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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.
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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.
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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.
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<TABLE>
<CAPTION>
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
---- ---- ---- ----
<S> <C> <C> <C> <C>
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)
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<CAPTION>
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
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
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%)
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<TABLE>
<CAPTION>
LEVI STRAUSS & CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
May 28, November 28,
------- ------------
2000 1999
---- ----
<S> <C> <C>
(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
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Total Assets....................................................... $3,156,706 $3,665,517
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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
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Total liabilities.................................................. 4,350,736 4,954,079
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Total stockholders' deficit........................................ (1,194,030) (1,288,562)
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Total Liabilities and Stockholders' Deficit........................ $3,156,706 $3,665,517
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