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Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended August 23, 2020
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 classTrading symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.001 par value per shareLEVINew 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 ¨
Accelerated filer ¨
Emerging growth company
Non-accelerated filer þ
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 September 30, 2020, the registrant had 66,461,001 shares of Class A common stock, $0.001 par value per share and 330,721,606 shares of Class B common stock, $0.001 par value per share, outstanding.


Table of Contents
LEVI STRAUSS & CO. AND SUBSIDIARIES
INDEX TO FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED AUGUST 23, 2020
 
  Page
Number
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
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 (https://levistrauss.com/investors/financial-news);
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.



Table of Contents
PART I — FINANCIAL INFORMATION

Item 1.CONSOLIDATED FINANCIAL STATEMENTS
LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
August 23,
2020
November 24,
2019
 (Dollars in thousands)
ASSETS
Current Assets:
Cash and cash equivalents
$1,353,042 $934,237 
Short-term investments in marketable securities
72,279 80,741 
Trade receivables, net of allowance for doubtful accounts of $17,437 and $6,172
543,257 782,846 
Inventories:
Raw materials
3,932 4,929 
Work-in-process
4,091 3,319 
Finished goods
936,311 875,944 
Total inventories
944,334 884,192 
Other current assets
169,004 188,170 
Total current assets
3,081,916 2,870,186 
Property, plant and equipment, net of accumulated depreciation of $1,071,260 and $1,054,267
447,869 529,558 
Goodwill263,692 235,788 
Other intangible assets, net48,624 42,782 
Deferred tax assets, net500,701 407,905 
Operating lease right-of-use assets, net (Note 1)985,497 — 
Other non-current assets218,970 146,199 
Total assets
$5,547,269 $4,232,418 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term debt
$23,941 $7,621 
Accounts payable
461,501 360,324 
Accrued salaries, wages and employee benefits
162,866 223,374 
Restructuring liabilities (Note 6)
58,009  
Accrued interest payable
23,832 5,350 
Accrued income taxes
29,510 24,050 
Accrued sales returns and allowances (Note 1)
172,149 171,113 
Short-term operating lease liability (Note 1)
218,098 — 
Other accrued liabilities (Note 1)
424,272 375,372 
Total current liabilities
1,574,178 1,167,204 
Long-term debt1,543,302 1,006,745 
Postretirement medical benefits59,294 64,006 
Pension liability174,183 193,214 
Long-term employee related benefits93,783 84,957 
Long-term income tax liabilities7,049 10,486 
Long-term operating lease liability (Note 1)852,366 — 
Other long-term liabilities51,843 134,249 
Total liabilities
4,355,998 2,660,861 
Commitments and contingencies
Stockholders’ Equity:
Levi Strauss & Co. stockholders’ equity
Common stock — $0.001 par value; 1,200,000,000 Class A shares authorized, 65,810,175 shares and 53,079,235 shares issued and outstanding as of August 23, 2020 and November 24, 2019, respectively; and 422,000,000 Class B shares authorized, 331,312,315 shares and 340,674,741 shares issued and outstanding, as of August 23, 2020 and November 24, 2019, respectively
397 394 
Additional paid-in capital
621,432 657,659 
Accumulated other comprehensive loss
(487,923)(404,986)
Retained earnings
1,057,365 1,310,464 
Total Levi Strauss & Co. stockholders’ equity
1,191,271 1,563,531 
Noncontrolling interest
 8,026 
Total stockholders’ equity
1,191,271 1,571,557 
Total liabilities and stockholders’ equity
$5,547,269 $4,232,418 

The accompanying notes are an integral part of these consolidated financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three Months EndedNine Months Ended
 August 23,
2020
August 25,
2019
August 23,
2020
August 25,
2019
(Dollars in thousands, except per share amounts)
(Unaudited)
Net revenues$1,063,085 $1,447,081 $3,066,753 $4,194,479 
Cost of goods sold485,687 680,335 1,480,376 1,944,502 
Gross profit577,398 766,746 1,586,377 2,249,977 
Selling, general and administrative expenses484,002 595,528 1,695,072 1,814,949 
Restructuring charges, net1,071  68,442  
Operating income (loss)92,325 171,218 (177,137)435,028 
Interest expense(28,437)(15,292)(56,337)(47,962)
Underwriter commission paid on behalf of selling stockholders   (24,860)
Other expense, net(12,274)(4,369)(8,269)(2,849)
Income (loss) before income taxes51,614 151,557 (241,743)359,357 
Income tax (benefit) expense24,565 27,340 (57,932)60,182 
Net income (loss)27,049 124,217 (183,811)299,175 
Net loss attributable to noncontrolling interest 292  141 
Net income (loss) attributable to Levi Strauss & Co.$27,049 $124,509 $(183,811)$299,316 
Earnings (loss) per common share attributable to common stockholders:
Basic$0.07 $0.32 $(0.46)$0.77 
Diluted$0.07 $0.30 $(0.46)$0.73 
Weighted-average common shares outstanding:
Basic397,711,322 394,169,688 397,010,522 387,289,913 
Diluted407,677,385 413,639,749 397,010,522 407,844,136 






















The accompanying notes are an integral part of these consolidated financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
 Three Months EndedNine Months Ended
 August 23,
2020
August 25,
2019
August 23,
2020
August 25,
2019
(Dollars in thousands)
(Unaudited)
Net income (loss)$27,049 $124,217 $(183,811)$299,175 
Other comprehensive income (loss), before related income taxes:
Pension and postretirement benefits
3,640 3,431 13,844 10,317 
Derivative instruments
(63,271)9,215 (50,068)23,619 
Foreign currency translation gains (losses)
36,915 (6,523)(1,974)(11,280)
Unrealized gains on marketable securities
6,104 475 5,313 1,694 
Total other comprehensive income (loss), before related income taxes
(16,612)6,598 (32,885)24,350 
Income taxes benefit (expense) related to items of other comprehensive income (loss)
6,385 (1,568)4,392 (5,741)
Comprehensive income (loss), net of income taxes16,822 129,247 (212,304)317,784 
Comprehensive loss (income) attributable to noncontrolling interest
 68  (334)
Comprehensive income (loss) attributable to Levi Strauss & Co.$16,822 $129,315 $(212,304)$317,450 
































The accompanying notes are an integral part of these consolidated financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three Months Ended August 23, 2020
Levi Strauss & Co. Stockholders
Class A & Class B Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotal Stockholders' Equity
(Dollars in thousands)
(Unaudited)
Balance at May 24, 2020$396 $611,993 $1,030,513 $(477,696)$ $1,165,206 
Net income— — 27,049 — — 27,049 
Other comprehensive loss, net of tax— — — (10,227)— (10,227)
Stock-based compensation and dividends, net
1 11,840 (197)— — 11,644 
Employee stock purchase plan— 1,889 — — — 1,889 
Shares surrendered for tax withholdings on equity awards— (4,290)— — — (4,290)
Balance at August 23, 2020$397 $621,432 $1,057,365 $(487,923)$ $1,191,271 
Nine Months Ended August 23, 2020
Levi Strauss & Co. Stockholders
Class A & Class B Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotal Stockholders' Equity
(Dollars in thousands)
(Unaudited)
Balance at November 24, 2019$394 $657,659 $1,310,464 $(404,986)$8,026 $1,571,557 
Net loss— — (183,811)— — (183,811)
Other comprehensive loss, net of tax
— — — (28,493)— (28,493)
Stock-based compensation and dividends, net
6 37,460 (224)— — 37,242 
Employee stock purchase plan— 6,171 — — — 6,171 
Repurchase of common stock(3)— (56,240)— — (56,243)
Shares surrendered for tax withholdings on equity awards— (79,858)— — — (79,858)
Changes in ownership of noncontrolling interest— — (8,809)— (8,026)(16,835)
Cumulative effect of adoption of new accounting standards— — 59,624 (54,444)— 5,180 
Cash dividends declared ($0.16 per share)
— — (63,639)— — (63,639)
Balance at August 23, 2020$397 $621,432 $1,057,365 $(487,923)$ $1,191,271 









The accompanying notes are an integral part of these consolidated financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
Three Months Ended August 25, 2019
Levi Strauss & Co. Stockholders
Class A & Class B Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotal Stockholders' Equity
(Dollars in thousands)
(Unaudited)
Balance at May 26, 2019$392 $629,703 $1,094,666 $(411,256)$7,748 $1,321,253 
Net income— — 124,509 — (292)124,217 
Other comprehensive income, net of tax
— — — 4,806 224 5,030 
Stock-based compensation and dividends, net
1 17,930 (86)— — 17,845 
Balance at August 25, 2019$393 $647,633 $1,219,089 $(406,450)$7,680 $1,468,345 
Nine Months Ended August 25, 2019
Levi Strauss & Co. Stockholders
Class A & Class B Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotal Stockholders' Equity
(Dollars in thousands)
(Unaudited)
Balance at November 25, 2018$376 $ $1,084,321 $(424,584)$7,346 $667,459 
Net income— — 299,316 — (141)299,175 
Other comprehensive income, net of tax— — — 18,134 475 18,609 
Stock-based compensation and dividends, net3 31,942 (86)— — 31,859 
Reclassification to temporary equity— (506)(23,339)— — (23,845)
Repurchase of common stock— (165)(2,923)— — (3,088)
Shares surrendered for tax withholdings on equity awards— (25,522)— — — (25,522)
Reclassification from temporary equity in connection with initial public offering— 351,185 (28,200)— — 322,985 
Issuance of Class A common stock in connection with initial public offering14 234,569 — — — 234,583 
Cancel liability-settled awards and replace with equity-settled awards in connection with initial public offering— 56,130 — — — 56,130 
Cash dividends declared ($0.29 per share)
— — (110,000)— — (110,000)
Balance at August 25, 2019$393 $647,633 $1,219,089 $(406,450)$7,680 $1,468,345 










The accompanying notes are an integral part of these consolidated financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Nine Months Ended
 August 23,
2020
August 25,
2019
(Dollars in thousands)
(Unaudited)
Cash Flows from Operating Activities:
Net income (loss)$(183,811)$299,175 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization104,997 90,305 
Property, plant, equipment, and right-of-use asset impairments60,968 939 
Unrealized foreign exchange losses5,706 19,625 
Realized gains on settlement of forward foreign exchange contracts not designated for hedge accounting
(17,636)(9,309)
Employee benefit plans’ amortization from accumulated other comprehensive loss and curtailment loss13,845 10,317 
Stock-based compensation37,242 31,859 
Allowance for doubtful accounts10,697 544 
Other, net6,120 1,897 
Benefit from deferred income taxes(87,871)(20,352)
Change in operating assets and liabilities, net of effect of acquisition:
Trade receivables219,779 (21,387)
Inventories(47,289)(79,355)
Accounts payable, accrued liabilities, and operating leases, net of right-of-use assets199,393 (26,541)
Restructuring liabilities57,762  
Income tax liabilities(9,466)34,918 
Accrued salaries, wages and employee benefits and long-term employee related benefits(82,497)(88,817)
Other operating assets and liabilities, net(47,074)(38,281)
Net cash provided by operating activities240,865 205,537 
Cash Flows from Investing Activities:
Purchases of property, plant and equipment(89,487)(128,041)
Payments for business acquisition(54,282) 
Proceeds on settlement of forward foreign exchange contracts not designated for hedge accounting17,636 9,309 
Payments to acquire short-term investments(67,458)(94,702)
Proceeds from sale, maturity and collection of short-term investments
75,863 15,057 
Net cash used for investing activities(117,728)(198,377)
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt502,500  
Proceeds from senior revolving credit facility300,000  
Repayments of senior revolving credit facility(300,000) 
Proceeds from short-term credit facilities8,936 25,259 
Repayments of short-term credit facilities(5,245)(38,280)
Other short-term borrowings, net12,980 9,486 
Payment of debt issuance costs(6,459) 
Proceeds from issuance of Class A common stock 254,329 
Payments for underwriter commission and other offering costs (19,746)
Proceeds from employee stock purchase plan6,173  
Repurchase of common stock(56,243)(3,088)
Repurchase of shares surrendered for tax withholdings on equity awards(79,857)(25,522)
Payments to noncontrolling interests(16,090) 
Dividend to stockholders(63,639)(55,000)
Other financing, net(535)(643)
Net cash provided by financing activities302,521 146,795 
Effect of exchange rate changes on cash and cash equivalents and restricted cash(6,914)(3,357)
Net increase in cash and cash equivalents and restricted cash418,744 150,598 
Beginning cash and cash equivalents, and restricted cash934,753 713,698 
Ending cash and cash equivalents, and restricted cash1,353,497 864,296 
Less: Ending restricted cash(455)(523)
Ending cash and cash equivalents$1,353,042 $863,773 
Noncash Investing and Financing Activity:
Property, plant and equipment acquired and not yet paid at end of period$33,255 $21,573 
Property, plant and equipment additions due to build-to-suit lease transactions 10,861 
Supplemental disclosure of cash flow information:
Cash paid for interest during the period$38,036 $29,621 
Cash paid for income taxes during the period, net of refunds34,657 80,159 
The accompanying notes are an integral part of these consolidated financial statements.

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LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTERLY PERIOD ENDED AUGUST 23, 2020
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, jackets, footwear and related accessories for men, women and children around the world under the Levi’s®, Dockers®, Signature by Levi Strauss & Co.™ and Denizen® brands. The Company operates its business through three geographic regions: Americas, Europe and Asia.
In March 2019, the Company completed an initial public offering ("IPO") of its Class A common stock, as a result of which its Class A common stock began trading on the New York Stock Exchange under the symbol "LEVI".
Basis of Presentation and Principles of Consolidation
The unaudited consolidated financial statements of the Company and its wholly-owned and majority-owned foreign and domestic subsidiaries are prepared in conformity with generally accepted accounting principles in the United States ("U.S. GAAP") for interim financial information. In the opinion of management, all adjustments necessary for a fair statement of the financial position and the results of operations for the periods presented have been included. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended November 24, 2019, included in the Company's 2019 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. Management believes the disclosures are adequate to make the information presented in the unaudited consolidated financial statements not misleading. The results of operations for the three and nine months ended August 23, 2020 may not be indicative of the results to be expected for any other interim period or the year ending November 29, 2020.
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 2020 and 2019 consists of 13 weeks, with the exception of the fourth quarter of 2020, which will consist of 14 weeks. All references to years and quarters relate to fiscal years and quarters rather than calendar years and quarters.
COVID-19 Update
The COVID-19 pandemic has materially impacted the Company's business and results of operations in 2020. Based on our initial estimates of the adverse impacts from the COVID-19 pandemic on the business, $242.0 million in incremental charges were recorded during the second quarter of fiscal 2020. During the three-month period ended August 23, 2020, $11.0 million of net reductions in the charges were recognized, consisting of $7.9 million in reductions of adverse fabric purchase commitments and inventory reserves and $6.6 million in recoveries of receivables previously estimated to be not collectible, offset by incremental restructuring and other costs incurred in response to the global pandemic. On a year-to-date basis, the net $231.0 million in charges consisted of $68.4 million of restructuring charges, COVID-19 related inventory costs of $77.9 million, and charges for customer receivables, asset impairments and other related charges of $84.7 million. For more information on the restructuring charges, refer to Note 6.
Substantially all of our company-operated stores were temporarily closed for varying periods of time throughout the second quarter. At the start of the third quarter, approximately half of our owned and operated retail stores were closed, with the majority reopened by mid-July but, in many cases, with reduced operating hours and occupancy levels. Our wholesale customers, including third-party retailers and franchise partners, have also experienced significant business disruptions, including lower traffic and consumer demand, resulting in decreased shipments to these customers.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in the United States. The CARES Act provides relief to U.S. Corporations through financial assistance programs and modifications to certain income tax provisions. The Company is applying certain beneficial provisions of the CARES Act, including the net operating loss carryback provision. Refer to Note 13 for more information. 

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LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED AUGUST 23, 2020

The Company also assessed the impacts of the pandemic on the estimates and assumptions used in preparing these consolidated financial statements. The estimates and assumptions used in these assessments were based on management’s judgment and may be subject to change as new events occur and additional information is obtained. In particular, significant uncertainty remains about the duration and extent of the impact of the COVID-19 pandemic and its resulting impact on global economic conditions. If economic conditions caused by the pandemic do not recover as currently estimated by management, the Company’s financial condition, cash flows and results of operations may be further materially impacted. See below for areas that required more judgments and estimates as a result of COVID-19.
Inventory Valuation and Adverse Purchase Commitments
The Company values inventory at the lower of cost or net realizable value. Net realizable value is determined by estimating expected selling prices based on anticipated recovery rates for slow-moving and obsolete inventory and other factors, such as market conditions, expected channel of distribution and current consumer demand and preferences. During the second quarter of 2020, an initial estimate of incremental inventory reserves directly related to the expected impact of COVID-19 on forecasted sales and expected selling prices was recorded. During the third quarter of fiscal 2020 and based on the actual selling prices of reserved products, the COVID-19 related impact on inventory valuation was reduced by $1.8 million. For the nine months ended August 23, 2020, the net COVID-19 related impact on inventory valuation, recognized within cost of goods sold, was $48.1 million.
The Company also has minimum inventory purchase commitments, including fabric commitments, with suppliers that secure a portion of material needs for future seasons. In light of the COVID-19 pandemic and in response to decreased demand, some of the Company's orders were canceled and a charge for estimated adverse purchase commitments was recorded in the second quarter of fiscal 2020. During the third quarter, the Company recorded a net reduction of $6.1 million in its charge for inventory purchase commitments based on updated demand and actual claims received from suppliers. For the nine months ended August 23, 2020, the net charge of $29.8 million was reflected in cost of goods sold in the Company's consolidated statement of operations. As of August 23, 2020, adverse purchase commitments of $32.5 million, which primarily relate to fabric liabilities as a result of the COVID-19 pandemic, were included in "Other accrued liabilities" in the accompanying consolidated balance sheets.
Accounts Receivable
Accounts receivable are recorded net of an allowance for doubtful accounts. The Company estimates the allowance for doubtful accounts 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. During the three-month period ended August 23, 2020, the Company recognized a reduction of $6.6 million in COVID-19 related charges, which were initially recorded in the second quarter, primarily due to recoveries of receivables previously estimated to be not collectible. For the nine months ended August 23, 2020, $21.0 million in total COVID-19 related charges were recorded related to accounts receivable including an incremental allowance for doubtful accounts of $8.5 million, and other allowances as a result of changes in customers' financial condition, actual and anticipated bankruptcies and other associated claims.
Long-Lived Assets
The Company reviews its other 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. Expected future cash flows decreased due to the anticipated COVID-19 related impact on foot traffic and consumer spending trends. As a result, during the second quarter of 2020, the Company recorded $54.1 million of non-cash impairment charges, of which $43.0 million and $11.1 million were related to the impairment of certain store right-of-use and other store assets, respectively. An additional $6.3 million was recognized related to other property and equipment. There were no additional impairment charges recorded in the three-month period ended August 23, 2020. The impairment charges are included in selling, general and administrative expenses ("SG&A") in the accompanying consolidated statements of operations for the nine-month period ended August 23, 2020. 

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LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED AUGUST 23, 2020

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. As a result of uncertainty and frequently changing information regarding the COVID-19 pandemic and its impact on global economic conditions, estimates may change frequently and in the near term.     
Reclassification
Certain insignificant amounts on the consolidated balance sheets and consolidated statements of cash flow have been conformed to the August 23, 2020 presentation.
The Jeans Company Acquisition
In December 2019, the Company completed an acquisition of all operating assets related to Levi’s® and Dockers® brands from The Jeans Company ("TJC"), the Company's distributor in Chile, Peru and Bolivia, for $52.2 million in cash, plus transaction costs. This includes 78 Levi’s® and Dockers® retail stores and one e-commerce site, distribution with the region’s leading multi-brand retailers, and the logistical operations within these markets.
The total fair value of assets acquired was $52.2 million and include goodwill, inventory, intangible and fixed assets. The goodwill and intangibles recognized as a result of the acquisition were $22.8 million and $9.2 million, respectively.
Restructuring Liabilities
Upon approval of a restructuring plan, the Company records restructuring liabilities for employee severance and related termination benefits when they become probable and estimable for recurring arrangements. The Company records other costs associated with exit activities as they are incurred. The long-term portion of restructuring liabilities is included in “Other long-term liabilities” in the Company’s consolidated balance sheets. See Note 6 for more information.
Share Repurchases
In January 2020, the Company's Board of Directors (the "Board") approved a share repurchase program that authorizes the repurchase of up to $100 million of the Company's Class A common stock. During the six months ended May 24, 2020, 3 million shares were repurchased for $56.2 million, plus broker's commissions, in the open market. This equates to an average repurchase price of approximately $18.73 per share. As of the second quarter of fiscal 2020, the Company has suspended its share buyback program until further notice.
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.
Noncontrolling Interest
In January 2020, the Company completed an all cash tender offer for the acquisition of the remaining 16.4% minority interest shares of Levi Strauss Japan K.K.'s common stock for a total purchase price of $13.6 million, plus transaction costs. As a result, Levi Strauss Japan K.K. has become a wholly owned subsidiary. Prior to this transaction, the noncontrolling interest included a 16.4% minority interest of third parties in Levi Strauss Japan K.K., the Company's Japanese subsidiary.
Changes in Accounting Principles
In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which requires the identification of arrangements that should be accounted for as leases

11


LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED AUGUST 23, 2020

by lessees. In general, for operating or financing lease arrangements exceeding a 12-month term, a right-of-use asset and a lease obligation will be recognized on the balance sheet of the lessee while the income statement will reflect lease expense for operating leases and amortization and interest expense for financing leases. The Company has identified leases for real estate, personal property and other arrangements. The new standard is required to be applied using a modified retrospective approach with two adoption methods permissible. The Company elected the transition method that applies the new lease standard at the adoption date instead of the earliest period presented. The Company elected the practical expedient to not separate lease components from nonlease components for all leases. Additionally, the Company made an accounting policy election to keep leases with an initial 12-month term or less off of the balance sheet and recognize these lease payments within the consolidated statements of operations on a straight-line basis over the term of the lease. The Company elected the package of transition practical expedients which allowed the Company to carry forward prior conclusions related to: (i) whether any expired or existing contracts contain leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for existing leases. The Company adopted this standard in the first quarter of fiscal 2020. Upon adoption, the Company recognized $1.0 billion of total operating lease liabilities and $1.0 billion of operating lease ROU assets, as well as removed $61 million of existing deferred rent liabilities, which was recorded as an offset against the ROU assets. In addition, the Company removed $43 million and $53 million of existing assets and liabilities related to build-to-suit lease arrangements, respectively. The difference of $10 million was recognize in retained earnings as of the date of initial application. The adoption of the standard did not have a material impact on the consolidated statements of operations or consolidated statements of cash flows. Refer to Note 8 for more information on the Company's lease arrangements.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220). ASU 2018-02 addresses certain stranded income tax effects in accumulated other comprehensive income (loss) resulting from the Tax Act enacted on December 22, 2017. The Company adopted this standard in the first quarter of fiscal 2020. As a result of the adoption, a $54.4 million adjustment was included in retained earnings with an offsetting adjustment to accumulated other comprehensive income (loss).
Effective February 24, 2020, the Company early adopted ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment issued by the FASB in January 2017, which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Under this guidance, if the carrying amount of a reporting unit exceeds its estimated fair value, an impairment charge shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The impact of the new standard will depend on the specific facts and circumstances of future individual goodwill impairments, if any.
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 2019 Annual Report on Form 10-K, except for the following:
First Quarter 2021
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. This guidance will be effective for the Company in the first quarter of fiscal 2021. Early adoption is permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.
First Quarter 2022
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The ASU is intended to enhance and simplify aspects of the income tax accounting guidance in ASC 740 as part of the FASB's simplification initiative. This guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2020 with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

12


LEVI STRAUSS & CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
FOR THE QUARTERLY PERIOD ENDED AUGUST 23, 2020

First Quarter 2023
In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The ASU is intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.
NOTE 2: FAIR VALUE OF FINANCIAL INSTRUMENTS
    The following table presents the Company’s financial instruments that are carried at fair value:
 August 23, 2020November 24, 2019
  Fair Value Estimated
Using
 Fair Value Estimated
Using
 Fair Value
Level 1 Inputs(1)
Level 2 Inputs(2)
Fair Value
Level 1 Inputs(1)
Level 2 Inputs(2)
 (Dollars in thousands)
Financial assets carried at fair value
Rabbi trust assets$66,596 $66,596 $ $49,207 $49,207 $ 
Short-term investments in marketable securities72,279 72,279 80,741  80,741 
Derivative instruments(3)
6,266  6,266 16,323  16,323 
Total$145,141 $66,596 $78,545 $146,271 $49,207 $97,064 
Financial liabilities carried at fair value
Derivative instruments(3)
9,981  9,981 8,123