ANNUAL REPORT 2011 DEAR FELLOW SHAREHOLDERS, We focus on having a positive impact on three mega trends aff ecting people the world over - obesity, an aging population and under employment. The solutions we off er to these global trends with our products and business opportunity continue to diff erentiate our company. In 2011, thanks to the teamwork of our Herbalife independent distributors and employees, we had another outstanding year with record net sales growth of 26 percent to $3.5 billion, a 39 percent increase in diluted EPS, and record sales leader retention of 52 percent. We’ve now had seven consecutive quarters of double-digit growth in volume points and distributor engagement, as well as two consecutive years of record sales leader retention. While our fi nancial results, such as record sales, volume and cash fl ow, indicate the strength of our business, the underlying fundamentals in our business are equally exciting and support our confi dence and our belief in the future. Daily consumption business methods are continuing to help drive our business, making access to our products easier and enabling more Distributors to be successful than ever before in Herbalife history. In 2011, we strengthened our fl agship Formula 1 shake line with the introduction of our Prolessa™ Duo satiety and fat-burning F1 booster and the addition of several seasonal F1 fl avors. We launched Herbalife24, our performance nutrition line for the 24-hour athlete, further establishing Herbalife as a premier nutrition company and garnering testimonials from our Distributors and sponsored athletes about how the products are improving their performance. The reception of Herbalife24 was outstanding at our sponsored events, such as the Tour of California, Indy 500 and during our title sponsorship of the Herbalife World Football Challenge. From these events to MLS Cup champions LA Galaxy, to three-time FIFA Ballon d’Or recipient Leo Messi representing us, our brand was seen by more people than ever before. Through all our growth, we continued to help to improve our communities. We partnered with the Global Alliance for Improved Nutrition (GAIN) and DSM, one of our nutrient suppliers, to distribute 20 million micronutrient sachets to those in need in Ethiopia and Kenya. The Herbalife Family Foundation opened nine Casa Herbalife programs so your generosity is now helping children at 72 Casa Herbalife programs. In 2011, we reached, and exceeded, the aspirational goal set early in the company’s history by founder Mark Hughes. Our new aspirational goal is to achieve 10 billion volume points by 2020. We believe we can achieve it … because we are just getting started. Thank you for your continuing confi dence and support, MICHAEL O. JOHNSON Chairman and Chief Executive Offi cer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 ‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 1-32381 HERBALIFE LTD. (Exact Name of Registrant as Specified in Its Charter) Cayman Islands 98-0377871 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) P.O. Box 309GT (Zip Code) Ugland House, South Church Street Grand Cayman, Cayman Islands (Address of Principal Executive Offices) (213) 745-0500 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Common Shares, par value $0.001 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No Í 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 Í No ‘ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes Í No ‘ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229,405 of this chap- ter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting com- pany” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Í Accelerated filer ‘ Non-accelerated filer ‘ Smaller reporting company ‘ (Do not check if a smaller reporting company) Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No Í There were 116,273,652 common shares outstanding as of February 15, 2012. The aggregate market value of the Regis- trant’s common shares held by non-affiliates was approximately $5,688 million as of June 30, 2011, based upon the last reported sales price on the New York Stock Exchange on that date of $57.64. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Definitive Proxy Statement to be filed with the Securities and Exchange Commission no later than 120 days after the end of the Registrant’s fiscal year ended December 31, 2011, are incorporated by reference in Part III of this Annual Report on Form 10-K. TABLE OF CONTENTS Page PART I Item 1. Business .................................................................. 4 Item 1a. Risk Factors ............................................................... 27 Item 1b. Unresolved Staff Comments ................................................... 45 Item 2. Properties ................................................................. 45 Item 3. Legal Proceedings ........................................................... 45 Item 4. Mine Safety Disclosure ...................................................... 45 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities ......................................................... 46 Item 6. Selected Financial Data ...................................................... 50 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ................................................................. 52 Item 7a. Quantitative and Qualitative Disclosures About Market Risk ......................... 81 Item 8. Financial Statements and Supplementary Data .................................... 85 Item 9. Changes In and Disagreements With Accountants On Accounting and Financial Disclosure ................................................................. 85 Item 9a. Controls and Procedures ...................................................... 85 Item 9b. Other Information ........................................................... 88 PART III Item 10. Directors, Executive Officers and Corporate Governance ............................ 88 Item 11. Executive Compensation ..................................................... 88 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ......................................................... 88 Item 13. Certain Relationships and Related Transactions, and Director Independence ............. 88 Item 14. Principal Accountant Fees and Services .......................................... 88 PART IV Item 15. Exhibits and Financial Statement Schedules ...................................... 89 Signatures ............................................................................. 136 2 FORWARD-LOOKING STATEMENTS This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state secu- rities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words “may,” “will,” “estimate,”