<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 29, 1994
OR
/ / 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 1-8344
THE LIMITED, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 31-1029810
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
THREE LIMITED PARKWAY, P.O. BOX 16000, COLUMBUS, OH 43230
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 479-7000
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.
Class Outstanding at December 1, 1994
----- -------------------------------
Common Stock, $.50 Par Value Shares 357,680,909
<PAGE> 2
THE LIMITED, INC.
TABLE OF CONTENTS
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income
Thirteen and Thirty-nine Weeks Ended
October 29, 1994 and October 30, 1993 . . . . . . . . . . . 3
Consolidated Balance Sheets
October 29, 1994 and January 29, 1994 . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
Thirty-nine Weeks Ended
October 29, 1994 and October 30, 1993 . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition . . . . . . . 10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 17
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
---------------------------- -----------------------------
October 29, October 30, October 29, October 30,
1994 1993 1994 1993
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $1,715,176 $1,616,667 $4,782,196 $4,824,283
Cost of Goods Sold, Occupancy
and Buying Costs 1,219,881 1,169,619 3,499,304 3,568,798
---------- ---------- ---------- ----------
GROSS INCOME 495,295 447,048 1,282,892 1,255,485
General, Administrative and Store
Operating Expenses (329,753) (298,159) (923,914) (894,813)
Special and Nonrecurring Items, net -- 2,617 -- 2,617
---------- ---------- ---------- ----------
OPERATING INCOME 165,542 151,506 358,978 363,289
Interest Expense (16,425) (16,378) (45,845) (47,715)
Other Income, net 1,373 1,087 5,465 4,098
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 150,490 136,215 318,598 319,672
Provision for Income Taxes 60,000 54,000 127,000 125,000
---------- ---------- ---------- ----------
NET INCOME $ 90,490 $ 82,215 $ 191,598 $ 194,672
========== ========== ========== ==========
NET INCOME PER SHARE $.25 $.23 $.53 $.53
========== ========== ========== ==========
DIVIDENDS PER SHARE $.09 $.09 $.27 $.27
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING 358,881 363,843 358,693 363,929
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands)
<TABLE>
<CAPTION>
October 29, January 29,
1994 1994
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and Equivalents $ 58,544 $ 320,558
Accounts Receivable 1,219,372 1,056,911
Inventories 1,092,194 733,700
Other 149,742 109,456
---------- ----------
TOTAL CURRENT ASSETS 2,519,852 2,220,625
PROPERTY AND EQUIPMENT, NET 1,715,373 1,666,588
OTHER ASSETS 320,533 247,892
---------- ----------
TOTAL ASSETS $4,555,758 $4,135,105
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 380,822 $ 250,363
Accrued Expenses 376,022 347,892
Commercial Paper and Certificates of Deposit 244,322 15,700
Income Taxes 28,671 93,489
---------- ----------
TOTAL CURRENT LIABILITIES 1,029,837 707,444
LONG-TERM DEBT 650,000 650,000
DEFERRED INCOME TAXES 279,432 275,101
OTHER LONG-TERM LIABILITIES 60,105 61,267
SHAREHOLDERS' EQUITY:
Common Stock 189,727 189,727
Paid-in Capital 131,795 128,906
Retained Earnings 2,491,964 2,397,112
---------- ----------
2,813,486 2,715,745
Less Treasury Stock, at average cost (277,102) (274,452)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 2,536,384 2,441,293
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $4,555,758 $4,135,105
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirty-nine Weeks Ended
-----------------------------
October 29, October 30,
1994 1993
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $191,598 $194,672
Impact of other operating activities on cash flows:
Depreciation and amortization 197,364 202,888
Special and nonrecurring items -- (2,617)
Changes in assets and liabilities:
Accounts receivable (162,461) (165,320)
Inventories (358,494) (198,516)
Accounts payable and accrued expenses 158,589 186,090
Income taxes (64,818) 5,369
Other assets and liabilities (97,089) (97,815)
-------- --------
NET CASH (USED FOR) PROVIDED FROM OPERATING ACTIVITIES (135,311) 124,751
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (261,468) (244,883)
Proceeds from sale of business -- 285,000
Tax effect of gain on sale of business -- (60,000)
-------- --------
CASH USED FOR INVESTING ACTIVITIES (261,468) (19,883)
-------- --------
FINANCING ACTIVITIES:
Net proceeds (repayments) of commercial paper
borrowings and certificates of deposit 228,622 (131,339)
Proceeds from issuance of unsecured notes -- 250,000
Dividends paid (96,746) (97,968)
Purchase of Treasury Stock (9,514) --
Stock options and other 12,403 5,131
-------- --------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 134,765 25,824
-------- --------
NET (DECREASE) INCREASE IN CASH AND
EQUIVALENTS (262,014) 130,692
Cash and equivalents, beginning of year 320,558 41,235
-------- --------
CASH AND EQUIVALENTS, END OF PERIOD $ 58,544 $171,927
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
THE LIMITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of The
Limited, Inc. (the "Company") and all significant subsidiaries which
are more than 50 percent owned and controlled. All significant
intercompany balances and transactions have been eliminated in
consolidation.
Investments in other entities (including joint ventures) which are
more than 20 percent owned are accounted for on the equity method.
The consolidated financial statements as of and for the periods ended
October 29, 1994 and October 30, 1993 are unaudited and are presented
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, the consolidated financial statements should
be read in conjunction with the financial statement disclosures
contained in the Company's 1993 Annual Report. In the opinion of
management, the accompanying consolidated financial statements reflect
all adjustments (which are of a normal recurring nature) necessary to
present fairly the financial position and results of operations and
cash flows for the interim periods, but are not necessarily indicative
of the results of operations for a full fiscal year.
The consolidated financial statements as of October 29, 1994 and for
the thirteen and thirty-nine week periods ended October 29, 1994 and
October 30, 1993 included herein have been reviewed by the independent
public accounting firm of Coopers & Lybrand and the report of such
firm follows the notes to consolidated financial statements.
2. INVENTORIES
The fiscal year of the Company and its subsidiaries is comprised of
two principal selling seasons: Spring (the first and second quarters)
and Fall (the third and fourth quarters). Valuation of finished goods
inventories is based principally upon the lower of average cost or
market determined on a first-in, first-out basis utilizing the retail
method. Inventory valuation at the end of the first and third
quarters reflects adjustments for inventory markdowns and shrinkage
estimates for the total selling season.
3. INCOME TAXES
The provision for income taxes is based on the current estimate of the
annual effective tax rate. Income taxes paid during the thirty-nine
weeks ended October 29, 1994 and October 30, 1993 approximated $177.5
million and $174.1 million.
The Internal Revenue Service has assessed the Company for additional
taxes and interest for 1989 and 1990. The assessment was based
primarily on the treatment of transactions involving the Company's
foreign operations and construction allowances. The Company strongly
disagrees with the assessment and is vigorously contesting the matter.
Management believes resolution of this matter will not have a material
adverse effect on the Company's results of operations or financial
condition.
6
<PAGE> 7
4. FINANCING ARRANGEMENTS
Long-term debt consisted of ($000):
<TABLE>
<CAPTION>
October 29, January 29,
1994 1994
----------- -----------
<S> <C> <C>
7 1/2% Debentures due March, 2023 $250,000 $250,000
7.80% Notes due May, 2002 150,000 150,000
9 1/8% Notes due February, 2001 150,000 150,000
8 7/8% Notes due August, 1999 100,000 100,000
-------- --------
$650,000 $650,000
======== ========
</TABLE>
The Company maintains two revolving credit agreements (the
"Agreements") totaling $840 million. One Agreement provides the
Company available borrowings of up to $490 million. The other
Agreement provides World Financial Network National Bank, a
wholly-owned consolidated subsidiary, available borrowings of up to
$350 million. Borrowings outstanding under the Agreements are due
December 4, 1999. However, the revolving terms of each of the
Agreements may be extended an additional two years upon notification
by the Company at least 60 days prior to December 4, 1996, subject to
the approval of the lending banks. Both Agreements have similar
borrowing options, including interest rates which are based on either
the lender's "Base Rate", as defined, LIBOR, CD based options or at a
rate submitted under a bidding process. Aggregate commitment and
facility fees for the Agreements approximate 0.11% of the total
commitment. The Agreements place restrictions on the amount of the
Company's working capital, debt and net worth. No amounts were
outstanding under the Agreements at October 29, 1994.
The Agreements support the Company's commercial paper program which
funds working capital and other general corporate requirements. The
Company had $225 million of commercial paper outstanding at October
29, 1994, classified as current based on its maturity.
Under the Company's shelf registration statement, up to $250 million
of debt securities and warrants to purchase debt securities may be
issued.
All long-term debt outstanding at October 29, 1994 and January 29,
1994 is unsecured.
Interest paid during the thirty-nine weeks ended October 29, 1994 and
October 30, 1993 approximated $53.2 million and $40.0 million.
7
<PAGE> 8
5. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of ($000):
<TABLE>
<CAPTION>
October 29, January 29,
1994 1994
----------- -----------
<S> <C> <C>
Property and equipment, at cost $2,785,274 $2,638,197
Accumulated depreciation and amortization (1,069,901) (971,609)
---------- ----------
Property and equipment, net $1,715,373 $1,666,588
========== ==========
</TABLE>
6. SPECIAL AND NONRECURRING ITEMS
During the third quarter of 1993, the Company approved a plan which
includes the following components: The sale of a 60% interest in its
Brylane mail order business; the acceleration of the store remodeling,
downsizing and closing program at the Limited Stores and Lerner
divisions; and the refocusing of the merchandising strategy at its
Henri Bendel division. The net pre-tax gain from these special and
nonrecurring items was $2.6 million.
The remodeling, downsizing and closing program includes approximately
360 Limited and Lerner stores and is expected to be completed by the
end of 1995. The Company had closed approximately 90 of these stores
and remodeled approximately 115 of these stores as of October 29, 1994.
The net impact of the plan is anticipated to be immaterial to future
operations.
8
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Audit Committee of
The Board of Directors of
The Limited, Inc.
We have reviewed the condensed consolidated balance sheet of The Limited, Inc.
and Subsidiaries at October 29, 1994, and the related condensed consolidated
statements of income and cash flows for the thirteen-week and thirty-nine-week
periods ended October 29, 1994 and October 30, 1993. These finnacial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in acordance with generally accepted auditing
standards, the consolidated balance sheet as of January 29, 1994, and the
related consolidated statements of income, shareholders' equity, and cash flows
for the year then ended (not presented herein); and in our report dated
February 14, 1994 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of January 29, 1994, is
fairly stated, in all material aspects, in relation to the consolidated balance
sheet from which it has been derived.
COOPERS & LYBRAND LLP
Columbus, Ohio
December 12, 1994
9
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
During the third quarter of 1994, net sales increased 6% to $1.715 billion
compared to $1.617 billion a year ago. Net income for the quarter of $90.5
million increased 10% from last year's $82.2 million and earnings per share
reached a record $.25 for the quarter compared to $.23 in 1993.
Divisional highlights include the following:
Express delivered low single digit improvement in comparable store
sales at the end of the quarter, representing an increase and change
in trend, and merchandising margins were up compared to last year.
Lane Bryant achieved high single digit comparable store sales gains.
Although Limited Stores and Lerner experienced negative comparable
store sales, merchandising margins were up compared to last year.
Victoria's Secret Stores significantly increased sales and produced
their highest ever third quarter operating income.
Victoria's Secret Catalogue increased sales significantly over 1993's
third quarter, and began operations at their second telephone sales
center.
Abercrombie & Fitch achieved strong comparable store sales gains along
with strong merchandise margins.
Structure delivered another solid quarter in terms of sales, and
produced an over 20% increase in operating income.
Bath & Body Works delivered comparable store sales increases of almost
40%, and operating margins continued at record levels.
Limited Too generated significant increases in comparable store sales
and operating income.
Net sales for the thirty-nine weeks ended October 29, 1994 of $4.782 billion
increased 4% from sales of $4.582 billion for the same period last year
(excluding Brylane sales). Operating income decreased 1% to $359.0 million,
while net income decreased 2% to $191.6 million. Earnings per share for the
thirty-nine weeks ended October 29, 1994 remained flat at $.53 per share
compared to the same period last year.
10
<PAGE> 11
Financial Summary
The following summarized financial data compares the thirteen and thirty-nine
week periods ended October 29, 1994 to the comparable periods for 1993:
<TABLE>
<CAPTION>
Third Quarter Year-to-Date
------------------- ----------------------
Change Change
From From
Prior Prior
1994 1993 Period 1994 1993 Period
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Retail Sales (millions) $1,594 $1,531 4% $ 4,398 $ 4,288 3%
Catalogue Sales (millions) 121 86 41% 384 536 (28%)
------ ------ ----- ------- ------- -----
Total Net Sales (millions) $1,715 $1,617 6% $ 4,782 $ 4,824 (1%)
====== ====== ===== ======= ======= =====
Increase (Decrease) in
Comparable Store Sales (2%) 1% (3%) 1%
Retail Sales Increase
Attributable to New and 6% 6% 6% 8%
Remodeled Stores
Retail Sales per Average
Selling Square Foot $63.47 $64.24 (1%) $176.53 $182.24 (3%)
Retail Sales per Average
Store (thousands) $335 $337 (1%) $931 $950 (2%)
Average Store Size at End
of Quarter (square feet) 5,265 5,255 0.2%
Number of Stores:
Beginning of Period 4,696 4,481 5% 4,623 4,425 4%
Opened 141 137 262 253
Closed (12) (13) (60) (73)
------ ------ ----- ------- ------- -----
End of Period 4,825 4,605 5% 4,825 4,605 5%
====== ====== ===== ======= ======= =====
</TABLE>
11
<PAGE> 12
Net Sales
Retail sales for the third quarter of 1994 increased 4% from the third quarter
of 1993 primarily due to the increased sales productivity of the non-women's
apparel businesses (lingerie, men's, kids and personal care), which had
comparable store sales increases of 10%, combined with a 6% increase in sales
attributable to new and remodeled stores. These increases were partially
offset by lower sales in the women's apparel divisions, which had comparable
store sales decreases of 6%.
The year-to-date 1994 retail sales increase of 3% is a result of a 13% increase
in comparable store sales at the non-women's apparel businesses combined with a
6% increase in sales attributable to new and remodeled stores. Women's apparel
comparable store sales for the year-to-date period declined 9%.
Catalogue sales were 41% higher in the third quarter of 1994 compared to the
third quarter of 1993, due to a significant increase in the number of books
mailed and a slight increase in the response rate.
Catalogue sales decreased 28% for the first three quarters of 1994, reflecting
the absence of Brylane Catalogue sales since the beginning of the third quarter
of 1993. Had last year catalogue sales excluded Brylane, catalogue sales for
the first three quarters of 1994 would have increased 31%, due to a significant
increase in the number of books mailed and a slight increase in the response
rate.
<TABLE>
<CAPTION>
# of Stores Selling Sq. Ft. (000's)
------------------------------------- ------------------------------------
Change Change
From From
October October Prior October October Prior
29, 1994 30, 1993 Period 29, 1994 30, 1993 Period
-------- -------- ------ -------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Express 703 664 39 4,219 3,793 426
Lerner 861 901 (40) 6,687 6,935 (248)
Limited Stores 730 749 (19) 4,447 4,455 (8)
Lane Bryant 818 817 1 3,877 3,846 31
Henri Bendel 4 4 0 93 93 0
Victoria's Secret Stores 594 577 17 2,531 2,288 243
Cacique 115 101 14 344 291 53
Structure 441 377 64 1,636 1,330 306
Abercrombie & Fitch 61 45 16 499 375 124
Bath & Body Works 286 179 107 424 221 203
Penhaligon's 6 6 0 3 3 0
Limited Too 206 185 21 646 568 78
----- ----- ---- ----- ------ -----
Total Stores and
Selling Square Feet 4,825 4,605 220 25,406 24,198 1,208
===== ===== ==== ====== ====== =====
</TABLE>
12
<PAGE> 13
Gross Income
Gross income increased as a percentage of sales to 28.9% for the third quarter
1994 from 27.7% for the same period in 1993. Merchandise margins, expressed as
a percentage of sales, increased 2.5%, as the Company continued to be less
price promotional than a year earlier. However, buying and occupancy costs,
which increased 1.3% as a percentage of sales, partially offset the merchandise
margin increase, primarily due to the lower sales productivity associated with
the 6% decrease in the women's apparel comparable store sales.
The 1994 year-to-date gross income rate increased .8% to 26.8% as compared to
1993. Merchandise margins, expressed as a percentage of sales, increased 2.4%
due to the Company's less promotional pricing strategy, partially offset by an
increase in buying and occupancy costs resulting from the 9% decrease in the
women's apparel comparable store sales.
General, Administrative and Store Operating Expenses
General, administrative and store operating expenses increased as a percentage
of sales to 19.2% in the third quarter of 1994 from 18.4% for the same period
in 1993. Sales productivity which is initially lower in new and remodeled
stores was also lower in existing stores. The Company continues to maintain
its high level of customer service, particularly at its women's apparel
businesses even though comparable store sales were down 6%.
Year-to-date general, administrative and store operating expenses increased as
a percentage of sales to 19.3% in 1994 compared to 18.5% in 1993. This
increase was due to lower sales productivity at both existing stores and new,
remodeled and expanded stores. The Company expects to continue its policy of
maintaining a high level of customer service.
Operating Income
Year-to-date operating income, as a percentage of sales, was 7.5% in both 1994
and 1993. The Company's higher gross income was offset by higher general,
administrative and store operating expenses.
As discussed more fully in Note 6 to the financial statements, operating income
during the third quarter of 1993 included a gain of $2.617 million related to
the Company's sale of a 60% interest in its Brylane mail order business, the
acceleration of the store remodeling, downsizing and closing program at the
Limited Stores and Lerner divisions, and the refocusing of the merchandising
strategy at its Henri Bendel division.
13
<PAGE> 14
Interest Expense
<TABLE>
<CAPTION>
Third Quarter Year-to-Date
---------------------- ----------------------
1994 1993 1994 1993
------ ------ ------ ------
<S> <C> <C> <C> <C>
Average Borrowings $783.6 $813.2 $714.4 $813.9
(in millions)
Average Effective Interest Rate 8.38% 8.06% 8.56% 7.82%
</TABLE>
Interest expense increased slightly in the third quarter of 1994 as compared to
the same period in 1993 while decreasing on a year- to-date basis, principally
as a result of lower borrowing levels. Higher interest rates increased
interest costs approximately $0.6 million and $4.0 million during the third
quarter and year-to-date periods. The effective interest rate increase was
offset by lower borrowing levels during the third quarter and year-to-date
periods which resulted in lower interest costs of approximately $0.6 million
and $5.8 million, respectively.
14
<PAGE> 15
FINANCIAL CONDITION
Liquidity and Capital Resources
Cash provided from operating activities, commercial paper backed by funds
available under committed long-term credit agreements and the Company's capital
structure continue to provide the resources to support operations, including
projected growth, seasonal requirements and capital expenditures. A summary of
the Company's working capital position and capitalization follows ($000):
<TABLE>
<CAPTION>
October 29, January 29,
1994 1994
----------- -----------
<S> <C> <C>
Working Capital $1,490,015 $1,513,181
========== ==========
Capitalization:
Long-term debt $ 650,000 $ 650,000
Deferred income taxes 279,432 275,101
Shareholders' equity 2,536,384 2,441,293
---------- ----------
Total Capitalization $3,465,816 $3,366,394
========== ==========
Additional amounts available under committed
long-term credit agreements $ 615,000 $ 840,000
========== ==========
</TABLE>
Net cash used for operating activities totaled $135.3 million for the
thirty-nine weeks ended October 29, 1994 versus $124.8 million provided in the
same period of 1993. Cash requirements for inventories were primarily due to
the net addition of approximately 1.2 million selling square feet which was
somewhat offset by conservatively planned inventory levels at our women's
apparel businesses. Cash requirements for other assets and liabilities related
primarily to a deposit made to the Internal Revenue Service in connection with
an assessment for additional taxes and interest for 1989 and 1990 which is
described in Note 3 to the financial statements.
Financing activities included $9.5 million of common stock representing
approximately 521,000 shares that the Company repurchased in the third quarter.
15
<PAGE> 16
Capital Expenditures
Capital expenditures totaled $261.5 million during the thirty-nine weeks ended
October 29, 1994, compared to $244.9 million for the comparable period of 1993.
The Company anticipates spending approximately $300 - $325 million for capital
expenditures in 1994 of which approximately $200 - $250 million will be for
new stores, the remodeling of existing stores, and fixturing and related
improvements for the retail businesses. The Company anticipates spending
approximately $10 million for a 24-hour telephone catalogue sales center in
Kettering, Ohio to expand Victoria's Secret Catalogue operations, of which $9.2
million was spent in the third quarter.
Through the end of the third quarter, a total of 1.0 million net selling square
feet was added. Based on the current store design and construction schedules,
the Company expects to add approximately .4 million net additional selling
square feet over the balance of the year.
The Company presently anticipates that substantially all 1994 capital
expenditures will be funded by net cash provided from operating activities. In
addition, the Company presently has available $615 million under committed,
unsecured long-term credit agreements as well as the ability to offer up to
$250 million of additional debt securities and warrants to purchase debt
securities under its shelf registration statement authorization.
16
<PAGE> 17
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
4. Instruments Defining the Rights of Security Holders.
4.1. Copy of the form of Global Security representing the
Company's 7 1/2% Debentures due 2023, incorporated by
reference to Exhibit 1 to the Company's Current
Report on Form 8-K dated March 4, 1993
4.2. $900,000,000 Credit Agreement dated as of August 30,
1990 (the "Credit Agreement") among the Company,
Morgan Guaranty Trust Company of New York and certain
other banks (collectively, the "Banks"), incorporated
by reference to Exhibit 4.7 to the Company's Quarterly
Report on Form 10-Q for the quarter ended August 4,
1990, as amended by Amendment No. 1 dated as of
December 4, 1992 (reducing the aggregate amount to
$560,000,000), incorporated by reference to Exhibit
4.8 to the Company's Quarterly Report on Form 10-Q for
the quarter ended October 31, 1992.
4.3. $280,000,000 Credit Agreement dated as of December 4,
1992 (the "WFNNB Credit Agreement") among the World
Financial Network National Bank, the Company, the
Banks and Morgan Guaranty Trust Company of New York,
incorporated by reference to Exhibit 4.9 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1992.
4.4. Conformed copy of the Indenture dated as of March 15,
1988 between the Company and The Bank of New York,
incorporated by reference to Exhibit 4.1(a) to the
Company's Current Report on Form 8-K dated March 21,
1989.
4.5. Copy of the form of Global Security representing the
Company's 8 7/8% Notes due August 15, 1999
incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated August 14,
1989.
4.6. Copy of the form of Global Security representing the
Company's 9 1/8% Notes due February 1, 2001
incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated February 6,
1991.
4.7. Proposed form of Debt Warrant Agreement for Warrants
attached to Debt Securities, with proposed form
of Debt Warrant Certificate incorporated by reference
to Exhibit 4.2 to the Company's Registration Statement
on Form S-3 (File no. 33-53366) originally filed with
the Securities and Exchange Commission (the
"Commission") on October 16, 1992 as amended by
Amendment No. 1 thereto, filed with the Commission
on February 23, 1993 (the "1993 Form S-3").
4.8. Proposed form of Debt Warrant Agreement for Warrants
not attached to Debt Securities, with proposed form
of Debt Warrant Certificate
17
<PAGE> 18
incorporated by reference
to Exhibit 4.3 to the 1993 Form S-3.
4.9. Amendment No. 2 dated as of April 28, 1994 to the
Credit Agreement among the Company, Morgan Guaranty
Trust Company of New York and the Banks, incorporated
by reference to Exhibit 4.9 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
April 30, 1994.
4.10. Amendment No. 1 dated as of April 28, 1994 to the
WFNNB Credit Agreement among the Company, Morgan
Guaranty Trust Company of New York and the Banks,
incorporated by reference to Exhibit 4.10 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1994.
11. Statement re: Computation of Per Share Earnings.
12. Statement re: Computation of Ratio of Earnings to Fixed Charges.
15. Letter re: Unaudited Interim Financial Information to Securities
and Exchange Commission re: Incorporation of Accountants' Report.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None.
18
<PAGE> 19
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.
THE LIMITED, INC.
(Registrant)
By /s/ Kenneth B. Gilman
-----------------------
Kenneth B. Gilman,
Vice Chairman and Chief
Financial Officer*
Date: December 12, 1994
_____________
* Mr. Gilman is the principal financial officer and has been duly authorized to
sign on behalf of the Registrant.
19
<PAGE> 20
EXHIBIT INDEX
Exhibit No. Document
- ----------- ------------------------------------------------------
11 Statement re: Computation of
Per Share Earnings.
12 Statement re: Ratio of
Earnings to Fixed Charges.
15 Letter re: Unaudited Interim Financial Information re:
Incorporation of Report of Independent Accountants
27 Financial Data Schedule
20
<PAGE> 1
EXHIBIT 11
THE LIMITED, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------------------
October 29, October 30,
1994 1993
----------- -----------
<S> <C> <C>
Net income $ 90,490 $ 82,215
======== ========
Common shares outstanding:
Weighted average 379,454 379,454
Dilutive effect of stock options 729 864
Weighted average treasury shares (21,302) (16,475)
-------- --------
Weighted average used to calculate
net income per share 358,881 363,843
======== ========
Net income per share $.25 $.23
======== ========
</TABLE>
<TABLE>
<CAPTION>
Thirty-nine Weeks Ended
-----------------------------------
October 29, October 30,
1994 1993
----------- -----------
<S> <C> <C>
Net income $191,598 $194,672
======== ========
Common shares outstanding:
Weighted average 379,454 379,454
Dilutive effect of stock options 651 1,070
Weighted average treasury shares (21,412) (16,595)
-------- --------
Weighted average used to calculate
net income per share 358,693 363,929
======== ========
Net income per share $.53 $.53
======== ========
</TABLE>
21
<PAGE> 1
EXHIBIT 12
THE LIMITED, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Thousands except ratio amounts)
<TABLE>
<CAPTION>
Thirty-nine Weeks Ended
------------------------------------
October 29, October 30,
1994 1993
----------- -----------
<S> <C> <C>
Adjusted Earnings
Income before income taxes $318,598 $319,672
Portion of minimum rent ($463,709 in 1994
and $435,217 in 1993) representative
of interest 154,570 145,072
Interest on indebtedness 45,845 47,715
-------- --------
Total Earnings as Adjusted $519,013 $512,459
======== ========
Fixed Charges
Portion of minimum rent representative
of interest $154,570 $145,072
Interest on indebtedness 45,845 47,715
-------- --------
Total Fixed Charges $200,415 $192,787
======== ========
Ratio of Earnings to Fixed Charges 2.59x 2.66x
======== ========
</TABLE>
22
<PAGE> 1
EXHIBIT 15
Securities and Exhchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
We are aware that our report dated December 12, 1994, on our review of the
interim consolidated financial information of The Limited, Inc. and
Subsidiaries for the thirteen-week and thirty-nine-week periods ended October
29, 1994 and included in this Form 10-Q is incorporated by reference in the
Company's registration statements on Form S-8, Registration Nos. 33-18533,
33-25005, 2-92277, 33-24829, 33-24507, 33-24828, 2-95788, 2-88919, 33-24518,
33-6965, 33-14049, 33-22844, 33-44041, 33-49871, and the registration
statements on Form S-3, Registration Nos. 33-20788, 33-31540, 33-43832, and
33-53366. Pursuant to Rule 436(c) under the Securities Act of 1933, this
report should not be considered a part of the registration statement prepared
or certified by us within the meaning of Sections 7 and 11 of that Act.
COOPERS & LYBRAND LLP
Columbus, Ohio
December 12, 1994
23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements (unaudited) of The Limited, Inc. and
Subsidiaries for the quarter ended October 29, 1994 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-29-1994
<PERIOD-START> JAN-30-1994
<PERIOD-END> OCT-29-1994
<CASH> 58,544
<SECURITIES> 0
<RECEIVABLES> 1,259,403
<ALLOWANCES> 40,031
<INVENTORY> 1,092,194
<CURRENT-ASSETS> 2,519,852
<PP&E> 2,785,274
<DEPRECIATION> 1,069,901
<TOTAL-ASSETS> 4,555,758
<CURRENT-LIABILITIES> 1,029,837
<BONDS> 650,000
<COMMON> 189,727
0
0
<OTHER-SE> 2,346,657
<TOTAL-LIABILITY-AND-EQUITY> 4,555,758
<SALES> 4,782,196
<TOTAL-REVENUES> 4,782,196
<CGS> 3,499,304
<TOTAL-COSTS> 3,499,304
<OTHER-EXPENSES> 918,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,845
<INCOME-PRETAX> 318,598
<INCOME-TAX> 127,000
<INCOME-CONTINUING> 191,598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 191,598
<EPS-PRIMARY> .53
<EPS-DILUTED> 0
</TABLE>
