94845--2/14/2006--LEVI_STRAUSS_&

related topics

{debt, indebtedness, cash}

{product, market, service}

{customer, product, revenue}

{cost, operation, labor}

{product, candidate, development}

{operation, international, foreign}

{cost, contract, operation}

{stock, price, share}

{control, financial, internal}

{personnel, key, retain}

{property, intellectual, protect}

{operation, natural, condition}

{cost, regulation, environmental}

{system, service, information}

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 and market share have declined since 1996, we have substantial debt and actions we have taken and may take to turn around our business may not be successful in the long term. We may be unable to maintain or increase our sales of Levi s and Dockers products through our primary distribution channels. We depend on a group of key customers for a significant portion of our sales. A significant adverse change in a customer relationship or in a customer s performance or financial position could harm our business and financial condition. We must attract younger consumers and more women consumers to our jeans brands. Our inability to revitalize our Dockers business or our European business could harm our financial results. Our Levi Strauss Signature business could erode our margins and our sales of our Levi s products. Increasing the number of our company-operated stores will require us to develop new capabilities and increase our expenditures. We rely on outsourced 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. Most of the employees in our distribution facilities are covered by collective bargaining agreements, and any material job actions could negatively affect our results of operations. We are a global company with nearly half our sales coming from our international operations, which exposes us to political and economic risks. During the past 24 months, we have experienced significant management turnover. The success of our business depends on our ability to attract and retain qualified employees. We have substantial liabilities and cash requirements associated with pension, post-retirement health benefit and deferred compensation plans, and with our restructuring activities. Our success depends on the continued protection of our trademarks and other proprietary intellectual property rights. We intend to expand our trademark licensing programs. Our licensees may not comply with our product quality, manufacturing standards, marketing and other requirements. 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 trading price of our debt securities. We must successfully maintain and/or upgrade our information technology systems. Earthquakes or other events outside of our control may damage our facilities or the facilities of third parties on which we depend. Risks Relating to Our Substantial Debt We have substantial debt and interest payment requirements that may restrict our future operations. Restrictions in our notes indentures, our senior secured term loan and our senior secured revolving credit facility may limit our activities, including dividend payments, share repurchases and acquisitions. If our foreign subsidiaries are unable to distribute cash to us when needed, we may be unable to satisfy our obligations under our debt securities, which could force us to sell our assets or use cash that we were planning to use elsewhere in our business.

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94845--2/14/2006--LEVI_STRAUSS_&_CO