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þ
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ANNUAL 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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Non-accelerated filer þ
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Accelerated filer ¨
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Smaller reporting company ¨
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Emerging growth company ¨
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Page
Number
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Item 1.
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Item 1A.
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Item 1B.
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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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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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Form 10-K Summary
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Item 1.
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BUSINESS
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•
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Maintain and strengthen our longstanding leadership in men's bottoms. We are actively focused on maintaining and strengthening our men’s bottoms business, which has been and will continue to be a key driver of our operating results. Our iconic 501 jean continues to be a staple in closets around the world, and we continually find ways to update this fit to appeal to new consumers and remain relevant as tastes change. We are also introducing new products, such as updated straight leg and taper styles and fabrics with added stretch for greater comfort. Enhancing the fit, finish and fabric of our existing product offerings while continuing to introduce new styles enables us to appeal to younger millennial customers and to capitalize on the ongoing consumer trend toward casualization in fashion. We will continue to be nimble and respond to evolving demographics and fashion trends while retaining our authentic heritage.
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•
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Expand and strengthen our established wholesale customer base. Our established wholesale customer base represents our largest distribution channel and will continue to represent a significant opportunity for growth. We are deepening key wholesale relationships through more targeted product assortments and a broader lifestyle offering. We are expanding our wholesale relationships, with a focus in the United States on growing premium accounts such as Nordstrom and Bloomingdale's. We are also growing our core business through wholesale e-commerce sites, including Amazon, where we have expanded our core product offering and established a Levi’s-branded storefront that offers consumers a curated experience similar to the one they enjoy when they visit our company-operated e-commerce sites.
|
•
|
Increase penetration and sales within our top five developed markets. We manage our business by region, which enables us to respond more rapidly to opportunities presented by specific geographic markets. We continue to see growth among our top five developed markets: the United States, France, Germany, Mexico and the United Kingdom. Across these markets, we plan to expand via a combination of new stores, expanded wholesale relationships and an increased e-commerce presence.
|
•
|
Invest in marketing and advertising to increase engagement with our brands. We expect to continue our investment in marketing and advertising, including television, digital and influencer marketing, focusing primarily on growing sales of our core product offerings and increasing engagement with all of our brands, particularly among younger consumers.
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•
|
Develop leading positions in categories outside of men’s bottoms. We are focusing our product design and marketing efforts to reshape our global consumer perceptions from a U.S. men’s bottoms-oriented company to a global lifestyle leader for both men and women. To this end, in the near term, we are focusing on growing our tops and women’s businesses. While our logo T-shirt business has been a key driver of this growth, we are also seeing growth across other tops sub-categories such as fleece (sweatshirts) and trucker jackets. We believe we have a long runway for growth in both our tops and women’s categories. In the longer term, we intend to increase our focus on expanding our other product categories such as footwear and outerwear.
|
•
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Expand presence in underpenetrated international markets. We believe we have a significant opportunity to deepen our presence in key emerging markets, such as China and India, to drive long-term growth. We believe our management team in China can significantly expand our business in China as we leverage a localized go-to-market strategy to open new stores and build affinity among Chinese consumers. In the fall of 2019, and in collaboration with a franchise partner, we opened a new 7,000 square foot door in Wuhan. This is now our largest store to-date in China, allowing us to showcase a broader assortment, including super-premium products, and early consumer response has been very strong. In India, to support further growth, we have opened three company-operated stores since December 2017 and launched a company-operated e-commerce platform for the country in January 2018.
|
•
|
Opportunistically pursue acquisitions. We expect to opportunistically pursue acquisitions to supplement our strong organic growth profile and drive further brand and category diversification. We will evaluate potential acquisition opportunities with a focus on strategic acquisitions that will enhance our portfolio of brands, bolster our product category expertise or add a new operating capability while fitting well with our corporate culture and providing an attractive financial return. We assess on a regular basis the potential acquisition of franchise partners, distributors and the product categories we have under license, to enhance the consumer experience and to accelerate distribution of our brands. We believe we are well-positioned and have the financial flexibility to pursue attractive acquisition opportunities as they arise. Just recently in December 2019, we acquired the assets of one of our distributors within Latin America in order to take direct control of our Levi's® and Docker's® brands within the Americas region and accelerate growth.
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•
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Continue to expand our retail presence and improve our sales productivity in existing stores. We continue to add new, profitable retail locations in the United States and across the globe. We had 81 more company-operated stores on November 24, 2019 than we did on November 25, 2018. We are focused on creating a shopping experience that excites today’s consumers with enhanced customization and personalization through our Tailor Shops and Print Bars. Additionally, we are continuing to implement integrated omni-channel and digital capabilities across our store fleet. We have updated our systems to enable customers to return products in-store that they purchased through our websites and allow our sales associates to place orders in store when desired fits or sizes are not available. We have continued rolling out our RFID inventory management system to improve operations and help us test the effectiveness of different store layouts and assortments. We have also started updating the POS terminals in our stores so we can deliver a seamless experience across all touchpoints to our customers and continue working toward our strategy of becoming a leading world-class omni-channel retailer.
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•
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Drive e-commerce growth through global presence and superior consumer experience. We have been focused on building out our e-commerce sites across geographies while also upgrading the foundation of our sites in key geographies such as the United States and Europe in order to deliver a better user experience. In addition, we are incubating a portfolio of innovative e-commerce features that further enhance consumer experience and demonstrate our leadership in fit and style in an online forum. For example, in 2017 we rolled out "Ask Indigo," an AI-powered stylebot, to help guide consumers to the products that best fit their needs, just as an associate would in a brick-and-mortar store. We are continually testing and refining these features to help drive increased traffic, conversion and order size. We also recently rolled out an online program that enables consumers to customize trucker jackets, logo T-shirts and other products just as they would in-store.
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•
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Improve operations by leveraging our scale and consolidating end-to-end accountability. We have ongoing initiatives to reduce inefficiency and increase profitability in our business. Our key efforts include leveraging our global scale to drive supply chain savings, end-to-end planning efforts to manage inventory more efficiently and a focus on driving continuous organizational efficiencies. We are in the process of implementing a new enterprise resource planning system that will strengthen our data and analysis capabilities. We are also planning to upgrade our distribution centers and improve our distribution networks in the United States and Europe to ensure we are prepared for future growth.
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•
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Improve flexibility and ability to respond to changing fashion and consumer trends. We are taking steps to shorten our time to market in order to better meet the rapidly evolving needs of our customers and consumers. For example, Project F.L.X. increases operational agility in our men’s and women’s bottoms businesses and facilitates improved inventory management by enabling us to make final decisions on the mix of styles for our denim products closer to the time of sale. We have also added shorter go-to-market processes in categories such as tops in order to forecast and buy inventory more effectively, leading to higher sell through rates and less marked down product.
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•
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We require all third-party contractors and subcontractors who manufacture or finish products for us to comply with our code of conduct relating to supplier working conditions as well as environmental, employment and sourcing practices. We also require our licensees to ensure that their manufacturers comply with our requirements.
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•
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Our supplier code of conduct covers employment practices such as wages and benefits, working hours, health and safety, working age and discriminatory practices, environmental matters such as wastewater treatment and solid waste disposal, and ethical and legal conduct.
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•
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We regularly assess manufacturing and finishing facilities through periodic on-site facility inspections and improvement activities, including use of independent monitors to supplement our internal staff. We integrate review and performance results into our sourcing decisions.
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•
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We disclose the names and locations of our contract manufacturers to encourage collaboration among apparel companies in factory monitoring and improvement. We regularly evaluate and refine our code of conduct processes.
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•
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anticipating and responding to changing consumer preferences and buying trends in a timely manner, and ensuring product availability at wholesale and DTC channels;
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•
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developing high-quality, innovative products with relevant designs, fits, finishes, fabrics, style and performance features that meet consumer desires and trends;
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•
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maintaining favorable and strong brand name recognition and appeal through strong and effective marketing support and intelligence in diverse market segments;
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•
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identifying and securing desirable new retail locations and presenting products effectively at company-operated retail and franchised and other brand-dedicated stores;
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•
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ensuring high-profile product placement at retailers;
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•
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anticipating and responding to consumer expectations regarding e-commerce shopping and shipping;
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•
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optimizing supply chain cost efficiencies and product development cycle lead times;
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•
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creating products at a range of price points that appeal to the consumers of both our wholesale customers and our dedicated retail stores and e-commerce sites situated in each of our geographic regions; and
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•
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generating competitive economics for wholesale customers, including retailers, franchisees, and licensees.
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Item 1A.
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RISK FACTORS
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•
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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;
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•
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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;
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•
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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
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•
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shrinking points of distribution, including fewer doors at our customer locations, or bankruptcy or financial difficulties of a customer.
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•
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currency fluctuations, which have impacted our results of operations significantly in recent years;
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•
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political, economic and social instability;
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•
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changes in tariffs and taxes;
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•
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regulatory restrictions on our ability to operate in our preferred manner;
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•
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rapidly changing regulatory restrictions and requirements, for example in the area of data privacy; and
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•
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less protective foreign laws relating to intellectual property.
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•
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actual or perceived disruption of service or reduction in service levels to customers and consumers;
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•
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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;
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•
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actual or perceived disruption to suppliers, distribution networks and other important operational relationships and the inability to resolve potential conflicts in a timely manner;
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•
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difficulty in obtaining timely delivery of products of acceptable quality from our contract manufacturers;
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•
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diversion of management attention from ongoing business activities and strategic objectives; and
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•
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failure to maintain employee morale and retain key employees.
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•
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increasing our vulnerability to general adverse economic and industry conditions;
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•
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limiting our flexibility in planning for or reacting to changes in our business and industry;
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•
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placing us at a competitive disadvantage compared to some of our competitors that have less debt; and
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•
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limiting our ability to obtain additional financing required to fund working capital and capital expenditures and for other general corporate purposes.
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•
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the international expansion and increased presence of vertically integrated specialty stores;
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•
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expansion into e-commerce by existing and new competitors;
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•
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the proliferation of private labels and exclusive brands offered by department stores, chain stores and mass channel retailers;
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•
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the introduction of lines of jeans, athleisure and casual apparel by well-known and successful athletic wear companies; and
|
•
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the transition of apparel companies who traditionally relied on wholesale distribution channels into their own retail distribution network.
|
•
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reduced gross margins across our product lines and distribution channels;
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•
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increased retailer demands for allowances, incentives and other forms of economic support; and
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•
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increased pressure on us to reduce our production costs and operating expenses.
|
•
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actual or anticipated fluctuations in our revenues or other operating results;
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•
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variations between our actual operating results and the expectations of securities analysts, investors and the financial community;
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•
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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;
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•
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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;
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•
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whether investors or securities analysts view our stock structure unfavorably, particularly our dual-class structure;
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•
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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;
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•
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announcements by us or our competitors of significant products or features, innovations, acquisitions, strategic partnerships, joint ventures, capital commitments, divestitures or other dispositions;
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•
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changes in operating performance and stock market valuations of companies in our industry, including our vendors and competitors;
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•
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price and volume fluctuations in the overall stock market, including as a result of general economic trends;
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•
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lawsuits threatened or filed against us, or events that negatively impact our reputation;
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•
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developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and
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•
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other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.
|
•
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establish a classified board of directors so that not all members are elected at one time;
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•
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permit our board of directors to establish the number of directors and fill any vacancies and newly-created directorships;
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•
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authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
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•
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provide that our board of directors is expressly authorized to make, alter or repeal our bylaws;
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•
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restrict the forum for certain litigation against us to Delaware;
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•
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reflect the dual class structure of our common stock; and
|
•
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establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders.
|
•
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any derivative action or proceeding brought on our behalf;
|
•
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any action asserting a breach of fiduciary duty;
|
•
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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
|
•
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any action asserting a claim against us that is governed by the internal-affairs doctrine.
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Item 1B.
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UNRESOLVED STAFF COMMENTS
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Item 2.
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PROPERTIES
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Location
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Primary Use
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Leased/Owned
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Americas
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San Francisco, CA
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Design and Product Development
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Leased
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Hebron, KY
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Distribution
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Owned
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Canton, MS
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Distribution
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Owned
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Henderson, NV
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Distribution
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Owned
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|
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Etobicoke, Canada
|
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Distribution
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Owned
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|
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Cuautitlan, Mexico
|
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Distribution
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Leased
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|
|
|
|
|
|
|
|
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Europe
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|
|
|
|
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Plock, Poland
|
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Manufacturing and Finishing
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Leased(1)
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Northhampton, U.K.
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Distribution
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Leased
|
|
|
|
|
|
|
|
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Asia
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|
|
|
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Adelaide, Australia
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Distribution
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Leased
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Cape Town, South Africa
|
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Manufacturing, Finishing and Distribution
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Leased
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(1)
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Building and improvements are owned but subject to a ground lease.
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Item 3.
|
LEGAL PROCEEDINGS
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Item 4.
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MINE SAFETY DISCLOSURES
|
Item 5.
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MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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(in dollars)
|
|
March 21, 2019
|
|
November 24, 2019
|
||||
Levi Strauss & Co.
|
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$
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100.00
|
|
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$
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76.40
|
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S&P 500
|
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$
|
100.00
|
|
|
$
|
114.49
|
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S&P 500 Apparel, Accessories and Luxury Goods
|
|
$
|
100.00
|
|
|
$
|
94.24
|
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Item 6.
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SELECTED FINANCIAL DATA
|
|
Year Ended November 24, 2019
|
|
Year Ended November 25, 2018
|
|
Year Ended November 26, 2017
|
|
Year Ended November 27, 2016
|
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Year Ended November 29, 2015
|
||||||||||
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(Dollars in thousands, except per share amounts)
|
||||||||||||||||||
Statements of Income Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net revenues
|
$
|
5,763,087
|
|
|
$
|
5,575,440
|
|
|
$
|
4,904,030
|
|
|
$
|
4,552,739
|
|
|
$
|
4,494,493
|
|
Cost of goods sold
|
2,661,714
|
|
|
2,577,465
|
|
|
2,341,301
|
|
|
2,223,727
|
|
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2,225,512
|
|
|||||
Gross profit
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3,101,373
|
|
|
2,997,975
|
|
|
2,562,729
|
|
|
2,329,012
|
|
|
2,268,981
|
|
|||||
Selling, general and administrative
expenses(1)(2)
|
2,534,698
|
|
|
2,457,564
|
|
|
2,082,662
|
|
|
1,853,489
|
|
|
1,800,277
|
|
|||||
Restructuring, net
|
—
|
|
|
—
|
|
|
—
|
|
|
312
|
|
|
14,071
|
|
|||||
Operating income
|
566,675
|
|
|
540,411
|
|
|
480,067
|
|
|
475,211
|
|
|
454,633
|
|
|||||
Interest expense
|
(66,248
|
)
|
|
(55,296
|
)
|
|
(68,603
|
)
|
|
(73,170
|
)
|
|
(81,214
|
)
|
|||||
Underwriter commission paid on behalf of selling stockholders
|
(24,860
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(22,793
|
)
|
|
—
|
|
|
(14,002
|
)
|
|||||
Other income (expense), net(2)
|
2,017
|
|
|
14,907
|
|
|
(39,890
|
)
|
|
5,219
|
|
|
(49,019
|
)
|
|||||
Income before taxes
|
477,584
|
|
|
500,022
|
|
|
348,781
|
|
|
407,260
|
|
|
310,398
|
|
|||||
Income tax expense
|
82,604
|
|
|
214,778
|
|
|
64,225
|
|
|
116,051
|
|
|
100,507
|
|
|||||
Net income
|
394,980
|
|
|
285,244
|
|
|
284,556
|
|
|
291,209
|
|
|
209,891
|
|
|||||
Net (income) loss attributable to noncontrolling interest
|
(368
|
)
|
|
(2,102
|
)
|
|
(3,153
|
)
|
|
(157
|
)
|
|
(455
|
)
|
|||||
Net income attributable to Levi Strauss & Co.
|
$
|
394,612
|
|
|
$
|
283,142
|
|
|
$
|
281,403
|
|
|
$
|
291,052
|
|
|
$
|
209,436
|
|
Earnings per common share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
1.01
|
|
|
$
|
0.75
|
|
|
$
|
0.75
|
|
|
$
|
0.78
|
|
|
$
|
0.56
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
0.73
|
|
|
$
|
0.73
|
|
|
$
|
0.76
|
|
|
$
|
0.55
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
389,082,277
|
|
|
377,139,847
|
|
|
376,177,350
|
|
|
375,141,560
|
|
|
374,831,820
|
|
|||||
Diluted
|
408,365,902
|
|
|
388,607,361
|
|
|
384,338,330
|
|
|
382,852,950
|
|
|
384,122,020
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Statements of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash flow provided by (used for):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
412,188
|
|
|
$
|
420,371
|
|
|
$
|
525,941
|
|
|
$
|
306,550
|
|
|
$
|
218,332
|
|
Investing activities
|
(243,343
|
)
|
|
(179,387
|
)
|
|
(124,391
|
)
|
|
(68,348
|
)
|
|
(80,833
|
)
|
|||||
Financing activities
|
55,018
|
|
|
(148,224
|
)
|
|
(151,733
|
)
|
|
(173,549
|
)
|
|
(94,895
|
)
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
934,237
|
|
|
$
|
713,120
|
|
|
$
|
633,622
|
|
|
$
|
375,563
|
|
|
$
|
318,571
|
|
Working capital(3)(4)
|
1,702,982
|
|
|
1,235,860
|
|
|
1,118,157
|
|
|
942,019
|
|
|
681,982
|
|
|||||
Total assets(3)
|
4,232,418
|
|
|
3,542,660
|
|
|
3,357,838
|
|
|
2,995,470
|
|
|
2,884,395
|
|
|||||
Total debt, excluding capital leases
|
1,014,366
|
|
|
1,052,154
|
|
|
1,077,311
|
|
|
1,045,178
|
|
|
1,152,541
|
|
|||||
Temporary equity
|
—
|
|
|
299,140
|
|
|
127,035
|
|
|
79,346
|
|
|
68,783
|
|
|||||
Total Levi Strauss & Co. stockholders' equity
|
1,563,531
|
|
|
660,113
|
|
|
696,910
|
|
|
509,555
|
|
|
330,268
|
|
|||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Depreciation and amortization
|
$
|
123,942
|
|
|
$
|
120,205
|
|
|
$
|
117,387
|
|
|
$
|
103,878
|
|
|
$
|
102,044
|
|
Capital expenditures
|
175,356
|
|
|
159,413
|
|
|
118,618
|
|
|
102,950
|
|
|
102,308
|
|
|||||
Cash dividends paid
|
113,914
|
|
|
90,000
|
|
|
70,000
|
|
|
60,000
|
|
|
50,000
|
|
(1)
|
Fiscal year 2017 includes an out-of-period adjustment which increased selling, general and administrative expenses by $8.3 million and decreased net income by $5.1 million. This item, which originated in prior years, relates to the correction of the periods used for the recognition of stock-based compensation expense associated with employees eligible to vest in awards after retirement. We have evaluated the effects of this out-of-period adjustment, both qualitatively and quantitatively, and concluded that the correction of this amount was not material to the current period or the periods in which they originated, including quarterly reporting.
|
(2)
|
The amounts in Selling, general and administrative expenses, and Other income (expense), net in fiscal years prior to 2019 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.
|
(3)
|
Certain insignificant amounts on the balance sheets from fiscal 2017 and 2016 have been conformed to the November 25, 2018 and November 24, 2019 presentation.
|
(4)
|
Increase in working capital in fiscal year 2019 is partially attributable to our IPO in March 2019, as net proceeds of $234.6 million were received, and as a result of cash-settled stock-based compensation being replaced with stock-settled awards, $45.8 million of related liabilities were reclassified from accrued salaries, wages and employee benefits to additional paid in capital. Refer to Note 1 for additional information.
|
Item 7.
|
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 in 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, and 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
|
•
|
Net revenues. Compared to 2018, consolidated net revenues increased 3.4% on a reported basis and 5.8% on a constant-currency basis driven by growth across all three regions.
|
•
|
Operating income. Compared to 2018, consolidated operating income increased 4.8% and operating margin increased to 9.8% from 9.7%, primarily reflecting higher net revenues and lower selling, general and administrative ("SG&A") expenses as a percent of net revenues as higher selling expenses incurred to support DTC growth were more than offset by lower administration expenses.
|
•
|
Net income. Compared to 2018, consolidated net income increased to $395.0 million from $285.3 million due to higher operating income in the current year and a $143.4 million charge in the prior year from the transitional impact from the 2017 Tax Act, partially offset with a $24.9 million underwriter commission paid by us on behalf of selling stockholders in connection with our IPO.
|
•
|
Adjusted EBIT. Compared to 2018, adjusted EBIT of $610.6 million increased 4% on a reported basis and 8% on a constant-currency basis as a result of higher net revenues. Adjusted EBIT margin was 10.6%, flat compared to prior year on a reported basis, and 20 basis points higher than the prior year on a constant-currency basis. The lack of Black Friday sales in 2019 adversely impacted the adjusted EBIT margin comparison by approximately 25 basis points.
|
•
|
Adjusted net income. Compared to 2018, adjusted net income increased 9% due to higher operating income in the current year, and a $47.8 million charge in the prior year from a one-time U.S. transition tax on undistributed foreign earnings and foreign and state tax costs associated with future remittances of undistributed earnings from foreign subsidiaries, both resulting from the 2017 Tax Act.
|
•
|
Earnings per share. Compared to 2018, diluted earnings per share increased from $0.73 to $0.97 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 2018, adjusted diluted earnings per share increased from $1.08 to $1.12 on a reported basis and increased from $1.03 to $1.12 on a constant-currency basis as a result of higher adjusted net income, partially offset by increased shares outstanding as a result of our IPO.
|
•
|
Net revenues comprise 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 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, 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 Income (Expense), net in the period ended November 25, 2018 and November 26, 2017 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.
|
|
Year Ended
|
|||||||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
%
Increase
(Decrease)
|
|
November 24,
2019 |
|
November 25,
2018 |
|||||||
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|||||||||||
|
(Dollars in millions, except per share amounts)
|
|||||||||||||||
Net revenues
|
$
|
5,763.1
|
|
|
$
|
5,575.4
|
|
|
3.4
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
2,661.7
|
|
|
2,577.4
|
|
|
3.3
|
%
|
|
46.2
|
%
|
|
46.2
|
%
|
||
Gross profit
|
3,101.4
|
|
|
2,998.0
|
|
|
3.4
|
%
|
|
53.8
|
%
|
|
53.8
|
%
|
||
Selling, general and administrative expenses
|
2,534.7
|
|
|
2,457.5
|
|
|
3.1
|
%
|
|
44.0
|
%
|
|
44.1
|
%
|
||
Operating income
|
566.7
|
|
|
540.5
|
|
|
4.8
|
%
|
|
9.8
|
%
|
|
9.7
|
%
|
||
Interest expense
|
(66.2
|
)
|
|
(55.3
|
)
|
|
19.7
|
%
|
|
(1.1
|
)%
|
|
(1.0
|
)%
|
||
Underwriter commission paid on behalf of selling stockholders
|
(24.9
|
)
|
|
—
|
|
|
*
|
|
|
(0.4
|
)%
|
|
—
|
%
|
||
Other income, net
|
2.0
|
|
|
14.9
|
|
|
(86.6
|
)%
|
|
—
|
%
|
|
0.3
|
%
|
||
Income before income taxes
|
477.6
|
|
|
500.1
|
|
|
(4.5
|
)%
|
|
8.3
|
%
|
|
9.0
|
%
|
||
Income tax expense
|
82.6
|
|
|
214.8
|
|
|
(61.5
|
)%
|
|
1.4
|
%
|
|
3.9
|
%
|
||
Net income
|
395.0
|
|
|
285.3
|
|
|
38.5
|
%
|
|
6.9
|
%
|
|
5.1
|
%
|
||
Net income attributable to noncontrolling interest
|
(0.4
|
)
|
|
(2.1
|
)
|
|
(81.0
|
)%
|
|
—
|
%
|
|
—
|
%
|
||
Net income attributable to Levi Strauss & Co.
|
$
|
394.6
|
|
|
$
|
283.2
|
|
|
39.3
|
%
|
|
6.8
|
%
|
|
5.1
|
%
|
Earnings per common share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
1.01
|
|
|
$
|
0.75
|
|
|
34.7
|
%
|
|
*
|
|
|
*
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
0.73
|
|
|
32.9
|
%
|
|
*
|
|
|
*
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
389.1
|
|
|
377.1
|
|
|
3.2
|
%
|
|
*
|
|
|
*
|
|
||
Diluted
|
408.4
|
|
|
388.6
|
|
|
5.1
|
%
|
|
*
|
|
|
*
|
|
|
Year Ended
|
||||||||||||
|
|
|
|
|
% Increase
|
||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
As
Reported
|
|
Constant
Currency
|
||||||
|
(Dollars in millions)
|
||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
3,057.0
|
|
|
$
|
3,042.7
|
|
|
0.5
|
%
|
|
0.8
|
%
|
Europe
|
1,768.1
|
|
|
1,646.2
|
|
|
7.4
|
%
|
|
13.3
|
%
|
||
Asia
|
938.0
|
|
|
886.5
|
|
|
5.8
|
%
|
|
9.5
|
%
|
||
Total net revenues
|
$
|
5,763.1
|
|
|
$
|
5,575.4
|
|
|
3.4
|
%
|
|
5.8
|
%
|
|
Year Ended
|
|||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
%
Increase
|
|||||
|
(Dollars in millions)
|
|||||||||
Net revenues
|
$
|
5,763.1
|
|
|
$
|
5,575.4
|
|
|
3.4
|
%
|
Cost of goods sold
|
2,661.7
|
|
|
2,577.4
|
|
|
3.3
|
%
|
||
Gross profit
|
$
|
3,101.4
|
|
|
$
|
2,998.0
|
|
|
3.4
|
%
|
Gross margin
|
53.8
|
%
|
|
53.8
|
%
|
|
|
|
Year Ended
|
|||||||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
%
Increase (Decrease)
|
|
November 24,
2019 |
|
November 25,
2018 |
|||||||
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|||||||||||
|
(Dollars in millions)
|
|||||||||||||||
Selling
|
$
|
1,116.8
|
|
|
$
|
1,043.0
|
|
|
7.1
|
%
|
|
19.4
|
%
|
|
18.7
|
%
|
Advertising and promotion
|
399.3
|
|
|
400.3
|
|
|
(0.2
|
)%
|
|
6.9
|
%
|
|
7.2
|
%
|
||
Administration
|
426.0
|
|
|
484.5
|
|
|
(12.1
|
)%
|
|
7.4
|
%
|
|
8.7
|
%
|
||
Other
|
592.6
|
|
|
529.7
|
|
|
11.9
|
%
|
|
10.3
|
%
|
|
9.5
|
%
|
||
Total SG&A expenses
|
$
|
2,534.7
|
|
|
$
|
2,457.5
|
|
|
3.1
|
%
|
|
44.0
|
%
|
|
44.1
|
%
|
|
Year Ended
|
|
||||||||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
% (Decrease)
Increase
|
|
November 24,
2019 |
|
|
November 25,
2018 |
|
|||||||
|
|
|
% of Net
Revenues
|
|
|
% of Net
Revenues
|
|
|||||||||||
|
(Dollars in millions)
|
|
||||||||||||||||
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Americas
|
$
|
545.1
|
|
|
$
|
551.4
|
|
|
(1.1
|
)%
|
|
17.8
|
%
|
|
|
18.1
|
%
|
|
Europe
|
353.1
|
|
|
292.9
|
|
|
20.6
|
%
|
|
20.0
|
%
|
|
|
17.8
|
%
|
|
||
Asia
|
85.8
|
|
|
86.6
|
|
|
(0.9
|
)%
|
|
9.1
|
%
|
|
|
9.8
|
%
|
|
||
Total regional operating income
|
984.0
|
|
|
930.9
|
|
|
5.7
|
%
|
|
17.1
|
%
|
*
|
|
16.7
|
%
|
*
|
||
Corporate expenses
|
417.3
|
|
|
390.4
|
|
|
6.9
|
%
|
|
7.2
|
%
|
*
|
|
7.0
|
%
|
*
|
||
Total operating income
|
$
|
566.7
|
|
|
$
|
540.5
|
|
|
4.8
|
%
|
|
9.8
|
%
|
*
|
|
9.7
|
%
|
*
|
Operating margin
|
9.8
|
%
|
|
9.7
|
%
|
|
|
|
|
|
|
|
|
•
|
Americas. Currency translation did not have a significant impact on operating income in the region for fiscal year 2019. The decrease in operating income was primarily due to an increase in net revenues and gross margin offset by higher SG&A selling expense, mainly to support growth across our DTC channel.
|
•
|
Europe. Currency translation unfavorably affected operating income in the region by approximately $17 million as compared to the prior year. Excluding the effects of currency, the increase in operating income was due to higher net revenues across all channels and increased gross margin, partially offset by higher SG&A selling, distribution, and advertising and promotion costs to support revenue growth.
|
•
|
Asia. Currency translation unfavorably affected operating income in the region by approximately $5 million in the region for fiscal year 2019. Excluding the effects of currency, the increase in operating income for 2019 was due to higher net revenues across all channels, offset by higher SG&A selling expense to support growth across our retail channel.
|
|
Year Ended
|
|||||||||||||||
|
November 25,
2018 |
|
November 26,
2017 |
|
%
Increase
(Decrease)
|
|
November 25,
2018 |
|
November 26,
2017 |
|||||||
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|||||||||||
|
(Dollars in millions, except per share amounts)
|
|||||||||||||||
Net revenues
|
$
|
5,575.4
|
|
|
$
|
4,904.0
|
|
|
13.7
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
2,577.4
|
|
|
2,341.3
|
|
|
10.1
|
%
|
|
46.2
|
%
|
|
47.7
|
%
|
||
Gross profit
|
2,998.0
|
|
|
2,562.7
|
|
|
17.0
|
%
|
|
53.8
|
%
|
|
52.3
|
%
|
||
Selling, general and administrative expenses(1)
|
2,457.5
|
|
|
2,082.6
|
|
|
18.0
|
%
|
|
44.1
|
%
|
|
42.5
|
%
|
||
Operating income
|
540.5
|
|
|
480.1
|
|
|
12.6
|
%
|
|
9.7
|
%
|
|
9.8
|
%
|
||
Interest expense
|
(55.3
|
)
|
|
(68.6
|
)
|
|
(19.4
|
)%
|
|
(1.0
|
)%
|
|
(1.4
|
)%
|
||
Loss on early extinguishment of debt
|
—
|
|
|
(22.8
|
)
|
|
*
|
|
|
—
|
%
|
|
(0.5
|
)%
|
||
Other income (expense), net(1)
|
14.9
|
|
|
(39.9
|
)
|
|
(137.3
|
)%
|
|
0.3
|
%
|
|
(0.8
|
)%
|
||
Income before income taxes
|
500.1
|
|
|
348.8
|
|
|
43.4
|
%
|
|
9.0
|
%
|
|
7.1
|
%
|
||
Income tax expense
|
214.8
|
|
|
64.2
|
|
|
*
|
|
|
3.9
|
%
|
|
1.3
|
%
|
||
Net income
|
285.3
|
|
|
284.6
|
|
|
0.2
|
%
|
|
5.1
|
%
|
|
5.8
|
%
|
||
Net income attributable to noncontrolling interest
|
(2.1
|
)
|
|
(3.2
|
)
|
|
(34.4
|
)%
|
|
—
|
%
|
|
(0.1
|
)%
|
||
Net income attributable to Levi Strauss & Co.
|
$
|
283.2
|
|
|
$
|
281.4
|
|
|
0.6
|
%
|
|
5.1
|
%
|
|
5.7
|
%
|
Earnings per common share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
0.75
|
|
|
$
|
0.75
|
|
|
—
|
%
|
|
*
|
|
|
*
|
|
Diluted
|
$
|
0.73
|
|
|
$
|
0.73
|
|
|
—
|
%
|
|
*
|
|
|
*
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
377.1
|
|
|
376.2
|
|
|
0.2
|
%
|
|
*
|
|
|
*
|
|
||
Diluted
|
388.6
|
|
|
384.3
|
|
|
1.1
|
%
|
|
*
|
|
|
*
|
|
(1)
|
The amounts in SG&A and Other income (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.
|
|
Year Ended
|
||||||||||||
|
|
|
|
|
% Increase
|
||||||||
|
November 25,
2018 |
|
November 26,
2017 |
|
As
Reported
|
|
Constant
Currency
|
||||||
|
(Dollars in millions)
|
||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
||||||
Americas
|
$
|
3,042.7
|
|
|
$
|
2,774.0
|
|
|
9.7
|
%
|
|
10.0
|
%
|
Europe
|
1,646.2
|
|
|
1,312.3
|
|
|
25.4
|
%
|
|
20.8
|
%
|
||
Asia
|
886.5
|
|
|
817.7
|
|
|
8.4
|
%
|
|
8.2
|
%
|
||
Total net revenues
|
$
|
5,575.4
|
|
|
$
|
4,904.0
|
|
|
13.7
|
%
|
|
12.7
|
%
|
|
Year Ended
|
|||||||||
|
November 25,
2018 |
|
November 26,
2017 |
|
%
Increase
|
|||||
|
(Dollars in millions)
|
|||||||||
Net revenues
|
$
|
5,575.4
|
|
|
$
|
4,904.0
|
|
|
13.7
|
%
|
Cost of goods sold
|
2,577.4
|
|
|
2,341.3
|
|
|
10.1
|
%
|
||
Gross profit
|
$
|
2,998.0
|
|
|
$
|
2,562.7
|
|
|
17.0
|
%
|
Gross margin
|
53.8
|
%
|
|
52.3
|
%
|
|
|
|
Year Ended
|
|||||||||||||||
|
November 25,
2018 |
|
November 26,
2017 |
|
%
Increase
|
|
November 25,
2018 |
|
November 26,
2017 |
|||||||
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|||||||||||
|
(Dollars in millions)
|
|||||||||||||||
Selling
|
$
|
1,043.0
|
|
|
$
|
888.2
|
|
|
17.4
|
%
|
|
18.7
|
%
|
|
18.1
|
%
|
Advertising and promotion
|
400.3
|
|
|
323.3
|
|
|
23.8
|
%
|
|
7.2
|
%
|
|
6.6
|
%
|
||
Administration
|
484.5
|
|
|
398.1
|
|
|
21.7
|
%
|
|
8.7
|
%
|
|
8.1
|
%
|
||
Other
|
529.7
|
|
|
473.0
|
|
|
12.0
|
%
|
|
9.5
|
%
|
|
9.7
|
%
|
||
Total SG&A expenses
|
$
|
2,457.5
|
|
|
$
|
2,082.6
|
|
|
18.0
|
%
|
|
44.1
|
%
|
|
42.5
|
%
|
|
Year Ended
|
|
||||||||||||||||
|
November 25,
2018 |
|
November 26,
2017 |
|
%
Increase
|
|
November 25,
2018 |
|
|
November 26,
2017 |
|
|||||||
|
|
|
% of Net
Revenues
|
|
|
% of Net
Revenues
|
|
|||||||||||
|
(Dollars in millions)
|
|
||||||||||||||||
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Americas
|
$
|
551.4
|
|
|
$
|
529.3
|
|
|
4.2
|
%
|
|
18.1
|
%
|
|
|
19.1
|
%
|
|
Europe
|
292.9
|
|
|
198.7
|
|
|
47.4
|
%
|
|
17.8
|
%
|
|
|
15.1
|
%
|
|
||
Asia
|
86.6
|
|
|
78.3
|
|
|
10.6
|
%
|
|
9.8
|
%
|
|
|
9.6
|
%
|
|
||
Total regional operating income
|
930.9
|
|
|
806.3
|
|
|
15.5
|
%
|
|
16.7
|
%
|
*
|
|
16.4
|
%
|
*
|
||
Corporate expenses
|
390.4
|
|
|
326.2
|
|
|
19.7
|
%
|
|
7.0
|
%
|
*
|
|
6.7
|
%
|
*
|
||
Total operating income
|
$
|
540.5
|
|
|
$
|
480.1
|
|
|
12.6
|
%
|
|
9.7
|
%
|
*
|
|
9.8
|
%
|
*
|
Operating margin
|
9.7
|
%
|
|
9.8
|
%
|
|
|
|
|
|
|
|
|
•
|
Americas. Currency translation did not have a significant impact on operating income in the region for fiscal year 2018. The increase in operating income was primarily due to higher net revenues and gross margin partially offset by higher SG&A selling expense due to store growth and an increased investment in advertising.
|
•
|
Europe. Currency translation favorably affected operating income by approximately $14 million as compared to the prior year. The increase in operating income was due to higher net revenues across all channels, partially offset by higher SG&A selling expense to support growth and higher advertising and promotion expense.
|
•
|
Asia. Currency translation did not have a significant impact on operating income in the region for fiscal year 2018. The increase in operating income for 2018 was due to higher net revenues and gross margins, partially offset by higher SG&A selling expense related to retail expansion.
|
|
Payments due or projected by fiscal period
|
||||||||||||||||||||||||||
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
||||||||||||||
|
(Dollars in millions)
|
||||||||||||||||||||||||||
Contractual and Long-term Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Short-term and long-term debt obligations
|
$
|
1,025
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,017
|
|
Interest(1)
|
273
|
|
|
46
|
|
|
45
|
|
|
45
|
|
|
43
|
|
|
43
|
|
|
51
|
|
|||||||
Future minimum payments(2)
|
1,147
|
|
|
234
|
|
|
203
|
|
|
175
|
|
|
140
|
|
|
111
|
|
|
284
|
|
|||||||
Purchase obligations(3)
|
863
|
|
|
636
|
|
|
41
|
|
|
27
|
|
|
18
|
|
|
16
|
|
|
125
|
|
|||||||
Postretirement obligations(4)
|
67
|
|
|
9
|
|
|
9
|
|
|
8
|
|
|
8
|
|
|
7
|
|
|
26
|
|
|||||||
Pension obligations(5)
|
194
|
|
|
44
|
|
|
25
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
80
|
|
|||||||
Long-term employee related benefits(6)
|
96
|
|
|
11
|
|
|
4
|
|
|
3
|
|
|
4
|
|
|
3
|
|
|
71
|
|
|||||||
Total
|
$
|
3,665
|
|
|
$
|
988
|
|
|
$
|
327
|
|
|
$
|
273
|
|
|
$
|
228
|
|
|
$
|
195
|
|
|
$
|
1,654
|
|
(1)
|
Interest obligations are computed using constant interest rates until maturity.
|
(2)
|
Amounts reflect contractual obligations relating to our existing leased facilities as of November 24, 2019, and therefore do not reflect our planned future openings of company-operated retail stores. For more information, see "Item 2 – Properties."
|
(3)
|
Amounts reflect estimated commitments of $568 million for inventory purchases, $174 million for sponsorship, naming rights and related benefits with respect to the Levi's® Stadium, and $121 million for human resources, advertising, information technology and other professional services.
|
(4)
|
The amounts presented in the table represent an estimate for the next ten years of our projected payments, based on information provided by our plans' actuaries, and have not been reduced by estimated Medicare subsidy receipts, the amounts of which are not material. Our policy is to fund postretirement benefits as claims and premiums are paid. For more information, see Note 8 to our audited consolidated financial statements included in this report.
|
(5)
|
The amounts presented in the table represent an estimate of our projected contributions to the plans for the next ten years based on information provided by our plans' actuaries. For U.S. qualified plans, these estimates can exceed the projected annual minimum required contributions in an effort to level out potential future funding requirements and provide annual funding flexibility. The 2020 contribution amounts will be recalculated at the end of the plans' fiscal years, which for our U.S. pension plan is at the beginning of our third fiscal quarter. Accordingly, actual contributions may differ materially from those presented here, based on factors such as changes in discount rates and the valuation of pension assets. For more information, see Note 8 to our audited consolidated financial statements included in this report.
|
(6)
|
Long-term employee-related benefits primarily relate to the current and non-current portion of deferred compensation arrangements and workers' compensation. We estimated these payments based on prior experience and forecasted activity for these items. For more information, see Note 12 to our audited consolidated financial statements included in this report.
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in millions)
|
||||||||||
Cash provided by operating activities
|
$
|
412.2
|
|
|
$
|
420.4
|
|
|
$
|
525.9
|
|
Cash used for investing activities
|
(243.3
|
)
|
|
(179.4
|
)
|
|
(124.4
|
)
|
|||
Cash provided by (used for) financing activities
|
55.0
|
|
|
(148.6
|
)
|
|
(151.8
|
)
|
|||
Cash and cash equivalents as of fiscal year end
|
934.2
|
|
|
713.1
|
|
|
633.6
|
|
•
|
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 (income) expense 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 certain other SG&A items, which include severance, transaction and deal related costs, including acquisition and integration costs 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.
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in millions)
|
||||||||||
Most comparable GAAP measure:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
$
|
2,534.7
|
|
|
$
|
2,457.5
|
|
|
$
|
2,082.6
|
|
|
|
|
|
|
|
||||||
Non-GAAP measure:
|
|
|
|
|
|
||||||
Selling, general and administrative expenses
|
2,534.7
|
|
|
2,457.5
|
|
|
2,082.6
|
|
|||
Other costs associated with the IPO
|
(3.5
|
)
|
|
(0.1
|
)
|
|
—
|
|
|||
Impact of changes in fair value on cash-settled stock-based compensation(1)
|
(34.1
|
)
|
|
(44.0
|
)
|
|
(8.2
|
)
|
|||
Restructuring and related charges, severance and other, net(2)
|
(6.3
|
)
|
|
(5.1
|
)
|
|
(13.4
|
)
|
|||
Adjusted SG&A
|
$
|
2,490.8
|
|
|
$
|
2,408.3
|
|
|
$
|
2,061.0
|
|
(1)
|
Includes the impact of the changes in fair value of Class B common stock following the grant date on awards that were granted as cash-settled and subsequently replaced with stock-settled awards concurrent with the IPO.
|
(2)
|
Restructuring and related charges, severance and other, net include transaction and deal related costs, including acquisition and integration costs.
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in millions)
|
||||||||||
Most comparable GAAP measure:
|
|
|
|
|
|
||||||
Net income
|
$
|
395.0
|
|
|
$
|
285.3
|
|
|
$
|
284.6
|
|
|
|
|
|
|
|
||||||
Non-GAAP measure:
|
|
|
|
|
|
||||||
Net income
|
395.0
|
|
|
285.3
|
|
|
284.6
|
|
|||
Income tax expense
|
82.6
|
|
|
214.8
|
|
|
64.2
|
|
|||
Interest expense
|
66.2
|
|
|
55.3
|
|
|
68.6
|
|
|||
Other (income) expense, net(1)
|
(2.0
|
)
|
|
(14.9
|
)
|
|
39.9
|
|
|||
Underwriter commission paid on behalf of selling stockholders
|
24.9
|
|
|
—
|
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
22.8
|
|
|||
Other costs associated with the IPO
|
3.5
|
|
|
0.1
|
|
|
—
|
|
|||
Impact of changes in fair value on cash-settled stock-based compensation(2)
|
34.1
|
|
|
44.0
|
|
|
8.2
|
|
|||
Restructuring and related charges, severance and other, net(3)
|
6.3
|
|
|
5.1
|
|
|
13.4
|
|
|||
Adjusted EBIT
|
$
|
610.6
|
|
|
$
|
589.7
|
|
|
$
|
501.7
|
|
Depreciation and amortization
|
123.9
|
|
|
120.2
|
|
|
117.4
|
|
|||
Adjusted EBITDA
|
$
|
734.5
|
|
|
$
|
709.9
|
|
|
$
|
619.1
|
|
Adjusted EBIT margin
|
10.6
|
%
|
|
10.6
|
%
|
|
10.2
|
%
|
(1)
|
Other (income) expense, net in the years ended November 25, 2018 and November 26, 2017 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.
|
(2)
|
Includes the impact of the changes in fair value of Class B common stock following the grant date on awards that were granted as cash-settled and subsequently replaced with stock-settled awards concurrent with the IPO.
|
(3)
|
Restructuring and related charges, severance and other, net include transaction and deal related costs, including acquisition and integration costs.
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in millions, except per share amounts)
|
||||||||||
Most comparable GAAP measure:
|
|
|
|
|
|
||||||
Net income
|
$
|
395.0
|
|
|
$
|
285.3
|
|
|
$
|
284.6
|
|
|
|
|
|
|
|
||||||
Non-GAAP measure:
|
|
|
|
|
|
||||||
Net income
|
395.0
|
|
|
285.3
|
|
|
284.6
|
|
|||
Underwriter commission paid on behalf of selling stockholders
|
24.9
|
|
|
—
|
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
22.8
|
|
|||
Other costs associated with the IPO
|
3.5
|
|
|
0.1
|
|
|
—
|
|
|||
Impact of changes in fair value on cash-settled stock-based compensation(1)
|
34.1
|
|
|
44.0
|
|
|
8.2
|
|
|||
Restructuring and related charges, severance and other, net(2)
|
6.3
|
|
|
5.1
|
|
|
13.4
|
|
|||
Remeasurement of deferred tax assets and liabilities
|
—
|
|
|
95.6
|
|
|
—
|
|
|||
Tax impact of adjustments
|
(7.6
|
)
|
|
(11.7
|
)
|
|
(8.2
|
)
|
|||
Adjusted net income
|
$
|
456.2
|
|
|
$
|
418.4
|
|
|
$
|
320.8
|
|
|
|
|
|
|
|
||||||
Adjusted net income margin
|
7.9
|
%
|
|
7.5
|
%
|
|
6.5
|
%
|
|||
Adjusted diluted earnings per share
|
$
|
1.12
|
|
|
$
|
1.08
|
|
|
$
|
0.83
|
|
(1)
|
Includes the impact of the changes in fair value of Class B common stock following the grant date on awards that were granted as cash-settled and subsequently replaced with stock-settled awards concurrent with the IPO.
|
(2)
|
Restructuring and related charges, severance and other, net include transaction and deal related costs, including acquisition and integration costs.
|
|
November 24, 2019
|
|
November 25, 2018
|
||||
|
(Dollars in millions)
|
||||||
Most comparable GAAP measure:
|
|
|
|
||||
Total debt, excluding capital leases
|
$
|
1,014.4
|
|
|
$
|
1,052.2
|
|
|
|
|
|
||||
Non-GAAP measure:
|
|
|
|
||||
Total debt, excluding capital leases
|
$
|
1,014.4
|
|
|
$
|
1,052.2
|
|
Cash and cash equivalents
|
(934.2
|
)
|
|
(713.1
|
)
|
||
Short-term investments in marketable securities
|
(80.7
|
)
|
|
—
|
|
||
Net debt
|
$
|
(0.5
|
)
|
|
$
|
339.1
|
|
|
November 24, 2019
|
|
November 25, 2018
|
||||
|
(Dollars in millions)
|
||||||
Total debt, excluding capital leases
|
$
|
1,014.4
|
|
|
$
|
1,052.2
|
|
Last Twelve Months Adjusted EBITDA
|
$
|
734.5
|
|
|
$
|
709.9
|
|
Leverage ratio
|
1.4
|
|
|
1.5
|
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in millions)
|
||||||||||
Most comparable GAAP measure:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
412.2
|
|
|
$
|
420.4
|
|
|
$
|
525.9
|
|
|
|
|
|
|
|
||||||
Non-GAAP measure:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
412.2
|
|
|
$
|
420.4
|
|
|
$
|
525.9
|
|
Underwriter commission paid on behalf of selling stockholders
|
24.9
|
|
|
—
|
|
|
—
|
|
|||
Purchases of property, plant and equipment
|
(175.4
|
)
|
|
(159.4
|
)
|
|
(118.6
|
)
|
|||
Proceeds (Payments) on settlement of forward foreign exchange contracts not designated for hedge accounting
|
12.2
|
|
|
(20.0
|
)
|
|
(5.8
|
)
|
|||
Payment of debt extinguishment costs
|
—
|
|
|
—
|
|
|
(21.9
|
)
|
|||
Repurchase of common stock, including shares surrendered for tax withholdings on equity award exercises
|
(44.0
|
)
|
|
(56.0
|
)
|
|
(25.1
|
)
|
|||
Dividend to stockholders
|
(113.9
|
)
|
|
(90.0
|
)
|
|
(70.0
|
)
|
|||
Adjusted free cash flow
|
$
|
116.0
|
|
|
$
|
95.0
|
|
|
$
|
284.5
|
|
|
Year Ended
|
||||||||||||||||
|
November 24,
2019 |
|
% Increase (Over Prior Year)
|
|
November 25, 2018
|
|
% Increase (Over Prior Year)
|
|
November 26,
2017 |
||||||||
|
(Dollars in millions)
|
||||||||||||||||
Total revenues
|
|
|
|
|
|
|
|
|
|
||||||||
As reported
|
$
|
5,763.1
|
|
|
3.4
|
%
|
|
$
|
5,575.4
|
|
|
13.7
|
%
|
|
$
|
4,904.0
|
|
Impact of foreign currency exchange rates
|
—
|
|
|
*
|
|
|
(126.2
|
)
|
|
*
|
|
|
44.0
|
|
|||
Constant-currency net revenues
|
$
|
5,763.1
|
|
|
5.8
|
%
|
|
$
|
5,449.2
|
|
|
12.7
|
%
|
|
$
|
4,948.0
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Americas
|
|
|
|
|
|
|
|
|
|
||||||||
As reported
|
$
|
3,057.0
|
|
|
0.5
|
%
|
|
$
|
3,042.7
|
|
|
9.7
|
%
|
|
$
|
2,774.0
|
|
Impact of foreign currency exchange rates
|
—
|
|
|
*
|
|
|
(10.4
|
)
|
|
*
|
|
|
(7.3
|
)
|
|||
Constant-currency net revenues - Americas
|
$
|
3,057.0
|
|
|
0.8
|
%
|
|
$
|
3,032.3
|
|
|
10.0
|
%
|
|
$
|
2,766.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Europe
|
|
|
|
|
|
|
|
|
|
||||||||
As reported
|
$
|
1,768.1
|
|
|
7.4
|
%
|
|
$
|
1,646.2
|
|
|
25.4
|
%
|
|
$
|
1,312.3
|
|
Impact of foreign currency exchange rates
|
—
|
|
|
*
|
|
|
(85.9
|
)
|
|
*
|
|
|
49.9
|
|
|||
Constant-currency net revenues - Europe
|
$
|
1,768.1
|
|
|
13.3
|
%
|
|
$
|
1,560.3
|
|
|
20.8
|
%
|
|
$
|
1,362.2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Asia
|
|
|
|
|
|
|
|
|
|
||||||||
As reported
|
$
|
938.0
|
|
|
5.8
|
%
|
|
$
|
886.5
|
|
|
8.4
|
%
|
|
$
|
817.7
|
|
Impact of foreign currency exchange rates
|
—
|
|
|
*
|
|
|
(29.9
|
)
|
|
*
|
|
|
1.4
|
|
|||
Constant-currency net revenues - Asia
|
$
|
938.0
|
|
|
9.5
|
%
|
|
$
|
856.6
|
|
|
8.2
|
%
|
|
$
|
819.1
|
|
|
Year Ended
|
||||||||||||||||
|
November 24,
2019 |
|
% Increase (Over Prior Year)
|
|
November 25, 2018
|
|
% Increase (Over Prior Year)
|
|
November 26,
2017 |
||||||||
|
(Dollars in millions)
|
||||||||||||||||
Adjusted EBIT(1)
|
$
|
610.6
|
|
|
3.5
|
%
|
|
$
|
589.7
|
|
|
17.5
|
%
|
|
$
|
501.7
|
|
Impact of foreign currency exchange rates
|
—
|
|
|
*
|
|
|
(21.6
|
)
|
|
*
|
|
|
12.4
|
|
|||
Constant-currency Adjusted EBIT
|
$
|
610.6
|
|
|
7.5
|
%
|
|
$
|
568.1
|
|
|
14.7
|
%
|
|
$
|
514.1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Constant-currency Adjusted EBIT margin(2)
|
10.6
|
%
|
|
|
|
10.4
|
%
|
|
|
|
10.4
|
%
|
|
Year Ended
|
||||||||||||||||
|
November 24,
2019 |
|
% Increase (Over Prior Year)
|
|
November 25, 2018
|
|
% Increase (Over Prior Year)
|
|
November 26,
2017 |
||||||||
|
(Dollars in millions, except per share amounts)
|
||||||||||||||||
Adjusted net income(1)
|
$
|
456.2
|
|
|
9.0
|
%
|
|
$
|
418.4
|
|
|
30.4
|
%
|
|
$
|
320.8
|
|
Impact of foreign currency exchange rates
|
—
|
|
|
*
|
|
|
(18.1
|
)
|
|
*
|
|
|
11.5
|
|
|||
Constant-currency Adjusted net income
|
$
|
456.2
|
|
|
14.0
|
%
|
|
$
|
400.3
|
|
|
25.9
|
%
|
|
$
|
332.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Constant-currency Adjusted net income margin(2)
|
7.9
|
%
|
|
|
|
7.3
|
%
|
|
|
|
6.7
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted diluted earnings per share
|
$
|
1.12
|
|
|
3.7
|
%
|
|
$
|
1.08
|
|
|
30.1
|
%
|
|
$
|
0.83
|
|
Impact of foreign currency exchange rates
|
—
|
|
|
*
|
|
|
(0.05
|
)
|
|
*
|
|
|
0.03
|
|
|||
Constant-currency adjusted diluted earnings per share
|
$
|
1.12
|
|
|
8.7
|
%
|
|
$
|
1.03
|
|
|
25.6
|
%
|
|
$
|
0.86
|
|
•
|
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 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 forecast and respond timely to price, innovation and other competitive pressures in the global apparel industry on and from our key customers and in our key markets;
|
•
|
our dependence on key distribution channels, customers and suppliers;
|
•
|
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 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;
|
•
|
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
|
•
|
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;
|
•
|
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;
|
•
|
our ability to successfully prevent or mitigate the impacts of data security breaches;
|
•
|
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 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;
|
•
|
ongoing or future litigation matters and disputes and regulatory developments;
|
•
|
political, social and economic instability, or natural disasters, in countries where we or our customers do business.
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
As of November 24, 2019
|
|
As of November 25, 2018
|
||||||||||||||||||
|
Average Forward Exchange Rate
|
|
Notional Amount
|
|
Fair Value
|
|
Average Forward Exchange Rate
|
|
Notional Amount
|
|
Fair Value
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Currency
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Australian Dollar
|
0.7
|
|
|
$
|
29,447
|
|
|
$
|
541
|
|
|
0.74
|
|
|
$
|
29,371
|
|
|
$
|
513
|
|
Brazilian Real
|
3.98
|
|
|
8,726
|
|
|
504
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Canadian Dollar
|
1.32
|
|
|
103,938
|
|
|
809
|
|
|
1.3
|
|
|
86,242
|
|
|
626
|
|
||||
Swiss Franc
|
0.99
|
|
|
(10,559
|
)
|
|
36
|
|
|
1
|
|
|
(12,031
|
)
|
|
169
|
|
||||
Czech Koruna
|
23.12
|
|
|
(1,459
|
)
|
|
8
|
|
|
22.78
|
|
|
(1,301
|
)
|
|
8
|
|
||||
Danish Krone
|
6.73
|
|
|
(1,114
|
)
|
|
5
|
|
|
6.55
|
|
|
(2,376
|
)
|
|
22
|
|
||||
Euro
|
1.14
|
|
|
406,350
|
|
|
6,321
|
|
|
1.17
|
|
|
312,601
|
|
|
6,577
|
|
||||
British Pound Sterling
|
1.25
|
|
|
167,793
|
|
|
(3,629
|
)
|
|
1.31
|
|
|
207,799
|
|
|
3,083
|
|
||||
Hong Kong Dollar
|
7.83
|
|
|
(5,005
|
)
|
|
—
|
|
|
7.81
|
|
|
(5,226
|
)
|
|
(3
|
)
|
||||
Hungarian Forint
|
301.73
|
|
|
(3,502
|
)
|
|
25
|
|
|
283.7
|
|
|
(2,622
|
)
|
|
40
|
|
||||
Japanese Yen
|
105.76
|
|
|
85,154
|
|
|
990
|
|
|
108.16
|
|
|
64,081
|
|
|
1,207
|
|
||||
South Korean Won
|
1,151.87
|
|
|
28,654
|
|
|
221
|
|
|
1,106.67
|
|
|
24,765
|
|
|
180
|
|
||||
Mexican Peso
|
20.15
|
|
|
131,910
|
|
|
(947
|
)
|
|
20.84
|
|
|
106,008
|
|
|
947
|
|
||||
Norwegian Krone
|
9.14
|
|
|
(3,690
|
)
|
|
5
|
|
|
8.44
|
|
|
(3,093
|
)
|
|
(20
|
)
|
||||
New Zealand Dollar
|
0.63
|
|
|
(2,562
|
)
|
|
32
|
|
|
0.68
|
|
|
(2,397
|
)
|
|
17
|
|
||||
Polish Zloty
|
3.88
|
|
|
(1,993
|
)
|
|
1
|
|
|
3.79
|
|
|
(5,190
|
)
|
|
47
|
|
||||
Swedish Krona
|
9.28
|
|
|
25,642
|
|
|
644
|
|
|
8.48
|
|
|
24,724
|
|
|
1,034
|
|
||||
Singapore Dollar
|
1.36
|
|
|
(5,703
|
)
|
|
(22
|
)
|
|
1.36
|
|
|
(34,528
|
)
|
|
(85
|
)
|
||||
Turkish Lira
|
5.73
|
|
|
1,009
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
South African Rand
|
—
|
|
|
—
|
|
|
—
|
|
|
15.08
|
|
|
1,444
|
|
|
(126
|
)
|
||||
Total
|
|
|
$
|
953,036
|
|
|
$
|
5,549
|
|
|
|
|
$
|
788,271
|
|
|
$
|
14,236
|
|
|
As of November 24, 2019
|
|
As of November 25, 2018
|
||||||||||||||||||||||||||||
|
Expected Maturity Date
|
|
|
|
|||||||||||||||||||||||||||
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Thereafter
|
|
Total
|
|
Total
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Debt Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed Rate (US$)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
Average Interest Rate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.00
|
%
|
|
5.00
|
%
|
|
5.00
|
%
|
||||||||
Fixed Rate (Euro 475 million)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
525,255
|
|
|
525,255
|
|
|
541,500
|
|
||||||||
Average Interest Rate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.375
|
%
|
|
3.375
|
%
|
|
3.375
|
%
|
||||||||
Variable Rate (US$)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Average Interest Rate
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total Principal (face amount) of our debt instruments(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,025,255
|
|
|
$
|
1,025,255
|
|
|
$
|
1,041,500
|
|
(1)
|
Excluded from this table are other short-term borrowings of $7.6 million as of November 24, 2019, consisting of term loans and revolving credit facilities at various foreign subsidiaries which we expect to either pay over the next twelve months or refinance at the end of their applicable terms. All of the $7.6 million was fixed-rate debt.
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
November 24,
2019 |
|
November 25,
2018 |
||||
|
(Dollars in thousands)
|
||||||
ASSETS
|
|||||||
Current Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
934,237
|
|
|
$
|
713,120
|
|
Short-term investments in marketable securities
|
80,741
|
|
|
—
|
|
||
Trade receivables, net of allowance for doubtful accounts of $6,172 and $10,037 (Note 1)
|
782,846
|
|
|
534,164
|
|
||
Inventories:
|
|
|
|
||||
Raw materials
|
4,929
|
|
|
3,681
|
|
||
Work-in-process
|
3,319
|
|
|
2,977
|
|
||
Finished goods
|
875,944
|
|
|
877,115
|
|
||
Total inventories
|
884,192
|
|
|
883,773
|
|
||
Other current assets
|
188,170
|
|
|
157,002
|
|
||
Total current assets
|
2,870,186
|
|
|
2,288,059
|
|
||
Property, plant and equipment, net of accumulated depreciation of $1,054,267 and $974,206
|
529,558
|
|
|
460,613
|
|
||
Goodwill
|
235,788
|
|
|
236,246
|
|
||
Other intangible assets, net
|
42,782
|
|
|
42,835
|
|
||
Deferred tax assets, net
|
407,905
|
|
|
397,791
|
|
||
Other non-current assets
|
146,199
|
|
|
117,116
|
|
||
Total assets
|
$
|
4,232,418
|
|
|
$
|
3,542,660
|
|
|
|
|
|
||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
|
|||||||
Current Liabilities:
|
|
|
|
||||
Short-term debt
|
$
|
7,621
|
|
|
$
|
31,935
|
|
Accounts payable
|
360,324
|
|
|
351,329
|
|
||
Accrued salaries, wages and employee benefits
|
223,374
|
|
|
298,990
|
|
||
Accrued interest payable
|
5,350
|
|
|
6,089
|
|
||
Accrued income taxes
|
24,050
|
|
|
15,466
|
|
||
Accrued sales allowances (Note 1)
|
123,311
|
|
|
—
|
|
||
Other accrued liabilities
|
423,174
|
|
|
348,390
|
|
||
Total current liabilities
|
1,167,204
|
|
|
1,052,199
|
|
||
Long-term debt
|
1,006,745
|
|
|
1,020,219
|
|
||
Postretirement medical benefits
|
64,006
|
|
|
74,181
|
|
||
Pension liability
|
193,214
|
|
|
195,639
|
|
||
Long-term employee related benefits
|
84,957
|
|
|
107,556
|
|
||
Long-term income tax liabilities
|
10,486
|
|
|
9,805
|
|
||
Other long-term liabilities
|
134,249
|
|
|
116,462
|
|
||
Total liabilities
|
2,660,861
|
|
|
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; 53,079,235 shares and no shares issued and outstanding as of November 24, 2019 and November 25, 2018, respectively; and 422,000,000 Class B shares authorized, 340,674,741 shares and 376,028,430 shares issued and outstanding, as of November 24, 2019 and November 25, 2018, respectively
|
394
|
|
|
376
|
|
||
Additional paid-in capital (Note 1)
|
657,659
|
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(404,986
|
)
|
|
(424,584
|
)
|
||
Retained earnings
|
1,310,464
|
|
|
1,084,321
|
|
||
Total Levi Strauss & Co. stockholders’ equity
|
1,563,531
|
|
|
660,113
|
|
||
Noncontrolling interest
|
8,026
|
|
|
7,346
|
|
||
Total stockholders’ equity
|
1,571,557
|
|
|
667,459
|
|
||
Total liabilities, temporary equity and stockholders’ equity
|
$
|
4,232,418
|
|
|
$
|
3,542,660
|
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||
Net revenues
|
$
|
5,763,087
|
|
|
$
|
5,575,440
|
|
|
$
|
4,904,030
|
|
Cost of goods sold
|
2,661,714
|
|
|
2,577,465
|
|
|
2,341,301
|
|
|||
Gross profit
|
3,101,373
|
|
|
2,997,975
|
|
|
2,562,729
|
|
|||
Selling, general and administrative expenses
|
2,534,698
|
|
|
2,457,564
|
|
|
2,082,662
|
|
|||
Operating income
|
566,675
|
|
|
540,411
|
|
|
480,067
|
|
|||
Interest expense
|
(66,248
|
)
|
|
(55,296
|
)
|
|
(68,603
|
)
|
|||
Underwriter commission paid on behalf of selling stockholders (Note 1)
|
(24,860
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(22,793
|
)
|
|||
Other income (expense), net
|
2,017
|
|
|
14,907
|
|
|
(39,890
|
)
|
|||
Income before income taxes
|
477,584
|
|
|
500,022
|
|
|
348,781
|
|
|||
Income tax expense
|
82,604
|
|
|
214,778
|
|
|
64,225
|
|
|||
Net income
|
394,980
|
|
|
285,244
|
|
|
284,556
|
|
|||
Net income attributable to noncontrolling interest
|
(368
|
)
|
|
(2,102
|
)
|
|
(3,153
|
)
|
|||
Net income attributable to Levi Strauss & Co.
|
$
|
394,612
|
|
|
$
|
283,142
|
|
|
$
|
281,403
|
|
Earnings per common share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.01
|
|
|
$
|
0.75
|
|
|
$
|
0.75
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
0.73
|
|
|
$
|
0.73
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
389,082,277
|
|
|
377,139,847
|
|
|
376,177,350
|
|
|||
Diluted
|
408,365,902
|
|
|
388,607,361
|
|
|
384,338,330
|
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in thousands)
|
||||||||||
Net income
|
$
|
394,980
|
|
|
$
|
285,244
|
|
|
$
|
284,556
|
|
Other comprehensive income (loss), before related income taxes:
|
|
|
|
|
|
||||||
Pension and postretirement benefits
|
10,248
|
|
|
4,336
|
|
|
30,125
|
|
|||
Derivative Instruments
|
19,026
|
|
|
21,280
|
|
|
(59,945
|
)
|
|||
Foreign currency translation (losses) gains
|
(7,250
|
)
|
|
(43,713
|
)
|
|
40,256
|
|
|||
Unrealized gains (losses) on marketable securities
|
4,362
|
|
|
(1,488
|
)
|
|
3,379
|
|
|||
Total other comprehensive income (loss), before related income taxes
|
26,386
|
|
|
(19,585
|
)
|
|
13,815
|
|
|||
Income tax (expense) benefit related to items of other comprehensive income (loss)
|
(6,476
|
)
|
|
(852
|
)
|
|
9,223
|
|
|||
Comprehensive income, net of income taxes
|
414,890
|
|
|
264,807
|
|
|
307,594
|
|
|||
Comprehensive income attributable to noncontrolling interest
|
(680
|
)
|
|
(1,868
|
)
|
|
(3,258
|
)
|
|||
Comprehensive income attributable to Levi Strauss & Co.
|
$
|
414,210
|
|
|
$
|
262,939
|
|
|
$
|
304,336
|
|
|
Levi Strauss & Co. Stockholders
|
|
|
|
|
||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Loss
|
|
Noncontrolling Interest
|
|
Total Stockholders' Equity
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Balance at November 27, 2016
|
$
|
375
|
|
|
$
|
1,445
|
|
|
$
|
935,049
|
|
|
$
|
(427,314
|
)
|
|
$
|
2,220
|
|
|
$
|
511,775
|
|
Net income
|
—
|
|
|
—
|
|
|
281,403
|
|
|
—
|
|
|
3,153
|
|
|
284,556
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
22,933
|
|
|
105
|
|
|
23,038
|
|
||||||
Stock-based compensation and dividends, net
|
2
|
|
|
25,878
|
|
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
25,810
|
|
||||||
Reclassification to temporary equity
|
—
|
|
|
(13,575
|
)
|
|
(34,114
|
)
|
|
—
|
|
|
—
|
|
|
(47,689
|
)
|
||||||
Repurchase of common stock
|
(2
|
)
|
|
(13,748
|
)
|
|
(11,352
|
)
|
|
—
|
|
|
—
|
|
|
(25,102
|
)
|
||||||
Cash dividends paid
|
—
|
|
|
—
|
|
|
(70,000
|
)
|
|
—
|
|
|
—
|
|
|
(70,000
|
)
|
||||||
Balance at November 26, 2017
|
375
|
|
|
—
|
|
|
1,100,916
|
|
|
(404,381
|
)
|
|
5,478
|
|
|
702,388
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
283,142
|
|
|
—
|
|
|
2,102
|
|
|
285,244
|
|
||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,203
|
)
|
|
(234
|
)
|
|
(20,437
|
)
|
||||||
Stock-based compensation and dividends, net
|
3
|
|
|
18,471
|
|
|
(67
|
)
|
|
—
|
|
|
—
|
|
|
18,407
|
|
||||||
Reclassification to temporary equity
|
—
|
|
|
11,232
|
|
|
(183,336
|
)
|
|
—
|
|
|
—
|
|
|
(172,104
|
)
|
||||||
Repurchase of common stock
|
(2
|
)
|
|
(29,703
|
)
|
|
(26,334
|
)
|
|
—
|
|
|
—
|
|
|
(56,039
|
)
|
||||||
Cash dividends paid
|
—
|
|
|
—
|
|
|
(90,000
|
)
|
|
—
|
|
|
—
|
|
|
(90,000
|
)
|
||||||
Balance at November 25, 2018
|
376
|
|
|
—
|
|
|
1,084,321
|
|
|
(424,584
|
)
|
|
7,346
|
|
|
667,459
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
394,612
|
|
|
—
|
|
|
368
|
|
|
394,980
|
|
||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
19,598
|
|
|
312
|
|
|
19,910
|
|
||||||
Stock-based compensation and dividends, net
|
4
|
|
|
55,278
|
|
|
(93
|
)
|
|
—
|
|
|
—
|
|
|
55,189
|
|
||||||
Employee stock purchase plan
|
—
|
|
|
2,062
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,062
|
|
||||||
Reclassification to temporary equity
|
—
|
|
|
(506
|
)
|
|
(23,339
|
)
|
|
—
|
|
|
—
|
|
|
(23,845
|
)
|
||||||
Repurchase of common stock
|
—
|
|
|
(41,059
|
)
|
|
(2,923
|
)
|
|
—
|
|
|
—
|
|
|
(43,982
|
)
|
||||||
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
|
|
||||||
Cash dividends paid
|
—
|
|
|
—
|
|
|
(113,914
|
)
|
|
—
|
|
|
—
|
|
|
(113,914
|
)
|
||||||
Balance at November 24, 2019
|
$
|
394
|
|
|
$
|
657,659
|
|
|
$
|
1,310,464
|
|
|
$
|
(404,986
|
)
|
|
$
|
8,026
|
|
|
$
|
1,571,557
|
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in thousands)
|
||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
394,980
|
|
|
$
|
285,244
|
|
|
$
|
284,556
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
123,942
|
|
|
120,205
|
|
|
117,387
|
|
|||
Unrealized foreign exchange losses (gains)
|
11,721
|
|
|
(30,804
|
)
|
|
24,731
|
|
|||
Realized (gain) loss on settlement of forward foreign exchange contracts not designated for hedge accounting
|
(12,166
|
)
|
|
19,974
|
|
|
5,773
|
|
|||
Employee benefit plans’ amortization from accumulated other comprehensive loss and settlement losses
|
10,248
|
|
|
4,336
|
|
|
30,125
|
|
|||
Loss on extinguishment of debt, net of write-off of unamortized debt issuance costs
|
—
|
|
|
—
|
|
|
22,793
|
|
|||
Stock-based compensation
|
55,188
|
|
|
18,407
|
|
|
25,809
|
|
|||
(Benefit from) provision for deferred income taxes
|
(14,963
|
)
|
|
134,258
|
|
|
(486
|
)
|
|||
Other, net
|
7,034
|
|
|
7,395
|
|
|
8,005
|
|
|||
Change in operating assets and liabilities:
|
|
|
|
|
|
||||||
Trade receivables
|
(82,344
|
)
|
|
(60,474
|
)
|
|
3,981
|
|
|||
Inventories
|
(22,434
|
)
|
|
(147,389
|
)
|
|
(14,409
|
)
|
|||
Other current assets
|
(22,102
|
)
|
|
(30,870
|
)
|
|
1,828
|
|
|||
Other non-current assets
|
(21,662
|
)
|
|
(3,189
|
)
|
|
(6,862
|
)
|
|||
Accounts payable and other accrued liabilities
|
18,054
|
|
|
161,039
|
|
|
35,714
|
|
|||
Restructuring liabilities
|
(256
|
)
|
|
(420
|
)
|
|
(4,274
|
)
|
|||
Income tax liabilities
|
9,352
|
|
|
(8,590
|
)
|
|
2,478
|
|
|||
Accrued salaries, wages and employee benefits and long-term employee related benefits
|
(55,363
|
)
|
|
(44,887
|
)
|
|
(9,408
|
)
|
|||
Other long-term liabilities
|
12,959
|
|
|
(3,864
|
)
|
|
(1,800
|
)
|
|||
Net cash provided by operating activities
|
412,188
|
|
|
420,371
|
|
|
525,941
|
|
|||
Cash Flows from Investing Activities:
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(175,356
|
)
|
|
(159,413
|
)
|
|
(118,618
|
)
|
|||
Proceeds (payments) on settlement of forward foreign exchange contracts not designated for hedge accounting
|
12,166
|
|
|
(19,974
|
)
|
|
(5,773
|
)
|
|||
Payments to acquire short-term investments
|
(114,247
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale, maturity and collection of short-term investments
|
34,094
|
|
|
—
|
|
|
—
|
|
|||
Net cash used for investing activities
|
(243,343
|
)
|
|
(179,387
|
)
|
|
(124,391
|
)
|
|||
Cash Flows from Financing Activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
—
|
|
|
502,835
|
|
|||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(525,000
|
)
|
|||
Proceeds from short-term credit facilities
|
39,175
|
|
|
31,929
|
|
|
35,333
|
|
|||
Repayments of short-term credit facilities
|
(53,025
|
)
|
|
(28,230
|
)
|
|
(29,764
|
)
|
|||
Other short-term borrowings, net
|
(9,418
|
)
|
|
(4,977
|
)
|
|
(6,231
|
)
|
|||
Payment of debt extinguishment costs
|
—
|
|
|
—
|
|
|
(21,902
|
)
|
|||
Payment of debt issuance costs
|
—
|
|
|
—
|
|
|
(10,366
|
)
|
|||
Proceeds from issuance of Class A common stock
|
254,329
|
|
|
—
|
|
|
—
|
|
|||
Payments for underwriter commission and other offering costs
|
(19,746
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from purchases of stock under employee stock purchase plan
|
2,062
|
|
|
—
|
|
|
—
|
|
|||
Repurchase of common stock, including shares surrendered for tax withholdings on equity exercises
|
(43,982
|
)
|
|
(56,039
|
)
|
|
(25,102
|
)
|
|||
Dividend to stockholders
|
(113,914
|
)
|
|
(90,000
|
)
|
|
(70,000
|
)
|
|||
Other financing, net
|
(463
|
)
|
|
(1,316
|
)
|
|
(1,632
|
)
|
|||
Net cash provided by (used for) financing activities
|
55,018
|
|
|
(148,633
|
)
|
|
(151,829
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents and restricted cash
|
(2,808
|
)
|
|
(13,344
|
)
|
|
8,417
|
|
|||
Net increase in cash and cash equivalents and restricted cash
|
221,055
|
|
|
79,007
|
|
|
258,138
|
|
|||
Beginning cash and cash equivalents, and restricted cash
|
713,698
|
|
|
634,691
|
|
|
376,553
|
|
|||
Ending cash and cash equivalents, and restricted cash
|
934,753
|
|
|
713,698
|
|
|
634,691
|
|
|||
Less: Ending restricted cash
|
(516
|
)
|
|
(578
|
)
|
|
(1,069
|
)
|
|||
Ending cash and cash equivalents
|
$
|
934,237
|
|
|
$
|
713,120
|
|
|
$
|
633,622
|
|
|
|
|
|
|
|
||||||
Noncash Investing Activity:
|
|
|
|
|
|
||||||
Property, plant and equipment acquired and not yet paid at end of period
|
$
|
30,512
|
|
|
$
|
23,099
|
|
|
$
|
22,664
|
|
Property, plant and equipment additions due to build-to-suit lease transactions
|
10,861
|
|
|
2,750
|
|
|
19,888
|
|
|||
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest during the period
|
$
|
54,000
|
|
|
$
|
51,200
|
|
|
$
|
52,097
|
|
Cash paid for income taxes during the period, net of refunds
|
96,540
|
|
|
96,277
|
|
|
54,602
|
|
•
|
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.
|
|
November 24, 2019
|
||||||||||
|
As Reported
|
|
Remove Effect of Adoption
|
|
Balances Without Adoption of Topic 606
|
||||||
|
(Dollars in thousands)
|
||||||||||
Trade receivables, net of allowance for doubtful accounts
|
$
|
782,846
|
|
|
$
|
171,113
|
|
|
$
|
611,733
|
|
Inventories: Finished goods
|
875,944
|
|
|
(16,444
|
)
|
|
892,388
|
|
|||
Other current assets
|
188,170
|
|
|
16,444
|
|
|
171,726
|
|
|||
Total current assets
|
2,870,186
|
|
|
171,113
|
|
|
2,699,073
|
|
|||
Total assets
|
4,232,418
|
|
|
171,113
|
|
|
4,061,305
|
|
|||
Accrued sales allowances
|
123,311
|
|
|
123,311
|
|
|
—
|
|
|||
Other accrued liabilities
|
423,174
|
|
|
47,802
|
|
|
375,372
|
|
|||
Total current liabilities
|
1,167,204
|
|
|
171,113
|
|
|
996,091
|
|
|||
Total liabilities, temporary equity and stockholders' equity
|
$
|
4,232,418
|
|
|
$
|
171,113
|
|
|
$
|
4,061,305
|
|
•
|
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 Income (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 costs, primarily interest costs and investment earnings, of $15.9 million, $3.4 million and $12.9 million for the year ended November 24, 2019, November 25, 2018 and November 26, 2017, respectively, were included in Other Income (Expense), Net line item rather than SG&A expenses in the Company's Consolidated Statements of Income.
|
•
|
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 will elect the transition method that applies the new lease standard at the adoption date instead of the earliest period presented. The Company will elect the practical expedient to not separate lease components from nonlease components for all leases. Additionally, the Company will 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 will 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. Based on our preliminary assessment, the Company anticipates upon adoption to recognize $1.0 billion to $1.2 billion of total operating lease liabilities and $0.9 billion to $1.1 billion of operating lease right-of-use assets, as well as remove $50 million to $60 million of existing deferred rent liabilities, which will be recorded as an offset against the right-of-use assets. In addition, the Company expects to remove $40 million to $50 million and $50 million to $60 million of existing assets and liabilities related to build-to-suit lease arrangements, respectively. The difference of nil to $20 million is expected to be recognized as the cumulative effect in retained earnings as of the date of initial application of the new lease standard.
|
•
|
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). ASU 2018-02 addresses certain stranded income tax effects in accumulated other comprehensive income (loss) resulting from the Tax Act enacted on December 22, 2017. The guidance will be effective for the Company in the first quarter of fiscal 2020. The Company estimates the accumulated adjustment to retained earnings will be $50 million to $60 million with an offsetting adjustment to accumulated other comprehensive income (loss) upon adoption.
|
•
|
In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment. ASU 2017-04 eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. The annual assessment of goodwill impairment will be determined by using the difference between the carrying amount and the fair value of the reporting unit. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.
|
•
|
In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40). ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software (and hosting arrangements that include an internal-use software license). The guidance provides criteria for determining which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The capitalized implementation costs are required to be expensed over the term of the hosting arrangement. The guidance also clarifies the presentation requirements for reporting such costs in the entity’s financial statements. Early adoption is permitted. The Company is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures.
|
•
|
In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20). ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined
|
|
November 24, 2019
|
|
November 25, 2018
|
||||
|
(Dollars in thousands)
|
||||||
Land
|
$
|
8,254
|
|
|
$
|
8,197
|
|
Buildings and leasehold improvements
|
516,239
|
|
|
466,256
|
|
||
Machinery and equipment
|
489,746
|
|
|
471,015
|
|
||
Capitalized internal-use software
|
511,927
|
|
|
453,943
|
|
||
Construction in progress
|
57,659
|
|
|
35,408
|
|
||
Subtotal
|
1,583,825
|
|
|
1,434,819
|
|
||
Accumulated depreciation
|
(1,054,267
|
)
|
|
(974,206
|
)
|
||
PP&E, net
|
$
|
529,558
|
|
|
$
|
460,613
|
|
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Balance, November 26, 2017
|
$
|
207,765
|
|
|
$
|
28,324
|
|
|
$
|
1,238
|
|
|
$
|
237,327
|
|
Foreign currency fluctuation
|
(34
|
)
|
|
(1,060
|
)
|
|
13
|
|
|
(1,081
|
)
|
||||
Balance, November 25, 2018
|
207,731
|
|
|
27,264
|
|
|
1,251
|
|
|
236,246
|
|
||||
Additions
|
—
|
|
|
—
|
|
|
321
|
|
|
321
|
|
||||
Foreign currency fluctuation
|
18
|
|
|
(729
|
)
|
|
(68
|
)
|
|
(779
|
)
|
||||
Balance, November 24, 2019
|
$
|
207,749
|
|
|
$
|
26,535
|
|
|
$
|
1,504
|
|
|
$
|
235,788
|
|
|
November 24, 2019
|
|
November 25, 2018
|
||||||||||||||||||||
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Total
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Total
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Non-amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trademarks
|
$
|
42,743
|
|
|
$
|
—
|
|
|
$
|
42,743
|
|
|
$
|
42,743
|
|
|
$
|
—
|
|
|
$
|
42,743
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquired contractual rights
|
448
|
|
|
(409
|
)
|
|
39
|
|
|
462
|
|
|
(370
|
)
|
|
92
|
|
||||||
Total
|
$
|
43,191
|
|
|
$
|
(409
|
)
|
|
$
|
42,782
|
|
|
$
|
43,205
|
|
|
$
|
(370
|
)
|
|
$
|
42,835
|
|
|
November 24, 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
|
$
|
49,207
|
|
|
$
|
49,207
|
|
|
$
|
—
|
|
|
$
|
34,385
|
|
|
$
|
34,385
|
|
|
$
|
—
|
|
Short-term investments in marketable securities
|
80,741
|
|
|
—
|
|
|
80,741
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Derivative instruments(3)
|
16,323
|
|
|
—
|
|
|
16,323
|
|
|
18,372
|
|
|
—
|
|
|
18,372
|
|
||||||
Total
|
$
|
146,271
|
|
|
$
|
49,207
|
|
|
$
|
97,064
|
|
|
$
|
52,757
|
|
|
$
|
34,385
|
|
|
$
|
18,372
|
|
Financial liabilities carried at fair value
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative instruments(3)
|
8,123
|
|
|
—
|
|
|
8,123
|
|
|
4,447
|
|
|
—
|
|
|
4,447
|
|
||||||
Total
|
$
|
8,123
|
|
|
$
|
—
|
|
|
$
|
8,123
|
|
|
$
|
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. See Note 12 for more information on rabbi trust assets.
|
(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. 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 5 for more information.
|
|
November 24, 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)
|
$
|
489,299
|
|
|
$
|
505,757
|
|
|
$
|
487,272
|
|
|
$
|
478,774
|
|
3.375% senior notes due 2027(1)
|
522,524
|
|
|
556,266
|
|
|
538,219
|
|
|
546,238
|
|
||||
Short-term borrowings
|
7,621
|
|
|
7,621
|
|
|
32,470
|
|
|
32,470
|
|
||||
Total
|
$
|
1,019,444
|
|
|
$
|
1,069,644
|
|
|
$
|
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 liabilities that the Company has the ability to access at the measurement date.
|
|
November 24, 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)
|
$
|
6,149
|
|
|
$
|
—
|
|
|
$
|
6,149
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange risk cash flow hedges(2)
|
—
|
|
|
(3,809
|
)
|
|
(3,809
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
6,149
|
|
|
$
|
(3,809
|
)
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Forward foreign exchange contracts(1)
|
$
|
16,323
|
|
|
$
|
(6,149
|
)
|
|
$
|
10,174
|
|
|
$
|
18,372
|
|
|
$
|
—
|
|
|
$
|
18,372
|
|
Forward foreign exchange contracts(2)
|
3,813
|
|
|
(8,127
|
)
|
|
(4,314
|
)
|
|
—
|
|
|
(4,447
|
)
|
|
(4,447
|
)
|
||||||
Total
|
$
|
20,136
|
|
|
$
|
(14,276
|
)
|
|
|
|
$
|
18,372
|
|
|
$
|
(4,447
|
)
|
|
|
||||
Non-derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Euro senior notes
|
$
|
—
|
|
|
$
|
(525,255
|
)
|
|
|
|
$
|
—
|
|
|
$
|
(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.
|
|
November 24, 2019
|
|
November 25, 2018
|
|||||||||||||||||||||
|
Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
Net Amount of Assets / (Liabilities)
|
Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
Net Amount of Assets / (Liabilities)
|
||||||||||||||
|
(Dollars in thousands)
|
|||||||||||||||||||||||
Foreign exchange risk contracts and forward foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Financial assets
|
$
|
21,839
|
|
|
$
|
(10,142
|
)
|
|
$
|
11,697
|
|
|
$
|
16,417
|
|
|
$
|
(1,756
|
)
|
|
$
|
14,661
|
|
|
Financial liabilities
|
(16,290
|
)
|
|
10,142
|
|
|
(6,148
|
)
|
|
(2,181
|
)
|
|
1,756
|
|
|
(425
|
)
|
|||||||
Total
|
|
|
|
|
$
|
5,549
|
|
|
|
|
|
|
$
|
14,236
|
|
|||||||||
Embedded derivative contracts
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Financial assets
|
$
|
4,446
|
|
|
$
|
—
|
|
|
$
|
4,446
|
|
|
$
|
1,955
|
|
|
$
|
—
|
|
|
$
|
1,955
|
|
|
Financial liabilities
|
(1,795
|
)
|
|
—
|
|
|
(1,795
|
)
|
|
(2,266
|
)
|
|
—
|
|
|
(2,266
|
)
|
|||||||
Total
|
|
|
|
|
$
|
2,651
|
|
|
|
|
|
|
$
|
(311
|
)
|
|
Gain or (Loss)
Recognized in AOCI
(Effective Portion)
|
|
Amount of Gain (Loss) Reclassified from AOCI into Net Income(1)
|
||||||||||||||||
|
As of
|
|
As of
|
|
Year Ended
|
||||||||||||||
November 24,
2019 |
November 25,
2018 |
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
|||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Foreign exchange risk contracts
|
$
|
2,781
|
|
|
$
|
—
|
|
|
$
|
3,418
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Realized forward foreign exchange swaps(2)
|
4,637
|
|
|
4,637
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Yen-denominated Eurobonds
|
(19,811
|
)
|
|
(19,811
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Euro-denominated senior notes
|
(38,171
|
)
|
|
(54,416
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Cumulative income taxes
|
25,606
|
|
|
29,703
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
||
Total
|
$
|
(24,958
|
)
|
|
$
|
(39,887
|
)
|
|
|
|
|
|
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in thousands)
|
||||||||||
Forward foreign exchange contracts:
|
|
|
|
|
|
||||||
Realized gain (loss)(1)
|
$
|
8,164
|
|
|
$
|
(19,974
|
)
|
|
$
|
(5,773
|
)
|
Unrealized (loss) gain (2)
|
(8,038
|
)
|
|
31,141
|
|
|
(35,394
|
)
|
|||
Total
|
$
|
126
|
|
|
$
|
11,167
|
|
|
$
|
(41,167
|
)
|
(1)
|
The realized gain in 2019 is driven by gains on contracts to sell various currencies, mainly the Euro, as a result of the U.S. Dollar strengthening throughout the year against lower original contract rates.
|
(2)
|
The unrealized loss in 2019 is driven by losses on contracts to sell various foreign currencies, mainly the Euro, as a result of the U.S. Dollar weakening against the original contract rates at year end. The gain in 2018 is primarily driven by gains on contracts to sell the Euro, the Mexican Peso and the British Pound, as a result of the U.S. Dollar strengthening at year end. The unrealized loss in 2017 is primarily driven by losses on contracts to sell the Mexican Peso, the Euro and the British Pound, as a result of the U.S. Dollar weakening at year end.
|
|
November 24,
2019 |
|
November 25,
2018 |
||||
|
(Dollars in thousands)
|
||||||
Long-term debt
|
|
|
|
||||
5.00% senior notes due 2025
|
$
|
487,632
|
|
|
$
|
485,605
|
|
3.375% senior notes due 2027
|
519,113
|
|
|
534,614
|
|
||
Total long-term debt
|
$
|
1,006,745
|
|
|
$
|
1,020,219
|
|
Short-term debt
|
|
|
|
||||
Short-term borrowings
|
7,621
|
|
|
31,935
|
|
||
Total debt
|
$
|
1,014,366
|
|
|
$
|
1,052,154
|
|
•
|
rank senior in right of payment to the Company's future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Notes due 2025;
|
•
|
are effectively subordinated in right of payment to all of the Company's existing and future senior secured debt and other obligations (including the credit facility) to the extent of the value of the collateral securing such debt; and
|
•
|
are structurally subordinated to all obligations of each of the Company's subsidiaries.
|
•
|
rank equal in right of payment with all of the Company's other existing and future unsecured and unsubordinated debt;
|
•
|
rank senior in right of payment to the Company's future debt and other obligations that are, by their terms, expressly subordinated in right of payment to the Senior Notes due 2027;
|
•
|
are effectively subordinated in right of payment to all of the Company's existing and future senior secured debt and other obligations (including the credit facility) to the extent of the value of the collateral securing such debt; and
|
•
|
are structurally subordinated to all obligations of each of the Company's subsidiaries.
|
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
1,136,720
|
|
|
$
|
1,243,852
|
|
|
$
|
82,907
|
|
|
$
|
98,675
|
|
Service cost
|
3,377
|
|
|
3,602
|
|
|
65
|
|
|
113
|
|
||||
Interest cost
|
41,341
|
|
|
36,070
|
|
|
3,042
|
|
|
2,718
|
|
||||
Plan participants' contribution
|
665
|
|
|
570
|
|
|
4,256
|
|
|
4,105
|
|
||||
Actuarial loss (gain)(1)
|
146,562
|
|
|
(69,602
|
)
|
|
(2,903
|
)
|
|
(6,353
|
)
|
||||
Net curtailment loss
|
64
|
|
|
113
|
|
|
—
|
|
|
—
|
|
||||
Impact of foreign currency changes
|
(2,210
|
)
|
|
(6,983
|
)
|
|
—
|
|
|
—
|
|
||||
Plan settlements
|
(436
|
)
|
|
(63
|
)
|
|
—
|
|
|
—
|
|
||||
Net benefits paid
|
(64,320
|
)
|
|
(70,839
|
)
|
|
(15,232
|
)
|
|
(16,351
|
)
|
||||
Benefit obligation at end of year
|
$
|
1,261,763
|
|
|
$
|
1,136,720
|
|
|
$
|
72,135
|
|
|
$
|
82,907
|
|
|
|
|
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
958,576
|
|
|
948,706
|
|
|
—
|
|
|
—
|
|
||||
Actual return (loss) on plan assets(2)
|
182,309
|
|
|
(36,468
|
)
|
|
—
|
|
|
—
|
|
||||
Employer contribution(3)
|
15,062
|
|
|
122,492
|
|
|
10,976
|
|
|
12,246
|
|
||||
Plan participants' contributions
|
665
|
|
|
570
|
|
|
4,256
|
|
|
4,105
|
|
||||
Plan settlements
|
(436
|
)
|
|
(63
|
)
|
|
—
|
|
|
—
|
|
||||
Impact of foreign currency changes
|
(694
|
)
|
|
(5,822
|
)
|
|
—
|
|
|
—
|
|
||||
Net benefits paid
|
(64,320
|
)
|
|
(70,839
|
)
|
|
(15,232
|
)
|
|
(16,351
|
)
|
||||
Fair value of plan assets at end of year
|
1,091,162
|
|
|
958,576
|
|
|
—
|
|
|
—
|
|
||||
Unfunded status at end of year
|
$
|
(170,601
|
)
|
|
$
|
(178,144
|
)
|
|
$
|
(72,135
|
)
|
|
$
|
(82,907
|
)
|
(1)
|
2019 actuarial losses and 2018 actuarial gains in the Company's pension benefit plans resulted from changes in discount rate assumptions. Changes in financial markets during 2019 including a decrease in corporate bond yield indices, resulted in an increase in benefit obligations. Changes in financial markets during 2018 including an increase in corporate bond yield indices, resulted in a decrease in benefit obligations.
|
(2)
|
The increase in return on plan assets in the Company's pension benefit plans in 2019 was primarily due to better-than-expected asset performance of U.S. and international equity securities.
|
(3)
|
The decrease in employer contributions to the Company's pension benefit plans in 2019 is due to additional planned contributions for the U.S. plan made during the prior year.
|
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Unfunded status recognized on the balance sheet:
|
|
|
|
|
|
|
|
||||||||
Prepaid benefit cost
|
$
|
27,704
|
|
|
$
|
22,738
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued benefit liability – current portion
|
(9,480
|
)
|
|
(9,390
|
)
|
|
(8,129
|
)
|
|
(8,725
|
)
|
||||
Accrued benefit liability – long-term portion
|
(188,825
|
)
|
|
(191,491
|
)
|
|
(64,006
|
)
|
|
(74,182
|
)
|
||||
|
$
|
(170,601
|
)
|
|
$
|
(178,143
|
)
|
|
$
|
(72,135
|
)
|
|
$
|
(82,907
|
)
|
|
|
|
|
|
|
|
|
||||||||
Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss
|
$
|
(358,484
|
)
|
|
$
|
(365,424
|
)
|
|
$
|
(11,284
|
)
|
|
$
|
(14,652
|
)
|
Net prior service benefit
|
291
|
|
|
351
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
(358,193
|
)
|
|
$
|
(365,073
|
)
|
|
$
|
(11,284
|
)
|
|
$
|
(14,652
|
)
|
|
Pension Benefits
|
||||||
|
2019
|
|
2018
|
||||
|
(Dollars in thousands)
|
||||||
Accumulated benefit obligations in excess of plan assets:
|
|
|
|
||||
Aggregate accumulated benefit obligation
|
$
|
1,093,503
|
|
|
$
|
986,084
|
|
Aggregate fair value of plan assets
|
903,556
|
|
|
792,427
|
|
||
|
|
|
|
||||
Projected benefit obligations in excess of plan assets:
|
|
|
|
||||
Aggregate projected benefit obligation
|
$
|
1,142,114
|
|
|
$
|
1,028,074
|
|
Aggregate fair value of plan assets
|
943,810
|
|
|
827,193
|
|
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost(1)
|
$
|
3,377
|
|
|
$
|
3,602
|
|
|
$
|
3,427
|
|
|
$
|
65
|
|
|
$
|
113
|
|
|
$
|
172
|
|
Interest cost
|
41,341
|
|
|
36,070
|
|
|
36,853
|
|
|
3,042
|
|
|
2,718
|
|
|
3,148
|
|
||||||
Expected return on plan assets(1)
|
(42,098
|
)
|
|
(48,830
|
)
|
|
(42,033
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service benefit
|
(61
|
)
|
|
(65
|
)
|
|
(62
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of actuarial loss
|
13,306
|
|
|
12,650
|
|
|
13,489
|
|
|
465
|
|
|
872
|
|
|
1,271
|
|
||||||
Curtailment loss
|
13
|
|
|
38
|
|
|
106
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net settlement (gain) loss
|
(56
|
)
|
|
(102
|
)
|
|
126
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic benefit cost
|
15,822
|
|
|
3,363
|
|
|
11,906
|
|
|
3,572
|
|
|
3,703
|
|
|
4,591
|
|
||||||
Changes in accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Actuarial loss (gain)
|
6,309
|
|
|
15,373
|
|
|
(9,785
|
)
|
|
(2,903
|
)
|
|
(6,354
|
)
|
|
(5,516
|
)
|
||||||
Amortization of prior service benefit
|
61
|
|
|
65
|
|
|
62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of actuarial loss
|
(13,306
|
)
|
|
(12,650
|
)
|
|
(13,489
|
)
|
|
(465
|
)
|
|
(872
|
)
|
|
(1,271
|
)
|
||||||
Net settlement gain (loss)
|
56
|
|
|
102
|
|
|
(126
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total recognized in accumulated other comprehensive loss
|
(6,880
|
)
|
|
2,890
|
|
|
(23,338
|
)
|
|
(3,368
|
)
|
|
(7,226
|
)
|
|
(6,787
|
)
|
||||||
Total recognized in net periodic benefit cost and accumulated other comprehensive loss
|
$
|
8,942
|
|
|
$
|
6,253
|
|
|
$
|
(11,432
|
)
|
|
$
|
204
|
|
|
$
|
(3,523
|
)
|
|
$
|
(2,196
|
)
|
(1)
|
Classification of service cost and expected return on plan assets related to U.S. and U.K. pension plans for 2017 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" to the 2018 and 2019 presentation requirements.
|
|
Pension Benefits
|
|
Postretirement Benefits
|
||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
Weighted-average assumptions used to determine net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
4.1%
|
|
3.4%
|
|
3.8%
|
|
4.2%
|
|
3.4%
|
|
3.7%
|
Expected long-term rate of return on plan assets
|
4.6%
|
|
5.4%
|
|
5.8%
|
|
|
|
|
|
|
Rate of compensation increase
|
3.4%
|
|
3.4%
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average assumptions used to determine benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
2.8%
|
|
4.1%
|
|
3.4%
|
|
2.8%
|
|
4.2%
|
|
3.4%
|
Rate of compensation increase
|
3.3%
|
|
3.4%
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assumed health care cost trend rates were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Health care trend rate assumed for next year
|
|
|
|
|
|
|
5.7%
|
|
5.9%
|
|
6.3%
|
Rate trend to which the cost trend is assumed to decline
|
|
|
|
|
|
|
4.4%
|
|
4.4%
|
|
4.4%
|
Year that rate reaches the ultimate trend rate
|
|
|
|
|
|
|
2037
|
|
2037
|
|
2037
|
|
Year Ended November 24, 2019
|
||||||||||||||
Asset Class
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Cash and cash equivalents
|
$
|
4,427
|
|
|
$
|
4,427
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities(1)
|
|
|
|
|
|
|
|
||||||||
U.S. large cap
|
93,019
|
|
|
—
|
|
|
93,019
|
|
|
—
|
|
||||
U.S. small cap
|
13,307
|
|
|
—
|
|
|
13,307
|
|
|
—
|
|
||||
International
|
115,607
|
|
|
—
|
|
|
115,607
|
|
|
—
|
|
||||
Fixed income securities(2)
|
808,546
|
|
|
—
|
|
|
808,546
|
|
|
—
|
|
||||
Other alternative investments
|
|
|
|
|
|
|
|
|
|
||||||
Real estate(3)
|
38,076
|
|
|
—
|
|
|
38,076
|
|
|
—
|
|
||||
Private equity(4)
|
289
|
|
|
—
|
|
|
—
|
|
|
289
|
|
||||
Hedge fund(5)
|
13,328
|
|
|
—
|
|
|
13,328
|
|
|
—
|
|
||||
Other(6)
|
4,564
|
|
|
—
|
|
|
4,564
|
|
|
—
|
|
||||
Total investments at fair value
|
$
|
1,091,163
|
|
|
$
|
4,427
|
|
|
$
|
1,086,447
|
|
|
$
|
289
|
|
|
Year Ended November 25, 2018
|
||||||||||||||
Asset Class
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Cash and cash equivalents
|
$
|
3,818
|
|
|
$
|
3,818
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity securities(1)
|
|
|
|
|
|
|
|
||||||||
U.S. large cap
|
91,663
|
|
|
—
|
|
|
91,663
|
|
|
—
|
|
||||
U.S. small cap
|
10,871
|
|
|
—
|
|
|
10,871
|
|
|
—
|
|
||||
International
|
86,974
|
|
|
—
|
|
|
86,974
|
|
|
—
|
|
||||
Fixed income securities(2)
|
714,034
|
|
|
—
|
|
|
714,034
|
|
|
—
|
|
||||
Other alternative investments
|
|
|
|
|
|
|
|
||||||||
Real estate(3)
|
35,265
|
|
|
—
|
|
|
35,265
|
|
|
—
|
|
||||
Private equity(4)
|
383
|
|
|
—
|
|
|
—
|
|
|
383
|
|
||||
Hedge fund(5)
|
11,389
|
|
|
—
|
|
|
11,389
|
|
|
—
|
|
||||
Other(6)
|
4,179
|
|
|
—
|
|
|
4,179
|
|
|
—
|
|
||||
Total investments at fair value
|
$
|
958,576
|
|
|
$
|
3,818
|
|
|
$
|
954,375
|
|
|
$
|
383
|
|
(1)
|
Primarily comprised of equity index funds that track various market indices.
|
(2)
|
Predominantly includes bond index funds that invest in long-term U.S. government and investment grade corporate bonds.
|
(3)
|
Primarily comprised of investments in U.S. Real Estate Investment Trusts.
|
(4)
|
Represents holdings in a diversified portfolio of private equity funds and direct investments in companies located primarily in North America. Fair values are determined by investment fund managers using primarily unobservable market data.
|
(5)
|
Primarily invested in a diversified portfolio of equities, bonds, alternatives and cash with a low tolerance for capital loss.
|
(6)
|
Primarily relates to accounts held and managed by a third-party insurance company for employee-participants in Belgium. Fair values are based on accumulated plan contributions plus a contractually-guaranteed return plus a share of any incremental investment fund profits.
|
|
Pension Benefits
|
|
Postretirement Benefits
|
|
Total
|
||||||
|
(Dollars in thousands)
|
||||||||||
2020
|
$
|
68,838
|
|
|
$
|
9,272
|
|
|
$
|
78,110
|
|
2021
|
69,039
|
|
|
8,570
|
|
|
77,609
|
|
|||
2022
|
69,622
|
|
|
8,131
|
|
|
77,753
|
|
|||
2023
|
69,379
|
|
|
7,612
|
|
|
76,991
|
|
|||
2024
|
70,185
|
|
|
6,966
|
|
|
77,151
|
|
|||
2025-2028
|
350,538
|
|
|
26,067
|
|
|
376,605
|
|
|
Service SARs
|
|
Performance SARs
|
||||||||||||||||||||||
|
Units
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life (Years)
|
|
Aggregate Intrinsic Value
|
|
Units
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Life (Years)
|
|
Aggregate Intrinsic Value
|
||||||||||
|
(Units and dollars in thousands, except weighted-average exercise price)
|
|
|
||||||||||||||||||||||
Outstanding at November 25, 2018(1)
|
17,871
|
|
|
$
|
6.36
|
|
|
3.4
|
|
|
|
|
9,217
|
|
|
$
|
6.05
|
|
|
3.1
|
|
|
|
||
Granted
|
1,009
|
|
|
14.93
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
||||
Exercised
|
(4,763
|
)
|
|
4.69
|
|
|
|
|
|
|
|
(2,462
|
)
|
|
4.76
|
|
|
|
|
|
|
||||
Forfeited
|
(45
|
)
|
|
13.3
|
|
|
|
|
|
|
|
—
|
|
|
4.31
|
|
|
|
|
|
|
||||
Performance adjustment
|
—
|
|
|
—
|
|
|
|
|
|
|
|
879
|
|
|
6.20
|
|
|
|
|
|
|
||||
Outstanding at November 24, 2019
|
14,072
|
|
|
$
|
7.51
|
|
|
3.3
|
|
|
|
|
7,634
|
|
|
$
|
6.49
|
|
|
2.5
|
|
|
|
||
Vested and expected to vest at November 24, 2019
|
14,072
|
|
|
$
|
7.51
|
|
|
3.3
|
|
$
|
133,359
|
|
|
7,634
|
|
|
$
|
6.49
|
|
|
2.5
|
|
$
|
80,176
|
|
Exercisable at November 24, 2019
|
10,494
|
|
|
$
|
6.74
|
|
|
2.5
|
|
$
|
107,609
|
|
|
7,634
|
|
|
$
|
6.49
|
|
|
2.5
|
|
$
|
80,176
|
|
(1)
|
All share and per-share data retroactively adjusted to reflect the ten-for-one stock split approved by the Company's stockholders in February 2019. Refer to Note 1 for more information.
|
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Aggregate intrinsic value of Service SARs exercised during the year
|
$
|
54,045
|
|
|
$
|
53,398
|
|
|
$
|
25,572
|
|
Aggregate intrinsic value of Performance SARs exercised during the year
|
$
|
27,776
|
|
|
$
|
6,777
|
|
|
$
|
883
|
|
|
Service SARs Granted
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Weighted-average grant date fair value(1)
|
$
|
4.49
|
|
|
$
|
2.61
|
|
|
$
|
1.61
|
|
|
|
|
|
|
|
||||||
Weighted-average assumptions:
|
|
|
|
|
|
||||||
Expected life (in years)
|
5.0
|
|
|
4.9
|
|
|
4.9
|
|
|||
Expected volatility
|
37.5
|
%
|
|
35.7
|
%
|
|
32.5
|
%
|
|||
Risk-free interest rate
|
2.5
|
%
|
|
2.5
|
%
|
|
1.9
|
%
|
|||
Expected dividend
|
2.0
|
%
|
|
2.5
|
%
|
|
2.7
|
%
|
(1)
|
All share and per-share data retroactively adjusted to reflect the ten-for-one stock split that was approved by the Company's stockholders in February 2019. Refer to Note 1 for more information.
|
|
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)
|
1,030
|
|
|
$
|
8.17
|
|
|
1.7
|
|
1,744
|
|
|
$
|
8.08
|
|
|
1.4
|
Granted
|
685
|
|
|
16.12
|
|
|
|
|
643
|
|
|
16.16
|
|
|
|
||
Vested
|
(110
|
)
|
|
8.80
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||
Granted Replacement Awards(2)
|
6,542
|
|
|
16.67
|
|
|
|
|
2,083
|
|
|
22.71
|
|
|
|
||
Forfeited
|
(368
|
)
|
|
16.51
|
|
|
|
|
(159
|
)
|
|
14.93
|
|
|
|
||
Outstanding at November 24, 2019
|
7,779
|
|
|
$
|
15.56
|
|
|
1.6
|
|
4,311
|
|
|
$
|
16.24
|
|
|
1.0
|
(1)
|
All share and per-share data retroactively adjusted to reflect the ten-for-one stock split approved by the Company's stockholders in February 2019. Refer to Note 1 for more information.
|
(2)
|
In connection with the IPO, the Company’s Board of Directors approved the cancellation of the majority of the outstanding unvested cash-settled RSUs and their concurrent replacement with similar stock-settled RSUs. Other than the form of settlement, all other terms of the awards, including their vesting schedules are the same. Refer to Note 1 for more information.
|
|
Performance RSUs Granted as Replacement Awards
|
|
Performance RSUs Granted
|
||||||||||||
|
2019
|
|
2019
|
|
2018
|
|
2017
|
||||||||
Weighted-average grant date fair value(1)
|
$
|
28.78
|
|
|
$
|
17.95
|
|
|
$
|
10.45
|
|
|
$
|
8.23
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average assumptions:
|
|
|
|
|
|
|
|
||||||||
Expected life (in years)
|
1.5
|
|
|
2.8
|
|
|
3.0
|
|
|
3.0
|
|
||||
Expected volatility
|
36.3
|
%
|
|
37.5
|
%
|
|
37.2
|
%
|
|
33.5
|
%
|
||||
Risk-free interest rate
|
2.5
|
%
|
|
2.3
|
%
|
|
2.3
|
%
|
|
1.4
|
%
|
||||
Expected dividend
|
1.7
|
%
|
|
1.9
|
%
|
|
2.5
|
%
|
|
2.7
|
%
|
(1)
|
All share and per-share data retroactively adjusted to reflect the ten-for-one stock split approved by the Company's stockholders in February 2019. Refer to Note 1 for more information.
|
|
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(1)
|
9,100
|
|
|
$
|
7.59
|
|
|
$
|
14.60
|
|
|
1,710
|
|
|
$
|
8.22
|
|
|
$
|
14.60
|
|
Granted
|
1,821
|
|
|
14.95
|
|
|
|
|
504
|
|
|
14.88
|
|
|
|
||||||
Vested
|
(3,617
|
)
|
|
6.87
|
|
|
|
|
—
|
|
|
—
|
|
|
|
||||||
Canceled(2)
|
(6,542
|
)
|
|
9.81
|
|
|
|
|
(2,083
|
)
|
|
9.69
|
|
|
|
||||||
Performance adjustment
|
—
|
|
|
—
|
|
|
|
|
4
|
|
|
6.90
|
|
|
|
||||||
Forfeited
|
(218
|
)
|
|
8.57
|
|
|
|
|
(64
|
)
|
|
9.45
|
|
|
|
||||||
Outstanding at November 24, 2019
|
544
|
|
|
$
|
9.96
|
|
|
$
|
16.99
|
|
|
71
|
|
|
$
|
11.38
|
|
|
$
|
16.99
|
|
Expected to vest at November 24, 2019
|
518
|
|
|
$
|
9.84
|
|
|
$
|
16.99
|
|
|
65
|
|
|
$
|
11.23
|
|
|
$
|
16.99
|
|
(1)
|
All share and per-share data retroactively adjusted to reflect the ten-for-one stock split approved by the Company's stockholders in February 2019. Refer to Note 1 for more information.
|
(2)
|
In connection with the IPO, the Company’s Board of Directors approved the cancellation of the majority of the outstanding unvested cash-settled RSUs and their concurrent replacement with similar stock-settled RSUs. Other than the form of settlement, all other terms of the awards, including their vesting schedules are the same. Refer to Note 1 for more information.
|
|
Future Minimum Payments
|
||
|
(Dollars in thousands)
|
||
2020
|
$
|
234,092
|
|
2021
|
203,483
|
|
|
2022
|
174,536
|
|
|
2023
|
140,278
|
|
|
2024
|
111,176
|
|
|
Thereafter
|
284,114
|
|
|
Total future minimum lease payments
|
$
|
1,147,679
|
|
|
Levi Strauss & Co.
|
|
Noncontrolling Interest
|
|
|
||||||||||||||||||||||
|
Pension and Postretirement Benefits
|
|
Translation Adjustments
|
|
Unrealized Gain (Loss) on Marketable Securities
|
|
|
|
|
|
|
||||||||||||||||
|
|
Net Investment Hedges
|
|
Foreign Currency Translation
|
|
|
Total
|
|
Foreign Currency Translation
|
|
Totals
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Accumulated other comprehensive (loss) income at November 27, 2016
|
$
|
(252,027
|
)
|
|
$
|
(18,757
|
)
|
|
$
|
(158,498
|
)
|
|
$
|
1,968
|
|
|
$
|
(427,314
|
)
|
|
$
|
9,433
|
|
|
$
|
(417,881
|
)
|
Gross changes
|
30,125
|
|
|
(59,945
|
)
|
|
40,151
|
|
|
3,379
|
|
|
13,710
|
|
|
105
|
|
|
13,815
|
|
|||||||
Tax
|
(10,279
|
)
|
|
23,084
|
|
|
(2,283
|
)
|
|
(1,299
|
)
|
|
9,223
|
|
|
—
|
|
|
9,223
|
|
|||||||
Other comprehensive income (loss), net of tax
|
19,846
|
|
|
(36,861
|
)
|
|
37,868
|
|
|
2,080
|
|
|
22,933
|
|
|
105
|
|
|
23,038
|
|
|||||||
Accumulated other comprehensive (loss) income at November 26, 2017
|
(232,181
|
)
|
|
(55,618
|
)
|
|
(120,630
|
)
|
|
4,048
|
|
|
(404,381
|
)
|
|
9,538
|
|
|
(394,843
|
)
|
|||||||
Gross changes
|
4,336
|
|
|
21,280
|
|
|
(43,479
|
)
|
|
(1,488
|
)
|
|
(19,351
|
)
|
|
(234
|
)
|
|
(19,585
|
)
|
|||||||
Tax
|
(1,178
|
)
|
|
(5,549
|
)
|
|
5,487
|
|
|
388
|
|
|
(852
|
)
|
|
—
|
|
|
(852
|
)
|
|||||||
Other comprehensive (loss) income, net of tax
|
3,158
|
|
|
15,731
|
|
|
(37,992
|
)
|
|
(1,100
|
)
|
|
(20,203
|
)
|
|
(234
|
)
|
|
(20,437
|
)
|
|||||||
Accumulated other comprehensive (loss) income at November 25, 2018
|
(229,023
|
)
|
|
(39,887
|
)
|
|
(158,622
|
)
|
|
2,948
|
|
|
(424,584
|
)
|
|
9,304
|
|
|
(415,280
|
)
|
|||||||
Gross changes
|
10,248
|
|
|
19,026
|
|
|
(7,562
|
)
|
|
4,362
|
|
|
26,074
|
|
|
312
|
|
|
26,386
|
|
|||||||
Tax
|
(2,084
|
)
|
|
(4,097
|
)
|
|
727
|
|
|
(1,022
|
)
|
|
(6,476
|
)
|
|
—
|
|
|
(6,476
|
)
|
|||||||
Other comprehensive (loss) income, net of tax
|
8,164
|
|
|
14,929
|
|
|
(6,835
|
)
|
|
3,340
|
|
|
19,598
|
|
|
312
|
|
|
19,910
|
|
|||||||
Accumulated other comprehensive (loss) income at November 24, 2019
|
$
|
(220,859
|
)
|
|
$
|
(24,958
|
)
|
|
$
|
(165,457
|
)
|
|
$
|
6,288
|
|
|
$
|
(404,986
|
)
|
|
$
|
9,616
|
|
|
$
|
(395,370
|
)
|
|
Year Ended November 24, 2019
|
||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues by channel:
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
2,181,168
|
|
|
$
|
981,308
|
|
|
$
|
498,043
|
|
|
$
|
3,660,519
|
|
Direct-to-consumer
|
875,856
|
|
|
786,748
|
|
|
439,964
|
|
|
2,102,568
|
|
||||
Total net revenues
|
$
|
3,057,024
|
|
|
$
|
1,768,056
|
|
|
$
|
938,007
|
|
|
$
|
5,763,087
|
|
|
Year Ended November 25, 2018
|
||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues by channel:
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
2,209,897
|
|
|
$
|
925,317
|
|
|
$
|
464,953
|
|
|
$
|
3,600,167
|
|
Direct-to-consumer
|
832,767
|
|
|
720,919
|
|
|
421,587
|
|
|
1,975,273
|
|
||||
Total net revenues
|
$
|
3,042,664
|
|
|
$
|
1,646,236
|
|
|
$
|
886,540
|
|
|
$
|
5,575,440
|
|
|
Year Ended November 26, 2017
|
||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Net revenues by channel:
|
|
|
|
|
|
|
|
||||||||
Wholesale
|
$
|
2,050,975
|
|
|
$
|
730,039
|
|
|
$
|
450,063
|
|
|
$
|
3,231,077
|
|
Direct-to-consumer
|
723,075
|
|
|
582,237
|
|
|
367,641
|
|
|
1,672,953
|
|
||||
Total net revenues
|
$
|
2,774,050
|
|
|
$
|
1,312,276
|
|
|
$
|
817,704
|
|
|
$
|
4,904,030
|
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in thousands)
|
||||||||||
Foreign exchange management gains (losses)(1)
|
$
|
126
|
|
|
$
|
11,167
|
|
|
$
|
(41,167
|
)
|
Foreign currency transaction (losses) gains(2)
|
(6,231
|
)
|
|
(7,498
|
)
|
|
7,853
|
|
|||
Interest income
|
17,190
|
|
|
9,400
|
|
|
3,380
|
|
|||
Investment income
|
1,509
|
|
|
734
|
|
|
629
|
|
|||
Other(3)
|
(10,577
|
)
|
|
1,104
|
|
|
(10,585
|
)
|
|||
Total other income (expense), net(3)
|
$
|
2,017
|
|
|
$
|
14,907
|
|
|
$
|
(39,890
|
)
|
(1)
|
Gains and losses on forward foreign exchange contracts primarily result from currency fluctuations relative to negotiated contract rates. Gains in 2018 were primarily due to favorable currency fluctuations relative to negotiated contract rates on positions to sell the Euro and the British Pound. Losses in 2017 were primarily due to unfavorable currency fluctuations relative to negotiated contract rates on positions to sell the Mexican Peso, the Euro and the British Pound.
|
(2)
|
Foreign currency transaction gains and losses reflect the impact of foreign currency fluctuation on the Company's foreign currency denominated balances. Gains in 2017 were primarily due to the strengthening of the Mexican Peso and Euro against the US dollar.
|
(3)
|
The amounts in Other income (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. The 2018 gain in Other is due to pension benefits yielding a higher expected return on assets and lower interest cost.
|
|
Year Ended
|
||||||||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||
Income tax expense at U.S. federal statutory rate
|
$
|
100,293
|
|
21.0
|
%
|
|
$
|
111,755
|
|
22.4
|
%
|
|
$
|
122,073
|
|
35.0
|
%
|
State income taxes, net of U.S. federal impact
|
4,496
|
|
1.0
|
%
|
|
11,102
|
|
2.2
|
%
|
|
7,598
|
|
2.2
|
%
|
|||
Change in valuation allowance
|
(81
|
)
|
—
|
%
|
|
(9,239
|
)
|
(1.9
|
)%
|
|
(9,624
|
)
|
(2.8
|
)%
|
|||
Impact of foreign operations(1)(2)
|
7,132
|
|
1.5
|
%
|
|
(17,149
|
)
|
(3.4
|
)%
|
|
(43,806
|
)
|
(12.6
|
)%
|
|||
Foreign-derived intangible income benefit ("FDII")
|
(11,918
|
)
|
(2.5
|
)%
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|||
Reassessment of tax liabilities
|
(6,480
|
)
|
(1.4
|
)%
|
|
(12,552
|
)
|
(2.5
|
)%
|
|
(5,553
|
)
|
(1.6
|
)%
|
|||
Stock-based compensation(3)
|
(15,730
|
)
|
(3.3
|
)%
|
|
(10,715
|
)
|
(2.1
|
)%
|
|
(5,602
|
)
|
(1.6
|
)%
|
|||
Other, including non-deductible expenses(1)
|
4,892
|
|
1.0
|
%
|
|
(1,783
|
)
|
(0.4
|
)%
|
|
(861
|
)
|
(0.2
|
)%
|
|||
Impact of US Tax Act
|
—
|
|
—
|
%
|
|
143,359
|
|
28.7
|
%
|
|
—
|
|
—
|
%
|
|||
Total
|
$
|
82,604
|
|
17.3
|
%
|
|
$
|
214,778
|
|
43.0
|
%
|
|
$
|
64,225
|
|
18.4
|
%
|
(1)
|
Foreign branches are included in the Impact of foreign operations. 2017 and 2018 have been conformed to the November 24, 2019 presentation.
|
(3)
|
Classification of stock-based compensation for 2017 has been conformed to the November 25, 2018 and November 24, 2019 presentation.
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Domestic
|
$
|
120,692
|
|
|
$
|
151,229
|
|
|
$
|
67,407
|
|
Foreign
|
356,892
|
|
|
348,793
|
|
|
281,374
|
|
|||
Total income before income taxes
|
$
|
477,584
|
|
|
$
|
500,022
|
|
|
$
|
348,781
|
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
U.S. Federal
|
|
|
|
|
|
||||||
Current
|
$
|
13,182
|
|
|
$
|
12,468
|
|
|
$
|
7,936
|
|
Deferred
|
(22,319
|
)
|
|
126,210
|
|
|
1,240
|
|
|||
|
$
|
(9,137
|
)
|
|
$
|
138,678
|
|
|
$
|
9,176
|
|
U.S. State
|
|
|
|
|
|
||||||
Current
|
$
|
(2,939
|
)
|
|
$
|
6,447
|
|
|
$
|
3,441
|
|
Deferred
|
1,002
|
|
|
4,655
|
|
|
4,157
|
|
|||
|
$
|
(1,937
|
)
|
|
$
|
11,102
|
|
|
$
|
7,598
|
|
Foreign
|
|
|
|
|
|
||||||
Current
|
$
|
87,324
|
|
|
$
|
61,605
|
|
|
$
|
53,334
|
|
Deferred
|
6,354
|
|
|
3,393
|
|
|
(5,883
|
)
|
|||
|
$
|
93,678
|
|
|
$
|
64,998
|
|
|
$
|
47,451
|
|
Consolidated
|
|
|
|
|
|
||||||
Current
|
$
|
97,567
|
|
|
$
|
80,520
|
|
|
$
|
64,711
|
|
Deferred
|
(14,963
|
)
|
|
134,258
|
|
|
(486
|
)
|
|||
Total income tax expense
|
$
|
82,604
|
|
|
$
|
214,778
|
|
|
$
|
64,225
|
|
|
November 24, 2019
|
|
November 25, 2018
|
||||
|
(Dollars in thousands)
|
||||||
Deferred tax assets
|
|
|
|
||||
Foreign tax credit carryforwards
|
$
|
157,379
|
|
|
$
|
133,620
|
|
State net operating loss carryforwards
|
10,070
|
|
|
9,708
|
|
||
Foreign net operating loss carryforwards
|
45,047
|
|
|
52,327
|
|
||
Employee compensation and benefit plans(1)
|
141,489
|
|
|
147,347
|
|
||
Advance royalties
|
15,213
|
|
|
22,366
|
|
||
Accrued liabilities(1)
|
24,648
|
|
|
26,167
|
|
||
Sales returns and allowances(1)
|
22,494
|
|
|
25,715
|
|
||
Inventory(1)
|
11,635
|
|
|
13,030
|
|
||
Property, plant and equipment(1)
|
12,266
|
|
|
11,823
|
|
||
Unrealized foreign exchange gains or losses
|
5,527
|
|
|
5,467
|
|
||
Other(1)
|
9,557
|
|
|
8,718
|
|
||
Total gross deferred tax assets
|
455,325
|
|
|
456,288
|
|
||
Less: Valuation allowance
|
(19,611
|
)
|
|
(21,970
|
)
|
||
Deferred tax assets, net of valuation allowance
|
435,714
|
|
|
434,318
|
|
||
Deferred tax liabilities
|
|
|
|
||||
U.S. Branches(1)
|
(27,134
|
)
|
|
(33,735
|
)
|
||
Residual tax liability on unremitted foreign earnings
|
(5,672
|
)
|
|
(5,737
|
)
|
||
Total deferred tax liabilities
|
(32,806
|
)
|
|
(39,472
|
)
|
||
Total net deferred tax assets
|
$
|
402,908
|
|
|
$
|
394,846
|
|
(1)
|
Certain components of net deferred tax assets for 2018 have been conformed to reflect the adoption of Tax Act guidance updates issued subsequent to November 25, 2018.
|
|
Valuation Allowance at November 25, 2018
|
|
Changes in Related Gross Deferred Tax Asset
|
|
Change / (Release)
|
|
Valuation Allowance at November 24, 2019
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
U.S. state net operating loss carryforwards
|
$
|
2,096
|
|
|
$
|
(494
|
)
|
|
$
|
938
|
|
|
$
|
2,540
|
|
Foreign net operating loss carryforwards and other foreign deferred tax assets
|
19,874
|
|
|
(1,784
|
)
|
|
(1,019
|
)
|
|
17,071
|
|
||||
|
$
|
21,970
|
|
|
$
|
(2,278
|
)
|
|
$
|
(81
|
)
|
|
$
|
19,611
|
|
|
November 24,
2019 |
|
November 25,
2018 |
||||
|
(Dollars in thousands)
|
||||||
Unrecognized tax benefits beginning balance
|
$
|
26,594
|
|
|
$
|
33,786
|
|
Increases related to current year tax positions
|
2,432
|
|
|
3,657
|
|
||
Increases related to tax positions from prior years
|
3,696
|
|
|
5,686
|
|
||
Decreases related to tax positions from prior years
|
(3,222
|
)
|
|
(13,731
|
)
|
||
Settlement with tax authorities
|
7,119
|
|
|
—
|
|
||
Lapses of statutes of limitation
|
(45
|
)
|
|
(1,811
|
)
|
||
Other, including foreign currency translation
|
(15
|
)
|
|
(993
|
)
|
||
Unrecognized tax benefits ending balance
|
$
|
36,559
|
|
|
$
|
26,594
|
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to Levi Strauss & Co.
|
$
|
394,612
|
|
|
$
|
283,142
|
|
|
$
|
281,403
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding - basic
|
389,082,277
|
|
|
377,139,847
|
|
|
376,177,350
|
|
|||
Dilutive effect of stock awards
|
19,283,625
|
|
|
11,467,514
|
|
|
8,160,980
|
|
|||
Weighted-average common shares outstanding - diluted
|
408,365,902
|
|
|
388,607,361
|
|
|
384,338,330
|
|
|||
Earnings per common share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
1.01
|
|
|
$
|
0.75
|
|
|
$
|
0.75
|
|
Diluted
|
$
|
0.97
|
|
|
$
|
0.73
|
|
|
$
|
0.73
|
|
Anti-dilutive securities excluded from calculation of diluted earnings per share attributable to common stockholders
|
174,923
|
|
|
755,550
|
|
|
9,045,540
|
|
|
Year Ended
|
||||||||||
|
November 24,
2019 |
|
November 25,
2018 |
|
November 26,
2017 |
||||||
|
(Dollars in thousands)
|
||||||||||
Net revenues:
|
|
|
|
|
|
||||||
Americas
|
$
|
3,057,024
|
|
|
$
|
3,042,664
|
|
|
$
|
2,774,050
|
|
Europe
|
1,768,056
|
|
|
1,646,236
|
|
|
1,312,276
|
|
|||
Asia
|
938,007
|
|
|
886,540
|
|
|
817,704
|
|
|||
Total net revenues
|
$
|
5,763,087
|
|
|
$
|
5,575,440
|
|
|
$
|
4,904,030
|
|
Operating income:
|
|
|
|
|
|
||||||
Americas
|
$
|
545,084
|
|
|
$
|
551,380
|
|
|
$
|
529,310
|
|
Europe
|
353,082
|
|
|
292,903
|
|
|
198,662
|
|
|||
Asia
|
85,824
|
|
|
86,573
|
|
|
78,257
|
|
|||
Regional operating income
|
983,990
|
|
|
930,856
|
|
|
806,229
|
|
|||
Corporate expenses(1)(2)
|
417,315
|
|
|
390,445
|
|
|
326,162
|
|
|||
Total operating income
|
566,675
|
|
|
540,411
|
|
|
480,067
|
|
|||
Interest expense
|
(66,248
|
)
|
|
(55,296
|
)
|
|
(68,603
|
)
|
|||
Underwriter commission paid on behalf of selling stockholders
|
(24,860
|
)
|
|
—
|
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(22,793
|
)
|
|||
Other income (expense), net(2)
|
2,017
|
|
|
14,907
|
|
|
(39,890
|
)
|
|||
Income before income taxes
|
$
|
477,584
|
|
|
$
|
500,022
|
|
|
$
|
348,781
|
|
(2)
|
The amounts in Corporate expenses and Other income (expense), net prior to fiscal year 2019 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.
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Depreciation and amortization expense:
|
|
|
|
|
|
||||||
Americas
|
$
|
45,884
|
|
|
$
|
43,478
|
|
|
$
|
37,802
|
|
Europe
|
23,595
|
|
|
22,658
|
|
|
17,479
|
|
|||
Asia
|
12,110
|
|
|
10,750
|
|
|
9,836
|
|
|||
Corporate
|
42,353
|
|
|
43,319
|
|
|
52,270
|
|
|||
Total depreciation and amortization expense
|
$
|
123,942
|
|
|
$
|
120,205
|
|
|
$
|
117,387
|
|
|
November 24, 2019
|
||||||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Unallocated
|
|
Consolidated Total
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade receivables, net
|
$
|
457,979
|
|
|
$
|
176,962
|
|
|
$
|
130,073
|
|
|
$
|
17,832
|
|
|
$
|
782,846
|
|
Inventories
|
456,611
|
|
|
180,949
|
|
|
157,892
|
|
|
88,740
|
|
|
884,192
|
|
|||||
All other assets
|
—
|
|
|
—
|
|
|
—
|
|
|
2,565,380
|
|
|
2,565,380
|
|
|||||
Total assets
|
|
|
|
|
|
|
|
|
$
|
4,232,418
|
|
|
November 25, 2018
|
||||||||||||||||||
|
Americas
|
|
Europe
|
|
Asia
|
|
Unallocated
|
|
Consolidated Total
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade receivables, net
|
$
|
362,825
|
|
|
$
|
102,989
|
|
|
$
|
54,266
|
|
|
$
|
14,084
|
|
|
$
|
534,164
|
|
Inventories
|
468,258
|
|
|
188,430
|
|
|
148,335
|
|
|
78,750
|
|
|
883,773
|
|
|||||
All other assets
|
—
|
|
|
—
|
|
|
—
|
|
|
2,124,723
|
|
|
2,124,723
|
|
|||||
Total assets
|
|
|
|
|
|
|
|
|
$
|
3,542,660
|
|
|
Year Ended
|
||||||||||
|
November 24, 2019
|
|
November 25, 2018
|
|
November 26, 2017
|
||||||
|
(Dollars in thousands)
|
||||||||||
Net revenues:
|
|
|
|
|
|
||||||
United States
|
$
|
2,525,325
|
|
|
$
|
2,546,907
|
|
|
$
|
2,347,860
|
|
Foreign countries
|
3,237,762
|
|
|
3,028,533
|
|
|
2,556,170
|
|
|||
Total net revenues
|
$
|
5,763,087
|
|
|
$
|
5,575,440
|
|
|
$
|
4,904,030
|
|
|
|
|
|
|
|
||||||
Net deferred tax assets:
|
|
|
|
|
|
||||||
United States
|
$
|
327,980
|
|
|
$
|
313,644
|
|
|
$
|
450,270
|
|
Foreign countries
|
79,925
|
|
|
84,147
|
|
|
87,653
|
|
|||
Total net deferred tax assets
|
$
|
407,905
|
|
|
$
|
397,791
|
|
|
$
|
537,923
|
|
|
|
|
|
|
|
||||||
Long-lived assets:
|
|
|
|
|
|
||||||
United States
|
$
|
376,883
|
|
|
$
|
335,705
|
|
|
$
|
312,656
|
|
Foreign countries
|
194,762
|
|
|
154,767
|
|
|
141,660
|
|
|||
Total long-lived assets
|
$
|
571,645
|
|
|
$
|
490,472
|
|
|
$
|
454,316
|
|
Year Ended November 24, 2019
|
First
Quarter
|
|
Second Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||
Net revenues
|
$
|
1,434,458
|
|
|
$
|
1,312,940
|
|
|
$
|
1,447,081
|
|
|
$
|
1,568,608
|
|
Cost of goods sold
|
651,650
|
|
|
612,517
|
|
|
680,335
|
|
|
717,212
|
|
||||
Gross profit
|
782,808
|
|
|
700,423
|
|
|
766,746
|
|
|
851,396
|
|
||||
Selling, general and administrative expenses
|
581,896
|
|
|
637,525
|
|
|
595,528
|
|
|
719,749
|
|
||||
Operating income
|
200,912
|
|
|
62,898
|
|
|
171,218
|
|
|
131,647
|
|
||||
Interest expense
|
(17,544
|
)
|
|
(15,126
|
)
|
|
(15,292
|
)
|
|
(18,286
|
)
|
||||
Underwriter commission paid on behalf of selling
|
—
|
|
|
(24,860
|
)
|
|
—
|
|
|
—
|
|
||||
Other (expense) income, net
|
(1,646
|
)
|
|
3,166
|
|
|
(4,369
|
)
|
|
4,866
|
|
||||
Income before income taxes
|
181,722
|
|
|
26,078
|
|
|
151,557
|
|
|
118,227
|
|
||||
Income tax expense (benefit)(1)
|
35,271
|
|
|
(2,429
|
)
|
|
27,340
|
|
|
22,422
|
|
||||
Net income
|
146,451
|
|
|
28,507
|
|
|
124,217
|
|
|
95,805
|
|
||||
Net loss (income) attributable to noncontrolling interest
|
126
|
|
|
(277
|
)
|
|
292
|
|
|
(509
|
)
|
||||
Net income attributable to Levi Strauss & Co.
|
$
|
146,577
|
|
|
$
|
28,230
|
|
|
$
|
124,509
|
|
|
$
|
95,296
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share attributable to common stockholders(2):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.39
|
|
|
$
|
0.07
|
|
|
$
|
0.32
|
|
|
$
|
0.24
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.07
|
|
|
$
|
0.30
|
|
|
$
|
0.23
|
|
Weighted-average common shares outstanding - diluted
|
|
|
|
|
|
|
|
||||||||
Basic
|
377,077,111
|
|
|
389,518,461
|
|
|
394,169,688
|
|
|
394,670,867
|
|
||||
Diluted
|
393,234,825
|
|
|
409,332,997
|
|
|
413,639,749
|
|
|
411,984,817
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per share
|
$
|
0.29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.01
|
|
(1)
|
The Income tax benefit in the second quarter is due to lower income taxes from less operating income and an excess tax benefit recognized related to the exercise of employee stock-based compensation.
|
(2)
|
The sum of the quarterly earnings per share may not equal the full-year amount, as the computations of the weighted-average number of common basic and diluted shares outstanding for each quarter and the full year are performed independently.
|
Year Ended November 25, 2018
|
First
Quarter
|
|
Second Quarter
|
|
Third
Quarter |
|
Fourth
Quarter
|
||||||||
|
(Dollars in thousands, except per share amounts)
|
||||||||||||||
Net revenues
|
$
|
1,343,685
|
|
|
$
|
1,245,742
|
|
|
$
|
1,394,153
|
|
|
$
|
1,591,860
|
|
Cost of goods sold
|
605,561
|
|
|
574,865
|
|
|
652,591
|
|
|
744,448
|
|
||||
Gross profit
|
738,124
|
|
|
670,877
|
|
|
741,562
|
|
|
847,412
|
|
||||
Selling, general and administrative expenses(2)
|
563,202
|
|
|
593,595
|
|
|
582,146
|
|
|
718,621
|
|
||||
Operating income
|
174,922
|
|
|
77,282
|
|
|
159,416
|
|
|
128,791
|
|
||||
Interest expense
|
(15,497
|
)
|
|
(14,465
|
)
|
|
(15,697
|
)
|
|
(9,637
|
)
|
||||
Other (expense) income, net(2)
|
(10,400
|
)
|
|
12,895
|
|
|
(3,839
|
)
|
|
16,251
|
|
||||
Income before income taxes
|
149,025
|
|
|
75,712
|
|
|
139,880
|
|
|
135,405
|
|
||||
Income tax expense (benefit)(3)
|
167,654
|
|
|
(1,320
|
)
|
|
10,299
|
|
|
38,145
|
|
||||
Net (loss) income
|
(18,629
|
)
|
|
77,032
|
|
|
129,581
|
|
|
97,260
|
|
||||
Net (income) loss attributable to noncontrolling interest
|
(383
|
)
|
|
(2,100
|
)
|
|
543
|
|
|
(162
|
)
|
||||
Net (loss) income attributable to Levi Strauss & Co.
|
$
|
(19,012
|
)
|
|
$
|
74,932
|
|
|
$
|
130,124
|
|
|
$
|
97,098
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share attributable to common stockholders(1):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.05
|
)
|
|
$
|
0.20
|
|
|
$
|
0.34
|
|
|
$
|
0.26
|
|
Diluted
|
$
|
(0.05
|
)
|
|
$
|
0.19
|
|
|
$
|
0.33
|
|
|
$
|
0.25
|
|
Weighted-average common shares outstanding - diluted
|
|
|
|
|
|
|
|
||||||||
Basic
|
376,165,783
|
|
|
377,132,162
|
|
|
377,742,492
|
|
|
376,968,560
|
|
||||
Diluted
|
376,165,783
|
|
|
387,764,580
|
|
|
390,586,032
|
|
|
391,088,937
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per share
|
$
|
0.24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
The sum of the quarterly earnings per share may not equal the full-year amount, as the computations of the weighted-average number of common basic and diluted shares outstanding for each quarter and the full year are performed independently.
|
(2)
|
The amounts in Selling, general and administrative expenses and Other income (expense), net in 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" and include non-service cost component of net periodic benefit costs. Refer to Note 1 for more information.
|
(3)
|
The Income tax expense in the first quarter is due to the one-time tax charge recorded in relation to the newly enacted Tax Act. The Income tax benefit in the second quarter is due to lower income taxes from less operating income and the release of tax reserves as tax audits were finalized.
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
Item 9B.
|
OTHER INFORMATION
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Item 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
|
|
Incorporated by Reference
|
|
|||
Exhibit Number
|
Description of Document
|
Form
|
SEC File No.
|
Exhibit
|
Filing Date
|
Filed Herewith
|
3.1
|
8-K
|
001-06631
|
3.1
|
3/25/2019
|
|
|
3.2
|
8-K
|
001-06631
|
3.2
|
3/25/2019
|
|
|
4.1
|
Reference is made to Exhibits 3.1 through 3.2
|
|
|
|
|
|
4.2
|
S-1/A
|
333-229630
|
4.1
|
3/11/2019
|
|
|
4.3
|
S-1
|
333-229630
|
4.2
|
2/13/2019
|
|
|
4.4
|
S-1
|
333-229630
|
4.3
|
2/13/2019
|
|
|
4.5
|
S-1
|
333-229630
|
4.4
|
2/13/2019
|
|
|
4.6
|
S-1
|
333-229630
|
4.5
|
2/13/2019
|
|
|
4.7
|
S-1/A
|
333-229630
|
4.6
|
3/6/2019
|
|
|
4.8
|
|
|
|
|
X
|
|
10.1*
|
S-1
|
333-229630
|
10.3
|
2/13/2019
|
|
10.2*
|
S-1
|
333-229630
|
10.4
|
2/13/2019
|
|
|
10.3*
|
S-1
|
333-229630
|
10.5
|
2/13/2019
|
|
|
10.4*
|
S-1
|
333-229630
|
10.6
|
2/13/2019
|
|
|
10.5*
|
S-1
|
333-229630
|
10.7
|
2/13/2019
|
|
|
10.6*
|
S-1/A
|
333-229630
|
10.8
|
3/11/2019
|
|
|
10.7*
|
S-1/A
|
333-229630
|
10.9
|
3/11/2019
|
|
|
10.8
|
|
|
|
|
X
|
|
10.9
|
|
|
|
|
X
|
|
10.10
|
|
|
|
|
X
|
|
10.11
|
|
|
|
|
X
|
|
10.12
|
|
|
|
|
X
|
|
10.13
|
|
|
|
|
X
|
|
10.14*
|
S-1
|
333-229630
|
10.10
|
2/13/2019
|
|
|
10.15*
|
S-1
|
333-229630
|
10.11
|
2/13/2019
|
|
|
10.16*
|
S-1
|
333-229630
|
10.12
|
2/13/2019
|
|
|
10.17*
|
S-1
|
333-229630
|
10.13
|
2/13/2019
|
|
|
10.18*
|
S-1
|
333-229630
|
10.14
|
2/13/2019
|
|
|
10.19**
|
|
|
|
|
X
|
|
10.20*
|
S-1
|
333-229630
|
10.15
|
2/13/2019
|
|
|
10.21*
|
S-1
|
333-229630
|
10.16
|
2/13/2019
|
|
|
10.22*
|
S-1
|
333-229630
|
10.17
|
2/13/2019
|
|
|
10.23*
|
S-1
|
333-229630
|
10.18
|
2/13/2019
|
|
|
10.24*
|
S-1
|
333-229630
|
10.19
|
2/13/2019
|
|
|
10.25*
|
S-1
|
333-229630
|
10.20
|
2/13/2019
|
|
|
10.26*
|
S-1
|
333-229630
|
10.21
|
2/13/2019
|
|
10.27*
|
S-1
|
333-229630
|
10.22
|
2/13/2019
|
|
|
10.28*
|
S-1
|
333-229630
|
10.23
|
2/13/2019
|
|
|
10.29*
|
S-1
|
333-229630
|
10.24
|
2/13/2019
|
|
|
10.30*
|
S-1
|
333-229630
|
10.25
|
2/13/2019
|
|
|
10.31*
|
S-1
|
333-229630
|
10.26
|
2/13/2019
|
|
|
10.32
|
S-1
|
333-229630
|
10.27
|
2/13/2019
|
|
|
10.33
|
S-1
|
333-229630
|
10.28
|
2/13/2019
|
|
|
10.34
|
S-1
|
333-229630
|
10.29
|
2/13/2019
|
|
|
10.35
|
S-1
|
333-229630
|
10.30
|
2/13/2019
|
|
|
10.36
|
S-1
|
333-229630
|
10.31
|
2/13/2019
|
|
|
10.37*
|
10-Q
|
001-06631
|
10.5
|
7/9/2019
|
|
|
10.38*
|
10-Q
|
001-00631
|
10.1
|
10/8/2019
|
|
|
21.1
|
|
|
|
|
X
|
|
23.1
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
X
|
|
32.1†
|
|
|
|
|
X
|
|
101.INS
|
XBRL Instance Document
|
|
|
|
|
X
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
X
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
X
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
X
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
X
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
X
|
*
|
Indicates management contract or compensatory plan or arrangement.
|
**
|
Portions of this exhibit have been redacted and filed separately with the Commission, pursuant to a request for confidential treatment granted by the Commission.
|
†
|
The certifications attached as Exhibit 32.1 accompany this Annual Report on Form 10-K are not deemed filed with the Commission and are not to be incorporated by reference into any filing of Levi Strauss & Co. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
|
SCHEDULE II
|
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
LEVI STRAUSS & CO. AND SUBSIDIARIES
|
|||||||||||||||
VALUATION AND QUALIFYING ACCOUNTS
|
|||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Allowance for Doubtful Accounts
|
Balance at Beginning of Period
|
|
Additions Charged to Expenses
|
|
Deductions(1)
|
|
Balance at End of Period
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
November 24, 2019
|
$
|
10,037
|
|
|
$
|
(978
|
)
|
|
$
|
2,887
|
|
|
$
|
6,172
|
|
November 25, 2018
|
$
|
11,726
|
|
|
$
|
2,284
|
|
|
$
|
3,973
|
|
|
$
|
10,037
|
|
November 26, 2017
|
$
|
11,974
|
|
|
$
|
1,645
|
|
|
$
|
1,893
|
|
|
$
|
11,726
|
|
|
|
|
|
|
|
|
|
||||||||
Sales Returns
|
Balance at Beginning of Period
|
|
Additions Charged to Net Sales
|
|
Deductions(1)
|
|
Balance at End of Period
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
November 24, 2019(2)
|
$
|
53,684
|
|
|
$
|
259,866
|
|
|
$
|
313,550
|
|
|
$
|
—
|
|
November 25, 2018
|
$
|
47,401
|
|
|
$
|
245,665
|
|
|
$
|
239,382
|
|
|
$
|
53,684
|
|
November 26, 2017
|
$
|
36,457
|
|
|
$
|
211,741
|
|
|
$
|
200,797
|
|
|
$
|
47,401
|
|
|
|
|
|
|
|
|
|
||||||||
Sales Discounts and Incentives
|
Balance at Beginning of Period
|
|
Additions Charged to Net Sales
|
|
Deductions(1)
|
|
Balance at End of Period
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
November 24, 2019(2)
|
$
|
120,704
|
|
|
$
|
351,686
|
|
|
$
|
470,634
|
|
|
$
|
1,756
|
|
November 25, 2018
|
$
|
135,139
|
|
|
$
|
357,929
|
|
|
$
|
372,364
|
|
|
$
|
120,704
|
|
November 26, 2017
|
$
|
105,477
|
|
|
$
|
342,169
|
|
|
$
|
312,507
|
|
|
$
|
135,139
|
|
|
|
|
|
|
|
|
|
||||||||
Valuation Allowance Against Deferred Tax Assets
|
Balance at Beginning of Period
|
|
Charges/(Releases) to Tax Expense
|
|
(Additions) / Deductions
|
|
Balance at End of Period
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
November 24, 2019
|
$
|
21,970
|
|
|
$
|
(81
|
)
|
|
$
|
2,278
|
|
|
$
|
19,611
|
|
November 25, 2018
|
$
|
38,692
|
|
|
$
|
(16,242
|
)
|
|
$
|
480
|
|
|
$
|
21,970
|
|
November 26, 2017
|
$
|
68,212
|
|
|
$
|
(19,301
|
)
|
|
$
|
10,219
|
|
|
$
|
38,692
|
|
(1)
|
The charges to the accounts are for the purposes for which the allowances were created.
|
(2)
|
In accordance with ASU 2014-09, “Revenue from Contracts with Customers”, adopted in 2019, allowances for estimated returns, discounts and retailer promotions and other similar incentives are presented as other accrued liabilities rather than netted within accounts receivable. Refer to Note 1 for more information.
|
Item 16.
|
FORM 10-K SUMMARY.
|
Date:
|
January 30, 2020
|
|
LEVI STRAUSS & CO.
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
By:
|
/s/ HARMIT SINGH
|
|
|
|
Harmit Singh
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
Signature
|
Title
|
|
|
|
|
|
|
/s/ STEPHEN C. NEAL
|
Chairperson of the Board
|
Date:
|
January 30, 2020
|
Stephen C. Neal
|
|
|
|
|
|
|
|
/s/ CHARLES V. BERGH
|
Director, President and
|
Date:
|
January 30, 2020
|
Charles V. Bergh
|
Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
/s/ TROY ALSTEAD
|
Director
|
Date:
|
January 30, 2020
|
Troy Alstead
|
|
|
|
|
|
|
|
/s/ JILL BERAUD
|
Director
|
Date:
|
January 30, 2020
|
Jill Beraud
|
|
|
|
|
|
|
|
/s/ ROBERT A. ECKERT
|
Director
|
Date:
|
January 30, 2020
|
Robert A. Eckert
|
|
|
|
|
|
|
|
/s/ SPENCER C. FLEISCHER
|
Director
|
Date:
|
January 30, 2020
|
Spencer C. Fleischer
|
|
|
|
|
|
|
|
/s/ DAVID A. FRIEDMAN
|
Director
|
Date:
|
January 30, 2020
|
David A. Friedman
|
|
|
|
|
|
|
|
/s/ YAEL GARTEN
|
Director
|
Date:
|
January 30, 2020
|
Yael Garten
|
|
|
|
|
|
|
|
/s/ CHRISTOPHER J. MCCORMICK
|
Director
|
Date:
|
January 30, 2020
|
Christopher J. McCormick
|
|
|
|
|
|
|
|
/s/ JENNY MING
|
Director
|
Date:
|
January 30, 2020
|
Jenny Ming
|
|
|
|
|
|
|
|
/s/ PATRICIA SALAS PINEDA
|
Director
|
Date:
|
January 30, 2020
|
Patricia Salas Pineda
|
|
|
|
|
|
|
|
/s/ JOSHUA E. PRIME
|
Director
|
Date:
|
January 30, 2020
|
Joshua E. Prime
|
|
|
|
|
|
|
|
/s/ GAVIN BROCKETT
|
Senior Vice President and Global Controller
|
Date:
|
January 30, 2020
|
Gavin Brockett
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
/s/ HARMIT SINGH
|
Executive Vice President and Chief Financial Officer
|
Date:
|
January 30, 2020
|
Harmit Singh
|
(Principal Financial Officer)
|
|
|
•
|
the approval of the holders of a majority of our then-outstanding Class A common stock and Class B common stock, voting together as a single class, will be required in order for us to issue shares of Class A common stock, or securities convertible into or exercisable for Class A common stock, if the number of securities to be issued is equal to or exceeds 20% of the sum of the number of shares of Class A common stock and Class B common stock outstanding before such issuance (or if the number of securities to be issued, together with any securities issued as consideration for acquisitions within the 12 months prior to such issuance, is equal to or exceeds 20% of the sum of (a) the number of shares of Class A common stock and Class B common stock as of the first day of such 12-month period and (b) the number of shares of Class A common stock and Class B common stock issued subsequent to such date pursuant to options, RSUs, SARs or other awards issued pursuant to stockholder-approved equity incentive plans and acquisitions); and
|
•
|
the approval of the holders of a majority of our then-outstanding Class B common stock will be required in order for us to: (i) amend, alter or repeal our amended and restated certificate of incorporation or our amended and restated bylaws in a manner that modifies the powers, preferences or rights of our Class B common stock; (ii) reclassify any outstanding shares of Class A common stock into shares having dividend or distribution rights that are senior to our Class B common stock or having the right to more than one vote per share; (iii) adopt or implement any stockholder rights plan that may have the effect of diluting the equity interest of any family member or entity controlled by a family member; (iv) issue shares of preferred stock, other than in connection with a stockholder rights plan; or (v) issue additional shares of Class B common stock, except upon the payment of certain dividends.
|
•
|
before such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
|
•
|
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, those shares owned (1) by persons who are directors and also officers and (2) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
on or after such date, the business combination is approved by the board of directors and authorized by the stockholders, by the affirmative vote of at least 662/3% of the outstanding voting stock that is not owned by the interested stockholder.
|
•
|
any merger or consolidation involving the corporation and the interested stockholder;
|
•
|
any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;
|
•
|
subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;
|
•
|
any transaction involving the corporation that has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder; or
|
•
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits by or through the corporation.
|
•
|
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;
|
•
|
provide that members of our board of directors may be removed at any time, with or without cause;
|
•
|
authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan;
|
•
|
provide that stockholders can take action by written consent, at an annual stockholder meeting or at a special stockholder meeting (which may be called by the Chairperson of our board of directors, our CEO, our board of directors (pursuant to a resolution adopted by a majority of the authorized directors) or stockholders entitled to cast 30% of the votes at such special meeting);
|
•
|
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.
|
Vesting Schedule:
|
Four annual equal installments of 25% beginning on the first anniversary of the grant date, subject to Participant’s Continuous Service through each such vesting date.
|
Issuance Schedule:
|
Subject to any Capitalization Adjustment, one share of Class A Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted Stock Unit that vests at the time set forth in Section 6 of the Award Agreement.
|
|
|
|
Participant
|
|
By:
|
|
|
|
|
|
signature
|
|
signature
|
|
|
|
|
|
|
Title:
|
President & CEO
|
|
Date:
|
###ACCEPTANCE_DATE##
|
Date:
|
###GRANT_DATE###
|
|
|
|
Participant:
|
###PARTICIPANT_NAME###
|
Date of Grant:
|
###GRANT_DATE###
|
Target Number PRSUs (“Target PRSUs”):
|
###TOTAL_AWARDS###
|
Maximum Number of PRSUs:
|
200% of Target PRSUs
|
Performance Period:
|
Three-Year Period Comprised of Fiscal Years
|
|
[____, ____, ____]
|
Vesting Schedule:
|
PERFORMANCE GOALS: The actual number of PRSUs under this Award that will vest at the end of a three-year period will be determined based on the level of achievement against the performance goals set forth in the related resolutions of the Board and set forth on Exhibit A to the Award Agreement (the “Performance Goals”). In each case, the goals and the extent to which they have been achieved will be determined by the Board, in its sole discretion.
|
Issuance Schedule:
|
Subject to any Capitalization Adjustment, one share of Class A Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted Stock Unit that vests at the time set forth in Section 6 of the Award Agreement.
|
|
|
|
Participant
|
|
By:
|
|
|
|
|
|
signature
|
|
signature
|
|
|
|
|
|
|
Title:
|
President & CEO
|
|
Date:
|
###ACCEPTANCE_DATE##
|
Date:
|
###GRANT_DATE###
|
|
|
|
Attachments:
|
Award Agreement
|
Participant:
|
###PARTICIPANT_NAME###
|
Date of Grant:
|
###GRANT_DATE###
|
Number of Stock Appreciation Rights:
|
###TOTAL_AWARDS###
|
Strike Price (Fair Market Value on Date of Grant):
|
###GRANT_PRICE###
|
Expiration Date:
|
###EXPIRY_DATE###
|
Vesting Schedule:
|
Four annual equal installments of 25% beginning on the first anniversary of the grant date, subject to Participant’s Continuous Service through each such vesting date.
|
Issuance Schedule:
|
Subject to any Capitalization Adjustment, the amount payable upon exercise of each vested Award shall be equal to the excess of (i) the Fair Market Value per share of Class A Common Stock on the date of exercise, over (ii) the Fair Market Value per share of Class A Common Stock on the date of grant of the Award (as indicated in your Grant Notice).
|
|
|
|
Participant
|
|
By:
|
|
|
|
|
|
signature
|
|
signature
|
|
|
|
|
|
|
Title:
|
President & CEO
|
|
|
|
Date:
|
###GRANT_DATE###
|
|
|
|
Attachments:
|
Award Agreement
|
Participant:
|
###PARTICIPANT_NAME###
|
Date of Grant:
|
###GRANT_DATE###
|
Number of Restricted Stock Units:
|
###TOTAL_AWARDS###
|
Vesting Schedule:
|
[Four annual equal installments of 25% beginning on the first anniversary of the Date of Grant, subject to Participant's Continuous Service through each such vesting date.]
|
Issuance Schedule:
|
Subject to any Capitalization Adjustment, one share of Class A Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted Stock Unit that vests at the time set forth in Section 6 of the Award Agreement.
|
|
|
|
Participant
|
|
By:
|
|
|
|
|
|
signature
|
|
signature
|
|
|
|
|
|
|
Title:
|
President & CEO
|
|
Date:
|
###ACCEPTANCE_DATE###
|
Date:
|
###GRANT_DATE###
|
|
|
|
Declaration of Consent. If you are based in the EEA+, by accepting the Award and indicating consent via the Company's online acceptance procedure, you explicitly declare your consent to the onward transfer of Data by the Company to the Designated Broker or, as the case may be, a different service provider of the Company as previously described in this Section 16.
|
If you are based outside of the EEA+, by accepting the Award and indicating consent via the Company's online acceptance procedure, you explicitly declare your consent to the entirety of the Data processing operations described in this Section 16 including, without limitation, the onward transfer of Data by the Company to the Designated Broker or, as the case may be, a different service provider of the Company.
|
1.
|
Your participation in the Plan does not constitute an acquired right;
|
2.
|
The Plan and your participation in it are offered by the Company on a wholly discretionary basis;
|
3.
|
Your participation in the Plan is voluntary; and
|
4.
|
The Company and its Affiliates are not responsible for any decrease in the value of any shares of Class A Common Stock acquired pursuant to the Restricted Stock Units.
|
1.
|
Su participación en el Plan no constituye un derecho adquirido;
|
2.
|
El Plan y su participación en el es ofrecido por la Compañía de manera completamente discrecional;
|
3.
|
Su participación del Beneficiario en el Plan es voluntaria; y
|
4.
|
La Compañía y sus Afiliadas no son responsables por ninguna disminución en el valor de las Acciones Comunes de Clase A adquiridas de conformidad con las Unidades de Acciones Restringidas.
|
Participant:
|
###PARTICIPANT_NAME###
|
Date of Grant:
|
###GRANT_DATE###
|
Target Number PRSUs (“Target PRSUs”):
|
###TOTAL_AWARDS###
|
Maximum Number of PRSUs:
|
200% of Target PRSUs
|
Performance Period:
|
Three-Year Period Comprised of Fiscal Years
|
|
[____, ____, ____]
|
Vesting Schedule:
|
PERFORMANCE GOALS: The actual number of PRSUs under this Award that will vest at the end of a three-year period will be determined based on the level of achievement against the performance goals set forth in the related resolutions of the Board and set forth on Exhibit A to the Award Agreement (the "Performance Goals"). In each case, the goals and the extent to which they have been achieved will be determined by the Board, in its sole discretion.
|
Issuance Schedule:
|
Subject to any Capitalization Adjustment, one share of Class A Common Stock (or its cash equivalent, at the discretion of the Company) will be issued for each Restricted Stock Unit that vests at the time set forth in Section 6 of the Award Agreement.
|
|
|
|
Participant
|
|
By:
|
|
|
|
|
|
signature
|
|
signature
|
|
|
|
|
|
|
Title:
|
President & CEO
|
|
Date:
|
###ACCEPTANCE_DATE##
|
Date:
|
###GRANT_DATE###
|
|
|
|
Attachments:
|
Award Agreement, Exhibit A, & Appendix
|
Declaration of Consent. If you are based in the EEA+, by accepting the Award and indicating consent via the Company's online acceptance procedure, you explicitly declare your consent to the onward transfer of Data by the Company to the Designated Broker or, as the case may be, a different service provider of the Company as previously described in this Section 16.
|
If you are based outside of the EEA+, by accepting the Award and indicating consent via the Company's online acceptance procedure, you explicitly declare your consent to the entirety of the Data processing operations described in this Section 16 including, without limitation, the onward transfer of Data by the Company to the Designated Broker or, as the case may be, a different service provider of the Company.
|
1.
|
Your participation in the Plan does not constitute an acquired right;
|
2.
|
The Plan and your participation in it are offered by the Company on a wholly discretionary basis;
|
3.
|
Your participation in the Plan is voluntary; and
|
4.
|
The Company and its Affiliates are not responsible for any decrease in the value of any shares of Class A Common Stock acquired pursuant to the Restricted Stock Units.
|
1.
|
Su participación en el Plan no constituye un derecho adquirido;
|
2.
|
El Plan y su participación en el es ofrecido por la Compañía de manera completamente discrecional;
|
3.
|
Su participación del Beneficiario en el Plan es voluntaria; y
|
4.
|
La Compañía y sus Afiliadas no son responsables por ninguna disminución en el valor de las Acciones Comunes de Clase A adquiridas de conformidad con las Unidades de Acciones Restringidas.
|
Participant:
|
###PARTICIPANT_NAME###
|
Date of Grant:
|
###GRANT_DATE###
|
Number of Stock Appreciation Rights:
|
###TOTAL_AWARDS###
|
Strike Price (Fair Market Value on Date of Grant):
|
###GRANT_PRICE###
|
Expiration Date:
|
###EXPIRY_DATE###
|
Vesting Schedule:
|
[Four annual equal installments of 25% beginning on the first anniversary of the Date of Grant, subject to Participant's Continuous Service through each such vesting date.]
|
Issuance Schedule:
|
Subject to any Capitalization Adjustment, the amount payable upon exercise of each vested Award shall be equal to the excess of (i) the Fair Market Value per share of Class A Common Stock on the date of exercise, over (ii) the Fair Market Value per share of Class A Common Stock on the date of grant of the Award (as indicated in your Grant Notice).
|
|
|
|
Participant
|
|
By:
|
|
|
|
|
|
signature
|
|
signature
|
|
|
|
|
|
|
Title:
|
President & CEO
|
|
Date:
|
###ACCEPTANCE_DATE###
|
Date:
|
###GRANT_DATE###
|
|
|
|
Declaration of Consent. If you are based in the EEA+, by accepting the Award and indicating consent via the Company's online acceptance procedure, you explicitly declare your consent to the onward transfer of Data by the Company to the Designated Broker or, as the case may be, a different service provider of the Company as previously described in this Section 16.
|
If you are based outside of the EEA+, by accepting the Award and indicating consent via the Company's online acceptance procedure, you explicitly declare your consent to the entirety of the Data processing operations described in this Section 16 including, without limitation, the onward transfer of Data by the Company to the Designated Broker or, as the case may be, a different service provider of the Company.
|
1.
|
Your participation in the Plan does not constitute an acquired right;
|
2.
|
The Plan and your participation in it are offered by the Company on a wholly discretionary basis;
|
3.
|
Your participation in the Plan is voluntary; and
|
4.
|
The Company and its Affiliates are not responsible for any decrease in the value of any shares of Class A Common Stock acquired pursuant to the Award.
|
1.
|
Su participación en el Plan no constituye un derecho adquirido;
|
2.
|
El Plan y su participación en el es ofrecido por la Compañía de manera completamente discrecional;
|
3.
|
Su participación del Beneficiario en el Plan es voluntaria; y
|
4.
|
La Compañía y sus Afiliadas no son responsables por ninguna disminución en el valor de las Acciones Comunes de Clase A adquiridas de conformidad con el Premio.
|
1.
|
Definitions.
|
1
|
2.
|
Eligibility for Severance Payments and Severance Benefits.
|
4
|
3.
|
Amount and Form of Severance Payments and Severance Benefits.
|
4
|
4.
|
Administration.
|
11
|
5.
|
Amendment or Termination.
|
11
|
6.
|
Claims Procedure.
|
11
|
7.
|
Source of Payments.
|
13
|
8.
|
Inalienability.
|
13
|
9.
|
Recovery of Payments Made by Mistake.
|
13
|
10.
|
No Enlargement of Employment Rights.
|
13
|
11.
|
Applicable Law.
|
13
|
12.
|
Severability.
|
13
|
13.
|
Execution
|
13
|
CEO
|
104 weeks of Compensation
|
Other Senior Executives
|
78 weeks of Compensation
|
CEO
|
156 weeks of Compensation
|
Other Senior Executives
|
104 weeks of Compensation
|
Subsidiary
|
Jurisdiction of Formation
|
Levi Strauss (Australia) Pty. Ltd.
|
Australia
|
Levi Strauss & Co. Europe SCA
|
Belgium
|
Levi Strauss Benelux Retail BVBA
|
Belgium
|
Levi Strauss Continental, S.A.
|
Belgium
|
Levi Strauss International Group Finance Coordination Services
|
Belgium
|
Majestic Insurance International, Ltd.
|
Bermuda
|
Levi Strauss Bolivia, S.R.L.
|
Bolivia
|
Levi Strauss do Brasil Franqueadora Ltda.
|
Brazil
|
Levi Strauss do Brasil Industria e Comercio Ltda.
|
Brazil
|
Levi Strauss & Co. (Canada) Inc.
|
Canada
|
Levi Strauss Chile Limitada
|
Chile
|
Levi Strauss Commerce (Shanghai) Limited
|
China
|
Levi's Footwear & Accessories (China) Ltd
|
China
|
Levi Strauss Praha, spol. s.r.o.
|
Czech Republic
|
Levi's Footwear & Accessories France S.A.S.
|
France
|
Paris - O.L.S. S.A.R.L.
|
France
|
Levi Strauss Germany GmbH
|
Germany
|
Levi Strauss Hellas S.A.
|
Greece
|
Levi Strauss (Hong Kong) Limited
|
Hong Kong
|
Levi Strauss Global Trading Company II, Limited
|
Hong Kong
|
Levi Strauss Global Trading Company Limited
|
Hong Kong
|
Levi's Footwear & Accessories HK Limited
|
Hong Kong
|
Levi Strauss Hungary Trading Limited Liability Company
|
Hungary
|
Levi Strauss (India) Private Limited
|
India
|
PT Levi Strauss Indonesia
|
Indonesia
|
Levi Strauss Italia S.R.L.
|
Italy
|
Levi's Footwear & Accessories Italy SpA
|
Italy
|
World Wide Logistics S.R.L.
|
Italy
|
Levi Strauss Japan Kabushiki Kaisha
|
Japan
|
Levi Strauss Korea Ltd.
|
Korea, Republic of
|
LS Retail (Macau) Limited
|
Macau
|
Levi Strauss (Malaysia) Sdn. Bhd.
|
Malaysia
|
LS Retail (Malaysia) Sdn. Bhd.
|
Malaysia
|
Levi Strauss Mauritius Limited
|
Mauritius
|
Administradora Levi Strauss Mexico, S.A. de C.V.
|
Mexico
|
Distribuidora Levi Strauss Mexico, S.A. de C.V.
|
Mexico
|
Levi Strauss de Mexico, S.A. de C.V.
|
Mexico
|
Levi Strauss Nederland B.V.
|
Netherlands
|
Levi Strauss Nederland Holding B.V.
|
Netherlands
|
LVC B.V.
|
Netherlands
|
Levi Strauss New Zealand Limited
|
New Zealand
|
Levi Strauss Pakistan (Private) Limited
|
Pakistan
|
LS Batwing Peru S.R.L.
|
Peru
|
Levi Strauss Philippines, Inc. II
|
Philippines
|
Levi Strauss Poland SP z.o.o.
|
Poland
|
"Levi Strauss Moscow" Limited Liability Company
|
Russian Federation
|
Levi Strauss Asia Pacific Division, PTE. LTD.
|
Singapore
|
Levi Strauss South Africa (Proprietary) Limited
|
South Africa
|
Levi Strauss de Espana, S.A.
|
Spain
|
Levi's Footwear & Accessories Spain S.A.
|
Spain
|
Levi Strauss (Suisse) SA
|
Switzerland
|
Levi's Footwear & Accessories (Switzerland) S.A.
|
Switzerland
|
Levi Strauss Istanbul Konfekslyon Sanayi ve Ticaret A.S.
|
Turkey
|
Levi Strauss (UK) Limited
|
United Kingdom
|
Levi Strauss Pension Trustee Ltd.
|
United Kingdom
|
Industrie Denim, LLC
|
United States (California)
|
Levi Strauss International
|
United States (California)
|
LS Operations LLC
|
United States (California)
|
Levi Strauss, U.S.A., LLC
|
United States (Delaware)
|
Levi Strauss-Argentina, LLC
|
United States (Delaware)
|
Levi's Only Stores Georgetown, LLC
|
United States (Delaware)
|
Levi's Only Stores, Inc.
|
United States (Delaware)
|
LVC, LLC
|
United States (Delaware)
|
|
|
/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
|
|
|
January 30, 2020
|
|
|
/s/ HARMIT SINGH
|
|
|
Harmit Singh
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
January 30, 2020
|