8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): July 13, 2004

Levi Strauss & Co.

(Exact name of registrant as specified in its charter)

DELAWARE	002-90139	94-0905160
(State of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

1155 Battery Street San Francisco, California	94111
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (415) 501-6000

ITEM 7. FINANCIAL STATEMENTS AND EXHIBIT

99         Press Release dated July 13, 2004.

ITEM 9. REGULATION FD DISCLOSURE

On July 13, 2004, Levi Strauss & Co. issued a press release titled “Levi Strauss & Co. Announces Second-Quarter 2004 Financial Results.” A copy of the press release is attached hereto as Exhibit 99. The information in this Item 9, including the exhibit thereto, is furnished pursuant to Item 9 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section.

ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 13, 2004, Levi Strauss & Co. issued a press release titled “Levi Strauss & Co. Announces Second-Quarter 2004 Financial Results.” A copy of the press release is attached hereto as Exhibit 99. The information in this Item 12, including the exhibit thereto, is furnished pursuant to Item 12 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section.

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 hereunto duly authorized.

Date: July 13, 2004

LEVI STRAUSS & CO.
By:	/s/ Gary W. Grellman
	Gary W. Grellman Title: Vice President and           Corporate Controller

EXHIBIT INDEX

Exhibit Number	Description
99	Press Release dated July 13, 2004

EX-99

Exhibit 99

LEVI STRAUSS     & CO. NEWS 1155 Battery Street, San Francisco, CA 94111

Investor Contact:	Eileen VanEss Levi Strauss & Co. (415) 501-2477
Media Contact:	Jeff Beckman Levi Strauss & Co. (415) 501-3317

LEVI STRAUSS & CO. ANNOUNCES SECOND-QUARTER 2004 FINANCIAL RESULTS

SAN FRANCISCO (July 13, 2004) – Levi Strauss & Co. (LS&CO.) today announced financial results for the second quarter ended May 30, 2004 and filed its second-quarter 2004 Form 10-Q with the Securities and Exchange Commission. Results for the quarter, as compared to the same quarter in the prior year, reflected improved gross margins; lower selling, general and administrative expenses; higher operating income; higher net income; and lower net debt.

Second-quarter 2004 net sales were $959 million compared to $932 million for the second quarter of 2003, representing an increase of 3 percent on a reported basis and a decline of 1 percent on a constant-currency basis. The sales performance reflected the continued growth of the company’s Asia Pacific business and worldwide rollout of the Levi Strauss Signature^™ brand. Net sales declined in LS&CO.’s U.S. and European Levi’s^® and Dockers^® businesses. Key factors contributing to sales decreases of the U.S. Levi’s^® and Dockers^® brands compared to the second quarter of 2003 included:

• the impact of wholesale price reductions taken in mid-2003 for both brands;

• a planned reduction in sales of Levi’s^® product to warehouse, club and off-price retail channels in 2004; and,

• substantial volume shipments in the second quarter of 2003 to fill retail shelves in conjunction with upgrading two major core Dockers^® programs.

“So far, so good,” said Phil Marineau, chief executive officer. “Overall, I’m pleased with our second-quarter performance, which delivered on our goal of improving our profitability this year. We still have a lot of work to do, but I’m encouraged by the progress we’re making in all our businesses.”

- more -

Second-Quarter 2004 Results

• Gross profit was $413 million, or 43.0 percent of sales, compared to $393 million, or 42.2 percent of sales for the second quarter of 2003. Gross profit in the 2004 period benefited from lower product costs and lower markdowns and sales allowances, as well as stronger foreign currencies.

• Selling, general and administrative (SG&A) expense decreased to $319 million from $345 million in the second quarter of 2003. Lower advertising expense, lower post-retirement healthcare expense and cost savings due to reorganization initiatives more than offset higher incentive compensation expense and the unfavorable impact of stronger foreign currencies.

Ø Advertising expense decreased 25 percent to $65 million, or 6.7 percent of net sales, compared to $87 million, or 9.3 percent of net sales in the 2003 period. This level of advertising expense as a percent of sales is not necessarily indicative of our likely full-year spending levels.

Ø Post-retirement healthcare expense was a net benefit of $11 million compared to a $16 million expense in the prior year period. The $27 million improvement resulted from lower expenses related to plan changes that we reported in the first quarter as well as a curtailment gain that was the result of our restructuring initiatives in the second quarter.

Ø Second quarter 2004 SG&A was impacted by total incentive compensation expense of $31 million versus a net reversal of $13 million in the second quarter of 2003.

• Operating income for the quarter increased 23 percent to $77 million, or 8.1 percent of revenue, compared to $63 million, or 6.7 percent of revenue, for the same period of 2003. Operating income improved in all three of the company’s geographic regions. Higher gross profit and lower SG&A expense more than offset higher restructuring charges for the quarter.

Ø Operating income was impacted by restructuring charges, net of reversals, of $26 million in the second quarter of 2004 versus net restructuring reversals of $5 million in the 2003 period. The second quarter 2004 charges were primarily associated with the proposed closure of two manufacturing plants in Spain and layoffs incurred in the United States as the company streamlined corporate support functions.

• Net income for the second quarter of 2004 was $6 million compared to a net loss of $42 million for the second quarter of 2003. The improvement was driven by higher operating income, lower tax expense and a decline in losses on foreign exchange management contracts, offset in part by higher restructuring charges.

- more -

As of May 30, 2004, total debt, less cash, stood at $1.96 billion compared to $2.11 billion at the end of fiscal year 2003. As of July 11, 2004, the company had available liquidity of approximately $552 million, consisting of approximately $287 million in highly liquid short-term investments, and $265 million in net available borrowing capacity under its revolving credit facility.

Ø Inventory at the end of the second quarter was $519 million, reflecting a $93 million reduction from the end of the first quarter and a total reduction of $161 million from year-end 2003. Inventory turns improved from 3.3x at year-end to 4.5x at the end of the second quarter.

“Our gross margins this quarter improved due to our dilution control, which resulted in lower markdowns and sales allowances,” said Jim Fogarty, chief financial officer. “Improving margins coupled with lower SG&A have yielded better operating profit. Our higher earnings and improved working capital management enabled us to bring net debt down this quarter. We continue to believe that we will be covenant compliant and have sufficient liquidity over the next 12 months.

“Last quarter we reported on our comprehensive LS&CO. and Alvarez & Marsal work plan aimed at making us more competitive in our SG&A as a percent of revenue and operating margins, as well as reducing debt,” Fogarty said. “During the second quarter, we announced several initiatives as part of this plan, including the reduction of approximately 175 headcount in North America; our intent to close our two Spanish manufacturing plants; and our exploration of the sale of the Dockers^® brand.”

Investor Conference Call

The company’s second-quarter investor conference call will be available through a live audio Webcast at http://levistrauss.com/news/webcast.htm today, July 13, 2004, at 7 a.m. PDT/10 a.m. EDT. A replay is available on the Web site the same day and will be archived for six months. A telephone replay also is available at 800-642-1687 in the U.S. and Canada, or 706-645-9291 internationally; I.D. #8192807 through August 13, 2004.

This news release contains, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current assumptions, expectations and projections about future events. We use words like “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Investors should consider the information contained in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended 2003, especially in the Management’s Discussion and Analysis - “Financial Condition and Results of Operations” and “Factors That May Affect Future Results” sections, our most recent Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Other unknown or unpredictable factors also could have material adverse effects on our future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this news release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this news release. We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this news release to reflect circumstances existing after the date of this news release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.

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LEVI STRAUSS & CO. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

(Unaudited)

	May 30, 2004			November 30, 2003
ASSETS
Current Assets:
Cash and cash equivalents	$	347,249		$	203,940
Trade receivables, net of allowances of $26,573 in 2004 and $26,956 in 2003		450,178			555,106
Inventories		519,112			680,068
Deferred tax assets, net of valuation allowance of $25,281 in both 2004 and 2003		131,827			131,827
Other current assets		82,959			104,176
Total current assets		1,531,325			1,675,117
Property, plant and equipment, net of accumulated depreciation of $471,225 in 2004 and $491,121 in 2003		427,708			486,714
Goodwill, net of accumulated amortization of $151,569 in 2004 and in 2003		199,905			199,905
Other intangible assets, net of accumulated amortization of $36,415 in 2004 and $36,349 in 2003		44,697			44,722
Non-current deferred tax assets, net of valuation allowance of $324,269 in both 2004 and 2003		490,021			490,021
Other assets		79,505			87,283
Total Assets	$	2,773,161		$	2,983,762
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Current maturities of long-term debt and short-term borrowings	$	85,434		$	34,700
Accounts payable		195,769			296,188
Restructuring reserves		66,364			96,406
Accrued liabilities		223,329			244,520
Accrued salaries, wages and employee benefits		238,653			195,129
Accrued taxes		36,369			29,863
Total current liabilities		845,918			896,806
Long-term debt, less current maturities		2,224,135			2,281,729
Postretirement medical benefits		514,435			555,008
Pension liability		226,798			250,814
Long-term employee related benefits		169,407			193,188
Long-term tax liabilities		109,352			143,082
Other long-term liabilities		33,242			32,576
Minority interest		23,571			23,731
Total liabilities		4,146,858			4,376,934
Stockholders’ Deficit:
Common stock—$.01 par value; 270,000,000 shares authorized; 37,278,238 shares issued and outstanding		373			373
Additional paid-in capital		88,808			88,808
Accumulated deficit		(1,381,562	)		(1,384,818	)
Accumulated other comprehensive loss		(81,316	)		(97,535	)
Total stockholders’ deficit		(1,373,697	)		(1,393,172	)
Total Liabilities and Stockholders’ Deficit	$	2,773,161		$	2,983,762

The notes accompanying our financial statements in our 10-Q are an integral part of these financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands)

(Unaudited)

	Three Months Ended May 30, 2004			Three Months Ended May 25, 2003			Six Months Ended May 30, 2004			Six Months Ended May 25, 2003
				(Restated)						(Restated)
Net sales	$	958,833		$	932,021		$	1,921,137		$	1,809,055
Cost of goods sold		546,140			538,825			1,100,198			1,055,707
Gross profit		412,693			393,196			820,939			753,348
Selling, general and administrative expenses		319,061			345,390			620,756			650,160
Other operating income		(9,520	)		(9,752	)		(18,033	)		(17,068	)
Restructuring charges, net of reversals		25,679			(5,336	)		80,041			(8,386	)
Operating income		77,473			62,894			138,175			128,642
Interest expense		65,208			63,346			133,435			123,025
Other expense, net		4,039			20,183			2,448			54,798
Income (loss) before taxes		8,226			(20,635	)		2,292			(49,181	)
Income tax expense (benefit)		2,602			21,200			(964	)		50,700
Net income (loss)	$	5,624		$	(41,835	)	$	3,256		$	(99,881	)

The notes accompanying our financial statements in our 10-Q are an integral part of these financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

(Unaudited)

	Six Months Ended
	May 30, 2004			May 25, 2003
				(Restated)
Cash Flows from Operating Activities:
Net income (loss)	$	3,256		$	(99,881	)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
Depreciation and amortization		30,127			31,276
Non-cash asset write-offs associated with reorganization initiatives		34,653			—
Gain on dispositions of property, plant and equipment		(1,088	)		(495	)
Unrealized foreign exchange (gains) losses		(6,441	)		17,409
Decrease in trade receivables		97,013			169,852
Decrease in income taxes receivables		344			904
Decrease (increase) in inventories		149,137			(171,941	)
Decrease (increase) in other current assets		21,756			(14,885	)
Decrease (increase) in other long-term assets		7,592			(22,440	)
Decrease (increase) in net deferred tax assets		—			—
Decrease in accounts payable and accrued liabilities		(103,095	)		(8,991	)
Decrease in restructuring reserves		(30,042	)		(40,164	)
Increase (decrease) in accrued salaries, wages and employee benefits		44,491			(39,173	)
Increase (decrease) in accrued taxes		7,570			(94,023	)
Decrease in long-term employee related benefits		(72,740	)		(74,225	)
(Decrease) increase in other long-term liabilities		(32,888	)		1,789
Other, net		2,774			733
Net cash provided by (used for) operating activities		152,419			(344,255	)
Cash Flows from Investing Activities:
Purchases of property, plant and equipment		(8,059	)		(35,435	)
Proceeds from sale of property, plant and equipment		5,592			7,604
Cash outflow from net investment hedges		(1,086	)		(18,468	)
Net cash used for investing activities		(3,553	)		(46,299	)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt		—			1,114,060
Repayments of long-term debt		(6,664	)		(675,012	)
Net decrease in short-term borrowings		(380	)		(3,474	)
Debt issuance costs		(525	)		—
Increase in restricted cash		—			(23,427	)
Net cash (used for) provided by financing activities		(7,569	)		412,147
Effect of exchange rate changes on cash		2,012			2,894
Net increase in cash and cash equivalents		143,309			24,487
Beginning cash and cash equivalents		203,940			96,478
Ending cash and cash equivalents	$	347,249		$	120,965
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	117,853		$	78,427
Income taxes		24,696			159,319
Restructuring initiatives		75,307			35,024

The notes accompanying our financial statements in our 10-Q are an integral part of these financial statements.

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