<PAGE>

                                                                      EXHIBIT 13

                         FINANCIAL STATEMENT INFORMATION

Selected Financial Data
(In thousands, except per-share data, number of stores and annual sales per
average square foot)
<TABLE>
<CAPTION>
                                                                             Fiscal  Year Ended
                                             -----------------------------------------------------------------------------------
                                               February 2,        February 3,      January 29,      January 30,      January 31,
                                                  2002               2001(1)          2000             1999             1998
                                             -----------------------------------------------------------------------------------
<S>                                            <C>              <C>             <C>              <C>               <C>
   Statement of Income Data:
     Net sales                                 $   602,689      $   545,040     $    450,426     $   374,637       $   320,228
     Gross income (2)                              217,522          192,581          158,189         122,908            93,325
     General, administrative and store
          operating expenses                       150,976          137,285          115,734          95,027            81,459
     Operating income                               66,546           55,296           42,455          27,881            11,866
     Net income                                     39,563           32,245           24,576          16,681             7,166
     Earnings per share-basic                  $      1.28      $      1.05     $       0.80     $      0.54       $      0.23
     Earnings per share-diluted                $      1.23      $      1.02     $       0.79     $      0.54       $      0.23

   Balance Sheet Data:
     Inventories                               $    44,537      $    45,715     $     34,656     $    27,565       $    18,661
     Total assets                                  265,577          209,111          178,593          90,769            73,514
     Total debt                                     50,000           50,000           50,000               -                 -
     Total shareholders' equity                    128,209           79,711           45,467          50,017            37,065

   Selected Operating Data:
     Comparable store sales increase(3)(6)               0%               4%               9%             15%               20%
     Total net sales growth                           10.6%            21.0%            20.2%           17.0%             24.7
     Gross income rate(4)                             36.1%            35.3%            35.1%           32.8%             29.1%
     Operating income rate  (4)                       11.0%            10.1%             9.4%            7.4%              3.7%
     Total number of stores open at
        year end                                       459(7)           406              352             319               312

     Total square feet at year end
        (thousands)                                  1,881(7)         1,669            1,441           1,281             1,244

     Annual sales per average square
        foot (5)                               $       336(7)   $       341     $        329     $       299       $       258
     Net cash provided by operating activities $    65,457      $    29,209     $     69,547     $    17,361       $    30,294
     Capital expenditures                      $    63,598      $    36,308     $     31,424     $    14,294       $     4,780
</TABLE>

(1)      Represents the 53-week fiscal year ended February 3, 2001.
(2)      Gross income equals net sales less costs of goods sold, buying and
         occupancy costs.
(3)      A store is included in our comparable store sales calculation once it
         has completed 52 weeks of operation. Further, stores that have changed
         more than 20% in square feet are treated as new stores for the purpose
         of this calculation.
(4)      Calculated as a percentage of net sales.
(5)      Annual sales per average square foot is the result of dividing net
         sales for the fiscal year by average gross square feet, which reflects
         the impact of opening and closing stores throughout the year.
(6)      Comparable store sales for fiscal 2000 are for the 52-weeks ended
         January 27, 2001.
(7)      Amount excludes the 7 mishmash stores.

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition
and results of operations in conjunction with our consolidated financial
statements and the related notes to those consolidated financial statements. For
the purposes of the following discussion, unless the context otherwise requires,
"Too, Inc.," "Too," "we," "our," "the Company" and "us" refer to Too, Inc. and
our subsidiaries.

GENERAL

Since our Spin-off from The Limited in August 1999, we have made solid progress
on several of our financial and strategic initiatives designed to improve our
financial performance and to build and strengthen our 360-degree brand. During
fiscal 2001, we have:

..    increased sales 11% to $602.7 million

..    increased net income 23% to $39.6 million or $1.23 per diluted share versus
     net income of $32.2 million or $1.02 per diluted share in fiscal 2000

..    mailed 21.7 million "catazines" which not only generated sales into its own
     channel, but served to drive sales to the stores

..    launched a brand new business, "mishmash," a lifestyle brand for young
     women fourteen through nineteen years of age

Additionally, we have nearly eliminated most support functions provided by The
Limited after the Spin-off that were covered by the Transitional Services and
Separation Agreements. This means that we are self-sufficient except for the
rent we pay The Limited for our home office and distribution services provided
by one of its subsidiaries. We are completing construction on our new
distribution center and home office facilities, which we expect to move into
during the first quarter 2002.

<PAGE>
RESULTS OF OPERATIONS

Our results of operations, expressed as a percentage of sales, follow:

<TABLE>
<CAPTION>
                                                  Fiscal Year Ended
                                      ------------------------------------------
                                       February 2,    February 3,    January 29,
                                         2002           2001(1)        2000
                                      -----------     ----------     -----------
<S>                                     <C>              <C>           <C>
Net sales                               100.0%            100.0%       100.0%
Costs of goods sold, buying and
   occupancy costs                       63.9              64.7         64.9
                                       ------           -------        -----
Gross income                             36.1              35.3         35.1
General, adminstrative and store
   operating expenses                    25.1              25.2         25.7
                                       ------           -------        -----
Operating income                         11.0              10.1          9.4
Interest expense, net                     0.1               0.3          0.3
                                       ------           -------        -----
Income before income taxes               10.9               9.9          9.1
Provision for income taxes                4.4               3.9          3.6
                                       ------           -------        -----
Net income                                6.6%              5.9%         5.5%
                                       ======           =======        =====
</TABLE>


(1) Represents the 53-week fiscal year ended February 3, 2001.

Net income increased 23% in fiscal 2001 to $39.6 million or $1.23 per diluted
share versus net income of $32.2 million or $1.02 per diluted share in fiscal
2000. An increase in gross income and a reduction, as a percent of sales, in
general, administrative and store operating expenses resulted in a 90 basis
point improvement in operating income for fiscal 2001.

<PAGE>

Financial Summary

Summarized annual financial data for the last three fiscal years is presented
below:

<TABLE>
<CAPTION>
                                                                         Fiscal Year Ended                       %         Change
                                                          -----------------------------------------------      -------------------
                                                          February 2,       February 3,       January 29,      2000-       1999-
                                                             2002            2001 (1)            2000          2001        2000
                                                          -----------       -----------       -----------      ------      -------
<S>                                                       <C>               <C>               <C>              <C>         <C>
Net sales (millions)                                        $  602.7         $   545.0         $   450.4        11  %         21 %
Comparable store sales increase (2) (3)                            0 %               4 %               9 %
Annual sales per average square foot (4)                    $    336(5)      $     341         $     329        (l) %          4 %
Sales per average store (thousands)                         $  1,374(5)      $   1,418         $   1,347        (3) %          5 %
Average store size at year end (square feet)                   4,098(5)          4,111             4,094         -  %          - %
Total square feet at year end (thousands)                      1,881(5)          1,669             1,441        13  %         16 %
Number of Limited Too stores:
   Beginning of year                                             406               352               319
     Opened                                                       57                58                42
     Closed                                                       (4)               (4)               (9)
                                                          ----------        ----------        ----------
   End of year                                                   459               406               352
                                                          ==========        ==========        ==========

   mishmash                                                        7                 -                 -
                                                          ==========        ==========        ==========

   Stores remodeled                                                6                10                18

   Stores with "Girl Power" format                               216               156                89

   Percentage of stores in "Girl Power" forrnat                   47 %              38 %              25 %
</TABLE>

(1)  Represents the 53-week fiscal year ended February 3, 2001.
(2)  A store is included in our comparable store sales calculation once it has
     completed 52 weeks of operation. Further, stores that have changed more
     than 20% in square feet are treated as new stores for purposes of this
     calculation.
(3)  Comparable store sales for fiscal 2000 are for the 52-weeks ended January
     27, 2001.
(4)  Annual sales per average square foot is the result of dividing net sales
     for the fiscal year by average gross square feet, which reflects the impact
     of opening and closing stores throughout the year.
(5)  Amount excludes the 7 mishmash stores.

<PAGE>

FISCAL YEAR ENDED FEBRUARY 2, 2002 COMPARED TO FISCAL YEAR ENDED FEBRUARY 3,
2001

Net Sales - Net sales for 2001 increased 11% to $602.7 million from $545.0
million for 2000. The increase was primarily a result of the net addition of 53
Limited Too and 7 mishmash stores. Within merchandise categories, sales of cut
and sewn casual tops and Active apparel, led by Active bottoms and tees,
increased significantly. Also, the Add-on category (principally innerwear,
underwear, bras and swimwear) posted solid sales increases.

Gross Income - The gross income rate expressed as a percentage of net sales,
increased to 36.1% in fiscal 2001 from 35.3% for 2000. The increase in rate was
primarily attributable to a higher merchandise margin arising from improved
initial markups which were partially offset by an increase in markdowns. This
increase in merchandise margin was partially offset by an increase in buying and
occupancy costs, expressed as a percentage of net sales, due to increased store
occupancy costs and incremental catazine costs. The Company mailed approximately
21.7 million catazines in fiscal 2001 compared to 12.5 million in 2000.

General, Administrative and Store Operating Expenses - General, administrative
and store operating expenses, expressed as a percentage of net sales, decreased
to 25.1% from 25.2% for 2000. This decrease was primarily due to lower home
office expenses, expressed as a percentage of sales.

Operating Income - Operating income, expressed as a percentage of net sales,
increased to 11.0% for 2001 from 10.1% for 2000. The increase was attributable
to higher gross income and lower general, administrative and store operating
expenses, expressed as a percentage of sales.

Interest Expense, Net - Interest expense, net of interest income, amounted to
$583,000 in fiscal 2001 compared to $1.55 million in 2000. Interest expense was
for the term portion of borrowings under the Company's Credit Facility, while
interest income was earned on the short-term investment of cash balances.
Interest expense amounted to $3.8 million and $5.0 million for the fiscal years
2001 and 2000, respectively. The decrease in expense was due to lower interest
rates, as well as capitalization of interest on the construction of the
distribution center and home office. Interest expense also includes the
amortization of financing fees and related costs incurred in connection with the
Credit Facility.

Interest income amounted to $3.2 million and $3.5 million for the fiscal years
2001 and 2000, respectively. The decrease in interest income was due to lower
interest rates available on short-term securities.

Income Taxes - Income tax expense amounted to $26.4 million for 2001 compared to
$21.5 million for 2000. The annual effective tax rate remained unchanged at 40%
for fiscal 2001.

<PAGE>

FISCAL YEAR ENDED FEBRUARY 3, 2001 COMPARED TO FISCAL YEAR ENDED JANUARY 29,
2000

Net Sales - Net sales for 2000 increased 21% to $545.0 million from $450.4
million for 1999. The increase was primarily a result of a 4% increase in
comparable store sales and the net addition of 54 stores. Additionally, over 1%
of the increase was due to an increase in catazine and e-commerce sales. Net
sales productivity increased 4% to $341 per average square foot due in part to
the increase in the number of stores operating under the Girl Power format.

Within merchandise categories, sales of Active apparel increased significantly
led by Active bottoms and tees. Also, the entire Add-on category (principally
underwear, bras, sleepwear and swimwear) posted solid sales increases as did cut
and sewn knit tops.

Gross Income - The gross income rate expressed as a percentage of net sales,
increased to 35.3% in fiscal 2000 from 35.1% for 1999. The increase in rate was
primarily attributable to a higher merchandise margin arising from improved
initial markups which were partially offset by an increase in markdowns. This
increase in merchandise margin was partially offset by an increase, expressed as
a percentage of net sales, in buying and occupancy costs due to incremental
catazine costs. The Company mailed approximately 12.5 million catazines in
fiscal 2000 compared to 1.5 million in 1999.

General, Administrative and Store Operating Expenses - General, administrative
and store operating expenses, expressed as a percentage of net sales, decreased
to 25.2% from 25.7% for 1999. The leveraging of store expenses associated with a
4% increase in comparable store sales and lower home office expenses, expressed
as a percentage of sales, was partially offset by higher catazine and e-commerce
related costs.

Operating Income - Operating income, expressed as a percentage of net sales,
increased to 10.1% for 2000 from 9.4% for 1999. The increase was attributable to
higher gross income and lower general, administrative and store operating
expenses, expressed as a percentage of sales.

Interest Expense, Net - Interest expense, net of interest income, amounted to
$1.55 million in fiscal 2000 compared to $1.48 million in 1999. Interest expense
was for the term portion of borrowings under the Company's Credit Facility,
while interest income was earned on the short-term investment of cash balances.
Interest expense and interest income amounted to $5.04 million and $3.49
million, respectively for the year ended February 3, 2001 and $2.62 and $1.14
million, respectively, for the year ended January 29, 2000. Interest expense
also includes the amortization of financing fees and related costs incurred in
connection with the Credit Facility.

Income Taxes - Income tax expense amounted to $21.5 million for 2000 compared to
$16.4 million for 1999. The annual effective tax rate remained unchanged at 40%
for fiscal 2000.

<PAGE>

FINANCIAL CONDITION

Our balance sheet remains strong due to a substantial increase in operating
income and positive cash flow from operations. We were able to finance all
capital expenditures with working capital generated from operations and ended
the year with approximately $63.5 million in cash and equivalents. Our
debt-to-equity ratio decreased substantially to 39% at February 2, 2002, from
63% at February 3, 2001, as total debt (incurred in connection with the
Spin-off) remained unchanged while equity increased principally due to a 23%
increase in net income. A more detailed discussion of liquidity, capital
resources and capital requirements follows.

Liquidity and Capital Resources

Cash provided from operating activities provided the resources to support
operations, including projected growth, seasonal working capital requirements
and capital expenditures. A summary of the Company's working capital position
and capitalization follows (in thousands):

<TABLE>
<CAPTION>
                                                                      Fiscal Year Ended
                                                          -------------------------------------------
                                                          February 2,     February 3,     January 29,
                                                            2002            2001             2000
                                                          -----------   -------------     -----------
<S>                                                       <C>           <C>                <C>
Net cash provided by operating activities                  $  65,457      $  29,209        $  69,547

Working capital, including current portion long-
   term debt of $17,500 at February 2, 2002                   23,815         40,762           26,098
Capitalization:
   Long-term debt                                             32,500         50,000           50,000
   Shareholders equity                                       128,209         79,711           45,467
                                                          -----------   -------------     -----------
Total capitalization                                       $ 160,709      $ 129,711        $  95,467
                                                          ===========   =============     ===========

Additional amounts available under the revolving
   portion of the Credit Facility                          $  50,000      $  50,000        $  50,000
</TABLE>


In connection with the Spin-off, the Company entered into a $100-million Credit
Facility used to finance a $50-million dividend to The Limited as well as the
repayment of a portion of working capital advances made by The Limited prior to
the Spin-off. At February 2, 2002, February 3, 2001 and January 29, 2000 only
the $50-million five-year term portion of the Credit Facility was outstanding.

Operating Activities

Net cash provided by operating activities amounted to $65.5 million for fiscal
2001 versus $29.2 million for fiscal 2000. An increase in net income plus
depreciation and amortization, the timing of income taxes paid and a decreased
investment in inventory were the primary causes for the increase. Net cash
provided by operating activities decreased to $29.2 million for fiscal 2000
compared to $69.5 million for fiscal 1999. An increase in net income plus
depreciation and amortization was more than offset by the timing of cash
payments related to accounts payable and accrued expenses in fiscal 2000 and
1999.

<PAGE>

Investing Activities

Capital expenditures amounted to $63.6 million, $36.3 million and $31.4 million
for fiscal years 2001, 2000 and 1999, respectively. We expended approximately
$46 million and $10 million in connection with the construction of our new home
office and distribution center in fiscal years 2001 and 2000, respectively. The
balance of capital expenditures in fiscal 2001 was incurred primarily to
construct new stores and remodel existing stores as was the case for 2000 and
1999.

We anticipate spending between $45 million and $50 million in fiscal 2002 for
capital expenditures, of which $17 million to $20 million will be for new
stores, remodeling or expansion of existing stores and related fixtures and
equipment. We intend to add 210,000 to 220,000 square feet in 2002, which will
represent an 11% to 12% increase over year-end 2001. We anticipate that the
increase will result from opening approximately 50 to 55 new Limited Too stores
and expanding approximately ten stores identified for remodeling. Additionally,
we plan to open at least four new mishmash stores during fiscal 2002.

We estimate that the average cost for leasehold improvements, furniture and
fixtures for Limited Too stores to be opened in 2002 will be between $175,000
and $190,000 per store, after giving effect to landlord allowances. Average
pre-opening costs per store, which will be expensed as incurred, are expected to
approximate $10,000 while inventory purchases are expected to average
approximately $75,000 per store. We also anticipate capital expenditures between
$21 million and $24 million in fiscal 2002 principally related to the completion
of a new distribution center and home office scheduled for completion in the
first quarter of 2002.

We expect that substantially all capital expenditures in 2002 will be funded by
cash on hand and net cash provided by operating activities.

Financing Activities

Financing activities in 2001 and 2000 principally consisted of the issuance of
common shares related to restricted stock and stock options plans. Financing
activities in 1999 included an increase of $20.9 million in the net investment
by The Limited representing $32.9 million of working capital advances through
the date of the Spin-off, of which $12 million was repaid on August 13, 1999
with proceeds from the $100-million Credit Facility. Additionally, the Company
paid a $50-million cash dividend to The Limited with proceeds from the Credit
Facility on August 13, 1999. In connection with the Spin-off, the balance of the
net investment by The Limited was converted to common stock and paid in capital
based on the 30.7 million shares issued with a par value of $.01 per share. The
Company also paid off borrowings under the revolving portion of the $100-million
Credit Facility during the third quarter of 1999.

<PAGE>

Transitional Services and Separation Agreements

In connection with the Spin-off, the Company entered into several Transitional
Services and Separation Agreements (the "Transitional Services Agreements") with
The Limited that govern certain aspects of our ongoing relationship. We believe
that the terms of these agreements are similar to terms achievable through arm's
length negotiations with third parties.

A summary of some of the more significant Transitional Services Agreements
follows:

Trademark and Service Mark Licensing Agreement

We have entered into an exclusive trademark and service mark licensing agreement
(the "Trademark Agreement") with The Limited that will allow us to operate under
the "Limited Too" brand name. The agreement had an initial term of five years
after the Spin-off, renewable annually at our option. All licenses granted under
the agreement will be granted free of charge. In return, we will be required to
provide The Limited with the right to inspect our stores and distribution
facilities and an ability to review and approve our advertising. Under the
Trademark Agreement, we will only be able to use the brand name "Limited Too" in
connection with any business in which we sell to our current target customer
group or to infants and toddlers. In addition, we may not use the Limited Too
brand name or its derivative that competes with merchandise currently offered by
The Limited or its subsidiaries, unless it is for our current target customer
group. The Limited has the right to terminate the Trademark Agreement under
certain limited conditions.

Services Agreement

The Services Agreement relates to transitional services that The Limited or its
subsidiaries or affiliates provides or provided to us subsequent to the
Spin-off. Under this agreement, The Limited provides services in exchange for
fees which we believe are similar in material respects to what a third-party
provider would charge, and are based on several billing methodologies. Under one
of these billing methodologies, which is the most prevalent, The Limited
provides us with services at costs comparable to those charged to other
businesses operated by The Limited from time to time. We are generally obligated
to purchase those services at fees equal to The Limited's costs of providing the
services plus 5% of these costs. However, third-party cost components are not
subject to the 5% mark-on. Subsequent to fiscal 2000, the services that The
Limited provides to us principally relate to merchandise distribution covering
flow of goods from factory to store through the third anniversary of the
Spin-off.

Store Leases Agreement

At February 2, 2002, 83 of our stores were adjacent to The Limited's stores,
many of which are included in 107 stores subject to sublease agreements (the
"Store Leases Agreement") with The Limited for stores where we occupy space that
The Limited leases from third-party landlords (the "Direct Limited Leases").
Under the terms of the Store Leases Agreement, we are responsible for our
proportionate share, based on the size of our selling space, of all costs
(principally rent, excess rent, if applicable, maintenance and utilities).

All termination rights and other remedies under the Direct Limited Leases will
remain with The Limited. If The Limited decides to terminate any of the Direct
Limited Leases early, The Limited must first offer to assign such lease to us.
If, as a result of such early termination by The Limited, we are forced to
remodel our store or relocate within the mall, The Limited will compensate us
with a combination of cash payments and loans which

<PAGE>

will vary depending on the remaining term of the affected store lease at the
time the Limited closes its adjacent store as follows:

                                           Cash           Loan
Remaining Lease Term                      Payment        Amount
--------------------------------          --------      --------

Less than one year                        $      -      $100,000
One to two years                            50,000       100,000
Three to four years                        100,000       100,000
Greater than four years                    100,000       150,000

Approximately 54 of the Direct Limited Leases of which we are a part are
scheduled to expire during 2006 or later. We may not assign or sublet our
interest in those premises, except to an affiliate, without The Limited's
consent. If The Limited intends to sublet or assign its portion of the leased
premises under any of the Direct Limited Leases to any non-affiliate, it will be
required to give us 60 days notice, and we will be allowed to terminate our
interest on that basis.

Approximately 51 of our direct leases are guaranteed by The Limited. Pursuant to
the Store Leases Agreement, we are required to make additional payments to The
Limited as consideration for the guarantees that The Limited provides under such
leases along with amounts for adjacent stores based on those locations achieving
certain performance targets.

Credit Facility

In August 1999, we entered into a five-year, $100-million collateralized Credit
Facility. The Credit Facility consists of a $50-million five-year term loan and
a $50-million, five-year revolving credit commitment. The Credit Facility's
interest rates, which reflect matrix pricing, are based on the London Interbank
Offered Rate or Prime plus a spread as defined in the agreement. The term loan
is interest only until the end of the third year at which time the amortization
of the outstanding principal balance will begin. The Credit Facility contains
customary representations and warranties as well as certain affirmative,
negative and financial covenants.

In November 2001, the Company amended the Credit Facility. The amendment allows
for the investment of cash in short-term, AAA-rated municipal bonds, as well as
less stringent limitations on 2001 capital expenditures and on indebtedness
incurred in relation to lease agreements.

At year-end, the entire amount of the $50-million revolving credit commitment
was available to fund working capital requirements and for general corporate
purposes.

Impact of Inflation

Our results of operations and financial condition are presented based upon
historical cost. While it is difficult to accurately measure the impact of
inflation due to the imprecise nature of the estimates required, we believe that
the effects of inflation, if any, on our results of operations and financial
condition have been minor.

<PAGE>

Critical Accounting Policies

As described in Note 2 to the Consolidated Financial Statements, inventories are
valued at the lower of average cost or market, on a first-in, first-out basis,
utilizing the retail method. Under the retail method, the valuation of
inventories at cost and the resulting gross margins are calculated by applying a
calculated cost-to-retail ratio to the retail value of inventories. The retail
method is an averaging method that has been widely used in the retail industry
due to its practicality. Also, it is recognized that the use of the retail
method will result in valuing inventories at lower of cost or market if
markdowns are currently taken as a reduction of the retail value of inventories.

Inherent in the retail method are certain significant management judgments and
estimates including, among others, initial merchandise markup, markdowns and
shrinkage, which significantly impact the ending inventory valuation at cost as
well as the resulting gross margins. The Company calculates inventory valuations
on an individual item-class basis to ensure a high degree of accuracy in
estimating the cost. Management regularly reviews inventories for slow-moving
items and records markdowns and reserves to properly state inventory valuations
at the lower of cost or market.

Property and equipment are stated at cost, net of accumulated depreciation and
amortization. As described in Note 2 to the Consolidated Financial Statements,
service lives are established for store assets ranging from 5 to 10 years for
building improvements and 3 to 10 years for other property and equipment. Assets
are reviewed on an annual basis for impairment, and based on management's
judgment, are written down to the estimated fair value based on anticipated
future cash flows. No impairment charges have been recorded based on
management's review.

Recently Issued Accounting Standards

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

Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations," will be effective in the first quarter of 2003.
The standard requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes the corresponding
estimated retirement cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement.
Because costs associated with exiting leased properties at the end of the lease
terms are minimal, the Company believes that when the statement is adopted, it
will not have a significant effect on the Company's results of operations or its
financial position.

In October 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
supercedes SFAS 121 and applies to all long-lived assets (including discontinued
operations) and consequently amends Accounting Principles Board Opinion No. 30
(APB 30), "Reporting Results of Operations Reporting the Effects of Disposal of
a Segment of a Business." SFAS 144 develops one accounting model (based on the
model in SFAS 121) for long-lived assets

<PAGE>

that are to be disposed of by sale. This model requires that long-lived assets
that are to be disposed of by sale be measured at the lower of book value or
fair value less cost to sell. Additionally, SFAS 144 expands the scope of
discontinued operations to include all components of an entity with operations
that (1) can be distinguished from the rest of the entity and (2) will be
eliminated from the ongoing operations of the entity in a disposal transaction.
SFAS 144 is effective for the Company's first quarter in fiscal 2002. The
Company is currently evaluating the impact of adopting SFAS 144 but the
Company's management does not expect the adoption of SFAS 144 to have a
significant impact on the results of operations, cash flows or the financial
position of the Company.

<PAGE>

SEASONALITY AND QUARTERLY FLUCTUATIONS

As illustrated in the table below, our business is highly seasonal, with
significantly higher sales, gross income and net income realized during the
fourth quarter, which includes the holiday selling season.

(In thousands except percentages)


2001 Quarters              First          Second         Third          Fourth
-------------            ----------     ----------     ----------    -----------

Net sales                $136,657       $125,468       $148,763      $ 191,801
   % of full year            22.7 %         20.8 %         24.7 %         31.8 %
Gross income             $ 44,963       $ 40,974       $ 51,382      $  80,203
   % of full year            20.7 %         18.8 %         23.6 %         36.9 %
Net income               $  3,815       $  2,877       $  8,040      $  24,831
   % of full year             9.6 %          7.3 %         20.3 %         62.8 %

2000 Quarters (1)
-----------------

Net sales                $118,753       $108,315       $133,829      $ 184,143
   % of full year            21.8 %         19.9 %         24.5 %         33.8 %
Gross income             $ 39,472       $ 34,731       $ 45,257      $  73,121
   % of full year            20.5 %         18.0 %         23.5 %         38.0 %
Net income               $  3,142       $  1,921       $  6,378      $  20,804
   % of full year             9.7 %          6.0 %         19.8 %         64.5 %

1999 Quarters
-------------

Net sales                $ 94,598       $ 86,365       $114,236      $ 155,227
   % of full year            21.0 %         19.2 %         25.4 %         34.4 %
Gross income             $ 31,274       $ 28,107       $ 37,756      $  61,052
   % of full year            19.8 %         17.8 %         23.9 %         38.5 %
Net income               $  1,622       $  1,004       $  4,740      $  17,210
   % of full year             6.6 %          4.1 %         19.3 %         70.0 %

(1) The fourth quarter of fiscal year 2000 represents the 14-week period ended
February 3, 2001.

<PAGE>

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

The Company cautions that any forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) contained in
Management's Discussion and Analysis or made by management of the Company
involve risks and uncertainties and are subject to change based on various
important factors, many of which may be beyond the Company's control.
Forward-looking statements are indicated by words such as "anticipate,"
"estimate," "expect," "intend," "risk," "could," "may," "will," "pro forma,"
"likely," "possible," "potential," and similar words and phrases and the
negative forms and variations of these words and phrases, and include statements
in this Management's Discussion and Analysis relating to anticipated capital
expenditures in 2002 for new stores and the remodeling or expansion of existing
stores, the completion of a new distribution center and home office, and the
related funding. The following factors, among others, in some cases have
affected, and in the future could affect, the Company's financial performance
and actual results and could cause future performance and financial results to
differ materially from those expressed or implied in any forward-looking
statements included in this Management's Discussion and Analysis or otherwise
made by management: changes in consumer spending patterns, consumer preferences
and overall economic conditions; the impact of competition and pricing; changes
in weather patterns; currency and exchange risks; changes in existing or
potential trade restrictions, duties, tariffs or quotas; changes in political or
financial stability; changes in postal rates and charges and paper and printing
costs; availability of suitable store locations at appropriate terms; ability to
develop new merchandise; ability to hire and train associates; and/or other risk
factors that may be described in the Risk Factors section of the Company's Form
10, filed August 18, 1999, as well as other filings with the Securities and
Exchange Commission. Future economic and industry trends that could potentially
impact revenue and profitability are difficult to predict. Therefore, there can
be no assurance that the forward-looking statements included herein will prove
to be accurate. In light of the significant uncertainties in the forward-looking
statements included herein, the inclusion of such information should not be
regarded a representation by the Company, or any other person, that the
objectives of the Company will be achieved. The forward-looking statements made
herein are based on information presently available to the management of the
Company. The Company assumes no obligation to publicly update or revise its
forward-looking statements even if experience or future changes make it clear
that any projected results expressed or implied therein will not be realized.

<PAGE>

                                    TOO, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                     (in thousands except per-share amounts)

<TABLE>
<CAPTION>
                                            2001           2000          1999
                                          --------       --------      --------
<S>                                       <C>            <C>           <C>
Net sales                                 $602,689       $545,040      $450,426
   Costs of goods sold, buying and
     occupancy costs                       385,167        352,459       292,237
                                          --------       --------      --------
Gross income                               217,522        192,581       158,189
   General, administrative and store
     operating expenses                    150,976        137,285       115,734
                                          --------       --------      --------
Operating income                            66,546         55,296        42,455
Interest expense, net                          583          1,551         1,479
                                          --------       --------      --------
Income before income taxes                  65,963         53,745        40,976
Provision for income taxes                  26,400         21,500        16,400
                                          --------       --------      --------
Net income                                $ 39,563       $ 32,245      $ 24,576
                                          ========       ========      ========

Net income per share:

   Basic                                  $   1.28       $   1.05      $   0.80
                                          ========       ========      ========

   Diluted                                $   1.23       $   1.02      $   0.79
                                          ========       ========      ========

Weighted average common shares:

   Basic                                    31,020         30,740        30,674
                                          ========       ========      ========

   Diluted                                  32,038         31,737        30,974
                                          ========       ========      ========
</TABLE>

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

<PAGE>

                                    TOO, INC.
                           CONSOLIDATED BALANCE SHEETS
                       (In thousands except share amounts)



<TABLE>
<CAPTION>
                                                                              February 2,        February 3,
                                                                                 2002                2001
                                                                              -----------        -----------
<S>                                                                           <C>                <C>
                     ASSETS

Current assets:
   Cash and equivalents                                                        $ 63,538            $ 54,788
   Receivables                                                                    2,547               2,422
   Inventories                                                                   44,537              45,715
   Store supplies                                                                10,357               9,050
   Deferred income taxes                                                              -               2,898
   Other                                                                          2,409               1,408
                                                                              ---------            --------
Total current assets                                                            123,388             116,281

Property and equipment, net                                                     126,415              81,184
Deferred income taxes                                                            14,786              10,321
Other assets                                                                        988               1,325
                                                                              ---------            --------

Total assets                                                                   $265,577            $209,111
                                                                              =========            ========

         LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Current portion long-term debt                                              $ 17,500            $     --
   Accounts payable                                                              23,341              24,213
   Accrued expenses                                                              39,036              37,703
   Income taxes payable                                                          19,696              13,603
                                                                              ---------            --------
Total current liabilities                                                        99,573              75,519

Long-term debt, less current portion                                             32,500              50,000

Other long-term liabilities                                                       5,295               3,881

Commitments and contingencies

                SHAREHOLDERS' EQUITY
Preferred stock, 50 million shares authorized                                         -                   -
Common stock, $.01 par value, 100 million shares authorized,
   31.3 million and 30.8 million shares issued and outstanding
   at February 2, 2002 and February 3, 2001, respectively                           313                 308
Paid in capital                                                                  35,338              26,408
Retained earnings                                                                92,558              52,995
                                                                              ---------            --------

Total shareholders' equity                                                      128,209              79,711
                                                                              ---------            --------

Total liabilities and shareholders' equity                                     $265,577            $209,111
                                                                              =========            ========
</TABLE>

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

<PAGE>

                                    TOO, INC.
                      CONSOLIDATED STATEMENTS OF CHANGES IN
                              SHAREHOLDERS' EQUITY
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                            Net
                                                                                         Investment                    Total
                                                      Common Shares            Paid in     by The        Retained   Shareholders'
                                                  ----------------------
                                                   Shares        Amount        Capital     Limited        Earnings      Equity
                                                  --------      --------      --------    ----------      --------   -------------
<S>                                               <C>           <C>           <C>         <C>             <C>        <C>
Balances, January 30, 1999                                                                 $ 50,017                   $ 50,017

Net income prior to Spin-off                                                                  3,826                      3,826
Cash dividend to The Limited                                                                (50,000)                   (50,000)
Distribution of Too, Inc. common stock
   by The Limited                                   30,674      $    307      $ 24,410      (24,717)                         -
Transfers from The Limited, net                                                              20,874                     20,874
Net income after Spin-off                                                                                  20,750       20,750
                                                  --------      --------      --------     --------      --------     --------

Balances, January 29, 2000                          30,674           307        24,410            -        20,750       45,467

Net income                                                                                                 32,245       32,245
Issuance of common stock under stock
   option and restricted stock plans                    85             1         1,100                                   1,101
Other, including tax benefit related to
   issuance of stock under stock option
   and restricted stock plans                                                      898                                     898
                                                  --------      --------      --------     --------      --------     --------

Balances, February 3, 2001                          30,759           308        26,408            -        52,995       79,711

Net income                                                                                                 39,563       39,563
Issuance of common stock under stock
   option and restricted stock plans                   582             5         6,371                                   6,376
Other, including tax benefit related to
   issuance of stock under stock option
   and restricted stock plans                                                    2,559                                   2,559
                                                  --------      --------      --------     --------      --------     --------

Balances, February 2, 2002                          31,341      $    313      $ 35,338     $      -      $ 92,558     $128,209
                                                  ========      ========      ========     ========      ========     ========
</TABLE>

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

<PAGE>

                                    TOO, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                          2001             2000          1999
                                                                                      ----------        ---------    ------------
<S>                                                                                  <C>               <C>          <C>
Cash flows from operating activities:

   Net income                                                                         $   39,563        $  32,245    $     24,576

Impact of other operating activities on cash flows:

   Depreciation and amortization                                                          17,950           16,536          13,804

   Changes in assets and liabilities:
     Inventories                                                                           1,178          (11,059)         (7,091)
     Accounts payable and accrued expenses                                                   536           (6,646)         40,075
     Income taxes                                                                          6,569           (2,319)            980
     Other assets                                                                         (1,753)          (1,386)         (2,999)
     Other liabilities                                                                     1,414            1,838             202
                                                                                      ----------        ---------    ------------

   Net cash provided by operating activities                                              65,457           29,209          69,547
                                                                                      ----------        ---------    ------------
Investing activities:

   Capital expenditures                                                                  (63,598)         (36,308)        (31,424)
                                                                                      ----------        ---------    ------------

   Net cash used for investing activities                                                (63,598)         (36,308)        (31,424)
                                                                                      ----------        ---------    ------------

Financing activities:

   Stock options, restricted stock and other equity changes                                6,891            1,903               -
   Net increase in investment by The Limited                                                   -                -          20,874
   Proceeds from borrowings under the credit facility                                          -                -          64,235
   Payment of dividend to The Limited                                                          -                -         (50,000)
   Repayment of borrowings under the credit facility                                           -                -         (14,235)
                                                                                      ----------        ---------    ------------

   Net cash provided by financing activities                                               6,891            1,903          20,874
                                                                                      ----------        ---------    ------------

   Net increase (decrease) in cash and equivalents                                         8,750           (5,196)         58,997

   Cash and equivalents, beginning of year                                                54,788           59,984             987
                                                                                      ----------        ---------    ------------
   Cash and equivalents, end of year                                                  $   63,538        $  54,788    $     59,984
                                                                                      ==========        =========    ============
</TABLE>


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


<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF FINANCIAL STATEMENT PRESENTATION

Too, Inc., (referred to herein as "Too" or the "Company") is the operator of two
specialty retailing businesses, Limited Too and mishmash. Limited Too sells
apparel, underwear, sleepwear, swimwear, footwear, lifestyle and personal care
products for fashion-aware, trend-setting young girls ages seven to fourteen
years. mishmash, launched by the Company in late September 2001, sells
cosmetics, sportswear, intimate apparel and footwear to young women ages
fourteen to nineteen. The assortment also includes accessories, jewelry, room
decor furnishings and lifestyle products. The accompanying consolidated
financial statements include the accounts of Too, Inc. and its subsidiaries and
reflect the Company's assets, liabilities, results of operations and cash flows
on a historical cost basis. The Company was established in 1987 and, prior to
the August 1999 Spin-off, was a wholly-owned subsidiary of The Limited, Inc.
("The Limited").

Effective August 23, 1999, The Limited distributed to its shareholders of record
as of August 11, 1999, all of its interest in Too on the basis of one share of
Too common stock for each seven shares of The Limited common stock (the
"Spin-off"). The Spin-off resulted in 30.7 million shares of Too common stock
outstanding as of August 23, 1999. As a result of the Spin-off, the Company
became an independent, separately traded, public company. In connection with the
Spin-off, Too and The Limited entered into certain agreements which are more
fully described in Note 8. From the time of the Spin-off until December 31, 2001
(the most recent date for which the Company has been provided beneficial
ownership information for the shareholder), the Company's largest shareholder
was also the largest shareholder of The Limited.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Too and all
subsidiaries which are more than 50% owned. All significant intercompany
balances and transactions have been eliminated in consolidation. The Company has
one reportable segment which includes all of its products.

Fiscal Year

The Company's fiscal year ends on the Saturday closest to January 31. Fiscal
years are designated in the financial statements and notes by the calendar year
in which the fiscal year commences. The results for fiscal years 2001 and 1999
represent the 52-week periods ended February 2, 2002 and January 29, 2000,
respectively, while the 2000 fiscal year represents the 53-week period ended
February 3, 2001.

Cash Equivalents

The Company considers short-term investments with original maturities of three
months or less to be cash equivalents.

<PAGE>

Inventories

Inventories are principally valued at the lower of average cost or market, on a
first-in, first-out basis, utilizing the retail method.

Store Supplies

The initial inventory of supplies for new stores including, but not limited to,
hangers, signage, security tags, packaging and point-of-sale supplies is
capitalized at the store opening date. In lieu of amortizing the initial
balance, subsequent shipments are expensed, except for new merchandise
presentation programs, which are capitalized. Store supply balances are
periodically reviewed and adjusted as appropriate for changes in supply levels
and costs.

Catalog and Advertising Costs

Catalog costs, principally catalog production and mailing costs, are amortized
over the expected revenue stream, which is generally three months from the date
that the catalogs are first mailed. All other advertising costs, including costs
associated with in-store photographs and direct mail campaigns, are expensed at
the time the promotion first appears in media or in the store. Advertising costs
amounted to $14.8 million, $8.4 million and $1.7 million for fiscal years 2001,
2000 and 1999, respectively.

Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization are
computed on a straight-line basis, using service lives ranging principally from
5 to 10 years for building improvements and 3 to 10 years for other property and
equipment. The cost of assets sold or retired and the related accumulated
depreciation or amortization are removed from the accounts, with any resulting
gain or loss included in net income. Interest costs associated with the
construction of certain long-term projects are capitalized. Maintenance and
repairs are charged to expense as incurred. Major renewals and betterments that
extend service lives are capitalized.

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that full recoverability is questionable. The store
assets are reviewed by district, in accordance with the method by which
management reviews store performance. Factors used in the valuation include, but
are not limited to, management's plans for future operations, recent operating
results and projected cash flows. Impaired assets are written down to estimated
fair value with fair value generally being determined based on discounted
expected future cash flows. No impairment charges have been recorded based on
management's review.

Income Taxes

The Company accounts for income taxes using the liability method. Under this
method, deferred tax assets and liabilities are recognized based on the
difference between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect in the years when
those temporary differences are expected to reverse. The effect on deferred
taxes of a change in tax rates is recognized in income in the period that
includes the enactment date.

<PAGE>

Prior to the Spin-off, the Company was included in The Limited's consolidated
federal and certain state income tax returns for income tax reporting purposes.
However, income taxes in the Company's consolidated financial statements were
calculated as if the Company had filed separate income tax returns for all
periods presented. In connection with the Spin-off, the Company entered into a
tax separation agreement with The Limited. The purpose of this agreement was to
reflect each party's rights and obligations relating to payment and refunds of
taxes attributable to periods up to and including the year of the Spin-off.

Revenue Recognition

Sales are recorded when the customer takes possession of merchandise -- that is,
the point of sale. Markdowns associated with the Frequent Buyer and "Too Bucks"
Programs are recognized upon redemption in conjunction with a qualifying
purchase. Catalog sales are recorded upon shipment to the customer. A reserve is
provided for projected merchandise returns based on prior experience.

In the fourth quarter 2000, the Company adopted Emerging Issues Task Force
(EITF) No. 00-10 "Accounting for Shipping and Handling Fees and Costs" which
changed its classification of shipping revenue. Amounts relating to shipping and
handling billed to customers in a sale transaction are now classified as
revenue. The Company considers related shipping and handling costs to be the
direct shipping charges associated with catalog and e-commerce sales. Such costs
are reflected in cost of goods sold, buying and occupancy costs. The Company
also changed the classification of employee discounts as a reduction of revenue.
Previously, shipping revenues and the related expenses and employee discounts
were included in SG&A. Prior periods' financial statements presented for
comparative purposes have been reclassified to comply with these new reporting
guidelines. These reclassifications had no impact on the results of operations,
cash flows or the financial position of the Company.

The Company adopted Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements" during the fourth quarter of 2000. SAB No.
101 provides the Securities and Exchange Commission's views in applying
generally accepted accounting principles to selected revenue recognition issues.
The adoption of SAB No. 101 did not have a material effect on the Company's
results of operations, cash flows or financial position.

Store Pre-opening Expenses

Pre-opening expenses related to new store openings are charged to operations as
incurred.

<PAGE>

Financial Instruments

The recorded values of financial instruments, including cash and cash
equivalents, receivables, the current portion of long-term debt and accounts
payable, approximate fair value due to their short maturity. The recorded value
of long-term debt approximates fair value as the interest rate on such debt was
reset near the end of fiscal 2001.

Stock-based Compensation

The Company accounts for stock options using Accounting Principle Board Opinion
No. 25 (APB 25) and has provided pro forma disclosures in accordance with
Statement of Financial Accounting Standards No. 123 (SFAS 123).

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution that could occur if stock options or
restricted stock were converted into common stock using the treasury stock
method.

Earnings per share, as presented in the Consolidated Statements of Income, for
periods prior to the Spin-off was calculated by dividing net income by the 30.7
million common shares issued in connection with the Spin-off as if these shares
were outstanding for such periods. A reconciliation of basic and diluted common
shares used in the determination of earnings per share follows (in thousands):

<TABLE>
<CAPTION>
                                                     2001            2000            1999
                                                  ---------       ---------        ---------
<S>                                               <C>             <C>              <C>
Net income                                        $  39,563       $  32,245        $  24,576
                                                  =========       =========        =========

Weighted average common shares - basic               31,020          30,740           30,674
Dilutive effect of stock options
   and restricted stock                               1,018             997              300
                                                  ---------       ---------        ---------
Weighted average common shares - diluted             32,038          31,737           30,974
                                                  =========       =========        =========
</TABLE>

Options to purchase 208,000, 174,200 and 9,000 common shares were not included
in the computation of net income per diluted share for the fiscal years ended
February 2, 2002, February 3, 2001 and January 29, 2000, respectively, as the
options' exercise prices were greater than the average market price of the
common shares for the reported periods.

<PAGE>

Use of Estimates in the Preparation of the Consolidated Financial Statements

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Because actual results may
differ from those estimates, the Company revises its estimates and assumptions
as new information becomes available.

Recently Issued Accounting Standards

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

Statement of Financial Accounting Standards ("SFAS") No. 143, "Accounting for
Asset Retirement Obligations," will be effective in the first quarter of 2003.
The standard requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred. When the
liability is initially recorded, the entity capitalizes the corresponding
estimated retirement cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful life of the
related asset. Upon settlement of the liability, an entity either settles the
obligation for its recorded amount or incurs a gain or loss upon settlement.
Because costs associated with exiting leased properties at the end of the lease
terms are minimal, the Company believes that when the statement is adopted, it
will not have a significant effect on the Company's results of operations or its
financial position.

In October 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144
supercedes SFAS 121 and applies to all long-lived assets (including discontinued
operations) and consequently amends Accounting Principles Board Opinion No. 30
(APB 30), "Reporting Results of Operations Reporting the Effects of Disposal of
a Segment of a Business." SFAS 144 develops one accounting model (based on the
model in SFAS 121) for long-lived assets that are to be disposed of by sale.
This model requires that long-lived assets that are to be disposed of by sale be
measured at the lower of book value or fair value less cost to sell.
Additionally, SFAS 144 expands the scope of discontinued operations to include
all components of an entity with operations that (1) can be distinguished from
the rest of the entity and (2) will be eliminated from the ongoing operations of
the entity in a disposal transaction. SFAS 144 is effective for the Company's
first quarter in fiscal 2002. The Company is currently evaluating the impact of
adopting SFAS 144 but the Company's management does not expect the adoption of
SFAS 144 to have a significant impact on the results of operations, cash flows
or the financial position of the Company.

Reclassifications

Certain reclassifications have been made to the prior years' financial
statements to conform to the classifications used in the current year.

<PAGE>

3. PROPERTY AND EQUIPMENT

Property and equipment, at cost, consisted of (in thousands):

                                           February 2,           February 3,
                                              2002                  2001
                                           -----------           -----------

Land                                        $   7,797             $   7,691
Furniture, fixtues and equipment              105,554                93,880
Leaseholds improvements                        45,408                42,528
Construction-in-progress                       49,069                 3,643
                                           -----------           -----------
   Total                                      207,828               147,742
Less: accumulated depreciation and
   amortization                               (81,413)              (66,558)
                                           -----------           -----------
Property and equipment, net                 $ 126,415             $  81,184
                                           ===========           ===========


4. LEASED FACILITIES AND COMMITMENTS

The Company operated stores under lease agreements expiring on various dates
through 2012. The initial terms of leases are generally 10 years. Annual store
rent is generally composed of a fixed minimum amount, plus contingent rent based
on a percentage of sales exceeding a stipulated amount. Many of the leases
provide for future rent escalations and renewal options. Most leases require the
Company to pay taxes, common area costs and certain other expenses.

At February 2, 2002, the Company operated 107 stores under sublease agreements
with The Limited. These sublease agreements require the Company to pay a
proportionate share, based on selling space, of all costs, principally rent,
maintenance, taxes and utilities. Pursuant to the sublease agreements, the
Company is required to pay contingent rent to The Limited if stores' sales
exceed a stipulated amount. The Limited also provides guarantees on 51 store
leases and assesses a fee based on stores' sales exceeding defined levels.

In addition, the Company leases certain equipment under operating lease
agreements that expire at various dates through 2006.

A summary of rent expense for the fiscal years 2001, 2000, and 1999 follows (in
thousands):

                                       2001           2000           1999
                                     --------       --------       --------

Fixed minimum                        $ 42,448       $ 36,881       $ 32,515
Contingent                              1,290          1,649          1,037
                                     --------       --------       --------
   Total store rent                    43,738         38,530         33,552
Equipment and other                     1,311          1,074          1,077
                                     --------       --------       --------
   Total rent expense                $ 45,049       $ 39,604       $ 34,629
                                     ========       ========       ========

<PAGE>

A summary of minimum rent commitments under noncancellable leases as of February
2, 2002 follows (in thousands):

2002                        $  48,463
2003                           48,289
2004                           46,618
2005                           41,633
2006                           34,610
Thereafter                     81,403


5. ACCRUED EXPENSES

Accrued expenses consisted of (in thousands):

                                                  February 2,       February 3,
                                                     2002              2001
                                                  -----------       -----------

Compensation, payroll taxes and benefits           $ 16,474          $ 16,057
Rent                                                  7,225             8,276
Deferred revenue                                      6,120             4,973
Taxes, other than income                              3,727             3,864
Other                                                 5,490             4,533
                                                  -----------       -----------
   Total                                           $ 39,036          $ 37,703
                                                  ===========       ===========

<PAGE>

6. CREDIT FACILITY

During August 1999, the Company entered into a $100-million, five-year credit
agreement (the "Credit Facility") with a syndicate of banks. The Credit Facility
is collateralized by virtually all assets of the Company and comprises a
$50-million, five-year term loan and a $50-million revolving loan commitment.
The entire amount of the term portion was drawn in order to fund a $50-million
dividend to The Limited.

The $50-million revolving loan commitment is available to fund working capital
requirements and for general corporate purposes. Interest on borrowings under
the Credit Facility is based on matrix pricing applied to either the London
Interbank Offered Rate or Prime, as defined in the agreement. Payments of
principal under the term loan are due at various dates from July 2002 to August
2004. A commitment fee based on matrix pricing is charged on the unused portion
of the revolving loan commitment. The commitment fee is up to 1/2 of 1% of the
unused revolving credit commitment per annum. Under the terms of the Credit
Facility, the Company is required to comply with certain financial ratios. The
Credit Facility limits the Company from incurring certain additional
indebtedness and restricts substantial asset sales, capital expenditures above
approved limits and cash dividends. The Company is in compliance with all
applicable terms of the Credit Facility. As of February 2, 2002, there were no
amounts outstanding under the revolving portion of the Credit Facility.

The aggregate amount of future maturities for long-term debt are as follows:
$17.5 million in 2002; $20.0 million in 2003; and $12.5 million in 2004.

Net interest expense consisted of the following (in thousands):



                                 2001           2000          1999
                               --------       --------      --------

Interest expense               $  3,787       $  5,044      $  2,622
Interest income                  (3,204)        (3,493)       (1,143)
                               --------       --------      --------
   Net interest expense        $    583       $  1,551      $  1,479
                               ========       ========      ========

Interest paid in fiscal 2001, 2000 and 1999 amounted to $3.0 million, $4.7
million and $2.1 million, respectively.

<PAGE>

7. INCOME TAXES

The provision for income taxes consisted of the following (in thousands):

                                2001             2000            1999
                              --------         --------        --------

Current:
   Federal                    $ 21,877         $ 19,534        $ 13,631
   State                         5,073            4,443           3,447
                              --------         --------        --------
   Total current                26,950           23,977          17,078
Deferred:
   Federal                        (626)          (2,347)           (621)
   State                            76             (130)            (57)
                              --------         --------        --------
   Total deferred                 (550)          (2,477)           (678)
                              --------         --------        --------
Total income tax provision    $ 26,400         $ 21,500        $ 16,400
                              ========         ========        ========

A reconciliation between the statutory federal income tax rate and the effective
income tax rate follows:

                                                  2001        2000        1999
                                                --------    --------    --------

Federal income tax rate                           35.0 %      35.0 %      35.0 %
State income taxes, net of federal benefit         4.5         4.5         4.5
Other items, net                                   0.5         0.5         0.5
                                                ------      ------      ------
Total effective income tax rate                   40.0 %      40.0 %      40.0 %
                                                ======      ======      ======

The effect of temporary differences which give rise to net deferred tax asset
balances was as follows (in thousands):

<TABLE>
<CAPTION>
                                                    February 2,              February 3,
                                                       2002                     2001
                                        ---------------------------------    -----------
                                          Assets    Liabilities    Total
                                        ----------  -----------   -------
<S>                                     <C>         <C>           <C>        <C>
Book depreciation in excess of tax      $    3,764   $      -     $ 3,764       $ 2,787
Rent                                         1,366          -       1,366         1,679
Inventory                                    1,495          -       1,495         1,149
Accrued expenses                             5,679          -       5,679         4,558
Store supplies - basis differential              -     (2,594)     (2,594)            -
Other, net                                   4,059          -       4,059         3,046
                                        ----------  ---------     -------    ----------
   Total deferred income taxes          $   16,363   $ (2,594)    $13,769       $13,219
                                        ==========  =========     =======    ==========
</TABLE>

No valuation allowance has been provided for deferred tax assets because
management believes that it is more likely than not that the full amount of the
net deferred tax assets will be realized in the future.

<PAGE>

Income taxes payable included net current deferred tax liabilities of $1.0
million in fiscal year 2001.

Subsequent to the Spin-off, the Company began filing its tax returns on a
separate basis. Prior to the Spin-off, income tax obligations were treated as
being settled through the intercompany accounts as if the Company was filing its
income tax returns on a separate company basis. Amounts paid to The Limited
related to income tax liabilities incurred prior to the Spin-off totaled
$640,000, $8.5 million and $12.0 million in fiscal years 2001, 2000 and 1999,
respectively. Subsequent to the Spin-off, the Company made income tax payments
directly to taxing authorities amounting to $21.4 million, $16.1 million and
$2.7 million in fiscal years 2001, 2000 and 1999, respectively.

8. RELATED PARTY TRANSACTIONS

Prior to the Spin-off, the Company and The Limited entered into service
agreements for generally a term of up to one year with most of the agreements
having expired during fiscal 2000. The remaining service agreements are for the
continued use by the Company of its home office space and distribution services
covering flow of goods from factory to store. These agreements are for a term of
up to three years from the Spin-off date. Costs for these services are The
Limited's costs of providing the services plus 5% of these costs, excluding any
markup on third-party costs.

Significant merchandise purchases were made from Mast, a wholly-owned subsidiary
of The Limited. In fiscal year 2000 and 1999, merchandise purchases were also
made from Gryphon, an indirect subsidiary of The Limited. Mast is a contract
manufacturer and apparel importer while Gryphon was a developer of fragrance and
personal care products as well as a contract manufacturer. Prices are negotiated
on a competitive basis by merchants of Too with Mast, Gryphon and manufacturers.

The Company does not anticipate that costs to replace the remaining service
agreements with The Limited will have a material adverse impact on its financial
condition.

Prior to the Spin-off, transactions between the Company and The Limited and its
subsidiaries and affiliates primarily consisted of merchandise purchases,
capital expenditures, inbound and outbound shipping, store leasing, construction
and management, distribution center, information systems and certain other home
office and corporate services expenses. Management believes that the charges and
allocations related to the services as described above were reasonable. However,
these charges and allocations were not necessarily indicative of the amounts
that would have been recorded by Too on a stand-alone basis.

<PAGE>

The following table summarizes amounts incurred related to transactions between
Too and The Limited (in thousands):

<TABLE>
<CAPTION>
                                                                    2001         2000         1999
                                                                  --------     --------     --------
<S>                                                               <C>          <C>          <C>
Merchandise purchases                                             $ 67,441     $ 74,866     $ 71,235
Capital expenditures                                                     -        9,038       29,867
Inbound and outbound shipping                                        8,359        8,717        6,790
Store leasing construction and management                           19,144       34,799       58,471
Distribution center, MIS and home office expenses                    8,571       12,325       12,508
Corporate services and centrally managed functions                       -            -        8,723
                                                                  --------     --------     --------
                                                                  $103,515     $139,745     $187,594
                                                                  ========     ========     ========
</TABLE>

Amounts payable to the Limited were $8.0 million at February 2, 2002 and $13.2
million at February 3, 2001.

The following table summarizes activity in the net investment by The Limited
account for fiscal year 1999 (in thousands):

                                                                    1999
                                                                 ---------
Beginning balance                                                $  50,017
Transactions with related parties                                  107,197
Centralized cash management, dividends and transfers              (173,040)
Settlement of income taxes                                          12,000
Net income                                                           3,826
                                                                 ---------
Ending balance                                                   $       -
                                                                 ---------

9.  RETIREMENT BENEFITS

The Company sponsors a qualified defined contribution retirement plan and a
nonqualified supplemental retirement plan. Participation in the qualified plan
is available to all associates who have completed 1,000 or more hours of service
with the Company during certain 12-month periods and attained the age of 21.
Participation in the nonqualified plan is subject to service and compensation
requirements. The Company's contributions to these plans are based on a
percentage of the associates' eligible annual compensation. The cost of these
plans was $4.9 million, $4.2 million, and $2.9 million in fiscal years 2001,
2000 and 1999, respectively.

10. STOCK-BASED COMPENSATION

The Company has various stock option and restricted stock plans which provide
incentive stock options, non-qualified stock options and restricted stock to
officers and key associates. Stock options are granted at the fair market value
of the Company's common shares on the date of grant and generally have 10-year
terms. The options generally become exercisable in installments of 25% on each
of the first four anniversaries of the grant date.

<PAGE>

Prior to the Spin-off, certain associates of the Company participated in The
Limited's stock option and restricted stock plans. In connection with the
Spin-off, Too associates were allowed to exercise vested Limited options within
90 days of the Spin-off date. All unvested Limited stock options and restricted
shares held by Too associates were replaced with Too stock options and
restricted shares (collectively, the "awards"). The awards have the same ratio
of the exercise price per option to the market value per share and the same
vesting provisions, option periods and other terms as The Limited's awards that
they replaced. The Company granted additional awards on the date of Spin-off to
certain associates and independent directors with exercise prices equal to the
market value of Too's common stock at the date of Spin-off.

Approximately 100,000 and 524,000 restricted shares were granted, respectively,
in 2000 and 1999 (inclusive of The Limited's restricted shares converted to Too
restricted shares in connection with the Spin-off) with total market value at
the grant date of $2.7 million and $8.9 million, respectively. All 100,000
restricted shares granted in 2000 and 399,000 of the restricted shares granted
in 1999 were subject to performance requirements all of which have been met.
Restricted shares generally vest on a graduated scale over four years. The
market value of restricted shares, as adjusted at the measurement date for
shares with performance requirements, is being amortized over the vesting
period. Compensation expense related to restricted shares amounted to $2.7
million, $4.3 million and $1.7 million for 2001, 2000 and 1999, respectively. No
restricted shares were granted in 2001.

A summary of changes in the Company's stock option plans for fiscal years 2001,
2000 and 1999 is presented below:

<TABLE>
<CAPTION>
                                                  2001                           2000                         1999
                                        ----------------------------  -----------------------------  -----------------------------
                                                         Weighted                       Weighted                       Weighted
                                         Number of    Average Option    Number of    Average Option   Number of     Average Option
                                            Shares     Price/Share       Shares       Price/Share       Shares       Price/Share
                                        ----------    --------------  -----------    --------------  ------------   --------------
<S>                                      <C>              <C>          <C>          <C>              <C>            <C>
Outstanding at beginning of year         2,336,200        $  14        1,897,400          $  11               -              -

   Granted and converted                   499,100        $  17          614,300          $  26       1,913,600          $  11

   Exercised                              (393,800)       $  10          (38,400)         $  10               -              -

   Canceled                                (36,500)       $  17         (137,100)         $  16         (16,200)         $   9
                                        ----------    ---------       ----------     ----------      ----------     ----------

Outstanding at end of year               2,405,000        $  16        2,336,200          $  14      $1,897,400          $  11
                                        ==========    =========       ==========     ==========      ==========     ==========

Options exercisable at end of year         662,000        $  15          514,200          $  11          25,300          $  10
                                        ==========    =========       ==========     ==========      ==========     ==========
</TABLE>

<PAGE>

The following table summarizes information about stock options outstanding at
February 2, 2002:


<TABLE>
<CAPTION>
                             Options Outstanding                  Options Exercisable
               ----------------------------------------------  --------------------------
                                 Weighted
                                 Average          Weighted                    Weighted
   Range of       Number        Remaining         Average        Number       Average
Exercise Price Outstanding   Contractual Life  Exercise Price  Exercisable Exercise Price
-------------- -----------   ----------------  --------------  ----------- --------------

<S>            <C>           <C>               <C>             <C>         <C>
$ 5 - $10         580,000          5.3              $ 7          140,200        $ 7
$l0 - $15         462,200          6.4              $11          259,700        $11
$15 - $20         784,000          8.3              $16          128,000        $17
$20 - $25          71,300          9.0              $23            9,100        $24
$25 - $32         507,500          8.3              $27          125,000        $27
               ----------    ----------------  --------------  ----------- --------------
                2,405,000          7.2              $16          662,000        $15
               ==========    ================  ==============  =========== ==============
</TABLE>

The weighted average fair value per-share of options granted is estimated using
the Black-Scholes option-pricing model and the following weighted average
assumptions for fiscal years 2001, 2000 and 1999, respectively: price volatility
of 40%, 45% and 35%, risk-free interest rate of 4.0%, 5.5% and 7.0%, and
expected life of 5.0, 5.5 and 5.2 years. Additionally, for fiscal years 2001,
2000 and 1999, no expected dividends are assumed and the forfeiture rate is 20%.

Shares reserved under the various plans amounted to 5.4 million as of February
2, 2002, and 3.8 million as of February 3, 2001 and January 29, 2000. The
weighted average fair value of options granted during fiscal years 2001, 2000
and 1999, respectively, was $6.99, $13.29 and $4.82.

Under APB 25, no compensation expense is recognized in the financial statements
for stock options. Had compensation expense been recognized for stock-based
compensation plans in accordance with the Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation," the Company would
have recorded net income of $37.7 million, $30.9 million and $24.0 million, and
diluted earnings per share of $1.18, $.97 and $.78, for fiscal years 2001, 2000
and 1999, respectively.

11. LEGAL MATTERS

There are various claims, lawsuits and pending actions against Too incident to
the operations of its business. It is the opinion of management that the
ultimate resolution of these matters will not have a material adverse effect on
Too's results of operations, cash flows or financial position.

<PAGE>

12. QUARTERLY FINANCIAL DATA (Unaudited, in thousands except per-share amounts)


2001                               First   Second    Third   Fourth
------------------------------   -------- -------- -------- --------
Net sales                        $136,657 $125,468 $148,763 $191,801
Gross income                       44,963   40,974   51,382   80,203
General, administrative and
   store operating expenses        38,516   35,720   37,968   38,772
Net income                          3,815    2,877    8,040   24,831
Earnings per share - basic       $   0.12 $   0.09 $   0.26 $   0.79
Earnings per share - diluted     $   0.12 $   0.09 $   0.25 $   0.77
Market price per share:
   - High                        $  21.53 $  27.40 $  29.10 $  30.23
   - Low                         $  15.27 $  18.43 $  18.00 $  23.00
   - Close                       $  19.04 $  23.20 $  27.35 $  27.16


2000 - (1)                         First   Second    Third   Fourth
------------------------------   -------- -------- -------- --------
Net sales                        $118,753 $108,315 $133,829 $184,143
Gross income                       39,472   34,731   45,257   73,121
General, administrative and
   store operating expenses        33,858   31,133   34,118   38,176
Net income                          3,142    1,921    6,378   20,804
Earnings per share - basic       $   0.10 $   0.06 $   0.21 $   0.68
Earnings per share - diluted     $   0.10 $   0.06 $   0.20 $   0.66
Market price per share:
   - High                        $  35.38 $  32.38 $  27.06 $  23.44
   - Low                         $  15.50 $  17.75 $  19.50 $  11.31
   - Close                       $  29.94 $  22.00 $  22.13 $  18.60




(1) In the fourth quarter 2000, the Company adopted Emerging Issues Task Force
(EITF) No. 00-10 "Accounting for Shipping and Handling Fees and Costs" which
changed its classification of shipping revenue. Amounts relating to shipping and
handling billed to customers in a sale transaction are now classified as
revenue. The Company considers related shipping and handling costs to be the
direct shipping charges associated with catalog and e-commerce sales. Such costs
are reflected in cost of goods sold, buying and occupancy costs. The Company
also changed the classification of employee discounts as a reduction of revenue.
Previously, shipping revenues and the related expenses and employee discounts
were included in SG&A. Prior periods' financial statements presented for
comparative purposes have been reclassified to comply with these new reporting
guidelines. These reclassifications had no impact on the results of operations,
cash flows or the financial position of the Company.

<PAGE>

Report of Management

We are responsible for the preparation and integrity of Too, Inc.'s financial
statements and other financial information presented in this Annual Report. The
financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America and include certain amounts
based upon our estimates and assumptions.

We maintain an internal control structure designed to provide reasonable
assurance that Too's assets are safeguarded against loss or unauthorized use and
to produce the records necessary for the preparation of the financial
information. There are limits inherent in all systems of internal control based
on the recognition that the costs of such systems should be related to the
benefits derived. We believe our system of controls provides the appropriate
balance.

The financial statements have been audited and reported on by our independent
accountants, PricewaterhouseCoopers LLP who were given free access to all
financial records and related data, including minutes of the meetings of the
Board of Directors and Committees of the Board.

The Audit Committee of the Board of Directors, which is comprised solely of
outside directors, provides oversight to our financial reporting process and our
control environment through periodic meetings with management and our
independent accountants.

Michael W. Rayden                           Kent A. Kleeberger
Chairman of the Board, President and        Executive Vice President - Chief
Chief Executive Officer                     Financial Officer, Logistics
Too, Inc.                                   and Systems, Secretary and Treasurer
                                            Too, Inc.

<PAGE>

                        Report of Independent Accountants

To the Board of Directors and Shareholders of Too, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of Too, Inc. and its
subsidiaries at February 2, 2002 and February 3, 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
February 2, 2002 in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP
Columbus, Ohio
February 20, 2002