DELAWARE | 001-06631 | 94-0905160 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
¨ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02. | Results of Operations and Financial Condition. |
ITEM 9.01. | Financial Statements and Exhibits. |
LEVI STRAUSS & CO. | |||
DATE: | October 8, 2019 | By: | /s/ GAVIN BROCKETT |
Name: | Gavin Brockett | ||
Title: | Senior Vice President and Global Controller | ||
(Principal Accounting Officer and Duly Authorized Officer) |
Investor Contact: | Aida Orphan | Media Contact: | Kelly Mason | |||
Levi Strauss & Co. | Levi Strauss & Co. | |||||
(415) 501-6194 | (415) 501-7777 | |||||
Investor-relations@levi.com | newsmediarequests@levi.com |
• | Broad-based net revenues growth of four percent on a reported basis, five percent in constant-currency, driven by double-digit constant-currency growth in the following areas of strategic priority: |
Third Quarter 2019 vs. Third Quarter 2018 Growth | Consecutive quarters of double-digit constant-currency growth | ||||
Reported basis | Constant-currency basis | ||||
Europe | 14% | 18% | 13 | ||
Asia | 9% | 12% | 5 | ||
Global direct-to-consumer | 10% | 12% | 15 | ||
Women’s | 10% | 12% | 11 | ||
Tops | 14% | 17% | 15 |
• | Gross margin declined 20 basis points due to FX headwinds; excluding all currency effects, gross margin increased 40 basis points reflecting direct-to-consumer and international net revenue growth |
• | Net income down four percent, despite higher operating income, due to tax benefits in the prior year |
• | Adjusted EBIT up two percent reported, four percent constant-currency; Adjusted EBIT margin 12.2 percent |
• | Inventory flat compared to the same period in prior year |
• | Company further augments shareholder value through increased dividend and distributor acquisition |
Three Months Ended | Increase (Decrease) As Reported | Nine Months Ended | Increase As Reported | |||||||||||||||||||
($ millions, except per-share amounts) | August 25, 2019 | August 26, 2018 | August 25, 2019 | August 26, 2018 | ||||||||||||||||||
Net revenues | $ | 1,447 | $ | 1,394 | 4 | % | $ | 4,195 | $ | 3,984 | 5 | % | ||||||||||
Net income | $ | 124 | $ | 130 | (4 | )% | $ | 299 | $ | 188 | 59 | % | ||||||||||
Adjusted net income | $ | 128 | $ | 134 | (4 | )% | $ | 348 | $ | 300 | 16 | % | ||||||||||
Adjusted EBIT | $ | 176 | $ | 173 | 2 | % | $ | 464 | $ | 439 | 6 | % | ||||||||||
Diluted earnings per share* | $ | 0.30 | $ | 0.33 | (3 | )¢ | $ | 0.73 | $ | 0.48 | 25 | ¢ | ||||||||||
Adjusted diluted earnings per share* | $ | 0.31 | $ | 0.34 | (3 | )¢ | $ | 0.85 | $ | 0.77 | 8 | ¢ |
• | Net revenues grew four percent on a reported basis, and five percent on a constant-currency basis excluding $19 million in unfavorable currency effects. The company's direct-to-consumer business grew by 12 percent on a constant-currency basis in the third quarter, primarily due to expansion and performance of the retail network and e-commerce growth. Net revenues from the company's wholesale business grew one percent on a reported basis and two percent on a constant-currency basis, reflecting growth in Europe and Asia. |
• | Gross profit of $767 million for the third quarter rose three percent on a reported basis from $742 million in the prior year. Gross margin was 53.0 percent of net revenues, compared with 53.2 percent in the same quarter of 2018, as the benefits of direct-to-consumer and international growth, as well as price increases the company initiated, were more than offset by unfavorable currency effects of 60 basis points and investment in product. |
• | Selling, general and administrative (SG&A) expenses for the third quarter were $596 million on a reported basis, compared with $582 million in the same quarter in the prior year. SG&A as a percentage of net revenues improved 60 basis-points, as compared to the third quarter of 2018, despite higher investments in direct-to-consumer expansion, technology and distribution capacity, as these were more than offset by leverage on base costs and lower incentive compensation expense, including a reduced impact from the previously-cash-settled stock-based compensation awards. Incentive compensation was higher in the prior-year period due to performance significantly ahead of the company’s internal expectations in 2018. |
• | Operating income for the third quarter was $171 million, up eight percent compared to the prior year on a reported basis, as higher net revenues in Europe and Asia were partially offset by higher SG&A expenses associated with the expansion of the company-operated retail network. |
• | Adjusted EBIT grew two percent on a reported basis and four percent on a constant-currency basis as compared to the prior year due to revenue growth. Adjusted EBIT margin was 12.2 percent, 20 basis-points lower than the prior year on a reported basis, due to the currency effect on gross margin. |
• | Adjusted net income decreased $5 million as compared to the prior year, despite higher operating income, primarily due to $11 million more in tax benefits recorded in the third quarter of 2018. |
• | Adjusted diluted earnings per share for the third quarter of 2019 were 31 cents, compared to 34 cents for the same prior-year period. The prior-year tax benefits, in combination with an increase in the company's share count, adversely impacted the year-over-year adjusted diluted earnings per share comparison by five cents. |
Net Revenues | Operating Income * | |||||||||||||||||||||
Three Months Ended | % (Decrease) Increase | Three Months Ended | % (Decrease) Increase | |||||||||||||||||||
($ millions) | August 25, 2019 | August 26, 2018 | August 25, 2019 | August 26, 2018 | ||||||||||||||||||
Americas | $ | 771 | $ | 793 | (3 | )% | $ | 152 | $ | 163 | (7 | )% | ||||||||||
Europe | $ | 463 | $ | 406 | 14 | % | $ | 103 | $ | 77 | 34 | % | ||||||||||
Asia | $ | 213 | $ | 196 | 9 | % | $ | 17 | $ | 15 | 18 | % |
• | In the Americas, net revenues declined three percent on both a reported and on a constant-currency basis due to a decline in the wholesale business, offset in part by growth in the direct-to-consumer business. Direct-to-consumer net revenues growth of nine percent reflected the Levi’s® brand’s strength in the region. The decline in wholesale primarily reflected a Dockers® line reset in the second half of 2018, reduced shipments to the off-price channel in 2019, and the impact in 2019 of a pending acquisition of a South American distributor. Operating income for the region declined seven percent on both a reported and constant-currency basis due to the lower net revenues and a lower operating margin, as higher SG&A investments in retail and distribution offset a higher gross margin from direct-to-consumer growth. |
• | In Europe, net revenues grew 14 percent on a reported basis and 18 percent on a constant-currency basis, reflecting continued broad-based growth in both direct-to-consumer and wholesale channels across the region. The region's operating income grew 34 percent on a reported basis and 39 percent on a constant-currency basis, reflecting the net revenues growth and a higher gross margin from direct-to-consumer growth, partially offset by higher selling costs. |
• | In Asia, net revenues grew nine percent on a reported basis and 12 percent on a constant-currency basis, reflecting strong performance across traditional wholesale and direct-to-consumer channels across the region. Revenue growth was broad-based across most of the region's markets. The region's operating income grew 18 percent on a reported basis and 25 percent on a constant-currency basis, reflecting higher net revenues, partially offset by higher SG&A to support retail expansion. |
• | Net revenues of $4.2 billion grew five percent on a reported basis and eight percent on a constant-currency basis. The company’s direct-to-consumer business grew thirteen percent on a constant-currency basis due to performance and expansion of the retail network and e-commerce growth. Wholesale net revenues grew three percent on a reported basis and five percent on a constant-currency basis reflecting growth in all regions. |
• | Adjusted EBIT of $464 million increased six percent on a reported basis and 11 percent on a constant-currency basis as a result of higher net revenues and Adjusted EBIT margin expansion. Adjusted EBIT margin was 11.1 percent, 10 basis-points higher than the prior year on a reported basis, and 30 basis-points higher than the prior year on a constant-currency basis, due to the lower incentive compensation expense and leverage on base costs. |
• | Net income of $299 million increased from $188 million in the prior year, primarily due to a charge in 2018 from the impact of the change in tax law in the United States. |
• | Adjusted net income of $348 million increased 16 percent as compared to the prior year, reflecting higher Adjusted EBIT and a lower tax rate. |
• | Diluted earnings per common share for the first nine months of 2019 were 73 cents, compared to 48 cents for the same prior-year period. Adjusted diluted earnings per share for the first nine months of 2019 were 85 cents, compared to 77 cents for the same prior-year period. |
• | Cash and cash equivalents at August 25, 2019, of $864 million and short-term investments of $80 million were complemented by $735 million available under the company's revolving credit facility, resulting in a total liquidity position of approximately $1.7 billion. Net debt at the end of the third quarter of 2019 was $91 million. The company’s leverage ratio declined to 1.4 at the end of the third quarter of 2019 as compared to 1.5 at the end of the third quarter of 2018. |
• | Cash from operations for the first nine months of 2019 was $206 million compared to $205 million in the first nine months of 2018. An increase in cash from the company's business growth was offset primarily by a payment made for underwriting commissions on behalf of selling stockholders in connection with the company’s IPO in March 2019. |
• | Adjusted free cash flow for the first nine months of 2019 was $28 million, an increase of $42 million compared to the first nine months of 2018, even after higher capital investment and a higher dividend in the first quarter of 2019. |
• | Inventory levels were flat compared to the corresponding prior-year period, and the composition of inventory was healthy heading into the fourth quarter. |
• | The company increased its semi-annual dividend payable in the fourth quarter of 2019 by seven percent, from $55 million to approximately $59 million ($0.15 per common share). The increase brings 2019 dividends to approximately $114 million, a 27 percent increase compared to 2018. |
• | The company announced the acquisition of its South American distributor in the markets of Chile, Peru and Bolivia. The transaction is expected to close in the first quarter of 2020. |
• | Constant-currency net revenues growth of five-and-a-half to six percent; this incorporates the impact of the South American distributor acquisition announced in August; |
• | Gross margin approximately flat to prior year on a reported basis; gross margin expansion in the range of 40-60 basis points excluding all currency effects, both translation and transaction; |
• | Adjusted EBIT margin approximately flat to prior year on a reported basis; adjusted EBIT margin expansion in the range of 10 basis points excluding currency effects from translation; |
• | Effective income tax rate in the range of 19-20 percent; |
• | Capital expenditures of approximately $190 - $200 million and nearly 100 new company-operated store openings in 2019; and |
• | Full-year weighted-average diluted share count in the range of 410-415 million shares. |
(Unaudited) | |||||||
August 25, 2019 | November 25, 2018 | ||||||
(Dollars in thousands) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 863,773 | $ | 713,120 | |||
Short-term investments in marketable securities | 80,220 | — | |||||
Trade receivables, net of allowance for doubtful accounts of $9,438 and $10,037 | 722,001 | 534,164 | |||||
Inventories: | |||||||
Raw materials | 5,560 | 3,681 | |||||
Work-in-process | 2,754 | 2,977 | |||||
Finished goods | 927,243 | 877,115 | |||||
Total inventories | 935,557 | 883,773 | |||||
Other current assets | 212,116 | 157,002 | |||||
Total current assets | 2,813,667 | 2,288,059 | |||||
Property, plant and equipment, net of accumulated depreciation of $1,033,729 and $974,206 | 498,938 | 460,613 | |||||
Goodwill | 235,630 | 236,246 | |||||
Other intangible assets, net | 42,794 | 42,835 | |||||
Deferred tax assets, net | 413,256 | 397,791 | |||||
Other non-current assets | 134,712 | 117,116 | |||||
Total assets | $ | 4,138,997 | $ | 3,542,660 | |||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Short-term debt | $ | 27,554 | $ | 31,935 | |||
Accounts payable | 357,747 | 351,329 | |||||
Accrued salaries, wages and employee benefits | 194,291 | 298,990 | |||||
Accrued interest payable | 16,263 | 6,089 | |||||
Accrued income taxes | 47,370 | 15,466 | |||||
Accrued sales allowances | 125,456 | — | |||||
Other accrued liabilities | 417,342 | 348,390 | |||||
Total current liabilities | 1,186,023 | 1,052,199 | |||||
Long-term debt | 1,007,008 | 1,020,219 | |||||
Postretirement medical benefits | 68,783 | 74,181 | |||||
Pension liability | 187,793 | 195,639 | |||||
Long-term employee related benefits | 80,406 | 107,556 | |||||
Long-term income tax liabilities | 11,716 | 9,805 | |||||
Other long-term liabilities | 128,923 | 116,462 | |||||
Total liabilities | 2,670,652 | 2,576,061 | |||||
Commitments and contingencies | |||||||
Temporary equity | — | 299,140 | |||||
Stockholders’ Equity: | |||||||
Levi Strauss & Co. stockholders’ equity | |||||||
Common stock — $.001 par value; 1,200,000,000 Class A shares authorized, 43,028,267 shares and no shares issued and outstanding as of August 25, 2019 and November 25, 2018, respectively; and 422,000,000 Class B shares authorized, 349,644,520 shares and 376,028,430 shares issued and outstanding, as of August 25, 2019 and November 25, 2018, respectively | 393 | 376 | |||||
Additional paid-in capital | 647,633 | — | |||||
Accumulated other comprehensive loss | (406,450 | ) | (424,584 | ) | |||
Retained earnings | 1,219,089 | 1,084,321 | |||||
Total Levi Strauss & Co. stockholders’ equity | 1,460,665 | 660,113 | |||||
Noncontrolling interest | 7,680 | 7,346 | |||||
Total stockholders’ equity | 1,468,345 | 667,459 | |||||
Total liabilities, temporary equity and stockholders’ equity | $ | 4,138,997 | $ | 3,542,660 |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 25, 2019 | August 26, 2018 | August 25, 2019 | August 26, 2018 | ||||||||||||
(Dollars in thousands, except per share amounts) (Unaudited) | |||||||||||||||
Net revenues | $ | 1,447,081 | $ | 1,394,153 | $ | 4,194,479 | $ | 3,983,580 | |||||||
Cost of goods sold | 680,335 | 652,591 | 1,944,502 | 1,833,017 | |||||||||||
Gross profit | 766,746 | 741,562 | 2,249,977 | 2,150,563 | |||||||||||
Selling, general and administrative expenses | 595,528 | 582,146 | 1,814,949 | 1,738,943 | |||||||||||
Operating income | 171,218 | 159,416 | 435,028 | 411,620 | |||||||||||
Interest expense | (15,292 | ) | (15,697 | ) | (47,962 | ) | (45,659 | ) | |||||||
Underwriter commission paid on behalf of selling stockholders | — | — | (24,860 | ) | — | ||||||||||
Other expense, net | (4,369 | ) | (3,839 | ) | (2,849 | ) | (1,344 | ) | |||||||
Income before income taxes | 151,557 | 139,880 | 359,357 | 364,617 | |||||||||||
Income tax expense | 27,340 | 10,299 | 60,182 | 176,633 | |||||||||||
Net income | 124,217 | 129,581 | 299,175 | 187,984 | |||||||||||
Net loss (income) attributable to noncontrolling interest | 292 | 543 | 141 | (1,940 | ) | ||||||||||
Net income attributable to Levi Strauss & Co. | $ | 124,509 | $ | 130,124 | $ | 299,316 | $ | 186,044 | |||||||
Earnings per common share attributable to common stockholders: | |||||||||||||||
Basic | $ | 0.32 | $ | 0.34 | $ | 0.77 | $ | 0.49 | |||||||
Diluted | $ | 0.30 | $ | 0.33 | $ | 0.73 | $ | 0.48 | |||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 394,169,688 | 377,742,492 | 387,289,913 | 377,171,010 | |||||||||||
Diluted | 413,639,749 | 390,586,032 | 407,844,136 | 387,849,263 |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 25, 2019 | August 26, 2018 | August 25, 2019 | August 26, 2018 | ||||||||||||
(Dollars in thousands) (Unaudited) | |||||||||||||||
Net income | $ | 124,217 | $ | 129,581 | $ | 299,175 | $ | 187,984 | |||||||
Other comprehensive income (loss), before related income taxes: | |||||||||||||||
Pension and postretirement benefits | 3,431 | 3,347 | 10,317 | 9,864 | |||||||||||
Derivative instruments | 9,215 | 8,645 | 23,619 | 14,772 | |||||||||||
Foreign currency translation losses | (6,523 | ) | (15,483 | ) | (11,280 | ) | (30,055 | ) | |||||||
Unrealized gains on marketable securities | 475 | 282 | 1,694 | 456 | |||||||||||
Total other comprehensive income (loss), before related income taxes | 6,598 | (3,209 | ) | 24,350 | (4,963 | ) | |||||||||
Income taxes expense related to items of other comprehensive income | (1,568 | ) | (2,050 | ) | (5,741 | ) | (4,433 | ) | |||||||
Comprehensive income, net of income taxes | 129,247 | 124,322 | 317,784 | 178,588 | |||||||||||
Comprehensive loss (income) attributable to noncontrolling interest | 68 | 700 | (334 | ) | (1,883 | ) | |||||||||
Comprehensive income attributable to Levi Strauss & Co. | $ | 129,315 | $ | 125,022 | $ | 317,450 | $ | 176,705 |
Levi Strauss & Co. Stockholders | |||||||||||||||||||||||
Class A & Class B Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss)/Income | Noncontrolling Interest | Total Stockholders' Equity | ||||||||||||||||||
(Dollars in thousands) (Unaudited) | |||||||||||||||||||||||
Balance at November 26, 2017 | $ | 375 | $ | — | $ | 1,100,916 | $ | (404,381 | ) | $ | 5,478 | $ | 702,388 | ||||||||||
Net (loss) income | — | — | (19,012 | ) | — | 383 | (18,629 | ) | |||||||||||||||
Other comprehensive income, net of tax | — | — | — | 5,167 | 261 | 5,428 | |||||||||||||||||
Stock-based compensation and dividends, net | 2 | 5,254 | — | — | — | 5,256 | |||||||||||||||||
Reclassification to temporary equity | — | 9,590 | (42,589 | ) | — | — | (32,999 | ) | |||||||||||||||
Repurchase of common stock | — | (14,844 | ) | — | — | — | (14,844 | ) | |||||||||||||||
Cash dividends declared ($0.24 per share) | — | — | (90,000 | ) | — | — | (90,000 | ) | |||||||||||||||
Balance at February 25, 2018 | 377 | — | 949,315 | (399,214 | ) | 6,122 | 556,600 | ||||||||||||||||
Net income | — | — | 74,932 | — | 2,100 | 77,032 | |||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | (9,405 | ) | (161 | ) | (9,566 | ) | ||||||||||||||
Stock-based compensation and dividends, net | — | 5,566 | — | — | — | 5,566 | |||||||||||||||||
Reclassification to temporary equity | — | (2,438 | ) | (27,796 | ) | — | — | (30,234 | ) | ||||||||||||||
Repurchase of common stock | — | (3,128 | ) | (4,055 | ) | — | — | (7,183 | ) | ||||||||||||||
Balance at May 27, 2018 | 377 | — | 992,396 | (408,619 | ) | 8,061 | 592,215 | ||||||||||||||||
Net income | — | — | 130,124 | — | (543 | ) | 129,581 | ||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | (5,102 | ) | (157 | ) | (5,259 | ) | ||||||||||||||
Stock-based compensation and dividends, net | 1 | 4,266 | (64 | ) | — | — | 4,203 | ||||||||||||||||
Reclassification to temporary equity | — | 7,230 | (42,052 | ) | — | — | (34,822 | ) | |||||||||||||||
Repurchase of common stock | (2 | ) | (11,496 | ) | (20,246 | ) | — | — | (31,744 | ) | |||||||||||||
Balance at August 26, 2018 | $ | 376 | $ | — | $ | 1,060,158 | $ | (413,721 | ) | $ | 7,361 | $ | 654,174 | ||||||||||
Balance at November 25, 2018 | $ | 376 | $ | — | $ | 1,084,321 | $ | (424,584 | ) | $ | 7,346 | $ | 667,459 | ||||||||||
Net income (loss) | — | — | 146,577 | — | (126 | ) | 146,451 | ||||||||||||||||
Other comprehensive income, net of tax | — | — | — | 8,214 | 180 | 8,394 | |||||||||||||||||
Stock-based compensation and dividends, net | — | 1,497 | — | — | — | 1,497 | |||||||||||||||||
Reclassification to temporary equity | — | (506 | ) | (23,339 | ) | — | — | (23,845 | ) | ||||||||||||||
Repurchase of common stock | — | (991 | ) | (2,923 | ) | — | — | (3,914 | ) | ||||||||||||||
Cash dividends declared ($0.29 per share) | — | — | (110,000 | ) | — | — | (110,000 | ) | |||||||||||||||
Balance at February 24, 2019 | 376 | — | 1,094,636 | (416,370 | ) | 7,400 | 686,042 | ||||||||||||||||
Net income | — | — | 28,230 | — | 277 | 28,507 | |||||||||||||||||
Other comprehensive income, net of tax | — | — | — | 5,114 | 71 | 5,185 | |||||||||||||||||
Stock-based compensation and dividends, net | 2 | 12,515 | — | — | — | 12,517 | |||||||||||||||||
Repurchase of common stock | — | (24,696 | ) | — | — | — | (24,696 | ) | |||||||||||||||
Reclassification from temporary equity in connection with initial public offering (Note 1) | — | 351,185 | (28,200 | ) | — | — | 322,985 | ||||||||||||||||
Issuance of Class A common stock in connection with initial public offering (Note 1) | 14 | 234,569 | — | — | — | 234,583 | |||||||||||||||||
Cancel liability-settled awards and replace with equity-settled awards in connection with initial public offering (Note 1) | — | 56,130 | — | — | — | 56,130 | |||||||||||||||||
Balance at May 26, 2019 | 392 | 629,703 | 1,094,666 | (411,256 | ) | 7,748 | 1,321,253 | ||||||||||||||||
Net income | — | — | 124,509 | — | (292 | ) | 124,217 | ||||||||||||||||
Other comprehensive income, net of tax | — | — | — | 4,806 | 224 | 5,030 | |||||||||||||||||
Stock-based compensation and dividends, net | 1 | 17,930 | (86 | ) | — | — | 17,845 | ||||||||||||||||
Balance at August 25, 2019 | $ | 393 | $ | 647,633 | $ | 1,219,089 | $ | (406,450 | ) | $ | 7,680 | $ | 1,468,345 |
Nine Months Ended | |||||||
August 25, 2019 | August 26, 2018 | ||||||
(Dollars in thousands) (Unaudited) | |||||||
Cash Flows from Operating Activities: | |||||||
Net income | $ | 299,175 | $ | 187,984 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 90,305 | 92,130 | |||||
Unrealized foreign exchange losses (gains) | 19,625 | (13,827 | ) | ||||
Realized (gain) loss on settlement of forward foreign exchange contracts not designated for hedge accounting | (9,309 | ) | 20,446 | ||||
Employee benefit plans’ amortization from accumulated other comprehensive loss and settlement loss | 10,317 | 9,865 | |||||
Stock-based compensation | 31,859 | 15,025 | |||||
Other, net | 3,380 | 3,678 | |||||
(Benefit from) provision for deferred income taxes | (20,352 | ) | 127,626 | ||||
Change in operating assets and liabilities: | |||||||
Trade receivables | (21,387 | ) | (11,692 | ) | |||
Inventories | (79,355 | ) | (202,822 | ) | |||
Other current assets | (40,926 | ) | (36,122 | ) | |||
Other non-current assets | (7,070 | ) | (6,045 | ) | |||
Accounts payable and other accrued liabilities | (26,293 | ) | 111,164 | ||||
Restructuring liabilities | (248 | ) | (306 | ) | |||
Income tax liabilities | 34,918 | 11,479 | |||||
Accrued salaries, wages and employee benefits and long-term employee related benefits | (88,817 | ) | (101,758 | ) | |||
Other long-term liabilities | 9,715 | (2,066 | ) | ||||
Net cash provided by operating activities | 205,537 | 204,759 | |||||
Cash Flows from Investing Activities: | |||||||
Purchases of property, plant and equipment | (128,041 | ) | (99,260 | ) | |||
Proceeds (payments) on settlement of forward foreign exchange contracts not designated for hedge accounting | 9,309 | (20,446 | ) | ||||
Payments to acquire short-term investments | (94,702 | ) | — | ||||
Proceeds from sale, maturity and collection of short-term investments | 15,057 | — | |||||
Net cash used for investing activities | (198,377 | ) | (119,706 | ) | |||
Cash Flows from Financing Activities: | |||||||
Proceeds from short-term credit facilities | 25,259 | 27,737 | |||||
Repayments of short-term credit facilities | (38,280 | ) | (24,196 | ) | |||
Other short-term borrowings, net | 9,486 | 49 | |||||
Proceeds from issuance of Class A common stock | 254,329 | — | |||||
Payments for underwriter commission and other offering costs | (19,746 | ) | — | ||||
Repurchase of common stock, including shares surrendered for tax withholdings on equity award exercises | (28,610 | ) | (53,773 | ) | |||
Dividend to stockholders | (55,000 | ) | (45,000 | ) | |||
Other financing, net | (643 | ) | (989 | ) | |||
Net cash provided by (used for) financing activities | 146,795 | (96,172 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (3,357 | ) | (10,512 | ) | |||
Net increase (decrease) in cash and cash equivalents and restricted cash | 150,598 | (21,631 | ) | ||||
Beginning cash and cash equivalents, and restricted cash | 713,698 | 634,691 | |||||
Ending cash and cash equivalents, and restricted cash | 864,296 | 613,060 | |||||
Less: Ending restricted cash | (523 | ) | (554 | ) | |||
Ending cash and cash equivalents | $ | 863,773 | $ | 612,506 | |||
Noncash Investing Activity: | |||||||
Property, plant and equipment acquired and not yet paid at end of period | $ | 21,573 | $ | 13,093 | |||
Property, plant and equipment additions due to build-to-suit lease transactions | 10,861 | 2,750 | |||||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest during the period | $ | 29,621 | $ | 27,511 | |||
Cash paid for income taxes during the period, net of refunds | 80,159 | 67,221 |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 25, 2019 | August 26, 2018 | August 25, 2019 | August 26, 2018 | ||||||||||||
(Dollars in millions) | |||||||||||||||
(Unaudited) | |||||||||||||||
Most comparable GAAP measure: | |||||||||||||||
Net income | $ | 124.2 | $ | 129.6 | $ | 299.2 | $ | 188.0 | |||||||
Non-GAAP measure: | |||||||||||||||
Net income | 124.2 | 129.6 | 299.2 | 188.0 | |||||||||||
Income tax expense | 27.4 | 10.3 | 60.2 | 176.6 | |||||||||||
Interest expense | 15.3 | 15.6 | 48.0 | 45.6 | |||||||||||
Other expense, net (1) | 4.4 | 3.9 | 2.8 | 1.4 | |||||||||||
Underwriter commission paid on behalf of selling stockholders | — | — | 24.9 | — | |||||||||||
Other costs associated with the IPO | — | — | 3.5 | — | |||||||||||
Impact of changes in fair value on cash-settled stock-based compensation | 5.1 | 11.0 | 25.4 | 23.2 | |||||||||||
Restructuring and related charges, severance and other, net | — | 2.9 | 0.3 | 4.0 | |||||||||||
Adjusted EBIT | $ | 176.4 | $ | 173.3 | $ | 464.3 | $ | 438.8 | |||||||
Adjusted EBIT margin | 12.2 | % | 12.4 | % | 11.1 | % | 11.0 | % | |||||||
Depreciation and amortization | 31.6 | 27.4 | 90.3 | 92.1 | |||||||||||
Adjusted EBITDA | $ | 208.0 | $ | 200.7 | $ | 554.6 | $ | 530.9 |
Three Months Ended | Nine Months Ended | ||||||||||||||
August 25, 2019 | August 26, 2018 | August 25, 2019 | August 26, 2018 | ||||||||||||
(Dollars in millions, except per share amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Most comparable GAAP measure: | |||||||||||||||
Net income | $ | 124.2 | $ | 129.6 | $ | 299.2 | $ | 188.0 | |||||||
Non-GAAP measure: | |||||||||||||||
Net income | 124.2 | 129.6 | 299.2 | 188.0 | |||||||||||
Underwriter commission paid on behalf of selling stockholders | — | — | 24.9 | — | |||||||||||
Other costs associated with the IPO | — | — | 3.5 | — | |||||||||||
Impact of changes in fair value on cash-settled stock-based compensation | 5.1 | 11.0 | 25.4 | 23.2 | |||||||||||
Restructuring and related charges, severance and other, net | — | 2.9 | 0.3 | 4.0 | |||||||||||
Remeasurement of deferred tax assets and liabilities | — | (7.6 | ) | — | 91.5 | ||||||||||
Tax impact of adjustments | (1.1 | ) | (2.3 | ) | (4.9 | ) | (6.3 | ) | |||||||
Adjusted net income | $ | 128.2 | $ | 133.6 | $ | 348.4 | $ | 300.4 | |||||||
Adjusted net income margin | 8.9 | % | 9.6 | % | 8.3 | % | 7.5 | % | |||||||
Adjusted diluted earnings per share | $ | 0.31 | $ | 0.34 | $ | 0.85 | $ | 0.77 |
August 25, 2019 | November 25, 2018 | ||||||
(Dollars in millions) | |||||||
(Unaudited) | |||||||
Most comparable GAAP measure: | |||||||
Total debt, excluding capital leases | $ | 1,034.6 | $ | 1,052.2 | |||
Non-GAAP measure: | |||||||
Total debt, excluding capital leases | $ | 1,034.6 | $ | 1,052.2 | |||
Cash and cash equivalents | (863.8 | ) | (713.1 | ) | |||
Short-term investments in marketable securities | (80.2 | ) | — | ||||
Net debt | $ | 90.6 | $ | 339.1 |
Nine Months Ended | |||||||
August 25, 2019 | August 26, 2018 | ||||||
(Dollars in millions) | |||||||
(Unaudited) | |||||||
Most comparable GAAP measure: | |||||||
Net cash provided by operating activities | $ | 205.5 | $ | 204.8 | |||
Non-GAAP measure: | |||||||
Net cash provided by operating activities | $ | 205.5 | $ | 204.8 | |||
Underwriter commission paid on behalf of selling stockholders | 24.9 | — | |||||
Purchases of property, plant and equipment | (128.0 | ) | (99.3 | ) | |||
Proceeds (payments) on settlement of forward foreign exchange contracts not designated for hedge accounting | 9.3 | (20.4 | ) | ||||
Repurchase of common stock, including shares surrendered for tax withholdings on equity award exercises | (28.6 | ) | (53.8 | ) | |||
Dividend to stockholders | (55.0 | ) | (45.0 | ) | |||
Adjusted free cash flow | $ | 28.1 | $ | (13.7 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
August 25, 2019 | August 26, 2018 | % Increase (Decrease) | August 25, 2019 | August 26, 2018 | % Increase | ||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Total revenues | |||||||||||||||||||||
As reported | $ | 1,447.1 | $ | 1,394.2 | 3.8 | % | $ | 4,194.5 | $ | 3,983.6 | 5.3 | % | |||||||||
Impact of foreign currency exchange rates | — | (18.6 | ) | * | — | (110.1 | ) | * | |||||||||||||
Constant-currency net revenues | $ | 1,447.1 | $ | 1,375.6 | 5.2 | % | $ | 4,194.5 | $ | 3,873.5 | 8.3 | % | |||||||||
Americas | |||||||||||||||||||||
As reported | $ | 770.8 | $ | 792.9 | (2.8 | )% | $ | 2,180.8 | $ | 2,119.8 | 2.9 | % | |||||||||
Impact of foreign currency exchange rates | — | 0.2 | * | — | (9.0 | ) | * | ||||||||||||||
Constant-currency net revenues - Americas | $ | 770.8 | $ | 793.1 | (2.8 | )% | $ | 2,180.8 | $ | 2,110.8 | 3.3 | % | |||||||||
Europe | |||||||||||||||||||||
As reported | $ | 463.3 | $ | 405.7 | 14.2 | % | $ | 1,326.3 | $ | 1,225.3 | 8.2 | % | |||||||||
Impact of foreign currency exchange rates | — | (13.5 | ) | * | — | (72.5 | ) | * | |||||||||||||
Constant-currency net revenues - Europe | $ | 463.3 | $ | 392.2 | 18.1 | % | $ | 1,326.3 | $ | 1,152.8 | 15.1 | % | |||||||||
Asia | |||||||||||||||||||||
As reported | $ | 213.0 | $ | 195.6 | 8.9 | % | $ | 687.4 | $ | 638.5 | 7.7 | % | |||||||||
Impact of foreign currency exchange rates | — | (5.3 | ) | * | — | (28.6 | ) | * | |||||||||||||
Constant-currency net revenues - Asia | $ | 213.0 | $ | 190.3 | 11.9 | % | $ | 687.4 | $ | 609.9 | 12.7 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
August 25, 2019 | August 26, 2018 | % Increase | August 25, 2019 | August 26, 2018 | % Increase (Decrease) | ||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Adjusted EBIT (1) | $ | 176.4 | $ | 173.3 | 1.8 | % | $ | 464.3 | $ | 438.8 | 5.8 | % | |||||||||
Impact of foreign currency exchange rates | — | (3.0 | ) | * | — | (21.0 | ) | * | |||||||||||||
Constant-currency Adjusted EBIT | $ | 176.4 | $ | 170.3 | 3.6 | % | $ | 464.3 | $ | 417.8 | 11.1 | % | |||||||||
Constant-currency Adjusted EBIT margin (2) | 12.2 | % | 12.4 | % | 11.1 | % | 10.8 | % |
August 25, 2019 | August 26, 2018 | ||||||
(Dollars in millions) | |||||||
(Unaudited) | |||||||
Total debt, excluding capital leases | $ | 1,034.6 | $ | 1,061.8 | |||
Last Twelve Months Adjusted EBITDA | $ | 733.5 | $ | 728.4 | |||
Leverage ratio | 1.4 | 1.5 |
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