Price Graph
Price
Yield
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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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Large accelerated filer
¨
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Accelerated filer
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Non-accelerated filer
þ
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(Do not check if a smaller reporting company)
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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 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 1.
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CONSOLIDATED FINANCIAL STATEMENTS
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(Unaudited)
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August 26,
2018 |
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November 26,
2017 |
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(Dollars in thousands)
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ASSETS
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Current Assets:
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Cash and cash equivalents
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$
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612,506
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$
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633,622
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Trade receivables, net of allowance for doubtful accounts of $9,113 and $11,726
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487,240
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485,485
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Inventories:
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Raw materials
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3,527
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3,858
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Work-in-process
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2,883
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3,008
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Finished goods
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931,843
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752,530
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Total inventories
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938,253
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759,396
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Other current assets
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157,982
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118,724
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Total current assets
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2,195,981
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1,997,227
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Property, plant and equipment, net of accumulated depreciation of $967,765 and $951,249
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420,008
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424,463
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Goodwill
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236,492
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237,327
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Other intangible assets, net
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42,850
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42,893
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Deferred tax assets, net
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400,778
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537,923
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Other non-current assets
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121,568
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118,005
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Total assets
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$
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3,417,677
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$
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3,357,838
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LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY
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Current Liabilities:
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Short-term debt
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$
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35,790
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$
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38,451
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Accounts payable
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361,702
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289,505
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Accrued salaries, wages and employee benefits
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249,889
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227,251
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Restructuring liabilities
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463
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786
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Accrued interest payable
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17,206
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6,327
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Accrued income taxes
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36,473
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16,020
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Other accrued liabilities
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340,498
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300,730
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Total current liabilities
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1,042,021
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879,070
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Long-term debt
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1,026,055
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1,038,860
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Long-term capital leases
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15,762
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16,524
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Postretirement medical benefits
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81,172
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89,248
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Pension liability
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191,134
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314,525
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Long-term employee related benefits
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97,038
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90,998
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Long-term income tax liabilities
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8,048
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20,457
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Other long-term liabilities
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77,183
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78,733
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Total liabilities
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2,538,413
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2,528,415
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Commitments and contingencies
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Temporary equity
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225,090
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127,035
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Stockholders’ Equity:
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Levi Strauss & Co. stockholders’ equity
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Common stock — $.01 par value; 270,000,000 shares authorized; 37,615,303 shares and 37,521,447 shares issued and outstanding
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376
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375
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Accumulated other comprehensive loss
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(413,721
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(404,381
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Retained earnings
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1,060,158
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1,100,916
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Total Levi Strauss & Co. stockholders’ equity
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646,813
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696,910
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Noncontrolling interest
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7,361
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5,478
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Total stockholders’ equity
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654,174
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702,388
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Total liabilities, temporary equity and stockholders’ equity
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$
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3,417,677
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$
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3,357,838
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Three Months Ended
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Nine Months Ended
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August 26,
2018 |
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August 27,
2017 |
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August 26,
2018 |
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August 27,
2017 |
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(Dollars in thousands)
(Unaudited) |
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Net revenues
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$
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1,394,153
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$
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1,268,391
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$
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3,983,580
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$
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3,438,237
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Cost of goods sold
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652,591
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611,762
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1,833,017
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1,658,663
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Gross profit
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741,562
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656,629
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2,150,563
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1,779,574
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Selling, general and administrative expenses
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582,953
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510,309
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1,741,331
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1,462,263
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Operating income
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158,609
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146,320
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409,232
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317,311
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Interest expense
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(15,697
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)
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(14,476
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)
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(45,659
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)
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(52,305
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)
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Loss on early extinguishment of debt
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—
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—
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—
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(22,793
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)
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Other (expense) income, net
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(3,032
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)
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(14,734
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)
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1,044
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(32,413
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)
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Income before income taxes
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139,880
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117,110
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364,617
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209,800
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Income tax expense
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10,299
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27,631
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176,633
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42,477
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Net income
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129,581
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|
89,479
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187,984
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167,323
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Net loss (income) attributable to noncontrolling interest
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543
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(1,487
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)
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(1,940
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)
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(1,672
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)
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Net income attributable to Levi Strauss & Co.
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$
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130,124
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$
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87,992
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$
|
186,044
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$
|
165,651
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Three Months Ended
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Nine Months Ended
|
||||||||||||
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August 26,
2018 |
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August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
||||||||
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(Dollars in thousands)
(Unaudited)
|
||||||||||||||
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Net income
|
$
|
129,581
|
|
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$
|
89,479
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$
|
187,984
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|
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$
|
167,323
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|
|
Other comprehensive income (loss), before related income taxes:
|
|
|
|
|
|
|
|
||||||||
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Pension and postretirement benefits
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3,347
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|
|
3,693
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|
|
9,864
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|
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11,153
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|
||||
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Net investment hedge gains (losses)
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8,645
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|
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(27,930
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)
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|
14,772
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|
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(57,570
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)
|
||||
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Foreign currency translation (losses) gains
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(15,483
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)
|
|
18,051
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|
|
(30,055
|
)
|
|
46,638
|
|
||||
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Unrealized gains on marketable securities
|
282
|
|
|
276
|
|
|
456
|
|
|
2,151
|
|
||||
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Total other comprehensive (loss) income, before related income taxes
|
(3,209
|
)
|
|
(5,910
|
)
|
|
(4,963
|
)
|
|
2,372
|
|
||||
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Income taxes (expense) benefit related to items of other comprehensive income
|
(2,050
|
)
|
|
9,287
|
|
|
(4,433
|
)
|
|
15,460
|
|
||||
|
Comprehensive income, net of income taxes
|
124,322
|
|
|
92,856
|
|
|
178,588
|
|
|
185,155
|
|
||||
|
Comprehensive loss (income) attributable to noncontrolling interest
|
700
|
|
|
(1,561
|
)
|
|
(1,883
|
)
|
|
(1,573
|
)
|
||||
|
Comprehensive income attributable to Levi Strauss & Co.
|
$
|
125,022
|
|
|
$
|
91,295
|
|
|
$
|
176,705
|
|
|
$
|
183,582
|
|
|
|
Nine Months Ended
|
||||||
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|
August 26,
2018 |
|
August 27,
2017 |
||||
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|
(Dollars in thousands)
(Unaudited)
|
||||||
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Cash Flows from Operating Activities:
|
|
|
|
||||
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Net income
|
$
|
187,984
|
|
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$
|
167,323
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|||
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Depreciation and amortization
|
92,130
|
|
|
85,618
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|
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Unrealized foreign exchange (gains) losses
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(13,827
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)
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|
36,717
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|
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Realized loss (gain) on settlement of forward foreign exchange contracts not designated for hedge accounting
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20,446
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(184
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)
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Employee benefit plans’ amortization from accumulated other comprehensive loss and settlement loss
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9,865
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|
11,153
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Loss on early extinguishment of debt
|
—
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|
|
22,793
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|
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Stock-based compensation
|
15,025
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|
21,910
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|
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Other, net
|
3,678
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|
|
4,146
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|
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Provision for (benefit from) deferred income taxes
|
127,626
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|
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(7,447
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)
|
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Change in operating assets and liabilities:
|
|
|
|
|
|||
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Trade receivables
|
(11,692
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)
|
|
45,642
|
|
||
|
Inventories
|
(202,822
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)
|
|
(77,758
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)
|
||
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Other current assets
|
(36,122
|
)
|
|
(4,947
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)
|
||
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Other non-current assets
|
(6,045
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)
|
|
(3,747
|
)
|
||
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Accounts payable and other accrued liabilities
|
111,164
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|
|
23,022
|
|
||
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Restructuring liabilities
|
(306
|
)
|
|
(3,559
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)
|
||
|
Income tax liabilities
|
11,479
|
|
|
16,042
|
|
||
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Accrued salaries, wages and employee benefits and long-term employee related benefits
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(101,758
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)
|
|
(42,599
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)
|
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Other long-term liabilities
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(2,066
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)
|
|
326
|
|
||
|
Net cash provided by operating activities
|
204,759
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|
|
294,451
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|
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Cash Flows from Investing Activities:
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|
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|
|||
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Purchases of property, plant and equipment
|
(99,260
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)
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|
(75,793
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)
|
||
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(Payments) proceeds on settlement of forward foreign exchange contracts not designated for hedge accounting
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(20,446
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)
|
|
184
|
|
||
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Net cash used for investing activities
|
(119,706
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)
|
|
(75,609
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)
|
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Cash Flows from Financing Activities:
|
|
|
|
|
|||
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Proceeds from issuance of long-term debt
|
—
|
|
|
502,835
|
|
||
|
Repayments of long-term debt
|
—
|
|
|
(525,000
|
)
|
||
|
Proceeds from short-term credit facilities
|
27,737
|
|
|
23,898
|
|
||
|
Repayments of short-term credit facilities
|
(24,196
|
)
|
|
(20,382
|
)
|
||
|
Other short-term borrowings, net
|
49
|
|
|
(10,255
|
)
|
||
|
Payment of debt extinguishment costs
|
—
|
|
|
(21,902
|
)
|
||
|
Payment of debt issuance costs
|
—
|
|
|
(10,110
|
)
|
||
|
Repurchase of common stock, including shares surrendered for tax withholdings on equity award exercises
|
(53,773
|
)
|
|
(13,292
|
)
|
||
|
Dividend to stockholders
|
(45,000
|
)
|
|
(35,000
|
)
|
||
|
Other financing, net
|
(580
|
)
|
|
(3,196
|
)
|
||
|
Net cash used for financing activities
|
(95,763
|
)
|
|
(112,404
|
)
|
||
|
Effect of exchange rate changes on cash and cash equivalents
|
(10,406
|
)
|
|
9,288
|
|
||
|
Net (decrease) increase in cash and cash equivalents
|
(21,116
|
)
|
|
115,726
|
|
||
|
Beginning cash and cash equivalents
|
633,622
|
|
|
375,563
|
|
||
|
Ending cash and cash equivalents
|
$
|
612,506
|
|
|
$
|
491,289
|
|
|
|
|
|
|
||||
|
Noncash Investing Activity:
|
|
|
|
||||
|
Property, plant and equipment acquired and not yet paid at end of period
|
$
|
13,093
|
|
|
$
|
10,951
|
|
|
Property, plant and equipment additions due to build-to-suit lease transactions
|
2,750
|
|
|
4,459
|
|
||
|
|
|
|
|
||||
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
|
Cash paid for interest during the period
|
$
|
27,511
|
|
|
$
|
29,570
|
|
|
Cash paid for income taxes during the period, net of refunds
|
67,221
|
|
|
32,944
|
|
||
|
•
|
In March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("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 will impact the Company's Consolidated Statements of Income, as the service cost components of net periodic benefit costs will be reported within operating income and the other components of net periodic benefit costs will be 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. The Company continues to assess the impact that adopting this new accounting standard will have on its consolidated financial statements.
|
|
•
|
In May 2014, the FASB issued 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 and supersedes most current revenue recognition guidance.
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 will be required regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.
|
|
•
|
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 twelve 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 is in the process of gathering information to evaluate real estate, personal property, and other arrangements that may meet the definition of a lease. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics, including permitted transition methods. Given the significant number of leases, the Company anticipates the new guidance will have a material impact on the consolidated balance sheets.
|
|
•
|
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 is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.
|
|
•
|
In February 2018, the FASB issued ASU 2018-02,
Income Statement - Reporting Comprehensive Income (Topic 220)
. ASU 2018-02 addresses the effect of the change in the U.S. federal corporate tax rate due to the enactment of the December 22, 2017 Tax Cuts and Jobs Act (the "Tax Act") on items within accumulated other comprehensive income (loss). The guidance will be effective for the Company in the first quarter of fiscal 2020 with early adoption permitted. 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 benefit pension or other postretirement plans. Early adoption is permitted. The Company is currently evaluating the impact that adopting this new accounting standard will have on its related disclosures.
|
|
|
August 26, 2018
|
|
November 26, 2017
|
||||||||||||||||||||
|
|
|
|
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
|
$
|
32,330
|
|
|
$
|
32,330
|
|
|
$
|
—
|
|
|
$
|
31,139
|
|
|
$
|
31,139
|
|
|
$
|
—
|
|
|
Forward foreign exchange contracts
(3)
|
16,450
|
|
|
—
|
|
|
16,450
|
|
|
6,296
|
|
|
—
|
|
|
6,296
|
|
||||||
|
Total
|
$
|
48,780
|
|
|
$
|
32,330
|
|
|
$
|
16,450
|
|
|
$
|
37,435
|
|
|
$
|
31,139
|
|
|
$
|
6,296
|
|
|
Financial liabilities carried at fair value
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Forward foreign exchange contracts
(3)
|
$
|
10,619
|
|
|
$
|
—
|
|
|
$
|
10,619
|
|
|
$
|
23,799
|
|
|
$
|
—
|
|
|
$
|
23,799
|
|
|
(1)
|
Fair values estimated using Level 1 inputs are inputs which consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Rabbi trust assets consist of a diversified portfolio of equity, fixed income and other securities.
|
|
(2)
|
Fair values estimated using Level 2 inputs are inputs, other than quoted prices, that are observable for the asset or liability, either directly or indirectly, and include among other things, quoted prices for similar assets or liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable. For forward foreign exchange contracts, inputs include foreign currency exchange and interest rates and, where applicable, credit default swap prices.
|
|
(3)
|
The Company’s over-the-counter forward foreign exchange contracts 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. Effective as of the first quarter of 2018, the Company recorded and presented the fair values of derivative over-the-counter forward foreign exchange contracts on a gross basis in its consolidated balance sheets, including those subject to master netting arrangements. The comparative period was revised to reflect the change from a net basis to a gross basis.
|
|
|
August 26, 2018
|
|
November 26, 2017
|
||||||||||||
|
|
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)
|
$
|
493,102
|
|
|
$
|
496,133
|
|
|
$
|
485,419
|
|
|
$
|
507,185
|
|
|
3.375% senior notes due 2027
(1)
|
549,584
|
|
|
571,222
|
|
|
559,037
|
|
|
590,266
|
|
||||
|
Short-term borrowings
|
36,148
|
|
|
36,148
|
|
|
38,727
|
|
|
38,727
|
|
||||
|
Total
|
$
|
1,078,834
|
|
|
$
|
1,103,503
|
|
|
$
|
1,083,183
|
|
|
$
|
1,136,178
|
|
|
(1)
|
Fair values are estimated using Level 1 inputs and incorporate mid-market price quotes. Level 1 inputs are inputs which consist of quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|
|
|
August 26, 2018
|
|
November 26, 2017
|
||||||||||||||||||||
|
|
Assets
|
|
(Liabilities)
|
|
Derivative Net Carrying Value
|
|
Assets
|
|
(Liabilities)
|
|
Derivative Net Carrying Value
|
||||||||||||
|
|
Carrying
Value
|
|
Carrying
Value
|
|
|
Carrying
Value
|
|
Carrying
Value
|
|
||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
|
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Forward foreign exchange contracts
(1)
|
$
|
16,450
|
|
|
$
|
—
|
|
|
$
|
16,450
|
|
|
$
|
6,296
|
|
|
$
|
—
|
|
|
$
|
6,296
|
|
|
Forward foreign exchange contracts
(2)
|
—
|
|
|
(10,619
|
)
|
|
(10,619
|
)
|
|
—
|
|
|
(23,799
|
)
|
|
(23,799
|
)
|
||||||
|
Total
|
$
|
16,450
|
|
|
$
|
(10,619
|
)
|
|
|
|
$
|
6,296
|
|
|
$
|
(23,799
|
)
|
|
|
||||
|
Non-derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Euro senior notes
|
$
|
—
|
|
|
$
|
(548,008
|
)
|
|
|
|
$
|
—
|
|
|
$
|
(562,780
|
)
|
|
|
||||
|
(1)
|
Included in "Other current assets" or "Other non-current assets" on the Company’s consolidated balance sheets.
|
|
(2)
|
Included in "Other accrued liabilities" or "Other long-term liabilities" on the Company’s consolidated balance sheets.
|
|
|
August 26, 2018
|
|
November 26, 2017
|
||||||||||||||||||||
|
|
Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
Net Amounts of Assets / (Liabilities)
|
|
Gross Amounts of Assets / (Liabilities) Presented in the Balance Sheet
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
Net Amounts of Assets / (Liabilities)
|
||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
|
|
(Dollars in thousands)
|
||||||||||||||||||||||
|
Over-the-counter forward foreign exchange contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Financial assets
|
$
|
15,112
|
|
|
$
|
(3,745
|
)
|
|
$
|
11,367
|
|
|
$
|
3,218
|
|
|
$
|
(3,146
|
)
|
|
$
|
72
|
|
|
Financial liabilities
|
(4,177
|
)
|
|
3,745
|
|
|
(432
|
)
|
|
(20,876
|
)
|
|
3,146
|
|
|
(17,730
|
)
|
||||||
|
Total
|
|
|
|
|
$
|
10,935
|
|
|
|
|
|
|
$
|
(17,658
|
)
|
||||||||
|
Embedded derivative contracts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Financial assets
|
$
|
1,338
|
|
|
$
|
—
|
|
|
$
|
1,338
|
|
|
$
|
3,078
|
|
|
$
|
—
|
|
|
$
|
3,078
|
|
|
Financial liabilities
|
(6,442
|
)
|
|
—
|
|
|
(6,442
|
)
|
|
(2,923
|
)
|
|
—
|
|
|
(2,923
|
)
|
||||||
|
Total
|
|
|
|
|
$
|
(5,104
|
)
|
|
|
|
|
|
$
|
155
|
|
||||||||
|
|
Gain or (Loss)
Recognized in AOCI
(Effective Portion)
|
||||||
|
|
As of
|
|
As of
|
||||
|
August 26,
2018 |
November 26,
2017 |
||||||
|
|
(Dollars in thousands)
|
||||||
|
Forward foreign exchange contracts
|
$
|
4,637
|
|
|
$
|
4,637
|
|
|
Yen-denominated Eurobonds
|
(19,811
|
)
|
|
(19,811
|
)
|
||
|
Euro-denominated senior notes
|
(60,924
|
)
|
|
(75,697
|
)
|
||
|
Cumulative income taxes
|
31,339
|
|
|
35,253
|
|
||
|
Total
|
$
|
(44,759
|
)
|
|
$
|
(55,618
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
|
Forward foreign exchange contracts:
|
|
|
|
|
|
|
|
||||||||
|
Realized (loss) gain
|
$
|
(2,298
|
)
|
|
$
|
(3,894
|
)
|
|
$
|
(20,446
|
)
|
|
$
|
184
|
|
|
Unrealized gain (loss)
|
6,835
|
|
|
(15,253
|
)
|
|
22,607
|
|
|
(44,705
|
)
|
||||
|
Total
|
$
|
4,537
|
|
|
$
|
(19,147
|
)
|
|
$
|
2,161
|
|
|
$
|
(44,521
|
)
|
|
|
August 26,
2018 |
|
November 26,
2017 |
||||
|
|
(Dollars in thousands)
|
||||||
|
Long-term debt
|
|
|
|
||||
|
5.00% senior notes due 2025
|
$
|
485,115
|
|
|
$
|
483,683
|
|
|
3.375% senior notes due 2027
|
540,940
|
|
|
555,177
|
|
||
|
Total long-term debt
|
$
|
1,026,055
|
|
|
$
|
1,038,860
|
|
|
Short-term debt
|
|
|
|
||||
|
Short-term borrowings
|
$
|
35,790
|
|
|
$
|
38,451
|
|
|
Total debt
|
$
|
1,061,845
|
|
|
$
|
1,077,311
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
|
Net periodic benefit cost:
|
|
|
|
|
|
|
|
||||||||
|
Pension Benefits
|
$
|
819
|
|
|
$
|
2,990
|
|
|
$
|
2,434
|
|
|
$
|
8,952
|
|
|
Postretirement Benefits
|
925
|
|
|
1,148
|
|
|
2,777
|
|
|
3,443
|
|
||||
|
Net periodic benefit cost
|
$
|
1,744
|
|
|
$
|
4,138
|
|
|
$
|
5,211
|
|
|
$
|
12,395
|
|
|
|
August 26,
2018 |
|
November 26,
2017 |
||||
|
|
(Dollars in thousands)
|
||||||
|
Pension and postretirement benefits
|
$
|
(225,013
|
)
|
|
$
|
(232,181
|
)
|
|
Net investment hedge losses
|
(44,759
|
)
|
|
(55,618
|
)
|
||
|
Foreign currency translation losses
|
(138,850
|
)
|
|
(111,092
|
)
|
||
|
Unrealized gains on marketable securities
|
4,383
|
|
|
4,048
|
|
||
|
Accumulated other comprehensive loss
|
(404,239
|
)
|
|
(394,843
|
)
|
||
|
Accumulated other comprehensive income attributable to noncontrolling interest
|
9,482
|
|
|
9,538
|
|
||
|
Accumulated other comprehensive loss attributable to Levi Strauss & Co.
|
$
|
(413,721
|
)
|
|
$
|
(404,381
|
)
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
|
Foreign exchange management gains (losses)
(1)
|
$
|
4,537
|
|
|
$
|
(19,147
|
)
|
|
$
|
2,161
|
|
|
$
|
(44,521
|
)
|
|
Foreign currency transaction (losses) gains
(2)
|
(11,147
|
)
|
|
1,163
|
|
|
(10,528
|
)
|
|
7,216
|
|
||||
|
Interest income
|
2,672
|
|
|
895
|
|
|
6,502
|
|
|
2,206
|
|
||||
|
Investment income
|
306
|
|
|
287
|
|
|
734
|
|
|
629
|
|
||||
|
Other, net
|
600
|
|
|
2,068
|
|
|
2,175
|
|
|
2,057
|
|
||||
|
Total other income (expense), net
|
$
|
(3,032
|
)
|
|
$
|
(14,734
|
)
|
|
$
|
1,044
|
|
|
$
|
(32,413
|
)
|
|
(1)
|
Gains and losses on forward foreign exchange contracts primarily resulted from currency fluctuations relative to negotiated contract rates. Gains in the
three-month period
ended
August 26, 2018
were primarily due to favorable currency fluctuations relative to negotiated contract rates on positions to sell the British Pound and Euro. Losses in the
three-month and nine-month periods
ended
August 27, 2017
were primarily due to unfavorable currency fluctuations relative to negotiated contract rates on positions to sell the Mexican Peso, the Euro and the Canadian dollar.
|
|
(2)
|
Foreign currency transaction gains and losses reflect the impact of foreign currency fluctuation on the Company's foreign currency denominated balances. Losses in the
three-month and nine-month periods
ended
August 26, 2018
were primarily due to the weakening of the Euro and Brazilian Real against the US dollar. Gains in the
nine-month period
ended
August 27, 2017
were primarily due to the strengthening of the Mexican Peso and Euro against the US dollar.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
|
Net revenues:
|
|
|
|
|
|
|
|
||||||||
|
Americas
|
$
|
792,832
|
|
|
$
|
738,687
|
|
|
$
|
2,119,820
|
|
|
$
|
1,918,657
|
|
|
Europe
|
405,737
|
|
|
348,016
|
|
|
1,225,295
|
|
|
938,719
|
|
||||
|
Asia
|
195,584
|
|
|
181,688
|
|
|
638,465
|
|
|
580,861
|
|
||||
|
Total net revenues
|
$
|
1,394,153
|
|
|
$
|
1,268,391
|
|
|
$
|
3,983,580
|
|
|
$
|
3,438,237
|
|
|
Operating income:
|
|
|
|
|
|
|
|
||||||||
|
Americas
|
$
|
162,469
|
|
|
$
|
155,652
|
|
|
$
|
370,926
|
|
|
$
|
347,873
|
|
|
Europe
|
76,848
|
|
|
61,536
|
|
|
245,307
|
|
|
160,778
|
|
||||
|
Asia
|
14,720
|
|
|
11,246
|
|
|
71,839
|
|
|
56,655
|
|
||||
|
Regional operating income
|
254,037
|
|
|
228,434
|
|
|
688,072
|
|
|
565,306
|
|
||||
|
Corporate expenses
(1)
|
95,428
|
|
|
82,114
|
|
|
278,840
|
|
|
247,995
|
|
||||
|
Total operating income
|
158,609
|
|
|
146,320
|
|
|
409,232
|
|
|
317,311
|
|
||||
|
Interest expense
|
(15,697
|
)
|
|
(14,476
|
)
|
|
(45,659
|
)
|
|
(52,305
|
)
|
||||
|
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,793
|
)
|
||||
|
Other (expense) income, net
|
(3,032
|
)
|
|
(14,734
|
)
|
|
1,044
|
|
|
(32,413
|
)
|
||||
|
Income before income taxes
|
$
|
139,880
|
|
|
$
|
117,110
|
|
|
$
|
364,617
|
|
|
$
|
209,800
|
|
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
|
|
•
|
Factors that impact consumer discretionary spending, which remains volatile globally, continue to create a complex and challenging retail environment for us and our customers, characterized by unpredictable traffic patterns and a general promotional environment. In developed economies, mixed real wage growth and shifting 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.
|
|
•
|
More competitors are seeking growth globally, thereby increasing the competition across regions. Some of these competitors are entering into 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. Most recently, the U.S. enacted new tax legislation, which is intended to stimulate economic growth and capital investments
|
|
•
|
Net revenues.
Compared to the
third
quarter of
2017
, consolidated net revenues increased
10%
on a reported basis and
11%
on a constant-currency basis driven by broad-based growth across all three regions, in every channel and product category.
|
|
•
|
Gross margin.
Compared to the
third
quarter of
2017
, consolidated gross margin percentage increased
1.4%
primarily due to growth in our higher margin company-operated retail and international revenues.
|
|
•
|
Operating income
. Compared to the
third
quarter of
2017
, consolidated operating income increased by
8%
and operating margin decreased to
11.4%
, primarily reflecting higher net revenues and strong gross margin, partially offset by higher selling, general and administrative expenses ("SG&A") associated with the expansion of our company-operated retail network and higher advertising and promotion expense.
|
|
•
|
Net revenues comprises of net sales and licensing revenues. Net sales include sales of products to wholesale customers, including franchised stores, and direct sales to consumers at our company-operated e-commerce sites and stores and at our company-operated shop-in-shops located within department stores. Net revenues include discounts, allowances for estimated returns and incentives.
|
|
•
|
Cost of goods sold comprises of product costs, labor and related overhead, sourcing costs, inbound freight, internal transfers, and the cost of operating our remaining manufacturing facilities, including the related depreciation expense.
|
|
•
|
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.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase |
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase |
||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||||
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Total revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As reported
|
$
|
1,394.2
|
|
|
$
|
1,268.4
|
|
|
9.9
|
%
|
|
$
|
3,983.6
|
|
|
$
|
3,438.3
|
|
|
15.9
|
%
|
|
Impact of foreign currency
|
—
|
|
|
(14.4
|
)
|
|
*
|
|
|
—
|
|
|
76.0
|
|
|
*
|
|
||||
|
Constant-currency
|
$
|
1,394.2
|
|
|
$
|
1,254.0
|
|
|
11.2
|
%
|
|
$
|
3,983.6
|
|
|
$
|
3,514.3
|
|
|
13.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Americas
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As reported
|
$
|
792.9
|
|
|
$
|
738.6
|
|
|
7.4
|
%
|
|
$
|
2,119.8
|
|
|
$
|
1,918.7
|
|
|
10.5
|
%
|
|
Impact of foreign currency
|
—
|
|
|
(7.8
|
)
|
|
*
|
|
|
—
|
|
|
(0.5
|
)
|
|
*
|
|
||||
|
Constant-currency
|
$
|
792.9
|
|
|
$
|
730.8
|
|
|
8.5
|
%
|
|
$
|
2,119.8
|
|
|
$
|
1,918.2
|
|
|
10.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Europe
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As reported
|
$
|
405.7
|
|
|
$
|
348.0
|
|
|
16.6
|
%
|
|
$
|
1,225.3
|
|
|
$
|
938.7
|
|
|
30.5
|
%
|
|
Impact of foreign currency
|
—
|
|
|
(2.5
|
)
|
|
*
|
|
|
—
|
|
|
64.2
|
|
|
*
|
|
||||
|
Constant-currency
|
$
|
405.7
|
|
|
$
|
345.5
|
|
|
17.4
|
%
|
|
$
|
1,225.3
|
|
|
$
|
1,002.9
|
|
|
22.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Asia
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As reported
|
$
|
195.6
|
|
|
$
|
181.8
|
|
|
7.6
|
%
|
|
$
|
638.5
|
|
|
$
|
580.9
|
|
|
9.9
|
%
|
|
Impact of foreign currency
|
—
|
|
|
(4.1
|
)
|
|
*
|
|
|
—
|
|
|
12.3
|
|
|
*
|
|
||||
|
Constant-currency
|
$
|
195.6
|
|
|
$
|
177.7
|
|
|
10.1
|
%
|
|
$
|
638.5
|
|
|
$
|
593.2
|
|
|
7.6
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase
(Decrease)
|
|
August 26,
2018 |
|
August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase
(Decrease)
|
|
August 26,
2018 |
|
August 27,
2017 |
||||||||||||||
|
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
||||||||||||||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||||||||||||||||
|
Net revenues
|
$
|
1,394.2
|
|
|
$
|
1,268.4
|
|
|
9.9
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
$
|
3,983.6
|
|
|
$
|
3,438.3
|
|
|
15.9
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Cost of goods sold
|
652.6
|
|
|
611.7
|
|
|
6.7
|
%
|
|
46.8
|
%
|
|
48.2
|
%
|
|
1,833.0
|
|
|
1,658.7
|
|
|
10.5
|
%
|
|
46.0
|
%
|
|
48.2
|
%
|
||||
|
Gross profit
|
741.6
|
|
|
656.7
|
|
|
12.9
|
%
|
|
53.2
|
%
|
|
51.8
|
%
|
|
2,150.6
|
|
|
1,779.6
|
|
|
20.8
|
%
|
|
54.0
|
%
|
|
51.8
|
%
|
||||
|
Selling, general and administrative expenses
|
583.0
|
|
|
510.3
|
|
|
14.2
|
%
|
|
41.8
|
%
|
|
40.2
|
%
|
|
1,741.4
|
|
|
1,462.3
|
|
|
19.1
|
%
|
|
43.7
|
%
|
|
42.5
|
%
|
||||
|
Operating income
|
158.6
|
|
|
146.4
|
|
|
8.3
|
%
|
|
11.4
|
%
|
|
11.5
|
%
|
|
409.2
|
|
|
317.3
|
|
|
29.0
|
%
|
|
10.3
|
%
|
|
9.2
|
%
|
||||
|
Interest expense
|
(15.6
|
)
|
|
(14.5
|
)
|
|
7.6
|
%
|
|
(1.1
|
)%
|
|
(1.1
|
)%
|
|
(45.6
|
)
|
|
(52.3
|
)
|
|
(12.8
|
)%
|
|
(1.1
|
)%
|
|
(1.5
|
)%
|
||||
|
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.8
|
)
|
|
(100.0
|
)%
|
|
—
|
|
|
(0.7
|
)%
|
||||
|
Other (expense) income, net
|
(3.1
|
)
|
|
(14.7
|
)
|
|
(78.9
|
)%
|
|
(0.2
|
)%
|
|
(1.2
|
)%
|
|
1.0
|
|
|
(32.4
|
)
|
|
(103.1
|
)%
|
|
—
|
|
|
(0.9
|
)%
|
||||
|
Income before income taxes
|
139.9
|
|
|
117.2
|
|
|
19.4
|
%
|
|
10.0
|
%
|
|
9.2
|
%
|
|
364.6
|
|
|
209.8
|
|
|
73.8
|
%
|
|
9.2
|
%
|
|
6.1
|
%
|
||||
|
Income tax expense
|
10.3
|
|
|
27.7
|
|
|
(62.8
|
)%
|
|
0.7
|
%
|
|
2.2
|
%
|
|
176.6
|
|
|
42.5
|
|
|
*
|
|
|
4.4
|
%
|
|
1.2
|
%
|
||||
|
Net income
|
129.6
|
|
|
89.5
|
|
|
44.8
|
%
|
|
9.3
|
%
|
|
7.1
|
%
|
|
188.0
|
|
|
167.3
|
|
|
12.4
|
%
|
|
4.7
|
%
|
|
4.9
|
%
|
||||
|
Net loss (income) attributable to noncontrolling interest
|
0.5
|
|
|
(1.5
|
)
|
|
(133.3
|
)%
|
|
—
|
|
|
(0.1
|
)%
|
|
(2.0
|
)
|
|
(1.7
|
)
|
|
17.6
|
%
|
|
(0.1
|
)%
|
|
—
|
|
||||
|
Net income attributable to Levi Strauss & Co.
|
$
|
130.1
|
|
|
$
|
88.0
|
|
|
47.8
|
%
|
|
9.3
|
%
|
|
6.9
|
%
|
|
$
|
186.0
|
|
|
$
|
165.6
|
|
|
12.3
|
%
|
|
4.7
|
%
|
|
4.8
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||
|
|
|
|
|
|
% Increase
|
|
|
|
|
|
% Increase
|
||||||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
As
Reported
|
|
Constant
Currency
|
|
August 26,
2018 |
|
August 27,
2017 |
|
As
Reported
|
|
Constant
Currency
|
||||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||||||||||
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Americas
|
$
|
792.9
|
|
|
$
|
738.6
|
|
|
7.4
|
%
|
|
8.5
|
%
|
|
$
|
2,119.8
|
|
|
$
|
1,918.7
|
|
|
10.5
|
%
|
|
10.5
|
%
|
|
Europe
|
405.7
|
|
|
348.0
|
|
|
16.6
|
%
|
|
17.4
|
%
|
|
1,225.3
|
|
|
938.7
|
|
|
30.5
|
%
|
|
22.2
|
%
|
||||
|
Asia
|
195.6
|
|
|
181.8
|
|
|
7.6
|
%
|
|
10.1
|
%
|
|
638.5
|
|
|
580.9
|
|
|
9.9
|
%
|
|
7.6
|
%
|
||||
|
Total net revenues
|
$
|
1,394.2
|
|
|
$
|
1,268.4
|
|
|
9.9
|
%
|
|
11.2
|
%
|
|
$
|
3,983.6
|
|
|
$
|
3,438.3
|
|
|
15.9
|
%
|
|
13.4
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase |
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase |
||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||||
|
Net revenues
|
$
|
1,394.2
|
|
|
$
|
1,268.4
|
|
|
9.9
|
%
|
|
$
|
3,983.6
|
|
|
$
|
3,438.3
|
|
|
15.9
|
%
|
|
Cost of goods sold
|
652.6
|
|
|
611.7
|
|
|
6.7
|
%
|
|
1,833.0
|
|
|
1,658.7
|
|
|
10.5
|
%
|
||||
|
Gross profit
|
$
|
741.6
|
|
|
$
|
656.7
|
|
|
12.9
|
%
|
|
$
|
2,150.6
|
|
|
$
|
1,779.6
|
|
|
20.8
|
%
|
|
Gross margin
|
53.2
|
%
|
|
51.8
|
%
|
|
|
|
54.0
|
%
|
|
51.8
|
%
|
|
|
||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase
|
|
August 26,
2018 |
|
August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase
|
|
August 26,
2018 |
|
August 27,
2017 |
||||||||||||||
|
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
|
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
||||||||||||||||||||||
|
|
(Dollars in millions)
|
||||||||||||||||||||||||||||||||
|
Selling
|
$
|
251.9
|
|
|
$
|
217.4
|
|
|
15.9
|
%
|
|
18.1
|
%
|
|
17.1
|
%
|
|
$
|
760.1
|
|
|
$
|
635.8
|
|
|
19.6
|
%
|
|
19.1
|
%
|
|
18.5
|
%
|
|
Advertising and promotion
|
78.6
|
|
|
65.4
|
|
|
20.2
|
%
|
|
5.6
|
%
|
|
5.2
|
%
|
|
251.7
|
|
|
194.5
|
|
|
29.4
|
%
|
|
6.3
|
%
|
|
5.7
|
%
|
||||
|
Administration
|
122.9
|
|
|
109.0
|
|
|
12.8
|
%
|
|
8.8
|
%
|
|
8.6
|
%
|
|
345.6
|
|
|
291.0
|
|
|
18.8
|
%
|
|
8.7
|
%
|
|
8.5
|
%
|
||||
|
Other
|
129.6
|
|
|
118.5
|
|
|
9.4
|
%
|
|
9.3
|
%
|
|
9.3
|
%
|
|
384.0
|
|
|
341.0
|
|
|
12.6
|
%
|
|
9.6
|
%
|
|
9.9
|
%
|
||||
|
Total SG&A
|
$
|
583.0
|
|
|
$
|
510.3
|
|
|
14.2
|
%
|
|
41.8
|
%
|
|
40.2
|
%
|
|
$
|
1,741.4
|
|
|
$
|
1,462.3
|
|
|
19.1
|
%
|
|
43.7
|
%
|
|
42.5
|
%
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
||||||||||||||||||||||||||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase
|
|
August 26,
2018 |
|
August 27,
2017 |
|
August 26,
2018 |
|
August 27,
2017 |
|
%
Increase
|
|
August 26,
2018 |
|
August 27,
2017 |
|
||||||||||||||
|
|
% of Net
Revenues
|
|
% of Net
Revenues
|
% of Net
Revenues
|
|
% of Net
Revenues
|
||||||||||||||||||||||||||||
|
|
(Dollars in millions)
|
|||||||||||||||||||||||||||||||||
|
Operating income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Americas
|
$
|
162.5
|
|
|
$
|
155.7
|
|
|
4.4
|
%
|
|
20.5
|
%
|
|
21.1
|
%
|
|
$
|
370.9
|
|
|
$
|
347.9
|
|
|
6.6
|
%
|
|
17.5
|
%
|
|
18.1
|
%
|
|
|
Europe
|
76.8
|
|
|
61.6
|
|
|
24.7
|
%
|
|
18.9
|
%
|
|
17.7
|
%
|
|
245.3
|
|
|
160.8
|
|
|
52.5
|
%
|
|
20.0
|
%
|
|
17.1
|
%
|
|
||||
|
Asia
|
14.7
|
|
|
11.3
|
|
|
30.1
|
%
|
|
7.5
|
%
|
|
6.2
|
%
|
|
71.8
|
|
|
56.7
|
|
|
26.6
|
%
|
|
11.2
|
%
|
|
9.8
|
%
|
|
||||
|
Total regional operating income
|
254.0
|
|
|
228.6
|
|
|
11.1
|
%
|
|
18.2
|
%
|
*
|
18.0
|
%
|
*
|
688.0
|
|
|
565.4
|
|
|
21.7
|
%
|
|
17.3
|
%
|
*
|
16.4
|
%
|
*
|
||||
|
Corporate expenses
|
95.4
|
|
|
82.2
|
|
|
16.1
|
%
|
|
6.8
|
%
|
*
|
6.5
|
%
|
*
|
278.8
|
|
|
248.1
|
|
|
12.4
|
%
|
|
7.0
|
%
|
*
|
7.2
|
%
|
*
|
||||
|
Total operating income
|
$
|
158.6
|
|
|
$
|
146.4
|
|
|
8.3
|
%
|
|
11.4
|
%
|
*
|
11.5
|
%
|
*
|
$
|
409.2
|
|
|
$
|
317.3
|
|
|
29.0
|
%
|
|
10.3
|
%
|
*
|
9.2
|
%
|
*
|
|
Operating margin
|
11.4
|
%
|
|
11.5
|
%
|
|
|
|
|
|
|
|
10.3
|
%
|
|
9.2
|
%
|
|
|
|
|
|
|
|
||||||||||
|
•
|
Americas
. Currency translation unfavorably affected operating income in the region by approximately
$2 million
for the
three-month period
and did not have a significant impact for the
nine-month period
ended
August 26, 2018
.
The increase in operating income was primarily due to higher net revenues as a result of strong performance of our company-operated retail network and wholesale business. This was partially offset by higher SG&A expense as a result of an increase in occupancy costs and an increased investment in advertising.
|
|
•
|
Europe
. Currency did not have a significant impact on operating income in the region for the
three-month period
and had a favorable impact of approximately
$16 million
for the
nine-month period
ended
August 26, 2018
. The increase in operating income was due to higher net revenues across all channels, partially offset by higher selling costs and increased investment in advertising.
|
|
•
|
Asia
. Currency did not have a significant impact on operating income in the region for the
three-month period
ended
August 26, 2018
and had a favorable impact of approximately
$3 million
for the
nine-month period
ended
August 26, 2018
. The increase in operating income was due to higher net revenues and gross margin, partially offset by higher SG&A expense to support retail expansion.
|
|
|
Nine Months Ended
|
||||||
|
|
August 26,
2018 |
|
August 27,
2017 |
||||
|
|
(Dollars in millions)
|
||||||
|
Cash provided by operating activities
|
$
|
204.8
|
|
|
$
|
294.5
|
|
|
Cash used for investing activities
|
(119.7
|
)
|
|
(75.6
|
)
|
||
|
Cash used for financing activities
|
(95.8
|
)
|
|
(112.4
|
)
|
||
|
Cash and cash equivalents
|
612.5
|
|
|
491.3
|
|
||
|
•
|
changes in general economic and financial conditions, and the resulting impact on the level of discretionary consumer spending for apparel and pricing trend fluctuations, and our ability to plan for and respond to the impact of those changes;
|
|
•
|
our ability to effectively manage any global productivity and outsourcing actions as planned, which are intended to increase productivity and efficiency in our global operations, take advantage of lower-cost service-delivery models in our distribution network and streamline our procurement practices to maximize efficiency in our global operations, without business disruption or mitigation to such disruptions;
|
|
•
|
consequences of impacts to the businesses of our wholesale customers, including significant store closures or a significant decline in a wholesale customer's financial condition leading to restructuring actions, bankruptcies, liquidations or other unfavorable events for our wholesale customers, caused by factors such as inability to secure financing, decreased discretionary consumer spending, inconsistent traffic patterns and an increase in promotional activity as a result of decreased traffic, pricing fluctuations, general economic and financial conditions and changing consumer preferences;
|
|
•
|
our and our wholesale customers' decisions to modify strategies and adjust product mix and pricing, and our ability to manage any resulting product transition costs, including liquidating inventory or increasing promotional activity;
|
|
•
|
our ability to purchase products through our independent contract manufacturers that are made with quality raw materials and our ability to mitigate the variability of costs related to manufacturing, sourcing, and raw materials supply and to manage consumer response to such mitigating actions;
|
|
•
|
our ability to gauge and adapt to changing U.S. and international retail environments and fashion trends and changing consumer preferences in product, price-points, as well as in-store and digital shopping experiences;
|
|
•
|
our ability to respond to price, innovation and other competitive pressures in the global apparel industry, on and from our key customers and in our key markets;
|
|
•
|
our ability to increase the number of dedicated stores for our products, including through opening and profitably operating company-operated stores;
|
|
•
|
consequences of foreign currency exchange and interest rate fluctuations;
|
|
•
|
our ability to successfully prevent or mitigate the impacts of data security breaches;
|
|
•
|
our ability to attract and retain key executives and other key employees;
|
|
•
|
our ability to protect our trademarks and other intellectual property;
|
|
•
|
the impact of the variables that affect the net periodic benefit cost and future funding requirements of our postretirement benefits and pension plans;
|
|
•
|
our dependence on key distribution channels, customers and suppliers;
|
|
•
|
our ability to utilize our tax credits and net operating loss carryforwards;
|
|
•
|
ongoing or future litigation matters and disputes and regulatory developments;
|
|
•
|
the impact of the recently passed Tax Act in the U.S., including related changes to our deferred tax assets and liabilities, tax obligations and effective tax rate in future periods, as well as the provisional charge recorded in the first quarter of 2018 based on a reasonable estimate, and are subject to change;
|
|
•
|
changes in or application of trade and tax laws, potential increases in import tariffs or taxes and the potential renegotiation of NAFTA; and
|
|
•
|
political, social and economic instability, or natural disasters, in countries where we or our customers do business.
|
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
Item 4.
|
CONTROLS AND PROCEDURES
|
|
Item 1.
|
LEGAL PROCEEDINGS
|
|
Item 1A.
|
RISK FACTORS
|
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
|
Item 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
|
Item 5.
|
OTHER INFORMATION
|
|
Item 6.
|
EXHIBITS
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document. Filed herewith.
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document. Filed herewith.
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document. Filed herewith.
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document. Filed herewith.
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document. Filed herewith.
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document. Filed herewith.
|
|
|
|
|
|
|
|
* Management contract, compensatory plan or arrangement.
|
|
Date:
|
October 9, 2018
|
|
LEVI STRAUSS & Co.
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ GAVIN BROCKETT
|
|
|
|
|
Gavin Brockett
Senior Vice President and Global Controller
|
|
|
|
|
(Principal Accounting Officer and Duly Authorized Officer)
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
Customers
| Customer name | Ticker |
|---|---|
| The Gap, Inc. | GPS |
| Nordstrom, Inc. | JWN |
| Ross Stores, Inc. | ROST |
| The TJX Companies, Inc. | TJX |
Suppliers
| Supplier name | Ticker |
|---|---|
| Expeditors International of Washington, Inc. | EXPD |
| Eastman Chemical Company | EMN |
| Matson, Inc. | MATX |
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|