<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________________ to___________________
Commission file number 1-8344
------
THE LIMITED, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1029810
- ------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
Three Limited Parkway, P.O. Box 16000, Columbus, OH 43216
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 479-7000
----------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 26, 1995
- ---------------------------- ----------------------------------
Common Stock, $.50 Par Value 357,319,798 Shares
<PAGE> 2
THE LIMITED, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income
Thirteen Weeks Ended
April 29, 1995 and April 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets
April 29, 1995 and January 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
Thirteen Weeks Ended
April 29, 1995 and April 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition . . . . . . . . . . . . . . . . . . . 10
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share amounts)
(Unaudited)
Thirteen Weeks Ended
------------------------------
April 29, April 30,
1995 1994
--------- ----------
<S> <C> <C>
NET SALES $1,588,134 $1,481,628
Cost of Goods Sold, Occupancy and
Buying Costs 1,185,468 1,096,697
--------- ---------
GROSS INCOME 402,666 384,931
General, Administrative and Store
Operating Expenses 322,646 293,761
--------- ---------
OPERATING INCOME 80,020 91,170
Interest Expense (16,488) (14,670)
Other Income, net 2,679 2,776
--------- ---------
INCOME BEFORE INCOME TAXES 66,211 79,276
Provision for Income Taxes 27,000 32,000
--------- ---------
NET INCOME $39,211 $47,276
========= =========
NET INCOME PER SHARE $.11 $.13
========= =========
DIVIDENDS PER SHARE $.10 $.09
========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING 357,975 358,563
========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands)
April 29, January 28,
ASSETS 1995 1995
------ ----------- -------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and Equivalents $59,967 $242,780
Accounts Receivable 1,252,495 1,292,399
Inventories 985,533 870,440
Other 140,905 142,047
------------ -------------
TOTAL CURRENT ASSETS 2,438,900 2,547,666
PROPERTY AND EQUIPMENT, NET 1,693,498 1,692,145
OTHER ASSETS 337,140 330,266
------------ -------------
TOTAL ASSETS $4,469,538 $4,570,077
============ =============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable $260,407 $275,303
Accrued Expenses 347,591 372,676
Certificates of Deposit and Commercial Paper 70,089 25,200
Income Taxes 22,402 124,376
------------ -------------
TOTAL CURRENT LIABILITIES 700,489 797,555
LONG-TERM DEBT 650,000 650,000
DEFERRED INCOME TAXES 300,835 306,139
OTHER LONG-TERM LIABILITIES 57,618 55,427
SHAREHOLDERS' EQUITY:
Common Stock 189,727 189,727
Paid-in Capital 134,634 132,938
Retained Earnings 2,720,002 2,716,516
------------ -------------
3,044,363 3,039,181
Less Treasury Stock, at cost (283,767) (278,225)
------------ -------------
TOTAL SHAREHOLDERS' EQUITY 2,760,596 2,760,956
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $4,469,538 $4,570,077
============ =============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
4
<PAGE> 5
THE LIMITED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------
April 29, April 30,
1995 1994
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $39,211 $47,276
Impact of other operating activities on cash flows:
Depreciation and amortization 69,548 67,978
Changes in assets and liabilities:
Accounts receivable 39,904 (9,965)
Inventory (115,093) (69,737)
Accounts payable and accrued expenses (39,981) (29,124)
Income taxes (101,974) (65,832)
Other assets and liabilities (10,873) (5,987)
--------- ---------
NET CASH USED FOR OPERATING ACTIVITIES (119,258) (65,391)
--------- ---------
CASH USED FOR INVESTING ACTIVITIES
Capital expenditures (68,873) (68,105)
--------- ---------
FINANCING ACTIVITIES:
Net proceeds of commercial paper
borrowings and certificates of deposits 44,889 1,400
Dividends paid (35,725) (32,209)
Purchase of treasury stock (8,981) -
Stock options and other 5,135 2,862
--------- ---------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES 5,318 (27,947)
--------- ---------
NET DECREASE IN CASH AND EQUIVALENTS (182,813) (161,443)
Cash and equivalents, beginning of year 242,780 320,558
--------- ---------
CASH AND EQUIVALENTS, END OF PERIOD $59,967 $159,115
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
THE LIMITED, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of The Limited,
Inc. (the "Company") and all significant subsidiaries which are more than 50
percent owned and controlled. All significant intercompany balances and
transactions have been eliminated in consolidation.
Investments in other entities (including joint ventures) which are more
than 20 percent owned are accounted for on the equity method.
The consolidated financial statements as of and for the periods ended April
29, 1995 and April 30, 1994 are unaudited and are presented pursuant to the
rules and regulations of the Securities and Exchange Commission.
Accordingly, the consolidated financial statements should be read in
conjunction with the financial statement disclosures contained in the
Company's 1994 Annual Report. In the opinion of management, the
accompanying consolidated financial statements reflect all adjustments
(which are of a normal recurring nature) necessary to present fairly the
financial position and results of operations and cash flows for the interim
periods, but are not necessarily indicative of the results of operations for
a full fiscal year.
The consolidated financial statements as of and for the thirteen week
periods ended April 29, 1995 and April 30, 1994 included herein have been
reviewed by the independent accounting firm of Coopers & Lybrand L.L.P. and
the report of such firm follows the notes to consolidated financial
statements.
2. ADOPTION OF ACCOUNTING STANDARD
Management evaluates the recoverability of goodwill and other long-lived
assets and several factors are used in the valuation including, but not
limited to, management's plans for future operations, recent operating
results and projected cash flows. During March, 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of." The Statement requires
that long-lived assets and certain identifiable intangibles held and used by
an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted SFAS 121 in the first quarter of 1995, the
adoption of which did not have a material effect on the results of
operations or financial condition.
3. INVENTORIES
The fiscal year of the Company and its subsidiaries is comprised of two
principal selling seasons: Spring (the first and second quarters) and Fall
(the third and fourth quarters). Valuation of finished goods inventories is
based principally upon the lower of average cost or market determined on a
first-in, first-out basis utilizing the retail method. Inventory valuation
at the end of the first and third quarters reflects adjustments for
inventory markdowns and shrinkage estimates for the total selling season.
6
<PAGE> 7
4. INCOME TAXES
The provision for income taxes is based on the current estimate of the
annual effective tax rate. Income taxes paid during the first quarter of
1995 and 1994 approximated $133.1 million and $98.2 million.
The Internal Revenue Service has assessed the Company for additional taxes
and interest for 1989 and 1990. The assessment was based primarily on the
treatment of transactions involving the Company's foreign operations and
construction allowances. The Company strongly disagrees with the assessment
and is vigorously contesting the matter. Management believes resolution of
this matter will not have a material adverse effect on the Company's results
of operations or financial condition.
5. FINANCING ARRANGEMENTS
<TABLE>
<CAPTION>
Long-term debt consisted of (thousands):
April 29, January 28,
1995 1995
---------- ------------
<S> <C> <C>
7 1/2% Debentures due March 2023 $250,000 $250,000
7.80% Notes due May 2002 150,000 150,000
9 1/8% Notes due February 2001 150,000 150,000
8 7/8% Notes due August 1999 100,000 100,000
---------- ------------
$650,000 $650,000
========== ============
</TABLE>
The Company maintains two revolving credit agreements (the "Agreements")
totaling $840 million. One Agreement provides the Company available
borrowings of up to $490 million. The other Agreement provides World
Financial Network National Bank (WFNNB), 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 0.16% 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
April 29, 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. Approximately $25 million of commercial paper was outstanding
at April 29, 1995.
Up to $250 million of debt securities and warrants to purchase debt
securities may be issued under the Company's shelf registration statement.
7
<PAGE> 8
All long-term debt outstanding at April 29, 1995 and January 28, 1995
is unsecured.
Interest paid during the first quarter of 1995 and 1994 approximated $24.4
million and $18.6 million.
6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net, consisted of (thousands):
<TABLE>
<CAPTION>
April 29, January 28,
1995 1995
----------- ------------
<S> <C> <C>
Property and equipment, at cost $2,852,630 $2,798,415
Accumulated depreciation and amortization (1,159,132) (1,106,270)
----------- ------------
Property and equipment, net $1,693,498 $1,692,145
=========== ============
</TABLE>
7. RECENT DEVELOPMENT
On May 15, 1995, the Company announced that the Board of Directors approved
implementation of a plan which includes the creation of two new public
companies out of existing operations and a special distribution of cash to
shareholders:
o The two new companies will be approximately 85% owned by The Limited,
Inc., with the balance owned by public shareholders. The
companies will be grouped based on complementary operations and
opportunities: the first, Intibrands, Inc., a newly formed company,
will contain Victoria's Secret Stores, Victoria's Secret Catalogue,
Bath & Body Works, Cacique, Penhaligon's and Gryphon. The second
company, still to be named, will contain Express, Limited Stores,
Lerner New York, Lane Bryant and Henri Bendel;
o The Company plans to sell a significant or majority interest in the
Company's credit card bank, World Financial Network/Limited Credit
Services, to one or more strategic financial and/or marketing partners;
o The Company plans to distribute the proceeds, which will become
available as a result of these transactions, to shareholders. The size
of this special distribution will depend upon the outcome of these
transactions.
8
<PAGE> 9
REPORT OF INDEPENDENT ACCOUNTANTS
To the Audit Committee of
The Board of Directors of
The Limited, Inc.
We have reviewed the condensed consolidated balance
sheet of The Limited, Inc. and Subsidiaries at April 29, 1995,
and the related condensed consolidated statements of income and
cash flows for the thirteen-week periods ended April 29, 1995
and April 30, 1994. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with
generally accepted auditing standards, the consolidated balance
sheet as of January 28, 1995, and the related consolidated
statements of income, shareholders' equity, and cash flows for
the year then ended (not presented herein); and in our report
dated February 13, 1995 we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of January 28, 1995, is fairly stated, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
June 6, 1995
9
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales for the first quarter of 1995 grew to $1.588 billion, an increase of
7% from $1.482 billion a year ago. Net income for the quarter was $39.2
million compared to $47.3 million last year and earnings per share were $0.11
versus $0.13 in 1994.
Divisional highlights include the following:
Victoria's Secret Stores had a very strong first quarter, with record
sales and near-record operating income.
Victoria's Secret Catalogue produced a 27% increase in sales over the
first quarter of 1994 and record operating income. The business
successfully mailed Spring editions of its Swimsuit and Country
Collection issues.
Bath & Body Works more than doubled sales and nearly tripled their
operating income over the prior year on a store-for-store sales
increase of 28%. This business opened 30 stores in the first quarter,
and plans to open a record 190 new and 11 remodeled stores this year,
bringing the total to over 500 stores by the end of 1995.
Express continued its fourth quarter momentum and produced a
significant improvement in operating income in the first quarter of
1995 over 1994's first quarter.
Abercrombie & Fitch Co. produced a profit for the first time in a
first quarter, primarily on the strength of increased sales and
improved margins.
In anticipation of second quarter demand, inventory levels will
continue to build at Limited Stores and Lerner New York. Even with
these increases, Limited Stores and Lerner New York inventory levels
will remain under historic levels on a per square foot basis.
Financial Summary
The following summarized financial data compares the thirteen week period
ended April 29, 1995 to the comparable period for 1994:
<TABLE>
<CAPTION>
First Quarter First Quarter % Change
1995 1994 From Prior Year
------------- ------------- --------------
<S> <C> <C> <C>
Net sales (millions):
Victoria's Secret Stores $241 $222 9%
Victoria's Secret Catalogue 155 122 27%
Bath & Body Works 66 32 106%
Cacique 15 20 (25%)
Other 3 2 50%
------------- ------------- --------------
Total Intibrands, Inc. $480 $398 21%
------------- ------------- --------------
Express 304 265 15%
Lerner New York 219 222 (1%)
Lane Bryant 204 223 (9%)
The Limited 179 204 (12%)
Henri Bendel 21 19 11%
------------- ------------- --------------
Total women's $927 $933 (1%)
------------- ------------- --------------
Structure 104 93 12%
Abercrombie & Fitch Co. 33 23 43%
The Limited Too 44 35 26%
------------- ------------- --------------
Total net sales $1,588 $1,482 7%
============= ============= ==============
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION> First Quarter First Quarter % Change
1995 1994 From Prior Year
------------- ------------- --------------
<S> <C> <C> <C>
OPERATING INCOME (MILLIONS):
Intibrands, Inc. $40 $27 48%
Women's 12 33 (64%)
Other 28 31 (10%)
------------- ------------- --------------
Total operating income $80 $91 (12%)
============= =============
Increase (decrease) in comparable store sales:
Victoria's Secret Stores 2% 13%
Bath & Body Works 28% 42%
Cacique (29%) 3%
------------- -------------
Total Intibrands, Inc. 3% 15%
------------- -------------
Express 8% (10%)
Lerner New York 0% (3%)
Lane Bryant (9%) 6%
The Limited (13%) (18%)
Henri Bendel 11% 8%
------------- -------------
Total women's (3%) (6%)
------------- -------------
Structure (4%) 21%
Abercrombie & Fitch Co. 7% 15%
The Limited Too 6% 36%
------------- -------------
Total comparable store sales
increase (decrease) (1%) 0%
============= =============
Retail sales increase
attributable to new and
remodeled stores 6% 5%
Retail sales per average selling
square foot $55.63 $55.53 -
Retail sales per average store
(thousands) $292 $294 (1%)
Average store size at end
of quarter (square feet) 5,226 5,291 (1%)
Retail selling square feet
(thousands) 25,892 24,555 5%
Number of stores:
Beginning of year 4,867 4,623
Opened 97 50
Closed (10) (32)
------------- -------------
End of first quarter 4,954 4,641
============= =============
</TABLE>
11
<PAGE> 12
<TABLE>
<CAPTION>
Number of Stores Selling Sq. Ft. (thousands)
---------------------------------------- --------------------------------------
Change Change
April 29, April 30, From Prior April 29, April 30, From Prior
1995 1994 Period 1995 1994 Period
-------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Victoria's Secret Stores 609 577 32 2,646 2,402 244
Bath & Body Works 347 213 134 549 279 270
Cacique 117 109 8 352 322 30
Penhaligon's 4 7 (3) 2 3 (1)
-------- --------- ---------- --------- --------- ----------
Total Intibrands, Inc. 1,077 906 171 3,549 3,006 543
-------- --------- ---------- --------- --------- ----------
Express 720 682 38 4,401 3,985 416
Lerner New York 843 871 (28) 6,536 6,761 (225)
Lane Bryant 814 817 (3) 3,866 3,852 14
The Limited 711 725 (14) 4,328 4,422 (94)
Henri Bendel 4 4 - 88 93 (5)
-------- --------- ---------- --------- --------- ----------
Total women's 3,092 3,099 (7) 19,219 19,113 106
-------- --------- ---------- --------- --------- ----------
Structure 473 402 71 1,784 1,455 329
Abercrombie & Fitch Co. 72 50 22 580 412 168
The Limited Too 240 184 56 760 569 191
Total stores and selling -------- --------- ---------- --------- --------- ----------
square feet 4,954 4,641 313 25,892 24,555 1,337
======== ========= ========== ========= ========= ==========
</TABLE>
Net Sales
- ---------
Net sales for the first quarter of 1995 increased 7% over the first quarter of
1994, primarily as a result of the net addition of new and expanded stores.
During the first quarter of this year, the Company opened 97 new stores,
remodeled 38 stores and closed 10 stores.
Sales at the Intibrand businesses for the first quarter of 1995 increased 21%
over the same period last year. This increase was attributable to the net
addition of 171 new stores, a 3% increase in comparable store sales and a 27%
increase in catalogue net sales.
Sales at the women's businesses for the first quarter of 1995 decreased 1% over
the first quarter of 1994, primarily due to the 3% decline in comparable store
sales.
Gross Income
- ------------
Gross income, expressed as a percentage of sales, decreased to 25.4% for the
first quarter of 1995 from 26.0% in the first quarter of 1994. Merchandise
margins decreased .4%, reflecting slightly higher markdowns in the first
quarter of 1995. Buying and occupancy costs also increased .3% 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 20.3% for the first quarter of 1995 as compared to 19.8%
for the same period in 1994. This increase was primarily due to lower sales
productivity. Sales productivity, which is initially lower in new and remodeled
stores, was also slightly lower in existing stores. The Company continues to
maintain a high level of customer service.
12
<PAGE> 13
Operating Income
- ----------------
Operating income, as a percentage of sales, was 5.0% and 6.2% for the first
quarter of 1995 and 1994. The decrease was due to lower merchandise margins
resulting from increased markdowns, higher buying and occupancy costs and
higher general, administrative and store operating expenses, expressed as a
percentage of sales.
Interest Expense
- ----------------
<TABLE>
<CAPTION>
First Quarter
-----------------------
1995 1994
------ -------
<S> <C> <C>
Average Borrowings $736.9 $681.3
(millions)
Average Effective Interest Rate 8.95% 8.61%
</TABLE>
Interest expense increased $1.8 million in the first quarter of 1995 as
compared to the first quarter of 1994. Higher interest rates increased
interest costs approximately $.6 million, while higher borrowing levels
increased interest costs approximately $1.2 million.
FINANCIAL CONDITION
Liquidity and Capital Resources
- -------------------------------
Cash provided from operating activities, commercial paper backed by funds
available under committed long-term credit agreements and the Company's capital
structure continue to provide the capital 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>
April 29, January 28,
1995 1995
----------- ------------
<S> <C> <C>
Working Capital $1,738,411 $1,750,111
=========== =============
Capitalization -
Long-term debt $650,000 $650,000
Deferred income taxes 300,835 306,139
Shareholders' equity 2,760,596 2,760,956
----------- ------------
Total Capitalization $3,711,431 $3,717,095
=========== =============
Additional amounts available under
long-term credit agreements $815,311 $840,000
=========== =============
</TABLE>
13
<PAGE> 14
Net cash used for operating activities was $119.3 million in the first quarter
of 1995 versus $65.4 million in the first quarter last year. Cash requirements
in the first quarter for inventories and income taxes are typical due to the
timing of Spring season merchandise deliveries and tax payments associated with
fourth quarter earnings. In 1995, the decline in the accounts receivable
balance was due to the payments by proprietary credit card holders on fourth
quarter 1994 credit balances. Cash requirements for accounts receivable
increased in the first quarter of 1994 due to the growth of the number of
proprietary credit card holders, which increased at a faster rate than
cardholder payments.
Investing activities included capital expenditures, primarily for new and
remodeled stores. Financing activities included the repurchase of $9.0 million
of the Company's common stock, which represented approximately .5 million
shares. Cash dividends paid increased to $.10 per share in 1995 from $.09 per
share in 1994.
On May 19, 1995, as discussed in note 7, the Company, through two subsidiaries
of Intibrands, Inc., borrowed $250 million under a new bank credit agreement.
The Company announced on May 15, 1995 that the Board of Directors approved
implementation of a plan which includes (1) the creation of two new public
companies out of existing operations to be approximately 85% owned by The
Limited, Inc., (2) the sale of a significant or majority interest in the
Company's credit card bank, and (3) the distribution of proceeds to
shareholders which will become available as a result of these transactions.
See note 7 for additional discussion of the plan. Management believes that
implementation of the plan will not have a material adverse effect on the
liquidity and capital resources of the Company.
Capital Expenditures
- --------------------
Capital expenditures totaled $68.9 million for the first quarter of 1995,
compared to $68.1 million for the first quarter of 1994. 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. In addition, the Company
presently has available $815 million under its long-term credit agreements
and has the ability to offer up to $250 million of debt securities and warrants
to purchase debt securities under its shelf registration statement.
14
<PAGE> 15
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on May 15, 1995.
The matters voted upon and the results of the voting were as follows:
(a) Leslie H. Wexner, Eugene M. Freedman, Kenneth B. Gilman, David T.
Kollat and Michael A. Weiss were elected to the Board of
Directors for a term of three years. Of the 296,182,471 shares
present in person or represented by proxy at the meeting, the
number of shares voted for and the number of shares as to which
authority to vote in the election was withheld, were as follows
with respect to each of the nominees:
<TABLE>
Shares as to Which
<CAPTION> Shares Voted for Voting Authority
Name Election Withheld
-------------------------- ---------------------------- ---------------------------
<S> <C> <C>
Leslie H. Wexner 294,283,691 1,898,780
Eugene M. Freedman 294,314,058 1,868,413
Kenneth B. Gilman 294,300,510 1,881,961
David T. Kollat 294,260,617 1,921,854
Michael A. Weiss 294,288,649 1,893,822
</TABLE>
In addition, directors whose term of office continued after the
Annual Meeting were: E. Gordon Gee, Thomas G. Hopkins, Claudine
B. Malone, Donald B. Shackelford, Allan R. Tessler, Martin
Trust, Bella Wexner and Raymond Zimmerman.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Exhibits.
---------
<S> <C>
4. Instruments Defining the Rights of Security Holders.
4.1. Copy of the form of Global Security representing the Company's 7 1/2% Debentures due 2023,
incorporated by reference 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.
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
4.3. $280,000,000 Credit Agreement dated as of December 4, 1992 (the "WFNNB Credit Agreement") among the
World Financial Network National Bank, the Company, the Banks and Morgan Guaranty Trust Company of New York,
incorporated by reference to Exhibit 4.9 to the Company's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1992.
4.4. Conformed copy of the Indenture dated as of March 15, 1988 between the Company and The Bank of New York,
incorporated by reference to Exhibit 4.1(a) to the Company's Current Report on Form 8-K dated March 21, 1989.
4.5. Copy of the form of Global Security representing the Company's 8 7/8% Notes due August 15, 1999, incorporated by
reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated August 14, 1989.
4.6. Copy of the form of Global Security representing the Company's 9 1/8% Notes due February 1, 2001, incorporated
by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 6, 1991.
4.7. Proposed form of Debt Warrant Agreement for Warrants attached to Debt Securities, with proposed form of Debt
Warrant Certificate incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-3
(File no. 33-53366) originally filed with the Securities and Exchange Commission (the "Commission") on October
16, 1992, as amended by Amendment No. 1 thereto, filed with the Commission on February 23, 1993 (the "1993 Form
S-3").
4.8. Proposed form of Debt Warrant Agreement for Warrants not attached to Debt Securities, with proposed form of
Debt Warrant Certificate 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 4.9 to the Company's Quarterly
Report on Form 10-Q for the quarter ended April 30, 1994.
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
11. Statement re: Computation of Per Share Earnings.
12. Statement re: Computation of Ratio of Earnings to Fixed Charges.
15. Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re: Incorporation of
Accountants' Report.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of fiscal year 1995.
</TABLE>
17
<PAGE> 18
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE LIMITED, INC.
(Registrant)
By /s/ Kenneth B. Gilman
---------------------
Kenneth B. Gilman,
Vice Chairman and Chief
Financial Officer*
Date: June 9, 1995
- -------------------
* Mr. Gilman is the principal financial officer and has been duly authorized to
sign on behalf of the Registrant.
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Document
- ----------- ----------------------------------------------------------------
<S> <C>
11 Statement re Computation of
Per Share Earnings.
12 Statement re Ratio of
Earnings to Fixed Charges.
15 Letter re: Unaudited Interim Financial Information re:
Incorporation of Report of Independent Accountants
27 Financial Data Schedule
</TABLE>
19
<PAGE> 1
EXHIBIT 11
THE LIMITED, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-------------------------------
April 29,1995 April 30, 1994
------------- --------------
<S> <C> <C>
Net income $39,211 $47,276
============= ==============
Common shares outstanding:
Weighted average 379,454 379,454
Dilutive effect of stock options 650 671
Weighted average treasury shares (22,129) (21,562)
------------- --------------
Weighted average used to calculate
net income per share 357,975 358,563
============= ==============
Net income per share $.11 $.13
============= ==============
</TABLE>
<PAGE> 1
EXHIBIT 12
THE LIMITED, INC. AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
(Thousands except ratio amounts)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
----------------------------
April 29, April 30,
1995 1994
-------- ---------
<S> <C> <C>
Adjusted Earnings
- -----------------
Income before income taxes $66,211 $79,276
Portion of minimum rent ($165,512 in 1995
and $150,922 in 1994) representative
of interest 55,171 50,306
Interest on indebtedness 16,488 14,670
-------- ---------
Total Earnings as Adjusted $137,870 $144,252
======== =========
Fixed Charges
- -------------
Portion of minimum rent representative
of interest $55,171 $50,306
Interest on indebtedness 16,488 14,670
-------- ---------
Total Fixed Charges $71,659 $64,976
======== =========
Ratio of Earnings to Fixed Charges 1.92x 2.22x
======== =========
</TABLE>
<PAGE> 1
EXHIBIT 15
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
We are aware that our report dated June 6, 1995, on our review of the interim
consolidated financial information of The Limited, Inc. and Subsidiaries for
the thirteen-week period ended April 29, 1995 and included in this Form 10-Q is
incorporated by reference in the Company's registration statements on Form S-8,
Registration Nos. 33-18533, 33-25005, 2-92277, 33-24829, 33-24507, 33-24828,
2-95788, 2-88919, 33-24518, 33-6965, 33-14049, 33-22844, 33-44041, 33-49871,
and the registration statements on Form S-3, Registration Nos. 33-20788,
33-31540, 33-43832, and 33-53366. Pursuant to Rule 436(c) under the Securities
Act of 1933, this report should not be considered a part of the registration
statement prepared or certified by us within the meaning of Sections 7 and 11
of that Act.
COOPERS & LYBRAND L.L.P.
Columbus, Ohio
June 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements of The Limited, Inc. and Subsidiaries for the
quarter ended April 29, 1995 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-START> JAN-29-1995
<PERIOD-END> APR-29-1995
<CASH> 59,967
<SECURITIES> 0
<RECEIVABLES> 1,294,906
<ALLOWANCES> 42,411
<INVENTORY> 985,533
<CURRENT-ASSETS> 2,438,900
<PP&E> 2,852,630
<DEPRECIATION> 1,159,132
<TOTAL-ASSETS> 4,469,538
<CURRENT-LIABILITIES> 700,489
<BONDS> 650,000
<COMMON> 189,727
0
0
<OTHER-SE> 2,854,636
<TOTAL-LIABILITY-AND-EQUITY> 4,469,538
<SALES> 1,588,134
<TOTAL-REVENUES> 1,588,134
<CGS> 1,185,468
<TOTAL-COSTS> 1,185,468
<OTHER-EXPENSES> 322,646
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,488
<INCOME-PRETAX> 66,211
<INCOME-TAX> 27,000
<INCOME-CONTINUING> 39,211
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,211
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
