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Merc was established by Javid Alavi in

1967. It all started out as a market stall on

Carnaby but quickly grew into a small shop

on Ganton St and finished up at number

10 Carnaby Street: The prime location in

which the store still stands today.

Originally influenced by and tailored

towards the mod culture, many of the

garments that were available then are still

sold today as part of our Heritage range.

Merc has since adapted and grown to reach

a wider clientele yet manages to retain a

unique and distinctive identity.

Javid remains the Chairman of the Merc

Group and still has a very active role in

the running of the company. Merc is now

recognized worldwide as a truly iconic

B r i t i s h b r and , s t eeped i n ove r 40

year s of heritage.

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Table of ContentsLetter From the President . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Selected Finacial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Analysis of Finacial Condition . . . . . . . . . . . . . . . . . . . . . . 16Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Financial Statements and Supplementary Data . . . . 71Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 124Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

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Javid AlaviPresident and Chief Executive Officer

Dear Customers, Employees,and Stakeholders,

Over the past few years, we’ve worked hard to move our business forward. One of our greatest priorities has been to reassert the creativity, boldness and leadership that has defined our company. The result has been a remarkable wave of innovation at Merc Clothing, including our move towards becoming a global brand-led organization, the launch of a new brand, the introduction of category changing jeans for women and efforts to minimize our environmental footprint.

We are pioneering in all sorts of ways. Whether it’s our approach to design and manufacturing, changing the way women think about fit, or leadership on social and environmental issues, we are thinking and acting in ways that we believe will shape the industry for years to come.

2011 PERFORMANCE

In 2011, we made significant progress moving toward sustainable long-term growth. Due to the hard work of our employees around the world, we finished the year strong, improving our profitability

and increasing revenues in all of our regions. Despite continued economic challenges around the globe, we grew our top- and bottom-line while investing in our business for future growth.

“It has been a critical year for us and for our customers. We are pioneering in all sorts of new ways. Whether it’s our approach to design and manufacturing, changing the way women think about fit, or leadership on social and environmental issues, we are thinking and acting in ways that we believe will shape the industry for years to come.”

REGIONAL PERFORMANCE

Americas

2011 was a year of positive change for our business in the Americas. Merc® London revenues increased as a result of the stores we acquired in 2010 and improved

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performance in our men’s and junior’s products. Our retail and wholesale business improved and net revenue for the year grew 8 percent.

Europe

Despite the challenging economic environment in Europe, we grew net revenue 6 percent over the prior year. Our growth was due to the expansion of our retail network, as well our progress in revitalizing the wholesale channel.

Asia Pacific

The Merc® London brand made solid gains in Asia Pacific, with particularly strong growth in India and China where we expanded our

brand-dedicated retail network. This helped offset declining sales in Japan. Full year net revenues for this region grew 7 percent over 2010.

BUILDING A GLOBAL BRAND - LED ORGANIZATION

In 2011, we began our transition to a global brandled organization. We’re still going through the process of reorganizing our

“The biggest challenge for any business today is how to tap into the phenomenal growth in China and India, as well as emerging markets worldwide. Instead of thinking “product” first, we began by thinking about the customer.”

Here are our 2011 financial highlights

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company to create a different approach to design and innovation. In essence, we’re shifting from a decentralized operating model to a global organization to drive long-term brand health, increase efficiencies, and help create a consistent consumer experience around the world.

STRATEGIES ACROSS OUR BRANDS

I’m particularly pleased with the progress we made in 2011 on our long-term strategies.

We built on our brands’ leadership in jeans & khakis.

With the investments we made in product and advertising, the global Merc® London brand grew in all three regions Harrington jackets are our birthright. We gave consumers a reason to wear it in their own, modern way. We delivered beautiful finishing and craftsmanship across a broad range of price points. Consumers embraced our better quality and improved aesthetics. In particular, the on-trend skinnier styles and modern finishes in men’s and juniors struck a chord. Our thought provoking advertising campaigns, such as “Mod vs Rockers,” generated tremendous buzz. We also re-engaged with female consumers around the globe with the rollout of our great-fitting, category changing Merc® London womans collection. After conducting extensive consumer research, we designed jeans to fit based on shape, not size. We initially launched Merc® London womans collection in our retail stores in the United States, as well as through wholesale and retail channels in Asia and Europe. The response has been tremendous: consumers appreciate this innovative approach to fit. In 2012, we added a fourth fit and we’re expanding the rollout to wholesale

customers in North America.

We worked to diversify and transform the wholesale business.

Wholesale remains the largest part of our business and we are focused on even more growth. With our wholesale customers, we invested in on-floor presentation for Merc® London men’s and junior lines throughout North America, Europe and Asia. In addition, we expanded our wholesale roster to include such new, desirable and market-leading customers. After its promising 2011 launch in the wholesale channels in Europe and Asia, we’re looking forward to expanding our Merc® London collection for women through our North American wholesale channel in 2012.

We accelerated growth through our dedicatedretail stores.

In 2010, we acquired more than 10 Merc® London Stores in the U.S. The outlet fleet is an important part of our business and the acquisition continued to drive positive results for us. In 2011, we invested in our outlet business by adding 28 new stores to the portfolio. We also expanded our mainline fleet. We remodeled our Merc® London Regent Street store in London and opened beautiful new Merc® London brand premium stores in New York’s Meatpacking District, Boston and in Malibu.

We drove productivity to fund investments in our business.

We invested in our infrastructure, including our IT systems. And we’re on track in 2012 to roll out our enterprise resource planning system, SAP , in Europe.

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SAP will allow us to optimize processes, improve profitability, adapt to change, and improve our communication. I’m also pleased to report that we completed thebremodel of our headquarters — on time and on budget. Having all of our San Francisco employees in one building not only fosters collaboration, but it also saves us rent. This was the first major update to our offices since we moved into Merc® London in 1967. The renovation focused on minimizing our environmental impact. Our goal is LEED certification for green building practices. LEED is a third-party certification program and the nationally accepted benchmark for the design, construction and operation of high-performance, green buildings.

2012 OUTLOOK

We recognize that the economic environment continues to be difficult, particularly in Europe. We’re also aware of rising cotton costs and the risk of other cost increases, such as labor and energy. Cotton is a major component of our product, and, like the rest of the industry, we face an unpredictable market. As such, we are keenly focused on the parts of the business and our supply chain

that we can control. We entered 2012 with strong momentum and will work to maintain it — as we execute on our plan and invest in our strategies for long-term growth. Levi Strauss & Co. has always been a pioneer in engaging employees, consumers, and communities around the world. We want to lead the charge and delight our consumers with new products and experiences. That’s what they’ve come to expect from us. But at Levi Strauss & Co., innovation has to operate at a deeper level. It has to be done in a way that connects our history, brand, and iconic product. These are enduring advantages worth preserving and building upon. I want to thank our Board of Directors for their support and counsel. Likewise, I want to thank our shareholders for their ongoing engagement in the growth and transformation of our business.

Sincerely,

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The following table sets forth our selected historical consolidated financial data which are derived from our consolidated financial statements for 2011, 2010, 2009, 2008 and 2007. The financial data set forth below should be read in conjunction with, and are qualified by reference to, “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements for 2011, 2010 and 2009 and the related notes to those audited consolidated financial statements, included elsewhere in this report.

Statements of Income data

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Statements of Cash Flow Data

2008

2008

2008

2009

2009

2009

2010

2010

2010

$2,776,875

$49,913

$2,989,381

$20,001

$3,135,249

$20,013

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Overview

We design and market Tshirts, Shirts and Knitwear, suits, jackets, footwear and related accessories for men and women under our Merc® brand around the world. We also license our trademarks in many countries throughout the world for a wide array of products, including accessories, pants, tops, footwear and other products.Our business is operated through three geographic regions: Americas, Europe and Asia Pacific. Our products are sold in 3 retail locations. We support our brandsthrough a global infrastructure, developing, sourcing and marketing our products around the world. We distribute our Merc® products primarily through subculture stores in the United States and primarily through specialty retailers outside of the United States. We also distribute our Merc® products through 3 company-operated stores located in 27 countries, which collectively generated approximately 15% of our net revenues in 2011, as compared to 11% in 2010. In addition, we distribute our Merc® products through their respective brand-dedicated online stores We distribute products under the Signature brand primarily through mass channel retailers in the United States and Canada and franchised stores in Asia Pacific.

Our 2011 Results

Our 2011 results reflect net revenue growth and the effects of the strategic investments we have made to support our long-term objectives.

• Net revenues: Our consolidated net revenues increased by 7% compared to 2010, an increase of 6% on a constant-currency basis, reflecting growth in each of our geographic regions. Increased net revenues driven by our acquisitions in 2010, growth in revenues associated with the Merc® brand, and the expansion of our dedicated store network globally were partially offset by declines in the wholesalechannel in certain markets.

• Operating income: Our operating income increased by $3 million and our operating margin declined as compared to 2010, as the benefits from a higher gross margin and the increase in our net revenues were offset by our continued strategic investments, including the expansion of our dedicated store network as well as advertising and promotion expenses to support the growth of our brands.

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• Cash flows: Cash flows provided by operating activities were $146 million in 2011 as compared to $389 million in 2010. This reflects our planned expenditures in our strategic business initiatives and inventory build in support of our growth. Lower operating cash flows were countered by a decline in required payments on the trademark tranche of our senior secured revolving credit facility and a significant decline in cash used for acquisitions as compared to 2010.

Results of Operations

2011 compared to 2010

The following table summarizes, for the periods indicated, the consolidated statements of income, the changes in these items from period to period and these items expressed as a percentage of net revenues:

2010

2010

2011

2011

November 29

November 29

November 28

November 28

Net sales

Gross profit

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Net revenues

The following table presents net revenues by reporting segment for the periods indicated and the changes in net revenues by reporting segment on both reported and constant-currency bases from period to period:

$2,549.1$2,357.7

8.1% 7.1%

November 292010

November 282011

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$1,105.2$1,042.1

6.1% 7.5%

November 292010

November 282011

Total net revenues increased on both reported and constant-currency bases for the year ended November 28, 2011, as compared to the prior year. Changes in foreign currency exchange rates affected our consolidated reported amounts favorably by approximately $53 million.

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