NEW YORK — In another big streamlining, The Limited Inc. is merging its Intimate Brands subsidiary back into the corporate parent through a stock exchange offer, beginning today.

Under the exchange, The Limited Inc. acquires all of the outstanding publicly held common shares of its 84 percent-owned subsidiary, Intimate Brands Inc., which was spun off in 1995. The offer expires 5:00 p.m., March 11, 2002, but could be extended.

The company also reported preliminary January sales and fourth-quarter results, which were good in both cases and exceeded Wall Street estimates, but gave a negative forecast for the first half.

“We are very pleased that we were able to increase earnings per share by approximately 33 percent in the fourth quarter, particularly given the current economic environment,” said Leslie Wexner, chairman and chief executive in a statement. “Victoria’s Secret had a very strong holiday sales performance. Throughout the enterprise, our focus on inventory management and efficiency initiatives had a positive impact on operating margins.”

According to Wexner and other Limited executives, the recombination of the businesses will lead to greater growth, a clearer, simpler structure helping to further develop key brands across merchandise categories and distribution channels, about $5 million, or a penny a share, annually in cost savings, a greater ability to utilize talent and resources across the corporation, and possibly increased shareholder value.

“The earnings, market capitalizations, and growth rates of Intimate Brands and The Limited Inc. have become virtually identical,” V. Ann Hailey, executive vice president and chief financial officer, said in a statement. “Based on Monday’s New York Stock Exchange closing stock prices, The Limited’s 84 percent ownership in Intimate Brands represents 95 percent of The Limited’s total market capitalization. For our fiscal year ending Feb. 2, 2002, we estimate Intimate Brands will contribute approximately 90 percent of The Limited’s operating income.”

IBI shareholders will be offered 1.046 shares of Limited common stock in a tax-free exchange for each outstanding share of Intimate Brands Class A common stock. Based on Monday’s New York Stock Exchange closing prices of $17.50 per share for Intimate Brands Class A common stock and $17.75 for Limited common stock, the offer represents a value of approximately $18.57 per Class A share of Intimate Brands or a 6.1 percent premium.

The offer is conditioned upon the tender of enough IBI shares so in addition to the shares it currently owns, The Limited would own at least 90 percent of the total number of outstanding shares of IBI. Based on currently outstanding shares, that means about 31 million Intimate Brands Class A shares must be tendered.

Limited comp-store sales for the four weeks ended Feb. 2, 2002 increased 6 percent compared to the four weeks ended Feb. 3, 2001. The company reported estimated net sales of $576.4 million for the four-week period,compared with $766.2 million for the year-ago period. Excluding sales from Lane Bryant and the extra week in January last year, the sales increase from the comparable four-week period last year was 11 percent.

With January sales and margins above expectations, and the last two weeks in December also strong, the company expects fourth-quarter earnings per share to be between $.72 and $.74, compared with $0.55 per share last year (which excludes a $.01 per share special and nonrecurring charge to close Bath & Body Works’ nine stores in the United Kingdom) and the current First Call consensus of $0.59 per share.

Intimate Brands Inc. is expected to report comp-store sales for the four weeks increased 7 percent and that estimated net sales were $341.9 million for the four-week period, compared to sales of $407.3 million. Excluding the extra week in January last year, the sales increase from the four-week period last year was 16 percent.

The Limited also expects Intimate Brands to report fourth-quarter earnings per share between $.58 and $.60, compared to $0.46 per share last year (which excludes a $.01 per share special and nonrecurring charge to close Bath & Body Works’ nine stores in the United Kingdom) and the current First Call consensus of $0.49 per share.

At Intimate Brands, The Limited expects comp-store sales to be slightly negative and earnings per share to be basically flat in the first half, reflecting an expectation that Victoria’s Secret Stores will maintain its recent momentum and Bath & Body Works will continue to be challenged. For the year, The Limited expects IBI’s 2002 comp-store sales to be flat to up in the low single digits and earnings per share to be flat to up in the mid-single-digit percentage range.

At Limited Inc., the Company also expects comparable-store sales to be slightly negative in the first half and for earnings per share to be basically flat to spring 2001 earnings per share of 10 cents.

For the year, the Limited expects 2002 comparable-store sales to be flat to up in the low single digits and earnings per share, excluding special items and Lane Bryant operating income in 2001, to be flat to up in the mid-single-digit percentage range.

Since 1995, The Limited has been streamlining, closing 1,500 stores and downsizing 475 others. The company sold off Penhaligon’s, closed Cacique, closed five of six Henri Bendel stores, integrated Gryphon’s capabilities into the personal care businesses, sold Brylane, completed the IPO and split-off of Abercrombie & Fitch, spun-off Limited, Too, sold majority interest in Galyan’s, and sold off Lane Bryant, among other steps.

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