DELAWARE | 002-90139 | 94-0905160 | ||
(State or Other Jurisdiction of | (Commission File Number) | (I.R.S. Employer Identification | ||
Incorporation) | No.) |
o | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c)) |
99.1 | Press release, dated April 12, 2011, announcing Levi Strauss & Co.s first quarter 2011 financial results. |
LEVI STRAUSS & CO. |
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DATE: April 12, 2011 | By: | /s/ Heidi L. Manes | ||
Name: | Heidi L. Manes | |||
Title: | Vice President and Controller |
99.1 | Press release, dated April 12, 2011, announcing Levi Strauss & Co.s first quarter 2011 financial results. |
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 |
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 | )% |
§ | 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 $99 million as benefits from the increase in net revenues were offset by the lower gross margin and continued investment in the companys retail network. |
% Increase (Decrease) | ||||||||||||||||
February 27, | February 28, | As | Constant | |||||||||||||
Net Revenues ($ millions) | 2011 | 2010 | Reported | Currency | ||||||||||||
Americas |
$ | 592 | $ | 545 | 9 | % | 8 | % | ||||||||
Europe |
$ | 312 | $ | 306 | 2 | % | 6 | % | ||||||||
Asia Pacific |
$ | 217 | $ | 184 | 18 | % | 12 | % |
§ | 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. |
(Unaudited) | ||||||||
February 27, | November 28, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
ASSETS |
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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 |
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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 | ||||
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 | ||||
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 |