##### Table of Contents





As filed with the Securities and
    Exchange Commission on June 28, 2011
  Registration
    No. 333-
     UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    Form S-4
 REGISTRATION
    STATEMENT
 UNDER
 THE SECURITIES ACT OF
    1933
    CLAIRES STORES,
    INC.
  (Exact name of Registrant as
    specified in its charter)
 Florida

5600

59-0940416(State or other jurisdiction
    of
    incorporation)

(Primary Standard Industrial
    Classification Code Number)

(I.R.S. Employer
    Identification Number)   2400 West Central Road
 Hoffman Estates, Illinois 60192
 (847) 765-1100
 (Address, including zip code,
    and telephone number, including area code, of Registrants
    principal executive offices)
  Rebecca Orand, ESQ.
 3 S.W. 129th Avenue
 Pembroke Pines, Florida 33027
 (954) 433-3900
 (Name and address, including zip
    code, and telephone number, including area code, of agent for
    service)
    With a copy to:
 Howard A. Kenny, ESQ.
 Morgan, Lewis & Bockius LLP
 101 Park Avenue
 New York, New York 10178
 (212) 309-6000
 Fax:
    (212) 309-6001
    Approximate date of commencement of proposed offer of
    securities to the public:
 o
 o
 o
 Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer þ
    (Do not check if a smaller reporting company)

Smaller reporting
    company o     Rule 13e-4(i) o
 Rule 14d-1(d) o
    CALCULATION
    OF REGISTRATION FEE
  Proposed Maximum


Proposed Maximum


Amount ofTitle of Each Class of


Amount


Offering


Aggregate


RegistrationSecurities to be Registered


to be Registered


Price per Note(1)


Offering Price(1)


Fee8.875% Senior Secured Second Lien Notes due 2019


$450,000,000


100%


$450,000,000


$52,245Guarantees of 8.875% Senior Secured Second Lien Notes due 2019(2)











(3)  (1)
    Estimated solely for purposes of calculating the registration
    fee pursuant to Rule 457(f) under the Securities Act of
    1933, as amended (the Securities Act).(2)
    The entities listed on the Table of Additional Registrants on
    the following page have guaranteed the notes being registered
    hereby.(3)
    Pursuant to Rule 457(n) under the Securities Act, no
    additional registration fee is required with respect to the
    guarantees.    The Registrants hereby amend this Registration Statement on
    such date or dates as may be necessary to delay its effective
    date until the Registrants shall file a further amendment which
    specifically states that this Registration Statement shall
    thereafter become effective in accordance with Section 8(a)
    of the Securities Act or until this Registration Statement shall
    become effective on such date as the Commission, acting pursuant
    to said Section 8(a), may determine.




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##### Table of Contents





*Table of
    Additional Registrants
  Primary StandardJurisdiction of

Industrial

I.R.S. EmployerIncorporation or

Classification Code

IdentificationName of Additional Registrant+

Formation

Number

NumberBMS Distributing Corp.


Delaware



5600



05-0544117CBI Distributing Corp.


Delaware



5600



65-0135574Claires Boutiques, Inc.


Colorado



5600



36-2025307Claires Canada Corp.


Delaware



5600



65-0447936Claires Puerto Rico Corp.


Delaware



5600



66-0496113CSI Canada LLC


Delaware



5600



None     +
    
    Addresses and telephone numbers of principal executive offices
    are the same as those of Claires Stores, Inc.




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The
information in this prospectus is not complete and may be
changed. We may not complete the exchange offer and issue these
securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where
the offer or sale is not permitted.  SUBJECT TO COMPLETION, DATED
    JUNE 28, 2011
  PROSPECTUS
  
  Offer to Exchange
  $450,000,000 aggregate principal amount of 8.875% Senior
    Secured Second Lien Notes due 2019
  For
  $450,000,000 aggregate principal amount of 8.875% Senior
    Secured Second Lien Notes due 2019
 registered under the Securities Act of 1933, as amended
    MATERIAL
    TERMS OF THE EXCHANGE OFFER
              See Risk Factors
    beginning on page 15 of this prospectus for a discussion of
    certain risks that you should consider in connection with an
    investment in the exchange notes.
  Neither the SEC nor any state securities commission has
    approved or disapproved of the exchange notes or passed upon the
    adequacy or accuracy of this prospectus. Any representation to
    the contrary is a criminal offense.




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##### 



TABLE OF
    CONTENTS
   
 WHERE YOU CAN FIND MORE INFORMATION


iiFORWARD-LOOKING STATEMENTS


iiiPROSPECTUS SUMMARY


1RISK FACTORS


15THE EXCHANGE OFFER


34USE OF PROCEEDS


41CAPITALIZATION


42SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND
    OTHER DATA


43MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


46BUSINESS


73MANAGEMENT


80EXECUTIVE COMPENSATION


84SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT


99CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


101DESCRIPTION OF CERTAIN INDEBTEDNESS


103DESCRIPTION OF EXCHANGE NOTES


106CERTAIN UNITED STATES FEDERAL INCOME TAX
    CONSIDERATIONS


167PLAN OF DISTRIBUTION


169LEGAL MATTERS


170EXPERTS


170INDEX TO COMBINED FINANCIAL STATEMENTS


F-1EX-3.13EX-3.14EX-5.1EX-5.2EX-12.1EX-23.1EX-25.1EX-99.1EX-99.2EX-99.3EX-99.4




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WHERE YOU
    CAN FIND MORE INFORMATION  1-800-SEC-0330 http://www.sec.gov.
  Form S-4
  We have not authorized anyone to give you any information or
    to make any representations about us or the transactions we
    discuss in this prospectus other than those contained in this
    prospectus. If you are given any information or representations
    about these matters that is not discussed in this prospectus,
    you must not rely on that information. This prospectus is not an
    offer to sell or a solicitation of an offer to buy securities
    anywhere or to anyone where or to whom we are not permitted to
    offer or sell securities under applicable law. You should rely
    only on the information contained or incorporated by reference
    in this prospectus. We have not authorized anyone to provide you
    with different information. We are not making an offer of these
    securities in any state or other jurisdiction where the offer is
    not permitted. You should not assume that the information
    contained in this prospectus is accurate as of any date other
    than the date on the front of this prospectus.
  Each broker-dealer that receives exchange notes for its own
    account in the exchange offer for old notes that were acquired
    as a result of market-making or other trading activities must
    acknowledge that it will comply with the prospectus delivery
    requirements of the Securities Act in connection with any offer
    to resell or other transfer of the exchange notes issued in the
    exchange offer. The accompanying letter of transmittal relating
    to the exchange offer states that by so acknowledging and
    delivering a prospectus, a broker-dealer will not be deemed to
    admit that it is an underwriter within the meaning
    of the Securities Act. This prospectus, as it may be amended or
    supplemented from time to time, may be used by a broker-dealer
    in connection with resales of exchange notes received in the
    exchange offer for old notes that were acquired by such
    broker-dealer as a result of market-making or other trading
    activities.
 ii




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##### Table of Contents



FORWARD-LOOKING
    STATEMENTS  e-commerce
   iii




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PROSPECTUS
    SUMMARY  This summary contains basic information about Claires
    Stores, Inc. and the exchange offer. It does not contain all the
    information that may be important to you in making your
    investment decision. Before deciding to participate in the
    exchange offer, you should read the entire prospectus carefully,
    including the matters discussed under the caption Risk
    Factors and the detailed information and financial
    statements included in this prospectus.
  Unless otherwise indicated or the context otherwise requires,
    references in this prospectus to Claires,
    we, our, us and the
    Company are to Claires Stores, Inc. and its
    consolidated subsidiaries.
  Our fiscal year ends on the Saturday closest to
    January 31, and we refer to the fiscal year by the calendar
    year in which it began. Thus, for example, we refer to the
    fiscal year ended January 29, 2011 as our Fiscal
    2010.
  The
    Company
  ® ®
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##### Table of Contents




    Accessories  includes fashion accessories for
    year-round use, including legwear, headwear, attitude glasses,
    scarves, armwear and belts, and seasonal use, including
    sunglasses, hats, fall footwear, sandals, scarves, gloves,
    boots, slippers and earmuffs; and other accessories, including
    hairgoods, handbags, and small leather goods, as well as
    cosmetics
    Jewelry  includes earrings, necklaces,
    bracelets, body jewelry and rings, as well as ear piercing    Our
    Competitive Strengths
  Strong Claires Name Brand Recognition Across the
    Globe.
  Diversification Across Geographies and Merchandise
    Categories.
    Cost-Efficient Global Sourcing
    Capabilities.
  Improved Cost Structure and Streamlined
    Operations.
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Substantial Free Cash Flow Generation.
  Strong and Experienced Senior Management
    Team. multi-unit
  Business
    Strategy
    Drive organic growth through our merchandise, stores, and
    customer offense.
  
    Merchandise:  We continue to enhance the
    fashion-orientation and quality of our product offering to
    deliver a unique, proprietary assortment that is highly relevant
    to our target customers, particularly the Claires Young
    (teenage) customer. We continue to focus on our
    multi-classification Accessories assortment, while maintaining
    our market leadership position in Jewelry, to capitalize on the
    evolving largest market opportunities. We are enabling these
    improvements through investments in fashion and trend
    forecasting, global product design and development, and in the
    enhancement of our Hong Kong-based sourcing capabilities to
    leverage our global purchasing economy of scale. Simultaneously,
    we are identifying product source alternatives.
    Stores:  In our almost 3,400 stores
    worldwide, our objective is to provide a consistent, engaging,
    and brand-right customer experience. We are continually
    improving our in-store presentation of merchandise and marketing
    collateral through a rigorous planning and communication
    process, resulting in improved execution and increased
    consistency across the chain and, ultimately, a superior
    shopping experience. We are also commencing efforts to heighten
    the selling orientation of our store teams specific to each
    brand and country.
    Customer:  In the past year, we have
    made significant strides to build deeper customer relationships
    and support our brands. We launched a new, innovative
    claires.comwebsite that uses customer-generated content,
    conveys a real-life interaction with our customers, and presents
    an authoritative fashion position. We further drive brand
    awareness and relevance with our ongoing social media, email,
    and text campaigns, which leverage our Facebook fan base and
    proprietary customer database. Lastly, in parallel with our
    digital efforts, we have significantly upgraded our in-store
    marketing collateral in order to present a much more fashionable
    brand image that appeals to our target customers.
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Increase our global reach through new store expansion (owned
    and franchise) and new distribution channels.
    
    Build New Company-owned Claires
    Stores:  We opened 82 new stores in 2010; 69
    in Europe and 13 in North America. In addition, we have
    plans to open approximately 140 new stores in 2011, the majority
    of which will be in Europe.
    Build New Company-owned Icing
    Stores:  As we refine the Icing brand concept,
    we believe there is significant opportunity to increase the
    store penetration in North America, as well as to roll out the
    concept on a global basis to markets where we can leverage the
    existing Claires infrastructure.
    Open New International Markets with Franchise
    Partners:  Building on our refined franchising
    model, which is present in multiple geographies worldwide, we
    will pursue high potential white space opportunities
    in new markets globally. In 2011, we intend to enter Mexico,
    India and possibly Australia. We are currently studying our
    brand entrance strategy for China and Southeast Asia for the
    ensuing years.
    Add Alternative Distribution
    Channels:  We will seek new opportunities
    globally to market and distribute our brands, beginning with the
    launch of
    E-Commerce
    in the Claires North America Division which is targeted to
    debut in mid-2011.    Acquisition
    of the Company by Apollo Management VI, L.P. in 2007
        
    the closing of the offering of the Existing Notes;
    the closing of our $1.65 billion senior secured credit
    facility (the Credit Facility); and
    the equity investment of approximately $595.7 million by
    Apollo Management VI, L.P. on behalf of certain affiliated
    co-investment partnerships.
 4




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Rent-A-Center,
  Corporate
    Information
    (847) 765-1100 www.clairestores.com
 5




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Summary
    of the Terms of the Exchange Offer
  The following summary contains basic information about the
    exchange offer. It does not contain all the information that may
    be important to you. For a more complete description of the
    exchange offer, you should read The Exchange Offer
    section of this prospectus.
  Exchange Notes
    
    $450.0 million aggregate principal amount of
    8.875% Senior Secured Second Lien Notes due 2019. The terms
    of the exchange notes are substantially identical to those of
    the old notes, except that the transfer restrictions and
    registration rights relating to the old notes will not apply to
    the exchange notes, and the exchange notes will not provide for
    the payment of additional interest in the event of a
    registration default. In addition, the exchange notes bear a
    different CUSIP number than the old notes.Old Notes
    
    $450.0 million aggregate principal amount of 8.875% Senior
    Secured Second Lien Notes due 2019, which were issued in a
    private placement on March 4, 2011.The Exchange Offer
    
    In the exchange offer, we will exchange old 8.875% Senior
    Secured Second Lien Notes due 2019 for registered
    8.875% Senior Secured Second Lien Notes due 2019.We will accept any and all old notes validly tendered and not
    withdrawn prior to 5:00 p.m., New York City time,
    on          ,
    2011. Holders may tender some or all of their old notes pursuant
    to the exchange offer. However, old notes may be tendered only
    in denominations of $2,000 and integral multiples of $1,000.In order to be exchanged, an outstanding old note must be
    properly tendered and accepted. All old notes that are validly
    tendered and not withdrawn will be exchanged. As of the date of
    this prospectus, there are $450.0 million aggregate
    principal amount of 8.875% Senior Secured Second Lien Notes
    due 2019 outstanding. We will issue exchange notes promptly
    after the expiration of the exchange offer. See The
    Exchange Offer  Terms of the Exchange Offer.Registration Rights Agreement
    
    In connection with the private placement of the old notes, we
    entered into a registration rights agreement with Credit Suisse
    Securities (USA) LLC, J.P. Morgan Securities LLC, Goldman,
    Sachs & Co. and Morgan Joseph TriArtisan LLC, as
    initial purchasers. Under the registration rights agreement, if
    eligible, you are entitled to exchange your old notes for
    exchange notes with substantially identical terms. This exchange
    offer is intended to satisfy these rights. After the exchange
    offer is complete, except as set forth in the next paragraph,
    you will no longer be entitled to any exchange or registration
    rights with respect to your old notes.The registration rights agreement requires us to file a
    registration statement for a continuous offering in accordance
    with Rule 415 under the Securities Act for your benefit if
    you would not receive freely tradable exchange notes in the
    exchange offer or you are ineligible to participate in the
    exchange offer, provided that you indicate that you wish to have
    your old notes registered under the Securities Act.Resales of the Exchange Notes
    
    We believe that the exchange notes issued in the exchange offer
    may be offered for resale, resold or otherwise transferred by
    you
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without compliance with the registration and prospectus delivery
    requirements of the Securities Act as long as:(1) you are acquiring the exchange notes in the ordinary
    course of your business;(2) you are not engaging in and do not intend to engage in
    a distribution of the exchange notes;(3) you do not have an arrangement or understanding with
    any person or entity to participate in the distribution of the
    exchange notes; and(4) you are not our affiliate as that term is
    defined in Rule 405 under the Securities Act.Our belief is based on interpretations by the staff of the SEC,
    as set forth in no-action letters issued to third parties
    unrelated to us. We have not asked the staff for a no-action
    letter in connection with this exchange offer, however, and we
    cannot assure you that the staff would make a similar
    determination with respect to the exchange offer.If you are an affiliate of ours, or are engaging in or intend to
    engage in or have any arrangement or understanding with any
    person to participate in the distribution of the exchange notes: you cannot rely on the applicable interpretations of
    the staff of the SEC; you will not be entitled to participate in the
    exchange offer; and you must comply with the registration and prospectus
    delivery requirements of the Securities Act in connection with
    any resale transaction.Each broker-dealer that receives exchange notes for its own
    account in the exchange offer for old notes that were acquired
    as a result of market-making or other trading activities must
    acknowledge that it will comply with the prospectus delivery
    requirements of the Securities Act in connection with any offer
    to resell or other transfer of the exchange notes issued in the
    exchange offer.Furthermore, any broker-dealer that acquired any of its old
    notes directly from us, in the absence of an exemption therefrom, may not rely on the applicable interpretation of the
    staff of the SECs position contained in Exxon Capital
    Holdings Corp., SEC no-action letter (April 13, 1988),
    Morgan, Stanley & Co. Inc., SEC no-action
    letter (June 5, 1991) and Shearman &
    Sterling, SEC no-action letter (July 2, 1993); and must comply with the registration and prospectus
    delivery requirements of the Securities Act in connection with
    any resale of the exchange notes.See Plan of Distribution.Expiration Date
    
    The exchange offer will expire at 5:00 p.m., New York City
    time,
    on          ,
    2011, unless we decide to extend the exchange offer. We do not
    intend to extend the exchange offer, although we reserve the
    right to do so.
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Conditions to the Exchange Offer
    
    The exchange offer is subject to customary conditions, including
    that it not violate any applicable law or any applicable
    interpretation of the staff of the SEC. The exchange offer is
    not conditioned upon any minimum principal amount of private
    notes being tendered for exchange. See The Exchange
    Offer  Conditions.Procedures for Tendering Old Notes
    
    The old notes were issued as global securities in fully
    registered form without coupons. Beneficial interests in the old
    notes that are held by direct or indirect participants in The
    Depository Trust Company (DTC) through
    certificateless depositary interests are shown on, and transfers
    of the old notes can be made only through, records maintained in
    book-entry form by DTC with respect to its participants.If you wish to exchange your old notes for exchange notes
    pursuant to the exchange offer, you must transmit to The Bank of
    New York Mellon Trust Company, N.A., as exchange agent, on
    or prior to the expiration of the exchange offer, either: a computer-generated message transmitted through
    DTCs Automated Tender Offer Program system
    (ATOP) and received by the exchange agent and
    forming a part of a confirmation of book-entry transfer in which
    you acknowledge and agree to be bound by the terms of the letter
    of transmittal; or a properly completed and duly executed letter of
    transmittal, which accompanies this prospectus, or a facsimile
    of the letter of transmittal, together with your old notes and
    any other required documentation, to the exchange agent at its
    address listed in this prospectus and on the front cover of the
    letter of transmittal.If you cannot satisfy either of these procedures on a timely
    basis, then you should comply with the guaranteed delivery
    procedures described below.By delivering a computer-generated message through DTCs
    ATOP system, you will represent to us, as set forth in the
    letter of transmittal, among other things, that: you are acquiring the exchange notes in the exchange
    offer in the ordinary course of your business; you are not engaging in and do not intend to engage
    in a distribution of the exchange notes; you do not have an arrangement or understanding with
    any person or entity to participate in the distribution of the
    exchange notes; and you are not our affiliate.Special Procedures for Beneficial Owners
    
    If you are the beneficial owner of old notes that are registered
    in the name of a broker, dealer, commercial bank, trust company
    or other nominee, and you wish to tender your old notes in the
    exchange offer, you should promptly contact the person in whose
    name your old notes are registered and instruct that person to
    tender on your behalf. If you wish to tender on your own behalf,
    you must, prior to completing and executing the letter of
    transmittal and delivering your notes, either make appropriate
    arrangements to
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register ownership of the old notes in your name or obtain a
    properly completed bond power from the person in whose name your
    old notes are registered. The transfer of registered ownership
    may take considerable time. See The Exchange
    Offer  Procedures for Tendering.Guaranteed Delivery Procedures
    
    If you wish to tender your old notes and time will not permit
    the documents required by the letter of transmittal to reach the
    exchange agent before the expiration date for the exchange
    offer, or the procedure for book-entry transfer cannot be
    completed on a timely basis, you must tender your old notes
    according to the guaranteed delivery procedures described in
    this prospectus under the heading The Exchange
    Offer  Guaranteed Delivery Procedures.Acceptance of Old Notes and Delivery of Exchange Notes
    
    Except under the circumstances summarized above under
    Conditions to the Exchange Offer, we will accept for
    exchange any and all old notes that are properly tendered in the
    exchange offer prior to 5:00 p.m., New York City time, on
    the expiration date for the exchange offer. The exchange notes
    to be issued to you in an exchange offer will be delivered
    promptly following the expiration of the exchange offer. See
    The Exchange Offer  Terms of the Exchange
    Offer.Withdrawal Rights
    
    You may withdraw any tender of your old notes at any time prior
    to 5:00 p.m., New York City time, on the expiration date of
    the exchange offer. We will return to you any old notes not
    accepted for exchange for any reason without expense to you as
    promptly as we can after the expiration or termination of the
    exchange offer. See The Exchange Offer 
    Withdrawal Rights.Exchange Agent
    
    The Bank of New York Mellon Trust Company, N.A., the
    trustee under the indenture governing the notes, is serving as
    the exchange agent in connection with the exchange offer.Consequences of Failure to Exchange
    
    If you do not participate or properly tender your old notes in
    the exchange offer: you will retain old notes that are not registered
    under the Securities Act and that will continue to be subject to
    restrictions on transfer that are described in the legend on the
    old notes; you will not be able, except in very limited
    instances, to require us to register your old notes under the
    Securities Act; you will not be able to offer to resell or transfer
    your old notes unless they are registered under the Securities
    Act or unless you offer to resell or transfer them pursuant to
    an exemption under the Securities Act; and the trading market for your old notes will become
    more limited to the extent that other holders of old notes
    participate in the exchange offer.Certain United Stated Federal Income Tax Considerations
    
    Your exchange of old notes for exchange notes in the exchange
    offer will not result in any gain or loss to you for U.S.
    federal income tax purposes. See Certain United States
    Federal Income Tax Considerations.
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Summary
    of the Terms of the Exchange Notes
  The summary below describes the principal terms of the
    exchange notes. Certain of the terms and conditions described
    below are subject to important limitations and exceptions. The
    Description of Exchange Notes section of this
    prospectus contains a more detailed description of the terms and
    conditions of the exchange notes.
  Issuer and Guarantors
    
    Claires Stores, Inc. is the obligor of the exchange notes,
    which are guaranteed by the guarantors as described under
    Description of Exchange Notes  Guarantees.Notes Offered
    
    $450.0 million aggregate principal amount of
    8.875% Senior Secured Second Lien Notes due 2019.Maturity Date
    
    The exchange notes will mature on March 15, 2019.Interest
    
    March 15 and September 15 of each year, beginning
    September 15, 2011. Interest began to accrue on
    March 4, 2011.Guarantees
    
    The exchange notes are jointly and severally and fully and
    unconditionally guaranteed on a second-priority senior secured
    basis by all of our existing and future direct or indirect
    wholly-owned domestic subsidiaries that guarantee our Credit
    Facility or that incur or guarantee certain other indebtedness.Ranking
    
    The exchange notes are our senior secured obligations and: rank equally in right of payment with all of our
    existing and future senior indebtedness; are effectively senior to our unsecured senior
    indebtedness to the extent of the value of the assets securing
    the notes; rank senior to any of our future senior subordinated
    indebtedness and subordinated indebtedness; and are effectively subordinated to our secured
    indebtedness that is secured by a prior lien on the collateral
    for the notes, including the obligations under our Credit
    Facility.The guarantees by our subsidiaries are their senior secured
    obligations and: rank equally in right of payment with all of the
    existing and future senior indebtedness of such subsidiaries; are effectively senior to the unsecured senior
    indebtedness of such subsidiaries to the extent of the value of
    the assets securing the guarantees; rank senior to any of the future senior subordinated
    indebtedness and subordinated indebtedness of such subsidiaries;
    and are effectively subordinated to the secured
    indebtedness of such subsidiaries that is secured by a prior
    lien on the collateral for the guarantees, including the
    obligations under our Credit Facility.In addition, the exchange notes and the related guarantees are
    effectively subordinated to all of the liabilities of our
    subsidiaries that do not guarantee the exchange notes. As of
    April 30, 2011,
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our non-guarantor subsidiaries had total liabilities of
    approximately $261.3 million.As of April 30, 2011, we had outstanding on a consolidated
    basis: $1,684.4 million of senior secured indebtedness; $580.9 million of unsecured senior
    indebtedness; and $259.6 million of unsecured senior subordinated
    indebtedness.Security
    
    The exchange notes and the related guarantees are secured by a
    second-priority lien on substantially all of the assets that
    secure our and our subsidiary guarantors obligations under
    our Credit Facility, subject to certain exceptions and permitted
    liens. See Description of Exchange Notes 
    Security.The value of collateral at any time will depend on market and
    other economic conditions, including the availability of
    suitable buyers for the collateral. The liens on the collateral
    may be released without the consent of the holders of the
    exchange notes if collateral is disposed of in a transaction
    that complies with the indenture governing the exchange notes
    and the related security documents or in accordance with the
    provisions of the intercreditor agreement entered into relating
    to the collateral securing the notes and our Credit Facility.
    See Risk Factors  Risks Relating to the
    Exchange Notes  It may be difficult to realize the
    value of the collateral securing the exchange notes,
    Description of Exchange Notes  Security
    and Description of Exchange Notes 
    Security  Security Documents and Intercreditor
    Agreement.Intercreditor Agreement
    
    The trustee and collateral agent for the exchange notes and the
    collateral agent under our Credit Facility entered into an
    intercreditor agreement regarding the relative priorities of
    their respective security interests in the assets securing the
    exchange notes and related guarantees and borrowings under the
    Credit Facility and certain other matters relating to the
    administration of security interests. See Description of
    Exchange Notes  Security  Security
    Documents and Intercreditor Agreement.Optional Redemption
    
    We may redeem some or all of the exchange notes at any time on
    or after March 15, 2015 at a redemption price set forth
    under Description of Exchange Notes  Optional
    Redemption. On or prior to March 15, 2014, we may
    redeem up to 35% of the exchange notes with the proceeds of
    certain sales of our equity or contributions to our equity, at
    the prices set forth under Description of Exchange
    Notes  Optional Redemption. On or prior to
    March 15, 2015, we may, at our option redeem some or all of
    the exchange notes at the make whole prices set
    forth under Description of Exchange Notes 
    Optional Redemption.Change of Control
    
    If a change of control occurs, we must give holders of the
    exchange notes an opportunity to sell to us their exchange notes
    at a purchase price of 101% of the principal amount of such
    exchange notes, plus accrued and unpaid interest and additional
    interest, if any, to the date of purchase. See Description
    of Exchange Notes  Certain Definitions 
    Change of Control.
 11




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##### Table of Contents



Certain Covenants
    
    The indenture governing the exchange notes contains covenants
    that, among other things, limit our ability and the ability of
    certain of our subsidiaries (as described in Description
    of Exchange Notes) to: incur or guarantee additional indebtedness; create or incur certain liens; pay dividends or other restricted payments; incur restrictions on the payment of dividends or
    other distributions from our restricted subsidiaries; make certain investments; transfer or sell assets; engage in transactions with affiliates; or merge or consolidate with other companies or
    transfer all or substantially all of our assets.These covenants are subject to a number of important limitations
    and exceptions described under Description of Exchange
    Notes  Certain Covenants.If the notes are assigned investment grade ratings by both
    Moodys and Standard & Poors and no default
    or event of default has occurred and is continuing, certain
    covenants will be suspended. See Description of Exchange
    Notes  Certain Covenants.Risk Factors
    
    You should carefully consider all of the information contained
    in this prospectus and, in particular, you should evaluate the
    specific factors under Risk Factors.
 12




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##### Table of Contents



Summary
    Historical Consolidated Financial Information
          Fiscal Year


Fiscal Year


Fiscal YearThree Months Ended


Ended


Ended


EndedApril 30,


May 1,


January 29,


January 30,


January 31.2011


2010


2011(1)


2010(1)


2009(1)(In thousands, except for ratios and store data)Statement of Operations Data:Net sales

$
346,446


$
322,077


$
1,426,397


$
1,342,389


$
1,412,960Cost of sales, occupancy and buying expenses


171,359



158,751



685,111



663,269



724,832Gross profit


175,087



163,326



741,286



679,120



688,128Other expenses:Selling, general and administrative


126,722



118,019



498,212



465,706



513,752Depreciation and amortization


17,054



16,366



65,198



71,471



85,093Impairment of assets










12,262



3,142



498,490Severance and transaction-related costs


343



102



741



921



15,928Other expense (income), net


5,311



1,230



411



(4,234
)


(4,499
)149,430



135,717



576,824



537,006



1,108,764Operating income (loss)


25,657



27,609



164,462



142,114



(420,636
)Gain on early debt extinguishment


249



4,487



13,388



36,412



Impairment of equity investment










6,030







25,500Interest expense (income), net


46,235



42,763



157,706



177,418



195,947Income (loss) from continuing operations before income taxes


(20,329
)


(10,667
)


14,114



1,108



(642,083
)Income tax expense (benefit)


(732
)


1,633



9,791



11,510



1,509Income (loss) from continuing operations

$
(19,597
)

$
(12,300
)

$
4,323


$
(10,402
)

$
(643,592
)Other Financial Data:Capital expenditures:New stores and remodels


14,027



6,267



39,022



16,557



36,270Other


1,765



1,951



9,689



8,395



23,135Total capital expenditures


15,792



8,218



48,711



24,952



59,405Cash interest expense(2)


18,912



17,838



108,923



126,733



168,567
 13




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##### Table of Contents



Fiscal Year


Fiscal Year


Fiscal YearThree Months Ended


Ended


Ended


EndedApril 30,


May 1,


January 29,


January 30,


January 31.2011


2010


2011(1)


2010(1)


2009(1)(In thousands, except for ratios and store data)Store Data:Number of stores (at period end) North America


1,960



1,990



1,972



1,993



2,026Europe


1,040



965



1,009



955



943Total number of stores (at period end)


3,000



2,955



2,981



2,948



2,969Total gross square footage (000s) (at period end)


3,018



2,987



3,012



2,982



3,011Net sales per store (000s)(3)


487



463



481



454



461Net sales per square foot(4)


483



457



476



448



453Balance Sheet Data (at period end)Cash and cash equivalents and restricted cash(5)


246,134



220,011



279,766



198,708



204,574Total assets


2,861,712



2,828,167



2,866,449



2,834,105



2,881,095Total debt


2,524,865



2,523,745



2,524,286



2,521,878



2,581,772Total stockholders equity (deficit)


(26,708
)


(48,244
)


(26,515
)


(34,642
)


(55,843
)     (1)
    
    Fiscal 2010, Fiscal 2009 and Fiscal 2008 were each fifty-two
    week periods.(2)
    
    Cash interest expense does not include amortization of debt
    issuance costs or interest expense paid in kind.(3)
    
    Net sales per store are calculated based on trailing twelve
    months net sales and the average number of stores during the
    period.(4)
    
    Net sales per square foot are calculated based on trailing
    twelve months net sales and the average gross square feet during
    the period.(5)
    
    At April 30, 2011 and January 29, 2011, included
    restricted cash of $26.0 million and $23.9 million,
    respectively.
 14




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##### Table of Contents



RISK
    FACTORS  You should carefully consider the risks described below as
    well as the other information contained in this prospectus
    before tendering your old notes in the exchange offer. These
    risks could have a material adverse effect on our business,
    financial position or results of operations. The following risk
    factors may not include all of the important factors that could
    affect our business or our industry or that could cause our
    future financial results to differ materially from historic or
    expected results. If any of the following risks occur, you could
    lose all or part of your investment in, and the expected return
    on, the notes.
  Risks
    Relating to Economic Conditions
  Economic
    conditions may adversely impact demand for our merchandise,
    reduce access to credit and cause our customers and others with
    whom we do business to suffer financial hardship, all of which
    could adversely impact our business, results of operations,
    financial condition and cash flows.
        Risks
    Relating to Our Company
  Fluctuations
    in consumer preference may adversely affect the demand for our
    products and result in a decline in our sales.
    Advance
    purchases of our merchandise make us vulnerable to changes in
    consumer preferences and pricing shifts and may negatively
    affect our results of operations.
   15




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##### Table of Contents



A
    disruption of imports from our foreign suppliers may increase
    our costs and reduce our supply of merchandise.
    Fluctuations
    in foreign currency exchange rates could negatively impact our
    results of operations.
    Our
    business depends on the willingness of vendors and service
    providers to supply us with goods and services pursuant to
    customary credit arrangements which may not be available to us
    in the future.
    The
    failure to grow our store base in Europe or expand our
    international franchising may adversely affect our
    business.
   16




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Our
    cost of doing business could increase as a result of changes in
    federal, state, local and international regulations regarding
    the content of our merchandise.
      Recalls,
    product liability claims, and government, customer or consumer
    concerns about product safety could harm our reputation,
    increase costs or reduce sales.
    If we
    are unable to renew or replace our store leases or enter into
    leases for new stores on favorable terms, or if any of our
    current leases are terminated prior to the expiration of their
    stated term and we cannot find suitable alternate locations, our
    growth and profitability could be adversely
    harmed.
   17




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Natural
    disasters or unusually adverse weather conditions or potential
    emergence of disease or pandemic could adversely affect our net
    sales or supply of inventory.
    Information
    technology systems changes may disrupt our supply of
    merchandise.
  e-commerce
  If we
    experience a data security breach and confidential customer
    information is disclosed, we may be subject to penalties and
    experience negative publicity, which could affect our customer
    relationships and have a material adverse effect on our
    business.
    Changes
    in the anticipated seasonal business pattern could adversely
    affect our sales and profits and our quarterly results may
    fluctuate due to a variety of factors.
  back-to-school
 18




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##### Table of Contents



A
    decline in number of people who go to shopping malls,
    particularly in North America, could reduce the number of our
    customers and reduce our net sales.
    Our
    industry is highly competitive.
  e-commerce e-commerce e-commerce,
  Adoption
    of new or revised employment and labor laws and regulations
    could make it easier for our employees to obtain union
    representation and our business could be adversely
    impacted.
    Higher
    health care costs and labor costs could adversely affect our
    business.
  U.S. Patient Protection
    and Affordable Care Act
 19




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Our
    profitability could be adversely affected by high petroleum
    prices.
    The
    possibility of war and acts of terrorism could disrupt our
    information or distribution systems and increase our costs of
    doing business.
    We
    depend on our key personnel.
    Litigation
    matters incidental to our business could be adversely determined
    against us.
    Goodwill
    and indefinite-lived intangible assets comprise a significant
    portion of our total assets. We must test goodwill and
    indefinite-lived intangible assets for impairment at least
    annually or whenever events or changes in circumstances indicate
    that their carrying amounts may not be recoverable; which could
    result in a material, non-cash write-down of goodwill or
    indefinite-lived intangible assets and could have a material
    adverse impact on our results of operations.
    There
    are factors that can affect our provision for income
    taxes.
   20




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If our
    independent manufacturers, franchisees or licensees do not use
    ethical business practices or comply with applicable laws and
    regulations, our brand name could be harmed due to negative
    publicity and our results of operations could be adversely
    affected.
    We
    rely on third parties to deliver our merchandise and if these
    third parties do not adequately perform this function, our
    business would be disrupted.
    We
    depend on single North American, European and International
    distribution facilities.
    We may
    be unable to protect our tradenames and other intellectual
    property rights.
    Our
    success depends on our ability to maintain the value of our
    brands.
   21




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We may
    be unable to rely on liability indemnities given by foreign
    vendors which could adversely affect our financial
    results.
    We are
    controlled by affiliates of Apollo, and its interests as an
    equity holder may conflict with the interest of our
    creditors.
    Risks
    Relating to Our Indebtedness
  Our
    substantial leverage could adversely affect our ability to raise
    additional capital to fund our operations, limit our ability to
    react to changes in the economy or our industry and prevent us
    from meeting our obligations under the Credit Facility, the
    Existing Notes and the exchange notes.
     22




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##### Table of Contents




    increasing our vulnerability to adverse economic, industry or
    competitive developments;
    requiring a substantial portion of cash flow from operations to
    be dedicated to the payment of principal and interest on our
    indebtedness, therefore reducing our ability to use our cash
    flow to fund our operations, capital expenditures and future
    business opportunities;
    exposing us to the risk of increased interest rates because
    certain of our borrowings, including borrowings under our Credit
    Facility, will be at variable rates of interest;
    making it more difficult for us to satisfy our obligations with
    respect to our indebtedness, including the exchange notes, and
    any failure to comply with the obligations of any of our debt
    instruments, including restrictive covenants and borrowing
    conditions, could result in an event of default under the
    indentures governing the Existing Notes and the exchange notes
    and the agreements governing such other indebtedness;
    restricting us from making strategic acquisitions or causing us
    to make non-strategic divestitures;
    limiting our ability to obtain additional financing for working
    capital, capital expenditures, product development, debt service
    requirements, acquisitions and general corporate or other
    purposes; and
    limiting our flexibility in planning for, or reacting to,
    changes in our business or market conditions and placing us at a
    competitive disadvantage compared to our competitors who are
    less highly leveraged and who therefore, may be able to take
    advantage of opportunities that our leverage prevents us from
    exploiting.  Despite
    our high indebtedness level, we and our subsidiaries are still
    able to incur significant additional amounts of debt, which
    could further exacerbate the risks associated with our
    substantial indebtedness.
      Our
    debt agreements contain restrictions that limit our flexibility
    in operating our business.
    
    incur additional indebtedness or issue certain preferred shares;
    pay dividends on, repurchase or make distributions in respect of
    our capital stock or make other restricted payments; 23




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##### Table of Contents




    make certain investments;
    transfer or sell certain assets;
    create liens;
    consolidate, merge, sell or otherwise dispose of all or
    substantially all of our assets; and
    enter into certain transactions with our affiliates.    We may
    not be able to generate sufficient cash to service all of our
    indebtedness, and may be forced to take other actions to satisfy
    our obligations under our indebtedness, which may not be
    successful.
      Repayment
    of our debt is dependent on cash flow generated by our
    subsidiaries.
   24




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To
    service our debt obligations, we may need to increase the
    portion of the income of our foreign subsidiaries that is
    expected to be remitted to the United States, which could
    increase our income tax expense.
    If we
    default on our obligations to pay our other indebtedness, the
    holders of our debt could exercise rights that could have a
    material effect on us.
    
    the holders of such indebtedness may be able to cause all of our
    available cash flow to be used to pay such indebtedness and, in
    any event, could elect to declare all the funds borrowed
    thereunder to be due and payable, together with accrued and
    unpaid interest;
    the lenders under our Credit Facility could elect to terminate
    their commitments thereunder, cease making further loans and
    institute foreclosure proceedings against our assets; and
    we could be forced into bankruptcy or liquidation.    Risks
    Relating to the Exchange Notes
  The
    collateral securing the exchange notes is subject to control by
    creditors with first-priority liens and subject to the terms of
    the intercreditor agreement. If there is a default, the value of
    the collateral may not be sufficient to repay both the
    first-priority creditors and the holders of the exchange notes
    and the other second-priority creditors.
     25




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##### Table of Contents



pari passu
  The
    capital stock of each of our subsidiaries that has been pledged
    to secure the exchange notes will be automatically released from
    the collateral for the notes to the extent that the pledge would
    require the preparation and filing of separate audited financial
    statements of such subsidiary under
    Rule 3-16
    of
    Regulation S-X
    under the Securities Act.
  Rule 3-16 Regulation S-X subsidiary-by-subsidiary
  Holders
    of exchange notes do not control decisions regarding
    collateral.
   26




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It may
    be difficult to realize the value of the collateral securing the
    exchange notes.
        There
    are circumstances other than repayment or discharge of the
    exchange notes under which collateral could be released
    automatically without the consent of the holders of the exchange
    notes, which could be adverse to holders of exchange
    notes.
    
    to enable the sale, transfer or other disposal of such
    collateral in a transaction not prohibited under the indenture,
    including the sale of any entity in its entirety that owns or
    holds such collateral;
    with respect to collateral held by a guarantor, upon the release
    of such guarantor from its guarantee; and
    without the consent of holders of the exchange notes if the
    collateral ceases to secure First-Priority Lien Obligations.   27




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Your
    rights in the collateral may be adversely affected by the
    failure to perfect security interests in
    collateral.
    Bankruptcy
    laws may limit your ability to realize value from the
    collateral.
      
    how long payments under the exchange notes could be delayed
    following commencement of a bankruptcy case;
    whether or when the trustee, as collateral agent for the
    exchange notes, could repossess or dispose of the collateral;
    the value of the collateral at the time of the bankruptcy
    petition; or
    whether or to what extent holders of the exchange notes would be
    compensated for any delay in payment or loss of value of the
    collateral through the requirement of adequate
    protection.   28




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In the
    event of a bankruptcy of us or any of the guarantors, holders of
    the exchange notes may be deemed to have an unsecured claim to
    the extent that our obligations in respect of the exchange notes
    exceed the fair market value of the collateral securing the
    exchange notes.
  debtor-in-possession
  The
    value of the collateral securing the exchange notes may not be
    sufficient to secure post-petition interest.
    Any
    future pledge of collateral might be avoidable in
    bankruptcy.
    The
    exchange notes are structurally subordinated to all liabilities
    of our non-guarantor subsidiaries.
   29




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##### Table of Contents



Federal
    and state fraudulent transfer laws permit a court, under certain
    circumstances, to void the exchange notes, guarantees and
    security interests, and, if that occurs, you may not receive any
    payments on the exchange notes.
    
    we or any of our subsidiary guarantors were or was insolvent or
    rendered insolvent by reason of issuing the exchange notes or
    the guarantees;
    payment of the consideration left us or any of our subsidiary
    guarantors with an unreasonably small amount of capital to carry
    on the business; or
    we or any of our subsidiary guarantors intended to, or believed
    that we or it would, incur debts beyond our or its ability to
    pay as they mature.      
    the sum of its debts, including contingent liabilities, was
    greater than the fair saleable value of all its assets;
    the present fair saleable value of its assets was less than the
    amount that would be required to pay its probable liability on
    its existing debts and liabilities, including contingent
    liabilities, as they become absolute and mature; or
    it could not pay its debts as they become due. 30




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Because
    each guarantors liability under its guarantees may be
    reduced to zero, avoided or released under certain
    circumstances, you may not receive any payments from some or all
    of the guarantors.
    We may
    not be able to repurchase the exchange notes upon a change of
    control.
  day-to-day
  During
    any period in which the exchange notes are rated investment
    grade, certain covenants contained in the indenture will not be
    applicable, however there is no assurance that the exchange
    notes will be rated investment grade.
   31




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##### Table of Contents



The
    market price for the notes may be volatile.
    Risks
    Relating to the Exchange Offer
  If you
    fail to exchange your old notes, they will continue to be
    restricted securities and may become less liquid.
    You
    may find it difficult to sell your exchange notes because there
    is no existing trading market for the exchange
    notes.
     32




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##### Table of Contents



Broker-dealers
    may become subject to the registration and prospectus delivery
    requirements of the Securities Act, and any profit on the resale
    of the exchange notes may be deemed to be underwriting
    compensation under the Securities Act.
    You
    may not receive the exchange notes in the exchange offer if the
    exchange offer procedures are not properly
    followed.
   33




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##### Table of Contents



THE
    EXCHANGE OFFER  Purpose
    and Effect of the Exchange Offer
      
    you are acquiring the exchange notes in the ordinary course of
    your business;
    you are not engaging in and do not intend to engage in a
    distribution of the exchange notes;
    you do not have an arrangement or understanding with any person
    or entity to participate in the distribution of the exchange
    notes; and
    you are not our affiliate as that term is defined in
    Rule 405 under the Securities Act.      Consequences
    of Failure to Exchange
    
    you will retain old notes that are not registered under the
    Securities Act and that will continue to be subject to
    restrictions on transfer that are described in the legend on the
    old notes; 34




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##### Table of Contents




    you will not be able to require us to register your old notes
    under the Securities Act unless, as set forth above, you do not
    receive freely tradable exchange notes in the exchange offer or
    are not eligible to participate in the exchange offer, and we
    are obligated to file a shelf registration statement;
    you will not be able to offer to resell or transfer your old
    notes unless they are registered under the Securities Act or
    unless you offer to resell or transfer them pursuant to an
    exemption under the Securities Act; and
    the trading market for your old notes will become more limited
    to the extent that other holders of old notes participate in the
    exchange offer.  Terms of
    the Exchange Offer
            Expiration
    Date; Amendment
   35




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##### Table of Contents




    to accept tendered notes after the expiration of the exchange
    offer and the settlement of the exchange offer with respect to
    tendered notes,
    and/or
    extend the exchange offer with respect to untendered notes,
    subject to applicable legal requirements;
    to delay accepting any old notes or, if any of the conditions
    set forth below under  Conditions have
    not been satisfied or waived, to terminate the exchange offer by
    giving oral (any such oral notice to be promptly confirmed in
    writing) or written notice of such delay or termination to the
    exchange agent; or
    to amend the terms of the exchange offer in any manner by
    complying with Rule
    14e-l(d)
    under the Exchange Act, to the extent that rule applies.  Rule 14e-l(c)
  Procedures
    for Tendering
    
    the certificates representing your old notes must be received by
    the exchange agent prior to the expiration date;
    a timely confirmation of book-entry transfer of such old notes
    into the exchange agents account at DTC pursuant to the
    procedure for book-entry transfers described below under
     Book-Entry Transfer must be received by
    the exchange agent prior to the expiration date; or
    you must comply with the guaranteed delivery procedures
    described below.        
    old notes tendered in the exchange offer are tendered either by
    a registered holder who has not completed the box titled
    Special Registration Instructions or Special
    Delivery Instructions on the holders letter of
    transmittal or for the account of an eligible
    institution; and
    the box titled Special Registration Instructions on
    the letter of transmittal has not been completed.     36




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##### Table of Contents




    you improperly tender your old notes;
    you have not cured any defects or irregularities in your
    tender; and
    we have not waived those defects, irregularities or improper
    tender.      
    purchase or make offers for, or offer exchange notes for, any
    old notes that remain outstanding subsequent to the expiration
    of the exchange offer;
    terminate the exchange offer; and
    to the extent permitted by applicable law, purchase notes in the
    open market, in privately negotiated transactions or otherwise.      Book-Entry
    Transfer
   37




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##### Table of Contents




    a timely confirmation of book-entry transfer of such notes into
    the exchange agents account at DTC pursuant to the
    procedure for book-entry transfers described above must be
    received by the exchange agent prior to the expiration
    date; or
    you must comply with the guaranteed delivery procedures
    described below.  Guaranteed
    Delivery Procedures
    
    you tender through an eligible financial institution;
    on or prior to 5:00 p.m., New York City time, on the
    expiration date, the exchange agent receives from an eligible
    institution, a written or facsimile copy of a properly completed
    and duly executed letter of transmittal and notice of guaranteed
    delivery, substantially in the form provided by us; and
    the certificates for all certificated old notes, in proper form
    for transfer, or a book-entry confirmation, and all other
    documents required by the letter of transmittal, are received by
    the exchange agent within three New York Stock Exchange trading
    days after the date of execution of the notice of guaranteed
    delivery.    
    your name and address;
    the amount of old notes you are tendering;
    a statement that your tender is being made by the notice of
    guaranteed delivery and that you guarantee that within three New
    York Stock Exchange trading days after the execution of the
    notice of guaranteed delivery, the eligible institution will
    deliver the following documents to the exchange agent;
    the certificates for all certificated old notes being tendered,
    in proper form, for transfer or a book-entry confirmation of
    tender; 38




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
    a written or facsimile copy of the letter of transmittal or a
    book-entry confirmation instead of the letter of
    transmittal; and
    any other documents required by the letter of transmittal.  Withdrawal
    Rights
        
    state your name;
    identify the specific old notes to be withdrawn, including the
    certificate number or numbers and the principal amounts of the
    old notes to be withdrawn;
    be signed by you in the same manner as you signed the letter of
    transmittal when you tendered your old notes, including any
    required signature guarantees, or be accompanied by documents of
    transfer sufficient for the exchange agent to register the
    transfer of the old notes into your name; and
    specify the name in which the old notes are to be registered, if
    different from yours.    Conditions
    
    any injunction, order or decree has been issued by any court or
    any governmental agency that would prohibit, prevent or
    otherwise materially impair our ability to proceed with the
    exchange offer; or
    the exchange offer violates any applicable law or any applicable
    interpretation of the staff of the SEC.     39




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##### Table of Contents



Exchange
    Agent
       c/o The      212-815-5788  212-298-1915
  DELIVERY
    OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
    FORTH ABOVE, OR TRANSMISSION OF SUCH LETTER OF TRANSMITTAL VIA
    FACSIMILE OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A
    VALID DELIVERY.
    Fees and
    Expenses
      Transfer
    Taxes
    Accounting
    Treatment
   40




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USE OF
    PROCEEDS   41




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##### Table of Contents



CAPITALIZATION    As of April 30, 2011Actual


As AdjustedUnaudited(In thousands)Cash and cash equivalents and restricted cash(1):

$
246,134


$
246,134Debt:Senior Secured Term Loan Facility due May 2014

$
1,154,310


$
1,154,310Old Notes (Senior Secured Second Lien Notes due 2019)


450,000



Exchange Notes (Senior Secured Second Lien Notes due 2019)






450,0009.25% Senior Fixed Rate Notes due 2015


226,000



226,0009.625% / 10.375% Senior Toggle Notes due 2015


354,857



354,85710.5% Senior Subordinated Notes due 2017


259,612



259,612Note payable to bank due 2012


62,796



62,796Capital lease obligation


17,290



17,290Total debt


2,524,865



2,524,865Total stockholders equity


(26,708
)


(26,708
)Total capitalization

$
2,498,157


$
2,498,157     (1)
    
    Includes restricted cash of $25,966. 42




---



##### Table of Contents



SELECTED
    HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA            Successor Entity



Predecessor EntityFiscal Year


Fiscal Year


Fiscal Year


May 29, 2007



Feb. 4, 2007


Fiscal YearThree Months Ended


Ended


Ended


Ended


through



through


EndedApril 30,


May 1,


January 29,


January 30,


January 31,


Feb. 2,



May 28,


February 3,2011


2010


2011(1)


2010(1)


2009(1)


2008



2007


2007(1)(In thousands, except for ratios and store data)Statement of Operations Data:Net sales

$
346,446


$
322,077


$
1,426,397


$
1,342,389


$
1,412,960


$
1,085,932



$
424,899


$
1,480,987Cost of sales, occupancy and buying expenses


171,359



158,751



685,111



663,269



724,832



521,384




206,438



691,646Gross profit


175,087



163,326



741,286



679,120



688,128



564,548




218,461



789,341Other expenses:Selling, general and administrative


126,722



118,019



498,212



465,706



513,752



354,875




154,409



481,979Depreciation and amortization


17,054



16,366



65,198



71,471



85,093



61,451




19,652



56,771Impairment of assets










12,262



3,142



498,490



3,478




73



Severance and transaction-related costs


343



102



741



921



15,928



7,319




72,672



 43




---



##### Table of Contents



Successor Entity



Predecessor EntityFiscal Year


Fiscal Year


Fiscal Year


May 29, 2007



Feb. 4, 2007


Fiscal YearThree Months Ended


Ended


Ended


Ended


through



through


EndedApril 30,


May 1,


January 29,


January 30,


January 31,


Feb. 2,



May 28,


February 3,2011


2010


2011(1)


2010(1)


2009(1)


2008



2007


2007(1)(In thousands, except for ratios and store data)Other expense (income), net


5,311



1,230



411



(4,234
)


(4,499
)


(3,088
)



(1,476
)


(3,484
)149,430



135,717



576,824



537,006



1,108,764



424,035




245,330



535,266Operating income (loss)


25,657



27,609



164,462



142,114



(420,636
)


140,513




(26,869
)


254,075Gain on early debt extinguishment


249



4,487



13,388



36,412
















Impairment of equity investment










6,030







25,500












Interest expense (income), net


46,235



42,763



157,706



177,418



195,947



147,892




(4,876
)


(14,575
)Income (loss) from continuing operations before income taxes


(20,329
)


(10,667
)


14,114



1,108



(642,083
)


(7,379
)



(21,993
)


268,650Income tax expense (benefit)


(732
)


1,633



9,791



11,510



1,509



(8,020
)



21,779



79,888Income (loss) from continuing operations

$
(19,597
)

$
(12,300
)

$
4,323


$
(10,402
)

$
(643,592
)

$
641



$
(43,772
)

$
188,762Other Financial Data:Capital expenditures:New stores and remodels


14,027



6,267



39,022



16,557



36,270



46,225




24,231



77,021Other


1,765



1,951



9,689



8,395



23,135



12,259




3,757



18,171
(2)Total capital expenditures


15,792



8,218



48,711



24,952



59,405



58,484




27,988



95,192Cash interest expense(3)


18,912



17,838



108,923



126,733



168,567



123,620




86



118Ratio of earnings to fixed charges(4)










1.1
x


1.0
x















5.2
xStore Data:Number of stores (at period end) North America


1,960



1,990



1,972



1,993



2,026



2,135




2,124



2,133Europe


1,040



965



1,009



955



943



905




879



859Total number of stores (at period end)


3,000



2,955



2,981



2,948



2,969



3,040




3,003



2,992Total gross square footage (000s) (at period end)


3,018



2,987



3,012



2,982



3,011



3,105




3,043



3,021Net sales per store (000s)(5)


487



463



481



454



461



359




142



504Net sales per square foot(6)


483



457



476



448



453



353




140



500Balance Sheet Data (at period end)Cash and cash equivalents and restricted cash(7)


246,134



220,011



279,766



198,708



204,574



85,974




350,476



340,877Total assets


2,861,712



2,828,167



2,866,449



2,834,105



2,881,095



3,348,497




1,119,047



1,091,266Total debt


2,524,865



2,523,745



2,524,286



2,521,878



2,581,772



2,377,750








Total stockholders equity (deficit)


(26,708
)


(48,244
)


(26,515
)


(34,642
)


(55,843
)


605,200




792,071



847,662     (1)
    
    Fiscal 2006 was a fifty-three week period and Fiscal 2010,
    Fiscal 2009, Fiscal 2008 and Fiscal 2007 were fifty-two week
    periods.(2)
    
    Includes management information system expenditures of
    $5.2 million in Fiscal 2006 for strategic projects of POS,
    merchandising systems, business intelligence, technology and the
    logistics system for the new distribution center in the
    Netherlands. 44




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##### Table of Contents



(3)
    
    Cash interest expense does not include amortization of debt
    issuance costs or interest expense paid in kind.(4)
    
    For purposes of calculating the ratio of earnings to fixed
    charges, earnings represent income from continuing operations
    before income taxes plus fixed charges. Fixed charges include
    interest expense, including amortization of debt issuance costs,
    and the portion of rental expense which management believes is
    representative of the interest component of rental expense. Due
    to the Companys loss during the three months ended
    April 30, 2011 and May 1, 2010, Fiscal 2008 and the
    combined period from May 29, 2007 through February 2,
    2008 and February 4, 2007 through May 28, 2007, the
    ratio coverage was less than 1:1. The Company must generate
    additional earnings of $20.3 million, $9.6 million,
    $642.4 million, $7.5 million and $22.7 million
    during the three months ended April 30, 2011 and
    May 1, 2010, Fiscal 2008, the period from May 29, 2007
    through February 2, 2008 and the period from
    February 4, 2007 through May 28, 2007, respectively,
    to achieve coverage of 1:1.(5)
    
    Net sales per store are calculated based on trailing twelve
    months net sales and the average number of stores during the
    period.(6)
    
    Net sales per square foot are calculated based on trailing
    twelve months net sales and the average gross square feet during
    the period.(7)
    
    At April 30, 2011 and January 29, 2011, included
    restricted cash of $26.0 million and $23.9 million,
    respectively. 45




---



##### Table of Contents



MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
    AND RESULTS OF OPERATIONS        Overview
  ® ®
         46




---



##### Table of Contents




    Accessories  includes fashion accessories for
    year-round use, including legwear, headwear, attitude glasses,
    scarves, armwear and belts, and seasonal use, including
    sunglasses, hats, fall footwear, sandals, scarves, gloves,
    boots, slippers and earmuffs; and other accessories, including
    hairgoods, handbags, and small leather goods, as well as
    cosmetics
    Jewelry  includes earrings, necklaces,
    bracelets, body jewelry and rings, as well as ear piercing    Current
    Market Conditions
    Acquisition
    of the Company by Apollo Management VI, L.P. in 2007
    
    the closing of the offering of the Existing Notes;
    the closing of our $1.65 billion Credit Facility; and
    the equity investment of approximately $595.7 million by
    Apollo Management VI, L.P. on behalf of certain affiliated
    co-investment partnerships.        Results
    of Consolidated Operations
  Management
    overview
   47




---



##### Table of Contents



Consolidated
    Results of Operations
  For
    the Three Months Ended April 30, 2011 and May 1,
    2010
    Three Months

Three MonthsEnded

EndedApril 30, 2011

May 1, 2010Net sales

$
346,446


$
322,077Increase in same store sales


3.2
%


7.6
%Gross profit percentage


50.5
%


50.7
%Selling, general and administrative expenses as a percentage of
    net sales


36.6
%


36.6
%Depreciation and amortization as a percentage of net sales


4.9
%


5.1
%Operating income

$
25,657


$
27,609Gain on early debt extinguishment

$
249


$
4,487Net loss

$
(19,597
)

$
(12,300
)Number of stores at the end of the period(1)


3,000



2,955     (1)
    
    Number of stores excludes stores operated under franchise and
    licensing agreements.  Net
    sales
        Percentage of TotalThree Months


Three MonthsEnded


EndedProduct Category

April 30, 2011


May 1, 2010Accessories


52.4



52.1Jewelry


47.6



47.9100.0



100.0   Gross
    profit
   48




---



##### Table of Contents



Selling,
    general and administrative expenses
    Depreciation
    and amortization expense
    Gain on
    early debt extinguishment
    Three Months Ended April 30, 2011RecognizedPrincipal


Repurchase


GainNotes Repurchased

Amount


Price


(Loss)(1)Senior Notes

$
10,000


$
9,930


$
(98
)Senior Toggle Notes


14,155



14,084



347$
24,155


$
24,014


$
249     (1)
    
    Net of deferred issuance cost write-offs of $168 for the Senior
    Notes and $179 for the Senior Toggle Notes, and accrued interest
    write-off of $455 for the Senior Toggle Notes.  Three Months Ended May 1, 2010Principal


Repurchase


RecognizedNotes Repurchased

Amount


Price


Gain(1)Senior Toggle Notes

$
6,000


$
4,985


$
1,087Senior Subordinated Notes


15,625



11,864



3,400$
21,625


$
16,849


$
4,487     (1)
    
    Net of deferred issuance cost write-offs of $104 and $361 for
    the Senior Toggle Notes and Senior Subordinated Notes,
    respectively, and accrued interest write-off of $176 for the
    Senior Toggle Notes. 49




---



##### Table of Contents



Other
    expense (income), net
    Three Months


Three MonthsEnded


EndedApril 30, 2011


May 1, 2010Foreign currency exchange loss, net

$
5,949


$
785Equity loss






1,116Royalty income


(389
)


(191
)Other income


(249
)


(480
)$
5,311


$
1,230     Interest
    expense, net
    Income
    taxes
    Segment
    Operations
    North
    America
    Three Months

Three MonthsEnded

EndedApril 30, 2011

May 1, 2010Net sales

$
224,188


$
212,599Increase in same store sales


4.8
%


8.9
%Gross profit percentage


52.5
%


51.7
%Number of stores at the end of the period(1)


1,960



1,990     (1)
    
    Number of stores excludes stores operated under franchise and
    licensing agreements.   50




---



##### Table of Contents



Percentage of TotalThree Months


Three MonthsEnded


EndedProduct Category

April 30, 2011


May 1, 2010Accessories


46.7



47.3Jewelry


53.3



52.7100.0



100.0   Europe
    Three Months

Three MonthsEnded

EndedApril 30, 2011

May 1, 2010Net sales

$
122,258


$
109,478Increase in same store sales


0.1
%


5.0
%Gross profit percentage


47.0
%


48.8
%Number of stores at the end of the period(1)


1,040



965     (1)
    
    Number of stores excludes stores operated under franchise and
    licensing agreements.       51




---



##### Table of Contents



Percentage of TotalThree Months


Three MonthsEnded


EndedProduct Category

April 30, 2011


May 1, 2010Accessories


62.5



61.3Jewelry


37.5



38.7100.0



100.0   Fiscal
    2010, Fiscal 2009 and Fiscal 2008
  Financial highlights for 2010 include the following
  
    Same store sales performance:  Fiscal 2010Consolidated


6.5
%North America


7.8
%Europe


4.3
%   
    Operating income increase of $22.3 million or 15.7% to
    $164.5 million.
    Net income increase of $14.7 million to $4.3 million
    from $(10.4) million.
    Cash flow from operating activities increase of
    $75.8 million or 100.4% to $151.3 million.
    Paid $79.9 million to retire $93.8 million of Notes.
    Cash and cash equivalents and restricted cash increase to
    $279.8 million.    Operational highlights for 2010 include the following
  
    Opened 82 new company-owned stores including stores in three new
    markets
    Reacquired exclusive territory rights for all of Asia, outside
    of Japan
    Executed license agreement with former joint venture partner to
    operate Claires Nippon stores as licensed stores in Japan
    Increased the average transaction value and average number of
    transactions per store
    Increased sales mix of our accessories product
    category
    Attained positive operating cash flow in approximately 95% of
    our stores. 52




---



##### Table of Contents



Fiscal 2010

Fiscal 2009

Fiscal 2008Net sales

$
1,426,397


$
1,342,389


$
1,412,960Increase (decrease) in same store sales


6.5
%


(1.7
)%


(6.9
)%Gross profit percentage


52.0
%


50.6
%


48.7
%Selling, general and administrative expenses as a percentage of
    net sales


34.9
%


34.7
%


36.4
%Depreciation and amortization as a percentage of net sales


4.6
%


5.3
%


6.0
%Severance and transaction-related costs as percentage of net
    sales


0.1
%


0.1
%


1.1
%Impairment of assets

$
12,262


$
3,142


$
498,490Operating income (loss)

$
164,462


$
142,114


$
(420,636
)Gain on early debt extinguishment

$
13,388


$
36,412


$
Impairment of equity investment

$
6,030


$



$
25,500Net income (loss)

$
4,323


$
(10,402
)

$
(643,592
)Number of stores at the end of the period(1)


2,981



2,948



2,969     (1)
    
    Number of stores excludes stores operated under franchise and
    license agreements.  Net
    sales
            Percentage of TotalProduct Category

Fiscal 2010


Fiscal 2009


Fiscal 2008Accessories


54.5



53.6



48.4Jewelry


45.5



46.4



51.6100.0



100.0



100.0   Gross
    profit
   53




---



##### Table of Contents



mark-up
  Selling,
    general and administrative expenses
      Depreciation
    and amortization expense
      Impairment
    charges
     54




---



##### Table of Contents



Severance
    and transaction-related costs
    Gain
    on early debt extinguishment
    Fiscal 2010Principal


Repurchase


RecognizedNotes Repurchased

Amount


Price


Gain(1)Senior Notes

$
14,000


$
12,268


$
1,467Senior Toggle Notes


57,173



49,798



7,612Senior Subordinated Notes


22,625



17,799



4,309$
93,798


$
79,865


$
13,388     (1)
    
    Net of deferred issuance cost write-offs of $265 for the Senior
    Notes, $922 for the Senior Toggle Notes and $517 for the Senior
    Subordinated Notes, and accrued interest write-off of $1,159 for
    the Senior Toggle Notes.  Fiscal 2009Principal


Repurchase


RecognizedNotes Repurchased

Amount


Price


Gain(1)Senior Toggle Notes

$
30,500


$
19,744


$
11,297Senior Subordinated Notes


52,763



26,347



25,115$
83,263


$
46,091


$
36,412     (1)
    
    Net of deferred issuance cost write-offs of $603 and $1,301 for
    the Senior Toggle Notes and Senior Subordinated Notes,
    respectively, and accrued interest write-off of $1,144 for the
    Senior Toggle Notes. 55




---



##### Table of Contents



Other
    expense (income), net
    Fiscal 2010


Fiscal 2009


Fiscal 2008Equity loss (income)

$
2,529


$
1,014


$
(320
)Franchise fees


(1,638
)


(1,943
)


(2,309
)Gain on sale of assets






(1,935
)


(1,287
)Other income


(480
)


(1,370
)


(583
)$
411


$
(4,234
)

$
(4,499
)   Interest
    expense (income), net
        Income
    taxes
          Segment
    Operations
   56




---



##### Table of Contents



North
    America
    Fiscal 2010

Fiscal 2009

Fiscal 2008Net sales

$
914,149


$
850,313


$
907,486Increase (decrease) in same store sales


7.8
%


(3.2
)%


(9.2
)%Gross profit percentage


52.1
%


50.0
%


47.9
%Number of stores at the end of the period(1)


1,972



1,993



2,026     (1)
    
    Number of stores excludes stores operated under franchise and
    licensing agreements.  Net
    sales
          Gross
    profit
        Percentage of TotalProduct Category

Fiscal 2010


Fiscal 2009


Fiscal 2008Accessories


49.8



48.5



43.3Jewelry


50.2



51.5



56.7100.0



100.0



100.0  57




---



##### Table of Contents



Europe
    Fiscal 2010

Fiscal 2009

Fiscal 2008Net sales

$
512,248


$
492,076


$
505,474Increase (decrease) in same store sales


4.3
%


1.1
%


(2.5
)%Gross profit percentage


51.7
%


51.7
%


50.1
%Number of stores at the end of the period(1)


1,009



955



943     (1)
    
    Number of stores excludes stores operated under franchise and
    licensing agreements.  Net
    sales
          Gross
    profit
        Percentage of TotalProduct Category

Fiscal 2010


Fiscal 2009


Fiscal 2008Accessories


62.7



62.2



57.3Jewelry


37.3



37.8



42.7100.0



100.0



100.0  58




---



##### Table of Contents



Liquidity
    and Capital Resources
    Short-term
    Debt
      Credit
    Facility
       59




---



##### Table of Contents




    a perfected pledge of all the equity interests held by us or any
    subsidiary guarantor, which pledge, in the case of any foreign
    subsidiary, is limited to 100% of the non-voting equity
    interests and 65% of the voting equity interests of such foreign
    subsidiary held directly by us and the subsidiary
    guarantors; and
    perfected security interests in, and mortgages on, substantially
    all material tangible and intangible assets owned by us and each
    subsidiary guarantor, subject to certain exceptions.    Senior Secured
    Second Lien Notes
 60




---



##### Table of Contents



Senior
    Notes and Senior Subordinated Notes
            
    incur additional indebtedness;
    pay dividends or distributions on our capital stock, repurchase
    or retire our capital stock and redeem, repurchase or defease
    any subordinated indebtedness;
    make certain investments;
    create or incur certain liens;
    create restrictions on the payment of dividends or other
    distributions to us from our subsidiaries;
    transfer or sell assets;
    engage in certain transactions with our affiliates; and
    merge or consolidate with other companies or transfer all or
    substantially all of our assets.     61




---



##### Table of Contents



European
    Credit Facilities
  non-U.S. subsidiaries
  Analysis
    of Consolidated Financial Condition
  Three
    Months Ended April 30, 2011 and May 1,
    2010
    Three Months

Three MonthsEnded

EndedApril 30, 2011

May 1, 2010Operating activities

$
643


$
35,905Investing activities


(17,439
)


8,358Financing activities


(23,106
)


(21,239
)   Cash
    flows from operating activities
    Cash
    flows from investing activities
    Cash
    flows from financing activities
     62




---



##### Table of Contents



Cash
    Position
      Fiscal
    2010 and Fiscal 2009
    Fiscal 2010

Fiscal 2009

Fiscal 2008Operating activities

$
151,259


$
75,476


$
1,373Investing activities


(56,952
)


(21,259
)


(60,756
)Financing activities


(38,139
)


(60,591
)


179,500     Cash
    flows from operating activities
      Cash
    flows from investing activities
   63




---



##### Table of Contents



Cash
    flows from financing activities
        Cash
    position
    Critical
    Accounting Policies and Estimates
    Inventory
    Valuation
   64




---



##### Table of Contents



cost-to-retail
  Valuation
    of Long-Lived Assets
        Goodwill
    Impairment
  Intangibles  Goodwill and Other
   65




---



##### Table of Contents



debt-to-equity
      Intangible
    Asset Impairment
   66




---



##### Table of Contents



Income
    Taxes
           67




---



##### Table of Contents



Stock-Based
    Compensation
    Compensation  Stock Compensation,
           68




---



##### Table of Contents



Derivatives
    and Hedging
  Derivatives and Hedging
    Fair Value Measurements and Disclosures,
    Contractual
    Obligations and Off Balance Sheet Arrangements
   69




---



##### Table of Contents



Payments Due by Period2-3


4-5


More than 5Contractual Obligations

Total


1 Year


Years


Years


Years(In millions)Recorded Contractual Obligations:Debt(1)

$
2,519.0


$
76.2


$
223.0


$
1,960.3
(2)

$
259.5Capital lease obligation


48.7



2.2



4.5



4.6



37.4Unrecorded Contractual Obligations:Operating lease obligations(3)


1,053.9



202.2



338.7



246.9



266.1Interest(4)


584.2



122.8



265.5



155.0



40.9Letters of credit


7.1



7.1











Total

$
4,212.9


$
410.5


$
831.7


$
2,366.8


$
603.9     (1)
    
    Represents debt expected to be paid and does not assume any note
    repurchases or prepayments other than scheduled debt payments
    under our Credit Facility.(2)
    
    Includes $1,351.8 million under our senior secured term
    loan facility, $372.5 million under our Senior Toggle Notes
    and $236.0 million under our Senior Subordinated Notes.(3)
    
    Operating lease obligations consists of future minimum lease
    commitments related to store operating leases, distribution
    center leases, office leases and equipment leases. Operating
    lease obligations do not include common area maintenance
    (CAM), contingent rent, insurance, marketing or tax
    payments for which the Company is also obligated.(4)
    
    Represents interest expected to be paid on our debt and does not
    assume any note repurchases or prepayments, other than scheduled
    debt payments under our Credit Facility. Projected interest on
    variable rate debt is calculated using the applicable interest
    rate at January 29, 2011, and the effect of the interest
    rate swap through July 2013 as discussed in
    Note 6  Derivatives and Hedging Activities in
    the Notes to our audited consolidated financial statements.  Regulation S-K
  Seasonality
    and Quarterly Results
  back-to-school
  Impact of
    Inflation
    Recent
    Accounting Pronouncements
  2010-06, Fair Value Measurements and Disclosures  Improving
    Disclosures about Fair Value Measurements Fair Value Measurements and Disclosures 2010-06
 70




---



##### Table of Contents



2010-09, Subsequent Events: Amendments to Certain Recognition and
    Disclosure Requirements Subsequent Events 2010-09
    Quantitative
    and Qualitative Disclosures About Market Risk
  Cash
    and Cash Equivalents
    Interest
    Rates
       71




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##### Table of Contents



Foreign
    Currency
        General
    Market Risk
   72




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BUSINESS  The
    Company
  ® ®
            
    Accessories  includes fashion accessories for
    year-round use, including legwear, headwear, attitude glasses,
    scarves, armwear and belts, and seasonal use, including
    sunglasses, hats, fall footwear, sandals, scarves, gloves,
    boots, slippers and earmuffs; and other accessories, including
    hairgoods, handbags, and small leather goods, as well as
    cosmetics
    Jewelry  includes earrings, necklaces,
    bracelets, body jewelry and rings, as well as ear piercing    Our
    Competitive Strengths
  Strong Claires Name Brand Recognition Across the
    Globe.
 73




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Diversification Across Geographies and Merchandise
    Categories.
    Cost-Efficient Global Sourcing
    Capabilities.
  Improved Cost Structure and Streamlined
    Operations.
  Substantial Free Cash Flow Generation.
  Strong and Experienced Senior Management
    Team. multi-unit
 74




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Business
    Strategy
    Drive organic growth through our merchandise, stores, and
    customer offense.
  
    Merchandise:  We continue to enhance the
    fashion-orientation and quality of our product offering to
    deliver a unique, proprietary assortment that is highly relevant
    to our target customers, particularly the Claires Young
    (teenage) customer. We continue to focus on our
    multi-classification Accessories assortment, while maintaining
    our market leadership position in Jewelry, to capitalize on the
    evolving largest market opportunities. We are enabling these
    improvements through investments in fashion and trend
    forecasting, global product design and development, and in the
    enhancement of our Hong Kong-based sourcing capabilities to
    leverage our global purchasing economy of scale. Simultaneously,
    we are identifying product source alternatives.
    Stores:  In our almost 3,400 stores
    worldwide, our objective is to provide a consistent, engaging,
    and brand-right customer experience. We are continually
    improving our in-store presentation of merchandise and marketing
    collateral through a rigorous planning and communication
    process, resulting in improved execution and increased
    consistency across the chain and, ultimately, a superior
    shopping experience. We are also commencing efforts to heighten
    the selling orientation of our store teams specific to each
    brand and country.
    Customer:  In the past year, we have
    made significant strides to build deeper customer relationships
    and support our brands. We launched a new, innovative
    claires.comwebsite that uses customer-generated content,
    conveys a real-life interaction with our customers, and presents
    an authoritative fashion position. We further drive brand
    awareness and relevance with our ongoing social media, email,
    and text campaigns, which leverage our Facebook fan base and
    proprietary customer database. Lastly, in parallel with our
    digital efforts, we have significantly upgraded our in-store
    marketing collateral in order to present a much more fashionable
    brand image that appeals to our target customers.  Increase our global reach through new store expansion (owned
    and franchise) and new distribution channels.
    
    Build New Company-owned Claires
    Stores:  We opened 82 new stores in 2010; 69
    in Europe and 13 in North America. In addition, we have
    plans to open approximately 140 new stores in 2011, the majority
    of which will be in Europe.
    Build New Company-owned Icing
    Stores:  As we refine the Icing brand concept,
    we believe there is significant opportunity to increase the
    store penetration in North America, as well as to roll out the
    concept on a global basis to markets where we can leverage the
    existing Claires infrastructure.
    Open New International Markets with Franchise
    Partners:  Building on our refined franchising
    model, which is present in multiple geographies worldwide, we
    will pursue high potential white space opportunities
    in new markets globally. In 2011, we intend to enter Mexico,
    India and possibly Australia. We are currently studying our
    brand entrance strategy for China and Southeast Asia for the
    ensuing years. 75




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
    Add Alternative Distribution
    Channels:  We will seek new opportunities
    globally to market and distribute our brands, beginning with the
    launch of
    E-Commerce
    in the Claires North America Division which is targeted to
    debut in mid-2011.    Fiscal
    2011 Priorities
    Deliver An Exceptional Highly Relevant Assortment for the
    Young Customer.
  Sustain Merchandise Margin.
  Enhance the In-Store Experience, Especially for the Young
    Customer.
  Heighten Brand Relevance. E-Commerce
  Extend Global Reach.
  Maintain Strong Financial Discipline. E-Commerce
  Develop our Team Members into a Top Performing Global
    Organization.
   76




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Stores
    Store
    Management
        Store
    Openings, Closings and Future Growth
    January 29,


January 30,


January 31,Store Count as of:

2011


2010


2009North America


1,972



1,993



2,026Europe


1,009



955



943Subtotal Company-Owned


2,981



2,948



2,969Joint Venture






211



214Franchise and License


395



195



196Subtotal Non-Owned


395



406



410Total


3,376



3,354



3,379     Purchasing
    and Distribution
   77




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Trademarks
    and Service Marks
    Information
    Technology
    Competition
    Seasonality
  back-to-school
  Employees
    Properties
  and/or
 78




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ApproximateSquareLocation

Use

FootageHoffman Estates, Illinois

Corporate and North America management and distribution center


538,000
(1)Birmingham, United Kingdom

Europe management and distribution center


105,600
(2)Pembroke Pines, Florida

Accounting and finance


36,000Hong Kong

Sourcing and buying


11,100Paris, France

Zone support


8,800
(3)Zurich, Switzerland

Zone support


3,800
(3)     (1)
    
    On February 19, 2010, we sold the Property to a third
    party. Contemporaneously with the sale of the Property, we
    entered into a lease agreement that provides for (a) an
    initial expiration date of February 28, 2030 with two
    (2) five (5) year renewal periods, each at our option,
    and (b) basic rent of $2.1 million per annum (subject
    to annual increases). This transaction is accounted for as a
    capital lease. Prior to February 19, 2010, we owned central
    buying and store operations offices and the North American
    distribution center located in Hoffman Estates, Illinois (the
    Property) which is on approximately 28.4 acres
    of land. The Property has buildings with approximately 538,000
    total square feet of space, of which 373,000 square feet is
    devoted to receiving and distribution and 165,000 square
    feet is devoted to office space.(2)
    
    Our subsidiary, Claires Accessories UK Ltd., or
    Claires UK, leases distribution and office
    space in Birmingham, United Kingdom. The facility consists of
    approximately 23,900 square feet of office space and
    approximately 81,700 square feet of distribution space. The
    lease expires in December 2024, and Claires UK has the
    right to assign or sublet this lease at any time during the term
    of the lease, subject to landlord approval. The Birmingham,
    United Kingdom distribution center currently services our owned
    stores in Europe.(3)
    
    We maintain our human resource and select operating functions
    for these countries.    Legal
    Proceedings
   79




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MANAGEMENT    Name

Age

PositionEugene S. Kahn


61


Chief Executive Officer and DirectorJames G. Conroy


41


President of Claires StoresJay K. Friedman


59


President of Claires North AmericaKenneth Wilson


44


President of Claires EuropeJ. Per Brodin


49


Executive Vice President and Chief Financial OfficerPeter P. Copses


52


Non-Executive Chairman of our Board of DirectorsRobert J. DiNicola


62


DirectorGeorge G. Golleher


63


DirectorRohit Manocha


52


DirectorRon Marshall


57


DirectorLance A. Milken


35


Director   Eugene S. Kahn
  James G. Conroy
  Jay K. Friedman multi-unit
  Kenneth Wilson
  J. Per Brodin
 80




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Peter P. Copses Rent-A-Center, rent-to-own
  Robert J. DiNicola
  George G. Golleher
 81




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Rohit Manocha
  Ron Marshall
  Lance A. Milken
  Board
    Composition
    Board
    Committees
   82




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Code of
    Ethics
  www.clairestores.com.
 83




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EXECUTIVE
    COMPENSATION  Compensation
    Discussion and Analysis
  Introduction
        Compensation
    Philosophy and Objectives
      Components
    of Executive Compensation
   84




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Base Salary.
  Bonus.
     85




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Fiscal
    2010 Performance Goals
  ExpenseControlSame Store Sales

New Store

Adjusted



(% ofBonus Level

(%)(1)

Sales(2)

EBITDA(3)

Free Cash Flow

Sales)($ in millions)

($ in millions)

($ in millions)Threshold


2.00



24



245



176



59.1
%Target


4.20



25



261



192



58.4
%Maximum


6.40



26



277



208



57.8
%     (1)
    
    We include a store in the calculation of same store sales once
    it has been in operation 60 weeks after its initial opening.(2)
    
    New store sales include sales from stores open less than
    60 weeks.(3)
    
    EBITDA represents income from continuing operations before
    provision (benefit) for income tax, interest income and expense
    and depreciation and amortization, as adjusted for certain
    non-recurring and non-cash expenses.    Fiscal
    Year 2010 Bonus Table
  Potential

Potential

PotentialName

Threshold

Target

Maximum

ActualEugene S. Kahn

$
500,000(50
)%

$
1,000,000(100
)%

$
1,500,000(150
)%

$
1,400,205Chief Executive OfficerJames G. Conroy

$
332,500(50
)%

$
665,000(100
)%

$
997,500(150
)%

$
931,137PresidentKenneth Wilson

$
309,773(50
)%

$
619,545(100
)%

$
929,318(150
)%

$
388,624President of Claires EuropeJ. Per Brodin

$
147,000(30
)%

$
294,000(60
)%

$
441,000(90
)%

$
399,456Executive Vice President andChief Financial Officer   Stock Option Awards.
   86




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87




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in-the-money
    Management Equity Investments.
    Benefits Programs.
  Retirement Plans.
  1 2
  Perquisites.
 88




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Severance Pay and Benefits upon Termination of Employment
    under Certain Circumstances.
  Eugene S. Kahn.
      James G. Conroy.
 89




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Jay Friedman.
    Kenneth Wilson.
    J. Per Brodin. 12-month
 90




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Compensation
    Committee Interlocks and Insider Participation
    Summary
    Compensation Table
    Non-EquityName and










Stock


Option


Incentive Plan


All OtherPrincipal

Fiscal


Salary


Bonus


Awards


Awards


Compensation


Compensation


TotalPosition

Year


($)


($)(2)


($)


($)(1)


($)


($)(3)


($)Eugene S. Kahn


2010



1,000,000



1,400,205
(2)


0



0



0



219,185
(3)


2,619,390Chief Executive


2009



1,000,000



983,650
(2)


0



0



0



142,229



2,125,879Officer


2008



1,000,000



0
(2)


0



0



0



132,289



1,132,289James G. Conroy


2010



648,750



931,137
(2)


0



0



0



10,200
(4)


1,590,087President


2009



600,000



590,190
(2)


0



346,250



0



15,356



1,551,7962008



598,846



225,000
(5)


0



0







77,483



901,329Jay Friedman(6)


2010



34,615



150,000
(7)


0



1,030,317



0



850
(4)


1,215,782PresidentNorth AmericaKenny Wilson(8)


2010



577,613



388,621
(2)


0



0



0



40,275
(9)


1,006,510President Europe


2009



575,108



769,993
(10)


0



972,800



0



165,156



2,483,057J. Per Brodin


2010



477,500



399,456
(2)


0



0



0



219,332
(11)


1,096,288Executive Vice


2009



440,000



302,714
(2)


0



0



0



6,600



749,314President and


2008



431,538



0
(2)


0



502,200



0



6,600



940,338Chief Financial Officer     (1)
    
    This column reflects the amounts recognized for financial
    statement reporting purposes for the portion of the fair value
    of option awards to purchase Parent common stock in accordance
    with ASC Topic 718,  Stock Compensation
    (formerly, Statement of Financial Accounting Standards
    No. 123 (Revised), Share-Based Payment). For a
    description of the assumptions used in calculating the fair
    value of option awards under ASC Topic 718,
    Compensation-Stock Compensation, see
    Note 9-Stock
    Options and Stock-Based Compensation of the Notes to our
    Consolidated Financial Statements included elsewhere in this
    prospectus. The amounts in this column reflect the accounting
    expense to the Company in connection with such option awards and
    do not reflect the amount of compensation actually received by
    the named executive officer during the respective fiscal year.(2)
    
    Represents bonus paid in accordance with the annual numeric
    performance goals established by our Compensation Committee. See
    Components of Executive Compensation, Bonus.(3)
    
    Includes (i) $198,330 for reimbursement of living expenses
    pursuant to Mr. Kahns employment agreement, grossed
    up for income tax purposes, (ii) $10,200 for automobile
    allowance, and (iii) $10,655 for life insurance
    reimbursement.(4)
    
    Represents automobile allowance. 91




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(5)
    
    Represents one-time minimum guaranteed incentive bonus pursuant
    to Mr. Conroys employment agreement.(6)
    
    Mr. Friedman became an executive officer on January 3,
    2011 and the information included in the table reflects his
    compensation from that date until our fiscal year end.(7)
    
    Represents one-time sign on bonus paid to Mr. Friedman
    pursuant to the terms of his employment agreement.(8)
    
    Represents amounts in British pounds converted to U.S. dollars
    at applicable average exchange rates.(9)
    
    Includes (i) automobile allowance of $26,158, and
    (ii) medical insurance expenses of $14,118.(10)
    
    Includes (i) one-time sign-on bonus of $219,139 pursuant to
    Mr. Wilsons employment agreement.(11)
    
    Includes (i) relocation expenses of $212,732 and
    (ii) $6,600 for automobile allowance.  Employment
    Arrangements with our Executive Officers
  Eugene S.
    Kahn
      James G.
    Conroy
   92




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Jay
    Friedman
    Kenneth
    Wilson
   93




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J. Per
    Brodin
  12-month
 94




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Grants of
    Plan-Based Awards in Fiscal 2010
    All OtherOptionEstimated Payouts



Awards:



Grant DateUnder Equity



Number of

Exercise or

Fair ValueIncentive



Securities

Base Price

of Stock andPlan Awards



Underlying

of Option

OptionGrant

Threshold

Target

Maximum

Options

Awards

AwardsNames

Date

(#)

(#)

(#)

(#)(2)

($/Sh)

($)(1)Jay FriedmanTime Options


1/3/11







160,000











10.00



583,117Performance Options


1/3/11







160,000







160,000



10.00



447,200     (1)
    
    This column reflects the grant date fair value of equity awards
    in accordance with ASC Topic 718, Compensation 
    Stock Compensation. For a description of the assumptions
    used in calculating the fair value of option awards under ASC
    Topic 718, Compensation - Stock Compensation,see
    Note 9 Stock Options and Stock-Based Compensation of the
    Notes to our audited consolidated financial statements included
    elsewhere in this prospectus.(2)
    
    This column shows the number of options to purchase Parent
    common stock with performance-based vesting requirements granted
    to the named executive officer in Fiscal 2011, which is also
    reflected in the Estimated Future Payouts Under Equity
    Incentive Plan Awards column of this table. 95




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Outstanding
    Equity Awards at End of Fiscal 2010
    Outstanding
    Equity Awards at January 29, 2011
  Option Awards

Stock AwardsNumber of

Number ofSecurities

Securities





Number of

Market Value ofUnderlying

Underlying





Shares or

Shares orUnexercised

Unexercised

Option



Units of Stock

Units of StockOptions

Options

Exercise

Option

That Have

That HaveExercisable

Unexercisable

Price

Expiration

Not Vested

Not VestedName

(#)

(#)

($)

Date

(#)

($)Eugene S. KahnRestricted Shares


















18,750



187,500
(1)Time Options(2)


358,080



119,360



10.00



5/29/2014Performance Options(3)






477,440



10.00



5/29/2014Stretch Options(3)






298,400



10.00



5/29/2014Management Investment Options(4)


100,000







10.00



5/29/2014James G. ConroyTime Options(2)


143,750



81,250



10.00



(5
)Performance Options(3)






225,000



10.00



(6
)Stretch Options(3)






112,500



10.00



(7
)Jay FriedmanTime Options(2)






160,000



10.00



1/3/2018Performance Options(3)






160,000



10.00



1/3/2018Kenneth WilsonTime Options(2)


80,000



80,000



10.00



1/18/2016Performance Options(3)






160,000



10.00



1/18/2016Stretch Options(3)






80,000



10.00



1/18/2016J. Per BrodinTime Options(2)


30,000



30,000



10.00



2/11/2015Performance Options(3)






60,000



10.00



2/11/2015     (1)
    
    Valued at $10.00 per share.(2)
    
    The time option becomes vested and exercisable in four equal
    annual installments on May 29, 2008, 2009, 2010 and 2011,
    subject to acceleration in the event of a change in control.(3)
    
    The target performance option generally provides that if on any
    Measurement Date, the Value Per Share
    equals or exceeds the Target Stock Price, then the
    target performance option will vest. The stretch performance
    option generally provides that if on any Measurement
    Date, the Value Per Share equals or exceeds
    the Stretch Stock Price, then the stretch
    performance option will vest and become exercisable. Prior to an
    initial public offering, a Measurement Date is the end of a
    fiscal quarter beginning with or following the last day of the
    second quarter of our fiscal year ending in 2010. Prior to an
    initial public offering, Value Per Share is Parents
    Net Equity Value divided by the number of fully
    diluted shares. Net Equity Value is calculated as the
    (1) 8.5 times Parents EBITDA for the four fiscal
    quarters ending on the Measurement Date, plus (2) the sum
    of all cash and cash equivalents and the aggregate exercise
    price of all outstanding options or warrants to purchase shares
    of Parents common stock as of the Measurement Date, less
    (3) Parents debt as of the Measurement Date. Upon a
    defined liquidity event, Value Per Share is the price per share
    realized by the Parents principal stockholders. The Target
    Stock 96




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Price means $10.00 compounded at an annual rate of 22.5% from
    May 29, 2007 to the Measurement Date, and the Stretch Stock
    Price means $10.00, compounded at an annual rate of 32% from
    May 29, 2007 to the Measurement Date. In May 2011,
    subsequent to the end of Fiscal 2010, the terms of the
    outstanding target performance options and certain of the
    outstanding stretch performance options were amended to include
    an additional vesting criteria applicable through the end of the
    Companys Fiscal 2012. See  Compensation
    Discussion and Analysis  Components of Executive
    Compensation  Stock Option Awards.(4)
    
    The management investment options are fully-vested.(5)
    
    Unexercisable time options include: (i) 43,750 options
    expiring 12/13/2014, and (ii) 37,500 options expiring
    4/16/2016.(6)
    
    Unexercisable performance options include: (i) 175,000
    options expiring 12/13/2014, and (ii) 50,000 options
    expiring 4/16/2016.(7)
    
    Unexercisable stretch options include: (i) 87,500 options
    expiring 12/13/2014, and (ii) 25,000 options expiring
    4/16/2016.  Option
    Exercises and Stock Vested in Fiscal 2010
    Stock AwardsValueNumber of Shares

Realized onAcquired on Vesting

VestingName

(#)

($)Eugene S. Kahn


18,750



187,500
(1)     (1)
    
    Valued at $10.00 per share.  Nonqualified
    Deferred Compensation
    Potential
    Payments Upon Termination or
    Change-In-Control
  change-in-control.
  Compensation
    of Directors
  out-of-pocket
 97




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Fees Earned orPaid in Cash(1)Name

($)Peter P. Copses(2)


67,000Robert J. DiNicola


58,000George G. Golleher


58,000Rohit Manocha(3)


67,000Ron Marshall


61,000Lance A. Milken(2)


67,000     (1)
    
    Includes annual retainer fees and committee fees.(2)
    
    Fees paid to Apollo Management.(3)
    
    Fees paid to Tri-Artisan Capital. 98




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SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      Number ofName of Beneficial Owner(1)

Shares

Percentage(2)(2)Apollo Management VI, L.P.


59,467,500
(3)


98.1Peter P. Copses(3)(4)






Lance A. Milken(3)(4)






Robert J. DiNicola(5)


120,000
(6)


*George G. Golleher(5)


120,000
(6)


*Rohit Manocha (3)(5)


20,000
(7)


*Ron Marshall(5)


20,000
(7)


*Eugene S. Kahn(5)


752,440
(8)


1.2James G. Conroy


156,250
(9)


*Kenneth Wilson


80,000
(10)


*J. Per Brodin


45,000
(11)


*All officers and directors as a group (10 persons)


1,313,690



2.2     *
    
    Less than 1% of the outstanding shares.(1)
    
    The amounts and percentages of common stock beneficially owned
    are reported on the basis of regulations of the SEC governing
    the determination of beneficial ownership of securities. Under
    the rules of the SEC, a person is deemed to be a
    beneficial owner of a security if that person has or
    shares voting power, which includes the power to vote or direct
    the voting of such security, or power, which includes the power
    to dispose of or to direct the disposition of such security. A
    person is also deemed to be a beneficial owner of any securities
    of which that person has a right to acquire beneficial ownership
    within 60 days. Securities that can be so acquired are
    deemed to be outstanding for purposes of computing such
    persons ownership percentage, but not deemed outstanding
    for purposes of computing the percentage of any other person.(2)
    
    These percentages are calculated on the basis of 60,592,500
    outstanding shares of Claires Inc.s common stock.(3)
    
    Represents all equity interests of Claires Inc. held of
    record by Apollo Investment Fund VI, L.P. (AIF
    VI), and Apollo Claires Investors A LLC, Apollo
    Claires Investors B LLC and Apollo Claires Investors
    C LLC (collectively, Apollo Claires). Apollo
    Management VI, L.P. (Management VI) is the manager
    of AIF VI and Apollo Claires. AIF VI Management, LLC
    (AIF VI LLC) is the general partner of Management
    VI. Apollo Management, L.P. (Apollo Management) is
    the sole member and manager of AIF VI LLC. Apollo Management GP,
    LLC (Management GP) is the general partner of Apollo
    Management. Apollo Management Holdings, L.P. (AMH)
    is the sole member and manager of Management GP. Apollo
    Management Holdings GP, LLC (AMH GP) is the general
    partner of AMH. Each of AIF VI, Apollo Claires, Management
    VI, AIF VI LLC, Apollo Management, Management GP, AMH, and AMH
    GP (collectively, the Apollo Entities) disclaim
    beneficial ownership of all shares of Claires Inc. common
    stock held of record or beneficially owned by any of the Apollo
    Entities, except to the extent of any pecuniary interest
    therein. The address of AIF VI and Apollo Claires is
    c/o Apollo
    Management, One Manhattanville Road, Suite 201, Purchase,
    New York 10577. The address of Management VI, AIF VI LLC, Apollo
    Management, Management GP, AHM and AMH GP is
    c/o Apollo
    Management, L.P., 9 West 57th St., New York, New York
    10019. Leon Black, Joshua Harris and Marc Rowan are the managers
    and executive officers of AMH GP and as such effectively have
    the power to exercise voting 99




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and investment control with respect to the shares of our common
    stock held of record or beneficially owned by any of the Apollo
    Entities. Each of Messrs. Black, Harris and Rowan disclaims
    beneficial ownership of such shares except to the extent of any
    pecuniary interest therein. The address of Messrs. Black,
    Harris and Rowan is
    c/o Apollo
    Management, L.P., 9 West 57th Street, New York,
    New York 10019. Each of Messers. Copses, and Milken, who
    are partners or principals of Apollo, disclaim beneficial
    ownership of any shares of Claires Inc. that may be deemed
    beneficially owned by the Apollo Entities.(4)
    
    The address for Messrs. Copses and Milken is
    c/o Apollo
    Management, L.P., 9 West 57th Street New York, New
    York 10019.(5)
    
    The address for each of Messrs. DiNicola, Golleher, Kahn,
    Manocha, Marshall, Conroy, Wilson and Brodin is
    c/o Claires
    Inc., 2400 W. Central Road, Hoffman Estates, IL 60192.(6)
    
    Includes fully-vested options to purchase 70,000 shares of
    common stock.(7)
    
    Includes a fully-vested option to purchase 20,000 shares of
    common stock held by Tri-Artisan, an entity affiliated with
    Mr. Manocha.(8)
    
    Includes (i) 100,000 owned shares, (ii) 75,000
    restricted shares of common stock, of which 18,780 shares
    remain subject to forfeiture pursuant to the terms of the grant,
    (iii) a fully-vested option to purchase 100,000 shares
    of common stock, and (iv) a fully-vested time-vested option
    to purchase 477,440 shares.(9)
    
    Includes fully-vested option to purchase 156,250 shares.(10)
    
    Includes fully-vested option to purchase 80,000 shares.(11)
    
    Includes fully-vested option to purchase 45,000 shares. 100




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##### Table of Contents



CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS  Management
    Fee
    Stockholders
    Agreement
    Retail
    Design Fees
  brother-in-law
  Senior
    Secured Second Lien Note Offering
    Policies
    and Procedures for Review of Related Party
    Transactions
  Regulation S-K
 101




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Director
    Independence
   102




---



##### Table of Contents



DESCRIPTION
    OF CERTAIN INDEBTEDNESS  Short-term
    Debt
      Credit
    Facility
           103




---



##### Table of Contents




    a perfected pledge of all the equity interests held by us or any
    subsidiary guarantor, which pledge, in the case of any foreign
    subsidiary, is limited to 100% of the non-voting equity
    interests and 65% of the voting equity interests of such foreign
    subsidiary held directly by us and the subsidiary
    guarantors; and
    perfected security interests in, and mortgages on, substantially
    all material tangible and intangible assets owned by us and each
    subsidiary guarantor, subject to certain exceptions.      Senior
    Notes and Senior Subordinated Notes
         104




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##### Table of Contents



European
    Credit Facilities
  non-U.S. subsidiaries
 105




---



##### Table of Contents



DESCRIPTION
    OF EXCHANGE NOTES      Terms of
    the Exchange Notes
    Optional
    Redemption
  12-month
  Period

Redemption Price2015


104.438
%2016


102.219
%2017 and thereafter


100.000
%     provided however
 106




---



##### Table of Contents



provided further
    Selection
  provided
  Mandatory
    Redemption; Offers to Purchase; Open Market Purchases
    Ranking
      pro forma
     107




---



##### Table of Contents



Guarantees
  Guaranteed
    Obligations
               108




---



##### Table of Contents



Security
                 109




---



##### Table of Contents



Limitations
    on Stock Collateral
    Rule 3-16 Regulation S-X Rule 3-16 Regulation S-X and/or
  Rule 3-16 Regulation S-X
 110




---



##### Table of Contents



Subsidiary-by-Subsidiary
  Additional
    Collateral
  provided however
  Security
    Documents and Intercreditor Agreement
  Collateral Agent
   111




---



##### Table of Contents



provided provided however
    (DIP Financing
         112




---



##### Table of Contents



Release
    of Collateral
       113




---



##### Table of Contents



Change of
    Control
          Change of Control
    Offer
             114




---



##### Table of Contents



Certain
    Covenants
       115




---



##### Table of Contents



Covenant Suspension Event Suspended Covenant Reversion Date and/or
     116




---



##### Table of Contents



Limitation
    on Incurrence of Indebtedness and Issuance of Disqualified Stock
    and Preferred Stock
        provided however pro
    forma pro forma
           117




---



##### Table of Contents



provided provided further
  provided
  provided provided further
     118




---



##### Table of Contents



provided
  provided however
         119




---



##### Table of Contents



provided further
  provided
                and/or
   120




---



##### Table of Contents



pro forma
  provided
  provided
    Limitation
    on Restricted Payments
     121




---



##### Table of Contents



Restricted Payments
          Cumulative Credit
  Reference Period
   122




---



##### Table of Contents



123




---



##### Table of Contents



provided however provided further however
  provided plus
  plus
 124




---



##### Table of Contents



provided provided, further
    provided
  provided
    provided however pro forma
         125




---



##### Table of Contents



and/or
      and/or
               126




---



##### Table of Contents



provided however
    Dividend
    and Other Payment Restrictions Affecting
    Subsidiaries
                     127




---



##### Table of Contents



provided however
      provided
    Asset
    Sales
   128




---



##### Table of Contents



provided
            provided provided
    provided Second Commitment
   129




---



##### Table of Contents



Excess
    Proceeds Asset Sale
    Offer
  Rule 14e-1
      Transactions
    with Affiliates
  Affiliate Transaction
     130




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##### Table of Contents



and/or provided
    plus out-of-pocket provided, however
            provided however
 131




---



##### Table of Contents



provided however
        Liens
      Reports
    and Other Information
   132




---



##### Table of Contents



Form 10-K
  Form 10-Q
  Form 8-K
    provided however
        provided
  Rule 12g3-2(b)
    Future
    Guarantors
   133




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##### Table of Contents



Amendment
    of Security Documents
    After-Acquired
    Property
    Merger,
    Amalgamation, Consolidation or Sale of All or Substantially All
    Assets
    Successor
    Issuer provided
     134




---



##### Table of Contents



pro forma
              Successor Guarantor
 135




---



##### Table of Contents



Transfer
  Defaults
                   136




---



##### Table of Contents



provided however
             137




---



##### Table of Contents



60-day
      Amendments
    and Waivers
                             138




---



##### Table of Contents



provided
      and/or
                  No
    Personal Liability of Directors, Officers, Employees, Managers
    and Stockholders
    Transfer
    and Exchange
   139




---



##### Table of Contents



Satisfaction
    and Discharge
      and/or
    Defeasance
       140




---



##### Table of Contents



Concerning
    the Trustee
    Governing
    Law
    Certain
    Definitions
  Acquired Indebtedness
      Acquisition
  Acquisition Documents
  Affiliate
  Applicable Premium
          Asset Sale
     141




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##### Table of Contents



142




---



##### Table of Contents



Bank Indebtedness
  Board of Directors
  Business Day
  Capital Stock
          Capitalized Lease Obligation
  Capitalized Software Expenditures
  Cash Equivalents
         143




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##### Table of Contents



A-1
    A-2
    Change of Control
    Rule 13d-5(b)(1) Rule 13d-3
    Code
  Collateral
  Collateral Agent
  Consolidated Depreciation and Amortization
    Expense
  Consolidated Interest Expense
   144




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##### Table of Contents



Consolidated Leverage Ratio
  Consolidated Net Income
         145




---



##### Table of Contents



146




---



##### Table of Contents



Consolidated Non-cash Charges
  Consolidated Taxes
  Consolidated Total Indebtedness
 147




---



##### Table of Contents



Contingent Obligations
            Credit Agreement
 148




---



##### Table of Contents



Credit Agreement Documents
  Default
  Designated Non-cash Consideration
  Designated Preferred Stock
  Discharge of Senior Lender Claims
  Disqualified Stock
         149




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##### Table of Contents



Domestic Subsidiary
  EBITDA
                      Equity Interests
  Equity Offering
  Form S-8; and
    Exchange Act
 150




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##### Table of Contents



Excluded Contributions
        Existing Notes
  Existing Senior Notes 9.625%/10.375% Senior
  Existing Senior Subordinated Notes
  Fair Market Value
  First Lien Agent
  First Priority After-Acquired Property
  First-Priority Lien Obligations
  Fixed Charge Coverage Ratio
   151




---



##### Table of Contents



Fixed Charges
      Foreign Subsidiary
  GAAP
 152




---



##### Table of Contents



guarantee
  Guarantee
  Guarantor
  Hedging Obligations
      holder noteholder
  Incur
  Indebtedness
         153




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##### Table of Contents



Independent Financial Advisor
  Initial Commitment Amount
  Intercreditor Agreement
  Investment Grade Rating
  Investment Grade Securities
      and/or
    Investments
   154




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##### Table of Contents



Issue Date
  Lien
  Management Group
  Merger Agreement
  Moodys
  Net Income
  Net Proceeds
 155




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##### Table of Contents



Obligations
  Officer
  Officers Certificate
  Opinion of Counsel
  Other Second-Lien Obligation
  Pari Passu Indebtedness
      Permitted Amount
  Permitted Holders
  Permitted Investments
         156




---



##### Table of Contents



157




---



##### Table of Contents



Permitted Liens
          rights-of-way,
 158




---



##### Table of Contents



159




---



##### Table of Contents



Person
  Preferred Stock
  Qualified Receivables Financing
       160




---



##### Table of Contents



Rating Agency Rule 15cs-1(c)(2)(vi)(F)
  Receivables Fees
  Receivables Financing
  Receivables Repurchase Obligation
  Receivables Subsidiary
       161




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##### Table of Contents



Representative
  Restricted Cash
  Restricted Investment
  Restricted Subsidiary
  Sale/Leaseback Transaction
  S&P
  SEC
  Second-Priority Obligations
  Secured Bank Indebtedness
  Secured Indebtedness
  Secured Indebtedness Leverage Ratio
   162




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##### Table of Contents



Securities Act
  Security Documents
  Significant Subsidiary Rule 1-02 Regulation S-X
  Similar Business
  Sponsors
  Standard Securitization Undertakings
 163




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##### Table of Contents



Stated Maturity
  Subordinated Indebtedness
  Subsidiary
  Synthetic Lease Obligations
  Tax Distributions
  TIA Sections 77aaa-77bbbb)
  Total Assets
  Transactions
  Treasury Rate
  Trustee
  Unapplied Proceeds
 164




---



##### Table of Contents



Unrestricted Subsidiary
                    U.S. Government Obligations
       165




---



##### Table of Contents



Voting Stock
  Weighted Average Life to Maturity
  Wholly-owned Restricted Subsidiary
  Wholly-owned Subsidiary
 166




---



##### Table of Contents



CERTAIN
    UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS    
    a dealer in securities or currencies;
    a trader in securities that elects to use a
    mark-to-market
    method of accounting for its securities holdings;
    a financial institution;
    an insurance company;
    a partnership or other pass-through entity or an investor in
    such entities;
    a tax-exempt organization;
    a person subject to alternative minimum tax;
    a person subject to the unearned income Medicare contribution
    tax;
    a person that owns notes as part of a straddle, constructive
    sale, wash sale, conversion transaction or other integrated
    transaction for tax purposes or as part of a hedge or a
    synthetic security;
    a controlled foreign corporation;
    a passive foreign investment company;
    certain U.S. expatriates; or
    a U.S. holder (as defined below) whose functional currency
    for tax purposes is not the U.S. dollar.    This section is provided for general informational purposes
    only and is not intended to be tax advice. Holders should
    consult their own tax advisors concerning the consequences of
    purchasing, owning and disposing of these notes in their
    particular circumstances under the Code and the laws of any
    other taxing jurisdiction.
    
    a citizen or individual resident of the U.S.;
    a domestic corporation;
    an estate whose income is subject to U.S. federal income
    tax regardless of its source; or
    a trust if a U.S. court can exercise primary supervision
    over the trusts administration and one or more
    U.S. persons are authorized to control all substantial
    decisions of the trust or if the trust was in existence on
    August 20, 1996 and has elected to continue to be treated
    as a U.S. person. 167




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##### Table of Contents



Exchange
    Offer
   168




---



##### Table of Contents



PLAN OF
    DISTRIBUTION        
    may not rely on the applicable interpretation of the staff of
    the SECs position contained in Exxon Capital Holdings
    Corp., SEC no-action letter (April 13, 1988),
    Morgan, Stanley and Co. Inc., SEC no-action letter
    (June 5, 1991) and Shearman &
    Sterling, SEC no-action letter (July 2, 1993); and
    must comply with the registration and prospectus delivery
    requirements of the Securities Act in connection with any resale
    of the exchange notes.   169




---



##### Table of Contents



LEGAL
    MATTERS   EXPERTS   170




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##### Table of Contents



INDEX TO
    FINANCIAL STATEMENTS



OF
    CLAIRES STORES, INC. AND SUBSIDIARIES  PageNumberAudited Consolidated Financial StatementsReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    January 29, 2011 and January 30, 2010


F-3Consolidated Statements of Operations and
    Comprehensive Income (Loss) for the fiscal years ended
    January 29, 2011, January 30, 2010 and
    January 31, 2009


F-4Consolidated Statements of Changes in
    Stockholders Equity (Deficit) for the fiscal years ending
    January 29, 2011, January 30, 2010 and
    January 31, 2009


F-5Consolidated Statements of Cash Flows for the
    fiscal years ending January 29, 2011, January 30, 2010
    and January 31, 2009


F-6Notes to Consolidated Financial Statements


F-7Interim Unaudited Consolidated Financial StatementsUnaudited Condensed Consolidated Balance Sheets
    as of April 30, 2011 and January 29, 2011


F-51Unaudited Condensed Consolidated Statements of
    Operations and Comprehensive Income (Loss) for the Three Months
    Ended April 30, 2011 and May 1, 2010


F-52Unaudited Condensed Consolidated Statements of
    Cash Flows for the Three Months Ended April 30, 2011 and
    May 1, 2010


F-53Notes to Unaudited Condensed Consolidated
    Financial Statements


F-54  F-1




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##### Table of Contents



Report of
    Independent Registered Public Accounting Firm           KPMG
    LLP
     F-2




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
  January 29,


January 30,2011


2010(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents and restricted cash of $23,864 and $0,
    respectively

$
279,766


$
198,708Inventories


136,148



110,338Prepaid expenses


21,449



32,873Other current assets


24,658



28,236Total current assets


462,021



370,155Property and equipment:Land and building






19,318Furniture, fixtures and equipment


186,514



162,602Leasehold improvements


248,030



228,503434,544



410,423Less accumulated depreciation and amortization


(233,511
)


(182,439
)201,033



227,984Leased property under capital lease:Land and building


18,055



Less accumulated depreciation and amortization


(903
)


17,152



Goodwill


1,550,056



1,550,056Intangible assets, net of accumulated amortization of $38,747
    and $28,032, respectively


557,466



580,027Deferred financing costs, net of accumulated amortization of
    $41,659 and $29,949, respectively


36,434



47,641Other assets


42,287



58,2422,186,243



2,235,966Total assets

$
2,866,449


$
2,834,105LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Short-term debt and current portion of long-term debt

$
76,154


$
14,500Trade accounts payable


54,355



42,163Income taxes payable


11,744



10,272Accrued interest payable


16,783



14,644Accrued expenses and other current liabilities


107,115



99,933Total current liabilities


266,151



181,512Long-term debt


2,236,842



2,313,378Revolving credit facility


194,000



194,000Obligation under capital lease


17,290



Deferred tax liability


121,776



122,145Deferred rent expense


26,637



22,082Unfavorable lease obligations and other long-term liabilities


30,268



35,6302,626,813



2,687,235Commitments and contingenciesStockholders deficit:Common stock par value $0.001 per share; authorized
    1,000 shares; issued and outstanding 100 shares






Additional paid-in capital


621,099



616,086Accumulated other comprehensive income, net of tax


1,416



2,625Accumulated deficit


(649,030
)


(653,353
)(26,515
)


(34,642
)Total liabilities and stockholders deficit

$
2,866,449


$
2,834,105    F-3




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##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS AND
    COMPREHENSIVE INCOME (LOSS)
  Fiscal Year


Fiscal Year


Fiscal YearEnded


Ended


EndedJanuary 29,


January 30,


January 31,2011


2010


2009(In thousands)Net sales

$
1,426,397


$
1,342,389


$
1,412,960Cost of sales, occupancy and buying expenses


685,111



663,269



724,832Gross profit


741,286



679,120



688,128Other expenses:Selling, general and administrative


498,212



465,706



513,752Depreciation and amortization


65,198



71,471



85,093Impairment of assets


12,262



3,142



498,490Severance and transaction-related costs


741



921



15,928Other expense (income), net


411



(4,234
)


(4,499
)576,824



537,006



1,108,764Operating income (loss)


164,462



142,114



(420,636
)Gain on early debt extinguishment


13,388



36,412



Impairment of equity investment


6,030







25,500Interest expense, net


157,706



177,418



195,947Income (loss) before income tax expense


14,114



1,108



(642,083
)Income tax expense


9,791



11,510



1,509Net income (loss)

$
4,323


$
(10,402
)

$
(643,592
)Net income (loss)

$
4,323


$
(10,402
)

$
(643,592
)Foreign currency translation and interest rate swap adjustments,
    net of tax


8,363



24,944



(25,677
)Reclassification of foreign currency translation adjustments
    into net income (loss)


(9,572
)






Comprehensive income (loss)

$
3,114


$
14,542


$
(669,269
)    F-4




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##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY (DEFICIT)
  AccumulatedNumber of








Other


RetainedShares of





Additional


Comprehensive


EarningsCommon


Common


Paid-In


Income (Loss),


(AccumulatedStock


Stock


Capital


Net


Deficit)


Total(In thousands, except per share amounts)Balance: February 2, 2008


100


$



$
601,201


$
3,358


$
641


$
605,200Net loss


















(643,592
)


(643,592
)Stock option expense










7,783











7,783Restricted stock expense, net of unearned compensation










443











443Foreign currency translation adjustment and unrealized loss on
    interest rate swaps, net of tax














(25,677
)






(25,677
)Balance: January 31, 2009


100







609,427



(22,319
)


(642,951
)


(55,843
)Net loss


















(10,402
)


(10,402
)Stock option expense










6,518











6,518Restricted stock expense, net of unearned compensation










141











141Foreign currency translation adjustment and unrealized gain on
    interest rate swaps, net of tax














24,944







24,944Balance: January 30, 2010


100







616,086



2,625



(653,353
)


(34,642
)Net income


















4,323



4,323Stock option expense










4,946











4,946Restricted stock expense, net of unearned compensation










67











67Foreign currency translation adjustment and unrealized gain on
    interest rate swaps, net of tax














8,363







8,363Reclassification of foreign currency translation adjustments
    into net income














(9,572
)






(9,572
)Balance: January 29, 2011


100


$



$
621,099


$
1,416


$
(649,030
)

$
(26,515
)    F-5




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##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Fiscal Year


Fiscal Year


Fiscal YearEnded


Ended


EndedJanuary 29,


January 30,


January 31,2011


2010


2009(In thousands)Cash flows from operating activities:Net income (loss)

$
4,323


$
(10,402
)

$
(643,592
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


65,198



71,471



85,093Impairment


18,292



3,142



523,990Amortization of lease rights and other assets


3,204



2,199



2,059Amortization of debt issuance costs


10,005



10,398



10,567Payment of in kind interest expense


36,872



39,013



24,522Net unfavorable accretion of lease obligations


(1,490
)


(2,151
)


(1,856
)Loss (gain) on sale/retirement of property and equipment, net


672



(1,389
)


(183
)Gain on early debt extinguishment


(13,388
)


(36,412
)


Gain on sale of intangible assets/lease rights






(506
)


(1,372
)Stock compensation expense


5,013



6,659



8,226(Increase) decrease in:Inventories


(25,374
)


(4,081
)


6,482Prepaid expenses


12,658



1,797



(1,087
)Other assets


751



(5,519
)


(9,085
)Increase (decrease) in:Trade accounts payable


10,314



(12,744
)


7,372Income taxes payable


3,667



5,510



(10,710
)Accrued interest payable


2,139



1,328



(6,219
)Accrued expenses and other liabilities


14,575



(129
)


3,032Deferred income taxes


(595
)


4,114



(4,809
)Deferred rent expense


4,423



3,178



8,943Net cash provided by operating activities


151,259



75,476



1,373Cash flows from investing activities:Acquisition of property and equipment, net


(48,711
)


(24,952
)


(59,405
)Proceeds from sale of property and equipment


16,765



1,830



104Acquisition of intangible assets/lease rights


(1,104
)


(546
)


(1,971
)Proceeds from sale of intangible assets/lease rights






2,409



516Changes in restricted cash


(23,902
)






Net cash used in investing activities


(56,952
)


(21,259
)


(60,756
)Cash flows from financing activities:Proceeds from Credit facility










194,000Payments of Credit facility


(14,500
)


(14,500
)


(14,500
)Proceeds from Short-term debt


57,494







Repurchases of Notes


(79,865
)


(46,091
)


Payment of debt issuance costs


(503
)






Principal payments of capital lease


(765
)






Net cash (used in) provided by financing activities:


(38,139
)


(60,591
)


179,500Effect of foreign currency exchange rate changes on cash and
    cash equivalents


1,026



508



(1,517
)Net increase (decrease) in cash and cash equivalents


57,194



(5,866
)


118,600Cash and cash equivalents, at beginning of period


198,708



204,574



85,974Cash and cash equivalents, at end of period


255,902



198,708



204,574Restricted cash, at end of period


23,864







Cash and cash equivalents and restricted cash, at end of period

$
279,766


$
198,708


$
204,574Supplemental disclosure of cash flow information:Income taxes paid

$
6,332


$
3,159


$
14,227Interest paid


108,923



126,733



168,567Non-cash investing and financing activities:Property acquired under capital lease


18,055







    F-6




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##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  1.
    NATURE OF
    OPERATIONS AND ACQUISITION OF CLAIRES STORES,
    INC.  Nature of Operations
  Acquisition of Claires Stores,
    Inc.
      
    the closing of the Companys senior secured term loan
    facility and revolving Credit Facility (collectively the
    Credit Facility) of $1.65 billion;
    the closing of the Companys senior notes offering (the
    Notes) in the aggregate principal amount of
    $935.0 million; and
    the equity investment by the Sponsors, collectively, of
    approximately $595.7 million.          2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Principles of Consolidation
  Fiscal Year
 F-7




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use of Estimates
  Reclassifications
  Cash and Cash Equivalents and Restricted
    Cash
  Inventories first-in,
  Prepaid Expenses
  January 29,


January 30,2011


2010Prepaid rent and occupancy

$
19,532


$
30,444Prepaid insurance


577



193Other


1,340



2,236Total prepaid expenses

$
21,449


$
32,873  F-8




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other Current Assets
  January 29,


January 30,2011


2010Credit card receivables

$
5,209


$
4,617Franchise receivables


4,139



6,457Store supplies


6,567



6,794Deferred tax assets, net of valuation allowance


4,064



2,839Income taxes receivable


69



2,556Other


4,610



4,973Total other current assets

$
24,658


$
28,236   Property and Equipment
  Capital Leases
  Goodwill  As discussed in
    Note 1
   F-9




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Intangible Assets and/or
  Deferred Financing Costs
  Other Assets
  January 29,


January 30,2011


2010Investment in Claires Nippon joint venture

$



$
17,758Initial direct costs of leases


16,358



16,905Prepaid lease payments


6,856



7,098Deferred tax assets, non-current


2,726



2,362Other


16,347



14,119Total other assets

$
42,287


$
58,242   845-10, Nonmonetary Transactions
   F-10




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Impairment of Long-Lived Assets
  Accrued Expenses and Other Current
    Liabilities
  January 29,


January 30,2011


2010Compensation and benefits

$
46,121


$
41,861Gift cards and certificates


21,917



20,989Sales and local taxes


14,321



8,036Store rent


3,753



4,873Interest rate swaps


1,165



8,752Other


19,838



15,422Total accrued expenses and other current liabilities

$
107,115


$
99,933   Revenue Recognition
      Cost of Sales
 F-11




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Advertising Expenses
  Rent Expense
  Stock-Based Compensation
      Income Taxes Income
    Taxes,
   F-12




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Foreign Currency Translation
  Comprehensive Income (Loss)
  Derivative Financial Instruments
  Fair Value Measurements Fair Value Measurement Disclosures
 F-13




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Financial
    Assets and Liabilities Measured at Fair Value on a Recurring
    Basis
    Fair Value Measurements at January 29, 2011 UsingQuotedPrices inActiveMarketsfor

SignificantIdentical

Other

SignificantAssets

Observable

UnobservableCarrying

(Liabilities)

Inputs

InputsValue

(Level 1)

(Level 2)

(Level 3)Interest rate swap

$
(1,165
)

$



$
(1,165
)

$
   Fair Value Measurements at January 30, 2010 UsingQuotedPrices inActiveMarketsfor

SignificantIdentical

Other

SignificantAssets

Observable

UnobservableCarrying

(Liabilities)

Inputs

InputsValue

(Level 1)

(Level 2)

(Level 3)Interest rate swaps

$
(8,752
)

$



$
(8,752
)

$
     Non-Financial
    Assets Measured at Fair Value on a Non-Recurring
    Basis
   F-14




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair Value Measurements at January 29, 2011 UsingQuotedPrices inActiveMarkets

Significantfor

Other

SignificantIdentical

Observable

Unobservable

ImpairmentCarrying

Assets

Inputs

Inputs

ChargesValue

(Level 1)

(Level 2)

(Level 3)(1)

Fiscal 2010Intangible assets

$
28,180


$



$



$
28,180


$
12,262     (1)
    
    See Note 3  Impairment Charges for discussion of
    the valuation techniques used to measure fair value, the
    description of the inputs and information used to develop those
    inputs.  Fair Value Measurements at January 30, 2010 UsingQuotedPrices inActiveMarkets

Significantfor

Other

SignificantIdentical

Observable

Unobservable

ImpairmentCarrying

Assets

Inputs

Inputs

ChargesValue

(Level 1)

(Level 2)

(Level 3)(1)

Fiscal 2009Long-lived assets

$
17,000


$



$



$
17,000


$
3,142     (1)
    
    See Note 3  Impairment Charges for discussion of
    the valuation techniques used to measure fair value, the
    description of the inputs and information used to develop those
    inputs.      Financial
    Instruments Not Measured at Fair Value
       F-15




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Recent Accounting Pronouncements 2010-06, Fair Value Measurements and Disclosures  Improving
    Disclosures about Fair Value Measurements Fair Value Measurements and Disclosures 2010-06
  2010-09, Subsequent Events: Amendments to Certain Recognition and
    Disclosure Requirements Subsequent Events 2010-09
    3.
    IMPAIRMENT
    CHARGES    Fiscal


Fiscal


Fiscal2010


2009


2008Goodwill

$



$



$
297,000Tradenames










199,000Franchise agreements


12,262







Investment in Claires Nippon


6,030







25,500Long-lived assets






3,142



2,490Total impairment charges

$
18,292


$
3,142


$
523,990        F-16




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Intangibles  Goodwill and Other
         F-17




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  323-10, Investments  Equity Method and Joint Ventures
  Property, Plant, and Equipment
  4.
    GOODWILL
    AND OTHER INTANGIBLE ASSETS      NorthAmerica


Europe


TotalBalance as of January 31, 2009:Goodwill

$
1,409,941


$
431,405


$
1,841,346Accumulated impairment losses


(180,000
)


(117,000
)


(297,000
)$
1,229,941


$
314,405


$
1,544,346Reclassification adjustment in Fiscal 2009(1)


5,710







5,710Balance as of January 29, 2011 and January 30, 2010:Goodwill

$
1,415,651


$
431,405


$
1,847,056Accumulated impairment losses


(180,000
)


(117,000
)


(297,000
)$
1,235,651


$
314,405


$
1,550,056     (1)
    
    Reclassification of valuation allowance on deferred tax assets. F-18




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     January 29, 2011


January 30, 2010Estimated

Gross





GrossLife

Carrying


Accumulated


Carrying


Accumulatedin Years

Amount


Amortization


Amount


AmortizationIntangible assets subject to amortization:Lease terms ranging
    fromLease rights

4.5 to 16.5

$
24,757


$
(5,996
)

$
13,681


$
(4,145
)Franchise agreements

1 to 9


40,738



(12,558
)


53,000



(9,291
)Favorable lease obligations

10


30,859



(20,000
)


30,501



(14,493
)Other

5


499



(193
)


372



(103
)Total intangible assets subject to amortization




96,853



(38,747
)


97,554



(28,032
)Indefinite-lived intangible assets:Indefinite-lived tradenames



$
447,108


$



$
447,112


$
Indefinite-lived lease rights




51,652







63,393



Indefinite-lived territory rights




600











Total indefinite-lived intangible assets




499,360







510,505



Total intangible assets



$
596,213


$
(38,747
)

$
608,059


$
(28,032
)     WeightedAverageAmortizationPeriod forAmortizableIntangibleAssetIntangible Asset Acquisitions (in 000s)

Amortizable

AcquisitionsLease rights:Fiscal 2010

$
978



9.9Fiscal 2009


435



9.9Fiscal 2008


1,794



8.7Other:Fiscal 2010


126



5.0Fiscal 2009


111



5.0Fiscal 2008


176



5.0  F-19




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Fiscal Year

Amortization2011

$
10,6092012


8,0572013


7,2022014


6,4062015


5,2112016 and thereafter


20,621Total

$
58,106   5.
    DEBT    January 29,


January 30,2011


2010Short-term debt and current portion of long-term debt:Note payable to bank due 2012

$
57,703


$
Current portion of long-term debt


18,451



14,500Total short-term debt and current portion of long-term debt

$
76,154


$
14,500Long-term debt:Senior secured term loan facility due 2014

$
1,399,250


$
1,413,750Senior notes due 2015


236,000



250,000Senior toggle notes due 2015


360,431



381,891Senior subordinated notes due 2017


259,612



282,2372,255,293



2,327,878Less: current portion of long-term debt


(18,451
)


(14,500
)Long-term debt

$
2,236,842


$
2,313,378Senior secured revolving credit facility due 2013

$
194,000


$
194,000Obligations under capital leases

$
17,290


$
  F-20




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    CapitalLeases


Debt2011

$
2,165


$
76,1542012


2,209



14,5002013


2,253



208,5002014


2,298



1,351,7992015


2,344



596,431Thereafter


37,407



259,612Total


48,676


$
2,506,996Imputed interest


(31,386
)Present value of minimum capital lease principal payments


17,290Current portion


Long-term capital lease obligation

$
17,290     Fiscal 2010


Fiscal 2009


Fiscal 2008Term loan facility

$
53,255


$
66,348


$
88,216Revolving credit facility


6,110



5,708



4,835Senior notes


22,605



23,154



23,074Senior toggle notes


36,881



39,021



35,671Senior subordinated notes


27,620



32,913



35,090Note payable to bank


85







Capital lease obligation


1,232







Amortization of deferred debt issue costs


10,005



10,398



10,567Other interest expense


57



82



(17
)Interest income


(144
)


(206
)


(1,489
)Interest expense, net

$
157,706


$
177,418


$
195,947     January 29,


January 30,2011


2010Term loan facility

$
8,239


$
5,474Revolving credit facility


231



328Senior notes


3,658



3,875Senior subordinated notes


4,568



4,966Note payable to bank


87



Other






1Total accrued interest payable

$
16,783


$
14,644  F-21




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  SHORT-TERM
    DEBT
      LONG-TERM
    DEBT
  Credit
    Facility
          
    a perfected pledge of all the equity interests held by us or any
    subsidiary guarantor, which pledge, in the case of any foreign
    subsidiary, is limited to 100% of the non-voting equity
    interests and 65% of the voting equity interests of such foreign
    subsidiary held directly by us and the subsidiary
    guarantors; and
    perfected security interests in, and mortgages on, substantially
    all material tangible and intangible assets owned by us and each
    subsidiary guarantor, subject to certain exceptions.   F-22




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    incur additional indebtedness or issue certain preferred shares;
    pay dividends on, repurchase or make distributions in respect of
    our capital stock or make other restricted payments;
    make certain investments;
    sell certain assets;
    create liens;
    consolidate, merge, sell or otherwise dispose of all or
    substantially all of our assets; and
    enter into certain transactions with our affiliates.    Senior
    Notes
           F-23




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##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Senior Cash Pay

Senior TogglePeriod

Notes

Notes2011


104.625
%


104.813
%2012


102.313
%


102.406
%2013 and thereafter


100.000
%


100.000
%       Senior
    Subordinated Notes
       F-24




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Period

Redemption Price2012


105.25
%2013


103.50
%2014


101.75
%2015 and thereafter


100.00
%         
    incur additional indebtedness;
    pay dividends or distributions on capital stock, repurchase or
    retire capital stock and redeem, repurchase or defease any
    subordinated indebtedness;
    make certain investments;
    create or incur certain liens;
    create restrictions on the payment of dividends or other
    distributions to the Company from its subsidiaries;
    transfer or sell assets;
    engage in certain transactions with its affiliates; and
    merge or consolidate with other companies or transfer all or
    substantially all of its assets.    European
    Credit Facilities
  non-U.S. subsidiaries
 F-25




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note
    Repurchases
    Fiscal 2010Principal


Repurchase


RecognizedNotes Repurchased

Amount


Price


Gain(1)Senior Notes

$
14,000


$
12,268


$
1,467Senior Toggle Notes


57,173



49,798



7,612Senior Subordinated Notes


22,625



17,799



4,309$
93,798


$
79,865


$
13,388     (1)
    
    Net of deferred issuance cost write-offs of $265 for the Senior
    Notes, $922 for the Senior Toggle Notes and $517 for the Senior
    Subordinated Notes, and accrued interest write-off of $1,159 for
    the Senior Toggle Notes  Fiscal 2009Principal


Repurchase


RecognizedNotes Repurchased

Amount


Price


Gain(1)Senior Toggle Notes

$
30,500


$
19,744


$
11,297Senior Subordinated Notes


52,763



26,347



25,115$
83,263


$
46,091


$
36,412     (1)
    
    Net of deferred issuance cost write-offs of $603 and $1,301 for
    the Senior Toggle Notes and Senior Subordinated Notes,
    respectively, and accrued interest write-off of $1,144 for the
    Senior Toggle Notes.  6.
    DERIVATIVES
    AND HEDGING ACTIVITIES       F-26




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             F-27




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amount of Gain or (Loss)Recognized in OCI on Derivative(Effective Portion)Fiscal

Fiscal

FiscalDerivatives in Cash Flow Hedging Relationships

2010

2009

2008Interest Rate Swaps

$
7,587


$
9,437


$
1,375   Amount of Gain or (Loss)Reclassified from AccumulatedOCI into Income(Effective Portion)(1)Location of Gain or (Loss) Reclassified from

Fiscal

Fiscal

FiscalAccumulated OCI into Income (Effective Portion)

2010

2009

2008Interest expense, net

$
(9,630
)

$
(19,011
)

$
(8,440
)     (1)
    
    Represents reclassification of amounts from accumulated other
    comprehensive income (loss) into earnings as interest expense is
    recognized on the senior secured term loan facility. No
    ineffectiveness is associated with these interest rate cash flow
    hedges.    7.
    COMMITMENTS
    AND CONTINGENCIES  Leases and/or and/or
  Fiscal 2010


Fiscal 2009


Fiscal 2008Minimum store rentals

$
199,304


$
199,908


$
205,807Store rentals based on net sales


2,990



1,454



2,398Other rental expense


11,751



13,181



16,745Total rental expense

$
214,045


$
214,543


$
224,950  F-28




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2011

$
202,1972012


180,7342013


157,9692014


135,3642015


111,560Thereafter


266,064Total

$
1,053,888     Asset Retirement and Environmental
    Obligations,
  Legal
    Employment Agreements
  Other
 F-29




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    ACCUMULATED
    OTHER COMPREHENSIVE INCOME (LOSS)    ForeignCurrency


DerivativeTranslation


Instruments


TotalBalance as of February 2, 2008

$
17,191


$
(13,833
)

$
3,358Foreign currency translation adjustment, net of tax of $0


(27,052
)






(27,052
)Unrealized gain on interest rate swaps, net of tax of $1,531






1,375



1,375Balance as of January 31, 2009


(9,861
)


(12,458
)


(22,319
)Foreign currency translation adjustment, net of tax of $0


15,507







15,507Unrealized gain on interest rate swaps, net of tax of $1,546






9,437



9,437Balance as of January 30, 2010


5,646



(3,021
)


2,625Foreign currency translation adjustment, net of tax of $0


776







776Unrealized gain on interest rate swaps, net of tax of $0






7,587



7,587Reclassification of foreign currency translation adjustments
    into net income, net of tax of $0


(9,572
)






(9,572
)Balance as of January 29, 2011

$
(3,150
)

$
4,566


$
1,416   9.
    STOCK
    OPTIONS AND STOCK-BASED COMPENSATION         F-30




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        WeightedWeighted


AverageAverage


RemainingNumber of


Exercise


ContractualShares


Price


Term (Years)Outstanding as of January 30, 2010


6,279,360


$
10.00Options granted


1,000,750


$
10.00Options exercised






Options forfeited or expired


(420,096
)

$
10.00Outstanding as of January 29, 2011


6,860,014


$
10.00



4.4Options vested and expected to vest at January 29, 2011


6,703,258


$
10.00



4.3Exercisable at end of period


2,195,119


$
10.00



3.8      F-31




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal

Fiscal

FiscalTime Options and BOGO Options (Black-Scholes)

2010

2009

2008Expected dividend yield

0.00%

0.00%

0.00%Weighted average expected stock price volatility

59.25%

55.53%

45.26%Weighted average risk-free interest rate

2.04%

2.15%

3.18%Range of risk-free interest rate

1.05%  2.54%

1.38%  2.98%

2.50%  3.44%Weighted average expected term (years)

4.74

4.39

4.75   Fiscal

Fiscal

FiscalPerformance Options (Monte Carlo)

2010

2009

2008Expected dividend yield

0.00%

0.00%

0.00%Weighted average expected stock price volatility

58.66%

53.50%

48.00%Weighted average risk-free interest rate

2.45%

2.05%

3.21%Range of risk-free interest rate

1.42%  2.93%

0.18%  4.25%

1.56%  4.38%Weighted average expected term (years)

N/A

N/A

N/A   Share-Based Payment
    Time-Vested
    Restricted Stock Awards
   F-32




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedAverageGrant DateShares


Fair ValueNonvested as of January 30, 2010


50,000


$
10.00Granted






Vested


(25,000
)

$
10.00Forfeited






Nonvested as of January 29, 2011


25,000


$
10.00   10.
    EMPLOYEE
    BENEFIT PLANS    11.
    INCOME
    TAXES    Fiscal 2010


Fiscal 2009


Fiscal 2008U.S.

$
(34,663
)

$
(76,154
)

$
(501,248
)Foreign


48,777



77,262



(140,835
)Total income (loss) before income taxes

$
14,114


$
1,108


$
(642,083
)  F-33




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal


Fiscal


Fiscal2010


2009


2008Federal:Current

$
22


$
378


$
509Deferred


1,098



3,541



12,4401,120



3,919



12,949StateCurrent


1,622



437



225Deferred


(779
)


63



(11,413
)843



500



(11,188
)ForeignCurrent


8,737



5,552



5,532Deferred


(909
)


1,539



(5,784
)7,828



7,091



(252
)Total income tax expense

$
9,791


$
11,510


$
1,509     Fiscal


Fiscal


Fiscal2010


2009


2008U.S. income taxes at statutory federal rate


35.0
%


35.0
%


35.0
%Valuation allowance


90.1



1,577.1



(15.6
)Nondeductible impairment charges










(17.6
)Foreign rate differential


(82.5
)


(1,927.8
)


(0.4
)State and local income taxes, net of federal tax benefit


(2.5
)


(92.1
)


1.1Repatriation of foreign earnings


3.0



1,674.7



(2.1
)Change in accrual for estimated tax contingencies


7.9



199.6



(0.4
)Other, net


18.4



(427.7
)


(0.2
)69.4
%


1,038.8
%


(0.2
)%      F-34




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Jan. 29,


Jan. 30,2011


2010Deferred tax assets:Tax carryforwards

$
69,306


$
85,737Debt related


19,708



15,812Compensation & benefits


15,009



11,595Deferred rent


7,415



6,892Depreciation


6,053



2,874Accrued expenses


4,802



4,055Gift cards


2,726



2,064Other


2,198



4,106Inventory


1,376



1,125Total gross deferred tax assets


128,593



134,260Valuation allowance


(120,286
)


(130,620
)Total deferred tax assets, net


8,307



3,640Deferred tax liabilities:Tradename intangibles


110,569



110,359Lease rights


8,555



8,865Other


4,169



1,360Total deferred tax liabilities


123,293



120,584Net deferred tax liability

$
(114,986
)

$
(116,944
)     Jan. 29,


Jan. 30,2011


2010Current deferred tax assets, net of valuation allowance

$
4,064


$
2,839Current deferred tax liabilities






Non-current deferred tax assets


2,726



2,362Non-current deferred tax liabilities, net of valuation allowance


(121,776
)


(122,145
)Net

$
(114,986
)

$
(116,944
)  F-35




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amount


Expiration DateU.S. federal net operating loss carryforwards

$
26,936


2028  2030Non-U.S. net
    operating loss carryforwards


9,810


IndefiniteNon-U.S. net
    operating loss carryforwards


7,589


2015  2025State net operating loss carryforwards


3,339


2013  2030U.S. foreign tax credits


21,632


2019  2021Total

$
69,306            F-36




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal


Fiscal


Fiscal2010


2009


2008Beginning balance

$
12,243


$
11,043


$
9,617Additions based on tax positions related to the current year


1,694



1,987



2,070Additions for tax positions of prior years






58



1Reductions for tax positions of prior years


(1,133
)






Statute expirations


(134
)


(351
)


(154
)Settlements






(494
)


(491
)Ending balance

$
12,670


$
12,243


$
11,043       non-U.S. income
    12.
    RELATED
    PARTY TRANSACTIONS   F-37




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      13.
    SELECTED
    QUARTERLY FINANCIAL DATA  Fiscal 20101st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Total Year(Unaudited, in thousands)Net sales

$
322,077


$
334,233


$
348,175


$
421,912


$
1,426,397Gross profit


163,326



175,013



180,602



222,345



741,286Impairment of assets(a)














12,262



12,262Severance and transaction related costs


102



212



121



306



741Gain on early debt extinguishment


4,487



6,249



2,652







13,388Impairment of equity investment(b)






6,030











6,030Interest expense, net


42,763



40,573



37,132



37,238



157,706Income tax expense(c)


1,633



1,607



3,369



3,182



9,791Net income (loss)


(12,300
)


(8,345
)


3,647



21,321



4,323     (a)
    
    Represents impairment charge related to franchise agreements.
    See Note 3  Impairment Charges for detail of
    impairment charges.(b)
    
    Represents impairment charge related to equity investment in
    Claires Nippon. See Note 3  Impairment
    Charges for detail of impairment charges.(c)
    
    Includes a $12.7 million charge for an increase in the
    valuation allowance related to deferred tax assets.  Fiscal 20091st Qtr

2nd Qtr

3rd Qtr

4th Qtr

Total YearNet sales

$
293,098


$
314,196


$
324,404


$
410,691


$
1,342,389Gross profit


140,743



155,056



165,004



218,317



679,120Impairment of assets(a)














3,142



3,142Severance and transaction related costs


349



25



32



515



921Gain on early debt extinguishment






17,104



16,096



3,212



36,412Interest expense, net


45,234



45,329



43,716



43,139



177,418Income tax expense (benefit)(b)


(1,679
)


2,797



2,187



8,205



11,510Net income (loss)


(29,023
)


(3,733
)


2,889



19,465



(10,402
)     (a)
    
    Represents impairment charges related to long-lived assets. See
    Note 3  Impairment Charges for detail of
    impairment charges.(b)
    
    Includes a $17.5 million charge for an increase in the
    valuation allowance related to deferred tax assets. F-38




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    SEGMENT
    REPORTING      Fiscal 2010


Fiscal 2009


Fiscal 2008Net sales:North America

$
914,149


$
850,313


$
907,486Europe


512,248



492,076



505,474Total net sales

$
1,426,397


$
1,342,389


$
1,412,960Depreciation and amortization:North America

$
42,169


$
47,574


$
57,516Europe


23,029


u
23,897



27,577Total depreciation and amortization

$
65,198


$
71,471


$
85,093Segment operating income:North America

$
124,606


$
88,890


$
63,490Europe


52,859



57,287



30,292Total segment operating income

$
177,465


$
146,177


$
93,782Impairment of assets:North America

$



$
3,142


$
314,000Europe


12,262







184,490Total impairment charges

$
12,262


$
3,142


$
498,490Impairment of equity investment:North America

$
6,030


$



$
25,500Europe










Total impairment of equity investment

$
6,030


$



$
25,500Interest expense (income), net:North America

$
157,595


$
177,496


$
196,732Europe


111



(78
)


(785
)Total interest expense (income), net

$
157,706


$
177,418


$
195,947 F-39




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal 2010


Fiscal 2009


Fiscal 2008Income (loss) before income taxes:North America

$
(26,003
)

$
(56,257
)

$
(482,670
)Europe


40,117



57,365



(159,413
)Total income (loss) before income taxes

$
14,114


$
1,108


$
(642,083
)Income tax expense (benefit):North America

$
2,694


$
4,559


$
1,613Europe


7,097



6,951



(104
)Total income tax expense

$
9,791


$
11,510


$
1,509Net income (loss):North America

$
(28,697
)

$
(60,816
)

$
(484,283
)Europe


33,020



50,414



(159,309
)Net income (loss)

$
4,323


$
(10,402
)

$
(643,592
)   Fiscal 2010


Fiscal 2009


Fiscal 2008Goodwill:North America

$
1,235,651


$
1,235,651


$
1,229,941Europe


314,405



314,405



314,405Total goodwill

$
1,550,056


$
1,550,056


$
1,544,346Long-lived assets:North America

$
142,090


$
161,648


$
197,839Europe


76,095



66,336



68,232Total long lived assets

$
218,185


$
227,984


$
266,071Total assets:North America

$
1,493,210


$
1,505,727


$
1,687,952Europe


1,373,239



1,328,378



1,193,143Total assets

$
2,866,449


$
2,834,105


$
2,881,095Capital ExpendituresNorth America

$
20,353


$
13,731


$
42,623Europe


28,358



11,221



16,782Total capital expenditures

$
48,711


$
24,952


$
59,405     Fiscal 2010


Fiscal 2009


Fiscal 2008Total segment operating income

$
177,465


$
146,177


$
93,782Impairment of assets


12,262



3,142



498,490Severance and transaction-related costs


741



921



15,928Consolidated operating income

$
164,462


$
142,114


$
(420,636
)  F-40




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Percentage of TotalProduct Category

Fiscal 2010


Fiscal 2009


Fiscal 2008Accessories:North America


31.8



30.5



27.6Europe


22.7



23.1



20.854.5



53.6



48.4Jewelry:North America


32.0



32.3



36.0Europe


13.5



14.1



15.645.5



46.4



51.6100.0



100.0



100.0     Percentage of Total Net SalesNet Sales:

Fiscal 2010


Fiscal 2009


Fiscal 2008United Kingdom


15.0



16.9



18.1France


9.1



8.7



8.1   Percentage of Total Long-lived AssetsLong-lived Assets:

January 29, 2011


January 30, 2010United Kingdom


10.4



12.1France


5.7



7.3   15.
    SUPPLEMENTAL
    FINANCIAL INFORMATION     F-41




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Condensed
    Consolidating Balance SheetJanuary 29, 2011
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents and restricted cash(1)

$
179,529


$
3,587


$
96,650


$



$
279,766Inventories






84,868



51,280







136,148Prepaid expenses


851



1,680



18,918







21,449Other current assets






16,547



8,111







24,658Total current assets


180,380



106,682



174,959







462,021Property and equipment:Land and building


















Furniture, fixtures and equipment


3,276



119,228



64,010







186,514Leasehold improvements


1,052



143,072



103,906







248,0304,328



262,300



167,916







434,544Less accumulated depreciation and amortization


(2,205
)


(147,857
)


(83,449
)






(233,511
)2,123



114,443



84,467







201,033Leased property under capital lease:Land and building






18,055











18,055Less accumulated depreciation and amortization






(903
)










(903
)



17,152











17,152Intercompany receivables






366,929







(366,929
)


Investment in subsidiaries


2,303,333



(63,535
)






(2,239,798
)


Goodwill






1,235,651



314,405







1,550,056Intangible assets, net


286,000



9,294



262,172







557,466Deferred financing costs, net


35,973







461







36,434Other assets


130



3,842



38,315







42,2872,625,436



1,552,181



615,353



(2,606,727
)


2,186,243Total assets

$
2,807,939


$
1,790,458


$
874,779


$
(2,606,727
)

$
2,866,449LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Short-term debt and current portion of long-term debt

$
18,451


$



$
57,703


$



$
76,154Trade accounts payable


1,199



24,545



28,611







54,355Income taxes payable






644



11,100







11,744Accrued interest payable


16,696







87







16,783Accrued expenses and other current liabilities


20,630



37,910



48,575







107,115Total current liabilities


56,976



63,099



146,076







266,151Intercompany payables


346,636







20,293



(366,929
)


Long-term debt


2,236,842















2,236,842Revolving credit facility


194,000















194,000Obligation under capital lease






17,290











17,290Deferred tax liability






106,797



14,979







121,776Deferred rent expense






17,230



9,407







26,637Unfavorable lease obligations and other long-term liabilities






28,889



1,379







30,2682,777,478



170,206



46,058



(366,929
)


2,626,813Stockholders equity (deficit):Common stock






367



2



(369
)


Additional paid in capital


621,099



1,435,909



815,866



(2,251,775
)


621,099Accumulated other comprehensive income (loss), net of tax


1,416



3,663



(7,080
)


3,417



1,416Retained earnings (accumulated deficit)


(649,030
)


117,214



(126,143
)


8,929



(649,030
)(26,515
)


1,557,153



682,645



(2,239,798
)


(26,515
)Total liabilities and stockholders equity (deficit)

$
2,807,939


$
1,790,458


$
874,779


$
(2,606,727
)

$
2,866,449     (1)
    
    Cash and cash equivalents includes restricted cash of $3,450 for
    Issuer and $20,414 for Non-Guarantors F-42




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Balance Sheet
    January 30, 2010
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents

$
109,138


$
(10,604
)

$
100,174


$



$
198,708Inventories






73,902



36,436







110,338Prepaid expenses


509



14,217



18,147







32,873Other current assets


1,030



19,527



7,679







28,236Total current assets


110,677



97,042



162,436







370,155Property and equipment:Land and building






19,318











19,318Furniture, fixtures and equipment


2,137



109,405



51,060







162,602Leasehold improvements


1,113



138,706



88,684







228,5033,250



267,429



139,744







410,423Less accumulated depreciation and amortization


(1,746
)


(117,101
)


(63,592
)






(182,439
)1,504



150,328



76,152







227,984Intercompany receivables






148,072







(148,072
)


Investment in subsidiaries


2,200,694



(7,069
)






(2,193,625
)


Goodwill






1,235,651



314,405







1,550,056Intangible assets, net


286,000



13,017



281,010







580,027Deferred financing costs, net


47,641















47,641Other assets


18,099



3,230



36,913







58,2422,552,434



1,392,901



632,328



(2,341,697
)


2,235,966Total assets

$
2,664,615


$
1,640,271


$
870,916


$
(2,341,697
)

$
2,834,105LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Current portion of long-term debt

$
14,500


$



$



$



$
14,500Trade accounts payable


1,327



16,750



24,086







42,163Income taxes payable






101



10,171







10,272Accrued interest payable


14,644















14,644Accrued expenses and other current liabilities


23,388



36,011



40,534







99,933Total current liabilities


53,859



52,862



74,791







181,512Intercompany payables


137,913







10,159



(148,072
)


Long-term debt


2,313,378















2,313,378Revolving credit facility


194,000















194,000Deferred tax liability






106,386



15,759







122,145Deferred rent expense


107



14,957



7,018







22,082Unfavorable lease obligations and other long-term liabilities






33,347



2,283







35,6302,645,398



154,690



35,219



(148,072
)


2,687,235Stockholders equity (deficit):Common stock






367



2



(369
)


Additional paid in capital


616,086



1,445,795



876,798



(2,322,593
)


616,086Accumulated other comprehensive income (loss), net of tax


2,625



2,101



(4,134
)


2,033



2,625Accumulated deficit


(653,353
)


(15,544
)


(111,760
)


127,304



(653,353
)(34,642
)


1,432,719



760,906



(2,193,625
)


(34,642
)Total liabilities and stockholders equity (deficit)

$
2,664,615


$
1,640,271


$
870,916


$
(2,341,697
)

$
2,834,105  F-43




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Operations and
    Comprehensive Income (Loss)
    Fiscal 2010
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Net sales

$



$
847,048


$
579,349


$



$
1,426,397Cost of sales, occupancy and buying expenses


5,222



408,851



271,038







685,111Gross (deficit) profit


(5,222
)


438,197



308,311







741,286Other expenses:Selling, general and administrative


35,895



252,629



209,688







498,212Depreciation and amortization


631



38,700



25,867







65,198Impairment of assets










12,262







12,262Severance and transaction-related costs


372







369







741Other expense (income), net


(21,067
)


10,218



11,260







41115,831



301,547



259,446







576,824Operating income (loss)


(21,053
)


136,650



48,865







164,462Gain on early debt extinguishment


13,388















13,388Impairment of equity investment






6,030











6,030Interest expense, net


156,427



1,190



89







157,706Income (loss) before income taxes


(164,092
)


129,430



48,776







14,114Income tax expense


23



1,939



7,829







9,791Income (loss) from continuing operations


(164,115
)


127,491



40,947







4,323Equity in earnings of subsidiaries


168,438



4,847







(173,285
)


Net income


4,323



132,338



40,947



(173,285
)


4,323Foreign currency translation and interest rate swap adjustments,
    net of tax


8,363



1,562



(2,946
)


1,384



8,363Reclassification of foreign currency translation adjustments
    into net income (loss)


(9,572
)


(9,572
)






9,572



(9,572
)Comprehensive income

$
3,114


$
124,328


$
38,001


$
(162,329
)

$
3,114  F-44




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidating Statement of Operations and
    Comprehensive Income (Loss)
    Fiscal 2009
  Non-





ConsolidatedIssuer


Guarantors


Guarantors


Eliminations


Combined(In thousands)Net sales

$



$
792,190


$
550,199


$



$
1,342,389Cost of sales, occupancy and buying expenses






402,594



260,675







663,269Gross profit






389,596



289,524







679,120Other expenses:Selling, general and administrative


31,786



241,226



192,694







465,706Depreciation and amortization


1,439



43,182



26,850







71,471Impairment of assets






3,142











3,142Severance and transaction-related costs


921















921Other expense (income), net


(16,756
)


19,714



(7,192
)






(4,234
)17,390



307,264



212,352







537,006Operating income (loss)


(17,390
)


82,332



77,172







142,114Gain on early debt extinguishment


36,412















36,412Interest expense (income), net


177,518



(11
)


(89
)






177,418Income (loss) before income taxes


(158,496
)


82,343



77,261







1,108Income tax expense


2,503



1,916



7,091







11,510Income (loss) from continuing operations


(160,999
)


80,427



70,170







(10,402
)Equity in earnings of subsidiaries


150,597



7,101







(157,698
)


Net income (loss)


(10,402
)


87,528



70,170



(157,698
)


(10,402
)Foreign currency translation and interest rate swap adjustments,
    net of tax


24,944



4,426



16,457



(20,883
)


24,944Comprehensive income

$
14,542


$
91,954


$
86,627


$
(178,581
)

$
14,542  F-45




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Condensed
    Consolidating Statement of Operations and
    Comprehensive Income (Loss)
    Fiscal 2008
  Non-





ConsolidatedIssuer


Guarantors


Guarantors


Eliminations


Combined(In thousands)Net sales

$



$
845,430


$
567,530


$



$
1,412,960Cost of sales, occupancy and buying expenses






445,307



279,525







724,832Gross profit






400,123



288,005







688,128Other expenses:Selling, general and administrative


32,720



266,838



214,194







513,752Depreciation and amortization


3,013



50,584



31,496







85,093Impairment of assets


134,000



180,000



184,490







498,490Severance and transaction-related costs


2,374



7,553



6,001







15,928Other expense (income), net


(19,778
)


21,740



(6,461
)






(4,499
)152,329



526,715



429,720







1,108,764Operating loss


(152,329
)


(126,592
)


(141,715
)






(420,636
)Impairment of equity investment


25,500















25,500Interest expense (income), net


197,089



(261
)


(881
)






195,947Loss before income taxes


(374,918
)


(126,331
)


(140,834
)






(642,083
)Income tax expense (benefit)


(18,143
)


19,904



(252
)






1,509Loss from continuing operations


(356,775
)


(146,235
)


(140,582
)






(643,592
)Equity in earnings (loss) of subsidiaries


(286,817
)


7,706







279,111



Net loss


(643,592
)


(138,529
)


(140,582
)


279,111



(643,592
)Foreign currency translation and interest rate swap adjustments,
    net of tax


(25,677
)


(5,285
)


(38,137
)


43,422



(25,677
)Comprehensive loss

$
(669,269
)

$
(143,814
)

$
(178,719
)

$
322,533


$
(669,269
)  F-46




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Cash Flows
    Fiscal 2010
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Cash flows from operating activities:Net income

$
4,323


$
132,338


$
40,947


$
(173,285
)

$
4,323Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Equity in earnings of subsidiaries


(168,438
)


(4,847
)






173,285



Depreciation and amortization


631



38,700



25,867







65,198Impairment






6,030



12,262







18,292Amortization of lease rights and other assets






29



3,175







3,204Amortization of debt issuance costs


9,963







42







10,005Payment of in kind interest expense


36,872















36,872Net accretion of favorable (unfavorable) lease obligations






(2,054
)


564







(1,490
)Loss on sale/retirement of property and equipment, net






668



4







672Gain on early debt extinguishment


(13,388
)














(13,388
)Stock compensation expense


3,863







1,150







5,013(Increase) decrease in:Inventories






(10,966
)


(14,408
)






(25,374
)Prepaid expenses


(342
)


12,536



464







12,658Other assets


1,243



4,335



(4,827
)






751Increase (decrease) in:Trade accounts payable


(128
)


6,682



3,760







10,314Income taxes payable






2,320



1,347







3,667Accrued interest payable


2,053







86







2,139Accrued expenses and other liabilities


4,828



1,800



7,947







14,575Deferred income taxes






318



(913
)






(595
)Deferred rent expense


(107
)


2,273



2,257







4,423Net cash provided by (used in) operating activities


(118,627
)


190,162



79,724







151,259Cash flows from investing activities:Acquisition of property and equipment, net


(1,248
)


(18,310
)


(29,153
)






(48,711
)Proceeds from sale of property and equipment






16,765











16,765Acquisition of intangible assets/lease rights






(126
)


(978
)






(1,104
)Changes in restricted cash


(3,450
)






(20,452
)






(23,902
)Net cash provided by (used in) investing activities


(4,698
)


(1,671
)


(50,583
)






(56,952
)Cash flows from financing activities:Payments from Credit facility


(14,500
)














(14,500
)Proceeds from Short-term debt










57,494







57,494Repurchase of Notes


(79,865
)














(79,865
)Payment of debt issuance costs










(503
)






(503
)Principal payments of capital leases






(765
)










(765
)Intercompany activity, net


284,631



(176,753
)


(107,878
)






Net cash provided by (used in) financing activities


190,266



(177,518
)


(50,887
)






(38,139
)Effect of foreign currency exchange rate changes on cash and
    cash equivalents






3,218



(2,192
)






1,026Net increase (decrease) in cash and cash equivalents


66,941



14,191



(23,938
)






57,194Cash and cash equivalents at beginning of period


109,138



(10,604
)


100,174







198,708Cash and cash equivalents at end of period


176,079



3,587



76,236







255,902Restricted cash at end of period


3,450







20,414







23,864Cash and cash equivalents and restricted cash at end of period

$
179,529


$
3,587


$
96,650


$



$
279,766  F-47




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Cash Flows
    Fiscal 2009
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Cash flows from operating activities:Net income (loss)

$
(10,402
)

$
87,528


$
70,170


$
(157,698
)

$
(10,402
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Equity in (earnings) loss of subsidiaries


(150,597
)


(7,101
)






157,698



Depreciation and amortization


1,439



43,182



26,850







71,471Impairment of assets






3,142











3,142Amortization of lease rights and other assets






49



2,150







2,199Amortization of debt issuance costs


10,398















10,398Payment of in kind interest expense


39,013















39,013Net accretion of favorable (unfavorable) lease obligations






(2,550
)


399







(2,151
)(Gain) loss on sale/retirement of property and equipment, net


(1,430
)


20



21







(1,389
)Gain on early debt extinguishment


(36,412
)














(36,412
)Gain on sale of intangible assets/lease rights










(506
)






(506
)Stock compensation expense


4,942







1,717







6,659(Increase) decrease in:Inventories






(457
)


(3,624
)






(4,081
)Prepaid expenses


(76
)


425



1,448







1,797Other assets


134



(4,926
)


(727
)






(5,519
)Increase (decrease) in:Trade accounts payable


(1,016
)


(3,389
)


(8,339
)






(12,744
)Income taxes payable






248



5,262







5,510Accrued interest payable


1,331







(3
)






1,328Accrued expenses and other current liabilities


(1,424
)


229



1,066







(129
)Deferred income taxes


2,483



13



1,618







4,114Deferred rent expense


(591
)


2,425



1,344







3,178Net cash provided by (used in) operating activities


(142,208
)


118,838



98,846







75,476Cash flows from investing activities:Acquisition of property and equipment, net


(120
)


(12,209
)


(12,623
)






(24,952
)Proceeds from sale of property and equipment


1,830















1,830Acquisition of intangible assets/lease rights






(111
)


(435
)






(546
)Proceeds from sale of intangible assets/lease rights










2,409







2,409Net cash provided by (used in) investing activities


1,710



(12,320
)


(10,649
)






(21,259
)Cash flows from financing activities:Payments of Credit facility


(14,500
)














(14,500
)Repurchase of Notes


(46,091
)














(46,091
)Intercompany activity, net


155,813



(117,125
)


(38,688
)






Net cash provided by (used in) financing activities


95,222



(117,125
)


(38,688
)






(60,591
)Effect of foreign currency exchange rate changes on cash and
    cash equivalents






(208
)


716







508Net increase (decrease) in cash and cash equivalents


(45,276
)


(10,815
)


50,225







(5,866
)Cash and cash equivalents at beginning of period


154,414



211



49,949







204,574Cash and cash equivalents at end of period

$
109,138


$
(10,604
)

$
100,174


$



$
198,708  F-48




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Cash Flows
    Fiscal 2008
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Cash flows from operating activities:Net loss

$
(643,592
)

$
(138,529
)

$
(140,582
)

$
279,111


$
(643,592
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Equity in (earnings) loss of subsidiaries


286,817



(7,706
)






(279,111
)


Depreciation and amortization


3,013



50,584



31,496







85,093Impairment of assets


159,500



180,000



184,490







523,990Amortization of lease rights and other assets






54



2,005







2,059Amortization of debt issuance costs


10,567















10,567Payment of in kind interest expense


24,522















24,522Net accretion of favorable (unfavorable) lease obligations






(2,424
)


568







(1,856
)Gain on sale/retirement of property and equipment, net


(23
)


(55
)


(105
)






(183
)Gain on sale of intangible assets/lease rights










(1,372
)






(1,372
)Stock compensation expense


6,203







2,023







8,226(Increase) decrease in:Inventories






11,506



(5,024
)






6,482Prepaid expenses


(31
)


624



(1,680
)






(1,087
)Other assets


(358
)


(822
)


(7,905
)






(9,085
)Increase (decrease) in:Trade accounts payable


1,582



3,225



2,565







7,372Income taxes payable


8,383



(16,239
)


(2,854
)






(10,710
)Accrued interest payable


(6,222
)






3







(6,219
)Accrued expenses and other current liabilities


4,507



(3,271
)


1,796







3,032Deferred income taxes






716



(5,525
)






(4,809
)Deferred rent expense


(558
)


7,182



2,319







8,943Net cash provided by (used in) operating activities


(145,690
)


84,845



62,218







1,373Cash flows from investing activities:Acquisition of property and equipment, net


(248
)


(41,013
)


(18,144
)






(59,405
)Proceeds from sale of property and equipment


104















104Acquisition of intangible assets/lease rights






(177
)


(1,794
)






(1,971
)Proceeds from sale of intangible assets/lease rights










516







516Net cash used in investing activities


(144
)


(41,190
)


(19,422
)






(60,756
)Cash flows from financing activities:Proceeds from Credit facility


194,000















194,000Payments of Credit facility


(14,500
)














(14,500
)Intercompany activity, net


94,913



(45,557
)


(49,356
)






Net cash provided by (used in) financing activities


274,413



(45,557
)


(49,356
)






179,500Effect of foreign currency exchange rate changes on cash and
    cash equivalents






221



(1,738
)






(1,517
)Net increase (decrease) in cash and cash equivalents


128,579



(1,681
)


(8,298
)






118,600Cash and cash equivalents at beginning of period


25,835



1,892



58,247







85,974Cash and cash equivalents at end of period

$
154,414


$
211


$
49,949


$



$
204,574  F-49




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  16.
    SUBSEQUENT
    EVENTS       F-50




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  UNAUDITED CONDENSED CONSOLIDATED BALANCE
    SHEETS
  April 30,


January 29,2011


2011(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents and restricted cash of $25,966 and
    $23,864, respectively

$
246,134


$
279,766Inventories


133,237



136,148Prepaid expenses


34,938



21,449Other current assets


22,748



24,658Total current assets


437,057



462,021Property and equipment:Furniture, fixtures and equipment


196,977



186,514Leasehold improvements


264,152



248,030461,129



434,544Less accumulated depreciation and amortization


(252,646
)


(233,511
)208,483



201,033Leased property under capital lease:Land and building


18,055



18,055Less accumulated depreciation and amortization


(1,128
)


(903
)16,927



17,152Goodwill


1,550,056



1,550,056Intangible assets, net of accumulated amortization of $42,962
    and $38,747, respectively


562,031



557,466Deferred financing costs, net of accumulated amortization of
    $47,905 and $41,659, respectively


40,341



36,434Other assets


46,817



42,2872,199,245



2,186,243Total assets

$
2,861,712


$
2,866,449LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Short-term debt and current portion of long-term debt

$
62,796


$
76,154Trade accounts payable


60,377



54,355Income taxes payable


8,436



11,744Accrued interest payable


29,232



16,783Accrued expenses and other current liabilities


88,557



107,115Total current liabilities


249,398



266,151Long-term debt


2,444,779



2,236,842Revolving credit facility






194,000Obligation under capital lease


17,290



17,290Deferred tax liability


121,479



121,776Deferred rent expense


27,471



26,637Unfavorable lease obligations and other long-term liabilities


28,003



30,2682,639,022



2,626,813Commitments and contingenciesStockholders deficit:Common stock par value $0.001 per share; authorized
    1,000 shares; issued and outstanding 100 shares






Additional paid-in capital


622,073



621,099Accumulated other comprehensive income, net of tax


19,846



1,416Accumulated deficit


(668,627
)


(649,030
)(26,708
)


(26,515
)Total liabilities and stockholders deficit

$
2,861,712


$
2,866,449    F-51




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
    OPERATIONS AND
 COMPREHENSIVE
    INCOME (LOSS)
  Three


ThreeMonths


MonthsEnded


EndedApril 30,


May 1,2011


2010(In thousands)Net sales

$
346,446


$
322,077Cost of sales, occupancy and buying expenses


171,359



158,751Gross profit


175,087



163,326Other expenses:Selling, general and administrative


126,722



118,019Depreciation and amortization


17,054



16,366Severance and transaction-related costs


343



102Other expense, net


5,311



1,230149,430



135,717Operating income


25,657



27,609Gain on early debt extinguishment


249



4,487Interest expense, net


46,235



42,763Loss before income tax (benefit) expense


(20,329
)


(10,667
)Income tax (benefit) expense


(732
)


1,633Net loss

$
(19,597
)

$
(12,300
)Net loss

$
(19,597
)

$
(12,300
)Foreign currency translation and interest rate swap adjustments,
    net of tax


18,431



(2,522
)Comprehensive loss

$
(1,166
)

$
(14,822
)    F-52




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  UNAUDITED
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Three


ThreeMonths


MonthsEnded


EndedApril 30,


May 1,2011


2010(In thousands)Cash flows from operating activities:Net loss

$
(19,597
)

$
(12,300
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation and amortization


17,054



16,366Amortization of lease rights and other assets


785



1,028Amortization of debt issuance costs


5,899



2,535Payment of in kind interest expense


9,035



9,651Foreign currency exchange net loss on Euro Loan


3,292



Net unfavorable accretion of lease obligations


(275
)


(476
)Loss on sale/retirement of property and equipment, net


48



236Gain on early debt extinguishment


(249
)


(4,487
)Stock compensation expense


974



1,220(Increase) decrease in:Inventories


6,683



(792
)Prepaid expenses


(11,840
)


1,439Other assets


(709
)


6,052Increase (decrease) in:Trade accounts payable


3,693



3,799Income taxes payable


(3,847
)


(2,329
)Accrued interest payable


12,396



12,727Accrued expenses and other liabilities


(21,884
)


(25
)Deferred income taxes


(1,029
)


474Deferred rent expense


214



787Net cash provided by operating activities


643



35,905Cash flows from investing activities:Acquisition of property and equipment, net


(15,792
)


(8,218
)Acquisition of intangible assets/lease rights


(1,347
)


(189
)Proceeds from sale of property






16,765Changes in restricted cash


(300
)


Net cash (used in) provided by investing activities


(17,439
)


8,358Cash flows from financing activities:Payments of Credit facility


(438,940
)


(3,625
)Proceeds from Note


450,000



Repurchases of Notes


(24,014
)


(16,849
)Payment of debt issuance costs


(10,152
)


Principal payments of capital leases






(765
)Net cash used in financing activities


(23,106
)


(21,239
)Effect of foreign currency exchange rate changes on cash and
    cash equivalents


4,168



(1,721
)Net (decrease) increase in cash and cash equivalents


(35,734
)


21,303Cash and cash equivalents, at beginning of period


255,902



198,708Cash and cash equivalents, at end of period


220,168



220,011Restricted cash, at end of period


25,966



Cash and cash equivalents and restricted cash, at end of period

$
246,134


$
220,011Supplemental disclosure of cash flow information:Income taxes paid

$
4,223


$
2,721Interest paid


18,912



17,838Non-cash investing and financing activities:Property acquired under capital lease






18,055    F-53




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    Basis of
    Presentation  Form 10-Q Form 10-K
        2.
    Recent
    Accounting Pronouncements  2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve
    Common Fair Value Measurement and Disclosure Requirements in
    U.S. GAAP and International Financial Reporting Standards
    (IFRSs) 2011-04
  3.
    Fair
    Value Measurements  Fair Value Measurement Disclosures
 F-54




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Financial
    Assets and Liabilities Measured at Fair Value on a Recurring
    Basis
    Fair Value Measurements at April 30, 2011 UsingQuotedPrices inActiveMarkets for

SignificantIdentical

Other

SignificantAssets

Observable

UnobservableCarrying

(Liabilities)

Inputs

InputsValue

(Level 1)

(Level 2)

(Level 3)Interest rate swap

$
(1,462
)

$



$
(1,462
)

$
   Fair Value Measurements at January 29, 2011 UsingQuotedPrices inActiveMarkets for

SignificantIdentical

Other

SignificantAssets

Observable

UnobservableCarrying

(Liabilities)

Inputs

InputsValue

(Level 1)

(Level 2)

(Level 3)Interest rate swaps

$
(1,165
)

$



$
(1,165
)

$
     Non-Financial
    Assets Measured at Fair Value on a Non-Recurring
    Basis
   F-55




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Financial
    Instruments Not Measured at Fair Value
      4.
    Debt    April 30,


January 29,2011


2011Short-term debt and current portion of long-term debt:Note payable to bank due 2012

$
62,796


$
57,703Current portion of long-term debt






18,451Total short-term debt and current portion of long-term debt

$
62,796


$
76,154Long-term debt:Senior secured term loan facility due 2014

$
1,154,310


$
1,399,250Senior notes due 2015


226,000



236,000Senior toggle notes due 2015


354,857



360,431Senior subordinated notes due 2017


259,612



259,612Senior secured second lien notes due 2019


450,000



2,444,779



2,255,293Less: current portion of long-term debt






(18,451
)Long-term debt

$
2,444,779


$
2,236,842Senior secured revolving credit facility due 2013

$



$
194,000Obligations under capital leases

$
17,290


$
17,290     Short-term
    Debt
   F-56




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Senior
    Secured Second Lien Notes
    Note
    Repurchases
    Three Months Ended April 30, 2011Principal


Repurchase


RecognizedNotes Repurchased

Amount


Price


Gain (Loss)(1)Senior Notes

$
10,000


$
9,930


$
(98
)Senior Toggle Notes


14,155



14,084



347$
24,155


$
24,014


$
249     (1)
    
    Net of deferred issuance cost write-offs of $168 for the Senior
    Notes and $179 for the Senior Toggle Notes, and accrued interest
    write-off of $455 for the Senior Toggle Notes.  Three Months Ended May 1, 2010Principal


Repurchase


RecognizedNotes Repurchased

Amount


Price


Gain(1)Senior Toggle Notes

$
6,000


$
4,985


$
1,087Senior Subordinated Notes


15,625



11,864



3,400$
21,625


$
16,849


$
4,487  F-57




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (1)
    
    Net of deferred issuance cost write-offs of $104 and $361 for
    the Senior Toggle Notes and Senior Subordinated Notes,
    respectively, and accrued interest write-off of $176 for the
    Senior Toggle Notes.  Covenants
    
    incur additional indebtedness;
    pay dividends or distributions on our capital stock, repurchase
    or retire our capital stock and redeem, repurchase or defease
    any subordinated indebtedness;
    make certain investments;
    create or incur certain liens;
    create restrictions on the payment of dividends or other
    distributions to us from our subsidiaries;
    transfer or sell assets;
    engage in certain transactions with our affiliates; and
    merge or consolidate with other companies or transfer all or
    substantially all of our assets.    5.
    Derivatives
    and Hedging Activities       F-58




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             F-59




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Location of Gain orAmount of Gain or (Loss)

(Loss) Reclassified

Amount of Gain or (Loss)Recognized in OCI on

from Accumulated

Reclassified from AccumulatedDerivative

OCI into Income

OCI into Income(Effective Portion)

(Effective Portion)

(Effective Portion)(1)Derivatives in Cash

Three Months Ended



Three Months EndedFlow Hedging

April 30,

May 1,



April 30,

May 1,Relationships

2011

2010



2011

2010Interest rate swaps

$
(297
)

$
5,159



Interest expense, net


$
(465
)

$
(5,332
)     (1)
    
    Represents reclassification of amounts from accumulated other
    comprehensive income (loss) to earnings as interest expense is
    recognized on the senior secured term loan facility. No
    ineffectiveness is associated with these interest rate cash flow
    hedges.    6.
    Commitments
    and Contingencies      7.
    Stock
    Options and Stock-Based Compensation    Weighted-Weighted-


AverageAverage


RemainingNumber of


Exercise


ContractualShares


Price


Term (Years)Outstanding at January 29, 2011


6,860,014


$
10.00Options granted


111,500


$
10.00Options exercised


Options forfeited or expired


(34,343
)

$
10.00Outstanding at April 30, 2011


6,937,171


$
10.00



4.2Options vested and expected to vest at April 30, 2011


6,334,811


$
10.00



4.1Exercisable at April 30, 2011


2,264,868


$
10.00



3.6    F-60




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    8.
    Income
    Taxes        9.
    Related
    Party Transactions      10.
    Segment
    Information   F-61




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Three


ThreeMonths


MonthsEnded


EndedApril 30,


May 1,2011


2010Net sales:North America

$
224,188


$
212,599Europe


122,258



109,478Total net sales


346,446



322,077Depreciation and amortization:North America


10,405



10,507Europe


6,649



5,859Total depreciation and amortization


17,054



16,366Operating income (loss) for reportable segments:North America


30,624



24,403Europe


(4,624
)


3,308Total operating income for reportable segments


26,000



27,711Severance and transaction-related costs


343



102Net consolidated operating income


25,657



27,609Gain on early debt extinguishment


249



4,487Interest expense, net


46,235



42,763Net consolidated loss before income tax expense

$
(20,329
)

$
(10,667
)       11.
    Supplemental
    Financial Information   F-62




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Condensed
    Consolidating Balance SheetApril 30, 2011
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents and restricted cash(1)

$
160,941


$
(8,002
)

$
93,195


$



$
246,134Inventories






79,423



53,814







133,237Prepaid expenses


434



15,171



19,333







34,938Other current assets


11



16,096



6,641







22,748Total current assets


161,386



102,688



172,983







437,057Property and equipment:Furniture, fixtures and equipment


3,446



121,260



72,271







196,977Leasehold improvements


1,071



143,577



119,504







264,1524,517



264,837



191,775







461,129Less accumulated depreciation and amortization


(2,368
)


(155,707
)


(94,571
)






(252,646
)2,149



109,130



97,204







208,483Leased property under capital lease:Land and building






18,055











18,055Less accumulated depreciation and amortization






(1,128
)










(1,128
)



16,927











16,927Intercompany receivables






411,558







(411,558
)


Investment in subsidiaries


2,297,149



(66,467
)






(2,230,682
)


Goodwill






1,235,651



314,405







1,550,056Intangible assets, net


286,000



8,404



267,627







562,031Deferred financing costs, net


39,960







381







40,341Other assets


130



4,133



42,554







46,8172,623,239



1,593,279



624,967



(2,642,240
)


2,199,245Total assets

$
2,786,774


$
1,822,024


$
895,154


$
(2,642,240
)

$
2,861,712LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Short-term debt

$



$



$
62,796


$



$
62,796Trade accounts payable


993



22,771



36,613







60,377Income taxes payable






(357
)


8,793







8,436Accrued interest payable


29,167







65







29,232Accrued expenses and other current liabilities


10,101



35,426



43,030







88,557Total current liabilities


40,261



57,840



151,297







249,398Intercompany payables


328,442







83,116



(411,558
)


Long-term debt


2,444,779















2,444,779Revolving credit facility


















Obligation under capital lease






17,290











17,290Deferred tax liability






106,064



15,415







121,479Deferred rent expense






17,246



10,225







27,471Unfavorable lease obligations and other long-term liabilities






26,750



1,253







28,0032,773,221



167,350



110,009



(411,558
)


2,639,022Stockholders equity (deficit):Common stock






367



2



(369
)


Additional paid in capital


622,073



1,435,909



815,866



(2,251,775
)


622,073Accumulated other comprehensive income (loss), net of tax


19,846



5,411



7,883



(13,294
)


19,846Retained earnings (accumulated deficit)


(668,627
)


155,147



(189,903
)


34,756



(668,627
)(26,708
)


1,596,834



633,848



(2,230,682
)


(26,708
)Total liabilities and stockholders equity (deficit)

$
2,786,774


$
1,822,024


$
895,154


$
(2,642,240
)

$
2,861,712     (1)
    
    Cash and cash equivalents includes restricted cash of $3,750 for
    Issuer and $22,216 for Non-Guarantors. F-63




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Balance SheetJanuary 29, 2011
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents and restricted cash(1)

$
179,529


$
3,587


$
96,650


$



$
279,766Inventories






84,868



51,280







136,148Prepaid expenses


851



1,680



18,918







21,449Other current assets






16,547



8,111







24,658Total current assets


180,380



106,682



174,959







462,021Property and equipment:Furniture, fixtures and equipment


3,276



119,228



64,010







186,514Leasehold improvements


1,052



143,072



103,906







248,0304,328



262,300



167,916







434,544Less accumulated depreciation and amortization


(2,205
)


(147,857
)


(83,449
)






(233,511
)2,123



114,443



84,467







201,033Leased property under capital lease:Land and building






18,055











18,055Less accumulated depreciation and amortization






(903
)










(903
)



17,152











17,152Intercompany receivables






366,929







(366,929
)


Investment in subsidiaries


2,303,333



(63,535
)






(2,239,798
)


Goodwill






1,235,651



314,405







1,550,056Intangible assets, net


286,000



9,294



262,172







557,466Deferred financing costs, net


35,973







461







36,434Other assets


130



3,842



38,315







42,2872,625,436



1,552,181



615,353



(2,606,727
)


2,186,243Total assets

$
2,807,939


$
1,790,458


$
874,779


$
(2,606,727
)

$
2,866,449LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Short-term debt and current portion of long-term debt

$
18,451


$



$
57,703


$



$
76,154Trade accounts payable


1,199



24,545



28,611







54,355Income taxes payable






644



11,100







11,744Accrued interest payable


16,696







87







16,783Accrued expenses and other current liabilities


20,630



37,910



48,575







107,115Total current liabilities


56,976



63,099



146,076







266,151Intercompany payables


346,636







20,293



(366,929
)


Long-term debt


2,236,842















2,236,842Revolving credit facility


194,000















194,000Obligation under capital lease






17,290











17,290Deferred tax liability






106,797



14,979







121,776Deferred rent expense






17,230



9,407







26,637Unfavorable lease obligations and other long-term liabilities






28,889



1,379







30,2682,777,478



170,206



46,058



(366,929
)


2,626,813Stockholders equity (deficit):Common stock






367



2



(369
)


Additional paid in capital


621,099



1,435,909



815,866



(2,251,775
)


621,099Accumulated other comprehensive income (loss), net of tax


1,416



3,663



(7,080
)


3,417



1,416Retained earnings (accumulated deficit)


(649,030
)


117,214



(126,143
)


8,929



(649,030
)(26,515
)


1,557,153



682,645



(2,239,798
)


(26,515
)Total liabilities and stockholders equity (deficit)

$
2,807,939


$
1,790,458


$
874,779


$
(2,606,727
)

$
2,866,449     (1)
    
    Cash and cash equivalents includes restricted cash of $3,450 for
    Issuer and $20,414 for Non-Guarantors F-64




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Operations and Comprehensive Income
    (Loss)
    For The Three Months Ended April 30, 2011
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Net sales

$



$
209,024


$
137,422


$



$
346,446Cost of sales, occupancy and buying expenses


1,595



98,449



71,315







171,359Gross profit


(1,595
)


110,575



66,107







175,087Other expenses:Selling, general and administrative


8,188



62,392



56,142







126,722Depreciation and amortization


181



9,478



7,395







17,054Severance and transaction-related costs


133







210







343Other (income) expense


(3,648
)


436



8,523







5,3114,854



72,306



72,270







149,430Operating income (loss)


(6,449
)


38,269



(6,163
)






25,657Gain on early debt extinguishment


249















249Interest expense, net


44,230



531



1,474







46,235Income (loss) before income taxes


(50,430
)


37,738



(7,637
)






(20,329
)Income tax expense (benefit)






(1,112
)


380







(732
)Income (loss) from continuing operations


(50,430
)


38,850



(8,017
)






(19,597
)Equity in earnings of subsidiaries


30,833



(917
)






(29,916
)


Net income (loss)


(19,597
)


37,933



(8,017
)


(29,916
)


(19,597
)Foreign currency translation and interest rate swap adjustments,
    net of tax


18,431



1,748



14,962



(16,710
)


18,431Comprehensive income (loss)

$
(1,166
)

$
39,681


$
6,945


$
(46,626
)

$
(1,166
)  F-65




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Operations and Comprehensive Income
    (Loss)For The Three Months Ended May 1,
    2010
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Net sales

$



$
198,592


$
123,485


$



$
322,077Cost of sales, occupancy and buying expenses


1,275



95,987



61,489







158,751Gross profit


(1,275
)


102,605



61,996







163,326Other expenses (income):Selling, general and administrative


8,432



61,423



48,164







118,019Depreciation and amortization


132



9,638



6,596







16,366Severance and transaction-related costs


102















102Other (income) expense


(5,875
)


2,254



4,851







1,2302,791



73,315



59,611







135,717Operating income (loss)


(4,066
)


29,290



2,385







27,609Gain on early debt extinguishment


4,487















4,487Interest expense, net


42,745



7



11







42,763Income (loss) before income taxes


(42,324
)


29,283



2,374







(10,667
)Income tax expense


23



616



994







1,633Income (loss) from continuing operations


(42,347
)


28,667



1,380







(12,300
)Equity in earnings of subsidiaries


30,047



(47
)






(30,000
)


Net income (loss)


(12,300
)


28,620



1,380



(30,000
)


(12,300
)Foreign currency translation and interest rate swap adjustments,
    net of tax


(2,522
)


9,432



(9,251
)


(181
)


(2,522
)Comprehensive income (loss)

$
(14,822
)

$
38,052


$
(7,871
)

$
(30,181
)

$
(14,822
)  F-66




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Cash FlowsThree Months Ended April 30,
    2011
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Cash flows from operating activities:Net income (loss)

$
(19,597
)

$
37,933


$
(8,017
)

$
(29,916
)

$
(19,597
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Equity in earnings of subsidiaries


(30,833
)


917







29,916



Depreciation and amortization


181



9,478



7,395







17,054Amortization of lease rights and other assets










785







785Amortization of debt issuance costs


5,751







148







5,899Payment of in kind interest expense


9,035















9,035Foreign currency exchange net loss on Euro Loan










3,292







3,292Net accretion of favorable (unfavorable) lease obligations






(430
)


155







(275
)Loss on sale/retirement of property and equipment, net






32



16







48Gain on early debt extinguishment


(249
)














(249
)Stock compensation expense


785







189







974(Increase) decrease in:Inventories






5,445



1,238







6,683Prepaid expenses


417



(13,491
)


1,234







(11,840
)Other assets


(11
)


(575
)


(123
)






(709
)Increase (decrease) in:Trade accounts payable


(207
)


(1,121
)


5,021







3,693Income taxes payable






(1,001
)


(2,846
)






(3,847
)Accrued interest payable


12,470







(74
)






12,396Accrued expenses and other liabilities


(10,825
)


(2,483
)


(8,576
)






(21,884
)Deferred income taxes






(1,116
)


87







(1,029
)Deferred rent expense






16



198







214Net cash provided by (used in) operating activities


(33,083
)


33,604



122







643Cash flows from investing activities:Acquisition of property and equipment, net


(208
)


(4,598
)


(10,986
)






(15,792
)Acquisition of intangible assets/lease rights






(7
)


(1,340
)






(1,347
)Changes in restricted cash


(300
)














(300
)Net cash used in investing activities


(508
)


(4,605
)


(12,326
)






(17,439
)Cash flows from financing activities:Payments of Credit facility


(438,940
)














(438,940
)Proceeds from Note


450,000















450,000Repurchases of Notes


(24,014
)














(24,014
)Payment of debt issuance costs


(10,085
)






(67
)






(10,152
)Intercompany activity, net


37,742



(44,629
)


6,887







Net cash provided by (used in) financing activities


14,703



(44,629
)


6,820







(23,106
)Effect of foreign currency exchange rate changes on cash and
    cash equivalents






4,041



127







4,168Net increase (decrease) in cash and cash equivalents


(18,888
)


(11,589
)


(5,257
)






(35,734
)Cash and cash equivalents, at beginning of period


176,079



3,587



76,236







255,902Cash and cash equivalents, at end of period


157,191



(8,002
)


70,979







220,168Restricted cash, at end of period


3,750







22,216







25,966Cash and cash equivalents and restricted cash, at end of period

$
160,941


$
(8,002
)

$
93,195


$



$
246,134  F-67




---



##### Table of Contents



CLAIRES
    STORES, INC. AND SUBSIDIARIES
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Condensed
    Consolidating Statement of Cash Flows
    Three Months Ended May 1, 2010
  Non-Issuer


Guarantors


Guarantors


Eliminations


Consolidated(In thousands)Cash flows from operating activities:Net income (loss)

$
(12,300
)

$
28,620


$
1,380


$
(30,000
)

$
(12,300
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Equity in earnings of subsidiaries


(30,047
)


47







30,000



Depreciation and amortization


132



9,638



6,596







16,366Amortization of lease rights and other assets






13



1,015







1,028Amortization of debt issuance costs


2,535















2,535Payment of in kind interest expense


9,651















9,651Net accretion of favorable (unfavorable) lease obligations






(571
)


95







(476
)Loss on sale/retirement of property and equipment, net






236











236Gain on early debt extinguishment


(4,487
)














(4,487
)Stock compensation expense


917







303







1,220(Increase) decrease in:Inventories






2,610



(3,402
)






(792
)Prepaid expenses


(96
)


137



1,398







1,439Other assets


1,197



4,684



171







6,052Increase (decrease) in:Trade accounts payable


(373
)


1,081



3,091







3,799Income taxes payable






96



(2,425
)






(2,329
)Accrued interest payable


12,727















12,727Accrued expenses and other liabilities


(2,535
)


43



2,467







(25
)Deferred income taxes






504



(30
)






474Deferred rent expense


(107
)


694



200







787Net cash provided by (used in) operating activities


(22,786
)


47,832



10,859







35,905Cash flows from investing activities:Acquisition of property and equipment, net


(26
)


(3,052
)


(5,140
)






(8,218
)Acquisition of intangibleassets/lease rights






(58
)


(131
)






(189
)Proceeds from sale of property






16,765











16,765Net cash provided by (used in) investing activities


(26
)


13,655



(5,271
)






8,358Cash flows from financing activities:Payments of Credit facility


(3,625
)














(3,625
)Repurchases of Notes


(16,849
)














(16,849
)Principal payments of capital leases






(765
)










(765
)Intercompany activity, net


78,855



(60,818
)


(18,037
)






Net cash provided by (used in) financing activities


58,381



(61,583
)


(18,037
)






(21,239
)Effect of foreign currency exchange rate changes on cash and
    cash equivalents






2,214



(3,935
)






(1,721
)Net increase (decrease) in cash and cash equivalents


35,569



2,118



(16,384
)






21,303Cash and cash equivalents, at beginning of period


109,138



(10,604
)


100,174







198,708Cash and cash equivalents, at end of period


144,707



(8,486
)


83,790







220,011Restricted cash, at end of period


















Cash and cash equivalents and restricted cash, at end of period

$
144,707


$
(8,486
)

$
83,790


$



$
220,011  F-68




---



##### Table of Contents



Offer to Exchange
  $450,000,000 aggregate
    principal amount of 8.875% Senior Secured Second
 Lien Notes due 2019
  For
  $450,000,000 aggregate
    principal amount of 8.875% Senior Secured Second
 Lien Notes due 2019 registered
    under the Securities Act of 1933, as amended
    PROSPECTUS
     Until          ,
    2011, all dealers that effect transactions in these securities,
    whether or not participating in the exchange offer, may be
    required to deliver a prospectus.




---



##### Table of Contents



PART II
  INFORMATION
    NOT REQUIRED IN PROSPECTUS
  Item 20.
    Indemnification
    of Directors and Officers.         II-1




---



##### Table of Contents



Section 7-108-401
  Section 7-109-102,
 II-2




---



##### Table of Contents



Item 21.
    Exhibits
    and Financial Schedules.  Exhibits.
    Financial Statement Schedules.
   II-3




---



##### Table of Contents



Item 22.
    Undertakings.                          II-4




---



##### Table of Contents



II-5




---



##### Table of Contents



SIGNATURES
      By:
    /s/  J.
    Per Brodin   Executive Vice President,
 Chief Financial Officer
  POWER OF
    ATTORNEY
      Signature

Title

Date/s/  Eugene
    S. KahnEugene
    S. Kahn

Chief Executive Officer and Director (principal executive
    officer)

June 28, 2011/s/  J.
    Per BrodinJ.
    Per Brodin

Executive Vice President and Chief Financial Officer (principal
    financial and accounting officer)

June 28, 2011/s/  Peter
    P. CopsesPeter
    P. Copses

Chairman of Board of Directors

June 28, 2011/s/  Robert
    J. DiNicolaRobert
    J. DiNicola

Director

June 28, 2011/s/  George
    G. GolleherGeorge
    G. Golleher

Director

June 28, 2011/s/  Rohit
    ManochaRohit
    Manocha

Director

June 28, 2011/s/  Ron
    MarshallRon
    Marshall

Director

June 28, 2011/s/  Lance
    A. MilkenLance
    A. Milken

Director

June 28, 2011  II-6




---



##### Table of Contents



SIGNATURES
      By:
    /s/  J.
    Per Brodin   Executive Vice President,
 Chief Financial Officer
  POWER OF
    ATTORNEY
  his/her his/her he/she
    Signature

Title

Date/s/  Eugene
    S. KahnEugene
    S. Kahn

Chief Executive Officer and Director (principal executive
    officer)

June 28, 2011/s/  J.
    Per BrodinJ.
    Per Brodin

Executive Vice President, Chief Financial Officer and Director
    (principal financial and accounting officer)

June 28, 2011/s/  Rebecca
    R. OrandRebecca
    R. Orand

Director

June 28, 2011  II-7




---



##### Table of Contents



SIGNATURES
      By:
    /s/  J.
    Per Brodin   Executive Vice President,
 Chief Financial Officer
  POWER OF
    ATTORNEY
  his/her his/her he/she
    Signature

Title

Date/s/  Eugene
    S. KahnEugene
    S. Kahn

Chief Executive Officer and Director (principal executive
    officer)

June 28, 2011/s/  J.
    Per BrodinJ.
    Per Brodin

Executive Vice President, Chief Financial Officer and Director
    (principal financial and accounting officer)

June 28, 2011/s/  Rebecca
    R. OrandRebecca
    R. Orand

Director

June 28, 2011  II-8




---



##### Table of Contents



SIGNATURES
      By:
    /s/  J.
    Per Brodin   Executive Vice President,
 Chief Financial Officer
  POWER OF
    ATTORNEY
  his/her his/her he/she
    Signature

Title

Date/s/  Eugene
    S. KahnEugene
    S. Kahn

Chief Executive Officer and Director (principal executive
    officer)

June 28, 2011/s/  J.
    Per BrodinJ.
    Per Brodin

Executive Vice President, Chief Financial Officer and Director
    (principal financial and accounting officer)

June 28, 2011/s/  Rebecca
    R. OrandRebecca
    R. Orand

Director

June 28, 2011  II-9




---



##### Table of Contents



SIGNATURES
      By:
    /s/  J.
    Per Brodin   Executive Vice President,
 Chief Financial Officer
  POWER OF
    ATTORNEY
  his/her his/her he/she
    Signature

Title

Date/s/  Eugene
    S. KahnEugene
    S. Kahn

Chief Executive Officer and Director (principal executive
    officer)

June 28, 2011/s/  J.
    Per BrodinJ.
    Per Brodin

Executive Vice President, Chief Financial Officer and Director
    (principal financial and accounting officer)

June 28, 2011/s/  Rebecca
    R. OrandRebecca
    R. Orand

Director

June 28, 2011  II-10




---



##### Table of Contents



SIGNATURES
      By:
    /s/  J.
    Per Brodin   Executive Vice President,
 Chief Financial Officer
  POWER OF
    ATTORNEY
  his/her his/her he/she
    Signature

Title

Date/s/  Eugene
    S. KahnEugene
    S. Kahn

Chief Executive Officer and Director (principal executive
    officer)

June 28, 2011/s/  J.
    Per BrodinJ.
    Per Brodin

Executive Vice President, Chief Financial Officer and Director
    (principal financial and accounting officer)

June 28, 2011/s/  Rebecca
    R. OrandRebecca
    R. Orand

Director

June 28, 2011  II-11




---



##### Table of Contents



SIGNATURES
      By:
    Claires Stores, Inc.,   By:
    /s/  J.
    Per Brodin   Manager
  POWER OF
    ATTORNEY
  his/her his/her he/she
    Signature

Title

Date/s/  J.
    Per BrodinBy:
    Claires Stores, Inc., as Sole Member Name: J. Per Brodin

Manager (principal executive officer)

June 28, 2011     *
    
    CSI Canada LLC is a single member limited liability company
    managed by its sole member, Claires Stores, Inc., and does
    not have any officers or a board of directors or similar body. A
    separate signature page for Claires Stores, Inc. is
    included elsewhere in this registration statement. II-12




---



##### Table of Contents



EXHIBIT INDEX
  Form S-4:
  ExhibitNumber

Description of Exhibits3
.1

Articles of Incorporation of Claires Stores, Inc.(1)3
.2

By-laws of Claires Stores, Inc.(1)3
.3

Certificate of Incorporation of BMS Distributing Corp.(1)3
.4

By-laws of BMS Distributing Corp.(1)3
.5

Certificate of Incorporation of CBI Distributing Corp.(1)3
.6

By-laws of CBI Distributing Corp.(1)3
.7

Articles of Incorporation of Claires Boutiques, Inc.(1)3
.8

By-laws of Claires Boutiques, Inc.(1)3
.9

Certificate of Incorporation of Claires Canada Corp.(1)3
.10

By-laws of Claires Canada Corp.(1)3
.11

Certificate of Incorporation of Claires Puerto Rico
    Corp.(1)3
.12

By-laws of Claires Puerto Rico Corp.(1)3
.13

Certificate of Formation of CSI Canada LLC(11)3
.14

Operating Agreement of CSI Canada LLC(11)4
.1

Senior Notes Indenture, dated as of May 29, 2007, between
    Bauble Acquisition Sub, Inc. and The Bank of New York, as
    Trustee(1)4
.2

Senior Toggle Notes Indenture, dated as of May 29, 2007,
    between Bauble Acquisition Sub, Inc. and The Bank of New York,
    as Trustee(1)4
.3

Senior Subordinated Notes Indenture, dated as of May 29,
    2007, between Bauble Acquisition Sub, Inc. and The Bank of New
    York, as Trustee(1)4
.4

Senior Notes Supplemental Indenture, dated as of May 29,
    2007, by and among Claires Stores, Inc., the guarantors
    listed on Exhibit A thereto and The Bank of New York, as
    Trustee, to the Senior Notes Indenture, dated as of May 29,
    2007, between Bauble Acquisition Sub, Inc. and The Bank of New
    York, as Trustee(1)4
.5

Senior Toggle Notes Supplemental Indenture, dated as of
    May 29, 2007, by and among Claires Stores, Inc., the
    guarantors listed on Exhibit A thereto and The Bank of New
    York, as Trustee, to the Senior Toggle Notes Indenture, dated as
    of May 29, 2007, between Bauble Acquisition Sub, Inc. and
    The Bank of New York, as Trustee(1)4
.6

Senior Subordinated Notes Supplemental Indenture, dated as of
    May 29, 2007, by and among Claires Stores, Inc., the
    guarantors listed on Exhibit A thereto and The Bank of New
    York, as Trustee, to the Senior Subordinated Notes Indenture,
    dated as of May 29, 2007, between Bauble Acquisition Sub,
    Inc. and The Bank of New York, as Trustee(1)4
.7

Form of 9.25% Senior Notes due 2015(1)4
.8

Form of 9.625%/10.375% Senior Toggle Notes due 2015(1)4
.9

Form of 10.50% Senior Subordinated Notes due 2017(1)4
.10

Indenture, dated as of March 4, 2011, by and between
    Claires Escrow Corporation and The Bank of New York Mellon
    Trust Company, N.A., as Trustee and Collateral Agent(8)4
.11

Supplemental Indenture, dated as of March 4, 2011, by and
    between Claires Stores, Inc., the Guarantors and The Bank
    of New York Mellon Trust Company, N.A., as Trustee and
    Collateral Agent(8)4
.12

Form of 8.875% Senior Secured Second Lien Notes due 2019
    (included in the Indenture filed as Exhibit 4.10 hereto)(8)4
.13

Registration Rights Agreement, dated as of March 4, 2011,
    by and between Claires Stores, Inc., Claires Escrow
    Corporation, the Guarantors and the Representatives(8)5
.1

Opinion of Morgan, Lewis & Bockius LLP(11)5
.2

Opinion of Hutchinson Black & Cook, LLC(11)




---



##### Table of Contents



ExhibitNumber

Description of Exhibits10
.1

Credit Agreement, dated as of May 29, 2007, among Bauble
    Holdings Corp., Bauble Acquisition Sub, Inc. (to be merged with
    and into Claires Stores, Inc.), as Borrower, the Lenders
    party thereto, Credit Suisse, as Administrative Agent, Bear
    Stearns Corporate Lending Inc. and Mizuho Corporate Bank, Ltd.,
    as Co-Syndication Agents, Lehman Commercial Paper Inc. and
    LaSalle Bank National Association, as Co-Documentation Agents,
    and Bear, Stearns & Co. Inc., Credit Suisse Securities
    (USA) LLC, and Lehman Brothers Inc., as Joint Bookrunners and
    Joint Lead Arrangers(1)10
.2

Management Services Agreement, dated as of May 29, 2007,
    among Claires Stores, Inc., Bauble Holdings Corp. and
    Apollo Management VI, L.P. and Tri-Artisan Capital Partners, LLC
    and TACP Investments  Claires LLC(1)10
.3

Claires Inc. Amended and Restated Stock Incentive Plan,
    dated May 20, 2011(10)10
.4

Standard Form of Option Grant Letter (Target Performance Option
    and Stretch Performance Option)(1)10
.5

Form of Option Grant Letter under Claires Inc. Amended and
    Restated Stock Incentive Plan(10)10
.6

Standard Form of Director Option Grant Letter(1)10
.7

Standard Form of Co-Investment Letter(9)10
.8

Employment Agreement with Eugene S. Kahn(1)10
.9

Employment Agreement with James Conroy(1)10
.10

Amendment to Employment Agreement with James Conroy(3)10
.11

2nd Amendment to Employment Agreement with James Conroy(7)10
.12

Employment Agreement with Kenny Wilson(4)10
.13

Lease Agreement, dated as of February 19, 2010, by and
    between AGNL Bling, L.L.C. and Claires Boutiques, Inc.(6)10
.14

Guarantee and Collateral Agreement, dated and effective as of
    May 29, 2007, among Bauble Holdings Corp., Bauble
    Acquisition Sub, Inc., and Credit Suisse, dated as of
    May 29, 2007(5)10
.15

Mortgage, Assignment of Leases and Rents, Security Agreement and
    Fixture Filing, dated as of May 29, 2007(5)10
.16

Employment Agreement with Jay Friedman(9)10
.17

Collateral Agreement, dated March 4, 2011, by and among
    Claires Stores, Inc., Claires Inc., the Guarantors
    and The Bank of New York Mellon Trust Company, N.A, as
    Collateral Agent(8)10
.18

Intercreditor Agreement, dated as of March 4, 2011, by and
    among Claires Stores, Inc., Claires Inc., the
    Guarantors, The Bank of New York Mellon Trust Company,
    N.A., as Trustee and Collateral Agent and Credit Suisse AG,
    Cayman Islands Branch (f/k/a Credit Suisse, Cayman Island
    Branch), as Credit Agreement Agent(8)10
.19

Second Lien Trademark Security Agreement, dated as of
    March 4, 2011, by and between CBI Distributing Corp. and
    The Bank of New York Mellon Trust Company, N.A., as
    Collateral Agent(8)12
.1

Statement Regarding the Computation of Ratio of Earnings to
    Fixed Charges for Claires Stores, Inc.(11)21
.1

Subsidiaries of Claires Stores, Inc.(9)23
.1

Consent of KPMG LLP(11)23
.2

Consent of Morgan, Lewis & Bockius LLP (included in
    Exhibit 5.1)(11)23
.3

Consent of Hutchinson Black & Cook, LLC (included in
    Exhibit 5.2)(11)24


Powers of Attorney (included in the signature pages to the
    registration statement)(11)25
.1

Statement of Eligibility on
    Form T-1
    of The Bank of New York Mellon Trust Company, N.A. with
    respect to the 8.875% Senior Secured Second Lien Notes due
    2019(11)99
.1

Form of Letter of Transmittal(11)99
.2

Form of Notice of Guaranteed Delivery(11)99
.3

Form of Letter to Brokers, Dealers, Commercial Banks,
    Trust Companies and Other Nominees(11)99
.4

Form of Letter from Brokers, Dealers, Commercial Banks,
    Trust Companies and Other Nominees to their Clients(11)




---



##### Table of Contents



(1)
    
    Filed previously as exhibit to the Registration Statement on
    Form S-4
    (File
    No. 333-148108)
    by the Company on December 17, 2007.(2)
    
    Filed previously as exhibit to
    Form 8-K
    by the Company on September 12, 2008.(3)
    
    Filed previously as exhibit to
    Form 8-K
    by the Company on April 22, 2009.(4)
    
    Filed previously as exhibit to
    Form 10-K/A
    by the Company on May 27, 2009.(5)
    
    Filed previously as exhibit to
    Form 10-Q
    on December 8, 2009.(6)
    
    Filed previously as exhibit to
    Form 8-K
    on February 25, 2010.(7)
    
    Filed previously as exhibit to Form 10 K/A on June 1,
    2010.(8)
    
    Filed previously as exhibit to
    Form 8-K
    by the Company on March 9, 2011.(9)
    
    Filed previously as exhibit to
    Form 10-K
    by the Company on April 21, 2011.(10)
    
    Filed previously as exhibit to
    Form 8-K
    on May 20, 2011.(11)
    
    Filed herewith.