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Fair value measurements | 3 Months Ended
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May 05, 2018
Fair Value Disclosures [Abstract] |
Fair value measurements | 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:
| May 5, 2018 |  | February 3, 2018 |  | April 29, 2017
(in millions) | Carrying Value |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Carrying Value |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2) |  | Carrying Value |  | Quoted prices in active markets for identical assets (Level 1) |  | Significant other observable inputs (Level 2)
Assets: |  |  |  |  |  |  |  |  |
US Treasury securities | $ | 7.3 |  |  | $ | 7.3 |  |  | $ | — |  |  | $ | 7.5 |  |  | $ | 7.5 |  |  | $ | — |  |  | $ | 7.9 |  |  | $ | 7.9 |  |  | $ | — |
Corporate equity securities | 4.3 |  |  | 4.3 |  |  | — |  |  | 4.5 |  |  | 4.5 |  |  | — |  |  | 4.0 |  |  | 4.0 |  |  | — |
Foreign currency contracts | 0.4 |  |  | — |  |  | 0.4 |  |  | — |  |  | — |  |  | — |  |  | 0.4 |  |  | — |  |  | 0.4 |
Commodity contracts | 0.1 |  |  | — |  |  | 0.1 |  |  | — |  |  | — |  |  | — |  |  | 2.0 |  |  | — |  |  | 2.0 |
Interest rate swaps | 2.3 |  |  | — |  |  | 2.3 |  |  | 2.2 |  |  | — |  |  | 2.2 |  |  | 0.8 |  |  | — |  |  | 0.8 |
US government agency securities | 4.7 |  |  | — |  |  | 4.7 |  |  | 5.1 |  |  | — |  |  | 5.1 |  |  | 4.9 |  |  | — |  |  | 4.9 |
Corporate bonds and notes | 10.6 |  |  | — |  |  | 10.6 |  |  | 10.8 |  |  | — |  |  | 10.8 |  |  | 11.1 |  |  | — |  |  | 11.1 |
Total assets | $ | 29.7 |  |  | $ | 11.6 |  |  | $ | 18.1 |  |  | $ | 30.1 |  |  | $ | 12.0 |  |  | $ | 18.1 |  |  | $ | 31.1 |  |  | $ | 11.9 |  |  | $ | 19.2 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency contracts | $ | (1.2 | ) |  | $ | — |  |  | $ | (1.2 | ) |  | $ | (2.3 | ) |  | $ | — |  |  | $ | (2.3 | ) |  | $ | (1.3 | ) |  | $ | — |  |  | $ | (1.3 | )
Commodity contracts | — |  |  | — |  |  | — |  |  | (0.1 | ) |  | — |  |  | (0.1 | ) |  | — |  |  | — |  |  | — |
Total liabilities | $ | (1.2 | ) |  | $ | — |  |  | $ | (1.2 | ) |  | $ | (2.4 | ) |  | $ | — |  |  | $ | (2.4 | ) |  | $ | (1.3 | ) |  | $ | — |  |  | $ | (1.3 | )
Investments in US Treasury securities and corporate equity securities are based on quoted market prices for identical instruments in active markets, and therefore were classified as Level 1 measurements in the fair value hierarchy. Investments in US government agency securities and corporate bonds and notes are based on quoted prices for similar instruments in active markets, and therefore were classified as Level 2 measurements in the fair value hierarchy. The fair value of derivative financial instruments has been determined based on market value equivalents at the balance sheet date, taking into account the current interest rate environment, foreign currency forward rates or commodity forward rates, and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note 16 for additional information related to the Company’s derivatives. As of May 5, 2018, the fair value of the in-house finance receivable portfolio was approximately 70% of par value. This estimated value was derived from a discounted cash flow model using unobservable inputs, including estimated yields, loss rates, payment rates and discount rates to estimate the fair value associated with the accounts receivable existing as of May 5, 2018, with consideration given to the terms of the agreements entered into with CarVal and Castlelake during the first quarter of Fiscal 2019. 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 the 13 weeks ended May 5, 2018, the Company performed an interim impairment test 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 15 for additional information. The carrying amounts of cash and cash equivalents, other receivables, accounts payable, accrued expenses, other liabilities, income taxes and the revolving credit facility approximate fair value because of the short-term maturity of these amounts. The fair values of long-term debt instruments were determined using quoted market prices in inactive markets or discounted cash flows based upon current observable market interest rates and therefore were classified as Level 2 measurements in the fair value hierarchy. See Note 18 for classification between current and long-term debt. The carrying amount and fair value of outstanding debt at May 5, 2018, February 3, 2018 and April 29, 2017 were as follows:
| May 5, 2018 |  | February 3, 2018 |  | April 29, 2017
(in millions) | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value |  | Fair Value
Long-term debt: |  |  |  |  |  |  |  |  |  |  |
Senior notes (Level 2) | $ | 394.6 |  |  | $ | 382.3 |  |  | $ | 394.5 |  |  | $ | 396.3 |  |  | $ | 393.9 |  |  | $ | 396.5 |
Securitization facility (Level 2) | — |  |  | — |  |  | — |  |  | — |  |  | 599.7 |  |  | 600.0 |
Term loan (Level 2) | 317.0 |  |  | 319.5 |  |  | 323.5 |  |  | 326.2 |  |  | 340.8 |  |  | 344.1 |
Total | $ | 711.6 |  |  | $ | 701.8 |  |  | $ | 718.0 |  |  | $ | 722.5 |  |  | $ | 1,334.4 |  |  | $ | 1,340.6 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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