| Condensed Consolidated Interim Statements of Loss and Comprehensive Loss(unaudited)(in millions of Canadian dollars, except per share amounts) |
| First quarter ended |
| June 28, | | June 30, |
| | Notes | 2020 | | 2019 |
| | | | $ | $ |
| Revenue | | 3 | 26.1 | | 71.1 |
| Cost of sales | | 6 | 21.3 | | 30.2 |
| Gross profit | 4.8 | | 40.9 |
| Selling, general and administrative expenses | 48.6 | | 57.5 |
| Depreciation and amortization | | 7, 8, 9 | 15.5 | | 10.9 |
| Operating loss | (59.3) | | (27.5) |
| Net interest, finance and other costs | | 12 | 6.7 | | 12.2 |
| Loss before income taxes | (66.0) | | (39.7) |
| Income tax recovery | (15.9) | | (10.3) |
| Net loss | (50.1) | | (29.4) |
| Other comprehensive incomeItems that may be reclassified to earnings, net of tax: |
| Cumulative translation adjustment | (1.6) | | | | (0.8) |
| Net gain on derivatives designated as cash flow hedges | | 17 | 0.1 | | | | 3.8 |
| Reclassification of net loss on cash flow hedges to income | | 17 | 1.9 | | | | 1.0 |
| Net gain (loss) on derivatives designated as a net investmenthedge |
| | 17 | 1.6 | | | | (0.1) |
| Other comprehensive income | 2.0 | | | | 3.9 |
| Comprehensive loss | (48.1) | | (25.5) |
| Loss per share | | 4 |
| Basic and diluted | $ | (0.46) $ | | (0.27) |
| The accompanying notes to the condensed consolidated interim financial statements are an integralpart of these financial statements. |
| | | | | | Canada Goose Holdings Inc. | Page 1 of 34 |
| Condensed Consolidated Interim Statements of Cash Flows(unaudited)(in millions of Canadian dollars) |
| First quarter ended |
| June 28, | | June 30, |
| | 2020 | | 2019 |
| | | | $ | $ |
| Operating activitiesNet loss |
| (50.1) | | (29.4) |
| Items not affecting cash: |
| Depreciation and amortization | | 18.8 | | 13.3 |
| (15.9) | | (10.3) |
| Interest expense | 4.8 | | | | 5.0 |
| Foreign exchange (gain) loss | 0.9 | | | | (4.4) |
| Acceleration of unamortized costs on debt extinguishment | | 12 | — | | | | 7.0 |
| Loss on disposal of assets | 0.1 | | | | 0.2 |
| Share-based payment | | 14 | 1.8 | | | | 1.9 |
| (39.6) | | (16.7) |
| Changes in non-cash operating items | | (24.4) | | (134.6) |
| (1.4) | | (24.6) |
| Interest paid | (4.4) | | | | (4.4) |
| (69.8) | | (180.3) |
| Investing activitiesPurchase of property, plant and equipment |
| | 7 | (4.0) | | | | (1.3) |
| Investment in intangible assets | | 8 | (0.8) | | | | (3.9) |
| Net cash used in investing activities | (4.8) | | | | (5.2) |
| Financing activitiesNet borrowings on debt facilities |
| | 212.1 | | 162.3 |
| Transaction costs on financing activities | | 12 | (0.3) | | | | (2.0) |
| Subordinate voting shares purchased for cancellation | | — | | (38.7) |
| Principal paid on lease liabilities | | 9 | (8.6) | | | | (5.0) |
| Settlement of term loan derivative contracts | | 16 | — | | | | 4.6 |
| Exercise of stock options | | 14 | 0.3 | | | | 0.3 |
| 203.5 | | 121.5 |
| Effects of foreign currency exchange rate changes on cash | (0.5) | | | | 0.4 |
| 128.4 | | (63.6) |
| 31.7 | | 88.6 |
| 160.1 | | 25.0 |
| The accompanying notes to the condensed consolidated interim financial statements are an integralpart of these financial statements. |
| | | | | | Canada Goose Holdings Inc. | Page 4 of 34 |
| | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 1. | The Company |
| Organization |
| Canada Goose Holdings Inc. and its subsidiaries (the “Company”) design, manufacture, and sellperformance luxury apparel for men, women, youth, children, and babies. The Company’s apparelcollections include various styles of parkas, lightweight down jackets, rainwear, windwear, knitwear,footwear, and accessories for the fall, winter, and spring seasons. The Company’s head office islocated at 250 Bowie Avenue, Toronto, Canada M6E 4Y2. The use of the terms “Canada Goose”,“we”, “us”, and “our” throughout these notes to the condensed consolidated interim financialstatements ("Interim Financial Statements") refer to the Company. |
| Canada Goose is a public company listed on the Toronto Stock Exchange and the New York StockExchange under the trading symbol “GOOS”. The principal shareholders of the Company areinvestment funds advised by Bain Capital LP and its affiliates (“Bain Capital”), and DTR LLC, anentity indirectly controlled by the President and Chief Executive Officer of the Company. Theprincipal shareholders hold multiple voting shares representing 46.3% of the total sharesoutstanding as at June 28, 2020, or 89.6% of the combined voting power of the total voting sharesoutstanding. Subordinate voting shares that trade on public markets represent 53.7% of the totalshares outstanding as at June 28, 2020, or 10.4% of the combined voting power of the total votingshares outstanding. |
| Statement of compliance |
| The Interim Financial Statements are prepared in accordance with International AccountingStandard (“IAS”) 34, Interim Financial Reporting, as issued by the International AccountingStandards Board (“IASB”). These Interim Financial Statements do not include all of the informationrequired for annual financial statements. Certain information, which is considered material to theunderstanding of the Interim Financial Statements and is normally included in the annual financialstatements prepared in accordance with International Financial Reporting Standards ("IFRS"), isprovided in these notes. These Interim Financial Statements have been prepared using theaccounting policies described in note 2 to the Company's March 29, 2020 annual consolidatedfinancial statements, which should be read in conjunction with these Interim Financial Statements. |
| The Interim Financial Statements were authorized for issuance in accordance with a resolution ofthe Company’s Board of Directors on August 10, 2020. |
| Seasonality |
| Our business is seasonal, and we have historically realized a significant portion of our Wholesalerevenue and operating income in the second and third quarters of the fiscal year and Direct-to-Consumer ("DTC") revenue and operating income in the third and fourth quarters of the fiscal year.Thus, lower-than-expected revenue in these periods could have an adverse impact on our annualoperating results. |
| Cash flows from operating activities are typically highest in the third and fourth quarters of the fiscalyear due to revenue from the DTC segment and the collection of trade receivables from Wholesalerevenue earlier in the year. Working capital requirements typically increase as inventory builds.Previous to fiscal 2021, borrowings have historically increased in the first and second quarters andbeen repaid in the third quarter of the fiscal year. |
| | | Canada Goose Holdings Inc. | Page 5 of 34 |
| | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 2. | Significant accounting policies and critical accounting estimates and |
| judgments |
| Basis of presentation |
| The significant accounting policies and critical accounting estimates and judgments as disclosedin the Company’s March 29, 2020 annual consolidated financial statements have been appliedconsistently in the preparation of these Interim Financial Statements except as noted below. TheInterim Financial Statements are presented in Canadian dollars, the Company’s functional andpresentation currency. |
| The Company's fiscal year is a 52 or 53-week reporting cycle with the fiscal year ending on theSunday closest to March 31. Each fiscal quarter is 13 weeks. Fiscal 2021 will end on March 28,2021 and will be a 52-week fiscal year. Fiscal 2021 comprises four fiscal quarters ending on June 28,2020, September 27, 2020, December 27, 2020 and March 28, 2021. In the Interim FinancialStatements, the term "first quarter ended June 28, 2020" refers to the 13 week period endedJune 28, 2020 and the term "first quarter ended June 30, 2019" refers to the 13 week period endedJune 30, 2019. Fiscal 2020 was a 52-week fiscal year. |
| Certain comparative figures have been restated to conform with current year presentation. |
| Product development costs, primarily employee salaries and benefits, were previously included ininventories and intangible assets, with subsequent recognition in cost of sales accordingly. As wecontinue to emphasize our DTC expansion, we have determined these activities in fiscal 2021 tonow be more closely supportive of our current selling and marketing activities. As a result, effectivethe first quarter of fiscal 2021, product development costs incurred in the current quarter wererecognized in selling, general and administrative expenses in the statement of loss. Those productdevelopment costs included in existing inventory and intangible assets will continue to berecognized within cost of sales. |
| COVID-19 pandemic |
| In response to the global outbreak of the novel coronavirus ("COVID-19"), various governmentprograms have been announced to provide financial relief for affected businesses. The mostsignificant relief measure which the Company qualifies for is the Canada Emergency Wage Subsidy("CEWS") under the COVID-19 Economic Response Plan in Canada. During the first quarter offiscal 2021, the Company recognized payroll subsidies totaling $8.7m under this wage subsidyprogram and similar plans in other jurisdictions. The Company recognizes government grants whenthere is reasonable assurance that it will comply with the conditions required to qualify for the grant,and that the grant will be received. These subsidies were recorded as a reduction to the associatedwage costs which the Company incurred, and were recognized in cost of sales ($1.3m), selling,general and administrative expenses ($7.1m), and other costs ($0.3m). No such grants wereapplied for or received in respect of the manufacture and sale of personal protective equipment("PPE") as these were sold to health authorities at cost. |
| In May 2020, the IASB issued an amendment to IFRS 16 - Leases exempting lessees fromdetermining whether COVID-19 related rent concessions are lease modifications. The amendmentis effective for annual reporting periods beginning on or after June 1, 2020 and earlier applicationis permitted. In accordance with the guidance issued, the Company adopted the amendmenteffective March 30, 2020 and elected not to treat COVID-19 related rent concessions as leasemodifications. Rent concessions of $0.7m were recognized in the statement of loss for the firstquarter ended June 28, 2020 and the Company is currently negotiating further rent concessionswith its landlords. |
| | | Canada Goose Holdings Inc. | Page 6 of 34 |
| Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Revenue is presented net of sales tax, estimated returns, allowances, and discounts. Sales returnsare estimated based on historical return rates and future expectations. Due to COVID-19, theCompany extended its DTC channel return policy, which is typically 30 days, and reflected this inthe sales returns provision accordingly (note 11). |
| As a result of the temporary closure of our manufacturing facilities, net overhead costs of $4.3mwere recognized in cost of sales during the first quarter ended June 28, 2020. Inventories arevalued at the lower of cost and net realizable value. The Company periodically reviews the valueof inventories and makes provisions as necessary to estimate the amounts expected to beunrecoverable due to obsolescence, damage, or declining selling prices. For the first quarter endedJune 28, 2020, the Company did not recognize any significant additional write-offs of inventories(note 6). |
| As a result of the temporary store closures, net costs of $6.7m were recognized in selling, generaland administrative expenses, depreciation and amortization, and interest during the first quarterended June 28, 2020. The temporary store closures, the significant reduction in shipments towholesale partners, and associated reduced profitability during the first quarter ended June 28,2020 are considered indicators of impairment. In accordance with IAS 36, Impairment of Assets,the Company performed an assessment of recoverability on the right-of-use assets, property, plantand equipment, goodwill and intangible assets and concluded there was no impairment. |
| Principles of consolidation |
| The Interim Financial Statements include the accounts of the Company and its subsidiaries. Allintercompany transactions and balances have been eliminated. |
| Operating segments |
| The Company classifies its business in three operating and reportable segments: DTC, Wholesale,and Other. The DTC segment comprises sales through country-specific e-commerce platformsand its Company-owned retail stores located in luxury shopping locations. |
| The Wholesale segment comprises sales made to a mix of functional and fashionable retailers,including major luxury department stores, outdoor specialty stores, and individual shops, and tointernational distributors. |
| In the fourth quarter of fiscal 2020, the Company revised the previous Unallocated segment to theOther segment. The Other segment comprises sales and costs not directly allocated to the DTCor Wholesale channels, such as sales to employees and sales of PPE in response to COVID-19,and selling, general and administrative expenses not directly allocated to the DTC or Wholesalesegments. The Other segment includes the cost of marketing expenditures and productdevelopment to build brand awareness across all segments, corporate costs in support ofmanufacturing operations, other corporate costs and foreign exchange gains and losses notspecifically associated with DTC or Wholesale segment operations. It also includes costs incurredas a consequence of the COVID-19 pandemic including overhead costs resulting from thetemporary closure of our manufacturing facilities. Comparative information has been restated toconform with the presentation adopted in the current year. |
| Standards issued and not yet adopted |
| Certain new standards, amendments, and interpretations to existing IFRS standards have beenpublished but are not yet effective and have not been adopted early by the Company. Managementanticipates that pronouncements will be adopted in the Company’s accounting policy for the first |
| | Canada Goose Holdings Inc. | Page 7 of 34 |
| Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| period beginning after the effective date of the pronouncement. Information on new standards,amendments, and interpretations is provided below. |
| In January 2020, the IASB issued an amendment to IAS 1 - Presentation of Financial Statementsto clarify its requirements for the presentation of liabilities in the statement of financial position.The limited scope amendment affected only the presentation of liabilities in the statement of financialposition and not the amount or timing of its recognition. The amendment clarified that theclassification of liabilities as current or non-current is based on rights that are in existence at theend of the reporting period and specified that classification is unaffected by expectations aboutwhether an entity will exercise its right to defer settlement of a liability. It also introduced a definitionof ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equityinstruments, other assets or services. The amendment is effective for annual reporting periodsbeginning on or after January 1, 2023. Earlier application is permitted. The Company is assessingthe potential impact of the amendment. |
| Note 3. | | | | Segment information |
| The Company has three reportable operating segments: DTC, Wholesale, and Other. The Companymeasures each reportable operating segment’s performance based on revenue and segmentoperating income, which is the profit metric utilized by the Company's chief operating decisionmaker, the President and Chief Executive Officer, for assessing the performance of operatingsegments. |
| In the first quarter of fiscal 2021, an international distributor in the Wholesale segment represented24.9% of total consolidated revenue. In the comparative quarter, the Company did not have anycustomers whose revenue represented greater than 10% of consolidated revenue. |
| The Company does not report total assets or total liabilities based on its reportable operatingsegments. |
| | Canada Goose Holdings Inc. | Page 8 of 34 |
| | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| First quarter ended June 28, 2020 |
| (in millions of Canadiandollars) | Direct-to- |
| | Consumer | Wholesale | Other | Total |
| | | | | | $ | $ | | | | $ | $ |
| Revenue | | | | | 10.4 | 8.7 | | | | 7.0 | 26.1 |
| Cost of sales | | | | | 1.8 | 7.2 | | | | 12.3 | 21.3 |
| Gross profit (loss) | | | | | 8.6 | 1.5 | | | | (5.3) | 4.8 |
| Selling, general andadministrative expenses |
| | | | | | 9.6 | 7.8 | | | | 31.2 | 48.6 |
| Depreciation and amortization | | | | | 11.2 | 0.9 | | | | 3.4 | 15.5 |
| Operating loss | | | | | (12.2) | (7.2) | | | | (39.9) | (59.3) |
| Net interest, finance and othercosts |
| | | | | 6.7 |
| Loss before income taxes | | | | (66.0) |
| First quarter ended June 30, 2019 |
| (in millions of Canadiandollars) | Direct-to- |
| | Consumer | Wholesale | Other | Total |
| | | | | | $ | $ | | | | $ | $ |
| Revenue | | | | | 34.8 | 35.6 | | | | 0.7 | 71.1 |
| Cost of sales | | | | | 8.8 | 20.7 | | | | 0.7 | 30.2 |
| Gross profit | | | | | 26.0 | 14.9 | | | | — | 40.9 |
| Selling, general andadministrative expenses |
| | | | | | 11.5 | 9.1 | | | | 36.9 | 57.5 |
| Depreciation and amortization | | | | | 8.0 | 0.8 | | | | 2.1 | 10.9 |
| Operating income (loss) | | | | | 6.5 | 5.0 | | | | (39.0) | (27.5) |
| Net interest, finance and othercosts |
| | | | | 12.2 |
| Loss before income taxes | | | | (39.7) |
| Geographic information |
| The Company determines the geographic location of revenue based on the location of its customers. |
| | | | First quarter ended |
| | | | | | | June 28, | June 30, |
| (in millions of Canadian dollars) | | | 2020 | 2019 |
| | | | $ | | | | $ |
| Canada | | | 11.6 | 29.2 |
| United States | | | 2.5 | 13.2 |
| Asia | | | 9.9 | 18.1 |
| Europe and Rest of World | | | 2.1 | 10.6 |
| Revenue | | | 26.1 | 71.1 |
| | Canada Goose Holdings Inc. | | | Page 9 of 34 |
| | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 4. | Earnings per share |
| Basic earnings per share is calculated by dividing net income attributable to ordinary equity holdersby the weighted average number of ordinary shares outstanding during the period. |
| Diluted earnings per share is calculated by dividing net income attributable to ordinary equityholders by the weighted average number of ordinary shares outstanding during the period plusthe weighted average number of ordinary shares, if any, that would be issued on exercise of stockoptions and restricted share units ("RSU") (note 14). |
| Subordinate voting shares issuable on exercise of stock options are not treated as dilutive ifincluding them would decrease the loss per share. Accordingly, 712,699 potentially dilutive shareshave been excluded from the calculation of diluted loss per share for the first quarter ended June28, 2020 (first quarter ended June 30, 2019 - 1,536,737 shares). |
| | First quarter ended |
| (in millions of Canadian dollars, except share and pershare amounts) | | | June 28, | June 30, |
| | 2020 | | 2019 |
| Net loss | | | | | $ | (50.1) $ | | (29.4) |
| Weighted average number of multiple and subordinate votingshares outstanding |
| | | 110,080,288 | 110,012,100 |
| Loss per share |
| Basic and diluted | | | | | $ | (0.46) $ | | (0.27) |
| Note 5. | Trade receivables |
| | | | | | | | June 28, | June 30, | March 29, |
| (in millions of Canadian dollars) | | | | | | | | 2020 | 2019 | | 2020 |
| | | | | | | | | $ | $ | | | | | | | | $ |
| Trade accounts receivable | | | | | | | | | 14.5 | 29.0 | | | | | | | | 26.9 |
| Credit card receivables | | | | | | | | | 0.1 | 2.5 | | | | | | | | 2.1 |
| Other receivables | | | | | | | | | 15.1 | 0.7 | | | | | | | | 5.1 |
| | | | | | | | | 29.7 | 32.2 | | | | | | | | 34.1 |
| Less: expected credit loss and salesallowances |
| | | | | | | | | (1.5) | (0.9) | | | | | | | | (1.8) |
| Trade receivables, net | | | | | | | | | 28.2 | 31.3 | | | | | | | | 32.3 |
| | | | | | | Canada Goose Holdings Inc. | Page 10 of 34 |
| | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 6. | Inventories |
| | June 28, | June 30, | March 29, |
| (in millions of Canadian dollars) | | 2020 | 2019 | | 2020 |
| | | | | | $ | $ | $ |
| Raw materials | | | | | | 71.4 | 57.6 | 61.5 |
| Work in progress | | | | | | 18.0 | 15.7 | 19.4 |
| Finished goods | | 339.2 | 292.8 | | 331.4 |
| Total inventories at the lower of cost andnet realizable value |
| | 428.6 | 366.1 | | 412.3 |
| Inventories are carried at the lower of cost and net realizable value. In estimating net realizablevalue, the Company estimates obsolescence and product loss incurred since the last inventorycount (“shrinkage”), based on historical experience. Included in inventory as at June 28, 2020 areprovisions for obsolescence and inventory shrinkage totaling $19.2m (June 30, 2019 - $15.0m,March 29, 2020 - $17.1m). |
| Amounts charged to cost of sales comprise the following: |
| | | | | | | First quarter ended |
| | | | | | June 28, | June 30, |
| (in millions of Canadian dollars) | | | 2020 | | 2019 |
| | | $ | | $ |
| Cost of goods manufactured | | | 18.0 | | 27.8 |
| Depreciation and amortization | | | 3.3 | | 2.4 |
| | | 21.3 | | 30.2 |
| | | | | | | | | Canada Goose Holdings Inc. | Page 11 of 34 |
| | | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| The following table presents the changes in cost and accumulated amortization of the Company’sintangible assets with finite lives: |
| Intangible assets with finite lives |
| (in millions ofCanadian dollars)ERPComputerIntellectual |
| | software | software | Lease rights | property | In progress | Total |
| Cost | | $ | $ | | | | | | | $ | $ | | | $ | $ |
| March 29, 2020 | | 24.4 | 21.4 | | | | | | | — | | 14.1 | 12.6 | 72.5 |
| Additions | | 0.1 | 0.6 | | | | | | | — | | — | 0.6 | 1.3 |
| Transfers | | 1.3 | 4.3 | | | | | | | — | | 0.6 | (6.2) | — |
| June 28, 2020 | | 25.8 | 26.3 | | | | | | | — | | 14.7 | 7.0 | 73.8 |
| March 31, 2019 | | 12.8 | 13.9 | | | | | | | 6.7 | | 9.0 | 15.2 | 57.6 |
| Additions— | 0.4 | | | | | | | — | | — | 5.3 | 5.7 |
| IFRS 16 initial directcosts (note 9) |
| | — | — | | | | | | | (6.7) | | — | — | (6.7) |
| Transfers | | 10.0 | — | | | | | | | — | | — | (10.0) | — |
| June 30, 2019 | | 22.8 | 14.3 | | | | | | | — | | 9.0 | 10.5 | 56.6 |
| (in millions ofCanadian dollars)ERPComputerIntellectual |
| | software | software | Lease rights | property | In progress | Total |
| Accumulatedamortization |
| | $ | $ | | | | | | | $ | $ | | | $ | $ |
| March 29, 2020 | | 9.1 | 10.5 | | | | | | | — | | 7.0 | — | 26.6 |
| Amortization | | 0.8 | 1.3 | | | | | | | — | | 1.4 | — | 3.5 |
| June 28, 2020 | | 9.9 | 11.8 | | | | | | | — | | 8.4 | — | 30.1 |
| March 31, 2019 | | 5.6 | 7.1 | | | | | | | 1.2 | | 3.9 | — | 17.8 |
| Amortization | | 0.9 | 0.6 | | | | | | | — | | 0.4 | — | 1.9 |
| IFRS 16 initial directcosts (note 9) |
| | — | — | | | | | | | (1.2) | | — | — | (1.2) |
| June 30, 2019 | | 6.5 | 7.7 | | | | | | | — | | 4.3 | — | 18.5 |
| Net book value |
| June 28, 2020 | | 15.9 | 14.5 | | | | | | | — | | 6.3 | 7.0 | 43.7 |
| June 30, 2019 | | 16.3 | 6.6 | | | | | | | — | | 4.7 | 10.5 | 38.1 |
| March 29, 2020 | | 15.3 | 10.9 | | | | | | | — | | 7.1 | 12.6 | 45.9 |
| Intellectual property consists of product development costs, acquired technology, and patents andtrademarks. |
| | | Canada Goose Holdings Inc. | | | | | | Page 14 of 34 |
| | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 9. | Leases |
| Right-of-use assets |
| The following table presents changes in the cost and the accumulated depreciation of theCompany’s right-of-use assets: |
| (in millions of Canadiandollars)Manufacturing |
| | Retail stores | | facilities | Other | Total |
| Cost | | | $ | | | | $ | $ | $ |
| March 29, 2020 | | | | | | | | | 191.5 | 36.6 | 18.0 | 246.1 |
| Additions | | | | | | | | | 10.9 | — | 3.0 | 13.9 |
| Lease modifications—— | (1.5) | (1.5) |
| Impact of foreign currencytranslation |
| | | | | | | | | (3.2) | — | (0.3) | (3.5) |
| June 28, 2020 | | | | | | | | | 199.2 | 36.6 | 19.2 | 255.0 |
| March 31, 2019 | | | — | | | | — | — | — |
| Initial application of IFRS16 |
| | | | | | | | | 97.0 | 27.2 | 12.4 | 136.6 |
| Reclassification of initialdirect costs |
| | | | | | | | | 5.5 | — | — | 5.5 |
| Additions | | | | | | | | | 62.6 | — | 1.5 | 64.1 |
| June 30, 2019 | | | | | | | | | 165.1 | 27.2 | 13.9 | 206.2 |
| (in millions of Canadiandollars)Manufacturing |
| | Retail stores | | facilities | Other | Total |
| Accumulateddepreciation |
| | | $ | | | | $ | $ | $ |
| March 29, 2020 | | | | | | | | | 26.8 | 4.8 | 2.7 | 34.3 |
| Depreciation | | | | | | | | | 7.6 | 1.3 | 0.6 | 9.5 |
| Impact of foreign currencytranslation |
| | | | | | | | | (0.5) | — | — | (0.5) |
| June 28, 2020 | | | | | | | | | 33.9 | 6.1 | 3.3 | 43.3 |
| March 31, 2019 | | | — | | | | — | — | — |
| Depreciation | | | | | | | | | 6.0 | 1.1 | 0.6 | 7.7 |
| June 30, 2019 | | | | | | | | | 6.0 | 1.1 | 0.6 | 7.7 |
| Net book valueJune 28, 2020 |
| | | | | | | | | 165.3 | 30.5 | 15.9 | 211.7 |
| June 30, 2019 | | | | | | | | | 159.1 | 26.1 | 13.3 | 198.5 |
| March 29, 2020 | | | | | | | | | 164.7 | 31.8 | 15.3 | 211.8 |
| | | | | | | | | Canada Goose Holdings Inc. | | Page 15 of 34 |
| | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Lease liabilities |
| The following table presents the changes in the Company's lease liabilities: |
| (in millions of Canadiandollars)Manufacturing |
| Retail stores | | facilities | Other | Total |
| | $ | | | | $ | $ | $ |
| March 29, 2020 | | | | | | | | 176.3 | 34.7 | 16.9 | 227.9 |
| Additions | | | | | | | | 10.9 | — | 3.0 | 13.9 |
| Lease modifications—— | (1.3) | (1.3) |
| Principal payments | | | | | | | | (6.6) | (1.2) | (0.8) | (8.6) |
| Impact of foreign currencytranslation |
| | | | | | | | (2.8) | — | (0.4) | (3.2) |
| June 28, 2020 | | | | | | | | 177.8 | 33.5 | 17.4 | 228.7 |
| March 31, 2019 | | — | | | | — | — | — |
| Initial application of IFRS16 |
| | | | | | | | 109.3 | 29.4 | 12.1 | 150.8 |
| Additions | | | | | | | | 61.4 | — | 1.5 | 62.9 |
| Principal payments | | | | | | | | (3.5) | (0.9) | (0.6) | (5.0) |
| June 30, 2019 | | | | | | | | 167.2 | 28.5 | 13.0 | 208.7 |
| Lease liabilities are classified as current and non-current liabilities as follows: |
| (in millions of Canadiandollars)Manufacturing |
| Retail stores | | facilities | Other | Total |
| | $ | | | | $ | $ | $ |
| Current lease liabilities | | | | | | | | 29.2 | 5.0 | 3.6 | 37.8 |
| Non-current lease liabilities | | | | | | | | 148.6 | 28.5 | 13.8 | 190.9 |
| June 28, 2020 | | | | | | | | 177.8 | 33.5 | 17.4 | 228.7 |
| Current lease liabilities | | | | | | | | 21.5 | 4.2 | 2.4 | 28.1 |
| Non-current lease liabilities | | | | | | | | 145.7 | 24.3 | 10.6 | 180.6 |
| June 30, 2019 | | | | | | | | 167.2 | 28.5 | 13.0 | 208.7 |
| Current lease liabilities | | | | | | | | 27.5 | 5.0 | 3.4 | 35.9 |
| Non-current lease liabilities | | | | | | | | 148.8 | 29.7 | 13.5 | 192.0 |
| March 29, 2020 | | | | | | | | 176.3 | 34.7 | 16.9 | 227.9 |
| Leases of low-value assets and short-term leases are not included in the calculation of leaseliabilities. These lease expenses are recognized in cost of sales or selling, general andadministrative expenses on a straight-line or other systematic basis. |
| | | | | | | | Canada Goose Holdings Inc. | | Page 16 of 34 |
| | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 10. | Accounts payable and accrued liabilities |
| Accounts payable and accrued liabilities consist of the following: |
| | June 28, | June 30, | March 29, |
| (in millions of Canadian dollars) | | 2020 | 2019 | | 2020 |
| | | | | | $ | $ | $ |
| Trade payables | | | | | | 52.4 | 30.8 | 53.3 |
| Accrued liabilities | | | | | | 47.0 | 55.5 | 53.8 |
| Employee benefits | | | | | | 15.1 | 13.5 | 13.6 |
| Derivative financial instruments | | | | | | 11.4 | 2.3 | 19.0 |
| Other payables | | | | | | 8.9 | 5.8 | 4.7 |
| Accounts payable and accrued liabilities | | 134.8 | 107.9 | | 144.4 |
| Note 11. | Provisions |
| Provisions consist primarily of amounts recorded with respect to customer warranty obligations,sales returns, asset retirement obligations, and termination of sales agents and distributors. |
| The provision for warranty claims represents the present value of management's best estimate ofthe future outflow of economic resources that will be required to meet the Company's obligationsfor warranties upon sale of goods, which may include repair or replacement of previously soldproducts. The estimate has been made on the basis of historical warranty trends and may vary asa result of new materials, altered manufacturing processes, customer behaviour and expectations,or other events affecting product quality and production. |
| Sales returns relate primarily to goods sold through the Wholesale channel. Beginning in the fourthquarter of fiscal 2020, the receipt of returned products was delayed in the Wholesale channel asa result of COVID-19. Goods sold through the DTC channel have a limited right of return, orexchange only, in certain jurisdictions. Due to COVID-19, the Company extended its DTC channelreturn policy, which is typically 30 days, and reflected this in the sales returns provision accordingly. |
| Asset retirement obligations relate to legal obligations associated with the retirement of tangiblelong-lived assets, primarily for leasehold improvements that the Company is contractually obligatedto remove at the end of the lease term. The Company recognizes the liability when such obligationsare incurred. The fair value of the liability is estimated based on a number of assumptions requiringmanagement’s judgment, including closing costs and inflation rates, and is accreted to its projectedfuture value over time. |
| The sales contract provision relates to management’s estimated cost of the departure of certainthird-party dealers and distributors. |
| | | | | | | | | Canada Goose Holdings Inc. | Page 17 of 34 |
| | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Provisions are classified as current and non-current liabilities based on management's expectationsof the timing of settlement, as follows: |
| | Asset | | Sales |
| (in millions ofCanadian dollars)retirementcontracts |
| Warranty Sales returns | | obligations | and other | Total |
| | | | | | $ | $ | $ | $ | $ |
| Current provisions | | | | | | 4.0 | 6.0 | — | | 0.8 | 10.8 |
| Non-current provisions | | | | | | 14.8 | — | 4.0 | | 3.0 | 21.8 |
| June 28, 2020 | | | | | | 18.8 | 6.0 | 4.0 | | 3.8 | 32.6 |
| Current provisions | | | | | | 1.9 | 4.0 | — | | — | 5.9 |
| Non-current provisions | | | | | | 8.9 | — | 2.5 | | 3.0 | 14.4 |
| June 30, 2019 | | | | | | 10.8 | 4.0 | 2.5 | | 3.0 | 20.3 |
| Current provisions | | | | | | 4.9 | 10.7 | — | | — | 15.6 |
| Non-current provisions | | | | | | 14.5 | — | 3.9 | | 3.0 | 21.4 |
| March 29, 2020 | | | | | | 19.4 | 10.7 | 3.9 | | 3.0 | 37.0 |
| During the first quarter ended June 28, 2020, the Company recognized a net restructuring cost of$1.6m associated with the May 20, 2020 reorganization to address the impact of COVID-19pandemic. The provision primarily consists of employee severance costs which includes obligationsrelated to ongoing payments and represents the best estimate of the amount that will ultimatelybe paid out. This was recorded in net interest, finance and other costs in the statement of loss. AtJune 28, 2020, the balance was $0.8m and is included in sales contracts and other in the tableabove. |
| Note 12. | | | | | | | | | | | | Borrowings |
| Short-term borrowings |
| On July 18, 2019, a subsidiary of the Company in Greater China entered into an uncommitted loanfacility in the amount of RMB 160.0m. The facility includes a non-financial bank guarantee facilityin the amount of RMB 10.0m. The term of each draw on the loan is one, three or six months orsuch other period as agreed upon and shall not exceed twelve months (including any extensionor rollover). The interest rate is equal to 105% of the applicable People's Bank of China BenchmarkLending Rate and payable at one, three or six months, depending on the term of each draw. Thefacility is guaranteed by the Company and proceeds drawn on the facility will be used to supportworking capital requirements. As at June 28, 2020, the Company had $2.6m owing on the facility. |
| | | | | | Canada Goose Holdings Inc. | | | | | Page 18 of 34 |
| | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Amendments to long-term debt agreements |
| On May 26, 2020, the Company entered into a further amendment to the revolving facility to increaseits ability to borrow against the borrowing base by up to $50.0m. The amended revolving facilityconsists of the existing revolving facility with a reduced commitment in the amount of $417.5m witha seasonal increase of up to $467.5m during the peak season (June 1 - November 30), and a first-in, last-out (“FILO”) revolving facility in the amount of $50.0m. Borrowings under the existingrevolving facility were transferred to the FILO revolving facility on the transaction date and futureamounts are drawn in priority on the FILO revolving facility. Amounts drawn on the FILO revolvingfacility are subject to an interest rate charge that is 2.00% higher than the existing revolving facility.The FILO revolving facility matures on May 25, 2021 and upon maturity, the credit commitmentson the existing revolving facility will be restored, resulting in no net change in aggregatecommitments under the revolving facility. Transaction costs are amortized over the term of thefacility. |
| Revolving facility |
| The Company has an agreement with a syndicate of lenders for a senior secured asset-basedcredit facility consisting of (i) a revolving credit facility in the amount of $417.5m, with an increasein commitments to $467.5m during the peak season (June 1 - November 30) (February 24, 2020to May 25, 2020 - $467.5m with an increase to $517.5m during the peak season, May 10, 2019to February 23, 2020 - $300.0m, with an increase to $350.0m during the peak season, prior to theMay 10, 2019 amendment - $200.0m with an increase to $250.0m during the peak season), and(ii) a FILO revolving facility in the amount of $50.0m. Amounts owing can be drawn in Canadiandollars, U.S. dollars, euros, British pounds sterling or other currencies. The revolving facility matureson June 3, 2024 (prior to the May 10, 2019 amendment - June 3, 2021) and the FILO revolvingfacility matures on May 25, 2021. Amounts owing under the revolving facility may be borrowed,repaid and re-borrowed for general corporate purposes. |
| The revolving facility has multiple interest rate charge options that are based on the Canadianprime rate, Banker's Acceptance rate, the lenders' Alternate Base Rate, European Base Rate,LIBOR rate, or EURIBOR rate plus an applicable margin, with interest payable quarterly or at theend of the then current interest period (whichever is earlier). The Company has pledgedsubstantially all of its assets as collateral for the revolving facility. The revolving facility containsfinancial and non-financial covenants which could impact the Company’s ability to draw funds. Asat and during the first quarter ended June 28, 2020, the Company was in compliance with allcovenants. |
| The amount outstanding with respect to the revolving facility is summarized as follows: |
| June 28, | June 30, | March 29, |
| (in millions of Canadian dollars) | 2020 | 2019 | | 2020 |
| | | | | $ | $ | $ |
| Revolving facility | 210.5 | 161.4 | | — |
| Unamortized portion of deferredtransaction costs |
| | | | | (2.6) | (1.8) | — |
| 207.9 | 159.6 | | — |
| As at March 29, 2020, the Company had repaid all amounts owing on the revolving facility andrelated deferred financing charges in the amounts of $1.7m were included in other long-termliabilities. |
| | | | | | | | Canada Goose Holdings Inc. | Page 19 of 34 |
| | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| The revolving credit commitment also includes a letter of credit commitment in the amount of$25.0m, with a $5.0m sub-commitment for letters of credit issued in a currency other than Canadiandollars, U.S. dollars, euros or British pounds sterling, and a swingline commitment for $25.0m. Asat June 28, 2020, the Company had letters of credit outstanding under the revolving facility of$6.5m (June 30, 2019 - $5.5m, March 29, 2020 - $5.7m). The Company has unused borrowingcapacity available under the revolving facility of $169.3m as at June 28, 2020 (June 30, 2019 -$299.4m, March 29, 2020 - $226.6m). |
| Term loan |
| The Company has a senior secured loan agreement with a syndicate of lenders that is securedon a split collateral basis alongside the revolving facility, with an aggregate principal amount owingof US$113.8m. The term loan bears interest at a rate of LIBOR plus an applicable margin of 3.50%(prior to the May 10, 2019 amendment - LIBOR plus an applicable margin of 4.00%, provided thatLIBOR may not be less than 1.00%), payable monthly in arrears. The term loan matures onDecember 2, 2024 (prior to the May 10, 2019 amendment - December 2, 2021). Amounts owingunder the term loan may be repaid at any time without premium or penalty, but once repaid maynot be reborrowed. The Company has pledged substantially all of its assets as collateral for theterm loan. The term loan contains financial and non-financial covenants which could impact theCompany’s ability to draw funds. As at and during the first quarter ended June 28, 2020, theCompany was in compliance with all covenants. |
| As the term loan is denominated in U.S. dollars, the Company remeasures the outstanding balanceplus accrued interest at each balance sheet date. |
| The amount outstanding with respect to the term loan is as follows: |
| June 28, | June 30, | March 29, |
| (in millions of Canadian dollars) | 2020 | 2019 | | 2020 |
| | | | | $ | $ | $ |
| Term loan | 155.7 | 149.0 | | 159.3 |
| Unamortized portion of deferredtransaction costs |
| | | | | (1.1) | (1.4) | (1.2) |
| 154.6 | 147.6 | | 158.1 |
| Hedging transactions on term loan |
| The Company entered into derivative transactions to hedge a portion of its exposure to foreigncurrency exchange risk and interest rate risk related to the term loan denominated in U.S. dollars.The designated hedge transactions remained effective after the amendment to the term loanagreement. Nevertheless, on June 12, 2019, the Company terminated its existing derivativecontracts and entered into new derivative transactions to better align with the amended interestrate and term to maturity of the term loan. |
| The Company entered into a cross-currency swap by selling US$70.0m, floating rate debt bearinginterest at LIBOR plus 3.50% as measured on the trade date, and receiving $93.0m fixed rate debtbearing interest at a rate of 5.02%. This cross-currency swap has been designated at inceptionand is accounted for as a cash flow hedge, and to the extent that the hedge is effective, unrealizedgains and losses are included in other comprehensive income until reclassified to the statementof loss as the hedged interest payments and principal repayments (or periodic remeasurements)impact net income. |
| | | | | | | | Canada Goose Holdings Inc. | Page 20 of 34 |
| | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Concurrently, the Company entered into a second cross-currency swap by selling the $93.0m fixedrate debt bearing interest at a rate of 5.02% and receiving €61.8m fixed rate debt bearing interestat a rate of 3.19%. This cross-currency swap has been designated and is accounted for as a hedgeof the net investment in its European subsidiary. Hedges of net investments are accounted forsimilarly to cash flow hedges, with unrealized gains and losses included in other comprehensiveincome. Amounts included in other comprehensive income are reclassified to net income in theperiod when the foreign operation is disposed of or sold. |
| The Company also entered into a long-dated forward exchange contract by selling $39.6m andreceiving US$30.0m as measured on the trade date, to fix the foreign exchange risk on a portionof the term loan borrowings over the term to maturity (December 2, 2024). Unrealized gains andlosses in the fair value of the forward contract are recognized in selling, general and administrativeexpenses in the statement of loss. |
| Net interest, finance and other costs |
| Net interest, finance and other costs consist of the following: |
| First quarter ended |
| | June 28, | June 30, |
| (in millions of Canadian dollars) | 2020 | | 2019 |
| $ | | | $ |
| Interest expense |
| Revolving facility | 0.8 | | | 0.5 |
| Term loan | 1.8 | | | 2.5 |
| Lease liabilities | 2.3 | | | 2.1 |
| Standby fees | 0.3 | | | 0.2 |
| Acceleration of unamortized costs on debt extinguishment— | | | 7.0 |
| Interest income | (0.1) | | | (0.1) |
| Other costs (note 11) | 1.6 | | | — |
| Net interest, finance and other costs | 6.7 | | | 12.2 |
| During the first quarter ended June 30, 2019, the Company entered into an agreement to amendthe terms of its term loan. The amendment to the term loan decreased the interest rate from LIBORplus 4.00% to LIBOR plus 3.50%, and extended the maturity date from December 2, 2021 toDecember 2, 2024. The Company determined that the amendment to the term loan was equivalentto a prepayment at no cost of the original term loan and the origination of the amended term loanat market conditions. The Company accounted for this as a debt extinguishment and re-borrowingof the loan amount. The existing term loan in the amount of $151.7m (US$113.8m) and relatedunamortized costs of $7.0m were derecognized as at June 30, 2019. The acceleration ofunamortized costs was included in net interest, finance and other costs in the statement of loss.The Company incurred transaction costs of $1.4m in connection with this amendment, which isamortized over the new term to maturity using the effective interest rate method. |
| | | | | | Canada Goose Holdings Inc. | Page 21 of 34 |
| | | | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 13. | Shareholders' equity |
| The authorized and issued share capital of the Company are as follows: |
| Authorized |
| The authorized share capital of the Company consists of an unlimited number of subordinate votingshares without par value, an unlimited number of multiple voting shares without par value, and anunlimited number of preferred shares without par value, issuable in series. |
| Issued |
| Multiple voting shares - Holders of the multiple voting shares are entitled to 10 votes per multiplevoting share. Multiple voting shares are convertible at any time at the option of the holder into onesubordinate voting share. The multiple voting shares will automatically be converted intosubordinate voting shares when they cease to be owned by one of the principal shareholders. Inaddition, the multiple voting shares of either of the principal shareholders will automatically beconverted to subordinate voting shares at such time as the beneficial ownership of that shareholderfalls below 15% of the outstanding subordinate voting shares and multiple voting sharesoutstanding, or additionally, in the case of DTR, when the President and Chief Executive Officerno longer serves as a director of the Company or in a senior management position. |
| Subordinate voting shares - Holders of the subordinate voting shares are entitled to one vote persubordinate voting share. |
| The rights of the subordinate voting shares and the multiple voting shares are substantially identical,except for voting and conversion. Subject to the prior rights of any preferred shares, the holdersof subordinate and multiple voting shares participate equally in any dividends declared and shareequally in any distribution of assets on liquidation, dissolution, or winding up. |
| Share capital transactions for the first quarter ended June 28, 2020 |
| The transactions affecting the issued and outstanding share capital of the Company are describedbelow: |
| (in millions ofCanadian dollars,except share and pershare amounts)Multiple votingSubordinate voting |
| | | shares | | shares | Total |
| | Number | | | | | $ | Number | | | | $ | Number | $ |
| March 29, 2020 | | | | | | | | | | 51,004,076 | 1.4 | 58,999,182 | 113.3 | | | 110,003,258 | 114.7 |
| Exercise of stockoptions |
| | | — | | | | — | 127,564 | 0.4 | | | | 127,564 | 0.4 |
| Settlement of RSUs—— | | | | 10,619 | — | 10,619 | — |
| June 28, 2020 | | | | | | | | | | 51,004,076 | 1.4 | 59,137,365 | 113.7 | | | 110,141,441 | 115.1 |
| Share capital transactions for the first quarter ended June 30, 2019 |
| Normal course issuer bid |
| The Board of Directors had previously authorized the Company to initiate a normal course issuerbid, in accordance with the requirements of the Toronto Stock Exchange, to purchase up to1,600,000 subordinate voting shares over the 12-month period from May 31, 2019 to May 30, 2020.Purchased subordinate voting shares would be cancelled. |
| During the first quarter ended June 30, 2019, the Company purchased 853,500 shares forcancellation at an average price per share of $45.35 for total cash consideration of $38.7m. The |
| | | Canada Goose Holdings Inc. | | | | | | | | | | Page 22 of 34 |
| | | | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| amount paid to purchase subordinate voting shares has been charged to share capital at theaverage share capital amount per share outstanding of $1.6m, with the remaining $37.1m chargedto retained earnings. There were no share purchased during the first quarter ended June 28, 2020. |
| The transactions affecting the issued and outstanding share capital of the Company are describedbelow: |
| (in millions ofCanadian dollars,except share and pershare amounts)Multiple votingSubordinate voting |
| | shares | | shares | Total |
| Number | | | | | $ | Number | | | | $ | Number | $ |
| March 31, 2019 | | | | | | | | | 51,004,076 | 1.4 | 59,106,998 | 111.2 | | | 110,111,074 | 112.6 |
| Purchase ofsubordinate votingshares |
| | — | | | | — | (853,500) | (38.7) | | | | (853,500) | (38.7) |
| Excess of purchaseprice over averageshare capital amount |
| | — | | | | — | — | 37.1 | | | | | | — | 37.1 |
| Exercise of stockoptions |
| | — | | | | — | 211,697 | 0.7 | | | | 211,697 | 0.7 |
| Settlement of RSUs—— | | | | | 3,550 | — | 3,550 | — |
| June 30, 2019 | | | | | | | | | 51,004,076 | 1.4 | 58,468,745 | 110.3 | | | 109,472,821 | 111.7 |
| Note 14. | | | | | | | | | | | | | Share-based payments |
| The Company has issued stock options to purchase subordinate voting shares under its incentiveplans, prior to the public share offering on March 21, 2017, the Legacy Plan, and subsequently,the Omnibus Plan. All options are issued at an exercise price that is not less than market value atthe time of grant and expire ten years after the grant date. |
| Legacy Plan |
| Under the terms of the Legacy Plan, options were granted to certain executives of the Companywhich are exercisable to purchase subordinate voting shares. The options vest contingent uponmeeting the service, performance goals and exit event conditions of the Legacy Plan. No newoptions will be issued under the Legacy Plan. |
| a) Service-vested options |
| | | | | | | | | | | | | | Service-vested options are subject to the executive’s continuing employment and generallyare scheduled to vest 40% on the second anniversary of the date of grant, 20% on the thirdanniversary, 20% on the fourth anniversary and 20% on the fifth anniversary. |
| b) Performance-vested and exit event options |
| | | | | | | | | | | | | | Performance-vested options that are tied to an exit event are eligible to vest pro rata onthe same schedule as service-vested options, but do not vest until the exit event hasoccurred. All exit event conditions have been met, and no outstanding options are subjectto exit event conditions. |
| | | | | | | | | | | | | | Other performance-vested options vest based on measurable performance targets that donot involve an exit event. Performance-vested options are subject to the executive’scontinued employment. |
| | Canada Goose Holdings Inc. | | | | | | | | Page 23 of 34 |
| | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Omnibus Plan |
| Under the terms of the Omnibus Plan, options are granted to certain employees of the Companywhich are exercisable to purchase subordinate voting shares. The options vest over four yearscontingent upon meeting the service conditions of the Omnibus Plan, 25% on each anniversaryof the date of grant. |
| Stock option transactions are as follows: |
| First quarter ended |
| | June 28, | June 30, |
| | 2020 | 2019 |
| | | | Weighted | Weighted |
| | | | average | average |
| (in millions of Canadian dollars,except share and per share amounts)exerciseNumber ofexerciseNumber of |
| | | | | price | shares | price | | shares |
| Options outstanding, beginning ofperiod |
| | | | $ | 32.97 | 1,793,957 $ | 15.75 | | 2,037,665 |
| Granted to purchase shares | | | | $ | 37.19 | 1,244,975 $ | 59.56 | | 539,916 |
| Exercised | | | | $ | 2.28 | (127,564) $ | 1.43 | | (211,697) |
| Cancelled | | | | $ | 50.57 | (69,969) $ | 62.18 | | (9,950) |
| Expired | | | | $ | 57.58 | (6,831) $ | | | | — | — |
| Options outstanding, end of period | | | | $ | 35.69 | 2,834,568 $ | 26.88 | | 2,355,934 |
| Restricted share units |
| Under the Omnibus Plan, the Company has granted RSUs to employees of the Company. TheRSUs are treated as equity instruments for accounting purposes. We expect that vested RSUs willbe paid at settlement through the issuance of one subordinate voting share per RSU. The RSUsvest over a period of three years, a third on each anniversary of the date of grant. |
| RSUs transactions are as follows: |
| First quarter ended |
| | June 28, | June 30, |
| | | | | | | | 2020 | 2019 |
| | Number | Number |
| RSUs outstanding, beginning of period | | | | | | | | 37,578 | 10,650 |
| Granted | | 119,758 | 30,943 |
| Settled | | (10,619) | (3,550) |
| Cancelled | | | | | | | | (4,199) | — |
| RSUs outstanding, end of period | | 142,518 | 38,043 |
| Subordinate voting shares, to a maximum of 4,011,663 shares, have been reserved for issuanceunder equity incentive plans to select employees of the Company, with vesting contingent uponmeeting the service, performance goals and other conditions of the Plan. |
| | | | | | | | | | Canada Goose Holdings Inc. | Page 24 of 34 |
| | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Accounting for share-based awards |
| In the first quarter ended June 28, 2020, the Company recorded $1.8m, as contributed surplusand compensation expense for the vesting of stock options and RSUs (first quarter ended June30, 2019 - $1.9m). Share-based compensation expense is included in selling, general andadministrative expenses. |
| The assumptions used to measure the fair value of options granted under the Black-Scholes optionpricing model at the grant date were as follows: |
| First quarter ended |
| (in millions of Canadian dollars, except share andper share amounts) | | June 28, | June 30, |
| | 2020 | 2019 |
| Weighted average stock price valuation | | | | $ | 37.19 | $ | | 59.56 |
| Weighted average exercise price | | | | $ | 37.19 | $ | | 59.56 |
| Risk-free interest rate | | 0.32% | 1.50% |
| Expected life in years | 5 | | | | 5 |
| Expected dividend yield | —% | | | | —% |
| Volatility | 40% | | | | 40% |
| Weighted average fair value of options issued | | | | $ | 9.90 | $ | | 18.22 |
| Fair value for RSUs is determined based on the market value of the subordinate voting shares atthe time of grant. As at June 28, 2020, the weighted average fair value of the RSUs issued was$33.97 (June 30, 2019 - $45.34). |
| Note 15. | | | | | | | | Related party transactions |
| The Company enters into transactions from time to time with its principal shareholders andorganizations affiliated with members of the Board of Directors by incurring expenses for businessservices. During the first quarter ended June 28, 2020, the Company incurred expenses with relatedparties of less than $0.1m (first quarter ended June 30, 2019 - $0.2m) from companies related tocertain shareholders. Net balances owing to related parties as at June 28, 2020 were $0.4m(June 30, 2019 - $0.4m, March 29, 2020 - $0.4m). |
| A lease liability due to the Baffin Vendor, the controlling shareholder of the acquired Baffin Inc.business, for leased premises was $5.1m as at June 28, 2020 (June 30, 2019 - $5.8m, March 29,2020 - $5.3m). During the first quarter ended June 28, 2020, the Company paid principal andinterest on the lease liability, net of rent concessions, and other operating costs to entities affiliatedwith the Baffin Vendor totalling $0.3m (first quarter ended June 30, 2019 - $0.3m). No amountswere owing to Baffin entities as at June 28, 2020, June 30, 2019, and March 29, 2020. Furthermore,$3.0m is payable to the Baffin Vendor on November 1, 2020 and is being charged to expense overtwo years. |
| Note 16. | | | | | | | | Financial instruments and fair value |
| Management has assessed that the fair values of cash, trade receivables, and accounts payableand accrued liabilities approximate their carrying amounts largely due to the short-term maturitiesof these instruments. |
| | | | | | | Canada Goose Holdings Inc. | Page 25 of 34 |
| | | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| The following table presents the fair values and fair value hierarchy of the Company’s financialinstruments and excludes financial instruments carried at amortized cost that are short-term innature: |
| June 28, |
| 2020 |
| (in millions of Canadiandollars)Carrying |
| | Level 1 | Level 2 | Level 3 | value | Fair value |
| | | | | | $ | $ | $ | $ | $ |
| Financial assets |
| Cash | | 160.1 | | | | | — | — | 160.1 | 160.1 |
| Derivatives included in othercurrent assets |
| | | | | | — | 7.1 | — | 7.1 | 7.1 |
| Derivatives included in otherlong-term assets |
| | | | | | — | 2.2 | — | 2.2 | 2.2 |
| Financial liabilities |
| Derivatives included inaccounts payable andaccrued liabilities |
| | | | | | — | 11.4 | | | | | — | 11.4 | 11.4 |
| Short-term borrowings—— | 2.6 | 2.6 | 2.6 |
| Derivatives included in otherlong-term liabilities |
| | | | | | — | 1.3 | — | 1.3 | 1.3 |
| Revolving facility—— | 207.9 | 207.9 | 210.5 |
| Term loan—— | 154.6 | 154.6 | 155.7 |
| Lease liabilities—— | 228.7 | 228.7 | 228.7 |
| | Canada Goose Holdings Inc. | Page 26 of 34 |
| | | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| June 30, |
| 2019 |
| (in millions of Canadiandollars) | | | | Carrying |
| | Level 1 | Level 2 | Level 3 | value | Fair value |
| | | | | | $ | $ | $ | $ | $ |
| Financial assets |
| Cash | 25.0 | | | | | — | — | 25.0 | 25.0 |
| Derivatives included in othercurrent assets |
| | | | | | — | 7.7 | — | 7.7 | 7.7 |
| Derivatives included in otherlong-term assets |
| | | | | | — | 2.8 | — | 2.8 | 2.8 |
| Financial liabilities |
| Derivatives included inaccounts payable andaccrued liabilities |
| | | | | | — | 2.3 | — | 2.3 | 2.3 |
| Derivatives included in otherlong-term liabilities |
| | | | | | — | 4.8 | — | 4.8 | 4.8 |
| Revolving facility | | | | | — | — | 159.6 | 159.6 | 161.4 |
| Term loan | | | | | — | — | 147.6 | 147.6 | 149.0 |
| Lease liabilities | | | | | — | — | 208.7 | 208.7 | 208.7 |
| March 29, |
| 2020 |
| (in millions of Canadiandollars) | | | | Carrying |
| | Level 1 | Level 2 | Level 3 | value | Fair value |
| | | | | | $ | $ | $ | $ | $ |
| Financial assets |
| Cash | 31.7 | | | | | — | — | 31.7 | 31.7 |
| Derivatives included in othercurrent assets |
| | | | | | — | 11.3 | | | | | — | 11.3 | 11.3 |
| Derivatives included in otherlong-term assets |
| | | | | | — | 5.9 | — | 5.9 | 5.9 |
| Financial liabilities |
| Derivatives included inaccounts payable andaccrued liabilities |
| | | | | | — | 19.0 | | | | | — | 19.0 | 19.0 |
| Derivatives included in otherlong-term liabilities |
| | | | | | — | 2.9 | — | 2.9 | 2.9 |
| Term loan | | | | | — | — | 158.1 | 158.1 | 159.3 |
| Lease liabilities | | | | | — | — | 227.9 | 227.9 | 227.9 |
| There were no transfers between the levels of the fair value hierarchy. |
| | Canada Goose Holdings Inc. | Page 27 of 34 |
| | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Note 17. | Financial risk management objectives and policies |
| The Company’s primary risk management objective is to protect the Company’s assets and cashflow, in order to increase the Company’s enterprise value. |
| The Company is exposed to capital management risk, liquidity risk, credit risk, market risk, foreignexchange risk, and interest rate risk. The Company’s senior management and Board of Directorsoversee the management of these risks. The Board of Directors reviews and agrees policies formanaging each of these risks which are summarized below. |
| Capital management |
| The Company manages its capital, which consists of equity (subordinate voting shares and multipleshares voting shares), short-term borrowings, and long-term debt (the revolving facility and theterm loan), with the objectives of safeguarding sufficient net working capital over the annualoperating cycle and providing sufficient financial resources to grow operations to meet long-termconsumer demand. Management targets a ratio of trailing 52 or 53-week period adjusted EBITDAR(defined as earnings before interest, taxes, depreciation and amortization, and rent expense) tonet debt, reflecting the seasonal change in the business as net working capital builds through thesecond fiscal quarter. The Board of Directors of the Company monitors the Company’s capitalmanagement on a regular basis. The Company will continually assess the adequacy of theCompany’s capital structure and capacity and make adjustments within the context of theCompany’s strategy, economic conditions, and risk characteristics of the business. |
| Liquidity risk |
| Liquidity risk is the risk that the Company will not be able to meet its financial obligations as theyfall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it willalways have sufficient liquidity to satisfy the requirements for business operations, capitalexpenditures, debt service and general corporate purposes, under normal and stressed conditions.The primary source of liquidity is funds generated by operating activities; the Company also relieson short-term borrowings and the revolving facility as sources of funds for short term working capitalneeds. The Company continuously reviews both actual and forecasted cash flows to ensure thatthe Company has appropriate capital capacity. |
| | | Canada Goose Holdings Inc. | Page 28 of 34 |
| | | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| The following table summarizes the amount of contractual undiscounted future cash flowrequirements as at June 28, 2020: |
| Contractualobligations | Q2 to |
| Q4 2021 | 2022 | 2023 | 2024 | 2025 | 2026 Thereafter | Total |
| (in millions ofCanadian dollars) |
| $ | $ | $ | $ | $ | $ | | $ |
| Accounts payable andaccrued liabilities |
| 134.8 | — | — | — | — | — | | — | 134.8 |
| Short-term borrowings | 2.6 | — | — | — | — | — | | — | 2.6 |
| Revolving facility———— | 210.5 | — | | — | 210.5 |
| Term loan———— | 155.7 | — | | — | 155.7 |
| Note payable | 3.0 | — | — | — | — | — | | — | 3.0 |
| Interest commitmentsrelating to borrowings |
| | | | | | | | | (1) |
| 8.1 | 10.7 | 10.7 | 10.7 | 4.7 | — | | — | 44.9 |
| Foreign exchangeforward contracts |
| 4.3 | — | — | — | — | — | | — | 4.3 |
| Lease obligations | 43.6 | 51.8 | 51.1 | 45.6 | 43.8 | 32.8 | | 57.1 | 325.8 |
| Pension obligation—————— | | 2.8 | 2.8 |
| (1) | Interest commitments are calculated based on the loan balance and the interest rate payableon the short-term borrowings, revolving facility and the term loan of 4.26%, 2.38% and 3.67%,respectively, as at June 28, 2020. |
| Letter of guarantee facility |
| On April 14, 2020, Canada Goose Inc. entered into a letter of guarantee facility in the amount of$10.0m. Letters of guarantee are available for terms of up to twelve months and will be chargeda fee equal to 1.2% per annum calculated against the face amount and over the term of theguarantee. Amounts issued on the facility will be used to finance working capital requirementsthrough letters of guarantee, standby letters of credit, performance bonds, counter guarantees,counter standby letters of credit, or similar credits. The Company shall immediately reimburse theissuing bank for amounts drawn on issued letters of guarantees. At June 28, 2020, the Companyhad $3.0m outstanding. |
| Credit risk |
| Credit risk is the risk that a counterparty will not meet its obligations under a financial instrumentor customer contract, leading to a financial loss. |
| Credit risk arises from the possibility that certain parties will be unable to discharge their obligations.The Company manages its credit risk through a combination of third party credit insurance andinternal house risk. Credit insurance is provided by a third party for customers and is subject tocontinuous monitoring of the credit worthiness of the Company's customers. Insurance covers aspecific amount of revenue, which may be less than the Company's total revenue with a specificcustomer. As at June 28, 2020, accounts receivable totaling approximately $4.7m (June 30, 2019 -$21.9m, March 29, 2020 - $20.1m) were insured. Accounts receivable as at June 28, 2020 included$4.2m of receivables from government authorities related to PPE sales which were not insured. |
| Credit insurance is subject to continuous review by the insurer and can be reduced or eliminatedif, in the view of the insurer, the customer's credit worthiness has deteriorated. Upon receivingnotification of credit insurance limit modifications, credit insurance remains in place for 60 days. |
| | Canada Goose Holdings Inc. | | | | | | Page 29 of 34 |
| | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| During the first quarter ended June 28, 2020, the Company experienced significant reductions ofcredit insurance for a number of its customers. |
| Complementary to the third party insurance, the Company routinely assesses the financial strengthof its customers through a combination of third party financial reports, credit monitoring, publiclyavailable information, and direct communication with those customers. The Company establishespayment terms with customers to mitigate credit risk and continues to closely monitor its accountsreceivable credit risk exposure. |
| Customer deposits are received in advance from certain customers for seasonal orders and appliedto reduce accounts receivable when goods are shipped. As at June 28, 2020, customer depositsof $1.8m (June 30, 2019 - $4.6m, March 29, 2020 - $2.1m) are included in accounts payable andaccrued liabilities. |
| The aging of trade receivables is as follows: |
| Past due |
| (in millions of Canadiandollars) |
| | Total | Current | < 30 days 31-60 days | > 61 days |
| | $ | | | $ | $ | $ | $ |
| Trade accounts receivable | | 14.5 | | | 7.1 | 1.5 | 1.1 | 4.8 |
| Credit card receivables | | 0.1 | | | 0.1 | — | — | — |
| Other receivables | | 15.1 | 15.1 | | | — | — | — |
| June 28, 2020 | | 29.7 | 22.3 | | | 1.5 | 1.1 | 4.8 |
| Trade accounts receivable | | 29.0 | 23.9 | | | 2.2 | 0.8 | 2.1 |
| Credit card receivables | | 2.5 | | | 2.5 | — | — | — |
| Other receivables | | 0.7 | | | 0.7 | — | — | — |
| June 30, 2019 | | 32.2 | 27.1 | | | 2.2 | 0.8 | 2.1 |
| Trade accounts receivable | | 26.9 | 15.9 | | | 5.0 | 2.5 | 3.5 |
| Credit card receivables | | 2.1 | | | 2.1 | — | — | — |
| Other receivables | | 5.1 | | | 5.1 | — | — | — |
| March 29, 2020 | | 34.1 | 23.1 | | | 5.0 | 2.5 | 3.5 |
| | Canada Goose Holdings Inc. | Page 30 of 34 |
| Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Trade accounts receivable factoring program |
| On December 23, 2019, a subsidiary of the Company in Europe entered into an agreement tofactor, on a limited recourse basis, certain of its trade accounts receivable up to a limit of €20.0min exchange for advanced funding equal to 100% of the principal value of the invoice. Acceptedcurrencies include euros, British pounds sterling, and Swiss francs. The Company is charged afee of the applicable EURIBOR or LIBOR reference rate plus 1.15% per annum, based on thenumber of days between the purchase date and the invoice due date, which is lower than theCompany’s average borrowing rate under its revolving facility. The program is utilized to providesufficient liquidity to support its international operating cash needs. Upon transfer of the receivables,the Company receives cash proceeds and continues to service the receivables on behalf of thethird-party financial institution. The program meets the derecognition requirements in accordancewith IFRS 9, Financial Instruments as the Company transfers substantially all the risks and rewardsof ownership upon the sale of a receivable. These proceeds are classified as cash flows fromoperating activities in the statement of cash flows. |
| For the first quarter ended June 28, 2020, the Company did not have any sales of trade accountsreceivable. As at June 28, 2020, all outstanding amounts of trade accounts receivable derecognizedfrom the Company’s statement of financial position, but which the Company continues to servicewere cleared (March 29, 2020 - $2.4m). |
| Market risk |
| Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuatebecause of changes in market prices. Market prices comprise foreign exchange risk and interestrate risk. |
| Foreign exchange risk |
| Foreign exchange risk in operating cash flows |
| The Company’s Interim Financial Statements are expressed in Canadian dollars, but a substantialportion of the Company’s revenues, inventory purchases and expenses are denominated in othercurrencies, principally U.S. dollars, euros, British pounds sterling, Swiss francs, Chinese yuan,and Hong Kong dollars. The Company has entered into forward foreign exchange contracts toreduce the foreign exchange risk associated with revenues, purchases, and expenses denominatedin these currencies. Certain forward foreign exchange contracts were designated at inception andaccounted for as cash flow hedges. The operating hedge program for the fiscal year ending March28, 2021 was initiated during the fourth quarter of the 2019 fiscal year. |
| | Canada Goose Holdings Inc. | Page 31 of 34 |
| | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| In the fourth quarter of fiscal 2020, the Company recognized $1.7m of unrealized losses on foreignexchange hedges deemed ineffective as a result of uncertainties in our future cash flows amongour foreign operations. |
| The Company recognized the following unrealized gains in the fair value of derivatives designatedas cash flow hedges in other comprehensive income: |
| First quarter ended |
| | June 28, | June 30, |
| | 2020 | 2019 |
| | | | | Tax | Tax |
| (in millions of Canadian dollars)Net gainexpenseNet gainexpense |
| | $ | $ | | $ | | | $ |
| Forward foreign exchange contracts designated ascash flow hedges |
| | | | | | | 2.3 | (0.8) | | | 5.1 | (1.1) |
| For the first quarter ended June 28, 2020, there were no amounts reclassified from othercomprehensive income on derivatives designated as cash flow hedges (first quarter ended June 30,2019 - less than $0.1m). |
| For the first quarter ended June 28, 2020, an unrealized gain of $0.6m (first quarter ended June30, 2019 - unrealized gain of $1.6m) on forward exchange contracts that are not treated as hedgeshas been recorded selling, general and administrative expenses in the statement of loss. |
| Foreign currency forward exchange contracts outstanding as at June 28, 2020 related to operatingcash flows are: |
| (in millions) | | | | Aggregate Amounts | | | | Currency |
| Forward contract to purchase Canadian dollars US$ | | 115.1 | U.S. dollars |
| | | | € | 102.1 | euros |
| Forward contract to sell Canadian dollars | | | | US$ | 57.2 | U.S. dollars |
| | | | € | 46.7 | euros |
| Forward contract to purchase eurosCHF | 2.1 | Swiss francs |
| | | | CNY | 427.7 | | | | | | Chinese yuan |
| | | | £ | 28.5 British pounds sterling |
| | | | HKD | 43.0 | Hong Kong dollars |
| | | | SEK | 4.6 | | | Swedish kronor |
| Forward contract to sell eurosCHF | 9.4 | Swiss francs |
| | | | £ | 1.8 British pounds sterling |
| Revenues and expenses of all foreign operations are translated into Canadian dollars at the foreigncurrency exchange rates that approximate the rates in effect at the dates when such items arerecognized. Appreciating foreign currencies relative to the Canadian dollar, to the extent they arenot hedged, will positively impact operating income and net income, while depreciating foreigncurrencies relative to the Canadian dollar will have the opposite impact. |
| | | | | | | | | | Canada Goose Holdings Inc. | Page 32 of 34 |
| | | | | | | | | Notes to the Condensed Consolidated Interim Financial Statements(unaudited) |
| Foreign exchange risk on borrowings |
| The Company hedges a portion of its exposure to foreign currency exchange risk on principal andinterest payments on its term loan denominated in U.S. dollars (note 12). |
| The Company recognized the following unrealized gains and losses in the fair value of derivativesdesigned as hedging instruments in other comprehensive income: |
| First quarter ended |
| | June 28, | June 30, |
| | 2020 | 2019 |
| | | | | Tax | Tax |
| | | | Net gain | (expense) | Net gain | | (expense) |
| (in millions of Canadian dollars)(loss)recovery(loss)recovery |
| | | | | | | $ | $ | | | $ | $ |
| Cross-currency swap designated as acash flow hedge |
| | | | | | | (2.1) | 0.3 | (1.3) | | | | | 0.2 |
| Euro-denominated cross-currency swapdesignated as a net investment hedge |
| | | | | | | 1.6 | (0.3) | (0.1) | | | | | — |
| The Company reclassified the following gains and losses from other comprehensive income onderivatives designated as hedging instruments to selling, general and administrative expenses: |
| First quarter ended |
| | | | | June 28, | June 30, |
| (in millions of Canadian dollars) | 2020 | | | | | 2019 |
| Loss from other comprehensive income | $ | | | | | $ |
| Cross-currency swap designated as a cash flow hedge | 2.2 | | | | | 1.2 |
| For the first quarter ended June 28, 2020, an unrealized loss of $0.8m (first quarter ended June30, 2019 - unrealized gain of $0.2m) in the fair value of the long-dated forward exchange contractrelated to a portion of the term loan balance has been recognized in selling, general andadministrative expenses in the statement of loss. |
| Interest rate risk |
| The Company is exposed to interest rate risk related to the effect of interest rate changes onborrowings outstanding under short-term borrowings, the revolving facility, and the term loan. Asat June 28, 2020, the Company had $2.6m outstanding on the short-term borrowings, $210.5mon the revolving facility and $155.7m under the term loan. These currently bear interest rates at4.26%, 2.38%, and 3.67% respectively. Based on the weighted average amount of outstandingborrowings on our short-term borrowings during the first quarter ended June 28, 2020, a 1.00%increase in the average interest rate on our borrowings would have increased interest expense byless than $0.1m. Correspondingly, a 1.00% increase in the average interest rate would haveincreased interest expense on the revolving facility and term loan by $0.3m and $0.4m, respectively(first quarter ended June 30, 2019 - $0.1m and $0.4m, respectively). Interest rate risk on the termloan is partially mitigated by cross-currency swap hedges. The impact on future interest expenseas a result of future changes in interest rates will depend largely on the gross amount of borrowingsat that time. |
| | | | | | | | | | Canada Goose Holdings Inc. | Page 33 of 34 |
