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SAN FRANCISCO--(BUSINESS WIRE)--Levi Strauss & Co. (NYSE: LEVI) today announced financial results for the first quarter ended February 28, 2021. Due to the companys fiscal quarter end, the impacts of the pandemic were not material to the company's results of operations for the first quarter of 2020. First-Quarter 2021 Results We've started the year strong, beating our internal expectations even as we are lapping a particularly good quarter in the prior year," said Chip Bergh, chief executive officer of Levi Strauss & Co. "Our strong results this quarter were driven by faster-than-expected recovery in our business from our relentless focus on the priorities that are driving outsized performance. We continue to lean into our strategies leading with our brands, investing in direct-to-consumer and diversifying our business while still operating prudently to manage the ongoing uncertainty, especially in Europe. As the vaccine rollout continues and consumer excitement returns, I am more confident than ever that we will emerge from the pandemic a stronger business and drive sustainable, profitable growth. We are very pleased to have exceeded our revenue, margins and EPS expectations during the quarter, said Harmit Singh, chief financial officer of Levi Strauss & Co. We are banking the outperformance and our outlook going forward has improved based on the strong demand signals we are seeing in the marketplace. We're delivering substantial gross margin expansion while holding our cost base in-line with 2019 and investing to accelerate growth. This gives me confidence we'll achieve our Adjusted EBIT margin objective of 12 percent-plus once revenues have returned to pre-pandemic levels. This, combined with the increase in our dividend, reflects our commitment to driving value for our shareholders over the long term. COVID-19 Update The companys top priority continues to be the health and safety of its associates, consumers and the employees of its business partners around the world. During the quarter the company experienced temporary door closures in geographies affected by lockdowns associated with COVID-19 cases; approximately a third of the full store footprint in Europe and 15 percent of doors globally were closed during the quarter. Currently, more than 40 percent of the full store footprint in Europe is closed, with others operating on reduced hours. As the company continues to navigate the COVID-19 pandemic and its impact, it remains focused on the areas that it believes will drive value and enable it to emerge stronger on the other side, including elevating its brands, investing in digital tools and capabilities, and accelerating efforts to diversify across geographies, product categories and distribution channels, including its direct-to-consumer and digital businesses. Although quarterly trends continue to improve sequentially, the ultimate impact of the COVID-19 pandemic remains highly uncertain. The company expects that its business and results of operations, including net revenues, earnings and cash flows, will continue to be significantly adversely impacted at least through the second quarter of 2021, and there remains the possibility of additional COVID-19 related inventory and other charges. First-Quarter Total Company Overview Three Months Ended Increase (Decrease) As Reported ($ millions, except per-share amounts) February 28, 2021 February 23, 2020 Net revenues $ 1,306 $ 1,506 (13 )% Net income $ 143 $ 153 (7 )% Adjusted net income $ 140 $ 162 (14 )% Adjusted EBIT $ 174 $ 189 (8 )% Diluted earnings per share* $ 0.35 $ 0.37 (2 ) Adjusted diluted earnings per share* $ 0.34 $ 0.40 (6 ) *Note: per share increase (decrease) compared to prior year displayed in cents Additional information regarding Adjusted gross margin, Adjusted EBIT, Adjusted EBIT margin, Adjusted net income, and Adjusted diluted earnings per share, as well as amounts presented on a constant-currency basis, all of which are non-GAAP financial measures, is provided at the end of this press release. First-Quarter 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 (Decrease) Three Months Ended % Increase (Decrease) ($ millions) February 28, 2021 February 23, 2020 February 28, 2021 February 23, 2020 Americas $ 641 $ 746 (14) % $ 131 $ 124 6 % Europe $ 429 $ 513 (16) % $ 111 $ 132 (16) % Asia $ 235 $ 248 (5) % $ 29 $ 33 (12) % * Note: Regional operating income is equal to regional Adjusted EBIT. Operating income for the Americas increased due to higher gross margins and lower SG&A expenses driven by the companys cost reduction initiatives in response to COVID-19 partially offset by lower net revenues as the COVID-19 pandemic continued to adversely impact the region during the quarter. Europe's operating income declined primarily due to the adverse revenue impacts of COVID-19, partially offset by higher gross margins and declines in SG&A expenses driven by lower variable expenses from lower brick-and-mortar sales as well as the companys cost reduction initiatives in response to COVID-19. Operating income for Asia declined primarily due to the adverse revenue impacts of COVID-19, partially offset by higher gross margins and declines in SG&A expenses driven by the companys cost reduction initiatives in response to COVID-19. Cash Flow and Balance Sheet Additional information regarding net debt, leverage ratio, and Adjusted free cash flow, all of which are non-GAAP financial measures, is provided at the end of this press release. Guidance The company raised its fiscal first-half 2021 reported net revenues outlook to 24-to-25 percent growth compared to the first half of 2020 and raised its first-half Adjusted EPS estimate to 41-to-42 cents. The company plans to share additional details during its investor conference call. The companys outlook assumes no significant worsening of the COVID-19 pandemic or dramatic incremental closure of global economies. Investor Conference Call The companys first-quarter 2021 investor conference call will be available through a live audio webcast at https://edge.media-server.com/mmc/p/8tsx7i8s on April 8, 2021, at 2 p.m. Pacific / 5 p.m. Eastern or via the following phone numbers: 833-693-0541 in the United States and Canada or +1-661-407-1582 internationally; I.D. No. 5889497. A replay is available the same day on http://www.levistrauss.com/investors/earnings-webcast and will be archived for one quarter. A telephone replay is also available through April 15, 2021, via the following phone numbers: 855-859-2056 in the United States and Canada or +1-404-537-3406 internationally; I.D. No. 5889497. 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 2020 net revenues were $4.5 billion. For more information, go to http://levistrauss.com, and for company news and announcements go to http://investors.levistrauss.com. Forward Looking Statements This press release and related conference call contain, in addition to historical information, forward-looking statements, including statements related to the companys ability to manage its business and liquidity during and after the COVID-19 pandemic, including its ability to forecast its results and re-open stores globally, the timing and effectiveness of global efforts to roll out vaccines, and the impact of potential virus variants and COVID-19 resurgences on the companys business and results of operations; emerging from the pandemic as a stronger business and driving sustainable, profitable growth; the impact of the COVID-19 pandemic on the companys results of operations; the companys prospects for financial performance and growth, including Adjusted EBIT and Adjusted gross margin, following the COVID-19 pandemic and its ability to achieve financial results before the onset of the COVID-19 pandemic; future financial results, including net revenues (on a fiscal and calendar basis), Adjusted gross margin, Adjusted EPS, Adjusted SG&A, and capital expenditures; new store openings; future dividends and share repurchases; future inventory positions; potential future paydowns of existing debt; the impact of continued geographic, product and channel diversification on the companys financial results; the impact of digitization initiatives on the companys financial results; the extent to which wholesale customer forward demand signals result in actual sales, and the achievement of diversity, equity and inclusion, and sustainability goals. 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, "confident" 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 (SEC), including its Annual Report on Form 10-K for fiscal year 2020 and its Quarterly Report on Form 10-Q for the quarter ended February 28, 2021, 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 gross profit, Adjusted gross margin, Adjusted SG&A, Adjusted EBIT (both reported and on a constant-currency basis), Adjusted EBIT margin (both reported and on a constant-currency basis), Adjusted net income (both reported and on a constant-currency basis), Adjusted diluted earnings per share (both reported and on a constant-currency basis), constant-currency net revenues, net debt, leverage ratio, and Adjusted free cash flow, 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 gross profit, Adjusted gross margin, Adjusted SG&A, Adjusted EBIT (both reported and on a constant-currency basis), Adjusted EBIT margin (both reported and on a constant-currency basis), Adjusted net income (both reported and on a constant-currency basis), Adjusted net income margin (both reported and on a constant-currency basis), Adjusted diluted earnings per share (both reported and on a constant-currency basis), constant-currency net revenues, net debt, leverage ratio, and Adjusted free cash flow, 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 companys financial position, results of operations and cash flows and should therefore be considered in assessing the companys 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) 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 below for reconciliation to the most comparable GAAP financial measures. Constant-currency The company reports certain operating results 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. Constant-currency results do not eliminate the transaction currency impact, which primarily include the realized and unrealized gains and losses recognized from the measurement and remeasurement of purchases and sales of products in a currency other than the functional currency. Additionally, gross margin is impacted by gains and losses related to the procurement of inventory, primarily products sourced in EUR and USD, by the company's global sourcing organization on behalf of its foreign subsidiaries. Source: Levi Strauss & Co. Investor Relations LEVI STRAUSS & CO. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) February 28, 2021 November 29, 2020 (Dollars in thousands) ASSETS Current Assets: Cash and cash equivalents $ 1,973,602 $ 1,497,155 Short-term investments in marketable securities 94,273 96,531 Trade receivables, net 600,271 540,227 Inventories 835,357 817,692 Other current assets 192,092 174,636 Total current assets 3,695,595 3,126,241 Property, plant and equipment, net 440,857 454,532 Goodwill 267,072 264,768 Other intangible assets, net 47,274 47,426 Deferred tax assets, net 517,202 497,556 Operating lease right-of-use assets, net 1,006,107 988,801 Other non-current assets 262,087 261,917 Total assets $ 6,236,194 $ 5,641,241 LIABILITIES AND STOCKHOLDERS EQUITY Current Liabilities: Short-term debt $ 8,059 $ 17,631 Current maturities of long-term debt 789,283 Accounts payable 420,616 375,450 Accrued salaries, wages and employee benefits 165,855 179,081 Restructuring liabilities 45,300 54,723 Accrued income taxes 29,206 21,986 Accrued sales returns and allowances 193,416 185,868 Short-term operating lease liabilities 254,676 237,142 Other accrued liabilities 417,321 477,001 Total current liabilities 2,323,732 1,548,882 Long-term debt 1,262,704 1,546,700 Postretirement medical benefits 58,992 60,249 Pension liabilities 168,549 168,721 Long-term employee related benefits 97,719 94,654 Long-term operating lease liabilities 856,103 858,293 Other long-term liabilities 61,411 64,267 Total liabilities 4,829,210 4,341,766 Commitments and contingencies Stockholders Equity: Levi Strauss & Co. stockholders equity Common stock $0.001 par value; 1,200,000,000 Class A shares authorized, 80,774,783 shares and 74,352,481 shares issued and outstanding as of February 28, 2021 and November 29, 2020, respectively; and 422,000,000 Class B shares authorized, 319,050,011 shares and 323,547,674 shares issued and outstanding, as of February 28, 2021 and November 29, 2020, respectively 400 398 Additional paid-in capital 609,068 626,243 Accumulated other comprehensive loss (443,276 ) (441,446 ) Retained earnings 1,240,792 1,114,280 Total stockholders equity 1,406,984 1,299,475 Total liabilities and stockholders equity $ 6,236,194 $ 5,641,241 The notes accompanying the consolidated financial statements in the company's Form 10-Q for the first quarter of fiscal 2021 are an integral part of these consolidated financial statements. LEVI STRAUSS & CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Three Months Ended February 28, 2021 February 23, 2020 (Dollars in thousands, except per share amounts) (Unaudited) Net revenues $ 1,305,602 $ 1,506,126 Cost of goods sold 545,573 666,799 Gross profit 760,029 839,327 Selling, general and administrative expenses 582,906 660,545 Operating income 177,123 178,782 Interest expense (23,310 ) (16,654 ) Other income, net 858 2,700 Income before income taxes 154,671 164,828 Income tax expense 12,167 12,139 Net income $ 142,504 $ 152,689 Earnings per common share attributable to common stockholders: Basic $ 0.36 $ 0.39 Diluted $ 0.35 $ 0.37 Weighted-average common shares outstanding: Basic 399,541,735 396,216,057 Diluted 411,872,771 410,068,373 The notes accompanying the consolidated financial statements in the company's Form 10-Q for the first quarter of fiscal 2021 are an integral part of these consolidated financial statements. LEVI STRAUSS & CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Three Months Ended February 28, 2021 February 23, 2020 (Dollars in thousands) (Unaudited) Net income $ 142,504 $ 152,689 Other comprehensive income, before related income taxes: Pension and postretirement benefits 2,938 3,591 Derivative instruments (17,315 ) 15,405 Foreign currency translation gains (losses) 10,941 (8,133 ) Unrealized gains on marketable securities 401 1,556 Total other comprehensive (loss) income, before related income taxes (3,035 ) 12,419 Income taxes expense related to items of other comprehensive income 1,203 (5,723 ) Comprehensive income, net of income taxes $ 140,672 $ 159,385 The notes accompanying the consolidated financial statements in the company's Form 10-Q for the first quarter of fiscal 2021 are an integral part of these consolidated financial statements. LEVI STRAUSS & CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Three Months Ended February 28, 2021 Levi Strauss & Co. Stockholders Class A Accumulated & Class B Additional Other Total Common Paid-In Retained Comprehensive Noncontrolling Stockholders' Stock Capital Earnings Loss Interest Equity (Dollars in thousands) (Unaudited) Balance at November 29, 2020 398 626,243 1,114,280 $ (441,446 ) $ $ 1,299,475 Net income 142,504 142,504 Other comprehensive loss, net of tax (1,830 ) (1,830 ) Stock-based compensation and dividends, net 2 6,714 6,716 Employee stock purchase plan 1,929 1,929 Shares surrendered for tax withholdings on equity awards (25,818 ) (25,818 ) Cash dividends declared ($0.04 per share) (15,992 ) (15,992 ) Balance at February 28, 2021 400 609,068 1,240,792 $ (443,276 ) $ $ 1,406,984 Three Months Ended February 23, 2020 Levi Strauss & Co. Stockholders Class A Accumulated & Class B Additional Other Total Common Paid-In Retained Comprehensive Noncontrolling Stockholders' Stock Capital Earnings Loss Interest Equity (Dollars in thousands) (Unaudited) Balance at November 24, 2019 $ 394 $ 657,659 $ 1,310,464 (404,986 ) 8,026 1,571,557 Net income 152,689 152,689 Other comprehensive income, net of tax 6,696 6,696 Stock-based compensation and dividends, net 5 17,530 17,535 Employee stock purchase plan 2,030 2,030 Repurchase of common stock (37,071 ) (37,071 ) Shares surrendered for tax withholdings on equity awards (75,243 ) (75,243 ) Changes in ownership of noncontrolling interest (8,672 ) (8,026 ) (16,698 ) Cumulative effect of the adoption of new accounting standards 59,708 (54,444 ) 5,264 Cash dividends declared ($0.08 per share) (31,930 ) (31,930 ) Balance at February 23, 2020 $ 399 $ 601,976 $ 1,445,188 (452,734 ) 1,594,829 The notes accompanying the consolidated financial statements in the company's Form 10-Q for the first quarter of fiscal 2021 are an integral part of these consolidated financial statements. LEVI STRAUSS & CO. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended February 28, 2021 February 23, 2020 (Dollars in thousands) (Unaudited) Cash Flows from Operating Activities: Net income $ 142,504 $ 152,689 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 35,469 35,974 Stock-based compensation 6,716 17,535 Benefit from deferred income taxes (18,786 ) (15,818 ) Other, net 6,725 5,270 Change in operating assets and liabilities, net of effect of acquisition: Trade receivables (56,674 ) 67,767 Inventories (13,901 ) 41,247 Accounts payable 45,038 (59,757 ) Accrued salaries, wages and employee benefits and long-term employee related benefits (13,885 ) (40,527 ) Other current and non-current assets (36,137 ) (28,083 ) Other current and long-term liabilities (27,589 ) 21,586 Net cash provided by operating activities 69,480 197,883 Cash Flows from Investing Activities: Purchases of property, plant and equipment (36,986 ) (44,424 ) Payments for business acquisition (52,201 ) Proceeds on settlement of forward foreign exchange contracts not designated for hedge accounting 78 (19,326 ) Payments to acquire short-term investments (30,915 ) (30,121 ) Proceeds from sale, maturity and collection of short-term investments 32,930 26,791 Net cash used for investing activities (34,893 ) (119,281 ) Cash Flows from Financing Activities: Proceeds from issuance of long-term debt 500,000 Other short-term borrowings, net (9,622 ) 12,021 Payment of debt issuance and refinancing costs (10,114 ) Proceeds from issuance of common stock and employee stock purchase 1,929 2,030 Repurchase of common stock (30,074 ) Repurchase of shares surrendered for tax withholdings on equity awards (25,818 ) (75,242 ) Payments to noncontrolling interests (14,825 ) Dividend to stockholders (15,992 ) (31,930 ) Other financing, net (715 ) Net cash provided by (used for) financing activities 439,668 (138,020 ) Effect of exchange rate changes on cash and cash equivalents and restricted cash 2,191 (1,270 ) Net increase (decrease) in cash and cash equivalents and restricted cash 476,446 (60,688 ) Beginning cash and cash equivalents, and restricted cash 1,497,648 934,753 Ending cash and cash equivalents, and restricted cash 1,974,094 874,065 Less: Ending restricted cash (492 ) (501 ) Ending cash and cash equivalents $ 1,973,602 $ 873,564 Noncash Investing and Financing Activity: Property, plant and equipment acquired and not yet paid at end of period $ 19,201 $ 12,089 Realized (gain) loss on foreign currency contracts not yet settled at end of period (17,338 ) Repurchase of common stock not yet settled at end of period 6,997 Supplemental disclosure of cash flow information: Cash paid for interest during the period $ 846 $ 818 Cash paid for income taxes during the period, net of refunds 9,991 19,636 The notes accompanying the consolidated financial statements in the company's Form 10-Q for the first quarter of fiscal 2021 are an integral part of these consolidated financial statements. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES FOR THE FIRST QUARTER OF 2021 The following information relates to non-GAAP financial measures and should be read in conjunction with the investor call held on April 8, 2021, discussing the companys financial condition and results of operations as of and for the quarter ended February 28, 2021. Adjusted gross profit, Adjusted gross margin, Adjusted SG&A, Adjusted EBIT, Adjusted EBIT margin, Adjusted net income, Adjusted diluted earnings per share, net debt, Adjusted free cash flow, constant-currency net revenues, constant-currency Adjusted EBIT and leverage ratio are not financial measures prepared in accordance with GAAP. As used in this press release: (1) Adjusted gross profit, represents gross profit excluding COVID-19 related inventory costs and Adjusted gross margin, represents Adjusted gross profit as a percentage of net revenues; (2) Adjusted SG&A represents SG&A less charges related to changes in fair value on cash-settled stock-based compensation, COVID-19 related charges, and restructuring and restructuring related charges, severance and other, net; (3) Adjusted EBIT represents net income (loss) excluding income tax expense (benefit), interest expense, other (income) expense, net, underwriter commission paid on behalf of selling stockholders, impact of changes in fair value on cash-settled stock-based compensation, COVID-19 related inventory costs and other charges, and restructuring and restructuring related charges, severance and other, net, and Adjusted EBIT margin as Adjusted EBIT as a percentage of net revenues; (4) Adjusted EBITDA represents Adjusted EBIT excluding depreciation and amortization expense; (5) Adjusted net income represents net income excluding charges related to the impact of changes in fair value on cash-settled stock-based compensation, loss on early extinguishment of debt, COVID-19 related inventory costs and other charges, and restructuring and restructuring related charges, severance and other, net, and tax impact of adjustments and Adjusted net income margin as Adjusted net income as a percentage of net revenues; (6) Adjusted diluted earnings per share represents Adjusted net income per weighted-average number of diluted common shares; (7) net debt represents total debt, excluding capital leases, less cash and cash equivalents and short-term investments in marketable securities; (8) leverage ratio represents total debt, excluding capital leases, divided by the last twelve months of Adjusted EBITDA; (9) Adjusted free cash flow represents net cash provided by operating activities less purchases of property, plant and equipment, plus proceeds on settlement of forward foreign exchange contracts not designated for hedge accounting, less repurchase of common stock including shares surrendered for tax withholdings on equity award exercises, and cash dividends to stockholders; (10) constant-currency net revenues represents net revenues without the impact of foreign currency exchange rate fluctuations; (11) constant-currency Adjusted EBIT represents Adjusted EBIT without the impact of foreign currency exchange rate fluctuations; (12) constant-currency Adjusted net income represents Adjusted net income without the impact of foreign currency exchange rate fluctuations; and (13) constant-currency Adjusted diluted earnings per share represents Adjusted diluted earnings per share without the impact of foreign currency exchange rate fluctuations. Adjusted Gross Profit: Three Months Ended February 28, 2021 February 23, 2020 (Dollars in millions) (Unaudited) Most comparable GAAP measure: Gross profit $ 760.0 $ 839.3 Non-GAAP measure: Gross profit $ 760.0 $ 839.3 COVID-19 related inventory costs (1) (7.2 ) Adjusted gross profit $ 752.8 $ 839.3 Adjusted gross margin 57.7 % 55.7 % Adjusted SG&A: Three Months Ended February 28, 2021 February 23, 2020 (Dollars in millions) (Unaudited) Most comparable GAAP measure: Selling, general and administrative expenses $ 582.9 $ 660.5 Non-GAAP measure: Selling, general and administrative expenses $ 582.9 $ 660.5 Impact of changes in fair value on cash-settled stock-based compensation (0.9 ) (4.9 ) COVID-19 related charges(1) (3.1 ) Restructuring and restructuring related charges, severance and other, net(2) (0.1 ) (5.6 ) Adjusted SG&A $ 578.8 $ 650.0 Adjusted EBIT and Adjusted EBITDA: Three Months Ended Twelve Months Ended February 28, 2021 February 23, 2020 February 28, 2021 February 23, 2020 (Dollars in millions) (Unaudited) Most comparable GAAP measure: Net income (loss) $ 142.5 $ 152.7 $ (137.3 ) $ 401.2 Non-GAAP measure: Net income (loss) $ 142.5 $ 152.7 $ (137.3 ) $ 401.2 Income tax expense (benefit) 12.2 12.1 (62.5 ) 59.4 Interest expense 23.3 16.7 88.8 65.4 Other (income) expense, net (0.9 ) (2.7 ) 24.2 (6.3 ) Underwriter commission paid on behalf of selling stockholders 24.9 Impact of changes in fair value on cash-settled stock-based compensation(1) 0.9 4.9 3.1 33.7 COVID-19 related inventory costs and other charges (2) (4.1 ) 155.5 Restructuring and restructuring related charges, severance and other, net(3) 0.1 5.6 94.0 15.3 Adjusted EBIT $ 174.0 $ 189.3 $ 165.8 $ 593.6 Depreciation and amortization(4) 35.2 34.7 137.1 130.0 Adjusted EBITDA $ 209.2 $ 224.0 $ 302.9 $ 723.6 Adjusted EBIT margin 13.3 % 12.6 % Adjusted Net Income and Adjusted Diluted Earnings per Share: Three Months Ended February 28, 2021 February 23, 2020 (Dollars in millions, except per share amounts) (Unaudited) Most comparable GAAP measure: Net income $ 142.5 $ 152.7 Non-GAAP measure: Net income $ 142.5 $ 152.7 Impact of changes in fair value on cash-settled stock-based compensation(1) 0.9 4.9 Loss on early extinguishment of debt 0.2 COVID-19 related inventory costs and other charges(2) (4.1 ) Restructuring and restructuring related charges, severance and other, net(3) 0.1 5.6 Tax impact of adjustments 0.7 (0.8 ) Adjusted net income $ 140.3 $ 162.4 Adjusted net income margin 10.7 % 10.8 % Adjusted diluted earnings per share $ 0.34 $ 0.40 Net Debt and Leverage Ratio: February 28, 2021 November 29, 2020 (Dollars in millions) (Unaudited) Most comparable GAAP measure: Total debt, excluding capital leases $ 2,060.0 $ 1,564.3 Non-GAAP measure: Total debt, excluding capital leases $ 2,060.0 $ 1,564.3 Cash and cash equivalents (1,973.6 ) (1,497.2 ) Short-term investments in marketable securities (94.3 ) (96.5 ) Net debt $ (7.9 ) $ (29.4 ) February 28, 2021 February 23, 2020 (Dollars in millions) (Unaudited) Total debt, excluding capital leases(1) $ 2,060.0 $ 1,013.7 Last Twelve Months Adjusted EBITDA(2) $ 302.9 $ 723.6 Leverage ratio 6.8 1.4 Adjusted Free Cash Flow: Three Months Ended February 28, 2021 February 23, 2020 (Dollars in millions) (Unaudited) Most comparable GAAP measure: Net cash provided by operating activities $ 69.5 $ 197.9 Net cash used for investing activities (34.9 ) (119.3 ) Cash provided by (used for) financing activities 439.7 (138.0 ) Non-GAAP measure: Net cash provided by operating activities $ 69.5 $ 197.9 Purchases of property, plant and equipment (37.0 ) (44.4 ) Proceeds on settlement of forward foreign exchange contracts not designated for hedge accounting 0.1 (19.3 ) Repurchase of common stock (30.1 ) Repurchase of shares surrendered for tax withholdings on equity awards (25.8 ) (75.2 ) Dividend to stockholders (16.0 ) (31.9 ) Adjusted free cash flow $ (9.2 ) $ (3.0 ) Constant-Currency Net Revenues: Three Months Ended % February 28, February 23, Increase 2021 2020 (Decrease) (Dollars in millions) (Unaudited) Total net revenues As reported $ 1,305.6 $ 1,506.1 (13.3 )% Impact of foreign currency exchange rates 41.5 * Constant-currency net revenues $ 1,305.6 $ 1,547.6 (15.6 )% Americas As reported $ 641.3 $ 745.6 (14.0 )% Impact of foreign currency exchange rates (4.8 ) * Constant-currency net revenues - Americas $ 641.3 $ 740.8 (13.4 )% Europe As reported $ 429.0 $ 512.9 (16.4 )% Impact of foreign currency exchange rates 39.0 * Constant-currency net revenues - Europe $ 429.0 $ 551.9 (22.3 )% Asia As reported $ 235.3 $ 247.6 (5.0 )% Impact of foreign currency exchange rates 7.3 * Constant-currency net revenues - Asia $ 235.3 $ 254.9 (7.7 )% * Not meaningful Constant-Currency Adjusted EBIT: Three Months Ended % February 28, February 23, Increase 2021 2020 (Decrease) (Dollars in millions) (Unaudited) Adjusted EBIT(1) $ 174.0 $ 189.3 (8.1 )% Impact of foreign currency exchange rates 12.5 * Constant-currency Adjusted EBIT $ 174.0 $ 201.8 (13.8 )% Constant-currency Adjusted EBIT margin(2) 13.3 % 13.0 % * Not meaningful Constant-Currency Adjusted Net Income and Adjusted Diluted Earnings per Share: Three Months Ended % February 28, February 23, Increase 2021 2020 (Decrease) (Dollars in millions, except per share amounts) (Unaudited) Adjusted net income (1) $ 140.3 $ 162.4 (13.6 )% Impact of foreign currency exchange rates 11.0 * Constant-currency Adjusted net income $ 140.3 $ 173.4 (19.1 )% Constant-currency Adjusted net income margin(2) 10.7 % 11.2 % Adjusted diluted earnings per share $ 0.34 $ 0.40 (15.0 )% Impact of foreign currency exchange rates 0.02 * Constant-currency Adjusted diluted earnings per share $ 0.34 $ 0.42 (19.0 )% * Not meaningful

Answer: Levi Strauss & Co. Reports First-Quarter 2021 Financial Results Reported Net Revenues of $1.3 Billion were down 13 percent Diluted EPS was $0.35; Adjusted Diluted EPS was $0.34 Operating margin was 14 percent; Adjusted EBIT margin was 13 percent Company raises second quarter dividend to $0.06 per share and raises first half outlook