Filed by The Limited, Inc.
Pursuant to Rule 425 under the
Securities Act of 1933 and deemed
filed pursuant to Rule 14a-12 under
the Securities Act of 1934
Subject Company: Intimate Brands, Inc.
Commission File No. 1-13814
Date: February 5, 2002
The following presentation was and will be used by The Limited in Meetings
with stockholders and analysts.
The Limited, Inc.
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Recombination of LTD and IBI
1
Forward Looking Statements
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This presentation contains certain "forward-looking statements" within the
meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, including among others, estimates of fiscal
year 2001 and 2002 results. Investors are cautioned that such forward
looking statements are subject to risks and uncertainties, many of which
are beyond The Limited's control. Accordingly, actual 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" and similar expressions may identify
forward-looking statements.
Investors should read page 22 of this presentation as well as The Limited's
prospectus and proxy statement relating to the proposed exchange offer and
merger and the documents incorporated therein for a more detailed
discussion of these risks and uncertainties. The Limited is under no
obligation and does not intend to update any of these forward-looking
statements even if experience or future charges make it clear that any
proposed results experienced or implied therein will not be realized. The
Limited is scheduled to report January sales results on February 7, 2002
and fourth quarter earnings on February 28, 2002.
2
Management Representatives
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o Les Wexner Chairman and CEO
o Ann Hailey EVP, CFO
o Tom Katzenmeyer VP, Investor Relations
3
Transaction Overview
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Transaction: Exchange offer for 16.3% publicly held
shares of IBI which Limited does not own
Consideration: 100% Limited stock
Exchange Ratio: 1.046 shares of Limited for each IBI share
Pro Forma IBI Ownership: 16.3% of Limited
Implied Premium: 6% to IBI's stock price on Monday 2/4/02
Tender Period: Expires at 5:00 p.m. (New York time), Monday,
March 11
Conditions to Closing: Limited owns => 90% of IBI shares after tender is
completed (requires that at least 39% of IBI
publicly held shares are tendered)
As required by NYSE, Limited shareholder approval
Limited's Intention: If closing conditions are met, complete short-form
merger
4
Today's Agenda
===============================================================================
o Recombination Rationale
o Financial Results and Outlook
o Continuing Our Strategy
5
Shareholder Benefits
===============================================================================
The Recombination:
o Advances The Limited, Inc.'s strategy by enhancing focus on bigger,
better brands
o Facilitates the seamless movement of brands, talent, and capabilities
o Simplifies structure
o Increases lender and rating agency clarity
o Creates modest cost savings opportunities
o Results in significantly improved liquidity for IBI shareholders
6
LTD and IBI Are Essentially
the Same Stock
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IBI's Contribution to The Limited
Operating Income Market Capitalization
---------------- ---------------------
[Graph displaying that the percentage [Graph displaying that the percentage
of The Limited's operating income of The Limited's market capitalization
controlled by IBI increased from represented by its interest in IBI
72% in 1995 to 90% in 2001 increased from 57% on 10/23/95(2) to
(estimate)(1)] 95% on 2/4/02.]
(1) Fiscal years ending February 1, 1996 (actual) and February 4, 2002
(current Limited management estimate).
(2) Date of IBI Initial Public Offering.
7
LTD and IBI Shared Operating Functions
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Shared Resources:
o Brand and Business Planning
o Limited Technology Services
o Limited Logistics Services
o Real Estate
o Store Design and Construction
o Tax
o Internal Audit
o Limited Design Services
8
Intimate Brands Shareholder Benefits
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o Receive approximately equal ownership of essentially same piece of paper
- Plus ownership interest in LTD apparel brands, equity stakes and
excess cash
o Substantially more liquid security
o Benefit from modest cost savings opportunities
9
Limited, Inc. Portfolio
===============================================================================
$ in millions
Implied Market Value of Non-IBI Assets Selected Limited Asset Values
Approx. Value Approx. Value
Aggregate per Pro Forma Aggregate per Pro Forma
Value Share(2) Value(1) Share(2)
------------------------ ------------------------
Current(1) $412 $0.80 Cash at Year End 1,400 $2.73
6-month average 321 $0.63 Equity Stakes in
12-month average 510 $0.99 Public Companies 416 0.62
Value of Apparel
Brands ??? ???
------ -----
Total $1,816+ $3.35+
====== =====
(1) As of February 4, 2002.
(2) Pro Forma for Transaction.
(3) Per share value of equity holdings on an after-tax basis
10
Financially Strong Company
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o Total cash projected to be approximately $1.4 billion at fiscal 2001 year end
o Additional $1.25 billion available under a revolving credit facility
o Offset by $400 million of balance sheet debt
11
Value in Non-Core Holdings
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Limited has demonstrated an ongoing ability to realize value through
monetizing non-core assets
Equity Stakes in Public
Companies Shares Market Value(1)
----------------------------------------------------------------------
Alliance Data Systems 14.7 $294
Galyan's Trading Company 4.2 56
Charming Shoppes 9.5 52(2)
Other 14
----
Total $416
====
Approx. $0.62 per share(3)
(1) As of February 4, 2002.
(2) Lock-up expires August 2002.
(3) After-tax basis, pro forma for transaction
12
The Limited, Inc. Portfolio Today
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The Limited, Inc.
-----------------
Equity Stakes
Intimate Brands Apparel Assets & Other
- --------------- -------------- -------------
o Victoria's Secret Stores o Express o $416 million market value
- Women's (as of 2/4/02) of equity
o Victoria's Secret Direct - Men's stakes in public companies
o Bath & Body Works o The Limited o $1.4 billion cash on balance
- White Barn Candle sheet anticipated at 2001
o Lerner/New York & Co. fiscal year end
o Intimate Beauty Corp.
- Victoria's Secret Beauty -------------------------------
- Shiseido JV o Over $3.6 Billion in Sales(1)
o 2,000 stores
-------------------------------
(1) For Fiscal Year ending February 2002.
13
Today's Agenda
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o Recommendation Rationale
o Financial Results and Outlook
o Continuing Our Strategy
14
Estimated Fourth Quarter Results(1)
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LTD IBI
--------------------------------
Estimated net sales (000's) $3,138 $1,937
Estimated comparable store sales (2%) 0%
Earnings per share:
Estimated 2001 $0.72 - $0.74 $0.58 - $0.60
2000(2) $0.55 $0.46
% increase 31% - 35% 26% - 30%
(1) Limited management estimates.
(2) Excludes a $9.9 million charge to close Bath and Body Works' nine stores
in the United Kingdom
15
2002 Outlook(1)
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First Half 2002 Full Year 2002
- -------------------------------------------------- -------------------
LTD
- ---
Comparable Store Sales Slightly negative Flat to up low single digits
Earnings per Share Basically flat Flat to up mid-single %
IBI
- ---
Comparable Store Sales Slightly negative Flat to up low-single digits
Earnings per Share Basically flat Flat to up mid-single %
(1) Limited management estimates.
16
Illustrative Pro Forma EPS
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Transaction essentially break-even excluding non-cash,
largely one-time option-related charges
2001E
-----
2001 EPS estimate $0.84
Ongoing impact:
- - Dilution from share issuance, net of benefit
of 100% of IBI earnings (0.03)
+ Cost savings 0.01
-----
EPS after ongoing cash impact $0.82
Non-cash impacts:
- - Amortization of intangible assets booked in
purchase accounting (0.01)
- - Non-cash expense for unvested options
and restricted stock(1) (0.02)
- - Non-recurring, non-cash impact for one-time
expense related to exchange of vested options (0.04)
-----
2001 Adjusted EPS $0.75
(1) Actual amounts will be established at the time of exchange. Amounts
displayed use Feb 4, 2002 closing prices and 1.046 exchange ratio, which
would result in after-tax amounts of $10.8mm, $9.8mm, and $2.7mm for years
2002, 2003, 2004 respectively.
17
Pro Forma Balance Sheet(1)
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Pro Forma
($ in million) Historical Adjustments Pro Forma
---------------------------------------
Assets
Current Assets $2,093 $2,093
Property & Equip, net 1,391 $ 8 1,399
Deferred Taxes 80 (80) --
Other Assets 593 1,507(2) 2,100
------ ------ ------
Total Assets $4,157 $1,435 $5,592
====== ====== ======
Liabilities and Equity
Current Liabilities $1,101 $ 14 $1,115
Long-Term Debt 250 (2) 248
Other liabilities (incl.
Deferred taxes) 236 65 301
Minority Interest 142 (142) --
Shareholder's Equity 2,428 1,500(3) 3,928
------ ------ ------
Total Liabilities & Equity $4,157 $1,435 $5,592
====== ====== ======
(1) As of November 3, 2001.
(2) Represents the fair value recognition of certain intangibles (primarily
Victoria's Secret and Bath and Body Works brands) and goodwill
(3) Primarily represents the market value of Limited shares issued.
18
Today's Agenda
===============================================================================
o Recombination Rationale
o Financial Results and Outlook
o Continuing our Strategy
19
Continue Our Strategy
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Sharpening our focus, strengthening our brands
1995-2000 2001
o IPO of Intimate Brands o IPO of Gaylans
o Split-off Abercrombie and Fitch o IPO of Alliance Data Systems
o Spun-off Limited Too o Sold Lane Bryant
o Sold Brylane, Penhaligon's, o Rebranded Structure as Express
and non-retail real estate Men's
o Closed Cacique and all but one o Closed 171 underperforming
Henri Bendel stores
o Closed in excess of 1,300 stores 2002
o Securitized $1.2 billion in o Recombination of Limited, Inc.
credit card receivables and Intimate Brands
o Repurchased over 300 million
shares ... CONTINUE OUR STRATEGY
20
This Transaction Furthers Limited's Strategic Agenda
===============================================================================
Limited's Mission Statement:
Create a family of the world's best fashion brands
to drive sustained growth in shareholder value
Improve franchise value by:
- Building stronger brands
- Seamlessly moving people, expertise and resources across the
enterprise
- Improving the operating margins at the apparel brands
- Identifying and exploiting growth opportunities
- Maintaining our inventory discipline and expense efficiencies
-------------------------------------------------
v v
v
Leading to Improved Shareholder Value
21
All Shareholders Benefit
===============================================================================
The Recombination:
o Advances The Limited, Inc.'s strategy by enhancing focus on bigger,
better brands
o Facilitates the seamless movement of brands, talent, and capabilities
o Simplifies structure
o Increases lender and rating agency clarity
o Creates cost savings opportunities
o Results in significantly larger float
22
===============================================================================
Forward Looking Statements
This presentation contains certain "forward-looking statements" within the
meaning of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, including among others, estimates of fiscal year 2001 and
2002 results. Investors are cautioned that such forward looking statements are
subject to risks and uncertainties, many of which are beyond The Limited's
control. Accordingly, actual 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" and similar
expressions may identify forward-looking statements.
The following factors, among others, in some cases have affected and in the
future could affect The Limited's (including, Intimate Brands') financial
performance and actual results and could cause actual results for 2001, 2002
and beyond to differ materially from those expressed or implied in any
forward-looking statements included in this presentation: changes in consumer
spending patterns, consumer preferences and overall economic conditions; the
potential impact of national and international security concerns on the retail
environment; the impact of competition and pricing; changes in weather
patterns; political stability; postal rate increases and charges; paper and
printing costs; risks associated with the seasonality of the retail industry;
risks related to consumer acceptance of the products sold and the ability to
develop new merchandise; the ability to retain, hire and train key personnel;
risks associated with the possible inability of manufacturers to deliver
products in a timely manner; risks associated with relying on foreign sources
of production and availability of suitable store locations on appropriate
terms. In addition, a number of risks relate to the offer and the merger,
including declines in the value of the consideration offered because the
exchange ratio is fixed; the risks and liabilities associated with The
Limited's non-Intimate Brands businesses that are different from those
associated with Intimate Brands' businesses; and the risk that the anticipated
benefits of the transaction will not be achieved.
Investors should read The Limited's prospectus and proxy statement relating to
the proposed exchange offer and merger and the documents incorporated therein
for a more detailed discussion of these risks and uncertainties. The Limited is
under no obligation and does not intend to update any of these forward-looking
statements even if experience or future charges make it clear that any proposed
results experienced or implied therein will not be realized. The Limited is
scheduled to report January sales results on February 7, 2002 and fourth
quarter earnings on February 28, 2002.
Additional Information
In connection with the proposed transaction, The Limited, Inc. has filed an
exchange offer prospectus and a proxy statement with the Securities and
Exchange Commission. INVESTORS AND STOCKHOLDERS ARE ADVISED TO READ THESE AND
ALL RELATED DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and
stockholders may obtain a free copy of the exchange offer prospectus, the proxy
statement and related documents from the Securities and Exchange Commission's
web site at http://www.sec.gov. Free copies of these documents may also be
obtained from The Limited by directing a request to The Limited, Inc.,
Investors Relations, Three Limited Parkway, Columbus, Ohio 43216, (614)
415-7076.
The Limited. and its directors, executive officers and other members of its
management and employees may be soliciting proxies from its stockholders in
connection with the proposed transaction. Information concerning The Limited's
participants in the solicitation is contained in a filing made by The Limited
with the Commission pursuant to Rule 14a-12 on February 4, 2002.
