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|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
31-1029810
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
Three Limited Parkway, P.O. Box 16000,
Columbus, Ohio
|
|
43216
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
ý
|
Accelerated filer
|
o
|
|
|
|
|
Non-accelerated filer
|
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
o
|
Common Stock, $.50 Par Value
|
|
Outstanding at August 24, 2012
|
|
|
287,414,106 Shares
|
|
|
Page No.
|
|
|
|
|
Item 1.
Financial Statements *
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 4.
Controls and Procedures
|
|
|
|
|
|
Item 1.
Legal Proceedings
|
|
|
|
Item 1A.
Risk Factors
|
|
|
|
|
|
Item 3.
Defaults Upon Senior Securities
|
|
|
|
Item 4.
Mine Safety Disclosures
|
|
|
|
Item 5.
Other Information
|
|
|
|
Item 6.
Exhibits
|
|
|
|
*
|
The Company’s fiscal year ends on the Saturday nearest to January 31. As used herein, “second quarter of 2012” and “second quarter of 2011” refer to the thirteen week periods ending July 28, 2012 and July 30, 2011, respectively. "Year-to-date 2012" and "year-to-date 2011" refer to the twenty-six week periods ending July 28, 2012 and July 30, 2011, respectively.
|
Item 1.
|
FINANCIAL STATEMENTS
|
|
Second Quarter
|
|
Year-to-Date
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net Sales
|
$
|
2,399
|
|
|
$
|
2,458
|
|
|
$
|
4,553
|
|
|
$
|
4,675
|
|
Costs of Goods Sold, Buying and Occupancy
|
(1,457
|
)
|
|
(1,556
|
)
|
|
(2,709
|
)
|
|
(2,931
|
)
|
||||
Gross Profit
|
942
|
|
|
902
|
|
|
1,844
|
|
|
1,744
|
|
||||
General, Administrative and Store Operating Expenses
|
(637
|
)
|
|
(708
|
)
|
|
(1,246
|
)
|
|
(1,334
|
)
|
||||
Operating Income
|
305
|
|
|
194
|
|
|
598
|
|
|
410
|
|
||||
Interest Expense
|
(79
|
)
|
|
(64
|
)
|
|
(157
|
)
|
|
(119
|
)
|
||||
Other Income
|
3
|
|
|
146
|
|
|
1
|
|
|
234
|
|
||||
Income Before Income Taxes
|
229
|
|
|
276
|
|
|
442
|
|
|
525
|
|
||||
Provision for Income Taxes
|
86
|
|
|
45
|
|
|
174
|
|
|
129
|
|
||||
Net Income
|
$
|
143
|
|
|
$
|
231
|
|
|
$
|
268
|
|
|
$
|
396
|
|
Net Income Per Basic Share
|
$
|
0.50
|
|
|
$
|
0.76
|
|
|
$
|
0.92
|
|
|
$
|
1.27
|
|
Net Income Per Diluted Share
|
$
|
0.49
|
|
|
$
|
0.73
|
|
|
$
|
0.90
|
|
|
$
|
1.23
|
|
Dividends Per Share
|
$
|
0.25
|
|
|
$
|
1.20
|
|
|
$
|
0.50
|
|
|
$
|
1.40
|
|
|
Second Quarter
|
|
Year-to-Date
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
Net Income
|
$
|
143
|
|
|
$
|
231
|
|
|
$
|
268
|
|
|
$
|
396
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
|
||||||||
Reclassification of Cash Flow Hedges to Earnings
|
(11
|
)
|
|
(5
|
)
|
|
1
|
|
|
24
|
|
||||
Foreign Currency Translation
|
5
|
|
|
1
|
|
|
1
|
|
|
(1
|
)
|
||||
Unrealized Gain (Loss) on Cash Flow Hedges
|
10
|
|
|
2
|
|
|
7
|
|
|
(26
|
)
|
||||
Total Other Comprehensive Income (Loss), Net of Tax
|
4
|
|
|
(2
|
)
|
|
9
|
|
|
(3
|
)
|
||||
Total Comprehensive Income
|
$
|
147
|
|
|
$
|
229
|
|
|
$
|
277
|
|
|
$
|
393
|
|
|
July 28,
2012 |
|
January 28,
2012 |
|
July 30,
2011 |
||||||
|
(Unaudited)
|
|
|
|
(Unaudited)
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current Assets:
|
|
|
|
|
|
||||||
Cash and Cash Equivalents
|
$
|
1,193
|
|
|
$
|
935
|
|
|
$
|
1,035
|
|
Accounts Receivable, Net
|
175
|
|
|
218
|
|
|
241
|
|
|||
Inventories
|
1,057
|
|
|
997
|
|
|
1,104
|
|
|||
Deferred Income Taxes
|
51
|
|
|
51
|
|
|
30
|
|
|||
Other
|
240
|
|
|
167
|
|
|
242
|
|
|||
Total Current Assets
|
2,716
|
|
|
2,368
|
|
|
2,652
|
|
|||
Property and Equipment, Net
|
1,775
|
|
|
1,644
|
|
|
1,583
|
|
|||
Goodwill
|
1,330
|
|
|
1,330
|
|
|
1,457
|
|
|||
Trade Names and Other Intangible Assets, Net
|
494
|
|
|
495
|
|
|
598
|
|
|||
Other Assets
|
274
|
|
|
271
|
|
|
210
|
|
|||
Total Assets
|
$
|
6,589
|
|
|
$
|
6,108
|
|
|
$
|
6,500
|
|
LIABILITIES AND EQUITY (DEFICIT)
|
|
|
|
|
|
||||||
Current Liabilities:
|
|
|
|
|
|
||||||
Accounts Payable
|
$
|
624
|
|
|
$
|
540
|
|
|
$
|
646
|
|
Accrued Expenses and Other
|
712
|
|
|
770
|
|
|
696
|
|
|||
Current Portion of Long-term Debt
|
57
|
|
|
57
|
|
|
—
|
|
|||
Income Taxes
|
7
|
|
|
159
|
|
|
5
|
|
|||
Total Current Liabilities
|
1,400
|
|
|
1,526
|
|
|
1,347
|
|
|||
Deferred Income Taxes
|
188
|
|
|
183
|
|
|
224
|
|
|||
Long-term Debt
|
4,480
|
|
|
3,481
|
|
|
3,524
|
|
|||
Other Long-term Liabilities
|
766
|
|
|
780
|
|
|
780
|
|
|||
Shareholders’ Equity (Deficit):
|
|
|
|
|
|
||||||
Preferred Stock - $1.00 par value; 10 shares authorized; none issued
|
—
|
|
|
—
|
|
|
—
|
|
|||
Common Stock - $0.50 par value; 1,000 shares authorized; 303, 296 and 334 shares issued; 288, 295 and 301 shares outstanding, respectively
|
151
|
|
|
148
|
|
|
167
|
|
|||
Paid-in Capital
|
112
|
|
|
25
|
|
|
252
|
|
|||
Accumulated Other Comprehensive Income (Loss)
|
9
|
|
|
—
|
|
|
(2
|
)
|
|||
Retained Earnings
|
146
|
|
|
24
|
|
|
1,320
|
|
|||
Less: Treasury Stock, at Average Cost; 15, 1 and 33 shares, respectively
|
(663
|
)
|
|
(60
|
)
|
|
(1,112
|
)
|
|||
Total Limited Brands, Inc. Shareholders’ Equity (Deficit)
|
(245
|
)
|
|
137
|
|
|
625
|
|
|||
Noncontrolling Interest
|
—
|
|
|
1
|
|
|
—
|
|
|||
Total Equity (Deficit)
|
(245
|
)
|
|
138
|
|
|
625
|
|
|||
Total Liabilities and Equity (Deficit)
|
$
|
6,589
|
|
|
$
|
6,108
|
|
|
$
|
6,500
|
|
|
Year-to-Date
|
||||||
|
2012
|
|
2011
|
||||
Operating Activities:
|
|
|
|
||||
Net Income
|
$
|
268
|
|
|
$
|
396
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities:
|
|
|
|
||||
Depreciation and Amortization of Long-lived Assets
|
191
|
|
|
196
|
|
||
Amortization of Landlord Allowances
|
(17
|
)
|
|
(16
|
)
|
||
Deferred Income Taxes
|
3
|
|
|
23
|
|
||
Share-based Compensation Expense
|
33
|
|
|
24
|
|
||
Excess Tax Benefits from Share-based Compensation
|
(100
|
)
|
|
(34
|
)
|
||
Gain on Sale of Express Common Stock
|
—
|
|
|
(86
|
)
|
||
Contribution of Express Common Stock to The Limited Brands Foundation
|
—
|
|
|
163
|
|
||
Gain on Contribution of Express Common Stock to The Limited Brands Foundation
|
—
|
|
|
(147
|
)
|
||
Changes in Assets and Liabilities:
|
|
|
|
||||
Accounts Receivable
|
32
|
|
|
(7
|
)
|
||
Inventories
|
(60
|
)
|
|
(69
|
)
|
||
Accounts Payable, Accrued Expenses and Other
|
(53
|
)
|
|
(12
|
)
|
||
Income Taxes Payable
|
(112
|
)
|
|
(155
|
)
|
||
Other Assets and Liabilities
|
20
|
|
|
(53
|
)
|
||
Net Cash Provided by Operating Activities
|
205
|
|
|
223
|
|
||
Investing Activities:
|
|
|
|
||||
Capital Expenditures
|
(329
|
)
|
|
(162
|
)
|
||
Proceeds from Sale of Express Common Stock
|
—
|
|
|
99
|
|
||
Other Investing Activities
|
11
|
|
|
—
|
|
||
Net Cash Used for Investing Activities
|
(318
|
)
|
|
(63
|
)
|
||
Financing Activities:
|
|
|
|
||||
Proceeds from Long-term Debt, Net of Issuance Costs
|
985
|
|
|
981
|
|
||
Repurchase of Common Stock
|
(604
|
)
|
|
(890
|
)
|
||
Dividends Paid
|
(146
|
)
|
|
(431
|
)
|
||
Excess Tax Benefits from Share-based Compensation
|
100
|
|
|
34
|
|
||
Proceeds from Exercise of Stock Options and Other
|
36
|
|
|
55
|
|
||
Financing Costs
|
—
|
|
|
(7
|
)
|
||
Net Cash Provided by (Used for) Financing Activities
|
371
|
|
|
(258
|
)
|
||
Effects of Exchange Rate Changes on Cash
|
—
|
|
|
3
|
|
||
Net Increase (Decrease) in Cash and Cash Equivalents
|
258
|
|
|
(95
|
)
|
||
Cash and Cash Equivalents, Beginning of Period
|
935
|
|
|
1,130
|
|
||
Cash and Cash Equivalents, End of Period
|
$
|
1,193
|
|
|
$
|
1,035
|
|
•
|
Victoria’s Secret
|
•
|
Victoria’s Secret Pink
|
•
|
Bath & Body Works
|
•
|
La Senza
|
•
|
Henri Bendel
|
|
Second Quarter
|
|
Year-to-Date
|
||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||
|
(in millions)
|
||||||||||
Weighted-average Common Shares:
|
|
|
|
|
|
|
|
||||
Issued Shares
|
302
|
|
|
334
|
|
|
300
|
|
|
332
|
|
Treasury Shares
|
(12
|
)
|
|
(29
|
)
|
|
(9
|
)
|
|
(21
|
)
|
Basic Shares
|
290
|
|
|
305
|
|
|
291
|
|
|
311
|
|
Effect of Dilutive Options and Restricted Stock
|
6
|
|
|
10
|
|
|
8
|
|
|
10
|
|
Diluted Shares
|
296
|
|
|
315
|
|
|
299
|
|
|
321
|
|
Anti-dilutive Options and Awards (a)
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
(a)
|
These options and awards were excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive.
|
|
Amount Authorized
|
|
Shares
Repurchased
|
|
Amount
Repurchased
|
|
Average Stock Price of Shares Repurchased within Program
|
||||||||||||||
Repurchase Program
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
||||||||||||
|
(in millions)
|
|
(in thousands)
|
|
(in millions)
|
|
|
||||||||||||||
February 2012 (a)
|
$
|
500
|
|
|
9,645
|
|
|
NA
|
|
|
$
|
439
|
|
|
NA
|
|
|
$
|
45.54
|
|
|
November 2011
|
250
|
|
|
3,657
|
|
|
NA
|
|
|
164
|
|
|
NA
|
|
|
44.90
|
|
||||
May 2011
|
500
|
|
|
NA
|
|
|
7,750
|
|
|
NA
|
|
|
$
|
296
|
|
|
38.13
|
|
|||
March 2011
|
500
|
|
|
NA
|
|
|
13,695
|
|
|
NA
|
|
|
500
|
|
|
36.49
|
|
||||
November 2010 (b)
|
200
|
|
|
NA
|
|
|
3,431
|
|
|
NA
|
|
|
109
|
|
|
31.65
|
|
||||
Total
|
|
|
13,302
|
|
|
24,876
|
|
|
$
|
603
|
|
|
$
|
905
|
|
|
|
(a)
|
The February 2012 repurchase program had
$61 million
remaining as of
July 28, 2012
.
|
(b)
|
The November 2010 repurchase program had
$31 million
remaining at the time it was cancelled in conjunction with the approval of the March 2011 repurchase program.
|
NA
|
Not applicable
|
|
|
Ordinary Dividends
|
|
Special Dividends
|
|
Total Dividends
|
|
Total Paid
|
||||||||
|
|
(per share)
|
|
(in millions)
|
||||||||||||
2012
|
|
|
|
|
|
|
|
|
||||||||
Second Quarter
|
|
$
|
0.25
|
|
|
$
|
—
|
|
|
$
|
0.25
|
|
|
$
|
73
|
|
First Quarter
|
|
0.25
|
|
|
—
|
|
|
0.25
|
|
|
73
|
|
||||
2012 Total
|
|
$
|
0.50
|
|
|
$
|
—
|
|
|
$
|
0.50
|
|
|
$
|
146
|
|
2011
|
|
|
|
|
|
|
|
|
||||||||
Second Quarter
|
|
$
|
0.20
|
|
|
$
|
1.00
|
|
|
$
|
1.20
|
|
|
$
|
367
|
|
First Quarter
|
|
0.20
|
|
|
—
|
|
|
0.20
|
|
|
64
|
|
||||
2011 Total
|
|
$
|
0.40
|
|
|
$
|
1.00
|
|
|
$
|
1.40
|
|
|
$
|
431
|
|
|
July 28,
2012 |
|
January 28, 2012
|
|
July 30,
2011 |
||||||
|
(in millions)
|
||||||||||
Finished Goods Merchandise
|
$
|
950
|
|
|
$
|
926
|
|
|
$
|
999
|
|
Raw Materials and Merchandise Components
|
107
|
|
|
71
|
|
|
105
|
|
|||
Total Inventories
|
$
|
1,057
|
|
|
$
|
997
|
|
|
$
|
1,104
|
|
|
July 28,
2012 |
|
January 28,
2012 |
|
July 30,
2011 |
||||||
|
(in millions)
|
||||||||||
Property and Equipment, at Cost
|
$
|
4,612
|
|
|
$
|
4,387
|
|
|
$
|
4,227
|
|
Accumulated Depreciation and Amortization
|
(2,837
|
)
|
|
(2,743
|
)
|
|
(2,644
|
)
|
|||
Property and Equipment, Net
|
$
|
1,775
|
|
|
$
|
1,644
|
|
|
$
|
1,583
|
|
|
Victoria’s
Secret
|
|
Bath &
Body Works
|
|
Other (a)
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance as of January 28, 2012
|
$
|
690
|
|
|
$
|
628
|
|
|
$
|
12
|
|
|
$
|
1,330
|
|
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Balance as of July 28, 2012
|
$
|
690
|
|
|
$
|
628
|
|
|
$
|
12
|
|
|
$
|
1,330
|
|
(a)
|
Balance is presented net of a
$189 million
and
$119 million
La Senza impairment recognized in the fourth quarter of 2008 and the fourth quarter of 2011, respectively.
|
|
Victoria’s
Secret
|
|
Bath &
Body Works
|
|
Other (a)
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Balance as of January 29, 2011
|
$
|
690
|
|
|
$
|
628
|
|
|
$
|
133
|
|
|
$
|
1,451
|
|
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
6
|
|
|
6
|
|
||||
Balance as of July 30, 2011
|
$
|
690
|
|
|
$
|
628
|
|
|
$
|
139
|
|
|
$
|
1,457
|
|
(a)
|
Balance is presented net of a
$189 million
La Senza impairment recognized in the fourth quarter of 2008.
|
|
July 28, 2012
|
|
January 28, 2012
|
|
July 30, 2011
|
||||||
|
(in millions)
|
||||||||||
Victoria's Secret
|
$
|
246
|
|
|
$
|
246
|
|
|
$
|
246
|
|
Bath & Body Works
|
165
|
|
|
165
|
|
|
165
|
|
|||
La Senza
|
75
|
|
|
75
|
|
|
173
|
|
|||
Intangible Assets - Trade Names
|
$
|
486
|
|
|
$
|
486
|
|
|
$
|
584
|
|
|
July 28,
2012 |
|
January 28,
2012 |
|
July 30,
2011 |
||||||
|
(in millions)
|
||||||||||
Senior Unsecured Debt with Subsidiary Guarantee
|
|
|
|
|
|
||||||
$1 billion, 5.625% Fixed Interest Rate Notes due February 2022 (“2022 Notes”)
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
$1 billion, 6.625% Fixed Interest Rate Notes due April 2021 (“2021 Notes”)
|
1,000
|
|
|
1,000
|
|
|
1,000
|
|
|||
$500 million, 8.50% Fixed Interest Rate Notes due June 2019, Less Unamortized Discount (“2019 Notes”)
|
489
|
|
|
488
|
|
|
487
|
|
|||
$400 million, 7.00% Fixed Interest Rate Notes due May 2020 (“2020 Notes”)
|
400
|
|
|
400
|
|
|
400
|
|
|||
Total Senior Unsecured Debt with Subsidiary Guarantee
|
$
|
2,889
|
|
|
$
|
1,888
|
|
|
$
|
1,887
|
|
Senior Unsecured Debt
|
|
|
|
|
|
||||||
$700 million, 6.90% Fixed Interest Rate Notes due July 2017, Less Unamortized Discount (“2017 Notes”)(a)
|
$
|
723
|
|
|
$
|
724
|
|
|
$
|
711
|
|
$350 million, 6.95% Fixed Interest Rate Debentures due March 2033, Less Unamortized Discount (“2033 Notes”)
|
350
|
|
|
350
|
|
|
350
|
|
|||
$300 million, 7.60% Fixed Interest Rate Notes due July 2037, Less Unamortized Discount (“2037 Notes”)
|
299
|
|
|
299
|
|
|
299
|
|
|||
5.25% Fixed Interest Rate Notes due November 2014, Less Unamortized Discount (“2014 Notes”)(b)
|
219
|
|
|
220
|
|
|
219
|
|
|||
6.125% Fixed Interest Rate Notes due December 2012, Less Unamortized Discount (“2012 Notes”)(c)
|
57
|
|
|
57
|
|
|
58
|
|
|||
Total Senior Unsecured Debt
|
$
|
1,648
|
|
|
$
|
1,650
|
|
|
$
|
1,637
|
|
Total
|
$
|
4,537
|
|
|
$
|
3,538
|
|
|
$
|
3,524
|
|
Current Portion of Long-term Debt
|
(57
|
)
|
|
(57
|
)
|
|
—
|
|
|||
Total Long-term Debt, Net of Current Portion
|
$
|
4,480
|
|
|
$
|
3,481
|
|
|
$
|
3,524
|
|
(a)
|
The balances include a fair value interest rate hedge adjustment which increased the debt balance by
$24 million
as of
July 28, 2012
,
$25 million
as of
January 28, 2012
and
$12 million
as of
July 30, 2011
.
|
(b)
|
The principal balance outstanding was
$213 million
as of
July 28, 2012
,
January 28, 2012
and
July 30, 2011
. The balances include a fair value interest rate hedge adjustment which increased the debt balance by
$6 million
as of
July 28, 2012
,
$7 million
as of
January 28, 2012
and
$7 million
as of
July 30, 2011
.
|
(c)
|
The principal balance outstanding was
$57 million
as of
July 28, 2012
,
January 28, 2012
and
July 30, 2011
. The
July 30, 2011
balance includes a fair value interest rate hedge adjustment which increased the debt balance by
$1 million
.
|
|
July 28,
2012 |
|
January 28,
2012 |
|
July 30,
2011 |
||||||
|
(in millions)
|
||||||||||
Other Long-term Liabilities
|
$
|
53
|
|
|
$
|
60
|
|
|
$
|
83
|
|
|
|
|
Second Quarter
|
|
Year-to-Date
|
||||||||||||
|
Location
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
|
|
|
(in millions)
|
||||||||||||||
Gain (Loss) Recognized in Other Comprehensive Income (Loss)
|
Other Comprehensive Income (Loss)
|
|
$
|
10
|
|
|
$
|
2
|
|
|
$
|
7
|
|
|
$
|
(26
|
)
|
(Gain) Loss Reclassified from Accumulated Other Comprehensive Income (Loss) into Other Income (a)
|
Other Income
|
|
(11
|
)
|
|
(5
|
)
|
|
1
|
|
|
23
|
|
(a)
|
Represents reclassification of amounts from accumulated other comprehensive income to earnings to completely offset foreign currency transaction gains and losses recognized on the intercompany loans.
No
ineffectiveness was associated with these foreign exchange cash flow hedges.
|
|
|
Notional Amount
|
||||||||||
|
|
July 28, 2012
|
|
January 28, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
(in millions)
|
|
|
||||||
2014 Notes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
213
|
|
2017 Notes
|
|
—
|
|
|
175
|
|
|
325
|
|
|||
Total
|
|
$
|
—
|
|
|
$
|
175
|
|
|
$
|
538
|
|
|
July 28,
2012 |
|
January 28,
2012 |
|
July 30,
2011 |
||||||
|
(in millions)
|
||||||||||
Other Assets
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
19
|
|
|
July 28,
2012 |
|
January 28,
2012 |
|
July 30,
2011 |
||||||
|
(in millions)
|
||||||||||
Carrying Value
|
$
|
4,537
|
|
|
$
|
3,538
|
|
|
$
|
3,524
|
|
Fair Value (a)
|
4,927
|
|
|
3,849
|
|
|
3,704
|
|
(a)
|
The estimated fair value of the Company’s publicly traded debt is based on reported transaction prices which are considered Level 2 inputs in accordance with ASC Topic 820,
Fair Value Measurements and Disclosure
. The estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
|
•
|
Level
1
– Quoted market prices in active markets for identical assets or liabilities.
|
•
|
Level
2
– Observable inputs other than quoted market prices included in Level 1, such as quoted prices of similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
•
|
Level
3
– Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
As of July 28, 2012
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and Cash Equivalents
|
$
|
1,193
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,193
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Cross-currency Cash Flow Hedges
|
—
|
|
|
53
|
|
|
—
|
|
|
53
|
|
||||
Lease Guarantees
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
As of January 28, 2012
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and Cash Equivalents
|
$
|
935
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
935
|
|
Interest Rate Designated Fair Value Hedges
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Cross-currency Cash Flow Hedges
|
—
|
|
|
60
|
|
|
—
|
|
|
60
|
|
||||
Lease Guarantees
|
—
|
|
|
—
|
|
|
4
|
|
|
4
|
|
||||
As of July 30, 2011
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and Cash Equivalents
|
$
|
1,035
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,035
|
|
Interest Rate Designated Fair Value Hedges
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Cross-currency Cash Flow Hedges
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
||||
Lease Guarantees
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
Second Quarter
|
|
Year-to-Date
|
||||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||
|
(in millions)
|
||||||||||||||
Beginning Balance
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
6
|
|
Change in Estimated Fair Value Reported in Earnings
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
||||
Ending Balance
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
Foreign Currency Translation
|
|
Cash Flow Hedges
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(in millions)
|
||||||||||
Balance as of January 28, 2012
|
$
|
(8
|
)
|
|
$
|
8
|
|
|
$
|
—
|
|
Current-period Other Comprehensive Income
|
1
|
|
|
8
|
|
|
9
|
|
|||
Balance as of July 28, 2012
|
$
|
(7
|
)
|
|
$
|
16
|
|
|
$
|
9
|
|
|
Foreign Currency Translation
|
|
Cash Flow Hedges
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||
|
(in millions)
|
||||||||||
Balance as of January 29, 2011
|
$
|
(7
|
)
|
|
$
|
8
|
|
|
$
|
1
|
|
Current-period Other Comprehensive Income (Loss)
|
(1
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
Balance as of July 30, 2011
|
$
|
(8
|
)
|
|
$
|
6
|
|
|
$
|
(2
|
)
|
•
|
Mast Global, a merchandise sourcing and production function serving the Company and its international partners;
|
•
|
International retail, franchise, license and wholesale operations, which include the company-owned La Senza, Bath & Body Works and Victoria’s Secret stores in Canada;
|
•
|
Henri Bendel, a chain of specialty stores which feature accessories and personal care products; and
|
•
|
Corporate functions including non-core real estate, equity investments and other governance functions such as treasury and tax.
|
|
Victoria’s
Secret
|
|
Bath &
Body Works
|
|
Other
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
2012
|
|
|
|
|
|
|
|
||||||||
Second Quarter:
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
1,577
|
|
|
$
|
609
|
|
|
$
|
213
|
|
|
$
|
2,399
|
|
Operating Income (Loss)
|
256
|
|
|
88
|
|
|
(39
|
)
|
|
305
|
|
||||
Year-to-Date:
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
3,047
|
|
|
$
|
1,114
|
|
|
$
|
392
|
|
|
$
|
4,553
|
|
Operating Income (Loss)
|
534
|
|
|
148
|
|
|
(84
|
)
|
|
598
|
|
||||
2011
|
|
|
|
|
|
|
|
||||||||
Second Quarter:
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
1,457
|
|
|
$
|
563
|
|
|
$
|
438
|
|
|
$
|
2,458
|
|
Operating Income (Loss)
|
239
|
|
|
70
|
|
|
(115
|
)
|
|
194
|
|
||||
Year-to-Date:
|
|
|
|
|
|
|
|
||||||||
Net Sales
|
$
|
2,812
|
|
|
$
|
1,043
|
|
|
$
|
820
|
|
|
$
|
4,675
|
|
Operating Income (Loss)
|
484
|
|
|
124
|
|
|
(198
|
)
|
|
410
|
|
|
July 28, 2012
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
$
|
—
|
|
|
$
|
623
|
|
|
$
|
570
|
|
|
$
|
—
|
|
|
$
|
1,193
|
|
Accounts Receivable, Net
|
—
|
|
|
113
|
|
|
62
|
|
|
—
|
|
|
175
|
|
|||||
Inventories
|
—
|
|
|
886
|
|
|
171
|
|
|
—
|
|
|
1,057
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
33
|
|
|
18
|
|
|
—
|
|
|
51
|
|
|||||
Other
|
—
|
|
|
179
|
|
|
61
|
|
|
—
|
|
|
240
|
|
|||||
Total Current Assets
|
—
|
|
|
1,834
|
|
|
882
|
|
|
—
|
|
|
2,716
|
|
|||||
Property and Equipment, Net
|
—
|
|
|
971
|
|
|
804
|
|
|
—
|
|
|
1,775
|
|
|||||
Goodwill
|
—
|
|
|
1,318
|
|
|
12
|
|
|
—
|
|
|
1,330
|
|
|||||
Trade Names and Other Intangible Assets, Net
|
—
|
|
|
410
|
|
|
84
|
|
|
—
|
|
|
494
|
|
|||||
Net Investments in and Advances to/from Consolidated Affiliates
|
4,169
|
|
|
13,874
|
|
|
557
|
|
|
(18,600
|
)
|
|
—
|
|
|||||
Other Assets
|
194
|
|
|
44
|
|
|
684
|
|
|
(648
|
)
|
|
274
|
|
|||||
Total Assets
|
$
|
4,363
|
|
|
$
|
18,451
|
|
|
$
|
3,023
|
|
|
$
|
(19,248
|
)
|
|
$
|
6,589
|
|
LIABILITIES AND EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts Payable
|
$
|
4
|
|
|
$
|
366
|
|
|
$
|
254
|
|
|
$
|
—
|
|
|
$
|
624
|
|
Accrued Expenses and Other
|
77
|
|
|
392
|
|
|
243
|
|
|
—
|
|
|
712
|
|
|||||
Current Portion of Long-term Debt
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|||||
Income Taxes
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||
Total Current Liabilities
|
138
|
|
|
758
|
|
|
504
|
|
|
—
|
|
|
1,400
|
|
|||||
Deferred Income Taxes
|
(5
|
)
|
|
12
|
|
|
181
|
|
|
—
|
|
|
188
|
|
|||||
Long-term Debt
|
4,480
|
|
|
596
|
|
|
37
|
|
|
(633
|
)
|
|
4,480
|
|
|||||
Other Long-term Liabilities
|
4
|
|
|
583
|
|
|
193
|
|
|
(14
|
)
|
|
766
|
|
|||||
Total Equity (Deficit)
|
(254
|
)
|
|
16,502
|
|
|
2,108
|
|
|
(18,601
|
)
|
|
(245
|
)
|
|||||
Total Liabilities and Equity (Deficit)
|
$
|
4,363
|
|
|
$
|
18,451
|
|
|
$
|
3,023
|
|
|
$
|
(19,248
|
)
|
|
$
|
6,589
|
|
|
January 28, 2012
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
$
|
—
|
|
|
$
|
371
|
|
|
$
|
564
|
|
|
$
|
—
|
|
|
$
|
935
|
|
Accounts Receivable, Net
|
—
|
|
|
142
|
|
|
76
|
|
|
—
|
|
|
218
|
|
|||||
Inventories
|
|
|
|
822
|
|
|
175
|
|
|
—
|
|
|
997
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
33
|
|
|
18
|
|
|
—
|
|
|
51
|
|
|||||
Other
|
—
|
|
|
109
|
|
|
58
|
|
|
—
|
|
|
167
|
|
|||||
Total Current Assets
|
—
|
|
|
1,477
|
|
|
891
|
|
|
—
|
|
|
2,368
|
|
|||||
Property and Equipment, Net
|
—
|
|
|
911
|
|
|
733
|
|
|
—
|
|
|
1,644
|
|
|||||
Goodwill
|
—
|
|
|
1,318
|
|
|
12
|
|
|
—
|
|
|
1,330
|
|
|||||
Trade Names and Other Intangible Assets, Net
|
—
|
|
|
410
|
|
|
85
|
|
|
—
|
|
|
495
|
|
|||||
Net Investments in and Advances to/from Consolidated Affiliates
|
3,531
|
|
|
13,928
|
|
|
518
|
|
|
(17,977
|
)
|
|
—
|
|
|||||
Other Assets
|
199
|
|
|
43
|
|
|
677
|
|
|
(648
|
)
|
|
271
|
|
|||||
Total Assets
|
$
|
3,730
|
|
|
$
|
18,087
|
|
|
$
|
2,916
|
|
|
$
|
(18,625
|
)
|
|
$
|
6,108
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts Payable
|
$
|
4
|
|
|
$
|
312
|
|
|
$
|
224
|
|
|
$
|
—
|
|
|
$
|
540
|
|
Accrued Expenses and Other
|
51
|
|
|
412
|
|
|
307
|
|
|
—
|
|
|
770
|
|
|||||
Current Portion of Long-term Debt
|
57
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|||||
Income Taxes
|
1
|
|
|
150
|
|
|
8
|
|
|
—
|
|
|
159
|
|
|||||
Total Current Liabilities
|
113
|
|
|
874
|
|
|
539
|
|
|
—
|
|
|
1,526
|
|
|||||
Deferred Income Taxes
|
(6
|
)
|
|
10
|
|
|
179
|
|
|
—
|
|
|
183
|
|
|||||
Long-term Debt
|
3,481
|
|
|
597
|
|
|
36
|
|
|
(633
|
)
|
|
3,481
|
|
|||||
Other Long-term Liabilities
|
6
|
|
|
582
|
|
|
207
|
|
|
(15
|
)
|
|
780
|
|
|||||
Total Equity
|
136
|
|
|
16,024
|
|
|
1,955
|
|
|
(17,977
|
)
|
|
138
|
|
|||||
Total Liabilities and Equity
|
$
|
3,730
|
|
|
$
|
18,087
|
|
|
$
|
2,916
|
|
|
$
|
(18,625
|
)
|
|
$
|
6,108
|
|
|
July 30, 2011
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
$
|
—
|
|
|
$
|
565
|
|
|
$
|
470
|
|
|
$
|
—
|
|
|
$
|
1,035
|
|
Accounts Receivable, Net
|
2
|
|
|
194
|
|
|
45
|
|
|
—
|
|
|
241
|
|
|||||
Inventories
|
—
|
|
|
911
|
|
|
193
|
|
|
—
|
|
|
1,104
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
31
|
|
|
(1
|
)
|
|
—
|
|
|
30
|
|
|||||
Other
|
(2
|
)
|
|
160
|
|
|
84
|
|
|
—
|
|
|
242
|
|
|||||
Total Current Assets
|
—
|
|
|
1,861
|
|
|
791
|
|
|
—
|
|
|
2,652
|
|
|||||
Property and Equipment, Net
|
—
|
|
|
903
|
|
|
680
|
|
|
—
|
|
|
1,583
|
|
|||||
Goodwill
|
—
|
|
|
1,318
|
|
|
139
|
|
|
—
|
|
|
1,457
|
|
|||||
Trade Names and Other Intangible Assets, Net
|
—
|
|
|
411
|
|
|
187
|
|
|
—
|
|
|
598
|
|
|||||
Net Investments in and Advances to/from Consolidated Affiliates
|
4,011
|
|
|
16,110
|
|
|
3,205
|
|
|
(23,326
|
)
|
|
—
|
|
|||||
Other Assets
|
210
|
|
|
45
|
|
|
602
|
|
|
(647
|
)
|
|
210
|
|
|||||
Total Assets
|
$
|
4,221
|
|
|
$
|
20,648
|
|
|
$
|
5,604
|
|
|
$
|
(23,973
|
)
|
|
$
|
6,500
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts Payable
|
$
|
15
|
|
|
$
|
321
|
|
|
$
|
310
|
|
|
$
|
—
|
|
|
$
|
646
|
|
Accrued Expenses and Other
|
52
|
|
|
384
|
|
|
260
|
|
|
—
|
|
|
696
|
|
|||||
Income Taxes
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Total Current Liabilities
|
67
|
|
|
705
|
|
|
575
|
|
|
—
|
|
|
1,347
|
|
|||||
Deferred Income Taxes
|
(5
|
)
|
|
41
|
|
|
188
|
|
|
—
|
|
|
224
|
|
|||||
Long-term Debt
|
3,524
|
|
|
597
|
|
|
36
|
|
|
(633
|
)
|
|
3,524
|
|
|||||
Other Long-term Liabilities
|
10
|
|
|
564
|
|
|
218
|
|
|
(12
|
)
|
|
780
|
|
|||||
Total Equity
|
625
|
|
|
18,741
|
|
|
4,587
|
|
|
(23,328
|
)
|
|
625
|
|
|||||
Total Liabilities and Equity
|
$
|
4,221
|
|
|
$
|
20,648
|
|
|
$
|
5,604
|
|
|
$
|
(23,973
|
)
|
|
$
|
6,500
|
|
|
Second Quarter 2012
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
2,190
|
|
|
$
|
678
|
|
|
$
|
(469
|
)
|
|
$
|
2,399
|
|
Costs of Goods Sold, Buying and Occupancy
|
—
|
|
|
(1,335
|
)
|
|
(582
|
)
|
|
460
|
|
|
(1,457
|
)
|
|||||
Gross Profit
|
—
|
|
|
855
|
|
|
96
|
|
|
(9
|
)
|
|
942
|
|
|||||
General, Administrative and Store Operating Expenses
|
(1
|
)
|
|
(556
|
)
|
|
(92
|
)
|
|
12
|
|
|
(637
|
)
|
|||||
Operating Income (Loss)
|
(1
|
)
|
|
299
|
|
|
4
|
|
|
3
|
|
|
305
|
|
|||||
Interest Expense
|
(79
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
6
|
|
|
(79
|
)
|
|||||
Other Income (Expense)
|
—
|
|
|
2
|
|
|
4
|
|
|
(3
|
)
|
|
3
|
|
|||||
Income (Loss) Before Income Taxes
|
(80
|
)
|
|
298
|
|
|
5
|
|
|
6
|
|
|
229
|
|
|||||
Provision (Benefit) for Income Taxes
|
—
|
|
|
46
|
|
|
40
|
|
|
—
|
|
|
86
|
|
|||||
Equity in Earnings (Loss), Net of Tax
|
223
|
|
|
37
|
|
|
(29
|
)
|
|
(231
|
)
|
|
—
|
|
|||||
Net Income (Loss)
|
$
|
143
|
|
|
$
|
289
|
|
|
$
|
(64
|
)
|
|
$
|
(225
|
)
|
|
$
|
143
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter 2012
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Income
|
$
|
143
|
|
|
$
|
289
|
|
|
$
|
(64
|
)
|
|
$
|
(225
|
)
|
|
$
|
143
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Reclassification of Cash Flow Hedges to Earnings
|
1
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(11
|
)
|
|||||
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Unrealized Gain (Loss) on Cash Flow Hedges
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Total Other Comprehensive Income (Loss), Net of Tax
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
4
|
|
|||||
Total Comprehensive Income
|
$
|
144
|
|
|
$
|
289
|
|
|
$
|
(61
|
)
|
|
$
|
(225
|
)
|
|
$
|
147
|
|
|
Second Quarter 2011
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
2,254
|
|
|
$
|
842
|
|
|
$
|
(638
|
)
|
|
$
|
2,458
|
|
Costs of Goods Sold, Buying and Occupancy
|
—
|
|
|
(1,446
|
)
|
|
(724
|
)
|
|
614
|
|
|
(1,556
|
)
|
|||||
Gross Profit
|
—
|
|
|
808
|
|
|
118
|
|
|
(24
|
)
|
|
902
|
|
|||||
General, Administrative and Store Operating Expenses
|
(2
|
)
|
|
(486
|
)
|
|
(250
|
)
|
|
30
|
|
|
(708
|
)
|
|||||
Operating Income (Loss)
|
(2
|
)
|
|
322
|
|
|
(132
|
)
|
|
6
|
|
|
194
|
|
|||||
Interest Expense
|
(64
|
)
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
(64
|
)
|
|||||
Other Income (Expense)
|
—
|
|
|
3
|
|
|
146
|
|
|
(3
|
)
|
|
146
|
|
|||||
Income (Loss) Before Income Taxes
|
(66
|
)
|
|
325
|
|
|
11
|
|
|
6
|
|
|
276
|
|
|||||
Provision (Benefit) for Income Taxes
|
—
|
|
|
43
|
|
|
2
|
|
|
—
|
|
|
45
|
|
|||||
Equity in Earnings (Loss), Net of Tax
|
297
|
|
|
94
|
|
|
(157
|
)
|
|
(234
|
)
|
|
—
|
|
|||||
Net Income (Loss)
|
$
|
231
|
|
|
$
|
376
|
|
|
$
|
(148
|
)
|
|
$
|
(228
|
)
|
|
$
|
231
|
|
|
Second Quarter 2011
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Income
|
$
|
231
|
|
|
$
|
376
|
|
|
$
|
(148
|
)
|
|
$
|
(228
|
)
|
|
$
|
231
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Reclassification of Cash Flow Hedges to Earnings
|
1
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Unrealized Gain (Loss) on Cash Flow Hedges
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Total Other Comprehensive Income (Loss), Net of Tax
|
1
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Total Comprehensive Income
|
$
|
232
|
|
|
$
|
376
|
|
|
$
|
(151
|
)
|
|
$
|
(228
|
)
|
|
$
|
229
|
|
|
Year-To-Date 2012
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
4,184
|
|
|
$
|
1,307
|
|
|
$
|
(938
|
)
|
|
$
|
4,553
|
|
Costs of Goods Sold, Buying and Occupancy
|
—
|
|
|
(2,504
|
)
|
|
(1,108
|
)
|
|
903
|
|
|
(2,709
|
)
|
|||||
Gross Profit
|
—
|
|
|
1,680
|
|
|
199
|
|
|
(35
|
)
|
|
1,844
|
|
|||||
General, Administrative and Store Operating Expenses
|
(3
|
)
|
|
(1,100
|
)
|
|
(179
|
)
|
|
36
|
|
|
(1,246
|
)
|
|||||
Operating Income (Loss)
|
(3
|
)
|
|
580
|
|
|
20
|
|
|
1
|
|
|
598
|
|
|||||
Interest Expense
|
(157
|
)
|
|
(10
|
)
|
|
(5
|
)
|
|
15
|
|
|
(157
|
)
|
|||||
Other Income (Expense)
|
1
|
|
|
4
|
|
|
2
|
|
|
(6
|
)
|
|
1
|
|
|||||
Income (Loss) Before Income Taxes
|
(159
|
)
|
|
574
|
|
|
17
|
|
|
10
|
|
|
442
|
|
|||||
Provision (Benefit) for Income Taxes
|
—
|
|
|
112
|
|
|
62
|
|
|
—
|
|
|
174
|
|
|||||
Equity in Earnings (Loss), Net of Tax
|
427
|
|
|
(33
|
)
|
|
62
|
|
|
(456
|
)
|
|
—
|
|
|||||
Net Income (Loss)
|
$
|
268
|
|
|
$
|
429
|
|
|
$
|
17
|
|
|
$
|
(446
|
)
|
|
$
|
268
|
|
|
Year-To-Date 2012
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Income
|
$
|
268
|
|
|
$
|
429
|
|
|
$
|
17
|
|
|
$
|
(446
|
)
|
|
$
|
268
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Reclassification of Cash Flow Hedges to Earnings
|
2
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
|||||
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Unrealized Gain (Loss) on Cash Flow Hedges
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||
Total Other Comprehensive Income (Loss), Net of Tax
|
2
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
9
|
|
|||||
Total Comprehensive Income
|
$
|
270
|
|
|
$
|
429
|
|
|
$
|
24
|
|
|
$
|
(446
|
)
|
|
$
|
277
|
|
|
Year-To-Date 2011
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Sales
|
$
|
—
|
|
|
$
|
4,315
|
|
|
$
|
1,567
|
|
|
$
|
(1,207
|
)
|
|
$
|
4,675
|
|
Costs of Goods Sold, Buying and Occupancy
|
—
|
|
|
(2,731
|
)
|
|
(1,350
|
)
|
|
1,150
|
|
|
(2,931
|
)
|
|||||
Gross Profit
|
—
|
|
|
1,584
|
|
|
217
|
|
|
(57
|
)
|
|
1,744
|
|
|||||
General, Administrative and Store Operating Expenses
|
(4
|
)
|
|
(1,065
|
)
|
|
(326
|
)
|
|
61
|
|
|
(1,334
|
)
|
|||||
Operating Income (Loss)
|
(4
|
)
|
|
519
|
|
|
(109
|
)
|
|
4
|
|
|
410
|
|
|||||
Interest Expense
|
(118
|
)
|
|
(9
|
)
|
|
(6
|
)
|
|
14
|
|
|
(119
|
)
|
|||||
Other Income (Expense)
|
—
|
|
|
7
|
|
|
231
|
|
|
(4
|
)
|
|
234
|
|
|||||
Income (Loss) Before Income Taxes
|
(122
|
)
|
|
517
|
|
|
116
|
|
|
14
|
|
|
525
|
|
|||||
Provision (Benefit) for Income Taxes
|
—
|
|
|
82
|
|
|
47
|
|
|
—
|
|
|
129
|
|
|||||
Equity in Earnings (Loss), Net of Tax
|
518
|
|
|
408
|
|
|
149
|
|
|
(1,075
|
)
|
|
—
|
|
|||||
Net Income (Loss)
|
$
|
396
|
|
|
$
|
843
|
|
|
$
|
218
|
|
|
$
|
(1,061
|
)
|
|
$
|
396
|
|
|
Year-To-Date 2011
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Income
|
$
|
396
|
|
|
$
|
843
|
|
|
$
|
218
|
|
|
$
|
(1,061
|
)
|
|
$
|
396
|
|
Other Comprehensive Income (Loss), Net of Tax:
|
|
|
|
|
|
|
|
|
|
||||||||||
Reclassification of Cash Flow Hedges to Earnings
|
2
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
24
|
|
|||||
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Unrealized Gain (Loss) on Cash Flow Hedges
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(26
|
)
|
|||||
Total Other Comprehensive Income (Loss), Net of Tax
|
2
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Total Comprehensive Income
|
$
|
398
|
|
|
$
|
843
|
|
|
$
|
213
|
|
|
$
|
(1,061
|
)
|
|
$
|
393
|
|
|
Year-To-Date 2012
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Cash Provided by (Used for) Operating Activities
|
$
|
(204
|
)
|
|
$
|
293
|
|
|
$
|
116
|
|
|
$
|
—
|
|
|
$
|
205
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital Expenditures
|
—
|
|
|
(184
|
)
|
|
(145
|
)
|
|
—
|
|
|
(329
|
)
|
|||||
Other Investing Activities
|
—
|
|
|
8
|
|
|
3
|
|
|
—
|
|
|
11
|
|
|||||
Net Cash Provided by (Used for) Investing Activities
|
—
|
|
|
(176
|
)
|
|
(142
|
)
|
|
—
|
|
|
(318
|
)
|
|||||
Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from Long-term Debt, Net of Issuance Costs
|
985
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
985
|
|
|||||
Repurchase of Common Stock
|
(604
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(604
|
)
|
|||||
Dividends Paid
|
(146
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(146
|
)
|
|||||
Excess Tax Benefits from Share-based Compensation
|
—
|
|
|
81
|
|
|
19
|
|
|
—
|
|
|
100
|
|
|||||
Net Financing Activities and Advances to/from Consolidated Affiliates
|
(67
|
)
|
|
54
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|||||
Proceeds from Exercise of Stock Options and Other
|
36
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||
Net Cash Provided by (Used for) Financing Activities
|
204
|
|
|
135
|
|
|
32
|
|
|
—
|
|
|
371
|
|
|||||
Effects of Exchange Rate Changes on Cash and Cash Equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
—
|
|
|
252
|
|
|
6
|
|
|
—
|
|
|
258
|
|
|||||
Cash and Cash Equivalents, Beginning of Period
|
—
|
|
|
371
|
|
|
564
|
|
|
—
|
|
|
935
|
|
|||||
Cash and Cash Equivalents, End of Period
|
$
|
—
|
|
|
$
|
623
|
|
|
$
|
570
|
|
|
$
|
—
|
|
|
$
|
1,193
|
|
|
Year-To-Date 2011
|
||||||||||||||||||
|
Limited
Brands, Inc.
|
|
Guarantor
Subsidiaries
|
|
Non-
guarantor
Subsidiaries
|
|
Eliminations
|
|
Consolidated
Limited
Brands, Inc.
|
||||||||||
Net Cash Provided by (Used for) Operating Activities
|
$
|
(94
|
)
|
|
$
|
205
|
|
|
$
|
112
|
|
|
$
|
—
|
|
|
$
|
223
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital Expenditures
|
—
|
|
|
(88
|
)
|
|
(74
|
)
|
|
—
|
|
|
(162
|
)
|
|||||
Proceeds from Sale of Express Common Stock
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
99
|
|
|||||
Net Cash Provided by (Used for) Investing Activities
|
—
|
|
|
(88
|
)
|
|
25
|
|
|
—
|
|
|
(63
|
)
|
|||||
Financing Activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from Long-term Debt, Net of Issuance Costs
|
981
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
981
|
|
|||||
Financing Costs
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Repurchase of Common Stock
|
(890
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(890
|
)
|
|||||
Dividends Paid
|
(431
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(431
|
)
|
|||||
Excess Tax Benefits from Share-based Compensation
|
—
|
|
|
28
|
|
|
6
|
|
|
—
|
|
|
34
|
|
|||||
Net Financing Activities and Advances to/from Consolidated Affiliates
|
386
|
|
|
(281
|
)
|
|
(105
|
)
|
|
—
|
|
|
—
|
|
|||||
Proceeds from Exercise of Stock Options and Other
|
55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|||||
Net Cash Provided by (Used for) Financing Activities
|
94
|
|
|
(253
|
)
|
|
(99
|
)
|
|
—
|
|
|
(258
|
)
|
|||||
Effects of Exchange Rate Changes on Cash and Cash Equivalents
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Net Increase (Decrease) in Cash and Cash Equivalents
|
—
|
|
|
(136
|
)
|
|
41
|
|
|
—
|
|
|
(95
|
)
|
|||||
Cash and Cash Equivalents, Beginning of Period
|
—
|
|
|
701
|
|
|
429
|
|
|
—
|
|
|
1,130
|
|
|||||
Cash and Cash Equivalents, End of Period
|
$
|
—
|
|
|
$
|
565
|
|
|
$
|
470
|
|
|
$
|
—
|
|
|
$
|
1,035
|
|
•
|
general economic conditions, consumer confidence, consumer spending patterns and market disruptions including severe weather conditions, natural disasters, health hazards, terrorist activities, financial crises, political crises or other major events, or the prospect of these events;
|
•
|
the seasonality of our business;
|
•
|
the dependence on a high volume of mall traffic and the possible lack of availability of suitable store locations on appropriate terms;
|
•
|
our ability to grow through new store openings and existing store remodels and expansions;
|
•
|
our ability to successfully expand into international markets and related risks;
|
•
|
our independent licensees and franchisees;
|
•
|
our direct channel business;
|
•
|
our failure to protect our reputation and our brand images;
|
•
|
our failure to protect our trade names, trademarks and patents;
|
•
|
the highly competitive nature of the retail industry generally and the segments in which we operate particularly;
|
•
|
consumer acceptance of our products and our ability to keep up with fashion trends, develop new merchandise and launch new product lines successfully;
|
•
|
our reliance on foreign sources of production, including risks related to:
|
•
|
political instability;
|
•
|
duties, taxes, other charges on imports;
|
•
|
legal and regulatory matters;
|
•
|
volatility in currency exchange rates;
|
•
|
local business practices and political issues;
|
•
|
potential delays or disruptions in shipping and related pricing impacts;
|
•
|
the disruption of imports by labor disputes; and
|
•
|
changing expectations regarding product safety due to new legislation;
|
•
|
stock price volatility;
|
•
|
our failure to maintain our credit rating;
|
•
|
our ability to service our debt;
|
•
|
our ability to retain key personnel;
|
•
|
our ability to attract, develop and retain qualified employees and manage labor costs;
|
•
|
the inability of our manufacturers to deliver products in a timely manner and meet quality standards;
|
•
|
fluctuations in product input costs;
|
•
|
fluctuations in energy costs;
|
•
|
increases in the costs of mailing, paper and printing;
|
•
|
claims arising from our self-insurance;
|
•
|
our ability to implement and maintain information technology systems;
|
•
|
our failure to comply with regulatory requirements;
|
•
|
tax matters; and
|
•
|
legal and compliance matters.
|
Item 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
Second Quarter
|
|
Year-to-date
|
||||||||||||||||||
|
|
2012
|
|
2011
|
|
% Change
|
|
2012
|
|
2011
|
|
% Change
|
||||||||||
Sales per Average Selling Square Foot
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Victoria’s Secret Stores (a)
|
|
$
|
194
|
|
|
$
|
177
|
|
|
10
|
%
|
|
$
|
373
|
|
|
$
|
340
|
|
|
10
|
%
|
Bath & Body Works (a)
|
|
149
|
|
|
138
|
|
|
8
|
%
|
|
275
|
|
|
256
|
|
|
7
|
%
|
||||
La Senza (b)
|
|
114
|
|
|
107
|
|
|
6
|
%
|
|
193
|
|
|
189
|
|
|
2
|
%
|
||||
Sales per Average Store (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Victoria’s Secret Stores (a)
|
|
$
|
1,156
|
|
|
$
|
1,043
|
|
|
11
|
%
|
|
$
|
2,222
|
|
|
$
|
2,004
|
|
|
11
|
%
|
Bath & Body Works (a)
|
|
354
|
|
|
328
|
|
|
8
|
%
|
|
651
|
|
|
607
|
|
|
7
|
%
|
||||
La Senza (b)
|
|
377
|
|
|
356
|
|
|
6
|
%
|
|
637
|
|
|
630
|
|
|
1
|
%
|
||||
Average Store Size (selling square feet)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Victoria’s Secret Stores (a)
|
|
5,968
|
|
|
5,913
|
|
|
1
|
%
|
|
|
|
|
|
|
|||||||
Bath & Body Works (a)
|
|
2,369
|
|
|
2,375
|
|
|
—
|
%
|
|
|
|
|
|
|
|||||||
La Senza
|
|
3,288
|
|
|
3,319
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|||||||
Total Selling Square Feet (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Victoria’s Secret Stores (a)
|
|
6,058
|
|
|
6,019
|
|
|
1
|
%
|
|
|
|
|
|
|
|||||||
Bath & Body Works (a)
|
|
3,745
|
|
|
3,790
|
|
|
(1
|
)%
|
|
|
|
|
|
|
|||||||
La Senza (c)
|
|
648
|
|
|
826
|
|
|
(22
|
)%
|
|
|
|
|
|
|
(a)
|
Metric relates to company-owned stores in the U.S.
|
(b)
|
Metric is presented in Canadian dollars to eliminate the impact of foreign currency fluctuations.
|
(c)
|
During the fourth quarter of 2011, we initiated a restructuring program designed to resize a portion of La Senza's store fleet. Under this program, we closed 38 underperforming stores. Of these stores, 12 were closed as of January 28, 2012. The remainder were closed during the first quarter of 2012. During the second quarter of 2012, we initiated a second restructuring program by announcing the closure of an additional 39 underperforming stores. Of these stores, 2 were closed as of July 28, 2012 with the remainder expected to close during the third quarter of 2012. For additional information, see Note
4
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
|
|
Second Quarter
|
|
Year-to-Date
|
||||||||
Number of Stores (a)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||
Victoria’s Secret U.S.
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
1,010
|
|
|
1,021
|
|
|
1,017
|
|
|
1,028
|
|
Opened
|
|
12
|
|
|
—
|
|
|
12
|
|
|
1
|
|
Closed
|
|
(7
|
)
|
|
(3
|
)
|
|
(14
|
)
|
|
(11
|
)
|
End of Period
|
|
1,015
|
|
|
1,018
|
|
|
1,015
|
|
|
1,018
|
|
Bath & Body Works U.S.
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
1,583
|
|
|
1,603
|
|
|
1,587
|
|
|
1,606
|
|
Opened
|
|
1
|
|
|
1
|
|
|
3
|
|
|
1
|
|
Closed
|
|
(3
|
)
|
|
(8
|
)
|
|
(9
|
)
|
|
(11
|
)
|
End of Period
|
|
1,581
|
|
|
1,596
|
|
|
1,581
|
|
|
1,596
|
|
La Senza
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
199
|
|
|
250
|
|
|
230
|
|
|
252
|
|
Opened
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Closed (b)
|
|
(2
|
)
|
|
(1
|
)
|
|
(33
|
)
|
|
(3
|
)
|
End of Period
|
|
197
|
|
|
249
|
|
|
197
|
|
|
249
|
|
Bath & Body Works Canada
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
68
|
|
|
59
|
|
|
69
|
|
|
59
|
|
Opened
|
|
1
|
|
|
3
|
|
|
1
|
|
|
3
|
|
Closed
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
End of Period
|
|
69
|
|
|
62
|
|
|
69
|
|
|
62
|
|
Victoria’s Secret Canada
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
20
|
|
|
12
|
|
|
19
|
|
|
12
|
|
Opened
|
|
—
|
|
|
2
|
|
|
1
|
|
|
2
|
|
Closed
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
End of Period
|
|
20
|
|
|
14
|
|
|
20
|
|
|
14
|
|
Henri Bendel
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
19
|
|
|
11
|
|
|
19
|
|
|
11
|
|
Opened
|
|
4
|
|
|
1
|
|
|
4
|
|
|
1
|
|
Closed
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
End of Period
|
|
23
|
|
|
12
|
|
|
23
|
|
|
12
|
|
Victoria’s Secret UK
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Opened
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Closed
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
End of Period
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
Total
|
|
|
|
|
|
|
|
|
||||
Beginning of Period
|
|
2,899
|
|
|
2,956
|
|
|
2,941
|
|
|
2,968
|
|
Opened
|
|
19
|
|
|
7
|
|
|
22
|
|
|
8
|
|
Closed
|
|
(12
|
)
|
|
(12
|
)
|
|
(57
|
)
|
|
(25
|
)
|
End of Period
|
|
2,906
|
|
|
2,951
|
|
|
2,906
|
|
|
2,951
|
|
(a)
|
Number of stores excludes independently owned La Senza, Bath & Body Works and Victoria’s Secret stores operated by licensees and franchisees.
|
(b)
|
During the fourth quarter of 2011, we initiated a restructuring program designed to resize a portion of La Senza's store fleet. Under this program, we closed 38 underperforming stores. Of these stores, 12 were closed as of January 28, 2012. The remainder were closed during the first quarter of 2012. During the second quarter of 2012, we initiated a second restructuring program by announcing the closure of an additional 39 underperforming stores. Of these stores, 2 were closed as of July 28, 2012 with the remainder expected to close during the third quarter of 2012. For additional information, see Note
4
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
|
|
|
|
|
Operating Income Rate
|
||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||
Second Quarter
|
(in millions)
|
|
|
|
|
||||||||
Victoria’s Secret
|
$
|
256
|
|
|
$
|
239
|
|
|
16.3
|
%
|
|
16.4
|
%
|
Bath & Body Works
|
88
|
|
|
70
|
|
|
14.4
|
%
|
|
12.5
|
%
|
||
Other (a) (b) (c)
|
(39
|
)
|
|
(115
|
)
|
|
(18.3
|
)%
|
|
(26.2
|
)%
|
||
Total Operating Income
|
$
|
305
|
|
|
$
|
194
|
|
|
12.7
|
%
|
|
7.9
|
%
|
(a)
|
Includes Corporate, Mast Global, Henri Bendel and our international operations including La Senza. In the fourth quarter of 2011, we divested 51% of our third-party apparel sourcing business. As such, results of this business are included in the
second
quarter of 2011 but not the
second
quarter of 2012. For additional information, see Note
8
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
(b)
|
2011 includes $113 million of expense associated with the charitable contribution of shares of Express to The Limited Brands Foundation. For additional information, see Note
8
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
(c)
|
2012 includes $4 million of expense associated with the store closure initiative at La Senza. For additional information, see Note
4
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
|
2012
|
|
2011
|
|
% Change
|
|||||
Second Quarter
|
(in millions)
|
|
|
|||||||
Victoria’s Secret Stores
|
$
|
1,170
|
|
|
$
|
1,064
|
|
|
10
|
%
|
Victoria’s Secret Direct
|
407
|
|
|
393
|
|
|
4
|
%
|
||
Total Victoria’s Secret
|
1,577
|
|
|
1,457
|
|
|
8
|
%
|
||
Bath & Body Works
|
609
|
|
|
563
|
|
|
8
|
%
|
||
Other (a)
|
213
|
|
|
438
|
|
|
(51
|
)%
|
||
Total Net Sales
|
$
|
2,399
|
|
|
$
|
2,458
|
|
|
(2
|
)%
|
(a)
|
Includes Corporate, Mast Global, Henri Bendel and our international operations including La Senza. In the fourth quarter of 2011, we divested 51% of our third-party apparel sourcing business. Second quarter 2011 sales included
$217 million
attributable to the third-party apparel sourcing business. For additional information, see Note
8
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
|
Victoria’s
Secret
|
|
Bath &
Body Works
|
|
Other
|
|
Total
|
||||||||
Second Quarter
|
(in millions)
|
||||||||||||||
2011 Net Sales
|
$
|
1,457
|
|
|
$
|
563
|
|
|
$
|
438
|
|
|
$
|
2,458
|
|
Comparable Store Sales
|
99
|
|
|
36
|
|
|
(5
|
)
|
|
130
|
|
||||
Sales Associated with New, Closed, and Non-comparable Remodeled Stores, Net
|
8
|
|
|
(1
|
)
|
|
7
|
|
|
14
|
|
||||
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
(8
|
)
|
||||
Direct Channels
|
13
|
|
|
11
|
|
|
—
|
|
|
24
|
|
||||
Mast Global and Other
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(2
|
)
|
||||
Divestiture of Third-party Apparel Sourcing Business
|
—
|
|
|
—
|
|
|
(217
|
)
|
|
(217
|
)
|
||||
2012 Net Sales
|
$
|
1,577
|
|
|
$
|
609
|
|
|
$
|
213
|
|
|
$
|
2,399
|
|
Second Quarter
|
2012
|
|
2011
|
||
Victoria’s Secret Stores
|
10
|
%
|
|
12
|
%
|
Bath & Body Works
|
7
|
%
|
|
4
|
%
|
Total Comparable Store Sales (a)
|
8
|
%
|
|
9
|
%
|
(a)
|
Includes La Senza, Bath & Body Works Canada, Victoria’s Secret Canada and Henri Bendel.
|
•
|
At Victoria's Secret Stores, net sales increased across most categories including core lingerie, Pink, swimwear and beauty, driven by a compelling merchandise assortment that incorporated newness, innovation and fashion as well as in-store execution; and
|
•
|
At Victoria's Secret Direct, net sales increased
4%
related to increases in core lingerie, swimwear, Pink, sleepwear and beauty partially offset by a decrease in apparel.
|
•
|
At Victoria's Secret Stores, gross profit increased due to higher merchandise margin dollars as a result of the increase in net sales. The increase in merchandise margin dollars was partially offset by higher buying and occupancy expenses due to an increase in occupancy expense driven by higher net sales and store related activity; and
|
•
|
At Victoria's Secret Direct, gross profit increased slightly primarily due to lower buying and occupancy expenses driven by a gain on the sale of a call center facility partially offset by higher website expenses.
|
•
|
An increase in store selling expenses related to higher sales and other investments to improve the customer experience, including investments in training and technology;
|
•
|
An increase in expenses resulting from increased international expansion;
|
•
|
An increase in marketing expenses at Victoria's Secret Stores primarily driven by various marketing campaigns and digital/mobile development expenses; and
|
•
|
$1 million in store closure restructuring charges related to our La Senza business.
|
Second Quarter
|
2012
|
|
2011
|
||||
Average daily borrowings (in millions)
|
$
|
4,520
|
|
|
$
|
3,520
|
|
Average borrowing rate (in percentages)
|
7.04
|
%
|
|
7.22
|
%
|
|
|
|
|
|
Operating Income Rate
|
||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||
Year-To-Date
|
(in millions)
|
|
|
|
|
||||||||
Victoria’s Secret
|
$
|
534
|
|
|
$
|
484
|
|
|
17.5
|
%
|
|
17.2
|
%
|
Bath & Body Works
|
148
|
|
|
124
|
|
|
13.3
|
%
|
|
11.9
|
%
|
||
Other (a) (b) (c)
|
(84
|
)
|
|
(198
|
)
|
|
(21.4
|
)%
|
|
(24.1
|
)%
|
||
Total Operating Income
|
$
|
598
|
|
|
$
|
410
|
|
|
13.1
|
%
|
|
8.8
|
%
|
(a)
|
Includes Corporate, Mast Global, Henri Bendel and our international operations including La Senza. In the fourth quarter of 2011, we divested 51% of our third-party apparel sourcing business. As such, results of this business are included in 2011 but not 2012. For additional information, see Note
8
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
(b)
|
2011 includes $163 million of expense associated with the charitable contribution of all of our remaining shares of Express to The Limited Brands Foundation. For additional information, see Note
8
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
(c)
|
2012 includes $4 million of expense associated with the store closure initiative at La Senza. For additional information, see Note
4
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
|
2012
|
|
2011
|
|
% Change
|
|||||
Year-To-Date
|
(in millions)
|
|
|
|||||||
Victoria’s Secret Stores
|
$
|
2,258
|
|
|
$
|
2,050
|
|
|
10
|
%
|
Victoria’s Secret Direct
|
789
|
|
|
762
|
|
|
4
|
%
|
||
Total Victoria’s Secret
|
3,047
|
|
|
2,812
|
|
|
8
|
%
|
||
Bath & Body Works
|
1,114
|
|
|
1,043
|
|
|
7
|
%
|
||
Other (a)
|
392
|
|
|
820
|
|
|
(52
|
)%
|
||
Total Net Sales
|
$
|
4,553
|
|
|
$
|
4,675
|
|
|
(3
|
)%
|
(a)
|
Includes Corporate, Mast Global, Henri Bendel and our international operations including La Senza. In the fourth quarter of 2011, we divested 51% of our third-party apparel sourcing business. Year-to-date 2011 sales included
$431 million
attributable to the third-party apparel sourcing business. For additional information, see Note
8
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
|
Victoria’s
Secret
|
|
Bath &
Body Works
|
|
Other
|
|
Total
|
||||||||
Year-To-Date
|
(in millions)
|
||||||||||||||
2011 Net Sales
|
$
|
2,812
|
|
|
$
|
1,043
|
|
|
$
|
820
|
|
|
$
|
4,675
|
|
Comparable Store Sales
|
186
|
|
|
61
|
|
|
(7
|
)
|
|
240
|
|
||||
Sales Associated with New, Closed, and Non-comparable Remodeled Stores, Net
|
22
|
|
|
(1
|
)
|
|
15
|
|
|
36
|
|
||||
Foreign Currency Translation
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
(10
|
)
|
||||
Direct Channels
|
27
|
|
|
11
|
|
|
—
|
|
|
38
|
|
||||
Mast Global and Other
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
||||
Divestiture of Third-party Apparel Sourcing Business
|
—
|
|
|
—
|
|
|
(431
|
)
|
|
(431
|
)
|
||||
2012 Net Sales
|
$
|
3,047
|
|
|
$
|
1,114
|
|
|
$
|
392
|
|
|
$
|
4,553
|
|
Year-To-Date
|
2012
|
|
2011
|
||
Victoria’s Secret Stores
|
10
|
%
|
|
15
|
%
|
Bath & Body Works
|
7
|
%
|
|
7
|
%
|
Total Comparable Store Sales (a)
|
8
|
%
|
|
12
|
%
|
(a)
|
Includes La Senza, Bath & Body Works Canada, Victoria’s Secret Canada and Henri Bendel.
|
•
|
At Victoria's Secret Stores, net sales increased across most categories including core lingerie, Pink, swimwear and beauty, driven by a compelling merchandise assortment that incorporated newness, innovation and fashion as well as in-store execution; and
|
•
|
At Victoria's Secret Direct, net sales increased
4%
related to increases in core lingerie, swimwear, Pink, sleepwear and beauty partially offset by a decrease in apparel.
|
•
|
At Victoria's Secret Stores, gross profit increased due to higher merchandise margin dollars as a result of the increase in net sales. The increase in merchandise margin dollars was partially offset by higher buying and occupancy expenses due to an increase in occupancy expense driven by higher net sales and store related activity; and
|
•
|
At Victoria's Secret Direct, gross profit increased primarily due to higher merchandise margin dollars as a result of the increase in net sales.
|
•
|
An increase in store selling expenses related to higher sales and other investments to improve the customer experience, including investments in training and technology;
|
•
|
An increase in expenses resulting from increased international expansion;
|
•
|
An increase in severance expense;
|
•
|
An increase in marketing expenses at Victoria's Secret Stores primarily driven by various marketing campaigns and digital/mobile development expenses; and
|
•
|
$1 million in store closure restructuring charges related to our La Senza business.
|
Year-To-Date
|
2012
|
|
2011
|
||||
Average daily borrowings (in millions)
|
$
|
4,488
|
|
|
$
|
3,218
|
|
Average borrowing rate (in percentages)
|
6.93
|
%
|
|
7.31
|
%
|
|
July 28,
2012 |
|
January 28,
2012 |
|
July 30,
2011 |
||||||
|
(in millions)
|
||||||||||
Senior Unsecured Debt with Subsidiary Guarantee
|
|
|
|
|
|
||||||
$1 billion, 5.625% Fixed Interest Rate Notes due February 2022 (“2022 Notes”)
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
$1 billion, 6.625% Fixed Interest Rate Notes due April 2021 (“2021 Notes”)
|
1,000
|
|
|
1,000
|
|
|
1,000
|
|
|||
$500 million, 8.50% Fixed Interest Rate Notes due June 2019, Less Unamortized Discount (“2019 Notes”)
|
489
|
|
|
488
|
|
|
487
|
|
|||
$400 million, 7.00% Fixed Interest Rate Notes due May 2020 (“2020 Notes”)
|
400
|
|
|
400
|
|
|
400
|
|
|||
Total Senior Unsecured Debt with Subsidiary Guarantee
|
$
|
2,889
|
|
|
$
|
1,888
|
|
|
$
|
1,887
|
|
Senior Unsecured Debt
|
|
|
|
|
|
||||||
$700 million, 6.90% Fixed Interest Rate Notes due July 2017, Less Unamortized Discount (“2017 Notes”)(a)
|
$
|
723
|
|
|
$
|
724
|
|
|
$
|
711
|
|
$350 million, 6.95% Fixed Interest Rate Debentures due March 2033, Less Unamortized Discount (“2033 Notes”)
|
350
|
|
|
350
|
|
|
350
|
|
|||
$300 million, 7.60% Fixed Interest Rate Notes due July 2037, Less Unamortized Discount (“2037 Notes”)
|
299
|
|
|
299
|
|
|
299
|
|
|||
5.25% Fixed Interest Rate Notes due November 2014, Less Unamortized Discount (“2014 Notes”)(b)
|
219
|
|
|
220
|
|
|
219
|
|
|||
6.125% Fixed Interest Rate Notes due December 2012, Less Unamortized Discount (“2012 Notes”)(c)
|
57
|
|
|
57
|
|
|
58
|
|
|||
Total Senior Unsecured Debt
|
$
|
1,648
|
|
|
$
|
1,650
|
|
|
$
|
1,637
|
|
Total
|
$
|
4,537
|
|
|
$
|
3,538
|
|
|
$
|
3,524
|
|
Current Portion of Long-term Debt
|
(57
|
)
|
|
(57
|
)
|
|
—
|
|
|||
Total Long-term Debt
|
$
|
4,480
|
|
|
$
|
3,481
|
|
|
$
|
3,524
|
|
(a)
|
The balances include a fair value interest rate hedge adjustment which increased the debt balance by
$24 million
as of
July 28, 2012
,
$25 million
as of
January 28, 2012
and
$12 million
as of
July 30, 2011
.
|
(b)
|
The principal balance outstanding was
$213 million
as of
July 28, 2012
,
January 28, 2012
and
July 30, 2011
. The balances include a fair value interest rate hedge adjustment which increased the debt balance by
$6 million
as of
July 28, 2012
,
$7 million
as of
January 28, 2012
and
$7 million
as of
July 30, 2011
.
|
(c)
|
The principal balance outstanding was
$57 million
as of
July 28, 2012
,
January 28, 2012
and
July 30, 2011
. The
July 30, 2011
balance includes a fair value interest rate hedge adjustment which increased the debt balance by
$1 million
.
|
|
|
Notional Amount
|
||||||||||
|
|
July 28, 2012
|
|
January 28, 2012
|
|
July 30, 2011
|
||||||
|
|
|
|
(in millions)
|
|
|
||||||
2014 Notes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
213
|
|
2017 Notes
|
|
—
|
|
|
175
|
|
|
325
|
|
|||
Total
|
|
$
|
—
|
|
|
$
|
175
|
|
|
$
|
538
|
|
|
July 28, 2012
|
|
January 28, 2012
|
|
July 30, 2011
|
||||||
|
(in millions)
|
||||||||||
Cash Provided by Operating Activities (a)
|
$
|
205
|
|
|
$
|
1,266
|
|
|
$
|
223
|
|
Capital Expenditures (a)
|
329
|
|
|
426
|
|
|
162
|
|
|||
Working Capital
|
1,316
|
|
|
842
|
|
|
1,305
|
|
|||
Capitalization:
|
|
|
|
|
|
||||||
Long-term Debt
|
4,480
|
|
|
3,481
|
|
|
3,524
|
|
|||
Shareholders’ Equity (Deficit)
|
(245
|
)
|
|
137
|
|
|
625
|
|
|||
Total Capitalization
|
4,235
|
|
|
3,618
|
|
|
4,149
|
|
|||
Remaining Amounts Available Under Credit Agreements (b)
|
985
|
|
|
987
|
|
|
970
|
|
(a)
|
The
January 28, 2012
amounts represent a twelve-month period and the
July 28, 2012
and
July 30, 2011
amounts represent
six
-month periods.
|
(b)
|
Letters of credit issued reduce our remaining availability under the Revolving Facility. We have outstanding letters of credit that reduce our remaining availability under the Revolving Facility of
$15 million
as of
July 28, 2012
,
$13 million
as of
January 28, 2012
and
$30 million
as of
July 30, 2011
.
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
Corporate
|
Ba1
|
|
BB+
|
|
BB+
|
Senior Unsecured Debt with Subsidiary Guarantee
|
Ba1
|
|
BB+
|
|
BB+
|
Senior Unsecured Debt
|
Ba2
|
|
BB-
|
|
BB
|
Outlook
|
Stable
|
|
Stable
|
|
Stable
|
|
Amount Authorized
|
|
Shares
Repurchased
|
|
Amount
Repurchased
|
|
Average Stock Price of Shares Repurchased within Program
|
||||||||||||||
Repurchase Program
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
||||||||||||
|
(in millions)
|
|
(in thousands)
|
|
(in millions)
|
|
|
||||||||||||||
February 2012 (a)
|
$
|
500
|
|
|
9,645
|
|
|
NA
|
|
|
$
|
439
|
|
|
NA
|
|
|
$
|
45.54
|
|
|
November 2011
|
250
|
|
|
3,657
|
|
|
NA
|
|
|
164
|
|
|
NA
|
|
|
44.90
|
|
||||
May 2011
|
500
|
|
|
NA
|
|
|
7,750
|
|
|
NA
|
|
|
$
|
296
|
|
|
38.13
|
|
|||
March 2011
|
500
|
|
|
NA
|
|
|
13,695
|
|
|
NA
|
|
|
500
|
|
|
36.49
|
|
||||
November 2010 (b)
|
200
|
|
|
NA
|
|
|
3,431
|
|
|
NA
|
|
|
109
|
|
|
31.65
|
|
||||
Total
|
|
|
13,302
|
|
|
24,876
|
|
|
$
|
603
|
|
|
$
|
905
|
|
|
|
(a)
|
The February 2012 repurchase program had
$61 million
remaining as of
July 28, 2012
.
|
(b)
|
The November 2010 repurchase program had
$31 million
remaining at the time it was cancelled in conjunction with the approval of the March 2011 repurchase program.
|
NA
|
Not applicable
|
|
|
Ordinary Dividends
|
|
Special Dividends
|
|
Total Dividends
|
|
Total Paid
|
||||||||
|
|
(per share)
|
|
(in millions)
|
||||||||||||
2012
|
|
|
|
|
|
|
|
|
||||||||
Second Quarter
|
|
$
|
0.25
|
|
|
$
|
—
|
|
|
$
|
0.25
|
|
|
$
|
73
|
|
First Quarter
|
|
0.25
|
|
|
—
|
|
|
0.25
|
|
|
73
|
|
||||
2012 Total
|
|
$
|
0.50
|
|
|
$
|
—
|
|
|
$
|
0.50
|
|
|
$
|
146
|
|
2011
|
|
|
|
|
|
|
|
|
||||||||
Second Quarter
|
|
$
|
0.20
|
|
|
$
|
1.00
|
|
|
$
|
1.20
|
|
|
$
|
367
|
|
First Quarter
|
|
0.20
|
|
|
—
|
|
|
0.20
|
|
|
64
|
|
||||
2011 Total
|
|
$
|
0.40
|
|
|
$
|
1.00
|
|
|
$
|
1.40
|
|
|
$
|
431
|
|
|
Year-to-Date
|
||||||
|
2012
|
|
2011
|
||||
|
(in millions)
|
||||||
Cash and Cash Equivalents, Beginning of Period
|
$
|
935
|
|
|
$
|
1,130
|
|
Net Cash Flows Provided by Operating Activities
|
205
|
|
|
223
|
|
||
Net Cash Flows Used for Investing Activities
|
(318
|
)
|
|
(63
|
)
|
||
Net Cash Flows Provided by (Used for) Financing Activities
|
371
|
|
|
(258
|
)
|
||
Effect of Exchange Rate Changes on Cash
|
—
|
|
|
3
|
|
||
Net Increase (Decrease) in Cash and Cash Equivalents
|
258
|
|
|
(95
|
)
|
||
Cash and Cash Equivalents, End of Period
|
$
|
1,193
|
|
|
$
|
1,035
|
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
July 28, 2012
|
|
January 28, 2012
|
|
July 30, 2011
|
||||||
|
(in millions)
|
||||||||||
Long-term Debt: (a)
|
|
|
|
|
|
||||||
Carrying Value
|
$
|
4,537
|
|
|
$
|
3,538
|
|
|
$
|
3,524
|
|
Fair Value, Estimated (b)
|
4,927
|
|
|
3,849
|
|
|
3,704
|
|
|||
Cross-currency Swap Arrangements (c)
|
53
|
|
|
60
|
|
|
83
|
|
|||
Fixed-to-Floating Interest Rate Swap Arrangements (c)
|
—
|
|
|
(14
|
)
|
|
(19
|
)
|
(a)
|
The increase in long-term debt is related to the issuance of the February 2022 Notes.
|
(b)
|
The estimated fair value is based on reported transaction prices. The estimates presented are not necessarily indicative of the amounts that we could realize in a current market exchange.
|
(c)
|
Swap arrangements are in an (asset) liability position.
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total
Number of
Shares
Purchased (a)
|
|
Average Price
Paid Per
Share (b)
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Programs (c)
|
|
Maximum
Number of
Shares (or
Approximate
Dollar Value)
that May Yet be
Purchased Under
the Programs (c)
|
||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
||||||||
May 2012
|
1,242
|
|
|
$
|
47.49
|
|
|
1,234
|
|
|
$
|
224,851
|
|
June 2012
|
3,112
|
|
|
42.49
|
|
|
3,108
|
|
|
92,781
|
|
||
July 2012
|
711
|
|
|
45.43
|
|
|
709
|
|
|
60,579
|
|
||
Total
|
5,065
|
|
|
|
|
5,051
|
|
|
|
(a)
|
The total number of shares repurchased includes shares repurchased as part of publicly announced programs, with the remainder relating to shares repurchased in connection with tax payments due upon vesting of employee restricted stock awards and the use of our stock to pay the exercise price on employee stock options.
|
(b)
|
The average price paid per share includes any broker commissions.
|
(c)
|
For additional share repurchase program information, see Note
3
to the Consolidated Financial Statements included in Item
1
. Financial Statements.
|
Item 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
Item 5.
|
OTHER INFORMATION
|
Item 6.
|
EXHIBITS
|
Exhibits
|
|
|
|
|
|
15
|
|
Letter re: Unaudited Interim Financial Information re: Incorporation of Report of Independent Registered Public Accounting Firm.
|
|
|
|
31.1
|
|
Section 302 Certification of CEO.
|
|
|
|
31.2
|
|
Section 302 Certification of CFO.
|
|
|
|
32
|
|
Section 906 Certification (by CEO and CFO).
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
L
IMITED
B
RANDS
, I
NC
.
|
|
|
(Registrant)
|
|
|
|
|
|
By:
|
/s/ STUART B. BURGDOERFER
|
|
|
Stuart B. Burgdoerfer
Executive Vice President and Chief Financial Officer *
|
*
|
Mr. Burgdoerfer is the principal financial officer and the principal accounting officer and has been duly authorized to sign on behalf of the Registrant.
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
No Customers Found
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|