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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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94-0905160
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(State or Other Jurisdiction of
Incorporation or Organization)
|
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(I.R.S. Employer
Identification No.)
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Title of each class
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Trading symbol(s)
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Name of each exchange on which registered
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Class A Common Stock, $0.001 par value per share
|
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LEVI
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New York Stock Exchange
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Large accelerated filer ¨
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Accelerated filer ¨
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Emerging growth company ¨
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Non-accelerated filer þ
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Smaller reporting company ¨
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Page
Number
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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||
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•
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our Investor Relations page (https://levistrauss.com/investors/financial-news);
|
•
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our Twitter account (https://twitter.com/LeviStraussCo);
|
•
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our company blog (https://www.levistrauss.com/unzipped-blog/);
|
•
|
our Facebook page (https://www.facebook.com/levistraussco/);
|
•
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our LinkedIn page (https://www.linkedin.com/company/levi-strauss-&-co-);
|
•
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our Instagram page (https://www.instagram.com/levistraussco/); and
|
•
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our YouTube channel (https://www.youtube.com/user/levistraussvideo);.
|
Item 1.
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
(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 (Note 1)
|
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 (Note 1)
|
—
|
|
|
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 (Note 1)
|
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
|
|
•
|
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under the new standard and its related amendments (collectively known as Accounting Standards Codification 606 ("ASC 606")), an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. Enhanced disclosures are required regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
|
|
August 25, 2019
|
||||||||||
|
As Reported
|
|
Remove Effect of Adoption
|
|
Balances Without Adoption of Topic 606
|
||||||
|
(Dollars in thousands)
|
||||||||||
Trade receivables, net of allowance for doubtful accounts
|
$
|
722,001
|
|
|
$
|
176,740
|
|
|
$
|
545,261
|
|
Inventories: Finished goods
|
927,243
|
|
|
(17,352
|
)
|
|
944,595
|
|
|||
Other current assets
|
212,116
|
|
|
17,352
|
|
|
194,764
|
|
|||
Total current assets
|
2,813,667
|
|
|
176,740
|
|
|
2,636,927
|
|
|||
Total assets
|
4,138,997
|
|
|
176,740
|
|
|
3,962,257
|
|
|||
Accrued sales allowances
|
125,456
|
|
|
125,456
|
|
|
—
|
|
|||
Other accrued liabilities
|
417,342
|
|
|
51,284
|
|
|
366,058
|
|
|||
Total current liabilities
|
1,186,023
|
|
|
176,740
|
|
|
1,009,283
|
|
|||
Total liabilities, temporary equity and stockholders' equity
|
$
|
4,138,997
|
|
|
$
|
176,740
|
|
|
$
|
3,962,257
|
|
•
|
In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. Restricted cash is reported in Other non-current assets in the Company's Consolidated Balance Sheets. The Company adopted this standard in the first quarter of 2019, and other than the change in presentation within the Consolidated Statements of Cash Flows, the adoption of ASU 2016-18 did not have an impact on the Company's consolidated financial statements.
|
•
|
In March 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits (Topic 715) Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 changes the income statement presentation of net periodic benefit costs requiring separation between operating expense (service cost component) and non-operating expense (all other components, including interest cost, expected return on plan assets, amortization of prior service costs or credits, curtailments and settlements, actuarial gains and losses, etc.). Accordingly, the Company determined this impacts the Company's Consolidated Statements of Income, as the service cost components of net periodic benefit costs are reported within operating income and the other components of net periodic benefit costs are reported in the Other Expense, Net line item. The presentation change in the Consolidated Statements of Income requires application on a retrospective basis. A practical expedient is permitted under the guidance which allows the Company to use information previously disclosed in the pension and other postretirement benefit plans footnote as the basis to apply the retrospective presentation requirements. As a result of the Company's adoption of this standard, other components of net periodic benefit
|
•
|
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) Targeted Improvements to Accounting for Hedging Activities. ASU 2017-12 refines and expands hedge accounting for both financial and commodity risks. This ASU creates more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. In addition, this ASU makes certain targeted improvements to simplify the application of hedge accounting guidance. The Company adopted this standard during the first quarter of 2019 upon entering into foreign exchange risk contracts designated as hedges.
|
•
|
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the identification of arrangements that should be accounted for as leases by lessees. In general, for operating or financing lease arrangements exceeding a 12-month term, a right-of-use asset and a lease obligation will be recognized on the balance sheet of the lessee while the income statement will reflect lease expense for operating leases and amortization and interest expense for financing leases. The Company has identified leases for real estate, personal property and other arrangements. The new standard is required to be applied using a modified retrospective approach with two adoption methods permissible. The Company expects to elect the transition method that applies the new lease standard at the adoption date instead of the earliest period presented. The Company plans to elect the practical expedient to not separate lease components from nonlease components for all leases. Additionally, the Company plans to make an accounting policy election to keep leases with an initial 12-month term or less off of the balance sheet and recognize these lease payments within the consolidated statements of income on a straight-line basis over the term of the lease. The Company continues to assess whether to elect the package of transition practical expedients which would allow the Company to carry forward prior conclusions related to: (i) whether any expired or existing contracts contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for existing leases. Given the significant number of leases, the Company anticipates the new guidance will have a material impact on the consolidated balance sheets.
|
|
August 25, 2019
|
|
November 25, 2018
|
||||||||||||||||||||
|
|
|
Fair Value Estimated
Using
|
|
|
|
Fair Value Estimated
Using
|
||||||||||||||||
|
Fair Value
|
|
Level 1 Inputs(1)
|
|
Level 2 Inputs(2)
|
|
Fair Value
|
|
Level 1 Inputs(1)
|
|
Level 2 Inputs(2)
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Financial assets carried at fair value
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Rabbi trust assets
|
$
|
46,477
|
|
|
$
|
46,477
|
|
|
$
|
—
|
|
|
$
|
34,385
|
|
|
$
|
34,385
|
|
|
$
|
—
|
|
Short-term investments in marketable securities
|
80,220
|
|
|
—
|
|
|
80,220
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Derivative instruments(3)
|
21,448
|
|
|
—
|
|
|
21,448
|
|
|
18,372
|
|
|
—
|
|
|
18,372
|
|
||||||
Total
|
$
|
148,145
|
|
|
$
|
46,477
|
|
|
$
|
101,668
|
|
|
$
|
52,757
|
|
|
$
|
34,385
|
|
|
$
|
18,372
|
|
Financial liabilities carried at fair value
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative instruments(3)
|
7,135
|
|
|
—
|
|
|
7,135
|
|
|
4,447
|
|
|
—
|
|
|
4,447
|
|
||||||
Total
|
$
|
7,135
|
|
|
$
|
—
|
|
|
$
|
7,135
|
|
|
$
|
4,447
|
|
|
$
|
—
|
|
|
$
|
4,447
|
|
(1)
|
Fair values estimated using Level 1 inputs are inputs which consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Rabbi trust assets consist of a diversified portfolio of equity, fixed income and other securities.
|
(2)
|
Fair values estimated using Level 2 inputs are inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly, and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. Short-term investments in marketable securities consist of fixed income securities. For forward foreign exchange contracts, inputs include foreign currency exchange and interest rates and, where applicable, credit default swap prices.
|
(3)
|
The Company’s cash flow hedges are subject to International Swaps and Derivatives Association, Inc. master agreements. These agreements permit the net settlement of these contracts on a per-institution basis. Refer to Note 3 for more information.
|
|
August 25, 2019
|
|
November 25, 2018
|
||||||||||||
|
Carrying
Value
|
|
Estimated Fair Value
|
|
Carrying
Value
|
|
Estimated Fair Value
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Financial liabilities carried at adjusted historical cost
|
|
|
|
|
|
|
|
||||||||
5.00% senior notes due 2025(1)
|
$
|
495,073
|
|
|
$
|
515,165
|
|
|
$
|
487,272
|
|
|
$
|
478,774
|
|
3.375% senior notes due 2027(1)
|
527,938
|
|
|
567,582
|
|
|
538,219
|
|
|
546,238
|
|
||||
Short-term borrowings
|
27,556
|
|
|
27,556
|
|
|
32,470
|
|
|
32,470
|
|
||||
Total
|
$
|
1,050,567
|
|
|
$
|
1,110,303
|
|
|
$
|
1,057,961
|
|
|
$
|
1,057,482
|
|
(1)
|
Fair values are estimated using Level 1 inputs and incorporate mid-market price quotes. Level 1 inputs are inputs which consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
|
August 25, 2019
|
|
November 25, 2018
|
||||||||||||||||||||
|
Assets
|
|
(Liabilities)
|
|
Derivative Net Carrying Value
|
|
Assets
|
|
(Liabilities)
|
|
Derivative Net Carrying Value
|
||||||||||||
|
Carrying
Value |
|
Carrying
Value |
|
|
Carrying
Value |
|
Carrying
Value |
|
||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Foreign exchange risk cash flow hedges(1)
|
$
|
10,228
|
|
|
$
|
—
|
|
|
$
|
10,228
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange risk cash flow hedges(2)
|
—
|
|
|
(358
|
)
|
|
(358
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
10,228
|
|
|
$
|
(358
|
)
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Forward foreign exchange contracts(1)
|
21,448
|
|
|
(10,228
|
)
|
|
11,220
|
|
|
18,372
|
|
|
—
|
|
|
18,372
|
|
||||||
Forward foreign exchange contracts(2)
|
358
|
|
|
(7,135
|
)
|
|
(6,777
|
)
|
|
—
|
|
|
(4,447
|
)
|
|
(4,447
|
)
|
||||||
Total
|
$
|
21,806
|
|
|
$
|
(17,363
|
)
|
|
|
|
$
|
18,372
|
|
|
$
|
(4,447
|
)
|
|
|
||||
Non-derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Euro senior notes
|
$
|
—
|
|
|
$
|
(526,253
|
)
|
|
|
|
$
|
—
|
|
|
$
|
(541,500
|
)
|
|
|
(1)
|
Included in "Other current assets" or "Other non-current assets" on the Company’s consolidated balance sheets.
|
(2)
|
Included in "Other accrued liabilities" or "Other long-term liabilities" on the Company’s consolidated balance sheets.
|
|
August 25, 2019
|
|
November 25, 2018
|
||||||||||||||||||||
|
Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
Net Amounts of Assets / (Liabilities)
|
|
Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
Net Amounts of Assets / (Liabilities)
|
||||||||||||
|
|
|
|
|
|||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Foreign exchange risk contracts and forward foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial assets
|
$
|
29,675
|
|
|
$
|
(4,516
|
)
|
|
$
|
25,159
|
|
|
$
|
16,417
|
|
|
$
|
(1,756
|
)
|
|
$
|
14,661
|
|
Financial liabilities
|
(15,958
|
)
|
|
4,516
|
|
|
(11,442
|
)
|
|
(2,181
|
)
|
|
1,756
|
|
|
(425
|
)
|
||||||
Total
|
|
|
|
|
$
|
13,717
|
|
|
|
|
|
|
$
|
14,236
|
|
||||||||
Embedded derivative contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financial assets
|
$
|
2,359
|
|
|
$
|
—
|
|
|
$
|
2,359
|
|
|
$
|
1,955
|
|
|
$
|
—
|
|
|
$
|
1,955
|
|
Financial liabilities
|
(1,763
|
)
|
|
—
|
|
|
(1,763
|
)
|
|
(2,266
|
)
|
|
—
|
|
|
(2,266
|
)
|
||||||
Total
|
|
|
|
|
$
|
596
|
|
|
|
|
|
|
$
|
(311
|
)
|
|
Amount of Gain (Loss)
Recognized in OCI
(Effective Portion)
|
|
Amount of Gain (Loss) Reclassified from AOCI into Net Income(1)
|
||||||||||||||||||||
|
As of
|
|
As of
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||
August 25,
2019 |
November 25,
2018 |
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
|||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Foreign exchange risk contracts
|
$
|
8,372
|
|
|
$
|
—
|
|
|
$
|
869
|
|
|
$
|
—
|
|
|
$
|
1,586
|
|
|
$
|
—
|
|
Realized forward foreign exchange swaps (2)
|
4,637
|
|
|
4,637
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Yen-denominated Eurobonds
|
(19,811
|
)
|
|
(19,811
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Euro-denominated senior notes
|
(39,169
|
)
|
|
(54,416
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Cumulative income taxes
|
24,266
|
|
|
29,703
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
(21,705
|
)
|
|
$
|
(39,887
|
)
|
|
|
|
|
|
|
|
|
|
August 25,
2019 |
||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||
Amount of Gain (Loss) on Cash Flow Hedge Activity:
|
(Dollars in thousands)
|
||||||
Revenues
|
$
|
(812
|
)
|
|
$
|
(3,257
|
)
|
Cost of Goods Sold
|
$
|
1,681
|
|
|
$
|
4,843
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Realized gain (loss)
|
$
|
979
|
|
|
$
|
(2,298
|
)
|
|
$
|
8,739
|
|
|
$
|
(20,446
|
)
|
Unrealized gain (loss)
|
535
|
|
|
6,835
|
|
|
(9,102
|
)
|
|
22,607
|
|
||||
Total
|
$
|
1,514
|
|
|
$
|
4,537
|
|
|
$
|
(363
|
)
|
|
$
|
2,161
|
|
|
August 25,
2019 |
|
November 25,
2018 |
||||
|
(Dollars in thousands)
|
||||||
Long-term debt
|
|
|
|
||||
5.00% senior notes due 2025
|
$
|
487,086
|
|
|
$
|
485,605
|
|
3.375% senior notes due 2027
|
519,922
|
|
|
534,614
|
|
||
Total long-term debt
|
$
|
1,007,008
|
|
|
$
|
1,020,219
|
|
Short-term debt
|
|
|
|
||||
Short-term borrowings
|
$
|
27,554
|
|
|
$
|
31,935
|
|
Total debt
|
$
|
1,034,562
|
|
|
$
|
1,052,154
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||
Pension benefits
|
$
|
3,975
|
|
|
$
|
819
|
|
|
$
|
11,968
|
|
|
$
|
2,434
|
|
Postretirement benefits
|
893
|
|
|
925
|
|
|
2,679
|
|
|
2,777
|
|
||||
Net periodic benefit cost
|
$
|
4,868
|
|
|
$
|
1,744
|
|
|
$
|
14,647
|
|
|
$
|
5,211
|
|
|
Service RSUs
|
|
Performance RSUs
|
||||||||||||||
|
Units
|
|
Weighted-Average Grant Date Fair Value
|
|
Weighted-Average Remaining Contractual Life (Years)
|
|
Units
|
|
Weighted-Average Grant Date Fair Value
|
|
Weighted-Average Remaining Contractual Life (Years)
|
||||||
|
(Units in thousands)
|
||||||||||||||||
Outstanding at November 25, 2018
|
1,030
|
|
|
$
|
8.17
|
|
|
1.7
|
|
1,744
|
|
|
$
|
8.08
|
|
|
1.4
|
Granted
|
425
|
|
|
16.31
|
|
|
|
|
594
|
|
|
15.93
|
|
|
|
||
Vested
|
(109
|
)
|
|
8.80
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||
Granted Replacement Awards
|
6,542
|
|
|
16.67
|
|
|
|
|
2,083
|
|
|
22.71
|
|
|
|
||
Forfeited
|
(201
|
)
|
|
16.65
|
|
|
|
|
(59
|
)
|
|
22.55
|
|
|
|
||
Outstanding at August 25, 2019
|
7,687
|
|
|
$
|
15.57
|
|
|
1.8
|
|
4,362
|
|
|
$
|
16.08
|
|
|
1.3
|
|
Phantom Service RSUs
|
|
Phantom Performance RSUs
|
||||||||||||||||||
|
Units
|
|
Weighted-Average Grant Date Fair Value
|
|
Fair Value At Period End
|
|
Units
|
|
Weighted-Average Grant Date Fair Value
|
|
Fair Value At Period End
|
||||||||||
|
(Units in thousands)
|
||||||||||||||||||||
Outstanding at November 25, 2018
|
9,100
|
|
|
$
|
7.59
|
|
|
$
|
14.60
|
|
|
1,710
|
|
|
$
|
8.22
|
|
|
$
|
14.60
|
|
Granted
|
1,810
|
|
|
14.95
|
|
|
|
|
504
|
|
|
14.88
|
|
|
|
||||||
Vested
|
(3,595
|
)
|
|
6.84
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Canceled
|
(6,542
|
)
|
|
9.81
|
|
|
|
|
(2,083
|
)
|
|
9.69
|
|
|
|
||||||
Forfeited
|
(215
|
)
|
|
8.59
|
|
|
|
|
(64
|
)
|
|
9.45
|
|
|
|
||||||
Outstanding at August 25, 2019
|
558
|
|
|
$
|
9.90
|
|
|
$
|
16.66
|
|
|
67
|
|
|
$
|
11.66
|
|
|
$
|
16.66
|
|
Expected to vest at August 25, 2019
|
519
|
|
|
$
|
9.75
|
|
|
$
|
16.66
|
|
|
59
|
|
|
$
|
11.50
|
|
|
$
|
16.66
|
|
|
August 25,
2019 |
|
November 25,
2018 |
|
August 26,
2018 |
||||||
|
(Dollars in thousands)
|
||||||||||
Pension and postretirement benefits
|
$
|
(221,278
|
)
|
|
$
|
(229,023
|
)
|
|
$
|
(225,013
|
)
|
Derivative instruments
|
(21,705
|
)
|
|
(39,887
|
)
|
|
(44,759
|
)
|
|||
Foreign currency translation losses
|
(157,980
|
)
|
|
(149,318
|
)
|
|
(138,850
|
)
|
|||
Unrealized gains on marketable securities
|
4,291
|
|
|
2,948
|
|
|
4,383
|
|
|||
Accumulated other comprehensive loss
|
(396,672
|
)
|
|
(415,280
|
)
|
|
(404,239
|
)
|
|||
Accumulated other comprehensive income attributable to noncontrolling interest
|
9,778
|
|
|
9,304
|
|
|
9,482
|
|
|||
Accumulated other comprehensive loss attributable to Levi Strauss & Co.
|
$
|
(406,450
|
)
|
|
$
|
(424,584
|
)
|
|
$
|
(413,721
|
)
|
|
Three Months Ended August 25, 2019
|
||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues by channel:
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
548,214
|
|
|
$
|
272,484
|
|
|
$
|
122,114
|
|
|
$
|
942,812
|
|
Direct-to-consumer
|
222,603
|
|
|
190,774
|
|
|
90,892
|
|
|
504,269
|
|
||||
Total net revenues
|
$
|
770,817
|
|
|
$
|
463,258
|
|
|
$
|
213,006
|
|
|
$
|
1,447,081
|
|
|
Nine Months Ended August 25, 2019
|
||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues by channel:
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
1,519,973
|
|
|
$
|
733,397
|
|
|
$
|
370,425
|
|
|
$
|
2,623,795
|
|
Direct-to-consumer
|
660,806
|
|
|
592,906
|
|
|
316,972
|
|
|
1,570,684
|
|
||||
Total net revenues
|
$
|
2,180,779
|
|
|
$
|
1,326,303
|
|
|
$
|
687,397
|
|
|
$
|
4,194,479
|
|
|
Three Months Ended August 26, 2018
|
||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues by channel:
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
588,683
|
|
|
$
|
237,920
|
|
|
$
|
107,509
|
|
|
$
|
934,112
|
|
Direct-to-consumer
|
204,149
|
|
|
167,817
|
|
|
88,075
|
|
|
460,041
|
|
||||
Total net revenues
|
$
|
792,832
|
|
|
$
|
405,737
|
|
|
$
|
195,584
|
|
|
$
|
1,394,153
|
|
|
Nine Months Ended August 26, 2018
|
||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues by channel:
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
1,518,105
|
|
|
$
|
694,366
|
|
|
$
|
335,835
|
|
|
$
|
2,548,306
|
|
Direct-to-consumer
|
601,715
|
|
|
530,929
|
|
|
302,630
|
|
|
1,435,274
|
|
||||
Total net revenues
|
$
|
2,119,820
|
|
|
$
|
1,225,295
|
|
|
$
|
638,465
|
|
|
$
|
3,983,580
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Foreign exchange management gains (losses)
|
$
|
1,514
|
|
|
$
|
4,537
|
|
|
$
|
(363
|
)
|
|
$
|
2,161
|
|
Foreign currency transaction losses(1)
|
(6,671
|
)
|
|
(11,147
|
)
|
|
(9,634
|
)
|
|
(10,528
|
)
|
||||
Interest income
|
4,986
|
|
|
2,672
|
|
|
12,644
|
|
|
6,502
|
|
||||
Investment income
|
493
|
|
|
306
|
|
|
1,506
|
|
|
734
|
|
||||
Other, net(2)
|
(4,691
|
)
|
|
(207
|
)
|
|
(7,002
|
)
|
|
(213
|
)
|
||||
Total other expense, net(2)
|
$
|
(4,369
|
)
|
|
$
|
(3,839
|
)
|
|
$
|
(2,849
|
)
|
|
$
|
(1,344
|
)
|
(1)
|
Foreign currency transaction losses reflect the impact of foreign currency fluctuation on the Company's foreign currency denominated balances. Losses in the three-month and nine-month periods ended August 25, 2019 were primarily due to the weakening of the Euro against the US dollar. Losses in the three-month and nine-month periods ended August 26, 2018 were primarily due to the weakening of the Euro and Brazilian Real against the US dollar.
|
(2)
|
The amounts in Other expense, net have been conformed to reflect the adoption of ASU 2017-07, "Compensation-Retirement Benefits (Topic 715) Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost" and include non-service cost component of net periodic benefit costs. Refer to Note 1 for more information.
|
|
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)
|
||||||||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Levi Strauss & Co.
|
$
|
124,509
|
|
|
$
|
130,124
|
|
|
$
|
299,316
|
|
|
$
|
186,044
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding - basic
|
394,169,688
|
|
|
377,742,492
|
|
|
387,289,913
|
|
|
377,171,010
|
|
||||
Dilutive effect of stock awards
|
19,470,061
|
|
|
12,843,540
|
|
|
20,554,223
|
|
|
10,678,253
|
|
||||
Weighted-average common shares outstanding - diluted
|
413,639,749
|
|
|
390,586,032
|
|
|
407,844,136
|
|
|
387,849,263
|
|
||||
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
|
|
Anti-dilutive securities excluded from calculation of diluted earnings per share attributable to common stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
1,379,464
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
770,817
|
|
|
$
|
792,832
|
|
|
$
|
2,180,779
|
|
|
$
|
2,119,820
|
|
Europe
|
463,258
|
|
|
405,737
|
|
|
1,326,303
|
|
|
1,225,295
|
|
||||
Asia
|
213,006
|
|
|
195,584
|
|
|
687,397
|
|
|
638,465
|
|
||||
Total net revenues
|
$
|
1,447,081
|
|
|
$
|
1,394,153
|
|
|
$
|
4,194,479
|
|
|
$
|
3,983,580
|
|
Operating income:
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
151,558
|
|
|
$
|
162,469
|
|
|
$
|
376,845
|
|
|
$
|
370,926
|
|
Europe
|
102,911
|
|
|
76,848
|
|
|
283,244
|
|
|
245,307
|
|
||||
Asia
|
17,410
|
|
|
14,720
|
|
|
77,438
|
|
|
71,839
|
|
||||
Regional operating income
|
271,879
|
|
|
254,037
|
|
|
737,527
|
|
|
688,072
|
|
||||
Corporate expenses(1)
|
100,661
|
|
|
94,621
|
|
|
302,499
|
|
|
276,452
|
|
||||
Total 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(1)
|
(4,369
|
)
|
|
(3,839
|
)
|
|
(2,849
|
)
|
|
(1,344
|
)
|
||||
Income before income taxes
|
$
|
151,557
|
|
|
$
|
139,880
|
|
|
$
|
359,357
|
|
|
$
|
364,617
|
|
(1)
|
The amounts in Corporate expenses and Other expense, net have been conformed to reflect the adoption of ASU 2017-07, "Compensation-Retirement Benefits (Topic 715) Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost" and include non-service cost component of net periodic benefit costs. Refer to Note 1 for more information.
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Factors that impact consumer discretionary spending, which remains volatile globally, continue to create a complex and challenging retail environment for us and our customers, characterized by unpredictable traffic patterns and a general promotional environment. In developed economies, mixed real wage growth and shifting consumer spending also continue to pressure global discretionary spending. Consumers continue to focus on value pricing and convenience with the off-price retail channel remaining strong and increased expectations for real-time delivery.
|
•
|
The diversification of our business model across regions, channels, brands and categories affects our gross margin. For example, if our sales in higher gross margin business regions, channels, brands and categories grow at a faster rate than in our lower gross margin business regions, channels, brands and categories, we would expect a favorable impact to aggregate gross margin over time. Gross margin in Europe is generally higher than in our other two regional operating segments. Sales directly to consumers generally have higher gross margins than sales through third parties, although these sales typically have higher selling expenses. Value brands, which are focused on the value-conscious consumer, generally generate lower gross margin. Enhancements to our existing product offerings, or our expansion into new products categories, may also impact our future gross margin.
|
•
|
More competitors are seeking growth globally, thereby increasing competition across regions. Some of these competitors are entering markets where we already have a mature business such as the United States, Mexico, Western Europe and Japan, and may provide consumers discretionary purchase alternatives or lower-priced apparel offerings.
|
•
|
Wholesaler/retailer dynamics and wholesale channels remain challenged by mixed growth prospects due to increased competition from e-commerce shopping, pricing transparency enabled by the proliferation of online technologies, and vertically-integrated specialty stores. Retailers, including our top customers, have in the past and may in the future decide to consolidate, undergo restructurings or rationalize their stores, which could result in a reduction in the number of stores that carry our products.
|
•
|
Many apparel companies that have traditionally relied on wholesale distribution channels have invested in expanding their own retail store and e-commerce distribution and consumer-facing technologies, which has increased competition in the retail market.
|
•
|
Competition for, and price volatility of, resources throughout the supply chain have increased, causing us and other apparel manufacturers to continue to seek alternative sourcing channels and create new efficiencies in our global supply chain. Trends affecting the supply chain include the proliferation of lower-cost sourcing alternatives, resulting in reduced barriers to entry for new competitors, and the impact of fluctuating prices of labor and raw materials as well as the consolidation of suppliers. Trends such as these can bring additional pressure on us and other wholesalers and retailers to shorten lead-times, reduce costs and raise product prices.
|
•
|
Foreign currencies continue to be volatile. Significant fluctuations of the U.S. Dollar against various foreign currencies, including the Euro, British Pound and Mexican Peso, will impact our financial results, affecting translation, revenue, operating margins and net income.
|
•
|
The current environment has introduced greater uncertainty with respect to potential tax and trade regulations. The current domestic and international political environment, including changes to other U.S. policies related to global trade and tariffs, have resulted in uncertainty surrounding the future state of the global economy. Such changes may require us to modify our current sourcing practices, which may impact our product costs, and, if not mitigated, could have a material adverse effect on our business and results of operations. In addition, the United States enacted new tax legislation in fiscal year 2018, which is intended to stimulate economic growth and capital investments in the United States by, among other provisions, lowering tax rates for both corporations and individuals.
|
•
|
Net revenues. Consolidated net revenues increased 4% on a reported basis and 5% on a constant-currency basis compared to the third quarter of 2018. This increase was driven by broad-based growth in our Europe and Asia regions, partially offset by a decline in the Americas reflecting the continued softening of the retail environment impacting our wholesale channel.
|
•
|
Operating income. Compared to the third quarter of 2018, consolidated operating income increased 8% and operating margin increased to 12%, as higher net revenues were partially offset by higher selling, general and administrative expenses ("SG&A") associated with the expansion of our company-operated retail network.
|
•
|
Net income. Compared to the third quarter of 2018, consolidated net income decreased to $124.2 million from $129.6 million, primarily due to the $7.1 million tax benefit recorded in the third quarter of 2018 mostly related to provisional amounts on re-measurement of deferred tax assets and liabilities due to finalization of the U.S. tax return, which was more than offset by higher operating income earned in the current year.
|
•
|
Adjusted Net Income. Compared to the third quarter of 2018, adjusted net income decreased 4% due to higher operating income in the current year which was more than offset by an increase in tax expense.
|
•
|
Earnings per share. Compared to the third quarter of 2018, diluted earnings per share decreased from $0.33 to $0.30 due to an increase in shares outstanding as a result of our IPO and lower net income.
|
•
|
Adjusted diluted earnings per share. Compared to the third quarter of 2018, adjusted diluted earnings per share decreased from $0.34 to $0.31 due to an increase in shares outstanding as a result of our IPO and lower adjusted net income.
|
•
|
Net revenues. Consolidated net revenues increased 5% on a reported basis and 8% on a constant-currency basis compared to the first nine months of 2018. This increase was driven by growth across all three regions and across both wholesale and DTC channels.
|
•
|
Operating income. Compared to the first nine months of 2018, consolidated operating income increased 6% and operating margin increased slightly to 10%, as higher net revenues was partially offset by higher SG&A associated with higher selling expenses to support store growth.
|
•
|
Net income. Compared to the first nine months of 2018, consolidated net income increased to $299.2 million from $188.0 million due to higher operating income in the current year and a prior period $129.6 million charge from the transitional impact from the 2017 Tax Act.
|
•
|
Adjusted Net Income. Compared to the first nine months of 2018, adjusted net income increased 16% due to higher operating income in the current year, and a $38.1 million charge in the prior year from the one-time U.S. transition tax on undistributed foreign earnings as a result of the Tax Act.
|
•
|
Earnings per share. Compared to the first nine months of 2018, diluted earnings per share increased from $0.48 to $0.73 due to higher net income, partially offset by an increase in shares outstanding as a result of our IPO.
|
•
|
Adjusted diluted earnings per share. Compared to the first nine months of 2018, adjusted diluted earnings per share increased from $0.77 to $0.85 as a result of higher adjusted net income, partially offset by increased shares outstanding as a result of our IPO.
|
•
|
Net revenues comprise of net sales and licensing revenues. Net sales include sales of products to wholesale customers, including franchised stores, and direct sales to consumers at our company-operated stores and shop-in-shops located within department stores and other third-party locations, as well as company-operated e-commerce sites. Net revenues include discounts, allowances for estimated returns and incentives. Licensing revenues, which include revenues from the use of our trademarks in connection with the manufacturing, advertising and distribution of trademarked products by third-party licensees, are earned and recognized as products are sold by licensees based on royalty rates as set forth in the applicable licensing agreements.
|
•
|
Cost of goods sold primarily comprises of product costs, labor and related overhead, sourcing costs, inbound freight, internal transfers and the cost of operating our remaining manufacturing facilities, including the related depreciation expense. On both a reported and constant-currency basis, cost of goods sold reflects the transactional currency impact resulting from the purchase of products in a currency other than the functional currency.
|
•
|
Selling expenses include, among other things, all occupancy costs and depreciation associated with our company-operated stores and commissions associated with our company-operated shop-in-shops, as well as costs associated with our e-commerce operations.
|
•
|
We reflect substantially all distribution costs in selling, general and administrative expenses ("SG&A"), including costs related to receiving and inspection at distribution centers, warehousing, shipping to our customers, handling, and certain other activities associated with our distribution network.
|
•
|
SG&A and Other Expense, net in the period ended August 26, 2018 have been conformed to reflect the adoption of ASU 2017-07, "Compensation-Retirement Benefits (Topic 715) Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost". Refer to Note 1 for more information.
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase
(Decrease)
|
|
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase (Decrease) |
|
August 25,
2019 |
|
August 26,
2018 |
||||||||||||||
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|
|
|
% of Net
Revenues |
|
% of Net
Revenues |
||||||||||||||||||||||
|
(Dollars and shares in millions, except per share amounts)
|
||||||||||||||||||||||||||||||||
Net revenues
|
$
|
1,447.1
|
|
|
$
|
1,394.2
|
|
|
3.8
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
4,194.5
|
|
|
$
|
3,983.6
|
|
|
5.3
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
680.3
|
|
|
652.6
|
|
|
4.2
|
%
|
|
47.0
|
%
|
|
46.8
|
%
|
|
1,944.5
|
|
|
1,833.0
|
|
|
6.1
|
%
|
|
46.4
|
%
|
|
46.0
|
%
|
||||
Gross profit
|
766.8
|
|
|
741.6
|
|
|
3.4
|
%
|
|
53.0
|
%
|
|
53.2
|
%
|
|
2,250.0
|
|
|
2,150.6
|
|
|
4.6
|
%
|
|
53.6
|
%
|
|
54.0
|
%
|
||||
Selling, general and administrative expenses
|
595.5
|
|
|
582.2
|
|
|
2.3
|
%
|
|
41.2
|
%
|
|
41.8
|
%
|
|
1,814.9
|
|
|
1,739.0
|
|
|
4.4
|
%
|
|
43.3
|
%
|
|
43.7
|
%
|
||||
Operating income
|
171.3
|
|
|
159.4
|
|
|
7.5
|
%
|
|
11.8
|
%
|
|
11.4
|
%
|
|
435.1
|
|
|
411.6
|
|
|
5.7
|
%
|
|
10.4
|
%
|
|
10.3
|
%
|
||||
Interest expense
|
(15.3
|
)
|
|
(15.6
|
)
|
|
(1.9
|
)%
|
|
(1.1
|
)%
|
|
(1.1
|
)%
|
|
(48.0
|
)
|
|
(45.6
|
)
|
|
5.3
|
%
|
|
(1.1
|
)%
|
|
(1.1
|
)%
|
||||
Underwriter commission paid on behalf of selling stockholders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.9
|
)
|
|
—
|
|
|
*
|
|
|
(0.6
|
)%
|
|
—
|
|
||||
Other expense, net
|
(4.4
|
)
|
|
(3.9
|
)
|
|
12.8
|
%
|
|
(0.3
|
)%
|
|
(0.3
|
)%
|
|
(2.8
|
)
|
|
(1.4
|
)
|
|
100.0
|
%
|
|
(0.1
|
)%
|
|
—
|
|
||||
Income before income taxes
|
151.6
|
|
|
139.9
|
|
|
8.4
|
%
|
|
10.5
|
%
|
|
10.0
|
%
|
|
359.4
|
|
|
364.6
|
|
|
(1.4
|
)%
|
|
8.6
|
%
|
|
9.2
|
%
|
||||
Income tax expense
|
27.4
|
|
|
10.3
|
|
|
166.0
|
%
|
|
1.9
|
%
|
|
0.7
|
%
|
|
60.2
|
|
|
176.6
|
|
|
(65.9
|
)%
|
|
1.4
|
%
|
|
4.4
|
%
|
||||
Net income
|
124.2
|
|
|
129.6
|
|
|
(4.2
|
)%
|
|
8.6
|
%
|
|
9.3
|
%
|
|
299.2
|
|
|
188.0
|
|
|
59.1
|
%
|
|
7.1
|
%
|
|
4.7
|
%
|
||||
Net loss (income) attributable to noncontrolling interest
|
0.3
|
|
|
0.5
|
|
|
(40.0
|
)%
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
(2.0
|
)
|
|
(105.0
|
)%
|
|
—
|
|
|
(0.1
|
)%
|
||||
Net income attributable to Levi Strauss & Co.
|
$
|
124.5
|
|
|
$
|
130.1
|
|
|
(4.3
|
)%
|
|
8.6
|
%
|
|
9.3
|
%
|
|
$
|
299.3
|
|
|
$
|
186.0
|
|
|
60.9
|
%
|
|
7.1
|
%
|
|
4.7
|
%
|
Earnings per common share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic
|
$
|
0.32
|
|
|
$
|
0.34
|
|
|
(5.9
|
)%
|
|
*
|
|
|
*
|
|
|
$
|
0.77
|
|
|
$
|
0.49
|
|
|
57.1
|
%
|
|
*
|
|
|
*
|
|
Diluted
|
$
|
0.30
|
|
|
$
|
0.33
|
|
|
(9.1
|
)%
|
|
*
|
|
|
*
|
|
|
$
|
0.73
|
|
|
$
|
0.48
|
|
|
52.1
|
%
|
|
*
|
|
|
*
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic
|
394.2
|
|
|
377.7
|
|
|
4.4
|
%
|
|
*
|
|
|
*
|
|
|
387.3
|
|
|
377.2
|
|
|
2.7
|
%
|
|
*
|
|
|
*
|
|
||||
Diluted
|
413.6
|
|
|
390.6
|
|
|
5.9
|
%
|
|
*
|
|
|
*
|
|
|
407.8
|
|
|
387.8
|
|
|
5.2
|
%
|
|
*
|
|
|
*
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
% Increase (Decrease)
|
|
|
|
|
|
% Increase
|
||||||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
As
Reported |
|
Constant
Currency |
|
August 25,
2019 |
|
August 26,
2018 |
|
As
Reported |
|
Constant
Currency |
||||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Americas
|
$
|
770.8
|
|
|
$
|
792.9
|
|
|
(2.8
|
)%
|
|
(2.8
|
)%
|
|
$
|
2,180.8
|
|
|
$
|
2,119.8
|
|
|
2.9
|
%
|
|
3.3
|
%
|
Europe
|
463.3
|
|
|
405.7
|
|
|
14.2
|
%
|
|
18.1
|
%
|
|
1,326.3
|
|
|
1,225.3
|
|
|
8.2
|
%
|
|
15.1
|
%
|
||||
Asia
|
213.0
|
|
|
195.6
|
|
|
8.9
|
%
|
|
11.9
|
%
|
|
687.4
|
|
|
638.5
|
|
|
7.7
|
%
|
|
12.7
|
%
|
||||
Total net revenues
|
$
|
1,447.1
|
|
|
$
|
1,394.2
|
|
|
3.8
|
%
|
|
5.2
|
%
|
|
$
|
4,194.5
|
|
|
$
|
3,983.6
|
|
|
5.3
|
%
|
|
8.3
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase |
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase |
||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||
Net revenues
|
$
|
1,447.1
|
|
|
$
|
1,394.2
|
|
|
3.8
|
%
|
|
$
|
4,194.5
|
|
|
$
|
3,983.6
|
|
|
5.3
|
%
|
Cost of goods sold
|
680.3
|
|
|
652.6
|
|
|
4.2
|
%
|
|
1,944.5
|
|
|
1,833.0
|
|
|
6.1
|
%
|
||||
Gross profit
|
$
|
766.8
|
|
|
$
|
741.6
|
|
|
3.4
|
%
|
|
$
|
2,250.0
|
|
|
$
|
2,150.6
|
|
|
4.6
|
%
|
Gross margin
|
53.0
|
%
|
|
53.2
|
%
|
|
|
|
53.6
|
%
|
|
54.0
|
%
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase (Decrease)
|
|
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase (Decrease) |
|
August 25,
2019 |
|
August 26,
2018 |
||||||||||||||
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|
|
|
% of Net
Revenues |
|
% of Net
Revenues |
||||||||||||||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||||||||||||||
Selling
|
$
|
268.3
|
|
|
$
|
251.9
|
|
|
6.5
|
%
|
|
18.5
|
%
|
|
18.1
|
%
|
|
$
|
815.8
|
|
|
$
|
760.1
|
|
|
7.3
|
%
|
|
19.4
|
%
|
|
19.1
|
%
|
Advertising and promotion
|
80.3
|
|
|
78.6
|
|
|
2.2
|
%
|
|
5.5
|
%
|
|
5.6
|
%
|
|
267.3
|
|
|
251.7
|
|
|
6.2
|
%
|
|
6.4
|
%
|
|
6.3
|
%
|
||||
Administration
|
101.7
|
|
|
122.1
|
|
|
(16.7
|
)%
|
|
7.0
|
%
|
|
8.8
|
%
|
|
307.9
|
|
|
343.2
|
|
|
(10.3
|
)%
|
|
7.3
|
%
|
|
8.6
|
%
|
||||
Other
|
145.2
|
|
|
129.6
|
|
|
12.0
|
%
|
|
10.0
|
%
|
|
9.3
|
%
|
|
423.9
|
|
|
384.0
|
|
|
10.4
|
%
|
|
10.1
|
%
|
|
9.6
|
%
|
||||
Total SG&A
|
$
|
595.5
|
|
|
$
|
582.2
|
|
|
2.3
|
%
|
|
41.2
|
%
|
|
41.8
|
%
|
|
$
|
1,814.9
|
|
|
$
|
1,739.0
|
|
|
4.4
|
%
|
|
43.3
|
%
|
|
43.7
|
%
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||||||||||||||||||||
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase (Decrease) |
|
August 25,
2019 |
|
August 26,
2018 |
|
August 25,
2019 |
|
August 26,
2018 |
|
%
Increase |
|
August 25,
2019 |
|
August 26,
2018 |
|
||||||||||||||
|
% of Net
Revenues |
|
% of Net
Revenues |
% of Net
Revenues |
|
% of Net
Revenues |
||||||||||||||||||||||||||||
|
(Dollars in millions)
|
|||||||||||||||||||||||||||||||||
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Americas
|
$
|
151.6
|
|
|
$
|
162.5
|
|
|
(6.7
|
)%
|
|
19.7
|
%
|
|
20.5
|
%
|
|
$
|
376.9
|
|
|
$
|
370.9
|
|
|
1.6
|
%
|
|
17.3
|
%
|
|
17.5
|
%
|
|
Europe
|
102.9
|
|
|
76.8
|
|
|
34.0
|
%
|
|
22.2
|
%
|
|
18.9
|
%
|
|
283.2
|
|
|
245.3
|
|
|
15.5
|
%
|
|
21.4
|
%
|
|
20.0
|
%
|
|
||||
Asia
|
17.4
|
|
|
14.7
|
|
|
18.4
|
%
|
|
8.2
|
%
|
|
7.5
|
%
|
|
77.4
|
|
|
71.8
|
|
|
7.8
|
%
|
|
11.3
|
%
|
|
11.2
|
%
|
|
||||
Total regional operating income
|
271.9
|
|
|
254.0
|
|
|
7.0
|
%
|
|
18.8
|
%
|
*
|
18.2
|
%
|
*
|
737.5
|
|
|
688.0
|
|
|
7.2
|
%
|
|
17.6
|
%
|
*
|
17.3
|
%
|
*
|
||||
Corporate expenses
|
100.6
|
|
|
94.6
|
|
|
6.3
|
%
|
|
7.0
|
%
|
*
|
6.8
|
%
|
*
|
302.4
|
|
|
276.4
|
|
|
9.4
|
%
|
|
7.2
|
%
|
*
|
6.9
|
%
|
*
|
||||
Total operating income
|
$
|
171.3
|
|
|
$
|
159.4
|
|
|
7.5
|
%
|
|
11.8
|
%
|
*
|
11.4
|
%
|
*
|
$
|
435.1
|
|
|
$
|
411.6
|
|
|
5.7
|
%
|
|
10.4
|
%
|
*
|
10.3
|
%
|
*
|
Operating margin
|
11.8
|
%
|
|
11.4
|
%
|
|
|
|
|
|
|
|
10.4
|
%
|
|
10.3
|
%
|
|
|
|
|
|
|
|
•
|
Americas. Currency translation did not have a significant impact for the three-month period and had an unfavorable impact of approximately $2 million for the nine-month period ended August 25, 2019. The decrease in operating income for the three-month period ended August 25, 2019 was primarily due to lower wholesale revenue in the U.S. The increase in operating income for the nine-month period was primarily due to higher net revenues as a result of expansion of our DTC business, partially offset by higher SG&A expense to support store growth. The decrease in operating income as a percent of revenue is primarily due to the wholesale business, as sales were slightly up in the first nine months, but were more than offset with higher SG&A expenses.
|
•
|
Europe. Currency translation had an unfavorable impact of approximately $3 million and $15 million for the three-month and nine-month periods ended August 25, 2019, respectively. The increase in operating income was due to higher net revenues across all channels, partially offset by higher selling costs to support store expansion. In the nine-month period higher net revenues were also partially offset by increased investment in advertising and promotion expense and higher distribution costs.
|
•
|
Asia. Currency translation did not have a significant impact for the three-month period and had an unfavorable impact of approximately $5 million for the nine-month period ended August 25, 2019. The increase in operating income was due to higher wholesale and DTC revenues, partially offset by higher SG&A expense to support retail expansion.
|
|
Nine Months Ended
|
||||||
|
August 25,
2019 |
|
August 26,
2018 |
||||
|
(Dollars in millions)
|
||||||
Cash provided by operating activities
|
$
|
205.5
|
|
|
$
|
204.8
|
|
Cash used for investing activities
|
(198.4
|
)
|
|
(119.7
|
)
|
||
Cash provided by (used for) financing activities
|
146.8
|
|
|
(96.2
|
)
|
||
Cash and cash equivalents at period end
|
863.8
|
|
|
612.5
|
|
•
|
Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect income tax payments that reduce cash available to us;
|
•
|
Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness, which reduces cash available to us;
|
•
|
Adjusted EBIT, Adjusted EBIT margin and Adjusted EBITDA exclude other expense (income) net, which has primarily consisted of realized and unrealized gains and losses on our forward foreign exchange contracts and transaction gains and losses on our foreign exchange balances, although these items affect the amount and timing of cash available to us when these gains and losses are realized;
|
•
|
all of these non-GAAP financial measures exclude underwriter commission paid on behalf of selling stockholders in connection with our IPO that reduces cash available to us;
|
•
|
all of these non-GAAP financial measures exclude other costs associated with our IPO;
|
•
|
all of these non-GAAP financial measures exclude the expense resulting from the impact of changes in fair value on our cash-settled stock-based compensation awards, even though, prior to March 2019, such awards were required to be settled in cash;
|
•
|
all of these non-GAAP financial measures exclude restructuring and related charges, severance and other, net which can affect our current and future cash requirements;
|
•
|
the expenses and other items that we exclude in our calculations of all of these non-GAAP financial measures may differ from the expenses and other items, if any, that other companies may exclude from all of these non-GAAP financial measures or similarly titled measures;
|
•
|
Adjusted EBITDA excludes the recurring, non-cash expenses of depreciation of property and equipment and, although these are non-cash expenses, the assets being depreciated may need to be replaced in the future; and
|
•
|
Adjusted net income, adjusted net income margin and adjusted diluted earnings per share do not include all of the effects of income taxes and changes in income taxes reflected in net income.
|
|
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
|
|
Depreciation and amortization
|
31.6
|
|
|
27.4
|
|
|
90.3
|
|
|
92.1
|
|
||||
Adjusted EBITDA
|
$
|
208.0
|
|
|
$
|
200.7
|
|
|
$
|
554.6
|
|
|
$
|
530.9
|
|
Adjusted EBIT margin
|
12.2
|
%
|
|
12.4
|
%
|
|
11.1
|
%
|
|
11.0
|
%
|
|
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 |
||||||||||
|
(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
|
%
|
|
|
•
|
changes in general economic and financial conditions, and the resulting impact on the level of discretionary consumer spending for apparel and pricing trend fluctuations, and our ability to plan for and respond to the impact of those changes;
|
•
|
our ability to effectively manage any global productivity and outsourcing actions as planned, which are intended to increase productivity and efficiency in our global operations, take advantage of lower-cost service-delivery models in our distribution network and streamline our procurement practices to maximize efficiency in our global operations, without business disruption or mitigation to such disruptions;
|
•
|
consequences of impacts to the businesses of our wholesale customers, including significant store closures or a significant decline in a wholesale customer's financial condition leading to restructuring actions, bankruptcies, liquidations or other unfavorable events for our wholesale customers, caused by factors such as inability to secure financing, decreased discretionary consumer spending, inconsistent traffic patterns and an increase in promotional activity as a result of decreased traffic, pricing fluctuations, general economic and financial conditions and changing consumer preferences;
|
•
|
our and our wholesale customers' decisions to modify strategies and adjust product mix and pricing, and our ability to manage any resulting product transition costs, including liquidating inventory or increasing promotional activity;
|
•
|
our ability to purchase products through our independent contract manufacturers that are made with quality raw materials and our ability to mitigate the variability of costs related to manufacturing, sourcing, and raw materials supply and to manage consumer response to such mitigating actions;
|
•
|
our ability to gauge and adapt to changing U.S. and international retail environments and fashion trends and changing consumer preferences in product, price-points, as well as in-store and digital shopping experiences;
|
•
|
our ability to respond to price, innovation and other competitive pressures in the global apparel industry, on and from our key customers and in our key markets;
|
•
|
our ability to increase the number of dedicated stores for our products, including through opening and profitably operating company-operated stores;
|
•
|
consequences of foreign currency exchange and interest rate fluctuations;
|
•
|
our ability to successfully prevent or mitigate the impacts of data security breaches;
|
•
|
our ability to attract and retain key executives and other key employees;
|
•
|
our ability to protect our trademarks and other intellectual property;
|
•
|
the impact of the variables that affect the net periodic benefit cost and future funding requirements of our postretirement benefits and pension plans;
|
•
|
our dependence on key distribution channels, customers and suppliers;
|
•
|
our ability to utilize our tax credits and net operating loss carryforwards;
|
•
|
ongoing or future litigation matters and disputes and regulatory developments;
|
•
|
the impact of the recently passed Tax Act in the United States, including related changes to our deferred tax assets and liabilities, tax obligations and effective tax rate in future periods, as well as the charge recorded in fiscal 2018;
|
•
|
changes in or application of trade and tax laws, potential increases in import tariffs or taxes and the potential withdrawal from or renegotiation or replacement of the North America Free Trade Agreement ("NAFTA"); and
|
•
|
political, social and economic instability, or natural disasters, in countries where we or our customers do business.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
•
|
the retailers in these channels maintain-and seek to grow-substantial private-label and exclusive offerings as they strive to differentiate the brands and products they offer from those of their competitors;
|
•
|
the retailers may change their apparel strategies in a way that shifts focus away from our typical consumer or that otherwise results in a reduction of sales of our products generally, such as a reduction of fixture spaces devoted to our products or a shift to other brands;
|
•
|
other channels, including vertically-integrated specialty stores and e-commerce sites, account for a substantial portion of jeanswear and casual wear sales. In some of our mature markets, these stores and sites have placed competitive pressure on our primary distribution channels, and many of these stores and sites are now looking to our developing markets to grow their business; and
|
•
|
shrinking points of distribution, including fewer doors at our customer locations, or bankruptcy or financial difficulties of a customer.
|
•
|
currency fluctuations, which have impacted our results of operations significantly in recent years;
|
•
|
political, economic and social instability;
|
•
|
changes in tariffs and taxes;
|
•
|
regulatory restrictions on repatriating foreign funds back to the United States; and
|
•
|
less protective foreign laws relating to intellectual property.
|
•
|
actual or perceived disruption of service or reduction in service levels to customers and consumers;
|
•
|
potential adverse effects on our internal control environment and inability to preserve adequate internal controls relating to our general and administrative functions in connection with the decision to outsource certain business service activities;
|
•
|
actual or perceived disruption to suppliers, distribution networks and other important operational relationships and the inability to resolve potential conflicts in a timely manner;
|
•
|
difficulty in obtaining timely delivery of products of acceptable quality from our contract manufacturers;
|
•
|
diversion of management attention from ongoing business activities and strategic objectives; and
|
•
|
failure to maintain employee morale and retain key employees.
|
•
|
increasing our vulnerability to general adverse economic and industry conditions;
|
•
|
limiting our flexibility in planning for or reacting to changes in our business and industry;
|
•
|
placing us at a competitive disadvantage compared to some of our competitors that have less debt; and
|
•
|
limiting our ability to obtain additional financing required to fund working capital and capital expenditures and for other general corporate purposes.
|
•
|
the international expansion and increased presence of vertically integrated specialty stores;
|
•
|
expansion into e-commerce by existing and new competitors;
|
•
|
the proliferation of private labels and exclusive brands offered by department stores, chain stores and mass channel retailers;
|
•
|
the introduction of lines of jeans, athleisure and casual apparel by well-known and successful athletic wear companies; and
|
•
|
the transition of apparel companies who traditionally relied on wholesale distribution channels into their own retail distribution network.
|
•
|
reduced gross margins across our product lines and distribution channels;
|
•
|
increased retailer demands for allowances, incentives and other forms of economic support; and
|
•
|
increased pressure on us to reduce our production costs and operating expenses.
|
•
|
actual or anticipated fluctuations in our revenues or other operating results;
|
•
|
variations between our actual operating results and the expectations of securities analysts, investors and the financial community;
|
•
|
any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information;
|
•
|
actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;
|
•
|
whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure;
|
•
|
additional shares of Class A common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales, including if existing stockholders sell shares into the market when applicable “lock-up” periods end;
|
•
|
announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions;
|
•
|
changes in operating performance and stock market valuations of companies in our industry, including our vendors and competitors;
|
•
|
price and volume fluctuations in the overall stock market, including as a result of general economic trends;
|
•
|
lawsuits threatened or filed against us, or events that negatively impact our reputation;
|
•
|
developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and
|
•
|
other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
|
•
|
establish a classified board of directors so that not all members are elected at one time;
|
•
|
permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships;
|
•
|
authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
|
•
|
provide that our board of directors is expressly authorized to make, alter or repeal our bylaws;
|
•
|
restrict the forum for certain litigation against us to Delaware;
|
•
|
reflect the dual class structure of our common stock; and
|
•
|
establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders.
|
•
|
any derivative action or proceeding brought on our behalf;
|
•
|
any action asserting a breach of fiduciary duty;
|
•
|
any action asserting a claim against us arising under the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws; and
|
•
|
any action asserting a claim against us that is governed by the internal-affairs doctrine.
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
(a) Total number of shares (or units) purchased (1)
|
|
(b) Average price paid per share (or unit)
|
|
(c) Total number of shares (or units) purchased as part of publicly announced plans or programs
|
|
(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
|
|||||
May 27, 2019 - June 23, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
June 24, 2019 - July 21, 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
July 22, 2019 - August 25, 2019
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Item 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
Item 5.
|
OTHER INFORMATION
|
Item 6.
|
EXHIBITS
|
|
|
|
|
Incorporated by Reference
|
||||||
Exhibit Number
|
|
Description of Document
|
|
Form
|
|
SEC File No.
|
|
Exhibit
|
|
Filing Date
|
3.1
|
|
|
8-K
|
|
001-06631
|
|
3.1
|
|
3/25/2019
|
|
3.2
|
|
|
8-K
|
|
001-06631
|
|
3.2
|
|
3/25/2019
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document. Filed herewith.
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document. Filed herewith.
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document. Filed herewith.
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document. Filed herewith.
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document. Filed herewith.
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document. Filed herewith.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
October 8, 2019
|
|
LEVI STRAUSS & CO.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ GAVIN BROCKETT
|
|
|
|
Gavin Brockett
Senior Vice President and Global Controller
|
|
|
|
(Principal Accounting Officer and Duly Authorized Officer)
|
Participant:
|
|
Date of Grant:
|
|
Vesting Commencement Date:
|
|
Number of Restricted Stock Units:
|
|
Payment for Common Stock:
|
Participant’s services to the Company
|
Attachments:
|
Award Agreement, Distribution Election Agreement, and 2016 Equity Incentive Plan
|
Name:
|
Employee Number /SS #:
|
Date of Grant:
|
Vesting Commencement Date:
|
Number of Restricted Stock Units:
|
Vesting Schedule:
|
•
|
You may elect a single Settlement Date that occurs after the date of vesting of your entire Award. The “Settlement Date” is the earlier of (i) the date on which you have elected to receive the shares of vested Common Stock associated with your Award, as set forth below, (ii) your Separation from Service, and (iii) a Change in Control. In the absence of your completion of this Distribution Election Agreement, such shares will be issued to you on the vesting dates of your Award, subject to Section 3 of your Agreement. Notwithstanding the foregoing, as described in Section 3 of your Agreement, the distribution of such shares, even if you make a deferral election using this Distribution Election Agreement, may be delayed if the Company determines that your sale of the shares on such date would violate the Company’s policy regarding insider trading of the Company’s stock, as determined by the Company in accordance with such policy.
|
•
|
This Distribution Election Agreement is irrevocable.
|
•
|
Notwithstanding any provision in this Distribution Election Agreement, your Agreement or the Plan to the contrary, the issuance of the Common Stock shall be made in a manner that complies with the requirements of Section 409A of the Code, which shall include, without limitation, deferring such issuance for six (6) months after your Separation from Service, if such Separation from Service is the event causing such issuance and you are a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code and the regulations and other guidance promulgated thereunder; provided however, that nothing in this paragraph shall require that such issuance be made earlier than it would otherwise be made under the Award.
|
l.
|
Withholding. The Company shall have the right to deduct from all deferrals or payments hereunder, any federal, state, or local tax required by law to be withheld, if applicable.
|
2.
|
Nonassignable. Your rights and interests under this Distribution Election Agreement may not be assigned, pledged, or transferred other than as provided in the Restricted Stock Unit Agreement.
|
3.
|
Termination of this Agreement. The Company reserves the right to terminate this Distribution Election Agreement at any time in accordance with the requirements of Section 409A of the Code. In such case, Common Stock granted to you pursuant to your Restricted Stock Unit Grant Agreement may be issued to you immediately, only to the extent permitted by Section 409A of the Code and the regulations and other guidance promulgated thereunder.
|
4.
|
Definition of Change in Control. As used in this Distribution Election Agreement, the term “Change in Control” shall have the meaning contained in Section 409A(a)(2)(A)(v) of the Code and the regulations and other guidance promulgated thereunder.
|
5.
|
Definition of Separation from Service. As used in this Distribution Election Agreement, the term “Separation from Service” shall have the meaning contained in Section 409A(a)(2)(A)(i) of the Code and the regulations and other guidance promulgated thereunder.
|
|
|
/s/ CHARLES V. BERGH
|
|
|
Charles V. Bergh
|
|
|
President and Chief Executive Officer
|
|
|
/s/ HARMIT SINGH
|
|
|
Harmit Singh
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
/s/ CHARLES V. BERGH
|
|
|
Charles V. Bergh
|
|
|
President and Chief Executive Officer
|
|
|
October 8, 2019
|
|
|
/s/ HARMIT SINGH
|
|
|
Harmit Singh
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
October 8, 2019
|