94845--2/12/2008--LEVI_STRAUSS_&

related topics

{product, market, service}

{customer, product, revenue}

{cost, operation, labor}

{operation, international, foreign}

{cost, contract, operation}

{debt, indebtedness, cash}

{competitive, industry, competition}

{acquisition, growth, future}

{control, financial, internal}

{personnel, key, retain}

{cost, regulation, environmental}

{operation, natural, condition}

{property, intellectual, protect}

{system, service, information}

{product, candidate, development}

Intense competition in the worldwide apparel industry could reduce our sales and prices. The success of our business depends upon our ability to offer innovative and upgraded products at attractive price points. The worldwide apparel industry is subject to ongoing pricing pressure. Increases in the price of raw materials or their reduced availability could increase our cost of goods and decrease our profitability. Our business is subject to risks associated with sourcing and manufacturing overseas. Risks Relating to Our Business Our net sales have not grown substantially for over ten years, we have substantial debt and actions we have taken, and may take in the future, to address these and other issues facing our business may not be successful over the long term. We may be unable to maintain or increase our sales through our primary distribution channels. We depend on a group of key customers for a significant portion of our revenues. A significant adverse change in a customer relationship or in a customer s performance or financial position could harm our business and financial condition. To grow our business, we must increase brand awareness and sales to female consumers and younger consumers. Our inability to revitalize our business in certain markets or product lines could harm our financial results. During the past several years, we have experienced significant changes in senior management. The success of our business depends on our ability to attract and retain qualified and effective senior management and board leadership. Increasing the number of company-operated stores will require us to develop new capabilities and increase our expenditures. We must successfully maintain and/or upgrade our information technology systems. We rely on contract manufacturing of our products. Our inability to secure production sources meeting our quality, cost, working conditions and other requirements, or failures by our contractors to perform, could harm our sales, service levels and reputation. We are a global company with nearly half our revenues coming from our international operations, which exposes us to political and economic risks. We have made changes in our logistics operations in recent years and continue to look for opportunities to increase efficiencies. Most of the employees in our production and distribution facilities are covered by collective bargaining agreements, and any material job actions could negatively affect our results of operations. Our licensees may not comply with our product quality, manufacturing standards, marketing and other requirements. Our success depends on the continued protection of our trademarks and other proprietary intellectual property rights. We have substantial liabilities and cash requirements associated with postretirement benefits, pension and deferred compensation plans, and with our restructuring activities. Earthquakes or other events outside of our control may damage our facilities or the facilities of third parties on which we depend. We will be required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act. Failure to timely comply with the requirements of Section 404 or any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the credit ratings and trading price of our debt securities. Risks Relating to Our Debt We have debt and interest payment requirements at a level that may restrict our future operations.

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94845--2/12/2008--LEVI_STRAUSS_&_CO