-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WWeA2lGkRCGx1v5M3K22YMCCZKSFgO4bgXWFMF8XLgt+644hwNKj+Rn4IHI3+/7H 1u1df/w20JZxzidCfqHkDA== 0001157523-03-005100.txt : 20030930 0001157523-03-005100.hdr.sgml : 20030930 20030930090107 ACCESSION NUMBER: 0001157523-03-005100 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030930 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030930 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEVI STRAUSS & CO CENTRAL INDEX KEY: 0000094845 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 940905160 STATE OF INCORPORATION: DE FISCAL YEAR END: 1124 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-90139 FILM NUMBER: 03916319 BUSINESS ADDRESS: STREET 1: 1155 BATTERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4155446000 MAIL ADDRESS: STREET 1: 1155 BATTERY STREET CITY: SAN FRAINCISCO STATE: CA ZIP: 94111 8-K 1 a4482596.txt LEVI STRAUSS & CO. 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (date of earliest event reported): September 30, 2003 Levi Strauss & Co. (Exact name of registrant as specified in its charter) DELAWARE 333-36234 94-0905160 (State of Incorporation) (Commission File Number) (IRS Employer Identification Number) 1155 Battery Street San Francisco, California 94111 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 501-6000 ITEM 7. FINANCIAL STATEMENTS AND EXHIBIT 99 Press Release dated September 30, 2003. ITEM 9. REGULATION FD DISCLOSURE On September 30, 2003, Levi Strauss & Co. issued a press release titled "Levi Strauss & Co. Announces Third-Quarter 2003 Financial Results." A copy of the press release is attached hereto as Exhibit 99. The information in this Item 9, including the exhibit thereto, is furnished pursuant to Item 9 of Form 8-K and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On September 30, 2003, Levi Strauss & Co. issued a press release titled "Levi Strauss & Co. Announces Third-Quarter 2003 Financial Results." A copy of the press release is attached hereto as Exhibit 99. The information in this Item 12, including the exhibit thereto, is furnished pursuant to Item 12 of Form 8-K and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: September 30, 2003 LEVI STRAUSS & CO. By /s/ William B. Chiasson ----------------------- William B. Chiasson Title: Senior Vice President and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99 Press Release dated September 30, 2003 EX-99 3 a4482596ex991.txt LEVI STRAUSS AND CO. PRESS RELEASE Exhibit 99 Levi Strauss & Co. Announces Third-Quarter 2003 Financial Results SAN FRANCISCO--(BUSINESS WIRE)--Sept. 30, 2003--Levi Strauss & Co. today announced financial results for the third fiscal quarter ended August 24, 2003. The company reported increases in sales, operating income and net income. Third-quarter net sales rose 6 percent to $1,082 million from $1,018 million in the third quarter of 2002. On a constant-currency basis, net sales increased approximately 3 percent for the period. "Sales and earnings for the quarter were up, even in the face of tremendous downward pricing pressure in apparel worldwide," said chief executive officer Phil Marineau. "Sales from the successful introduction of our new Levi Strauss Signature(TM) brand into 3,000 U.S. Wal-Mart stores and the strength of our Asian business more than offset weakness in our European business. Although U.S. sales in the Levi's(R) and Dockers(R) brands were lower than a year ago, we've seen recent consumer sell-through increases for these brands during the important back-to-school selling season. "With the Levi Strauss Signature(TM) and Levi's(R) brands, we are now segmenting the market with distinct jeanswear products to reach a much broader range of consumers where they shop," said Marineau. "From high-end specialty stores to value-driven mass market retailers, we're selling quality products in fits, fabrics and finishes consumers want. Most importantly, we're not seeing cannibalization from one brand to the other. This consumer segmentation strategy will help drive the full-year sales growth we expect to achieve in 2004." Third-quarter gross profit was $404 million, or 37.3 percent of sales, which compares to $414 million, or 40.7 percent of sales, in the third quarter of 2002. Included in 2002 gross profit is $4 million of restructuring-related expenses associated with the closure of manufacturing plants that year. Excluding restructuring-related expenses, gross profit in the third quarter of 2002 was $418 million, or 41.1 percent of sales. Gross margin for the third quarter of 2003 was impacted by wholesale price reductions to improve retailer margins. Additionally, there was a greater proportion of lower margin products in Europe and the United States. Operating income for the quarter was $98 million, or 9.1 percent of net sales, compared to operating income of $97 million in the third quarter of 2002, or 9.5 percent of sales. Excluding restructuring-related expenses of $4 million and reversals of $17 million of restructuring charges from prior years' restructuring initiatives, operating income in 2002 was $84 million or 8.2 percent of sales. Operating income for the third quarter of 2003 benefited from reduced marketing, general and administrative expenses, primarily as a result of lower incentive compensation expense. Net income in the third quarter of 2003 was $27 million compared to $14 million for the same period last year, an increase of 95 percent. Excluding the restructuring-related expenses and restructuring reversals described above, net income would have been $7 million for the third quarter of 2002. The current year's third quarter benefited from higher operating income and net gains from the company's foreign exchange management activities compared to losses for the same period last year, partially offset by higher interest expense. As of August 24, 2003, total debt was $2.37 billion compared to $2.31 billion as of May 25, 2003 and $1.85 billion as of the fiscal year ended November 24, 2002. At quarter-end, total debt, less cash, stood at $2.29 billion compared to $2.17 billion as of May 25, 2003 and $1.75 billion at the end of fiscal year 2002. As expected, debt peaked during the third quarter primarily due to seasonal working capital needs. "I am pleased to report that this week we have successfully completed a new financing arrangement consisting of a $650 million revolving credit facility and a $500 million term loan," said Bill Chiasson, chief financial officer. "This gives us more liquidity and financial flexibility to undertake the restructuring initiatives and plant closures that we announced earlier this month. These actions will continue to help us improve our competitiveness in the market." Levi Strauss & Co. is one of the world's leading branded apparel companies, marketing its products in more than 100 countries worldwide. The company designs and markets jeans and jeans-related pants, casual and dress pants, shirts, jackets and related accessories for men, women and children under the Levi's(R), Dockers(R) and Levi Strauss Signature(TM) brands. The company's third-quarter investor conference call, featuring Phil Marineau, chief executive officer; Bill Chiasson, chief financial officer; and Joe Maurer, treasurer, will be available through a live audio Webcast at http://levistrauss.com/news/webcast.htm on September 30, 2003 at 10 a.m. ET. A replay is available on the Web site the same day beginning at approximately 1 p.m. ET and will be archived for one year. A telephone replay also is available at 706-645-9291; I.D. #2649729 from approximately 1 p.m. ET through October 7, 2003. Explanatory Notes Restructuring charges, net of reversals and related expenses Throughout this news release, references have been made to certain financial items that exclude restructuring related expenses and restructuring reversals. These relate to charges the company has taken relating to prior years' restructuring initiatives, specifically plant closures and workforce reductions that the company has initiated since 1997. "Restructuring related expenses" is a defined term under our senior secured credit facilities and consists of expenses incurred in connection with our restructuring initiatives but they do not qualify for inclusion on the restructuring charges, net of reversals line item in our consolidated financial statements. In 2002, such expenses primarily related to workers' compensation and pension enhancement in the United States. Operating income excluding restructuring charges, net of reversals and restructuring-related expenses is a non-GAAP measure that internal management and our investors use in assessing and evaluating the operating performance of the company. It should not be considered in isolation from, and is not intended to represent an alternative measure of, operating income or cash flow or any other measure of performance determined in accordance with generally accepted accounting principles. Other companies may calculate operating income excluding restructuring charges, net of reversals and restructuring related expenses differently, and our operating income excluding restructuring charges, net of reversals and related expenses calculations are not necessarily comparable with similarly titled figures for other companies. 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," "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 2002, especially in the Risk Factors and Management's Discussion and Analysis sections, our most recent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. 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. LEVI STRAUSS & CO. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands) (Unaudited) Three Months Ended Nine Months Ended ----------------------- ----------------------- August 24, August 25, August 24, August 25, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Net sales $1,081,755 $1,017,744 $2,886,874 $2,876,546 Cost of goods sold 677,854 603,249 1,738,976 1,693,923 ----------- ----------- ----------- ----------- Gross profit 403,901 414,495 1,147,898 1,182,623 Marketing, general and administrative expenses 316,261 340,390 983,193 958,129 Other operating (income) (10,280) (6,015) (27,348) (20,640) Restructuring charges, net of reversals -- (16,565) (9,719) 124,513 ----------- ----------- ----------- ----------- Operating income 97,920 96,685 201,772 120,621 Interest expense 62,524 48,476 185,550 139,009 Other (income) expense, net (9,342) 20,791 33,562 20,613 ----------- ----------- ----------- ----------- Income (loss) before taxes 44,738 27,418 (17,340) (39,001) Income tax expense (benefit) 18,055 13,709 (6,155) (19,500) ----------- ----------- ----------- ----------- Net income (loss) $26,683 $13,709 $(11,185) $(19,501) =========== =========== =========== =========== SUPPLEMENTAL INFORMATION (Dollars in Thousands) (Unaudited) Three Months Ended Nine Months Ended --------------------- --------------------- August 24, August 25, August 24, August 25, 2003 2002 2003 2002 ---------- ---------- ---------- ---------- Operating income $97,920 $96,685 $201,772 $120,621 Restructuring charges, net of reversals -- (16,565) (9,719) 124,513 Restructuring related expenses -- 2002 plant closures -- 3,767 -- 33,866 ---------- ---------- ---------- ---------- Operating income, excluding restructuring charges, net of reversals and related expenses $97,920 $83,887 $192,053 $279,000 ========== ========== ========== ========== Operating income margin, excluding restructuring charges, net of reversals and related expenses 9.1% 8.2% 6.7% 9.7% ========== ========== ========== ========== Operating income margin 9.1% 9.5% 7.0% 4.2% ========== ========== ========== ========== Advertising expense $70,375 $76,394 $225,827 $212,106 ========== ========== ========== ========== Depreciation and amortization expense $16,622 $18,029 $47,898 $54,267 ========== ========== ========== ========== LEVI STRAUSS & CO. NET SALES BY REGION (Dollars in millions) (Unaudited) Three Months Ended Nine Months Ended --------------------------- --------------------------- Net Sales (as August August Percent August August Percent reported) 24, 25, Change 24, 25, Change 2003 2002 2003 2002 - -------------- ------------------------------------------------------- Region - -------------- Americas $748.6 $684.0 9.4% $1,823.3 $1,882.0 (3.1%) Europe 243.2 254.9 (4.6)% 778.7 756.9 2.9% Asia 90.0 78.8 14.2% 284.8 237.6 19.9% Total $1,081.8 $1,017.7 6.3% $2,886.9 $2,876.5 0.4% Three Months Ended Nine Months Ended --------------------------- --------------------------- Net Sales (at August August Percent August August Percent Prior Year 24, 25, Change 24, 25, Change Currency 2003 2002 2003 2002 Exchange At 2002 At 2002 Rates) Currency Currency Rates Rates - -------------- --------------------------- --------------------------- Region - -------------- Americas $747.2 $684.0 9.3% $1,827.7 $1,882.0 (2.9%) Europe 210.0 254.9 (17.6%) 658.1 756.9 (13.1%) Asia 86.8 78.8 10.1% 268.7 237.6 13.1% Total $1,044.0 $1,017.7 2.6% $2,754.5 $2,876.5 (4.2%) LEVI STRAUSS & CO. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) (Unaudited) August 24, November 24, 2003 2002 ------------- ------------- ASSETS Cash and cash equivalents $50,677 $96,478 Restricted cash 23,427 -- Trade receivables, net 601,225 660,516 Total inventories 804,591 591,714 Other current assets 456,911 310,185 ------------- ------------- Total current assets 1,936,831 1,658,893 Property, plant and equipment, net 491,044 482,446 Other long-term assets 908,357 875,945 ------------- ------------- Total Assets $3,336,232 $3,017,284 ============= ============= LIABILITIES AND STOCKHOLDERS' DEFICIT Current maturities of long-term debt and short-term borrowings $39,588 $95,225 Accounts payable 300,377 292,383 Restructuring reserves 20,325 65,576 Other current liabilities 501,307 631,606 ------------- ------------- Total current liabilities 861,597 1,084,790 Long-term debt, less current maturities 2,327,411 1,751,752 Long-term employee related benefits 436,672 527,418 Post-retirement medical benefits 551,700 548,930 Other long-term liabilities 163,849 99,978 ------------- ------------- Total liabilities 4,341,229 4,012,868 ------------- ------------- Total stockholders' deficit (1,004,997) (995,584) ------------- ------------- Total Liabilities and Stockholders' Deficit $3,336,232 $3,017,284 ============= ============= CONTACT: Levi Strauss & Co. Eileen VanEss, 415-501-2477 (investors) Linda Butler, 415-501-3317 (media) -----END PRIVACY-ENHANCED MESSAGE-----