DELAWARE | 002-90139 | 94-0905160 | ||
(State or Other Jurisdiction of | (Commission File Number) | (I.R.S. Employer Identification | ||
Incorporation) | No.) |
99.1
|
Press release, dated July 12, 2011, announcing Levi Strauss & Co.s second quarter 2011 financial results. |
LEVI STRAUSS & CO. |
||||
DATE: July 12, 2011 | By: | /s/ Heidi L. Manes | ||
Name: | Heidi L. Manes | |||
Title: | Vice President and Controller |
Exhibit Number | Description | |
99.1
|
Press release, dated July 12, 2011, announcing Levi Strauss & Co.s second quarter 2011 financial results. |
Investor Contact:
|
Chris Ogle | Media Contact: | Kris Marubio | |||||
Levi Strauss & Co. | Levi Strauss & Co. | |||||||
(800) 438-0349 | (415) 501-6709 | |||||||
cogle@levi.com | kmarubio@levi.com |
Three Months Ended | ||||||||
($ millions) | May 29, 2011 | May 30, 2010 | ||||||
Net revenues |
$ | 1,093 | $ | 977 | ||||
Net income (loss) |
$ | 21 | $ | (14 | ) |
| Gross profit in the second quarter increased to $541 million compared with $499 million for the same period in 2010, reflecting the companys higher net revenues. Gross margin for the second quarter remained in the companys expected range, but decreased to 49 percent of revenues compared with 51 percent of revenues in the same quarter of 2010. The gross margin decline reflects the impact of higher-priced cotton and an increase in discounted sales to manage inventory. Gross margin continued to benefit from an increased contribution from company-operated retail stores. | ||
| Selling, general and administrative (SG&A) expenses for the second quarter increased to $476 million from $430 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 network. | ||
| Operating income for the second quarter declined to $65 million compared with $69 million for the same period of 2010, as the increase in revenue were offset primarily by a lower gross margin and the companys continued investment in its retail expansion. |
% Increase (Decrease) | ||||||||||||||||
Net Revenues ($ millions) | May 29, 2011 | May 30, 2010 | As Reported | Constant Currency | ||||||||||||
Americas |
$ | 599 | $ | 558 | 7 | % | 7 | % | ||||||||
Europe |
$ | 281 | $ | 240 | 17 | % | 9 | % | ||||||||
Asia Pacific |
$ | 213 | $ | 178 | 19 | % | 12 | % |
| Higher net revenues in the Americas were due to the Levis® brand, which had higher sales in both the companys operated retail stores and wholesale channel, including the success of the Levis® Curve ID collection for women. The higher net revenues also reflected the price increases that the company has implemented. The improved Levis® brand performance was partially offset by declines from the Dockers® brand in the United States. | ||
| Net revenues in Europe increased due to the expansion of the company-operated retail network and higher sales in the wholesale channel. The sales growth reflected the success of the Levis® Curve ID collection for women. | ||
| Revenue growth in Asia Pacific, primarily driven by the Levis® brand, continued expansion of the companys brand-dedicated retail network in China and India as well as other emerging markets, more than offset the decline of net revenue in Japan. |
(Unaudited) | ||||||||
May 29, | November 28, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 258,491 | $ | 269,726 | ||||
Restricted cash |
3,737 | 4,028 | ||||||
Trade receivables, net of allowance for doubtful accounts of $23,401 and $24,617 |
428,521 | 553,385 | ||||||
Inventories: |
||||||||
Raw materials |
7,358 | 6,770 | ||||||
Work-in-process |
12,231 | 9,405 | ||||||
Finished goods |
618,529 | 563,728 | ||||||
Total inventories |
638,118 | 579,903 | ||||||
Deferred tax assets, net |
141,426 | 137,892 | ||||||
Other current assets |
143,595 | 106,198 | ||||||
Total current assets |
1,613,888 | 1,651,132 | ||||||
Property, plant and equipment, net of accumulated depreciation of $722,138 and $683,258 |
509,757 | 488,603 | ||||||
Goodwill |
243,306 | 241,472 | ||||||
Other intangible assets, net |
78,998 | 84,652 | ||||||
Non-current deferred tax assets, net |
552,727 | 559,053 | ||||||
Other assets |
117,203 | 110,337 | ||||||
Total assets |
$ | 3,115,879 | $ | 3,135,249 | ||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS DEFICIT |
||||||||
Current Liabilities: |
||||||||
Short-term borrowings |
$ | 51,610 | $ | 46,418 | ||||
Current maturities of long-term debt |
| | ||||||
Current maturities of capital leases |
1,871 | 1,777 | ||||||
Accounts payable |
233,716 | 212,935 | ||||||
Other accrued liabilities |
229,110 | 275,443 | ||||||
Accrued salaries, wages and employee benefits |
181,740 | 196,152 | ||||||
Accrued interest payable |
9,571 | 9,685 | ||||||
Accrued income taxes |
15,024 | 17,115 | ||||||
Total current liabilities |
722,642 | 759,525 | ||||||
Long-term debt |
1,843,585 | 1,816,728 | ||||||
Long-term capital leases |
2,995 | 3,578 | ||||||
Postretirement medical benefits |
141,253 | 147,065 | ||||||
Pension liability |
332,475 | 400,584 | ||||||
Long-term employee related benefits |
97,957 | 102,764 | ||||||
Long-term income tax liabilities |
47,752 | 50,552 | ||||||
Other long-term liabilities |
54,278 | 54,281 | ||||||
Total liabilities |
3,242,937 | 3,335,077 | ||||||
Commitments and contingencies |
||||||||
Temporary equity |
8,371 | 8,973 | ||||||
Stockholders Deficit: |
||||||||
Levi Strauss
& Co. stockholders deficit |
||||||||
Common stock$.01 par value; 270,000,000 shares authorized; 37,324,857
shares and 37,322,358 shares issued and outstanding |
373 | 373 | ||||||
Additional paid-in capital |
22,856 | 18,840 | ||||||
Retained Earnings |
74,723 | 33,346 | ||||||
Accumulated other comprehensive loss |
(242,513 | ) | (272,168 | ) | ||||
Total Levi Strauss & Co. stockholders deficit |
(144,561 | ) | (219,609 | ) | ||||
Noncontrolling interest |
9,132 | 10,808 | ||||||
Total stockholders deficit |
(135,429 | ) | (208,801 | ) | ||||
Total liabilities, temporary equity and stockholders deficit |
$ | 3,115,879 | $ | 3,135,249 | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
May 29, | May 30, | May 29, | May 30, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Net sales |
$ | 1,074,400 | $ | 957,959 | $ | 2,174,285 | $ | 1,973,966 | ||||||||
Licensing revenue |
18,522 | 18,570 | 39,330 | 37,769 | ||||||||||||
Net revenues |
1,092,922 | 976,529 | 2,213,615 | 2,011,735 | ||||||||||||
Cost of goods sold |
552,226 | 477,108 | 1,114,952 | 979,386 | ||||||||||||
Gross profit |
540,696 | 499,421 | 1,098,663 | 1,032,349 | ||||||||||||
Selling, general and administrative expenses |
475,720 | 430,199 | 934,813 | 855,876 | ||||||||||||
Operating income |
64,976 | 69,222 | 163,850 | 176,473 | ||||||||||||
Interest expense |
(33,515 | ) | (34,440 | ) | (68,381 | ) | (68,613 | ) | ||||||||
Loss on early extinguishment of debt |
| (16,587 | ) | | (16,587 | ) | ||||||||||
Other income (expense), net |
(1,006 | ) | 6,694 | (6,965 | ) | 19,157 | ||||||||||
Income before income taxes |
30,455 | 24,889 | 88,504 | 110,430 | ||||||||||||
Income tax expense |
9,944 | 43,279 | 28,825 | 72,951 | ||||||||||||
Net income (loss) |
20,511 | (18,390 | ) | 59,679 | 37,479 | |||||||||||
Net loss attributable to noncontrolling interest |
460 | 4,009 | 1,967 | 4,494 | ||||||||||||
Net income (loss) attributable to Levi Strauss & Co. |
$ | 20,971 | $ | (14,381 | ) | $ | 61,646 | $ | 41,973 | |||||||
Six Months Ended | ||||||||
May 29, | May 30, | |||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Cash Flows from Operating Activities: |
||||||||
Net income |
$ | 59,679 | $ | 37,479 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
57,495 | 51,650 | ||||||
Asset impairments |
2,382 | 1,166 | ||||||
(Gain) loss on disposal of property, plant and equipment |
(76 | ) | 51 | |||||
Unrealized foreign exchange losses (gains) |
9,300 | (19,376 | ) | |||||
Realized loss on settlement of forward foreign exchange contracts not designated for hedge accounting |
4,863 | 5,340 | ||||||
Employee benefit plans amortization from accumulated other comprehensive loss |
(503 | ) | 1,732 | |||||
Employee benefit plans curtailment loss, net |
3,055 | 100 | ||||||
Noncash gain on extinguishment of debt, net of write-off of unamortized debt issuance costs |
| (13,647 | ) | |||||
Amortization of deferred debt issuance costs |
2,138 | 2,284 | ||||||
Stock-based compensation |
3,414 | 2,875 | ||||||
Allowance for doubtful accounts |
1,354 | 3,564 | ||||||
Change in operating assets and liabilities: |
||||||||
Trade receivables |
134,540 | 129,489 | ||||||
Inventories |
(42,491 | ) | (47,382 | ) | ||||
Other current assets |
(38,850 | ) | (11,301 | ) | ||||
Other non-current assets |
1,603 | (16,851 | ) | |||||
Accounts payable and other accrued liabilities |
(38,238 | ) | (30,251 | ) | ||||
Income tax liabilities |
(4,386 | ) | 56,525 | |||||
Accrued salaries, wages and employee benefits and long-term employee related benefits |
(69,003 | ) | (25,379 | ) | ||||
Other long-term liabilities |
(1,018 | ) | 18,510 | |||||
Other, net |
171 | (159 | ) | |||||
Net cash provided by operating activities |
85,429 | 146,419 | ||||||
Cash Flows from Investing Activities: |
||||||||
Purchases of property, plant and equipment |
(75,713 | ) | (78,187 | ) | ||||
Proceeds from sale of property, plant and equipment |
135 | 1,323 | ||||||
Payments on settlement of forward foreign exchange contracts not designated for hedge accounting |
(4,863 | ) | (5,340 | ) | ||||
Acquisitions, net of cash acquired |
| (12,242 | ) | |||||
Other |
(500 | ) | (114 | ) | ||||
Net cash used for investing activities |
(80,941 | ) | (94,560 | ) | ||||
Cash Flows from Financing Activities: |
||||||||
Proceeds from issuance of long-term debt |
| 909,390 | ||||||
Repayments of long-term debt and capital leases |
(953 | ) | (865,076 | ) | ||||
Short-term borrowings, net |
527 | 21,798 | ||||||
Debt issuance costs |
| (16,931 | ) | |||||
Restricted cash |
571 | (257 | ) | |||||
Repurchase of common stock |
(245 | ) | | |||||
Dividends to stockholders |
(20,023 | ) | (20,013 | ) | ||||
Net cash (used for) provided by financing activities |
(20,123 | ) | 28,911 | |||||
Effect of exchange rate changes on cash and cash equivalents |
4,400 | 1,493 | ||||||
Net (decrease) increase in cash and cash equivalents |
(11,235 | ) | 82,263 | |||||
Beginning cash and cash equivalents |
269,726 | 270,804 | ||||||
Ending cash and cash equivalents |
$ | 258,491 | $ | 353,067 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid during the period for: |
||||||||
Interest |
$ | 64,651 | $ | 82,453 | ||||
Income taxes |
30,467 | 26,317 |