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8-K - FORM 8-K - LEVI STRAUSS & CO | f58868e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Investor Contact:
|
Chris Ogle | Media Contact: | Kris Marubio | |||
Levi Strauss & Co. | Levi Strauss & Co. | |||||
(800) 438-0349 | (415) 501-6709 | |||||
Investor-relations@levi.com | kmarubio@levi.com |
LEVI STRAUSS & CO. ANNOUNCES FIRST-QUARTER 2011 FINANCIAL RESULTS
Net Revenue Up In All Regions
SAN FRANCISCO (April 12, 2011) Levi Strauss & Co. (LS&Co.) today announced financial results for
the first quarter ended February 27, 2011 and filed its first quarter 2011 results on Form 10-Q
with the Securities and Exchange Commission.
Highlights include:
Three Months Ended | % Increase | |||||||||||
February 27, | February 28, | |||||||||||
($ millions) | 2011 | 2010 | As Reported | |||||||||
Net revenues |
$ | 1,121 | $ | 1,035 | 8 | % | ||||||
Net income |
$ | 41 | $ | 56 | (28 | )% |
Net revenues increased eight percent on both reported and constant-currency bases, reflecting sales
growth in each region. Increased net revenues were primarily in the Levis® brand through global
expansion and performance of the companys brand-dedicated retail network and performance at
wholesale in the Americas.
First quarter net income attributable to the company was $41 million, a decline of $16 million
compared with last year. Net income declined primarily due to a decline in the companys gross
margin and a non-operating charge from the companys foreign exchange management activities.
We made progress executing against our strategic initiatives and drove sales growth across all
regions in the first quarter, said John Anderson, president and chief executive officer. We
continued to offer consumers innovative products by introducing the fourth revolutionary fit for
women in our Levis® Curve ID collection as well as launching Levis® Water<Less jeans, which
are setting a new green standard. In addition, our Dockers® team expanded its distribution channel
to reach more consumers in a wider range of stores.
-more-
LS&Co. Q1 2010 Results/Add One
April 12, 2011
April 12, 2011
In a separate release today, the company announced the future launch of Denizen in North America.
During the quarter, we also continued the rollout of our newest brand Denizen to address the
growing markets in China and India, added Anderson. With more than 100 Denizen stores in Asia,
were now looking forward to bringing the brand to consumers in the United States and Mexico this
summer.
First-Quarter 2011 Highlights
§ | Gross profit in the first quarter increased to $558 million compared with $533 million for the same period in 2010. Gross margin for the first quarter was 49.8 percent of revenues compared with 51.5 percent of revenues in the same quarter of 2010. Decline in gross margin was primarily due to higher sales allowances and discounts in both the Levis® and Dockers® brands to increase sales and manage inventory. Gross margin benefited from increased revenue contribution from the companys retail stores. | ||
§ | Selling, general and administrative (SG&A) expenses for the first quarter increased in-line with the growth in net revenues, to $459 million from $426 million in the same period of 2010. Higher SG&A was primarily due to additional selling expenses related to the expansion of the company-operated retail operations. | ||
§ | Operating income declined from $107 million to $99 million as benefits from the increase in net revenues were offset by the lower gross margin and continued investment in the companys retail network. |
Regional Overview
Regional net revenues for the quarter were as follows:
% Increase (Decrease) | ||||||||||||||||
February 27, | February 28, | As | Constant | |||||||||||||
Net Revenues ($ millions) | 2011 | 2010 | Reported | Currency | ||||||||||||
Americas |
$ | 592 | $ | 545 | 9 | % | 8 | % | ||||||||
Europe |
$ | 312 | $ | 306 | 2 | % | 6 | % | ||||||||
Asia Pacific |
$ | 217 | $ | 184 | 18 | % | 12 | % |
-more-
LS&Co. Q1 2011 Results/Add Two
April 12, 2011
April 12, 2011
§ | Higher net revenues in the Americas were due to the Levis® brand, which had higher sales in both the companys retail stores as well as the wholesale channel. In addition, online revenue grew. | ||
§ | Net revenues in Europe increased due to the expansion and improved performance of the company-operated retail network and higher sales to franchised stores. The sales growth reflected the success of the Levis® Curve ID collection for women. | ||
§ | Net revenues in Asia Pacific increased primarily due to the continued expansion of the companys brand-dedicated retail network in China and India, as well as other emerging markets. |
Cash Flow and Balance Sheet
At February 27, 2011, cash and cash equivalents were $249 million, complemented by $298 million
available under the companys revolving credit facility. Cash provided by operating activities was
$46 million, compared with $76 million for the same period in 2010, reflecting the companys
inventory build and an increased contribution to its pension plans. During the first quarter of
2011, the company paid a $20 million dividend; in 2010, the companys dividend payment of $20
million was made in the second quarter. Net debt at the end of the first quarter of 2011 was $1.63
billion, compared to $1.59 billion at the end of 2010.
Were pleased with the progress we made in the first quarter towards driving long-term growth,
said Blake Jorgensen, chief financial officer. Looking ahead, were focused on investing behind
our strategic initiatives, as we navigate challenging conditions for the apparel industry.
Investor Conference Call
The companys first-quarter 2011 investor conference call will be available through a live audio
Webcast at http://us.meeting-stream.com/levistraussco_041211 today, April 12, 2011, at 1 p.m.
Pacific / 4 p.m. Eastern. 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 April 18, 2011 at 800-642-1687 in the
United States and Canada, or 706-645-9291 internationally; I.D. No.
55616794.
-more-
LS&Co. Q1 2011 Results/Add Three
April 12, 2011
April 12, 2011
Forward Looking Statement
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 Managements 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 worlds 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 Levis®, Dockers®, Signature by Levi Strauss & Co., and Denizen
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
February 27, 2011, the company operated 482 stores within 31 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
(Unaudited) | ||||||||
February 27, | November 28, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 249,113 | $ | 269,726 | ||||
Restricted cash |
3,563 | 4,028 | ||||||
Trade receivables, net of allowance for doubtful accounts of $27,826 and $24,617 |
463,836 | 553,385 | ||||||
Inventories: |
||||||||
Raw materials |
5,691 | 6,770 | ||||||
Work-in-process |
9,666 | 9,405 | ||||||
Finished goods |
608,960 | 563,728 | ||||||
Total inventories |
624,317 | 579,903 | ||||||
Deferred tax assets, net |
141,088 | 137,892 | ||||||
Other current assets |
102,652 | 106,198 | ||||||
Total current assets |
1,584,569 | 1,651,132 | ||||||
Property, plant and equipment, net of accumulated depreciation of $699,906 and $683,258 |
497,345 | 488,603 | ||||||
Goodwill |
242,482 | 241,472 | ||||||
Other intangible assets, net |
81,894 | 84,652 | ||||||
Non-current deferred tax assets, net |
561,792 | 559,053 | ||||||
Other assets |
114,516 | 110,337 | ||||||
Total assets |
$ | 3,082,598 | $ | 3,135,249 | ||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS DEFICIT |
||||||||
Current Liabilities: |
||||||||
Short-term borrowings |
$ | 43,375 | $ | 46,418 | ||||
Current maturities of long-term debt |
| | ||||||
Current maturities of capital leases |
1,828 | 1,777 | ||||||
Accounts payable |
203,472 | 212,935 | ||||||
Other accrued liabilities |
240,324 | 275,443 | ||||||
Accrued salaries, wages and employee benefits |
168,090 | 196,152 | ||||||
Accrued interest payable |
36,440 | 9,685 | ||||||
Accrued income taxes |
22,299 | 17,115 | ||||||
Total current liabilities |
715,828 | 759,525 | ||||||
Long-term debt |
1,832,324 | 1,816,728 | ||||||
Long-term capital leases |
3,315 | 3,578 | ||||||
Postretirement medical benefits |
144,332 | 147,065 | ||||||
Pension liability |
367,169 | 400,584 | ||||||
Long-term employee related benefits |
94,093 | 102,764 | ||||||
Long-term income tax liabilities |
50,313 | 50,552 | ||||||
Other long-term liabilities |
53,587 | 54,281 | ||||||
Total liabilities |
3,260,961 | 3,335,077 | ||||||
Commitments and contingencies |
||||||||
Temporary equity |
9,911 | 8,973 | ||||||
Stockholders Deficit: |
||||||||
Levi Strauss & Co. stockholders deficit |
||||||||
Common stock$.01 par value; 270,000,000 shares authorized; 37,318,279
shares and 37,322,358 shares issued and outstanding |
373 | 373 | ||||||
Additional paid-in capital |
19,737 | 18,840 | ||||||
Retained Earnings |
53,757 | 33,346 | ||||||
Accumulated other comprehensive loss |
(271,658 | ) | (272,168 | ) | ||||
Total Levi Strauss & Co. stockholders deficit |
(197,791 | ) | (219,609 | ) | ||||
Noncontrolling interest |
9,517 | 10,808 | ||||||
Total stockholders deficit |
(188,274 | ) | (208,801 | ) | ||||
Total liabilities, temporary equity and stockholders deficit |
$ | 3,082,598 | $ | 3,135,249 | ||||
The notes accompanying our consolidated financial statements in our Form 10-Q are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended | ||||||||
February 27, | February 28, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Net sales |
$ | 1,099,885 | $ | 1,016,007 | ||||
Licensing revenue |
20,808 | 19,199 | ||||||
Net revenues |
1,120,693 | 1,035,206 | ||||||
Cost of goods sold |
562,726 | 502,278 | ||||||
Gross profit |
557,967 | 532,928 | ||||||
Selling, general and administrative expenses |
459,093 | 425,677 | ||||||
Operating income |
98,874 | 107,251 | ||||||
Interest expense |
(34,866 | ) | (34,173 | ) | ||||
Other income (expense), net |
(5,959 | ) | 12,463 | |||||
Income before income taxes |
58,049 | 85,541 | ||||||
Income tax expense |
18,881 | 29,672 | ||||||
Net income |
39,168 | 55,869 | ||||||
Net loss attributable to noncontrolling interest |
1,507 | 485 | ||||||
Net income attributable to Levi Strauss & Co. |
$ | 40,675 | $ | 56,354 | ||||
The notes accompanying our consolidated financial statements in our Form 10-Q are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended | ||||||||
February 27, | February 28, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Cash Flows from Operating Activities: |
||||||||
Net income |
$ | 39,168 | $ | 55,869 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
28,390 | 25,524 | ||||||
Asset impairments |
596 | 580 | ||||||
Gain on disposal of property, plant and equipment |
(59 | ) | (121 | ) | ||||
Unrealized foreign exchange losses (gains) |
6,650 | (12,677 | ) | |||||
Realized loss on settlement of forward foreign exchange contracts not designated for hedge accounting |
5,723 | 2,364 | ||||||
Employee benefit plans amortization from accumulated other comprehensive loss |
793 | 944 | ||||||
Employee benefit plans curtailment (gain) loss, net |
(16 | ) | 100 | |||||
Amortization of deferred debt issuance costs |
1,058 | 1,144 | ||||||
Stock-based compensation |
1,841 | 1,586 | ||||||
Allowance for doubtful accounts |
3,028 | 1,306 | ||||||
Change in operating assets and liabilities: |
||||||||
Trade receivables |
87,388 | 78,826 | ||||||
Inventories |
(43,962 | ) | (20,683 | ) | ||||
Other current assets |
3,313 | (11,326 | ) | |||||
Other non-current assets |
(5,350 | ) | (6,103 | ) | ||||
Accounts payable and other accrued liabilities |
(11,799 | ) | (18,224 | ) | ||||
Income tax liabilities |
3,799 | 15,591 | ||||||
Accrued salaries, wages and employee benefits and long-term employee related benefits |
(74,259 | ) | (42,332 | ) | ||||
Other long-term liabilities |
(359 | ) | 3,220 | |||||
Other, net |
83 | (61 | ) | |||||
Net cash provided by operating activities |
46,026 | 75,527 | ||||||
Cash Flows from Investing Activities: |
||||||||
Purchases of property, plant and equipment |
(40,498 | ) | (36,365 | ) | ||||
Proceeds from sale of property, plant and equipment |
76 | 914 | ||||||
Payments on settlement of forward foreign exchange contracts not designated for hedge accounting |
(5,723 | ) | (2,364 | ) | ||||
Other |
| (114 | ) | |||||
Net cash used for investing activities |
(46,145 | ) | (37,929 | ) | ||||
Cash Flows from Financing Activities: |
||||||||
Repayments of long-term debt and capital leases |
(456 | ) | (454 | ) | ||||
Short-term borrowings, net |
(2,261 | ) | 8,884 | |||||
Restricted cash |
618 | (32 | ) | |||||
Repurchase of common stock |
(245 | ) | | |||||
Dividends to stockholders |
(20,023 | ) | | |||||
Net cash (used for) provided by financing activities |
(22,367 | ) | 8,398 | |||||
Effect of exchange rate changes on cash and cash equivalents |
1,873 | (1,431 | ) | |||||
Net (decrease) increase in cash and cash equivalents |
(20,613 | ) | 44,565 | |||||
Beginning cash and cash equivalents |
269,726 | 270,804 | ||||||
Ending cash and cash equivalents |
$ | 249,113 | $ | 315,369 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid during the period for: |
||||||||
Interest |
$ | 5,009 | $ | 26,283 | ||||
Income taxes |
11,933 | 16,500 |
The notes accompanying our consolidated financial statements in our Form 10-Q are an integral part of these consolidated financial statements.