SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended November 3, 2001

OR

o		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 1-13814

INTIMATE BRANDS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

31-1436998
(I.R.S. Employer Identification No.)

Three Limited Parkway, P.O. Box 16000, Columbus, OH 43216
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (614) 415-6900

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 x

No o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class A Common Stock $.01 Par Value		Outstanding at November 30, 2001 79,837,849 Shares

Class B Common Stock $.01 Par Value		Outstanding at November 30, 2001 411,635,902 Shares

INTIMATE BRANDS, INC.

TABLE OF CONTENTS

		Page No.

Part I. Financial Information

Item 1. Financial Statements
Consolidated Statements of Income Thirteen and Thirty-nine Weeks Ended November 3, 2001 and October 28, 2000		4

Consolidated Balance Sheets November 3, 2001, February 3, 2001 and October 28, 2000		5

Consolidated Statements of Cash Flows Thirty-nine Weeks Ended November 3, 2001 and October 28, 2000		6

Notes to Consolidated Financial Statements		7

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition		13

Item 3. Quantitative and Qualitative Disclosures About Market Risk		19

Part II. Other Information

Item 1. Legal Proceedings		20

Item 5. Other Information		21

Item 6. Exhibits and Reports on Form 8-K		22

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

The Company cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Quarterly Report on Form 10-Q ("Report") or made by management of the Company involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company's control. Accordingly, the Company's 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" 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 Company's financial performance and actual results and could cause actual results for 2001 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this Report or otherwise made by management: 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 Company's products and the ability to develop new merchandise; the ability to retain, hire and train key personnel; risks associated with the possible inability of the Company's 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. See the Company's Annual Report on Form 10-K for a more detailed discussion of these matters and other risk factors. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTIMATE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Thousands except per share amounts)

(Unaudited)


	Thirteen Weeks Ended						Thirty-nine Weeks Ended

	November 3, 2001			October 28, 2000			November 3, 2001			October 28, 2000

Net sales	$	905,628		$	944,035		$	3,084,476		$	3,179,665

Costs of goods sold, buying and occupancy		(606,795	)		(582,276	)		(1,985,710	)		(1,951,102	)

Gross income		298,833			361,759			1,098,766			1,228,563

General, administrative and store operating expenses		(312,298	)		(281,640	)		(933,846	)		(861,505	)

Operating income (loss)		(13,465	)		80,119			164,920			367,058

Interest expense		(3,069	)		(8,023	)		(7,491	)		(18,723	)

Other income (expense), net		(1,151	)		—			(2,494	)		3,131


Income (loss) before income taxes		(17,685	)		72,096			154,935			351,466

Income tax expense (benefit)		(7,000	)		28,900			61,600			140,600

Net income (loss)		($10,685	)	$	43,196		$	93,335		$	210,866

Net income (loss) per share:

Basic		($0.02	)	$	0.09		$	0.19		$	0.43

Diluted		($0.02	)	$	0.09		$	0.19		$	0.42

Dividends per share	$	0.07		$	0.07		$	0.21		$	0.21

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

INTIMATE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Thousands)

	November 3, 2001			February 3, 2001				October 28, 2000
	(Unaudited)								(Unaudited)
ASSETS

Current assets:
Cash and equivalents	$	7,148			$	8,923			$	24,252
Accounts receivable		15,981				13,974				19,775
Inventories		839,862				632,389				869,415
Stores supplies		49,549				46,220				45,715
Other		74,229				56,205				86,017

Total current assets		986,769				757,711				1,045,174

Property and equipment, net		613,408				560,451				517,285

Other assets		124,490				139,186				122,305

Total assets	$	1,724,667			$	1,457,348			$	1,684,764


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	154,055			$	113,080			$	136,242
Current portion of long-term debt		—				—-				150,000
Accrued expenses		238,886				288,985				184,358
Payable to The Limited, Inc.		497,216				113,063				580,279
Income taxes		—				120,825				—

Total current liabilities		890,157				635,953				1,050,879

Long-term debt		100,000				100,000				100,000

Deferred income taxes		—				—				12,168

Other long-term liabilities		75,167				56,067				58,140

Shareholders' equity:
Common stock		5,318				5,318				5,318
Paid-in capital		1,209,135				1,215,278				1,215,130
Retained earnings (deficit)		171,221				181,100				(6,151	)

		1,385,674				1,401,696				1,214,297

Less: treasury stock, at average cost		(726,331	)			(736,368	)			(750,720	)

Total shareholders' equity		659,343				665,328				463,577

Total liabilities and shareholders' equity	$	1,724,667			$	1,457,348			$	1,684,764

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

INTIMATE BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Thousands)

(Unaudited)


	Thirty-nine Weeks Ended
	November 3, 2001			October 28, 2000

Operating activities:
Net income	$	93,335		$	210,866
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
Depreciation and amortization		103,677			85,899
Changes in assets and liabilities:
Inventories		(207,473	)		(285,946	)
Accounts payable and accrued expenses		(9,124	)		(22,337	)
Income taxes		(122,308	)		(149,878	)
Other assets and liabilities		14,690			4,129

Net cash used for operating activities		(127,203	)		(157,267	)

Investing activities:
Capital expenditures		(157,529	)		(155,827	)

Financing activities:
Net increase in payable to The Limited, Inc.		384,153			556,538
Repurchase of common stock		(7,794	)		(197,878	)
Dividends paid		(103,214	)		(103,950	)
Proceeds from exercise of stock options and other		9,812			6,263

Net cash provided by financing activities		282,957			260,973

Net decrease in cash and equivalents		(1,775	)		(52,121	)
Cash and equivalents, beginning of year		8,923			76,373

Cash and equivalents, end of period	$	7,148		$	24,252

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

INTIMATE BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.		Basis of Presentation

		Intimate Brands, Inc. (the "Company") includes specialty retail stores and direct response (catalog and e-commerce) businesses, which offer women's intimate and other apparel, personal care products and accessories. The Company consists of Victoria's Secret Stores, Victoria's Secret Direct, and Bath & Body Works. The Limited, Inc. ("The Limited") owns approximately 84% of the outstanding common stock of the Company.

		The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

		Investments in unconsolidated entities over which the Company exercises significant influence but does not have control are accounted for using the equity method. The Company's share of the net income or loss of those unconsolidated entities is included in other income (expense).

		The consolidated financial statements as of and for the thirteen and thirty-nine week periods ended November 3, 2001 and October 28, 2000 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company's 2000 Annual Report on Form 10-K. In the opinion of management, the accompanying consolidated financial statements reflect all adjustments (which are of a normal recurring nature) necessary for a fair statement of the results for the interim periods, but are not necessarily indicative of the results of operations for a full fiscal year.

		The consolidated financial statements as of and for the thirteen and thirty-nine week periods ended November 3, 2001 and October 28, 2000 included herein have been reviewed by the independent public accounting firm of PricewaterhouseCoopers LLP and the report of such firm follows the Notes to Consolidated Financial Statements. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for its report on the consolidated financial statements because that report is not a "report" within the meaning of Sections 7 and 11 of that Act.

		Certain prior year amounts have been reclassified to conform to the current year presentation.

2.		Earnings Per Share and Shareholders' Equity

		Earnings per basic share is computed based on the weighted average number of outstanding common shares. Earnings per diluted share includes the weighted average effect of dilutive options and restricted stock on the weighted average shares outstanding.


	Weighted average common shares outstanding (millions):

		Thirteen Weeks Ended						Thirty-nine Weeks Ended
		November 3, 2001			October 28, 2000			November 3, 2001			October 28, 2000

	Common shares issued	533			532			532			532
	Treasury shares	(41	)		(42	)		(41	)		(38	)

	Basic shares	492			490			491			494
	Dilutive effect of stock options and restricted shares	—			6			3			7

	Diluted shares	492			496			494			501


	During the three months ended November 3, 2001, 1.7 million common share equivalents related to options were outstanding, but were not included in the computation of earnings per diluted share because the Company reported a net loss for the period and, therefore, the effect would be antidilutive. The quarterly computation of earnings per diluted share excludes options to purchase 8.3 million and 1.1 million shares of common stock at November 3, 2001 and October 28, 2000, respectively, and the year-to-date computation of earnings per diluted share excludes options to purchase 6.5 million and 1.9 million shares because the options' exercise prices were greater than the average market price of the common shares during the period.

3.	Inventories

	The fiscal year of the Company and its subsidiaries is comprised of two principal selling seasons: spring (the first and second quarters) and fall (the third and fourth quarters). Inventories are principally valued at the lower of average cost or market, on a first-in, first-out basis, using the retail method. Inventory valuation at the end of the first and third quarters reflects adjustments for inventory markdowns for the total selling season.

4.	Property and Equipment, Net

	Property and equipment, net, consisted of (millions):

				November 3, 2001			February 3, 2001			October 28, 2000

	Property and equipment, at cost			$	1,254		$	1,134		$	1,062
	Accumulated depreciation and amortization				(641	)		(574	)		(545	)

	Property and equipment, net			$	613		$	560		$	517


5.	Income Taxes

	The provision for income taxes is based on the current estimate of the annual effective tax rate. Current income tax obligations are treated as having been settled through the intercompany accounts as if the Company was filing its income tax returns on a separate company basis. Such amounts were $182.0 million and $283.0 million for the thirty-nine weeks ended November 3, 2001 and October 28, 2000. Other current assets included current deferred tax assets of $1.3 million at November 3, 2001, $12.2 million at February 3, 2001 and $32.4 million at October 28, 2000. Other assets included long-term deferred tax assets of $7.5 million at November 3, 2001 and $18.6 million at February 3, 2001.

6.	Long-term Debt


	Long-term debt consists of notes which represent the Company's proportionate share of certain long-term debt of The Limited. The interest rates and maturities of the notes parallel those of the corresponding debt of The Limited. The 7 ½% debentures are subject to early redemption beginning in 2003 at specified declining premiums concurrent with any prepayment of the corresponding debt by The Limited.

	Long-term debt consisted of (millions):

		November 3, 2001		February 3, 2001		October 28, 2000


	7 1/2% Debentures due March 2023	$	100	$	100	$	100
	9 1/8% Notes due February 2001		—		—		150

			100		100		250
	Less: current portion of long-term debt		—		—		150

		$	100	$	100	$	100



	Interest paid during the thirty-nine weeks ended November 3, 2001 and October 28, 2000, including interest on the intercompany cash management account (see Note 7), was $9.4 million and $24.1 million, respectively.


7.	Intercompany Relationship with the Parent


	The Limited provides various services to the Company including, among other things, real estate management, store design and construction supervision, inbound and outbound transportation, merchandise sourcing, financial support (certain tax, treasury, accounting and audit), aircraft, legal, corporate development, risk management, human resources (certain management and benefit plan administration) and government affairs services. To the extent expenditures are specifically identifiable, they are charged to the Company. All other service-related costs not specifically attributable to an operating business have been allocated to the Company based upon various allocation methods, which the Company believes are reasonable. The Company and The Limited have entered into intercompany agreements which establish the provision of services in accordance with the terms described above.

	The Company participates in The Limited's centralized cash management system. Under this system, cash received from the Company's operations is transferred to The Limited's centralized cash accounts and cash disbursements are funded from the centralized cash accounts on a daily basis. The intercompany cash management account is an interest-earning asset or interest-bearing liability of the Company. Interest on the intercompany cash management account is calculated based on the Federal Reserve AA Composite 30-day rate.

	The Company's proprietary credit card processing is performed by Alliance Data Systems, which is 20%-owned by The Limited.

The Company and The Limited are parties to a corporate agreement under which the Company granted to The Limited a continuing option to purchase, under certain circumstances, additional shares of Class B Common Stock or shares of nonvoting capital stock of the Company. The Corporate Agreement further provides that, upon request of The Limited, the Company will use its best efforts to effect the registration of any of the shares of Class B Common Stock and nonvoting capital stock held by The Limited for sale.

Segment Information

The Company identifies operating segments based on a business's operating characteristics. Reportable segments were determined based on similar economic characteristics, the nature of products and services, and the method of distribution. The retail segment includes the store-based operations of Victoria's Secret Stores and Bath & Body Works. The VS Direct segment consists of the Victoria's Secret Direct catalog and e-commerce operations. Sales outside the United States were not significant.

Segment information as of and for the thirteen and thirty-nine weeks ended November 3, 2001 and October 28, 2000 follows (in millions):

2001		Retail		VS Direct		Corporate			Total

Thirteen Weeks:

Net sales	$	758	$	148		—		$	906

Operating income (loss)		18		(2	)	($29	)		(13	)

Thirty-nine Weeks:

Net sales		2,481		603		—			3,084

Operating income (loss)		235		24		(94	)		165

Total assets		1,419		210		96			1,725

2000		Retail		VS Direct	Corporate			Total

Thirteen Weeks:

Net sales	$	785	$	159	—		$	944

Operating income (loss)		104		3	($27	)		80

Thirty-nine Weeks:

Net sales		2,496		684	—-			3,180

Operating income (loss)		401		48	(82	)		367

Total assets		1,376		211	98			1,685

In addition to its operating segments, management also focuses on Victoria's Secret as a brand. Sales of the Victoria's Secret brand decreased 3% to $605.1 million for the thirteen weeks ended November 3, 2001, and decreased 4% to $2.103 billion for the thirty-nine weeks ended November 3, 2001.

Report of Independent Accountants

To the Board of Directors and
Shareholders of
Intimate Brands, Inc.

We have reviewed the accompanying consolidated balance sheets of Intimate Brands, Inc. and its subsidiaries (the "Company") as of November 3, 2001 and October 28, 2000, and the related consolidated statements of income for each of the thirteen and thirty-nine week periods ended November 3, 2001 and October 28, 2000 and the consolidated statements of cash flows for the thirty-nine week periods ended November 3, 2001 and October 28, 2000. These financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of February 3, 2001, and the related consolidated statements of income, of shareholders' equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 27, 2001 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of February 3, 2001 is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

Columbus, Ohio
November 20, 2001

Item 2.		MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS

Net sales for the third quarter of 2001 were $905.6 million, a decrease of 4% from $944.0 million for the third quarter of 2000. Gross income decreased 17% to $298.8 million from $361.8 million in 2000. Operating income declined in the third quarter of 2001 to a loss of $13.5 million from operating income of $80.1 million in 2000. The operating income decline resulted primarily from a 4% sales decline, a decrease in merchandise margins and increased store selling and occupancy expenses. As a result of the operating income decline, the Company reported a net loss for the third quarter of 2001 of $10.7 million, compared to net income of $43.2 million in 2000. The net loss per share was $0.02, a decrease from earnings per share of $0.09 in 2000.

Net sales for the thirty-nine weeks ended November 3, 2001 were $3.084 billion, a decrease of 3% from $3.180 billion in 2000. Gross income decreased 11% to $1.099 billion from $1.229 billion in 2000, and operating income decreased 55% to $164.9 million from $367.1 million in 2000. Net income was $93.3 million, a 56% decrease from $210.9 million in 2000. Earnings per share decreased to $0.19 per share from $0.42 per share in 2000.

Financial Summary

The following summarized financial and statistical data compares the reported results for the thirteen and thirty-nine week periods ended November 3, 2001 to the comparable periods for 2000:


	Third Quarter										Year-To-Date
	2001			2000			Change			2001			2000			Change
Net Sales (millions):
Victoria's Secret Stores	$	457		$	462			(1	%)	$	1,500		$	1,510			(1	%)
Bath & Body Works		301			313			(4	%)		979			964			2	%
Other		—			10			N/M			2			22			(91	%)

Total retail sales		758			785						2,481			2,496

Victoria's Secret Direct		148			159			(7	%)		603			684			(12	%)

Total net sales	$	906		$	944			(4	%)	$	3,084		$	3,180			(3	%)


Comparable Store Sales:
Victoria's Secret Stores		(5	%)		8	%					(5	%)		11	%
Bath & Body Works		(16	%)		5	%					(11	%)		5	%


Total comparable store sales increase (decrease)		(10	%)		6	%					(7	%)		9	%

N/M - Not meaningful


		Third Quarter								Year-To-Date
		2001			2000		Change			2001			2000		Change
Store Data:
Retail sales increase attributable to net new and remodeled stores:
Victoria's Secret Stores		4	%		2	%				4	%		3	%
Bath & Body Works		12	%		18	%				13	%		15	%

Retail sales per average selling square
foot:
Victoria's Secret Stores	$	104		$	114		(9	%)	$	347		$	374		(7	%)
Bath & Body Works	$	89		$	110		(19	%)	$	303		$	353		(14	%)

Retail sales per average store (thousands):
Victoria's Secret Stores	$	460		$	505		(9	%)	$	1,530		$	1,657		(8	%)
Bath & Body Works	$	191		$	231		(17	%)	$	646		$	735		(12	%)

Average store size at end of quarter
(selling square feet):
Victoria's Secret Stores		4,424			4,416		0	%
Bath & Body Works		2,146			2,112		2	%

Selling square feet at end of quarter
(thousands):
Victoria's Secret Stores		4,437			4,094		8	%
Bath & Body Works		3,435			2,978		15	%

Number of Stores:
Beginning of period		2,521			2,205					2,390			2,110
Opened		86			136					220			238
Closed		(3	)		(4	)				(6	)		(11	)

End of period		2,604			2,337					2,604			2,337

	Number of Stores		Selling Sq. Ft. (Thousands)
	November 3, 2001	October 28, 2000	November 3, 2001	October 28, 2000

Victoria's Secret Stores	1,003	927	4,437	4,094
Bath & Body Works	1,601	1,410	3,435	2,978

Total stores and selling square feet	2,604	2,337	7,872	7,072

Net Sales

Net sales for the third quarter of 2001 decreased 4% to $905.6 million from $944.0 million in 2000. The net sales decline was primarily due to a 10% decrease in comparable store sales and a 7% decrease in sales at Victoria's Secret Direct. The events of September 11^th and the overall economic environment negatively impacted sales for the quarter. These declines were partially offset by an increase from the net addition of 267 new stores (800,000 selling square feet).

Retail sales of $757.6 million for the third quarter of 2001 decreased 4% from $785.4 million in 2000. Victoria's Secret Stores' sales decreased 1% to $457.0 million due to a 5% decrease in comparable store sales, partially offset by the net addition of 76 stores (343,000 selling square feet). Bath & Body Works' sales decreased 4% to $300.6 million, due to a 16% decrease in comparable store sales, partially offset by the net addition of 191 new stores (457,000 selling square feet). Net sales at Victoria's Secret Direct decreased 7% to $148.0 million due to unfavorable results in clothing categories and a 5% decrease in the number of books mailed, partially offset by an increase in e-commerce sales.

Year-to-date net sales in 2001 decreased 3% to $3.084 billion from $3.180 billion in 2000. The decrease was primarily due to a 7% decrease in comparable store sales and a 12% decline in sales at Victoria's Secret Direct. These declines were partially offset by the net addition of 267 new stores (800,000 selling square feet).

Gross Income

For the third quarter of 2001, the gross income rate (expressed as a percentage of net sales) decreased to 33.0% from 38.3% in 2000. The rate decrease was due to both an increase in the buying and occupancy expense rate and lower merchandise margins. The increase in the buying and occupancy expense rate was driven by the inability to achieve leverage on store-related costs as comparable store sales decreased 10%. In addition, the buying and occupancy expense rate increase was due to the expansion of Bath & Body Works' stores into non-mall locations, which, although profitable, typically have higher occupancy costs as a percentage of net sales. The lower merchandise margin rate was due to higher markdowns resulting in part from the difficult economic environment.

The year-to-date gross income rate decreased to 35.6% from 38.6% in 2000, primarily due to the expense-related factors discussed above.

General, Administrative and Store Operating Expenses

The general, administrative and store operating expense rate (expressed as a percentage of net sales) increased to 34.5% in the third quarter of 2001 from 29.8% in 2000 due to the inability to leverage these expenses on a comparable store sales decline of 10%. General, administrative and store operating expenses increased 11% reflecting higher store selling expenses from the net addition of 267 new stores. At Victoria's Secret Stores and Bath & Body Works, the general, administrative and store operating expense rate increased due to the deleveraging impact of a comparable store sales decrease of 5% and 16%, respectively. Victoria's Secret Stores' and Bath & Body Works' general, administrative and store operating expenses increased due to higher store selling expenses resulting from increases in selling square feet of 8% and 15%, respectively.

The year-to-date general, administrative and store operating expense rate increased to 30.3% from 27.1% in 2000, primarily due to the factors discussed above.

Operating Income (Loss)

The third quarter operating income (loss) rate (expressed as a percentage of net sales) decreased to (1.5%) from 8.5% in 2000. The rate decrease was due to the 5.3% decrease in the gross income rate and the 4.7% increase in the general, administrative and store operating expense rate.

The year-to-date operating income rate was 5.3% in 2001 and 11.5% in 2000. The rate decrease was due to the 3.0% decrease in the gross income rate and the 3.2% increase in the general, administrative and store operating expense rate.

Interest Expense and Other Income (Expense)

Third quarter and year-to-date interest expense was $3.1 million and $7.5 million, respectively, in 2001 compared to $8.0 million and $18.7 million in 2000. The decrease in interest expense was primarily due a debt repayment of $150 million in February 2001.

The Company incurred other expense of $1.1 million and $2.5 million in the third quarter and year-to-date periods in 2001 compared to income of $3.1 million for the year-to-date period in 2000. The decrease in other income was primarily due to the use of previously invested cash to repay $150 million in debt, as well as equity in the losses of an investee.

FINANCIAL CONDITION

Liquidity and Capital Resources

Cash provided by operating activities and borrowings from The Limited provide the resources to support current operations, projected growth, seasonal funding requirements and capital expenditures. A summary of the Company's working capital position and capitalization follows (millions):

	November 3, 2001		February 3, 2001		October 28, 2000

Working capital (deficit)	$	97	$	122		($6	)


Capitalization:
Long-term debt	$	100	$	100	$	100
Shareholders' equity		659		665		464


Total capitalization	$	759	$	765	$	564

Net cash used for operating activities totaled $127 million and $157 million for the thirty-nine weeks ended November 3, 2001 and October 28, 2000. The change in net cash used for operating activities was primarily driven by a decrease in inventory purchases as compared to the same period during 2000 and changes in other operating assets and liabilities primarily due to timing, partially offset by lower net income.

Investing activities represent capital expenditures, which were primarily for new and remodeled stores.

Financing activities for the thirty-nine weeks ended November 3, 2001 included cash dividend payments of $0.21 per share and the repurchase of 0.8 million shares of the Company's common stock from its public shareholders for $7.8 million. The cash dividend payment and stock repurchase were more than offset by a $384 million net increase in The Limited's intercompany cash management account payable (see Note 7 to the Consolidated Financial Statements).

In 2000, financing activities included cash dividend payments of $0.21 per share, the repurchase of 1.4 million shares of the Company's common stock from its public shareholders for $31.4 million and the repurchase of 7.4 million shares from The Limited for $166.5 million. The cash dividend payment and stock repurchases were offset by a $556.5 million net increase in The Limited's intercompany cash management account payable (see Note 7 to the Consolidated Financial Statements).

Capital Expenditures

Capital expenditures, primarily for new and remodeled stores, totaled $157.5 million for the thirty-nine weeks ended November 3, 2001, compared to $155.8 million for the comparable period of 2000. The Company anticipates spending approximately $235 million in 2001 for capital expenditures, of which approximately $210 million will be for new stores and for remodeling of and improvements to existing stores. The Company expects that 2001 capital expenditures will be funded by net cash provided by operating activities.

The Company intends to add approximately 690,000 selling square feet in 2001, which will represent a 10% increase over year-end 2000. It is anticipated the increase will result from the addition of approximately 245 new stores and the expansion of 64 stores, partially offset by the closing of 15 stores.

Recently Issued Accounting Pronouncements

EITF Issue No. 00-14, "Accounting for Certain Sales Incentives," will be effective in the first quarter of 2002 and addresses the accounting for, and classification of, various sales incentives. The Company has determined that adopting the provisions of the EITF Issue will not have a material impact on its results of operations or its financial position.

On June 29, 2001 the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and also addresses the accounting for goodwill and other intangible assets. SFAS No. 142 addresses the accounting for goodwill and other intangible assets subsequent to their acquisition, and will be effective in the first quarter of 2002. The Company is assessing the provisions of SFAS No. 141 and SFAS No. 142 and does not expect the adoption of these statements to have a material impact on its results of operations or its financial position.

In August 2001 the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement establishes a single accounting model for long-lived assets to be disposed of by sale and resolves significant implementation issues related to SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and For Long-Lived Assets to be Disposed Of" and is effective for fiscal years beginning after December 15, 2001. The Company is currently evaluating the impact of adopting SFAS No. 144.

Impact of Inflation

The Company's results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, the Company believes the effects of inflation, if any, on the results of operations and financial condition have been minor.

Item 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk of the Company's financial instruments as of November 3, 2001 has not significantly changed since February 3, 2001. Information regarding the Company's financial instruments and market risk as of February 3, 2001 is disclosed in the Company's 2000 Annual Report on Form 10-K.

PART II - OTHER INFORMATION

Item 1.		LEGAL PROCEEDINGS

		The Company is a defendant in a variety of lawsuits arising in the ordinary course of business.

		On January 13, 1999, two lawsuits were filed against the Company, as well as other defendants, including many national retailers. Both lawsuits relate to labor practices allegedly employed on the island of Saipan, Commonwealth of the Northern Mariana Islands, by apparel manufacturers unrelated to the Company (some of which have sold goods to the Company) and seek injunctions, unspecified monetary damages, and other relief. One lawsuit, on behalf of a class of unnamed garment workers, was filed in the United States District Court for the Central District of California, Western Division and subsequently transferred to the United States District Court for the Northern Mariana Islands. It alleged violations of federal statutes, the United States Constitution, and international law. A first amended complaint was filed on April 28, 2000, which added additional defendants but did not otherwise substantively alter either the claims alleged or relief sought. On November 26, 2001, a motion to dismiss the first amended complaint for failure to state a claim upon which relief can be granted was granted in part and denied in part. The second lawsuit was filed by a national labor union and other organizations in the Superior Court of the State of California, San Francisco County, and alleges unfair business practices under California law. A motion for summary judgment on that complaint was filed on October 30, 2001, and remains pending.

		Although it is not possible to predict with certainty the eventual outcome of any litigation, in the opinion of management, the foregoing proceedings are not expected to have a material adverse effect on the Company's financial position or results of operations.

Item 5.		OTHER INFORMATION

		The Company's Certificate of Incorporation includes provisions relating to potential conflicts of interest that may arise between the Company and The Limited. Such provisions were adopted in light of the fact that the Company and The Limited and its subsidiaries are engaged in retail businesses and may pursue similar opportunities in the ordinary course of business. Among other things, these provisions generally eliminate the liability of directors and officers of the Company with respect to certain matters involving The Limited and its subsidiaries, including matters that may constitute corporate opportunities of The Limited, its subsidiaries or the Company. Any person purchasing or acquiring an interest in shares of capital stock of the Company will be deemed to have consented to such provisions relating to conflicts of interest and corporate opportunities, and such consent may restrict such person's ability to challenge transactions carried out in compliance with such provisions. Investors should review the Company's Certificate of Incorporation before making any investment in shares of the Company's capital stock.

Item 6.	EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibits

	15.	Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re: Incorporation of Report of Independent Accountants.

(b)	Reports on Form 8-K

	i.	On September 19, 2001, the Company filed a report on Form 8-K which contained a press release and related exhibits dated September 17, 2001.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	INTIMATE BRANDS, INC. (Registrant)


	By	/s/ Tracey Thomas Travis
		Tracey Thomas Travis, Vice President, Finance and Chief Financial Officer of Intimate Brands, Inc.*

Date: December 14, 2001


*Ms. Travis is the principal financial officer and has been duly authorized to sign on behalf of the Registrant.

INTIMATE BRANDS INC 10-Q