EX-99 2 0002.txt PRESS RELEASE DATED JUNE 20, 2000 Exhibit 99 Media Inquiries: Jeff Beckman Levi Strauss & Co. (415) 501-1698 Investors: Chad Jacobs Integrated Corporate Relations (203) 222-9013 LEVI STRAUSS & CO. REPORTS IMPROVED SECOND-QUARTER AND FIRST-HALF FINANCIAL RESULTS CEO Cites Progress in Business Turnaround Second-Quarter Operating Income Jumps 45 Percent as Sales Trend Improves SAN FRANCISCO (June 20, 2000) -- Levi Strauss & Co. today announced financial results for the second quarter and first six months ended May 28, 2000, which reflect solid progress in the company's business turnaround. The company reported improvements across several performance measures, including sales trends, gross margins, operating income and debt reduction. Net sales for the quarter declined 6 percent to $1.149 billion from $1.228 billion in the year-ago period - a significant improvement from the 15 percent decline in net sales reported for the first quarter of this year. Had the U.S. dollar remained at 1999 levels, net sales would have declined 5 percent. Product innovation and marketing initiatives, as well as supply chain execution, contributed to the improved sales trend. "I'm very pleased with where we are in our business turnaround," said Philip Marineau, president and chief executive officer of San Francisco-based Levi Strauss & Co. "We are doing what we said we would do to stabilize the business. Our performance measures are improving - the rate of our sales decline has slowed, gross margins are up, our net income is rising and we are decreasing our debt. In addition, we have maintained strict and effective cost controls." Second-quarter gross margin rose to 42.4 percent versus 40.0 percent in the second quarter of last year, reflecting the company's improved product mix and sourcing arrangements. Gross profit for the quarter totaled $487.6 compared with $490.6 million in the year-ago period. -- more -- LS&CO. Q.2 June 20, 2000 During the quarter, operating income improved to $120.2 million compared with $71.1 million in last year's second quarter. Operating income for the 1999 period includes a restructuring charge of $11.8 million. Excluding the effects of the restructuring charge, operating income would have increased 45 percent over the same period last year. EBITDA, which the company defines as operating income excluding depreciation, amortization, special compensation and restructuring charges, increased to $143.8 million or 12.5 percent of sales. In the second quarter of 1999, EBITDA totaled $121.8 million or 10 percent of sales. Net income for the second quarter rose 48 percent to $45.0 million from $30.4 million in the same period last year. Net sales for the six-month period ended May 28, 2000 declined 11 percent to $2.231 billion from $2.506 billion in the same period last year. Had the U.S. dollar remained at 1999 levels, net sales would have declined 9 percent. Gross margin for the first six months rose to 42.0 percent compared with 38.1 percent in 1999, while gross profit for the period was $937.6 million compared to $954.3 million in the first half of last year. Operating income for the six-month period rose to $248.0 million compared with an operating loss of $278.4 million in the first half of 1999. Operating income for the 1999 period included restructuring charges of $405.9 million. Excluding the effects of restructuring charges, operating income would have increased 95 percent over the prior-year period, due primarily to gross margin improvements and effective management of marketing, general and administrative expenses. As a result, EBITDA increased to $292.3 million or 13.1 percent of sales compared with an EBITDA of $200.4 million or 8.0 percent of sales in the first half of 1999. For the six-month period ended May 28, net income increased sharply to $110.1 million compared with a net loss of $206.8 million in the year-earlier period, which included the effects of the restructuring initiatives. As of May 28, 2000, total debt was $2.303 billion, a significant reduction from $2.665 billion at the end of fiscal year 1999. -- more -- LS&CO. Q.2 June 20, 2000 "My experience with business turnarounds has shown me that they happen on a wide arc," said Marineau. "Our progress to date reinforces my belief that we are in position to stabilize the business by the end of the year, setting the stage to restore growth. Our improvements in products, marketing, retail collaboration and operations are having a positive impact on consumers and retailers. We still have a great deal of work to accomplish, but I believe the turnaround is under way." Levi Strauss & Co. is one of the world's leading branded apparel companies with operations in more than 40 countries. 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 Slates(R) brands. The company's second-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 www.levistrauss.com on June 20 at 10 a.m. Eastern Daylight Time. A replay is available on the Web site the same day beginning at approximately 2 p.m. Eastern Daylight Time and will remain until August 20. A telephone replay also is available at (402) 530-7824 from approximately noon Eastern Daylight Time until June 27. This news release includes forward-looking statements about sales performance and trends, fashion trends, new product development in our three brands, product mix, inventory position and management, expense levels including overhead and advertising expense, debt repayment and liquidity, customer orders, retail relationships and developments including sell-through, presentation of product at retail and marketing collaborations, and marketing and advertising initiatives. We have based these forward-looking statements on our current assumptions, expectations and projections about future events. When used in this announcement, the words "believe," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are subject to risks and uncertainties including, without limitation, risks related to the impact of competitive products; changing fashion trends; dependence on key distribution channels, customers and suppliers; our supply chain executional performance; ongoing competitive pressures in the apparel industry; changing international retail environments; changes in the level of consumer spending or preferences in apparel; trade restrictions; political or financial instability in countries where our products are manufactured; and other risks detailed in our registration statement on Form S-4 filed with the Securities and Exchange Commission on May 4, 2000 and our other filings with the Securities and Exchange Commission. Our actual results might differ materially from historical performance or current expectations.
LEVI STRAUSS & CO. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Dollars in Thousands) (Unaudited) Three Months Ended Six Months Ended ------------------ ---------------- May 28, May 30, May 28, May 30, ------- ------- ------- ------- 2000 1999 2000 1999 ---- ---- ---- ---- Net sales........................................................ $1,149,044 $1,227,910 $2,231,481 $2,506,232 Cost of goods sold............................................... 661,469 737,303 1,293,911 1,551,976 ------- ------- --------- --------- Gross profit.................................................. 487,575 490,607 937,570 954,256 Marketing, general and administrative expenses................... 367,417 407,677 689,528 826,762 Excess capacity/restructuring charge............................. -- 11,780 -- 405,885 ------ ------ ------- ------- Operating income (loss)....................................... 120,158 71,150 248,042 (278,391) Interest expense................................................. 60,989 43,819 117,771 86,976 Other income, net................................................ (10,100) (20,931) (39,241) (37,058) ------- ------- ------- ------- Income (loss) before taxes.................................... 69,269 48,262 169,512 (328,309) Income tax expense (benefit)..................................... 24,245 17,857 59,329 (121,474) ------ ------ ------ -------- Net income (loss)............................................. $ 45,024 $ 30,405 $ 110,183 $ (206,835) ========== ========== ========== ========== NET SALES BY REGION (in millions) (Unaudited) Three Months Ended Six Months Ended ------------------ ---------------- Net Sales May 28, May 30, Percent May 28, May 30, Percent ------- ------- ------- ------- ------- ------- 2000 1999 Change 2000 1999 Change ---- ---- ------ ---- ---- ------ Americas $762.1 $801.8 (4.9%) $1,452.6 $1,621.6 (10.4%) Europe $278.7 $337.3 (17.4%) $581.7 $714.3 (18.6%) Asia $108.3 $88.8 21.9% $197.2 $170.4 15.7% Total Company $1,149.0 $1,227.9 (6.4%) $2,231.5 $2,506.2 (11.0%) Three Months Ended Six Months Ended ------------------ ---------------- Net Sales at Prior- Year May 28, May 30, Percent May 28, May 30, Percent ------- ------- ------- ------- ------- ------- Currency Exchange Rates 2000 1999 Change 2000 1999 Change ---- ---- ------ ---- ---- ------ (Restated) (Restated) ---------- ---------- Americas $761.5 $801.8 (5.0%) $1,450.1 $1621.6 (10.6%) Europe $299.1 $337.3 (11.3%) $640.9 $714.3 (10.3%) Asia $102.6 $88.9 15.5% $187.0 $170.4 9.8% Total Company $1,163.2 $1,227.9 (5.3%) $2,277.9 $2,506.2 (9.1%)
LEVI STRAUSS & CO. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) May 28, November 28, ------- ------------ 2000 1999 ---- ---- (Unaudited) ASSETS Cash and cash equivalents............................................................ $ 128,363 $ 192,816 Trade receivables, net............................................................... 625,912 759,273 Total inventories ................................................................... 588,131 671,487 Property, plant and equipment, net. ................................................. 579,324 685,026 Other assets......................................................................... 1,234,976 1,356,915 --------- --------- Total Assets....................................................... $3,156,706 $3,665,517 ========== ========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current maturities of long-term debt and short-term borrowings....................... $ 232,165 $ 233,992 Accounts payable..................................................................... 201,891 262,389 Restructuring reserves............................................................... 107,546 258,784 Long-term debt, less current maturities.............................................. 2,070,556 2,430,617 Long-term employee related benefits.................................................. 330,334 325,518 Post-retirement medical benefits..................................................... 549,380 541,815 Other liabilities ................................................................... 858,864 900,964 ------- ------- Total liabilities.................................................. 4,350,736 4,954,079 --------- --------- Total stockholders' deficit........................................ (1,194,030) (1,288,562) ---------- ---------- Total Liabilities and Stockholders' Deficit........................ $3,156,706 $3,665,517 ========== ==========