-
First Quarter Reported Revenues up 7% on Growth Across All
Regions; Constant-Currency up 11%
-
Reported Net Income of $147 Million Compared to Net Loss in
Prior Year; Adjusted Net Income up 81%
-
Adjusted EBIT up 14% on Higher Revenues and Margin Expansion;
Constant-Currency up 21%
SAN FRANCISCO--(BUSINESS WIRE)--
Levi Strauss & Co. (NYSE: LEVI) today announced financial results for
the first quarter ended February 24, 2019, and affirmed annual guidance.
"We delivered our sixth consecutive quarter of double-digit
constant-currency revenue growth," said Chip Bergh, president and chief
executive officer of Levi Strauss & Co. "Growth was broad-based across
all three regions and all channels, demonstrating that our strategies
are working and our investments are paying off."
Highlights include:
|
|
Three Months Ended
|
|
% Increase
|
|
($ millions)
|
|
February 24, 2019
|
|
February 25, 2018
|
|
As Reported
|
|
Net revenues
|
|
$
|
1,435
|
|
|
$
|
1,344
|
|
|
7
|
%
|
|
Net income (loss) attributable to Levi Strauss & Co.
|
|
$
|
147
|
|
|
$
|
(19
|
)
|
|
*
|
|
|
Adjusted net income
|
|
$
|
151
|
|
|
$
|
83
|
|
|
81
|
%
|
|
Adjusted EBIT
|
|
$
|
206
|
|
|
$
|
180
|
|
|
14
|
%
|
|
_____________
* Not meaningful
|
|
|
First quarter net revenues grew 7 percent on a reported basis and 11
percent on a constant-currency basis, excluding $48 million in
unfavorable currency translation effects. Reported net revenues related
to the company's direct-to-consumer business grew 10 percent, primarily
due to performance and expansion of the retail network as well as
e-commerce growth. The company had 70 more company-operated stores at
the end of the first quarter of 2019 than it did a year prior. Reported
net revenues related to the company's wholesale business grew 5 percent,
reflecting growth in all regions.
First quarter net income attributable to Levi Strauss & Co. increased
$166 million, primarily due to charges in the prior year from the
transitional impact of the 2017 Tax Cuts and Jobs Act of $99 million for
the remeasurement of deferred tax assets and liabilities and $37 million
on undistributed foreign earnings.
First quarter adjusted net income grew 81 percent, primarily due to a
$37 million transition charge in the prior year on undistributed foreign
earnings, as well as $26 million higher Adjusted EBIT in the current
year. First quarter Adjusted EBIT grew 14 percent inclusive of
unfavorable currency translation effects and 21 percent on a
constant-currency basis, primarily due to a combination of the higher
net revenues and leverage on Selling, general and administrative (SG&A)
costs. Additional information regarding adjusted net income and Adjusted
EBIT, non-GAAP financial measures, is provided at the end of this press
release.
First Quarter 2019 Highlights
-
On a reported basis, gross margin for the first quarter was 54.6
percent of net revenues compared with 54.9 percent in the same quarter
of fiscal 2018, primarily due to 90 basis-points of unfavorable
transactional currency impact, which was partially offset by the
margin benefit from growth in the company's global direct-to-consumer
channel.
-
SG&A expenses for the first quarter were $582 million compared with
$563 million in the same quarter of fiscal 2018 primarily reflecting
the growth and expansion of the company's direct-to-consumer business,
partially offset by the favorable impact of currency. SG&A expenses as
a percent of net revenues declined 130 basis-points compared to the
same quarter of fiscal 2018, as leverage on base costs and lower
advertising due to the timing of the company's advertising campaigns
were only partially offset by the higher direct-to-consumer-related
costs.
-
Operating income for the first quarter of $201 million was up 15
percent compared to the same quarter of fiscal 2018 reflecting higher
revenues and a 100 basis-point increase in operating margin.
-
Diluted earnings per common share attributable to common stockholders
for the first quarter of 2019 was 37 cents, as compared with a
five-cent loss per common share for the same quarter of fiscal 2018.
The loss in 2018 was due to the charges from the transitional impact
of the 2017 Tax Cuts and Jobs Act.
Regional Overview
Reported regional net revenues and operating income for the quarter are
set forth in the table below:
|
|
Net Revenues
|
|
Operating Income *
|
|
|
Three Months Ended
|
|
% Increase
|
|
Three Months Ended
|
|
% Increase
|
|
($ millions)
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
Americas
|
|
$
|
717
|
|
|
$
|
657
|
|
|
9
|
%
|
|
$
|
124
|
|
|
$
|
111
|
|
|
11
|
%
|
|
Europe
|
|
$
|
465
|
|
|
$
|
453
|
|
|
3
|
%
|
|
$
|
122
|
|
|
$
|
115
|
|
|
6
|
%
|
|
Asia
|
|
$
|
253
|
|
|
$
|
234
|
|
|
8
|
%
|
|
$
|
43
|
|
|
$
|
41
|
|
|
6
|
%
|
|
|
|
* Note: Regional operating income is equal to regional Adjusted
EBIT.
|
|
|
-
In the Americas, net revenues grew 9 percent on a reported basis and
10 percent on a constant-currency basis, reflecting higher revenues
across both wholesale and direct-to-consumer channels across the
region. Operating income for the region grew 11 percent on a reported
basis and 12 percent on a constant-currency basis on the higher net
revenues and lower advertising costs, which were partially offset by
higher direct-to-consumer costs and increased distribution costs to
support higher volume.
-
In Europe, net revenues grew 3 percent on a reported basis and 10
percent on a constant-currency basis, reflecting continued broad-based
growth across direct-to-consumer and wholesale channels. The region's
operating income grew 6 percent on a reported basis and 13 percent on
a constant-currency basis reflecting the net revenues growth and a
higher gross margin from a shift towards the direct-to-consumer
channel, partially offset by higher direct-to-consumer and
distribution costs.
-
In Asia, net revenues grew 8 percent on a reported basis and 14
percent on a constant-currency basis, reflecting strong performance
across traditional wholesale, franchisee and direct-to-consumer
channels. Revenue growth was broad-based across the region's markets,
including China. The region's operating income grew 6 percent on a
reported basis and 13 percent on a constant-currency basis, reflecting
higher revenues partially offset by a decline in gross margin driven
by product cost investment.
Cash Flow and Balance Sheet
At February 24, 2019, cash and cash equivalents of $622 million and
short-term investments of $100 million were complemented by $806 million
available under the company's revolving credit facility, resulting in a
total liquidity position of approximately $1.5 billion. Net debt at the
end of the first quarter of 2019 was $319 million.
Cash from operations for the first three months of fiscal 2019 was $56
million, a decrease of $10 million compared to the first three months of
fiscal 2018. The decrease primarily reflects higher payments for
employee incentive compensation related to strong fiscal 2018 results,
partially offset by lower pension plan contributions.
Adjusted free cash flow for the first three months of fiscal 2019 was
$17 million, an increase of $52 million compared to the first three
months of fiscal 2018. The increase was due to the timing of proceeds
from the settlement of forward foreign exchange contracts, partially
offset by the decrease in cash from operations and a higher dividend
payment. The company previously announced a $110 million dividend for
fiscal 2019, half of which was paid in the first quarter.
A reconciliation of net debt and adjusted free cash flow, non-GAAP
financial measures, is provided at the end of this press release.
Annual Guidance
The company's expectations for fiscal 2019, as compared to fiscal 2018,
are as follows:
-
Constant-currency net revenues growth of mid-single digits; and
-
Constant-currency Adjusted EBIT margin flat-to-slightly up.
The company noted that due to the timing of its fiscal year ending the
final Sunday of November, fiscal 2019 will not contain the benefit of a
Black Friday, which normally represents about half-a-point of annual net
revenues and an additional 25 basis-points of Adjusted EBIT margin.
Additionally, the company anticipates capital expenditures of
approximately $190 - $200 million and nearly 100 new company-operated
store openings in fiscal 2019.
Investor Conference Call
The company’s first-quarter 2019 investor conference call will be
available through a live audio webcast at https://engage.vevent.com/rt/levistraussao~8997045
on April 9, 2019, at 2 p.m. Pacific / 5 p.m. Eastern or via the
following phone numbers: 800-891-4735 in the United States and Canada,
or +1-973-200-3066 internationally; I.D. No. 8997045. A replay is
available the same day on http://www.levistrauss.com/investors/earnings-webcast
and will be archived for three months. A telephone replay is also
available through April 15, 2019, at 855-859-2056 in the United States
and Canada or +1-404-537-3406 internationally; I.D. No. 8997045.
Please see http://www.levistrauss.com/investors/earnings-webcast
for a discussion and reconciliation of non-GAAP measures referenced on
the investor conference call.
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 Denizen® brands. Its products
are sold in more than 110 countries worldwide through a combination of
chain retailers, department stores, online sites, and a global footprint
of approximately 3,000 retail stores and shop-in-shops. Levi Strauss &
Co.'s reported fiscal 2018 net revenues were $5.6 billion. For more
information, go to http://levistrauss.com.
Forward Looking Statement
This press release and related conference call contains, in addition
to historical information, forward-looking statements, including
statements related to: inventory levels; gross margin; SG&A and
advertising costs; revenues growth; adjusted EBIT margin; dividends;
expectations for and projected capital expenditures in fiscal 2019;
store openings; and currency impacts. The company has based these
forward-looking statements on its current assumptions, expectations and
projections about future events. Words such as, but not limited to,
“believe,” “will,” “so we can,” “when,” “anticipate,” “intend,”
“estimate,” “expect,” “project” and similar expressions are used 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 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 the
company's filings with the U.S. Securities and Exchange Commission (the
“SEC”), including its Annual Report on Form 10-K for fiscal year 2018
and its Quarterly Report on Form 10-Q for the quarter ended February 24,
2019, 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 future results, performance or achievements.
In light of these risks, uncertainties, assumptions and factors, the
forward-looking events discussed in this press release and related
conference call 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 press
release and related conference call. The company is not under any
obligation and does not intend to update or revise any of the
forward-looking statements contained in this press release and related
conference call to reflect circumstances existing after the date of this
press release and related conference call or to reflect the occurrence
of future events, even if such circumstances or future events make it
clear that any expected results expressed or implied by those
forward-looking statements will not be realized.
Non-GAAP Financial Measures
The company reports its financial results in accordance with
generally accepted accounting principles in the United States (“GAAP”)
and the rules of the SEC. To supplement its financial statements
prepared and presented in accordance with GAAP, the company uses certain
non-GAAP financial measures, such as adjusted free cash flow, net debt,
Adjusted EBIT, adjusted net income and constant-currency net revenues,
to provide investors with additional useful information about its
financial performance, to enhance the overall understanding of its past
performance and future prospects and to allow for greater transparency
with respect to important metrics used by management for financial and
operating decision-making. The company presents these non-GAAP financial
measures to assist investors in seeing its financial performance from
management's view and because it believes they provide an additional
tool for investors to use in computing the company's core financial
performance over multiple periods with other companies in its industry.
The tables found below present adjusted free cash flow, net debt,
Adjusted EBIT, adjusted net income and constant-currency net revenues
and corresponding reconciliations of these non-GAAP financial measures
to the most directly comparable financial measures calculated in
accordance with GAAP. Non-GAAP financial measures have limitations in
their usefulness to investors because they have no standardized meaning
prescribed by GAAP and are not prepared under any comprehensive set of
accounting rules or principles. Certain items that may be excluded or
included in non-GAAP financial measures may be significant items that
could impact the company’s financial position, results of operations and
cash flows and should therefore be considered in assessing the company’s
actual financial condition and performance. Non-GAAP financial measures
are subject to inherent limitations as they reflect the exercise of
judgment by management in determining how they are formulated. Some
specific limitations include but are not limited to, the fact that such
non-GAAP financial measures: (a) do not reflect cash outlays for capital
expenditures, contractual commitments or liabilities including pension
obligations, post-retirement health benefit obligations and income tax
liabilities, (b) do not reflect changes in, or cash requirements for,
working capital requirements; and (c) they do not reflect the interest
expense, or the cash requirements necessary to service interest or
principal payments, on indebtedness. In addition, non-GAAP financial
measures may be calculated differently from, and therefore may not be
directly comparable to, similarly titled measures used by other
companies. As a result, non-GAAP financial measures should be viewed as
supplementing, and not as an alternative or substitute for, the
company's financial results prepared in accordance with GAAP. The
company urges investors to review the reconciliation of these non-GAAP
financial measures to the most directly comparable GAAP financial
measures included in this press release, and not to rely on any single
financial measure to evaluate its business. See “RECONCILIATION OF GAAP
TO NON-GAAP FINANCIAL MEASURES FOR THE FIRST QUARTER OF 2019” below for
reconciliation to the most comparable GAAP financial measures.
Constant-currency
The company reports operating results in accordance with GAAP,
as
well as on a constant-currency basis in order to facilitate
period-to-period comparisons of its results without regard to the impact
of fluctuating foreign currency exchange rates. The term foreign
currency exchange rates refers to the exchange rates used to translate
the company's operating results for all countries where the functional
currency is not the U.S. Dollar into U.S. Dollars. Because the company
is a global company, foreign currency exchange rates used for
translation may have a significant effect on its reported results. In
general, the company's financial results are affected positively by a
weaker U.S. Dollar and are affected negatively by a stronger U.S. Dollar
as compared to the foreign currencies in which it conducts its business.
References to operating results on a constant-currency basis mean
operating results without the impact of foreign currency exchange rate
fluctuations.
The company believes disclosure of constant-currency results is
helpful to investors because it facilitates period-to-period comparisons
of its results by increasing the transparency of the underlying
performance by excluding the impact of fluctuating foreign currency
exchange rates. However, constant-currency results are non-GAAP
financial measures and are not meant to be considered as an alternative
or substitute for comparable measures prepared in accordance with GAAP.
Constant-currency results have no standardized meaning prescribed by
GAAP, are not prepared under any comprehensive set of accounting rules
or principles and should be read in conjunction with the company's
consolidated financial statements prepared in accordance with GAAP.
Constant-currency results have limitations in their usefulness to
investors and may be calculated differently from, and therefore may not
be directly comparable to, similarly titled measures used by other
companies.
The company calculates constant-currency amounts by translating local
currency amounts in the prior-year period at actual foreign exchange
rates for the current period. The company's constant-currency results do
not eliminate the transaction currency impact of purchases and sales of
products in a currency other than the functional currency.
Source: Levi Strauss & Co. Investor Relations
|
|
|
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
February 24,
2019
|
|
November 25,
2018
|
|
|
(Dollars in thousands)
|
|
ASSETS
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
621,934
|
|
|
$
|
713,120
|
|
|
Short-term investments in marketable securities
|
|
100,017
|
|
|
—
|
|
|
Trade receivables, net of allowance for doubtful accounts of $8,332
and $10,037
|
|
633,534
|
|
|
534,164
|
|
|
Inventories:
|
|
|
|
|
|
Raw materials
|
|
5,900
|
|
|
3,681
|
|
|
Work-in-process
|
|
2,889
|
|
|
2,977
|
|
|
Finished goods
|
|
905,488
|
|
|
877,115
|
|
|
Total inventories
|
|
914,277
|
|
|
883,773
|
|
|
Other current assets
|
|
177,540
|
|
|
157,002
|
|
|
Total current assets
|
|
2,447,302
|
|
|
2,288,059
|
|
|
Property, plant and equipment, net of accumulated depreciation of
$998,131 and $974,206
|
|
463,840
|
|
|
460,613
|
|
|
Goodwill
|
|
236,127
|
|
|
236,246
|
|
|
Other intangible assets, net
|
|
42,822
|
|
|
42,835
|
|
|
Deferred tax assets, net
|
|
398,008
|
|
|
397,791
|
|
|
Other non-current assets
|
|
120,269
|
|
|
117,116
|
|
|
Total assets
|
|
$
|
3,708,368
|
|
|
$
|
3,542,660
|
|
|
|
|
|
|
|
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
|
|
Current Liabilities:
|
|
|
|
|
|
Short-term debt
|
|
$
|
23,477
|
|
|
$
|
31,935
|
|
|
Accounts payable
|
|
329,913
|
|
|
351,329
|
|
|
Accrued salaries, wages and employee benefits
|
|
215,811
|
|
|
298,990
|
|
|
Accrued interest payable
|
|
16,648
|
|
|
6,089
|
|
|
Accrued income taxes
|
|
34,624
|
|
|
15,466
|
|
|
Accrued sales allowances
|
|
109,663
|
|
|
—
|
|
|
Other accrued liabilities
|
|
474,256
|
|
|
348,390
|
|
|
Total current liabilities
|
|
1,204,392
|
|
|
1,052,199
|
|
|
Long-term debt
|
|
1,017,660
|
|
|
1,020,219
|
|
|
Postretirement medical benefits
|
|
72,752
|
|
|
74,181
|
|
|
Pension liability
|
|
193,297
|
|
|
195,639
|
|
|
Long-term employee related benefits
|
|
84,607
|
|
|
107,556
|
|
|
Long-term income tax liabilities
|
|
10,281
|
|
|
9,805
|
|
|
Other long-term liabilities
|
|
116,353
|
|
|
116,462
|
|
|
Total liabilities
|
|
2,699,342
|
|
|
2,576,061
|
|
|
Commitments and contingencies
|
|
|
|
|
|
Temporary equity
|
|
322,984
|
|
|
299,140
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
Levi Strauss & Co. stockholders’ equity
|
|
|
|
|
|
Common stock — $.001 par value; 1,200,000,000 shares authorized;
375,874,600 shares and 376,028,430 shares issued and outstanding
|
|
376
|
|
|
376
|
|
|
Additional paid-in capital
|
|
—
|
|
|
—
|
|
|
Accumulated other comprehensive loss
|
|
(416,370
|
)
|
|
(424,584
|
)
|
|
Retained earnings
|
|
1,094,636
|
|
|
1,084,321
|
|
|
Total Levi Strauss & Co. stockholders’ equity
|
|
678,642
|
|
|
660,113
|
|
|
Noncontrolling interest
|
|
7,400
|
|
|
7,346
|
|
|
Total stockholders’ equity
|
|
686,042
|
|
|
667,459
|
|
|
Total liabilities, temporary equity and stockholders’ equity
|
|
$
|
3,708,368
|
|
|
$
|
3,542,660
|
|
|
|
|
|
|
|
|
|
|
|
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 (LOSS)
|
|
|
|
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
(Dollars in thousands, except per share amounts)
(Unaudited)
|
|
Net revenues
|
|
$
|
1,434,458
|
|
|
$
|
1,343,685
|
|
|
Cost of goods sold
|
|
651,650
|
|
|
605,561
|
|
|
Gross profit
|
|
782,808
|
|
|
738,124
|
|
|
Selling, general and administrative expenses
|
|
581,896
|
|
|
563,202
|
|
|
Operating income
|
|
200,912
|
|
|
174,922
|
|
|
Interest expense
|
|
(17,544
|
)
|
|
(15,497
|
)
|
|
Other income (expense), net
|
|
(1,646
|
)
|
|
(10,400
|
)
|
|
Income before income taxes
|
|
181,722
|
|
|
149,025
|
|
|
Income tax expense
|
|
35,271
|
|
|
167,654
|
|
|
Net income (loss)
|
|
146,451
|
|
|
(18,629
|
)
|
|
Net loss (income) attributable to noncontrolling interest
|
|
126
|
|
|
(383
|
)
|
|
Net income (loss) attributable to Levi Strauss & Co.
|
|
$
|
146,577
|
|
|
$
|
(19,012
|
)
|
|
Earnings (loss) per common share attributable to common stockholders:
|
|
|
|
|
|
Basic
|
|
$
|
0.39
|
|
|
$
|
(0.05
|
)
|
|
Diluted
|
|
$
|
0.37
|
|
|
$
|
(0.05
|
)
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
Basic
|
|
377,077,111
|
|
|
376,165,783
|
|
|
Diluted
|
|
393,234,825
|
|
|
376,165,783
|
|
|
|
|
|
|
|
|
|
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 COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
(Dollars in thousands)
(Unaudited)
|
|
Net income (loss)
|
|
$
|
146,451
|
|
|
$
|
(18,629
|
)
|
|
Other comprehensive income (loss), before related income taxes:
|
|
|
|
|
|
Pension and postretirement benefits
|
|
3,422
|
|
|
3,360
|
|
|
Derivative instruments
|
|
1,737
|
|
|
(22,848
|
)
|
|
Foreign currency translation gains
|
|
4,086
|
|
|
19,781
|
|
|
Unrealized gains on marketable securities
|
|
890
|
|
|
290
|
|
|
Total other comprehensive income, before related income taxes
|
|
10,135
|
|
|
583
|
|
|
Income taxes (expense) benefit related to items of other
comprehensive income
|
|
(1,741
|
)
|
|
4,846
|
|
|
Comprehensive income, net of income taxes
|
|
154,845
|
|
|
(13,200
|
)
|
|
Comprehensive income attributable to noncontrolling interest
|
|
(54
|
)
|
|
(644
|
)
|
|
Comprehensive income (loss) attributable to Levi Strauss & Co.
|
|
$
|
154,791
|
|
|
$
|
(13,844
|
)
|
|
|
|
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
|
|
|
|
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
(Dollars in thousands)
(Unaudited)
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
Net income (loss)
|
|
$
|
146,451
|
|
|
$
|
(18,629
|
)
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
28,559
|
|
|
32,821
|
|
|
Unrealized foreign exchange losses
|
|
9,046
|
|
|
10,022
|
|
|
Realized (gain) loss on settlement of forward foreign exchange
contracts not designated for hedge accounting
|
|
(4,618
|
)
|
|
10,303
|
|
|
Employee benefit plans’ amortization from accumulated other
comprehensive loss and settlement loss
|
|
3,422
|
|
|
3,360
|
|
|
Stock-based compensation
|
|
1,497
|
|
|
5,256
|
|
|
Other, net
|
|
(413
|
)
|
|
1,624
|
|
|
(Benefit from) provision for deferred income taxes
|
|
(795
|
)
|
|
129,542
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
Trade receivables
|
|
69,672
|
|
|
59,497
|
|
|
Inventories
|
|
(48,120
|
)
|
|
(61,867
|
)
|
|
Other current assets
|
|
(6,162
|
)
|
|
(16,100
|
)
|
|
Other non-current assets
|
|
(2,251
|
)
|
|
(3,405
|
)
|
|
Accounts payable and other accrued liabilities
|
|
(48,041
|
)
|
|
14,659
|
|
|
Restructuring liabilities
|
|
(4
|
)
|
|
(44
|
)
|
|
Income tax liabilities
|
|
19,496
|
|
|
26,194
|
|
|
Accrued salaries, wages and employee benefits and long-term employee
related benefits
|
|
(110,338
|
)
|
|
(126,939
|
)
|
|
Other long-term liabilities
|
|
(1,579
|
)
|
|
(124
|
)
|
|
Net cash provided by operating activities
|
|
55,822
|
|
|
66,170
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(36,149
|
)
|
|
(30,996
|
)
|
|
Proceeds (Payments) on settlement of forward foreign exchange
contracts not designated for hedge accounting
|
|
55,818
|
|
|
(10,303
|
)
|
|
Payments to acquire short-term investments
|
|
(99,880
|
)
|
|
—
|
|
|
Net cash used for investing activities
|
|
(80,211
|
)
|
|
(41,299
|
)
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
Proceeds from short-term credit facilities
|
|
13,442
|
|
|
17,511
|
|
|
Repayments of short-term credit facilities
|
|
(12,556
|
)
|
|
(16,944
|
)
|
|
Other short-term borrowings, net
|
|
(9,422
|
)
|
|
(14,537
|
)
|
|
Repurchase of common stock, including shares surrendered for tax
withholdings on equity award exercises
|
|
(3,914
|
)
|
|
(14,844
|
)
|
|
Dividend to stockholders
|
|
(55,000
|
)
|
|
(45,000
|
)
|
|
Other financing, net
|
|
(296
|
)
|
|
(386
|
)
|
|
Net cash used for financing activities
|
|
(67,746
|
)
|
|
(74,200
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents and
restricted cash
|
|
952
|
|
|
5,597
|
|
|
Net decrease in cash and cash equivalents and restricted cash
|
|
(91,183
|
)
|
|
(43,732
|
)
|
|
Beginning cash and cash equivalents, and restricted cash
|
|
713,698
|
|
|
634,691
|
|
|
Ending cash and cash equivalents, and restricted cash
|
|
$
|
622,515
|
|
|
$
|
590,959
|
|
|
Less: Ending restricted cash
|
|
(581
|
)
|
|
(729
|
)
|
|
Ending cash and cash equivalents
|
|
621,934
|
|
|
590,230
|
|
|
|
|
|
|
|
Noncash Investing Activity:
|
|
|
|
|
|
Property, plant and equipment acquired and not yet paid at end of
period
|
|
$
|
10,513
|
|
|
$
|
10,574
|
|
|
Property, plant and equipment additions due to build-to-suit lease
transactions
|
|
7,842
|
|
|
723
|
|
|
Realized loss on foreign currency contracts not yet paid at end of
period
|
|
51,200
|
|
|
—
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
Cash paid for interest during the period
|
|
$
|
2,778
|
|
|
$
|
1,628
|
|
|
Cash paid for income taxes during the period, net of refunds
|
|
17,157
|
|
|
11,939
|
|
|
|
|
|
|
|
|
|
The notes accompanying our consolidated financial statements in
our Form 10-Q are an integral part of these consolidated financial
statements.
|
|
|
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR THE FIRST
QUARTER OF 2019
The following information relates to non-GAAP financial measures, and
should be read in conjunction with the investor call held on April 9,
2019, discussing the company’s financial condition and results of
operations as of and for the quarter ended February 24, 2019. Adjusted
EBIT, adjusted net income, net debt, adjusted free cash flow,
constant-currency net revenues and constant-currency Adjusted EBIT are
not financial measures prepared in accordance with GAAP. As used in this
press release: (1) Adjusted EBIT represents net income (loss) plus
income tax expense, interest expense, other (income) expense, net,
impact of changes in fair value on cash-settled stock based
compensation, and restructuring related charges, severance and other,
net; (2) adjusted net income represents net income (loss), impact of
changes in fair value on cash-settled stock based compensation,
restructuring related charges, severance and other, net, remeasurement
of deferred tax assets and liabilities, and tax impact of adjustments;
(3) net debt represents total debt, excluding capital leases, less cash
and cash equivalents and short-term investments in marketable
securities; (4) Adjusted free cash flow represents cash from operating
activities less purchases of property, plant and equipment, proceeds
(payments) on settlement of forward foreign exchange contracts not
designated for hedge accounting, repurchase of common stock including
shares surrendered for tax withholdings on equity award exercises, and
cash dividends to stockholders; (5) constant-currency net revenues
represents net revenues without the impact of foreign currency exchange
rate fluctuations; and (6) constant-currency Adjusted EBIT represents
Adjusted EBIT without the impact of foreign currency exchange rate
fluctuations.
Adjusted EBIT:
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
(Dollars in millions)
|
|
|
(Unaudited)
|
|
Most comparable GAAP measure:
|
|
|
|
|
|
Net income (loss)
|
|
$
|
146.5
|
|
|
$
|
(18.6
|
)
|
|
|
|
|
|
|
Non-GAAP measure:
|
|
|
|
|
|
Net income (loss)
|
|
146.5
|
|
|
(18.6
|
)
|
|
Income tax expense
|
|
35.3
|
|
|
167.7
|
|
|
Interest expense
|
|
17.5
|
|
|
15.5
|
|
|
Other expense, net
|
|
1.6
|
|
|
10.4
|
|
|
Impact of changes in fair value on cash-settled stock based
compensation
|
|
5.3
|
|
|
5.0
|
|
|
Restructuring and related charges, severance and other, net
|
|
0.1
|
|
|
0.3
|
|
|
Adjusted EBIT
|
|
$
|
206.3
|
|
|
$
|
180.3
|
|
|
Adjusted EBIT margin
|
|
14.4
|
%
|
|
13.4
|
%
|
|
|
|
|
|
|
Depreciation and amortization
|
|
28.6
|
|
|
32.8
|
|
|
Adjusted EBITDA
|
|
$
|
234.9
|
|
|
$
|
213.1
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income:
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
(Dollars in millions)
|
|
|
(Unaudited)
|
|
Most comparable GAAP measure:
|
|
|
|
|
|
Net income (loss)
|
|
$
|
146.5
|
|
|
$
|
(18.6
|
)
|
|
|
|
|
|
|
Non-GAAP measure:
|
|
|
|
|
|
Net income (loss)
|
|
146.5
|
|
|
(18.6
|
)
|
|
Impact of changes in fair value on cash-settled stock based
compensation
|
|
5.3
|
|
|
5.0
|
|
|
Restructuring and related charges, severance and other, net
|
|
0.1
|
|
|
0.3
|
|
|
Remeasurement of deferred tax assets and liabilities
|
|
—
|
|
|
99.1
|
|
|
Tax impact of adjustments
|
|
(1.0
|
)
|
|
(2.4
|
)
|
|
Adjusted net income
|
|
$
|
150.9
|
|
|
$
|
83.4
|
|
|
Adjusted net income margin
|
|
10.5
|
%
|
|
6.2
|
%
|
|
|
|
|
|
|
|
Net debt:
|
|
February 24,
2019
|
|
November 25,
2018
|
|
|
(Dollars in millions)
|
|
|
(Unaudited)
|
|
|
|
Most comparable GAAP measure:
|
|
|
|
|
|
Total debt, excluding capital leases
|
|
$
|
1,041.1
|
|
|
$
|
1,052.2
|
|
|
|
|
|
|
|
Non-GAAP measure:
|
|
|
|
|
|
Total debt, excluding capital leases
|
|
$
|
1,041.1
|
|
|
$
|
1,052.2
|
|
|
Cash and cash equivalents
|
|
(621.9
|
)
|
|
(713.1
|
)
|
|
Short-term investments in marketable securities
|
|
(100.0
|
)
|
|
—
|
|
|
Net debt
|
|
$
|
319.2
|
|
|
$
|
339.1
|
|
|
|
|
|
|
|
|
|
|
Adjusted free cash flow:
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
|
(Dollars in millions)
|
|
|
(Unaudited)
|
|
Most comparable GAAP measure:
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
55.8
|
|
|
$
|
66.2
|
|
|
|
|
|
|
|
Non-GAAP measure:
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
55.8
|
|
|
$
|
66.2
|
|
|
Purchases of property, plant and equipment
|
|
(36.1
|
)
|
|
(31.0
|
)
|
|
Proceeds (Payments) on settlement of forward foreign exchange
contracts not designated for hedge accounting
|
|
55.8
|
|
|
(10.3
|
)
|
|
Repurchase of common stock, including shares surrendered for tax
withholdings on equity award exercises
|
|
(3.9
|
)
|
|
(14.8
|
)
|
|
Dividend to stockholders
|
|
(55.0
|
)
|
|
(45.0
|
)
|
|
Adjusted free cash flow
|
|
$
|
16.6
|
|
|
$
|
(34.9
|
)
|
|
|
|
|
|
|
|
|
|
Constant-currency net revenues:
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
%
Increase
|
|
|
(Dollars in millions)
|
|
|
(Unaudited)
|
|
Total revenues
|
|
|
|
|
|
|
|
As reported
|
|
$
|
1,434.5
|
|
|
$
|
1,343.7
|
|
|
6.8
|
%
|
|
Impact of foreign currency exchange rates
|
|
—
|
|
|
(47.8
|
)
|
|
*
|
|
Constant-currency net revenues
|
|
$
|
1,434.5
|
|
|
$
|
1,295.9
|
|
|
10.7
|
%
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
|
|
|
|
As reported
|
|
$
|
717.3
|
|
|
$
|
657.2
|
|
|
9.1
|
%
|
|
Impact of foreign currency exchange rates
|
|
—
|
|
|
(5.5
|
)
|
|
*
|
|
Constant-currency net revenues - Americas
|
|
$
|
717.3
|
|
|
$
|
651.7
|
|
|
10.1
|
%
|
|
|
|
|
|
|
|
|
Europe
|
|
|
|
|
|
|
|
As reported
|
|
$
|
464.7
|
|
|
$
|
452.7
|
|
|
2.7
|
%
|
|
Impact of foreign currency exchange rates
|
|
—
|
|
|
(30.3
|
)
|
|
*
|
|
Constant-currency net revenues - Europe
|
|
$
|
464.7
|
|
|
$
|
422.4
|
|
|
10.0
|
%
|
|
|
|
|
|
|
|
|
Asia
|
|
|
|
|
|
|
|
As reported
|
|
$
|
252.5
|
|
|
$
|
233.8
|
|
|
8.0
|
%
|
|
Impact of foreign currency exchange rates
|
|
—
|
|
|
(12.0
|
)
|
|
*
|
|
Constant-currency net revenues - Asia
|
|
$
|
252.5
|
|
|
$
|
221.8
|
|
|
13.8
|
%
|
|
_____________
* Not meaningful
|
|
|
Constant-currency Adjusted EBIT:
|
|
Three Months Ended
|
|
|
February 24,
2019
|
|
February 25,
2018
|
|
%
Increase
|
|
|
(Dollars in millions)
|
|
|
(Unaudited)
|
|
Adjusted EBIT
|
|
$
|
206.3
|
|
|
$
|
180.3
|
|
|
14.4
|
%
|
|
Impact of foreign currency exchange rates
|
|
—
|
|
|
(10.1
|
)
|
|
|
*
|
|
Constant-currency Adjusted EBIT
|
|
$
|
206.3
|
|
|
$
|
170.2
|
|
|
21.2
|
%
|
|
Constant-currency Adjusted EBIT margin
(1)
|
|
14.4
|
%
|
|
13.1
|
%
|
|
|
|
|
_____________
(1) We define constant-currency Adjusted EBIT margin as
constant-currency Adjusted EBIT as a percentage of
constant-currency net revenues.
* Not meaningful
|
|
|
View source version on businesswire.com:
https://www.businesswire.com/news/home/20190409005987/en/
Investor Contact:
Aida Orphan
Levi Strauss & Co.
(415)
501-6194
Investor-relations@levi.com
Media
Contact:
Amber McCasland
Levi Strauss & Co.
(415)
501-7777
newsmediarequests@levi.com
Source: Levi Strauss & Co. Investor Relations