- Amends Bank Term Loan and Revolver Financial Covenants to Provide
Additional Flexibility - COLUMBUS, Ohio, Feb. 26
/PRNewswire-FirstCall/ -- Limited Brands, Inc. (NYSE:LTD) today
reported 2008 fourth quarter and full-year results. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020520/CLM001LOGO) Fourth
Quarter Results Adjusted earnings per share for the fourth quarter
ended Jan. 31, 2009, which exclude certain significant items as
detailed below, were $0.68 compared to $0.94 for the quarter ended
Feb. 2, 2008. Fourth quarter adjusted operating income was $390.7
million compared to $573.6 million last year, and adjusted net
income was $218.9 million compared to $331.7 million last year.
Including these significant items, reported fourth quarter earnings
per share were $0.05 compared to $1.10 last year; operating income
was $153.1 million compared to $621.4 million last year; and net
income was $16.1 million compared to $388.6 million last year.
Significant items are as follows: In 2008 (totaling $0.63 per
share): -- A pre-tax non-cash impairment charge of $215.0 million,
or $0.63 per share, to reduce the carrying value of La Senza
goodwill and other intangible assets. This charge is expected to
have no impact on the company's business, bank credit agreements or
bond indentures; -- A pre-tax charge of $22.6 million, or $0.04 per
share, for severance related to the reduction of roughly 10% of
home office headcount, or approximately 400 associates; and -- A
tax benefit of $15.0 million, or $0.05 per share, primarily related
to certain discrete foreign and state income tax items In 2007
(totaling $0.16 per share): -- A pre-tax gain of $47.8 million, or
$0.08 per share, related to the recognition of initial gift card
breakage at Victoria's Secret; and -- A tax benefit of $28 million,
or $0.08 per share, related to a decline in the Canadian federal
tax rate, the finalization of income taxes related to the Express
and Limited Stores divestitures, audit settlements and other items
The company reported a comparable store sales decrease of 10
percent for the fourth quarter ended Jan. 31, 2009. Net sales were
$2.991 billion compared to net sales of $3.228 billion last year,
excluding the previously mentioned $47.8 million in initial gift
card breakage. Full-Year Results Adjusted earnings per share for
the year ended Jan. 31, 2009, which exclude certain significant
items, were $1.05 compared to $1.21 for the year ended Feb. 2,
2008. Adjusted 2008 operating income was $717.5 million compared to
$861.0 million last year, and adjusted net income was $353.4
million compared to $461.8 million last year. Including these
significant items, reported 2008 full-year earnings per share were
$0.65 compared to $1.89 last year; operating income was $588.9
million compared to $1.110 billion last year; and net income was
$220.1 million compared to $718.0 million last year. At the
conclusion of this press release is a reconciliation of reported to
adjusted results, including a description of the significant items.
The company reported a comparable store sales decrease of 9 percent
for the year ended Jan. 31, 2009. Net sales were $9.043 billion
compared to net sales of $10.086 billion last year, excluding the
previously mentioned $47.8 million in initial gift card breakage.
2007 net sales include Express sales through July 6, 2007, the
closing date of the sale of a majority interest to affiliates of
Golden Gate Capital, and Limited Stores sales through Aug. 3, 2007,
the closing date of the transfer of a majority interest to
affiliates of Sun Capital Partners. Term Loan and Revolver
Amendment The company also announced that it has entered into an
agreement to amend its existing bank credit agreements. The size of
the company's multi-year revolving credit facility ($1 billion) and
term loan ($750 million) and their maturity dates (Aug. 3, 2012)
remain unchanged, continuing to provide substantial liquidity to
the company. In connection with the amendment, the company
determined that it no longer required and has therefore canceled
its 364-day $300 million revolving credit facility. "We continue to
manage our capital structure and credit facilities in a proactive
and conservative manner," said Stuart Burgdoerfer, CFO. "We ended
2008 with $1.2 billion in cash and significant cushion in both of
our financial covenants. As we looked at 2009, we thought it was
important to amend the terms of our borrowing facilities to ensure
flexibility in the event of continued deterioration in the economic
environment. This action, coupled with our substantial cash flow,
strong existing liquidity and lack of near-term debt maturities,
gives us great advantage as we navigate this uncertain economy. We
have long enjoyed a very strong relationship with our bank group,
led by J.P. Morgan, Bank of America and Citigroup, and we are
pleased with their support on this transaction." The amendment
updates both the leverage and fixed-charge-coverage covenants of
the bank credit agreements to provide additional flexibility to the
company. In return for these covenant changes, fees and pricing
were increased, and the company provided certain security from its
U.S. subsidiaries. The company noted that it has no current
borrowings against the revolving credit agreement and did not
borrow against it during 2008. 2009 Outlook Chairman and CEO Leslie
Wexner stated, "In the current environment, we are managing all
aspects of the business, including inventory, expenses, capital
expenditures, cash and liquidity, very conservatively. We are also
working to maximize sales by offering compelling merchandise,
marketing and store experiences to our customers." The company's
earnings forecast is based on various assumptions which will be
discussed more fully on the earnings conference call. The company
expects 2009 full-year earnings per share to be between $0.60 and
$0.85 per share, including a loss of between $0.07 per share and
$0.12 per share in the first quarter. In 2009, the company expects
capital expenditures to approximate $200 million, primarily related
to new and remodeled stores. Earnings Call and Additional
Information Limited Brands will conduct its fourth quarter earnings
call at 10 a.m. Eastern time on Thursday, Feb. 26. To listen, call
1-866-583-6618 (international dial-in number: 1-937-200-3978). For
an audio replay, call 1-866-NEWS-LTD (international replay number:
1-706-902-3452) or log onto http://www.limitedbrands.com/ .
Additional fourth quarter and full-year financial information is
also available at http://www.limitedbrands.com/. LIMITED BRANDS,
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND
RECONCILIATION OF ADJUSTED RESULTS THIRTEEN WEEKS ENDED JANUARY 31,
2009 AND FEBRUARY 2, 2008 (Unaudited) (In thousands except per
share amounts) 2008 ---- Reported Adjustments Adjusted --------
----------- -------- Net Sales $2,991,102 $- $2,991,102 Gross
Profit 1,024,660 - 1,024,660 General, Administrative and Store
Operating Expenses (656,525) 22,600 (633,925) Impairment of
Goodwill and Other Intangible Assets (215,000) 215,000 - --------
------- ------- Operating Income 153,135 237,600 390,735 Interest
Expense (44,575) - (44,575) Interest Income 1,173 - 1,173 Other
Income 477 - 477 Minority Interest - - - ------ ------ ------
Income Before Income Taxes 110,210 237,600 347,810 Provision for
Income Taxes 94,104 34,773 128,877 ------ ------ ------- Net Income
$16,106 $202,827 $218,933 ======= ======== ======== Net Income Per
Diluted Share $0.05 $0.68 ===== ===== Weighted Average Shares
Outstanding 323,463 323,463 ======= ======= 2007 ---- Reported
Adjustments Adjusted -------- ----------- -------- Net Sales
$3,276,181 $(47,837) $3,228,344 Gross Profit 1,296,684 (47,837)
1,248,847 General, Administrative and Store Operating Expenses
(675,240) - (675,240) Impairment of Goodwill and Other Intangible
Assets - - - ------- ------- ------- Operating Income 621,444
(47,837) 573,607 Interest Expense (46,292) - (46,292) Interest
Income 5,510 - 5,510 Other Income 10,006 - 10,006 Minority Interest
(112) - (112) ---- ---- ---- Income Before Income Taxes 590,556
(47,837) 542,719 Provision for Income Taxes 202,000 9,000 211,000
------- ----- ------- Net Income $388,556 $(56,837) $331,719
======== ======== ======== Net Income Per Diluted Share $1.10 $0.94
===== ===== Weighted Average Shares Outstanding 353,786 353,786
======= ======= Certain prior year amounts have been reclassified
to conform with the current year presentation. See attached Notes
to Consolidated Statements of Income and Reconciliation of Adjusted
Results. LIMITED BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME AND RECONCILIATION OF ADJUSTED RESULTS
FIFTY-TWO WEEKS ENDED JANUARY 31, 2009 AND FEBRUARY 2, 2008
(Unaudited) (In thousands except per share amounts) 2008 ----
Reported Adjustments Adjusted -------- ----------- -------- Net
Sales $9,042,681 $- $9,042,681 Gross Profit 3,006,397 - 3,006,397
General, Administrative and Store Operating Expenses (2,311,452)
22,600 (2,288,852) Impairment of Goodwill and Other Intangible
Assets (215,000) 215,000 - Net Gain on Joint Ventures 108,962
(108,962) - Gain on Divestiture of Express - - - Loss on
Divestiture of Limited Stores - - - ------- ------- -------
Operating Income 588,907 128,638 717,545 Interest Expense (180,788)
- (180,788) Interest Income 17,917 - 17,917 Other Income 23,659
(13,293) 10,366 Minority Interest 3,733 - 3,733 ----- ------ -----
Income Before Income Taxes 453,428 115,345 568,773 Provision for
Income Taxes 233,329 (17,917) 215,412 ------- ------- ------- Net
Income $220,099 $133,262 $353,361 ======== ======== ======== Net
Income Per Diluted Share $0.65 $1.05 ===== ===== Weighted Average
Shares Outstanding 337,301 337,301 ======= ======= 2007 ----
Reported Adjustments Adjusted -------- ----------- -------- Net
Sales $10,134,205 $(47,837) $10,086,368 Gross Profit 3,509,340
(45,837) 3,463,503 General, Administrative and Store Operating
Expenses (2,628,919) 26,449 (2,602,470) Impairment of Goodwill and
Other Intangible Assets - - - Net Gain on Joint Ventures - - - Gain
on Divestiture of Express 301,843 (301,843) - Loss on Divestiture
of Limited Stores (72,308) 72,308 - ------- ------ -------
Operating Income 1,109,956 (248,923) 861,033 Interest Expense
(149,496) - (149,496) Interest Income 17,976 - 17,976 Other Income
128,073 (116,700) 11,373 Minority Interest 22,463 (6,500) 15,963
------ ------ ------ Income Before Income Taxes 1,128,972 (372,123)
756,849 Provision for Income Taxes 411,000 (116,000) 295,000
------- -------- ------- Net Income $717,972 $(256,123) $461,849
======== ========= ======== Net Income Per Diluted Share $1.89
$1.21 ===== ===== Weighted Average Shares Outstanding 380,230
380,230 ======= ======= Certain prior year amounts have been
reclassified to conform with the current year presentation. See
attached Notes to Consolidated Statements of Income and
Reconciliation of Adjusted Results. LIMITED BRANDS, INC. AND
SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS OF INCOME AND
RECONCILIATION OF ADJUSTED RESULTS (Unaudited) The "Adjusted
Results" provided in the attached unaudited Consolidated Statements
of Income and Reconciliation of Adjusted Results are non-GAAP
financial measures and reflect the following: Fiscal 2008 In the
first quarter of 2008, adjusted results exclude the following: -- a
$128 million pre-tax gain related to the sale of a non-core joint
venture; and -- a $19 million pre-tax charge related to the
impairment of the investment carrying value of another non-core
joint venture In the second quarter of 2008, adjusted results
exclude a $13.3 million pre-tax gain, included in other income,
related to a $71 million cash distribution from Express. In the
fourth quarter of 2008, adjusted results exclude the following: --
a $215 million pre-tax charge to reduce the carrying value of La
Senza goodwill and other intangible assets; -- a $22.6 million
pre-tax charge for severance related to the reduction of roughly
10% of home office headcount, or approximately 400 associates; and
-- a $15 million tax benefit primarily related to certain discrete
foreign and state income tax items Fiscal 2007 In the second
quarter of 2007, adjusted results exclude the following: -- a $302
million pre-tax gain related to the divestiture of a 75% interest
in Express to affiliates of Golden Gate Capital; -- a $73 million
pre-tax loss related to the divestiture of a 75% interest in
Limited Stores to affiliates of Sun Capital Partners; -- a $39
million tax benefit related to an adjustment to state net operating
loss valuation allowances in connection with the divestiture of the
apparel brands; -- a $100 million pre-tax gain related to the
refinancing of Easton Town Center, in which the company has an
investment interest, included in other income; -- a $47 million
pre-tax restructuring charge for costs of disposing of non-core
assets and severance related to the reduction of approximately 10%
of the company's home office headcount; and -- a $17 million
pre-tax gain related to an interest rate hedge entered into in the
first quarter in anticipation of the intended financing of the La
Senza acquisition, included in other income In the third quarter of
2007, adjusted results exclude a $24.5 million pre-tax gain related
to asset sales. In the fourth quarter of 2007, adjusted results
exclude the following: -- a $47.8 million pre-tax gain related to
the recognition of initial gift card breakage at Victoria's Secret;
and -- a $28 million tax benefit related to a decline in the
Canadian federal tax rate, the finalization of income taxes related
to the Express and Limited Stores divestitures, audit settlements
and other items The Unaudited Adjusted Consolidated Statements of
Income should not be construed as an alternative to the reported
results determined in accordance with generally accepted accounting
principles. Further, the Company's definition of adjusted income
information may differ from similarly titled measures used by other
companies. While it is not possible to predict future results,
management believes the adjusted information is useful for the
assessment of the ongoing operations of the Company. The Unaudited
Adjusted Consolidated Statements of Income should be read in
conjunction with the Company's historical financial statements and
notes thereto contained in the Company's quarterly reports on Form
10-Q and annual report on Form 10-K. ABOUT LIMITED BRANDS: Limited
Brands, through Victoria's Secret, Pink, Bath & Body Works,
C.O. Bigelow, La Senza, White Barn Candle Co. and Henri Bendel,
presently operates 3,014 specialty stores. The company's products
are also available online at http://www.victoriassecret.com/,
http://www.bathandbodyworks.com/, http://www.henribendel.com/ and
http://www.lasenza.com/ . Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995 We caution that any
forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) contained in this press
release or the fourth quarter earnings call involve risks and
uncertainties and are subject to change based on various important
factors, many of which are beyond our control. Accordingly, our
future performance and financial results may differ materially from
those expressed or implied in any such forward-looking statements.
Words such as "estimate," "project," "plan," "believe," "expect,"
"anticipate," "intend," "planned," "potential" and similar
expressions may identify forward-looking statements. Risks
associated with the following factors, among others, in some cases
have affected and in the future could affect our financial
performance and actual results and could cause actual results to
differ materially from those expressed or implied in any
forward-looking statements included in this press release or the
fourth quarter earnings call: -- general economic conditions,
consumer confidence and consumer spending patterns, including risks
related to: -- the continued deterioration in the U.S. economic
environment, including recessionary pressures; -- the significant
decline in consumer confidence and the negative impact on consumer
discretionary spending; -- the disruption and significant
tightening in the U.S. credit and lending markets; -- the
dependence on a high volume of mall traffic and the possible lack
of availability of suitable store locations on appropriate terms;
-- the seasonality of our business; -- our ability to grow through
new store openings and existing store remodels and expansions; --
our ability to expand into international markets; -- independent
licensees; -- our direct channel business including risks
associated with our new distribution center; -- our failure to
protect our reputation and our brand images; -- our failure to
protect our trade names and trademarks; -- market disruptions
including severe weather conditions, natural disasters, health
hazards, terrorist activities or the prospect of these events; --
stock price volatility; -- our failure to maintain our credit
rating; -- our ability to service our debt; -- 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, launch new product lines successfully,
offer products at the appropriate price points and enhance our
brand image; -- our ability to retain key personnel; -- our ability
to attract, develop and retain qualified employees and manage labor
costs; -- our reliance on foreign sources of production, including
risks related to: -- political instability, -- duties, taxes, other
charges on imports, -- legal and regulatory matters, -- currency
and exchange rates, -- local business practices and political
issues, -- potential delays or disruptions in shipping and related
pricing impacts and -- the disruption of imports by labor disputes;
-- the possible inability of our manufacturers to deliver products
in a timely manner or meet quality standards; -- rising energy
costs; -- increases in the costs of mailing, paper and printing; --
our ability to implement and sustain information technology
systems; and -- our failure to comply with regulatory requirements.
We are not under any obligation and do not intend to make publicly
available any update or other revisions to any of the
forward-looking statements contained in this press release or the
fourth quarter earnings call to reflect circumstances existing
after the date of this press release or to reflect the occurrence
of future events even if experience or future events make it clear
that any expected results expressed or implied by those
forward-looking statements will not be realized. Additional
information regarding these and other factors can be found in "Item
1A. Risk Factors" in our 2007 Annual Report on Form 10-K and in our
third quarter 2008 Quarterly Report on Form 10-Q.
http://www.newscom.com/cgi-bin/prnh/20020520/CLM001LOGO
http://photoarchive.ap.org/ DATASOURCE: Limited Brands, Inc.
CONTACT: Investor Relations, Amie Preston, +1-614-415-6704, , or
Media, Tammy Roberts Myers, , +1-614-415-7072, both of Limited
Brands Web Site: http://www.limitedbrands.com/ Company News
On-Call: http://www.prnewswire.com/comp/151960.html
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