Debt

9 Months Ended

Aug. 28, 2011

Debt [Abstract]

DEBT

NOTE 5:   DEBT

	August 28,		November 28,
	2011		2010
	(Dollars in thousands)
Long-term debt
Secured:
Senior revolving credit facility	$	108,250	$	108,250
Unsecured:
Senior term loan due 2014		323,939		323,676
8.875% senior notes due 2016		350,000		350,000
4.25% Yen-denominated Eurobonds due 2016		117,708		109,062
7.75% Euro senior notes due 2018		431,340		400,740
7.625% senior notes due 2020		525,000		525,000
Total unsecured		1,747,987		1,708,478
Less: current maturities		—		—
Total long-term debt	$	1,856,237	$	1,816,728
Short-term debt
Secured:
Senior revolving credit facility	$	70,000	$	—
Unsecured:
Short-term borrowings		59,010		46,418
Current maturities of long-term debt		—		—
Total short-term debt	$	129,010	$	46,418
Total long-term and short-term debt	$	1,985,247	$	1,863,146

Interest Rates on Borrowings

The Company’s weighted-average interest rate on average borrowings outstanding during the three and nine months ended August 28, 2011, was 6.74% and 6.81%, respectively, as compared to 6.74% and 7.27%, respectively, in the same periods of 2010.

Senior Revolving Credit Facility

As of August 28, 2011, the Company’s total availability of $421.0 million under its then-effective senior secured revolving credit facility was reduced by $84.3 million of letters of credit and other credit usage under the facility, yielding a net availability of $336.7 million.

On September 30, 2011, the Company entered into a new senior secured revolving credit facility. The new facility is an asset-based facility, in which the borrowing availability varies according to the levels of accounts receivable, inventory and cash and investment securities deposited in secured accounts with the administrative agent or other lenders as further described below.

Availability, interest and maturity.  The maximum availability under the new facility is $850.0 million, of which $800.0 million is available to the Company for revolving loans in U.S. Dollars and $50.0 million is available to the Company for revolving loans either in U.S. Dollars or Canadian Dollars. Subject to the level of this borrowing base, the Company may make and repay borrowings from time to time until the maturity of the facility. The Company may make voluntary prepayments of borrowings at any time and must make mandatory prepayments if certain events occur. Borrowings under the facility will bear an interest rate of LIBOR plus 150 to 275 basis points, depending on borrowing base availability, and undrawn availability bears a rate of 37.5 to 50 basis points. The facility has a maturity date of September 30, 2016, which may be accelerated to December 26, 2013, if the senior term loan due 2014 is still outstanding on that date and the Company has not met other conditions set forth in the new facility. Upon the maturity date, all of the obligations outstanding under the new facility become due.

Guarantees and security.  The Company’s obligations under the new facility are guaranteed by its domestic subsidiaries. The facility is secured by, among other domestic assets, certain U.S. trademarks associated with the Levi’s^® brand and accounts receivable, goods and inventory in the U.S. Additionally, the obligations of Levi Strauss & Co. (Canada) Inc. under the new facility are secured by Canadian accounts receivable, goods, inventory and other Canadian assets. The lien on the U.S. Levi’s^® trademarks and related intellectual property may be released at the Company’s discretion so long as it meet certain conditions; such release would reduce the borrowing base.

Covenants.  The new facility contains customary covenants restricting the Company’s activities as well as those of the Company’s subsidiaries, including limitations on the ability to sell assets; engage in mergers; enter into transactions involving related parties or derivatives; incur or prepay indebtedness or grant liens or negative pledges on the Company’s assets; make loans or other investments; pay dividends or repurchase stock or other securities; guaranty third-party obligations; and make changes in the Company’s corporate structure. There are exceptions to these covenants, and some are only applicable when unused availability falls below specified thresholds. In addition, the new facility includes as a financial covenant a springing fixed charge coverage ratio of 1.0:1.0, which arises when availability falls below a specified threshold.

Events of default.  The new facility contains customary events of default, including payment failures; failure to comply with covenants; failure to satisfy other obligations under the credit agreements or related documents; defaults in respect of other indebtedness; bankruptcy, insolvency and inability to pay debts when due; material judgments; pension plan terminations or specified underfunding; substantial stock ownership changes; and specified changes in the composition of our board of directors. The cross-default provisions in the facility apply if a default occurs on other indebtedness in excess of $50.0 million and the applicable grace period in respect of the indebtedness has expired, such that the lenders of or trustee for the defaulted indebtedness have the right to accelerate. If an event of default occurs under the new facility, the lenders may terminate their commitments, declare immediately payable all borrowings under the facility and foreclose on the collateral.

Use of proceeds.  In connection with the new senior secured revolving credit facility, the Company terminated the previous amended and restated senior secured revolving credit facility. Borrowings outstanding under the previous facility were refinanced into the new senior secured revolving credit facility.