(Mark One) | ||
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Quarterly Period Ended August 28, 2011 | ||
or
|
||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE (State or Other Jurisdiction of Incorporation or Organization) |
94-0905160 (I.R.S. Employer Identification No.) |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
2
Item 1. | CONSOLIDATED FINANCIAL STATEMENTS |
(Unaudited) |
||||||||
August 28, |
November 28, |
|||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 230,844 | $ | 269,726 | ||||
Restricted cash
|
7,432 | 4,028 | ||||||
Trade receivables, net of allowance for doubtful accounts of
$22,778 and $24,617
|
539,042 | 553,385 | ||||||
Inventories:
|
||||||||
Raw materials
|
7,960 | 6,770 | ||||||
Work-in-process
|
13,421 | 9,405 | ||||||
Finished goods
|
709,253 | 563,728 | ||||||
Total inventories
|
730,634 | 579,903 | ||||||
Deferred tax assets, net
|
143,466 | 137,892 | ||||||
Other current assets
|
140,546 | 106,198 | ||||||
Total current assets
|
1,791,964 | 1,651,132 | ||||||
Property, plant and equipment, net of accumulated depreciation
of $729,843 and $683,258
|
507,933 | 488,603 | ||||||
Goodwill
|
243,680 | 241,472 | ||||||
Other intangible assets, net
|
76,015 | 84,652 | ||||||
Non-current deferred tax assets, net
|
558,881 | 559,053 | ||||||
Other assets
|
109,285 | 110,337 | ||||||
Total assets
|
$ | 3,287,758 | $ | 3,135,249 | ||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS DEFICIT | ||||||||
Current Liabilities:
|
||||||||
Short-term debt
|
$ | 129,010 | $ | 46,418 | ||||
Current maturities of long-term debt
|
| | ||||||
Current maturities of capital leases
|
1,740 | 1,777 | ||||||
Accounts payable
|
248,806 | 212,935 | ||||||
Other accrued liabilities
|
233,871 | 275,443 | ||||||
Accrued salaries, wages and employee benefits
|
192,553 | 196,152 | ||||||
Accrued interest payable
|
37,319 | 9,685 | ||||||
Accrued income taxes
|
18,333 | 17,115 | ||||||
Total current liabilities
|
861,632 | 759,525 | ||||||
Long-term debt
|
1,856,237 | 1,816,728 | ||||||
Long-term capital leases
|
2,795 | 3,578 | ||||||
Postretirement medical benefits
|
139,410 | 147,065 | ||||||
Pension liability
|
326,344 | 400,584 | ||||||
Long-term employee related benefits
|
94,441 | 102,764 | ||||||
Long-term income tax liabilities
|
48,659 | 50,552 | ||||||
Other long-term liabilities
|
54,250 | 54,281 | ||||||
Total liabilities
|
3,383,768 | 3,335,077 | ||||||
Commitments and contingencies
|
||||||||
Temporary equity
|
10,720 | 8,973 | ||||||
Stockholders Deficit:
|
||||||||
Levi Strauss & Co. stockholders deficit
|
||||||||
Common stock $.01 par value;
270,000,000 shares authorized; 37,346,643 shares and
37,322,358 shares issued and outstanding
|
373 | 373 | ||||||
Additional paid-in capital
|
24,857 | 18,840 | ||||||
Retained earnings
|
106,894 | 33,346 | ||||||
Accumulated other comprehensive loss
|
(247,555 | ) | (272,168 | ) | ||||
Total Levi Strauss & Co. stockholders deficit
|
(115,431 | ) | (219,609 | ) | ||||
Noncontrolling interest
|
8,701 | 10,808 | ||||||
Total stockholders deficit
|
(106,730 | ) | (208,801 | ) | ||||
Total liabilities, temporary equity and stockholders
deficit
|
$ | 3,287,758 | $ | 3,135,249 | ||||
3
Three Months Ended | Nine Months Ended | |||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) |
||||||||||||||||
(Unaudited) | ||||||||||||||||
Net sales
|
$ | 1,183,890 | $ | 1,090,448 | $ | 3,358,175 | $ | 3,064,414 | ||||||||
Licensing revenue
|
20,127 | 18,557 | 59,457 | 56,326 | ||||||||||||
Net revenues
|
1,204,017 | 1,109,005 | 3,417,632 | 3,120,740 | ||||||||||||
Cost of goods sold
|
634,573 | 565,393 | 1,749,525 | 1,544,779 | ||||||||||||
Gross profit
|
569,444 | 543,612 | 1,668,107 | 1,575,961 | ||||||||||||
Selling, general and administrative expenses
|
488,545 | 457,309 | 1,423,358 | 1,313,185 | ||||||||||||
Operating income
|
80,899 | 86,303 | 244,749 | 262,776 | ||||||||||||
Interest expense
|
(30,208 | ) | (31,734 | ) | (98,589 | ) | (100,347 | ) | ||||||||
Loss on early extinguishment of debt
|
| | | (16,587 | ) | |||||||||||
Other income (expense), net
|
(5,779 | ) | (7,695 | ) | (12,744 | ) | 11,462 | |||||||||
Income before income taxes
|
44,912 | 46,874 | 133,416 | 157,304 | ||||||||||||
Income tax expense
|
13,612 | 20,252 | 42,437 | 93,203 | ||||||||||||
Net income
|
31,300 | 26,622 | 90,979 | 64,101 | ||||||||||||
Net loss attributable to noncontrolling interest
|
893 | 1,556 | 2,860 | 6,050 | ||||||||||||
Net income attributable to Levi Strauss & Co.
|
$ | 32,193 | $ | 28,178 | $ | 93,839 | $ | 70,151 | ||||||||
4
Nine Months Ended | ||||||||
August 28, |
August 29, |
|||||||
2011 | 2010 | |||||||
(Dollars in thousands) (Unaudited) | ||||||||
Cash Flows from Operating Activities:
|
||||||||
Net income
|
$ | 90,979 | $ | 64,101 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||
Depreciation and amortization
|
87,420 | 77,983 | ||||||
Asset impairments
|
2,957 | 2,307 | ||||||
Gain on disposal of property, plant and equipment
|
| (100 | ) | |||||
Unrealized foreign exchange losses (gains)
|
11,262 | (15,789 | ) | |||||
Realized loss on settlement of forward foreign exchange
contracts not designated for hedge accounting
|
8,252 | 8,412 | ||||||
Employee benefit plans amortization from accumulated other
comprehensive loss
|
(4,555 | ) | 2,557 | |||||
Employee benefit plans curtailment loss, net
|
1,629 | 100 | ||||||
Noncash gain on extinguishment of debt, net of write-off of
unamortized debt issuance costs
|
| (13,647 | ) | |||||
Amortization of deferred debt issuance costs
|
3,241 | 3,293 | ||||||
Stock-based compensation
|
7,741 | 4,419 | ||||||
Allowance for doubtful accounts
|
4,957 | 6,428 | ||||||
Change in operating assets and liabilities:
|
||||||||
Trade receivables
|
22,260 | 16,871 | ||||||
Inventories
|
(115,169 | ) | (134,592 | ) | ||||
Other current assets
|
(28,823 | ) | (6,930 | ) | ||||
Other non-current assets
|
1,124 | (17,320 | ) | |||||
Accounts payable and other accrued liabilities
|
1,309 | 55,700 | ||||||
Income tax liabilities
|
(3,554 | ) | 63,760 | |||||
Accrued salaries, wages and employee benefits and long-term
employee related benefits
|
(73,019 | ) | (40,820 | ) | ||||
Other long-term liabilities
|
(994 | ) | 19,113 | |||||
Other, net
|
270 | (17 | ) | |||||
Net cash provided by operating activities
|
17,287 | 95,829 | ||||||
Cash Flows from Investing Activities:
|
||||||||
Purchases of property, plant and equipment
|
(106,010 | ) | (107,874 | ) | ||||
Proceeds from sale of property, plant and equipment
|
158 | 1,375 | ||||||
Payments on settlement of forward foreign exchange contracts not
designated for hedge accounting
|
(8,252 | ) | (8,412 | ) | ||||
Acquisitions, net of cash acquired
|
| (12,242 | ) | |||||
Other
|
(500 | ) | (114 | ) | ||||
Net cash used for investing activities
|
(114,604 | ) | (127,267 | ) | ||||
Cash Flows from Financing Activities:
|
||||||||
Proceeds from issuance of long-term debt
|
| 909,390 | ||||||
Repayments of long-term debt and capital leases
|
(1,470 | ) | (865,527 | ) | ||||
Proceeds from senior revolving credit facility
|
70,000 | | ||||||
Short-term borrowings, net
|
6,926 | 19,176 | ||||||
Debt issuance costs
|
| (17,512 | ) | |||||
Restricted cash
|
(2,866 | ) | (248 | ) | ||||
Repurchase of common stock
|
(245 | ) | | |||||
Dividend to stockholders
|
(20,023 | ) | (20,013 | ) | ||||
Net cash provided by financing activities
|
52,322 | 25,266 | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
6,113 | (3,434 | ) | |||||
Net decrease in cash and cash equivalents
|
(38,882 | ) | (9,606 | ) | ||||
Beginning cash and cash equivalents
|
269,726 | 270,804 | ||||||
Ending cash and cash equivalents
|
$ | 230,844 | $ | 261,198 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$ | 69,124 | $ | 87,097 | ||||
Income taxes
|
43,697 | 34,980 |
5
NOTE 1: | SIGNIFICANT ACCOUNTING POLICIES |
6
| In May 2011, the FASB issued Accounting Standards Update No. 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, (ASU 2011-04). ASU 2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively. The Company anticipates that the adoption of this standard will not materially change its consolidated financial statement footnote disclosures. |
| In September 2011, the FASB issued Accounting Standards Update No. 2011-09, Compensation Retirement Benefits Multiemployer Plans (Subtopic 715-80), (ASU 2011-09). ASU 2011-09 requires that employers provide additional separate disclosures for multiemployer pension plans and multiemployer other postretirement benefit plans. The additional quantitative and qualitative disclosures will provide users with more detailed information about an employers involvement in multiemployer pension plans. The Company anticipates that the adoption of this standard will expand its consolidated financial statement footnote disclosures. |
| In June 2011, the FASB issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, (ASU 2011-05). ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in equity. ASU 2011-05 requires that all nonowner changes in stockholders equity be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This new guidance is to |
7
be applied retrospectively. The Company anticipates that the adoption of this standard may materially change the presentation of its consolidated financial statements. |
NOTE 2: | GOODWILL AND OTHER INTANGIBLE ASSETS |
Asia |
||||||||||||||||
Americas | Europe | Pacific | Total | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Balance, November 28, 2010
|
$ | 207,427 | $ | 31,603 | $ | 2,442 | $ | 241,472 | ||||||||
Foreign currency fluctuation
|
(1 | ) | 2,279 | (70 | ) | 2,208 | ||||||||||
Balance, August 28, 2011
|
$ | 207,426 | $ | 33,882 | $ | 2,372 | $ | 243,680 | ||||||||
August 28, 2011 | November 28, 2010 | |||||||||||||||||||||||
Gross |
Accumulated |
Gross |
Accumulated |
|||||||||||||||||||||
Carrying Value | Amortization | Total | Carrying Value | Amortization | Total | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Unamortized intangible assets:
|
||||||||||||||||||||||||
Trademarks
|
$ | 42,743 | $ | | $ | 42,743 | $ | 42,743 | $ | | $ | 42,743 | ||||||||||||
Amortized intangible assets:
|
||||||||||||||||||||||||
Acquired contractual rights
|
41,944 | (20,881 | ) | 21,063 | 45,712 | (17,765 | ) | 27,947 | ||||||||||||||||
Customer lists
|
21,567 | (9,358 | ) | 12,209 | 20,037 | (6,075 | ) | 13,962 | ||||||||||||||||
Total
|
$ | 106,254 | $ | (30,239 | ) | $ | 76,015 | $ | 108,492 | $ | (23,840 | ) | $ | 84,652 | ||||||||||
8
NOTE 3: | FAIR VALUE OF FINANCIAL INSTRUMENTS |
August 28, 2011 | November 28, 2010 | |||||||||||||||||||||||
Fair Value Estimated Using | Fair Value Estimated Using | |||||||||||||||||||||||
Leve1 1 |
Level 2 |
Leve1 |
Level 2 |
|||||||||||||||||||||
Fair Value | Inputs(1) | Inputs(2) | Fair Value | Inputs(1) | Inputs(2) | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Financial assets carried at fair value
|
||||||||||||||||||||||||
Rabbi trust assets
|
$ | 18,365 | $ | 18,365 | $ | | $ | 18,316 | $ | 18,316 | $ | | ||||||||||||
Forward foreign exchange contracts,
net(3)
|
7,753 | | 7,753 | 1,385 | | 1,385 | ||||||||||||||||||
Total
|
$ | 26,118 | $ | 18,365 | $ | 7,753 | $ | 19,701 | $ | 18,316 | $ | 1,385 | ||||||||||||
Financial liabilities carried at fair value
|
||||||||||||||||||||||||
Forward foreign exchange contracts,
net(3)
|
$ | 4,489 | $ | | $ | 4,489 | $ | 5,003 | $ | | $ | 5,003 | ||||||||||||
Total
|
$ | 4,489 | $ | | $ | 4,489 | $ | 5,003 | $ | | $ | 5,003 | ||||||||||||
(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 Companys 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. |
August 28, 2011 | November 28, 2010 | |||||||||||||||||||
Carrying |
Estimated |
Carrying |
Estimated |
|||||||||||||||||
Value | Fair Value(1) | Value | Fair Value(1) | |||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Financial liabilities carried at adjusted historical cost
|
||||||||||||||||||||
Senior revolving credit facility
|
$ | 178,529 | $ | 177,638 | $ | 108,482 | $ | 107,129 | ||||||||||||
Senior term loan due 2014
|
324,665 | 282,553 | 324,423 | 311,476 | ||||||||||||||||
8.875% senior notes due 2016
|
362,770 | 373,270 | 355,004 | 373,379 | ||||||||||||||||
4.25% Yen-denominated Eurobonds due 2016
|
119,304 | 100,765 | 109,429 | 98,063 | ||||||||||||||||
7.75% Euro senior notes due 2018
|
440,971 | 389,210 | 401,982 | 407,993 | ||||||||||||||||
7.625% senior notes due 2020
|
536,564 | 510,314 | 526,557 | 542,307 | ||||||||||||||||
Short-term borrowings
|
59,454 | 59,454 | 46,722 | 46,722 | ||||||||||||||||
Total
|
$ | 2,022,257 | $ | 1,893,204 | $ | 1,872,599 | $ | 1,887,069 | ||||||||||||
(1) | Fair value estimate incorporates mid-market price quotes. |
9
NOTE 4: | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
August 28, 2011 | November 28, 2010 | |||||||||||||||||||||||
Assets | (Liabilities) | Assets | (Liabilities) | |||||||||||||||||||||
Derivative |
Derivative |
|||||||||||||||||||||||
Carrying |
Carrying |
Net Carrying |
Carrying |
Carrying |
Net Carrying |
|||||||||||||||||||
Value | Value | Value | Value | Value | Value | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Derivatives not designated as hedging
|
||||||||||||||||||||||||
instruments
|
||||||||||||||||||||||||
Forward foreign exchange
contracts(1)
|
$ | 9,369 | $ | (1,616 | ) | $ | 7,753 | $ | 7,717 | $ | (6,332 | ) | $ | 1,385 | ||||||||||
Forward foreign exchange
contracts(2)
|
9,147 | (13,636 | ) | (4,489 | ) | 4,266 | (9,269 | ) | (5,003 | ) | ||||||||||||||
Total
|
$ | 18,516 | $ | (15,252 | ) | $ | 11,983 | $ | (15,601 | ) | ||||||||||||||
Non-derivatives designated as hedging instruments
|
||||||||||||||||||||||||
4.25% Yen-denominated Eurobonds due 2016
|
$ | | $ | (50,615 | ) | $ | | $ | (61,075 | ) | ||||||||||||||
7.75% Euro senior notes due 2018
|
| (431,340 | ) | | (400,740 | ) | ||||||||||||||||||
Total
|
$ | | $ | (481,955 | ) | $ | | $ | (461,815 | ) | ||||||||||||||
(1) | Included in Other current assets or Other assets on the Companys consolidated balance sheets. | |
(2) | Included in Other accrued liabilities on the Companys consolidated balance sheets. |
Gain or (Loss) Recognized in Other |
||||||||||||||||||||||||
Gain or (Loss) |
Income (Expense), net (Ineffective |
|||||||||||||||||||||||
Recognized in AOCI |
Portion and Amount Excluded from |
|||||||||||||||||||||||
(Effective Portion) | Effectiveness Testing) | |||||||||||||||||||||||
As of |
As of |
Three Months Ended | Nine Months Ended | |||||||||||||||||||||
August 28, |
November 28, |
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Forward foreign exchange contracts
|
$ | 4,637 | $ | 4,637 | $ | | $ | | $ | | $ | | ||||||||||||
Yen-denominated Eurobonds
|
(28,316 | ) | (24,377 | ) | (3,161 | ) | (2,818 | ) | (4,707 | ) | 2,732 | |||||||||||||
Euro senior notes
|
(54,271 | ) | (23,671 | ) | | | | | ||||||||||||||||
Cumulative income taxes
|
30,316 | 17,022 | ||||||||||||||||||||||
Total
|
$ | (47,634 | ) | $ | (26,389 | ) | ||||||||||||||||||
10
Gain or (Loss) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Forward foreign exchange contracts:
|
||||||||||||||||
Realized
|
$ | (3,389 | ) | $ | (3,072 | ) | $ | (8,252 | ) | $ | (8,412 | ) | ||||
Unrealized
|
8,008 | (3,459 | ) | 7,040 | 12,486 | |||||||||||
Total
|
$ | 4,619 | $ | (6,531 | ) | $ | (1,212 | ) | $ | 4,074 | ||||||
NOTE 5: | DEBT |
August 28, |
November 28, |
|||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
Long-term debt
|
||||||||
Secured:
|
||||||||
Senior revolving credit facility
|
$ | 108,250 | $ | 108,250 | ||||
Unsecured:
|
||||||||
Senior term loan due 2014
|
323,939 | 323,676 | ||||||
8.875% senior notes due 2016
|
350,000 | 350,000 | ||||||
4.25% Yen-denominated Eurobonds due 2016
|
117,708 | 109,062 | ||||||
7.75% Euro senior notes due 2018
|
431,340 | 400,740 | ||||||
7.625% senior notes due 2020
|
525,000 | 525,000 | ||||||
Total unsecured
|
1,747,987 | 1,708,478 | ||||||
Less: current maturities
|
| | ||||||
Total long-term debt
|
$ | 1,856,237 | $ | 1,816,728 | ||||
Short-term debt
|
||||||||
Secured:
|
||||||||
Senior revolving credit facility
|
$ | 70,000 | $ | | ||||
Unsecured:
|
||||||||
Short-term borrowings
|
59,010 | 46,418 | ||||||
Current maturities of long-term debt
|
| | ||||||
Total short-term debt
|
$ | 129,010 | $ | 46,418 | ||||
Total long-term and short-term debt
|
$ | 1,985,247 | $ | 1,863,146 | ||||
11
12
NOTE 6: | EMPLOYEE BENEFIT PLANS |
Pension Benefits | Postretirement Benefits | |||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net periodic benefit cost (income):
|
||||||||||||||||
Service cost
|
$ | 2,552 | $ | 1,908 | $ | 119 | $ | 120 | ||||||||
Interest cost
|
15,123 | 14,855 | 1,908 | 2,168 | ||||||||||||
Expected return on plan assets
|
(13,535 | ) | (11,439 | ) | | | ||||||||||
Amortization of prior service (benefit)
cost(1)
|
(20 | ) | 111 | (7,236 | ) | (7,392 | ) | |||||||||
Amortization of actuarial loss
|
1,939 | 6,665 | 1,256 | 1,402 | ||||||||||||
Curtailment gain
|
(1,426 | ) | | | | |||||||||||
Net settlement loss
|
20 | 117 | | | ||||||||||||
Net periodic benefit cost (income)
|
4,653 | 12,217 | (3,953 | ) | (3,702 | ) | ||||||||||
Changes in accumulated other comprehensive loss:
|
||||||||||||||||
Actuarial loss
|
105 | | | | ||||||||||||
Amortization of prior service benefit (cost)
|
20 | (111 | ) | 7,236 | 7,392 | |||||||||||
Amortization of actuarial loss
|
(1,939 | ) | (6,665 | ) | (1,256 | ) | (1,402 | ) | ||||||||
Curtailment loss
|
(7 | ) | | | | |||||||||||
Net settlement loss
|
(9 | ) | (39 | ) | | | ||||||||||
Total recognized in accumulated other comprehensive loss
|
(1,830 | ) | (6,815 | ) | 5,980 | 5,990 | ||||||||||
Total recognized in net periodic benefit cost (income) and
accumulated other comprehensive loss
|
$ | 2,823 | $ | 5,402 | $ | 2,027 | $ | 2,288 | ||||||||
13
Pension Benefits | Postretirement Benefits | |||||||||||||||
Nine Months Ended | Nine Months Ended | |||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net periodic benefit cost (income):
|
||||||||||||||||
Service cost
|
$ | 7,739 | $ | 5,822 | $ | 358 | $ | 356 | ||||||||
Interest cost
|
45,277 | 44,732 | 5,722 | 6,506 | ||||||||||||
Expected return on plan assets
|
(39,490 | ) | (34,529 | ) | | | ||||||||||
Amortization of prior service cost
(benefit)(1)
|
65 | 340 | (21,709 | ) | (22,175 | ) | ||||||||||
Amortization of actuarial loss
|
12,973 | 19,996 | 3,769 | 4,206 | ||||||||||||
Curtailment loss
|
1,629 | 100 | | | ||||||||||||
Net settlement loss
|
736 | 309 | | | ||||||||||||
Net periodic benefit cost (income)
|
28,929 | 36,770 | (11,860 | ) | (11,107 | ) | ||||||||||
Changes in accumulated other comprehensive loss:
|
||||||||||||||||
Actuarial (gain) loss
|
(32,310 | ) | 303 | | | |||||||||||
Amortization of prior service (cost) benefit
|
(65 | ) | (340 | ) | 21,709 | 22,175 | ||||||||||
Amortization of actuarial loss
|
(12,973 | ) | (19,996 | ) | (3,769 | ) | (4,206 | ) | ||||||||
Curtailment loss
|
(3,078 | ) | (13 | ) | | | ||||||||||
Net settlement loss
|
(347 | ) | (190 | ) | | | ||||||||||
Total recognized in accumulated other comprehensive loss
|
(48,773 | ) | (20,236 | ) | 17,940 | 17,969 | ||||||||||
Total recognized in net periodic benefit cost (income) and
accumulated other comprehensive loss
|
$ | (19,844 | ) | $ | 16,534 | $ | 6,080 | $ | 6,862 | |||||||
(1) | Postretirement benefits amortization of prior service benefit recognized during each period relates primarily to the favorable impact of the February 2004 and August 2003 plan amendments. |
NOTE 7: | COMMITMENTS AND CONTINGENCIES |
14
NOTE 8: | DIVIDEND PAYMENT |
NOTE 9: | COMPREHENSIVE INCOME |
Three Months Ended | Nine Months Ended | |||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net income
|
$ | 31,300 | $ | 26,622 | $ | 90,979 | $ | 64,101 | ||||||||
Other comprehensive income (loss):
|
||||||||||||||||
Pension and postretirement benefits
|
(2,700 | ) | 560 | 19,150 | 1,583 | |||||||||||
Net investment hedge (losses) gains
|
(5,785 | ) | (9,673 | ) | (21,245 | ) | 35,170 | |||||||||
Foreign currency translation gains (losses)
|
4,943 | 13,054 | 27,833 | (38,554 | ) | |||||||||||
Unrealized (loss) gain on marketable securities
|
(1,038 | ) | 542 | (371 | ) | 726 | ||||||||||
Total other comprehensive income (loss)
|
(4,580 | ) | 4,483 | 25,367 | (1,075 | ) | ||||||||||
Comprehensive income
|
26,720 | 31,105 | 116,346 | 63,026 | ||||||||||||
Comprehensive loss attributable to noncontrolling interest
|
(431 | ) | (1,775 | ) | (2,106 | ) | (7,237 | ) | ||||||||
Comprehensive income attributable to Levi Strauss &
Co.
|
$ | 27,151 | $ | 32,880 | $ | 118,452 | $ | 70,263 | ||||||||
15
August 28, |
November 28, |
|||||||
2011 | 2010 | |||||||
(Dollars in thousands) | ||||||||
Pension and postretirement benefits
|
$ | (179,657 | ) | $ | (198,807 | ) | ||
Net investment hedge losses
|
(47,634 | ) | (26,389 | ) | ||||
Foreign currency translation losses
|
(9,221 | ) | (37,054 | ) | ||||
Unrealized (loss) gain on marketable securities
|
(214 | ) | 157 | |||||
Accumulated other comprehensive loss
|
(236,726 | ) | (262,093 | ) | ||||
Accumulated other comprehensive income attributable to
noncontrolling interest
|
10,829 | 10,075 | ||||||
Accumulated other comprehensive loss attributable to Levi
Strauss & Co.
|
$ | (247,555 | ) | $ | (272,168 | ) | ||
NOTE 10: | OTHER INCOME (EXPENSE), NET |
Three Months Ended | Nine Months Ended | |||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Foreign exchange management gains
(losses)(1)
|
$ | 4,619 | $ | (6,531 | ) | $ | (1,212 | ) | $ | 4,074 | ||||||
Foreign currency transaction (losses)
gains(2)
|
(10,118 | ) | (1,698 | ) | (13,412 | ) | 6,505 | |||||||||
Interest income
|
477 | 438 | 1,296 | 1,730 | ||||||||||||
Other
|
(757 | ) | 96 | 584 | (847 | ) | ||||||||||
Total other income (expense), net
|
$ | (5,779 | ) | $ | (7,695 | ) | $ | (12,744 | ) | $ | 11,462 | |||||
(1) | Gains on forward foreign exchange contracts in the three-month period in 2011 primarily resulted from favorable currency fluctuations relative to negotiated contract rates on positions to buy the Euro and sell the Mexican Peso. Losses in the three-month period in 2010 primarily resulted from unfavorable currency fluctuations relative to negotiated contract rates on positions to sell the Euro, the Swedish Krona and the Australian Dollar. | |
Losses in the nine-month period in 2011 primarily resulted from unfavorable currency fluctuations relative to negotiated contract rates on positions to sell the Swedish Krona and the Australian Dollar, partially offset by a correction recorded in the second quarter of 2011 for embedded foreign currency derivatives in certain of the Companys leases. Gains in the nine-month period in 2010 were primarily due to the appreciation of the U.S. Dollar against negotiated contract rates on positions on the Euro and the Swedish Krona. | ||
(2) | Foreign currency transaction losses in 2011 were primarily due to the depreciation of the U.S. Dollar, the Turkish Lira and the Mexican Peso against various currencies. Foreign currency transaction gains in the nine-month period of 2010 were primarily due to the appreciation of the U.S. Dollar against the Euro and Japanese Yen. |
NOTE 11: | INCOME TAXES |
16
NOTE 12: | RELATED PARTIES |
NOTE 13: | BUSINESS SEGMENT INFORMATION |
17
Three Months Ended | Nine Months Ended | |||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Net revenues:
|
||||||||||||||||
Americas
|
$ | 717,586 | $ | 673,443 | $ | 1,908,846 | $ | 1,776,654 | ||||||||
Europe
|
275,127 | 259,097 | 867,839 | 805,350 | ||||||||||||
Asia Pacific
|
211,304 | 176,465 | 640,947 | 538,736 | ||||||||||||
Total net revenues
|
$ | 1,204,017 | $ | 1,109,005 | $ | 3,417,632 | $ | 3,120,740 | ||||||||
Operating income:
|
||||||||||||||||
Americas
|
$ | 111,485 | $ | 102,934 | $ | 269,118 | $ | 263,914 | ||||||||
Europe
|
31,316 | 34,401 | 140,129 | 132,384 | ||||||||||||
Asia Pacific
|
26,450 | 15,340 | 89,242 | 62,889 | ||||||||||||
Regional operating income
|
169,251 | 152,675 | 498,489 | 459,187 | ||||||||||||
Corporate expenses
|
88,352 | 66,372 | 253,740 | 196,411 | ||||||||||||
Total operating income
|
80,899 | 86,303 | 244,749 | 262,776 | ||||||||||||
Interest expense
|
(30,208 | ) | (31,734 | ) | (98,589 | ) | (100,347 | ) | ||||||||
Loss on early extinguishment of debt
|
| | | (16,587 | ) | |||||||||||
Other income (expense), net
|
(5,779 | ) | (7,695 | ) | (12,744 | ) | 11,462 | |||||||||
Income before income taxes
|
$ | 44,912 | $ | 46,874 | $ | 133,416 | $ | 157,304 | ||||||||
NOTE 14: | SUBSEQUENT EVENT |
18
Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| Net revenues. Consolidated net revenues increased by 9% compared to the third quarter of 2010, an increase of 4% on a constant-currency basis. Increased net revenues were primarily associated with our Levis® brand, through the expansion and performance of our store network globally. | |
| Operating income. Consolidated operating income and operating margin declined compared to the third quarter of 2010, as the benefits from the increase in our net revenues were offset primarily by a lower gross margin, reflecting higher sales discounts and the higher cost of cotton, which our price increases did not fully cover. | |
| Cash flows. Cash flows provided by operating activities were $17 million for the nine-month period in 2011 as compared to $96 million for the same period in 2010, primarily reflecting the increased cost of |
19
inventory due primarily to higher cotton prices, our higher operating expenses and higher contribution to our pension plans in 2011. |
| Net sales 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. | |
| Licensing revenue consists of 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 commission payments 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. |
20
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||||||||||||||||||||||||||
% |
2011 |
2010 |
% |
2011 |
2010 |
|||||||||||||||||||||||||||||||||||
August 28, |
August 29, |
Increase |
% of Net |
% of Net |
August 28, |
August 29, |
Increase |
% of Net |
% of Net |
|||||||||||||||||||||||||||||||
2011 | 2010 | (Decrease) | Revenues | Revenues | 2011 | 2010 | (Decrease) | Revenues | Revenues | |||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||
Net sales
|
$ | 1,183.9 | $ | 1,090.4 | 8.6 | % | 98.3 | % | 98.3 | % | $ | 3,358.2 | $ | 3,064.4 | 9.6 | % | 98.3 | % | 98.2 | % | ||||||||||||||||||||
Licensing revenue
|
20.1 | 18.6 | 8.5 | % | 1.7 | % | 1.7 | % | 59.4 | 56.3 | 5.6 | % | 1.7 | % | 1.8 | % | ||||||||||||||||||||||||
Net revenues
|
1,204.0 | 1,109.0 | 8.6 | % | 100.0 | % | 100.0 | % | 3,417.6 | 3,120.7 | 9.5 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||||
Cost of goods sold
|
634.6 | 565.4 | 12.2 | % | 52.7 | % | 51.0 | % | 1,749.5 | 1,544.7 | 13.3 | % | 51.2 | % | 49.5 | % | ||||||||||||||||||||||||
Gross profit
|
569.4 | 543.6 | 4.8 | % | 47.3 | % | 49.0 | % | 1,668.1 | 1,576.0 | 5.8 | % | 48.8 | % | 50.5 | % | ||||||||||||||||||||||||
Selling, general and administrative expenses
|
488.5 | 457.3 | 6.8 | % | 40.6 | % | 41.2 | % | 1,423.4 | 1,313.2 | 8.4 | % | 41.6 | % | 42.1 | % | ||||||||||||||||||||||||
Operating income
|
80.9 | 86.3 | (6.3 | )% | 6.7 | % | 7.8 | % | 244.7 | 262.8 | (6.9 | )% | 7.2 | % | 8.4 | % | ||||||||||||||||||||||||
Interest expense
|
(30.2 | ) | (31.7 | ) | (4.8 | )% | (2.5 | )% | (2.9 | )% | (98.6 | ) | (100.3 | ) | (1.8 | )% | (2.9 | )% | (3.2 | )% | ||||||||||||||||||||
Loss on early extinguishment of debt
|
| | | | | | (16.6 | ) | (100.0 | )% | | (0.5 | )% | |||||||||||||||||||||||||||
Other income (expense), net
|
(5.8 | ) | (7.7 | ) | (24.9 | )% | (0.5 | )% | (0.7 | )% | (12.7 | ) | 11.4 | (211.2 | )% | (0.4 | )% | 0.4 | % | |||||||||||||||||||||
Income before income taxes
|
44.9 | 46.9 | (4.2 | )% | 3.7 | % | 4.2 | % | 133.4 | 157.3 | (15.2 | )% | 3.9 | % | 5.0 | % | ||||||||||||||||||||||||
Income tax expense
|
13.6 | 20.3 | (32.8 | )% | 1.1 | % | 1.8 | % | 42.4 | 93.2 | (54.5 | )% | 1.2 | % | 3.0 | % | ||||||||||||||||||||||||
Net income
|
31.3 | 26.6 | 17.6 | % | 2.6 | % | 2.4 | % | 91.0 | 64.1 | 41.9 | % | 2.7 | % | 2.1 | % | ||||||||||||||||||||||||
Net loss attributable to noncontrolling interest
|
0.9 | 1.6 | (42.6 | )% | 0.1 | % | 0.1 | % | 2.8 | 6.1 | (52.7 | )% | 0.1 | % | 0.2 | % | ||||||||||||||||||||||||
Net income attributable to Levi Strauss & Co.
|
$ | 32.2 | $ | 28.2 | 14.2 | % | 2.7 | % | 2.5 | % | $ | 93.8 | $ | 70.2 | 33.8 | % | 2.7 | % | 2.2 | % | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
% Increase (Decrease) | % Increase (Decrease) | |||||||||||||||||||||||||||||||
August 28, |
August 29, |
As |
Constant |
August 28, |
August 29, |
As |
Constant |
|||||||||||||||||||||||||
2011 | 2010 | Reported | Currency | 2011 | 2010 | Reported | Currency | |||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||
Net revenues:
|
||||||||||||||||||||||||||||||||
Americas
|
$ | 717.6 | $ | 673.4 | 6.6 | % | 5.7 | % | $ | 1,908.9 | $ | 1,776.6 | 7.4 | % | 6.7 | % | ||||||||||||||||
Europe
|
275.1 | 259.1 | 6.2 | % | (4.1 | )% | 867.8 | 805.4 | 7.8 | % | 3.7 | % | ||||||||||||||||||||
Asia Pacific
|
211.3 | 176.5 | 19.7 | % | 11.3 | % | 640.9 | 538.7 | 19.0 | % | 11.9 | % | ||||||||||||||||||||
Total net revenues
|
$ | 1,204.0 | $ | 1,109.0 | 8.6 | % | 4.2 | % | $ | 3,417.6 | $ | 3,120.7 | 9.5 | % | 6.8 | % | ||||||||||||||||
21
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
% |
% |
|||||||||||||||||||||||
August 28, |
August 29, |
Increase |
August 28, |
August 29, |
Increase |
|||||||||||||||||||
2011 | 2010 | (Decrease) | 2011 | 2010 | (Decrease) | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Net revenues
|
$ | 1,204.0 | $ | 1,109.0 | 8.6 | % | $ | 3,417.6 | $ | 3,120.7 | 9.5 | % | ||||||||||||
Cost of goods sold
|
634.6 | 565.4 | 12.2 | % | 1,749.5 | 1,544.7 | 13.3 | % | ||||||||||||||||
Gross profit
|
$ | 569.4 | $ | 543.6 | 4.8 | % | $ | 1,668.1 | $ | 1,576.0 | 5.8 | % | ||||||||||||
Gross margin
|
47.3 | % | 49.0 | % | 48.8 | % | 50.5 | % |
22
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||||||||||||||||||||||||||
% |
2011 |
2010 |
% |
2011 |
2010 |
|||||||||||||||||||||||||||||||||||
August 28, |
August 29, |
Increase |
% of Net |
% of Net |
August 28, |
August 29, |
Increase |
% of Net |
% of Net |
|||||||||||||||||||||||||||||||
2011 | 2010 | (Decrease) | Revenues | Revenues | 2011 | 2010 | (Decrease) | Revenues | Revenues | |||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||
Selling
|
$ | 176.0 | $ | 154.1 | 14.2 | % | 14.6 | % | 13.9 | % | $ | 525.2 | $ | 458.0 | 14.7 | % | 15.4 | % | 14.7 | % | ||||||||||||||||||||
Advertising and promotion
|
78.7 | 93.0 | (15.4 | )% | 6.5 | % | 8.4 | % | 213.2 | 222.6 | (4.3 | )% | 6.2 | % | 7.1 | % | ||||||||||||||||||||||||
Administration
|
98.7 | 95.4 | 3.5 | % | 8.2 | % | 8.6 | % | 306.1 | 288.9 | 6.0 | % | 9.0 | % | 9.3 | % | ||||||||||||||||||||||||
Other
|
135.1 | 114.8 | 17.7 | % | 11.2 | % | 10.3 | % | 378.9 | 343.7 | 10.2 | % | 11.1 | % | 11.0 | % | ||||||||||||||||||||||||
Total SG&A
|
$ | 488.5 | $ | 457.3 | 6.8 | % | 40.6 | % | 41.2 | % | $ | 1,423.4 | $ | 1,313.2 | 8.4 | % | 41.6 | % | 42.1 | % | ||||||||||||||||||||
23
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||||
August 28, |
August 29, |
August 28, |
August 29, |
|||||||||||||||||||||||||||||||||||||
% |
2011 |
2010 |
% |
2011 |
2010 |
|||||||||||||||||||||||||||||||||||
August 28, |
August 29, |
Increase |
% of Net |
% of Net |
August 28, |
August 29, |
Increase |
% of Net |
% of Net |
|||||||||||||||||||||||||||||||
2011 | 2010 | (Decrease) | Revenues | Revenues | 2011 | 2010 | (Decrease) | Revenues | Revenues | |||||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||||||||||||||
Operating income:
|
||||||||||||||||||||||||||||||||||||||||
Americas
|
$ | 111.5 | $ | 102.9 | 8.3 | % | 15.5 | % | 15.3 | % | $ | 269.1 | $ | 263.9 | 2.0 | % | 14.1 | % | 14.9 | % | ||||||||||||||||||||
Europe
|
31.3 | 34.4 | (9.0 | )% | 11.4 | % | 13.3 | % | 140.1 | 132.4 | 5.9 | % | 16.1 | % | 16.4 | % | ||||||||||||||||||||||||
Asia Pacific
|
26.5 | 15.4 | 72.4 | % | 12.5 | % | 8.7 | % | 89.3 | 62.9 | 41.9 | % | 13.9 | % | 11.7 | % | ||||||||||||||||||||||||
Total regional operating income
|
169.3 | 152.7 | 10.9 | % | 14.1 | %* | 13.8 | %* | 498.5 | 459.2 | 8.6 | % | 14.6 | %* | 14.7 | %* | ||||||||||||||||||||||||
Corporate expenses
|
88.4 | 66.4 | 33.1 | % | 7.3 | %* | 6.0 | %* | 253.8 | 196.4 | 29.2 | % | 7.4 | %* | 6.3 | %* | ||||||||||||||||||||||||
Total operating income
|
$ | 80.9 | $ | 86.3 | (6.3 | )% | 6.7 | %* | 7.8 | %* | $ | 244.7 | $ | 262.8 | (6.9 | )% | 7.2 | %* | 8.4 | %* | ||||||||||||||||||||
Operating margin
|
6.7 | % | 7.8 | % | 7.2 | % | 8.4 | % |
* | Percentage of consolidated net revenues |
| Americas. The increase in operating income in both periods primarily reflected net revenue growth in the region. For the nine-month period, the increase was partially offset by a decrease in operating margin, primarily reflecting the regions decline in gross margin. | |
| Europe. For the three- and nine-month periods, the operating margin decreased due to the regions decline in gross margin, the effects of which on operating income were offset partially and fully, respectively, by the favorable impact of currency, and with respect to the nine-month period, the regions higher net revenues. | |
| Asia Pacific. The increases in operating margin and operating income for the three-month period primarily reflected the regions lower SG&A expenses; the increases for the nine-month period primarily reflected the regions improved gross margin and higher net revenues. In both periods, the region benefitted from the favorable impact of currency. |
24
25
Nine Months Ended | ||||||||
August 28, |
August 29, |
|||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Cash provided by operating activities
|
$ | 17.3 | $ | 95.8 | ||||
Cash used for investing activities
|
(114.6 | ) | (127.3 | ) | ||||
Cash provided by financing activities
|
52.3 | 25.3 | ||||||
Cash and cash equivalents
|
230.8 | 261.2 |
26
| We no longer consider our accounting policy on derivative and foreign exchange management activities to be critical; and | |
| We measure changes in the funded status of our pension and postretirement benefits plans using actuarial models which utilize an attribution approach that generally spreads individual events either over the estimated service lives of the remaining employees in the plan, or, for plans where participants will not earn additional benefits by rendering future service, over the plan participants estimated remaining lives. |
27
| consequences of impacts to the businesses of our wholesale customers caused by factors such as lower consumer spending, pricing changes and general economic conditions and changing consumer preferences; | |
| changes in the level of consumer spending for apparel in view of general economic and environmental conditions and pricing trends, and our ability to plan for and respond to the impact of those changes; | |
| our ability to mitigate costs related to manufacturing, sourcing, and raw materials supply, such as cotton, and to manage consumer response to such mitigating actions; | |
| consequences of the actions we take to support our supply chain partners as a response to the rising costs of manufacturing, sourcing, and raw materials supply; | |
| our ability to mitigate the impact of a slowdown in the Japanese economy due to the natural disasters and related events in that country; | |
| our adjustment to organizational changes including the continued globalization of our brand management and the introduction of a new chief executive officer; | |
| our ability to grow our Dockers® brand and to expand our Denizentm brand into new markets and channels; | |
| our and our wholesale customers decisions to modify strategies and adjust product mix, and our ability to manage any resulting product transition costs; | |
| 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 and shopping experiences; | |
| our ability to respond to price, innovation and other competitive pressures in the apparel industry and on our key customers; | |
| our ability to increase the number of dedicated stores for our products, including through opening and profitably operating company-operated stores; | |
| our effectiveness in increasing productivity and efficiency in our operations; | |
| our ability to implement, stabilize and optimize our enterprise resource planning system throughout our business without disruption or to mitigate such disruptions; | |
| 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 do business. |
28
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
Item 4. | CONTROLS AND PROCEDURES |
29
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. | REMOVED AND RESERVED |
Item 5. | OTHER INFORMATION |
Item 6. | EXHIBITS |
10 | .1 | Employment Agreement between the Company and Charles V. Bergh, dated June 9, 2011. Incorporated by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K filed with the Commission on June 16, 2011. | ||
10 | .2 | Transition Services, Separation Agreement and Release of All Claims between John Anderson and the Company, dated June 16, 2011. Incorporated by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K filed with the Commission on June 16, 2011. | ||
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. Furnished herewith. | ||
101 | .SCH | XBRL Taxonomy Extension Schema Document. Furnished herewith. | ||
101 | .CAL | XBRL Taxonomy Extension Calculation Linkbase Document. Furnished herewith. | ||
101 | .LAB | XBRL Taxonomy Extension Label Linkbase Document. Furnished herewith. | ||
101 | .PRE | XBRL Taxonomy Extension Presentation Linkbase Document. Furnished herewith. |
30
By: |
/s/ Heidi
L. Manes
|
31
10 | .1 | Employment Agreement between the Company and Charles V. Bergh, dated June 9, 2011. Incorporated by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K filed with the Commission on June 16, 2011. | ||
10 | .2 | Transition Services, Separation Agreement and Release of All Claims between John Anderson and the Company, dated June 16, 2011. Incorporated by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K filed with the Commission on June 16, 2011. | ||
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. Furnished herewith. | ||
101 | .SCH | XBRL Taxonomy Extension Schema Document. Furnished herewith. | ||
101 | .CAL | XBRL Taxonomy Extension Calculation Linkbase Document. Furnished herewith. | ||
101 | .LAB | XBRL Taxonomy Extension Label Linkbase Document. Furnished herewith. | ||
101 | .PRE | XBRL Taxonomy Extension Presentation Linkbase Document. Furnished herewith. |
Consolidated Balance Sheets (Parenthetical) (USD $)
In Thousands, except Share data |
Aug. 28, 2011
|
Nov. 28, 2010
|
---|---|---|
ASSETS | Â | Â |
Net of accumulated depreciation | $ 729,843 | $ 683,258 |
Current Assets: | Â | Â |
Net of allowance for doubtful accounts | $ 22,778 | $ 24,617 |
Levi Strauss & Co. stockholders' deficit | Â | Â |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 270,000,000 | 270,000,000 |
Common stock, shares issued | 37,346,643 | 37,322,358 |
Common stock, shares outstanding | 37,346,643 | 37,322,358 |
Consolidated Statements of Income (Unaudited) (USD $)
In Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Aug. 28, 2011
|
Aug. 29, 2010
|
Aug. 28, 2011
|
Aug. 29, 2010
|
|
Consolidated Statements of Income [Abstract] | Â | Â | Â | Â |
Net sales | $ 1,183,890 | $ 1,090,448 | $ 3,358,175 | $ 3,064,414 |
Licensing revenue | 20,127 | 18,557 | 59,457 | 56,326 |
Net revenues | 1,204,017 | 1,109,005 | 3,417,632 | 3,120,740 |
Cost of goods sold | 634,573 | 565,393 | 1,749,525 | 1,544,779 |
Gross profit | 569,444 | 543,612 | 1,668,107 | 1,575,961 |
Selling, general and administrative expenses | 488,545 | 457,309 | 1,423,358 | 1,313,185 |
Operating income | 80,899 | 86,303 | 244,749 | 262,776 |
Interest expense | (30,208) | (31,734) | (98,589) | (100,347) |
Loss on early extinguishment of debt | Â | Â | Â | (16,587) |
Other income (expense), net | (5,779) | (7,695) | (12,744) | 11,462 |
Income before income taxes | 44,912 | 46,874 | 133,416 | 157,304 |
Income tax expense | 13,612 | 20,252 | 42,437 | 93,203 |
Net income | 31,300 | 26,622 | 90,979 | 64,101 |
Net loss attributable to noncontrolling interest | 893 | 1,556 | 2,860 | 6,050 |
Net income attributable to Levi Strauss & Co. | $ 32,193 | $ 28,178 | $ 93,839 | $ 70,151 |
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