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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 28, 1995
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OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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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)
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Delaware 31-1029810
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Three Limited Parkway, P.O. Box 16000, Columbus, Ohio 43216
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (614) 479-7000
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Securities registered pursuant to Section 12(b) of the Act:
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<CAPTION>
Title of each class Name of each exchange on which registered
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Common Stock, $.50 Par Value The New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None.
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 and (2) has been subject to the filing requirements for
the past 90 days. Yes X No
-- --
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. X
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Aggregate market value of the registrant's Common Stock held by non-affiliates
of the registrant as of March 24, 1995: $6,965,448,984.
Number of shares outstanding of the registrant's Common Stock as of March
24,1995: 357,202,512.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the registrant's annual report to shareholders for the fiscal year
ended January 28, 1995 are incorporated by reference into Part I and Part II,
and portions of the registrant's proxy statement for the Annual Meeting of
Shareholders scheduled for May 15, 1995 are incorporated by reference into Part
III.
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PART I
ITEM 1. BUSINESS.
GENERAL.
The Limited, Inc., a Delaware corporation (the "Company"), is principally
engaged in the purchase, distribution and sale of women's apparel, lingerie,
men's apparel, personal care products and children's apparel. The Company
operates an integrated distribution system which supports the Company's retail
activities. These activities are conducted under various trade names through the
retail stores and catalogue divisions of the Company. Merchandise is targeted to
appeal to customers in specialty markets who have distinctive consumer
characteristics. The Company's women's apparel divisions offer regular and
special-sized fashion apparel at various price levels, including shirts,
blouses, sweaters, pants, skirts, coats and dresses. In addition, the Company
offers lingerie and accessories, men's apparel, fragrances, bed, bath, personal
care products, specialty gift items and children's apparel. The Company's
wholly-owned credit card bank, World Financial Network National Bank, provides
credit services to customers of the retail and catalogue divisions of the
Company, as well as other affiliates of the Company.
DESCRIPTION OF OPERATIONS.
General.
As of January 28, 1995, the Company operated the following divisions: (1) five
women's apparel retail divisions, (2) three lingerie divisions including two
retail divisions and one catalogue division (Victoria's Secret Catalogue), (3)
two men's apparel divisions, and (4) two personal care divisions and one
children's apparel division. The following chart reflects the retail divisions
and the number of stores in operation in each division at January 28, 1995 and
January 29, 1994.
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RETAIL DIVISIONS NUMBER OF STORES
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January 28, 1995 January 29, 1994
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Women's
Express 716 673
Lerner 846 877
Lane Bryant 812 817
The Limited 709 746
Henri Bendel 4 4
Lingerie
Victoria's Secret Stores 601 570
Cacique 114 108
Men's
Structure 466 394
Abercrombie & Fitch Co. 67 49
Personal Care & Children's
Bath & Body Works 318 194
Penhaligon's 4 7
The Limited Too 210 184
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Total 4,867 4,623
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The following table shows the changes in the number of retail stores operated by
the Company for the past five fiscal years:
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Fiscal Beginning
Year of Year Acquired Opened Closed End of Year
---- ------- -------- ------ ------ -----------
<S> <C> <C> <C> <C> <C>
1990 3,344 7 456 (47) 3,760
1991 3,760 - 484 (50) 4,194
1992 4,194 - 323 (92) 4,425
1993 4,425 - 322 (124) 4,623
1994 4,623 - 358 (114) 4,867
</TABLE>
The Company also operates Mast Industries, Inc., a contract manufacturer and
apparel importer, and Gryphon Development, Inc. ("Gryphon"). Gryphon creates,
develops and contract manufactures most of the bath and personal care products
sold by the Company.
During fiscal year 1994, the Company purchased merchandise from approximately
4,000 suppliers and factories located throughout the world. Approximately 55% of
the Company's merchandise is purchased in foreign markets and a portion of
merchandise purchased in the domestic market is manufactured overseas. Company
records, however, do not allocate between foreign and domestic sources for
merchandise purchased domestically. No more than 5% of goods purchased
originated from any single manufacturer.
Most of the merchandise and related materials for the Company's stores is
shipped to the Company's distribution centers in the Columbus, Ohio area, where
the merchandise is received and inspected. The Company uses common and contract
carriers to distribute merchandise and related materials to its stores. The
Company's divisions generally have independent distribution capabilities and no
division receives priority over any other division. There are no distribution
channels between the divisions.
The Company's policy is to maintain sufficient quantities of inventory on hand
in its retail stores and distribution centers so that it can offer customers a
full selection of current merchandise. The Company emphasizes rapid turnover and
takes markdowns where required to keep merchandise fresh and current with
fashion trends.
The Company views the retail apparel market as having two principal selling
seasons, Spring and Fall. As is generally the case in the apparel industry, the
Company experiences its peak sales activity during the Fall season. This
seasonal sales pattern results in increased inventory and accounts receivable
during the Fall and Christmas selling periods. During fiscal year 1994, the
highest inventory level approximated $1.226 billion at the November 1994
month-end and the lowest inventory level approximated $750 million at the June
1994 month-end.
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Merchandise sales are paid for in cash, personal check or by credit cards issued
by the Company's wholly-owned credit card bank, World Financial Network National
Bank ("WFNNB"), for customers of Express, Lerner New York, Lane Bryant, The
Limited, Henri Bendel, Victoria's Secret Stores, Victoria's Secret Catalogue,
Structure and Abercrombie & Fitch Co., as well as credit cards issued by third
party banks and other financial institutions. Further information related to
WFNNB's loan balances and allowance for uncollectible accounts is contained in
Note 3 of the Notes To Consolidated Financial Statements included in The
Limited, Inc. 1994 Annual Report to Shareholders, portions of which are annexed
hereto as Exhibit 13 (the "1994 Annual Report") and is incorporated herein by
reference.
The Company offers its customers a liberal return policy stated as "No Sale is
Ever Final." The Company believes that certain of its competitors offer similar
credit card and service policies.
The following is a brief description of each of the Company's operating
divisions, including their respective target markets.
Women's
EXPRESS - Express brings international women's sportswear and accessories with a
distinctive European point of view to fashion-forward women in a spirited
continental store environment.
LERNER NEW YORK - Lerner New York is a moderate-priced specialty retailer of
conventional women's sportswear, ready-to-wear and coats.
LANE BRYANT - Lane Bryant focuses on sportswear, ready-to-wear, coats and
intimate apparel for the fashion-conscious large size woman.
THE LIMITED - The Limited offers a full range of fashion-forward private label
sportswear, ready-to-wear and accessories for women.
HENRI BENDEL - Henri Bendel offers glamorous and sophisticated women's fashions
in an exclusive shopping environment.
Lingerie
VICTORIA'S SECRET STORES - Victoria's Secret Stores offers lingerie, beautiful
fragrances and romantic gifts in an atmosphere of "pure indulgence."
CACIQUE - Cacique offers fashion lingerie and gifts in an European shopping
environment.
VICTORIA'S SECRET CATALOGUE - Victoria's Secret Catalogue sells women's
lingerie, sportswear and ready-to-wear via catalogue.
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Men's
STRUCTURE - Structure offers a men's sportswear collection with a distinct
international flavor. The store environment mixes classic Palladian and modern
architectural styles to appeal to men with a good sense of fine design.
ABERCROMBIE & FITCH CO. - Abercrombie & Fitch provides spirited traditional
sportswear for young-thinking men and women.
Personal Care & Children's
BATH & BODY WORKS - Bath & Body Works provides personal care products for women
and men.
PENHALIGON'S - Penhaligon's designs, distributes, wholesales and retails a
variety of perfumes, toiletries, grooming accessories and antique silver gifts.
THE LIMITED TOO - The Limited Too offers fashionable casual sportswear for
girls.
Additional information about the Company's business, including its revenues and
profits for the last three years, plus selling square footage and other
information about each of the Company's operating divisions, is set forth under
the caption "Management's Discussion and Analysis" of the 1994 Annual Report and
is incorporated herein by reference.
COMPETITION.
The sale of apparel and personal care products through retail stores is a highly
competitive business with numerous competitors, including individual and chain
fashion specialty stores and department stores. Design, price and quality are
the principal competitive factors in retail store sales. The Company's catalogue
division competes with numerous national and regional catalogue merchandisers in
catalogue sales. Design, price, quality and catalogue presentation are the
principal competitive factors in catalogue sales.
The Company is unable to estimate the number of competitors or its relative
competitive position due to the large number of companies selling apparel and
personal care products at retail, both through stores and catalogues.
ASSOCIATE RELATIONS.
On January 28, 1995, the Company employed approximately 105,600 associates,
72,400 of whom were part-time. In addition, temporary associates are hired
during peak periods, such as the Christmas season.
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RECENT DEVELOPMENT.
On March 28, 1995, the Company announced that the Board of Directors has
authorized management to explore and refine the following plan over the next few
months:
- - First, the Company intends to create, out of its existing operations,
two new entities. The Company expects that each will be 85-90% owned by
The Limited, Inc., with the balance owned by public shareholders. These
entities would initially be grouped based on complementary operations
and opportunity. The first one is likely to contain the lingerie and
personal care businesses: Victoria's Secret Stores, Cacique, Victoria's
Secret Catalogue, Bath & Body Works, Penhaligon's and Gryphon. The
other new entity is likely to contain the major women's apparel
businesses: Express, Lerner New York, Lane Bryant and The Limited.
- - Second, to allow the Company's credit card bank, WFNNB, to supplement
its capabilities, enhance its operations and aggressively pursue new
opportunities for growth, the Company intends to seek strategic
financial and marketing partners. This may involve selling a majority
interest to these partners.
- - Third, the Company's intention is to distribute the cash made
available as a result of these transactions to its shareholders. The
size of this special distribution will depend upon the outcome of these
transactions.
- - Finally, new ventures and the Company's other businesses -- Structure,
Abercrombie & Fitch Co., The Limited Too, Henri Bendel and Mast
Industries -- would continue to be wholly owned by The Limited, Inc.
ITEM 2. PROPERTIES.
The Company's business is principally conducted from office, distribution and
shipping facilities located in the Columbus, Ohio area. Additional facilities
are located in New York City, Andover, Massachusetts and Kettering, Ohio.
The distribution and shipping facilities owned by the Company consist of seven
buildings located in Columbus, Ohio, comprising approximately 5.2 million square
feet. The operations of WFNNB are located in three leased facilities in the
Columbus area, which, in the aggregate, cover approximately 260,000 square feet.
Substantially all of the retail stores operated by the Company are located in
leased facilities, primarily in shopping centers throughout the continental
United States. The leases expire at various dates principally between 1995 and
2015 and generally do not have renewal options.
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Typically, when space is leased for a retail store in a shopping center, all
improvements, including interior walls, floors, ceilings, fixtures and
decorations, are supplied by the tenant. In certain cases, the landlord of the
property may provide a construction allowance to defray a portion of the cost of
improvements. The cost of improvements varies widely, depending on the size and
location of the store. Rental terms for new locations usually include a fixed
minimum rent plus a percentage of sales in excess of a specified amount. Certain
operating costs such as common area maintenance, utilities, insurance, and taxes
are typically paid by tenants.
ITEM 3. LEGAL PROCEEDINGS.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT.
Set forth below is certain information regarding the executive officers of the
Company as of January 28, 1995.
Leslie H. Wexner, 57, has been Chairman of the Board of Directors of the Company
for more than five years and its President and Chief Executive Officer since he
founded the Company in 1963.
Kenneth B. Gilman, 48, has been Vice Chairman and Chief Financial Officer of the
Company since June 1993. Mr. Gilman was the Executive Vice President and Chief
Financial Officer of the Company for more than five years prior thereto.
Michael Weiss, 53, has been Vice Chairman of the Company since June 1993. Mr.
Weiss was the Chief Executive Officer of the Company's Express division for more
than five years prior thereto.
Bella Wexner, over 65 years of age, has been the Secretary of the Company for
more than five years.
Martin Trust, 60, has been President of Mast Industries, Inc., a wholly-owned
subsidiary of the Company, for more than five years.
Arnold F. Kanarick, 54, has been Executive Vice President and Director of Human
Resources since October 1992. Mr. Kanarick was Vice President, Human Resources
of Analog Devices, a manufacturer of semiconductors, from 1985 to 1992.
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Wade H. Buff, 60, has been Vice President, Internal Audit of the Company for
more than five years.
Alfred S. Dietzel, 63, has been Vice President, Financial and Public Relations
of the Company for more than five years.
Barry Erdos, 50, has been Vice President and Corporate Controller of the Company
since August 1993. Mr. Erdos was Executive Vice President and Chief Financial
Officer of the Company's Henri Bendel division for more than five years prior
thereto.
Samuel P. Fried, 43, has been Vice President and General Counsel of the Company
since November 1991. Mr. Fried was Vice President and General Counsel of Exide
Corporation, a manufacturer of automotive and industrial batteries, from
February 1987 to October 1991.
William K. Gerber, 40, has been Vice President, Finance of the Company since
August 1993. Mr. Gerber was Vice President and Corporate Controller of the
Company for more than five years prior thereto.
Patrick C. Hectorne, 42, has been Treasurer of the Company since August 1993.
Mr. Hectorne was Assistant Treasurer of the Company for more than five years
prior thereto.
Charles W. Hinson, 58, has been President, Store Planning of the Company for
more than five years.
Jack Listanowsky, 47, has been Vice President and Chief Sourcing and Production
Officer of the Company since March 1995. Mr. Listanowsky was Executive Vice
President, Manufacturing and Operations for Liz Claiborne, Inc. for more than
five years prior thereto.
Timothy B. Lyons, 48, has been Vice President, Taxes of the Company for more
than five years.
Edward G. Razek, 46, has been Vice President and Director of Marketing of the
Company since November 1993. Mr. Razek was the Executive Vice President of
Marketing for Limited Stores for more than five years prior thereto.
Bruce A. Soll, 37, has been Vice President of the Company since October 1991.
Mr. Soll was Counselor/Director of Policy Planning for the U.S. Department of
Commerce from February 1989 to September 1991.
All of the above officers serve at the pleasure of the Board of Directors of the
Company.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information regarding markets in which the Company's common stock was traded
during fiscal years 1994 and 1993, approximate number of holders of common
stock, and quarterly cash dividend per share information of the Company's common
stock for the fiscal years 1994 and 1993 is set forth under the caption "Market
Price and Dividend Information" of the 1994 Annual Report and is incorporated
herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data is set forth under the caption "Financial Summary" of
the 1994 Annual Report and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's discussion and analysis of financial condition and results of
operations is set forth under the caption "Management's Discussion and Analysis"
of the 1994 Annual Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of the Company and subsidiaries, the Notes
to Consolidated Financial Statements and the Report of Independent Accountants
are set forth in the 1994 Annual Report and are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding directors of the Company is set forth under the captions
"ELECTION OF DIRECTORS - Nominees and Directors", "- Business Experience" and "-
Information Concerning the Board of Directors" on pages 1 through 4 of the
Company's proxy statement for the Annual Meeting of Shareholders to be held May
15, 1995 (the "Proxy Statement") and is incorporated herein by reference.
Information regarding executive officers is set forth herein under the caption
"SUPPLEMENTAL ITEM. EXECUTIVE OFFICERS OF THE REGISTRANT" in Part I. Information
regarding family relationships is set forth under the caption "PRINCIPAL HOLDERS
OF VOTING SECURITIES" on pages 13 and 14 of the Proxy Statement and is
incorporated herein by reference.
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ITEM 11. EXECUTIVE COMPENSATION.
Information regarding executive compensation is set forth under the caption
"EXECUTIVE COMPENSATION" on pages 6 through 8 of the Proxy Statement and is
incorporated herein by reference. Such incorporation by reference shall not be
deemed to specifically incorporate by reference the information referred to in
Item 402(a)(8) of Regulation S-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding the security ownership of certain beneficial owners and
management is set forth under the caption "ELECTION OF DIRECTORS - Security
Ownership of Directors and Management" on pages 4 and 5 of the Proxy Statement
and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding certain relationships and related transactions is set
forth under the caption "ELECTION OF DIRECTORS - Business Experience" on pages 2
and 3 of the Proxy Statement and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) List of Financial Statements.
The following consolidated financial statements of The Limited, Inc. and
subsidiaries and the related notes are filed as a part of this report pursuant
to ITEM 8:
Consolidated Statements of Income for the fiscal years ended January
28, 1995, January 29, 1994 and January 30, 1993.
Consolidated Balance Sheets as of January 28, 1995 and January 29,
1994.
Consolidated Statements of Shareholders' Equity for the fiscal years
ended January 28, 1995, January 29, 1994 and January 30, 1993.
Consolidated Statements of Cash Flows for the fiscal years ended
January 28, 1995, January 29, 1994 and January 30, 1993.
Notes to Consolidated Financial Statements.
Report of Independent Accountants.
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(a)(2) List of Financial Statement Schedules.
The following consolidated financial statement schedule of The Limited, Inc. and
subsidiaries is filed as part of this report pursuant to ITEM 14(d):
II. Valuation and Qualifying Accounts.
All other schedules are omitted because the required information is either
presented in the financial statements or notes thereto, or is not applicable,
required or material. Columns omitted from schedules have been omitted because
the information is not applicable.
(a)(3) List of Exhibits
3. Articles of Incorporation and Bylaws.
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3.1 Certificate of Incorporation of the Company
incorporated by reference to Exhibit 3.4 to the
Company's Annual Report on Form 10-K for the fiscal
year ended January 30, 1988.
3.2 Restated Bylaws of the Company incorporated by
reference to Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended
February 2, 1991 (the "1990 Form 10-K").
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4. Instruments Defining the Rights of Security Holders.
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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.
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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 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.
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10. Material Contracts.
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10.1 The Restated 1981 Stock Option Plan of The Limited,
Inc., incorporated by reference to Exhibit 28(b) to
the Company's Registration Statement on Form S-8
(File No. 33-18533) (the "Form S-8").
10.2 The 1987 Stock Option Plan of The Limited, Inc.,
incorporated by reference to Exhibit 28(a) to the
Form S-8.
10.3 Officers' Benefits Plan incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on Form
10-K for the fiscal year ended January 28, 1989 (the
"1988 Form 10-K").
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10.4 The Limited Deferred Compensation Plan incorporated
by reference to Exhibit 10.4 to the 1990 Form 10-K.
10.5 Form of Indemnification Agreement between the Company
and the directors and officers of the Company,
incorporated by reference to Exhibit A to the
Company's definitive proxy statement dated April 18,
1988 for the Company's 1988 Annual Meeting of
Shareholders held May 23, 1988.
10.6 Schedule of directors and officers who became parties
to Indemnification Agreements effective May 23, 1988,
incorporated by reference to Exhibit 19.1 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended October 29, 1988.
10.7 Supplemental schedule of officer who became a party
to an Indemnification Agreement effective May 23,
1988 incorporated by reference to Exhibit 10.7 to the
1988 Form 10-K.
10.8 Supplemental schedule of directors and officers who
became parties to Indemnification Agreements
incorporated by reference to Exhibit 19.1 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended August 1, 1992.
10.9 Supplemental schedule of officer who became party to
an Indemnification Agreement effective November 16,
1992 incorporated by reference to Exhibit 10.9 to the
Company's Annual Report on Form 10-K for the year
ended January 30, 1993.
10.10 Supplemental schedule of officer who became
party to an Indemnification Agreement effective June
3, 1993, incorporated by reference to the Company's
Quarterly Report on Form 10-Q for the quarter ended
July 31, 1993.
10.11 The 1993 Stock Option and Performance Incentive Plan
of the Company, incorporated by reference to Exhibit
4 to the Company's Registration Statement on Form S-8
(File No. 33-49871).
10.12 Supplemental schedule of director who became party to
an Indemnification Agreement effective January 27,
1995.
10.13 Supplemental schedule of officer who became party to
an Indemnification Agreement effective March 20,
1995.
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11 Statement re Computation of Per Share Earnings.
12 Statement re Computation of Ratio of Earnings to Fixed Charges.
13 Excerpts from the 1994 Annual Report to Shareholders.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Powers of Attorney.
99 Annual Report of The Limited, Inc. Savings and Retirement Plan.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the fourth quarter of
fiscal year 1994.
(c) Exhibits.
The exhibits to this report are listed in section (a)(3) of Item
14 above.
(d) Financial Statement Schedules
The financial statement schedule filed with this report is
listed in section (a)(2) of Item 14 above.
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SIGNATURES
Pursuant to the requirements of Section 13 or l5(d) 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: April 25, 1995
THE LIMITED, INC.
(registrant)
By /s/ KENNETH B. GILMAN
----------------------------
Kenneth B. Gilman,
Vice Chairman and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on April 25, 1995:
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<CAPTION>
Signature Title
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<S> <C>
/s/ LESLIE H. WEXNER* Chairman of the Board of Directors,
- ----------------------------- President and Chief Executive Officer
Leslie H. Wexner
/s/ KENNETH B. GILMAN Director, Vice Chairman,
- ----------------------------- Chief Financial Officer and
Kenneth B. Gilman Principal Accounting Officer
/s/ MICHAEL A. WEISS * Director and Vice Chairman
- -----------------------------
Michael A. Weiss
Director
- -----------------------------
Bella Wexner
/s/ MARTIN TRUST* Director
- -----------------------------
Martin Trust
/s/ EUGENE M. FREEDMAN* Director
- -----------------------------
Eugene M. Freedman
</TABLE>
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<S> <C>
/s/ E. GORDON GEE* Director
- -----------------------------
E. Gordon Gee
/s/ THOMAS G. HOPKINS* Director
- -----------------------------
Thomas G. Hopkins
/s/ DAVID T. KOLLAT* Director
- -----------------------------
David T. Kollat
/s/ CLAUDINE MALONE* Director
- -----------------------------
Claudine Malone
/s/ DONALD B. SHACKELFORD* Director
- -----------------------------
Donald B. Shackelford
/s/ ALLAN R. TESSLER* Director
- -----------------------------
Allan R. Tessler
/s/ RAYMOND ZIMMERMAN* Director
- -----------------------------
Raymond Zimmerman
</TABLE>
*The undersigned, by signing his name hereto, does hereby sign this report on
behalf of each of the above-indicated directors of the registrant pursuant to
powers of attorney executed by such directors.
By /s/ KENNETH B. GILMAN
---------------------------
Kenneth B. Gilman
Attorney-in-fact
16
<PAGE> 17
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
----------------
THE LIMITED, INC.
(exact name of registrant as specified in its charter)
----------------
FINANCIAL STATEMENT SCHEDULES
----------------
================================================================================
<PAGE> 18
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
The Limited, Inc.
We have audited the consolidated financial statements of The Limited, Inc. and
Subsidiaries as of January 28, 1995, and January 29, 1994, and for each of the
three fiscal years in the period ended January 28, 1995, which financial
statements are included on pages 66 through 77 of the 1994 Annual Report to
Shareholders of the Limited, Inc. and incorporated by reference herein. We have
also audited the financial statement schedule for each of the three fiscal
years in the period ended January 28, 1995, listed in Item 14(a)(2) of this
Form 10-K. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of The Limited, Inc.
and Subsidiaries as of January 28, 1995 and January 29, 1994, and the
consolidated results of their operations and their cash flows for each of the
three fiscal years in the period ended January 28, 1995 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule for each of the three fiscal years in the period
ended January 28, 1995 referred to above, when considered in relation to the
basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
February 13, 1995
<PAGE> 19
Schedule II
THE LIMITED, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE FISCAL YEARS ENDED JANUARY 28, 1995,
JANUARY 29, 1994 AND JANUARY 30, 1993
<TABLE>
<CAPTION>
(THOUSANDS)
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Fiscal Year Expenses Accounts Deductions Fiscal Year
------------ ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
Fiscal year ended January 28, 1995 $34,897 72,725 - 62,676(A) $44,946
======= ====== == ========== ========
Fiscal year ended January 29, 1994 $24,973 50,803 - 40,879(A) $34,897
======= ====== == ========== ========
Fiscal year ended January 30, 1993 $24,678 40,026 - 39,731(A) $24,973
======= ====== == ========== ========
</TABLE>
(A) - Write-offs, net of recoveries
<PAGE> 20
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
--------
THE LIMITED, INC.
(exact name of Registrant as specified in its charter)
--------
EXHIBITS
--------
================================================================================
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- --------------------------------
<S> <C>
10.12 Supplemental Schedule of Director who Became Part to an
Indemnification Agreement.
10.13 Supplemental Schedule of Officer who Became Party to an
Indemnification Agreement.
11 Statement re Computation of Per Share Earnings.
12 Statement re Computation of Ratio of Earnings to Fixed
Charges.
13 Excerpts from the 1994 Annual Report to Shareholders.
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Powers of Attorney.
27 Financial Data Schedule.
99 Annual Report of The Limited, Inc. Savings and Retirement
Plan.
</TABLE>
<PAGE> 1
EXHIBIT 10.12
SUPPLEMENTAL SCHEDULE OF DIRECTOR WHO BECAME
A PARTY TO AN INDEMNIFICATION AGREEMENT
EFFECTIVE JANUARY 27, 1995
<TABLE>
<CAPTION>
Signatory Capacity
- --------- --------
<S> <C>
Eugene M. Freedman Director
</TABLE>
<PAGE> 1
EXHIBIT 10.13
SUPPLEMENTAL SCHEDULE OF OFFICER WHO BECAME
A PARTY TO AN INDEMNIFICATION AGREEMENT
EFFECTIVE MARCH 20, 1995
<TABLE>
<CAPTION>
Signatory Capacity
- --------- --------
<S> <C>
Jack Listanowsky Officer
</TABLE>
<PAGE> 1
EXHIBIT 11
THE LIMITED, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------------
January 28, 1995 January 29, 1994
---------------- ----------------
<S> <C> <C>
Net Income $ 256,745 $ 196,327
========= =========
Common Shares outstanding:
Weighted average 379,454 379,454
Dilutive effect of stock options 640 617
Weighted average treasury shares (21,769) (18,920)
--------- ---------
Weighted average used to calculate
net income per share 358,325 361,151
========= =========
Net Income per share $ 0.72 $ 0.54
========= =========
</TABLE>
<TABLE>
<CAPTION>
Year Ended
-------------------------------------
January 28, 1995 January 29, 1994
---------------- ----------------
<S> <C> <C>
Net Income $ 448,343 $ 390,999
========= =========
Common Shares outstanding:
Weighted average 379,454 379,454
Dilutive effect of stock options 649 957
Weighted average treasury shares (21,502) (17,177)
--------- ---------
Weighted average used to calculate
net income per share 358,601 363,234
========= =========
Net Income per share $ 1.25 $ 1.08
========== =========
</TABLE>
<PAGE> 1
EXHIBIT 12
THE LIMITED, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Thousands)
<TABLE>
<CAPTION>
Year Ended
------------------------------------------------------------------------------------------
January 28, 1995 January 29, 1994 January 30, 1993 February 1, 1992 February 2, 1991
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Adjusted Earnings
Pretax earnings $ 744,343 $644,999 $745,497 $660,302 $653,438
Portion of minimum rent ($614,147 in 204,716 190,759 170,181 139,675 111,102
1994, $572,278 in 1993, $510,544 in
1992, $419,025 in 1991, and $333,306
in 1990) representative of interest
Interest on indebtedness 65,381 63,865 62,398 63,927 56,609
---------- -------- -------- -------- --------
Total Earnings as Adjusted $1,014,440 $899,623 $978,076 $863,904 $821,149
========== ======== ======== ======== ========
Fixed Charges
Portion of minimum rent representative
of interest $ 204,716 $190,759 $170,181 $139,675 $111,102
Interest on indebtedness 65,381 63,865 62,398 63,927 56,609
---------- -------- -------- -------- --------
Total Fixed Charges $ 270,097 $254,624 $232,579 $203,602 $167,711
========== ======== ======== ======== ========
Ratio of Earnings to Fixed Charges 3.76x 3.53x 4.21x 4.24x 4.90x
========== ======== ======== ======== ========
</TABLE>
<PAGE> 1
EXHIBIT 13
<TABLE>
pause
<CAPTION>
women's>
% OF TOTAL SALES
($ in Millions)
<S> <C> <C>
1994 $4,318 59%
1993 4,655 64%
1992 4,683 67%
% OF TOTAL OPERATING
INCOME
($ in Millions)
1994 $298 37%
1993 305 44%
1992 502 64%
<CAPTION>
SALES % TOTAL
(Millions) SALES
<S> <C> <C> <C>
Express 1994 $1,387 19%
1993 1,421 20%
1992 1,312 19%
Lerner 1994 $1,019 14%
New York 1993 1,141 16%
1992 1,175 17%
Lane Bryant 1994 $ 959 13%
1993 928 13%
1992 918 13%
The Limited 1994 $ 869 12%
1993 1,084 15%
1992 1,205 17%
Henri Bendel 1994 $ 84 01%
1993 81 01%
1992 73 01%
</TABLE>
22
<PAGE> 2
<TABLE>
pause
<CAPTION>
lingerie>
% OF TOTAL SALES
($ in Millions)
<S> <C> <C>
1994 $1,842 25%
1993 1,514 21%
1992 1,263 18%
% OF TOTAL OPERATING
INCOME
($ in Millions)
1994 $ 297 37%
1993 235 33%
1992 171 22%
men's>
% OF TOTAL SALES
($ in Millions)
1994 $ 721 10%
1993 561 8%
1992 403 6%
% OF TOTAL OPERATING
INCOME
($ in Millions)
1994 $ 75 9%
1993 52 7%
1992 29 4%
<CAPTION>
SALES % TOTAL
(Millions) SALES
<S> <C> <C> <C>
VICTORIA'S 1994 $1,181 16%
SECRET 1993 992 14%
STORES 1992 840 12%
VICTORIA'S 1994 $ 569 8%
SECRET 1993 436 6%
CATALOGUE 1992 367 5%
CACIQUE 1994 $ 92 1%
1993 86 1%
1992 56 1%
STRUCTURE 1994 $ 556 8%
1993 450 6%
1992 318 5%
ABERCROMBIE 1994 $ 165 2%
& FITCH CO. 1993 111 2%
1992 85 1%
</TABLE>
34
<PAGE> 3
<TABLE>
pause
personal care
& children's>
<CAPTION>
% OF TOTAL SALES
($ in Millions)
<S> <C> <C>
1994 $ 439 6%
1993 264 4%
1992 170 3%
% OF TOTAL OPERATING
INCOME
($ in Millions)
1994 $ 66 8%
1993 23 3%
1992 (11) -1%
<CAPTION>
SALES % TOTAL
(Millions) SALES
<S> <C> <C> <C>
BATH & 1994 $260 4%
BODY WORKS 1993 112 2%
1992 57 1%
PENHALIGON'S 1994 $ 5 0%
1993 5 0%
1992 5 0%
THE LIMITED 1994 $174 2%
TOO 1993 147 2%
1992 108 2%
</TABLE>
42
<PAGE> 4
<TABLE>
Our Operating Results
(Thousands except per share amounts)
<CAPTION>
1994 1993 % Change
<S> <C> <C> <C>
Net Sales $7,320,792 $7,245,088 1%
Operating Income $ 798,989 701,556 14%
Net Income $ 448,343 $ 390,999 15%
Net Income as a
Percentage of Sales 6.1% 5.4%
Net Income Per Share $ 1.25 $ 1.08 16%
Dividends Per Share $ .36 $ 36
</TABLE>
<TABLE>
Our Year-End Position
(Thousands except per share amounts)
<CAPTION>
1994 1993 % Change
<S> <C> <C> <C>
Total Assets $4,570,077 $4,135,105 11%
Working Capital $1,750,111 $1,513,181 16%
Current Ratio 3.2 3.1
Long-Term Debt $ 650,000 $ 650,000 --
Debt to Equity Ratio 24% 27%
Shareholders' Equity $2,760,956 $2,441,293 13%
Return on Average
Shareholders' Equity 17% 17%
</TABLE>
<TABLE>
Stores Open at End of Year
<CAPTION>
1994 1993
<S> <C> <C>
Express 716 673
Lerner New York 846 877
Lane Bryant 812 817
The Limited 709 746
Henri Bendel 4 4
Victoria's Secret Stores 601 570
Cacique 114 108
Structure 466 394
Abercrombie & Fitch Co. 67 49
Bath & Body Works 318 194
Penhaligon's 4 7
The Limited Too 210 184
Total Number of Stores 4,867 4,623
Selling Square Feet 25,627,000 24,426,000
Number of Associates 105,600
</TABLE>
57
<PAGE> 5
<TABLE>
FINANCIAL SUMMARY
- -------------------------------------------------------------------------------------------------------------------
(Thousands except per share amounts, ratios and store and associate data)
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FISCAL YEAR 1994 1993(1) 1992 1991(2) 1990(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net Sales $ 7,320,792 $ 7,245,088 $ 6,944,296 $ 6,149,218 $ 5,253,509
Gross Income 2,114,363 1,958,835 1,990,740 1,793,543 1,630,439
Operating Income 798,989 701,556 788,698 712,700 697,537
Income Before Income Taxes 744,343 644,999 745,497 660,302 653,438
Net Income $ 448,343 $ 390,999 $ 455,497 $ 403,302 $ 398,438
Net Income as a Percentage
of Sales 6.1% 5.4% 6.6% 6.6% 7.6%
- -------------------------------------------------------------------------------------------------------------------
PER SHARE RESULTS
Net Income $ 1.25 $ 1.08 $ 1.25 $ 1.11 $ 1.10
Dividends $ .36 $ .36 $ .28 $ .28 $ .24
Book Value $ 7.72 $ 6.82 $ 6.25 $ 5.19 $ 4.33
Weighted Average Shares
Outstanding 358,601 363,234 363,738 363,594 362,044
- -------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INFORMATION
Total Assets $ 4,570,077 $ 4,135,105 $ 3,846,450 $ 3,418,856 $ 2,871,878
Working Capital $ 1,750,111 $ 1,513,181 $ 1,063,352 $ 1,084,205 $ 884,004
Current Ratio 3.2 3.1 2.5 3.1 2.8
Long-Term Debt $ 650,000 $ 650,000 $ 541,639 $ 713,758 $ 540,446
Debt-to-Equity Ratio 24% 27% 24% 38% 35
Shareholders' Equity $ 2,760,956 $ 2,441,293 $ 2,267,617 $ 1,876,792 $ 1,560,052
Return on Average
Shareholders' Equity 17% 17% 22% 23% 28%
- -------------------------------------------------------------------------------------------------------------------
STORES AND ASSOCIATES AT END OF YEAR
Total Number of Stores Open 4,867 4,623 4,425 4,194 3,760
Selling Square Feet 25,627,000 24,426,000 22,863,000 20,355,000 17,008,000
Number of Associates 105,600 97,500 100,700 83,800 72,500
- -------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes the results of companies disposed of up to the disposition date.
(2) Includes the results of companies acquired subsequent to the date of acquisition.
(3) Fifty-three week fiscal year.
</TABLE>
<TABLE>
<CAPTION>
Year Number of Stores
---- ----------------
<S> <C>
74 48
79 309
84 1,412
89 3,344
94 4,867
</TABLE>
58
<PAGE> 6
<TABLE>
FINANCIAL SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
(Thousands except per share amounts, ratios and store and associate data)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR 1989(3)(1) 1988(2) 1987 1986 1985(2) 1984(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
Net Sales $ 4,647,916 $ 4,070,777 $ 3,527,941 $ 3,142,696 $ 2,387,110 $ 1,343,134
Gross Income 1,446,635 1,214,703 992,775 961,827 718,843 404,321
Operating Income 625,254 467,418 408,872 438,229 276,212 173,102
Income Before Income Taxes 573,926 396,136 378,188 394,780 239,317 157,495
Net Income $ 346,926 $ 245,136 $ 235,188 $ 227,780 $ 145,317 $ 92,495
Net Income as a Percentage
of Sales 7.5% 6.0% 6.7% 7.2% 6.1% 6.9%
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE RESULTS
Net Income $ .96 $ .68 $ .62 $ .60 $ .40 $ .26
Dividends $ .16 $ .12 $ .12 $ .08 $ .05 $ .04
Book Value $ 3.45 $ 2.64 $ 2.04 $ 2.07 $ 1.13 $ .77
Weighted Average Shares
Outstanding 361,288 360,186 376,626 376,860 365,638 361,262
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL INFORMATION
Total Assets $ 2,418,486 $ 2,145,506 $ 1,929,477 $ 1,726,544 $ 1,494,313 $ 657,242
Working Capital $ 685,524 $ 567,639 $ 629,783 $ 586,827 $ 419,706 $ 180,960
Current Ratio 2.4 2.2 2.9 2.7 2.2 2.0
Long-Term Debt $ 445,674 $ 517,952 $ 681,000 $ 417,420 $ 670,744 $ 150,139
Debt-to-Equity Ratio 36% 55% 93% 53% 166% 55%
Shareholders' Equity $ 1,240,454 $ 946,207 $ 729,171 $ 781,542 $ 404,075 $ 275,403
Return on Average
Shareholders' Equity 32% 29% 31% 38% 43% 40%
- ------------------------------------------------------------------------------------------------------------------------------------
STORES AND ASSOCIATES AT END OF YEAR
Total Number of Stores Open 3,344 3,497 3,115 2,682 2,353 1,412
Selling Square Feet 14,374,000 14,296,000 12,795,000 11,320,000 10,460,000 5,166,000
Number of Associates 63,000 56,700 50,200 43,200 33,600 17,700
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes the results of companies disposed of up to the disposition date.
(2) Includes the results of companies acquired subsequent to the date of acquisition.
(3) Fifty-three week fiscal year.
</TABLE>
59
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -------------------------------------------------------------------------------
RESULTS OF OPERATIONS
Net sales for the fourth quarter grew to $2.539 billion, an increase of 5% from
$2.421 billion a year ago. Net income was $257 million, compared to $196
million last year, and earnings per share were $0.72 versus $0.54 in 1993.
Net sales for the 52-week fiscal year ended January 28, 1995 of $7.321
billion increased $318 million from sales of $7.003 billion last year
(excluding Brylane's 1993 sales). Net income was $448 million compared to $391
million a year ago. Earnings per share were $1.25 compared to $1.08 last year.
In 1994, the Company delivered solid results and made significant
progress on the two principal objectives for the year.
First, the Company achieved the goal of restoring merchandise margin
integrity at the women's fashion apparel businesses despite negative comparable
store sales, and thereby increased their operating income contribution as a
percentage of sales. Merchandise margin is the key indicator by which the
Company is measuring its progress in its effort to return these businesses to
their historic levels of productivity and profitability.
Second, the Company continued to profitably grow its lingerie, men's,
personal care and children's businesses. These divisions increased their total
sales by 28%, contributed 41% of total sales and 55% of operating income.
Divisional highlights include the following:
- Express delivered a significant increase in merchandise margin rate
during the fourth quarter and one of the best Fall seasons in their
history in terms of operating income.
- Lane Bryant also had a solid year, producing a moderate increase in
sales with improved margins.
- Although Lerner New York and Limited Stores experienced negative
comparable store sales, merchandise margins for the year were up to
last year.
- Victoria's Secret Stores set new fourth quarter and full year
records in operating income dollars, on an increase in sales of
almost $200 million for the year.
- Abercrombie & Fitch Co. set new records for merchandise margin rate
and profitability for the fourth quarter and year, increasing their
earnings contribution over last year.
- Structure produced a 20% increase in earnings for the year in spite
of a disappointing fourth quarter.
- Bath & Body Works produced another stellar year, more than doubling
their sales while setting new records for the fourth quarter and year
for merchandise margin and operating profit rate. The global
potential for the brand was demonstrated by the successful opening of
five stores in the United Kingdom in partnership with Next plc.
For further information about the Company's divisions including sales
and operating income, see pages 22, 23, 34, 35, 42 and 43 of this Annual
Report.
60
<PAGE> 8
<TABLE>
FINANCIAL SUMMARY
- ---------------------------------------------------------------------------------------------------------------
<CAPTION>
The following summarized financial data compares 1994 to the comparable periods
for 1993 and 1992:
- ---------------------------------------------------------------------------------------------------------------
% CHANGE
-----------------------
1994 1993 1992 1994-93 1993-92
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Retail Sales (millions) $ 6,752 $ 6,567 $ 6,153 3% 7%
Catalogue Sales (millions) 569 678 791 (16%) (14%)
---------------------------------------
Total Net Sales (millions) $ 7,321 $ 7,245 $ 6,944 1% 4%
Increase (Decrease) in
Comparable Store Sales (3%) (1%) 2%
Retail Sales Increase Attributable
to New and Remodeled Stores 6% 8% 12%
Retail Sales per Average Selling
Square Foot $ 270 $ 278 $ 285 (3%) (2%)
Retail Sales per Average Store
(thousands) $ 1,423 $ 1,452 $ 1,428 (2%) 2%
Average Store Size at End
of Year (square feet) 5,265 5,284 5,167 - 2%
Retail Selling Square Feet
(thousands) 25,627 24,426 22,863 5% 7%
Number of Stores:
Beginning of Year 4,623 4,425 4,194
Opened 358 322 323
Closed (114) (124) (92)
---------------------------------------
End of Year 4,867 4,623 4,425
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NET SALES
- --------------------------------------------------------------------------------
Fourth quarter 1994 sales as compared to 1993 increased 5% to $2.539 billion
due to a 9% increase in sales attributable to new and remodeled stores. Fourth
quarter 1993 sales of $2.421 billion were flat to 1992 due to the sale of a 60%
interest in the Brylane division on August 30, 1993. Excluding Brylane sales
from 1992, fourth quarter sales in 1993 would have increased 4% due to an 8%
increase in sales attributable to new and remodeled stores.
The 1994 retail sales increase is attributable to the net addition of
new and remodeled stores, which was partially offset by a 3% decline in
comparable store sales. The Company added 358 new stores in 1994, remodeled 226
stores and closed 114 stores for a net addition of 244 stores and in excess of
1.2 million square feet of new retail selling space. Consistent with the
comparable store sales decline, average sales productivity declined slightly to
$270 per square foot.
Catalogue sales decreased 16% in 1994 as compared to 1993 due to Brylane
sales being included in the first and second quarters of 1993 prior to its sale
in August 1993. Had last year's catalogue sales excluded Brylane, catalogue
sales would have increased 30%, due to a significant increase in the number of
books mailed, although the average sales demand per book decreased slightly.
Retail sales increased 7% during 1993, reflecting the additional volume
from new and remodeled stores. The Company added 322 new stores in 1993,
remodeled 239 stores and closed 124 stores for a net addition of 198 stores and
in excess of 1.5 million square feet of new retail selling space. However,
average sales productivity declined slightly to $278 per square foot.
Catalogue sales decreased 14% in 1993, due to Brylane sales being
included in the third and fourth quarters of 1992. Had 1992's catalogue sales
excluded Brylane, catalogue sales would have increased 19% during 1993 as the
number of books mailed during the year increased while the average sales demand
per book decreased slightly.
- --------------------------------------------------------------------------------
GROSS INCOME
- --------------------------------------------------------------------------------
Gross income increased as a percentage of sales to 32.8% for the fourth quarter
of 1994 from 29.1% for the same period in 1993. Merchandise margins, expressed
as a percentage of sales, increased 4.4%, as the Company continued to be less
price promotional than a year earlier. However, the merchandise margin increase
was partially offset by increased buying and occupancy costs, which rose .7%
as a percentage of sales, primarily due to the lower sales productivity
associated with an 11% decrease in women's apparel comparable store sales.
61
<PAGE> 9
Gross income decreased as a percentage of sales to 29.1% for the fourth
quarter of 1993 from 32.2% for the same period in 1992. Merchandise margins,
expressed as a percentage of sales, decreased 1.4% reflecting a higher level of
promotional activity (particularly in the women's apparel businesses) to
liquidate seasonal inventories. In addition, buying and occupancy costs,
expressed as a percentage of sales, increased 1.6% primarily as a result of
lower sales productivity associated with several of the Company's women's
apparel businesses.
The 1994 gross income rate of 28.9% was 1.9% above the rate for 1993.
Merchandise margins, expressed as a percentage of sales, increased 3.0%, due to
the Company's less promotional pricing strategy. However, the merchandise margin
increase was partially offset by increased buying and occupancy costs, which
rose 1.2% as a percentage of sales, primarily due to the lower sales
productivity associated with a 9% decrease in women's apparel comparable store
sales.
The 1993 gross income rate of 27.0% was 1.7% below the rate for 1992.
Merchandise margins, expressed as a percentage of sales, decreased .4%
reflecting higher promotional activity, notably in the fourth quarter. Buying
and occupancy costs were not sufficiently leveraged (particularly at the
Company's women's apparel businesses) and as a result, these costs increased
approximately 1.2%, expressed as a percentage of sales.
- --------------------------------------------------------------------------------
GENERAL, ADMINISTRATIVE AND STORE OPERATING EXPENSES
- --------------------------------------------------------------------------------
General, administrative and store operating expenses, expressed as a
percentage of sales, increased to 15.4% in the fourth quarter of 1994 from 15.1%
in the same period of 1993, principally due to lower sales productivity. Sales
productivity, which is initially lower in new and remodeled stores, was also
lower in existing stores. The Company continued to maintain its high level of
customer service despite negative comparable store sales, particularly at the
women's apparel businesses where comparable store sales were down 11%.
These costs, expressed as a percentage of sales, were 18.0%, 17.4% and
17.3% for fiscal years 1994, 1993 and 1992. The increases in 1994 and 1993 were
due to the lower sales productivity at both existing stores and new and
remodeled stores. The Company expects to continue its policy of maintaining a
high level of customer service.
- --------------------------------------------------------------------------------
SPECIAL AND NONRECURRING ITEMS
- --------------------------------------------------------------------------------
As more fully described in Note 2 to the Consolidated Financial
Statements, the Company announced during 1993 the sale of a 60% interest in its
Brylane division for $285 million in cash. This transaction was part of a
program aimed at accelerating the growth of the retail businesses, which
included 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 the Henri Bendel division. The net pre-tax gain from
these special and nonrecurring items was $2.6 million. The impact of these items
on future operating results is anticipated to be immaterial. In the near term,
the Company's reduced share of Brylane's operating income is expected to be
offset by improved sales productivity and reduced depreciation and amortization
costs.
The Company also announced a program to repurchase up to $500 million of
the Company's common stock over time as market conditions warrant. As of the end
of fiscal year 1994, the Company had repurchased 5.9 million shares at a cost of
$104.7 million. Market conditions will dictate any future purchases.
- --------------------------------------------------------------------------------
INTEREST EXPENSE
<TABLE>
- -------------------------------------------------------------------------------
FOURTH QUARTER YEAR-TO-DATE
-----------------------------------------------
1994 1993 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Average Daily Borrowings
(in millions) $996.7 $848.2 $785.0 $822.5 $1,046.3
Average Effective
Interest Rate 7.84% 7.62% 8.33% 7.76% 5.96%
- -------------------------------------------------------------------------------
</TABLE>
Interest expense increased in the fourth quarter and for all 1994 as compared
to the comparable periods in 1993. Higher interest rates increased costs
approximately $.6 million and $4.4 million during the fourth quarter and for
all of 1994. Higher borrowing levels during the fourth quarter increased costs
by $2.8 million. For the year, lower borrowing levels resulted in lower
interest costs of approximately $2.9 million as compared to 1993, which
partially offset the effective interest rate increase.
62
<PAGE> 10
- --------------------------------------------------------------------------------
OPERATING INCOME
- --------------------------------------------------------------------------------
Operating income, as a percentage of sales, was 10.9%, 9.6% and 11.4% for
fiscal years 1994, 1993 and 1992. The increase in operating income in 1994 was
primarily due to higher merchandise margins, partially offset by higher buying
and occupancy costs and higher general, administrative and store operating
expenses.
- --------------------------------------------------------------------------------
GAIN ON ISSUANCE OF UNITED RETAIL GROUP, INC. STOCK
- --------------------------------------------------------------------------------
The 1992 results include a $9 million pre-tax gain which resulted from the
March 1992 initial public offering of United Retail Group, Inc. (URGI), a
specialty retailer of large-size woman's apparel. URGI sold approximately 3.7
million shares of common stock at $15 per share and received total
consideration of approximately $55.6 million. Prior to the initial public
offering, the Company owned approximately a 33% equity interest; subsequent to
the initial public offering, the Company's ownership was diluted to
approximately 20%. See Note 1 to the Consolidated Financial Statements for
further discussion of this matter.
- --------------------------------------------------------------------------------
ACQUISITIONS
- --------------------------------------------------------------------------------
Gryphon Development, L.P. (Gryphon) creates, develops and manufactures most of
the bath and personal care products sold by the Company. Prior to April 10,
1992, the Company owned approximately 65% of Gryphon. Effective April 10, 1992,
the Company acquired the remaining 35% of Gryphon for approximately $60 million
and separately entered into a non-compete agreement with certain of the former
Gryphon partners in return for warrants to purchase 1.5 million shares of the
Company's common stock.
- --------------------------------------------------------------------------------
FINANCIAL CONDITION
- --------------------------------------------------------------------------------
The Company's balance sheet at January 28, 1995 provides continuing evidence of
financial strength and flexibility. The Company's debt-to-equity ratio declined
to only 23.5% at the end of 1994, the current ratio reached a record 3.2 and
working capital was in excess of $1.75 billion. A more detailed discussion of
liquidity, capital resources and capital requirements follows:
- --------------------------------------------------------------------------------
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
(thousands):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Provided by Operating Activities $ 361,078 $ 448,139 $ 754,128
Working Capital $1,750,111 $1,513,181 $1,063,352
Capitalization:
Long-Term Debt $ 650,000 $ 650,000 $ 541,639
Deferred Income Taxes 306,139 275,101 274,844
Shareholders' Equity 2,760,956 2,441,293 2,267,617
- ------------------------------------------------------------------------------------------
TOTAL CAPITALIZATION $3,717,095 $3,366,394 $3,084,100
Additional Amounts Available
Under Long-Term Credit Agreements $ 840,000 $ 840,000 $ 811,000
- ------------------------------------------------------------------------------------------
</TABLE>
The Company considers the following to be several measures of liquidity and
capital resources:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1994 1993 1992
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt-to-Equity Ratio (Long-Term Debt
Divided by Shareholders' Equity) 24% 27% 24%
Debt-to-Capitalization Ratio (Long-Term
Debt Divided by Total Capitalization) 17% 19% 18%
Interest Coverage Ratio (Income Before Interest
Expense, Depreciation, Amortization and
Income Taxes Divided by Interest Expense) 16x 15x 17x
Cash Flow to Capital Investment (Net Cash
Provided by Operating Activities Divided
by Capital Expenditures) 113% 151% 176%
- ------------------------------------------------------------------------------------------
</TABLE>
63
<PAGE> 11
Net cash provided by operating activities totaled $361.1 million, $448.1 million
and $754.1 million for 1994, 1993 and 1992 and continued to serve as the
Company's primary source of liquidity. Cash requirements for accounts receivable
increased $235 million in 1994 and $220 million in 1993 due to the continued
growth in the number of proprietary credit card holders at the Company's various
divisions. Cash requirements for inventories and accounts payable and accrued
expenses have tended to fluctuate during the three-year period based on sales
volumes and inventory management practices. An increase in income taxes payable
in 1994 resulted in an additional $30 million in cash as compared to 1993 due to
the timing of tax payments associated with the fourth quarter earnings increase.
Cash requirements for other assets and liabilities related primarily to a
deposit made to the Internal Revenue Service in 1994 in connection with an
assessment for additional taxes and interest for 1989 and 1990 which is
discussed further in Note 7 to the Consolidated Financial Statements.
Investing activities included capital expenditures, primarily for new
and remodeled stores, the 1993 sale of 60% of the Company's interest in Brylane,
and the 1992 acquisition of Gryphon.
Financing activities included the repurchase of $11.4 million and $93.3
million of the Company's common stock in 1994 and 1993, which represented
approximately .6 million and 5.3 million shares. Cash dividends paid in 1993
increased 25% from 1992. Cash dividends paid in 1994 remained consistent with
1993 at $.36 per share.
At January 28, 1995, the Company had available $840 million under its
long-term credit agreements. In addition, the Company has the ability to offer
up to $250 million of additional debt securities and warrants to purchase debt
securities under its shelf registration statement authorization.
- --------------------------------------------------------------------------------
CAPITAL EXPENDITURES
- --------------------------------------------------------------------------------
Capital expenditures amounted to $319.7 million, $295.8 million and $429.5
million in 1994, 1993 and 1992, respectively, of which $201.2 million, $198.1
million and $258.2 million was for new stores and remodeling and expanding
existing stores. The Company expended $10.7 million in 1994 for a catalogue
telemarketing center in Kettering, Ohio to expand Victoria's Secret Catalogue
operations. Approximately $29 million was expended in 1992 for the completion of
Victoria's Secret Catalogue's fulfillment center and office facility in
Columbus, Ohio. In addition, office facilities previously committed under a
long-term lease were acquired in 1992 for approximately $101 million.
The Company anticipates spending $325-$375 million for capital
expenditures in 1995, of which $230-$270 million will be for new stores, the
remodeling of existing stores and related improvements for the retail
businesses. The Company expects that substantially all 1995 capital expenditures
will be funded by net cash provided by operating activities.
The Company has announced its intention to add approximately 1.6 million
selling square feet in 1995 which will represent a 6% increase over year-end
1994. It is anticipated the increase will result from the net addition of
approximately 465 new stores and the remodeling of approximately 225 stores. A
summary of stores and selling square feet by division for 1993 and 1994 and
goals for 1995 follow:
<TABLE>
<CAPTION>
YEAR SELLING SQUARE FEET
- ---- -------------------
<S> <C>
79 $ 1,082,000
84 5,166,000
89 14,374,000
94 25,627,000
</TABLE>
64
<PAGE> 12
<TABLE>
<CAPTION>
CHANGE FROM
---------------------
GOAL-1995 1994 1993 1995-94 1994-93
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EXPRESS
Stores 745 716 673 29 43
Selling Sq. Ft. 4,613,000 4,357,000 3,902,000 256,000 455,000
- ----------------------------------------------------------------------------------------------------
LERNER NEW YORK
Stores 838 846 877 (8) (31)
Selling Sq. Ft. 6,396,000 6,580,000 6,802,000 (184,000) (222,000)
- ----------------------------------------------------------------------------------------------------
LANE BRYANT
Stores 826 812 817 14 (5)
Selling Sq. Ft. 3,936,000 3,859,000 3,852,000 77,000 7,000
- ----------------------------------------------------------------------------------------------------
THE LIMITED
Stores 708 709 746 (1) (37)
Selling Sq. Ft. 4,284,000 4,358,000 4,482,000 (74,000) (124,000)
- ----------------------------------------------------------------------------------------------------
HENRI BENDEL
Stores 4 4 4 0 0
Selling Sq. Ft. 88,000 93,000 93,000 (5,000) 0
- ----------------------------------------------------------------------------------------------------
VICTORIA'S SECRET STORES
Stores 667 601 570 66 31
Selling Sq. Ft. 2,966,000 2,586,000 2,346,000 380,000 240,000
- ----------------------------------------------------------------------------------------------------
CACIQUE
Stores 120 114 108 6 6
Selling Sq. Ft. 364,000 342,000 318,000 22,000 24,000
- ----------------------------------------------------------------------------------------------------
STRUCTURE
Stores 514 466 394 48 72
Selling Sq. Ft. 1,985,000 1,755,000 1,409,000 230,000 346,000
- ----------------------------------------------------------------------------------------------------
ABERCROMBIE & FITCH CO.
Stores 102 67 49 35 18
Selling Sq. Ft. 808,000 541,000 405,000 267,000 136,000
- ----------------------------------------------------------------------------------------------------
BATH & BODY WORKS
Stores 518 318 194 200 124
Selling Sq. Ft. 881,000 489,000 248,000 392,000 241,000
- ----------------------------------------------------------------------------------------------------
PENHALIGON'S
Stores 4 4 7 0 (3)
Selling Sq. Ft. 2,000 2,000 3,000 0 (1,000)
- ----------------------------------------------------------------------------------------------------
THE LIMITED TOO
Stores 288 210 184 78 26
Selling Sq. Ft. 907,000 665,000 566,000 242,000 99,000
- ----------------------------------------------------------------------------------------------------
TOTAL RETAIL DIVISIONS
Stores 5,334 4,867 4,623 467 244
Selling Sq. Ft. 27,230,000 25,627,000 24,426,000 1,603,000 1,201,000
- ----------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IMPACT OF INFLATION
- --------------------------------------------------------------------------------
The Company's results of operations and financial condition are presented based
upon historical cost. While it is difficult to accurately measure the impact of
inflation due to the imprecise nature of the estimates required, the Company
believes that the effects of inflation, if any, on the results of operations
and financial condition have been minor.
65
<PAGE> 13
CONSOLIDATED STATEMENTS OF INCOME
- -------------------------------------------------------------------------------
(Thousands except per share amounts)
<TABLE>
- -----------------------------------------------------------------------------
1994 1993 1992
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $ 7,320,792 $ 7,245,088 $ 6,944,296
Costs of Goods Sold,
Occupancy and Buying Costs (5,206,429) (5,286,253) (4,953,556)
- -----------------------------------------------------------------------------
GROSS INCOME 2,114,363 1,958,835 1,990,740
General, Administrative
and Store Operating Expenses (1,315,374) (1,259,896) (1,202,042)
Special and Nonrecurring Items, Net - 2,617 -
- -----------------------------------------------------------------------------
OPERATING INCOME 798,989 701,556 788,698
Interest Expense (65,381) (63,865) (62,398)
Other Income, Net 10,735 7,308 10,080
Gain on Issuance of United
Retail Group Stock - - 9,117
- -----------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 744,343 644,999 745,497
Provision for Income Taxes 296,000 254,000 290,000
- -----------------------------------------------------------------------------
NET INCOME $ 448,343 $ 390,999 $ 455,497
- -----------------------------------------------------------------------------
NET INCOME PER SHARE $ 1.25 $ 1.08 $ 1.25
- -----------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
<TABLE>
<CAPTION>
NET INCOME
(Millions)
CAGR 17%
(Compound Annual
Growth Rate, last
ten years)
<S> <C>
84 $ 92
85 145
86 228
87 235
88 245
89 347
90 398
91 403
92 455
93 391
94 448
</TABLE>
<TABLE>
<CAPTION>
NET SALES
(Millions)
CAGR 18%
<S> <C>
84 $1,343
85 2,387
86 3,143
87 3,528
88 4,071
89 4,648
90 5,254
91 6,149
92 6,944
93 7,245
94 7,321
</TABLE>
66
<PAGE> 14
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------
(Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
ASSETS JAN. 28, 1995 JAN. 29, 1994
- --------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and Equivalents $ 242,780 $ 320,558
Accounts Receivable 1,292,399 1,056,911
Inventories 870,440 733,700
Other 142,047 109,456
- --------------------------------------------------------------------------
TOTAL CURRENT ASSETS 2,547,666 2,220,625
- --------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, NET 1,692,145 1,666,588
- --------------------------------------------------------------------------
OTHER ASSETS 330,266 247,892
- --------------------------------------------------------------------------
TOTAL ASSETS $4,570,077 $4,135,105
- --------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- --------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts Payable $ 275,303 $ 250,363
Accrued Expenses 372,676 347,892
Certificates of Deposit 25,200 15,700
Income Taxes 124,376 93,489
- --------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 797,555 707,444
- --------------------------------------------------------------------------
LONG-TERM DEBT 650,000 650,000
- --------------------------------------------------------------------------
DEFERRED INCOME TAXES 306,139 275,101
- --------------------------------------------------------------------------
OTHER LONG-TERM LIABILITIES 55,427 61,267
- --------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Common Stock 189,727 189,727
Paid-In Capital 132,938 128,906
Retained Earnings 2,716,516 2,397,112
- --------------------------------------------------------------------------
3,039,181 2,715,745
Less: Treasury Stock, at Cost (278,225) (274,452)
- --------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,760,956 2,441,293
- --------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,570,077 $4,135,105
- --------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
<TABLE>
<CAPTION>
EQUITY AND DEBT
(Billions)
84 85 86 87 88 89 90 91 92 93 94
-------- -------- -------- -------- -------- ---------- ---------- ---------- ---------- ---------- ----------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY $.275 $.404 $.781 $.729 $.946 $1,240 $1,560 $1,877 $2,268 $2,441 $2,761
DEBT $.150 $.671 $.417 $.681 $.518 $ .446 $ .540 $ .714 $ .542 $ .650 $ .650
</TABLE>
67
<PAGE> 15
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------
(Thousands)
<CAPTION>
COMMON STOCK
------------------
SHARES PAR
OUTSTANDING VALUE
- ------------------------------------------------------------------
<S> <C> <C>
BALANCE, FEBRUARY 1, 1992 361,786 $189,727
- ------------------------------------------------------------------
Net Income -- --
Cash Dividends -- --
Exercise of Stock Options and Other 862 --
Warrants Issued for Acquisition -- --
- ------------------------------------------------------------------
BALANCE, JANUARY 30, 1993 362,648 $189,727
- ------------------------------------------------------------------
Net Income -- --
Cash Dividends -- --
Purchase of Treasury Stock (5,288) --
Exercise of Stock Options and Other 441 --
- ------------------------------------------------------------------
BALANCE, JANUARY 29, 1994 357,801 $189,727
- ------------------------------------------------------------------
Net Income -- --
Cash Dividends -- --
Purchase of Treasury Stock (629) --
Exercise of Stock Options and Other 432 --
- ------------------------------------------------------------------
BALANCE, JANUARY 28, 1995 357,604 $189,727
- ------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
<TABLE>
<CAPTION>
SHAREHOLDERS' EQUITY
(Millions) CAGR 26%
84 85 86 87 88 89 90 91 92 93 94
-------- -------- -------- -------- -------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$.275 $.404 $.781 $.729 $.946 $1,240 $1,560 $1,877 $2,268 $2,441 $2,761
</TABLE>
<TABLE>
<CAPTION>
NET INCOME PER SHARE CAGR 17%
84 85 86 87 88 89 90 91 92 93 94
------- ------- ------- ------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ .26 $ .40 $ .60 $ .62 $ .68 $ .96 $1.10 $1.11 $1.25 $1.08 $1.25
</TABLE>
<PAGE> 16
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------
(Thousands)
<CAPTION>
TOTAL
PAID-IN RETAINED TREASURY STOCK, SHAREHOLDERS'
CAPITAL EARNINGS AT COST EQUITY
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, FEBRUARY 1, 1992 $100,929 $1,783,027 $(196,891) $1,876,792
- ---------------------------------------------------------------------------------------------------------
Net Income -- 455,497 -- 455,497
Cash Dividends -- (101,730) -- (101,730)
Exercise of Stock Options and Other 6,598 -- 10,211 16,809
Warrants Issued for Acquisition 20,249 -- -- 20,249
- ---------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 30, 1993 $127,776 $2,136,794 $(186,680) $2,267,617
- ---------------------------------------------------------------------------------------------------------
Net Income -- 390,999 -- 390,999
Cash Dividends -- (130,681) -- (130,681)
Purchase of Treasury Stock -- -- (93,328) (93,328)
Exercise of Stock Options and Other 1,130 -- 5,556 6,686
- ---------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 29, 1994 $128,906 $2,397,112 $(274,452) $2,441,293
- ---------------------------------------------------------------------------------------------------------
Net Income -- 448,343 -- 448,343
Cash Dividends -- (128,939) -- (128,939)
Purchase of Treasury Stock -- -- (11,382) (11,382)
Exercise of Stock Options and Other 4,032 -- 7,609 11,641
- ---------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 28, 1995 $132,938 $2,716,516 $(278,225) $2,760,956
- ---------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
<TABLE>
<CAPTION>
WORKING CAPITAL
(Millions)
84 85 86 87 88 89 90 91 92 93 94
-------- -------- -------- -------- -------- -------- -------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$.181 $.420 $.587 $.630 $.568 $.686 $.884 $1,084 $1,063 $1,513 $1,750
</TABLE>
69
<PAGE> 17
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------
(Thousands)
<CAPTION>
1994 1993 1992
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 448,343 $ 390,999 $ 455,497
- ---------------------------------------------------------------------------------------
IMPACT OF OTHER OPERATING ACTIVITIES
ON CASH FLOWS
Depreciation and Amortization 267,888 271,353 246,977
Special and Nonrecurring Items -- (2,617) --
- ---------------------------------------------------------------------------------------
CHANGE IN ASSETS AND LIABILITIES
Accounts Receivable (235,488) (219,534) (101,545)
Inventories (136,740) 70,006 (73,657)
Accounts Payable and Accrued Expenses 49,724 14,943 118,289
Income Taxes 30,887 20,773 82,369
Other Assets and Liabilities (63,536) (97,784) 26,198
- ---------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 361,078 448,139 754,128
- ---------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Capital Expenditures (319,676) (295,804) (429,545)
Businesses Acquired -- -- (60,043)
Proceeds from Sale of Business -- 285,000 --
Tax Effect of Gain on Sale of Business -- (64,750) --
- ---------------------------------------------------------------------------------------
CASH USED FOR INVESTING ACTIVITIES (319,676) (75,554) (489,588)
- ---------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net Proceeds (Repayments) of
Commercial Paper Borrowings
and Certificates of Deposit 9,500 (25,939) (322,119)
Repayments of Long-Term Debt -- (100,000) --
Proceeds from Issuance
of Unsecured Notes -- 250,000 150,000
Dividends Paid (128,939) (130,681) (101,730)
Purchase of Treasury Stock (11,382) (93,328) --
Stock Options and Other 11,641 6,686 16,809
- ---------------------------------------------------------------------------------------
NET CASH USED FOR
FINANCING ACTIVITIES (119,180) (93,262) (257,040)
- ---------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN
CASH AND EQUIVALENTS (77,778) 279,323 7,500
Cash and Equivalents, Beginning of Year 320,558 41,235 33,735
- ---------------------------------------------------------------------------------------
CASH AND EQUIVALENTS, END OF YEAR $ 242,780 $ 320,558 $ 41,235
- ---------------------------------------------------------------------------------------
The accompanying Notes are an integral part of these Consolidated Financial Statements.
</TABLE>
70
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- - PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of The Limited, Inc.
(the Company) and all significant subsidiaries which are more than 50% 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% owned are accounted for on the equity method.
- - FISCAL YEAR
The Company's fiscal year ends on the Saturday closest to January 31. Fiscal
years are designated in the financial statements and notes by the calendar year
in which the fiscal year commences. The results for fiscal years 1994, 1993 and
1992 represent the 52-week periods ended January 28, 1995, January 29, 1994 and
January 30, 1993.
- - CASH AND EQUIVALENTS
Cash and equivalents include amounts on deposit with financial institutions and
money market investments with maturities of less than 90 days.
- - INVENTORIES
Inventories are principally valued at the lower of average cost or market, on a
first-in first-out basis, utilizing the retail method.
- - PROPERTY AND EQUIPMENT
Depreciation and amortization of property and equipment are computed for
financial reporting purposes on a straight-line basis, using service lives
ranging principally from 10-30 years for buildings and improvements and 3-10
years for other property and equipment. The cost of assets sold or retired and
the related accumulated depreciation or amortization are removed from the
accounts with any resulting gain or loss included in net income. Maintenance
and repairs are charged to expense as incurred. Major renewals and betterments
which extend service lives are capitalized.
- - GOODWILL AMORTIZATION
Goodwill represents the excess of the purchase price over the fair value of the
net assets of acquired companies and is amortized on a straight-line basis
principally over 30 years.
- - INTEREST RATE SWAP AGREEMENTS
The difference between the amount of interest to be paid and the amount of
interest to be received under interest rate swap agreements due to changing
interest rates is charged or credited to interest expense over the life of the
swap agreement. Gains and losses from the disposition of swap agreements are
deferred and amortized over the term of the related agreements.
- - INCOME TAXES
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards (SFAS) 109, "Accounting for Income Taxes." SFAS 109
requires a change from the deferred method of accounting for income taxes to
the liability method. Under this method, deferred tax assets and liabilities
are recognized based on the difference between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates in
effect in the years in which those temporary differences are expected to
reverse. Under SFAS 109, the effect on deferred taxes of a change in tax rates
is recognized in income in the period that includes the enactment date. Under
the deferred method, which was applied in 1992 and prior years, deferred income
taxes are recognized for income and expense items that are reported in
different years for financial reporting purposes and income tax purposes using
the tax rate applicable for the year of calculation. Under the deferred method,
deferred taxes are not adjusted for subsequent changes in tax rates.
71
<PAGE> 19
- - SHAREHOLDERS' EQUITY
Five hundred million shares of $.50 par value common stock are authorized, of
which 357.6 million and 357.8 million were outstanding, net of 21.8 million
shares and 21.7 million shares held in treasury at January 28, 1995 and January
29, 1994. Ten million shares of $1.00 par value preferred stock are authorized,
none of which have been issued.
- - NET INCOME PER SHARE
Net income per share is computed based upon the weighted average number of
outstanding common shares, including the effect of stock options. There were
358.6 million, 363.2 million and 363.7 million weighted average outstanding
shares for 1994, 1993 and 1992.
- - ISSUANCE OF SUBSIDIARY STOCK
Gains or losses resulting from stock issued by a subsidiary of the Company are
recognized in current year's income. In 1992, the Company recognized a $9
million pre-tax gain which resulted from the March 1992 initial public offering
of the United Retail Group, Inc. A more detailed discussion of this matter is
included under the heading "Gain on Issuance of United Retail Group, Inc.
Stock" in Management's Discussion and Analysis on page 63 of this Annual Report.
2 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 the 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 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 80 of these stores and remodeled
approximately 200 of these stores as of January 28, 1995. The charge for these
actions totaled approximately $200 million. Costs remaining to be incurred
related to this program are approximately $14 million at January 28, 1995.
The net impact of the plan is anticipated to be immaterial.
A further discussion of this matter is included under the heading
"Special and Non-recurring Items" in Management's Discussion and Analysis on
page 62 of this Annual Report.
3 ACCOUNTS RECEIVABLE
Accounts receivable consisted of (Thousands):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
1994 1993
- ----------------------------------------------------------------------
<S> <C> <C>
Deferred Payment Accounts $1,250,636 $1,013,276
Trade and Other 86,709 78,532
Allowance for Uncollectible Accounts (44,946) (34,897)
---------- ----------
$1,292,399 $1,056,911
- ----------------------------------------------------------------------
</TABLE>
Finance charge revenue on the deferred payment accounts amounted to $223.9
million, $174.5 million and $141.8 million in 1994, 1993 and 1992, and the
provision for uncollectible accounts amounted to $72.7 million, $50.8 million
and $40.0 million in 1994, 1993 and 1992. These amounts are classified as
components of the cost to administer the deferred payment program and are
included in general, administrative and store operating expenses.
72
<PAGE> 20
4 PROPERTY AND EQUIPMENT
Property and equipment, at cost, consisted of (Thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C>
Land, Buildings and Improvements $ 510,563 $ 510,998
Furniture, Fixtures and Equipment 1,714,587 1,571,568
Leaseholds and Improvements 515,226 506,258
Construction in Progress 58,039 49,373
---------- ----------
2,798,415 2,638,197
Less: Accumulated Depreciation and Amortization 1,106,270 971,609
---------- ----------
Property and Equipment, Net $1,692,145 $1,666,588
- ---------------------------------------------------------------------------
</TABLE>
5 LEASED FACILITIES AND COMMITMENTS
Annual store rent is comprised of a fixed minimum amount, plus contingent rent
based upon a percentage of sales exceeding a stipulated amount. Store lease
terms generally require additional payments covering taxes, common area costs
and certain other expenses.
A summary of rent expense for 1994, 1993 and 1992 follows (Thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
STORE RENT: 1994 1993 1992
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed Minimum $586,437 $540,381 $498,607
Contingent 17,522 19,727 19,043
-------- -------- --------
Total Store Rent 603,959 560,108 517,650
Equipment and Other 27,710 31,897 37,228
-------- -------- --------
Total Rent Expense $631,669 $592,005 $554,878
- ---------------------------------------------------------------------------
</TABLE>
At January 28, 1995, the Company was committed to noncancelable leases
with remaining terms of one to forty years. A substantial portion of these
commitments are store leases with initial terms ranging from ten to twenty
years. Accrued rent expense was $116.5 million and $99.1 million at January 28,
1995 and January 29, 1994.
A summary of minimum rent commitments under noncancelable leases
follows (Thousands):
<TABLE>
<S> <C>
1995 $ 617,645
1996 606,120
1997 587,825
1998 565,999
1999 539,742
Thereafter $2,802,487
</TABLE>
6 LONG-TERM DEBT
Long-term debt consisted of (Thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------
1994 1993
- ---------------------------------------------------------
<S> <C> <C>
7 1/2% Debentures Due March 2023 $250,000 $250,000
7 4/5% 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>
73
<PAGE> 21
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.
Both Agreements place restrictions on the amount of the Company's working
capital, debt and net worth. No amounts were outstanding under the Agreements
at January 28, 1995.
The Agreements support the Company's commercial paper program which is used
from time to time to fund working capital and other general corporate
requirements. No commercial paper was outstanding at January 28, 1995.
Up to $250 million of debt securities and warrants to purchase debt
securities may be issued under the Company's shelf registration statement.
All long-term debt outstanding at January 28, 1995 and January 29, 1994 is
unsecured.
The Company periodically enters into interest rate swap agreements with the
intent to manage interest rate exposure. At January 28, 1995, the Company had
three interest rate swap positions outstanding, each having a $100 million
notional principal amount. One contract effectively changed the Company's
interest rate exposure on $100 million of variable rate debt to a fixed rate of
8.09% through July 2000. The counterparty to the swap contract has an option to
cancel the remaining term of the contract in July 1995. The remaining two
contracts effectively change the interest rate on $200 million of fixed rate
debt to a variable rate. These contracts expire in November 1995 and February
1996.
No long-term debt matures in years 1995-1998; $100 million matures in 1999.
Interest paid approximated $64.7 million, $57.4 million and $60.0 million in
1994, 1993 and 1992.
7 INCOME TAXES
The Company adopted SFAS No. 109 effective January 31, 1993. No cumulative
effect adjustment was required for the adoption as the difference in deferred
income taxes under SFAS 109 and APB Opinion 11 was immaterial. The impact on
the year of adoption was also immaterial.
The provision for income taxes consisted of (Thousands):
<TABLE>
- ------------------------------------------------------------------------------
CURRENTLY PAYABLE: 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal $231,000 $249,400 $174,900
State 32,000 35,100 28,700
Foreign 4,100 6,400 6,400
-------- -------- --------
267,100 290,900 210,000
- ------------------------------------------------------------------------------
DEFERRED:
Federal 12,900 (41,800) 62,700
State 16,000 4,900 17,300
-------- -------- --------
28,900 (36,900) 80,000
-------- -------- --------
Total Provision $296,000 $254,000 $290,000
- ------------------------------------------------------------------------------
</TABLE>
The foreign component of pre-tax income, arising principally from overseas
sourcing operations, was $40.9 million, $54.8 million and $58.7 million in
1994, 1993 and 1992.
A reconciliation between the statutory Federal income tax rate and the
effective income tax rate follows:
74
<PAGE> 22
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal Income Tax Rate 35.0% 35.0% 34.0%
State Income Tax, Net of
Federal Income Tax Effect 4.2 4.0 4.0
Other Items, Net .6 .4 .9
---- ---- ----
39.8% 39.4% 38.9%
- -------------------------------------------------------------------------------
</TABLE>
Income taxes payable included current deferred tax assets of $44.5 million and
$41.1 million at January 28, 1995 and January 29, 1994. The effect of temporary
differences which give rise to deferred income tax balances was as follows
(Thousands):
<TABLE>
- -------------------------------------------------------------------------------------------------------
<CAPTION>
1994 1993
------------------------------------ -----------------------------------
ASSETS LIABILITIES TOTAL ASSETS LIABILITIES TOTAL
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Excess of Tax Over
Book Depreciation -- $(156,208) $(156,208) -- $(123,539) $(123,539)
Undistributed Earnings
of Foreign Affiliate -- (109,350) (109,350) -- (103,485) (103,485)
Investment in Affiliate -- (28,056) (28,056) -- (39,171) (39,171)
State Income Taxes $12,595 -- 12,595 $ 8,681 -- 8,681
Bad Debt Reserve 18,678 -- 18,678 11,022 -- 11,022
Special and Nonrecurring 18,912 -- 18,912 25,092 -- 25,092
Other 30,170 (48,385) (18,215) 23,163 (35,735) (12,572)
------- --------- --------- ------- --------- ---------
Total Deferred
Income Taxes $80,355 $(341,999) $(261,644) $67,958 $(301,930) $(233,972)
- -------------------------------------------------------------------------------------------------------
</TABLE>
For the year 1992, deferred income tax expense resulted from timing differences
in the recognition of income and expense. The components of the deferred tax
provision follow (Thousands):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1992
- ---------------------------------------------------------------------------
<S> <C>
Excess of Tax Over Book Depreciation $45,400
Other Items, Net 34,600
-------
$80,000
- ---------------------------------------------------------------------------
</TABLE>
Income tax payments approximated $230.9 million, $291.3 million and $199.8
million for 1994, 1993 and 1992.
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.
<TABLE>
8 STOCK OPTIONS AND RESTRICTED STOCK
Stock options are granted to officers and key employees based upon fair market
value at the date of grant. Option activity for 1992, 1993 and 1994 follows:
<CAPTION>
- ---------------------------------------------------------------------------------------------
Number of Weighted Average
Shares Option Price Per Share
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
OUTSTANDING OPTIONS, FEBRUARY 1, 1992 5,122,000 $16.49
Activity During 1992: Granted 1,476,000 23.91
Exercised (772,000) 12.73
Canceled (312,000) 22.99
- ---------------------------------------------------------------------------------------------
OUTSTANDING OPTIONS, JANUARY 30, 1993 5,514,000 $18.57
Activity During 1993: Granted 2,457,000 21.74
Exercised (431,000) 12.22
Canceled (357,000) 22.32
- ---------------------------------------------------------------------------------------------
OUTSTANDING OPTIONS, JANUARY 29, 1994 7,183,000 $19.87
Activity During 1994: Granted 2,122,000 17.19
Exercised (393,000) 11.44
Canceled (498,000) 21.49
- ---------------------------------------------------------------------------------------------
OUTSTANDING OPTIONS, JANUARY 28, 1995 8,414,000 $19.56
- ---------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE> 23
The Company had approximately 2.2 million shares available for grant at January
28, 1995 as compared to 5.3 million shares available at January 29, 1994 and
7.4 million shares available at January 30, 1993. Approximately 8.4 million
shares of the Company's common stock were reserved for outstanding options, of
which 4.1 million were exercisable as of January 28, 1995.
In 1994 and 1993, approximately 848,000 and 590,000 restricted shares of the
Company's common stock were granted to certain officers and key associates. The
market value of the shares at the date of grant amounted to $16.7 million in
1994 and $12.7 million in 1993 and is recorded within treasury stock in the
accompanying Consolidated Financial Statements. The market value is being
amortized as compensation expense over the vesting period which ranges from
four to ten years. Compensation expense of $7.3 million and $1.3 million was
recorded in 1994 and 1993.
9 RETIREMENT BENEFITS
The Company sponsors a defined contribution retirement plan. Participation in
this plan is available to all associates who have completed 1,000 or more hours
of service with the Company during certain 12 month periods and attained the
age of 21. Company contributions#to this plan are based on a percentage of the
associates# annual compensation. The cost of this plan was $26.7 million in
1994, $25.9 million in 1993 and $20.1 million in 1992.
<TABLE>
10 FINANCE SUBSIDIARY
World Financial Network National Bank, a wholly-owned consolidated finance subsidiary,
provides private label credit card lines to the customers of certain retail affiliates.
Condensed financial information of the finance subsidiary follows (Thousands):
- ----------------------------------------------------------------------------------
<CAPTION>
ASSETS JAN. 28, 1995 JAN. 29, 1994
- ----------------------------------------------------------------------------------
<S> <C> <C>
Credit Card Receivables, Net of
Allowance for Uncollectible Accounts $1,206,000 $0,978,500
Other Assets, Net 48,900 40,300
---------- ----------
$1,254,900 $1,018,800
- ----------------------------------------------------------------------------------
LIABILITIES AND INVESTMENT
Certificates of Deposit $ 25,200 $ 15,700
Payable to Wholly-Owned Subsidiaries
and Affiliates of The Limited, Inc. 37,400 18,200
- ----------------------------------------------------------------------------------
INVESTMENT OF THE LIMITED, INC.:
Subordinated Debt 1,095,900 902,700
Equity Investment 96,400 82,200
---------- ----------
$1,254,900 $1,018,800
- ----------------------------------------------------------------------------------
</TABLE>
Holders of credit cards issued by the finance subsidiary are located throughout
the United States, and have various available lines of credit which are subject
to change by the finance subsidiary. The credit cards are used to purchase
merchandise offered for sale by affiliates.
11 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
/ / CURRENT ASSETS AND CURRENT LIABILITIES
The carrying value of cash equivalents, short-term borrowings, accounts payable
and accrued expenses approximates fair value because of their short maturity.
The carrying amount of the credit card receivables approximates fair value due
to the short maturity and because the average interest rate approximates
current market origination rates.
/ / LONG-TERM DEBT
The fair value of the Company's long-term debt is estimated based on the quoted
market prices for the same or similar issues or on the current rates offered to
the Company for debt of the same remaining maturities.
/ / INTEREST RATE SWAP AGREEMENTS
The fair value of interest rate swaps is the estimated amount that the Company
would receive or pay to terminate the swap agreements at the reporting date,
taking into account current interest rates and the current creditworthiness of
the swap counterparties.
76
<PAGE> 24
<TABLE>
The estimated fair values of the Company's financial instruments are as follows (Thousands):
- --------------------------------------------------------------------------------------
<CAPTION>
1994 1993
------------------------- -------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-Term Debt $(650,000) $(620,540) $(650,000) $(712,078)
Interest Rate Swaps $ (886) $ (5,970) $ (13) $ (13,289)
- --------------------------------------------------------------------------------------
</TABLE>
<TABLE>
12 QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial results for 1994 and 1993 follow (Thousands
except per share amounts):
- ---------------------------------------------------------------------------------
<CAPTION>
FIRST SECOND THIRD FOURTH
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994 QUARTER
Net Sales $1,481,628 $1,585,392 $1,715,176 $2,538,596
Gross Income 384,931 402,666 495,295 831,471
Net Income 47,276 53,832 90,490 256,745
Net Income Per Share $0.13 $0.15 $0.25 $0.72
- ---------------------------------------------------------------------------------
1993 QUARTER
Net Sales $1,518,561 $1,689,055 $1,616,667 $2,420,805
Gross Income 380,727 427,710 447,048 703,350
Net Income 44,225 68,232 82,215 196,327
Net Income Per Share $0.12 $0.19 $0.23 $0.54
- ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
MARKET PRICE AND DIVIDEND INFORMATION
- --------------------------------------------------------------------------
<CAPTION>
CASH DIVIDEND
MARKET PRICE PER SHARE
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
FISCAL YEAR 1994 HIGH LOW
4th Quarter $21-3/8 $16-7/8 $.09
3rd Quarter 21-5/8 17-1/4 .09
2nd Quarter 20 16-7/8 .09
1st Quarter $22-1/4 $16-3/4 $.09
- --------------------------------------------------------------------------
FISCAL YEAR 1993
4th Quarter $23-1/4 $16-5/8 $.09
3rd Quarter 24 20 .09
2nd Quarter 24-7/8 19-3/4 .09
1st Quarter $30 $21-1/4 $.09
- --------------------------------------------------------------------------
</TABLE>
The Company's common stock is traded on the New York Stock Exchange ("LTD") and
the London Stock Exchange. On January 28, 1995, there were 74,321 shareholders
of record. However, when including active associates who participate in the
Company's stock purchase plan, associates who own shares through Company
sponsored retirement plans and others holding shares in broker accounts under
street name, the Company estimates the shareholder base at approximately
140,000.
77
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Jurisdiction
Subsidiaries(a) of Incorporation
------------ ----------------
<S> <C>
Express, Inc.(b) Delaware
Lerner New York, Inc.(c) Delaware
Lane Bryant, Inc.(d) Delaware
The Limited London-Paris-New York, Inc.(e) Delaware
Henri Bendel, Inc.(f) Delaware
Victoria's Secret Stores, Inc.(g) Delaware
Cacique, Inc.(h) Delaware
Victoria's Secret Catalogue, Inc.(i) Delaware
Structure, Inc.(j) Delaware
Abercrombie & Fitch, Inc.(k) Delaware
Bath & Body Works, Inc.(l) Delaware
Penhaligon's Limited(m) United Kingdom
Limited Too, Inc.(n) Delaware
Mast Industries, Inc.(o) Delaware
Mast Industries (Far East) Limited(p) Hong Kong
Gryphon Development, Inc.(q) Delaware
World Financial Network National Bank(r) United States
Limited Distribution Services, Inc.(s) Delaware
Limited Service Corporation(t) Delaware
</TABLE>
- -----------------
(a) The names of certain subsidiaries are omitted since such unnamed
subsidiaries, considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary as of January 28, 1995.
(b) Express, Inc. is a wholly-owned subsidiary of Express Holding Corporation,
a Delaware corporation and a wholly-owned subsidiary of the registrant.
(c) Lerner New York, Inc. is a wholly-owned subsidiary of Lerner Holding
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(d) Lane Bryant, Inc. is a wholly-owned subsidiary of Lane Bryant Holding
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(e) The Limited London-Paris-New York, Inc. is a wholly-owned subsidiary of LIM
Holding Corporation, a Delaware corporation and a wholly-owned subsidiary
of the registrant.
(f) Henri Bendel, Inc. is a wholly-owned subsidiary of Henri Bendel Holding
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(g) Victoria's Secret Stores, Inc. is a wholly-owned subsidiary of Victoria's
Secret Stores Holding Corporation, a Delaware corporation and a
wholly-owned subsidiary of the registrant.
(h) Cacique, Inc. is a wholly-owned subsidiary of Cacique Holding Corporation,
a Delaware corporation and a wholly-owned subsidiary of the registrant.
<PAGE> 2
(i) Victoria's Secret Catalogue, Inc. is a wholly-owned subsidiary of
Victoria's Secret Catalogue Holding Corporation, a Delaware corporation and
a wholly-owned subsidiary of the registrant.
(j) Structure, Inc. is a wholly-owned subsidiary of Structure Holding
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(k) Abercrombie & Fitch, Inc. is a wholly-owned subsidiary of Abercrombie &
Fitch Holding Corporation, a Delaware corporation and a wholly-owned
subsidiary of the registrant.
(l) Bath & Body Works, Inc. is a wholly-owned subsidiary of Bath and Body Works
Holding Corporation, Inc., a Delaware corporation and a wholly-owned
subsidiary of the registrant.
(m) Penhaligon's Limited is a wholly-owned subsidiary of PENHAL Investments,
Inc., a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(n) Limited Too, Inc. is a wholly-owned subsidiary of Limited Too Holding
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(o) Mast Industries, Inc. is a wholly-owned subsidiary of Mast Holding
Corporation, a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(p) Mast Industries (Far East) Limited is a wholly-owned subsidiary of Mast
Industries, Inc.
(q) Gryphon Development, Inc. is a wholly-owned subsidiary of the Gryphon
Holding Corporation, a Delaware corporation and a wholly-owned subsidiary
of the registrant.
(r) World Financial Network National Bank is a wholly-owned subsidiary of the
registrant.
(s) Limited Distribution Services, Inc. is a wholly-owned subsidiary of LTDSP,
Inc., a Delaware corporation and a wholly-owned subsidiary of the
registrant.
(t) Limited Service Corporation is a wholly-owned subsidiary of the registrant.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
The Limited, Inc. 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 of our report dated
February 13, 1995, on our audits of the consolidated financial statements and
financial statement schedule of The Limited, Inc. and Subsidiaries as of
January 28, 1995, and January 29, 1994, and for the fiscal years ended January
28, 1995, January 29, 1994, and January 30, 1993, which report is included in
this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
April 24, 1995
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Leslie H. Wexner
-----------------------------------
Leslie H. Wexner
<PAGE> 2
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Michael A. Weiss
-----------------------------------
Michael A. Weiss
<PAGE> 3
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Martin Trust
-----------------------------------
Martin Trust
<PAGE> 4
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Eugene M. Freedman
-----------------------------------
Eugene M. Freedman
<PAGE> 5
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ E. Gordon Gee
-----------------------------------
E. Gordon Gee
<PAGE> 6
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Thomas G. Hopkins
-----------------------------------
Thomas G. Hopkins
<PAGE> 7
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ David T. Kollat
-----------------------------------
David T. Kollat
<PAGE> 8
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Claudine B. Malone
-----------------------------------
Claudine B. Malone
<PAGE> 9
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Donald B. Shackelford
-----------------------------------
Donald B. Shackelford
<PAGE> 10
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Allan R. Tessler
-----------------------------------
Allan R. Tessler
<PAGE> 11
POWER OF ATTORNEY
OFFICERS AND DIRECTORS OF
THE LIMITED, INC.
The undersigned officer and/or director of The Limited, Inc., a
Delaware corporation, which anticipates filing an Annual Report on Form 10-K
for its fiscal year ended January 28, 1995 under the provisions of the
Securities Exchange Act of 1934 with the Securities and Exchange Commission,
Washington, D.C., hereby constitutes and appoints Leslie H. Wexner and
Kenneth B. Gilman, and each of them, with full powers of substitution and
resubstitution, as attorney to sign for the undersigned in any and all
capacities such Annual Report on Form 10-K and any and all amendments thereto,
and any and all applications or other documents to be filed with the Securities
and Exchange Commission pertaining to such Annual Report on Form 10-K with full
power and authority to do and perform any and all acts and things whatsoever
required and necessary to be done in the premises, as fully to all intents and
purposes as the undersigned could do if personally present. The undersigned
hereby ratifies and confirms all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
EXECUTED as of the 27th day of January, 1995.
/s/ Raymond Zimmerman
-----------------------------------
Raymond Zimmerman
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1995
<PERIOD-END> JAN-28-1995
<CASH> 242,780
<SECURITIES> 0
<RECEIVABLES> 1,337,345
<ALLOWANCES> 44,946
<INVENTORY> 870,440
<CURRENT-ASSETS> 2,547,666
<PP&E> 2,798,415
<DEPRECIATION> 1,106,270
<TOTAL-ASSETS> 4,570,077
<CURRENT-LIABILITIES> 797,555
<BONDS> 650,000
<COMMON> 189,727
0
0
<OTHER-SE> 2,849,454
<TOTAL-LIABILITY-AND-EQUITY> 4,570,077
<SALES> 7,320,792
<TOTAL-REVENUES> 7,320,792
<CGS> 5,206,429
<TOTAL-COSTS> 5,206,429
<OTHER-EXPENSES> 1,315,374
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,381
<INCOME-PRETAX> 744,343
<INCOME-TAX> 296,000
<INCOME-CONTINUING> 448,343
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 448,343
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
</TABLE>
<PAGE> 1
EXHIBIT 99
[ARY, EARMAN and ROEPCKE LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of The Limited,
Inc. Savings and Retirement Plan:
We have audited the accompanying statements of net assets available for
benefits of The Limited, Inc. Savings and Retirement Plan as of December 31,
1994 and 1993, and the related statements of changes in net assets available for
benefits for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the net assets available for benefits of the
Plan as of December 31, 1994 and 1993, and the changes in net assets available
for benefits for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles.
/s/ ARY, EARMAN and ROEPCKE
-------------------------------
Columbus, Ohio
March 29, 1995.
<PAGE> 2
THE LIMITED, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Limited Fixed
TOTAL Stock Fund Income Fund Indexed Fund World Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at Fair Value:
Determined by Quoted Market Price
Common Stock of The Limited, Inc.
(Cost $31,473,031) $ 74,213,936 $ 74,213,936 $ - $ - $ -
Vanguard Indexed Mutual Fund
(Cost $21,363,025) 22,393,334 - - 22,393,334 -
Vanguard World Mutual Fund
(Cost $16,934,527) 17,568,066 - - - 17,568,066
Determined By Contract Value:
Guaranteed Investment Contracts:
Vanguard Investment Contract Trust 54,831,553 - 54,831,553 - -
Metropolitan Life Insurance 12,983,134 - 12,983,134 - -
Temporary Investments (Cost
Approximates Fair Value) 38,054 10,693 21,013 3,000 3,348
------------ ------------ ------------ ------------ ------------
Total Investments 182,028,077 74,224,629 67,835,700 22,396,334 17,571,414
Contribution Receivable from Employers 16,899,542 2,706,921 8,659,768 3,198,332 2,334,521
Receivable from Employers for Withheld
Participants' Contributions 936,072 147,762 351,168 264,962 172,180
Due from Brokers 1,406,791 1,406,791 - - -
Interfund Transfers - (916,433) 408,641 456,929 50,863
Accrued Interest and Dividends 2,622 1,287 771 291 273
Other Assets 412 - - - 412
------------ ------------ ------------ ------------ ------------
Total Assets 201,273,516 77,570,957 77,256,048 26,316,848 20,129,663
LIABILITIES
Administrative Fees Payable 372,240 161,033 134,051 43,429 33,727
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $200,901,276 $ 77,409,924 $ 77,121,997 $ 26,273,419 $ 20,095,936
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-1
<PAGE> 3
THE LIMITED, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1993
<TABLE>
<CAPTION>
Limited Fixed
TOTAL Stock Fund Income Fund Indexed Fund World Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at Fair Value:
Determined by Quoted Market Price
Common Stock of The Limited, Inc.
(Cost $28,548,294) $ 76,924,612 $ 76,924,612 $ - $ - $ -
Vanguard Indexed Mutual Fund
(Cost $15,690,019) 17,288,449 - - 17,288,449 -
Vanguard World Mutual Fund
(Cost $13,532,146) 13,799,287 - - - 13,799,287
Determined By Contract Value:
Guaranteed Investment Contracts:
Vanguard Investment Contract Trust 46,129,637 - 46,129,637 - -
Metropolitan Life Insurance 11,929,738 - 11,929,738 - -
John Hancock Life Insurance 1,693,809 - 1,693,809 - -
Temporary Investments (Cost
Approximates Fair Value) 351,056 2,390 312,905 17,880 17,881
------------ ------------ ------------ ------------ ------------
Total Investments 168,116,588 76,927,002 60,066,089 17,306,329 13,817,168
Contribution Receivable from Employers 16,654,367 2,961,061 8,853,901 2,637,242 2,202,163
Receivable from Employers for Withheld
Participants' Contributions 884,649 111,468 381,942 227,114 164,125
Due from Brokers 531,601 531,601 - - -
Interfund Transfers - (856,847) 373,730 340,564 142,553
Accrued Interest and Dividends 1,373 621 358 143 251
Other Assets
780 - 368 - 412
------------ ------------ ------------ ------------ ------------
Total Assets 186,189,358 79,674,906 69,676,388 20,511,392 16,326,672
------------ ------------ ------------ ------------ ------------
LIABILITIES
Other Liabilities 1,218 1,218 - - -
Administrative Fees Payable 699,365 320,641 249,463 71,876 57,385
------------ ------------ ------------ ------------ ------------
Total Liabilities 700,583 321,859 249,463 71,876 57,385
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $185,488,775 $ 79,353,047 $ 69,426,925 $ 20,439,516 $ 16,269,287
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-2
<PAGE> 4
THE LIMITED, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Limited Fixed
Total Stock Fund Income Fund Indexed Fund World Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Increase (Decrease) in Net
Unrealized Appreciation $ 1,716,786 $ 1,918,510 $ - $ (568,121) $ 366,397
Realized Gain on Sale of Securities 3,033,768 2,781,458 - 206,695 45,615
Interest 4,123,855 9,181 4,110,632 2,223 1,819
Dividends 1,575,897 1,575,897 - - -
Mutual Funds' Earnings 864,642 - - 661,477 203,165
------------ ------------ ------------ ------------ ------------
Total Investment Income 11,314,948 6,285,046 4,110,632 302,274 616,996
------------ ------------ ------------ ------------ ------------
Contributions:
Employers 23,236,673 4,220,346 11,221,074 4,509,396 3,285,857
Participants 10,745,605 2,466,228 3,919,556 2,532,832 1,826,989
------------ ------------ ------------ ------------ ------------
Total Contributions 33,982,278 6,686,574 15,140,630 7,042,228 5,112,846
------------ ------------ ------------ ------------ ------------
Transfer of Participants' Account
Balances to Former Affiliate's Plan (37,482) (14) (37,468) - -
------------ ------------ ------------ ------------ ------------
Interfund Transfers - (1,149,559) 231,825 879,225 38,509
------------ ------------ ------------ ------------ ------------
Administrative Expense (755,565) (335,032) (270,359) (84,273) (65,901)
------------ ------------ ------------ ------------ ------------
Benefits to Participants (29,091,678) (13,430,138) (11,480,188) (2,305,551) (1,875,801)
------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
Available for Benefits 15,412,501 (1,943,123) 7,695,072 5,833,903 3,826,649
Beginning Net Assets Available for
Benefits 185,488,775 79,353,047 69,426,925 20,439,516 16,269,287
------------ ------------ ------------ ------------ ------------
Ending Net Assets Available for Benefits $200,901,276 $ 77,409,924 $ 77,121,997 $ 26,273,419 $ 20,095,936
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-3
<PAGE> 5
THE LIMITED, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Limited Fixed
Total Stock Fund Income Fund Indexed Fund World Fund
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Increase (Decrease) in Net
Unrealized Appreciation $(51,165,802) $(51,222,621) $ - $ 537,811 $ (480,992)
Realized Gain on Sale of Securities 4,073,977 3,367,169 - 636,926 69,882
Interest 4,439,846 6,689 4,429,569 1,880 1,708
Dividends 1,783,025 1,783,025 - - -
Mutual Funds' Earnings 657,135 - - 464,994 192,141
------------ ------------ ------------ ------------ ------------
Total Investment Income (Loss) (40,211,819) (46,065,738) 4,429,569 1,641,611 (217,261)
------------ ------------ ------------ ------------ ------------
Contributions:
Employers 23,371,564 5,561,152 11,270,178 3,496,942 3,043,292
Participants 10,428,961 3,098,271 3,790,368 1,934,509 1,605,813
------------ ------------ ------------ ------------ ------------
Total Contributions 33,800,525 8,659,423 15,060,546 5,431,451 4,649,105
------------ ------------ ------------ ------------ ------------
Transfer of Participants' Account
Balances from Affiliated Plans 1,140,371 - 514,198 422,367 203,806
------------ ------------ ------------ ------------ ------------
Transfer of Participants' Account
Balances to Former Affiliate's Plan (20,815,838) (5,390,244) (10,483,032) (3,227,343) (1,715,219)
------------ ------------ ------------ ------------ ------------
Interfund Transfers - (4,461,978) 1,028,778 3,401,455 31,745
------------ ------------ ------------ ------------ ------------
Administrative Expense (752,234) (354,091) (261,967) (75,921) (60,255)
------------ ------------ ------------ ------------ ------------
Benefits to Participants (39,043,060) (20,796,573) (13,029,735) (2,847,422) (2,369,330)
------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
Available for Benefits (65,882,055) (68,409,201) (2,741,643) 4,746,198 522,591
Beginning Net Assets Available for
Benefits 251,370,830 147,762,248 72,168,568 15,693,318 15,746,696
------------ ------------ ------------ ------------ ------------
Ending Net Assets Available for Benefits $185,488,775 $ 79,353,047 $ 69,426,925 $ 20,439,516 $ 16,269,287
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-4
<PAGE> 6
THE LIMITED, INC. SAVINGS AND RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
Limited Fixed Balanced
Total Stock Fund Income Fund Indexed Fund World Fund Fund
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Increase (Decrease) in Net
Unrealized Appreciation $(35,113,811) $(30,558,791) $ - $ 1,040,860 $ 740,430 $ (6,336,310)
Realized Gain on Sale of
Securities 14,724,409 14,621,430 - 76,279 26,700 -
Master Trusts' Earnings 5,079,699 - 410,088 - - 4,669,611
Interest 3,339,282 20,979 3,317,745 273 285 -
Dividends 1,656,283 1,656,283 - - - -
Mutual Funds' Earnings 569,200 - - 336,311 232,889 -
------------ ------------ ------------ ------------ ------------ ------------
Total Investment Income (Loss) (9,744,938) (14,260,099) 3,727,833 1,453,723 1,000,304 (1,666,699)
------------ ------------ ------------ ------------ ------------ ------------
Contributions:
Employers:
Cash 21,629,777 6,331,664 10,291,305 2,211,975 2,391,300 403,533
The Limited, Inc. Common Stock 2,252,884 2,252,884 - - - -
Participants 9,745,785 3,664,723 3,776,604 846,944 877,007 580,507
------------ ------------ ------------ ------------ ------------ ------------
Total Contributions 33,628,446 12,249,271 14,067,909 3,058,919 3,268,307 984,040
------------ ------------ ------------ ------------ ------------ ------------
Transfer of Participants' Account
Balances from Affiliated Plans 121,306,985 61,642,002 12,602,071 - - 47,062,912
------------ ------------ ------------ ------------ ------------ ------------
Interfund Transfers - (4,110,765) 46,737,477 12,081,798 12,305,257 (67,013,767)
------------ ------------ ------------ ------------ ------------ ------------
Administrative Expense (386,007) (225,205) (113,686) (23,692) (23,424) -
------------ ------------ ------------ ------------ ------------ ------------
Benefits to Participants (43,518,434) (29,018,749) (12,495,636) (877,430) (803,748) (322,871)
------------ ------------ ------------ ------------ ------------ ------------
Increase (Decrease) in Net Assets
Available for Benefits 101,286,052 26,276,455 64,525,968 15,693,318 15,746,696 (20,956,385)
Beginning Net Assets Available for
Benefits 150,084,778 121,485,793 7,642,600 - - 20,956,385
------------ ------------ ------------ ------------ ------------ ------------
Ending Net Assets Available for
Benefits $251,370,830 $147,762,248 $ 72,168,568 $ 15,693,318 $ 15,746,696 $ -
============ ============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-5
<PAGE> 7
THE LIMITED, INC. SAVINGS AND RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
(1) DESCRIPTION OF THE PLAN
General
The Limited, Inc. Savings and Retirement Plan (the "Plan"), formerly
The Limited Stores Savings and Retirement Plan, is a defined
contribution plan covering certain employees of The Limited, Inc.
and its affiliates (the "Employers") who are at least 21 years of
age and have completed 1,000 or more hours of service during their
first consecutive twelve months of employment or any calendar year
beginning in or after their first consecutive twelve months of
employment. Certain employees of the Employers, who are covered by
a collective bargaining agreement, are not eligible to participate
in the Plan. At December 31, 1994, there were 20,891 participants
in the Plan.
Effective January 1, 1992, the plans of affiliates, except Fulcrum
Management Group Savings and Retirement Plan, were merged and all
assets and liabilities of the affiliate plans were pooled into the
Plan. Effective January 1, 1993, the Fulcrum Management Group
Savings and Retirement Plan was merged into the Plan.
On August 31, 1993, The Limited, Inc. sold 60% of its interest in
Brylane, Inc. and transferred the assets and liabilities allocated
to the employees of Brylane, Inc. and its affiliates to the
Brylane L.P. Savings and Retirement Plan.
The following description of the Plan provides only general
information. Participants should refer to the Plan document for a
more complete description of the Plan's provisions. The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA) as amended.
Amendments
Effective January 1, 1992, the Plan was amended and restated to, among
other things, (1) change the sponsorship of the Plan to the
Limited Service Corporation from The Limited, Inc., (2) rename the
Plan to The Limited, Inc. Savings and Retirement Plan from The
Limited Stores Savings and Retirement Plan and (3) change the
Employers' retirement contributions as noted under "Employer
Contributions" below.
Effective April 1, 1992, the Plan was amended and restated to, among
other things, (1) allow participants to change investment
directions quarterly and in 1% increments from semi-annually and
10%, (2) allow participants to direct the investment of the
Employers' retirement contribution and (3) allow the payment of
benefits as noted under "Payment of Benefits" below.
Contributions
Employer Contributions:
The Employers may provide a non-service related retirement
contribution of 4% of annual compensation up to the Social
Security wage base and 7% of annual compensation after that and a
service related retirement contribution of 1% of annual
compensation for participants who have completed five or more
years of vesting service as of the last day of the Plan year.
Participants who complete 500 hours of service during the Plan
year and are participants on the last day of the Plan year are
eligible. The annual compensation of each participant taken into
account under the Plan is limited to the maximum amount permitted
under Section 401(a)(17) of the Internal Revenue Code. The annual
compensation limit for the Plan year ended December 31, 1994, was
$150,000. Prior to the amendments effective January 1, 1992 there
was no service related retirement contribution.
The Employers may provide a matching contribution of 100% of the
participant's voluntary contributions up to 3% of the
participant's total annual compensation.
F-6
<PAGE> 8
Participant Voluntary Contributions:
A participant may elect to make a voluntary tax-deferred
contribution of 1% to 6% of his or her annual compensation up to
the maximum permitted under Section 402(g) of the Internal Revenue
Code adjusted annually ($9,240 at December 31, 1994). This
voluntary tax-deferred contribution may be limited by Section
401(k) of the Internal Revenue Code.
A participant earning annually more than $66,000, $64,245 and
$62,345, for the years ended December 31, 1994, 1993 and 1992,
respectively, may be limited to voluntary contributions to the
Plan of less than 6% due to requirements of Section 401(k) of the
Internal Revenue Code based on the current levels of participant
voluntary contributions.
Vesting
A participant is fully and immediately vested for voluntary and
rollover contributions. A summary of vesting percentages in the
Employers' contributions follows:
<TABLE>
<CAPTION>
Years of Vested Service Percentage
- ----------------------- ----------
<S> <C>
Less than 3 years 0%
3 years 20
4 years 40
5 years 60
6 years 80
7 years 100
</TABLE>
Payment Of Benefits
The full value of participants' accounts becomes payable upon
retirement, disability, or death. Upon termination of employment
for any other reason participants' accounts, to the extent vested,
become payable. Those participants with vested account balances
greater than $3,500 have the option of leaving their accounts
invested in the Plan until age 65. All benefits will be paid as a
lump-sum distribution. Those participants holding greater than 100
shares of Employer Securities will be distributed the shares.
Prior to the amendment effective April 1, 1992, participants had
the option of receiving cash in lieu of shares. Effective January
1, 1993, participants have the option of having their benefit paid
directly to an eligible retirement plan specified by the
participant.
A participant who is fully vested in his or her account and who has
participated in the Plan for at least five years may obtain an
in-service withdrawal from their account based on the percentage
amounts designated by the Plan. A participant may also request a
hardship distribution due to an immediate and heavy financial need
based on the terms of the Plan.
Amounts Allocated Participants Withdrawn from the Plan
The vested portion of net assets available for benefits allocated to
participants withdrawn from the plan as of December 31, 1994 and
1993, is set forth below:
<TABLE>
<CAPTION>
Fixed
Limited Income Indexed World
Total Stock Fund Fund Fund Fund
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
December 31, 1994 $3,894,855 $1,796,254 $1,321,029 $ 452,849 $ 324,723
December 31, 1993 $2,746,868 $ 964,773 $1,332,112 $ 280,308 $ 169,675
</TABLE>
Forfeitures
Forfeitures are used to reduce the Employers' required contributions.
In 1994, 1993 and 1992, forfeitures utilized amounted to
$3,851,243, $2,362,621 and $2,937,347, respectively.
F-7
<PAGE> 9
Expenses and Unallocated Earnings
Administrative expenses of the Plan may be paid from the Plan unless
the Employers elect to pay such expenses. Prior to July 1, 1992,
expenses of the Plan were paid by the Employers. Since July 1,
1992, the Plan has been paying these expenses from earnings not
allocated to participants' accounts. Unallocated earnings being
held as of December 31, 1994 and 1993 are set forth below:
<TABLE>
<CAPTION>
Limited Fixed
Stock Income Indexed World
Total Fund Fund Fund Fund
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
December 31, 1994 $354,505 $ 93,066 $146,831 $ 52,607 $ 62,001
December 31, 1993 $974,367 $402,278 $289,298 $149,361 $133,430
</TABLE>
Tax Determination
The Plan obtained its latest determination letter on January 30, 1995,
in which the Internal Revenue Service stated that the Plan, as
amended and restated January 11, 1992 and April 1, 1992, was in
compliance with the applicable requirements of the Internal
Revenue Code. Accordingly, the following Federal income tax rules
will apply to the Plan:
Voluntary tax-deferred contributions made under the Plan by a
participant and contributions made by the Employers to
participant accounts are generally not taxable until such
amounts are distributed.
The participants are not subject to Federal income tax on
interest, dividends, or gains in their particular accounts
until distributed.
The foregoing is only a brief summary of certain tax implications and
applies only to Federal tax regulations currently in effect.
(2) SUMMARY OF ACCOUNTING POLICIES
The Plan's financial statements are prepared on the accrual basis of
accounting. Assets of the Plan are valued at fair value. If
available, quoted market prices are used to value investments. The
amounts for investments that have no quoted market price are shown
at their estimated fair value, which is determined based on yields
equivalent for such securities or for securities of comparable
maturity, quality, and type as obtained from market makers.
Guaranteed investment contracts issued by insurance companies are
valued at contract value. Contract value represents contributions
made under the contract, and interest at the contract rate, less
Plan withdrawals and administration expenses charged by the
insurance companies.
Realized gains or losses on the distribution or sale of securities
represent the difference between the average cost of such
securities held and the fair value on the date of distribution or
sale.
INVESTMENTS
Net unrealized appreciation, equal to the difference between cost and
fair value of all investments held at the applicable valuation
dates, is recognized in determining the value of each fund. The
unrealized appreciation as of December 31, 1994, 1993 and 1992
follows:
<TABLE>
<CAPTION>
Limited Fixed Indexed
Total Stock Fund Income Fund Fund World Fund
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
December 31, 1994 $ 44,404,753 $ 42,740,905 $ - $ 1,030,309 $ 633,539
December 31, 1993 $ 50,241,889 $ 48,376,318 $ - $ 1,598,430 $ 267,141
December 31, 1992 $119,696,266 $117,914,976 $ - $ 1,040,860 $ 740,430
</TABLE>
F-8
<PAGE> 10
The Following is a summary of the net gain on securities sold during
the periods ended December 31, 1994, 1993 and 1992:
<TABLE>
<CAPTION>
Limited Fixed Indexed
Total Stock Fund Income Fund Fund World Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Period Ended
December 31, 1994
Proceeds $26,357,549 $ 4,926,530 $14,779,530 $ 3,511,736 $ 3,139,753
Cost 23,323,781 2,145,072 14,779,530 3,305,041 3,094,138
----------- ----------- ----------- ----------- -----------
Net Realized Gain $ 3,033,768 $ 2,781,458 $ - $ 206,695 $ 45,615
=========== =========== =========== =========== ===========
Period Ended
December 31, 1993
Proceeds $47,420,114 $ 4,627,603 $29,287,560 $ 7,187,529 $ 6,317,422
Cost 43,346,137 1,260,434 29,287,560 6,550,603 6,247,540
----------- ----------- ----------- ----------- -----------
Net Realized Gain $ 4,073,977 $ 3,367,169 $ - $ 636,926 $ 69,882
=========== =========== =========== =========== ===========
Period Ended
December 31, 1992
Proceeds $33,651,152 $17,863,464 $13,045,550 $ 1,662,911 $ 1,079,227
Cost 18,926,743 3,242,034 13,045,550 1,586,632 1,052,527
----------- ----------- ----------- ----------- -----------
Net Realized Gain $14,724,409 $14,621,430 $ - $ 76,279 $ 26,700
=========== =========== =========== =========== ===========
</TABLE>
Contributions under the Plan are invested in one of four investment
funds: (1) The Limited Stock Fund, consisting of common stock of
The Limited, Inc., a Delaware corporation (the "Issuer") and
parent company of the Employers, (2) the Fixed Income Fund, which
is invested in the Vanguard Investment Contract Trust and other
guaranteed investment contracts issued by insurance companies, (3)
the Indexed Fund, which is invested in the Vanguard Indexed Fund,
and (4) the World Fund, which is invested in the Vanguard World
Fund.
Prior to April 1, 1992, the Fixed Fund was invested through a master
trust consisting of guaranteed investment contracts issued by
insurance companies and the Plan provided for a Balanced Fund,
which was invested through a master trust consisting of stocks,
bonds, notes, investment contracts, cash and cash equivalents.
Effective April 1, 1992, the Balanced Fund was eliminated as an
investment election when the Indexed and World Funds were offered.
Participants' voluntary and Employers' contributions may be invested in
any one or more of the funds, at the election of the participant.
There are 5,968 participants in the Limited Stock Fund, 14,570 in
the Fixed Income Fund, 4,657 in the Indexed Fund, and 3,886 in the
World Fund at December 31, 1994.
The Balanced Fund was held in The Limited, Inc. Balanced Fund Master
Trust (the "Balanced Fund Trust") along with other balanced funds
of other employee benefit plans of the Employers' affiliates.
Effective April 1, 1992, the Balanced Fund Trust was terminated
with the assets being sold and cash distributed to the
participating plans. The Plan's participation in the Balanced Fund
Trust assets was based on fair value and monthly earnings in the
Balanced Fund Trust were allocated based on the respective Plan's
investment as of the 15th of the month.
The Fixed Income Fund was held in The Limited Fixed Income Fund Master
Trust (the "Fixed Income Fund Trust") along with other fixed
income funds of other employee benefit plans of the Employers'
affiliates. Effective April l, 1992, the Fixed Income Fund Trust
was terminated and the assets distributed to the respective
participating plans. The Plan's participation in the Fixed Income
Fund Trust assets was based on fair value and monthly earnings in
the Fixed Income Fund Trust were allocated based on the respective
Plan's investment as of the 15th of the month in each of the
investment pools within the Fixed Income Fund Trust.
(4) PLAN ADMINISTRATION
The Plan is administered by a Committee, the members of which are
appointed by the Board of Directors of the Employers.
(5) PLAN TERMINATION
Although the Employers have not expressed any intent, the Employers
have the right under the Plan to discontinue their contributions
at any time. The Limited, Inc. has the right any time, by action
of its Board of Directors, to terminate the Plan subject to
provisions of ERISA. Upon Plan termination or partial termination,
participants will become fully vested in their accounts.
F-9
