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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 to
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 April 30, 1994
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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
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THE LIMITED, INC.
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(Exact name of registrant as specified in its charter)
Delaware 31-1029810
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Three Limited Parkway, P.O. Box 16000, Columbus, OH 43230
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 479-7000
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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
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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 May 27, 1994
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Common Stock, $.50 Par Value 358,027,713 Shares
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Amending the due date of the Agreements as defined in footnote 4 from
December 4, 1996 to December 4, 1999.
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THE LIMITED, INC.
TABLE OF CONTENTS
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Page No.
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Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income
Thirteen Weeks Ended
April 30, 1994 and May 1, 1993............................... 3
Consolidated Balance Sheets
April 30, 1994 and January 29, 1994.......................... 4
Consolidated Statements of Cash Flows
Thirteen Weeks Ended
April 30, 1994 and May 1, 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 4. Submission of Matters to a Vote of Security
Holders.................................................. 15
Item 6. Exhibits and Reports on Form 8-K.......................... 15
</TABLE>
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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
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April 30, May 1,
1994 1993
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<S> <C> <C>
NET SALES $1,481,628 $1,518,561
Cost of Goods Sold, Occupancy and
Buying Costs 1,096,697 1,137,834
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GROSS INCOME 384,931 380,727
General, Administrative and Store
Operating Expenses 293,761 295,238
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OPERATING INCOME 91,170 85,489
Interest Expense (14,670) (14,988)
Other Income, net 2,776 1,724
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INCOME BEFORE INCOME TAXES 79,276 72,225
Provision for Income Taxes 32,000 28,000
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NET INCOME $ 47,276 $ 44,225
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NET INCOME PER SHARE $.13 $.12
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DIVIDENDS PER SHARE $.09 $.09
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WEIGHTED AVERAGE SHARES
OUTSTANDING 358,563 364,054
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands)
<TABLE>
<CAPTION>
April 30, January 29,
ASSETS 1994 1994
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(Unaudited)
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CURRENT ASSETS:
Cash and Equivalents $ 159,115 $ 320,558
Accounts Receivable 1,066,876 1,056,911
Inventories 803,437 733,700
Other 106,433 109,456
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TOTAL CURRENT ASSETS 2,135,861 2,220,625
PROPERTY AND EQUIPMENT, NET 1,668,066 1,666,588
OTHER ASSETS 245,739 247,892
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TOTAL ASSETS $4,049,666 $4,135,105
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LIABILITIES AND SHAREHOLDERS' EQUITY
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<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $ 235,376 $ 250,363
Accrued Expenses 333,755 347,892
Certificates of Deposit 17,100 15,700
Income Taxes 27,657 93,489
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TOTAL CURRENT LIABILITIES 613,888 707,444
LONG-TERM DEBT 650,000 650,000
DEFERRED INCOME TAXES 265,566 275,101
OTHER LONG-TERM LIABILITIES 60,990 61,267
SHAREHOLDERS' EQUITY:
Common Stock 189,727 189,727
Paid-in Capital 129,638 128,906
Retained Earnings 2,412,179 2,397,112
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2,731,544 2,715,745
Less Treasury Stock, at cost (272,322) (274,452)
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TOTAL SHAREHOLDERS' EQUITY 2,459,222 2,441,293
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $4,049,666 $4,135,105
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
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April 30, May 1,
1994 1993
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 47,276 $ 44,225
Impact of other operating activities on cash flows:
Depreciation and amortization 67,978 68,468
Changes in assets and liabilities:
Accounts receivable (9,965) (5,139)
Inventory (69,737) (70,304)
Accounts payable and accrued expenses (29,124) 23,313
Income taxes (65,832) (77,794)
Other assets and liabilities (5,987) (15,727)
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NET CASH USED FOR OPERATING ACTIVITIES (65,391) (32,958)
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CASH USED FOR INVESTING ACTIVITIES
Capital expenditures (68,105) (56,540)
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FINANCING ACTIVITIES:
Net proceeds (repayments) of commercial paper
borrowings and certificates of deposits 1,400 (110,509)
Proceeds from issuance of unsecured notes - 250,000
Dividends paid (32,209) (32,643)
Stock options and other 2,862 1,946
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NET CASH (USED FOR) PROVIDED BY FINANCING
ACTIVITIES (27,947) 108,794
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NET (DECREASE) INCREASE IN CASH AND
EQUIVALENTS (161,443) 19,296
Cash and equivalents, beginning of year 320,558 41,235
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CASH AND EQUIVALENTS, END OF PERIOD $ 159,115 $ 60,531
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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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 April
30, 1994 and May 1, 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 and for the thirteen week
periods ended April 30, 1994 and May 1, 1993 included herein have been
reviewed by the independent 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 first quarter of
1994 and 1993 approximated $98.2 million and $106.3 million.
The Internal Revenue Service has issued a notice of deficiency to the
Company for additional taxes and interest for 1989 and 1990. The IRS
notice was based primarily on the treatment of transactions involving the
Company's foreign operations and construction allowances. The Company
strongly disagrees with the IRS position and intends to vigorously
contest the matter. This matter will not have a material adverse effect
on the Company's results of operations or financial condition.
6
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4. FINANCING ARRANGEMENTS
Long-term debt consisted of ($000):
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<CAPTION>
April 30, January 29,
1994 1994
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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
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$650,000 $650,000
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</TABLE>
Effective April 28, 1994, the Company amended its 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 April 30, 1994.
The Agreements support the Company's commercial paper program which funds
working capital and other general corporate requirements. No commercial
paper was outstanding at April 30, 1994.
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 April 30, 1994 and January 29, 1994 is
unsecured.
Interest paid during the first quarter of 1994 and 1993 approximated $18.6
million and $10.8 million.
7
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5. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of ($000):
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<CAPTION>
April 30, January 29,
1994 1994
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<S> <C> <C>
Property and equipment, at cost $ 2,675,885 $2,638,197
Accumulated depreciation and amortization (1,007,819) (971,609)
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Property and equipment, net $ 1,668,066 $1,666,588
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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 the
Brylane mail order business; the acceleration of store remodeling,
downsizing and closing program at the Limited Stores and Lerner divisions;
and the refocusing of the merchandise strategy at the Henri Bendel
division.
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 80 of these stores and
remodeled approximately 60 of these stores as of April 30, 1994.
The net impact of the plan is anticipated to be immaterial to future
operations.
8
