Canada Goose Holdings Inc.
Annual Consolidated Financial Statements
March 31, 2024
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Canada Goose Holdings Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Canada Goose Holdings Inc. and subsidiaries (the "Company") as of March 31, 2024 and April 2, 2023, the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended March 31, 2024, and the related notes and the schedule of Condensed Financial Information of Canada Goose Holdings Inc. (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2024 and April 2, 2023 and its financial performance and its cash flows for each of the three years in the period ended March 31, 2024, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 15, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F-2
Inventory Obsolescence- Refer to Notes 2k, 3 and 10 to the financial statements
Critical Audit Matter Description
Inventory comprises raw materials, work-in-process and finished goods and is carried at the lower of cost and net realizable value. In estimating net realizable value, the Company uses estimates related to fluctuations in inventory levels, planned production, customer behaviour, obsolescence, future selling prices, seasonality and costs necessary to sell the inventory. As a result of management's analysis, included in inventory are provisions for obsolete inventory.
Given the importance of inventory to the Company's operations and the judgement involved in determining net realizable value related to finished goods inventory, specifically estimated future revenue (future selling prices and product demand); our audit procedures involved a high degree of auditor judgement and an increased extent of audit effort.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the future revenue used in determining net realizable value related to finished good inventory included the following, among others:
- Evaluated the effectiveness of controls, including those related to management's process for developing the estimates used in the determination of net realizable value and the provisions for obsolete inventory.
- Analyzed inventory levels and revenue to evaluate the completeness of management's identified population of inventory with obsolescence exposure.
- Performed a retrospective review on the prior year estimated future revenue and compared it to current year activity to evaluate management's ability to accurately estimate the net realizable value.
- Evaluated the reasonableness of future selling prices and product demand by:
- Comparing future selling price assumptions to historical trends and recent transactions.
- Assessing management's merchandising strategy to evaluate the reasonableness of management's assumptions relating to the expected impact on overall product demand.
- Considering industry trends and evidence obtained in other areas of the audit.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
May 15, 2024
We have served as the Company's auditor since fiscal 2010.
F-3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Canada Goose Holdings Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Canada Goose Holdings Inc. and subsidiaries (the "Company") as of March 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control-IntegratedFramework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended March 31, 2024, of the Company and our report dated May 15, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
F-4
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
May 15, 2024
F-5
Consolidated Statements of Income
(in millions of Canadian dollars, except per share amounts)
Year ended | |||||||
Notes | March 31, | April 2, | April 3, | ||||
2024 | 2023 | 2022 | |||||
Reclassified | Reclassified | ||||||
$ | $ | $ | |||||
Revenue | 6 | 1,333.8 | 1,217.0 | 1,098.4 | |||
Cost of sales | 10 | 416.4 | 401.8 | 364.8 | |||
Gross profit | 917.4 | 815.2 | 733.6 | ||||
Selling, general & administrative expenses | 11, 12, 13 | 792.9 | 667.6 | 574.1 | |||
Operating income | 6 | 124.5 | 147.6 | 159.5 | |||
Net interest, finance and other costs | 17 | 48.8 | 54.1 | 41.8 | |||
Income before income taxes | 75.7 | 93.5 | 117.7 | ||||
Income tax expense | 7 | 17.6 | 24.6 | 23.1 | |||
Net income | 58.1 | 68.9 | 94.6 | ||||
Attributable to: | |||||||
Shareholders of the Company | 58.4 | 72.7 | 94.6 | ||||
Non-controlling interest | (0.3) | (3.8) | - | ||||
Net income | 58.1 | 68.9 | 94.6 | ||||
Earnings per share attributable to | |||||||
shareholders of the Company | |||||||
Basic | 8 | $ | 0.58 | $ | 0.69 | $ | 0.87 |
Diluted | 8 | $ | 0.57 | $ | 0.69 | $ | 0.87 |
The accompanying notes to the consolidated financial statements are an integral part of these financial statements.
F-6
Consolidated Statements of Comprehensive Income (in millions of Canadian dollars, except per share amounts)
Year ended | ||||
Notes | March 31, | April 2, | April 3, | |
2024 | 2023 | 2022 | ||
$ | $ | $ | ||
Net income | 58.1 | 68.9 | 94.6 | |
Other comprehensive income (loss) | ||||
Items that will not be reclassified to earnings, | ||||
net of tax: | ||||
Actuarial gain on post-employment | - | 0.6 | 0.1 | |
obligation | ||||
Items that may be reclassified to earnings, | ||||
net of tax: | ||||
Cumulative translation adjustment (loss) | (0.2) | 16.1 | (25.5) | |
gain | ||||
Net (loss) gain on derivatives designated | 22 | (0.5) | 0.4 | 8.7 |
as cash flow hedges | ||||
Reclassification of net (gain) loss on cash | 22 | (1.1) | 6.0 | 4.7 |
flow hedges to income | ||||
Other comprehensive (loss) income | (1.8) | 23.1 | (12.0) | |
Comprehensive income | 56.3 | 92.0 | 82.6 | |
Attributable to: | ||||
Shareholders of the Company | 57.8 | 95.7 | 82.6 | |
Non-controlling interest | (1.5) | (3.7) | - | |
Comprehensive income | 56.3 | 92.0 | 82.6 | |
The accompanying notes to the consolidated financial statements are an integral part of these financial statements.
F-7
Consolidated Statements of Financial Position
(in millions of Canadian dollars)
Notes | March 31, | April 2, | |
2024 | 2023 | ||
Assets | $ | $ | |
Current assets | |||
Cash | 144.9 | 286.5 | |
Trade receivables | 5, 9 | 70.4 | 50.9 |
Inventories | 5, 10 | 445.2 | 472.6 |
Income taxes receivable | 28.0 | 0.9 | |
Other current assets | 21 | 52.3 | 52.3 |
Total current assets | 740.8 | 863.2 | |
Deferred income taxes | 7 | 76.3 | 67.5 |
Property, plant and equipment | 5, 11 | 171.8 | 156.0 |
Intangible assets | 12 | 135.1 | 135.1 |
Right-of-use assets | 5, 13 | 279.8 | 291.8 |
Goodwill | 5, 14 | 70.8 | 63.9 |
Other long-term assets | 21 | 7.0 | 12.5 |
Total assets | 1,481.6 | 1,590.0 | |
Liabilities | |||
Current liabilities | |||
Accounts payable and accrued liabilities | 5, 15, 21 | 177.7 | 195.6 |
Provisions | 16 | 26.1 | 21.6 |
Income taxes payable | 16.8 | 31.5 | |
Short-term borrowings | 17 | 9.4 | 27.6 |
Current portion of lease liabilities | 5, 13 | 79.9 | 76.1 |
Total current liabilities | 309.9 | 352.4 | |
Provisions | 16 | 37.3 | 36.5 |
Deferred income taxes | 7 | 17.2 | 16.4 |
Revolving Facility | 17 | - | - |
Term Loan | 17 | 388.5 | 391.6 |
Lease liabilities | 5, 13 | 250.6 | 258.7 |
Other long-term liabilities | 21 | 54.6 | 56.9 |
Total liabilities | 1,058.1 | 1,112.5 | |
Equity | 18 | ||
Equity attributable to shareholders of the Company | 417.0 | 469.5 | |
Non-controlling interests | 6.5 | 8.0 | |
Total equity | 423.5 | 477.5 | |
Total liabilities and equity | 1,481.6 | 1,590.0 | |
The accompanying notes to the consolidated financial statements are an integral part of these financial statements.
F-8
Consolidated Statements of Changes in Equity
(in millions of Canadian dollars)
Contributed | Retained | Accumulated other | Total | Non- | ||||||
Share capital | comprehensive | attributable to | controlling | Total | ||||||
surplus | earnings | (loss) income | shareholders | interest | ||||||
Multiple | Subordinate | |||||||||
Notes | voting | voting | Total | |||||||
shares | shares | |||||||||
$ | $ | $ | $ | $ | $ | $ | $ | $ | ||
Balance at March 28, 2021 | 1.4 | 119.1 | 120.5 | 25.2 | 437.1 | (5.2) | 577.6 | - | 577.6 | |
Normal course issuer bid purchase of | 18 | - | (11.9) | (11.9) | - | (241.3) | - | (253.2) | - | (253.2) |
subordinate voting shares | ||||||||||
Issuance of shares | 18 | - | 9.9 | 9.9 | (2.8) | - | - | 7.1 | - | 7.1 |
Net income | - | - | - | - | 94.6 | - | 94.6 | - | 94.6 | |
Other comprehensive loss | - | - | - | - | - | (12.0) | (12.0) | - | (12.0) | |
Share-based payment | 19 | - | - | - | 14.0 | - | - | 14.0 | - | 14.0 |
Deferred tax on share-based payment | - | - | - | (0.2) | - | - | (0.2) | - | (0.2) | |
Balance at April 3, 2022 | 1.4 | 117.1 | 118.5 | 36.2 | 290.4 | (17.2) | 427.9 | - | 427.9 | |
Non-controlling interest on business | - | - | - | - | - | - | - | 11.7 | 11.7 | |
combination | ||||||||||
Put option for non-controlling interest | - | - | - | - | (21.2) | - | (21.2) | - | (21.2) | |
Normal course issuer bid purchase of | 18 | - | (2.4) | (2.4) | - | (24.3) | - | (26.7) | - | (26.7) |
subordinate voting shares | ||||||||||
Normal course issuer bid purchase of | 18 | - | (0.1) | (0.1) | - | (1.1) | - | (1.2) | - | (1.2) |
subordinate voting shares held for cancellation | ||||||||||
Liability to broker under automatic share | 18 | - | - | - | (20.0) | - | - | (20.0) | - | (20.0) |
purchase plan | ||||||||||
Issuance of shares | 18 | - | 2.7 | 2.7 | (2.7) | - | - | - | - | - |
Net income (loss) | - | - | - | - | 72.7 | - | 72.7 | (3.8) | 68.9 | |
Other comprehensive income | - | - | - | - | - | 23.0 | 23.0 | 0.1 | 23.1 | |
Share-based payment | 19 | - | - | - | 15.0 | - | - | 15.0 | - | 15.0 |
Balance at April 2, 2023 | 1.4 | 117.3 | 118.7 | 28.5 | 316.5 | 5.8 | 469.5 | 8.0 | 477.5 | |
Normal course issuer bid purchase of | 18 | - | (17.8) | (17.8) | - | (122.4) | - | (140.2) | - | (140.2) |
subordinate voting shares | ||||||||||
Liability to broker under automatic share | 18 | - | - | - | 20.0 | - | - | 20.0 | - | 20.0 |
purchase plan | ||||||||||
Issuance of shares | 18 | - | 4.0 | 4.0 | (3.9) | - | - | 0.1 | - | 0.1 |
Net income (loss) | - | - | - | - | 58.4 | - | 58.4 | (0.3) | 58.1 | |
Other comprehensive loss | - | - | - | - | - | (0.6) | (0.6) | (1.2) | (1.8) | |
Share-based payment | 19 | - | - | - | 9.8 | - | - | 9.8 | - | 9.8 |
Balance at March 31, 2024 | 1.4 | 103.5 | 104.9 | 54.4 | 252.5 | 5.2 | 417.0 | 6.5 | 423.5 | |
The accompanying notes to the consolidated financial statements are an integral part of these financial statements.
F-9
Consolidated Statements of Cash Flows
(in millions of Canadian dollars)
Year ended | ||||
Notes | March 31, | April 2, | April 3, | |
2024 | 2023 | 2022 | ||
$ | $ | $ | ||
Operating activities | ||||
Net income | 58.1 | 68.9 | 94.6 | |
Items not affecting cash: | ||||
Depreciation and amortization | 6, 11, 12, 13 | 126.0 | 109.1 | 95.8 |
Income tax expense | 7 | 17.6 | 24.6 | 23.1 |
Interest expense | 17 | 44.4 | 34.0 | 38.1 |
Foreign exchange loss | 0.8 | 0.3 | 9.0 | |
Acceleration of unamortized costs on debt | 17 | - | - | 9.5 |
extinguishment | ||||
Impairment losses | 11, 13 | 1.2 | 1.0 | 7.7 |
Loss (gain) on disposal of assets | 0.1 | (0.1) | 0.1 | |
Share-based payment | 19 | 10.2 | 15.0 | 14.0 |
Remeasurement of put option | 21 | 1.6 | 10.9 | - |
Remeasurement of contingent consideration | 21 | 2.8 | (2.9) | - |
262.8 | 260.8 | 291.9 | ||
Changes in non-cash operating items | 23 | 10.5 | (75.4) | (82.8) |
Income taxes paid | (66.3) | (37.0) | (25.2) | |
Interest paid | (42.4) | (32.1) | (32.3) | |
Net cash from operating activities | 164.6 | 116.3 | 151.6 | |
Investing activities | ||||
Purchase of property, plant and equipment | 11 | (54.9) | (45.2) | (34.5) |
Investment in intangible assets | 12 | (1.0) | (2.2) | (1.5) |
Initial direct costs of right-of-use assets | 13 | (0.6) | (0.7) | (1.2) |
Net cash (outflow) inflow from business combination | 5 | (15.9) | 2.8 | - |
Net cash used in investing activities | (72.4) | (45.3) | (37.2) | |
Financing activities | ||||
Mainland China Facilities (repayments) borrowings | 17 | (9.8) | 9.8 | - |
Japan Facility repayments | 17 | (8.3) | (5.7) | - |
Term Loan repayments | 17 | (4.0) | (4.0) | (4.7) |
Revolving Facility (repayments) borrowings | 17 | - | (0.5) | 0.5 |
Transaction costs on financing activities | 17 | (0.2) | - | (1.0) |
Normal course issuer bid purchase of subordinate voting | 18 | (141.4) | (26.7) | (253.2) |
shares | ||||
Principal payments on lease liabilities | 13 | (69.2) | (62.2) | (46.9) |
Settlement of term loan derivative contracts | 22 | - | 8.6 | - |
Issuance of shares | 19 | 0.1 | - | 7.1 |
Net cash used in financing activities | (232.8) | (80.7) | (298.2) | |
Effects of foreign currency exchange rate changes on | (1.0) | 8.5 | (6.4) | |
cash | ||||
Decrease in cash | (141.6) | (1.2) | (190.2) | |
Cash, beginning of period | 286.5 | 287.7 | 477.9 | |
Cash, end of period | 144.9 | 286.5 | 287.7 | |
The accompanying notes to the consolidated financial statements are an integral part of these financial statements.
F-10
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Canada Goose Holdings Inc. published this content on 16 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 May 2024 14:44:01 UTC.