Attached files
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| 8-K - FORM 8-K - LEVI STRAUSS & CO | f58217e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Contact:
|
Blake Jorgensen Levi Strauss & Co. (800) 438-0349 investor-relations@levi.com |
Media Contact: | Kris Marubio Levi Strauss & Co. (415)501-6709 kmarubio@levi.com |
LEVI STRAUSS & CO. ANNOUNCES FOURTH-QUARTER AND
FISCAL-YEAR 2010 FINANCIAL RESULTS
FISCAL-YEAR 2010 FINANCIAL RESULTS
| • | Fourth-Quarter Net Revenues Up 7% and Net Income Up 28% | ||
| • | Full-Year Net Revenues Up 7% and Net Income Up 3% |
SAN FRANCISCO (February 8, 2011) — Levi Strauss & Co. (LS&Co.) today announced financial results
for the fourth quarter and fiscal year ended November 28, 2010.
Highlights include:
| Three Months Ended | % Change vs. 2009 | Fiscal Year Ended | % Change vs. 2009 | |||||||||||||
| ($ millions) | Nov. 28, 2010 | As Reported | Nov. 28, 2010 | As Reported | ||||||||||||
Net revenues |
$ | 1,290 | 7 | % | $ | 4,411 | 7 | % | ||||||||
Net income |
$ | 86 | 28 | % | $ | 157 | 3 | % | ||||||||
The company grew revenues across each geographic region in fiscal year 2010, due to the
strength of the Levi’s® brand, an expanded global store network and the acquisitions made in 2009.
As a result, full-year net revenues were up 7 percent from the prior year and fourth-quarter net
revenues were up 7 percent compared to the same period in the prior year. Full-year net income
increased 3 percent over the prior year and fourth-quarter net income increased 28 percent compared
to the same period in the prior year.
“In 2010, we made significant progress transforming our business and moving towards sustainable
long-term growth,” said John Anderson, president and chief executive officer of Levi Strauss & Co.
“We improved our profitability, and across all of our regions we grew revenues. Looking ahead, we
remain committed to our strategies to enhance product, engage consumers with innovative brand
experiences and expand our global presence.”
— more —
LS&Co. FY 2010 Results/Add Two
February 8, 2011
February 8, 2011
Fourth Quarter 2010 Highlights
| • | Gross profit in the fourth quarter was $647 million compared with $618 million for the same period in 2009 reflecting the increase in net revenues. Gross margin for the fourth quarter was 50.2 percent of revenues compared with 51.1 percent of revenues in the fourth quarter of 2009. | ||
| • | Selling, general and administrative (SG&A) expenses for the fourth quarter were $528 million compared with $501 million in the same period of 2009. The increase was primarily due to higher selling costs related to additional company-operated retail stores. | ||
| • | Operating income for the fourth quarter was $119 million compared with $118 million for the same period of 2009. |
Regional Overview
Regional net revenues for the fourth quarter were as follows:
| Net Revenues | Three Months Ended | Three Months Ended | % Increase | |||||||||||||
| ($ millions) | November 28, 2010 | November 29, 2009 | As Reported | Constant Currency | ||||||||||||
Americas |
$ | 772 | $ | 720 | 7 | % | 7 | % | ||||||||
Europe |
$ | 300 | $ | 288 | 4 | % | 11 | % | ||||||||
Asia Pacific |
$ | 218 | $ | 201 | 8 | % | 3 | % | ||||||||
| • | Higher net revenues in the Americas primarily resulted from the Levi’s® retail business and U.S. Dockers® brand. | ||
| • | Net revenues in Europe increased due to growth in the company-operated retail network across the region and improvement in the Levi’s® wholesale business. | ||
| • | Net revenues in Asia Pacific increased due to the continued expansion of the company’s brand-dedicated retail network in China and India as well as in other emerging markets, while Japan continued to decline. |
— more —
LS&Co. FY 2010 Results/Add Three
February 8, 2011
February 8, 2011
“We are pleased that we delivered top-line growth for 2010,” said Blake Jorgensen, chief
financial officer of Levi Strauss & Co. “We are committed to driving long-term sustainable growth
and we will continue to invest behind our strategies in 2011 as we did in 2010.”
Fiscal Year 2010 Highlights
| • | Gross profit for the fiscal year was $2,223 million compared with $1,973 million in 2009. Gross margin increased to 50.4 percent of revenues for the year compared with 48.1 percent of revenues in 2009. Gross margin benefited from an increased proportion of sales from the company’s retail network. | ||
| • | Selling, general and administrative expenses were $1,842 million for 2010 compared to $1,595 million the prior year. The increase resulted from a combination of continued expansion of the company-operated store network; planned advertising and promotions to support the U.S. Levi’s® brand and U.S. Dockers® brand campaigns, as well as the global launch of Levi’s® Curve ID jeans for women and the launch of Denizen™ brand in Asia Pacific; and higher costs associated with the company’s pension. | ||
| • | Operating income for 2010 increased to $381 million compared to $378 million in 2009, inclusive of the favorable effects of currency. |
Cash Flow and Balance Sheet
The company ended the fourth quarter with cash and cash equivalents of $270 million. Cash provided
by operating activities was $146 million for 2010, compared with $389 million for the same period
in 2009, primarily reflecting in the company’s strategic investments and inventory build in support
of the company’s growth. The company ended the year with net debt of $1.59 billion. During the
year, the company paid a $20 million cash dividend to common stockholders. Subsequent to the end
of the company’s fiscal year, in December 2010, the company paid a $20 million cash dividend to
common stockholders.
— more —
LS&Co. FY 2010 Results/Add Four
February 8, 2011
February 8, 2011
Investor Conference Call
The company’s fourth-quarter and full-year 2010 investor conference call will be available through
a live audio Webcast at http://levistrauss.com/Financials/EarningsWebcasts.aspx today,
February 8, 2011,
at 1 p.m. PST/4 p.m. EST. A replay is available on the Web site the same day and will be archived
for one month. A telephone replay also is available through February 15, 2011, at 800-642-1687 in
the United States and Canada, or 706-645-9291 internationally; I.D. No. 37914694.
Forward Looking Statements
This news release contains, in addition to historical information, forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these
forward-looking statements on our current assumptions, expectations and projections about future
events. We use words like “believe,” “will,” “so we can,” “when,” “anticipate,” “intend,”
“estimate,” “expect,” “project” and similar expressions to identify forward-looking statements,
although not all forward-looking statements contain these words. These forward-looking statements
are necessarily estimates reflecting the best judgment of our senior management and involve a
number of risks and uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. Investors should consider the information contained
in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual
Report on Form 10-K for the fiscal year ended 2010, especially in the “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections. Other
unknown or unpredictable factors also could have material adverse effects on our future results,
performance or achievements. In light of these risks, uncertainties, assumptions and factors, the
forward-looking events discussed in this news release may not occur. You are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of the date stated,
or if no date is stated, as of the date of this news release. We are not under any obligation and
do not intend to make publicly available any update or other revisions to any of the
forward-looking statements contained in this news release to reflect circumstances existing after
the date of this news release or to reflect the occurrence of future events even if experience or
future events make it clear that any expected results expressed or implied by those forward-looking
statements will not be realized.
About Levi Strauss & Co.
Levi Strauss & Co. is one of the world’s largest brand-name apparel companies and a global leader
in jeanswear. The company designs and markets jeans, casual wear and related accessories for men,
women and children under the Levi’s®, Dockers®, Signature by Levi Strauss & Co.™, and
DenizenTM brands. Its products are sold in more than 110 countries worldwide
through a combination of chain retailers, department stores, online sites, and franchised and
company-owned stores. As of November 28, 2010, the company operated 470 stores within 27
countries. Levi Strauss & Co.’s reported fiscal 2010 net revenues were $4.4 billion. For more
information, go to http://levistrauss.com.
# # #
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS
| November 28, | November 29, | |||||||
| 2010 | 2009 | |||||||
| (Dollars in thousands) | ||||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 269,726 | $ | 270,804 | ||||
Restricted cash |
4,028 | 3,684 | ||||||
Trade receivables, net of allowance for doubtful accounts of $24,617 and $22,523 |
553,385 | 552,252 | ||||||
Inventories: |
||||||||
Raw materials |
6,770 | 6,818 | ||||||
Work-in-process |
9,405 | 10,908 | ||||||
Finished goods |
563,728 | 433,546 | ||||||
Total inventories |
579,903 | 451,272 | ||||||
Deferred tax assets, net |
137,892 | 135,508 | ||||||
Other current assets |
106,198 | 92,344 | ||||||
Total current assets |
1,651,132 | 1,505,864 | ||||||
Property, plant and equipment, net of accumulated depreciation of $683,258 and $664,891 |
488,603 | 430,070 | ||||||
Goodwill |
241,472 | 241,768 | ||||||
Other intangible assets, net |
84,652 | 103,198 | ||||||
Non-current deferred tax assets, net |
559,053 | 601,526 | ||||||
Other assets |
110,337 | 106,955 | ||||||
Total assets |
$ | 3,135,249 | $ | 2,989,381 | ||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT |
||||||||
Current Liabilities: |
||||||||
Short-term borrowings |
$ | 46,418 | $ | 18,749 | ||||
Current maturities of long-term debt |
— | — | ||||||
Current maturities of capital leases |
1,777 | 1,852 | ||||||
Accounts payable |
212,935 | 198,220 | ||||||
Other accrued liabilities |
275,443 | 271,019 | ||||||
Accrued salaries, wages and employee benefits |
196,152 | 195,434 | ||||||
Accrued interest payable |
9,685 | 28,709 | ||||||
Accrued income taxes |
17,115 | 12,993 | ||||||
Total current liabilities |
759,525 | 726,976 | ||||||
Long-term debt |
1,816,728 | 1,834,151 | ||||||
Long-term capital leases |
3,578 | 5,513 | ||||||
Postretirement medical benefits |
147,065 | 156,834 | ||||||
Pension liability |
400,584 | 382,503 | ||||||
Long-term employee related benefits |
102,764 | 97,508 | ||||||
Long-term income tax liabilities |
50,552 | 55,862 | ||||||
Other long-term liabilities |
54,281 | 43,480 | ||||||
Total liabilities |
3,335,077 | 3,302,827 | ||||||
Commitments and contingencies |
||||||||
Temporary equity |
8,973 | 1,938 | ||||||
Stockholders’ Deficit: |
||||||||
Levi Strauss & Co. stockholders’ deficit |
||||||||
Common stock—$.01 par value; 270,000,000 shares authorized; 37,322,358
shares and 37,284,741 shares issued and outstanding |
373 | 373 | ||||||
Additional paid-in capital |
18,840 | 39,532 | ||||||
Accumulated earnings (deficit) |
33,346 | (123,157 | ) | |||||
Accumulated other comprehensive loss |
(272,168 | ) | (249,867 | ) | ||||
Total Levi Strauss & Co. stockholders’ deficit |
(219,609 | ) | (333,119 | ) | ||||
Noncontrolling interest |
10,808 | 17,735 | ||||||
Total stockholders’ deficit |
(208,801 | ) | (315,384 | ) | ||||
Total liabilities, temporary equity and stockholders’ deficit |
$ | 3,135,249 | $ | 2,989,381 | ||||
The notes accompanying our consolidated financial statements in our Form 10-K are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF INCOME
| Year Ended | Year Ended | Year Ended | ||||||||||
| November 28, | November 29, | November 30, | ||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| (Dollars in thousands) | ||||||||||||
Net sales |
$ | 4,325,908 | $ | 4,022,854 | $ | 4,303,075 | ||||||
Licensing revenue |
84,741 | 82,912 | 97,839 | |||||||||
Net revenues |
4,410,649 | 4,105,766 | 4,400,914 | |||||||||
Cost of goods sold |
2,187,726 | 2,132,361 | 2,261,112 | |||||||||
Gross profit |
2,222,923 | 1,973,405 | 2,139,802 | |||||||||
Selling, general and administrative expenses |
1,841,562 | 1,595,317 | 1,614,730 | |||||||||
Operating income |
381,361 | 378,088 | 525,072 | |||||||||
Interest expense |
(135,823 | ) | (148,718 | ) | (154,086 | ) | ||||||
Loss on early extinguishment of debt |
(16,587 | ) | — | (1,417 | ) | |||||||
Other income (expense), net |
6,647 | (39,445 | ) | (303 | ) | |||||||
Income before income taxes |
235,598 | 189,925 | 369,266 | |||||||||
Income tax expense |
86,152 | 39,213 | 138,884 | |||||||||
Net income |
149,446 | 150,712 | 230,382 | |||||||||
Net loss (income) attributable to noncontrolling interest |
7,057 | 1,163 | (1,097 | ) | ||||||||
Net income attributable to Levi Strauss & Co. |
$ | 156,503 | $ | 151,875 | $ | 229,285 | ||||||
The notes accompanying our consolidated financial statements in our Form 10-K are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended | Year Ended | Year Ended | ||||||||||
| November 28, | November 29, | November 30, | ||||||||||
| 2010 | 2009 | 2008 | ||||||||||
| (Dollars in thousands) | ||||||||||||
Cash Flows from Operating Activities: |
||||||||||||
Net income |
$ | 149,446 | $ | 150,712 | $ | 230,382 | ||||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||||||
Depreciation and amortization |
104,896 | 84,603 | 77,983 | |||||||||
Asset impairments |
6,865 | 16,814 | 20,308 | |||||||||
(Gain) loss on disposal of property, plant and equipment |
(248 | ) | (175 | ) | 40 | |||||||
Unrealized foreign exchange (gains) losses |
(17,662 | ) | 14,657 | 50,736 | ||||||||
Realized loss (gain) on settlement of forward foreign exchange contracts not
designated for hedge accounting |
16,342 | 50,760 | (53,499 | ) | ||||||||
Employee benefit plans’ amortization from accumulated other comprehensive loss |
3,580 | (19,730 | ) | (35,995 | ) | |||||||
Employee benefit plans’ curtailment loss (gain), net |
106 | 1,643 | (5,162 | ) | ||||||||
Noncash (gain) loss on extinguishment of debt, net of write-off of unamortized
debt issuance costs |
(13,647 | ) | — | 394 | ||||||||
Amortization of deferred debt issuance costs |
4,332 | 4,344 | 4,007 | |||||||||
Stock-based compensation |
6,438 | 7,822 | 6,832 | |||||||||
Allowance for doubtful accounts |
7,536 | 7,246 | 10,376 | |||||||||
Deferred income taxes |
31,113 | (5,128 | ) | 75,827 | ||||||||
Change in operating assets and liabilities (excluding assets and liabilities acquired): |
||||||||||||
Trade receivables |
(30,259 | ) | 27,568 | 61,707 | ||||||||
Inventories |
(148,533 | ) | 113,014 | (21,777 | ) | |||||||
Other current assets |
(20,131 | ) | 5,626 | (25,400 | ) | |||||||
Other non-current assets |
(7,160 | ) | (11,757 | ) | (16,773 | ) | ||||||
Accounts payable and other accrued liabilities |
39,886 | (58,185 | ) | (100,388 | ) | |||||||
Income tax liabilities |
6,330 | (3,377 | ) | 3,923 | ||||||||
Accrued salaries, wages and employee benefits |
(18,463 | ) | (20,082 | ) | (30,566 | ) | ||||||
Long-term employee related benefits |
6,335 | 26,871 | (35,112 | ) | ||||||||
Other long-term liabilities |
19,120 | (4,452 | ) | 6,922 | ||||||||
Other, net |
52 | (11 | ) | 44 | ||||||||
Net cash provided by operating activities |
146,274 | 388,783 | 224,809 | |||||||||
Cash Flows from Investing Activities: |
||||||||||||
Purchases of property, plant and equipment |
(154,632 | ) | (82,938 | ) | (80,350 | ) | ||||||
Proceeds from sale of property, plant and equipment |
1,549 | 939 | 995 | |||||||||
(Payments) proceeds on settlement of forward foreign exchange contracts not
designated for hedge accounting |
(16,342 | ) | (50,760 | ) | 53,499 | |||||||
Acquisitions, net of cash acquired |
(12,242 | ) | (100,270 | ) | (959 | ) | ||||||
Other |
(114 | ) | — | — | ||||||||
Net cash used for investing activities |
(181,781 | ) | (233,029 | ) | (26,815 | ) | ||||||
Cash Flows from Financing Activities: |
||||||||||||
Proceeds from issuance of long-term debt |
909,390 | — | — | |||||||||
Repayments of long-term debt and capital leases |
(866,051 | ) | (72,870 | ) | (94,904 | ) | ||||||
Short-term borrowings, net |
27,311 | (2,704 | ) | 12,181 | ||||||||
Debt issuance costs |
(17,546 | ) | — | (446 | ) | |||||||
Restricted cash |
(700 | ) | (602 | ) | (1,224 | ) | ||||||
Repurchase of common stock |
(78 | ) | — | — | ||||||||
Dividends to noncontrolling interest shareholders of Levi Strauss Japan K.K. |
— | (978 | ) | (1,114 | ) | |||||||
Dividend to stockholders |
(20,013 | ) | (20,001 | ) | (49,953 | ) | ||||||
Net cash provided by (used for) financing activities |
32,313 | (97,155 | ) | (135,460 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents |
2,116 | 1,393 | (7,636 | ) | ||||||||
Net (decrease) increase in cash and cash equivalents |
(1,078 | ) | 59,992 | 54,898 | ||||||||
Beginning cash and cash equivalents |
270,804 | 210,812 | $ | 155,914 | ||||||||
Ending cash and cash equivalents |
$ | 269,726 | $ | 270,804 | $ | 210,812 | ||||||
Supplemental disclosure of cash flow information: |
||||||||||||
Cash paid during the period for: |
||||||||||||
Interest |
$ | 147,237 | $ | 135,576 | $ | 154,103 | ||||||
Income taxes |
52,912 | 56,922 | 63,107 | |||||||||
The notes accompanying our consolidated financial statements in our Form 10-K are an integral part of these consolidated financial statements.