<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MAY 1, 1999
-----------
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 1-13814
-------
INTIMATE BRANDS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1436998
- ------------------- ----------------------
(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) 415-6900
------------------------
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 A Common Stock Outstanding at March 24, 2000
-------------------- -----------------------------
$.01 Par Value 39,505,622 Shares
Class B Common Stock Outstanding at March 24, 2000
-------------------- -----------------------------
$.01 Par Value 209,799,538 Shares
<PAGE>
INFORMATION REGARDING FILING OF FORM 10-Q/A
CHANGE IN ACCOUNTING FOR GIFT CERTIFICATES, STORE CREDITS AND LAYAWAY SALES.
The Company sells gift certificates in exchange for cash and issues store
credits in exchange for the value of returned merchandise. These gift
certificates and store credits do not expire and both can be redeemed toward
the purchase of merchandise in the future. The Company also offers a layaway
sales program, which allows customers to make payments over a period of time
toward the purchase of merchandise.
As discussed in Note 2 to the Consolidated Financial Statements, the Company
has changed its accounting for gift certificates, store credits and layaway
sales. The Company had historically recognized net receipts/(redemptions)
from gift certificates and store credits as a reduction/(increase) to
general, administrative and store operating expenses. Layaway sales were
recognized upon receipt of the initial payment. The Company now defers the
recognition of income on these transactions until the merchandise is
delivered to the customer.
The Company has given retroactive effect to this accounting change by
restating its previously issued financial statements, including the
Consolidated Statements of Operations for the thirteen weeks ended May 1,
1999 and May 2, 1998. In addition, the restatement resulted in changes to
the Consolidated Balance Sheets as of May 1, 1999 and May 2, 1998 and to the
Notes 1, 8, 9, 15 and 16 to the Consolidated Financial Statements. Although
the restatement has no impact on the cash flows of the Company, certain
classifications within the Consolidated Statements of Cash Flows for the
thirteen weeks ended May 1, 1999 and May 2, 1998 were adjusted to reflect the
restatement.
In addition, on June 22, 1999, the Company declared a five percent stock
dividend to both The Limited, Inc. and public shareholders. All share and per
share information for all periods presented have been restated to reflect the
five percent stock dividend (see Note 3 to the Consolidated Financial
Statements).
3
<PAGE>
INTIMATE BRANDS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Information Regarding Filing of Form 10-Q/A 3
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Income
Thirteen Weeks Ended
May 1, 1999 and May 2, 1998............................................................. 4
Consolidated Balance Sheets
May 1, 1999, January 30, 1999 and May 2, 1998........................................... 5
Consolidated Statements of Cash Flows
Thirteen Weeks Ended
May 1, 1999 and May 2, 1998............................................................. 6
Notes to Consolidated Financial Statements....................................................... 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition............................................ 15
Part II. Other Information
Item 1. Legal Proceedings............... .............................................................24
Item 4. Submission of Matters to a Vote of Security Holders.......................................... 25
Item 5. Other Information.............. ..............................................................25
Item 6. Exhibits and Reports on Form 8-K............................................................. 26
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
INTIMATE BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-----------------------------
May 1, May 2,
1999 1998
------------ ------------
<S> <C> <C>
Net sales $877,821 $770,868
Cost of goods sold, and buying and occupancy costs (551,229) (504,011)
------------ ------------
Gross income 326,592 266,857
General, administrative and store operating expenses (231,898) (185,839)
------------ ------------
Operating income 94,694 81,018
Interest expense (8,864) (7,563)
Other income 1,976 4,372
------------ ------------
Income before income taxes 87,806 77,827
Provision for income taxes 35,100 31,000
------------ ------------
Net income $52,706 $46,827
============ ============
Net income per basic and diluted share $0.21 $0.18
============ ============
Dividends per share $0.13 $0.13
============ ============
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
4
<PAGE>
INTIMATE BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands)
<TABLE>
<CAPTION>
May 1, January 30, May 2,
1999 1999 1998
------------- ------------- ------------
(Unaudited) (Unaudited)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and equivalents $15,472 $387,774 $22,850
Accounts receivable 16,819 15,627 18,375
Inventories 524,754 479,896 439,886
Intercompany receivable - - 180,821
Other 89,832 82,639 90,724
------------- ------------ ------------
Total current assets 646,877 965,936 752,656
Property and equipment, net 404,890 398,469 388,059
Other assets 81,739 83,672 83,824
------------- ------------ ------------
Total assets $1,133,506 $1,448,077 $1,224,539
============= ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $76,700 $93,764 $67,053
Current portion of long-term debt 100,000 100,000 -
Accrued expenses 207,704 232,592 193,168
Intercompany payable 159,177 5,860 -
Income taxes 28,273 114,623 23,769
------------ ------------ -----------
Total current liabilities 571,854 546,839 283,990
Long-term debt 250,000 250,000 350,000
Deferred income taxes 3,692 2,251 11,630
Other long-term liabilities 42,050 40,244 35,449
Shareholders' equity:
Common stock 2,527 2,527 2,527
Paid-in capital 670,723 672,391 674,488
Retained earnings (deficit) 128,625 109,496 (132,912)
------------ ------------ -------------
801,875 784,414 544,103
Less: treasury stock, at average cost (535,965) (175,671) (633)
------------ ------------ ------------
Total shareholders' equity 265,910 608,743 543,470
------------ ------------ -----------
Total liabilities and shareholders' equity $1,133,506 $1,448,077 $1,224,539
============ ============ ===========
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
5
<PAGE>
INTIMATE BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
---------------------------
May 1, May 2,
1999 1998
------------- ------------
<S> <C> <C>
Operating activities
Net income $52,706 $46,827
Impact of other operating activities on cash flows:
Depreciation and amortization 27,159 24,345
Change in assets and liabilities
Inventories (44,858) (22,183)
Accounts payable and accrued expenses (41,952) (87,038)
Income taxes (84,909) (51,127)
Other assets and liabilities (5,004) 26,370
------------- ------------
Net cash used for operating activities (96,858) (62,806)
------------- ------------
Investing activities
Capital expenditures (33,222) (20,448)
------------- ------------
Financing activities
Dividends paid (33,577) (35,374)
Repurchase of common stock (365,212) -
Change in intercompany receivable/payable 153,317 (168,364)
Stock options and other 3,250 1,122
------------- ------------
Net cash used for financing activities (242,222) (202,616)
------------- ------------
Net decrease in cash and equivalents (372,302) (285,870)
Cash and equivalents, beginning of year 387,774 308,720
------------- ------------
Cash and equivalents, end of period $15,472 $22,850
============= ============
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
6
<PAGE>
INTIMATE BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
Intimate Brands, Inc. (the Company) includes specialty retail and
catalogue operations, which offer women's intimate and other apparel,
personal care products and accessories. The Company consists of
Victoria's Secret Stores, Victoria's Secret Catalogue, Bath & Body
Works and Gryphon Development. The Limited, Inc. owns 84.3% of the
outstanding common stock of the Company.
The consolidated financial statements include the accounts of 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. Certain prior
period amounts have been reclassified to conform with current period
presentation.
The consolidated financial statements as of and for the periods ended
May 1, 1999 and May 2, 1998 are unaudited and are presented pursuant to
the rules and regulations of the Securities and Exchange Commission.
Accordingly, these consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto contained in the Company's 1998 Annual Report on Form 10-K/A.
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 periods ended
May 1, 1999 and May 2, 1998 included herein have been reviewed by the
independent public accounting firm of PricewaterhouseCoopers LLP and
the report of such firm follows the notes to consolidated financial
statements.
2. Change in Accounting
The Company sells gift certificates in exchange for cash and issues
store credits in exchange for the value of returned merchandise. These
gift certificates and store credits do not expire and both can be
redeemed toward the purchase of merchandise in the future. The Company
also offers a layaway sales program, which allows customers to make
payments over a period of time toward the purchase of merchandise.
The Company has changed its accounting for gift certificates, store
credits and layaway sales. The Company had historically recognized
net receipts/(redemptions) from gift certificates and store credits
as a reduction/(increase) to general, administrative and store
operating expenses. Layaway sales were recognized upon receipt of
the initial payment. The Company now defers the recognition of
income on these transactions until
7
<PAGE>
the merchandise is delivered to the customer.
The Company has given retroactive effect to this accounting change by
restating its previously issued financial statements beginning with
fiscal 1996. The impact of the restatement on the Consolidated
Statements of Operations relates principally to gift certificates and
store credits. The impact for the thirteen weeks ended May 1, 1999 and
May 2, 1998 is as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
MAY 1, 1999 MAY 2, 1998
-------------------------------- --------------------------------
AS PREVIOUSLY AS AS PREVIOUSLY AS
REPORTED RESTATED REPORTED RESTATED
---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
General, administrative and $ (249,233) $ (231,898) $ (200,454) $ (185,839)
store operating expenses
Operating income 84,194 94,694 71,418 81,018
Income before income taxes 77,306 87,806 68,227 77,827
Provision for income taxes 30,900 35,100 27,200 31,000
Net income $ 46,406 $ 52,706 $ 41,027 $ 46,827
Basic and diluted earnings per share $ 0.18 $ 0.21 $ 0.15 $ 0.18
</TABLE>
In addition, the restatement resulted in changes to the Consolidated
Balance Sheets as of May 1, 1999, January 30, 1999 and May 2, 1998.
Although the restatement has no impact on the cash flows of the
Company, certain classifications within the Consolidated Statements of
Cash Flows for the thirteen weeks ended May 1, 1999 and May 2, 1998
were adjusted to reflect the restatement.
In addition to the above, the Company reclassified certain distribution
costs related to Bath and Body Works from general, administrative and
store operating expense to buying and occupancy expense, consistent
with the Company's other businesses. Such amounts were $6.8 million and
$5.0 million for thirteen weeks ended May 1, 1999 and May 2, 1998.
3. Subsequent Event
On June 22, 1999, the Company declared a five percent stock dividend to
both The Limited and public shareholders. The stock dividend resulted
in the issuance of 11.8 million additional shares of common stock. All
share and per share information for all periods presented have been
restated to reflect the five percent stock dividend.
8
<PAGE>
4. Earnings Per Share
Weighted average common shares outstanding (thousands):
<TABLE>
<CAPTION>
Thirteen Weeks Ended
-------------------------------
May 1, 1999 May 2, 1998
------------- -------------
<S> <C> <C>
Common shares issued 265,738 265,335
Treasury shares (13,134) (195)
------------ -------------
Basic shares 252,604 265,140
Dilutive effect of stock options and restricted shares 4,149 2,165
------------ -------------
Diluted shares 256,753 267,305
============ =============
</TABLE>
There were no options outstanding at quarter-end 1999 and 1998 excluded
from the computation of earnings per share because the options'
exercise price was greater than the average market price of the common
shares during the period.
9
<PAGE>
5. 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. Property and Equipment, net
Property and equipment, net, consisted of (thousands):
<TABLE>
<CAPTION>
May 1, January 30, May 2,
1999 1999 1998
----------- --------------- ------------
<S> <C> <C> <C>
Property and equipment, at cost $846,403 $821,061 $758,957
Accumulated depreciation and
amortization (441,513) (422,592) (370,898)
----------- --------------- ------------
Property and equipment, net $404,890 $398,469 $388,059
=========== =============== =============
</TABLE>
7. Income Taxes
The Company is included in The Limited's consolidated federal and
certain state income tax groups for income tax purposes and is
responsible for its proportionate share of income taxes calculated upon
its federal taxable income at a current estimate of the annual
consolidated effective tax rate. Income taxes paid to The Limited
during the thirteen weeks ended May 1, 1999 and May 2, 1998
approximated $120.0 million and $80.7 million.
8. Long-term Debt
Long-term debt consists of notes which represent the Company's
proportionate share of certain long-term debt of The Limited. The
interest rates and maturities of the notes parallel those of the
corresponding debt of The Limited. The 7 1/2% debentures are subject to
early redemption beginning in 2003 concurrent with any prepayment of
the corresponding debt by The Limited.
10
<PAGE>
Unsecured long-term debt consisted of (thousands):
<TABLE>
<CAPTION>
May 1, January 30, May 2,
1999 1999 1998
----------- ------------- ------------
<S> <C> <C> <C>
7 1/2% debentures due March 2023 $100,000 $100,000 $100,000
9 1/8% notes due February 2001 150,000 150,000 150,000
8 7/8% notes due August 1999 100,000 100,000 100,000
----------- ------------- ------------
350,000 350,000 350,000
Less current portion of long-term debt 100,000 100,000 -
----------- ------------- ------------
$250,000 $250,000 $350,000
=========== ============= ============
</TABLE>
Interest paid during the thirteen weeks ended May 1, 1999 and May 2,
1998, including interest on the intercompany cash management account
(see Note 9), approximated $16.4 million and $15.1 million.
9. Intercompany Relationship with the Parent
The Limited provides various services to the Company including, but not
limited to, store design and construction supervision, real estate
management, travel and flight support and merchandise sourcing. To the
extent expenditures are specifically identifiable they are charged to
the Company. All other services-related costs not specifically
attributable to an operating business have been allocated to the
Company based upon various allocation methods. The Company and The
Limited have entered into intercompany agreements which establish the
provision of services in accordance with the terms described above.
The Company participates in The Limited's centralized cash management
system. Under this system cash received from the Company's operations
is transferred to The Limited's centralized cash accounts and cash
disbursements are funded from the centralized cash accounts on a daily
basis. The intercompany cash management account is an interest-earning
asset or interest-bearing liability of the Company. Interest on the
intercompany cash management account is calculated based on the Federal
Reserve AA Composite 30-day rate.
The Company's proprietary credit card processing is performed by
Alliance Data Systems which is approximately 31%-owned by The Limited.
The Company and The Limited are parties to a corporate agreement under
which the Company granted to The Limited a continuing option to
purchase, under certain circumstances, additional shares of Class B
Common Stock or shares of nonvoting capital stock of the Company. The
Corporate Agreement further provides that, upon request of The Limited,
the Company will use its best efforts to effect the registration of any
of the shares of Class B Common Stock and nonvoting capital stock held
by The Limited for sale.
11
<PAGE>
10. Segment Information
The Company has adopted SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company identifies operating
segments based on a businesses' operating characteristics and whether
management reports directly to the Chairman. Reportable segments were
determined based on the similar economic characteristics of the retail
businesses and the similar methods used to distribute products and
combine the store-based operations of Victoria's Secret Stores and Bath
& Body Works. The Catalogue segment consists of the Victoria's Secret
Catalogue operations. Sales outside the United States were immaterial.
Segment information for the thirteen weeks ended May 1, 1999 and May 2,
1998 follows (in thousands):
<TABLE>
<CAPTION>
Reconciling
1999 Retail Catalogue Other (a) Items Total
- --------------------------- -------------- ------------ ------------ ----------------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $680,871 $194,007 $2,943 - $877,821
Intersegment sales - - $77,574 ($77,574) (b) -
Operating income (loss) $95,991 $17,101 ($18,398) - $94,694
Total assets $832,470 $204,900 $96,136 - $1,133,506
Reconciling
1998 Retail Catalogue Other (a) Items Total
- --------------------------- -------------- ------------ -------------- ----------------- -------------
Net sales $566,888 $199,013 $4,967 - $770,868
Intersegment sales - - $63,207 ($63,207) (b) -
Operating income (loss) $76,881 $20,244 ($16,107) - $81,018
Total assets $744,578 $203,063 $276,898 - $1,224,539
</TABLE>
(a) Included in the "other" category are Gryphon and Corporate, neither of
which are significant operating segments. Total assets included an
intercompany receivable of $180,821 in 1998. The Company maintained an
intercompany payable of $159,177 as of May 1, 1999 (see Note 9).
(b) Represents intersegment sales elimination
In addition to its operating segments, management also focuses on
Victoria's Secret as a brand. Sales of the Victoria's Secret brand
grew 10% in the first quarter of 1999 and 11% in the first quarter
of 1998 and totaled $616.8 million in 1999 and $560.8 million in
1998.
11. Special and Nonrecurring Charge
In the fourth quarter of 1997, the Company recognized a $67.6 million
charge in conjunction with closing Cacique, a 118-store lingerie
business, effective January 31, 1998. The amount included noncash
charges of $30 million, comprised principally of write-offs and
liquidations of store assets, which were recognized in 1997. Outlays
for
12
<PAGE>
the cash component of the charge amounted to $26.8 million in 1998
and $1.3 million in 1999, leaving a $9.5 million liability at May 1,
1999.
The $9.5 million liability relates principally to future payments for
settlement of store obligations, currently scheduled through 2004. In
determining the provision for lease obligations, the Company considered
the estimated amount necessary for either buying out the lease or
continued rent payments through lease expiration.
13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Intimate Brands, Inc.
We have reviewed the accompanying condensed consolidated balance sheets of
Intimate Brands, Inc. and Subsidiaries (the "Company") as of May 1, 1999 and
May 2, 1998, and the related condensed consolidated statements of income and
cash flows for each of the thirteen-week periods ended May 1, 1999 and May 2,
1998. 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 condensed consolidated interim 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 30, 1999, 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 17, 1999, except for the information in Notes 2 and 3 as to which
the date is February 16, 2000, 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 30,
1999 is fairly stated in all material respects in relation to the
consolidated balance sheet from which it has been derived.
The condensed consolidated financial statements as of May 1, 1999 and May 2,
1998 and for each of the thirteen-week periods ended May 1, 1999 and May 2,
1998 have been restated as described in Note 2.
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbus, Ohio
May 12, 1999, except for the information in Notes 2 and 3 as to which the
date is February 16, 2000
14
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
CHANGE IN ACCOUNTING FOR GIFT CERTIFICATES, STORE CREDITS AND LAYAWAY SALES
The Company sells gift certificates in exchange for cash and issues store
credits in exchange for the value of returned merchandise. These gift
certificates and store credits do not expire and both can be redeemed toward the
purchase of merchandise in the future. The Company also offers a layaway sales
program, which allows customers to make payments over a period of time toward
the purchase of merchandise.
As discussed in Note 2 to the Consolidated Financial Statements, the Company
has changed its accounting for gift certificates, store credits and layaway
sales. The Company had historically recognized net receipts/(redemptions)
from gift certificates and store credits as a reduction/(increase) to
general, administrative and store operating expenses. Layaway sales were
recognized upon receipt of the initial payment. The Company now defers the
recognition of income on these transactions until the merchandise is
delivered to the customer.
The Company has given retroactive effect to this accounting change by
restating its previously issued financial statements beginning with fiscal
1996. The change in accounting results in a shift in the pattern of quarterly
earnings from the fourth quarter (when receipts exceed redemptions) to the
first and second quarters (when redemptions exceed receipts). Accordingly,
net income for the thirteen weeks ended May 1, 1999 and May 2, 1998 was
increased from the previously reported amounts by $6.3 million, or $0.03 per
diluted share, and $5.8 million, or $0.03 per diluted share.
STOCK DIVIDEND DECLARED SUBSEQUENT TO THE FIRST QUARTER OF 1999
On June 22, 1999, the Company declared a five percent stock dividend to both The
Limited and public shareholders. The stock dividend resulted in the issuance of
11.8 million additional shares of common stock. All share and per share
information for all periods presented have been restated to reflect the five
percent stock dividend (see Notes to the Consolidated Financial Statements).
RESULTS OF OPERATIONS
Net sales for the first quarter of 1999 were $877.8 million, an increase of 14%
from $770.9 million for the first quarter of 1998. Gross income increased 22% to
$326.6 million from $266.9 million in 1998 and operating income increased 17% to
$94.7 from $81.0 million in 1998. Earnings per diluted share grew 17% to $.21
per share, compared to $.18 per share in 1998.
Business highlights include the following:
Victoria's Secret Stores' sales increased 17% to $422.8 million in 1999 which
reflected a comparable store sales increase of 13%, while operating profits grew
23%. Sales were driven by three new product launches including `Body by
Victoria,' the most successful launch in brand
15
<PAGE>
history. These product launches were supported by national television
advertising.
Bath & Body Works' sales increased 26% to $258.1 million in 1999 with comparable
stores sales increases of 13%. Operating profits grew 28%. Overall, the brand
experienced solid customer response to its new product offerings and continued
strong sales of White Barn Candle Co. home fragrance products.
During the quarter, the Company repurchased $365.2 million of common stock in
connection with the previously announced $500 million share repurchase. These
shares were repurchased on a proportionate basis from both the open market and
The Limited. This stock repurchase was completed in May 1999.
FINANCIAL SUMMARY
The following summarized financial data compares the thirteen week period ended
May 1, 1999 to the comparable 1998 period:
<TABLE>
<CAPTION>
Change
From Prior
1999 1998 Year
--------- --------- ----------------
<S> <C> <C> <C>
NET SALES (MILLIONS):
Victoria's Secret Stores $423 $362 17%
Bath & Body Works 258 205 26%
--------- --------- ----------------
Total retail sales 681 567 20%
Victoria's Secret Catalogue 194 199 (3%)
Other 3 5 N/M
--------- --------- ----------------
Total net sales $878 $771 14%
========= ========= ================
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
% Change From
COMPARABLE STORE SALES: 1999 1998 Prior Year
--------- --------- ----------------
<S> <C> <C> <C>
Victoria's Secret Stores 13% 6%
Bath & Body Works 13% (1%)
--------- ---------
Total comparable store sales increase 13% 4%
========= =========
STORE DATA:
Retail sales increase attributable to new and
remodeled stores 7% 9%
Retail sales per average selling square foot $116 $105 10%
Retail sales per average store (thousands) $355 $327 9%
Average store size at end of quarter (selling square feet) 3,047 3,101 (2%)
Retail selling square feet at end of quarter (thousands) 5,941 5,448 9%
NUMBER OF STORES:
Beginning of year 1,890 1,710
Opened 61 51
Closed (1) (4)
--------- ---------
End of period 1,950 1,757 11%
========= =========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Number of Stores Selling Sq. Ft. (thousands)
-------------------------------------------- -------------------------------------------
Change Change
May 1, May 2, From May 1, May 2, From
1999 1998 Prior Year 1999 1998 Prior Year
---------- ---------- ---------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Victoria's Secret Stores 849 797 52 3,764 3,580 184
Bath & Body Works 1,101 960 141 2,177 1,868 309
---------- ---------- ---------------- ---------- ---------- ---------------
Total stores and selling
square feet 1,950 1,757 193 5,941 5,448 493
========== ========== ================ ========== ========== ===============
</TABLE>
NET SALES
Net sales for the first quarter of 1999 increased by 14% to $877.8 million from
$770.9 million in 1998. The net sales increase was primarily due to a 13%
increase in comparable store sales. The balance of the increase was due to the
net addition of 193 new stores, partially offset by a decrease in catalogue and
other sales.
In the first quarter of 1999, retail sales increased 20% to $680.9 million, led
by Bath & Body Works' sales increase of 26%. Bath & Body Works' sales increase
was primarily attributable to the net addition of 141 new stores and 309,000
selling square feet, as well as a 13% increase in comparable store sales.
Victoria's Secret Stores' sales increased 17% to $422.8 million. The sales
increase was primarily due to a 13% increase in comparable store sales, with the
remaining increase coming from the addition of 52 new stores and 184,000 selling
square feet.
Victoria's Secret Catalogue net sales for the first quarter of 1999 decreased 3%
to $194.0 million from $199.0 million a year ago. The sales decrease was
primarily driven by a decline in sales of Fall clearance merchandise resulting
from fewer clearance catalogues mailed in the first quarter of 1999 versus the
same period in 1998. While gross demand increased 3% and Spring media sales per
page and response rates increased 13% and 30%, net sales of Spring merchandise
were negatively impacted by an increase in backorders.
GROSS INCOME
The first quarter of 1999 gross income rate, expressed as a percentage of net
sales, increased to 37.2% from 34.6% for the same period in 1998. The majority
of the rate increase was due to an increase in the merchandise margin rate
(which represents gross income before deduction of buying and occupancy costs).
The remaining increase was driven by a decrease in buying and occupancy costs.
The increase in the merchandise margin rate was primarily attributable to higher
retail markups and reduced markdowns, particularly at Victoria's Secret Stores.
Both the merchandise margin rate and the buying and occupancy rate were
favorably impacted by Bath & Body Works which increased to 29% of total Company
net sales in 1999 from 27% in 1998. Bath & Body Works has historically recorded
higher merchandise margins due to higher retail markups and lower buying and
occupancy costs due to smaller store sizes and higher sales productivity.
18
<PAGE>
GENERAL, ADMINISTRATIVE AND STORE OPERATING EXPENSES
The general, administrative and store operating expense rate, expressed as a
percentage of net sales, increased to 26.4% in the first quarter of 1999 from
24.1% for the same period in 1998. The rate increase was primarily due to an
increase in national advertising investment for the Victoria's Secret brand.
OPERATING INCOME
The operating income rate, expressed as a percentage of net sales, increased
slightly to 10.8% in the first quarter of 1999 from 10.5% in 1998. Operating
income increased 17% to $94.7 in 1999. The improvement in operating income was
driven by increases in gross income which more than offset increased general,
administrative and store operating costs.
INTEREST EXPENSE AND OTHER INCOME
The Company incurred $8.9 million in interest expense in the first quarter of
1999 compared to $7.6 million for the same period in 1998. Interest expense
primarily resulted from the $350 million of debt. The increase in interest
expense is primarily due to an increase in the Company's intercompany payable as
a result of the share repurchase.
The Company earned $2.0 million in other income compared to $4.4 million for the
same period in 1998. The other income was primarily interest income earned from
excess net cash from operations managed through The Limited's centralized cash
management system (see Note 9 to the Consolidated Financial Statements). The
decrease in other income is primarily due to decreased cash, which was used to
fund the share repurchase.
SPECIAL AND NONRECURRING CHARGE
In the fourth quarter of 1997, the Company recognized a $67.6 million charge in
conjunction with closing Cacique, a 118-store lingerie business, effective
January 31, 1998. The amount included noncash charges of $30 million, comprised
principally of write-offs and liquidations of store assets, which were
recognized in 1997. Outlays for the cash component of the charge amounted to
$26.8 million in 1998 and $1.3 million in 1999, leaving a $9.5 million liability
at May 1, 1999.
The $9.5 million liability relates principally to future payments for settlement
of store obligations, currently scheduled through 2004. In determining the
provision for lease obligations, the Company considered the estimated amount
necessary for either buying out the lease or continued rent payments through
lease expiration.
19
<PAGE>
FINANCIAL CONDITION
The Company's consolidated balance sheet as of May 1, 1999 provides evidence of
financial strength and flexibility. A more detailed discussion of liquidity,
capital resources and capital requirements follows.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operating activities and cash funding from The Limited's
centralized cash management systems 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>
May 1, January 30, May 2,
1999 1999 1998
---------- ---------- -----------
<S> <C> <C> <C>
Working capital $75,023 $419,097 $468,666
========== ========== ===========
Capitalization:
Long-term debt $250,000 $250,000 $350,000
Shareholders' equity 265,910 608,743 543,470
========== ========== ===========
Total capitalization $515,910 $858,743 $893,470
========== ========== ===========
</TABLE>
Net cash used in operating activities totaled $96.9 million for the thirteen
weeks ended May 1, 1999 versus $62.8 million for the same period in 1998. The
decrease in cash provided by operations was primarily driven by two factors: 1)
an increase in inventories; and 2) an increase in the amount of income tax
payments.
Investing activities were all for capital expenditures, which are primarily for
new and remodeled stores.
Financing activities included the quarterly cash dividend payment of $0.13 per
share. In addition, financing activities included the repurchase of
approximately 9.5 million shares of the Company's common stock for $365.2
million. The Company has previously announced authorization by its Board of
Directors to repurchase up to $500 million of its common stock on a
proportionate basis from both the open market and The Limited. As of May 1,
1999, the Company had repurchased a total of 12.2 million shares for $460.8
million under this program which was completed in May 1999. The cash dividend
payment and stock repurchase were partially offset by a $153.3 million net
increase in The Limited's intercompany cash management account payable (see Note
9 to the Consolidated Financial Statements).
20
<PAGE>
CAPITAL EXPENDITURES
Capital expenditures, primarily for new and remodeled stores, totaled $33.2
million for the thirteen weeks ended May 1, 1999, compared to $20.4 million
for the comparable period of 1998. The Company anticipates spending $150-$170
million in 1999 for capital expenditures, of which $110-$120 million will be
for new stores, the relocation and expansion of existing stores and related
improvements for the retail business.
The Company intends to add approximately 850,000 selling square feet in 1999,
which will represent a 15% increase over year-end 1998. It is anticipated the
increase will result from the addition of approximately 260 net new stores
and the expansion of approximately 45 stores. The Company expects that
capital expenditures will be funded principally by net cash provided by
operating activities.
INFORMATION SYSTEMS AND "YEAR 2000" COMPLIANCE
The Year 2000 issue arises primarily from computer programs, commercial
systems and embedded chips that will be unable to properly interpret dates
beyond the year 1999. The Company utilizes a variety of proprietary and third
party computer technologies - both hardware and software - directly in its
businesses. The Company also relies on numerous third parties and their
systems' ability to address the Year 2000 issue. The Company's critical
information technology ("IT") functions include point-of-sale equipment,
merchandise distribution, merchandise and non-merchandise procurement, credit
card and banking services, transportation, and business and accounting
management systems. The Company is using both internal and external resources
to complete its Year 2000 initiatives.
In order to address the Year 2000 issue, the Company is participating with
its parent, The Limited, which established a program management office to
oversee, monitor and coordinate the company-wide Year 2000 effort. This
office has developed and is implementing a Year 2000 plan. The implementation
includes five stages: (i) awareness, (ii) assessment, (iii)
renovation/development, (iv) validation, and (v) implementation. There are
several areas of focus: (1) renovation of legacy systems throughout the
Company; (2) upgrade existing software packages at two operating businesses;
(3) assessment of Year 2000 readiness at key vendors and suppliers; and (4)
evaluating facilities and distribution equipment with embedded computer
technology.
The status of each area of focus is as follows:
(1) All five stages of Year 2000 implementation for renovation of legacy
systems are complete for significant IT systems at the Company's
businesses.
(2) The upgrade of existing software packages at two of the Company's
businesses has been completed.
21
<PAGE>
(3) A vast network of vendors, suppliers and service providers located both
within and outside the United States provide the Company with merchandise
for resale, supplies for operational purposes and services. The Company has
identified key vendors, suppliers and service providers and is making
inquiries to determine their Year 2000 status. The Company has obtained
assurances from a number of its key vendors regarding their Year 2000
status and expects to complete this process in mid-1999. In addition, the
Company has completed on-site assessments of certain of its key vendors to
further assess such vendors' progress and risks. Also, the Company, along
with other major retail organizations, is participating in a national
industry Year 2000 survey of over 80,000 suppliers and vendors.
(4) The Company also utilizes various facilities and distribution equipment
with embedded computer technology, such as conveyors, elevators, security
systems, fire protection systems, and energy management systems. The
Company's assessment of these systems is in process and all stages of its
efforts are expected to be complete in the second quarter of 1999.
The Company believes that the reasonably likely worst-case scenario would
involve short-term disruption of systems affecting its supply and
distribution channels. The Company is developing contingency plans, such as
alternative sourcing, and identifying the necessary actions that it would
need to take if critical systems or service providers were not Year 2000
compliant. The Company expects to finalize these contingency plans in the
second half of 1999.
At the present time, the Company is not aware of any Year 2000 issues that
are expected to affect materially its products, services, competitive
position or financial performance. However, despite the Company's significant
efforts to make its systems, facilities and equipment Year 2000 compliant,
the compliance of third party service providers and vendors (including, for
instance, governmental entities and utility companies) is beyond the
Company's control. Accordingly, the Company can give no assurances that the
failure of systems of other companies on which the Company's systems rely, or
the failure of key suppliers or other third parties to comply with Year 2000
requirements, will not have a material adverse effect on the Company.
Total expenditures related to remediation, testing, conversion, replacement
and upgrading system applications were $18 million. These expenditures were
completed in 1998. In addition, the Company has incurred internal payroll
costs (not separately identified) relating to the Company's Year 2000
initiatives. Any additional expenditures are not expected to be material.
Total incremental expenses, primarily depreciation and amortization of new
package systems, are not expected to have a material impact on the Company's
financial condition during 1999 and 2000.
22
<PAGE>
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company cautions that any forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) contained in
this Form 10-Q/A or made by management of the Company involve risks and
uncertainties and are subject to change based on various important factors,
many of which may be beyond the Company's control. Accordingly, the Company's
future performance and financial results may differ materially from those
expressed or implied in any such forward-looking statements. The foregoing
statements as to costs and dates relating to the Year 2000 effort are
forward-looking and are based on the Company's current best estimates that
may be proven incorrect as additional information becomes available. The
Company's Year 2000-related forward-looking statements are also based on
assumptions about many important factors, including the technical skills of
employees and independent contractors, the representations and preparedness
of third parties, the ability of vendors to deliver merchandise or perform
services required by the Company and the collateral effects of the Year 2000
issues on the Company's business partners and customers. While the Company
believes its assumptions are reasonable, it cautions that it is impossible to
predict factors that could cause actual costs or timetables to differ
materially from the expected results. In addition to Year 2000 issues, the
following factors, among others, in some cases have affected and in the
future could affect the Company's financial performance and actual results
and could cause actual results for 1999 and beyond to differ materially from
those expressed or implied in any forward-looking statements included in this
Form 10-Q/A or otherwise made by management: changes in consumer spending
patterns, consumer preferences and overall economic conditions, the impact of
competition and pricing, changes in weather patterns, political stability,
currency and exchange risks and changes in existing or potential duties,
tariffs or quotas, postal rate increases and charges, paper and printing
costs, availability of suitable store locations at appropriate terms, ability
to develop new merchandise and ability to hire and train associates.
IMPACT OF INFLATION
The Company's results of operations and financial condition are presented
based on 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.
23
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is a defendant in a variety of lawsuits arising in the
ordinary course of business.
On November 13, 1997, the United States District Court for the Southern
District of Ohio, Eastern Division, dismissed with prejudice an amended
complaint that had been filed against the Company, The Limited and
certain of The Limited's other subsidiaries by the American Textile
Manufacturers Institute ("ATMI"), a textile industry trade association.
The amended complaint alleged that the defendants violated the federal
False Claims Act by submitting false country of origin declarations to
the U.S. Customs Service. On November 26, 1997, ATMI served a motion to
alter or amend judgment and a motion to disqualify the presiding judge
and to vacate the order of dismissal. The motion to disqualify was
denied on December 22, 1997, but as a matter of his personal
discretion, the presiding judge elected to recuse himself from further
proceedings and this matter was transferred to a judge of the United
States District Court for the Southern District of Ohio, Western
Division. On May 21, 1998, this judge denied all pending motions
seeking to alter, amend or vacate the judgment that had been entered in
favor of the Company. On June 5, 1998, ATMI appealed to the United
States Court of Appeals for the Sixth Circuit, where the matter remains
pending.
On January 13, 1999, two complaints were filed against the Company's
parent, The Limited, and one of its subsidiaries, as well as other
defendants, including many national retailers. Both complaints relate
to labor practices allegedly employed on the island of Saipan,
Commonwealth of the Northern Mariana Islands, by apparel manufacturers
unrelated to The Limited (some of which have sold goods to The Limited)
and seek injunctions, unspecified monetary damages, and other relief.
One complaint, on behalf of a class of unnamed garment workers, filed
in the United States District Court for the Central District of
California, Western Division, alleges violations of federal statutes,
the United States Constitution, and international law. On March 29,
1999, a motion was filed to transfer this action to the United States
District Court located on Saipan, and on April 12, 1999, a motion to
dismiss the complaint for failure to state a claim upon which relief
can be granted was filed. The second complaint, filed by a national
labor union and other organizations in the Superior Court of the State
of California, San Francisco County, alleges unfair business practices
under California law. On March 29, 1999, a motion seeking dismissal of
this complaint was filed.
Although it is not possible to predict with certainty the eventual
outcome of any litigation, in the opinion of management, the foregoing
proceedings are not expected to have a material adverse effect on the
Company's financial position or results of operations.
24
<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on May 18, 1998.
The matters voted upon and the results of the voting were as follows:
Roger D. Blackwell, Grace A. Nichols and Donald B. Shackelford were
elected to the Board of Directors for a term of three years. Of the
32,481,844 Class A shares and 200,409,163 Class B shares (representing
601,227,489 votes) present in person or represented by proxy at the
meeting, the number of votes for and the number of votes as to which
authority to vote in the election was withheld, were as follows with
respect to each of the nominees:
<TABLE>
<CAPTION>
Votes Votes as to Which
For Voting Authority
Name Election Withheld
--------------------------------- --------------- -----------------------
<S> <C> <C>
Roger D. Blackwell 633,444,535 264,798
Grace A. Nichols 633,395,940 313,393
Donald B. Shackelford 633,441,440 267,893
</TABLE>
In addition, directors whose term of office continued after the Annual
Meeting were: Cynthia A. Fields, Kenneth B. Gilman, E. Gordon Gee,
William E. Kirwan, Beth M. Pritchard, Alex Shumate and Leslie H.
Wexner.
Item 5. OTHER INFORMATION
The Company's Certificate of Incorporation includes provisions relating
to potential conflicts of interest that may arise between the Company
and The Limited. Such provisions were adopted in light of the fact that
the Company and The Limited and its subsidiaries are engaged in retail
businesses and may pursue similar opportunities in the ordinary course
of business. Among other things, these provisions generally eliminate
the liability of directors and officers of the Company with respect to
certain matters involving The Limited and its subsidiaries, including
matters that may constitute corporate opportunities of The Limited, its
subsidiaries or the Company. Any person purchasing or acquiring an
interest in shares of capital stock of the Company will be deemed to
have consented to such provisions relating to conflicts of interest and
corporate opportunities, and such consent may restrict such person's
ability to challenge transactions carried out in compliance with such
provisions. Investors should review the Company's Certificate of
Incorporation before making any investment in shares of the Company's
capital stock.
25
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.6. Building Lease Agreement by Distribution Land Corp.
and Victoria's Secret Stores, Inc., dated January 31,
1999 incorporated by reference to Exhibit 10.6 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended May 1, 1999.
10.7. Building Lease Agreement by Distribution Land Corp.
and Victoria's Secret Catalogue, Inc., dated January
31, 1999 incorporated by reference to Exhibit 10.7
to the Company's Quarterly Report on Form 10-Q for
the quarter ended May 1, 1999.
10.9. Building Lease Agreement by Distribution Land Corp.
and Bath & Body Works, Inc., dated January 31,
1999 incorporated by reference to Exhibit 10.9 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended May 1, 1999.
15. Letter re: Unaudited Interim Financial Information to
Securities and Exchange Commission re: Incorporation
of Report of Independent Accountants'.
27. Restated Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
None.
26
<PAGE>
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.
INTIMATE BRANDS, INC.
(Registrant)
By /s/ V. Ann Hailey
----------------------
V. Ann Hailey
Executive Vice President
and Chief Financial
Officer of The Limited
Inc.*
Date: April 18, 2000
- --------------------------------------
* Ms. Hailey is the principal financial officer of The Limited, Inc. and has
been duly authorized to sign on behalf of the Registrant.
27
<PAGE>
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.
INTIMATE BRANDS, INC.
(Registrant)
By_______________________
V. Ann Hailey
Executive Vice President
and Chief Financial
Officer of The Limited
Inc.*
Date: April 18, 2000
- ------------------------------------
* Ms. Hailey is the principal financial officer of The Limited, Inc. and has
been duly authorized to sign on behalf of the Registrant.
28
<PAGE>
Exhibit 15
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Commissioners:
We are aware that our report dated May 12, 1999, except for the information
in Notes 2 and 3 as to which the date is February 16, 2000, on our review of
the interim consolidated financial information of Intimate Brands, Inc. and
Subsidiaries (the "Company") as of and for the thirteen-week period ended May 1,
1999 and included in this Form 10-Q/A is incorporated by reference in the
Company's registration statement on Form S-3, Registration No. 333-78485, and
the registration statements on Form S-8, Registration Nos. 333-04921 and
333-04923. 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.
Very truly yours,
/s/PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Columbus, Ohio
April 14, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OF INTIMATE BRANDS, INC. AND
SUBSIDIARIES FOR THE QUARTER ENDED MAY 1, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
THE COMPANY CHANGED ITS ACCOUNTING FOR GIFT CERTIFICATES, STORE CREDITS AND
LAYAWAY SALES (SEE NOTE 2 TO THE CONSOLIDATED FINANCIAL STATEMENTS). THE
COMPANY HAS GIVEN RETROACTIVE EFFECT TO THIS ACCOUNTING CHANGE BY RESTATING ITS
PREVIOUSLY ISSUED FINANCIAL STATEMENTS BEGINNING WITH FISCAL 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> MAY-01-1999
<CASH> 15,472
<SECURITIES> 0
<RECEIVABLES> 16,819
<ALLOWANCES> 0
<INVENTORY> 524,754
<CURRENT-ASSETS> 646,877
<PP&E> 846,403
<DEPRECIATION> 441,513
<TOTAL-ASSETS> 1,133,506
<CURRENT-LIABILITIES> 571,854
<BONDS> 0
0
0
<COMMON> 2,527
<OTHER-SE> 263,383
<TOTAL-LIABILITY-AND-EQUITY> 1,133,506
<SALES> 877,821
<TOTAL-REVENUES> 877,821
<CGS> 551,229
<TOTAL-COSTS> 551,229
<OTHER-EXPENSES> 231,898
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,864
<INCOME-PRETAX> 87,806
<INCOME-TAX> 35,100
<INCOME-CONTINUING> 52,706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,706
<EPS-BASIC> 0.21
<EPS-DILUTED> 0.21
</TABLE>
