Levi Strauss & (US:LEVI)2023-01-24 16:00Business Operations and Risks - The company anticipates ongoing adverse effects from the COVID-19 pandemic on its business and results of operations[20] - The company has significant international revenues, exposing it to foreign currency fluctuations and political/economic risks[20] - The company faces risks from global supply chain disruptions, which could materially affect its business and financial condition[20] - The company is exposed to market risks primarily related to foreign currencies, managing these risks through various financial instruments[372] Financial Performance - Net revenues for the year ended November 27, 2022, increased to $6,168.6 million, up 7.0% from $5,763.9 million in the previous year[398] - Gross profit for the same period was $3,548.8 million, representing a gross margin of approximately 57.5%[398] - Net income for the year was $569.1 million, compared to $553.5 million in the prior year, reflecting a growth of 2.5%[398] - The company reported a basic earnings per share of $1.43 for the year, compared to $1.38 in the previous year, marking a 3.6% increase[398] - Net income for the year ended November 27, 2022, was $569.1 million, an increase of 2.0% from 553.5 million in the previous year[407] Cash Flow and Liquidity - Cash and cash equivalents decreased to $429.6 million from $810.3 million, highlighting a significant reduction in liquidity[396] - Net cash provided by operating activities decreased significantly to $228.1 million from $737.3 million, a decline of approximately 69.0%[407] - Cash used for investing activities was $235.7 million, down from $571.8 million in the prior year, indicating a reduction of about 58.8%[407] - The company reported a net cash outflow from financing activities of $365.4 million, compared to an outflow of $840.9 million in the previous year, a decrease of approximately 56.5%[407] - Ending cash and cash equivalents were $429.6 million, down from $810.3 million at the end of the previous fiscal year, representing a decline of about 47.0%[407] Shareholder Returns and Capital Allocation - The company aims to increase total shareholder returns through capital allocation priorities, including share repurchases and dividends[14] - The Company approved a new share repurchase program on May 31, 2022, authorizing the repurchase of up to $750 million of Class A common stock, following the completion of a previous $200 million program[463] - In fiscal year 2022, the Company repurchased 8.7 million shares for $172.9 million, compared to 3.4 million shares for $88.4 million in fiscal year 2021[463] Debt and Financing - As of November 27, 2022, the total principal amount of the company's debt instruments is $994.5 million, with an average interest rate of 3.50% for fixed-rate US debt[377] - The company expects to refinance $11.7 million of short-term borrowings within the next 12 months[377] - The Company issued $500.0 million in aggregate principal amount of 5.00% senior notes due 2025, with a net loss of $30.1 million recorded on early extinguishment of debt in March 2021[527] - The weighted-average interest rate on average borrowings outstanding during fiscal year 2022 was 3.96%, down from 4.32% in 2021 and 4.75% in 2020[542] Assets and Liabilities - Total current assets increased to $2,827.9 million, up from $2,709.9 million in the previous year, primarily driven by higher inventories[396] - Total liabilities decreased to $4,134.1 million from $4,234.4 million, indicating a reduction in long-term debt and pension liabilities[396] - The company has substantial liabilities related to postretirement benefits, pension, and deferred compensation plans[22] - The company's consolidated balances of goodwill and non-amortized other intangible assets are $365.7 million and $258.7 million, respectively, as of November 27, 2022[391] Acquisitions and Intangible Assets - The company acquired Beyond Yoga in the fourth quarter of fiscal 2021, which has been consolidated since the acquisition[408] - The fair value of intangible assets acquired from Beyond Yoga was $245.5 million, with the trademark valued at $216.0 million[487] - Goodwill primarily resulted from acquisitions, including Beyond Yoga in 2021, and is tested for impairment annually[438] Operational Efficiency and Strategy - The company is focused on enhancing its brand and expanding its direct-to-consumer business, particularly in under-penetrated markets[14] - The company is committed to operational excellence, aiming to improve speed-to-market and gross margins[14] - The company plans to continue focusing on market expansion and new product development to drive future growth[398] Tax and Accounting Policies - The Company evaluates uncertain tax positions using a two-step approach, ensuring recorded tax liabilities are adequate for all open tax years[432] - The Company adopted ASU 2018-15 in 2021, aligning requirements for capitalizing implementation costs for cloud computing arrangements with internal-use software[433] - The Company capitalizes software development costs during the application development phase, depreciating them over a typical useful life of three to seven years[436]