% (7.2)% (1.9)%4.2 % (11.4)% (8.2)%
Benefit in current year taxes - the TCJ Act— % (4.1)% — %
Remeasurement of deferred taxes - the TCJ Act— % (12.3)% — %
Impairment of goodwill(13.4)% — % — %
Out of period adjustment1.4 % — % — %
Other items0.2 % 0.4 % (0.1)%— % 0.1 % 0.3 %
Effective tax rate28.9 % 29.5 % 35.0 %18.1 % 1.5 % 23.9 %
In Fiscal 2016,2019, Signet’s effective tax rate was lower than the US federal income tax rate primarily due to the impact of nondeductible goodwill impairment charges partially offset by (i) Signet’s global reinsurance andarrangement, (ii) Signet’s global financing arrangements utilized to fund the acquisition of Zale.Zale and (iii) an immaterial out of period adjustment resulting from an $11 million reduction to a deferred tax liability associated with the acquisition of Zale in May 2014. Signet’s future effective tax rate is largely dependent on changes in the geographic mix of income.
US Tax Reform
On December 22, 2017, the U.S. government enacted “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018”, which is commonly referred to as “The Tax Cuts and Jobs Act” (the “TCJ Act”). The TCJ Act provides for comprehensive tax legislation that reduces the U.S. federal statutory corporate tax rate from 35.0 percent to 21.0 percent effective January 1, 2018, limits certain deductions, including limiting the deductibility of interest expense to 30% of U.S. Earnings Before Interest, Taxes, Depreciation and Amortization, broadens the U.S. federal income tax base, requires companies to pay a one-time repatriation tax on earnings of certain foreign subsidiaries that were previously tax deferred (“transition tax”), and creates new taxes on certain foreign sourced earnings. As we have a 52-53-week tax year ending the movementSaturday nearest October 31, the lower corporate income tax rate is administratively phased in, foreign exchange translation rates.resulting in a blended U.S. federal statutory tax rate of approximately 23.4 percent for our tax year from October 29, 2017 through November 3, 2018, and 21.0 percent for our tax years thereafter.

Additionally, on December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (“SAB 118”), expressing its views regarding the FASB's Accounting Standards Codification 740, Income Taxes, in the reporting period that includes the enactment date of the TCJ Act. SAB 118 recognizes that a registrant’s review of certain income tax effects of the TCJ Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. Specifically, SAB 118 allows a company to report provisional estimates in the reporting period that includes the enactment date if the company does not have the necessary information available, prepared, or fully analyzed for certain income tax effects of the TCJ Act. The provisional estimates would be adjusted during a measurement period not to exceed 12 months from the enactment date of the TCJ Act, at which time the accounting for the income tax effects of the TCJ Act is required to be completed. The Company adopted the provisions of SAB 118 with respect to the impact of the TCJ Act on its financial statements for the year ended February 3, 2018.
Accordingly, our income tax provision as of February 3, 2018, reflected provisional amounts with respect to Fiscal 2018 impacts of the TCJ Act on the effective tax rate as follows:
 Fiscal 2018
(in millions)Income tax benefit (expense)
Net impact on remeasurement of US deferred tax assets and liabilities$64.7
Net impact of reduce US tax rate on income from October 29, 2017 through February 3, 201821.5
Net benefit of the TCJ Act$86.2
Consistent with SAB 118, the Company calculated and recorded reasonable estimates for the impact of the remeasurement of our existing US deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future, of which the federal component is approximately 23.4 percent for reversals expected in the tax year from October 29, 2018 through November 3, 2018 and 21.0 percent thereafter. The provisional amount recorded related to the remeasurement of our deferred tax balance was a benefit of $64.7 million. The effect of the remeasurement was recorded in the fourth quarter of Fiscal 2018, consistent with the enactment date of the TCJ Act, and reflected in our provision for income taxes. The Company has completed its analysis during the fiscal year ended February 2, 2019 and no material adjustments have been recognized under SAB 118.


Deferred taxes
Deferred tax assets (liabilities) consisted of the following:

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January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
(in millions)Assets (Liabilities) Total Assets (Liabilities) TotalAssets (Liabilities) Total Assets (Liabilities) Total
Intangible assets$—
 $(156.2) $(156.2) $—
 $(133.0) $(133.0)$—
 $(63.8) $(63.8) $—
 $(130.9) $(130.9)
US property, plant and equipment—
 (73.6) (73.6) —
 (50.7) (50.7)—
 (68.2) (68.2) —
 (65.2) (65.2)
Foreign property, plant and equipment5.4
 —
 5.4
 7.0
 —
 7.0
6.5
 —
 6.5
 6.2
 —
 6.2
Inventory valuation—
 (252.8) (252.8) —
 (256.4) (256.4)—
 (179.1) (179.1) —
 (193.7) (193.7)
Allowances for doubtful accounts54.1
 —
 54.1
 46.0
 —
 46.0
—
 —
 —
 34.4
 —
 34.4
Revenue deferral188.5
 —
 188.5
 172.7
 —
 172.7
122.0
 —
 122.0
 147.1
 —
 147.1
Derivative instruments1.6
 —
 1.6
 —
 (2.2) (2.2)—
 (1.3) (1.3) —
 (0.3) (0.3)
Straight-line lease payments35.0
 —
 35.0
 31.8
 —
 31.8
26.2
 —
 26.2
 26.5
 —
 26.5
Deferred compensation13.9
 —
 13.9
 11.1
 —
 11.1
7.5
 —
 7.5
 9.2
 —
 9.2
Retirement benefit obligations—
 (10.3) (10.3) —
 (7.5) (7.5)—
 (5.8) (5.8) —
 (7.6) (7.6)
Share-based compensation7.4
 —
 7.4
 5.8
 —
 5.8
3.5
 —
 3.5
 4.4
 —
 4.4
Other temporary differences52.4
 —
 52.4
 49.8
 —
 49.8
46.7
 —
 46.7
 47.1
 —
 47.1
Net operating losses and foreign tax credits80.6
 —
 80.6
 91.8
 —
 91.8
151.8
 —
 151.8
 56.9
 —
 56.9
Value of foreign capital losses13.4
 —
 13.4
 15.0
 —
 15.0
Value of capital losses13.9
 —
 13.9
 12.0
 —
 12.0
Total gross deferred tax assets (liabilities)$452.3
 $(492.9) $(40.6) $431.0
 $(449.8) $(18.8)$378.1
 $(318.2) $59.9
 $343.8
 $(397.7) $(53.9)
Valuation allowance(31.9) —
 (31.9) (32.4) —
 (32.4)(38.9) —
 (38.9) (37.0) —
 (37.0)
Deferred tax assets (liabilities)$420.4
 $(492.9) $(72.5) $398.6
 $(449.8) $(51.2)$339.2
 $(318.2) $21.0
 $306.8
 $(397.7) $(90.9)
                      
Disclosed as:                      
Non-current assets    $—
     $2.3
    $21.0
     $1.4
Non-current liabilities    (72.5)     (53.5)    —
     (92.3)
Deferred tax assets (liabilities)    $(72.5)     $(51.2)    $21.0
     $(90.9)
As of January 30, 2016,February 2, 2019, Signet had deferred tax assets associated with net operating loss carry forwards of $56.1$124.7 million, of which $32.1 million are subject to ownership change limitations rules under Section 382 of the Internal Revenue Code (“IRC”) and various US state regulations and expire between 20162019 and 2033.2037. Deferred tax assets associated with foreign tax credits also subject to Section 382 of the IRC total $13.7 million as of January 30, 2016February 2, 2019, which expire between 20162019 and 2024 and foreign net operating loss carryforwards of $10.8$13.4 million, which expire between 20182019 and 2036.2038. Additionally, Signet had foreign capital loss carry forward deferred tax assets of $13.4$11.6 million (Fiscal 2015: $15.02018: $12.0 million), which can be carried forward over an indefinite period and US capital loss carryforwards of $3.0 million which expire in 2022, both of which are only available to offset future capital gains, if any, over an indefinite period.gains.
The decreaseincrease in the total valuation allowance in Fiscal 20162019 was $0.5 million (Fiscal 2015: $7.5 million net increase; Fiscal 2014: $0.7 million net decrease).$1.9 million. The valuation allowance primarily relates to foreign capital and tradingoperating loss carry forwards and foreign tax credits and net operating losses that, in the judgment of management, are not more likely than not to be realized.
Signet believes that it is more likely than not that deferred tax assets not subject to a valuation allowance as of January 30, 2016February 2, 2019 will be offset where permissible by deferred tax liabilities or realized on future tax returns, primarily from the generation of future taxable income.

Uncertain tax positions
The following table summarizes the activity related to the Company’s unrecognized tax benefits for US federal, US state and non-US tax jurisdictions:
(in millions)Fiscal 2019 Fiscal 2018 Fiscal 2017
Unrecognized tax benefits, beginning of period$12.0
 $12.0
 $11.4
Increases related to current year tax positions2.5
 2.3
 2.4
Increases related to prior year tax positions6.2
 —
 —
Lapse of statute of limitations(2.4) (2.4) (1.9)
Difference on foreign currency translation(0.2) 0.1
 0.1
Unrecognized tax benefits, end of period$18.1
 $12.0
 $12.0
As of February 2, 2019, Signet had approximately $18.1 million of unrecognized tax benefits in respect to uncertain tax positions. The unrecognized tax benefits relate primarily to intercompany deductions including 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 February 2, 2019, Signet had accrued interest of $3.2 million and $0.7 million of accrued penalties. If all of these unrecognized tax benefits were settled in Signet’s favor, the effective income tax rate would be favorably impacted by $19.5 million.
Over the next twelve months management believes that it is reasonably possible that there could be a reduction of some or all of the unrecognized tax benefits as of February 2, 2019 due to settlement of the uncertain tax positions with the tax authorities.
Signet has business activity in all states within the US and files income tax returns for the US federal jurisdiction and all applicable states. Signet also files income tax returns in the UK, Canada and certain other foreign jurisdictions. Signet is subject to examinations by the US federal and state and Canadian tax authorities for tax years ending after November 1, 20102011 and is subject to examination by the UK tax authority for tax years ending after February 1, 2014.
As of January 30, 2016, Signet had approximately $11.4 million of unrecognized tax benefits in respect to uncertain tax positions. The unrecognized tax benefits relate primarily to financing arrangements and intra-group charges which are subject to different and changing interpretations of tax law. If all of these unrecognized tax benefits were settled in Signet's favor, the effective income tax rate would be favorably impacted by $10.3 million.
Signet recognizes accrued interest and, where appropriate, penalties related to unrecognized tax benefits within income tax expense. As of January 30, 2016, Signet had accrued interest of $1.9 million and $0.7 million of accrued penalties.
Over the next twelve months management believes that it is reasonably possible that there could be a reduction of substantially all of the unrecognized tax benefits as of January 30, 2016 due to settlement of the uncertain tax positions with the tax authorities.

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The following table summarizes the activity related to unrecognized tax benefits:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014
Unrecognized tax benefits, beginning of period$11.4
 $4.6
 $4.5
Acquired existing unrecognized tax benefits—
 4.3
 —
Increases related to current year tax positions2.0
 3.5
 0.4
Prior year tax positions:     
Increases—
 —
 0.2
Decreases—
 (0.1) —
Cash settlements—
 —
 (0.5)
Lapse of statute of limitations(1.9) (0.4) —
Difference on foreign currency translation(0.1) (0.5) —
Unrecognized tax benefits, end of period$11.4
 $11.4
 $4.6
9.13. Other operating income, net
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Interest income from in-house customer finance programs(1)$252.6
 $217.9
 $186.4
$22.8
 $258.1
 $282.5
Other(1.7) (2.6) 0.3
3.4
 2.7
 0.1
Other operating income, net$250.9
 $215.3
 $186.7
$26.2
 $260.8
 $282.6
(1)
See Note 4 and Note 14 for additional information.
10.14. Accounts receivable, net
Prior to the second quarter of Fiscal 2019, Signet’s accounts receivable primarily consistconsisted of US customer in-house financing receivables. TheThis accounts receivable portfolio consistshistorically consisted of a population that iswas of similar characteristics and iswas evaluated collectively for impairment.
In October 2017, the Company completed the sale of the prime portion of the Sterling Jewelers customer in-house finance receivables. See Note 4 for additional information regarding the sale of the prime portion of the customer in-house finance receivable portfolio.
In June 2018, the Company completed the sale of the remaining Sterling Jewelers and Zale customer in-house finance receivables. See Note 4 for additional information regarding the agreement. For a five-year term ending in 2023, Signet will remain the issuer of non-prime credit with investment funds managed by CarVal and Castlelake purchasing forward flow receivables at a discount rate determined in accordance with their respective agreements. Receivables issued by the Company but pending transfer to Carval and Castlelake as of period end are classified as “held for sale” in the consolidated balance sheet. As of February 2, 2019, the accounts receivable held for sale were recorded at fair value. See Note 20 for additional information regarding the assumptions utilized in the calculation of fair value of the finance receivables held for sale.

(in millions)January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
Accounts receivable by portfolio segment, net:      
Sterling Jewelers customer in-house finance receivables$1,725.9
 $1,552.9
Zale customer in-house finance receivables13.6
 —
Legacy Sterling Jewelers customer in-house finance receivables$—
 $649.4
Legacy Zale customer in-house finance receivables—
 33.5
North America customer in-house finance receivables$—
 $682.9
Other accounts receivable16.9
 14.7
19.5
 9.6
Total accounts receivable, net$1,756.4
 $1,567.6
$19.5
 $692.5
   
Accounts receivable, held for sale$4.2
 $—
Prior to the sale of the remaining Sterling Jewelers and Zale customer in-house finance receivables in June 2018, Signet grantsgranted credit to customers based on a variety of credit quality indicators, including consumer financial information and prior payment experience. On an ongoing basis, management monitorsManagement monitored the credit exposure based on past due status and collection experience, as it hashad found a meaningful correlation between the past due status of customers and the risk of loss.
During the third quarter of Fiscal 2016, Signet implemented a program to provide in-house credit to customers in the Zale division’s US locations (“second look”). The resulting accounts receivable balance and allowance for doubtful accounts was immaterial as of January 30, 2016. The credit function for the Zale division was outsourced during Fiscal 2015 and, as such, no accounts receivable exist as of January 31, 2015.
Other accounts receivable is comprised primarily of gross accounts receivable relating to the insurance loss replacement business in the UK Jewelry divisionInternational segment of $14.1$10.1 million (Fiscal 2015: $13.7 million), with a corresponding valuation allowance of $0.5 million (Fiscal 2015: $0.5(February 3, 2018: $9.3 million).
The activity in the allowance for credit losses on Sterling Jewelers customer in-house finance receivables is shown below:

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(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Beginning balance:$(113.1) $(97.8) $(87.7)$(113.5) $(138.7) $(130.0)
Charge-offs173.6
 144.7
 128.2
Charge-offs, net56.3
 221.2
 203.4
Recoveries35.3
 27.5
 26.0
4.2
 34.3
 35.1
Provision(225.8) (187.5) (164.3)(54.6) (251.0) (247.2)
Reversal of allowance on receivables sold(1)
107.6
 20.7
 —
Ending balance$(130.0) $(113.1) $(97.8)$—
 $(113.5) $(138.7)
Ending receivable balance evaluated for impairment1,855.9
 1,666.0
 1,453.8
—
 762.9
 1,952.0
Sterling Jewelers customer in-house finance receivables, net$1,725.9
 $1,552.9
 $1,356.0
$—
 $649.4
 $1,813.3
     
(1)
Amounts reflected for Fiscal 2019 and Fiscal 2018 represent activity for the periods prior to the reclassification of the in-house finance receivables portfolio to held for sale during the first quarter of Fiscal 2019 and the period prior to the reclassification of the prime receivables portfolio to held for sale in October 2017, respectively, when the allowances were reversed.
As a result of the sale of the prime-only credit portion of the customer in-house finance receivable portfolio and the outsourcing of the credit servicing on the remaining in-house finance receivable portfolio in October 2017 as disclosed in Note 4, the Company revised its methodology for measuring delinquency to be based on the contractual basis.
Net bad debt expense is defined as the provision expense less recoveries.
CreditThe credit quality indicator and age analysis of past due Sterling Jewelers customer in-house finance receivables as of February 3, 2018 are shown below:
   
January 30, 2016 January 31, 2015 February 1, 2014
(in millions)Gross Valuation
allowance		 Gross Valuation
allowance		 Gross Valuation
allowance
Performing:           
Current, aged 0 – 30 days$1,473.0
 $(45.4) $1,332.2
 $(41.1) $1,170.4
 $(36.3)
Past due, aged 31 – 60 days259.6
 (8.3) 230.2
 (7.5) 195.7
 (6.4)
Past due, aged 61 – 90 days49.2
 (2.2) 40.9
 (1.8) 34.2
 (1.6)
Non Performing:           
Past due, aged more than 90 days74.1
 (74.1) 62.7
 (62.7) 53.5
 (53.5)
 $1,855.9
 $(130.0) $1,666.0
 $(113.1) $1,453.8
 $(97.8)
below under the contractual basis:
 January 30, 2016 January 31, 2015 February 1, 2014
(as a percentage of the ending receivable balance)Gross Valuation
allowance		 Gross Valuation
allowance		 Gross Valuation
allowance
Performing:           
Current, aged 0 – 30 days79.4% 3.1% 80.0% 3.1% 80.5% 3.1%
Past due, aged 31 – 60 days14.0% 3.2% 13.8% 3.3% 13.5% 3.3%
Past due, aged 61 – 90 days2.6% 4.5% 2.4% 4.4% 2.3% 4.7%
Non Performing:           
Past due, aged more than 90 days4.0% 100.0% 3.8% 100.0% 3.7% 100.0%
 100.0% 7.0% 100.0% 6.8% 100.0% 6.7%
   
February 3, 2018
(in millions)Gross Valuation
allowance
Performing (accrual status):   
0 - 120 days past due$703.4
 $(54.0)
121 or more days past due59.5
 (59.5)
 $762.9
 $(113.5)
 

 

Valuation allowance as a % of ending receivable balance  14.9%
Securitized
Prior to the fourth quarter of Fiscal 2018, the Company’s calculation of the allowance for credit cardlosses was based on a recency measure of delinquency. The credit quality indicator and age analysis of customer in-house finance receivables prior to the sale of the prime-only credit portion of the in-house receivable portfolio as of January 28, 2017 are shown below under the recency basis:
The Sterling Jewelers division securitizes its credit card receivables through its Sterling Jewelers Receivables Master Note Trust established on May 15, 2014. See Note 19 for additional information regarding this asset-backed securitization facility.
   
 January 28, 2017
(in millions) Gross Valuation
allowance
Performing (accrual status):    
Current, aged 0 – 30 days $1,538.2
 $(47.2)
Past due, aged 31 – 60 days 282.0
 (9.0)
Past due, aged 61 – 90 days 51.6
 (2.3)
Non Performing (nonaccrual status):    
Past due, aged more than 90 days 80.2
 (80.2)
  $1,952.0
 $(138.7)
     
Valuation allowance as a % of ending receivable balance   7.1%
11.15. Inventories
Signet held $441.9$726.8 million of consignment inventory at January 30, 2016 (January 31, 2015: $434.6February 2, 2019 (February 3, 2018: $606.4 million), which is not recorded on the balance sheet. The principal terms of the consignment agreements, which can generally be terminated by either party, are such that Signet can return any or all of the inventory to the relevant suppliers without financial or commercial penalties and the supplier can adjust the inventory prices prior to sale.
The following table summarizes the details of the Company’s inventory:
(in millions)January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
Raw materials$81.8
 $75.2
$76.3
 $72.0
Finished goods2,372.1
 2,363.8
2,310.6
 2,208.5
Total inventories$2,453.9
 $2,439.0
$2,386.9
 $2,280.5

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Inventory reserves
(in millions)Balance at beginning of period Charged
to profit		 
Utilized(1)
 Balance at end of period
Fiscal 2014$23.4
 $33.3
 $(40.4) $16.3
Fiscal 201516.3
 44.6
 (32.5) 28.4
Fiscal 2016$28.4
 $87.6
 $(72.8) $43.2
(in millions)Fiscal 2019 Fiscal 2018 Fiscal 2017
Inventory reserve, beginning of period$40.6
 $43.2
 $43.2
Charged to profit(1)
131.4
 75.8
 57.3
Utilization(2)
(76.7) (78.4) (57.3)
Inventory reserve, end of period(3)
$95.3
 $40.6
 $43.2
(1)Includes $62.2 million inventory charge associated with the Company’s restructuring plan. See Note 7 for additional information.
(2) Includes the impact of foreign exchange translation between opening and closing balance sheet dates.dates, as well as $10.6 million utilized for inventory identified as part of the Company’s restructuring plan which was disposed of in Fiscal 2019. See Note 7 for additional information.
12.(3) Includes $51.6 million for inventory identified as part of the Company’s restructuring plan during the second quarter of Fiscal 2019. See Note 7 for additional information.
During Fiscal 2019, as a part of the Plan, the Company recorded inventory charges of $62.2 million primarily associated with discontinued brands and collections within the restructuring charges - cost of sales line item on the condensed consolidated income statements. See Note 7 for additional information.

16. Property, plant and equipment, net
(in millions)January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
Land and buildings$34.7
 $36.0
$34.0
 $35.9
Leasehold improvements591.7
 556.4
688.8
 689.8
Furniture and fixtures688.7
 596.6
802.9
 804.2
Equipment, including software315.5
 278.6
Equipment196.1
 177.0
Software289.5
 271.4
Construction in progress46.2
 50.4
72.0
 97.2
Total$1,676.8
 $1,518.0
$2,083.3
 $2,075.5
Accumulated depreciation and amortization(949.2) (852.1)(1,282.8) (1,197.6)
Property, plant and equipment, net$727.6
 $665.9
$800.5
 $877.9
Depreciation and amortization expense for Fiscal 20162019 was $161.4$179.6 million (Fiscal 2015: $140.12018: $194.1 million; Fiscal 2014: $110.22017: $175.0 million). The expense for Fiscal 20162019 includes $0.7$0.9 million (Fiscal 2015: $0.82018: $1.0 million; Fiscal 2014: $0.72017: $1.3 million) for the impairment of assets.
13.17. Goodwill and intangibles
In connection with the acquisition of R2Net on September 12, 2017, the Company recognized $299.1 million of goodwill, which is reported in the North America segment.
Goodwill and other indefinite-lived intangible assets, such as indefinite-lived trade names, are evaluated for impairment annually. Additionally, if events or conditions were to indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may not be recoverable, the Company would evaluate the asset for impairment at that time. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value. When the carrying amount of the reporting unit or other intangible assets exceeds its fair value, an impairment charge is recorded.
Due to a sustained decline in the Company’s market capitalization during the 13 weeks ended May 5, 2018, the Company determined a triggering event had occurred that required an interim impairment assessment for all of its reporting units and indefinite-lived intangible assets. As part of the assessment, it was determined that an increase in the discount rate applied in the valuation was required to align with market-based assumptions and company-specific risk. This higher discount rate, in conjunction with revised long-term projections associated with finalizing certain initial aspects of the Company’s Path to Brilliance transformation plan in the first quarter, resulted in lower than previously projected long-term future cash flows for the reporting units which negatively affected the valuation compared to previous valuations. As a result of the interim impairment assessment, the Company recognized pre-tax impairment charges totaling $448.7 million in the 13 weeks ended May 5, 2018.
Due to a continued decline in the Company’s market capitalization during the 13 weeks ended February 2, 2019, the Company determined a triggering event had occurred that required additional interim impairment assessments for its’ reporting units and indefinite-lived intangible assets. The Company recognized additional pre-tax impairment charges totaling $286.7 million during the 13 weeks ended February 2, 2019 primarily related to revised long-term projections and a higher discount rate associated with James Allen.
Goodwill
Using a combination of discounted cash flow and guideline public company methodologies, the Company compared the fair value of each of its reporting units with their carrying value and concluded that a deficit existed. Accordingly, in the 13 weeks ended May 5, 2018, the Company recognized pre-tax impairment charges in operations of $308.8 million within its’ North America segment. Due to the second triggering event in the 13 weeks ended February 2, 2019 and using similar methodologies as the initial impairment assessment, the Company recognized additional pre-tax impairment charges in operations of $208.8 million and $3.6 million within its’ North America and Other segments, respectively.

The following table summarizes the Company’s goodwill by reportable segment:
(in millions)Sterling
Jewelers		 Zale
Jewelry		 Piercing
Pagoda		 UK Jewelry Other Total
North
America
 Other Total
Balance at February 1, 201423.2
 —
 —
 —
 3.6
 26.8
Balance at January 28, 2017$514.0
 $3.6
 $517.6
Acquisitions—
 499.4
 —
 —
 —
 499.4
301.7
 —
 301.7
Impact of foreign exchange—
 (7.0) —
 —
 —
 (7.0)2.4
 —
 2.4
Balance at January 31, 201523.2
 492.4
 —
 —
 3.6
 519.2
Impact of foreign exchange—
 (3.7) —
 —
 —
 (3.7)
Balance at January 30, 2016$23.2
 $488.7
 $—
 $—
 $3.6
 $515.5
Balance at February 3, 2018$818.1
 $3.6
 $821.7
Impairment(517.6) (3.6) (521.2)
Impact of foreign exchange and other adjustments(1)
(3.9) —
 (3.9)
Balance at February 2, 2019$296.6
 $—
 $296.6
(1)During Fiscal 2019, other adjustments include a purchase price accounting adjustment of $2.6 million related to a revised valuation of acquired intangible assets from the R2Net acquisition. Refer to Note 5 for additional details.
There have beenwere no goodwill impairment losses recognized during Fiscal 2016 and Fiscal 2015.2018. If future economic conditions are different than those projected by management, future impairment charges may be required.
Intangibles
IntangibleDefinite-lived intangible assets with indefinite and definite lives represent Zaleinclude trade names and favorable leases acquired, whilelease agreements. Indefinite-lived intangible assets include trade names. Both definite and indefinite-lived assets are recorded within intangible assets, net on the consolidated balance sheets. Intangible liabilities, net is comprised of unfavorable lease agreements and contracts and is recorded within other liabilities on the consolidated balance sheets.
In conjunction with definite lives represent unfavorable leasesthe interim goodwill impairment tests, the Company reviewed its indefinite-lived intangible assets for potential impairment by calculating the fair values of the assets using the relief from royalty method and contract rights acquiredcomparing the fair value to their respective carrying amounts. The interim impairment test resulted in the Zale Acquisition. See Note 3 for additional information. No otherdetermination that the fair values of indefinite-lived intangible assets or liabilitiesrelated to certain Zales trade names were less than their carrying value. Accordingly, in the 13 weeks ended May 5, 2018, the Company recognized prior topre-tax impairment charges in operations of $139.9 million within its’ North America segment. Additionally, in conjunction with the acquisitioninterim goodwill impairment tests associated with the second triggering event in the fourth quarter Fiscal 2019, the Company determined that the fair values of Zale Corporation on May 29, 2014. As of January 30, 2016, the remaining weighted-average amortization period for acquired definite-livedindefinite-lived intangible assets and liabilities wasrelated to trade names, primarily James Allen, were less than their carrying value. Accordingly, in the 13 weeks ended February 2, years and 5 years, respectively. 2019, the Company recognized pre-tax impairment charges in operations of $74.3 million within its’ North America segment.
There were no indefinite-lived intangible assets impairment losses recognized during Fiscal 2018. If future economic conditions are different than those projected by management, future impairment charges may be required.
The following table provides additional detail regarding the composition of intangible assets and liabilities.liabilities:


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   January 30, 2016 January 31, 2015
(in millions)Balance sheet location Gross
carrying
amount		 Accumulated
amortization		 Net
carrying
amount		 Gross
carrying
amount		 Accumulated
amortization		 Net
carrying
amount
Definite-lived intangible assets:             
Trade namesIntangible assets, net $1.4
 $(0.5) $0.9
 $1.5
 $(0.2) $1.3
Favorable leasesIntangible assets, net 47.0
 (22.3) 24.7
 48.1
 (9.1) 39.0
Total definite-lived intangible assets  48.4
 (22.8) 25.6
 49.6
 (9.3) 40.3
Indefinite-lived trade namesIntangible assets, net 402.2
 —
 402.2
 406.8
 —
 406.8
Total intangible assets, net  $450.6
 $(22.8) $427.8
 $456.4
 $(9.3) $447.1
              
Definite-lived intangible liabilities:             
Unfavorable leasesOther liabilities $(47.7) $23.7
 $(24.0) $(48.7) $9.7
 $(39.0)
Unfavorable contractsOther liabilities $(65.6) $28.1
 $(37.5) $(65.6) $13.8
 $(51.8)
Total intangible liabilities, net  $(113.3) $51.8
 $(61.5) $(114.3) $23.5
 $(90.8)
  February 2, 2019 February 3, 2018
(in millions) Gross
carrying
amount		 Accumulated
amortization		 Accumulated impairment loss Net
carrying
amount		 Gross
carrying
amount		 Accumulated
amortization		 Net
carrying
amount
Intangible assets, net:              
Definite-lived intangible assets $53.3
 $(50.1) $—
 $3.2
 $49.8
 $(46.7) $3.1
Indefinite-lived intangible assets 475.9
 —
 (214.1) 261.8
 478.4
 —
 478.4
Total intangible assets, net $529.2
 $(50.1) $(214.1) $265.0
 $528.2
 $(46.7) $481.5
               
Intangible liabilities, net $(113.9) $92.5
 $—
 $(21.4) $(114.5) $85.2
 $(29.3)

Amortization expense relating to the intangible assets was $13.9 million and $9.6$4.0 million in Fiscal 2016 and2019 (Fiscal 2018: $9.3 million; Fiscal 2015, respectively. As the Acquisition occurred on May 29, 2014, there was no amortization expense relating to intangible assets in Fiscal 2014. The expected future amortization expense for intangible assets recorded at January 30, 2016 follows:
(in millions)Trade names Favorable leases Total
2017$0.3
 $13.4
 $13.7
20180.3
 8.8
 9.1
20190.2
 2.3
 2.5
20200.1
 0.2
 0.3
2021—
 —
 —
Thereafter—
 —
 —
Total$0.9
 $24.7
 $25.6
2017: $13.8 million). The unfavorable leases and unfavorable contracts are classified as a liabilityliabilities and recognized over the term of the underlying lease or contract. Amortization relating to the intangible liabilities was $28.7 million and $23.7$7.9 million in Fiscal 20162019 (Fiscal 2018: $13.0 million; Fiscal 2017: $19.7 million). Expected future amortization for intangible assets and Fiscal 2015, respectively. As the Acquisition occurred on May 29. 2014, there was no amortization relating to intangible liabilities in Fiscal 2014. Expected future amortization for intangible liabilities recorded at January 30, 2016February 2, 2019 follows:
(in millions)Unfavorable leases Unfavorable contracts Total
2017$(14.1) $(5.4) $(19.5)
2018(7.5) (5.4) (12.9)
2019(2.1) (5.4) (7.5)
2020(0.3) (5.4) (5.7)
2021—
 (5.4) (5.4)
Thereafter—
 (10.5) (10.5)
Total$(24.0) $(37.5) $(61.5)
(in millions) Intangible assets, net amortization Intangible liabilities amortization
Fiscal 2020 $0.9
 $(5.5)
Fiscal 2021 0.9
 (5.4)
Fiscal 2022 0.8
 (5.4)
Fiscal 2023 0.6
 (5.1)
Total $3.2
 $(21.4)


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14. Other assets
(in millions)January 30, 2016 January 31, 2015
Deferred extended service plan selling costs$79.4
 $69.7
Investments(1)
26.8
 25.2
Other assets56.1
 45.1
Total other assets$162.3
 $140.0
(1) See Note 15 for additional detail.
In addition, other current assets include deferred direct selling costs in relation to the sale of ESP of $26.4 million as of January 30, 2016 (January 31, 2015: $24.9 million).
15.18. Investments
Investments in debt and equity securities are held by certain insurance subsidiaries and are reported at fair value as other assets in the accompanying consolidated balance sheets. All investments are classified as available-for-sale and include the following:
January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
(in millions)Cost Unrealized Gain (Loss) Fair Value Cost Unrealized Gain (Loss) Fair ValueCost Unrealized Gain (Loss) Fair Value Cost Unrealized Gain (Loss) Fair Value
US Treasury securities$9.2
 $(0.4) $8.8
 $9.7
 $(0.1) $9.6
$5.1
 $(0.4) $4.7
 $8.3
 $(0.8) $7.5
US government agency securities4.0
 —
 4.0
 1.4
 —
 1.4
2.6
 (0.1) 2.5
 5.3
 (0.2) 5.1
Corporate bonds and notes10.8
 —
 10.8
 10.6
 0.2
 10.8
5.3
 (0.1) 5.2
 11.0
 (0.2) 10.8
Corporate equity securities3.5
 (0.3) 3.2
 3.5
 (0.1) 3.4
2.7
 (0.3) 2.4
 3.5
 1.0
 4.5
Total investments$27.5
 $(0.7) $26.8
 $25.2
 $—
 $25.2
$15.7
 $(0.9) $14.8
 $28.1
 $(0.2) $27.9
Realized gains and losses on investments are determined on the specific identification basis. There were no material net realized gains or losses during Fiscal 20162019 and Fiscal 2015.2018. Investments with a carrying value of $7.1$3.4 million and $7.2$6.8 million were on deposit with various state insurance departments at January 30, 2016February 2, 2019 and January 31, 2015,February 3, 2018, respectively, as required by law.
Investments in debt securities outstanding as of January 30, 2016February 2, 2019 mature as follows:
(in millions)Cost Fair ValueCost Fair Value
Less than one year$4.8
 $4.6
$2.1
 $1.8
Year two through year five11.1
 11.0
9.8
 9.6
Year six through year ten8.0
 8.0
1.1
 1.0
After ten years0.1
 —
Total investment in debt securities$24.0
 $23.6
$13.0
 $12.4
16.19. Derivatives
Derivative transactions are used by Signet for risk management purposes to address risks inherent in Signet’s business operations and sources of financing. The main risks arising from Signet’s operations are market risk including foreign currency risk, commodity risk, liquidity risk and interest rate risk. Signet uses derivative financial instruments to manage and mitigate certain of these risks under policies reviewed and approved by the Board.Board of Directors. Signet does not enter into derivative transactions for tradingspeculative purposes.
Market risk
Signet generates revenues and incurs expenses in US dollars, Canadian dollars and British pounds. As a portion of UK Jewelrythe International segment purchases and purchases made by the Canadian operations of the Zale divisionNorth America segment are denominated in US dollars, Signet enters into forward foreign currency exchange contracts, foreign currency option contracts and foreign currency swaps to manage these exposuresthis exposure to the US dollar.

Signet holds a fluctuating amount of British pounds and Canadian dollars reflecting the cash generative characteristics of operations. Signet’s objective is to minimize net foreign exchange exposure to the income statement on non-US dollar denominated items through managing cash levels, non-US dollar denominated intra-entity balances and foreign currency swaps. In order to manage the foreign exchange exposure and minimize the level of funds denominated in British pounds and Canadian dollars, dividends are paid regularly by subsidiaries to their immediate holding companies and excess British pounds and Canadian dollars are sold in exchange for US dollars.

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Signet’s policy is to minimizereduce the impact of precious metal commodity price volatility on operating results through the use of outright forward purchases of, or by entering into options to purchase, precious metals within treasury guidelines approved by the Board.Board of Directors. In particular, Signet undertakes some hedging of its requirements for gold through the use of forward purchase contracts, options and net zero-costzero premium collar arrangements (a combination of callforwards and put option contracts), forward contracts and commodity purchasing, while fluctuations in the cost of diamonds are not hedged..
Liquidity risk
Signet’s objective is to ensure that it has access to, or the ability to generate, sufficient cash from either internal or external sources in a timely and cost-effective manner to meet its commitments as they become due and payable. Signet manages liquidity risks as part of its overall risk management policy. Management produces forecasting and budgeting information that is reviewed and monitored by the Board.Board of Directors. Cash generated from operations and external financing are the main sources of funding, supplementingwhich supplement Signet’s resources in meeting liquidity requirements.
The main external sources of financingfunding are a senior unsecured credit facility and senior unsecured notes and securitized credit card receivables, as described in Note 19.22.
Interest rate risk
Signet has exposure to movements in interest rates associated with cash and borrowings. Signet may enter into various interest rate protection agreements in order to limit the impact of movements in interest rates.
Interest rate swap (designated) — This contract was entered into to reduce the consolidated interest rate risk 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 specified intervals, the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional amounts. This contract was entered into to reduce the consolidated interest rate risk associated with variable rate, long-term debt. The Company designated this derivative as a cash flow hedge of the variability in expected cash outflows for interest payments. The Company has effectively converted a portion of its variable-rate senior unsecured term loan into fixed-rate debt.
The fair value of the swap is presented within the consolidated balance sheets, and the Company recognizes any changes in the fair value as an adjustment of AOCI within equity to the extent the swap is effective. The ineffective portion, if any, is recognized in current period earnings. As interest expense is accrued on the debt obligation, amounts in AOCI related to the interest rate swap are reclassified into income resulting in a net interest expense on the hedged amount of the underlying debt obligation equal to the effective yield of the fixed rate of the swap. In the event that the interest rate swap is dedesignated prior to maturity, gains or losses in AOCI remain deferred and are reclassified into earnings in the periods in which the hedged forecasted transaction affects earnings.
Credit risk and concentrations of credit risk
Credit risk represents the loss that would be recognized at the reporting date if counterparties failed to perform as contracted. Signet does not anticipate non-performance by counterparties of its financial instruments, except for customer in-house financing receivables as disclosed in Note 10 of which no single customer represents a significant portion of the Company’s receivable balance.instruments. Signet does not require collateral or other security to support cash investments or financial instruments with credit risk; however, it is Signet’s policy to only hold cash and cash equivalent investments and to transact financial instruments with financial institutions with a certain minimum credit rating. Management does not believe Signet is exposed to any significant concentrations of credit risk that arise from cash and cash equivalent investments, derivatives or accounts receivable.
Commodity and foreign currency risks
The following types of derivative financial instruments are utilized by Signet to mitigate certain risk exposures related to changes in commodity prices and foreign exchange rates:
Forward foreign currency exchange contracts (designated) — These contracts, which are principally in US dollars, are entered into to limit the impact of movements in foreign exchange rates on forecasted foreign currency purchases. The total notional amount of these foreign currency contracts outstanding as of January 30, 2016February 2, 2019 was $10.7$22.4 million (January 31, 2015: $23.5(February 3, 2018: $26.6 million). These contracts have been designated as cash flow hedges and will be settled over the next 612 months (January 31, 2015: 12(February 3, 2018: 11 months).
Forward foreign currency exchange contracts (undesignated) — Foreign currency contracts not designated as cash flow hedges are used to limit the impact of movements in foreign exchange rates on recognized foreign currency payables and to hedge currency flows through Signet’s bank accounts to mitigate Signet’s exposure to foreign currency exchange risk in its cash and borrowings. The total notional amount of these foreign currency contracts outstanding as of January 30, 2016February 2, 2019 was $32.0$111.5 million (January 31, 2015: $40.3(February 3, 2018: $112.7 million).

Commodity forward purchase contracts, options and net zero-costzero premium collar arrangements (designated) — These contracts are entered into to reduce Signet’s exposure to significant movements in the price of the underlying precious metal raw material. The total notional amount of these commodity derivative contracts outstanding as of January 30, 2016February 2, 2019 was for approximately 76,00089,000 ounces of gold (January 31, 2015: 81,000(February 3, 2018: 6,000 ounces). These contracts have been designated as cash flow hedges and will be settled over the next 1220 months (January 31, 2015: 11(February 3, 2018: 12 months).

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The bank counterparties to the derivative instruments expose Signet to credit-related losses in the event of their non-performance. However, to mitigate that risk, Signet only contracts with counterparties that meet certain minimum requirements under its counterparty risk assessment process. As of January 30, 2016,February 2, 2019, Signet believes that this credit risk did not materially change the fair value of the foreign currency or commodity contracts.
The following table summarizes the fair value and presentation of derivative instruments in the consolidated balance sheets:
Fair value of derivative assetsFair value of derivative assets
(in millions)Balance sheet location January 30, 2016 January 31, 2015Balance sheet location February 2, 2019 February 3, 2018
Derivatives designated as hedging instruments:        
Foreign currency contractsOther current assets $0.8
 $1.0
Other current assets $0.1
 $—
Commodity contractsOther current assets 0.6
 6.3
Other current assets 4.3
 —
Commodity contractsOther assets 1.4
 —
Interest rate swapsOther assets 0.6
 2.2
 1.4
 7.3
 6.4
 2.2
Derivatives not designated as hedging instruments:        
Foreign currency contractsOther current assets —
 0.1
Other current assets 0.8
 —
Total derivative assets $1.4
 $7.4
 $7.2
 $2.2
Fair value of derivative liabilitiesFair value of derivative liabilities
(in millions)Balance sheet location January 30, 2016 January 31, 2015Balance sheet location February 2, 2019 February 3, 2018
Derivatives designated as hedging instruments:        
Foreign currency contractsOther current liabilities $(0.2) $(1.4)
Commodity contractsOther current liabilities (0.8) —
Other current liabilities —
 (0.1)
Interest rate swapsOther liabilities (3.4) —
 (4.2) —
 (0.2) (1.5)
Derivatives not designated as hedging instruments:        
Foreign currency contractsOther current liabilities (0.2) —
Other current liabilities —
 (0.9)
Total derivative liabilities $(4.4) $—
 $(0.2) $(2.4)
Derivatives designated as cash flow hedges
The following table summarizes the pre-tax gains (losses) recorded in AOCI for derivatives designated in cash flow hedging relationships:
(in millions)January 30, 2016 January 31, 2015 February 2, 2019 February 3, 2018
Foreign currency contracts$1.4
 $0.9
 $0.7
 $(2.4)
Commodity contracts(3.7) 5.7
 4.0
 1.4
Interest rate swaps(3.4) —
 0.6
 2.2
Total$(5.7) $6.6
 
    
Gains recorded in AOCI$5.3
 $1.2

The following tables summarize the effect of derivative instruments designated as cash flow hedges in OCI and the consolidated income statements:
Foreign currency contracts
(in millions)Income statement caption Fiscal 2016 Fiscal 2015
Gains (losses) recorded in AOCI, beginning of period  $0.9
 $(2.3)
Current period gains recognized in OCI  0.9
 1.9
(Gains) losses reclassified from AOCI to net (loss) incomeCost of sales (0.4) 1.3
Gains recorded in AOCI, end of period  $1.4
 $0.9
(in millions)Income statement caption Fiscal 2019 Fiscal 2018
Gains (losses) recorded in AOCI, beginning of period  $(2.4) $4.1
Current period gains (losses) recognized in OCI  2.4
 (3.3)
Losses (gains) reclassified from AOCI to net incomeCost of sales 0.7
 (3.2)
Gains (losses) recorded in AOCI, end of period  $0.7
 $(2.4)

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Commodity contracts
(in millions)Income statement caption Fiscal 2016 Fiscal 2015
Gains (losses) recorded in AOCI, beginning of period  $5.7
 $(18.8)
Current period (losses) gains recognized in OCI  (12.0) 7.2
Losses reclassified from AOCI to net (loss) incomeCost of sales 2.6
 17.3
(Losses) gains recorded in AOCI, end of period  $(3.7) $5.7
(in millions)Income statement caption Fiscal 2019 Fiscal 2018
Gains (losses) recorded in AOCI, beginning of period  $1.4
 $(2.1)
Current period gains recognized in OCI  3.5
 5.2
Gains reclassified from AOCI to net incomeCost of sales (0.9) (1.7)
Gains recorded in AOCI, end of period  $4.0
 $1.4
Interest rate swaps
(in millions)Income statement caption Fiscal 2016 Fiscal 2015
Gains (losses) recorded in AOCI, beginning of period  $—
 $—
Current period losses recognized in OCI  (6.1) —
Losses reclassified from AOCI to net incomeInterest expense, net 2.7
 —
Losses recorded in AOCI, end of period  $(3.4) $—
(in millions)Income statement caption Fiscal 2019 Fiscal 2018
Gains recorded in AOCI, beginning of period  $2.2
 $0.4
Current period gains recognized in OCI  0.3
 1.5
Losses (gains) reclassified from AOCI to net incomeInterest expense, net (1.9) 0.3
Gains recorded in AOCI, end of period  $0.6
 $2.2
There was no material ineffectiveness related to the Company’s derivative instruments designated in cash flow hedging relationships during Fiscal 20162019 and Fiscal 2015.2018. Based on current valuations, the Company expects approximately $4.9$2.0 million of net pre-tax derivative lossesgains to be reclassified out of AOCI into earnings within the next 12 months.
Derivatives not designated as hedging instruments
The following table presents the effects of the Company’s derivatives instruments not designated as cash flow hedges in the consolidated income statements:
Income statement caption Amount of gain (loss) recognized in incomeIncome statement caption Amount of gains (losses) recognized in net income
(in millions) Fiscal 2016 Fiscal 2015 Fiscal 2019 Fiscal 2018
Derivatives not designated as hedging instruments:        
Foreign currency contractsOther operating income, net $(4.5) $0.6
Other operating income, net $(14.4) $8.4
Total $(4.5) $0.6
17.20. Fair value measurement
The estimated fair value of Signet’s financial instruments held or issued to finance Signet’s operations is summarized below. Certain estimates and judgments were required to develop the fair value amounts. The fair value amounts shown below are not necessarily indicative of the amounts that Signet would realize upon disposition nor do they indicate Signet’s intent or ability to dispose of the financial instrument. Assets and liabilities that are carried at fair value are required to be classified and disclosed in one of the following three categories:
Level 1—quoted market prices in active markets for identical assets and liabilities
Level 2—observable market based inputs or unobservable inputs that are corroborated by market data
Level 3—unobservable inputs that are not corroborated by market data

Signet determines fair value based upon quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. The methods Signet uses to determine fair value on an instrument-specific basis are detailed below:

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January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
(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)		 Carrying Value Quoted prices in
active
markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)
Assets:              
US Treasury securities$8.8
 $8.8
 $—
 $9.6
 $9.6
 $—
$4.7
 $4.7
 $—
 $7.5
 $7.5
 $—
Corporate equity securities3.2
 3.2
 —
 3.4
 3.4
 —
2.4
 2.4
 —
 4.5
 4.5
 —
Foreign currency contracts0.8
 —
 0.8
 1.1
 —
 1.1
0.9
 —
 0.9
 —
 —
 —
Commodity contracts0.6
 —
 0.6
 6.3
 —
 6.3
5.7
 —
 5.7
 —
 —
 —
Interest rate swaps0.6
 —
 0.6
 2.2
 —
 2.2
US government agency securities4.0
 —
 4.0
 1.4
 —
 1.4
2.5
 —
 2.5
 5.1
 —
 5.1
Corporate bonds and notes10.8
 —
 10.8
 10.8
 —
 10.8
5.2
 —
 5.2
 10.8
 —
 10.8
Total Assets$28.2
 $12.0
 $16.2
 $32.6
 $13.0
 $19.6
Total assets$22.0
 $7.1
 $14.9
 $30.1
 $12.0
 $18.1
                      
Liabilities:                      
Foreign currency contracts$(0.2) $—
 $(0.2) $—
 $—
 $—
$(0.2) $—
 $(0.2) $(2.3) $—
 $(2.3)
Commodity contracts(0.8) —
 (0.8) —
 —
 —
—
 —
 —
 (0.1) —
 (0.1)
Interest rate swaps(3.4) —
 (3.4) —
 —
 —
Total Liabilities$(4.4) $—
 $(4.4) $—
 $—
 $—
Total liabilities$(0.2) $—
 $(0.2) $(2.4) $—
 $(2.4)
Investments in US Treasury securities and corporate equity securities are based on quoted market prices for identical instruments in active markets, and therefore were classified as Level 1 measurements in the fair value hierarchy. Investments in US government agency securities and corporate bonds and notes are based on quoted prices for similar instruments in active markets, and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note 1518 for additional information related to the Company’s available-for-sale investments. The fair valuesvalue of derivative financial instruments havehas been determined based on market value equivalents at the balance sheet date, taking into account the current interest rate environment, foreign currency forward rates or commodity forward rates, and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note 1619 for additional information related to the Company’s derivatives.
During the second quarter of Fiscal 2019, the Company completed the sale of all eligible non-prime in-house accounts receivable. Upon closing, 5% of the purchase price was deferred until the second anniversary of the closing date. Final payment of the deferred purchase price is contingent upon the non-prime portfolio achieving a pre-defined yield. The Company recorded an asset related to this deferred payment within other assets at fair value and will adjust the asset to fair value in each subsequent period through the performance period through AOCI until settled. This estimated fair value was derived from a discounted cash flow model using unobservable inputs, including estimated yields derived from historic performance, loss rates, payment rates and discount rates to estimate the fair value associated with the accounts receivable. As of February 2, 2019, the fair value of the deferred payment was $18.5 million, which is recorded within other assets on the consolidated balance sheets. See Note 4 for additional information.
Goodwill and other indefinite-lived intangible assets, are evaluated for impairment annually or more frequently if events or conditions indicate the carrying value of a reporting unit or an indefinite-lived intangible asset may not be recoverable. Impairment testing compares the carrying amount of the reporting unit or other intangible assets with its fair value. During Fiscal 2019, the Company performed interim impairment tests for goodwill and indefinite-lived intangible assets. The fair value was calculated using a combination of discounted cash flow and guideline public company methodologies for the reporting units and the relief from royalty method for the indefinite-lived intangible assets, respectively. The fair value of goodwill and indefinite-lived intangible assets is a Level 3 valuation based on certain unobservable inputs including projected cash flows and estimated risk-adjusted rates of return that would be utilized by market participants in valuing these assets or prices of similar assets. See Note 17 for additional information.
The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, accounts payable, accrued expenses, other liabilities, income taxes and accrued liabilitiesthe revolving credit facility approximate fair value because of the short-term maturitynature of these amounts.instruments.

The fair values of long-term debt instruments were determined using quoted market prices in inactive markets or discounted cash flows based upon current observable market interest rates and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note 1922 for classification between current and long-term debt. The carrying amount and fair value of outstanding debt at January 30, 2016February 2, 2019 and January 31, 2015February 3, 2018 were as follows:
 Fiscal 2016 Fiscal 2015
(in millions)Carrying
Value		 Fair Value Carrying
Value		 Fair Value
Outstanding debt:       
Senior notes (Level 2)$398.6
 $405.9
 $398.5
 $415.3
Securitization facility (Level 2)600.0
 600.0
 600.0
 600.0
Term loan (Level 2)365.0
 365.0
 390.0
 390.0
Capital lease obligations (Level 2)0.2
 0.2
 1.2
 1.2
Total outstanding debt$1,363.8
 $1,371.1
 $1,389.7
 $1,406.5
 February 2, 2019 February 3, 2018
(in millions)Carrying
Value		 Fair Value Carrying
Value		 Fair Value
Long-term debt       
Senior notes (Level 2)$395.3
 $340.3
 $394.5
 $396.3
Term loan (Level 2)293.0
 294.9
 323.5
 326.2
Total$688.3
 $635.2
 $718.0
 $722.5
18.21. Pension plans
The UK Plan, which ceased to admit new employees from April 2004, is a funded plan with assets held in a separate trustee administered fund, which is independently managed. Signet used January 30, 2016February 2, 2019 and January 31, 2015February 3, 2018 measurement dates in determining the UK Plan’s benefit obligation and fair value of plan assets.
In September 2017, the Company approved an amendment to freeze benefit accruals under the UK Plan in an effort to reduce anticipated future pension expense. As a result of this amendment, the Company will freeze the pension plan for all participants with an effective date of either December 2017 or October 2019 as elected by the plan participants. All future benefit accruals under the plan shall cease. The amendment to the plan was accounted for in accordance with FASB Accounting Standards Codification (“ASC”) Topic 715, “Compensation - Retirement Benefits.”
The following tables provide information concerning the UK Plan as of and for the fiscal years ended January 30, 2016February 2, 2019 and January 31, 2015:

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(in millions)Fiscal 2016 Fiscal 2015
Change in UK Plan assets:   
Fair value at beginning of year$295.8
 $282.6
Actual return on UK Plan assets(4.8) 43.9
Employer contributions2.5
 4.2
Members’ contributions0.7
 0.7
Benefits paid(11.2) (10.2)
Foreign currency changes(16.8) (25.4)
Fair value at end of year$266.2
 $295.8
February 3, 2018:
(in millions)Fiscal 2016 Fiscal 2015
Change in benefit obligation:   
Benefit obligation at beginning of year$258.8
 $226.3
Service cost2.6
 2.3
Past service cost0.6
 0.9
Interest cost7.7
 9.7
Members’ contributions0.7
 0.7
Actuarial (gain) loss(29.4) 47.5
Benefits paid(11.2) (10.2)
Foreign currency changes(14.9) (18.4)
Benefit obligation at end of year$214.9
 $258.8
Funded status at end of year: UK Plan assets less benefit obligation$51.3
 $37.0
(in millions)Fiscal 2019 Fiscal 2018
Change in UK Plan assets:   
Fair value at beginning of year$272.2
 $247.6
Actual return on UK Plan assets2.1
 11.0
Employer contributions4.4
 3.2
Members’ contributions0.3
 0.4
Benefits paid(13.5) (8.7)
Plan settlements—
 (10.8)
Foreign currency translation(20.0) 29.5
Fair value at end of year$245.5
 $272.2
(in millions)January 30, 2016 January 31, 2015
Amounts recognized in the balance sheet consist of:   
Non-current assets$51.3
 $37.0
Non-current liabilities—
 —
Net asset recognized$51.3
 $37.0
(in millions)Fiscal 2019 Fiscal 2018
Change in benefit obligation:   
Benefit obligation at beginning of year$232.4
 $215.7
Service cost0.9
 2.1
Interest cost5.8
 6.1
Members’ contributions0.3
 0.4
Actuarial (gain) loss(2.1) 2.3
Benefits paid(13.5) (8.7)
Plan settlements8.3
 (10.8)
Foreign currency translation(17.2) 25.3
Benefit obligation at end of year$214.9
 $232.4
Funded status at end of year$30.6
 $39.8

(in millions)February 2, 2019 February 3, 2018
Amounts recognized in the balance sheet consist of:   
Non-current assets$30.6
 $39.8
Items in AOCI not yet recognized as income (expense) in the income statement:
(in millions)January 30, 2016 January 31, 2015 February 1, 2014February 2, 2019 February 3, 2018 January 28, 2017
Net actuarial losses$(43.1) $(56.7) $(42.5)$(53.8) $(51.1) $(55.5)
Net prior service credits11.1
 13.3
 15.3
Net prior service (costs) credits(4.1) 2.4
 9.2
The estimated actuarial losslosses and prior service creditcosts for the UK Plan that will be amortized from AOCI into net periodic pension cost over the next fiscal year are $1.6$(1.2) million and $(2.0)$(0.1) million, respectively.
The accumulated benefit obligation for the UK Plan was $204.2$214.6 million and $245.2$231.1 million at January 30, 2016as of February 2, 2019 and January 31, 2015,February 3, 2018, respectively.
The components of net periodic pension costbenefit (cost) and other amounts recognized in OCI for the UK Plan are as follows:

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(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Components of net periodic pension cost:     
Components of net periodic pension benefit (cost):     
Service cost$(2.6) $(2.3) $(2.4)$(0.9) $(2.1) $(2.0)
Interest cost(7.7) (9.7) (9.3)(5.8) (6.1) (7.2)
Expected return on UK Plan assets11.5
 14.7
 13.0
8.4
 9.4
 10.4
Amortization of unrecognized net prior service credit2.2
 1.7
 1.5
Amortization of unrecognized actuarial loss(3.4) (2.0) (2.3)
Net periodic pension benefit (cost)$—
 $2.4
 $0.5
Amortization of unrecognized actuarial losses(0.9) (2.8) (1.5)
Amortization of unrecognized net prior service credits—
 1.4
 1.9
Net curtailment gain and settlement loss—
 3.7
 —
Net periodic pension benefit$0.8
 $3.5
 $1.6
Other changes in assets and benefit obligations recognized in OCI14.4
 (21.0) 0.1
(11.3) (2.9) (17.8)
Total recognized in net periodic pension benefit (cost) and OCI$14.4
 $(18.6) $0.6
$(10.5) $0.6
 $(16.2)
January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
Assumptions used to determine benefit obligations (at the end of the year):      
Discount rate3.60% 3.00%2.70% 2.60%
Salary increases2.50% 2.50%1.50% 2.50%
Assumptions used to determine net periodic pension costs (at the start of the year):      
Discount rate3.00% 4.40%2.60% 2.90%
Expected return on UK Plan assets3.90% 5.25%3.60% 3.80%
Salary increases2.50% 3.00%2.50% 2.00%
The discount rate is based upon published rates for high-quality fixed-income investments that produce expected cash flows that approximate the timing and amount of expected future benefit payments.
The expected return on the UK Plan assets assumption is based upon the historical return and future expected returns for each asset class, as well as the target asset allocation of the portfolio of UK Plan assets.
The UK Plan’s investment strategy is guided by an objective of achieving a return on the investments, which is consistent with the long-term return assumptions and funding policy, to ensure the UK Plan obligations are met. The investment policy is to carry a balance ofallocate funds to achieve these aims. These funds carrya diverse portfolio of investments, inincluding UK and overseas equities, diversified growth funds, UK corporate bonds, open-ended funds and commercial property. The commercial property investment is through a Pooled Pensions Property Fund that provides a diversified portfolio of property assets.
The As of February 2, 2019, the target allocation for the UK Plan’s assets at January 30, 2016 was bonds 52%53%, diversified growth funds 35%34%, equities 8% and property 5%. This allocation is consistent with the long-term target allocation of investments underlying the UK Plan’s funding strategy.

The fair value of the assets in the UK Plan at January 30, 2016February 2, 2019 and January 31, 2015February 3, 2018 are required to be classified and disclosed in one of the following three categories:
Level 1—quoted market prices in active markets for identical assets and liabilities
Level 2—observable market based inputs or unobservable inputs that are corroborated by market data
Level 3—unobservable inputs that are not corroborated by market data

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The methods Signet uses to determine fair value on an instrument-specific basis are detailed below:
Fair value measurements as of January 30, 2016 Fair value measurements as of January 31, 2015Fair value measurements as of February 2, 2019 Fair value measurements as of February 3, 2018
(in millions)Total Quoted prices in
active
markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)		 Significant
Unobservable
inputs
(Level 3)		 Total Quoted prices in
active
markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)		 Significant
unobservable
inputs
(Level 3)		Total Quoted prices in
active
markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)		 Significant
unobservable
inputs
(Level 3)		 Total Quoted prices in
active
markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)		 Significant
unobservable
inputs
(Level 3)
Asset category:                      
Diversified equity securities$21.2
 $11.3
 $9.9
 $—
 $23.6
 $12.2
 $11.4
 $—
$19.4
 $—
 $19.4
 $—
 $24.0
 $—
 $24.0
 $—
Diversified growth funds90.5
 44.8
 45.7
 —
 99.0
 49.8
 49.2
 —
66.4
 43.6
 22.8
 —
 96.3
 49.4
 46.9
 —
Fixed income – government bonds87.1
 —
 87.1
 —
 95.8
 —
 95.8
 —
80.6
 —
 80.6
 —
 83.9
 —
 83.9
 —
Fixed income – corporate bonds53.6
 —
 53.6
 —
 64.6
 —
 64.6
 —
46.2
 —
 46.2
 —
 52.6
 —
 52.6
 —
Property13.0
 —
 —
 13.0
 12.3
 —
 —
 12.3
—
 —
 —
 —
 14.3
 —
 —
 14.3
Cash0.8
 0.8
 —
 —
 0.5
 0.5
 —
 —
1.9
 1.9
 —
 —
 1.1
 1.1
 —
 —
Investments measured at NAV(1):
               
Diversified growth funds17.4
       —
      
Property13.6
       —
      
Total$266.2
 $56.9
 $196.3
 $13.0
 $295.8
 $62.5
 $221.0
 $12.3
$245.5
 $45.5
 $169.0
 $—
 $272.2
 $50.5
 $207.4
 $14.3
(1)
Certain assets that are measured at fair value using the net asset value (“NAV”) practical expedient have not been classified in the fair value hierarchy.
Investments in diversified equity securities, diversified growth funds and fixed income securities are in pooled funds. Investments are valued based on unadjusted quoted prices for each fund in active markets, where possible and, therefore, classified in Level 1 of the fair value hierarchy. If unadjusted quoted prices for identical assets are unavailable, investments are valued by the administrators of the funds. The valuation is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of units outstanding. The unit price is based on underlying investments which are generally either traded in an active market or are valued based on observable inputs such as market interest rates and quoted prices for similar securities and, therefore, classified in Level 2 of the fair value hierarchy.
Certain diversified growth funds are in funds seeking an interest-based return through investments in various asset classes including: asset backed securities; mortgage backed securities: collateralized debt and loan obligations; and loan investments. The investments in these diversified growth funds are subject to certain restrictions whereby funds may only be divested quarterly. The investment in property is in pooled funds valued by the administrators of the fund. The valuation is based on the value of the underlying assets owned by the fund, minus its liabilities and then divided by the number of units outstanding. The unit price is based on underlying investments which are independently valued on a monthly basis. The investment in the property fund is subject to certain restrictions on withdrawals that could delay the receipt of funds by up to 16 months.
The table below sets forth changes invaluation of these assets are based on the fair valueNAV of the Level 3 investmentunderlying assets, in Fiscal 2016 and Fiscal 2015:
(in millions)Significant
unobservable
inputs
(Level 3)
Balance as of February 1, 2014$11.6
Actual return on assets0.7
Balance as of January 31, 2015$12.3
Actual return on assets0.7
Balance as of January 30, 2016$13.0
which are independently valued on a monthly basis.
Signet contributed $2.5$4.4 million to the UK Plan in Fiscal 20162019 and expects to contribute a minimum of $2.6$5.4 million to the UK Plan in Fiscal 2017.2020. The level of contributions is in accordance with an agreed upon deficit recovery plan and based on the results of the actuarial valuation as of April 5, 2015.2017.

The following benefit payments, which reflect expected future service, as appropriate, are estimated to be paid by the UK Plan:
(in millions)Expected benefit paymentsExpected benefit payments
Fiscal 2017$8.5
Fiscal 20188.3
Fiscal 20198.5
Fiscal 20208.9
$9.2
Fiscal 20219.4
9.5
Fiscal 20229.5
Fiscal 20239.6
Fiscal 20249.5
Thereafter$49.2
$49.4
In June 2004, Signet introduced a defined contribution plan which replaced the UK Plan for new UK employees. The contributions to this plan in Fiscal 20162019 were $2.0$2.3 million (Fiscal 2015: $1.82018: $2.6 million; Fiscal 2014: $1.02017: $1.8 million).

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In the US, Signet operates a defined contribution 401(k) retirement savings plan for all eligible employees who meet minimum age and service requirements. The assets of this plan are held in a separate trust and Signet matches 50% of up to 6% of employee elective salary deferrals, subject to statutory limitations. Signet’s contributions to this plan in Fiscal 20162019 were $8.3$10.4 million (Fiscal 2015: $7.62018: $10.0 million; Fiscal 2014: $7.12017: $14.6 million). The Sterling Jewelers divisionCompany has also established two unfunded, non-qualified deferred compensation plans, one of which permits certain management and highly compensated employees to elect annually to defer all or a portion of their compensation and earn interest on the deferred amounts (“DCP”) and the other of which is frozen as to new participants and new deferrals. Beginning in April 2011, the DCP provided for a matching contribution based on each participant’s annual compensation deferral. The plan also permits employer contributions on a discretionary basis. In connection with these plans, Signet has invested in trust-owned life insurance policies and money market funds. The cost recognized in connection with the DCP in Fiscal 20162019 was $2.9$3.6 million (Fiscal 2015: $2.62018: $3.8 million; Fiscal 2014: $2.42017: $4.6 million).
The fair value of the assets in the two unfunded, non-qualified deferred compensation plans at January 30, 2016February 2, 2019 and January 31, 2015February 3, 2018 are required to be classified and disclosed. Although these plans are not required to be funded by the Company, the Company may elect to fund the plans. The value and classification of these assets are as follows:
Fair value measurements as of January 30, 2016 Fair value measurements as of January 31, 2015Fair value measurements as of February 2, 2019 Fair value measurements as of February 3, 2018
(in millions)Total Quoted prices in
active markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)		 Total Quoted prices in
active markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)		Total Quoted prices in
active markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)		 Total Quoted prices in
active markets for
identical assets
(Level 1)		 Significant
other
observable
inputs
(Level 2)
Assets:                      
Corporate-owned life insurance plans$8.3
 $—
 $8.3
 $9.0
 $—
 $9.0
$7.0
 $—
 $7.0
 $7.3
 $—
 $7.3
Money market funds25.1
 25.1
 —
 20.8
 20.8
 —
26.9
 26.9
 —
 30.2
 30.2
 —
Total assets$33.4
 $25.1
 $8.3
 $29.8
 $20.8
 $9.0
$33.9
 $26.9
 $7.0
 $37.5
 $30.2
 $7.3
19.22. Loans, overdrafts and long-term debt
(in millions)January 30, 2016 January 31, 2015
Current liabilities – loans and overdrafts:   
Revolving credit facility$—
 $—
Current portion of senior unsecured term loan35.0
 25.0
Current portion of capital lease obligations0.1
 0.9
Bank overdrafts24.4
 71.6
Total loans and overdrafts59.5
 97.5
    
Long-term debt:   
Senior unsecured notes due 2024, net of unamortized discount398.6
 398.5
Securitization facility600.0
 600.0
Senior unsecured term loan330.0
 365.0
Capital lease obligations0.1
 0.3
Total long-term debt$1,328.7
 $1,363.8
    
Total loans, overdrafts and long-term debt$1,388.2
 $1,461.3
(in millions)February 2, 2019 February 3, 2018
Debt:   
Senior unsecured notes due 2024, net of unamortized discount$399.0
 $398.9
Senior unsecured term loan294.9
 326.2
Bank overdrafts40.1
 14.2
Total debt$734.0
 $739.3
Less: Current portion of loans and overdrafts(78.8) (44.0)
Less: Unamortized capitalized debt issuance fees(5.6) (7.1)
Total long-term debt$649.6
 $688.2

Revolving credit facility and term loan (the “Credit Facility”)
The Company hasCompany’s Credit Facility contains a $400$700.0 million senior unsecured multi-currency multi-year revolving credit facility agreement that was entered into in May 2011. The agreement was subsequently amended in May 2014 to extend the maturity date to 2019 and expand the agreement to include a new $400$357.5 million term loan. The $400 million five-year senior unsecured term loan requiresfacility. The maturity date for the Credit Facility, including both individual facilities disclosed above, is July 2021.
Deferred financing fees associated with the revolving credit facility as of February 2, 2019 total $2.6 million with the unamortized balance recorded as an asset within the consolidated balance sheets. Accumulated amortization related to these capitalized fees as of February 2, 2019 was $1.6 million (February 3, 2018: $1.2 million). Amortization relating to these fees of $0.4 million was recorded as interest expense in the consolidated income statements for Fiscal 2019 and Fiscal 2018. As of February 2, 2019 and February 3, 2018, the Company had stand-by letters of credit outstanding of $14.6 million and $15.7 million, respectively, that reduce remaining borrowing availability. The revolving credit facility had a weighted average interest rate of 3.87% and 2.46% during Fiscal 2019 and Fiscal 2018, respectively.
Beginning in October 2016, the Company is required to make scheduled quarterly principal payments commencing on November 1, 2014 equal to the amounts per annum of the originaloutstanding principal amount of the term loanbalance as follows: 5%5.0% in the first year, 7.5% in the second year, 10%10.0% in the third year, 12.5% in the fourth year and 15%15.0% in the fifth year after the initial payment date, with the balance due on May 27, 2019. As of January 30, 2016 and January 31, 2015, $365.0 million and $390.0 million remained outstanding onin July 2021.
Deferred financing fees associated with the term loan respectively.facility as of February 2, 2019 total $6.2 million with the unamortized balance recorded as a direct deduction from the outstanding liability within the consolidated balance sheets. Accumulated amortization related to these capitalized fees as of February 2, 2019 was $4.3 million (February 3, 2018: $3.5 million). Amortization relating to these fees of $0.8 million was recorded as interest expense in the consolidated income statements for Fiscal 2019 and Fiscal 2018. Excluding the impact of the interest rate swapsswap designated as a cash flow hedgeshedge discussed in Note 14,19, the term loan had a weighted average interest rate of 1.48%3.66% and 1.52%2.42% during Fiscal 20162019 and Fiscal 2015,2018, respectively.

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Borrowings under the Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Company’s option, either (a) a base rate or (b) a LIBOR rate. The Credit Facility provides that the Company 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. In addition, the Credit Facility contains various customary representations and warranties, financial reporting requirements and other affirmative and negative covenants. As with the Company’s prior credit facility, theThe Company is 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 for the trailing twelve months.
Capitalized fees relating to the amended Credit Facility total $6.7 million. Accumulated amortization related to these capitalized fees as of January 30, 2016 was $2.2 million (January 31, 2015: $0.9 million). Amortization relating to these fees of $1.3 million and $0.9 million was recorded as interest expense in the consolidated income statements for Fiscal 2016 and Fiscal 2015, respectively. In addition, capitalized fees associated with the May 2011 credit facility agreement of $0.9 million were written-off in Fiscal 2015 upon execution of the amended credit agreement in May 2014.
At January 30, 2016 and January 31, 2015 there were no outstanding borrowings under the revolving credit facility. The Company had stand-by letters of credit on the revolving credit facility of $28.8 million and $25.4 million as of January 30, 2016 and January 31, 2015, respectively, that reduce remaining availability under the revolving credit facility. The revolving credit facility had a weighted average interest rate of 1.18% and 1.14% during Fiscal 2016 and Fiscal 2015, respectively.
On February 19, 2014, Signet entered into a definitive agreement to acquire Zale Corporation and concurrently received commitments for an $800 million 364-day unsecured bridge facility to finance the transaction. The bridge facility contained customary fees and incurred interest on any borrowings drawn on the facility. In May 2014, Signet executed its Zale Acquisition financing as described in Note 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 by the issuances of long-term debt listed below. Fees of $4.0 million relating to this unsecured bridge facility were incurred and capitalized during Fiscal 2015. The capitalized fees of $4.0 million were fully expensed in Fiscal 2015.
Senior unsecured notes due 2024
On May 19, 2014, Signet UK Finance plc (“Signet UK Finance”), a wholly owned subsidiary of the Company, issued $400 million aggregate principal amount of its 4.700%4.70% senior unsecured notes due in 2024 (the “Notes”). The Notes were issued under an effective registration statement previously filed with the SEC. Interest on the notes is payable semi-annually on June 15 and December 15 of each year, commencing December 15, 2014.year. The Notes are jointly and severally guaranteed, on a full and unconditional basis, by the Company and by certain of the Company’s wholly owned subsidiaries (such subsidiaries, the “Guarantors”). See Note 2527 for additional information. The Notes were issued pursuant to a base indenture among the Company, Signet UK Finance, the Guarantors and Deutsche Bank Trust Company Americas as trustee, with the indenture containing customary covenants and events of default provisions. The Company received proceeds from the offering of approximately $393.9 million, which were net of underwriting discounts, commissions and offering expenses.
CapitalizedDeferred financing fees relating to the senior unsecured notes total $7.0 million. Accumulated amortization related to these capitalized fees as of January 30, 2016 and January 31, 2015February 2, 2019 was $1.2$3.3 million and $0.5 million, respectively.(February 3, 2018: $2.6 million). The remaining unamortized capitalized fees are recorded as a direct deduction from the outstanding liability within the consolidated balance sheets. Amortization relating to these fees of $0.7 million and $0.5 million was recorded as interest expense in the consolidated income statements for Fiscal 20162019 and Fiscal 2015, respectively.2018.
Asset-backed securitization facility
On May 15, 2014, theThe Company sold an undivided interest in certain credit card receivables to Sterling Jewelers Receivables Master Note Trust (the “Issuer”), a wholly-owned Delaware statutory trust and a wholly-owned indirect subsidiary of the Company and issued two-year revolving asset-backed variable funding notes to unrelatednotes. As a condition of closing the credit transaction disclosed in Note 4, during the third party conduits pursuant to a master indenture dated asquarter of November 2, 2001, as supplemented byFiscal 2018, the Series 2014-A indenture supplement dated as of May 15, 2014 among the Issuer, Sterling Jewelers Inc. (“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 bear interest at a rate per annum equal to LIBOR plus an applicable margin. 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 January 30, 2016 and January 31, 2015, $600.0 million remained outstanding under the securitization facility with a weighted average interest rate of 1.61% and 1.50% during Fiscal 2016 and Fiscal 2015, respectively.
Capitalized fees relating toterminated the asset-backed securitization facility, total $2.8 million. Accumulated amortization relatedwhich had a principal balance outstanding of $600 million, in order to thesetransfer the receivables free and clear. Unamortized capitalized fees of $0.2 million associated with the asset-backed securitization facility were written-off during the third quarter of Fiscal 2018. Capitalized fees previously totaled $3.4 million, offset by accumulated amortization of $3.4 million as of January 30, 2016 and January 31, 2015 was $2.4 million and $0.9 million, respectively.February 3, 2018. Amortization relating to these fees of $1.5 million and $0.9$0.3 million was recorded as interest expense in the consolidated income statements for Fiscal 2016 and Fiscal 2015, respectively.

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During the second quarter of Fiscal 2016, Signet amended the note purchase agreement associated with the2018. The asset-backed securitization facility had a weighted average interest rate of 2.50% during Fiscal 2018.
Unsecured term loan (the “Bridge Loan”)
In conjunction with the acquisition of R2Net, Signet entered into a $350.0 million unsecured term loan to extendfinance the termtransaction. The Company executed and repaid the Bridge Loan during the 13 weeks ended October 28, 2017. The Bridge Loan contained customary fees in addition to interest incurred on borrowings. Fees incurred of $1.4 million and interest of $0.9 million relating to the facility by one year to May 2017 with all terms substantially the same as the original agreement.Bridge Loan were expensed during Fiscal 2018.

Other
As of January 30, 2016February 2, 2019 and January 31, 2015,February 3, 2018, the Company was in compliance with all debt covenants.
As of January 30, 2016February 2, 2019 and January 31, 2015,February 3, 2018, there were $24.4$40.1 million and $71.6$14.2 million in overdrafts, which represent issued and outstanding checks where no bank balances exist with the right of offset.
20.23. Accrued expenses and other current liabilities
(in millions)January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
Accrued compensation$162.3
 $156.2
$88.1
 $68.3
Other liabilities36.0
 37.9
28.3
 34.7
Other taxes45.1
 43.0
32.6
 36.3
Payroll taxes11.5
 11.6
10.8
 11.8
Accrued expenses243.4
 233.7
343.0
 296.9
Total accrued expenses and other current liabilities$498.3
 $482.4
$502.8
 $448.0
The sales returns reserve, included in accrued expenses, is as follows:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014
Sales return reserve, beginning of period$15.3
 $8.4
 $7.6
Net adjustment(1)
$(1.3) $6.9
 $0.8
Sales return reserve, end of period$14.0
 $15.3
 $8.4
(1)     Net adjustment relates to sales returns previously provided for, changes in estimate and the impact of foreign exchange translation.
Sterling Jewelers and Zale Jewelry segments provideNorth America segment provides 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 aA similar product lifetime guarantee is also provided 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:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Warranty reserve, beginning of period$44.9
 $19.1
 $18.5
$37.2
 $40.0
 $41.9
Warranty obligations acquired—
 28.4
 —
Warranty expense(1)
10.8
 7.4
 7.4
Utilized(2)
(13.8) (10.0) (6.8)
Warranty expense8.0
 8.5
 11.5
Utilized(1)
(12.0) (11.3) (13.4)
Warranty reserve, end of period$41.9
 $44.9
 $19.1
$33.2
 $37.2
 $40.0
(1) Includes impact of acquisition accounting adjustment related to warranty obligations acquired in the Zale Acquisition.
(2) Includes impact of foreign exchange translation.
(1)
Includes impact of foreign exchange translation.
(in millions)January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
Disclosed as:      
Current liabilities(1)
$12.3
 $17.2
$10.0
 $11.5
Non-current liabilities (see Note 22)29.6
 27.7
Non-current liabilities (see Note 24)23.2
 25.7
Total warranty reserve$41.9
 $44.9
$33.2
 $37.2
(1)
Included within accrued expenses above.
(1) Included within accrued expenses above.



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21. Deferred revenue
Deferred revenue is comprised primarily of ESP and voucher promotions and other as follows:
(in millions)January 30, 2016 January 31, 2015
Sterling Jewelers ESP deferred revenue$715.1
 $668.9
Zale ESP deferred revenue146.1
 120.3
Voucher promotions and other28.2
 22.7
Total deferred revenue$889.4
 $811.9
    
Disclosed as:   
Current liabilities$260.3
 $248.0
Non-current liabilities629.1
 563.9
Total deferred revenue$889.4
 $811.9
ESP deferred revenue
(in millions)Fiscal 2016 Fiscal 2015
Sterling Jewelers ESP deferred revenue, beginning of period$668.9
 $601.2
Plans sold281.2
 257.5
Revenue recognized(235.0) (189.8)
Sterling Jewelers ESP deferred revenue, end of period$715.1
 $668.9
(in millions)Fiscal 2016 Fiscal 2015
Zale ESP deferred revenue, beginning of period$120.3
 $—
Plans acquired—
 93.3
Plans sold138.6
 88.4
Revenue recognized(112.8) (61.4)
Zale ESP deferred revenue, end of period$146.1
 $120.3
22.24. Other liabilities—non-current
(in millions)January 30, 2016 January 31, 2015February 2, 2019 February 3, 2018
Straight-line rent$81.2
 $73.8
$95.1
 $91.2
Deferred compensation36.5
 28.4
30.4
 32.2
Warranty reserve29.6
 27.7
23.2
 25.7
Lease loss reserve3.4
 4.2
Other liabilities79.8
 96.1
75.4
 90.5
Total other liabilities$230.5
 $230.2
$224.1
 $239.6
A lease loss reserve is recorded within other liabilities for the net present value of the difference between the contractual rent obligations and sublease income expected from the properties.
(in millions)Fiscal 2016 Fiscal 2015
Lease loss reserve, beginning of period$4.2
 $5.8
Adjustments, net(0.2) (0.4)
Utilization(1)
(0.6) (1.2)
Lease loss reserve, end of period$3.4
 $4.2
(1) Includes the impact of foreign exchange translation.
The cash expenditures on the remaining lease loss reserve are expected to be paid over the various remaining lease terms through 2023.

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23.25. Share-based compensation
Signet operates several share-based compensation plans which can be categorized as the “Omnibus Plan,”Plans” and “Share Saving Plans” and the “Executive Plans.”
Impact on results
Share-based compensation expense and the associated tax benefits recognized in the consolidated income statements are as follows:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Share-based compensation expense$16.4
 $12.1
 $14.4
$16.5
 $16.1
 $8.0
Income tax benefit$(5.9) $(4.3) $(5.2)$(4.1) $(5.3) $(2.8)
UnrecognizedAs of February 2, 2019, unrecognized compensation cost related to unvested awards granted under share-based compensation plans is as follows:
Unrecognized Compensation Cost
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Unrecognized Compensation Cost Weighted average period
Omnibus Plan$19.0
 $10.5
 $14.4
$21.8
 2.0 years
Share Saving Plans4.4
 3.3
 2.9
1.8
 1.4 years
IIP grant—
 4.0
 —
Total$23.4
 $17.8
 $17.3
$23.6
 
Weighted average period of amortization1.9 years
 1.7 years
 1.8 years
As ofSince April 2012, the Company has opted to satisfy share option exercises and the vesting of restricted stock and restricted stock units (“RSUs”) under its plans with the issuance of treasury shares. Prior to April 2012, all share option exercises and award vestings were satisfied through the issuance of new shares.
Omnibus Plan
In June 2009,2018, Signet’s shareholders approved and Signet adopted the Signet Jewelers Limited 2018 Omnibus Incentive Plan (the “2018 Omnibus Plan”). Upon adoption of the 2018 Omnibus Plan, shares that were previously available under the Signet Jewelers Limited Omnibus Incentive Plan, which was approved in June 2009 (the “2009 Omnibus Plan”)(collectively, with the 2018 Omnibus Incentive Plan, the “Omnibus Plan”Plans”). are no longer available for future grant and were not transferred to the 2018 Omnibus Incentive Plan. Awards that may be granted under the 2018 Omnibus Plan include restricted stock, RSUs, stock options, and stock appreciation rights.rights and other stock-based awards. The Fiscal 2016,2019, Fiscal 20152018 and Fiscal 20142017 annual awards granted under the Omnibus PlanPlans have two elements, time-based restricted stock and performance-based RSUs. Additionally, during Fiscal 2019, time-based stock options were granted under the 2009 Plan and time-based RSUs were granted under the 2018 Plan. The time-based restricted stock has a three year cliffthree-year vesting period, subject to continued employment, and has the same voting rights and dividend rights as common shares (which are payable once the shares have vested). BeginningPerformance-based RSUs granted in Fiscal 2014, performance-based2019 include two performance measures, operating income (subject to certain adjustments) and return on invested capital (“ROIC”), although the ROIC measure is applicable only to senior executives. Performance-based RSUs granted in Fiscal 2018 and Fiscal 2017 include two performance measures, operating income and return on capital employed (“ROCE”), withalthough the ROCE measure is applicable only applicable to senior executives. For boththe performance measures, cumulative results achieved during the relevant three year performance period are compared to target metrics established in the underlying grant agreements. The relevant performance is measured overtime-based stock options vest on the third anniversary of the grant date, subject to continued employment and time-based RSUs generally have a three year vesting period, from the start of the fiscal year in which the award is granted.subject to continued employment. The 2018 Omnibus Plan permits the grant of awards to employees, non-employee directors and consultants for up to 7,000,0003,575,000 common shares.
In Fiscal 2015, the Company issued a grant of performance-based RSUs under the Omnibus Plan. This grant occurred as part of the Signet Integration Incentive Plan (“IIP”), a transaction-related special incentive program that was designed to facilitate the integration of the Zale Acquisition and to reward the anticipated efforts of key management personnel on both sides of the transaction. The RSUs vest, subject to continued employment, based upon gross synergies realized during the one year performance period compared to targeted gross synergy metrics established in the underlying grant agreement.
The significant assumptions utilized to estimate the weighted-average fair value of restricted stock and RSU awards granted under the Omnibus PlanPlans are as follows:
Omnibus PlanOmnibus Plan
Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Share price$136.37
 $104.57
 $67.39
$41.36
 $65.74
 $109.03
Risk free interest rate0.8% 0.8% 0.3%
Expected term2.9 years
 2.7 years
 2.8 years
2.8 years
 2.7 years
 2.8 years
Expected volatility25.4% 32.1% 41.7%
Dividend yield0.7% 0.9% 1.1%3.6% 2.1% 1.1%
Fair value$134.46
 $103.12
 $66.10
$38.57
 $63.42
 $106.48


The significant assumptions utilized to estimate the weighted-average fair value of stock options granted under the Omnibus Plans are as follows:

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Table of Contents
 Fiscal 2019
Share price$40.09
Exercise price$39.72
Risk free interest rate2.9%
Expected term6.5 years
Expected volatility37.6%
Dividend yield3.7%
Fair value$11.21

The risk-free interest rate is based on the US Treasury (for US-based award recipients) or UK Gilt (for UK-based award recipients) yield curve in effect at the grant date with remaining terms equal to the expected term of the awards. The expected term utilized is based on the contractual vesting period of the awards. The expected volatility is determined by calculating the historical volatility of Signet’s share price over the expected term of the award.
The Fiscal 20162019 activity for restricted stock and RSU awards granted under the Omnibus PlanPlans is as follows:
Omnibus PlansOmnibus Plans
(in millions, except per share amounts)No. of
shares		 Weighted
average
grant date
fair value		 Weighted
average
remaining
contractual
life		 
Intrinsic
value(1)
No. of
shares		 Weighted
average
grant date
fair value		 Weighted
average
remaining
contractual
life		 
Intrinsic
value(1)
Outstanding at January 31, 20150.7
 $70.69
 1.0 year $78.6
Fiscal 2016 activity:     
Outstanding at February 3, 20181.1
 $82.65
 1.5 years $55.0
Fiscal 2019 activity:     
Granted0.2
 134.46
  1.0
 38.57
  
Vested(0.2) 49.29
  (0.2) 84.10
  
Lapsed(0.1) 66.54
  (0.3) 102.97
  
Outstanding at January 30, 20160.6
 $101.88
 1.1 years $69.8
Outstanding at February 2, 20191.6
 $54.08
 1.5 years $39.9
(1) 
Intrinsic value for outstanding restricted stock and RSUs is based on the fair market value of Signet’s common stock on the last business day of the fiscal year.
The Fiscal 2019 activity for stock options granted under the Omnibus Plans is as follows:
 Omnibus Plans
(in millions, except per share amounts)No. of
shares		 Weighted
average
exercise
price		 Weighted
average
remaining
contractual
life		 
Intrinsic
value(1)
Outstanding at February 3, 2018—
 $—
 0.0 years $—
Fiscal 2019 activity:       
Granted0.8
 39.72
    
Exercised—
 —
    
Lapsed—
 —
    
Outstanding at February 2, 20190.8
 $39.72
 9.2 years $—
(1)    Intrinsic value for outstanding awards is based on the fair market value of Signet’s common stock on the last business day of the fiscal year.
The following table summarizes additional information about awards granted under the Omnibus Plan:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Total intrinsic value of awards vested$22.2
 $43.9
 $25.3
$6.8
 $7.1
 $13.6

Share Saving Plans
Signet has three share option savings plans (collectively, the “Share Saving Plans”) available to employees as follows:
Employee Share SavingsPurchase Plan, for US employees
Sharesave Plan, for UK employees
Irish Sub-Plan to the Sharesave Plan, for Republic of Ireland employees
The Share Saving Plans are compensatory and compensation expense is recognized over the requisite service period. In any 10 year period not more than 10% of the issued common shares of the Company from time to time may, in aggregate, be issued or be issuable pursuant to options granted under the Share Saving Plans or any other employees share plans adopted by Signet.
The Employee Share SavingsPurchase Plan as adopted in 2018 is a savings plan intended to qualify under US Section 423 of the US Internal Revenue Code and allows employees to purchase common shares at a discount of approximately 15%5% to the closing price of the New York Stock Exchange on the date of grant. Options grantedpurchase, which occurs on the last trading day of a twelve-month offering period. This plan is non-compensatory and no more than 1,250,000 shares may be issued under the Employee Share Savings Plan vest after 24 months and are generally only exercisable between 24 and 27 months of the grant date.Purchase Plan.
The Sharesave Plan and Irish Sharesave PlanSub-Plan as adopted in 2018 allow eligible employees to purchasebe granted, and to exercise, options over common shares at a discount of approximately 20%15% below a determined market price based on the LondonNew York Stock Exchange.Exchange, using savings accumulated under savings contract entered into in accordance with the relevant plan rules. The market price is generally determined as one of: (i) the average middle market price for the three trading days immediately prior to the invitation date, ordate; (ii) the market price on the day immediately preceding the participation dateinvitation date; or other(iii) the market price at such other time as may be agreed in writing, whichever is the higher value.wither Majesty’s Revenue and Customs . Options granted under the Sharesave Plan and the Irish Sharesave PlanSub-Plan vest after 36 months and are generally only exercisable between 36 and 42 months from commencement of the related savings contract. These plans are compensatory and compensation expense is recognized over the requisite service period, and no more than 1,000,000 shares may be allocated under these plans.
The significant assumptions utilized to estimate the weighted-average fair value of awards granted under the Share Saving Plans are as follows:

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Share Saving PlansShare Saving Plans
Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Share price$139.18
 $114.93
 $72.65
$58.50
 $59.84
 $84.37
Exercise price$114.67
 $96.67
 $59.75
$57.97
 $52.00
 $67.24
Risk free interest rate0.7% 0.9% 0.7%3.0% 1.2% 0.6%
Expected term2.6 years
 2.8 years
 2.7 years
3.7 years
 2.7 years
 2.7 years
Expected volatility27.1% 27.6% 40.2%44.4% 37.0% 31.3%
Dividend yield0.8% 0.8% 1.1%2.6% 2.7% 1.7%
Fair value$34.76
 $28.76
 $22.89
$18.07
 $15.22
 $22.82
The risk-free interest rate is based on the US Treasury (for US-based award recipients) or UK Gilt (for UK-based award recipients) yield curve in effect at the grant date with remaining terms equal to the expected term of the awards. The expected term utilized is based on the contractual vesting period of the awards, inclusive of any exercise period available to award recipients after vesting. The expected volatility is determined by calculating the historical volatility of Signet’s share price over the expected term of the awards.
The Fiscal 20162019 activity for awards granted under the Share Saving Plans is as follows:
 Share Saving Plans
(in millions, except per share amounts)No. of
shares		 Weighted
average
exercise
price		 Weighted
average
remaining
contractual
life		 
Intrinsic
value(1)
Outstanding at January 31, 20150.2
 $69.05
 1.9 years $11.0
Fiscal 2016 activity:       
Granted0.1
 114.67
    
Exercised(0.1) 51.17
    
Lapsed—
 81.83
    
Outstanding at January 30, 20160.2
 $94.07
 1.9 years $4.9
Exercisable at January 31, 2015—
 $—
   $—
Exercisable at January 30, 2016—
 $—
   $—
 Share Saving Plans
(in millions, except per share amounts)No. of
shares		 Weighted
average
exercise
price		 Weighted
average
remaining
contractual
life		 
Intrinsic
value(1)
Outstanding at February 3, 20180.3
 $62.80
 1.8 years $—
Fiscal 2019 activity:       
Granted—
 57.97
    
Exercised—
 57.80
    
Lapsed(0.1) 65.42
    
Outstanding at February 2, 20190.2
 $54.80
 1.5 years $—
Exercisable at February 3, 2018—
 $—
   $—
Exercisable at February 2, 2019—
 $—
   $—
(1)    Intrinsic value for outstanding awards is based on the fair market value of Signet’s common stock on the last business day of the fiscal year.

The following table summarizes additional information about awards granted under the Share Saving Plans:
(in millions, except per share amounts)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Weighted average grant date fair value per share of awards granted$34.76
 $28.76
 $22.89
$18.07
 $15.22
 $22.82
Total intrinsic value of options exercised$6.4
 $11.0
 $4.9
$—
 $0.1
 $1.5
Cash received from share options exercised$4.0
 $4.3
 $2.9
$—
 $0.3
 $1.4
Executive Plans
Signet operates three 2003 executive share plans (the “2003 Plans”), together referred to as the “Executive Plans.” Option awards under the Executive Plans were generally granted with an exercise price equal to the market price of the Company’s shares at the date of grant. No awards have been granted under the Executive Plans since the adoption of the Omnibus Plan in Fiscal 2010. During Fiscal 2014, the plan periods for the Executive Plans expired. As a result, no additional awards may be granted under the Executive Plans.
The Fiscal 2016 activity for awards granted under the Executive Plans is as follows:

121

 Executive Plans
(in millions, except per share amounts)No. of
shares		 Weighted
average
exercise
price		 Weighted
average
remaining
contractual
life		 
Intrinsic
value(1)
Outstanding at January 31, 20150.1
 $35.56
 2.7 years $4.7
Fiscal 2016 activity:       
Granted—
 —
    
Exercised(0.1) $30.60
    
Lapsed—
 49.80
    
Outstanding at January 30, 2016—
 $43.50
 1.5 years $1.5
Exercisable at January 31, 20150.1
 $35.56
   $4.7
Exercisable at January 30, 2016—
 $43.50
   $1.5
(1)    Intrinsic value for outstanding awards is based on the fair market value of Signet’s common stock on the last business day of the fiscal year.
The following table summarizes additional information about awards granted under the Executive Plans:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014
Total intrinsic value of options exercised$3.4
 $2.9
 $4.8
Cash received from share options exercised$1.0
 $1.8
 $6.3
24.26. Commitments and contingencies
Operating leases
Signet occupies certain properties and holds machinery and vehicles under operating leases. Rental expense for operating leases is as follows:
(in millions)Fiscal 2016 Fiscal 2015 Fiscal 2014Fiscal 2019 Fiscal 2018 Fiscal 2017
Minimum rentals$525.7
 $462.9
 $323.7
$510.3
 $528.1
 $524.4
Contingent rent15.3
 14.0
 11.1
8.1
 8.5
 10.2
Sublease income(0.7) (0.8) (0.9)(1.1) (0.5) (0.6)
Total$540.3
 $476.1
 $333.9
$517.3
 $536.1
 $534.0
The future minimum operating lease payments for operating leases having initial or non-cancelable terms in excess of one year are as follows:
(in millions) 
Fiscal 2017$463.6
Fiscal 2018391.7
Fiscal 2019323.7
Fiscal 2020288.2
Fiscal 2021260.9
Thereafter1,017.5
Total$2,745.6
Signet has entered into sale and leaseback transactions of certain properties. Under these transactions it continues to occupy the space in the normal course of business. Gains on the transactions are deferred and recognized as a reduction of rent expense over the life of the operating lease.
(in millions) 
Fiscal 2020$450.4
Fiscal 2021408.4
Fiscal 2022361.1
Fiscal 2023312.0
Fiscal 2024247.4
Thereafter755.2
Total$2,534.5
Contingent property liabilities
Approximately 31 UK18 property leases had been assigned in the UK by Signet at January 30, 2016February 2, 2019 (and remained unexpired and occupied by assignees at that date) and approximately 175 additional properties were sub-leased in the US and UK at that date. Should the assignees or sub-tenants fail to fulfill any obligations in respect of those leases or any other leases which have at any other time been assigned or sub-leased, Signet or one of its UK subsidiaries may be liable for those defaults. The number of such claims arising to date has been small, and the liability, which is charged to the income statement as it arises, has not been material.

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Capital commitments
At January 30, 2016February 2, 2019 Signet has committed to spend $28.9$52.5 million (January 31, 2015: $42.9(February 3, 2018: $46.9 million) related to capital commitments. These commitments principally relate to the expansion and renovation of stores.stores and capital investments in IT.
Legal proceedings
Employment practices
As previously reported, in March 2008, a group of private plaintiffs (the “Claimants”) filed a class action lawsuit for an unspecified amount against SJI, a subsidiary of Signet, in the US District Court for the Southern District of New York alleging that US store-level employment practices are discriminatory as to compensation and promotional activities with respect to gender. In June 2008, the District Court referred the matter to private arbitration where the Claimants sought to proceed on a class-wide basis. The Claimants filed a motion for class certification and SJI opposed the motion. A hearing on the class certification motion was held in late February 2014.  On February 2, 2015, the arbitrator issued a Class Determination Award in which she certified for a class-wide hearing Claimants’ disparate impact declaratory and injunctive relief class claim under Title VII, with a class period of July 22, 2004 through date of trial for the Claimants’ compensation claims and December 7, 2004 through date of trial for Claimants’ promotion claims. The arbitrator otherwise denied Claimants’ motion to certify a disparate treatment class alleged under Title VII, denied a disparate impact monetary damages class alleged under Title VII, and denied an opt-out monetary damages class under the Equal Pay Act. On February 9, 2015, Claimants filed an Emergency Motion To Restrict Communications With The Certified Class And For Corrective Notice. SJI filed its opposition to Claimants’ emergency motion on February 17, 2015, and a hearing was held on February

18, 2015. Claimants'Claimants’ motion was granted in part and denied in part in an order issued on March 16, 2015. Claimants filed a Motion for Reconsideration Regarding Title VII Claims for Disparate Treatment in Compensation on February 11, 2015.2015, which SJI filed its opposition to Claimants’ Motion for Reconsideration on March 4, 2015. Claimants’ reply was filed on March 16, 2015. Claimants’ Motion was denied inopposed. April 27, 2015, the arbitrator issued an order issued April 27, 2015. Claimants fileddenying the Claimants’ Motion for Conditional Certification of Claimants’ Equal Pay Act Claims and Authorization of Notice on March 6, 2015. SJI’s opposition was filed on May 1, 2015. Claimants filed their reply on June 5, 2015. Claimants’ Motion was granted and the Arbitrator issued an Equal Pay Act Collective Action Conditional Certification Award and companion Order Regarding Claimants’ Motion For Tolling Of EPA Limitations Period on February 29, 2016. SJI’s deadline to move the US District Court for the Southern District of New York to vacate the Conditional Certification Award and Order Regarding Claimants’ Motion For Tolling Of EPA Limitations Period is March 30, 2016.Motion. SJI filed with the US District Court for the Southern District of New York a Motion to Vacate the Arbitrator’s Class Certification Award on March 3, 2015. Claimants’ opposition was filed on March 23, 2015, and SJI’s reply was filed on April 3, 2015. SJI’s motion was heard on May 4, 2015.which Claimants opposed. On November 16, 2015, the US District Court for the Southern District of New York granted SJI’s Motion to Vacate the Arbitrator’s Class Certification Award in part and denied it in part. On December 3, 2015, SJI filed with the United States Court of Appeals for the Second Circuit SJI’s Notice of Appeal of the District Court’s November 16, 2015 Opinion and Order. On November 25, 2015, SJI filed a Motion to Stay the AAA Proceedings while SJI appeals the decision of the US District Court for the Southern District of New York to the United States Court of Appeals for the Second Circuit.Circuit, which Claimants opposed. The arbitrator issued an order denying SJI’s Motion was deniedto Stay on February 22, 2016. On December 9, 2015, SJI docketed2016.SJI filed its Notice of AppealBrief and Special Appendix with the United States Court of Appeals forSecond Circuit on March 16, 2016. The matter was fully briefed and oral argument was heard by the Second Circuit. SJI’s Brief and Appendix of Appellant was filed with the United StatesU.S. Court of Appeals for the Second Circuit on March 17,November 2, 2016. In the AAA proceeding, onOn April 6, 2015, Claimants filed in the AAA Claimants’ Motion for Clarification or in the Alternative Motion for Stay of the Effect of the Class Certification Award as to the Individual Intentional Discrimination Claims.Claims, which SJI opposed. On June 15, 2015, the arbitrator granted the Claimants’ motion. On March 6, 2017, Claimants filed Claimants’ Motion for Conditional Certification of Claimants’ Equal Pay Act Claims and Authorization of Notice, which SJI opposed The arbitrator heard oral argument on Claimants’ Motion on December 18, 2015 and, on February 29, 2016, issued an Equal Pay Act Collective Action Conditional Certification Award and Order Re Claimants’ Motion For Tolling Of EPA Limitations Period, conditionally certifying Claimants’ Equal Pay Act claims as a collective action, and tolling the statute of limitations on EPA claims to October 16, 2003 to ninety days after notice issues to the putative members of the collective action. SJI filed in the AAA a Motion To Stay Arbitration Pending The District Court’s Consideration Of Respondent’s Motion To Vacate Arbitrator’s Equal Pay Act Collective Action Conditional Certification Award And Order Re Claimants’ Motion For Tolling Of EPA Limitations Period on March 10, 2016. SJI filed in the AAA a Renewed Motion To Stay Arbitration Pending The District Court’s Resolution Of Sterling’s Motion To Vacate Arbitrator’s Equal Pay Act Collective Action Conditional Certification Award And Order Re Claimants’ Motion For Tolling Of EPA Limitations Period on March 31, 2016, which Claimants opposed. On April 5, 2016, the arbitrator denied SJI’s Motion. On March 23, 2016 SJI filed with the US District Court for the Southern District of New York a Motion To Vacate The Arbitrator’s Equal Pay Act Collective Action Conditional Certification Award And Order Re Claimants’ Motion For Tolling Of EPA Limitations Period, which Claimants opposed. SJI’s Motion was denied on May 22, 2016. On May 31, 2016, SJI filed a Notice Of Appeal of Judge Rakoff’s opinion and order to the Second Circuit Court of Appeals, which Claimant’s opposed. On June 1, 2017, the Second Circuit Court of Appeals dismissed SJI’s appeal for lack of appellate jurisdiction. Claimants filed a Motion For Amended Class Determination Award on November 18, 2015, and on March 31, 2016 the arbitrator entered an order amending the Title VII class certification award to preclude class members from requesting exclusion from the injunctive and declaratory relief class certified in the arbitration. The arbitrator issued a Bifurcated Case Management Plan on April 5, 2016, and ordered into effect the parties’ Stipulation Regarding Notice Of Equal Pay Act Collective Action And Related Notice Administrative Procedures on April 7, 2016. SJI filed in the AAA a Motion For Protective Order on May 2, 2016, which Claimants opposed. The matter was fully briefed and oral argument was heard on July 22, 2016. The motion was granted in part on January 27, 2017. Notice to EPA collective action members was issued on May 3, 2016, and the opt-in period for these notice recipients closed on August 1, 2016. Approximately, 10,314 current and former employees submitted consent forms to opt in to the collective action; however, some have withdrawn their consents. The number of valid consents is disputed and yet to be determined. SJI believes the number of valid consents to be approximately 9,124. On July 24, 2017, the United States Court of Appeals for the Second Circuit issued its unanimous Summary Order that held that the absent class members “never consented” to the Arbitrator determining the permissibility of class arbitration under the agreements, and remanded the matter to the District Court to determine whether the Arbitrator exceeded her authority by certifying the Title VII class that contained absent class members who had not opted in the litigation. On August 7, 2017, SJI filed its opposition on May 12, 2015. Claimants’ reply was filed on May 22, 2015. Claimants’ motion was granted on June 15, 2015. On February 24, 2016, the Arbitrator also issued an Order granting Claimants’ motion for a stay ofRenewed Motion to Vacate the Class Determination Award orrelative to absent class members with the District Court. The matter was fully briefed and an oral argument was heard on October 16, 2017. On January 15, 2018, District Court granted SJI’s Motion finding that the Arbitrator exceeded her authority by binding non-parties (absent class members) to the Title VII claim. The District Court further held that the RESOLVE Agreement does not permit class action procedures, thereby, reducing the Claimants in the Title VII matter from 70,000 to 254. Claimants dispute that the number of claimants in the Title VII is 254. On January 18, 2018, the Claimants filed a Notice of Appeal with the United States Court of Appeals for equitable tollingthe Second Circuit. The appeal was fully briefed and oral argument before the Second Circuit occurred on May 7, 2018. SJI currently awaits the Second Circuit’s decision on this appeal. On November 10, 2017, SJI filed in the arbitration motions for summary judgment, and for decertification, of Claimants’ Equal Pay Act and Title VII promotions claims. On January 30, 2018, oral argument on SJI’s motions was heard. On January 26, 2018, SJI filed a Motion to Vacate The Equal Pay Act Collective Action Award And Tolling Order asserting that the Arbitrator exceeded her authority by conditionally certifying the Equal Pay Act claim and allowing the absent claimants to opt-in the litigation. On March 12, 2018, the Arbitrator denied SJI’s Motion to Vacate The Equal Pay Act Collective Action Award and Tolling Order. SJI still has a pending motion seeking decertification of the statuteEPA Collective Action before the Arbitrator. On March 19, 2018, the Arbitrator issued an Order partially granting SJI’s Motion to Amend the Arbitrator’s November 2, 2017, Bifurcated Seventh Amended Case Management Plan resulting in a continuance of limitations with respectthe May 14, 2018 trial date. A new trial date has not been set.
SJI denies the allegations of the Claimants and has been defending the case vigorously. At this point, no outcome or possible loss or range of losses, if any, arising from the litigation is able to the putative class of Claimants alleging disparate treatment.be estimated.

Also, as previously reported, on September 23, 2008, the US Equal Employment Opportunity Commission (“EEOC”) filed a lawsuit against SJI in the US District Court for the Western District of New York. This suit was settled on May 5, 2017, as further described below. The EEOC’s lawsuit allegesalleged that SJI engaged in intentional and disparate impact gender discrimination with respect to pay and promotions of female retail store employees from January 1, 2003 to the present. The EEOC assertsasserted claims for unspecified monetary relief and non-monetary relief against the Company on behalf of a class of female employees subjected to these alleged practices. Non-expert fact discovery closed in mid-May 2013. In September 2013, SJI made a motion for partial summary judgment on procedural grounds, which was referred to a Magistrate Judge. The Magistrate Judge heard oral arguments on the summary judgment motion in December 2013. On January 2, 2014, the Magistrate Judge issued his Report, Recommendation and Order, recommending that the Court grant SJI’s motion for partial summary judgment and dismiss the EEOC’s claims in their entirety. The EEOC filed its objections to the Magistrate Judge’s ruling and SJI filed its response thereto. The District Court Judge heard oral arguments on the EEOC’s objections to the Magistrate Judge’s ruling on March 7, 2014 and on March 11, 2014 entered an order dismissing the action with prejudice. On May 12, 2014, the EEOC filed its Notice of Appeal of the District Court Judge’s dismissal of the action to United States Court of Appeals for the Second Circuit. The parties fully briefed the appeal and oral argument occurred on May 5, 2015. On September 9, 2015, the United States Court of Appeals for the Second Circuit issued a decision vacating the District Court’s order and remanding the case back to the District Court for further proceedings. SJI filed a Petition for Panel Rehearing and En Banc Review with the United States Court of Appeals for the Second Circuit, which was denied on December 1, 2015. On December 4, 2015, SJI filed a motion to stayin the MandateUnited States Court of Appeals for the Second Circuit pending SJI’s filing ofa Motion Of Appellee Sterling Jewelers Inc. For Stay Of Mandate Pending Petition For Writ Of Certiorari. The Motion was granted by the Second Circuit on December 10, 2015. SJI filed a Petition forFor Writ ofOf Certiorari with the Supreme Court of the United States. On December 5, 2015, the District Court referred the case to Magistrate Judge Michael J. Roehmer for pretrial and to hear and report on dispositive motion proceedings. On February 5, 2016, SJI filed within the Supreme Court of the United States an application for extension to file its Petition for Certiorari. On February 9, 2016, the application was granted. SJI’s Petition for Certiorari is due for filing on April 29, 2016.
2016, which was denied. The case was remanded to the Western District of New York and on November 2, 2016, the Court issued a case scheduling order. On January 25, 2017, the parties filed a joint motion to extend case scheduling order deadlines. The motion was granted on January 27, 2017. On May 5, 2017 the U.S. District Court for the Western District of New York approved and entered the Consent Decree jointly proposed by the EEOC and SJI, denies the allegationsresolving all of the ClaimantsEEOC’s claims against SJI in this litigation for various injunctive relief including but not limited to the appointment of an employment practices expert to review specific policies and EEOC and has been defending these cases vigorously. At this point, no outcome or possible loss or range of losses, if any, arising from the litigation is ablepractices, a compliance officer to be estimated.

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Prior to the Acquisition, Zale Corporation wasConsent Decree is three years and three months, expiring on August 4, 2020. 
Shareholder Actions
In August 2016, two alleged Company shareholders each filed a defendant in three purportedputative class action lawsuits, Tessa Hodge v. Zale Delaware, Inc., d/b/a Piercing Pagoda which was filed on April 23, 2013complaint in the SuperiorUnited States District Court offor 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;New York against the Company and Melissa Roberts v. Zale Delaware, Inc. which wasits then-current Chief Executive Officer and current Chief Financial Officer (Nos. 16-cv-6728 and 16-cv-6861, the “S.D.N.Y. cases”). On September 16, 2016, the Court consolidated the S.D.N.Y. cases under case number 16-cv-6728. On April 3, 2017, the plaintiffs 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 soughta second amended complaint, purportedly on behalf of persons that acquired the Company’s securities on or between August 29, 2013, and February 27, 2017, naming as defendants the Company, its then-current and former Chief Executive Officers, and its current and former Piercing PagodaChief Financial Officers. The second amended complaint alleged that the defendants violated Sections 10(b) and Zale Corporation’s employees.20(a) of the Securities Exchange Act of 1934 by, among other things, misrepresenting the Company’s business and earnings by (i) failing to disclose that the Company was allegedly having issues ensuring the safety of customers’ jewelry while in the Company’s custody for repairs, which allegedly damaged customer confidence; (ii) making misleading statements about the Company’s credit portfolio; and (iii) failing to disclose reports of sexual harassment allegations that were raised by claimants in an ongoing pay and promotion gender discrimination class arbitration (the “Arbitration”). The lawsuits seek to recover damages, penalties and attorneys’ feessecond amended complaint alleged that the Company’s share price was artificially inflated as a result of the alleged violations. Without admitting or conceding any liability,misrepresentations and sought unspecified compensatory damages and costs and expenses, including attorneys’ and experts’ fees.
In March 2017, two other alleged Company shareholders each filed a putative class action complaint in the United States District Court for the Northern District of Texas against the Company reachedand its then-current and former Chief Executive Officers (Nos. 17-cv-875 and 17-cv-923, the “N.D. Tex. cases”). Those complaints were nearly identical to each other and alleged that the defendants’ statements concerning the Arbitration violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The N.D. Tex. cases were subsequently transferred to the Southern District of New York and consolidated with the S.D.N.Y. cases (the “Consolidated Action”). On July 27, 2017, the Court appointed a lead plaintiff and lead plaintiff’s counsel in the Consolidated Action. On August 3, 2017, the Court ordered the lead plaintiff in the Consolidated Action to file a third amended complaint by September 29, 2017. On September 29, 2017, the lead plaintiff filed a third amended complaint that covered a putative class period of August 29, 2013, through May 24, 2017, and that asserted substantially similar claims to the second amended complaint, except that it omitted the claim based on defendants’ alleged misstatements concerning the security of customers’ jewelry while in the Company’s custody for repairs. The defendants moved to dismiss the third amended complaint on December 1, 2017. On December 4, 2017, the Court entered an agreementorder permitting the lead plaintiff to settleamend its complaint as of right by December 22, 2017, and providing that the Hodgelead plaintiff would not be given any further opportunity to amend its complaint to address the issues raised in the defendants’ motion to dismiss.

On December 15, 2017, Nebil Aydin filed a putative class action complaint in the United States District Court for the Southern District of New York against the Company and Roberts mattersits current Chief Executive Officer and Chief Financial Officer (No. 17-cv-9853). The Aydin complaint alleged that the defendants made misleading statements regarding the Company’s credit portfolio between August 24, 2017, and November 21, 2017, in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and sought unspecified compensatory damages and costs and expenses, including attorneys’ and experts’ fees. On January 7, 2018, the Aydin case was consolidated into the Consolidated Action.
On December 22, 2017, the lead plaintiff in the Consolidated Action filed its fourth amended complaint, which asserted substantially the same claims as its third amended complaint for an immaterial amount. Final approvalexpanded class period of August 28, 2013, through December 1, 2017. On January 26, 2017, the settlementdefendants moved to dismiss the fourth amended complaint. This motion was granted onfully briefed as of March 9, 2015 and the settlement was implemented.2018.
On April 1, 2015, Plaintiff filed Plaintiff’s Notice of Motion and Motion for Class CertificationMarch 20, 2018, the Court granted the lead plaintiff leave to file a fifth amended complaint. On March 22, 2018, the lead plaintiff in the Naomi Tapia v. Zale Corporation litigation.Consolidated Action filed its fifth amended complaint which asserts substantially the same claims as its fourth amended complaint for an expanded class period of August 29, 2013, through March 13, 2018. The prior motion to dismiss was denied as moot. On May 22, 2015,March 30, 2018, the Company filed Defendants’ Oppositiondefendants moved 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 parties await a ruling ondismiss the Motion for Class Certification. The Company intendsfifth amended complaint.
On November 26, 2018, the Court denied the defendants’ motion to vigorously defend its positiondismiss. Discovery is ongoing 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.action.
Litigation Challenging the Company’s Acquisition of Zale Corporation
Five putative stockholder class action lawsuits challenging the Company’s acquisition of Zale CorporationOn March 27, 2019, two actions were filed in the U.S. District Court for the Southern District of Chancery ofNew York by investment funds that allegedly purchased the State of Delaware: BreyerCompany’s stock. The actions are captioned Pennant Master Fund LP et al. v. Zale Corp.Signet Jewelers et al., C.A.Civ. No. 9388-VCP, filed February 24, 2014; Stein19-2757, and The Alger Funds et al. v. Zale Corp.Signet Jewelers et al., C.A.Civ. 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;19-2758, and Pill v. Zale Corp. et al., C.A. No. 9440-VCP, filed March 12, 2014 (collectively, the “Actions”). Each of these Actions was brought by a purported former holder of Zale Corporation common stock, both individually and on behalf of a putative class of former Zale Corporation stockholders.
The Court of Chancery consolidated the Actions on March 25, 2014 (the “Consolidated Action”), and the plaintiffs filed a consolidated amended complaint on April 23, 2014, which named as defendants Zale Corporation, the members of the board of directors of Zale Corporation,name the Company and a merger-related subsidiaryits current and former Chief Executive Officers and Chief Financial Officers as defendants. Both complaints allege violations of Sections 10(b), 18, and 20(a) of the Company,Securities Exchange Act of 1934, and common law fraud, based on alleged misstatements and omissions concerning the Company’s credit portfolio. These claims are substantially the same as the credit-related claims in the Consolidated Action, except that the Zale Corporation directors breached their fiduciary dutiesPennant action alleges misstatements for the period August 29, 2013, to Zale Corporation stockholders in connection with their consideration and approval of the merger agreement by failing to maximize stockholder value and agreeing to an inadequate merger price and to deal terms that deter higher bids. That complaint also alleged that the Zale Corporation directors issued a materially misleading and incomplete proxy statement regarding the merger and that Zale CorporationJune 2, 2016, and the Company aided and abettedAlger Funds action alleges misstatements for the Zale Corporation directors’ breaches of fiduciary duty. On May 23, 2014, the Court of Chancery denied plaintiffs’ motion for a preliminary injunctionperiod August 29, 2013, to prevent the consummation of the merger.August 25, 2016.
Derivative Action
On September 30, 2014, the plaintiffs1, 2017, Josanne Aungst filed an amended complaint asserting substantially similar claims and allegations as the prior complaint. The amended complaint added Zale Corporation’s former financial advisor, Bank of America Merrill Lynch, as a defendant for allegedly aiding and abetting the Zale Corporation directors’ breaches of fiduciary duty. The amended complaint no longer named as defendants Zale Corporation or the Company’s merger-related subsidiary. The amended complaint sought, among other things, rescission of the merger or damages, as well as attorneys’ and experts’ fees. The defendant's motion to dismiss was heard by the Court of Chancery on May 20, 2015. On October 1, 2015, the Court dismissed the claims against the Zale Corporation directors and the Company. On October 29, 2015, the Court dismissed the claims against Bank of America Merrill Lynch. On November 30, 2015, plaintiffs filed an appeal of the October 1, 2015 and October 29, 2015 decisions of the Court of Chancery, which is pending with the Supreme Court of the State of Delaware.
At this point, no outcome or possible loss or range of losses, if any, arising from the litigation is able to be estimated.
Appraisal Litigation
Following the consummation of the acquisition of Zale Corporation by the Company, former Zale Corporation stockholders sought appraisal pursuant to 8 Del. C. § 262putative shareholder derivative action entitled Aungst v. Light, et al., No. CV-2017-3665, in the Court of ChanceryCommon Pleas for Summit County Ohio. The complaint in this action, which purports to have been brought by Ms. Aungst on behalf of the StateCompany, names certain current and former directors and officers of Delaware,the Company as defendants and alleges claims for breach of fiduciary duty, abuse of control, and gross mismanagement.  The complaint challenges certain public disclosures and conduct relating to the allegations that were raised by the claimants in consolidated proceedings captioned Merion Capital L.P. et al. v. Zale Corp., C.A. No. 9731-VCP,TIG Arbitrage Opportunity Fund I, L.P. v. Zale Corp., C.A. No. 10070-VCP,the Arbitration. The complaint also alleges that the Company’s share price was artificially inflated as a result of alleged misrepresentations and omissions. The Gabelli ABC Fund et al. v. Zale Corp., C.A. No. 10162-VCP(complaint seeks money damages on behalf of the “Appraisal Action”).Company, changes to the Company’s corporate governance, and other equitable relief, as well as plaintiff’s legal fees and costs. The total numberdefendants’ motion to dismiss the complaint was granted on February 28, 2019. On March 26, 2019, plaintiff filed a notice of sharesappeal.
The Company believes that the claims brought in these shareholder actions are without merit and cannot estimate a range of Zale Corporation’s common stock for which appraisal had been demanded was approximately 8.8 million.potential liability, if any, at this time.
Regulatory Matters
On August 12, 2015,January 16, 2019, Sterling Jewelers Inc., (“Sterling”), a wholly owned subsidiary of Company, without admitting or denying any of the parties in the Appraisal Actionallegations, findings of fact, or conclusions of law (except to establish jurisdiction), entered into a settlement agreementConsent Order with the Consumer Financial Protection Bureau (the “Settlement Agreement”"CFPB") and New York Attorney General (the “NY AG”) settling a previously disclosed investigation of certain in-store credit practices, promotions, and payment protection products (the "Consent Order").  The terms ofAmong other things, the Settlement Agreement provided for the paymentConsent Order requires Sterling to petitioners in the Appraisal Action of $21.00 per share of Zale Corporation common stock (the consideration offered in the Company’s acquisition of Zale Corporation) plus a total sum of $34.2 million to be allocated among petitioners, which proceeds are inclusive of and in satisfaction of any statutory interest that may have accrued on petitioners’ shares pursuant to 8 Del. C. § 262. On August 12, 2015, the Court of Chancery dismissed the Appraisal Action pursuant(i) submit an accurate written compliance report to the Settlement Agreement asCFPB; (ii) pay an $10,000,000 civil money penalty to all former Zale Corporation stockholders who have submittedthe CFPB;  (iii) pay a $1,000,000 civil money penalty to the NY AG: and not withdrawn a demand(iv) maintain policies and procedures related to the issuance of credit cards, including with respect to credit applications, credit financing terms and conditions, and any related add-on products that are reasonably designed to ensure consumer knowledge or consent.  All payments required by the Consent Order were made in February 2019.  We continue to work to ensure compliance with the Consent Order, which may result in us incurring additional costs. See Item 1A for appraisal. The Company recorded an accrual forrisks relating to the Settlement Agreement of $34.2 million duringCFPB and our continued compliance with the second quarter of Fiscal 2016. This amount was paid to petitioners during the third quarter of Fiscal 2016.
In the ordinary course of business, Signet may be subject, from time to time, to various other proceedings, lawsuits, disputes or claims incidental to its business, which the Company believes are not significant to Signet’s consolidated financial position, results of operations or cash flows.Consent Order.


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25.27. Condensed consolidating financial information
The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” We and certain of our subsidiaries have guaranteed the obligations under certain debt securities that have been issued by Signet UK Finance plc. The following presents the condensed consolidating financial information for: (i) the indirect Parent Company (Signet Jewelers Limited); (ii) the Issuer of the guaranteed obligations (Signet UK Finance plc); (iii) the Guarantor subsidiaries, on a combined basis; (iv) the non-guarantor subsidiaries, on a combined basis; (v) consolidating eliminations; and (vi) Signet Jewelers Limited and Subsidiaries on a consolidated basis. Each Guarantor subsidiary is 100% owned by the Parent Company at the date of each balance sheet presented. The Guarantor subsidiaries, along with Signet Jewelers Limited, will fully and unconditionally guarantee the obligations of Signet UK Finance plc under any such debt securities. Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements.
The accompanying condensed consolidating financial information has been presented on the equity method of accounting for all periods presented. Under this method, investments in subsidiaries are recorded at cost and adjusted for the subsidiaries’ cumulative results of operations, capital contributions and distributions, and other changes in equity. Elimination entries include consolidating and eliminating entries for investments in subsidiaries, and intra-entity activity and balances.

125

Condensed ConsolidatedConsolidating Income Statement
For the 52 week period ended January 30, 2016week period ended February 2, 2019
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations ConsolidatedSignet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Sales$—
 $—
 $6,444.8
 $105.4
 $—
 $6,550.2
$—
 $—
 $5,722.8
 $524.3
 $—
 $6,247.1
Cost of sales—
 —
 (4,089.3) (20.5) —
 (4,109.8)—
 —
 (3,755.5) (268.6) —
 (4,024.1)
Restructuring charges - cost of sales—
 —
 (56.5) (5.7) —
 (62.2)
Gross margin—
 —
 2,355.5
 84.9
 —
 2,440.4
—
 —
 1,910.8
 250.0
 —
 2,160.8
Selling, general and administrative expenses(2.2) —
 (1,942.7) (42.7) —
 (1,987.6)(1.0) —
 (1,833.4) (150.7) —
 (1,985.1)
Other operating income (loss), net—
 —
 254.8
 (3.9) —
 250.9
Operating (loss) income(2.2) —
 667.6
 38.3
 —
 703.7
Credit transaction, net—
 —
 (167.4) —
 —
 (167.4)
Restructuring charges—
 —
 (55.3) (8.4) —
 (63.7)
Goodwill and intangible impairments—
 —
 (470.4) (265.0) —
 (735.4)
Other operating income, net(0.1) —
 22.5
 3.8
 —
 26.2
Operating income (loss)(1.1) —
 (593.2) (170.3) —
 (764.6)
Intra-entity interest income (expense)—
 18.8
 (186.0) 167.2
 —
 —
(4.6) 18.9
 (243.4) 229.1
 —
 —
Interest expense, net—
 (19.9) (14.8) (11.2) —
 (45.9)—
 (14.9) (25.0) 0.2
 —
 (39.7)
(Loss) income before income taxes(2.2) (1.1) 466.8
 194.3
 —
 657.8
Other non-operating income—
 —
 1.7
 —
 —
 1.7
Income (loss) before income taxes(5.7) 4.0
 (859.9) 59.0
 —
 (802.6)
Income taxes—
 0.2
 (192.7) 2.6
 —
 (189.9)—
 (0.8) 133.0
 13.0
 —
 145.2
Equity in income of subsidiaries470.1
 —
 281.4
 293.9
 (1,045.4) —
(651.7) —
 (1,043.1) (770.4) 2,465.2
 —
Net income (loss)$467.9
 $(0.9) $555.5
 $490.8
 $(1,045.4) $467.9
(657.4) 3.2
 (1,770.0) (698.4) 2,465.2
 (657.4)
Dividends on redeemable convertible preferred shares(32.9) —
 —
 —
 —
 (32.9)
Net income (loss) attributable to common shareholders$(690.3) $3.2
 $(1,770.0) $(698.4) $2,465.2
 $(690.3)

126

Condensed ConsolidatedConsolidating Income Statement
For the 53 week period ended week period ended February 3, 2018
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Sales$—
 $—
 $5,866.6
 $386.4
 $—
 $6,253.0
Cost of sales—
 —
 (3,926.6) (136.4) —
 (4,063.0)
Gross margin—
 —
 1,940.0
 250.0
 —
 2,190.0
Selling, general and administrative expenses(1.9) —
 (1,738.2) (132.1) —
 (1,872.2)
Credit transaction, net—
 —
 1.3
 —
 —
 1.3
Other operating income, net0.1
 —
 260.3
 0.4
 —
 260.8
Operating income (loss)(1.8) —
 463.4
 118.3
 —
 579.9
Intra-entity interest income (expense)—
 18.8
 (190.2) 171.4
 —
 —
Interest expense, net—
 (19.9) (21.6) (11.2) —
 (52.7)
Income (loss) before income taxes(1.8) (1.1) 251.6
 278.5
 —
 527.2
Income taxes—
 0.2
 (21.3) 13.2
 —
 (7.9)
Equity in income of subsidiaries521.1
 —
 229.6
 233.1
 (983.8) —
Net income (loss)519.3
 (0.9) 459.9
 524.8
 (983.8) 519.3
Dividends on redeemable convertible preferred shares(32.9) —
 —
 —
 —
 (32.9)
Net income (loss) attributable to common shareholders$486.4
 $(0.9) $459.9
 $524.8
 $(983.8) $486.4


Condensed Consolidating Income Statement
For the 52 week period ended week period ended January 31, 201528, 2017
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations ConsolidatedSignet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Sales$—
 $—
 $5,671.4
 $64.9
 $—
 $5,736.3
$—
 $—
 $6,141.9
 $266.5
 $—
 $6,408.4
Cost of sales—
 —
 (3,647.0) (15.1) —
 (3,662.1)—
 —
 (3,997.2) (50.4) —
 (4,047.6)
Gross margin—
 —
 2,024.4
 49.8
 —
 2,074.2
—
 —
 2,144.7
 216.1
 —
 2,360.8
Selling, general and administrative expenses(2.5) —
 (1,683.6) (26.8) —
 (1,712.9)(1.3) —
 (1,775.1) (103.8) —
 (1,880.2)
Other operating income (loss), net—
 —
 220.8
 (5.5) —
 215.3
Operating (loss) income(2.5) —
 561.6
 17.5
 —
 576.6
Other operating income, net—
 —
 293.8
 (11.2) —
 282.6
Operating income (loss)(1.3) —
 663.4
 101.1
 —
 763.2
Intra-entity interest income (expense)—
 13.2
 (129.6) 116.4
 —
 —
—
 18.8
 (188.4) 169.6
 —
 —
Interest expense, net—
 (13.9) (14.8) (7.3) —
 (36.0)—
 (19.8) (16.6) (13.0) —
 (49.4)
(Loss) income before income taxes(2.5) (0.7) 417.2
 126.6
 —
 540.6
Income (loss) before income taxes(1.3) (1.0) 458.4
 257.7
 —
 713.8
Income taxes—
 0.1
 (159.5) 0.1
 —
 (159.3)—
 0.2
 (175.1) 4.3
 —
 (170.6)
Equity in income of subsidiaries383.8
 —
 579.8
 565.4
 (1,529.0) —
544.5
 —
 276.4
 295.7
 (1,116.6) —
Net income (loss)$381.3
 $(0.6) $837.5
 $692.1
 $(1,529.0) $381.3
543.2
 (0.8) 559.7
 557.7
 (1,116.6) 543.2
Dividends on redeemable convertible preferred shares(11.9) —
 —
 —
 —
 (11.9)
Net income (loss) attributable to common shareholders$531.3
 $(0.8) $559.7
 $557.7
 $(1,116.6) $531.3

Condensed Consolidated Income Statement
For the 52 week period ended February 1, 2014
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Sales$—
 $—
 $4,162.9
 $46.3
 $—
 $4,209.2
Cost of sales—
 —
 (2,621.2) (7.5) —
 (2,628.7)
Gross margin—
 —
 1,541.7
 38.8
 —
 1,580.5
Selling, general and administrative expenses(2.9) —
 (1,193.1) (0.7) —
 (1,196.7)
Other operating income (loss), net—
 —
 183.8
 2.9
 —
 186.7
Operating (loss) income(2.9) —
 532.4
 41.0
 —
 570.5
Intra-entity interest income (expense)—
 —
 (34.5) 34.5
 —
 —
Interest expense, net—
 —
 (3.9) (0.1) —
 (4.0)
(Loss) income before income taxes(2.9) —
 494.0
 75.4
 —
 566.5
Income taxes—
 —
 (196.8) (1.7) —
 (198.5)
Equity in income of subsidiaries370.9
 —
 344.2
 301.3
 (1,016.4) —
Net income (loss)$368.0
 $—
 $641.4
 $375.0
 $(1,016.4) $368.0

127

Condensed ConsolidatedConsolidating Statement of Comprehensive Income
For the 52 week period ended January 30, 2016week period ended February 2, 2019
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations ConsolidatedSignet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net income$467.9
 $(0.9) $555.5
 $490.8
 $(1,045.4) $467.9
Net income (loss)$(657.4) $3.2
 $(1,770.0) $(698.4) $2,465.2
 $(657.4)
Other comprehensive income (loss):                      
Foreign currency translation adjustments(40.2) —
 (44.8) 4.6
 40.2
 (40.2)(35.9) —
 (35.4) (0.5) 35.9
 (35.9)
Available-for-sale securities:                      
Unrealized (loss) gain on securities, net(0.4) —
 —
 (0.4) 0.4
 (0.4)
Unrealized gain (loss)(1)
0.4
 —
 —
 0.4
 (0.4) 0.4
Impacts from adoption of new accounting pronouncements(2)
(0.8) —
 —
 (0.8) 0.8
 (0.8)
Cash flow hedges:                      
Unrealized gain (loss)(11.8) —
 (11.8) —
 11.8
 (11.8)4.8
 —
 4.8
 —
 (4.8) 4.8
Reclassification adjustment for losses to net income3.5
 —
 3.5
 —
 (3.5) 3.5
(1.5) —
 (1.5) —
 1.5
 (1.5)
Pension plan:                      
Actuarial gain (loss)10.9
 —
 10.9
 —
 (10.9) 10.9
(3.4) —
 (3.4) —
 3.4
 (3.4)
Reclassification adjustment to net income for amortization of actuarial losses2.7
 —
 2.7
 —
 (2.7) 2.7
0.7
 —
 0.7
 —
 (0.7) 0.7
Prior service costs(0.5) —
 (0.5) —
 0.5
 (0.5)(6.5) —
 (6.5) —
 6.5
 (6.5)
Reclassification adjustment to net income for amortization of net prior service credits(1.7) —
 (1.7) —
 1.7
 (1.7)
Total other comprehensive (loss) income(37.5) —
 (41.7) 4.2
 37.5
 (37.5)
Total comprehensive income$430.4
 $(0.9) $513.8
 $495.0
 $(1,007.9) $430.4
Total other comprehensive income (loss)(42.2) —
 (41.3) (0.9) 42.2
 (42.2)
Total comprehensive income (loss)$(699.6) $3.2
 $(1,811.3) $(699.3) $2,507.4
 $(699.6)
(1)
During Fiscal 2019, amount represents unrealized losses related to the Company’s available-for-sale debt securities. During Fiscal 2018, amount represents unrealized gains related to the Company’s available-for-sale debt and equity securities.
(2)
Adjustment reflects the reclassification of unrealized gains related to the Company’s available-for-sale equity security investments as of February 3, 2018 from AOCI into retained earnings associated with the adoption of ASU 2016-01.


Condensed Consolidating Statement of Comprehensive Income
For the 53 week period ended week period ended February 3, 2018
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net income (loss)$519.3
 $(0.9) $459.9
 $524.8
 $(983.8) $519.3
Other comprehensive income (loss):           
Foreign currency translation adjustments50.9
 —
 50.2
 0.7
 (50.9) 50.9
Available-for-sale securities:           
Unrealized gain (loss)0.3
 —
 —
 0.3
 (0.3) 0.3
Cash flow hedges:           
Unrealized gain (loss)1.8
 —
 1.8
 —
 (1.8) 1.8
Reclassification adjustment for losses to net income(3.5) —
 (3.5) —
 3.5
 (3.5)
Pension plan:           
Reclassification adjustment to net income for amortization of actuarial losses2.2
 —
 2.2
 —
 (2.2) 2.2
Prior service costs(0.5) —
 (0.5) —
 0.5
 (0.5)
Reclassification adjustment to net income for amortization of net prior service credits(1.1) —
 (1.1) —
 1.1
 (1.1)
Net curtailment gain and settlement loss(3.0) —
 (3.0) —
 3.0
 (3.0)
Total other comprehensive income (loss)47.1
 —
 46.1
 1.0
 (47.1) 47.1
Total comprehensive income (loss)$566.4
 $(0.9) $506.0
 $525.8
 $(1,030.9) $566.4




128

Condensed ConsolidatedConsolidating Statement of Comprehensive Income
For the 52 week period ended week period ended January 31, 201528, 2017
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations ConsolidatedSignet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net income$381.3
 $(0.6) $837.5
 $692.1
 $(1,529.0) $381.3
Net income (loss)$543.2
 $(0.8) $559.7
 $557.7
 $(1,116.6) $543.2
Other comprehensive income (loss):                      
Foreign currency translation adjustments(60.6) —
 (61.1) 4.6
 56.5
 (60.6)(25.6) —
 (31.2) 5.6
 25.6
 (25.6)
Available-for-sale securities:                      
Unrealized (loss) gain on securities, net—
 —
 —
 —
 —
 —
Cash flow hedges:                      
Unrealized gain (loss)6.2
 —
 6.2
 —
 (6.2) 6.2
6.9
 —
 6.9
 —
 (6.9) 6.9
Reclassification adjustment for losses to net income12.5
 —
 12.5
 —
 (12.5) 12.5
(0.6) —
 (0.6) —
 0.6
 (0.6)
Pension plan:                      
Actuarial gain (loss)(15.8) —
 (15.8) —
 15.8
 (15.8)(13.6) —
 (13.6) —
 13.6
 (13.6)
Reclassification adjustment to net income for amortization of actuarial losses1.6
 —
 1.6
 —
 (1.6) 1.6
1.2
 —
 1.2
 —
 (1.2) 1.2
Prior service costs(0.7) —
 (0.7) —
 0.7
 (0.7)(0.4) —
 (0.4) —
 0.4
 (0.4)
Reclassification adjustment to net income for amortization of net prior service credits(1.3) —
 (1.3) —
 1.3
 (1.3)(1.5) —
 (1.5) —
 1.5
 (1.5)
Total other comprehensive (loss) income(58.1) —
 (58.6) 4.6
 54.0
 (58.1)
Total comprehensive income$323.2
 $(0.6) $778.9
 $696.7
 $(1,475.0) $323.2
Total other comprehensive income (loss)(33.6) —
 (39.2) 5.6
 33.6
 (33.6)
Total comprehensive income (loss)$509.6
 $(0.8) $520.5
 $563.3
 $(1,083.0) $509.6

Condensed Consolidated Statement of Comprehensive IncomeConsolidating Balance Sheet
For the 52 week period ended February 1, 20142, 2019
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net income$368.0
 $—
 $641.4
 $375.0
 $(1,016.4) $368.0
Other comprehensive income (loss):           
Foreign currency translation adjustments12.4
 —
 13.9
 (2.7) (11.2) 12.4
Available-for-sale securities:           
Unrealized (loss) gain on securities, net—
 —
 —
 —
 —
 —
Cash flow hedges:           
Unrealized gain (loss)(22.0) —
 (22.0) —
 22.0
 (22.0)
Reclassification adjustment for losses to net income6.7
 —
 6.7
 —
 (6.7) 6.7
Pension plan:           
Actuarial gain (loss)0.2
 —
 0.2
 —
 (0.2) 0.2
Reclassification adjustment to net income for amortization of actuarial losses1.7
 —
 1.7
 —
 (1.7) 1.7
Prior service costs(0.7) —
 (0.7) —
 0.7
 (0.7)
Reclassification adjustment to net income for amortization of net prior service credits(1.1) —
 (1.1) —
 1.1
 (1.1)
Total other comprehensive (loss) income(2.8) —
 (1.3) (2.7) 4.0
 (2.8)
Total comprehensive income$365.2
 $—
 $640.1
 $372.3
 $(1,012.4) $365.2
(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
 $146.7
 $48.4
 $—
 $195.4
Accounts receivable, held for sale—
 —
 4.2
 —
 —
 4.2
Accounts receivable, net—
 —
 10.1
 9.4
 —
 19.5
Intra-entity receivables, net—
 7.9
 83.4
 220.0
 (311.3) —
Other receivables—
 —
 46.5
 26.0
 —
 72.5
Other current assets—
 —
 169.4
 2.1
 —
 171.5
Income taxes—
 —
 5.1
 0.7
 —
 5.8
Inventories—
 —
 2,302.6
 84.3
 —
 2,386.9
Total current assets0.2
 8.0
 2,768.0
 390.9
 (311.3) 2,855.8
Non-current assets:           
Property, plant and equipment, net—
 —
 789.6
 10.9
 —
 800.5
Goodwill—
 —
 206.3
 90.3
 —
 296.6
Intangible assets, net—
 —
 244.0
 21.0
 —
 265.0
Investment in subsidiaries2,155.7
 —
 (15.7) (305.5) (1,834.5) —
Intra-entity receivables, net—
 400.0
 —
 2,588.0
 (2,988.0) —
Other assets—
 —
 133.4
 17.2
 —
 150.6
Deferred tax assets—
 —
 24.5
 (3.5) —
 21.0
Retirement benefit asset—
 —
 30.6
 —
 —
 30.6
Total assets$2,155.9
 $408.0
 $4,180.7
 $2,809.3
 $(5,133.8) $4,420.1
Liabilities and Shareholders’ equity           
Current liabilities:           
Loans and overdrafts$—
 $(0.7) $79.5
 $—
 $—
 $78.8
Accounts payable—
 —
 119.7
 34.0
 —
 153.7
Intra-entity payables, net311.3
 —
 —
 —
 (311.3) —
Accrued expenses and other current liabilities27.7
 2.4
 450.4
 22.3
 —
 502.8
Deferred revenue—
 —
 257.6
 12.4
 —
 270.0
Income taxes—
 0.8
 26.4
 0.5
 —
 27.7
Total current liabilities339.0
 2.5

933.6
 69.2
 (311.3) 1,033.0
Non-current liabilities:           
Long-term debt—
 396.0
 253.6
 —
 —
 649.6
Intra-entity payables, net—
 —
 2,988.0
 —
 (2,988.0) —
Other liabilities—
 —
 219.4
 4.7
 —
 224.1
Deferred revenue—
 —
 696.5
 —
 —
 696.5
Deferred tax liabilities—
 —
 —
 —
 —
 —
Total liabilities339.0
 398.5
 5,091.1
 73.9
 (3,299.3) 2,603.2
Series A redeemable convertible preferred shares615.3
 —
 —
 —
 —
 615.3
Total shareholders’ equity1,201.6
 9.5
 (910.4) 2,735.4
 (1,834.5) 1,201.6
Total liabilities, redeemable convertible preferred shares and shareholders’ equity$2,155.9
 $408.0
 $4,180.7
 $2,809.3
 $(5,133.8) $4,420.1

129

Condensed ConsolidatedConsolidating Balance Sheet
January 30, 2016February 3, 2018
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations ConsolidatedSignet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Assets                      
Current assets:                      
Cash and cash equivalents$1.9
 $0.1
 $102.0
 $33.7
 $—
 $137.7
$1.7
 $0.1
 $150.5
 $72.8
 $—
 $225.1
Accounts receivable, net—
 —
 1,753.0
 3.4
 —
 1,756.4
—
 —
 692.5
 —
 —
 692.5
Intra-entity receivables, net28.7
 —
 —
 380.1
 (408.8) —
—
 2.9
 —
 166.9
 (169.8) —
Other receivables—
 —
 68.8
 15.2
 —
 84.0
—
 —
 62.0
 25.2
 —
 87.2
Other current assets0.1
 0.7
 145.3
 8.3
 —
 154.4
—
 —
 154.4
 3.8
 —
 158.2
Income taxes—
 0.2
 2.3
 1.0
 —
 3.5
—
 —
 2.6
 —
 —
 2.6
Inventories—
 —
 2,372.7
 81.2
 —
 2,453.9
—
 —
 2,201.3
 79.2
 —
 2,280.5
Total current assets30.7
 1.0
 4,444.1
 522.9
 (408.8) 4,589.9
1.7
 3.0
 3,263.3
 347.9
 (169.8) 3,446.1
Non-current assets:                      
Property, plant and equipment, net—
 —
 722.3
 5.3
 —
 727.6
—
 —
 870.1
 7.8
 —
 877.9
Goodwill—
 —
 511.9
 3.6
 —
 515.5
—
 —
 516.4
 305.3
 —
 821.7
Intangible assets, net—
 —
 427.8
 —
 —
 427.8
—
 —
 410.9
 70.6
 —
 481.5
Investment in subsidiaries3,047.8
 —
 762.9
 600.0
 (4,410.7) —
3,150.2
 —
 1,163.6
 606.0
 (4,919.8) —
Intra-entity receivables, net—
 402.6
 —
 3,467.4
 (3,870.0) —
—
 400.0
 —
 2,859.0
 (3,259.0) —
Other assets—
 5.1
 127.1
 30.1
 —
 162.3
—
 —
 140.1
 31.1
 —
 171.2
Deferred tax assets—
 —
 —
 —
 —
 —
—
 —
 1.3
 0.1
 —
 1.4
Retirement benefit asset—
 —
 51.3
 —
 —
 51.3
—
 —
 39.8
 —
 —
 39.8
Total assets$3,078.5
 $408.7
 $7,047.4
 $4,629.3
 $(8,689.5) $6,474.4
$3,151.9
 $403.0
 $6,405.5
 $4,227.8
 $(8,348.6) $5,839.6
Liabilities and Shareholders’ equity                      
Current liabilities:                      
Loans and overdrafts$—
 $—
 $59.5
 $—
 $—
 $59.5
$—
 $(0.7) $44.7
 $—
 $—
 $44.0
Accounts payable—
 —
 260.3
 8.8
 —
 269.1
—
 —
 202.2
 34.8
 —
 237.0
Intra-entity payables, net—
 —
 408.8
 —
 (408.8) —
11.3
 —
 158.5
 —
 (169.8) —
Accrued expenses and other current liabilities17.8
 2.4
 467.0
 11.1
 —
 498.3
27.2
 2.4
 397.5
 20.9
 —
 448.0
Deferred revenue—
 —
 260.3
 —
 —
 260.3
—
 —
 276.2
 12.4
 —
 288.6
Income taxes—
 —
 68.4
 (2.7) —
 65.7
—
 (0.2) 36.7
 (16.9) —
 19.6
Total current liabilities17.8
 2.4

1,524.3
 17.2
 (408.8) 1,152.9
38.5
 1.5
 1,115.8
 51.2
 (169.8) 1,037.2
Non-current liabilities:                      
Long-term debt—
 398.6
 330.1
 600.0
 —
 1,328.7
—
 395.2
 293.0
 —
 —
 688.2
Intra-entity payables, net—
 —
 3,870.0
 —
 (3,870.0) —
—
 —
 3,259.0
 —
 (3,259.0) —
Other liabilities—
 —
 223.6
 6.9
 —
 230.5
—
 —
 233.0
 6.6
 —
 239.6
Deferred revenue—
 —
 629.1
 —
 —
 629.1
—
 —
 668.9
 —
 —
 668.9
Deferred tax liabilities—
 —
 73.0
 (0.5) —
 72.5
—
 —
 76.7
 15.6
 —
 92.3
Total liabilities17.8
 401.0
 6,650.1
 623.6
 (4,278.8) 3,413.7
38.5
 396.7
 5,646.4
 73.4
 (3,428.8) 2,726.2
Series A redeemable convertible preferred shares613.6
 —
 —
 —
 —
 613.6
Total shareholders’ equity3,060.7
 7.7
 397.3
 4,005.7
 (4,410.7) 3,060.7
2,499.8
 6.3
 759.1
 4,154.4
 (4,919.8) 2,499.8
Total liabilities and shareholders’ equity$3,078.5
 $408.7
 $7,047.4
 $4,629.3
 $(8,689.5) $6,474.4
Total liabilities, redeemable convertible preferred shares and shareholders’ equity$3,151.9
 $403.0
 $6,405.5
 $4,227.8
 $(8,348.6) $5,839.6

130

Condensed Consolidated Balance Sheet
January 31, 2015
(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, net121.6
 —
 —
 61.8
 (183.4) —
Other receivables—
 —
 53.9
 9.7
 —
 63.6
Other current assets0.1
 0.7
 130.9
 5.5
 —
 137.2
Income taxes—
 —
 1.8
 —
 —
 1.8
Inventories—
 —
 2,376.6
 62.4
 —
 2,439.0
Total current assets123.8
 0.8
 4,295.9
 165.7
 (183.4) 4,402.8
Non-current assets:           
Property, plant and equipment, net—
 —
 660.2
 5.7
 —
 665.9
Goodwill—
 —
 515.6
 3.6
 —
 519.2
Intangible assets, net—
 —
 447.1
 —
 —
 447.1
Investment in subsidiaries2,701.3
 —
 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—
 —
 2.0
 0.3
 —
 2.3
Retirement benefit asset—
 —
 37.0
 —
 —
 37.0
Total assets$2,825.1
 $409.0
 $6,525.9
 $4,115.9
 $(7,661.6) $6,214.3
Liabilities and Shareholders’ equity       
Current liabilities:           
Loans and overdrafts$—
 $—
 $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 liabilities14.7
 2.4
 456.7
 8.6
 —
 482.4
Deferred revenue—
 —
 248.0
 —
 —
 248.0
Income taxes—
 (0.2) 87.7
 (0.6) —
 86.9
Total current liabilities14.7
 2.2
 1,346.7
 12.3
 (183.4) 1,192.5
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—
 —
 53.5
 —
 —
 53.5
Total liabilities14.7
 400.7
 6,443.8
 620.5
 (4,075.8) 3,403.9
Total shareholders’ equity2,810.4
 8.3
 82.1
 3,495.4
 (3,585.8) 2,810.4
Total liabilities and shareholders’ equity$2,825.1
 $409.0
 $6,525.9
 $4,115.9
 $(7,661.6) $6,214.3

131

Condensed ConsolidatedConsolidating Statement of Cash Flows
For the 52 week period ended January 30, 2016week period ended February 2, 2019
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations ConsolidatedSignet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net cash provided by (used in) operating activities$98.6
 $(0.1) $325.7
 $215.0
 $(195.9) $443.3
$653.1
 $5.0
 $363.8
 $336.6
 $(660.8) $697.7
Investing activities                      
Purchase of property, plant and equipment—
 —
 (225.9) (0.6) —
 (226.5)—
 —
 (128.9) (4.6) —
 (133.5)
Proceeds from sale of assets—
 —
 —
 5.5
 —
 5.5
Investment in subsidiaries—
 —
 (0.3) —
 0.3
 —
(80.0) —
 —
 —
 80.0
 —
Purchase of available-for-sale securities—
 —
 —
 (6.2) —
 (6.2)—
 —
 —
 (0.6) —
 (0.6)
Proceeds from available-for-sale securities—
 —
 —
 4.0
 —
 4.0
—
 —
 —
 9.6
 —
 9.6
Acquisition of Ultra Stores, Inc., net of cash received—
 —
 —
 —
 —
 —
Acquisition of Zale Corporation, net of cash acquired—
 —
 —
 —
 —
 —
Acquisition of diamond polishing factory—
 —
 —
 —
 —
 —
Net cash (used in) provided by investing activities—
 —
 (226.2) (2.8) 0.3
 (228.7)
Net cash provided by (used in) investing activities(80.0) —
 (128.9) 9.9
 80.0
 (119.0)
Financing activities                      
Dividends paid(67.1) —
 —
 —
 —
 (67.1)
Dividends paid on common shares(79.0) —
 —
 —
 —
 (79.0)
Dividends paid on redeemable convertible preferred shares(31.2) —
 —
 —
 —
 (31.2)
Intra-entity dividends paid—
 —
 (149.3) (46.6) 195.9
 —
—
 —
 —
 (660.8) 660.8
 —
Repurchase of common shares(485.0) —
 —
 —
 —
 (485.0)
Proceeds from issuance of common shares5.0
 0.3
 —
 —
 (0.3) 5.0
—
 —
 80.0
 —
 (80.0) —
Excess tax benefit from exercise of share awards—
 —
 6.9
 —
 —
 6.9
Proceeds from senior notes—
 —
 —
 —
 —
 —
Proceeds from term loan—
 —
 —
 —
 —
 —
Repayments of term loan—
 —
 (25.0) —
 —
 (25.0)—
 —
 (31.3) —
 —
 (31.3)
Proceeds from securitization facility—
 —
 —
 2,303.9
 —
 2,303.9
Repayment of securitization facility—
 —
 —
 (2,303.9) —
 (2,303.9)
Proceeds from revolving credit facility—
 —
 316.0
 —
 —
 316.0
—
 —
 787.0
 —
 —
 787.0
Repayments of revolving credit facility—
 —
 (316.0) —
 —
 (316.0)—
 —
 (787.0) —
 —
 (787.0)
Payment of debt issuance costs—
 —
 —
 —
 —
 —
Repurchase of common shares(130.0) —
 —
 —
 —
 (130.0)
Net settlement of equity based awards(8.3) —
 —
 —
 —
 (8.3)
Principal payments under capital lease obligations—
 —
 (1.0) —
 —
 (1.0)
Proceeds from (repayment of) short-term borrowings—
 —
 (47.1) —
 —
 (47.1)—
 —
 25.9
 —
 —
 25.9
Other financing activities(2.1) —
 —
 —
 —
 (2.1)
Intra-entity activity, net101.6
 (0.2) 54.9
 (156.3) —
 —
22.7
 (5.0) (307.9) 290.2
 —
 —
Net cash (used in) provided by financing activities(98.8) 0.1
 (160.6) (202.9) 195.6
 (266.6)
Net cash provided by (used in) financing activities(574.6) (5.0) (233.3) (370.6) 580.8
 (602.7)
Cash and cash equivalents at beginning of period2.1
 0.1
 166.5
 24.9
 —
 193.6
1.7
 0.1
 150.5
 72.8
 —
 225.1
(Decrease) increase in cash and cash equivalents(0.2) —
 (61.1) 9.3
 —
 (52.0)
Increase (decrease) in cash and cash equivalents(1.5) —
 1.6
 (24.1) —
 (24.0)
Effect of exchange rate changes on cash and cash equivalents—
 —
 (3.4) (0.5) —
 (3.9)—
 —
 (5.4) (0.3) —
 (5.7)
Cash and cash equivalents at end of period$1.9
 $0.1
 $102.0
 $33.7
 $—
 $137.7
$0.2
 $0.1
 $146.7
 $48.4
 $—
 $195.4

132

Condensed ConsolidatedConsolidating Statement of Cash Flows
For the 53 week period ended week period ended February 3, 2018
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net cash provided by (used in) operating activities$767.8
 $(0.1) $1,856.7
 $586.0
 $(1,269.9) $1,940.5
Investing activities           
Purchase of property, plant and equipment—
 —
 (236.3) (1.1) —
 (237.4)
Investment in subsidiaries(219.9) —
 (25.0) —
 244.9
 —
Purchase of available-for-sale securities—
 —
 —
 (2.4) —
 (2.4)
Proceeds from available-for-sale securities—
 —
 —
 2.2
 —
 2.2
Acquisition of R2Net, net of cash acquired—
 —
 (331.8) —
 —
 (331.8)
Net cash provided by (used in) investing activities(219.9) —
 (593.1)
(1.3) 244.9
 (569.4)
Financing activities           
Dividends paid on common shares(76.5) —
 —
 —
 —
 (76.5)
Dividends paid on redeemable convertible preferred shares(34.7) —
 —
 —
 —
 (34.7)
Intra-entity dividends paid—
 —
 (800.0) (469.9) 1,269.9
 —
Repurchase of common shares(460.0) —
 —
 —
 —
 (460.0)
Proceeds from issuance of common shares0.3
 —
 219.9
 25.0
 (244.9) 0.3
Net settlement of equity based awards(2.9) —
 —
 —
 —
 (2.9)
Proceeds from term loan—
 —
 350.0
 —
 —
 350.0
Repayments of term loan—
 —
 (372.3) —
 —
 (372.3)
Proceeds from securitization facility—
 —
 —
 1,745.9
 —
 1,745.9
Repayment of securitization facility—
 —
 —
 (2,345.9) —
 (2,345.9)
Proceeds from revolving credit facility—
 —
 814.0
 —
 —
 814.0
Repayments of revolving credit facility—
 —
 (870.0) —
 —
 (870.0)
Payment of debt issuance costs—
 —
 (1.4) —
 —
 (1.4)
Proceeds from (repayment of) short-term borrowings—
 —
 (0.1) —
 —
 (0.1)
Intra-entity activity, net25.9
 0.1
 (532.2) 506.2
 —
 —
Net cash provided by (used in) financing activities(547.9) 0.1
 (1,192.1) (538.7) 1,025.0
 (1,253.6)
Cash and cash equivalents at beginning of period1.7
 0.1
 70.3
 26.6
 —
 98.7
Increase (decrease) in cash and cash equivalents—
 —
 71.5
 46.0
 —
 117.5
Effect of exchange rate changes on cash and cash equivalents—
 —
 8.7
 0.2
 —
 8.9
Cash and cash equivalents at end of period$1.7
 $0.1
 $150.5
 $72.8
 $—
 $225.1

Condensed Consolidating Statement of Cash Flows
For the 52 week period ended week period ended January 31, 201528, 2017
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net cash provided by (used in) operating activities$150.5
 $2.2
 $166.6
 $116.7
 $(153.0) $283.0
Investing activities

 
 

 

 

 

Purchase of property, plant and equipment—
 —
 (219.8) (0.4) —
 (220.2)
Investment in subsidiaries—
 —
 (18.9) (10.0) 28.9
 —
Purchase of available-for-sale securities—
 —
 —
 (5.7) —
 (5.7)
Proceeds from available-for-sale securities—
 —
 —
 2.5
 —
 2.5
Acquisition of Ultra Stores, Inc., net of cash received—
 —
 —
 —
 —
 —
Acquisition of Zale Corporation, net of cash acquired—
 —
 (1,431.1) 1.9
 —
 (1,429.2)
Acquisition of diamond polishing factory—
 —
 —
 —
 —
 —
Net cash used in investing activities—
 —
 (1,669.8)
(11.7) 28.9
 (1,652.6)
Financing activities

 
 

 

 

 

Dividends paid(55.3) —
 —
 —
 —
 (55.3)
Intra-entity dividends paid—
 —
 (953.0) —
 953.0
 —
Proceeds from issuance of common shares6.1
 8.9
 10.0
 810.0
 (828.9) 6.1
Excess tax benefit from exercise of share awards—
 —
 11.8
 —
 —
 11.8
Proceeds from senior notes—
 398.4
 —
 —
 —
 398.4
Proceeds from term loan—
 —
 400.0
 —
 —
 400.0
Repayments of term loan—
 —
 (10.0) —
 —
 (10.0)
Proceeds from securitization facility—
 —
 —
 1,941.9
 —
 1,941.9
Repayment of securitization facility—
 —
 —
 (1,341.9) —
 (1,341.9)
Proceeds from revolving credit facility—
 —
 260.0
 —
 —
 260.0
Repayments of revolving credit facility—
 —
 (260.0) —
 —
 (260.0)
Payment of debt issuance costs—
 (7.0) (10.7) (2.8) —
 (20.5)
Repurchase of common shares(29.8) —
 —
 —
 —
 (29.8)
Net settlement of equity based awards(18.4) —
 —
 —
 —
 (18.4)
Principal payments under capital lease obligations
—
 —
 (0.8) —
 —
 (0.8)
Proceeds from (repayment of) short-term borrowings—
 —
 39.4
 —
 —
 39.4
Intra-entity activity, net(52.4) (402.4) 1,957.9
 (1,503.1) —
 —
Net cash used in financing activities(149.8) (2.1) 1,444.6
 (95.9) 124.1
 1,320.9
Cash and cash equivalents at beginning of period1.4
 —
 237.0
 9.2
 —
 247.6
Decrease in cash and cash equivalents0.7
 0.1
 (58.6) 9.1
 —
 (48.7)
Effect of exchange rate changes on cash and cash equivalents—
 —
 (11.9) 6.6
 —
 (5.3)
Cash and cash equivalents at end of period$2.1
 $0.1
 $166.5
 $24.9
 $—
 $193.6

133

Condensed Consolidated Statement of Cash Flows
For the 52 week period ended February 1, 2014
(in millions)Signet
Jewelers
Limited		 Signet UK
Finance  plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations ConsolidatedSignet
Jewelers
Limited		 Signet UK
Finance plc		 Guarantor
Subsidiaries		 Non-
Guarantor
Subsidiaries		 Eliminations Consolidated
Net cash provided by (used in) operating activities$137.3
 $—
 $421.3
 $286.9
 $(610.0) $235.5
$1,057.9
 $0.1
 $724.8
 $525.6
 $(1,630.1) $678.3
Investing activities

 
 

 

 

 

           
Purchase of property, plant and equipment—
 —
 (152.6) (0.1) —
 (152.7)—
 —
 (277.9) (0.1) —
 (278.0)
Investment in subsidiaries(0.3) —
 (11.0) (11.0) 22.3
 —
(610.0) —
 —
 —
 610.0
 —
Acquisition of Ultra Stores, Inc., net of cash received—
 —
 1.4
 —
 —
 1.4
Acquisition of Zale Corporation, net of cash acquired—
 —
 —
 —
 —
 —
Acquisition of diamond polishing factory—
 —
 —
 (9.1) —
 (9.1)
Net cash used in investing activities(0.3) —
 (162.2) (20.2) 22.3
 (160.4)
Purchase of available-for-sale securities—
 —
 —
 (10.4) —
 (10.4)
Proceeds from available-for-sale securities—
 —
 —
 10.0
 —
 10.0
Net cash provided by (used in) investing activities(610.0) —
 (277.9) (0.5) 610.0
 (278.4)
Financing activities

 
 

 

 

 

           
Dividends paid(46.0) —
 —
 —
 —
 (46.0)
Dividends paid on common shares(75.6) —
 —
 —
 —
 (75.6)
Intra-entity dividends paid—
 —
 (104.4) (35.6) 140.0
 —
—
 —
 (730.0) (900.1) 1,630.1
 —
Repurchase of common shares(1,000.0) —
 —
 —
 —
 (1,000.0)
Proceeds from issuance of common shares9.3
 —
 —
 22.3
 (22.3) 9.3
2.1
 —
 610.0
 —
 (610.0) 2.1
Proceeds from issuance of redeemable convertible preferred shares, net of issuance costs611.3
 —
 —
 —
 —
 611.3
Net settlement of equity based awards(4.9) —
 —
��—
 —
 (4.9)
Excess tax benefit from exercise of share awards—
 —
 6.5
 —
 —
 6.5
—
 —
 2.4
 —
 —
 2.4
Proceeds from senior notes—
 —
 —
 —
 —
 —
Proceeds from term loan—
 —
 —
 —
 —
 —
Repayments of term loan—
 —
 —
 —
 —
 —
—
 —
 (16.4) —
 —
 (16.4)
Proceeds from securitization facility—
 —
 —
 —
 —
 —
—
 —
 —
 2,404.1
 —
 2,404.1
Repayment of securitization facility—
 —
 —
 —
 —
 —
—
 —
 —
 (2,404.1) —
 (2,404.1)
Proceeds from revolving credit facility—
 —
 57.0
 —
 —
 57.0
—
 —
 1,270.0
 —
 —
 1,270.0
Repayments of revolving credit facility—
 —
 (57.0) —
 —
 (57.0)—
 —
 (1,214.0) —
 —
 (1,214.0)
Payment of debt issuance costs—
 —
 —
 —
 —
 —
—
 —
 (2.1) (0.6) —
 (2.7)
Repurchase of common shares(104.7) —
 —
 —
 —
 (104.7)
Net settlement of equity based awards(9.2) —
 —
 —
 —
 (9.2)
Principal payments under capital lease obligations
—
 —
 —
 —
 —
 —
—
 —
 (0.2) —
 —
 (0.2)
Proceeds from short-term borrowings—
 —
 19.3
 —
 —
 19.3
Repayment of short-term borrowings—
 —
 (10.2) —
 —
 (10.2)
Intra-entity activity, net1.6
 —
 (214.6) (257.0) 470.0
 —
19.0
 (0.1) (386.6) 367.7
 —
 —
Net cash used in financing activities(149.0) —
 (293.2) (270.3) 587.7
 (124.8)
Net cash provided by (used in) financing activities(448.1) (0.1) (477.1) (533.0) 1,020.1
 (438.2)
Cash and cash equivalents at beginning of period13.4
 —
 271.3
 16.3
 —
 301.0
1.9
 0.1
 102.0
 33.7
 —
 137.7
Decrease in cash and cash equivalents(12.0) —
 (34.1) (3.6) —
 (49.7)
Increase (decrease) in cash and cash equivalents(0.2) —
 (30.2) (7.9) —
 (38.3)
Effect of exchange rate changes on cash and cash equivalents—
 —
 (0.2) (3.5) —
 (3.7)—
 —
 (1.5) 0.8
 —
 (0.7)
Cash and cash equivalents at end of period$1.4
 $—
 $237.0
 $9.2
 $—
 $247.6
$1.7
 $0.1
 $70.3
 $26.6
 $—
 $98.7


134

QUARTERLY FINANCIAL INFORMATION—UNAUDITED
The sum of the quarterly earnings per share data may not equal the full year amount as the computations of the weighted average shares outstanding for each quarter and the full year are calculated independently.
Fiscal 2016
Quarters ended		Fiscal 2019
Quarters ended
(in millions, except per share amounts)May 2, 2015 August 1, 2015 October 31, 2015 January 30, 2016May 5, 2018 August 4, 2018 November 3, 2018 February 2, 2019
Sales$1,530.6  $1,410.6
 $1,216.4
 $2,392.6
$1,480.6
 $1,420.1
 $1,191.7
 $2,154.7
Gross margin565.9  490.8
 367.7
 1,016.0
484.8
 427.0
 371.2
 877.8
Net income118.8  62.2
 15.0
 271.9
Earnings per share:       
Net income (loss) attributable to common shareholders(504.8) (31.2) (38.1) (116.2)
Earnings (loss) per common share:       
Basic$1.49  $0.78
 $0.19
 $3.43
$(8.48) $(0.56) $(0.74) $(2.25)
Diluted$1.48  $0.78
 $0.19
 $3.42
$(8.48) $(0.56) $(0.74) $(2.25)
Fiscal 2015
Quarters ended		Fiscal 2018
Quarters ended
(in millions, except per share amounts)May 3, 2014 August 2, 2014 November 1, 2014 January 31, 2015April 29, 2017 July 29, 2017 October 28, 2017 February 3, 2018
Sales$1,056.1  $1,225.9
 $1,177.9
 $2,276.4
$1,403.4
 $1,399.6
 $1,156.9
 $2,293.1
Gross margin407.2  409.0
 345.9
 912.1
491.2
 457.9
 321.1
 919.8
Net income96.6  58.0
 (1.3) 228.0
Earnings (loss) per share:       
Net income (loss) attributable to common shareholders70.3
 85.2
 (12.1) 343.0
Earnings (loss) per common share:       
Basic$1.21  $0.73
 $(0.02) $2.85
$1.03
 $1.34
 $(0.20) $5.70
Diluted$1.20  $0.72
 $(0.02) $2.84
$1.03
 $1.33
 $(0.20) $5.24


135



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
The directors review the effectiveness of Signet’s system of internal controls in the following areas:
financial;
operational;
compliance;financial, operational, compliance and
risk management.management areas.
Signet’s disclosure controls and procedures are designed to help ensure that processes and procedures for information management are in place at all levels of the business. The disclosure controls and procedures aim to provide reasonable assurance that any information disclosed by Signet in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The procedures are also designed to ensure that information is accumulated and communicated to management, including the Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate to allow timely decisions to be made regarding required disclosure. Signet’s Disclosure Control Committee, which has a written Charter, consists of the Chief Financial Officer, Signet’s Chief Governance Officer and Corporate Secretary, the Vice President of Investor Relations, Treasurer, Chief Legal Officer and the Financial Controller, who consult with Signet’s external advisers and auditor, as necessary. These procedures are designed to enable Signet to make timely, appropriate and accurate public disclosures. The activities and findings of the Disclosure Control Committee are reported to the Audit Committee.
Based on their evaluation of Signet’s disclosure controls and procedures, as of January 30, 2016February 2, 2019 and in accordance with the requirements of Section 302 of the Sarbanes-Oxley Act of 2002, the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective and provide reasonable assurance that information regarding Signet is recorded, processed, summarized and reported and that the information is accumulated and communicated to management to allow timely decisions regarding required disclosure.
Management’s annual report on internal control over financial reporting
Signet’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management conducted an evaluation of internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this evaluation, management determined that Signet’s internal control over financial reporting was effective as of January 30, 2016.February 2, 2019.
Our independent registered public accountants, KPMG LLP, audited the consolidated financial statements of Signet for Fiscal 20162019 and have also audited the effectiveness of internal control over financial reporting as of January 30, 2016.February 2, 2019. An unqualified opinion has been issued thereon, the details of which are included within this Annual Report on Form 10-K.
Changes in internal control over financial reporting
There were no changes in internal control over financial reporting during the quarter ended January 30, 2016February 2, 2019 that have materially affected, or are reasonably likely to materially affect, Signet’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
NoneNone.

136

PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information concerning directors, executive officers and corporate governance may be found under the captions “Election of Ten Directors,”Directors” and “Board of Directors and Corporate Governance” and “Executive Officers of the Company” in our definitive proxy statement for our 20162019 Annual General Meeting of Shareholders (the “2016“2019 Proxy Statement”), which will be filed with the SEC within 120 days after the close of our fiscal year. Such information is incorporated herein by reference. The information in the 20162019 Proxy Statement set forth under the captionscaption “Section 16(a) Beneficial Ownership Reporting Compliance” and “Report of the Audit Committee” is incorporated herein by reference.
The Company has a policy on business integrity, as well as more detailed guidance and regulations as part of its staff orientation, training and operational procedures. These policies include the Code of Conduct, which is applicable to all Directors, officers and employees as required by NYSE listing rules, and the Code of Ethics for Senior Officers, which applies to the Chairman, CEO, Directors and other senior officers. Copies of these codes are available on request from the Corporate Secretary and may be downloaded from www.signetjewelers.com/ethics. The Company intends to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Code of Ethics for Senior Officers for the Company’s principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions, by posting such information on its website.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation may be found under the captions “Executive Compensation,” “Report of the Compensation Committee”Compensation” and “Director Compensation,” in the 20162019 Proxy Statement. Such information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information in the 20162019 Proxy Statement set forth under the captions “Shareholders Who Beneficially Own At Least Five Percent of the Common Shares,” “Ownership by Directors, Director Nominees and Executive Officers” and “Equity Compensation Plan Information” is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information in the 20162019 Proxy Statement set forth under the captions “Board of Directors and Corporate Governance,” “Board Committees” and “Transactions with Related Persons” is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information in the 20162019 Proxy Statement set forth under the caption “Appointment of Independent Auditor” is incorporated herein by reference.

137

PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
  PAGE 
  
(1) The following consolidated financial statements are included in Item 8:    
  
Consolidated income statements for the fiscal years ended February 2, 2019, February 3, 2018, and January 30, 2016, January 31, 2015 and February 1, 201428, 2017  8367 
  
Consolidated statements of comprehensive income for the fiscal years ended February 2, 2019, February 3, 2018, and January 30, 2016, January 31, 2015 and February 1, 201428, 2017  8468 
  
Consolidated balance sheets as of January 30, 2016February 2, 2019 and January 31, 2015February 3, 2018  8569 
  
Consolidated statements of cash flows for the fiscal years ended February 2, 2019, February 3, 2018, and January 30, 2016, January 31, 2015 and February 1, 201428, 2017  8670 
  
Consolidated statements of shareholders’ equity for the fiscal years ended February 2, 2019, February 3, 2018, and January 30, 2016, January 31, 2015 and February 1, 201428, 2017  8872 
  
Notes to the consolidated financial statements  8973 
  
(2) The following exhibits are filed as part of this Annual Report on Form 10-K or are incorporated herein by reference.   

138

   
Number Description of Exhibits
    2.1 
Agreement and Plan of Merger dated February 19, 2014 by and among Signet Jewelers Limited, Carat Merger Sub, Inc. and Zale Corporation (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Zale Corporation on February 19, 2014)2014 (File No. 333-153435)).
     2.2
Agreement and Plan of Merger, by and among Sterling Jewelers Inc., Signet Jewelers Ltd., Aquarius Sub Inc., R2Net Inc., and the Seller’s Representative, dated August 23, 2017 (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed August 24, 2017).
  
    3.1 
Memorandum of Association of Signet Limited and Certificate of Incorporation on Change of Name to Signet Jewelers Limited (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A filed September 11, 2008 (“Form 8-A”) (File No. 333-153435)).
  
    3.2 
Amended and Restated Bye-laws of Signet Jewelers Limited (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed September 10, 2014).
  
    4.1 
Form of common share certificate of Signet Jewelers Limited (incorporated by reference to Exhibit 4.1 to Form 8-A).
  
    4.2 Master Indenture dated as of November 2, 2001 among Sterling Jewelers Receivables Master Note Trust, as issuer, Bankers Trust Company, as Trustee, and Sterling Jewelers Inc., as Servicer (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed May 21, 2014).
    4.32014-A Indenture Supplement, dated as of May 15, 2014, among Sterling Jewelers Receivables Master Note Trust, as issuer, Sterling Jewelers Inc., as servicer, and Deutsche Bank Trust Company Americas, as indenture trustee (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed May 21, 2014).
    4.4
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 (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q filed September 10, 2014).
  
    4.54.3 Amended and Restated Transfer and Servicing Agreement dated as
Certificate of May 15, 2014, among SterlingDesignation of Series A Convertible Preference Shares, Par Value $0.01 Per Share, of Signet Jewelers Receivables Corp., as transferor, Sterling Jewelers Inc., as servicer, and Sterling Jewelers Receivables Master Note Trust, as issuerLimited (incorporated by reference to Exhibit 4.33.1 to the Company’s Current Report on Form 8-K filed May 21, 2014)November 3, 2016).
 
    4.6Third Amended and Restated Receivables Purchase Agreement dated as of May 15, 2014 between Sterling Jewelers Inc., as seller, and Sterling Jewelers Receivables Corp., as purchaser (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed May 21, 2014).
    4.7Administration Agreement dated as of November 2, 2001 between Sterling Jewelers Receivables Master Note Trust, as issuer, and Sterling Jewelers Inc., as administrator (incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed May 21, 2014).
    4.8Performance Undertaking dated as of May 15, 2014 by Signet Jewelers Limited, as performance guarantor, in favor of JP Morgan Chase Bank, N.A., as recipient (incorporated by reference to Exhibit 4.6 to the Company’s Current Report on Form 8-K filed May 21, 2014).
  
  10.1 Depositary Agreement dated as of September 3, 2008 between Signet Jewelers Limited and Capita IRG Trustees Limited (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed March 30, 2010).
  10.2Credit Agreement dated as of May 24, 2011 among Signet Group Limited and Signet Group Treasury Services, Inc. as Borrowers, Signet Jewelers Limited, as Parent, the Additional Borrowers from time to time party hereto, the Lenders from time to time party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Barclays Capital, the investment banking division of Barclays Bank PLC, as Syndication Agent, and Fifth Third Bank, PNC Bank, National Association, RBS Citizens, N.A. and Standard Chartered Bank as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 26, 2011).
  10.3
Second Amended and Restated Credit Agreement, dated as of May 27, 2014,July 14, 2016, by and among Signet Jewelers Limited, as Parent, Signet Group Limited, Signet Group Treasury Services Inc. and Sterling Jewelers Inc. as Borrowers,borrowers, the Additional Borrowersadditional borrowers from time to time party thereto, Signet Jewelers Limited, as Parent, the Lendersfinancial institutions from time to time party thereto as lenders, JPMorgan Chase Bank, N.A., as Administrative Agentadministrative agent and the other agentsparties party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 29, 2014)July 15, 2016).
  
  10.410.2 First Amendment
Sale and Purchase Agreement, by and among Sterling Jewelers Inc. and Comenity Bank, dated May 25, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 25, 2017).
  10.3
Credit Card Program Agreement, dated September 9, 2014,by and among Signet Group Limited, Signet Group Treasury ServicesSterling Jewelers Inc. and Sterling Jewelers Inc., as Borrowers, Signet Jewelers Limited as Parent, the Lenders thereto, JPMorgan ChaseComenity Bank, N.A. as Administrative Agent and the other agents party theretodated May 25, 2017 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed May 25, 2017).
  10.4
Receivables Sale and Purchase Agreement, by and among Sterling Jewelers Inc., Zale Delaware, Inc., Signet Jewelers Limited and CVI SGP Acquisition Trust, dated March 12, 2018 (incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K filed March 14, 2018).
  10.5
Termination Agreement, dated October 20, 2017, among Sterling Jewelers Receivables Master Note Trust, Sterling Jewelers Inc., Sterling Jewelers Receivable Corp., Deutsche Bank Trust Company Americas, JPMorgan Chase Bank, N.A., Chariot Funding LLC, Jupiter Securitization Company LLC and the noteholders related thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 23, 2017).
  10.6
Receivables Sale and Purchase Agreement, by and among Sterling Jewelers Inc., Zale Delaware, Inc., Signet Jewelers Limited and CLSIG Acquisition Trust, dated April 30, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 2, 2018).
  10.7†
Termination Protection Agreement between Sterling Jewelers Inc. and Steven J. Becker (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed October 20, 2015).
  10.8†
Separation and Release Agreement, dated July 27, 2017 between Signet Jewelers Ltd. and Bryan Morgan (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed August 29, 2017).
  10.9†
Separation and Release Agreement, dated July 15, 2017 between Signet Jewelers Ltd. and Mark Light (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed July 17, 2017).
  10.10†
Termination Protection Agreement dated September 10, 2014)26, 2017 between Sterling Jewelers Inc. and Virginia Drosos (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed December 1, 2017).

139

   
Number Description of Exhibits
  10.5†10.11† Termination Protection
Amendment to Confidential Separation and Release Agreement, dated March 1, 2018 between Sterling Jewelers Inc. and Mark S. Light (incorporated by reference to Exhibit 10.1 to the Company’s Current Form on Form 8-K filed October 20, 2015).
  10.6†Termination Protection Agreement between Sterling Jewelers Inc. and Michele Santana (incorporated by reference to Exhibit 10.2 to the Company’s Current Form on Form 8-K filed October 20, 2015).
  10.7†Termination Protection Agreement between Sterling Jewelers Inc. and Steven J. Becker (incorporated by reference to Exhibit 10.3 to the Company’s Current Form on Form 8-K filed October 20, 2015).
  10.8*†Termination Protection Agreement between Sterling Jewelers Inc. and Edward Hrabak (incorporated by reference to Exhibit 10.4 to the Company’s Current Form on Form 8-K filed October 20, 2015).
  10.9†Termination Protection Agreement between Sterling Jewelers Inc. and George Murray (incorporated by reference to Exhibit 10.5 to the Company’s Current Form on Form 8-K filed October 20, 2015).
  10.10†Composite Employment Agreement dated January 23, 2003 and amended as of August 22, 2004, September 1, 2007, December 26, 2007, May 25, 2011 and October 4, 2012 between Sterling Jewelers Inc. and Robert D. Trabucco (incorporated by reference to Exhibit 10.1510.40 to the Company’s Annual Report on Form 10-K filed March 28, 2013)April 2, 2018).
 
  10.11†Separation Agreement dated October 13, 2014 between Signet Jewelers Limited and Michael W. Barnes (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 14, 2014).
  
  10.12† Separation
Termination Protection Agreement, dated June 27, 2014January 29, 2017 between SignetSterling Jewelers LimitedInc. and Ronald W. RistauSebastian Hobbs (incorporated by reference to Exhibit 10.110.41 to the Company’s CurrentAnnual Report on Form 8-K10-K filed July 3, 2014)April 2, 2018).
  
  10.13† Rules of the Signet Group 2005 Long-Term Incentive Plan
Personal Employment Agreement, dated August 23, 2017 between R2Net Israel Ltd. and Oded Edelman (incorporated by reference to Exhibit 4.1610.43 to the Company’s Annual Report on Form 20-F10-K filed May 4, 2006)April 2, 2018).
  
  10.14† 
Signet Jewelers Limited Rules of the Sharesave Scheme (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).
  
  10.15† 
Signet Jewelers Limited Rules of the Irish Sharesave Scheme (incorporated by reference to Exhibit 99.4 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).
   
  10.16† 
Signet Jewelers Limited US Stock Option Plan 2008 (incorporated by reference to Exhibit 99.5 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).
   
  10.17† 
Signet Jewelers Limited International Share Option Plan 2008 (incorporated by reference to Exhibit 99.6 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).
   
  10.18† 
Signet Jewelers Limited UK Approved Share OptionUS Employee Stock Savings Plan 2008 (incorporated by reference to Exhibit 99.799.2 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)333-15343)).
   
  10.19† Rules of the Signet Group plc Sharesave Scheme (incorporated by reference to Exhibit 99.8 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).
  10.20†Rules of the Signet Group plc Sharesave Scheme (The Republic of Ireland) (incorporated by reference to Exhibit 99.9 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).
  10.21†Signet Group plc International Share Option Plan 2003 (incorporated by reference to Exhibit 99.10 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).
  10.22†Signet Group plc UK Inland Revenue Approved Share Option Plan 2003 (incorporated by reference to Exhibit 99.11 to the Company’s Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-153435)).

140

NumberDescription of Exhibits
  10.23†Signet Group plc Employee Stock Savings Plan (incorporated by reference to Exhibit 99.1 to the Company’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-9634)).
  10.24†Signet Group plc US Share Option Plan 2003 (incorporated by reference to Exhibit 99.2 to the Company’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-134192)).
  10.25†Signet Group plc 2000 Long-Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-12304)).
  10.26†Signet Group plc 1993 Executive Share Option Scheme (incorporated by reference to Exhibit 99.1 to the Company’s Post-Effective Amendment No. 1 to Registration Statement on Form S-8 filed September 11, 2008 (File No. 333-8964)).
  10.27†Signet Jewelers Limited Omnibus Incentive Plan (incorporated by references to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed June 15, 2009 (File No. 333-159987)).
  
  10.28†10.20† 
Form of Signet Jewelers Limited Omnibus Incentive Plan Performance Based Restricted Stock Unit Award Notice and Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed May 24, 2012)2012 (File No. 333-153435)).
  
  10.29†10.21† 
Form of Signet Jewelers Limited Omnibus Incentive Plan Time-Based Restricted Stock Award Notice and Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed May 24, 2012)2012 (File No. 333-153435)).
  
  10.22†
Separation and Release Agreement dated February 23, 2018 between Sterling Jewelers Inc and George Murray (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed June 12, 2018).
  10.23†
Signet Jewelers Limited 2018 Omnibus Incentive Plan (incorporated by reference to Exhibit 99.1 to the Company’s Registration Statement on Form S-8 filed on June 15, 2018).
  10.24†
Form of Signet Jewelers Limited 2018 Omnibus Incentive Plan Time-Based Restricted Stock Unit Award Notice and Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed September 6, 2018).
  10.25†
Form of Signet Jewelers Limited 2018 Omnibus Incentive Plan Time-Based Restricted Stock Award Notice and Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed September 6, 2018).
  10.26†
Form of Signet Jewelers Limited 2018 Omnibus Incentive Plan Performance Based Restricted Stock Unit Award Notice and Agreement (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed September 6, 2018).
  10.27†
Signet Jewelers Limited Sharesave Scheme (incorporated by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8 filed on June 15, 2018).
  10.28†
Irish Sub-Plan established pursuant to the Signet Jewelers Limited Sharesave Scheme (incorporated by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8 filed on June 15, 2018).
  10.29†
Signet Jewelers Limited Employee Share Purchase Plan for U.S. Employees (incorporated by reference to Exhibit 99.4 to the Company’s Registration Statement on Form S-8 filed on June 15, 2018).

NumberDescription of Exhibits
10.30† 
Separation and Release Agreement, dated August 28, 2018 between Sterling Jewelers Inc. and Michele Santana (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed August 30, 2018).
  10.31†
Side Letter, dated March 13, 2019, between Sterling Jewelers Inc. and Michele Santana (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 15, 2019).
  10.32†
Termination Protection Agreement, dated March 12, 2019, between Sterling Jewelers Inc. and Joan Hilson (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 13, 2019).
  10.33†
Form of Letter of Appointment of Independent Directors (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K filed March 22, 2012)2012 (File No. 333-153435)).
  
  10.31†10.34† 
Form of Deed of Indemnity for Directors (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K filed March 30, 2010)2010 (File No. 333-153435)).
   
  10.3210.35 Voting and Support
Investment Agreement, dated February 19, 2014as of August 24, 2016, by and among Signet ZaleJewelers Limited, Green Equity Investors VI, L.P. and The Z Investment Holdings, LLCGreen Equity Investors Side VI, L.P. (incorporated by reference to Exhibit 10.1 ofto the Company’s Current Report on Form 8-K filed by Zale Corporation on February 19, 2014)August 25, 2016).
   
  12.1*10.36 Ratio
Shareholders’ Agreement by and among Signet Jewelers Limited, Green Equity Investors VI, L.P., Green Equity Investors Side VI, L.P., LGP Associates VI-A LLC and LGP Associates VI-B LLC, dated as of earningsOctober 5, 2016 (incorporated by reference to fixed charges.Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 6, 2016).
  10.37
Registration Rights Agreement, dated as of October 5, 2016, by and among Signet Jewelers Limited, Green Equity Investors VI, LP, Green Equity Investors Side VI, L.P., LGP Associates VI-A LLC and LGP Associates VI-B LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed October 6, 2016).
  10.38
Accelerated Share Repurchase Master Confirmation Agreement, dated as of October 5, 2016, by and among Signet Jewelers Limited and JPMorgan Chase Bank, National Association (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed November 29, 2016).
  10.39
Accelerated Share Repurchase Supplemental Confirmation Agreement, dated as of October 5, 2016, by and among Signet Jewelers Limited and JPMorgan Chase Bank, National Association (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed November 29, 2016).
   
  21.1* 
Subsidiaries of Signet Jewelers Limited.
   
  23.1* 
Consent of independent registered public accounting firm.
   
  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.

   
NumberDescription of Exhibits
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.
*Filed herewith.
†Management contract or compensatory plan or arrangement.

141
ITEM 16. FORM 10-K SUMMARY
Table of ContentsNone.


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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
    
Date: March 24, 2016April 3, 2019 By: /s/ Michele L. Santana
    Name: Michele L. Santana
    Title: 
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on the date set forth below.
       
Date   Signature Title
    
March 24, 2016April 3, 2019 By: /s/ Mark LightVirginia C. Drosos Chief Executive Officer (Principal Executive Officer and Director)
    Mark LightVirginia C. Drosos 
    
March 24, 2016April 3, 2019 By: /s/ Michele L. Santana Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
    Michele L. Santana 
    
March 24, 2016April 3, 2019 By: /s/ H. Todd Stitzer Chairman of the Board
    H. Todd Stitzer 
    
March 24, 2016April 3, 2019 By: /s/ Dale W. HilpertR. Mark Graf Director
    Dale W. HilpertR. Mark Graf 
    
March 24, 2016April 3, 2019By:/s/ Zackery A. HicksDirector
Zackery A. Hicks
April 3, 2019By:/s/ Helen E. McCluskeyDirector
Helen E. McCluskey
April 3, 2019By:/s/ Sharon L. McCollamDirector
Sharon L. McCollam
April 3, 2019 By: /s/ Marianne Miller Parrs Director
    Marianne Miller Parrs 
    
March 24, 2016April 3, 2019 By: /s/ Thomas G. Plaskett Director
    Thomas G. Plaskett 
    
March 24, 2016April 3, 2019 By: /s/ Russell WallsNancy A. Reardon Director
    Russell WallsNancy A. Reardon 
    
March 24, 2016April 3, 2019 By: /s/ Virginia C. DrososJonathan Sokoloff Director
    Virginia C. DrososJonathan Sokoloff 
    
March 24, 2016April 3, 2019 By: /s/ Helen E. McCluskeyBrian Tilzer Director
    Helen E. McCluskeyBrian Tilzer 
    
March 24, 2016April 3, 2019 By: /s/ Eugenia M. Ulasewicz Director
    Eugenia M. Ulasewicz 
March 24, 2016By:/s/ Robert J. StackDirector
Robert J. Stack

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