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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
Form 10-Q
(Mark One)
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| ☑ | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarterly Period Ended May 28, 2023
or
| | | | | | | | |
| ☐ | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 001-06631
_________________
LEVI STRAUSS & CO.
(Exact Name of Registrant as Specified in Its Charter)
| | | | | | | | |
| 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)
_________________
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| | | | | | | | | | | | | | |
| Title of each class | | Trading symbol(s) | | Name of each exchange on which registered |
| Class A Common Stock, $0.001 par value per share | | LEVI | | New York Stock Exchange |
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 þ No ¨
Indicate by check mark whether the registrant has submitted electronically 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, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of "Large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
| | | | | | | | |
Large accelerated filer þ | Accelerated filer ¨ | Emerging growth company ☐ |
Non-accelerated filer ¨ | | Smaller reporting company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ
As of June 29, 2023, the registrant had 99,641,243 shares of Class A common stock, $0.001 par value per share and 297,025,479 shares of Class B common stock, $0.001 par value per share, outstanding.
LEVI STRAUSS & CO. AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
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WHERE YOU CAN FIND MORE INFORMATION
Investors and others should note that we announce material financial information to our investors using our corporate website, press releases, SEC filings and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about our company, products, planned financial and other announcements, attendance at upcoming investor and industry conferences and other matters, as well as for complying with our disclosure obligations under Regulation FD promulgated under the Securities Exchange Act of 1934, as amended:
•our Investor Relations page (http://investors.levistrauss.com);
•our Twitter account (https://twitter.com/LeviStraussCo);
•our company blog (https://www.levistrauss.com/unzipped-blog/);
•our Facebook page (https://www.facebook.com/levistraussco/);
•our LinkedIn page (https://www.linkedin.com/company/levi-strauss-&-co-);
•our Instagram page (https://www.instagram.com/levistraussco/); and
•our YouTube channel (https://www.youtube.com/user/levistraussvideo).
The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report.
PART I — FINANCIAL INFORMATION
| | | | | |
| Item 1. | CONSOLIDATED FINANCIAL STATEMENTS |
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | | | |
| (Unaudited) | | |
| May 28,
2023 | | November 27,
2022 |
| | | |
| | (Dollars in millions) |
| ASSETS |
| Current Assets: | | | |
| Cash and cash equivalents | $ | 471.6 | | | $ | 429.6 | |
| Short-term investments in marketable securities | — | | | 70.6 | |
| Trade receivables, net | 560.7 | | | 697.0 | |
| Inventories | 1,313.5 | | | 1,416.8 | |
| Other current assets | 198.4 | | | 213.9 | |
| Total current assets | 2,544.2 | | | 2,827.9 | |
| Property, plant and equipment, net | 660.4 | | | 622.8 | |
| Goodwill | 373.2 | | | 365.7 | |
| Other intangible assets, net | 284.8 | | | 286.7 | |
| Deferred tax assets, net | 668.6 | | | 625.0 | |
| Operating lease right-of-use assets, net | 977.8 | | | 970.0 | |
| Other non-current assets | 382.8 | | | 339.7 | |
| Total assets | $ | 5,891.8 | | | $ | 6,037.8 | |
| | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
| Current Liabilities: | | | |
| Short-term debt | 136.4 | | | 11.7 | |
| | | |
| Accounts payable | 464.2 | | | 657.2 | |
| Accrued salaries, wages and employee benefits | 190.3 | | | 246.7 | |
| Accrued sales returns and allowances | 170.2 | | | 180.0 | |
| Short-term operating lease liabilities | 237.4 | | | 235.7 | |
| Other accrued liabilities | 599.9 | | | 650.3 | |
| Total current liabilities | 1,798.4 | | | 1,981.6 | |
| Long-term debt | 1,000.2 | | | 984.5 | |
| | | |
| | | |
| | | |
| Long-term operating lease liabilities | 856.3 | | | 859.1 | |
| Long-term employee related benefits and other liabilities | 299.2 | | | 308.9 | |
| Total liabilities | 3,954.1 | | | 4,134.1 | |
| | | |
| Commitments and contingencies | | | |
| | | |
| | | |
| | | |
| Stockholders’ Equity: | | | |
| | | |
Common stock — $0.001 par value; 1,200,000,000 Class A shares authorized, 99,295,195 shares and 96,028,351 shares issued and outstanding as of May 28, 2023 and November 27, 2022, respectively; and 422,000,000 Class B shares authorized, 297,365,829 shares and 297,703,442 shares issued and outstanding, as of May 28, 2023 and November 27, 2022, respectively | 0.4 | | | 0.4 | |
| Additional paid-in capital | 649.9 | | | 625.6 | |
| Accumulated other comprehensive loss | (421.7) | | | (421.7) | |
| Retained earnings | 1,709.1 | | | 1,699.4 | |
| | | |
| | | |
| Total stockholders’ equity | 1,937.7 | | | 1,903.7 | |
| Total liabilities and stockholders’ equity | $ | 5,891.8 | | | $ | 6,037.8 | |
The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | May 28,
2023 | | May 29,
2022 | | May 28,
2023 | | May 29,
2022 |
| | | | | | | |
| (Dollars in millions, except per share amounts)
(Unaudited) |
| Net revenues | $ | 1,336.8 | | | $ | 1,471.1 | | | $ | 3,025.7 | | | $ | 3,062.7 | |
| Cost of goods sold | 552.6 | | | 616.1 | | | 1,299.2 | | | 1,264.1 | |
| Gross profit | 784.2 | | | 855.0 | | | 1,726.5 | | | 1,798.6 | |
| Selling, general and administrative expenses | 774.3 | | | 778.8 | | | 1,559.2 | | | 1,488.2 | |
| | | | | | | |
| Operating income | 9.9 | | | 76.2 | | | 167.3 | | | 310.4 | |
| Interest expense | (13.2) | | | (4.4) | | | (23.9) | | | (8.6) | |
| | | | | | | |
| | | | | | | |
| Other (expense) income, net | (3.9) | | | 6.0 | | | (11.4) | | | 21.9 | |
| (Loss) income before income taxes | (7.2) | | | 77.8 | | | 132.0 | | | 323.7 | |
| Income tax (benefit) expense | (5.6) | | | 28.1 | | | 18.9 | | | 78.1 | |
| Net (loss) income | $ | (1.6) | | | $ | 49.7 | | | $ | 113.1 | | | $ | 245.6 | |
| | | | | | | |
| | | | | | | |
| (Loss) earnings per common share attributable to common stockholders: | | | | | | | |
| Basic | $(0.00 | ) | | $0.13 | | | $0.29 | | | $0.62 | |
| Diluted | $(0.00 | ) | | $0.12 | | | $0.28 | | | $0.61 | |
| Weighted-average common shares outstanding: | | | | | | | |
| Basic | 397,455,261 | | | 397,882,576 | | | 396,671,862 | | | 398,650,665 | |
| Diluted | 397,455,261 | | | 403,782,416 | | | 401,141,666 | | | 405,852,351 | |
The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | May 28,
2023 | | May 29,
2022 | | May 28,
2023 | | May 29,
2022 |
| | | | | | | |
| (Dollars in millions)
(Unaudited) |
| Net (loss) income | $ | (1.6) | | | $ | 49.7 | | | $ | 113.1 | | | $ | 245.6 | |
| Other comprehensive (loss) income, before related income taxes: | | | | | | | |
Pension and postretirement benefits | 2.3 | | | 2.0 | | | 4.6 | | | 4.2 | |
Derivative instruments | (26.7) | | | 34.0 | | | (51.5) | | | 29.9 | |
| Foreign currency translation gains (losses) | 19.3 | | | (14.0) | | | 47.4 | | | (25.2) | |
| Unrealized (losses) gains on marketable securities | — | | | (4.4) | | | 0.7 | | | (10.4) | |
| Total other comprehensive (loss) income, before related income taxes | (5.1) | | | 17.6 | | | 1.2 | | | (1.5) | |
| Income tax benefit (expense) related to items of other comprehensive (loss) income | 1.9 | | | (0.4) | | | (1.2) | | | 1.7 | |
| Comprehensive (loss) income, net of income taxes | $ | (4.8) | | | $ | 66.9 | | | $ | 113.1 | | | $ | 245.8 | |
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The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended May 28, 2023 |
| | | | | |
| Class A
& Class B
Common
Stock | | Additional
Paid-In Capital | | Retained
Earnings | | Accumulated Other
Comprehensive Loss | | | | Total
Stockholders' Equity |
| | | | | | | | | | | |
| (Dollars in millions)
(Unaudited) |
Balance at February 26, 2023 | $ | 0.4 | | | $ | 627.2 | | | $ | 1,758.4 | | | $ | (418.5) | | | | | $ | 1,967.5 | |
| Net loss | — | | | — | | | (1.6) | | | — | | | | | (1.6) | |
| Other comprehensive loss, net of tax | — | | | — | | | — | | | (3.2) | | | | | (3.2) | |
| Stock-based compensation and dividends, net | — | | | 20.9 | | | (0.1) | | | — | | | | | 20.8 | |
| Employee stock purchase plan | — | | | 2.2 | | | — | | | — | | | | | 2.2 | |
| | | | | | | | | | | |
| Tax withholdings on equity awards | — | | | (0.4) | | | — | | | — | | | | | (0.4) | |
Cash dividends declared ($0.12 per share) | — | | | — | | | (47.6) | | | — | | | | | (47.6) | |
Balance at May 28, 2023 | $ | 0.4 | | | $ | 649.9 | | | $ | 1,709.1 | | | $ | (421.7) | | | | | $ | 1,937.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended May 28, 2023 |
| | | | | |
| Class A
& Class B
Common
Stock | | Additional
Paid-In Capital | | Retained
Earnings | | Accumulated Other
Comprehensive Loss | | | | Total
Stockholders' Equity |
| | | | | | | | | | | |
| (Dollars in millions)
(Unaudited) |
Balance at November 27, 2022 | $ | 0.4 | | | $ | 625.6 | | | $ | 1,699.4 | | | $ | (421.7) | | | | | $ | 1,903.7 | |
| Net income | — | | | — | | | 113.1 | | | — | | | | | 113.1 | |
| | | | | | | | | | | |
| Stock-based compensation and dividends, net | — | | | 38.5 | | | (0.1) | | | — | | | | | 38.4 | |
| Employee stock purchase plan | — | | | 4.8 | | | — | | | — | | | | | 4.8 | |
| Repurchase of common stock | — | | | — | | | (8.1) | | | — | | | | | (8.1) | |
| Tax withholdings on equity awards | — | | | (19.0) | | | — | | | — | | | | | (19.0) | |
Cash dividends declared ($0.24 per share) | — | | | — | | | (95.2) | | | — | | | | | (95.2) | |
Balance at May 28, 2023 | $ | 0.4 | | | $ | 649.9 | | | $ | 1,709.1 | | | $ | (421.7) | | | | | $ | 1,937.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended May 29, 2022 |
| | | | | |
| Class A
& Class B
Common
Stock | | Additional
Paid-In Capital | | Retained
Earnings | | Accumulated Other
Comprehensive Loss | | | | Total
Stockholders' Equity |
| | | | | | | | | | | |
| (Dollars in millions)
(Unaudited) |
Balance at February 27, 2022 | $ | 0.4 | | | $ | 575.3 | | | $ | 1,559.3 | | | $ | (411.4) | | | | | $ | 1,723.6 | |
| Net Income | — | | | — | | | 49.7 | | | — | | | | | 49.7 | |
| Other comprehensive income, net of tax | — | | | — | | | — | | | 17.2 | | | | | 17.2 | |
| Stock-based compensation and dividends, net | — | | | 16.7 | | | — | | | — | | | | | 16.7 | |
| Employee stock purchase plan | — | | | 2.1 | | | — | | | — | | | | | 2.1 | |
| Repurchase of common stock | — | | | — | | | (40.0) | | | — | | | | | (40.0) | |
| Tax withholdings on equity awards | — | | | (1.3) | | | — | | | — | | | | | (1.3) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Cash dividends declared ($0.10 per share) | — | | | — | | | (39.7) | | | — | | | | | (39.7) | |
Balance at May 29, 2022 | $ | 0.4 | | | $ | 592.8 | | | $ | 1,529.3 | | | $ | (394.2) | | | | | $ | 1,728.3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended May 29, 2022 |
| | | | | |
| Class A
& Class B
Common
Stock | | Additional
Paid-In Capital | | Retained
Earnings | | Accumulated Other
Comprehensive Loss | | | | Total
Stockholders' Equity |
| | | | | | | | | | | |
| (Dollars in millions)
(Unaudited) |
Balance at November 28, 2021 | $ | 0.4 | | | $ | 584.8 | | | $ | 1,474.9 | | | $ | (394.4) | | | | | $ | 1,665.7 | |
| Net income | — | | | — | | | 245.6 | | | — | | | | | 245.6 | |
| Other comprehensive income, net of tax | — | | | — | | | — | | | 0.2 | | | | | 0.2 | |
| Stock-based compensation and dividends, net | — | | | 30.7 | | | — | | | — | | | | | 30.7 | |
| Employee stock purchase plan | — | | | 4.5 | | | — | | | — | | | | | 4.5 | |
| Repurchase of common stock | — | | | — | | | (111.7) | | | — | | | | | (111.7) | |
| Tax withholdings on equity awards | — | | | (27.2) | | | — | | | — | | | | | (27.2) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Cash dividends declared ($0.20 per share) | — | | | — | | | (79.5) | | | — | | | | | (79.5) | |
Balance at May 29, 2022 | $ | 0.4 | | | $ | 592.8 | | | $ | 1,529.3 | | | $ | (394.2) | | | | | $ | 1,728.3 | |
The accompanying notes are an integral part of these consolidated financial statements.
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | |
| | Six Months Ended |
| | May 28,
2023 | | May 29,
2022 |
| | | |
| (Dollars in millions)
(Unaudited) |
| Cash Flows from Operating Activities: | | | |
| Net income | $ | 113.1 | | | $ | 245.6 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation and amortization | 79.4 | | | 77.7 | |
| Property, plant, equipment, right-of-use asset, goodwill impairments, and early lease terminations, net | 14.9 | | | 54.7 | |
| | | |
| | | |
| | | |
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| | | |
| | | |
| | | |
| | | |
| Stock-based compensation | 38.4 | | | 30.7 | |
| | | |
| (Benefit from) provision for deferred income taxes | (36.5) | | | 17.4 | |
| Other, net | (11.3) | | | 9.8 | |
| Net change in operating assets and liabilities | (72.6) | | | (290.0) | |
| | | |
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| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Net cash provided by operating activities | 125.4 | | | 145.9 | |
| Cash Flows from Investing Activities: | | | |
| Purchases of property, plant and equipment | (186.6) | | | (120.5) | |
| | | |
| Proceeds (payments) on settlement of forward foreign exchange contracts not designated for hedge accounting | 34.3 | | | (9.1) | |
| Payments to acquire short-term investments | — | | | (44.6) | |
| Proceeds from sale, maturity and collection of short-term investments | 70.8 | | | 39.0 | |
| | | |
| Net cash used for investing activities | (81.5) | | | (135.2) | |
| Cash Flows from Financing Activities: | | | |
| | | |
| | | |
| | | |
| Proceeds from senior revolving credit facility | 200.0 | | | — | |
| Repayments of senior revolving credit facility | (75.0) | | | — | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Repurchase of common stock | (8.1) | | | (114.2) | |
| | | |
| | | |
| Dividends to stockholders | (95.2) | | | (79.5) | |
| Other financing activities, net | (15.8) | | | (23.4) | |
| Net cash provided by (used for) financing activities | 5.9 | | | (217.1) | |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (7.8) | | | (2.0) | |
| Net increase (decrease) in cash and cash equivalents and restricted cash | 42.0 | | | (208.4) | |
| Beginning cash and cash equivalents, and restricted cash | 430.0 | | | 810.6 | |
| Ending cash and cash equivalents, and restricted cash | 472.0 | | | 602.2 | |
| Less: Ending restricted cash | (0.4) | | | (0.3) | |
| Ending cash and cash equivalents | $ | 471.6 | | | $ | 601.9 | |
| | | |
| Noncash Investing Activity: | | | |
| Property, plant and equipment acquired and not yet paid at end of period | $ | 39.9 | | | $ | 47.2 | |
| | | |
| | | |
| | | |
| | | |
| Supplemental disclosure of cash flow information: | | | |
| | | |
| Cash paid for income taxes during the period, net of refunds | 40.5 | | | 56.8 | |
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 MAY 28, 2023
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Levi Strauss & Co. (the "Company") is one of the world’s largest brand-name apparel companies. The Company designs, markets and sells – directly or through third parties and licensees – products that include jeans, casual and dress pants, tops, shorts, skirts, dresses, jackets, activewear, footwear and related accessories for men, women and children around the world under the Levi’s®, Signature by Levi Strauss & Co.™, Denizen®, Dockers® and Beyond Yoga® brands.
Basis of Presentation and Principles of Consolidation
The interim consolidated financial statements of the Company and its wholly-owned and majority-owned foreign and domestic subsidiaries, including the notes, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC") applicable to interim period financial statements and do not include all of the information and disclosures required by generally accepted accounting principles in the United States ("U.S. GAAP") for complete financial statements. 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. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended November 27, 2022, included in the Company's 2022 Annual Report on Form 10-K.
The unaudited consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions have been eliminated. The results of operations for the three and six months ended May 28, 2023 may not be indicative of the results to be expected for any other interim period or the year ending November 26, 2023.
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 2023 and 2022 consists of 13 weeks. All references to years and quarters relate to fiscal years and quarters rather than calendar years and quarters.
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.
Accounts Receivable
Accounts receivable are recorded net of an allowance for credit losses. The Company estimates the allowance for credit losses based on an analysis of the aging of accounts receivable, assessment of collectability, including any known or anticipated bankruptcies, customer-specific circumstances and an evaluation of current economic conditions. The allowance for credit losses was $6.7 million and $7.5 million as of May 28, 2023 and November 27, 2022, respectively.
Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may be impaired. Impairment losses are measured and recorded for the excess of carrying value over its fair value, estimated based on expected future cash flows and other quantitative and qualitative factors. Property, plant and equipment, net includes accumulated depreciation of $1.3 billion and $1.2 billion as of May 28, 2023 and November 27, 2022, respectively.
In the first quarter of 2023, the Company recorded $18.6 million in charges primarily related to the impairment of capitalized internal-use software, as a result of the decision to discontinue certain technology projects in connection with the overall restructuring initiative. In the second quarter of 2022, as a result of the Russia-Ukraine crisis, the Company reviewed certain long-lived assets for impairment and recorded $60.4 million in charges, which reflect the full impairment of long-lived assets, including $35.4 million related to certain store right-of-use assets, $11.6 million related to goodwill and $4.1 million
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
related to property, plant and equipment, as well as $9.3 million of other incremental charges related to the wind-down of operations. Both impairment charges are included in selling, general and administrative expenses ("SG&A") in the accompanying consolidated statements of operations. For more on the restructuring, refer to Note 7.
Share Repurchases
During the six months ended May 28, 2023, the Company repurchased 0.5 million shares for $8.1 million, plus broker's commissions, in the open market during the first quarter. This equates to an average repurchase price of approximately $17.97 per share. During the second quarter of 2023, there were no shares repurchased. During the three and six months ended May 29, 2022, the Company repurchased 2.0 million and 5.0 million shares for $40.0 million and $111.5 million, plus broker's commissions, respectively, in the open market. This equates to an average repurchase price of approximately $22.00 per share for the six months ended May 29, 2022.
The Company accounts for share repurchases by charging the excess of repurchase price over the repurchased Class A common stock's par value entirely to retained earnings. All repurchased shares are retired and become authorized but unissued shares. The Company accrues for the shares purchased under the share repurchase plan based on the trade date. The Company may terminate or limit the share repurchase program at any time.
Partial Pension Settlement
On May 30, 2023, subsequent to quarter end, the Company used pension plan assets to purchase nonparticipating annuity contracts in order to transfer certain liabilities associated with its U.S. pension plan to an insurance company. As a result, a noncash pension settlement charge of approximately $19 million will be recognized within Other (expense) income, net in the Company's consolidated statement of operations and approximately $21 million of unrealized losses will be reclassified from "Accumulated other comprehensive loss" ("AOCL") on the Company's consolidated balance sheets.
Reclassification
Certain amounts on the consolidated balance sheets and statements of cash flow have been conformed to the May 28, 2023 presentation.
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 and footnote disclosures, from those disclosed in the 2022 Annual Report on Form 10-K.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
NOTE 2: INVENTORIES
The following table presents the Company's inventory balances:
| | | | | | | | | | | |
| May 28,
2023 | | November 27,
2022 |
| | | |
| | (Dollars in millions) |
| | | |
| Raw materials | $ | 12.8 | | | $ | 12.3 | |
| Work-in-progress | 5.2 | | | 4.7 | |
| Finished goods | 1,295.5 | | | 1,399.8 | |
| Total inventories | $ | 1,313.5 | | | $ | 1,416.8 | |
NOTE 3: FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the Company’s financial instruments that are carried at fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | May 28, 2023 | | November 27, 2022 |
| | | | 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 millions) |
| Financial assets carried at fair value | | | | | | | | | | | |
| Rabbi trust assets | $ | 74.6 | | | $ | 74.6 | | | $ | — | | | $ | 71.5 | | | $ | 71.5 | | | $ | — | |
| Short-term investments in marketable securities | — | | | — | | | — | | | 70.6 | | | — | | | 70.6 | |
Derivative instruments(3) | 5.8 | | | — | | | 5.8 | | | 21.5 | | | — | | | 21.5 | |
| Total | $ | 80.4 | | | $ | 74.6 | | | $ | 5.8 | | | $ | 163.6 | | | $ | 71.5 | | | $ | 92.1 | |
| Financial liabilities carried at fair value | | | | | | | | | | | |
| | | | | | | | | | | |
Derivative instruments(3) | 23.5 | | | — | | | 23.5 | | | 8.1 | | | — | | | 8.1 | |
| Total | $ | 23.5 | | | $ | — | | | $ | 23.5 | | | $ | 8.1 | | | $ | — | | | $ | 8.1 | |
_____________
(1)Fair values estimated using Level 1 inputs are inputs that 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 marketable equity 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. Short-term investments in marketable securities consist of fixed income securities. For forward foreign exchange contracts, inputs include foreign currency exchange and interest rates and, where applicable, credit default swap prices.
(3)The Company’s cash flow hedges are subject to International Swaps and Derivatives Association, Inc. master agreements. These agreements permit the net settlement of these contracts on a per-institution basis. Refer to Note 4 for more information.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
The following table presents the amortized cost, gross unrealized gains (losses) and fair values of the Company’s available for sale investments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | November 27, 2022 |
| | | | | | | | | | Amortized
Cost | | Unrealized
Gains | | Unrealized
Losses | | Fair Value |
| | | | | | | | | | | | | | | |
| | | | | | | | | | (Dollars in millions) |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Available for sale investments | | | | | | | | | | | | | | | |
| Short-term investments in marketable securities | | | | | | | | | $ | 71.1 | | | $ | 0.3 | | | $ | (0.8) | | | $ | 70.6 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
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:
| | | | | | | | | | | | | | | | | | | | | | | |
| | May 28, 2023 | | November 27, 2022 |
| | Carrying
Value | | Estimated Fair
Value | | Carrying
Value | | Estimated Fair
Value |
| | | | | | | |
| | (Dollars in millions) |
| Financial liabilities carried at adjusted historical cost | | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
3.375% senior notes due 2027(1) | $ | 509.6 | | | $ | 486.8 | | | $ | 493.9 | | | $ | 461.4 | |
3.50% senior notes due 2031(1) | 498.5 | | | 409.5 | | | 498.1 | | | 404.3 | |
| Short-term borrowings | 137.1 | | | 137.1 | | | 11.7 | | | 11.7 | |
| Total | $ | 1,145.2 | | | $ | 1,033.4 | | | $ | 1,003.7 | | | $ | 877.4 | |
_____________
(1)Fair values are estimated using Level 2 inputs and incorporate mid-market price quotes. Level 2 inputs are inputs other than quoted prices, that are observable for the liability, either directly or indirectly and include among other things, quoted prices for similar liabilities in markets that are active or inactive as well as inputs other than quoted prices that are observable.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
NOTE 4: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Designated Cash Flow Hedges
The Company actively manages the risk of changes in functional currency equivalent cash flows resulting from anticipated non-functional currency denominated purchases and sales. The Company’s global sourcing organization uses the U.S. Dollar as its functional currency and is primarily exposed to changes in functional currency equivalent cash flows from anticipated inventory purchases, as it procures inventory on behalf of subsidiaries with the Euro, Australian Dollar and Japanese Yen functional currencies. The Mexico subsidiary uses the Mexican Peso as its functional currency and is exposed as it procures inventory in the U.S. Dollar. Additionally, a European subsidiary uses Euros as its functional currency and is exposed to anticipated non-functional currency denominated sales. The Company manages these risks by using currency forward contracts formally designated and effective as cash flow hedges. Hedge effectiveness is generally determined by evaluating the ability of a hedging instrument's cumulative change in fair value to offset the cumulative change in the present value of expected cash flows on the underlying exposures. For forward contracts, forward points are excluded from the determination of hedge effectiveness and are included in cost of goods sold for hedges of anticipated inventory purchases and in net revenues for hedges of anticipated sales on a straight-line basis over the life of the contract. In each accounting period, differences between the change in fair value of the forward points and the amount recognized on a straight-line basis is recognized in other comprehensive (loss) income.
Net Investment Hedges
The Company designates certain non-derivative instruments as net investment hedges to hedge the Company's net investment position in certain of its foreign subsidiaries. For these instruments, the Company documents the hedge designation by identifying the hedging instrument, the nature of the risk being hedged and the approach for measuring hedge effectiveness. The ineffective portions of these hedges are recorded in "Other (expense) income, net" in the Company's consolidated statements of operations. The effective portions of these hedges are recorded in AOCL on the Company's consolidated balance sheets and are not reclassified to earnings until the related net investment position has been liquidated.
Non-designated Cash Flow Hedges
The Company enters into derivative instruments not designated as hedges. These derivative instruments are not speculative and are used to manage the Company’s exposure to certain product sourcing activities, some intercompany sales, foreign subsidiaries' royalty payments, interest payments, earnings repatriations, net investment in foreign operations and funding activities but the Company has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in "Other (expense) income, net" in the Company’s consolidated statements of operations.
As of May 28, 2023, the Company had forward foreign exchange contracts derivatives that were not designated as hedges in qualifying hedging relationships, of which $795.0 million were contracts to buy and $577.3 million were contracts to sell various foreign currencies. These contracts are at various exchange rates and expire at various dates through May 2024.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
The table below provides data about the carrying values of derivative and non-derivative instruments:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | May 28, 2023 | | November 27, 2022 |
| | Assets | | (Liabilities) | | Derivative
Net Carrying
Value | | Assets | | (Liabilities) | | Derivative
Net Carrying
Value |
| | Carrying
Value | | Carrying
Value | | | Carrying
Value | | Carrying
Value | |
| | | | | | | | | | | |
| | (Dollars in millions) |
Derivatives designated as hedging instruments | | | | | | | | | | | |
Foreign exchange risk cash flow hedges(1) | $ | 2.6 | | | $ | — | | | $ | 2.6 | | | $ | 15.6 | | | $ | — | | | $ | 15.6 | |
Foreign exchange risk cash flow hedges(2) | — | | | (17.0) | | | (17.0) | | | — | | | (7.2) | | | (7.2) | |
Total | $ | 2.6 | | | $ | (17.0) | | | | | $ | 15.6 | | | $ | (7.2) | | | |
Derivatives not designated as hedging instruments | | | | | | | | | | | |
Forward foreign exchange contracts(1) | $ | 5.8 | | | $ | (2.6) | | | $ | 3.2 | | | $ | 21.5 | | | $ | (15.6) | | | $ | 5.9 | |
Forward foreign exchange contracts(2) | 17.0 | | | (23.5) | | | (6.5) | | | 7.2 | | | (8.1) | | | (0.9) | |
Total | $ | 22.8 | | | $ | (26.1) | | | | | $ | 28.7 | | | $ | (23.7) | | | |
Non-derivatives designated as hedging instruments | | | | | | | | | | | |
Euro senior notes | $ | — | | | $ | (509.4) | | | | | $ | — | | | $ | (494.5) | | | |
_____________
(1)Included in "Other current assets" or "Other non-current assets" on the Company’s consolidated balance sheets.
(2)Included in "Other accrued liabilities" or "Other long-term liabilities" on the Company’s consolidated balance sheets.
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; however, the Company records the fair value on a gross basis on its consolidated balance sheets based on maturity dates, including those subject to master netting arrangements. The table below presents the gross and net amounts of these contracts recognized on the Company's consolidated balance sheets by type of financial instrument:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| May 28, 2023 | | | | | | | November 27, 2022 |
| Gross Amounts of Assets / (Liabilities)
Presented in the Balance Sheet | | Gross Amounts
Not Offset in the Balance Sheet | | Net Amounts
of Assets / (Liabilities) | | | | | Gross Amounts of Assets / (Liabilities)
Presented in the Balance Sheet | | Gross Amounts
Not Offset in the Balance Sheet | | Net Amounts
of Assets / (Liabilities) |
| | | | | | | | | |
| | | | | | | | | | | | | | | | |
| (Dollars in millions) |
| Foreign exchange risk contracts and forward foreign exchange contracts | | | | | | | | | | | | | | | | |
| Financial assets | $ | 25.4 | | | $ | (10.9) | | | $ | 14.5 | | | | | | | | $ | 44.3 | | | $ | (14.6) | | | $ | 29.7 | |
| Financial liabilities | (43.1) | | | 10.9 | | | (32.2) | | | | | | | | (30.9) | | | 14.6 | | | (16.3) | |
| Total | | | | | $ | (17.7) | | | | | | | | | | | | $ | 13.4 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
The table below provides data about the amount of gains and losses related to derivative instruments designated as cash flow hedges and non-derivative instruments designated as net investment hedges included in AOCL on the Company’s consolidated balance sheets:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Amount of Gain (Loss)
Recognized in AOCL
(Effective Portion) | | Amount of Gain (Loss) Reclassified from AOCL into Net Income(1) |
| | As of May 28, 2023 | | As of November 27, 2022 | | Three Months Ended | | Six Months Ended |
May 28,
2023 | | May 29,
2022 | | May 28,
2023 | | May 29,
2022 |
| | | | | | | | | | | |
| | (Dollars in millions) |
| Foreign exchange risk contracts | $ | (14.1) | | | $ | 22.6 | | | $ | 13.6 | | | $ | 3.1 | | | $ | 24.8 | | | $ | 3.6 | |
Realized forward foreign exchange swaps (2) | 4.6 | | | 4.6 | | | — | | | — | | | — | | | — | |
| Yen-denominated Eurobonds | (19.8) | | | (19.8) | | | — | | | — | | | — | | | — | |
| Euro-denominated senior notes | (22.3) | | | (7.4) | | | — | | | — | | | — | | | — | |
| Cumulative income taxes | 17.9 | | | 7.2 | | | — | | | — | | | — | | | — | |
| Total | $ | (33.7) | | | $ | 7.2 | | | | | | | | | |
_____________
(1)Amounts reclassified from AOCL were classified as net revenues and cost of goods sold on the Company's consolidated statements of operations.
(2)Prior to and during 2005, the Company used foreign exchange currency swaps to hedge the net investment in its foreign operations. For hedges that qualified for hedge accounting, the net gains were included in AOCL and are not reclassified to earnings until the related net investment position has been liquidated.
There was no hedge ineffectiveness for the six months ended May 28, 2023. Within the next 12 months, a $15.4 million loss from cash flow hedges is expected to be reclassified from AOCL into net (loss) income.
The table below presents the effects of the Company's cash flow hedges of foreign exchange risk contracts on the consolidated statements of operations:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Six Months Ended |
| May 28,
2023 | | May 29,
2022 | | May 28,
2023 | | May 29,
2022 |
| | | | | | | |
| (Dollars in millions) |
| Amount of Gain (Loss) on Cash Flow Hedge Activity | | | | | | | |
| Net revenues | $ | 0.8 | | | $ | (0.9) | | | $ | 2.4 | | | $ | (1.8) | |
| Cost of goods sold | $ | 12.9 | | | $ | 4.0 | | | $ | 22.4 | | | $ | 5.5 | |
The table below provides data about the amount of gains and losses related to derivatives instruments included in "Other (expense) income, net" in the Company's consolidated statements of operations:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended |
| | May 28,
2023 | | May 29,
2022 | | May 28,
2023 | | May 29,
2022 |
| | | | | | | |
| | (Dollars in millions) |
| Realized gain (loss) | $ | 13.1 | | | $ | (17.7) | | | $ | 22.6 | | | $ | (19.1) | |
| Unrealized (loss) gain | (1.2) | | | 10.2 | | | (6.8) | | | 13.9 | |
| Total | $ | 11.9 | | | $ | (7.5) | | | $ | 15.8 | | | $ | (5.2) | |
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
NOTE 5: OTHER ACCRUED LIABILITIES
The following table presents the Company's other accrued liabilities:
| | | | | | | | | | | |
| May 28,
2023 | | November 27,
2022 |
| | | |
| | (Dollars in millions) |
| Other accrued liabilities | | | |
| Accrued non-trade payables | $ | 201.2 | | | $ | 268.4 | |
| | | |
| Accrued advertising and promotion | 72.4 | | | 57.1 | |
| Taxes other than income taxes payable | 56.5 | | | 53.2 | |
| Accrued property, plant and equipment | 39.9 | | | 93.3 | |
| Accrued income taxes | 38.5 | | | 13.1 | |
| Fair value derivatives | 23.4 | | | 7.5 | |
| Restructuring liabilities | 23.2 | | | 9.8 | |
| Accrued interest payable | 8.9 | | | 8.0 | |
| Accrued rent | 7.4 | | | 9.1 | |
| Other | 128.5 | | | 130.8 | |
| Total other accrued liabilities | $ | 599.9 | | | $ | 650.3 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
NOTE 6: DEBT
The following table presents the Company's debt:
| | | | | | | | | | | |
| May 28,
2023 | | November 27,
2022 |
| | | |
| | (Dollars in millions) |
| Long-term debt | | | |
| Unsecured: | | | |
| | | |
3.375% senior notes due 2027 | $ | 506.0 | | | $ | 490.6 | |
3.50% senior notes due 2031 | 494.2 | | | 493.9 | |
| Total long-term debt | $ | 1,000.2 | | | $ | 984.5 | |
| Short-term debt | | | |
| Secured: | | | |
| Senior revolving credit facility | $ | 125.0 | | | $ | — | |
| Unsecured: | | | |
| | | |
| Short-term borrowings | 11.4 | | | 11.7 | |
| | | |
| Total short-term debt | 136.4 | | | 11.7 | |
| Total debt | $ | 1,136.6 | | | $ | 996.2 | |
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
Senior Revolving Credit Facility
As of May 28, 2023, the Company had $125.0 million in borrowings under the Credit Facility. The Company's unused availability under the Credit Facility was $860.1 million at May 28, 2023, as the total availability of $875.0 million was reduced by $14.9 million of letters of credit and other credit usage allocated under the Credit Facility.
On June 30, 2023, subsequent to quarter end, the Company repaid $100 million of its Credit Facility.
Interest Rates on Borrowings
The Company’s weighted-average interest rate on average borrowings outstanding during the three and six months ended May 28, 2023 was 4.50% and 4.19%, respectively, as compared to 4.00% and 3.91%, respectively, during the same periods of 2022.
NOTE 7: RESTRUCTURING ACTIVITIES
In the fourth quarter of 2022, the Company began a restructuring initiative designed to reduce costs and streamline operations in support of enterprise prioritization efforts. The plan is expected to continue through 2023 and will include further prioritization, cost reductions, and organizational changes.
For the three-month and six-month periods ended May 28, 2023, the Company recognized net restructuring charges of $6.5 million and $17.8 million, respectively, which primarily relate to severance benefits, based on separation benefits provided by Company policy or statutory benefit plans. During the six-month period ended May 28, 2023, the Company also recognized $18.8 million in charges related to the impairment of capitalized internal-use software, as a result of the decision to discontinue certain technology projects. Both charges were recorded in SG&A in the accompanying consolidated statements of operations.
NOTE 8: COMMITMENTS AND CONTINGENCIES
Forward Foreign Exchange Contracts
The Company uses cash flow hedge 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. See Note 4 for additional information.
Other Contingencies
Litigation. In the ordinary course of business, the Company has various claims, complaints and pending cases, including contractual matters, facility and employee-related matters, distribution matters, product liability matters, intellectual property matters, bankruptcy preference matters, and tax and administrative matters. The Company establishes loss provisions for these ordinary course claims as well as other matters in which losses are probable and can be reasonably estimated. The Company does not believe any of these pending claims, complaints and legal proceedings will have a material impact on its financial condition, results of operations or cash flows.
Customs Duty Audits. The Company imports both raw materials and finished garments into all of its geographic regions and, as such, is subject to numerous countries' complex customs laws and regulations with respect to its import and export activity. The Company has various pending audit assessments in connection with these activities. As of May 28, 2023, the Company has recorded certain reserves for these matters which are not material. The Company does not believe any of the claims for customs duty and related charges will have a material impact on its financial condition, results of operations or cash flows.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
NOTE 9: DIVIDENDS
Dividends are declared at the discretion of the Board. In both January and April 2023, the Company declared cash dividends, each $0.12 per share, to holders of record of its Class A and Class B common stock. In both January and April 2022, the Company declared cash dividends, each $0.10 per share. During the three and six months ended May 28, 2023, dividends were paid in the amount of $47.6 million and $95.2 million, respectively, compared to $39.6 million and $79.5 million for the same prior-year periods.
The Company does not have an established dividend policy. The Board reviews the Company's ability to pay dividends on an ongoing basis and establishes the dividend amount based on the Company's financial condition, results of operations, capital requirements, current and projected cash flows and other factors, and any restrictions related to the terms of the Company’s debt agreements.
Subsequent to the Company's quarter end, a cash dividend of $0.12 per share was declared to holders of record of its Class A and Class B common stock at the close of business on August 4, 2023. The cash dividend will be payable on August 17, 2023, for a total quarterly dividend of approximately $48 million.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
NOTE 10: ACCUMULATED OTHER COMPREHENSIVE LOSS
The following is a summary of the components of "Accumulated other comprehensive loss," net of related income taxes:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended May 28, 2023 |
| Pension and Postretirement Benefits(1) | | Translation Adjustments | | Unrealized (Loss) Gain on Marketable Securities(1) | | |
| | Derivative Instruments(2) | | Foreign
Currency
Translation | | | Total |
| | | | | | | | | |
| (Dollars in millions) |
| Accumulated other comprehensive (loss) income at February 26, 2023 | $ | (177.7) | | | $ | (12.4) | | | $ | (228.4) | | | $ | — | | | $ | (418.5) | |
| Other comprehensive (loss) income before reclassifications | (0.6) | | | (7.6) | | | 16.4 | | | — | | | 8.2 | |
| Amounts reclassified from accumulated other comprehensive (loss) income | 2.3 | | | (13.7) | | | — | | | — | | | (11.4) | |
| Net increase (decrease) in other comprehensive (loss) income | 1.7 | | | (21.3) | | | 16.4 | | | — | | | (3.2) | |
| | | | | | | | | |
Accumulated other comprehensive (loss) income at May 28, 2023 | $ | (176.0) | | | $ | (33.7) | | | $ | (212.0) | | | $ | — | | | $ | (421.7) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended May 28, 2023 |
| Pension and Postretirement Benefits(1) | | Translation Adjustments | | Unrealized (Loss) Gain on Marketable Securities(1) | | |
| | Derivative Instruments(2) | | Foreign
Currency
Translation | | | Total |
| | | | | | | | | |
| (Dollars in millions) |
Accumulated other comprehensive (loss) income at November 27, 2022 | $ | (179.5) | | | $ | 7.2 | | | $ | (248.7) | | | $ | (0.7) | | | $ | (421.7) | |
| Other comprehensive income (loss) before reclassifications | (1.1) | | | (16.1) | | | 36.7 | | | 0.1 | | | 19.6 | |
| Amounts reclassified from accumulated other comprehensive (loss) income | 4.6 | | | (24.8) | | | — | | | 0.6 | | | (19.6) | |
| Net increase (decrease) in other comprehensive (loss) income | 3.5 | | | (40.9) | | | 36.7 | | | 0.7 | | | — | |
| | | | | | | | | |
Accumulated other comprehensive (loss) income at May 28, 2023 | $ | (176.0) | | | $ | (33.7) | | | $ | (212.0) | | | $ | — | | | $ | (421.7) | |
____________
(1)Amounts reclassified were recorded in other (expense) income, net.
(2)Amounts reclassified were recorded within net revenues and cost of goods sold. For more information, refer to Note 4.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended May 29, 2022 |
| Pension and Postretirement Benefits(1) | | Translation Adjustments | | Unrealized Gain (Loss) on Marketable Securities(1) | | |
| | Derivative Instruments(2) | | Foreign
Currency
Translation | | | Total |
| | | | | | | | | |
| (Dollars in millions) |
| Accumulated other comprehensive (loss) income at February 27, 2022 | $ | (193.8) | | | $ | (24.0) | | | $ | (207.7) | | | $ | 14.1 | | | $ | (411.4) | |
| Other comprehensive (loss) income before reclassifications | (0.5) | | | 29.9 | | | (7.8) | | | (3.4) | | | 18.2 | |
| Amounts reclassified from accumulated other comprehensive (loss) income | 2.0 | | | (3.0) | | | — | | | — | | | (1.0) | |
| Net increase (decrease) in other comprehensive (loss) income | 1.5 | | | 26.9 | | | (7.8) | | | (3.4) | | | 17.2 | |
| | | | | | | | | |
Accumulated other comprehensive (loss) income at May 29, 2022 | $ | (192.3) | | | $ | 2.9 | | | $ | (215.5) | | | $ | 10.7 | | | $ | (394.2) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended May 29, 2022 |
| Pension and Postretirement Benefits(1) | | Translation Adjustments | | Unrealized Gain (Loss) on Marketable Securities(1) | | |
| | Derivative Instruments(2) | | Foreign
Currency
Translation | | | Total |
| | | | | | | | | |
| (Dollars in millions) |
Accumulated other comprehensive (loss) income at November 28, 2021 | $ | (195.5) | | | $ | (20.9) | | | $ | (196.8) | | | $ | 18.8 | | | $ | (394.4) | |
| Other comprehensive (loss) income before reclassifications | (1.0) | | | 27.4 | | | (18.7) | | | (8.1) | | | (0.4) | |
| Amounts reclassified from accumulated other comprehensive (loss) income | 4.2 | | | (3.6) | | | — | | | — | | | 0.6 | |
| Net increase (decrease) in other comprehensive income (loss) income | 3.2 | | | 23.8 | | | (18.7) | | | (8.1) | | | 0.2 | |
| | | | | | | | | |
Accumulated other comprehensive (loss) income at May 29, 2022 | $ | (192.3) | | | $ | 2.9 | | | $ | (215.5) | | | $ | 10.7 | | | $ | (394.2) | |
_____________
(1)Amounts reclassified were recorded in other (expense) income, net.
(2)Amounts reclassified were recorded within net revenues and cost of goods sold. For more information, refer to Note 4.
LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED MAY 28, 2023
NOTE 11: NET REVENUES
Disaggregated Revenue
The table below provides the Company's revenues disaggregated by segment and channel.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended May 28, 2023 |
| Levi's Brands | | | | |
| Americas | | Europe | | Asia | | Other Brands | | Total |
| | | | | | | | | |
| (Dollars in millions) |
| Net revenues by channel: | | | | | | | | | |
| Wholesale | $ | 366.7 | | | $ | 172.5 | | | $ | 112.3 | | | $ | 63.8 | | | $ | 715.3 | |
| Direct-to-consumer | 242.2 | | | 188.8 | | | 149.4 | | | 41.1 | | | 621.5 | |
| Total net revenues | $ | 608.9 | | | $ | 361.3 | | | $ | 261.7 | | | $ | 104.9 | | | $ | 1,336.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended May 28, 2023 |
| Levi's Brands | | | | |
| Americas | | Europe | | Asia | | Other Brands | | Total |
| | | | | | | | | |
| (Dollars in millions) |
| Net revenues by channel: | | | | | | | | | |
| Wholesale | $ | 897.3 | | | $ | 416.6 | | | $ | 246.3 | | | $ | 140.0 | | | $ | 1,700.2 | |
| Direct-to-consumer | 534.6 | | | 399.8 | | | 304.9 | | | 86.2 | | | 1,325.5 | |
| Total net revenues | $ | 1,431.9 | | | $ | 816.4 | | | $ | 551.2 | | | $ | 226.2 | | | $ | 3,025.7 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended May 29, 2022 |
| Levi's Brands | | | | |
| Americas | | Europe | | Asia | | Other Brands | | Total |
| | | | | | | | | |
| (Dollars in millions) |
| Net revenues by channel: | | | | | | | | | |
| Wholesale | $ | 547.7 | | | $ | 190.6 | | | $ | 107.3 | | | $ | 74.9 | | | $ | 920.5 | |
| Direct-to-consumer | 228.4 | | | 176.5 | | | 114.5 | | | 31.2 | | | 550.6 | |
| Total net revenues | $ | 776.1 | | | $ | 367.1 | | | $ | 221.8 | | | $ | 106.1 | | | $ | 1,471.1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended May 29, 2022 |
| Levi's Brands | | | | |
| Americas | | Europe | | Asia | | Other Brands | | Total |
| | | | | | | | | |
| (Dollars in millions) |
| Net revenues by channel: | | | | | | | | | |
| Wholesale | $ | 1,058.5 | | | $ | 456.3 | | | $ | |