<DOCUMENT>
<TYPE>424B3
<SEQUENCE>1
<FILENAME>prospectus6.txt
<DESCRIPTION>PROSPECTUS SUPPLEMENT NO. 6
<TEXT>


                                               File pursuant to Rule 424 (b) (3)
                                                              File No. 333-55694







                               LEVI STRAUSS & CO.







              Supplement No. 6 to Prospectus dated March 8, 2001.




               The date of this Supplement No. 6 is October 3, 2001






                   On October 3, 2001, Levi Strauss & Co. filed
                  with the Securities and Exchange Commission
                                  the attached
                          Quarterly Report on Form 10-Q.



<PAGE>


================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-Q

                                   (Mark One)

     [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                 FOR THE QUARTERLY PERIOD ENDED AUGUST 26, 2001

                                       or

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                        Commission file number: 333-36234

                               LEVI STRAUSS & CO.
             (Exact Name of Registrant as Specified in Its Charter)

         DELAWARE                                              94-0905160
(State or Other Jurisdiction of                             (I.R.S. Employer
 Incorporation or Organization)                            Identification No.)

              1155 BATTERY STREET, SAN FRANCISCO, CALIFORNIA 94111
                    (Address of Principal Executive Offices)

                                 (415) 501-6000
              (Registrant's Telephone Number, Including Area Code)

                                      None
        (Former Name, Former Address, and Former Fiscal Year, if Changed
                               Since Last Report)

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 X    No
                                       ---     ---

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Common Stock $.01 par value --- 37,278,238 shares outstanding on October 3, 2001


<PAGE>


LEVI STRAUSS & CO.
INDEX TO FORM 10-Q
AUGUST 26, 2001

<table>
<caption>



                                                                                                  PAGE
                                                                                                NUMBER
                                                                                                ------
<S>                                                                                               <C>

PART I - FINANCIAL INFORMATION

Item 1.    Financial Statements:

           Consolidated Balance Sheets as of August 26, 2001 and November 26, 2000..............     3

           Consolidated Statements of Income for the Three and Nine Months Ended
            August 26, 2001 and August 27, 2000.................................................     4

           Consolidated Statements of Cash Flows for the Nine Months Ended
            August 26, 2001 and August 27, 2000.................................................     5

           Notes to the Consolidated Financial Statements.......................................     6

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of
             Operations.........................................................................    19

Item 3.    Quantitative and Qualitative Disclosures about Market Risk...........................    25

PART II - OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K.....................................................    26

SIGNATURE.......................................................................................    27

                                       2
</TABLE>

<PAGE>


PART I - FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                   LEVI STRAUSS & CO. AND SUBSIDIARIES
                                       CONSOLIDATED BALANCE SHEETS
                                         (Dollars in Thousands)

                                                                                          August 26,   November 26,
                                                                                            2001          2000
                                                                                            ----          ----
                                                                                         (Unaudited)
<S>                                                                                          <C>           <C>

                                                  ASSETS
Current Assets:
      Cash and cash equivalents......................................................   $   63,765    $  117,058
      Trade receivables, net of allowance for doubtful accounts of $29,923 in 2001
         and $29,717 in 2000.........................................................      576,880       660,128
      Inventories:
          Raw materials..............................................................      121,171       120,760
          Work-in-process............................................................       78,674        84,871
          Finished goods.............................................................      596,318       446,618
                                                                                        ----------    ----------
             Total inventories.......................................................      796,163       652,249
      Deferred tax assets............................................................      247,325       250,817
      Other current assets...........................................................      134,037       168,621
                                                                                        ----------    ----------
                  Total current assets...............................................    1,818,170     1,848,873
Property, plant and equipment, net of accumulated depreciation of $529,808 in
   2001 and $495,986 in 2000.........................................................      528,577       574,039
Goodwill and other intangibles, net of accumulated amortization of $172,877 in
   2001 and $164,826 in 2000.........................................................      257,103       264,956
Non-current deferred tax assets......................................................      420,532       439,692
Other assets ........................................................................      113,639        78,168
                                                                                        ----------    ----------
                  Total Assets.......................................................   $3,138,021    $3,205,728
                                                                                        ==========    ==========

                                    LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
      Current maturities of long-term debt and short-term borrowings.................   $  109,273    $  231,290
      Accounts payable...............................................................      208,452       268,473
      Restructuring reserves.........................................................       53,411        71,595
      Accrued liabilities............................................................      359,813       395,660
      Accrued salaries, wages and employee benefits..................................      180,010       257,021
      Accrued taxes..................................................................       14,281        69,772
                                                                                        ----------    ----------
                  Total current liabilities..........................................      925,240     1,293,811
Long-term debt, less current maturities..............................................    2,048,677     1,895,140
Postretirement medical benefits......................................................      550,331       545,574
Long-term employee related benefits..................................................      392,103       358,849
Long-term tax liability..............................................................      175,492       166,854
Other long-term liabilities..........................................................       21,394        20,588
Minority interest ...................................................................       21,055        23,485
                                                                                        ----------    ----------
                  Total liabilities..................................................    4,134,292     4,304,301
                                                                                        ----------    ----------
Stockholders' Deficit:
      Common stock--$.01 par value; authorized 270,000,000 shares; issued and
         outstanding: 37,278,238 shares..............................................          373           373
      Additional paid-in capital.....................................................       88,808        88,808
      Accumulated deficit............................................................   (1,083,841)   (1,171,864)
      Accumulated other comprehensive loss...........................................       (1,611)      (15,890)
                                                                                        ----------    ----------
                  Total stockholders' deficit........................................     (996,271)   (1,098,573)
                                                                                        ----------    ----------
                  Total Liabilities and Stockholders' Deficit........................   $3,138,021    $3,205,728
                                                                                        ==========    ==========
<FN>
   The accompanying notes are an integral part of these financial statements.
</FN>
                                       3
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                   LEVI STRAUSS & CO. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF INCOME
                              (Dollars in Thousands, Except Per Share Data)
                                             (Unaudited)


                                                                        Three Months Ended          Nine Months Ended
                                                                        ------------------          -----------------
                                                                     August 26,    August 27,    August 26,    August 27,
                                                                        2001          2000          2001          2000
                                                                        ----          ----          ----          ----
<S>                                                                     <C>          <C>           <C>            <C>

Net sales........................................................   $  983,508    $1,127,740    $3,023,828    $3,359,221
Cost of goods sold...............................................      584,279       663,418     1,732,170     1,957,328
                                                                    ----------    ----------    ----------    ----------
   Gross profit..................................................      399,229       464,322     1,291,658     1,401,893
Marketing, general and administrative expenses...................      314,482       358,524       976,706     1,048,052
Other operating income...........................................        8,377        10,404        22,916        20,852
                                                                    ----------    ----------    ----------    ----------
   Operating income..............................................       93,124       116,202       337,868       374,693
Interest expense.................................................       55,429        59,406       178,532       177,177
Other (income) expense, net......................................       13,850        (1,359)       19,617       (30,151)
                                                                    ----------    ----------    ----------    ----------
   Income before taxes...........................................       23,845        58,155       139,719       227,667
Provision for taxes..............................................        8,822        20,354        51,696        79,683
                                                                    ----------    ----------    ----------    ----------
   Net income....................................................   $   15,023    $   37,801    $   88,023    $  147,984
                                                                    ==========    ==========    ==========    ==========

Earnings per share--basic and diluted.............................  $     0.40    $     1.01    $     2.36    $     3.97
                                                                    ==========    ==========    ==========    ==========

Weighted-average common shares outstanding.......................   37,278,238    37,278,238    37,278,238    37,278,238
                                                                    ==========    ==========    ==========    ==========

<FN>
   The accompanying notes are an integral part of these financial statements.
</FN>
                                       4
</TABLE>

<PAGE>


<TABLE>
<CAPTION>
                       LEVI STRAUSS & CO. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)

                                                                                            Nine Months Ended
                                                                                            -----------------
                                                                                       August 26,       August 27,
                                                                                          2001             2000
                                                                                          ----             ----
<S>                                                                                       <C>               <C>


Cash Flows from Operating Activities:
Net income...................................................................         $  88,023         $147,984
Adjustments to reconcile net cash (used for) provided by operating activities:
        Depreciation and amortization........................................            60,810           69,563
        (Gain) loss on disposition of property, plant and equipment..........             1,167          (26,025)
        Unrealized foreign exchange gains....................................            (5,143)          (6,877)
        Decrease in trade receivables........................................            84,532           74,746
        Decrease in income taxes receivables.................................                --           70,000
        (Increase) decrease in inventories...................................          (135,120)          10,836
        Decrease (increase) in other current assets..........................            31,151           (5,198)
        Increase in other long-term assets...................................           (35,189)         (18,377)
        Decrease in net deferred tax assets..................................            18,310           42,836
        Decrease in accounts payable and accrued liabilities.................          (100,729)         (13,010)
        Decrease in restructuring reserves...................................           (18,184)        (169,043)
        (Decrease) increase in accrued salaries, wages and employee benefits.           (78,315)           9,358
        (Decrease) increase in accrued taxes.................................           (54,418)          37,815
        Increase in long-term employee benefits..............................            38,070           22,529
        Increase (decrease) in other long-term liabilities...................             8,251          (33,921)
        Other, net...........................................................             3,440          (13,924)
                                                                                     ----------         --------
           Net cash (used for) provided by operating activities..............           (93,344)         199,292
                                                                                     ----------         --------

Cash Flows from Investing Activities:
        Purchases of property, plant and equipment...........................          (14,621)          (15,799)
        Proceeds from sale of property, plant and equipment..................            2,903           106,965
        (Increase) decrease in net investment hedges.........................           (1,664)           52,884
        Other, net...........................................................               --               152
                                                                                     ---------          --------
           Net cash (used for) provided by investing activities..............          (13,382)          144,202
                                                                                     ---------          --------

Cash Flows from Financing Activities:
        Proceeds from issuance of long-term debt.............................        1,801,702           340,500
        Repayments of long-term debt.........................................       (1,744,955)         (799,238)
        Net (decrease) increase in short-term borrowings.....................           (6,439)            1,549
                                                                                    ----------          --------
           Net cash provided by (used for) financing activities..............           50,308          (457,189)
                                                                                    ----------          --------
Effect of exchange rate changes on cash......................................            3,125            (3,675)
                                                                                    ----------          --------
           Net decrease in cash and cash equivalents.........................          (53,293)         (117,370)
Beginning cash and cash equivalents..........................................          117,058           192,816
                                                                                    ----------          --------
Ending Cash and Cash Equivalents.............................................       $   63,765          $ 75,446
                                                                                    ==========          ========

Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
        Interest.............................................................       $  138,702          $135,052
        Income taxes.........................................................           78,664            30,641
        Restructuring initiatives............................................           18,184           169,043
<FN>

   The accompanying notes are an integral part of these financial statements.
</FN>

                                       5
</TABLE>

<PAGE>


                       LEVI STRAUSS & CO. AND SUBSIDIARIES
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE 1: PREPARATION OF FINANCIAL STATEMENTS

     The  unaudited  consolidated financial statements of Levi Strauss & Co. and
subsidiaries  ("LS&CO." or "Company") are prepared in conformity  with generally
accepted accounting principles for interim financial information. In the opinion
of  management,  all  adjustments  necessary  for a  fair  presentation  of  the
financial  position and operating  results for the periods  presented  have been
included.  These unaudited  consolidated  financial statements should be read in
conjunction with the audited consolidated financial statements of LS&CO. for the
year ended November 26, 2000 included in the annual report on Form 10-K filed by
LS&CO.  with the Securities and Exchange  Commission  (the "SEC") on February 5,
2001.

     The  consolidated  financial  statements include the accounts of LS&CO. and
its subsidiaries. All intercompany transactions have been eliminated. Management
believes  that,  along  with the  following  information,  the  disclosures  are
adequate to make the information presented herein not misleading.  Certain prior
year amounts have been reclassified to conform to the current presentation.  The
results of  operations  for the three and nine months  ended August 26, 2001 may
not be indicative of the results to be expected for the year ending November 25,
2001.

     The Company adopted Statement of Financial Accounting Standards No.("SFAS")
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities," on the
first day of fiscal  year 2001.  Due to the  adoption  of SFAS 133,  the Company
reported a net transition gain in other income/expense for the nine months ended
August 26, 2001 of $87 thousand.  This  transition  amount was not recorded as a
separate line item as a change in accounting  principle,  net of tax, due to the
minimal impact on the Company's results of operations.  In addition, the Company
recorded a  transition  amount of $0.7  million (or $0.4  million net of related
income  taxes)  that  reduced  other  comprehensive  income.  (See Note 7 to the
Consolidated Financial Statements.)

     The Company  adopted  SFAS  140, "Accounting for Transfers and Servicing of
Financial Assets and  Extinguishments of Liabilities,"  which replaces SFAS 125,
"Accounting for Transfers and Services of Financial  Assets and  Extinguishments
of  Liabilities,"  in  fiscal  year  2001.  SFAS 140  revises  the  methods  for
accounting  for  securitizations  and other  transfers of  financial  assets and
collateral as outlined in SFAS 125, and requires certain additional disclosures.
The adoption of SFAS 140 had no financial impact on the Company.  (See Note 4 to
the Consolidated Financial Statements.)

     The  Financial  Accounting  Standards  Board issued SFAS 142, "Goodwill and
Other  Intangible  Assets,"  dated June 2001,  which  requires that goodwill and
intangible  assets  with  indefinite  useful  lives no longer be  amortized  but
instead be reviewed  annually for impairment  using a fair-value based approach.
Intangible  assets that have a finite life will  continue to be  amortized  over
their  respective  estimated  useful lives. The Company is required to adopt the
provisions  of SFAS 142 on the first day of fiscal  year  2003;  however,  early
application is permitted in which the Company can adopt SFAS 142 on November 26,
2001.  The Company has not yet  determined if it will adopt this standard  early
and is  currently  evaluating  the  impact  SFAS 142 may  have on its  financial
position and results of operations.

                                       6


<PAGE>
<TABLE>
<CAPTION>
                                       LEVI STRAUSS & CO.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                           (Unaudited)


NOTE 2: COMPREHENSIVE INCOME

     The following is a summary of the components of total comprehensive income, net of related income taxes:

                                                                           Three Months Ended       Nine Months Ended
                                                                           ------------------       -----------------
                                                                         August 26,  August 27,    August 26,   August 27,
                                                                            2001        2000          2001       2000
                                                                            ----        ----          ----       ----
                                                                                    (Dollars in Thousands)
<S>                                                                          <C>        <C>            <C>         <C>

   Net income..........................................................    $15,023     $37,801     $ 88,023        $147,984
                                                                           -------     -------     --------        --------
   Other comprehensive income (loss):
        Transition adjustments:
          Unrealized losses on cash flow hedges........................         --          --         (522)             --
          Reclassification of cash flow hedges to other
            income/expense.............................................        130          --          391              --
                                                                           -------     -------     --------        --------
           Net gains (losses) on cash flow hedges......................        130          --         (131)             --
          Net investment hedges........................................         --          --           76              --
                                                                           -------     -------     --------        --------
            Total transition adjustments...............................        130          --          (55)             --
                                                                           -------     -------     --------        --------
        Foreign currency translation adjustments:
          Net investment hedges........................................     (5,403)      6,011       (3,081)         23,207
          Foreign currency translations................................     10,628      12,657       18,009         (20,190)
                                                                           -------     -------     --------        --------
            Total foreign currency translation adjustments.............      5,225      18,668       14,928           3,017
                                                                           -------     -------     --------        --------

        Unrealized gains (losses) on cash flow hedges..................     (2,163)         --        1,364              --
        Reclassification of cash flow hedges to other
          income/expense...............................................       (953)         --       (1,958)             --
                                                                           -------     -------     --------        --------
          Net gains on cash flow hedges................................     (3,116)         --         (594)             --
                                                                           -------     -------     --------        --------
            Total other comprehensive income...........................      2,239      18,668       14,279           3,017
                                                                           -------     -------     --------        --------
   Total comprehensive income..........................................    $17,262     $56,469     $102,302        $151,001
                                                                           =======     =======     ========        ========

        The following is a summary of the components of accumulated other comprehensive income (loss) balances:

<CAPTION>
                                                                      August 26,     November 26,
                                                                          2001           2000
                                                                          ----           ----
                                                                        (Dollars in Thousands)
<S>                                                                         <C>           <C>

        Cumulated transition adjustments:
          Beginning balance of cash flow hedges..................        $   --       $     --
           Unrealized losses on cash flow hedges.................          (522)            --
           Reclassification of cash flow hedges to other
             income/expense......................................            391            --
                                                                         -------      --------
          Ending balance of cash flow hedges.....................           (131)           --
          Net investment hedges..................................            76             --
                                                                         -------      --------
            Total cumulated transition adjustments...............           (55)            --
                                                                         -------      --------
        Cumulated translation adjustments:
          Net investment hedges..................................         36,393        39,474
          Foreign currency translations..........................        (37,355)      (55,364)
                                                                         -------      --------
            Total cumulated translation adjustments..............           (962)      (15,890)
                                                                         -------      --------
          Beginning balance of cash flow hedges..................             --            --
           Unrealized gains on cash flow hedges..................          1,364            --
           Reclassification of cash flow hedges to other
             income/expense......................................         (1,958)           --
                                                                         -------      --------
          Ending balance of cash flow hedges.....................           (594)           --
                                                                         -------      --------
        Accumulated other comprehensive loss.....................        $(1,611)     $(15,890)
                                                                         =======      ========
</TABLE>
                                       7
<PAGE>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)

NOTE 3: EXCESS CAPACITY/RESTRUCTURING RESERVES

NORTH AMERICA PLANT CLOSURES

     In  view  of  declining  sales  that  started  in  1997,  the need to bring
manufacturing  capacity  in line with sales  projections  and the need to reduce
costs,  the Company  decided to close some of its owned and operated  production
facilities in North  America.  The Company  announced in 1997 the closure of ten
manufacturing  facilities and a finishing  center in the U.S., which were closed
during  1998 and  displaced  approximately  6,400  employees.  The  table  below
displays the activity and liability balances of this reserve.

     In 1998, the Company  announced  the closures of two more finishing centers
in the U.S.  that  were  closed  during  1999 and  displaced  approximately  990
employees.  The table below displays the activity and liability balances of this
reserve.

     The Company announced  in  February 1999 plans  to  close  11 manufacturing
facilities in North America. The 11 manufacturing  facilities were closed during
1999 and approximately 5,900 employees were displaced.  The table below displays
the activity and liability balances of this reserve.

1997 NORTH AMERICA PLANT CLOSURES
<TABLE>
<CAPTION>

                                                                         Balance                 Balance
                                                                        11/26/00   Reductions    8/26/01
                                                                        --------   ----------    -------
                                                                             (Dollars in Thousands)
<S>                                                                          <C>         <C>        <C>

Severance and employee benefits........................................     $  221      $ (35)   $  186
Other restructuring costs..............................................      2,226       (473)    1,753
                                                                            ------      -----    ------
   Total...............................................................     $2,447      $(508)   $1,939
                                                                            ======      =====    ======

1998 NORTH AMERICA PLANT CLOSURES

<CAPTION>
                                                                         Balance                 Balance
                                                                        11/26/00   Reductions    8/26/01
                                                                        --------   ----------    -------
                                                                             (Dollars in Thousands)
<S>                                                                          <C>         <C>        <C>

Severance and employee benefits........................................     $1,449     $(121)    $1,328
Other restructuring costs..............................................        608        (4)       604
                                                                            ------     -----     ------
   Total...............................................................     $2,057     $(125)    $1,932
                                                                            ======     =====     ======

1999 NORTH AMERICA PLANT CLOSURES

                                                                         Balance                 Balance
                                                                        11/26/00   Reductions    8/26/01
                                                                        --------   ----------    -------
<CAPTION>
                                                                             (Dollars in Thousands)
<S>                                                                          <C>         <C>        <C>

Severance and employee benefits........................................    $19,852   $ (6,965)   $12,887
Other restructuring costs..............................................     34,765     (5,238)    29,527
                                                                           -------   --------    -------
   Total...............................................................    $54,617   $(12,203)   $42,414
                                                                           =======   ========    =======

</TABLE>
                                       8

<PAGE>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)

CORPORATE REORGANIZATION INITIATIVES

     Starting  in  1998, the Company  instituted various overhead reorganization
initiatives  to  reduce   overhead  costs  and   consolidate   operations.   The
reorganization   initiative  instituted  in  1998  displaced  approximately  770
employees.  The table below displays the activity and liability balances of this
reserve.

     In conjunction with  the  overhead  reorganization initiatives, the Company
announced  restructuring  plans  during  1999  that are  estimated  to  displace
approximately 730 employees. As of August 26, 2001,  approximately 715 employees
had been displaced. The table below displays the activity and liability balances
of this reserve.

<TABLE>
<CAPTION>
1998 CORPORATE REORGANIZATION INITIATIVES

                                                                     Balance                Balance
                                                                     11/26/00  Reductions   8/26/01
                                                                     --------- ----------   -------
                                                                         (Dollars in Thousands)
<S>                                                                       <C>        <C>        <C>

Severance and employee benefits.....................................    $  100     $ (100)    $    -
Other restructuring costs...........................................     1,773       (230)     1,543
                                                                        ------     ------     ------
   Total............................................................    $1,873     $ (330)    $1,543
                                                                        ======     ======     ======

1999 CORPORATE REORGANIZATION INITIATIVES

                                                                     Balance                Balance
                                                                     11/26/00  Reductions   8/26/01
                                                                     --------  ----------   -------
                                                                         (Dollars in Thousands)

Severance and employee benefits.....................................    $2,762    $(1,198)    $1,564
                                                                        ======    =======     ======
</TABLE>
EUROPE REORGANIZATION AND PLANT CLOSURES

     In 1998, the  Company  announced  plans  to close two manufacturing and two
finishing facilities,  and reorganize  operations throughout Europe,  displacing
approximately 1,650 employees. These plans were prompted by decreased demand for
denim jeans  products and a resulting  over-capacity  in the Company's  European
owned and operated plants.  The production  facilities were closed by the end of
1999  and  as of  August  26,  2001,  approximately  1,645  employees  had  been
displaced.  The table below displays the activity and liability balances of this
reserve.

     In  conjunction  with  these  plans  in  Europe,  the  Company announced in
September  1999 plans to close a production  facility  and reduce  capacity at a
finishing  facility in the United  Kingdom.  The production  facility  closed in
December  1999.  As  of  August  26,  2001,  approximately  945  employees  were
displaced.  The table below displays the activity and liability balances of this
reserve.

                                       9
<PAGE>

<TABLE>
<CAPTION>

                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)


1998 EUROPE REORGANIZATION AND PLANT CLOSURES

                                                                   Balance                Balance
                                                                   11/26/00  Reductions   8/26/01
                                                                   --------  ----------   -------
                                                                       (Dollars in Thousands)
<S>                                                                    <C>         <C>      <C>

Severance and employee benefits...................................    $1,508      $(989)     $519
                                                                      ======      =====      ====

1999 EUROPE REORGANIZATION AND PLANT CLOSURES

                                                                   Balance                Balance
                                                                   11/26/00  Reductions   8/26/01
                                                                   --------  ----------   -------
                                                                       (Dollars in Thousands)
Severance and employee benefits...................................    $5,691    $(2,831)    $2,860
Other restructuring costs.........................................       640         --        640
                                                                      ------    -------     ------

   Total..........................................................    $6,331    $(2,831)    $3,500
                                                                      ======    =======     ======
</TABLE>

     Reductions consist  of  payments for severance and  employee  benefits  and
other  restructuring  costs. The balance of severance and employee  benefits and
other  restructuring  costs are  included  under  restructuring  reserves on the
balance sheet.

NOTE 4: FINANCING

SENIOR NOTES OFFERING

      On  January  18, 2001,  the  Company  issued  two  series of notes payable
totaling the equivalent of $497.5 million to qualified  institutional  investors
in reliance on Rule 144A under the Securities Act of 1933 (the "Securities Act")
and outside the U.S. in accordance  with  Regulation S under the Securities Act.
The notes are  unsecured  obligations  of the Company and may be redeemed at any
time after  January 15, 2005.  The  issuance  was divided into two series:  U.S.
$380.0 million dollar notes ("Dollar Notes") and 125.0 million euro notes ("Euro
Notes"), (collectively,  the "Notes"). Both series of notes are seven-year notes
maturing  on January 15,  2008 and bear  interest at 11.625% per annum,  payable
semi-annually  in January and July of each year.  These Notes were  offered at a
discount  of $5.2  million to be  amortized  over the term of the  Notes.  Costs
representing  underwriting  fees and  other  expenses  of $14.4  million  on the
original issue will be amortized  over the term of the Notes.  Net proceeds from
the offering were used to repay a portion of the indebtedness  outstanding under
the credit facility.

      The  indentures  governing  the  Notes  contain  covenants  that limit the
Company's and its subsidiaries'  ability to incur additional debt; pay dividends
or make other restricted payments;  consummate specified asset sales; enter into
transactions with affiliates; incur liens; impose restrictions on the ability of
a  subsidiary  to pay  dividends  or  make  payments  to  the  Company  and  its
subsidiaries;  merge or  consolidate  with any other person;  and sell,  assign,
transfer,  lease, convey or otherwise dispose of all or substantially all of the
Company's  assets or the assets of the  Company's  subsidiaries.  If the Company
experiences  a change in  control as defined  in the  indentures  governing  the
Notes,  the Company will be required  under the  indentures  to make an offer to
repurchase  the  Notes at a price  equal to 101% of the  principal  amount  plus
accrued and unpaid  interest,  if any, to the date of  repurchase.  If the Notes
receive and  maintain an  investment  grade  rating by both  Standard and Poor's
Ratings  Service  and  Moody's   Investors  Service  and  the  Company  and  its
subsidiaries are and remain in compliance with the indentures,  then the Company
and its  subsidiaries  will not be required to comply with  specified  covenants
contained in the indentures.

                                       10
<PAGE>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)


SENIOR NOTES EXCHANGE OFFER

      In   March 2001,  the  Company,  as  required  under  registration  rights
agreements  it  entered  into when it issued  the  Notes,  filed a  registration
statement  on Form S-4  under the  Securities  Act with the SEC  relating  to an
exchange offer for the Notes. The exchange offer gave holders the opportunity to
exchange the Notes for new notes that are registered  under the Securities  Act.
The new notes are  identical  in all  material  respects to the old notes except
that the new notes are registered  under the Securities  Act. The exchange offer
ended on April 6, 2001. As a result of the exchange offer, all but $200 thousand
of the  $380.0  million  aggregate  principal  amount of old  Dollar  Notes were
exchanged  for new  Dollar  Notes,  and all but 595  thousand  euro of the 125.0
million aggregate principal amount of old Euro Notes were exchanged for new Euro
Notes.

SENIOR SECURED CREDIT FACILITY

      On  February  1,  2001,  the  Company  entered into a $1.05 billion senior
secured  credit  facility  to  replace  its  existing  credit  facility  on more
favorable  terms.  The credit  facility  consists of a $700.0 million  revolving
credit  facility and $350.0  million of term loans.  This  facility  reduces the
Company's  borrowing  costs and extends the maturity of the Company's  principal
bank credit facility to August 2003.

     The  facility  is  secured  in  substantially  the same manner as the prior
facility. Collateral includes: domestic inventories, certain domestic equipment,
trademarks,   other  intellectual  property,  100%  of  the  stock  in  domestic
subsidiaries, 65% of the stock of certain foreign subsidiaries and other assets.
Borrowings  under the facility  bear  interest at LIBOR or the agent bank's base
rate plus an  incremental  borrowing  spread.  Before the  domestic  receivables
securitization   transaction  described  below,  the  collateral  also  included
domestic  receivables.  In connection with the securitization  transaction,  the
lenders  under  the  credit  facility   released  their  security   interest  in
receivables sold in that transaction, and retained security interests in certain
related assets.

     The  facility  contains  customary  covenants   restricting  the  Company's
activities as well as those of its  subsidiaries,  including  limitations on the
Company's and its subsidiaries' ability to sell assets; engage in mergers; enter
into  operating  leases or capital  leases;  enter into  transactions  involving
related  parties,  derivatives  or letters of  credit;  enter into  intercompany
transactions;  incur  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;  make  capital
expenditures;  and  make  changes  in the  Company's  corporate  structure.  The
facility also contains  financial  covenants that the Company must satisfy on an
ongoing basis, including maximum leverage ratios and minimum coverage ratios. As
of August 26, 2001, the Company was in compliance  with the financial  covenants
under the facility.

EUROPEAN RECEIVABLES SECURITIZATION AGREEMENTS

     In  February  2000,  several of the Company's European subsidiaries entered
into  receivable  securitization  financing  agreements  with several lenders to
borrow  up to  $125.0  million.  Borrowings  are  collateralized  by a  security
interest in the receivables of these subsidiaries. The Company adopted SFAS 140,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of  Liabilities,"  in fiscal  year 2001.  The  securitizations  did not meet the
criteria  for  sales   accounting   under  SFAS  140  and  therefore  have  been
consistently accounted for as a secured borrowing.

                                       11
<PAGE>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)

DOMESTIC RECEIVABLES SECURITIZATION TRANSACTION

     On  July 31,  2001, the Company and several of its subsidiaries completed a
receivables  securitization  transaction  involving  receivables  generated from
sales of products to the Company's U.S. customers.  The transaction involved the
issuance by Levi Strauss Receivables Funding, LLC, an indirect subsidiary of the
Company,  of $110.0 million in secured term notes. The notes,  which are secured
by trade  receivables  originated by Levi Strauss & Co., bear interest at a rate
equal to the  one-month  LIBOR  rate  plus  0.32% per  annum,  and have a stated
maturity date of November  2005. Net proceeds of the offering were used to repay
a portion of the  outstanding  debt under the Company's  senior  secured  credit
facility.  The  transaction is accounted for under SFAS 140. The transaction did
not meet the  criteria  for sales  accounting  under SFAS 140 and  therefore  is
accounted  for as a secured  borrowing.  The purpose of the  transaction  was to
lower the Company's  interest  expense and diversify  its funding  sources.  The
notes were issued in a private  placement  transaction  in accordance  with Rule
144A under the Securities Act and,  accordingly,  have not been registered under
the Securities Act and may not be sold in the United States absent  registration
or  an  applicable  exemption  from  the  registration  requirements  under  the
Securities Act.

     Under the securitization  arrangement, collections on receivables remaining
after  payment of interest  and fees  relating to the notes are used to purchase
new receivables from Levi Strauss & Co. The  securitization  agreements  provide
that, in specified  cases, the collections will not be released but will instead
be  deposited  and  used  to  pay  the  principal  amount  of the  notes.  Those
circumstances  include,  among other  things,  failure to maintain  the required
level of  overcollaterization  due to deterioration in the credit quality of the
receivables,  failure  to pay  interest  or other  amounts  which is not  cured,
breaches of covenants,  representations  and  warranties or events of bankruptcy
relating to the Company and certain of its subsidiaries.


INTEREST RATE CONTRACTS

     The  Company is  exposed  to interest rate risk. It is the Company's policy
and practice to use derivative  instruments,  primarily  interest rate swaps and
options, to manage and reduce interest rate exposures.

      The Company  has  entered into interest rate option contracts to reduce or
neutralize the exposure to changes in variable  interest rates. As of August 26,
2001, the contracts  represent an outstanding  notional amount of $425.0 million
and cover a series of variable cash flows through  November  2001. The contracts
do not qualify for hedge accounting and therefore the Company reports changes in
fair value in other  income/expense  (see Note 7 to the  Consolidated  Financial
Statements).  At  August  26,  2001,  the  Company  had no  interest  rate  swap
transactions outstanding.

      The Company's market risk is generally related to fluctuations in interest
rates. The Company is exposed to credit loss in the event of  nonperformance  by
the counterparties to the interest rate derivative  transactions.  However,  the
Company believes these  counterparties are creditworthy  financial  institutions
and does not anticipate nonperformance.

INTEREST RATES ON BORROWINGS

     The  Company's  weighted  average  interest  rate  on  average   borrowings
outstanding  during the three and nine months ended  August 26, 2001,  including
the amortization of capitalized bank fees,  interest rate swap cancellations and
underwriting fees, was 9.4% and 9.6%, respectively. These interest rates exclude
the write-off of fees that resulted from the replacement of the credit agreement
dated January 31, 2000 (see "Senior Secured Credit Facility" above).

                                       12

<PAGE>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)

NOTE 5: COMMITMENTS AND CONTINGENCIES

FOREIGN EXCHANGE CONTRACTS

     At  August 26, 2001, the Company had U.S. dollar forward currency contracts
to  buy  $1.0  billion  and to  sell  $515.6  million  against  various  foreign
currencies.  The Company also had euro forward  currency  contracts to buy 119.6
million euro against  various  foreign  currencies and to sell 70.3 million euro
against various  foreign  currencies.  In addition,  the Company had U.S. dollar
option  contracts to buy $1.5 billion and to sell $841.0 million against various
foreign  currencies.  The Company also had euro option currency contracts to buy
160.0 million euro against various  foreign  currencies and to sell 60.0 million
euro against various foreign currencies. These contracts are at various exchange
rates and expire at various dates through December 2002.

     The Company  has  entered  into  option  contracts to hedge its exposure to
numerous foreign currencies.  Option transactions  included in the amounts above
are  principally  for the  exchange of the euro and U.S.  dollar.  At August 26,
2001, the Company had bought U.S.  dollar options to sell $347.0 million against
the euro. To finance the option premiums  related to these options,  the Company
sold options having the obligation to buy $245.7 million against the euro.

     The Company's  market  risk  is  generally  related  to fluctuations in the
currency  exchange rates.  The Company is exposed to credit loss in the event of
nonperformance by the counterparties to the foreign exchange contracts. However,
the  Company   believes  these   counterparties   are   creditworthy   financial
institutions and does not anticipate nonperformance.

OTHER CONTINGENCIES

     In the  ordinary course  of  its  business, the Company has pending various
cases involving contractual, employee-related,  distribution, product liability,
product recall,  trademark  infringement and other matters. The Company does not
believe there are any pending legal proceedings that will have a material impact
on the Company's financial position or results of operations.

     The operations and  properties  of  the  Company comply with all applicable
federal, state and local laws enacted for the protection of the environment, and
with permits and  approvals  issued in  connection  therewith,  except where the
failure to comply would not  reasonably  be expected to have a material  adverse
effect on the  Company's  financial  position or business  operations.  Based on
currently available  information,  the Company does not consider there to be any
circumstances  existing that would be reasonably  likely to form the basis of an
action  against the  Company  that could have a material  adverse  effect on the
Company's financial position or business operations.

                                       13

<PAGE>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)


NOTE 6: FAIR VALUE OF FINANCIAL INSTRUMENTS

     The  estimated  fair  value  of  certain  financial  instruments  has  been
determined by the Company using  available  market  information  and appropriate
valuation   methodologies.   However,   considerable  judgment  is  required  in
interpreting  market data.  Accordingly,  the estimates presented herein are not
necessarily  indicative  of the  amounts  that the  Company  could  realize in a
current market exchange.

     The carrying  amount  and  estimated  fair  value  (in  each case including
accrued interest) of the Company's financial instrument assets and (liabilities)
at August 26, 2001 and November 26, 2000 are as follows:

<TABLE>
<CAPTION>
                                                                  August 26,                  November 26,
                                                                    2001                          2000
                                                                    ----                          ----
                                                            Carrying       Estimated      Carrying      Estimated
                                                              Value       Fair Value        Value       Fair Value
                                                              -----       ----------        -----       ----------
                                                                         (Dollars in Thousands)
<S>                                                             <C>           <C>            <C>          <C>
DEBT INSTRUMENTS:
   Credit facilities..................................     $ (439,009)     $(439,009)   $(1,000,131)  $(1,000,131)
   Yen-denominated eurobond placement.................       (168,943)      (123,333)      (184,043)     (133,945)
   U.S. dollar notes offering.........................     (1,195,394)      (983,500)      (799,606)     (628,000)
   Euro notes offering................................       (115,397)      (101,905)            --            --
   European receivables-backed securitization.........        (42,960)       (42,960)       (31,148)      (31,148)
   Domestic receivables-backed securitization.........       (110,145)      (110,145)            --            --
   Industrial development revenue refunding bond......        (10,021)       (10,021)       (10,036)      (10,036)
   Customer service center equipment financing........        (80,065)       (80,065)       (86,901)      (86,901)

CURRENCY AND INTEREST RATE HEDGES:
   Foreign exchange forward contracts.................       $ (6,482)      $ (6,482)      $  9,830      $  9,593
   Foreign exchange option contracts..................         (1,312)        (1,312)         7,309         6,289
   Interest rate option contracts.....................         (4,643)        (4,643)           457          (789)

</TABLE>

      Quoted  market prices or dealer quotes are used to determine the estimated
fair value of foreign  exchange  contracts,  option  contracts and interest rate
swap  contracts.  Dealer  quotes  and  other  valuation  methods,  such  as  the
discounted  value of future cash flows,  replacement  cost and termination  cost
have been used to determine the estimated  fair value for long-term debt and the
remaining  financial   instruments.   The  carrying  values  of  cash  and  cash
equivalents, trade receivables,  current assets, certain current and non-current
maturities of long-term debt,  short-term  borrowings and taxes approximate fair
value.

     The  fair  value  estimates  presented  herein  are  based  on  information
available  to the Company as of August 26, 2001 and  November  26,  2000.  These
amounts  have not been  updated  since those dates and,  therefore,  the current
estimates of fair value at dates  subsequent to August 26, 2001 and November 26,
2000 may differ  substantially from these amounts. In addition,  the aggregation
of the fair value calculations  presented herein do not represent and should not
be construed to represent the underlying value of the Company.

                                       14
<PAGE>




                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)


NOTE 7: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     The  Company  adopted  SFAS 133, "Accounting for Derivative Instruments and
Hedging  Activities,"  on the first day of fiscal year 2001. Due to the adoption
of SFAS 133, the Company  reported a net gain transition  amount of $87 thousand
in other  income/expense.  This transition amount was not recorded on a separate
line item as a change in  accounting  principle  net of tax,  due to the minimal
impact on the Company's results of operations. In addition, the Company recorded
a  transition  amount of $0.7  million (or $0.4  million  net of related  income
taxes) that reduced accumulated other comprehensive income.

Foreign Exchange Hedging

      The  primary  purpose of the Company's foreign exchange hedging activities
is to maximize  the U.S.  dollar value over the long term.  The Company  manages
foreign  currency  exposures  in a way that makes it  unlikely  to obtain  hedge
accounting  treatment  for  all  exposure  management  activities.  The  Company
attempts to take a long-term  view of managing  exposures on an economic  basis,
using forecasts to develop exposure  positions and engaging in active management
of those  exposures  with the  objective  of  protecting  future  cash flows and
mitigating  risks.  As a result,  not all  exposure  management  activities  and
foreign  currency  derivative  instruments  will  qualify  for hedge  accounting
treatment.  Derivative  instruments  utilized  in these  transactions  are being
valued at fair value with changes in fair value  classified  into earnings.  The
Company  does not enter  into or hold any  derivative  instruments  for  trading
purposes.

      The Company  uses  a variety of derivative instruments, including forward,
swap and option contracts, to protect against foreign currency exposures related
to sourcing, net investment positions, royalties and cash management.

      The derivative instruments used to hedge sourcing exposures do not qualify
for hedge  accounting  treatment  and are  recorded  at their fair value and any
changes in fair value are included in other income/expense.

      The Company hedges its  net  investment  position  in  its subsidiaries in
major  currencies  by using  forward,  swap and  option  contracts.  Part of the
contracts  hedging these net  investments  qualify for hedge  accounting and the
related  gains  and  losses  are  consequently  categorized  in  the  cumulative
translation  adjustment in the accumulated other comprehensive income section of
stockholders'  deficit.  At August 26, 2001,  the fair value of  qualifying  net
investment  hedges  was a $0.5  million  net  asset of which  $0.5  million  was
recorded in the cumulative  translation  adjustment section of accumulated other
comprehensive  income.  There  were no  gains  or  losses  excluded  from  hedge
effectiveness  testing.  In addition,  the Company holds derivatives hedging the
net  investment  positions  in major  currencies  that do not  qualify for hedge
accounting.  The fair value of these net  investment  hedges at August 26,  2001
represented a $1.6 million net asset.

      The Company  designates  a  portion  of  its  outstanding  yen-denominated
eurobond as a net  investment  hedge.  As of August 26, 2001, a $5.3 million net
asset  related to the  translation  effects of the  eurobond was recorded in the
cumulative  translation  adjustment  section of accumulated other  comprehensive
income.

                                       15

<PAGE>



                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)

     The Company holds derivatives hedging forecasted intercompany royalty flows
that qualify as cash flow hedges.  The fair value of the  outstanding  contracts
qualifying  as cash flow hedges  amounted to a $1.3 million net  liability as of
August 26, 2001.  The gains and losses on the  contracts  that qualify for hedge
accounting  treatment are recorded in  accumulated  other  comprehensive  income
until  the  underlying  royalty  flow has been  settled.  Hedging  activity  for
qualifying  cash flow  hedges of a net loss of $0.9  million is  expected  to be
reclassified  to earnings in the next sixteen  months as the  underlying  hedged
items affect earnings. For the three months ended August 26, 2001, a net loss of
$0.3 million related to  ineffectiveness  of qualifying cash flow hedges of such
intercompany royalty flows was recorded in other  income/expense.  The amount of
matured cash flow hedges  reclassified  during the three months ended August 26,
2001  from  accumulated  other  comprehensive  income  to  other  income/expense
amounted to a net gain of $1.5  million.  No cash flow hedges were  discontinued
during the three  months  ended  August 26,  2001.  The Company also enters into
contracts hedging forecasted  intercompany  royalty flows that do not qualify as
cash flow hedges.  The fair value of these instruments as of August 26, 2001 was
a $1.2 million net liability.

      The  derivative  instruments  utilized  in   transactions   hedging   cash
management  exposures are currently marked to market at their fair value and any
changes in fair value are recorded in other income/expense.

      The Company also entered into transactions hedging the exposure related to
the Euro Notes  issued on January 18, 2001.  These  derivative  instruments  are
currently marked to market at their fair value and any changes in fair value are
recorded in other income/expense.

     Fair values  of  forward  transactions  and  of the forward portion of swap
transactions are calculated using the discounted difference between the contract
forward price and the forward  price at the closing date for the remaining  life
of the contract.  Prior to the adoption of SFAS 133,  forward  points and option
premiums  were  recorded  as  assets or  liabilities  on the  balance  sheet and
amortized over the life of the contract.  Option  contracts are also recorded at
fair value. Due to the adoption of SFAS 133, these changes in valuation  methods
resulted  in  a  net  gain  of  $1.3   million   that  was   recorded  in  other
income/expense.  In addition, the accumulated other comprehensive income section
of stockholders'  deficit decreased by approximately $0.7 million.  As of August
26, 2001,  the  transition  adjustment  related to  qualifying  cash flow hedges
amounted  to a net  loss of $0.2  million.  This  net  loss  is  expected  to be
reclassified to earnings in the next three months as the underlying hedged items
affect  earnings.  For the three  months  ended  August 26,  2001,  the  Company
reclassified  a  net  realized  loss  of  $0.2  million  related  to  transition
adjustment  of matured  cash flow hedges from  accumulated  other  comprehensive
income to other income/expense.

Interest Rate Hedging

      The  Company  is exposed to interest rate risk. It is the Company's policy
and practice to use derivative  instruments,  primarily  interest rate swaps and
options,  to manage and reduce  interest rate exposures using a mix of fixed and
variable debt.

      The fair value of the derivative instruments hedging interest rate risk as
of  August  26,  2001  was a $4.6  million  net  liability.  As the  outstanding
transactions  either do not  qualify  for hedge  accounting  or  management  has
elected not to designate such  transactions  for hedge  accounting,  the Company
reports the changes in fair value of such derivatives in other income/expense.

      Due to the adoption  of SFAS 133, the  Company adjusted the carrying value
of the outstanding interest rate derivatives to their fair value, which resulted
in a net loss of $1.2  million and was recorded in other  income/expense  during
the first quarter of fiscal year 2001.

                                       16
<PAGE>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)

      The tables below give an overview of the realized and unrealized gains and
losses  reported  in  other   income/expense,   realized  and  unrealized  other
comprehensive  income  ("OCI")  balances,   realized  and  unrealized  cumulated
translation  adjustments  ("CTA")  balances,  and the fair values of  derivative
instruments reported as an asset or liability. OCI and CTA are components of the
accumulated other comprehensive income section of stockholders' deficit.
<TABLE>
<CAPTION>

-------------------------------- -------------------------- ------------------------ -----------------------------------------------
                                    Three Months Ended          Nine Months Ended
                                      August 26, 2001            August 26, 2001                      At August 26, 2001
-------------------------------- -------------------------- ------------------------ -----------------------------------------------
                                   Other (income)/expense    Other (income)/expense     OCI gain/(loss)           CTA gain/(loss)
-------------------------------- -------------------------- ------------------------ ----------------------- -----------------------
 (Dollars in Thousands)            Realized    Unrealized     Realized   Unrealized   Realized   Unrealized   Realized    Unrealized
-------------------------------- ----------- -------------- ----------- ------------ ---------- ------------ ---------- ------------
<S>                                  <C>           <C>           <C>         <C>         <C>        <C>          <C>        <C>

 Foreign Exchange Hedging:
    Sourcing                       $12,985       $ 12,387     $10,488      $19,143        $--      $  --      $    --     $   --

    Net Investment                   1,736         (3,970)      2,381       (1,419)        --         --       52,112        497
    Yen Bond                            --          1,829          --       (7,569)        --         --           --      5,277

    Royalties                         (323)        (1,290)     (6,785)       3,734         --       (943)          --         --

    Cash Management                (10,179)         5,597      (8,751)         994         --         --           --         --

    Transition Adjustments             207             --         621           --         --       (207)          --        120

 Euro Notes Offering                (6,307)          (315)      1,929          845         --         --           --         --

-------------------------------- ----------- -------------- ----------- ------------ ---------- ------------ ---------- ------------


 Interest Rate Hedging             $    --       $(1,008)     $    --      $ 3,854          $  --                   $   --

    Transition Adjustments              --             --          --        1,246             --                       --

-------------------------------- ----------- -------------- ----------- ------------ ----------------------- -----------------------

                             ------------------------------ ----------------
                                                              At August 26,
                                                                 2001
                             ------------------------------ ----------------
                                                               Fair value
                                                            asset/(liability)
                             ------------------------------ ----------------
                              (Dollars in Thousands)
                             ------------------------------ ----------------

                              Foreign Exchange Hedging:
                                 Sourcing                      $(4,017)

                                 Net Investment                  2,139

                                 Royalties                      (2,549)

                                 Cash Management                (2,522)

                              Euro Notes Offering                 (845)

                             ------------------------------ ----------------

                              Interest Rate Hedging            $(4,643)

                             ------------------------------ ----------------

                                     17
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                               LEVI STRAUSS & CO.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(continued)
                                   (Unaudited)



NOTE 8: BUSINESS SEGMENT INFORMATION

                                                                                Asia      All
                                                        Americas    Europe    Pacific    Other    Consolidated
                                                        --------    ------    -------    -----    ------------
                                                                        (Dollars in Thousands)
<S>                                                         <C>         <C>         <C>       <C>        <C>
THREE MONTHS ENDED AUGUST 26, 2001:
   Net sales.......................................       $689,892   $222,515   $71,101   $    --    $983,508
   Earnings contribution...........................         74,161     33,530     6,027        --     113,718
   Interest expense................................             --         --        --    55,429      55,429
   Corporate and other expense, net................             --         --        --    34,444      34,444
   Income before income taxes......................             --         --        --        --      23,845

THREE MONTHS ENDED AUGUST 27, 2000:
   Net sales.......................................       $802,637   $235,869   $89,234   $    --  $1,127,740
   Earnings contribution...........................        132,524     33,916    10,623        --     177,063
   Interest expense................................             --         --        --    59,406      59,406
   Corporate and other expense, net................             --         --        --    59,502      59,502
   Income before income taxes......................             --         --        --        --      58,155





                                                                                Asia      All
                                                        Americas    Europe    Pacific    Other    Consolidated
                                                        --------    ------    -------    -----    ------------
                                                                        (Dollars in Thousands)
NINE MONTHS ENDED AUGUST 26, 2001:
   Net sales.......................................     $2,034,171   $756,524  $233,133  $     --  $3,023,828
   Earnings contribution...........................        270,370    147,905    31,078        --     449,353
   Interest expense................................             --         --        --   178,532     178,532
   Corporate and other expense, net................             --         --        --   131,102     131,102
   Income before income taxes......................             --         --        --        --     139,719

NINE MONTHS ENDED AUGUST 27, 2000:
   Net sales.......................................     $2,255,279   $817,529  $286,413  $     --  $3,359,221
   Earnings contribution...........................        304,623    175,689    37,176        --     517,488
   Interest expense................................             --         --        --   177,177     177,177
   Corporate and other expense, net................             --         --        --   112,644     112,644
   Income before income taxes......................             --         --        --        --     227,667

</TABLE>

                                       18

<PAGE>



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

     The  following  table sets forth, for the periods indicated, selected items
in our consolidated  statements of operations,  expressed as a percentage of net
sales (amounts may not total due to rounding).
<TABLE>
<CAPTION>

                                                                  Three Months Ended            Nine Months Ended
                                                                  ------------------            -----------------
                                                                August 26,     August 27,    August 26,     August 27,
                                                                   2001           2000          2001           2000
                                                                   ----          -----         -----          -----
<S>                                                                <C>            <C>            <C>            <C>
MARGIN DATA:
Net sales.....................................................    100.0%         100.0%         100.0%        100.0%
Cost of goods sold............................................     59.4           58.8           57.3          58.3
                                                                  -----          -----          -----         -----
Gross profit..................................................     40.6           41.2           42.7          41.7
Marketing, general and administrative expenses................     32.0           31.8           32.3          31.2
Other operating income........................................      0.9            0.9            0.8           0.6
                                                                  -----          -----          -----         -----
Operating income..............................................      9.5           10.3           11.2          11.2
Interest expense..............................................      5.6            5.3            5.9           5.3
Other (income) expense, net...................................      1.4           (0.1)           0.6          (0.9)
                                                                  -----          -----          -----         -----
Income before taxes...........................................      2.4            5.2            4.6           6.8
Income tax expense............................................      0.9            1.8            1.7           2.4
                                                                  -----          -----          -----         -----
Net income....................................................      1.5%           3.4%           2.9%          4.4%
                                                                  =====          =====          =====         =====


NET SALES SEGMENT DATA:
Geographic
         Americas.............................................     70.1%         71.2%          67.3%         67.1%
         Europe...............................................     22.6          20.9           25.0          24.3
         Asia Pacific.........................................      7.2           7.9            7.7           8.5

</TABLE>

     Net sales.  Net  sales for the three months ended August 26, 2001 decreased
12.8% to $983.5 million,  as compared to $1,127.7 million for the same period in
2000.  Net sales for the nine months  ended August 26, 2001  decreased  10.0% to
$3,023.8  million,  as compared to $3,359.2 million for the same period in 2000.
These  decreases  reflect  volume  declines  primarily due to weak economies and
retail markets in the U.S. and Japan and the impact of a weaker euro and yen. If
currency  exchange rates were  unchanged from the prior year periods,  net sales
for the three  months ended  August 26, 2001 would have  declined  approximately
10.7% and net  sales for the nine  months  ended  August  26,  2001  would  have
declined approximately 7.5% from the same periods in 2000.

      Although  net  sales  levels decreased from the prior year periods, we are
seeing  positive  developments  across several  dimensions of our business where
improvements  are needed.  They include our  experience  with new products,  our
service levels, our relations with customers and presentation of our products at
retail.  In  addition,  we  continued  to  maintain  our margins and control our
operating expenses and, during the third quarter of fiscal year 2001, we reduced
our debt.

     Before  the  terrorist  attacks  of  September  11, 2001, we had expected a
decline in net sales for the full  fiscal  year in the high  single  digits on a
constant currency basis. This expectation  reflected  continuing poor retail and
economic conditions in the U.S. and Japan, coupled with some positive indicators
for the fourth fiscal quarter of 2001.  Those indicators  included  sell-through
data,  early  experience with new products such as our Levi's(R)  Superlow jeans
and planned advertising activities for the quarter.

                                       19
<PAGE>



     Since  the  terrorist attacks,  several retailers have issued warnings that
they  may  have  to  cut  their  earnings  outlook,  and  there  are  widespread
expressions  of concern  about the U.S. and European  economies.  We believe the
events of September 11th create considerable uncertainty about the world economy
in general and the retail apparel  environment, and retailer and consumer buying
behavior specifically,  and add greater risk to our expectations for the balance
of the year. In addition,  we currently anticipate difficult retail and economic
conditions to continue into 2002,  along with the continued need for executional
improvements,  including  bringing greater focus on core products and innovation
to the U.S. product line. As a result,  we believe our net sales will decline in
2002, and we are planning our production and operating expenses accordingly.

     In  the  Americas,  net  sales  for  the three months ended August 26, 2001
decreased  14.0% to $689.9  million,  as compared to $802.6 million for the same
period in 2000.  Net sales for the nine months ended  August 26, 2001  decreased
9.8% to $2,034.2 million, as compared to $2,255.3 million for the same period in
2000. These decreases were primarily attributable to the weak economy and retail
apparel  market  in the  U.S.  We also  believe  retailers  are  reducing  their
open-to-buy and overall inventory levels in response to the weak apparel market.
However, where we have introduced updated and relevant products, supporting them
with the right advertising and retail programs, our data shows good sell-through
to consumers.  This is the case with our Levi's(R) Superlow jeans and Dockers(R)
Mobile(TM) pant.

     In  Europe, net sales for the  three months ended August 26, 2001 decreased
5.7% to $222.5  million,  as compared  to $235.9  million for the same period in
2000.  Net sales for the nine months  ended  August 26, 2001  decreased  7.5% to
$756.5  million,  as compared to $817.5 million for the same period in 2000. The
net sales  decreases  for the three and nine months  ended  August 26, 2001 were
primarily due to the effects of translation to U.S. dollar reported results. The
net sales  decrease  for the nine months ended August 26, 2001 was also due to a
decline in volume.  On a constant currency basis, net sales would have increased
by approximately 0.6% for the three months ended August 26, 2001 compared to the
same period in 2000,  and would have decreased  approximately  0.7% for the nine
months ended August 26, 2001 compared to the same period in 2000. We believe the
constant  currency  results indicate that our business in Europe is beginning to
stabilize,  reflecting the impact of our innovative products,  such as Levi's(R)
Engineered  Jeans(TM),  marketing,  retail presentation  programs,  and improved
delivery performance.

     In our Asia Pacific region, net sales for the three months ended August 26,
2001 decreased 20.3% to $71.1 million, as compared to $89.2 million for the same
period in 2000.  Net sales for the nine months ended  August 26, 2001  decreased
18.6% to $233.1  million,  as compared to $286.4  million.  These decreases were
primarily  driven  by the  economic  uncertainty  in Japan  and the  effects  of
translation to U.S.  dollar reported  results.  If exchange rates were unchanged
from  the  prior  year  periods,   the  net  sales  decreases  would  have  been
approximately  10.3% for the three months ended August 26, 2001 and 9.2% for the
nine months  ended  August 26, 2001  compared  to the same  periods in 2000.  In
Japan,  which accounts for approximately 55% of our business in Asia,  difficult
business  conditions  have resulted in retail  consolidation,  closure of retail
store locations and bankruptcies, including four of our key retail customers.

     Gross profit. Gross  profit for  the  three  months  ended  August 26, 2001
totaled $399.2 million compared with $464.3 million for the same period in 2000.
Gross profit as a percentage of net sales, or gross margin, for the three months
ended  August 26,  2001  decreased  to 40.6%,  as compared to 41.2% for the same
period in 2000.  Gross  profit for the nine months ended August 26, 2001 totaled
$1,291.7 million,  compared to $1,401.9 million.  Gross margin increased for the
nine months  ended  August 26, 2001 to 42.7%,  as compared to 41.7% for the same
period in 2000.  The gross margin  decline for the three months ended August 26,
2001 was primarily due to costs of  approximately  $8.0 million  associated with
production  down time we took in our  domestic  plants in  response  to the weak
retail market,  as well as costs of approximately  $3.0 million  attributed to a
product recall in Europe.  In late August,  we recalled a limited  collection of
"glossy finish" Levi's(R) jeans,  shirts and jackets that were on the market for
just under one month and accounted for less than one percent of our Levi's brand
volume in Europe.  The gross margin improvement for the nine months ended August
26, 2001 was  primarily  due to lower  sourcing  and fabric  costs,  and reduced
inventory  markdowns.  The Caribbean Basin Initiative trade act was a key reason
for the  sourcing  cost  improvements.  We  anticipate  that our full year gross
margin for 2001 will be within our target range of 40% to 42%.

                                       20
<PAGE>

     Marketing, general and  administrative  expenses.  Marketing,  general  and
administrative  expenses for the three  months  ended August 26, 2001  decreased
12.3% to $314.5  million as  compared  to $358.5  million for the same period in
2000.  Marketing,  general and administrative  expenses as a percentage of sales
for the three  months  ended  August 26,  2001  increased  slightly  to 32.0% as
compared  to  31.8%  for  the  same  period  in  2000.  Marketing,  general  and
administrative expenses for the nine months ended August 26, 2001 decreased 6.8%
to $976.7  million as compared to $1,048.1  million for the same period in 2000.
Marketing,  general and administrative expenses as a percentage of sales for the
nine months  ended  August 26, 2001  increased  slightly to 32.3% as compared to
31.2% for the same period in 2000.

      The dollar decreases in marketing, general and administrative expenses for
the three and nine  months  ended  August  26,  2001 were  primarily  due to our
continuing cost  containment  efforts,  including lower levels of incentive plan
accruals and advertising  expenses,  as well as lower volume-related  costs. The
lower levels of incentive plan accruals  include a reversal of costs  associated
with an employee  long-term  incentive  plan as a result of forfeitures of $12.0
million for the three  months  ended  August 26, 2001 and $18.0  million for the
nine  months  ended  August 26,  2001.  Marketing,  general  and  administrative
expenses  for the three and nine months  ended  August 27, 2000 also  included a
reversal of employee benefit costs of approximately $24.0 million due to changes
in  the  demographic  profile  of  our  workforce.   We  continue  to  look  for
opportunities  to  streamline  our  organization,  in line with our core product
focus and related initiatives to reduce business complexity.

     Advertising  expense for  the  three months ended August 26, 2001 decreased
13.1% to $84.5  million,  as  compared  to $97.3  million for the same period in
2000.  Advertising  expense as a percentage  of sales for the three months ended
August  26,  2001  was  flat  at 8.6%  compared  to the  same  period  in  2000.
Advertising expense for the nine months ended August 26, 2001 decreased 12.0% to
$252.0  million,  as  compared  to $286.3  million  for the same period in 2000.
Advertising  expense as a  percentage  of sales for the nine months ended August
26, 2001 decreased  slightly to 8.3%, as compared to 8.5% for the same period in
2000.  Advertising expense as a percentage of sales for the three and nine month
periods  in 2001 is  consistent  with  our annual  target  range of 8% to 9%. We
expect to be within our target range for fiscal year 2001.

     Other operating income. Licensing  income for the three months ended August
26, 2001 of $8.4 million  decreased  19.5%, as compared to $10.4 million for the
same period in 2000. The decrease for the three months ended August 26, 2001 was
primarily due to the timing of licensing income  accruals.  Licensing income for
the nine  months  ended  August 26, 2001 of $22.9  million  increased  9.9%,  as
compared  to $20.9  million  for the same  period  in 2000.  This  increase  was
primarily due to an increase in licensed  merchandise such as outerwear,  shoes,
belts, headwear and handbags.

     Operating income. Operating  income  for  the three months ended August 26,
2001 of $93.1 million  decreased  19.9%,  as compared to $116.2 million from the
same period in 2000.  The decrease was primarily  due to lower sales,  partially
offset by lower marketing, general and administrative expenses. Operating income
for the nine months ended August 26, 2001 of $337.9 million  decreased  9.8%, as
compared  to $374.7  million  from the same  period in 2000.  The  decrease  was
primarily due to lower sales,  partially  offset by an improved gross margin and
lower marketing, general and administrative expenses.

     Interest expense. Interest  expense for  the  three months ended August 26,
2001 decreased 6.7% to $55.4 million,  as compared to $59.4 million for the same
period in 2000.  The decrease was primarily due to lower market  interest  rates
and lower  average debt levels.  The average  cost of  borrowings  for the three
months  ended  August  26,  2001 and  August  27,  2000  were  9.4%  and  10.0%,
respectively.  Interest  expense  for the nine  months  ended  August  26,  2001
increased  0.8% to $178.5  million,  as compared to $177.2  million for the same
period in 2000.  The  increase  was due to a  write-off  of fees  related to the
credit agreement  replaced by a new credit facility in February 2001 (see Note 4
to the Consolidated Financial Statements). Excluding the fee write-off, interest
expense would have been 5.3% lower than the same period in 2000 primarily due to
lower average debt levels,  partially offset by higher interest rates associated
with the senior notes issued  January 18, 2001.  The average cost of  borrowings
for the nine  months  ended  August 26,  2001 and August 27,  2000 were 9.6% and
9.4%, respectively, excluding the write-off of fees.

                                       21
<PAGE>



     Other income/expense, net.  Other  expense,  net for the three months ended
August 26, 2001 was $13.9 million, as compared to income of $1.4 million for the
same period in 2000.  Other  expense,  net for the nine months  ended August 26,
2001 was $19.6  million,  as  compared  to income of $30.2  million for the same
period in 2000. The expenses for the three and nine months ended August 26, 2001
were  primarily  due to net  losses  from  foreign  currency  exposures  and the
contracts to hedge foreign  currency  exposures.  These net losses are primarily
due to foreign  currency  and market value  fluctuations,  which  introduces  an
element of volatility in our income statement quarter-to-quarter. (See Note 7 to
the  Consolidated  Financial  Statements.) In addition,  the income for the nine
months ended August 27, 2000 was primarily  attributable to a $26.1 million gain
from the sale of two  office  buildings  in San  Francisco  located  next to our
corporate headquarters.

     Income tax expense.  Income tax  expense for  the three months ended August
26, 2001  decreased  56.7% to $8.8 million as compared to $20.4  million for the
same period in 2000.  Income tax expense  for the nine months  ended  August 26,
2001 decreased  35.1% to $51.7 million as compared to $79.7 million for the same
period in 2000.  The  decrease  in income  taxes  for both  periods  in 2001 was
primarily due to lower income before taxes. Our effective tax rate for the three
and nine month  periods in 2001 was 37%  compared to 35% for the same periods in
2000.

     Net income. Net income for the three months ended August 26, 2001 decreased
60.3% to $15.0  million  from $37.8  million  for the same  period in 2000.  Net
income for the nine  months  ended  August  26,  2001  decreased  40.5% to $88.0
million from $148.0  million for the same period in 2000.  These  decreases were
primarily  due to lower  sales and the  impact  of  currency  volatility  on our
foreign  currency  hedging  activities,  partially  offset  by lower  marketing,
general and  administrative  expenses  and, for the nine months ended August 26,
2001,  higher gross margins.  The nine months ended August 27, 2000 results also
included a gain from the sale of office buildings.

RESTRUCTURING AND EXCESS CAPACITY REDUCTION

     Since  1997, we  have  closed  29  of our owned and operated production and
finishing  facilities in North America and Europe and  instituted  restructuring
initiatives in order to reduce costs,  eliminate  excess  capacity and align our
sourcing strategy with changes in the industry and in consumer demand. The total
balance of the reserves at August 26, 2001 was $53.4  million  compared to $71.6
million at November 26, 2000. (See Note 3 to the Consolidated Financial
Statements.)

LIQUIDITY AND CAPITAL RESOURCES

      Our principal  capital  requirements have been to fund working capital and
capital  expenditures.  As of August 26, 2001,  total cash and cash  equivalents
were $63.8  million,  a $53.3  million  decrease  from the $117.1  million  cash
balance reported as of November 26, 2000.

      Cash  used for/provided by  operations. Cash used for operating activities
for the nine months ended August 26, 2001 was $93.3 million, as compared to cash
provided by operating  activities of $199.3 million for the same period in 2000.
The use of cash  for the  nine  months  ended  August  26,  2001  was  primarily
attributable to payments on annual incentive programs,  an increase in inventory
and the  payment of income  taxes on an  Internal  Revenue  Service  settlement.
Inventory,  primarily  first quality basic products,  increased  during the nine
months  ended  August 26, 2001  primarily  due to lower sales in the U.S. We are
focusing  on managing  inventory  levels to be more in line with sales but we do
not  expect  to be able to work  through  the  entire  excess  by  year-end.  In
addition,  we took  production  down time of  approximately  $8.0 million in the
third quarter of fiscal year 2001 to help manage our  inventories and expect our
total down time cost to be approximately $15.0 million by the end of this fiscal
year.  Inventory  consists primarily of first quality basic products in which we
do not expect significant markdowns of that inventory.

                                       22
<PAGE>



      Other long-term  assets  increased during the nine months ended August 26,
2001 primarily due to the  capitalization of underwriting and other fees for the
senior notes issued in January 2001 and fees associated with the credit facility
entered  into in  February  2001.  Net  deferred  tax assets  and  restructuring
reserves decreased during the nine months ended August 26, 2001 primarily due to
spending related to the restructuring initiatives.  Accrued salaries, wages, and
employee  benefits  decreased  during the nine  months  ended  August  26,  2001
primarily due to the payment of annual employee  incentives.  Long-term employee
benefits  increased  primarily due to increased  accruals for long-term employee
incentive plans. Accrued taxes decreased during the nine months ended August 26,
2001 primarily due to a payment of  approximately  $40.0 million to the Internal
Revenue  Service in connection with an examination of our income tax returns for
the years 1986 - 1989.

      Cash used for/provided  by  investing  activities. Cash used for investing
activities  during the nine months ended August 26, 2001 was $13.4  million,  as
compared to cash provided by investing  activities of $144.2  million during the
same period in 2000. Cash used for investing  activities  during the nine months
ended August 26, 2001 resulted  primarily from purchases of property,  plant and
equipment.  Cash provided by investing  activities  during the nine months ended
August 27, 2000 was primarily attributable to proceeds received from the sale of
office buildings.  We expect that capital expenditures for fiscal year 2001 will
not exceed the 2000 fiscal year-end level of $28.0 million.

      Cash provided by/used for financing activities. Cash provided by financing
activities  for the nine  months  ended  August 26, 2001 was $50.3  million,  as
compared to cash used for financing  activities  of $457.2  million for the same
period in 2000.  Cash  provided by financing  activities  during the nine months
ended August 26, 2001 was primarily  from the senior notes issued in January and
the domestic receivables  securitization transaction completed in July (see Note
4 to the Consolidated Financial Statements).

Financial Condition

     Credit Agreement. On February 1, 2001, we  entered  into  a  $1.05  billion
senior secured credit facility to replace the then existing 2000 credit facility
on more  favorable  terms.  The credit  facility  consists  of a $700.0  million
revolving  credit  facility  and $350.0  million of term  loans.  This  facility
reduces  our  borrowing  costs and extends the  maturity of our  principal  bank
credit facility to August 2003.

     The facility is secured in substantially the same manner as the 2000 credit
facility. Collateral includes: domestic inventories, certain domestic equipment,
trademarks,   other  intellectual  property,  100%  of  the  stock  of  domestic
subsidiaries, 65% of the stock of certain foreign subsidiaries and other assets.
Borrowings  under the facility  bear  interest at LIBOR or the agent bank's base
rate plus an  incremental  borrowing  spread.  Before the  domestic  receivables
securitization   transaction  described  below,  the  collateral  also  included
domestic  receivables.  In connection with the securitization  transaction,  the
lenders  under  the  credit  facility   released  their  security   interest  in
receivables sold in that transaction, and retained security interests in certain
related assets.

     The facility  contains  customary  covenants  restricting our activities as
well  as  those  of our  subsidiaries,  including  limitations  on our  and  our
subsidiaries'  ability to sell assets;  engage in mergers;  enter into operating
leases or capital leases;  enter into  transactions  involving  related parties,
derivatives or letters of credit;  enter into intercompany  transactions;  incur
indebtedness  or grant  liens or negative  pledges on our assets;  make loans or
other  investments;  pay  dividends  or  repurchase  stock or other  securities;
guaranty third party obligations; make capital expenditures; and make changes in
our  corporate  structure.  The credit  agreements  will also contain  financial
covenants that we must satisfy on an ongoing basis,  including  maximum leverage
ratios and minimum coverage ratios. As of August 26, 2001, we were in compliance
with the financial covenants under the facility.

     Notes Offering. In  January  2001,  we  issued two series of notes payable,
U.S.  $380.0  million  dollar notes and 125.0  million euro notes,  totaling the
equivalent of $497.5 million to qualified institutional investors. The notes are
unsecured  obligations  and may be redeemed at any time after  January 15, 2005.
The notes mature on January 15, 2008. We used the net proceeds from the offering
to repay a  portion  of the  indebtedness  outstanding  under  the  2000  credit
facility.

                                       23
<PAGE>



      The  indentures  governing  the notes contain covenants that limit our and
our subsidiaries'  ability to incur additional debt; pay dividends or make other
restricted  payments;  consummate specified asset sales; enter into transactions
with affiliates; incur liens; impose restrictions on the ability of a subsidiary
to  pay  dividends  or  make  payments  to us and  our  subsidiaries;  merge  or
consolidate with any other person; and sell, assign, transfer,  lease, convey or
otherwise dispose of all or substantially all of our assets or the assets of our
subsidiaries.  If the notes receive and maintain an  investment  grade rating by
both Standard and Poor's Ratings  Service and Moody's  Investors  Service and we
and our subsidiaries  are and remain in compliance with the indentures,  then we
and our  subsidiaries  will not be required to comply with  specified  covenants
contained  in  the  indentures.  (See  Note  4  to  the  Consolidated  Financial
Statements.)

      On  August 31, 2001,  Moody's  Investors Service downgraded the ratings of
both our senior  secured credit  facility and our senior  unsecured  notes.  The
senior secured credit facility was downgraded to "Ba3" from "Ba2" and the senior
unsecured  notes were  downgraded  to "B2" from  "Ba3"  with a negative  outlook
primarily  due,  according  to  Moody's,  to  our  declining  sales  and  excess
inventory.

     Domestic Securitization.  On  July  31,  2001,  we  completed a receivables
securitization   transaction  involving  receivables  generated  from  sales  of
products to our U.S.  customers.  The transaction  involved the issuance by Levi
Strauss Receivables Funding,  LLC, an indirect subsidiary,  of $110.0 million of
term notes. The notes, which are secured by trade receivables originated by Levi
Strauss & Co., bear  interest at a rate equal to the  one-month  LIBOR rate plus
0.32% per annum,  and have a stated maturity date of November 2005. Net proceeds
of the offering were used to repay a portion of the  outstanding  debt under our
senior secured credit facility. The transaction is accounted for under SFAS 140.
The  transaction did not meet the criteria for sales  accounting  under SFAS 140
and  therefore  is  accounted  for as a secured  borrowing.  The  purpose of the
transaction was to lower our interest expense and diversify funding sources. The
notes were issued in a private  placement  transaction  in accordance  with Rule
144A under the Securities Act and,  accordingly,  have not been registered under
the Securities Act and may not be sold in the United States absent  registration
or  an  applicable  exemption  from  the  registration  requirements  under  the
Securities Act.

     Under the securitization  arrangement, collections on receivables remaining
after  payment of interest  and fees  relating to the notes are used to purchase
new receivables from Levi Strauss & Co. The  securitization  agreements  provide
that, in specified  cases, the collections will not be released but will instead
be  deposited  and  used  to  pay  the  principal  amount  of the  notes.  Those
circumstances  include,  among other  things,  failure to maintain  the required
level of  overcollaterization  due to deterioration in the credit quality of the
receivables,  failure  to pay  interest  or other  amounts  which is not  cured,
breaches of covenants,  representations  and  warranties or events of bankruptcy
relating to us and certain of our  subsidiaries.  Non-release  of collections in
these limited circumstances could have an adverse effect on our liquidity.


NEW ACCOUNTING STANDARDS

     We  adopted  Statement  of Financial Accounting Standards No. ("SFAS") 133,
"Accounting for Derivative Instruments and Hedging Activities," on the first day
of fiscal  year  2001.  Due to the  adoption  of SFAS  133,  we  reported  a net
transition  gain in other  income/expense  for the nine months  ended August 26,
2001 of $87 thousand. This transition amount was not recorded as a separate line
item as a change in accounting principle,  net of tax, due to the minimal impact
on results of operations.  In addition,  we recorded a transition amount of $0.7
million  (or $0.4  million  net of related  income  taxes)  that  reduced  other
comprehensive income. (See Note 7 to the Consolidated Financial Statements.)

     We adopted SFAS 140, "Accounting for  Transfers  and Servicing of Financial
Assets and Extinguishments of Liabilities," which replaces SFAS 125, "Accounting
for  Transfers  and  Services  of  Financial  Assets  and   Extinguishments   of
Liabilities,"  in fiscal year 2001.  SFAS 140 revises the methods for accounting
for  securitizations  and other transfers of financial  assets and collateral as
outlined in SFAS 125, and requires certain additional disclosures.  The adoption
of SFAS 140 had no financial impact.  (See Note 4 to the Consolidated  Financial
Statements.)

                                       24
<PAGE>

     The Financial  Accounting  Standards  Board  issued SFAS 142, "Goodwill and
Other  Intangible  Assets,"  dated June 2001,  which  requires that goodwill and
intangible  assets  with  indefinite  useful  lives no longer be  amortized  but
instead be reviewed  annually for impairment  using a fair-value based approach.
Intangible  assets that have a finite life will  continue to be  amortized  over
their respective estimated useful lives. We are required to adopt the provisions
of SFAS 142 on the first day of fiscal year 2003; however,  early application is
permitted in which we can adopt SFAS 142 on November  26, 2001.  We have not yet
determined if we will adopt this standard early and are currently evaluating the
impact SFAS 142 may have on our financial position and results of operations.

STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE

     This Form 10-Q includes forward-looking statements about retail conditions;
sales performance and trends; inventory position and management;  debt repayment
and liquidity;  gross margins; product innovation and new product development in
our brands;  expense levels including overhead and advertising  expense;  retail
relationships and developments including  sell-through;  presentation of product
at retail and marketing  collaborations;  marketing and advertising initiatives;
and other matters. We have based these forward-looking statements on our current
assumptions, expectations and projections about future events. When used in this
document,  the words "believe,"  "anticipate,"  "intend,"  "estimate," "expect,"
"project"  and similar  expressions  are  intended  to identify  forward-looking
statements, although not all forward-looking statements contain these words.

     These forward-looking  statements are  subject  to  risks and uncertainties
including,  without limitation, risks related to the impact of changing domestic
and international retail environments; changes in the level of consumer spending
or  preferences  in  apparel;  impact of the  terrorist  attacks in the U.S.  on
September  11, 2001;  dependence  on key  distribution  channels,  customers and
suppliers;  changing fashion trends;  our supply chain executional  performance;
internal impact of organizational developments; ongoing competitive pressures in
the apparel industry; trade restrictions;  political or financial instability in
countries where our products are  manufactured;  and other risks detailed in our
annual  report on Form 10-K for the year ended  November 26, 2000,  registration
statements and other filings with the Securities  and Exchange  Commission.  Our
actual results might differ  materially from  historical  performance or current
expectations.  We do not undertake any  obligation to update or revise  publicly
any forward-looking statements,  whether as a result of new information,  future
events or otherwise.


ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

DERIVATIVE FINANCIAL INSTRUMENTS

     We  are  exposed  to  market  risk  primarily  related to foreign exchange,
interest rates and the price of cotton.  We actively manage foreign currency and
interest  rate risk with the  objective of reducing  fluctuations  in actual and
anticipated  cash flows by  entering  into a variety of  derivative  instruments
including  spot,  forward,  options  and swaps.  We  currently  do not hedge our
exposure to the price of cotton with derivative instruments.

FOREIGN EXCHANGE RISK

     Foreign  exchange  market  risk  exposures  are  primarily  related to cash
management   activities,   raw  material  and  finished  goods  purchases,   net
investments and royalty flows from affiliates.


INTEREST RATE RISK

     We  have  an  interest  rate  risk management policy designed to manage the
interest rate risk on our borrowings by entering into a variety of interest rate
derivatives.

     For  more  information  about  market  risk,  see Notes  4,  5 and 7 to the
Consolidated Financial Statements.

                                       25
<PAGE>


PART II - OTHER INFORMATION
ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K:

        (A)   EXHIBITS:
              10.1  First  Amendment  to  Credit Agreement, dated as of July 11,
                    2001, among the Registrant, the Initial Lenders and  Issuing
                    Banks   named   therein,   Bank   of   America,   N.A.,   as
                    Administrative Agency and Collateral Agent, Bank  of America
                    Securities  LLC  and  Salomon  Smith Barney Inc., as Co-Lead
                    Arrangers and Joint Book Managers, Citicorp  USA,   Inc., as
                    Syndication  Agent,  and  The  Bank  of   Nova   Scotia,  as
                    Documentation Agent.  Filed herewith.
              10.2  Master Indenture, dated as of  July 31, 2001, by and between
                    Levi  Strauss  Receivables  Funding,   LLC,  as  issuer, and
                    Citibank,  N.A.  as   Indenture   Trustee,   Paying   Agent,
                    Authentication Agent and Transfer Agent and Registrar. Filed
                    herewith.
              10.3  Indenture  Supplement,  dated  as of  July 31, 2001, by  and
                    among Levi Strauss Receivables Funding, LLC, as Issuer, Levi
                    Strauss  Financial  Center   Corporation   as  Servicer  and
                    Citibank,   N.A.  as  Indenture   Trustee,   Paying   Agent,
                    Authentication Agent and Transfer Agent and Registrar. Filed
                    herewith.
              10.4  Receivables Purchase  Agreement,  dated as of July 31, 2001,
                    is made by and among Levi Strauss Receivables Funding,  LLC,
                    as Issuer,   Levi  Strauss Funding, LLC, as Transferor, Levi
                    Strauss  Financial  Center  Corporation,   as   Seller   and
                    Servicer, and  Levi  Strauss  Securitization  Corp.  as  SPC
                    Member. Filed herewith.
              10.5  Parent  Undertaking,   dated  as  of July 31, 2001,  made by
                    the Registrant in favor of Levi Strauss Receivables Funding,
                    LLC. Filed herewith.
              10.6  Consent  and Release Agreement,  dated as of July 31,  2001,
                    is  entered  into by and among Levi Strauss Funding, LLC, as
                    Transferor, Levi Strauss  Financial  Center  Corporation, as
                    Seller,   the   Registrant,  as   Originator,  Levi  Strauss
                    Receivables  Funding,  LLC,  as  Issuer,  Citibank,  N.A. as
                    Indenture  Trustee,  and  Bank  of  America,  N.A. as Agent.
                    Filed herewith.



        (B)     REPORTS ON FORM 8-K:

         Current Report on Form 8-K on July 31, 2001 filed pursuant to Item 5 of
         the report and relating to  completion,  on  July  31,  2001,  by  Levi
         Strauss  &  Co.  and  various  of  its  subsidiaries  of  a receivables
         securitization transaction involving receivables generated  from  sales
         of products to the Company's U.S. customers.

         Current Report on Form 8-K on September 19, 2001 filed pursuant to Item
         5 of the report and containing a copy of the  Company's  press  release
         titled "Levi Strauss & Co. Reports Third-Quarter Financial Results."

                                       26

<PAGE>




                                    SIGNATURE
                                    ---------

         Pursuant  to  the  requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be  signed on its  behalf  by  the
undersigned thereunto duly authorized.



Date: October 3, 2001          Levi Strauss & Co.
                               ------------------
                               (Registrant)


                          By:  /s/ William B. Chiasson
                               -----------------------
                               William B. Chiasson
                               Senior Vice President and Chief Financial Officer



                                       27

</TEXT>
</DOCUMENT>
