LEVI STRAUSS & CO. ANNOUNCES FOURTH-QUARTER AND FISCAL-YEAR 2009 FINANCIAL RESULTS (2-9-10)

Fourth-Quarter Net Income Up
Strong Cash Flow and Liquidity
Opportunistic Acquisitions Amid Economic Downturn

SAN FRANCISCO (February 9, 2010) — Levi Strauss & Co. (LS&Co.) today announced financial results for the fourth quarter and fiscal year ended November 29, 2009.

Highlights include:

Fourth-quarter and full-year net revenues benefited from acquisitions completed in 2009, retail stores opened during the year and growth in most Asia Pacific markets. These contributions to revenue were more than offset by lower U.S. Dockers® and Signature sales, challenging wholesale performance across Europe and continued sales declines in Japan. Full-year net revenues were down 3 percent excluding the negative effects of currency.

Fourth-quarter net income improved compared to the prior year. Operating income declines were more than offset by lower taxes. Full-year net income reflects the decline in net revenue and the investment in acquisitions and retail expansion.

“We ended the year with a higher fourth-quarter net income and an improved liquidity position compared to last year,” said John Anderson, president and chief executive officer. “We are pleased with the progress we have made in a very challenging global economy. The Levi’s® brand is performing well in the Americas and most of our markets in Asia, we completely overhauled our Dockers® business, and we made several strategic investments to position the company for revenue growth in 2010.”

Fourth Quarter 2009 Highlights

Gross profit in the fourth quarter was essentially flat at $618 million compared with $625 million for the same period in 2008 despite a 5 percent decline in net revenues. Gross margin for the fourth quarter increased to 51.1 percent of revenues compared with 49.2 percent of revenues in the fourth quarter of 2008, reflecting improved Levi’s® performance in the Americas and the positive impact of additional company-operated retail stores.

Selling, general and administrative (SG&A) expenses for the fourth quarter increased to $501 million from $479 million in the same period of 2008. The increase was due to increased selling costs related to additional company-operated retail stores and higher pension expense. Higher SG&A expenses were partially offset by lower advertising and promotion expenses outside the United States and lower organization and distribution costs.

Operating income for the fourth quarter was $118 million compared with $143 million for the same period of 2008, reflecting higher SG&A expenses.

Fiscal Year 2009 Highlights

Gross profit for the fiscal year decreased to $1,973 million compared with $2,140 million in 2008. Gross margin decreased to 48.1 percent of revenues for the year compared with 48.6 percent of revenues in 2008. Gross margin was adversely impacted by currencies.

Selling, general and administrative expenses decreased to $1,590 million for 2009 compared to $1,606 million the prior year. The decrease included favorable currency impacts and lower advertising and promotion expenses, partially offset by higher selling costs related to additional company-operated retail stores as well as higher pension expense.

Operating income for 2009 was $378 million compared to $525 million in 2008. Nearly half of the decline was related to the impact of currency. Excluding the effects of currency, the balance of the change was due to lower net revenue and operating margin.

Cash Flow and Balance Sheet

The company ended the fourth quarter with cash and cash equivalents of $271 million, an increase of $60 million from November 30, 2008. Cash provided by operating activities was $389 million for 2009, compared with $225 million for the same period in 2008, primarily reflecting reduced investment in inventory and lower operating expenses for the year. Net debt was $1.58 billion at the end of fiscal 2009, compared to $1.64 billion at the end of fiscal 2008. During the year, the company reduced long-term debt by $71 million in addition to paying more than $100 million for acquisitions and a $20 million cash dividend to common stockholders.

“We navigated one of the most challenging economic downturns in decades and came out with a stronger liquidity position and lower debt levels than at the end of 2008,” said Blake Jorgensen, chief financial officer. “At the same time, we successfully integrated our strategic acquisitions and generated solid results from those businesses. These were substantial accomplishments in a very tough environment. ”

Investor Conference Call

The company’s fourth-quarter and full-year 2009 investor conference call will be available through a live audio Webcast at www.levistrauss.com/Financials/EarningsWebcasts.aspx today, February 9, 2010, at 1 p.m. PST/4 p.m. EST. A replay is available on the Web site the same day and will be archived for one month. A telephone replay also is available through February 16 at 800-642-1687 in the United States and Canada, or 706-645-9291 internationally; I.D. No. 52331217.

This news release contains, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current assumptions, expectations and projections about future events. We use words like “believe,” “will,” “so we can,” “when,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Investors should consider the information contained in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the fiscal year ended 2009, especially in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections. Other unknown or unpredictable factors also could have material adverse effects on our future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this news release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this news release. We are not under any obligation and do not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this news release to reflect circumstances existing after the date of this news release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.

Investor Contact:
Roger Fleischmann
Levi Strauss & Co.
(800) 438-0349

Media Contact:
Jeff Beckman
Levi Strauss & Co.
(415) 501-7777