|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to MKHL | $ | 219.4 | $ | 271.3 | $ | 547.8 | $ | 579.3 | |||||||
Denominator: | |||||||||||||||
Basic weighted average shares | 152,047,963 | 163,148,597 | 152,772,067 | 168,000,933 | |||||||||||
Weighted average dilutive share equivalents: | |||||||||||||||
Share options, restricted shares/units, and performance restricted share units | 2,575,376 | 2,065,448 | 2,448,917 | 2,221,655 | |||||||||||
Diluted weighted average shares | 154,623,339 | 165,214,045 | 155,220,984 | 170,222,588 | |||||||||||
Basic net income per share | $ | 1.44 | $ | 1.66 | $ | 3.59 | $ | 3.45 | |||||||
Diluted net income per share | $ | 1.42 | $ | 1.64 | $ | 3.53 | $ | 3.40 |
|
November 1, 2017 | |||
Consideration paid to Jimmy Choo shareholders | $ | 1,181.2 | |
Repayment of debt and related obligations | 266.2 | ||
Total purchase price | $ | 1,447.4 |
November 1, 2017 | |||
Cash and cash equivalents | $ | 34.3 | |
Accounts receivable | 30.7 | ||
Inventory(1) | 126.2 | ||
Other current assets | 63.9 | ||
Current assets | 255.1 | ||
Property and equipment(2) | 51.0 | ||
Goodwill(3) | 684.9 | ||
Brand(4) | 577.8 | ||
Customer relationships(5) | 212.8 | ||
Lease rights | 5.9 | ||
Deferred tax assets | 22.5 | ||
Other assets | 28.1 | ||
Total assets acquired | $ | 1,838.1 | |
Accounts payable | $ | 129.3 | |
Other current liabilities | 96.5 | ||
Current liabilities | 225.8 | ||
Deferred tax liabilities | 134.9 | ||
Other liabilities | 26.9 | ||
Total liabilities assumed | $ | 387.6 | |
Less: Noncontrolling interest in joint ventures | $ | 3.1 | |
Fair value of net assets acquired | $ | 1,447.4 | |
Fair value of acquisition consideration | $ | 1,447.4 |
(4) | Represents the fair value Jimmy Choo's brand, which is an indefinite-lived intangible asset due to being essential to the Company's ability to operate the Jimmy Choo business for the foreseeable future. The Jimmy Choo brand was valued using the relief-from-royalty method of the income valuation approach. |
Three Months Ended | Nine Months Ended | ||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||
Pro-forma total revenue | $ | 1,478.5 | $ | 1,499.1 | $ | 3,832.6 | $ | 3,819.6 | |||||
Pro-forma net income | 242.8 | 279.4 | 574.2 | 586.2 | |||||||||
Pro-forma net income per ordinary share attributable to MKHL: | |||||||||||||
Basic | $ | 1.60 | $ | 1.71 | $ | 3.76 | $ | 3.49 | |||||
Diluted | $ | 1.57 | $ | 1.69 | $ | 3.70 | $ | 3.44 |
Three Months Ended | Nine Months Ended | ||||||
December 31, 2016 | December 31, 2016 | ||||||
Pro-forma total revenue | $ | 1,352.8 | $ | 3,455.3 | |||
Pro-forma net income | 271.0 | 584.0 | |||||
Pro-forma net income per ordinary share attributable to MKHL: | |||||||
Basic | $ | 1.66 | $ | 3.48 | |||
Diluted | $ | 1.64 | $ | 3.43 |
|
December 30, 2017 | April 1, 2017 | ||||||
Trade receivables: | |||||||
Credit risk assumed by insured | $ | 283.1 | $ | 294.0 | |||
Credit risk retained by Company | 90.6 | 63.8 | |||||
Receivables due from licensees | 31.0 | 11.9 | |||||
404.7 | 369.7 | ||||||
Less: allowances | (116.7 | ) | (103.9 | ) | |||
$ | 288.0 | $ | 265.8 |
|
December 30, 2017 | April 1, 2017 | ||||||
Leasehold improvements | $ | 562.0 | $ | 507.9 | |||
Furniture and fixtures | 270.4 | 244.1 | |||||
In-store shops | 269.4 | 256.0 | |||||
Computer equipment and software | 262.1 | 226.2 | |||||
Equipment | 116.5 | 104.4 | |||||
Building | 50.3 | 40.6 | |||||
Land | 15.8 | 14.0 | |||||
1,546.5 | 1,393.2 | ||||||
Less: accumulated depreciation and amortization | (969.9 | ) | (833.9 | ) | |||
576.6 | 559.3 | ||||||
Construction-in-progress | 22.8 | 32.2 | |||||
$ | 599.4 | $ | 591.5 |
|
December 30, 2017 | April 1, 2017 | ||||||
Definite-lived intangible assets: | |||||||
Reacquired Rights | $ | 400.4 | $ | 400.4 | |||
Trademarks | 23.0 | 23.0 | |||||
Lease Rights | 78.9 | 74.2 | |||||
Customer Relationships | 223.3 | 5.0 | |||||
Total definite-lived intangible assets | 725.6 | 502.6 | |||||
Less: accumulated amortization | (102.7 | ) | (84.5 | ) | |||
Net definite-lived intangible assets | $ | 622.9 | $ | 418.1 | |||
Indefinite-lived intangible assets: | |||||||
Jimmy Choo brand | $ | 592.5 | $ | — |
Remainder of Fiscal 2018 | $ | 8.4 | |
Fiscal 2019 | 33.7 | ||
Fiscal 2020 | 33.6 | ||
Fiscal 2021 | 33.5 | ||
Fiscal 2022 | 33.3 | ||
Thereafter | 480.4 | ||
$ | 622.9 |
MK Retail | MK Wholesale | MK Licensing | Jimmy Choo | Total | |||||||||||||||
Balance at April 1, 2017 | $ | 91.9 | $ | 25.9 | $ | 1.9 | $ | — | $ | 119.7 | |||||||||
Acquisition of Jimmy Choo | — | — | — | 684.9 | 684.9 | ||||||||||||||
Foreign currency translation | — | — | — | 17.4 | 17.4 | ||||||||||||||
Balance at December 30, 2017 | $ | 91.9 | $ | 25.9 | $ | 1.9 | $ | 702.3 | $ | 822.0 |
|
December 30, 2017 | April 1, 2017 | ||||||
Prepaid taxes | $ | 96.1 | $ | 56.6 | |||
Prepaid rent | 22.9 | 21.7 | |||||
Leasehold incentive receivable | 9.5 | 12.0 | |||||
Prepaid insurance | 2.9 | 3.2 | |||||
Restricted cash | 0.3 | 1.9 | |||||
Unrealized gains on forward foreign exchange contracts | — | 4.7 | |||||
Other | 30.6 | 21.8 | |||||
$ | 162.3 | $ | 121.9 |
December 30, 2017 | April 1, 2017 | ||||||
Other taxes payable | $ | 72.0 | $ | 29.2 | |||
Accrued rent | 36.0 | 21.5 | |||||
Accrued advertising and marketing | 30.9 | 10.7 | |||||
Accrued capital expenditures | 22.0 | 20.5 | |||||
Professional services | 16.4 | 7.1 | |||||
Gift cards and retail store credits | 14.3 | 12.9 | |||||
Unrealized loss on forward foreign currency exchange contracts | 9.5 | 0.4 | |||||
Accrued samples | 7.0 | 2.2 | |||||
Accrued interest | 3.8 | 0.3 | |||||
Deferred income | 3.2 | 0.1 | |||||
Advance royalties | 0.6 | 5.0 | |||||
Other | 61.7 | 25.1 | |||||
$ | 277.4 | $ | 135.0 |
|
Three Months Ended | Nine Months Ended | ||||||
December 30, 2017 | December 30, 2017 | ||||||
Lease termination and store closure costs | $ | 2.4 | $ | 7.7 | |||
Severance and benefits costs | — | 0.6 | |||||
Total restructuring charges | $ | 2.4 | $ | 8.3 |
|
December 30, 2017 | April 1, 2017 | ||||||
Term Loan | $ | 550.0 | $ | — | |||
4.000% Senior Notes | 450.0 | — | |||||
Revolving Credit Facilities | — | 133.1 | |||||
Other | 0.1 | — | |||||
Total debt | 1,000.1 | 133.1 | |||||
Less: Debt issuance costs | 5.4 | — | |||||
Less: Unamortized discount on long-term debt | 2.2 | — | |||||
Total carrying value of debt | 992.5 | 133.1 | |||||
Less: Short-term debt | 0.1 | 133.1 | |||||
Total long-term debt | $ | 992.4 | $ | — |
• | for any loans (except loans denominated in Canadian Dollars), the greater of Adjusted LIBOR for the applicable interest period and zero, plus an applicable margin based on the Company’s public debt rating; |
• | for loans denominated in U.S. Dollars, an alternate base rate, which is the greatest of: (a) the prime rate publicly announced from time to time by JPMorgan Chase, (b) the greater of the federal funds effective rate and the Federal Reserve Bank of New York overnight bank funding rate and zero, plus 50 basis points, and (c) the greater of the one-month London Interbank Offered Rate adjusted for statutory reserve requirements for Eurocurrency liabilities (“Adjusted LIBOR”) and zero, plus 100 basis points, in each case, plus an applicable margin based on the Company’s public debt ratings; |
• | for loans denominated in Canadian Dollars, the Canadian prime rate, which is the greater of the PRIMCAN Index rate and the rate applicable to one-month Canadian Dollar banker’s acceptances quoted on Reuters (“CDOR”), plus 100 basis points, plus an applicable margin based on the Company’s public debt ratings; or |
• | for loans denominated in Canadian Dollars, the average CDOR rate for the applicable interest period, plus 10 basis points per annum, plus an applicable margin based on the Company’s public debt ratings. |
|
Remainder of Fiscal 2018 | $ | 98.9 | |
Fiscal 2019 | 304.5 | ||
Fiscal 2020 | 280.4 | ||
Fiscal 2021 | 262.2 | ||
Fiscal 2022 | 234.1 | ||
Thereafter | 689.3 | ||
$ | 1,869.4 |
|
Fair value at December 30, 2017 using: | Fair value at April 1, 2017 using: | ||||||||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||
Forward foreign currency exchange contracts - assets | $ | — | $ | — | $ | — | $ | — | $ | 4.7 | $ | — | |||||||||||
Forward foreign currency exchange contracts - liabilities | $ | — | $ | 9.5 | $ | — | $ | — | $ | 0.4 | $ | — |
December 30, 2017 | ||||||||
Carrying Value | Estimated Fair Value | |||||||
4.000% Senior Notes | $ | 444.2 | $ | 453.0 | ||||
Term Loan | $ | 548.2 | $ | 553.4 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 30, 2017 | ||||||||||||||
Carrying Value Prior to Impairment | Fair Value | Carrying Value Prior to Impairment | Fair Value | ||||||||||||
Fixed assets | $ | 3.5 | $ | 0.9 | $ | 16.9 | $ | 2.4 | |||||||
Lease Rights | — | — | 3.6 | 0.2 | |||||||||||
Customer relationships | — | — | 1.0 | — | |||||||||||
Total | $ | 3.5 | $ | 0.9 | $ | 21.5 | $ | 2.6 |
|
Fair Values | |||||||||||||||||||||||
Notional Amounts | Current Assets (1) | Current Liabilities (2) | |||||||||||||||||||||
December 30, 2017 | April 1, 2017 | December 30, 2017 | April 1, 2017 | December 30, 2017 | April 1, 2017 | ||||||||||||||||||
Designated forward foreign currency exchange contracts | $ | 168.9 | $ | 167.5 | $ | — | $ | 4.7 | $ | 7.1 | $ | 0.4 | |||||||||||
Undesignated forward foreign currency exchange contracts | 20.6 | — | — | — | 2.4 | — | |||||||||||||||||
Total | $ | 189.5 | $ | 167.5 | $ | — | $ | 4.7 | $ | 9.5 | $ | 0.4 |
(1) | Recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets. |
(2) | Recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets. |
Three Months Ended | |||||||||||||||
December 30, 2017 | December 31, 2016 | ||||||||||||||
Pre-Tax Loss Recognized in OCI (Effective Portion) | Pre-Tax Loss Reclassified from Accumulated OCI into Earnings (Effective Portion) | Pre-Tax Gain Recognized in OCI (Effective Portion) | Pre-Tax Loss Reclassified from Accumulated OCI into Earnings (Effective Portion) | ||||||||||||
Forward foreign currency exchange contracts | $ | (2.4 | ) | $ | (2.2 | ) | $ | 10.2 | $ | (0.2 | ) |
Nine Months Ended | |||||||||||||||
December 30, 2017 | December 31, 2016 | ||||||||||||||
Pre-Tax Loss Recognized in OCI (Effective Portion) | Pre-Tax Gain Reclassified from Accumulated OCI into Earnings (Effective Portion) | Pre-Tax Gain Recognized in OCI (Effective Portion) | Pre-Tax Amount Reclassified from Accumulated OCI into Earnings (Effective Portion) | ||||||||||||
Forward foreign currency exchange contracts | $ | (17.7 | ) | $ | 1.0 | $ | 12.3 | $ | — |
|
Foreign Currency Translation (Losses) Gains | Net (Losses) Gains on Derivatives (1) | Other Comprehensive (Loss) Income Attributable to MKHL | Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest | Total Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
Balance at April 2, 2016 | $ | (77.7 | ) | $ | (3.2 | ) | $ | (80.9 | ) | $ | 0.1 | $ | (80.8 | ) | |||||
Other comprehensive (loss) income before reclassifications (2) | (20.4 | ) | 11.1 | (9.3 | ) | (0.4 | ) | (9.7 | ) | ||||||||||
Less: amounts reclassified from AOCI to earnings (3) | — | (0.1 | ) | (0.1 | ) | — | (0.1 | ) | |||||||||||
Other comprehensive (loss) income net of tax | (20.4 | ) | 11.2 | (9.2 | ) | (0.4 | ) | (9.6 | ) | ||||||||||
Balance at December 31, 2016 | $ | (98.1 | ) | $ | 8.0 | $ | (90.1 | ) | $ | (0.3 | ) | $ | (90.4 | ) | |||||
Balance at April 1, 2017 | $ | (86.1 | ) | $ | 5.5 | $ | (80.6 | ) | $ | (0.3 | ) | $ | (80.9 | ) | |||||
Other comprehensive income (loss) before reclassifications (2) | 78.6 | (15.4 | ) | 63.2 | 0.1 | 63.3 | |||||||||||||
Less: amounts reclassified from AOCI to earnings (3) | — | 1.0 | 1.0 | — | 1.0 | ||||||||||||||
Other comprehensive income (loss) net of tax | 78.6 | (16.4 | ) | 62.2 | 0.1 | 62.3 | |||||||||||||
Balance at December 30, 2017 | $ | (7.5 | ) | $ | (10.9 | ) | $ | (18.4 | ) | $ | (0.2 | ) | $ | (18.6 | ) |
(1) | Accumulated other comprehensive income balance related to net gains on derivative financial instruments as of December 30, 2017 and April 1, 2017 is net of a tax benefit of $1.5 million and a tax provision $0.8 million, respectively. Other comprehensive income (loss) before reclassifications related to derivative financial instruments for the nine months ended December 30, 2017 and December 31, 2016 is net of a tax provisions of $2.3 million and $1.1 million, respectively. All other tax effects were not material for the periods presented. |
(2) | Foreign currency translation losses for the nine months ended December 30, 2017 and December 31, 2016 include net losses of $4.4 million and $3.1 million respectively on intra-entity transactions that are of a long-term investment nature. Foreign currency translation losses for the nine months ended December 30, 2017 are net of a $35.2 million translation gain relating to the newly acquired Jimmy Choo business. |
(3) | Reclassified amounts relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations. |
|
• | MK Retail — segment includes sales through Michael Kors operated stores, including “Collection,” “Lifestyle” including “concessions,” and outlet stores located throughout the Americas (U.S., Canada and Latin America, excluding Brazil), Europe and certain parts of Asia, as well as Michael Kors e-commerce sales. Products sold through the MK Retail segment include women’s apparel, accessories (which include handbags and small leather goods such as wallets), men’s apparel, footwear and licensed products, such as watches, jewelry, fragrances and beauty, and eyewear. |
• | MK Wholesale — segment includes sales primarily to major department stores and specialty shops throughout the Americas, Europe and Asia. Products sold through the MK Wholesale segment include accessories (which include handbags and small leather goods such as wallets), footwear and women’s and men’s apparel. The Company also has wholesale arrangements pursuant to which it sells products to Michael Kors geographic licensees in certain parts of EMEA (Europe, Middle East and Africa) and Asia, as well as in Brazil. |
• | MK Licensing — segment includes royalties and other contributions earned on licensed products and use of the Company’s trademarks, and rights granted to third parties for the right to operate retail stores and/or sell the Company’s products in certain geographic regions such as Brazil, the Middle East, South Africa, Eastern Europe, certain parts of Asia and Australia. |
• | Jimmy Choo — segment includes revenue generated from sales of footwear, handbags and small leather goods through directly operated Jimmy Choo stores throughout the Americas (United States, Canada and Latin America, excluding Brazil), EMEA and certain parts of Asia, as well as through the Jimmy Choo e-commerce site. In addition, revenue is generated through wholesale sales to distribution partners, multi-brand department stores and specialty stores worldwide, as well as through product license agreements in connection with the manufacturing and sale of sunglasses, eyewear, fragrance and soft accessories, as well as through geographic licensing arrangements. |
As of | |||||||
December 30, 2017 | April 1, 2017 | ||||||
MK Retail | $ | 91.9 | $ | 91.9 | |||
MK Wholesale | 25.9 | 25.9 | |||||
MK Licensing | 1.9 | 1.9 | |||||
Jimmy Choo | 702.3 | — | |||||
Total Goodwill | $ | 822.0 | $ | 119.7 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Total revenue: | |||||||||||||||
MK Retail | $ | 846.3 | $ | 836.7 | $ | 2,111.2 | $ | 1,996.8 | |||||||
MK Wholesale | 430.8 | 473.1 | 1,198.0 | 1,319.7 | |||||||||||
MK Licensing | 48.3 | 43.0 | 115.2 | 112.4 | |||||||||||
Michael Kors | 1,325.4 | 1,352.8 | 3,424.4 | 3,428.9 | |||||||||||
Jimmy Choo | 114.7 | — | 114.7 | — | |||||||||||
Total revenue | $ | 1,440.1 | $ | 1,352.8 | $ | 3,539.1 | $ | 3,428.9 | |||||||
Income from operations: | |||||||||||||||
MK Retail | $ | 180.4 | $ | 178.2 | $ | 341.6 | $ | 314.4 | |||||||
MK Wholesale | 100.5 | 140.2 | 263.6 | 367.2 | |||||||||||
MK Licensing | 26.9 | 23.5 | 51.1 | 50.9 | |||||||||||
Michael Kors | 307.8 | 341.9 | 656.3 | 732.5 | |||||||||||
Jimmy Choo | 5.7 | — | 5.7 | — | |||||||||||
Income from operations | $ | 313.5 | $ | 341.9 | $ | 662.0 | $ | 732.5 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Depreciation and amortization: | |||||||||||||||
MK Retail | $ | 33.7 | $ | 40.1 | $ | 98.8 | $ | 114.6 | |||||||
MK Wholesale | 13.9 | 15.1 | 43.5 | 46.3 | |||||||||||
MK Licensing | 0.6 | 0.5 | 1.8 | 1.6 | |||||||||||
Michael Kors | 48.2 | 55.7 | 144.1 | 162.5 | |||||||||||
Jimmy Choo | 5.8 | — | 5.8 | — | |||||||||||
Total depreciation and amortization | $ | 54.0 | $ | 55.7 | $ | 149.9 | $ | 162.5 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Total revenue: | |||||||||||||||
The Americas (1) | $ | 946.6 | $ | 983.8 | $ | 2,332.6 | $ | 2,419.7 | |||||||
EMEA | 333.1 | 256.7 | 805.0 | 728.7 | |||||||||||
Asia | 160.4 | 112.3 | 401.5 | 280.5 | |||||||||||
Total revenue | $ | 1,440.1 | $ | 1,352.8 | $ | 3,539.1 | $ | 3,428.9 |
As of | |||||||
December 30, 2017 | April 1, 2017 | ||||||
Long-lived assets, excluding goodwill: | |||||||
The Americas (1) | $ | 332.6 | $ | 356.1 | |||
EMEA | 1,027.0 | 197.7 | |||||
Asia | 455.2 | 455.8 | |||||
Total Long-lived assets | $ | 1,814.8 | $ | 1,009.6 |
(1) | Total revenue earned in the U.S. were $883.2 million and $2.164 billion, respectively, for the three and nine months ended December 30, 2017 and $925.7 million and $2.261 billion for the three and nine months ended December 31, 2016. Long-lived assets located in the U.S. as of December 30, 2017 and April 1, 2017 were $286.4 million and $328.8 million, respectively. |
|
|
|
|
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to MKHL | $ | 219.4 | $ | 271.3 | $ | 547.8 | $ | 579.3 | |||||||
Denominator: | |||||||||||||||
Basic weighted average shares | 152,047,963 | 163,148,597 | 152,772,067 | 168,000,933 | |||||||||||
Weighted average dilutive share equivalents: | |||||||||||||||
Share options, restricted shares/units, and performance restricted share units | 2,575,376 | 2,065,448 | 2,448,917 | 2,221,655 | |||||||||||
Diluted weighted average shares | 154,623,339 | 165,214,045 | 155,220,984 | 170,222,588 | |||||||||||
Basic net income per share | $ | 1.44 | $ | 1.66 | $ | 3.59 | $ | 3.45 | |||||||
Diluted net income per share | $ | 1.42 | $ | 1.64 | $ | 3.53 | $ | 3.40 |
|
November 1, 2017 | |||
Consideration paid to Jimmy Choo shareholders | $ | 1,181.2 | |
Repayment of debt and related obligations | 266.2 | ||
Total purchase price | $ | 1,447.4 |
November 1, 2017 | |||
Cash and cash equivalents | $ | 34.3 | |
Accounts receivable | 30.7 | ||
Inventory(1) | 126.2 | ||
Other current assets | 63.9 | ||
Current assets | 255.1 | ||
Property and equipment(2) | 51.0 | ||
Goodwill(3) | 684.9 | ||
Brand(4) | 577.8 | ||
Customer relationships(5) | 212.8 | ||
Lease rights | 5.9 | ||
Deferred tax assets | 22.5 | ||
Other assets | 28.1 | ||
Total assets acquired | $ | 1,838.1 | |
Accounts payable | $ | 129.3 | |
Other current liabilities | 96.5 | ||
Current liabilities | 225.8 | ||
Deferred tax liabilities | 134.9 | ||
Other liabilities | 26.9 | ||
Total liabilities assumed | $ | 387.6 | |
Less: Noncontrolling interest in joint ventures | $ | 3.1 | |
Fair value of net assets acquired | $ | 1,447.4 | |
Fair value of acquisition consideration | $ | 1,447.4 |
(4) | Represents the fair value Jimmy Choo's brand, which is an indefinite-lived intangible asset due to being essential to the Company's ability to operate the Jimmy Choo business for the foreseeable future. The Jimmy Choo brand was valued using the relief-from-royalty method of the income valuation approach. |
Three Months Ended | Nine Months Ended | ||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||
Pro-forma total revenue | $ | 1,478.5 | $ | 1,499.1 | $ | 3,832.6 | $ | 3,819.6 | |||||
Pro-forma net income | 242.8 | 279.4 | 574.2 | 586.2 | |||||||||
Pro-forma net income per ordinary share attributable to MKHL: | |||||||||||||
Basic | $ | 1.60 | $ | 1.71 | $ | 3.76 | $ | 3.49 | |||||
Diluted | $ | 1.57 | $ | 1.69 | $ | 3.70 | $ | 3.44 |
Three Months Ended | Nine Months Ended | ||||||
December 31, 2016 | December 31, 2016 | ||||||
Pro-forma total revenue | $ | 1,352.8 | $ | 3,455.3 | |||
Pro-forma net income | 271.0 | 584.0 | |||||
Pro-forma net income per ordinary share attributable to MKHL: | |||||||
Basic | $ | 1.66 | $ | 3.48 | |||
Diluted | $ | 1.64 | $ | 3.43 |
|
December 30, 2017 | April 1, 2017 | ||||||
Trade receivables: | |||||||
Credit risk assumed by insured | $ | 283.1 | $ | 294.0 | |||
Credit risk retained by Company | 90.6 | 63.8 | |||||
Receivables due from licensees | 31.0 | 11.9 | |||||
404.7 | 369.7 | ||||||
Less: allowances | (116.7 | ) | (103.9 | ) | |||
$ | 288.0 | $ | 265.8 |
|
December 30, 2017 | April 1, 2017 | ||||||
Leasehold improvements | $ | 562.0 | $ | 507.9 | |||
Furniture and fixtures | 270.4 | 244.1 | |||||
In-store shops | 269.4 | 256.0 | |||||
Computer equipment and software | 262.1 | 226.2 | |||||
Equipment | 116.5 | 104.4 | |||||
Building | 50.3 | 40.6 | |||||
Land | 15.8 | 14.0 | |||||
1,546.5 | 1,393.2 | ||||||
Less: accumulated depreciation and amortization | (969.9 | ) | (833.9 | ) | |||
576.6 | 559.3 | ||||||
Construction-in-progress | 22.8 | 32.2 | |||||
$ | 599.4 | $ | 591.5 |
|
December 30, 2017 | April 1, 2017 | ||||||
Definite-lived intangible assets: | |||||||
Reacquired Rights | $ | 400.4 | $ | 400.4 | |||
Trademarks | 23.0 | 23.0 | |||||
Lease Rights | 78.9 | 74.2 | |||||
Customer Relationships | 223.3 | 5.0 | |||||
Total definite-lived intangible assets | 725.6 | 502.6 | |||||
Less: accumulated amortization | (102.7 | ) | (84.5 | ) | |||
Net definite-lived intangible assets | $ | 622.9 | $ | 418.1 | |||
Indefinite-lived intangible assets: | |||||||
Jimmy Choo brand | $ | 592.5 | $ | — |
Remainder of Fiscal 2018 | $ | 8.4 | |
Fiscal 2019 | 33.7 | ||
Fiscal 2020 | 33.6 | ||
Fiscal 2021 | 33.5 | ||
Fiscal 2022 | 33.3 | ||
Thereafter | 480.4 | ||
$ | 622.9 |
MK Retail | MK Wholesale | MK Licensing | Jimmy Choo | Total | |||||||||||||||
Balance at April 1, 2017 | $ | 91.9 | $ | 25.9 | $ | 1.9 | $ | — | $ | 119.7 | |||||||||
Acquisition of Jimmy Choo | — | — | — | 684.9 | 684.9 | ||||||||||||||
Foreign currency translation | — | — | — | 17.4 | 17.4 | ||||||||||||||
Balance at December 30, 2017 | $ | 91.9 | $ | 25.9 | $ | 1.9 | $ | 702.3 | $ | 822.0 |
|
December 30, 2017 | April 1, 2017 | ||||||
Prepaid taxes | $ | 96.1 | $ | 56.6 | |||
Prepaid rent | 22.9 | 21.7 | |||||
Leasehold incentive receivable | 9.5 | 12.0 | |||||
Prepaid insurance | 2.9 | 3.2 | |||||
Restricted cash | 0.3 | 1.9 | |||||
Unrealized gains on forward foreign exchange contracts | — | 4.7 | |||||
Other | 30.6 | 21.8 | |||||
$ | 162.3 | $ | 121.9 |
December 30, 2017 | April 1, 2017 | ||||||
Other taxes payable | $ | 72.0 | $ | 29.2 | |||
Accrued rent | 36.0 | 21.5 | |||||
Accrued advertising and marketing | 30.9 | 10.7 | |||||
Accrued capital expenditures | 22.0 | 20.5 | |||||
Professional services | 16.4 | 7.1 | |||||
Gift cards and retail store credits | 14.3 | 12.9 | |||||
Unrealized loss on forward foreign currency exchange contracts | 9.5 | 0.4 | |||||
Accrued samples | 7.0 | 2.2 | |||||
Accrued interest | 3.8 | 0.3 | |||||
Deferred income | 3.2 | 0.1 | |||||
Advance royalties | 0.6 | 5.0 | |||||
Other | 61.7 | 25.1 | |||||
$ | 277.4 | $ | 135.0 |
|
Three Months Ended | Nine Months Ended | ||||||
December 30, 2017 | December 30, 2017 | ||||||
Lease termination and store closure costs | $ | 2.4 | $ | 7.7 | |||
Severance and benefits costs | — | 0.6 | |||||
Total restructuring charges | $ | 2.4 | $ | 8.3 |
|
December 30, 2017 | April 1, 2017 | ||||||
Term Loan | $ | 550.0 | $ | — | |||
4.000% Senior Notes | 450.0 | — | |||||
Revolving Credit Facilities | — | 133.1 | |||||
Other | 0.1 | — | |||||
Total debt | 1,000.1 | 133.1 | |||||
Less: Debt issuance costs | 5.4 | — | |||||
Less: Unamortized discount on long-term debt | 2.2 | — | |||||
Total carrying value of debt | 992.5 | 133.1 | |||||
Less: Short-term debt | 0.1 | 133.1 | |||||
Total long-term debt | $ | 992.4 | $ | — |
|
Remainder of Fiscal 2018 | $ | 98.9 | |
Fiscal 2019 | 304.5 | ||
Fiscal 2020 | 280.4 | ||
Fiscal 2021 | 262.2 | ||
Fiscal 2022 | 234.1 | ||
Thereafter | 689.3 | ||
$ | 1,869.4 |
|
Fair value at December 30, 2017 using: | Fair value at April 1, 2017 using: | ||||||||||||||||||||||
Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | ||||||||||||||||||
Forward foreign currency exchange contracts - assets | $ | — | $ | — | $ | — | $ | — | $ | 4.7 | $ | — | |||||||||||
Forward foreign currency exchange contracts - liabilities | $ | — | $ | 9.5 | $ | — | $ | — | $ | 0.4 | $ | — |
December 30, 2017 | ||||||||
Carrying Value | Estimated Fair Value | |||||||
4.000% Senior Notes | $ | 444.2 | $ | 453.0 | ||||
Term Loan | $ | 548.2 | $ | 553.4 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 30, 2017 | ||||||||||||||
Carrying Value Prior to Impairment | Fair Value | Carrying Value Prior to Impairment | Fair Value | ||||||||||||
Fixed assets | $ | 3.5 | $ | 0.9 | $ | 16.9 | $ | 2.4 | |||||||
Lease Rights | — | — | 3.6 | 0.2 | |||||||||||
Customer relationships | — | — | 1.0 | — | |||||||||||
Total | $ | 3.5 | $ | 0.9 | $ | 21.5 | $ | 2.6 |
|
Fair Values | |||||||||||||||||||||||
Notional Amounts | Current Assets (1) | Current Liabilities (2) | |||||||||||||||||||||
December 30, 2017 | April 1, 2017 | December 30, 2017 | April 1, 2017 | December 30, 2017 | April 1, 2017 | ||||||||||||||||||
Designated forward foreign currency exchange contracts | $ | 168.9 | $ | 167.5 | $ | — | $ | 4.7 | $ | 7.1 | $ | 0.4 | |||||||||||
Undesignated forward foreign currency exchange contracts | 20.6 | — | — | — | 2.4 | — | |||||||||||||||||
Total | $ | 189.5 | $ | 167.5 | $ | — | $ | 4.7 | $ | 9.5 | $ | 0.4 |
(1) | Recorded within prepaid expenses and other current assets in the Company’s consolidated balance sheets. |
(2) | Recorded within accrued expenses and other current liabilities in the Company’s consolidated balance sheets. |
Three Months Ended | |||||||||||||||
December 30, 2017 | December 31, 2016 | ||||||||||||||
Pre-Tax Loss Recognized in OCI (Effective Portion) | Pre-Tax Loss Reclassified from Accumulated OCI into Earnings (Effective Portion) | Pre-Tax Gain Recognized in OCI (Effective Portion) | Pre-Tax Loss Reclassified from Accumulated OCI into Earnings (Effective Portion) | ||||||||||||
Forward foreign currency exchange contracts | $ | (2.4 | ) | $ | (2.2 | ) | $ | 10.2 | $ | (0.2 | ) |
Nine Months Ended | |||||||||||||||
December 30, 2017 | December 31, 2016 | ||||||||||||||
Pre-Tax Loss Recognized in OCI (Effective Portion) | Pre-Tax Gain Reclassified from Accumulated OCI into Earnings (Effective Portion) | Pre-Tax Gain Recognized in OCI (Effective Portion) | Pre-Tax Amount Reclassified from Accumulated OCI into Earnings (Effective Portion) | ||||||||||||
Forward foreign currency exchange contracts | $ | (17.7 | ) | $ | 1.0 | $ | 12.3 | $ | — |
|
Foreign Currency Translation (Losses) Gains | Net (Losses) Gains on Derivatives (1) | Other Comprehensive (Loss) Income Attributable to MKHL | Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest | Total Accumulated Other Comprehensive (Loss) Income | |||||||||||||||
Balance at April 2, 2016 | $ | (77.7 | ) | $ | (3.2 | ) | $ | (80.9 | ) | $ | 0.1 | $ | (80.8 | ) | |||||
Other comprehensive (loss) income before reclassifications (2) | (20.4 | ) | 11.1 | (9.3 | ) | (0.4 | ) | (9.7 | ) | ||||||||||
Less: amounts reclassified from AOCI to earnings (3) | — | (0.1 | ) | (0.1 | ) | — | (0.1 | ) | |||||||||||
Other comprehensive (loss) income net of tax | (20.4 | ) | 11.2 | (9.2 | ) | (0.4 | ) | (9.6 | ) | ||||||||||
Balance at December 31, 2016 | $ | (98.1 | ) | $ | 8.0 | $ | (90.1 | ) | $ | (0.3 | ) | $ | (90.4 | ) | |||||
Balance at April 1, 2017 | $ | (86.1 | ) | $ | 5.5 | $ | (80.6 | ) | $ | (0.3 | ) | $ | (80.9 | ) | |||||
Other comprehensive income (loss) before reclassifications (2) | 78.6 | (15.4 | ) | 63.2 | 0.1 | 63.3 | |||||||||||||
Less: amounts reclassified from AOCI to earnings (3) | — | 1.0 | 1.0 | — | 1.0 | ||||||||||||||
Other comprehensive income (loss) net of tax | 78.6 | (16.4 | ) | 62.2 | 0.1 | 62.3 | |||||||||||||
Balance at December 30, 2017 | $ | (7.5 | ) | $ | (10.9 | ) | $ | (18.4 | ) | $ | (0.2 | ) | $ | (18.6 | ) |
(1) | Accumulated other comprehensive income balance related to net gains on derivative financial instruments as of December 30, 2017 and April 1, 2017 is net of a tax benefit of $1.5 million and a tax provision $0.8 million, respectively. Other comprehensive income (loss) before reclassifications related to derivative financial instruments for the nine months ended December 30, 2017 and December 31, 2016 is net of a tax provisions of $2.3 million and $1.1 million, respectively. All other tax effects were not material for the periods presented. |
(2) | Foreign currency translation losses for the nine months ended December 30, 2017 and December 31, 2016 include net losses of $4.4 million and $3.1 million respectively on intra-entity transactions that are of a long-term investment nature. Foreign currency translation losses for the nine months ended December 30, 2017 are net of a $35.2 million translation gain relating to the newly acquired Jimmy Choo business. |
(3) | Reclassified amounts relate to the Company’s forward foreign currency exchange contracts for inventory purchases and are recorded within cost of goods sold in the Company’s consolidated statements of operations. |
|
As of | |||||||
December 30, 2017 | April 1, 2017 | ||||||
MK Retail | $ | 91.9 | $ | 91.9 | |||
MK Wholesale | 25.9 | 25.9 | |||||
MK Licensing | 1.9 | 1.9 | |||||
Jimmy Choo | 702.3 | — | |||||
Total Goodwill | $ | 822.0 | $ | 119.7 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Total revenue: | |||||||||||||||
MK Retail | $ | 846.3 | $ | 836.7 | $ | 2,111.2 | $ | 1,996.8 | |||||||
MK Wholesale | 430.8 | 473.1 | 1,198.0 | 1,319.7 | |||||||||||
MK Licensing | 48.3 | 43.0 | 115.2 | 112.4 | |||||||||||
Michael Kors | 1,325.4 | 1,352.8 | 3,424.4 | 3,428.9 | |||||||||||
Jimmy Choo | 114.7 | — | 114.7 | — | |||||||||||
Total revenue | $ | 1,440.1 | $ | 1,352.8 | $ | 3,539.1 | $ | 3,428.9 | |||||||
Income from operations: | |||||||||||||||
MK Retail | $ | 180.4 | $ | 178.2 | $ | 341.6 | $ | 314.4 | |||||||
MK Wholesale | 100.5 | 140.2 | 263.6 | 367.2 | |||||||||||
MK Licensing | 26.9 | 23.5 | 51.1 | 50.9 | |||||||||||
Michael Kors | 307.8 | 341.9 | 656.3 | 732.5 | |||||||||||
Jimmy Choo | 5.7 | — | 5.7 | — | |||||||||||
Income from operations | $ | 313.5 | $ | 341.9 | $ | 662.0 | $ | 732.5 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Depreciation and amortization: | |||||||||||||||
MK Retail | $ | 33.7 | $ | 40.1 | $ | 98.8 | $ | 114.6 | |||||||
MK Wholesale | 13.9 | 15.1 | 43.5 | 46.3 | |||||||||||
MK Licensing | 0.6 | 0.5 | 1.8 | 1.6 | |||||||||||
Michael Kors | 48.2 | 55.7 | 144.1 | 162.5 | |||||||||||
Jimmy Choo | 5.8 | — | 5.8 | — | |||||||||||
Total depreciation and amortization | $ | 54.0 | $ | 55.7 | $ | 149.9 | $ | 162.5 |
Three Months Ended | Nine Months Ended | ||||||||||||||
December 30, 2017 | December 31, 2016 | December 30, 2017 | December 31, 2016 | ||||||||||||
Total revenue: | |||||||||||||||
The Americas (1) | $ | 946.6 | $ | 983.8 | $ | 2,332.6 | $ | 2,419.7 | |||||||
EMEA | 333.1 | 256.7 | 805.0 | 728.7 | |||||||||||
Asia | 160.4 | 112.3 | 401.5 | 280.5 | |||||||||||
Total revenue | $ | 1,440.1 | $ | 1,352.8 | $ | 3,539.1 | $ | 3,428.9 |
As of | |||||||
December 30, 2017 | April 1, 2017 | ||||||
Long-lived assets, excluding goodwill: | |||||||
The Americas (1) | $ | 332.6 | $ | 356.1 | |||
EMEA | 1,027.0 | 197.7 | |||||
Asia | 455.2 | 455.8 | |||||
Total Long-lived assets | $ | 1,814.8 | $ | 1,009.6 |
(1) | Total revenue earned in the U.S. were $883.2 million and $2.164 billion, respectively, for the three and nine months ended December 30, 2017 and $925.7 million and $2.261 billion for the three and nine months ended December 31, 2016. Long-lived assets located in the U.S. as of December 30, 2017 and April 1, 2017 were $286.4 million and $328.8 million, respectively. |
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|