1Q 2014 Form 10-Q
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
Form 10-Q
(Mark One)
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þ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended February 23, 2014
or
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¨ | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 002-90139
_________________
LEVI STRAUSS & CO.
(Exact Name of Registrant as Specified in Its Charter)
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| | |
DELAWARE | | 94-0905160 |
(State or Other Jurisdiction of Incorporation or Organization) | | (I.R.S. Employer Identification No.) |
1155 Battery Street, San Francisco, California 94111
(Address of Principal Executive Offices) (Zip Code)
(415) 501-6000
(Registrant’s Telephone Number, Including Area Code)
None
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
_________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨ No þ
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of “Large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer ¨ | | Accelerated filer ¨ | | Non-accelerated filer þ | | Smaller reporting company ¨ |
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ
The Company is privately held. Nearly all of its common equity is owned by descendants of the family of the Company’s founder, Levi Strauss, and their relatives. There is no trading in the common equity and therefore an aggregate market value based on sales or bid and asked prices is not determinable.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock $.01 par value — 37,401,466 shares outstanding on April 3, 2014
LEVI STRAUSS & CO. AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
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Item 1. | | | |
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Item 2. | | | |
Item 3. | | | |
Item 4. | | | |
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Item 1. | | | |
Item 1A. | | | |
Item 2. | | | |
Item 3. | | | |
Item 4. | | | |
Item 5. | | | |
Item 6. | | | |
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PART I — FINANCIAL INFORMATION
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Item 1. | CONSOLIDATED FINANCIAL STATEMENTS |
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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| | | | | | | |
| (Unaudited) | | |
| February 23, 2014 | | November 24, 2013 |
| (Dollars in thousands) |
ASSETS |
Current Assets: | | | |
Cash and cash equivalents | $ | 502,830 |
| | $ | 489,258 |
|
Trade receivables, net of allowance for doubtful accounts of $18,205 and $18,264 | 388,315 |
| | 446,671 |
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Inventories: | | | |
Raw materials | 3,774 |
| | 3,361 |
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Work-in-process | 6,157 |
| | 6,597 |
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Finished goods | 655,682 |
| | 593,909 |
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Total inventories | 665,613 |
| | 603,867 |
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Deferred tax assets, net | 196,582 |
| | 187,836 |
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Other current assets | 116,189 |
| | 112,082 |
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Total current assets | 1,869,529 |
| | 1,839,714 |
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Property, plant and equipment, net of accumulated depreciation of $787,593 and $775,933 | 422,672 |
| | 439,861 |
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Goodwill | 241,756 |
| | 241,228 |
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Other intangible assets, net | 48,460 |
| | 49,149 |
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Non-current deferred tax assets, net | 452,723 |
| | 448,839 |
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Other non-current assets | 110,814 |
| | 108,627 |
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Total assets | $ | 3,145,954 |
| | $ | 3,127,418 |
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LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY |
Current Liabilities: | | | |
Short-term debt | $ | 35,489 |
| | $ | 41,861 |
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Accounts payable | 249,772 |
| | 254,516 |
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Accrued salaries, wages and employee benefits | 161,822 |
| | 209,966 |
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Restructuring liabilities | 56,978 |
| | — |
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Accrued interest payable | 32,530 |
| | 5,346 |
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Accrued income taxes | 27,323 |
| | 11,301 |
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Other accrued liabilities | 219,853 |
| | 262,488 |
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Total current liabilities | 783,767 |
| | 785,478 |
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Long-term debt | 1,510,302 |
| | 1,504,016 |
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Long-term capital leases | 10,699 |
| | 10,243 |
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Postretirement medical benefits | 121,651 |
| | 122,248 |
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Pension liability | 327,372 |
| | 326,767 |
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Long-term employee related benefits | 74,429 |
| | 73,386 |
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Long-term income tax liabilities | 28,572 |
| | 30,683 |
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Other long-term liabilities | 59,729 |
| | 61,097 |
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Total liabilities | 2,916,521 |
| | 2,913,918 |
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Commitments and contingencies |
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Temporary equity | 38,796 |
| | 38,524 |
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Stockholders’ Equity: | | | |
Levi Strauss & Co. stockholders’ equity | | | |
Common stock — $.01 par value; 270,000,000 shares authorized; 37,446,988 shares and 37,446,087 shares issued and outstanding | 374 |
| | 374 |
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Additional paid-in capital | 9,405 |
| | 7,361 |
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Retained earnings | 495,928 |
| | 475,960 |
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Accumulated other comprehensive loss | (317,989 | ) | | (312,029 | ) |
Total Levi Strauss & Co. stockholders’ equity | 187,718 |
| | 171,666 |
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Noncontrolling interest | 2,919 |
| | 3,310 |
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Total stockholders’ equity | 190,637 |
| | 174,976 |
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Total liabilities, temporary equity and stockholders’ equity | $ | 3,145,954 |
| | $ | 3,127,418 |
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The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
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| Three Months Ended |
| February 23, 2014 | | February 24, 2013 |
| (Dollars in thousands) (Unaudited) |
Net revenues | $ | 1,129,990 |
| | $ | 1,146,678 |
|
Cost of goods sold | 553,637 |
| | 554,800 |
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Gross profit | 576,353 |
| | 591,878 |
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Selling, general and administrative expenses | 424,762 |
| | 410,423 |
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Restructuring | 57,935 |
| | — |
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Operating income | 93,656 |
| | 181,455 |
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Interest expense | (31,829 | ) | | (32,157 | ) |
Loss on early extinguishment of debt | — |
| | (114 | ) |
Other income, net | 4,183 |
| | 6,066 |
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Income before income taxes | 66,010 |
| | 155,250 |
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Income tax expense | 16,387 |
| | 48,375 |
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Net income | 49,623 |
| | 106,875 |
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Net loss attributable to noncontrolling interest | 348 |
| | 145 |
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Net income attributable to Levi Strauss & Co. | $ | 49,971 |
| | $ | 107,020 |
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The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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| Three Months Ended |
| February 23, 2014 | | February 24, 2013 |
| (Dollars in thousands) (Unaudited) |
Net income | $ | 49,623 |
| | $ | 106,875 |
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Other comprehensive loss, net of related income taxes: | | | |
Pension and postretirement benefits | 2,302 |
| | 3,909 |
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Net investment hedge losses | (4,228 | ) | | (3,638 | ) |
Foreign currency translation losses | (4,114 | ) | | (3,097 | ) |
Unrealized gain (loss) on marketable securities | 39 |
| | (962 | ) |
Total other comprehensive loss | (6,001 | ) | | (3,788 | ) |
Comprehensive income | 43,622 |
| | 103,087 |
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Comprehensive loss attributable to noncontrolling interest | 389 |
| | 806 |
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Comprehensive income attributable to Levi Strauss & Co. | $ | 44,011 |
| | $ | 103,893 |
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The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
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| Three Months Ended |
| February 23, 2014 | | February 24, 2013 |
| (Dollars in thousands) (Unaudited) |
Cash Flows from Operating Activities: | | | |
Net income | $ | 49,623 |
| | $ | 106,875 |
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Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Depreciation and amortization | 26,945 |
| | 28,368 |
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Asset impairments | 234 |
| | 835 |
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Loss (gain) on disposal of assets | 3 |
| | (149 | ) |
Unrealized foreign exchange gains | (3,785 | ) | | (6,189 | ) |
Realized (gain) loss on settlement of forward foreign exchange contracts not designated for hedge accounting | (5,915 | ) | | 2,710 |
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Employee benefit plans’ amortization from accumulated other comprehensive loss | 3,692 |
| | 5,767 |
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Noncash restructuring charges | 957 |
| | — |
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Noncash loss on extinguishment of debt | — |
| | 114 |
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Amortization of deferred debt issuance costs | 1,099 |
| | 1,066 |
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Stock-based compensation | 2,314 |
| | 1,435 |
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Allowance for doubtful accounts | 703 |
| | 2,153 |
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Change in operating assets and liabilities: | | | |
Trade receivables | 63,555 |
| | 97,437 |
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Inventories | (55,739 | ) | | (56,050 | ) |
Other current assets | (8,749 | ) | | 12,471 |
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Other non-current assets | 168 |
| | (6,629 | ) |
Accounts payable and other accrued liabilities | (45,417 | ) | | 2,859 |
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Restructuring liabilities | 56,978 |
| | — |
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Income tax liabilities | 3,020 |
| | 34,212 |
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Accrued salaries, wages and employee benefits and long-term employee related benefits | (53,302 | ) | | (83,244 | ) |
Other long-term liabilities | (326 | ) | | (1,093 | ) |
Other, net | (384 | ) | | 106 |
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Net cash provided by operating activities | 35,674 |
| | 143,054 |
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Cash Flows from Investing Activities: | | | |
Purchases of property, plant and equipment | (20,434 | ) | | (20,883 | ) |
Proceeds from sale of assets | 47 |
| | 45 |
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Proceeds (payments) on settlement of forward foreign exchange contracts not designated for hedge accounting | 5,915 |
| | (2,710 | ) |
Acquisitions, net of cash acquired | (75 | ) | | — |
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Net cash used for investing activities | (14,547 | ) | | (23,548 | ) |
Cash Flows from Financing Activities: | | | |
Repayments of long-term debt and capital leases | (1,029 | ) | | (50,450 | ) |
Proceeds from short-term credit facilities | 3,088 |
| | 24,668 |
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Repayments of short-term credit facilities | (2,423 | ) | | (27,143 | ) |
Other short-term borrowings, net | (7,179 | ) | | 2,128 |
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Restricted cash | 560 |
| | (127 | ) |
Excess tax benefits from stock-based compensation | 29 |
| | — |
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Dividend to stockholders | — |
| | (25,076 | ) |
Net cash used for financing activities | (6,954 | ) | | (76,000 | ) |
Effect of exchange rate changes on cash and cash equivalents | (601 | ) | | (44 | ) |
Net increase in cash and cash equivalents | 13,572 |
| | 43,462 |
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Beginning cash and cash equivalents | 489,258 |
| | 406,134 |
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Ending cash and cash equivalents | $ | 502,830 |
| | $ | 449,596 |
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Supplemental disclosure of cash flow information: | | | |
Cash paid during the period for: | | | |
Interest | $ | 2,490 |
| | $ | 4,580 |
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Income taxes | 13,441 |
| | (15,376 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Levi Strauss & Co. (the “Company”) is one of the world’s leading branded apparel companies. The Company designs and markets jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children around the world under the Levi’s®, Dockers®, Signature by Levi Strauss & Co.™ and Denizen® brands. The Company operates its business through three geographic regions: Americas, Europe and Asia.
Basis of Presentation and Principles of Consolidation
The unaudited consolidated financial statements of the Company and its wholly-owned and majority-owned foreign and domestic subsidiaries are prepared in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim financial information. In the opinion of management, all adjustments necessary for a fair statement of the financial position and the results of operations for the periods presented have been included. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended November 24, 2013, included in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (“SEC”) on February 11, 2014.
The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions have been eliminated. Management believes the disclosures are adequate to make the information presented herein not misleading. The results of operations for the three months ended February 23, 2014, may not be indicative of the results to be expected for any other interim period or the year ending November 30, 2014.
The Company’s fiscal year ends on the last Sunday of November in each year, although the fiscal years of certain foreign subsidiaries end on November 30. Each quarter of both fiscal years 2014 and 2013 consists of 13 weeks, with the exception of the fourth quarter of 2014, which will consist of 14 weeks. All references to years relate to fiscal years rather than calendar years.
Subsequent events have been evaluated through the issuance date of these financial statements.
The financing section of the Company's consolidated statements of cash flows has been corrected to present the proceeds and repayments of short-term credit facility borrowings with terms greater than three months on a gross basis. Amounts were previously presented on a net basis. There was no change to the total financing cash flows and the change was immaterial to the financial statements taken as a whole.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the related notes to the consolidated financial statements. Estimates are based upon historical factors, current circumstances and the experience and judgment of the Company’s management. Management evaluates its estimates and assumptions on an ongoing basis and may employ outside experts to assist in its evaluations. Changes in such estimates, based on more accurate future information, or different assumptions or conditions, may affect amounts reported in future periods.
Restructuring Liabilities
Upon approval of a restructuring plan, the Company records restructuring liabilities for employee severance and related termination benefits when they become probable and estimable for recurring arrangements. The Company records other costs associated with exit activities as they are incurred. The long-term portion of restructuring liabilities is included in “Other long-term liabilities” in the Company’s consolidated balance sheets.
Recently Issued Accounting Standards
There have been no developments to recently issued accounting standards, including the expected dates of adoption and estimated effects on the Company’s consolidated financial statements, from those disclosed in the Company’s 2013 Annual Report on Form 10-K.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 2: FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the Company’s financial instruments that are carried at fair value:
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| | | | | | | | | | | | | | | | | | | | | | | |
| February 23, 2014 | | November 24, 2013 |
| | | 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 | $ | 24,122 |
| | $ | 24,122 |
| | $ | — |
| | $ | 23,752 |
| | $ | 23,752 |
| | $ | — |
|
Forward foreign exchange contracts, net | 8,813 |
| | — |
| | 8,813 |
| | 7,145 |
| | — |
| | 7,145 |
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Total | $ | 32,935 |
| | $ | 24,122 |
| | $ | 8,813 |
| | $ | 30,897 |
| | $ | 23,752 |
| | $ | 7,145 |
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Financial liabilities carried at fair value | | | | | | | | | | | |
Forward foreign exchange contracts, net | $ | 5,610 |
| | $ | — |
| | $ | 5,610 |
| | $ | 2,335 |
| | $ | — |
| | $ | 2,335 |
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(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. |
The following table presents the carrying value – including related accrued interest – and estimated fair value of the Company’s financial instruments that are carried at adjusted historical cost:
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| | | | | | | | | | | | | | | |
| February 23, 2014 | | November 24, 2013 |
| Carrying Value | | Estimated Fair Value(1) | | Carrying Value | | Estimated Fair Value(1) |
| (Dollars in thousands) |
Financial liabilities carried at adjusted historical cost | | | | | | | |
4.25% Yen-denominated Eurobonds due 2016 | $ | 39,634 |
| | $ | 39,634 |
| | $ | 39,659 |
| | $ | 38,523 |
|
7.75% Euro senior notes due 2018 | 420,259 |
| | 440,322 |
| | 405,304 |
| | 432,098 |
|
7.625% senior notes due 2020 | 536,009 |
| | 582,602 |
| | 526,112 |
| | 577,956 |
|
6.875% senior notes due 2022 | 545,979 |
| | 599,444 |
| | 537,447 |
| | 588,275 |
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Short-term borrowings | 35,724 |
| | 35,724 |
| | 41,976 |
| | 41,976 |
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Total | $ | 1,577,605 |
| | $ | 1,697,726 |
| | $ | 1,550,498 |
| | $ | 1,678,828 |
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(1) | Fair value estimate incorporates mid-market price quotes. |
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 3: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
As of February 23, 2014, the Company had forward foreign exchange contracts to buy $678.1 million and to sell $397.1 million against various foreign currencies. These contracts are at various exchange rates and expire at various dates through August 2015.
The table below provides data about the carrying values of derivative instruments and non-derivative instruments:
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| | | | | | | | | | | | | | | | | | | | | | | |
| February 23, 2014 | | November 24, 2013 |
| 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 | $ | 12,896 |
| | $ | (4,083 | ) | | $ | 8,813 |
| | $ | 11,145 |
| | $ | (4,000 | ) | | $ | 7,145 |
|
Forward foreign exchange contracts | 1,271 |
| | (6,881 | ) | | (5,610 | ) | | 880 |
| | (3,215 | ) | | (2,335 | ) |
Total | $ | 14,167 |
| | $ | (10,964 | ) | | | | $ | 12,025 |
| | $ | (7,215 | ) | | |
Non-derivatives designated as hedging instruments | | | | | | | | | | | |
4.25% Yen-denominated Eurobonds due 2016 | $ | — |
| | $ | (19,556 | ) | | | | $ | — |
| | $ | (20,564 | ) | | |
7.75% Euro senior notes due 2018 | — |
| | (411,540 | ) | | | | — |
| | (404,430 | ) | | |
Total | $ | — |
| | $ | (431,096 | ) | | | | $ | — |
| | $ | (424,994 | ) | | |
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. The table below presents, by type of financial instrument, the gross amounts of the Company's derivative instruments, amounts offset due to master netting arrangements with the Company's various counterparties, and the net amounts recognized on the Company's consolidated balance sheets:
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| | | | | | | | | | | | | | | | | | | | | | | |
| February 23, 2014 | | November 24, 2013 |
| Gross Amounts of Recognized Assets/(Liabilities) | | Gross Amounts Offset in the Statement of Financial Position | | Net Amounts of Assets/(Liabilities) Presented in the Statement of Financial Position | | Gross Amounts of Recognized Assets/(Liabilities) | | Gross Amounts Offset in the Statement of Financial Position | | Net Amounts of Assets/(Liabilities) Presented in the Statement of Financial Position |
| | | | |
| (Dollars in thousands) |
Over-the-counter forward foreign exchange contracts | | | | | | | | | | | |
Financial assets | $ | 11,411 |
| | $ | (5,354 | ) | | $ | 6,057 |
| | $ | 8,600 |
| | $ | (4,880 | ) | | $ | 3,720 |
|
Financial liabilities | (6,835 | ) | | 5,354 |
| | (1,481 | ) | | (5,855 | ) | | 4,880 |
| | (975 | ) |
Total | | | | | $ | 4,576 |
| | | | | | $ | 2,745 |
|
Embedded derivative contracts | | | | | | | | | | | |
Financial assets | $ | 2,756 |
| | $ | — |
| | $ | 2,756 |
| | $ | 3,425 |
| | $ | — |
| | $ | 3,425 |
|
Financial liabilities | (4,129 | ) | | — |
| | (4,129 | ) | | (1,360 | ) | | — |
| | (1,360 | ) |
Total | | | | | $ | (1,373 | ) | | | | | | $ | 2,065 |
|
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
The table below provides data about the amount of gains and losses related to derivative instruments and non-derivative instruments designated as net investment hedges included in “Accumulated other comprehensive loss” (“AOCI”) on the Company’s consolidated balance sheets, and in “Other income, net” in the Company’s consolidated statements of income:
|
| | | | | | | | | | | | | | | |
| Gain or (Loss) Recognized in AOCI (Effective Portion) | | Gain or (Loss) Recognized in Other Income, net (Ineffective Portion and Amount Excluded from Effectiveness Testing) |
| As of | | As of | | Three Months Ended |
February 23, 2014 | November 24, 2013 | February 23, 2014 | | February 24, 2013 |
| (Dollars in thousands) |
Forward foreign exchange contracts | $ | 4,637 |
| | $ | 4,637 |
| |
|
| |
|
|
4.25% Yen-denominated Eurobonds due 2016 | (20,944 | ) | | (21,161 | ) | | $ | 217 |
| | $ | 2,328 |
|
7.75% Euro senior notes due 2018 | (34,471 | ) | | (27,361 | ) | | — |
| | — |
|
Cumulative income taxes | 19,851 |
| | 17,186 |
| | | | |
Total | $ | (30,927 | ) | | $ | (26,699 | ) | | | | |
The table below provides data about the amount of gains and losses related to derivatives not designated as hedging instruments included in “Other income, net” in the Company’s consolidated statements of income:
|
| | | | | | | |
| Gain or (Loss) |
| Three Months Ended |
| February 23, 2014 | | February 24, 2013 |
| (Dollars in thousands) |
Forward foreign exchange contracts: | | | |
Realized | $ | 5,915 |
| | $ | (2,710 | ) |
Unrealized | (1,479 | ) | | (109 | ) |
Total | $ | 4,436 |
| | $ | (2,819 | ) |
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 4: DEBT
|
| | | | | | | | | |
| | February 23, 2014 | | November 24, 2013 | |
| | (Dollars in thousands) | |
| | | |
| Long-term debt | | | | |
| Unsecured: | | | | |
| 4.25% Yen-denominated Eurobonds due 2016 | $ | 39,112 |
| | $ | 39,545 |
| |
| 7.75% Euro senior notes due 2018 | 411,540 |
| | 404,430 |
| |
| 7.625% senior notes due 2020 | 525,000 |
| | 525,000 |
| |
| 6.875% senior notes due 2022 | 534,650 |
| | 535,041 |
| |
| Total unsecured | 1,510,302 |
| | 1,504,016 |
| |
| Total long-term debt | $ | 1,510,302 |
| | $ | 1,504,016 |
| |
| Short-term debt | | | | |
| Short-term borrowings | $ | 35,489 |
| | $ | 41,861 |
| |
| Total short-term debt | $ | 35,489 |
| | $ | 41,861 |
| |
| Total long-term and short-term debt | $ | 1,545,791 |
| | $ | 1,545,877 |
| |
Interest Rates on Borrowings
The Company’s weighted-average interest rate on average borrowings outstanding during the three months ended February 23, 2014, was 7.91% as compared to 6.91% in the same period of 2013.
Senior Secured Revolving Credit Facility
The Company’s unused availability under its senior secured revolving credit facility was $626.0 million at February 23, 2014, as the Company’s total availability of $693.7 million was reduced by $67.7 million of letters of credit and other credit usage allocated under the credit facility.
Subsequent Event – Senior Secured Revolving Credit Facility
On March 21, 2014, the Company amended and restated its senior secured revolving credit facility, extending the term of the credit facility through March 2019, subject to shortening if obligations under the Company's Euro senior notes due 2018 are outstanding on February 13, 2018. The terms of the amended and restated credit facility are similar to the terms under the existing credit facility, except that of the maximum availability of $850.0 million, $350.0 million is secured by the U.S. Levi's® trademarks, an increase from the $250.0 million stated in the existing credit facility. The interest rate for borrowings under the credit facility was reduced from LIBOR plus 150 – 275 basis points to LIBOR plus 125 – 200 basis points, depending on borrowing base availability, and the range of the rate for undrawn availability was reduced from 37.5 – 50 basis points to 25 – 30 basis points (depending on the Company's credit ratings). Under the terms of the amended and restated credit facility, total availability as of February 23, 2014, would have been enhanced to $839.7 million, based on collateral levels as defined by the agreement.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 5: EMPLOYEE BENEFIT PLANS
The following table summarizes the components of net periodic benefit cost and the changes recognized in “Accumulated other comprehensive loss” for the Company’s defined benefit pension plans and postretirement benefit plans:
|
| | | | | | | | | | | | | | | |
| Pension Benefits | | Postretirement Benefits |
| Three Months Ended | | Three Months Ended |
| February 23, 2014 | | February 24, 2013 | | February 23, 2014 | | February 24, 2013 |
| (Dollars in thousands) |
Net periodic benefit cost: | | | | | | | |
Service cost | $ | 2,159 |
| | $ | 2,281 |
| | $ | 68 |
| | $ | 94 |
|
Interest cost | 13,761 |
| | 13,066 |
| | 1,338 |
| | 1,239 |
|
Expected return on plan assets | (13,843 | ) | | (14,014 | ) | | — |
| | — |
|
Amortization of prior service benefit | (17 | ) | | (20 | ) | | (1 | ) | | (122 | ) |
Amortization of actuarial loss | 2,696 |
| | 4,218 |
| | 989 |
| | 1,691 |
|
Curtailment loss | 232 |
| | — |
| | 700 |
| | — |
|
Net settlement loss | 60 |
| | 45 |
| | — |
| | — |
|
Net periodic benefit cost | 5,048 |
| | 5,576 |
| | 3,094 |
| | 2,902 |
|
Changes in accumulated other comprehensive loss: | | | | | | | |
Amortization of prior service benefit | 17 |
| | 20 |
| | 1 |
| | 122 |
|
Amortization of actuarial loss | (2,696 | ) | | (4,218 | ) | | (989 | ) | | (1,691 | ) |
Curtailment loss | — |
| | (440 | ) | | — |
| | — |
|
Net settlement loss | (25 | ) | | — |
| | — |
| | — |
|
Total recognized in accumulated other comprehensive loss | (2,704 | ) | | (4,638 | ) | | (988 | ) | | (1,569 | ) |
Total recognized in net periodic benefit cost and accumulated other comprehensive loss | $ | 2,344 |
| | $ | 938 |
| | $ | 2,106 |
| | $ | 1,333 |
|
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 6: RESTRUCTURING LIABILITIES
On February 5, 2014, at a regular meeting of the Company's Board of Directors (the “Board”), the Board endorsed a global productivity initiative designed to streamline operations and fuel long-term profitable growth. This initiative will be implemented in phases over the next 12 to 18 months. The Board also delegated authority to an ad hoc committee of the Board (“Ad Hoc Committee”) to approve the terms of the first phase of the global productivity initiative, including the expected timing and implementation thereof. On March 24-25, 2014, the Ad Hoc Committee of the Board approved the terms of the first phase of the global productivity initiative presented by management. On March 26, 2014, the Company announced and began to implement the first phase of the global productivity initiative.
The first phase of the global productivity initiative includes the elimination of approximately 800 positions within the Company’s global non-retail and non-manufacturing employee population and a centrally-led procurement savings project. The role eliminations reflect a reduction of management layers, an increase in spans of control, the removal of duplicative roles, a regrouping of country clusters and other structural changes. The Company anticipates the elimination of positions will be substantially completed within the U.S. and Asia within the second quarter of 2014. Final estimates for headcount, timing and charges in certain areas of the international business are subject to completion of applicable local works council and other consultative processes.
For the three-month period ended February 23, 2014, the Company recognized restructuring charges of $57.9 million, which were recorded on a separate line item in the Company's consolidated statements of income. These charges primarily relate to severance benefits, based on separation benefits provided by Company policy or statutory benefit plans, and consulting fees. The charges relating to severance benefits were recorded in the first quarter of 2014 as the amounts became probable in the first quarter when the Board endorsed the initiative on February 5, 2014, and amounts became estimable prior to issuance of these financial statements when the Ad Hoc Committee approved the terms of the first phase of the global productivity initiative on March 24-25, 2014. Related charges of $6.4 million, consisting primarily of costs related to the Company's procurement savings project, were recorded in "Selling, general and administrative expenses" in the Company's consolidated statements of income.
The Company estimates that it will incur future additional restructuring charges related to this first phase of the global productivity initiative. Additionally, the Company is unable at this time to make a good faith determination of cost estimates, or ranges of cost estimates, associated with future phases of the global productivity initiative. Cash payments for the first phase of the global productivity initiative are expected to be made primarily in 2014.
The following table summarizes the restructuring activity and the related restructuring liabilities balances as of February 23, 2014:
|
| | | | | | | | | | | | | | | | | | | |
| 2014 Restructuring Activities |
| Liabilities | | | | | | | | Liabilities |
| November 24, 2013 | | Charges | | Payments | | Adjustments(2) | | February 23, 2014 |
| (Dollars in thousands) |
| | | | | | | | | |
Severance and employee-related benefits | $ | — |
| | $ | 52,278 |
| | $ | — |
| | $ | (957 | ) | | $ | 51,321 |
|
Lease and other contract termination costs | — |
| | — |
| | — |
| | — |
| | — |
|
Other(1) | — |
| | 5,657 |
| | — |
| | — |
| | 5,657 |
|
Total | $ | — |
| | $ | 57,935 |
| | $ | — |
| | $ | (957 | ) | | $ | 56,978 |
|
| | | | | | | | | |
Current portion | $ | — |
| | | | | | | | $ | 56,978 |
|
Long-term portion | — |
| | | | | | | | — |
|
Total | $ | — |
| | | | | | | | $ | 56,978 |
|
_____________
| |
(1) | Other restructuring costs primarily relate to consulting fees and legal expenses, which are expensed as incurred. |
| |
(2) | Adjustments primarily relate to pension and postretirement curtailment losses. |
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 7: COMMITMENTS AND CONTINGENCIES
Forward Foreign Exchange Contracts
The Company uses over-the-counter derivative instruments to manage its exposure to foreign currencies. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the forward foreign exchange contracts. However, the Company believes that its exposures are appropriately diversified across counterparties and that these counterparties are creditworthy financial institutions. Please see Note 3 for additional information.
Other Contingencies
Litigation. There have been no material developments with respect to the information previously reported in the Company’s 2013 Annual Report on Form 10-K related to legal proceedings.
In the ordinary course of business, the Company has various pending cases involving contractual matters, facility and employee-related matters, distribution matters, product liability claims, trademark infringement and other matters. The Company does not believe any of these pending legal proceedings will have a material impact on its financial condition, results of operations or cash flows.
NOTE 8: DIVIDEND
The Company's Board of Directors declared a cash dividend of $30.0 million in the first quarter of 2014, payable in the second quarter of 2014 to stockholders of record at the close of business on February 18, 2014. Dividend payable is included in "Other accrued liabilities" on the Company's consolidated balance sheets. Subsequent to the Company's quarter-end, on April 4, 2014, the Company paid the cash dividend.
The Company does not have an established annual dividend policy. The Company will continue to review its ability to pay cash dividends at least annually, and dividends may be declared at the discretion of the Company's Board of Directors depending upon, among other factors, the income tax impact to the dividend recipients, the Company's financial condition and compliance with the terms of the Company's debt agreements.
NOTE 9: ACCUMULATED OTHER COMPREHENSIVE LOSS
The following is a summary of the components of “Accumulated other comprehensive loss,” net of related income taxes:
|
| | | | | | | | | |
| | February 23, 2014 | | November 24, 2013 | |
| | (Dollars in thousands) | |
| Pension and postretirement benefits | $ | (224,470 | ) | | $ | (226,772 | ) | |
| Net investment hedge losses | (30,927 | ) | | (26,699 | ) | |
| Foreign currency translation losses | (54,572 | ) | | (50,458 | ) | |
| Unrealized gain on marketable securities | 1,305 |
| | 1,266 |
| |
| Accumulated other comprehensive loss | (308,664 | ) | | (302,663 | ) | |
| Accumulated other comprehensive income attributable to noncontrolling interest | 9,325 |
| | 9,366 |
| |
| Accumulated other comprehensive loss attributable to Levi Strauss & Co. | $ | (317,989 | ) | | $ | (312,029 | ) | |
No amounts were reclassified out of "Accumulated other comprehensive loss" into net income other than those that pertain to the Company's pension and postretirement benefit plans. Please see Note 5 for additional information. These amounts are included in "Selling, general and administrative expenses" in the consolidated statements of income.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 10: OTHER INCOME, NET
The following table summarizes significant components of “Other income, net”:
|
| | | | | | | | | |
| | Three Months Ended | |
| | February 23, 2014 | | February 24, 2013 | |
| | (Dollars in thousands) | |
| Foreign exchange management gains (losses) | $ | 4,436 |
| | $ | (2,819 | ) | |
| Foreign currency transaction (losses) gains | (2,238 | ) | | 4,398 |
| |
| Interest income | 627 |
| | 391 |
| |
| Investment income | 307 |
| | 2,805 |
| |
| Other | 1,051 |
| | 1,291 |
| |
| Total other income, net | $ | 4,183 |
| | $ | 6,066 |
| |
NOTE 11: INCOME TAXES
The effective income tax rate was 24.8% for the three months ended February 23, 2014, compared to 31.2% for the same period ended February 24, 2013. Of the decrease in the effective tax rate in 2014, 5.6% was due to a $3.7 million tax benefit that the Company recorded during the three months ended February 23, 2014, as a result of reversing a deferred tax liability associated with undistributed foreign earnings.
The Company historically provided for U.S. income taxes on all the undistributed earnings of foreign subsidiaries and provided for a deferred tax liability totaling $3.7 million as of November 24, 2013. During the first quarter of 2014, management made an assertion that $75.0 million of undistributed foreign earnings in certain foreign subsidiaries are indefinitely reinvested. As such, the Company recorded a $3.7 million tax benefit resulting from reversal of the previously recorded deferred tax liability on undistributed foreign earnings.
NOTE 12: RELATED PARTIES
Robert D. Haas, Chairman Emeritus of the Company, is the President of the Levi Strauss Foundation, which is not a consolidated entity of the Company. During the three-month period ended February 23, 2014, the Company donated $5.2 million to the Levi Strauss Foundation as compared to $3.1 million for the same prior-year period.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED FEBRUARY 23, 2014
NOTE 13: BUSINESS SEGMENT INFORMATION
The Company manages its business according to three regional segments: the Americas, Europe and Asia. The Company considers its chief executive officer to be the Company’s chief operating decision maker. The Company’s management, including the chief operating decision maker, manages business operations, evaluates performance and allocates resources based on the regional segments’ net revenues and operating income.
Effective as of the beginning of 2014, the Company's reporting segments were revised to combine its Middle East and North Africa markets, previously managed by the Company's Europe region, with the Company's Asia Pacific region, which was renamed to Asia as a result of the change. Financial information attributable to these markets are not significant to any of the Company's regional segments individually in any of the periods presented herein, and accordingly, business segment information for the prior year has not been revised.
Business segment information for the Company is as follows:
|
| | | | | | | |
| Three Months Ended |
| February 23, 2014 | | February 24, 2013 |
| (Dollars in thousands) |
Net revenues: | | | |
Americas | $ | 626,836 |
| | $ | 647,127 |
|
Europe | 300,426 |
| | 296,587 |
|
Asia | 202,728 |
| | 202,964 |
|
Total net revenues | $ | 1,129,990 |
| | $ | 1,146,678 |
|
Operating income: | | | |
Americas | $ | 111,052 |
| | $ | 132,463 |
|
Europe | 71,406 |
| | 62,926 |
|
Asia | 46,902 |
| | 48,965 |
|
Regional operating income | 229,360 |
| | 244,354 |
|
Corporate: | | | |
Restructuring | 57,935 |
| | — |
|
Other corporate staff costs and expenses | 77,769 |
| | 62,899 |
|
Corporate expenses | 135,704 |
| | 62,899 |
|
Total operating income | 93,656 |
| | 181,455 |
|
Interest expense | (31,829 | ) | | (32,157 | ) |
Loss on early extinguishment of debt | — |
| | (114 | ) |
Other income, net | 4,183 |
| | 6,066 |
|
Income before income taxes | $ | 66,010 |
| | $ | 155,250 |
|
|
| |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Overview
We design, market and sell – directly or through third parties and licensees – products that include jeans, casual and dress pants, tops, shorts, skirts, jackets, footwear and related accessories for men, women and children around the world under our Levi’s®, Dockers®, Signature by Levi Strauss & Co.™ (“Signature”) and Denizen® brands.
Our business is operated through three geographic regions: Americas, Europe and Asia. Our products are sold in approximately 50,000 retail locations in more than 110 countries. We support our brands through a global infrastructure, developing, sourcing and marketing our products around the world. We distribute our Levi’s® and Dockers® products primarily through chain retailers and department stores in the United States and primarily through department stores, specialty retailers and approximately 2,200 franchised or other brand-dedicated stores and shop-in-shops outside of the United States. We also distribute our Levi’s® and Dockers® products through 537 company-operated stores located in 32 countries, including the United States, and through the online stores we operate. Our company-operated and online stores generated approximately 27% of our net revenues in the first three months of 2014, as compared to 24% in the same period in 2013, with our online stores representing approximately 13% of this revenue. In addition, we distribute our Levi’s® and Dockers® products through online stores operated by certain of our key wholesale customers and other third parties. We distribute products under our Signature and Denizen® brands primarily through mass channel retailers in the Americas.
Our Europe and Asia businesses, collectively, contributed approximately 45% of our net revenues and 52% of our regional operating income in the three-month period in 2014, as compared to 44% and 46% in the same period in 2013. Sales of Levi’s® brand products represented approximately 86% of our total net sales in each of the three-month periods in 2014 and 2013.
On February 5, 2014, at a regular meeting of our Board of Directors (“Board”), our Board endorsed a global productivity initiative designed to streamline operations and fuel long-term profitable growth. We expect this initiative to generate annualized cost savings of $175 – $200 million and will be implemented in phases over the next 12 to 18 months. On March 26, 2014, we announced and began to implement the first phase of the global productivity initiative.
The first phase of the global productivity initiative will deliver approximately $75 – $100 million in annualized savings before related charges, with restructuring and other related charges of approximately $64 million recorded in the first fiscal quarter of 2014. Approximately $58 million are recorded as restructuring charges and consist primarily of severance benefits and consulting fees. Related charges of approximately $6 million, consisting primarily of costs related a centrally-led procurement savings project, are recorded in selling, general and administrative expense ("SG&A").
We estimate that we will incur future additional restructuring charges related to this first phase of the global productivity initiative. Additionally, we are unable at this time to make a good faith determination of cost estimates, or ranges of cost estimates, associated with future phases of the global productivity initiative. Cash payments for the first phase of the global productivity initiative are expected to be made primarily in 2014.
The first phase of the global productivity initiative includes the elimination of approximately 800 positions within our global non-retail and non-manufacturing employee population. We anticipate the elimination of positions will be substantially completed within the U.S. and Asia within the second fiscal quarter of 2014. Final estimates for headcount, timing and charges in certain areas of the international business are subject to completion of applicable local works council and other consultative processes.
We expect additional savings in future periods to come from streamlining our product development, planning and go-to-market strategies, implementing efficiencies across our supply chain and distribution network, adopting lower-cost service-delivery models and continuing to pursue more disciplined procurement practices. Additional restructuring charges will be recorded for these efforts as they become estimable and probable.
Trends Affecting Our Business
Our key long-term objectives are to strengthen our brands globally in order to deliver sustainable profitable growth, generate strong cash flow and reduce our debt. Critical strategies to achieve these objectives include driving our profitable core business; expanding the reach of our global brands and building a more balanced product portfolio; elevating the performance of our retail channel, including e-commerce; and leveraging our global scale to develop a competitive cost structure.
During the first quarter of 2014, soft retail market conditions impacted our performance in many markets around the world, particularly in our U.S. businesses. We and several of our wholesale customers experienced traffic declines during the Holiday season, partially driven by inclement weather across the U.S., but also as a result of lingering high unemployment, slow real wage growth and a shift in consumer spending to interest-rate sensitive durable goods. The weak Holiday traffic resulted in heavy sales promotions as retailers sought to clear seasonal merchandise, pressuring merchandise margins across the apparel industry. Consumers’ increasing focus on value pricing amid the recovering economy has also resulted in relative strength in the off-price retail channel, partially to the detriment of traditional broadline retailers, particularly at the mid-tier. Global competition remains an ongoing challenge, particularly in our international regions, where domestic and multi-national competitors continue their channel expansion in brick-and-mortar retail and e-commerce.
Our First Quarter 2014 Results
| |
• | Net revenues. Compared to the first quarter of 2013, consolidated net revenues decreased on a reported basis by 1% and were flat on a constant-currency basis, primarily reflecting lower sales at wholesale in the Americas, offset by improved performance in Asia and Europe. |
| |
• | Operating income. Compared to the first quarter of 2013, consolidated operating income decreased by 48% and operating margin declined to 8%, primarily reflecting restructuring charges, higher SG&A and lower gross margin in 2014. |
| |
• | Cash flows. Cash flows provided by operating activities were approximately $36 million for the three-month period in 2014 as compared to $143 million for the same period in 2013; the decrease reflected our lower beginning accounts receivable balance and our higher inventory levels. |
Financial Information Presentation
Fiscal year. Our fiscal year ends on the last Sunday of November in each year, although the fiscal years of certain foreign subsidiaries end on November 30. Each quarter of fiscal years 2014 and 2013 consists of 13 weeks, with the exception of the fourth quarter of 2014, which will consist of 14 weeks.
Segments. We manage our business according to three regional segments: the Americas, Europe and Asia. Effective as of the beginning of 2014, our reporting segments were revised to combine our Middle East and North Africa markets, previously managed by our Europe region, with our Asia Pacific region, which was renamed to Asia as a result of the change. Financial information attributable to these markets are not significant to any of the Company's regional segments individually in any of the periods presented herein, and accordingly, business segment information for the prior year has not been revised.
Classification. Our classification of certain significant revenues and expenses reflects the following:
| |
• | Net revenues is primarily comprised of sales of products to wholesale customers, including franchised stores, and direct sales to consumers at our company-operated and online stores and at our company-operated shop-in-shops located within department stores. It includes discounts, allowances for estimated returns and incentives. Net revenues also includes royalties earned from the use of our trademarks by third-party licensees in connection with the manufacturing, advertising and distribution of trademarked products. |
| |
• | Cost of goods sold is primarily comprised 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 costs 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. |
| |
• | 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. |
Gross margins may not be comparable to those of other companies in our industry since some companies may include costs related to their distribution network and occupancy costs associated with company-operated stores in cost of goods sold.
Constant currency. Effective as of the beginning of 2014, constant-currency comparisons are based on translating local currency amounts in the prior-year period at actual foreign exchange rates for the current year. Prior to 2014, local currency amounts were translated utilizing foreign exchange rates used in our internal planning process. There was no significant impact to our constant-currency comparisons as a result of this change. We routinely evaluate our financial performance on a constant-currency basis in order to facilitate period-to-period comparisons without regard to the impact of changing foreign currency exchange rates.
Results of Operations for Three Months Ended February 23, 2014, as Compared to Same Period in 2013
The following table summarizes, for the periods indicated, our consolidated statements of income, the changes in these items from period to period and these items expressed as a percentage of net revenues:
|
| | | | | | | | | | | | | | | | |
| Three Months Ended |
| February 23, 2014 | | February 24, 2013 | | % Increase (Decrease) | | February 23, 2014 | | February 24, 2013 |
| | | % of Net Revenues | | % of Net Revenues |
| (Dollars in millions) |
Net revenues | $ | 1,130.0 |
| | $ | 1,146.7 |
| | (1.5 | )% | | 100.0 | % | | 100.0 | % |
Cost of goods sold | 553.6 |
| | 554.8 |
| | (0.2 | )% | | 49.0 | % | | 48.4 | % |
Gross profit | 576.4 |
| | 591.9 |
| | (2.6 | )% | | 51.0 | % | | 51.6 | % |
Selling, general and administrative expenses | 424.8 |
| | 410.4 |
| | 3.5 | % | | 37.6 | % | | 35.8 | % |
Restructuring | 57.9 |
| | — |
| | — |
| | 5.1 | % | | — |
|
Operating income | 93.7 |
| | 181.5 |
| | (48.4 | )% | | 8.3 | % | | 15.8 | % |
Interest expense | (31.9 | ) | | (32.2 | ) | | (1.0 | )% | | (2.8 | )% | | (2.8 | )% |
Loss on early extinguishment of debt | — |
| | (0.1 | ) | | (100.0 | )% | | — |
| | — |
|
Other income, net | 4.2 |
| | 6.1 |
| | (31.0 | )% | | 0.4 | % | | 0.5 | % |
Income before income taxes | 66.0 |
| | 155.3 |
| | (57.5 | )% | | 5.8 | % | | 13.5 | % |
Income tax expense | 16.4 |
| | 48.4 |
| | (66.1 | )% | | 1.5 | % | | 4.2 | % |
Net income | 49.6 |
| | 106.9 |
| | (53.6 | )% | | 4.4 | % | | 9.3 | % |
Net loss attributable to noncontrolling interest | 0.4 |
| | 0.1 |
| | 140.0 | % | | — |
| | — |
|
Net income attributable to Levi Strauss & Co. | $ | 50.0 |
| | $ | 107.0 |
| | (53.3 | )% | | 4.4 | % | | 9.3 | % |
Net revenues
The following table presents net revenues by reporting segment for the periods indicated and the changes in net revenues by reporting segment on both reported and constant-currency bases from period to period.
|
| | | | | | | | | | | | | |
| Three Months Ended |
| | | | | % Increase (Decrease) |
| February 23, 2014 | | February 24, 2013 | | As Reported | | Constant Currency |
| (Dollars in millions) |
Net revenues: | | | | | | | |
Americas | $ | 626.9 |
| | $ | 647.1 |
| | (3.1 | )% | | (2.6 | )% |
Europe | 300.4 |
| | 296.6 |
| | 1.3 | % | | 0.4 | % |
Asia | 202.7 |
| | 203.0 |
| | (0.1 | )% | | 6.4 | % |
Total net revenues | $ | 1,130.0 |
| | $ | 1,146.7 |
| | (1.5 | )% | | (0.3 | )% |
Total net revenues decreased on both reported and constant-currency bases for the three-month period ended February 23, 2014, as compared to the same prior-year period.
Americas. For the three-month period, net revenues in our Americas region decreased on both reported and constant-currency bases, with currency affecting net revenues unfavorably by approximately $4 million.
Wholesale net revenues declined, primarily due to lower sales of women's products. Due to the timing of our fiscal year, the Black Friday sales week occurred during the first quarter, and this shift was reflected in increased sales in the retail channel, which partially offset the decline in wholesale net revenues.
Europe. Net revenues in Europe increased on both reported and constant-currency bases for the three-month period, with currency affecting net revenues favorably by approximately $3 million.
Net revenues increased from the performance and expansion of our company-operated retail network, particularly in the U.K. and Russia markets. This improvement was partially offset by lower sales in our traditional wholesale channels.
Asia. Net revenues in Asia decreased on a reported basis but increased on a constant-currency basis. Currency affected net revenues unfavorably for the three-month period by approximately $12 million.
The increase in constant-currency net revenues for the three-month period was primarily due to improved product availability during the Chinese New Year sales season. The improvement was partially offset by lower traditional wholesale revenues as compared to the prior year, primarily reflecting the liquidation of Denizen® brand products as we exited that business.
Gross profit
The following table shows consolidated gross profit and gross margin for the periods indicated and the changes in these items from period to period:
|
| | | | | | | | | | |
| Three Months Ended |
| February 23, 2014 | | February 24, 2013 | | % Increase (Decrease) |
| (Dollars in millions) |
Net revenues | $ | 1,130.0 |
| | $ | 1,146.7 |
| | (1.5 | )% |
Cost of goods sold | 553.6 |
| | 554.8 |
| | (0.2 | )% |
Gross profit | $ | 576.4 |
| | $ | 591.9 |
| | (2.6 | )% |
Gross margin | 51.0 | % | | 51.6 | % | | |
Currency affected gross profit unfavorably by approximately $5 million for the three-month period ended February 23, 2014, as compared to the same prior-year period. Gross margin declined primarily due to higher discounted sales and increased inventory markdown activities, reflecting our higher inventory levels and our efforts to manage inventory levels in the current retail market in the Americas, as well as product investment costs. The decline was partially offset by increased contribution from our company-operated retail network, which generally has a higher gross margin than our wholesale business.
Selling, general and administrative expenses
The following table shows our selling, general and administrative expenses (“SG&A”) for the periods indicated, the changes in these items from period to period and these items expressed as a percentage of net revenues:
|
| | | | | | | | | | | | | | | | |
| Three Months Ended |
| February 23, 2014 | | February 24, 2013 | | % Increase (Decrease) | | February 23, 2014 | | February 24, 2013 |
| | | % of Net Revenues | | % of Net Revenues |
| (Dollars in millions) |
Selling | $ | 183.2 |
| | $ | 178.7 |
| | 2.5 | % | | 16.2 | % | | 15.6 | % |
Advertising and promotion | 31.6 |
| | 32.8 |
| | (3.6 | )% | | 2.8 | % | | 2.9 | % |
Administration | 93.3 |
| | 87.5 |
| | 6.6 | % | | 8.3 | % | | 7.6 | % |
Other | 116.7 |
| | 111.4 |
| | 4.7 | % | | 10.3 | % | | 9.7 | % |
Total SG&A | $ | 424.8 |
| | $ | 410.4 |
| | 3.5 | % | | 37.6 | % | | 35.8 | % |
Currency impacted SG&A favorably by approximately $4 million for the three-month period ended February 23, 2014, as compared to the same prior-year period.
Selling. We had 32 more company-operated stores at the end of the first quarter of 2014 than we did at the end of the first quarter of 2013. Higher expenses were associated with the expansion of our company-operated store network.
Administration. The increase in administration expenses was primarily related to consulting fees incurred for our centrally-led procurement savings project in the first quarter of 2014 as compared to a reversal of severance expenses in the first quarter of 2013.
Other. Other SG&A includes distribution, information resources, and marketing organization costs, all of which increased slightly during the period.
Operating income
The following table shows operating income by reporting segment and corporate expenses for the periods indicated, the changes in these items from period to period and these items expressed as a percentage of net revenues:
|
| | | | | | | | | | | | | | | | | |
| Three Months Ended | |
| February 23, 2014 | | February 24, 2013 | | % Increase (Decrease) | | February 23, 2014 | | February 24, 2013 | |
| | | % of Net Revenues | | % of Net Revenues | |
| (Dollars in millions) | |
Operating income: | | | | | | | | | | |
Americas | $ | 111.1 |
| | $ | 132.5 |
| | (16.2 | )% | | 17.7 | % | | 20.5 | % | |
Europe | 71.4 |
| | 62.9 |
| | 13.5 | % | | 23.8 | % | | 21.2 | % | |
Asia | 46.9 |
| | 49.0 |
| | (4.2 | )% | | 23.1 | % | | 24.1 | % | |
Total regional operating income | 229.4 |
| | 244.4 |
| | (6.1 | )% | | 20.3 | % | * | 21.3 | % | * |
Corporate expenses | 135.7 |
| | 62.9 |
| | 115.7 | % | | 12.0 | % | * | 5.5 | % | * |
Total operating income | $ | 93.7 |
| | $ | 181.5 |
| | (48.4 | )% | | 8.3 | % | * | 15.8 | % | * |
Operating margin | 8.3 | % | | 15.8 | % | | | | | | | |
______________
* Percentage of consolidated net revenues
Currency had no significant impact on total operating income for the three-month period ended February 23, 2014.
Regional operating income.
| |
• | Americas. The decline in operating income and operating margin reflected the region's lower gross margin and lower net revenues. |
| |
• | Europe. The increase in operating income and operating margin primarily reflected the region's lower SG&A. |
| |
• | Asia. The decrease in operating income and operating margin primarily reflected the unfavorable impact of currency. |
Corporate. Corporate expenses include selling, general and administrative expenses that are not attributed to any of our regional operating segments. As compared to the same prior-year period, higher corporate expenses in the three-month period ended February 23, 2014, reflected our restructuring charges of $57.9 million and the higher administration expenses.
Interest expense
Interest expense decreased to $31.9 million for the three-month period ended February 23, 2014, from $32.2 million for the same period in 2013. The weighted-average interest rate on average borrowings outstanding for the three-month period ended February 23, 2014, was 7.91% as compared to 6.91% for the same period in 2013. The weighted-average interest rate increased as a result of our debt refinancing activities during the second quarter of 2013.
Income tax expense
Our effective income tax rate was 24.8% for the three months ended February 23, 2014, compared to 31.2% for the same period ended February 24, 2013. The Company historically provided for U.S. income taxes on all the undistributed earnings of foreign subsidiaries and provided for a deferred tax liability totaling $3.7 million as of November 24, 2013. During the first quarter of 2014, management made an assertion that $75.0 million of undistributed foreign earnings in certain foreign subsidiaries are indefinitely reinvested. As such, the Company recorded a $3.7 million tax benefit resulting from reversal of the previously recorded deferred tax liability on undistributed foreign earnings, decreasing the effective tax rate in 2014.
Liquidity and Capital Resources
Liquidity outlook
We believe we will have adequate liquidity over the next twelve months to operate our business and to meet our cash requirements.
Cash sources
We are a privately-held corporation. We have historically relied primarily on cash flows from operations, borrowings under credit facilities, issuances of notes and other forms of debt financing. We regularly explore financing and debt reduction alternatives, including new credit agreements, unsecured and secured note issuances, equity financing, equipment and real estate financing, securitizations and asset sales. Key sources of cash include earnings from operations and borrowing availability under our revolving credit facility.
We are borrowers under a senior secured revolving credit facility. The credit facility, which was amended and restated on March 21, 2014, as further described below, is an asset-based facility, in which the borrowing availability is primarily based on the value of our U.S. Levi’s® trademarks and the levels of accounts receivable and inventory in the United States and Canada. The maximum availability under the facility is $850 million, of which $800 million is available to us for revolving loans in U.S. Dollars and $50 million is available to us for revolving loans either in U.S. Dollars or Canadian Dollars.
As of February 23, 2014, we had no borrowings under the credit facility, and unused availability under the credit facility was $626.0 million, as our total availability of $693.7 million, based on collateral levels as defined by the agreement, was reduced by $67.7 million of other credit-related instruments.
As of February 23, 2014, we had cash and cash equivalents totaling approximately $502.8 million, resulting in a total liquidity position (unused availability and cash and cash equivalents) of $1.1 billion.
On March 21, 2014, we amended and restated our senior secured revolving credit facility, extending the term of the credit facility through March 2019, subject to shortening if obligations under our Euro senior notes due 2018 are outstanding on February 13, 2018. The terms of the amended facility are similar to the terms under the existing facility, except that of the maximum availability of $850.0 million, $350.0 million is secured by our U.S. Levi's® trademarks, an increase from the $250.0 million stated in the existing facility. The interest rate for borrowings under the credit facility was reduced from LIBOR plus 150 – 275 basis points to LIBOR plus 125 – 200 basis points, depending on borrowing base availability, and the range of the rate for undrawn availability was reduced from 37.5 – 50 basis points to 25 – 30 basis points (depending on the Company's credit ratings). Under the terms of the amended and restated credit facility, total availability as of February 23, 2014, would have been enhanced to $839.7 million, based on collateral levels as defined by the agreement.
Cash uses
Our principal cash requirements include working capital, capital expenditures, payments of principal and interest on our debt, payments of taxes, contributions to our pension plans and payments for postretirement health benefit plans, settlement of shares issued under our 2006 Equity Incentive Plan and, if market conditions warrant, occasional investments in, or acquisitions of, business ventures in our line of business. In addition, we regularly evaluate our ability to pay dividends or repurchase stock, all consistent with the terms of our debt agreements.
There have been no material changes to our estimated cash requirements for 2014 from those disclosed in our 2013 Annual Report on Form 10-K.
Cash flows
The following table summarizes, for the periods indicated, selected items in our consolidated statements of cash flows:
|
| | | | | | | | | |
| | Three Months Ended | |
| | February 23, 2014 | | February 24, 2013 | |
| | (Dollars in millions) | |
| Cash provided by operating activities | $ | 35.7 |
| | $ | 143.1 |
| |
| Cash used for investing activities | (14.5 | ) | | (23.5 | ) | |
| Cash used for financing activities | (7.0 | ) | | (76.0 | ) | |
| Cash and cash equivalents | 502.8 |
| | 449.6 |
| |
Cash flows from operating activities
Cash provided by operating activities was $35.7 million for the three-month period in 2014, as compared to $143.1 million for the same period in 2013. Cash provided by operating activities decreased compared to the prior year due to a decrease in cash received from customers, reflecting our lower beginning accounts receivable balance, and an increase in cash used for inventory, reflecting our higher inventory build. Cash provided by operating activities in 2013 reflected a tax refund received in 2013 from the State of California.
Cash flows from investing activities
Cash used for investing activities was $14.5 million for the three-month period in 2014, as compared to $23.5 million for the same period in 2013. The decrease in cash used for investing activities as compared to the prior year primarily reflects lower spend on facilities, offset by increased investment in information technology projects.
Cash flows from financing activities
Cash used for financing activities was $7.0 million for the three-month period in 2014, as compared to $76.0 million for the same period in 2013. The decrease in cash used in 2014 primarily related to the timing of our dividend payment to stockholders in 2014 and our 2013 pay down of a portion of our debt.
Indebtedness
The borrower of substantially all of our debt is Levi Strauss & Co., the parent and U.S. operating company. Substantially all of our debt as of February 23, 2014, was fixed-rate debt. As of February 23, 2014, our required aggregate debt principal payments on our unsecured long-term debt were $39.1 million in 2016, $411.5 million in 2018, and the remaining $1.1 billion in years after 2018. Short-term borrowings of $35.5 million at various foreign subsidiaries were expected to be either paid over the next twelve months or refinanced at the end of their applicable terms.
Our long-term debt agreements contain customary covenants restricting our activities as well as those of our subsidiaries. Currently, we are in compliance with all of these covenants.
Off-Balance Sheet Arrangements, Guarantees and Other Contingent Obligations
There have been no significant changes to our off-balance sheet arrangements or contractual commitments from those disclosed in our 2013 Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the related notes. There have been no significant changes to our critical accounting policies from those disclosed in our 2013 Annual Report on Form 10-K.
Recently Issued Accounting Standards
See Note 1 to our unaudited consolidated financial statements included in this report for recently issued accounting standards, including the expected dates of adoption and estimated effects on our consolidated financial statements.
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this report, including (without limitation) statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contain forward-looking statements. Although we believe that, in making any such statements, our expectations are based on reasonable assumptions, any such statement may be influenced by factors that could cause actual outcomes and results to be materially different from those projected.
These forward-looking statements include statements relating to our anticipated financial performance and business prospects and/or statements preceded by, followed by or that include the words “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, “could”, “plans”, “seeks” and similar expressions. These forward-looking statements speak only as of the date stated and we do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these expectations may not prove to be correct or we may not achieve the financial results, savings or other benefits anticipated in the forward-looking statements. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties, some of which may be beyond our control. These risks and uncertainties, including those disclosed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended November 24, 2013, and our other filings with the Securities and Exchange Commission, could cause actual results to differ materially from those suggested by the forward-looking statements and include, without limitation:
| |
• | 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 timely and effectively implement organizational cost-saving initiatives as planned that are intended to increase productivity and efficiency in our operations, take advantage of lower-cost service delivery options in our distribution practices and overhaul our procurement practices in order to globally streamline our operations without business disruption or mitigation to such disruptions; |
| |
• | consequences of impacts to the businesses of our wholesale customers caused by factors such as 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; |
| |
• | availability of 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 online 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 rate fluctuations; |
| |
• | 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; |
| |
• | changes in or application of trade and tax laws; and |
| |
• | political, social and economic instability in countries where we and our customers do business. |
Our actual results might differ materially from historical performance or current expectations. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
|
| |
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
There have been no material changes in our primary market risk exposures or how those exposures are managed from the information disclosed in our 2013 Annual Report on Form 10-K.
|
| |
Item 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934) that are designed to provide reasonable assurance that information required to be disclosed in the reports we file or submit to the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
We have evaluated, under the supervision and with the participation of management, including our chief executive officer and our chief financial officer, the effectiveness of the design and operation of our disclosure controls and procedures as of February 23, 2014. Based on that evaluation, our chief executive officer and our chief financial officer concluded that as of February 23, 2014, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Controls
We maintain a system of internal control over financial reporting that is designed to provide reasonable assurance that our books and records accurately reflect our transactions and that our established policies and procedures are followed. There were no changes to our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Litigation. There have been no material developments with respect to the information previously reported in our 2013 Annual Report on Form 10-K related to legal proceedings.
In the ordinary course of business, we have various pending cases involving contractual matters, facility and employee-related matters, distribution matters, product liability claims, trademark infringement and other matters. We do not believe any of these pending legal proceedings will have a material impact on our financial condition, results of operations or cash flows.
There have been no material changes in our risk factors from those disclosed in our 2013 Annual Report on Form 10-K, except for the following:
We face risks arising from the restructuring of our operations and uncertainty with respect to our ability to achieve the estimated cost savings.
In March 2014, we announced the first phase of our global productivity initiative, which entails, among other things:
| |
• | eliminating approximately 800 positions within our global non-retail and non-manufacturing employee population; and |
| |
• | initiating a centrally-led procurement savings project. |
We have incurred and expect to incur additional charges related to the global productivity initiative during the next 12 to 18 months, which may harm our profitability in the periods incurred. If we incur unexpected charges related to the global productivity initiative, or in connection with any potential future restructuring program, our financial condition and results of operations may further suffer.
Implementation of the global productivity initiative, or any potential future restructuring program, presents a number of significant risks, including:
| |
• | actual or perceived disruption of service or reduction in service standards to wholesale customers; |
| |
• | the failure to preserve adequate internal controls as we restructure our general and administrative functions; |
| |
• | the failure to preserve supplier, distribution, sales and other important relationships and to resolve conflicts that may arise; |
| |
• | diversion of management attention from ongoing business activities; and |
| |
• | the failure to maintain employee morale and retaining key employees while implementing restructuring programs that often include reductions in the workforce. |
Because of these and other factors, we cannot predict whether we will realize the purpose and anticipated benefits of these measures and, if we do not, our business and results of operations may be adversely affected.
Additionally, there may be delays in implementing the global productivity initiative or a failure to achieve the anticipated levels of cost savings and efficiency as a result of the global productivity initiative, each of which could materially and adversely impact our business and results of operations. Further, if we experience additional adverse changes to our business, further restructuring or reorganization activities may be required in the future.
|
| |
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
On February 5, 2014, our Board approved the award of stock appreciation rights (“SARs”) representing an aggregate of 787,861 shares of our common stock to certain of our executives. All of these awards were made under our 2006 Equity Incentive Plan, as amended (the “Plan”).
SARs are granted with an exercise price equal to the fair market value of our common stock, as determined under the Plan, on the date of grant. The SARs were granted in two groups and are identical except as described below:
| |
• | 472,712 of the SARs, referred to as service-vested SARs, were granted with the following vesting schedule: 25% percent of the SAR grant vests on the day prior to the one-year anniversary of the date of grant, with the remaining 75% balance vesting monthly over 36 months commencing on such anniversary, at a rate of 2.08% per month; |
| |
• | 315,149 of the SARs, referred to as performance-based SARs, were granted with the following vesting schedule: 50% of the performance-based SARs will vest to the extent that the Company has achieved certain goals based on the Company's (i) average earnings before interest and taxes margin percentage and (ii) the compound annual growth rate of the Company's net revenues, each over fiscal years 2014, 2015 and 2016, and the remaining 50% of the performance-based SARs will vest based on the Company's performance against a three-year market-related relative total shareholder return goal. Our Board will determine the extent to which the goals under the performance-based SARs have been satisfied on or before March 1, 2017. |
Upon the exercise of a SAR, the recipient will be entitled to receive common stock with an aggregate fair market value equal to the excess of the per share fair market value of the Company's common stock on the date of exercise over the exercise price, multiplied by the number of SARs exercised.
We will not receive any proceeds from the issuance or vesting of SARs. The SARs were granted under Section 4(a)(2) of the Securities Act of 1933, as amended. Section 4(a)(2) generally provides an exemption from registration for transactions by an issuer not involving any public offering.
We are a privately-held corporation; there is no public trading of our common stock. As of April 3, 2014, we had 37,401,466 shares outstanding.
|
| |
Item 3. | DEFAULTS UPON SENIOR SECURITIES |
None.
|
| |
Item 4. | MINE SAFETY DISCLOSURES |
None.
None.
|
| | |
10.1 | | Annual Incentive Plan, effective November 25, 2013. Incorporated by reference to Exhibit 10.6 to Registrant's Annual Report on Form 10-K filed with the Commission on February 11, 2014.* |
| | |
10.2 | | Forms of stock appreciation rights award agreements. Incorporated by reference to Exhibit 10.22 to Registrant's Annual Report on Form 10-K filed with the Commission on February 11, 2014.* |
| | |
10.3 | | Levi Strauss & Co. Executive Severance Plan, effective as of February 10, 2014. Filed herewith.* |
| | |
31.1 | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. |
| | |
31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. |
| | |
32 | | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. |
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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. |
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101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. Filed herewith. |
| | |
* Management contract, compensatory plan or arrangement. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| | | |
Date: | April 8, 2014 | | LEVI STRAUSS & Co. |
| | | (Registrant) |
| | | |
| | | |
| | By: | /s/ HEIDI L. MANES |
| | | Heidi L. Manes Vice President and Controller (Principal Accounting Officer) |
EXHIBIT INDEX
|
| | |
10.1 | | Annual Incentive Plan, effective November 25, 2013. Incorporated by reference to Exhibit 10.6 to Registrant's Annual Report on Form 10-K filed with the Commission on February 11, 2014.* |
| | |
10.2 | | Forms of stock appreciation rights award agreements. Incorporated by reference to Exhibit 10.22 to Registrant's Annual Report on Form 10-K filed with the Commission on February 11, 2014.* |
| | |
10.3 | | Levi Strauss & Co. Executive Severance Plan, effective as of February 10, 2014. Filed herewith.* |
| | |
31.1 | | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. |
| | |
31.2 | | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith. |
| | |
32 | | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith. |
| | |
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. |