L Brands : Quarterly report which provides a continuing view of a company's financial position

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

_________________________________

• QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

For the quarterly period ended May 4, 2019

OR

• TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-8344
_________________________________
L BRANDS, INC.
(Exact name of registrant as specified in its charter)
_______________________________
Delaware	31-1029810
(State or other jurisdiction of
incorporation or organization)	(IRS Employer Identification No.)
Three Limited Parkway
Columbus, Ohio	43230
(Address of principal executive offices)	(Zip Code)
[phone]
(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	ý	Accelerated filer	o
Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	o
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial

accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):	Yes o No ý
Securities registered pursuant to Section 12(b) of the Act:
Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 Par Value		LB	The New York Stock Exchange

As of May 31, 2019, the number of outstanding shares of the Registrant's common stock, was 276,340,439 shares.

Table of Contents

L BRANDS, INC.

TABLE OF CONTENTS

	Page No.
Part I. Financial Information
Item 1. Financial Statements *
Consolidated Statements of Income for the Thirteen-Weeks Ended May 4, 2019 and May 5, 2018 (Unaudited)	3
Consolidated Statements of Comprehensive Income for the Thirteen-Weeks Ended May 4, 2019 and May 5, 2018 (Unaudited)	3
Consolidated Balance Sheets as of May 4, 2019 (Unaudited), February 2, 2019 and May 5, 2018 (Unaudited)	4
Consolidated Statements of Total Equity (Deficit) for the Thirteen-Weeks Ended May 4, 2019 and May 5, 2018 (Unaudited)	5
Consolidated Statements of Cash Flows for the Thirteen-Weeks Ended May 4, 2019 and May 5, 2018 (Unaudited)	6
Notes to Consolidated Financial Statements (Unaudited)	7
Report of Independent Registered Public Accounting Firm	27
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995	28
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	40
Item 4. Controls and Procedures	41
Part II. Other Information	42
Item 1. Legal Proceedings	42
Item 1A. Risk Factors	42
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3. Defaults Upon Senior Securities	42
Item 4. Mine Safety Disclosures	42
Item 5. Other Information	42
Item 6. Exhibits	43
Signature	44

• The Company's fiscal year ends on the Saturday nearest to January 31. As used herein, "first quarter of 2019" and "first quarter of 2018" refer to the thirteen-week periods ended May 4, 2019 and May 5, 2018, respectively.

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Table of Contents
	PART I-FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS
	L BRANDS, INC.
	CONSOLIDATED STATEMENTS OF INCOME
	(in millions except per share amounts)
	(Unaudited)
			First Quarter
			2019			2018
Net Sales		$	2,629		$	2,626
Costs of Goods Sold, Buying and Occupancy		(1,695)			(1,682)
Gross Profit			934			944
General, Administrative and Store Operating Expenses		(781)			(789)
Operating Income		153			155
Interest Expense			(99)			(98)
Other Income			6			2
Income Before Income Taxes		60			59
Provision for Income Taxes		20			11
Net Income		$	40		$	48
Net Income Per Basic Share	$	0.15		$	0.17
Net Income Per Diluted Share
$	0.14		$	0.17
Dividends Per Share	$	0.30		$	0.60
	L BRANDS, INC.
	CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	(in millions)
	(Unaudited)
			First Quarter
			2019			2018
Net Income		$	40		$	48
Other Comprehensive Income (Loss), Net of Tax:
Foreign Currency Translation		(4)			(13)
Unrealized Gain on Cash Flow Hedges		2			6
Reclassification of Cash Flow Hedges to Earnings		(2)			2
Total Other Comprehensive Income (Loss), Net of Tax		(4)			(5)
Total Comprehensive Income	$	36		$	43

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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L BRANDS, INC.

CONSOLIDATED BALANCE SHEETS (in millions except par value amounts)

		May 4,			February 2,			May 5,
		2019			2019			2018
		(Unaudited)						(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents	$	1,146		$	1,413		$	1,032
Accounts Receivable, Net		274			367			274
Inventories		1,357			1,248			1,350
Other		170			232			234
Total Current Assets		2,947			3,260			2,890
Property and Equipment, Net		2,794			2,818			2,894
Operating Lease Assets		3,271			-			-
Goodwill		1,348			1,348			1,348
Trade Names		411			411			411
Deferred Income Taxes		61			62			22
Other Assets		166			191			184
Total Assets	$	10,998	$	8,090	$	7,749
LIABILITIES AND EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable	$	688		$	711		$	717
Accrued Expenses and Other		872			1,082			848
Current Debt		72			72			89
Current Operating Lease Liabilities		443			-			-
Income Taxes		122			121			204
Total Current Liabilities		2,197			1,986			1,858
Deferred Income Taxes		238			226			234
Long-term Debt		5,749			5,739			5,719
Long-term Operating Lease Liabilities		3,234			-			-
Other Long-term Liabilities		478			1,004			907
Shareholders' Equity (Deficit):
Preferred Stock - $1.00 par value; 10 shares authorized; none issued		-			-			-
Common Stock - $0.50 par value; 1,000 shares authorized; 284, 283 and 283 shares issued; 276,
275 and 278 shares outstanding, respectively		142			141			141
Paid-in Capital		786			771			696
Accumulated Other Comprehensive Income		55			59			17
Retained Earnings (Deficit)		(1,527)			(1,482)			(1,580)
Less: Treasury Stock, at Average Cost; 8, 8 and 5 shares, respectively		(358)			(358)			(245)
Total L Brands, Inc. Shareholders' Equity (Deficit)		(902)			(869)			(971)
Noncontrolling Interest		4			4			2
Total Equity (Deficit)		(898)			(865)			(969)
Total Liabilities and Equity (Deficit)	$	10,998		$	8,090		$	7,749

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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L BRANDS, INC.

CONSOLIDATED STATEMENTS OF TOTAL EQUITY (DEFICIT)

(in millions except per share amounts)

(Unaudited)

		Common Stock								Accumulated		Retained		Treasury
																	Other		Earnings		Stock, at					Total
		Shares			Par		Paid-In			Comprehensive		(Accumulated		Average					Equity
		Outstanding			Value		Capital			Income		Deficit)		Cost	Noncontrolling Interest		(Deficit)
Balance, February 2, 2019	275			$	141			$	771			$	59		$	(1,482)		$	(358)		$	4		$	(865)
Cumulative Effect of
Accounting Change	-			-			-			-		(2)			-		-		(2)
Balance, February 3, 2019	275					141					771					59			(1,484)			(358)			4			(867)
Net Income	-			-			-			-		40			-		-		40
Other Comprehensive Income
(Loss)	-				-				-				(4)			-			-			-			(4)
Total Comprehensive Income	-			-			-			(4)			40			-		-		36
Cash Dividends ($0.30 per
share)	-			-			-			-		(83)			-		-		(83)
Share-based Compensation and
Other	1					1					15					-		-		-		-		16
Balance, May 4, 2019	276			$	142			$	786			$	55		$	(1,527)		$	(358)		$	4		$	(898)
		Common Stock								Accumulated		Retained		Treasury
																	Other		Earnings		Stock, at					Total
		Shares			Par			Paid-In			Comprehensive		(Accumulated		Average		Noncontrolling		Equity
		Outstanding			Value			Capital			Income		Deficit)		Cost		Interest		(Deficit)
Balance, February 3, 2018		280				$	141				$	678				$	24		$	(1,434)		$	(162)		$	2		$	(751)
Cumulative Effect of
Accounting Changes	-			-			-			(2)			(26)			-		-		(28)
Balance, February 4, 2018		280					141					678					22			(1,460)			(162)			2			(779)
Net Income	-			-			-			-		48			-		-		48
Other Comprehensive Income
(Loss)		-				-				-				(5)			-			-			-			(5)
Total Comprehensive Income		-			-			-			(5)			48			-		-		43
Cash Dividends ($0.60 per
share)	-			-			-			-		(168)			-		-		(168)
Repurchase of Common Stock	(2)					-			-			-		-		(83)			-		(83)
Share-based Compensation
and Other		-				-				18					-			-			-			-			18
Balance, May 5, 2018		278			$	141			$	696			$	17		$	(1,580)		$	(245)		$	2		$	(969)

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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