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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended February 2, 2008
 
 o
    
    TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from
_________ to _________
 Commission File Number: 1-14987
 
 
  Delaware
    
    31-1333930(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 8323 Walton Parkway, New Albany, Ohio 43054
  614-775-3500
 
  
 Title of each class
    
    Name of each exchange on which registeredCommon Shares, $.01 par value
    
    New York Stock ExchangePreferred Stock Purchase Rights
    
    New York Stock Exchange
  
 þ o
 o þ
 þ o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TWEEN BRANDS, INC.
 TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    4Item 1A.
    
    Risk Factors
    
    
    9Item 1B.
    
    Unresolved Staff Comments
    
    
    15Item 2.
    
    Properties
    
    
    16Item 3.
    
    Legal Proceedings
    
    
    18Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    18PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    19Item 6.
    
    Selected Financial Data
    
    
    22Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    45Item 8.
    
    Financial Statements and Supplementary Data
    
    
    47Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    72Item 9A.
    
    Controls and Procedures
    
    
    73Item 9B.
    
    Other Information
    
    
    76PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    77Item 11.
    
    Executive Compensation
    
    
    77Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    77Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    77Item 14.
    
    Principal Accounting Fees and Services
    
    
    77PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    78SIGNATURES
    
    
    
    
    82EX-10.31EX-10.32Ex-23.1Ex-23.2Ex-24Ex-31.1Ex-31.2Ex-32.1Ex-32.2
  2




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PART I
 
 Item 1. Business.
 The Company
   Our History
    Our Girl
   4




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Limited Too Retail Operations
   
    
    apparel, such as jeans and other denim and woven bottoms; knit tops and tee shirts
displaying our brand name and other graphics; dresses and outerwear;
 
    
    accessories, such as jewelry, hair ornaments, hats, key chains, wallets, backpacks, purses,
and watches;
 
    
    footwear, such as slippers, sandals, flip-flops, boots and shoes;
 
    
    lifestyle products, such as electronics, music, games, toys and candy;
 
    
    girlcare products such as age-appropriate cosmetics and toiletries; and
 
    
    underwear, sleepwear and swimwear.
  Justice Retail Operations
   
    
    apparel, such as jeans and other pants, skirts, shorts, knit tops, graphic tee shirts,
dresses and outerwear
 
    
    accessories, such as bags, belts, hats, coin purses, backpacks, jewelry, hair ornaments,
and legwear;
 
    
    footwear, such as casual shoes, boots, flip flops and slippers;
 
    
    lifestyle products, such as bedroom furnishings, music, stationary, candy, party favors,
electronics and web based toys; and
 
    
    swimwear, underwear, bras and sleepwear.
  5




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Product Development
  Sourcing
    Distribution
  6




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Inventory Management
  Seasonality
  Stores
  Fiscal Year2007
    
    2006
    
    2005
    
    2004
    
    2003Number of stores:Beginning of year
    
    
    722
    
    
    
    666
    
    
    
    603
    
    
    
    558
    
    
    
    510Opened
    
    
    140
    
    
    
    79
    
    
    
    70
    
    
    
    55
    
    
    
    54Closed
    
    
    (20
    )
    
    
    (23
    )
    
    
    (7
    )
    
    
    (10
    )
    
    
    (6
    )End of year
    
    
    842
    
    
    
    722
    
    
    
    666
    
    
    
    603
    
    
    
    558Stores remodeled
    
    
    33
    
    
    
    34
    
    
    
    25
    
    
    
    20
    
    
    
    4Total square feet at period end
(thousands)
    
    
    3,510
    
    
    
    3,006
    
    
    
    2,777
    
    
    
    2,495
    
    
    
    2,307Average store size at period end
(gross square feet)
    
    
    4,169
    
    
    
    4,163
    
    
    
    4,170
    
    
    
    4,138
    
    
    
    4,134Number of Limited Too stores
    
    
    582
    
    
    
    563
    
    
    
    574
    
    
    
    568
    
    
    
    553Number of Justice stores
    
    
    260
    
    
    
    159
    
    
    
    92
    
    
    
    35
    
    
    
    5
  Trademarks and Service Marks
   7




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Competition
  Associate Relations
  Being Tween
  Be Focused must
 Be Driven
 Be Creative
 Be Ethical
 Be Balanced
  Available Information
  8




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Fiscal Year Definitions
  Number of weeksFiscal Year
    
    Period Ending
    
    in Fiscal Year2007
    
    February 2, 2008
    
    52 weeks2006
    
    February 3, 2007
    
    53 weeks2005
    
    January 28, 2006
    
    52 weeks2004
    
    January 29, 2005
    
    52 weeks2003
    
    January 31, 2004
    
    52 weeks
 
 Item 1A. Risk Factors.
   We may not be able to grow or maintain comparable store sales
  
    
    economic conditions;
 
    
    weather conditions;
 
    
    changing fashion trends;
 
    
    competition;
 
    
    new store openings in existing markets;
 
    
    store remodeling and expansions;
 
    
    customer response to our marketing programs;
 
    
    procurement and management of merchandise inventory; and
 
    
    development and growth of our Justice brand.
 9




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We must identify and respond to fashion and lifestyle trends and satisfy customer demands in order
to continue to succeed
  We may be unable to compete successfully in our highly competitive segment of the retail industry
   We depend on a high volume of mall and power center traffic to generate sales
  Expansion into new and existing markets creates challenges
  10




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Effectiveness of store remodels is unpredictable
  The market for prime real estate is competitive
  Our future success depends upon brand awareness and the effectiveness of our marketing programs
  Our licensed Limited Too and registered Justice brands are integral to our brand strategy
    
    
    we breach any of our obligations under the agreement and do not cure the breach within 60
days after receiving notice of the breach;
 
    
    we become bankrupt or insolvent; or
 
    
    we experience a change of control.
  11




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Talented personnel are critical to our success
  We may not be able to sustain a growth rate sufficient to implement our expansion strategy
  
    
    find suitable markets and sites for our stores and negotiate leases on acceptable terms for
those stores;
 
    
    fulfill our plans to open new stores and remodel or expand existing stores;
 
    
    continue to develop our sales channels, including our direct-to-consumer operations;
 
    
    identify suitable franchise operators for our international expansion initiative;
 
    
    expand our infrastructure to accommodate our growth, including maintaining high levels of
customer service;
 
    
    attract, train and retain qualified sales associates;
 
    
    manage our inventory effectively, maintain sufficient distribution capacity and deliver our
merchandise in a timely manner;
 
    
    keep up with constantly shifting fashion trends and develop new and appealing merchandise;
and
 
    
    maintain continued success for our Justice brand.
  There would be risks associated with launching and maintaining a new concept
  
    
    customer awareness and acceptance of the new brand and its products;
 
    
    competition, both external and internal;
 
    
    product and brand differentiation among our already-existing brands; and
 
    
    the ability to attract, develop and retain qualified personnel including management and
designers.
  12




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Our business fluctuates on a seasonal basis
   Our business is sensitive to macro-economic conditions and consumer spending patterns
  We rely on a single distribution center
  We rely on foreign sources of production
   
    
    political instability;
 
    
    currency and exchange risks;
 
    
    local business practice and political issues, including issues relating to compliance with
domestic or international labor standards;
 
    
    changes in trade restrictions, duties, tariffs or quotas;
 
    
    international health concerns;
 
    
    potential delays or disruptions in shipping and related pricing impacts; and
 
    
    inability to meet our quality standards.
 13




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We source merchandise through our internal sourcing offices in Asia
  We utilize ports to import our products from Asia
  We are pursuing a strategy of international expansion
  We will need to comply with existing and new laws and regulations that govern us
  We rely on our manufacturers to enforce ethical labor practices
  14




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We may be unable to service our debt
  We are implementing new information systems
   Our business may be harmed if our computer network security is compromised
  We may be a party to legal proceedings that could result in unexpected outcomes and have an adverse
effect on our financial condition or results of operations
  We may suffer negative publicity and our business may be harmed if we need to recall any products
we sell
  
 Item 1B. Unresolved Staff Comments.
  15




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Item 2. Properties.
     16




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Geographic Location
    
    Limited Too
    
    Justice
    
    TotalTexas
    
    
    47
    
    
    
    35
    
    
    
    82California
    
    
    54
    
    
    
    16
    
    
    
    70Florida
    
    
    43
    
    
    
    22
    
    
    
    65Pennsylvania
    
    
    37
    
    
    
    14
    
    
    
    51Illinois
    
    
    24
    
    
    
    15
    
    
    
    39New York
    
    
    30
    
    
    
    8
    
    
    
    38Ohio
    
    
    22
    
    
    
    15
    
    
    
    37New Jersey
    
    
    22
    
    
    
    11
    
    
    
    33Georgia
    
    
    21
    
    
    
    11
    
    
    
    32Michigan
    
    
    21
    
    
    
    11
    
    
    
    32Indiana
    
    
    15
    
    
    
    8
    
    
    
    23North Carolina
    
    
    15
    
    
    
    7
    
    
    
    22Virginia
    
    
    16
    
    
    
    6
    
    
    
    22Massachusetts
    
    
    14
    
    
    
    5
    
    
    
    19Tennessee
    
    
    13
    
    
    
    6
    
    
    
    19Missouri
    
    
    13
    
    
    
    5
    
    
    
    18Arizona
    
    
    9
    
    
    
    8
    
    
    
    17Maryland
    
    
    15
    
    
    
    2
    
    
    
    17Connecticut
    
    
    11
    
    
    
    5
    
    
    
    16Alabama
    
    
    10
    
    
    
    5
    
    
    
    15Colorado
    
    
    8
    
    
    
    6
    
    
    
    14Minnesota
    
    
    12
    
    
    
    2
    
    
    
    14Kentucky
    
    
    11
    
    
    
    2
    
    
    
    13Nevada
    
    
    5
    
    
    
    8
    
    
    
    13South Carolina
    
    
    10
    
    
    
    3
    
    
    
    13Washington
    
    
    8
    
    
    
    4
    
    
    
    12Louisiana
    
    
    9
    
    
    
    1
    
    
    
    10Utah
    
    
    5
    
    
    
    5
    
    
    
    10Wisconsin
    
    
    9
    
    
    
    1
    
    
    
    10Kansas
    
    
    5
    
    
    
    3
    
    
    
    8Mississippi
    
    
    5
    
    
    
    2
    
    
    
    7Oklahoma
    
    
    5
    
    
    
    1
    
    
    
    6Arkansas
    
    
    4
    
    
    
    1
    
    
    
    5Iowa
    
    
    4
    
    
    
    1
    
    
    
    5Nebraska
    
    
    3
    
    
    
    2
    
    
    
    5New Hampshire
    
    
    5
    
    
    
    
    
    
    
    5Oregon
    
    
    3
    
    
    
    2
    
    
    
    5Delaware
    
    
    4
    
    
    
    
    
    
    
    4Maine
    
    
    2
    
    
    
    1
    
    
    
    3West Virginia
    
    
    3
    
    
    
    
    
    
    
    3North Dakota
    
    
    2
    
    
    
    
    
    
    
    2New Mexico
    
    
    2
    
    
    
    
    
    
    
    2Rhode Island
    
    
    2
    
    
    
    
    
    
    
    2Idaho
    
    
    1
    
    
    
    
    
    
    
    1South Dakota
    
    
    1
    
    
    
    
    
    
    
    1Vermont
    
    
    1
    
    
    
    
    
    
    
    1Puerto Rico
    
    
    1
    
    
    
    
    
    
    
    1Total
    
    
    582
    
    
    
    260
    
    
    
    842
 17




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Item 3. Legal Proceedings.
     
 Item 4. Submission Of Matters To A Vote Of Security Holders.
  18




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PART II
 
 Item 5. Market For Registrants Common Equity, Related Stockholder Matters And Issuer Purchases Of
Equity Securities.
 (a)
    
    Tween Brands, Inc. shares are traded on the New York Stock Exchange under the trading symbol
TWB (formerly TOO). The following is a summary of the high, low and close sales prices of
our common stock as reported on the New York Stock Exchange for the 2007 and 2006 fiscal
years:
 Sales PriceHigh
    
    Low
    
    Close2007 Fiscal Year4th Quarter
    
    $
    32.92
    
    
    $
    22.75
    
    
    $
    32.923rd Quarter
    
    $
    43.28
    
    
    $
    27.17
    
    
    $
    27.892nd Quarter
    
    $
    49.00
    
    
    $
    37.17
    
    
    $
    37.611st Quarter
    
    $
    40.08
    
    
    $
    33.62
    
    
    $
    39.562006 Fiscal Year4th Quarter
    
    $
    44.53
    
    
    $
    33.00
    
    
    $
    34.863rd Quarter
    
    $
    41.59
    
    
    $
    31.05
    
    
    $
    41.462nd Quarter
    
    $
    43.34
    
    
    $
    34.91
    
    
    $
    36.671st Quarter
    
    $
    38.96
    
    
    $
    27.93
    
    
    $
    38.42
  Shareholder Return Graph
  
 19




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Total Return To Shareholders
 Annual Return PercentageFiscal Years EndingCompany/Index
    
    1/31/04
    
    1/29/05
    
    1/28/06
    
    2/3/07
    
    2/2/08Tween Brands, Inc
    
    
    (8.11
    )
    
    
    74.18
    
    
    
    7.32
    
    
    
    21.89
    
    
    
    (5.57
    )S&P SmallCap 600 Index
    
    
    47.86
    
    
    
    14.20
    
    
    
    21.10
    
    
    
    10.57
    
    
    
    (6.12
    )S&P Apparel Retail
    
    
    31.54
    
    
    
    19.69
    
    
    
    (7.04
    )
    
    
    18.56
    
    
    
    (2.61
    )
 Indexed ReturnsFiscal Years EndingBase PeriodCompany/Index
    
    2/1/03
    
    1/31/04
    
    1/29/05
    
    1/28/06
    
    2/3/07
    
    2/2/08Tween Brands, Inc
    
    
    100
    
    
    
    91.89
    
    
    
    160.06
    
    
    
    171.77
    
    
    
    209.37
    
    
    
    197.72S&P SmallCap 600 Index
    
    
    100
    
    
    
    147.86
    
    
    
    168.85
    
    
    
    204.47
    
    
    
    226.08
    
    
    
    212.26S&P Apparel Retail
    
    
    100
    
    
    
    131.54
    
    
    
    157.44
    
    
    
    146.36
    
    
    
    173.53
    
    
    
    169.00
 Summary of Share RepurchasesFiscal Years Ending (in millions)1/31/04
    
    1/29/05
    
    1/28/06
    
    2/3/07
    
    2/2/08$0.0
    
    $3.5
    
    $56.1
    
    $59.9
    
    $236.0
 (b)
    
    Not applicable. No sales of unregistered securities.(c)
    
    In November 2004, our Board of Directors authorized the repurchase of up to $125.0 million of
our common stock as a means of further enhancing shareholder value over a two year period
beginning November 18, 2004. Between November 18, 2004 and November 16, 2005 we repurchased
$59.6 million of common stock.In November 2005 our Board of Directors restored the amount available for share repurchases to
$125.0 million over a two year period beginning November 17, 2005. Between November 17, 2005
and August 20, 2006, we repurchased $40.0 million of common stock.In August 2006 our Board of Directors restored the amount available for share repurchases to
$125.0 million over a two year period beginning August 21, 2006. Between August 21, 2006 and
May 29, 2007, we repurchased $79.2 million of common stock.In May 2007, our Board of Directors reauthorized the stock repurchase program and increased the
amount available to $150.0 million over a two year period beginning May 29, 2007 (May 2007
Share Repurchase Program). Between May
29, 2007 and February 2, 2008, we repurchased $1.7 million of common stock, leaving $148.3
million remaining under the May 2007 Share Repurchase Program.In September 2007, our Board of Directors authorized the repurchase of up to $175.0 million of
our outstanding shares beginning September 13, 2007 (The September 2007 Share Repurchase
Program). The September 2007 Share Repurchase Program
supplemented the $148.3 million remaining
under the May 2007 Share Repurchase Program. On September 13, 2007, we entered into an
agreement to purchase $143.3 million of Tween Brands common stock as part of an accelerated
share repurchase (ASR) program and by the end of fiscal 2007 used the remainder of the $175.0
million authorization under the September 2007 Share Repurchase Program to repurchase $31.7
million of shares. From February 3, 2008 through the date of this filing, no shares of common
stock have been repurchased; however, in
 20




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the first fiscal quarter of 2008 we made our $5.9
million settlement payment as required under the terms of our ASR. The payment reduced the
authorization remaining under the May 2007 Share Repurchase Program to $142.4 million.
  MaximumTotal Number
    
    
    Dollar Valueof Shares
    
    
    of Shares thatPurchased as
    
    
    may yet beTotal Number
    
    
    Average
    
    
    Part of Publicly
    
    
    purchased underof Shares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    the PlansPeriod
    
    Purchased
    
    
    per Share
    
    
    or Programs
    
    
    or ProgramsNovember (November 4, 2007
through December 1,
2007)
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    $
    148,333,757December (December 2, 2007
through January 5, 2008)
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    $
    148,333,757January (January 6, 2008
through February 2,
2008)
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    $
    148,333,757Total
    
    
    0
    
    
    $
    0.00
    
    
    
    0
    
    
    $
    148,333,757
 21




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Item 6. Selected Financial Data.
  Fiscal Year2007
    
    2006 (1)
    
    2005
    
    2004
    
    2003 (2)Statement of Operations Data:Net sales (3)
    
    $
    1,013,971
    
    
    $
    883,683
    
    
    $
    757,936
    
    
    $
    675,834
    
    
    $
    598,681Gross income
    
    
    369,381
    
    
    
    333,968
    
    
    
    291,297
    
    
    
    241,887
    
    
    
    200,626Store operating, general and
administrative expenses
    
    
    285,059
    
    
    
    238,278
    
    
    
    208,338
    
    
    
    177,508
    
    
    
    154,275Operating income
    
    
    84,322
    
    
    
    95,690
    
    
    
    82,959
    
    
    
    64,379
    
    
    
    46,351Income from continuing operations
    
    
    52,574
    
    
    
    64,821
    
    
    
    54,451
    
    
    
    41,589
    
    
    
    29,114Net income (4)
    
    
    52,574
    
    
    
    64,821
    
    
    
    54,451
    
    
    
    41,589
    
    
    
    23,134Earnings per share  basic
    
    $
    1.84
    
    
    $
    1.99
    
    
    $
    1.62
    
    
    $
    1.21
    
    
    $
    0.85Earnings per share  diluted
    
    $
    1.81
    
    
    $
    1.95
    
    
    $
    1.60
    
    
    $
    1.19
    
    
    $
    0.84Balance Sheet Data:Cash and cash equivalents
    
    $
    46,009
    
    
    $
    48,394
    
    
    $
    22,248
    
    
    $
    26,212
    
    
    $
    4,991Inventories
    
    
    107,483
    
    
    
    91,742
    
    
    
    66,033
    
    
    
    62,441
    
    
    
    58,299Total assets
    
    
    611,637
    
    
    
    569,677
    
    
    
    523,730
    
    
    
    493,696
    
    
    
    441,253Total debt
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total shareholders equity
    
    
    194,999
    
    
    
    371,326
    
    
    
    350,783
    
    
    
    322,524
    
    
    
    276,565Selected Operating Data:Comparable store sales
increase/(decrease) (5) (6)
    
    
    4
    %
    
    
    6
    %
    
    
    5
    %
    
    
    4
    %
    
    
    (13
    )%Total net sales growth/(decline)
    
    
    14.7
    %
    
    
    16.6
    %
    
    
    12.1
    %
    
    
    12.9
    %
    
    
    (6.5
    )%Gross income rate (7)
    
    
    36.4
    %
    
    
    37.8
    %
    
    
    38.4
    %
    
    
    35.8
    %
    
    
    33.5
    %Operating income rate (7)
    
    
    8.3
    %
    
    
    10.8
    %
    
    
    10.9
    %
    
    
    9.5
    %
    
    
    7.7
    %Total number of stores open at
year end
    
    
    842
    
    
    
    722
    
    
    
    666
    
    
    
    603
    
    
    
    558Total gross square feet at year end
    
    
    3,510
    
    
    
    3,006
    
    
    
    2,777
    
    
    
    2,495
    
    
    
    2,307Annual net store sales per average
gross square foot (8)
    
    $
    296
    
    
    $
    299
    
    
    $
    284
    
    
    $
    272
    
    
    $
    268
 
 (1)
    
    Represents the 53-week fiscal year ended February 3, 2007.(2)
    
    Due to the discontinuation of mishmash in 2003, its results are excluded for all
periods presented.(3)
    
    Net sales includes: store sales, net of associate discounts; direct sales; shipping
revenue; international revenue and partner advertising revenue.(4)
    
    Includes the impact of the loss on discontinued operations of mishmash, net of tax, of
$6.0 million for fiscal 2003.(5)
    
    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 gross square feet
are treated as new stores for the purpose of this calculation.(6)
    
    Comparable store sales for fiscal 2006 are measured against a 53-week period ending
February 4, 2006. Comparable store sales for fiscal 2007 are measured against a 52-week
period ending February 3, 2007.(7)
    
    Calculated as a percentage of net sales.(8)
    
    Annual net store sales per average gross square foot is the result of dividing net
store sales for the fiscal year by the monthly average gross square feet, which reflects
the impact of opening and closing stores throughout the period. 22




---



##### Table of Contents



Item 7. Managements Discussion And Analysis of Financial Condition And Results of Operations.
  Executive Overview
 Sales Cross $1 Billion Mark
  Limited Too
 Webkinz TM Webkinz TM
 Kajeet® Nims Island TM © Dolphin Entertainment Roxy Hunter . Roxy Hunter Hannah Montana
  23




---



##### Table of Contents



Justice
  Webkinz TM Hannah Montana
  International Expansion
  24




---



##### Table of Contents



Restructuring
  Share Repurchase Programs
    Capital Investment and Resources
   25




---



##### Table of Contents



Home Office Expansion
  Results of Operations
 Financial Summary
  Financial Summary
  % ChangeFiscal Year
    
    
    2006-
    
    
    2005-2007
    
    
    2006 (1)
    
    
    2005
    
    
    2007
    
    
    2006Net sales (millions) (2)
    
    $
    1,014.0
    
    
    $
    883.7
    
    
    $
    757.9
    
    
    
    15
    %
    
    
    17
    %Comparable store sales (3)(4)
    
    
    4
    %
    
    
    6
    %
    
    
    5
    %Annual net store sales per average gross square
foot (5)
    
    $
    296
    
    
    $
    299
    
    
    $
    284
    
    
    
    -1
    %
    
    
    5
    %Net store sales per average store (thousands) (6)
    
    $
    1,229.0
    
    
    $
    1,246.1
    
    
    $
    1,181.2
    
    
    
    -1
    %
    
    
    5
    %Average store size at period end (gross square
feet)
    
    
    4,169
    
    
    
    4,163
    
    
    
    4,170
    
    
    
    0
    %
    
    
    0
    %Total gross square feet at period end (thousands)
    
    
    3,510
    
    
    
    3,006
    
    
    
    2,777
    
    
    
    17
    %
    
    
    8
    %Store inventory per gross square foot at period
end (7)
    
    $
    25.8
    
    
    $
    27.3
    
    
    $
    22.6
    
    
    
    -5
    %
    
    
    21
    %Store inventory per store at period end (7)
    
    $
    107,551
    
    
    $
    113,506
    
    
    $
    94,179
    
    
    
    -5
    %
    
    
    21
    %Number of stores:Beginning of period
    
    
    722
    
    
    
    666
    
    
    
    603Opened
    
    
    140
    
    
    
    79
    
    
    
    70Closed
    
    
    (20
    )
    
    
    (23
    )
    
    
    (7
    )End of period
    
    
    842
    
    
    
    722
    
    
    
    666Limited Too stores remodeled
    
    
    33
    
    
    
    34
    
    
    
    25Number of Limited Too stores
    
    
    582
    
    
    
    563
    
    
    
    574Number of Justice stores
    
    
    260
    
    
    
    159
    
    
    
    92
 
 (1)
    
    Represents the 53-week fiscal year ended February 3, 2007.(2)
    
    Net sales includes: store sales, net of associate discounts, direct sales, shipping revenue,
international revenue and partner advertising revenue.(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 gross square feet are
treated as new stores for purposes of this calculation.(4)
    
    Comparable store sales for fiscal 2006 are measured against a 53-week period ended February
4, 2006.(5)
    
    Annual net store sales per average gross square foot is the result of dividing net store
sales for the fiscal period by the monthly average gross square feet, which reflects the
impact of opening and closing stores throughout the period.(6)
    
    Net store sales per average store is the result of dividing net store sales for the fiscal
period by average store count, which reflects the impact of opening and closing stores
throughout the period.(7)
    
    Inventory value includes store and distribution center inventory net of estimated shrink. 26




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##### Table of Contents



Fiscal Year2007
    
    
    2006
    
    
    2005Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of goods sold, buying and
occupancy costs
    
    
    63.6
    
    
    
    62.2
    
    
    
    61.6Gross income
    
    
    36.4
    
    
    
    37.8
    
    
    
    38.4Store operating, general and
administrative expenses
    
    
    28.1
    
    
    
    27.0
    
    
    
    27.5Operating income
    
    
    8.3
    
    
    
    10.8
    
    
    
    10.9Interest (expense)/income, net
    
    
    (0.1
    )
    
    
    0.6
    
    
    
    0.3Earnings before income taxes
    
    
    8.2
    
    
    
    11.4
    
    
    
    11.2Provision for income taxes
    
    
    3.0
    
    
    
    4.1
    
    
    
    4.0Net income
    
    
    5.2
    %
    
    
    7.3
    %
    
    
    7.2
    %
 Net Sales
   % ChangeFiscal Year
    
    2006-
    
    2005-Limited Too and Justice:
    
    2007
    
    2006 (1)
    
    2005
    
    2007
    
    2006Average dollar value of units sold at retail
(AUR) (2)
    
    $
    12.47
    
    
    $
    13.07
    
    
    $
    12.97
    
    
    
    -5
    %
    
    
    1
    %Average number of units per transaction (UPT)
    
    
    4.20
    
    
    
    4.08
    
    
    
    3.94
    
    
    
    3
    %
    
    
    4
    %Average dollar sales value per transaction (ADS)
(3)
    
    $
    52.42
    
    
    $
    53.32
    
    
    $
    51.08
    
    
    
    -2
    %
    
    
    4
    %Number of transactions per average store (4)
    
    
    23,666
    
    
    
    23,184
    
    
    
    23,282
    
    
    
    2
    %
    
    
    0
    %Sales from transactions over $50 (% of total sales)
    
    
    75.3
    %
    
    
    77.5
    %
    
    
    73.2
    %
    
    
    -3
    %
    
    
    6
    %Transactions over $50 (% of total transactions)
    
    
    38.5
    %
    
    
    39.5
    %
    
    
    37.8
    %
    
    
    -3
    %
    
    
    4
    %
 
 (1)
    
    The above metrics for 2006 have been adjusted from the reported values in previous filings
due to the extra week in fiscal year 2006. The fiscal year of 2006 as reported began on
January 29, 2006 and ended February 3, 2007; the above numbers are from the fifty-two week
period beginning on February 5, 2006 and ending on February 3, 2007.(2)
    
    Average dollar value of unit sold at retail is the result of dividing gross store sales
dollars, store sales before associate discounts, for the period by the number of units sold
during the period.(3)
    
    Average dollar sales value per transaction is the result of dividing gross store sales
dollars for the period by the number of store transactions.(4)
    
    Number of transactions per average store is the result of dividing the total number of
transactions for the fiscal period by the average store count, which reflects the impact of
opening and closing stores throughout the period.  rd
 27




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##### Table of Contents



Gross Income
   2007
    
    
    2006
    
    
    Dollar ChangeGross Income
    
    $
    369,381
    
    
    $
    333,968
    
    
    $
    35,413Add Back: Buying & Occupancy Costs
    
    
    229,805
    
    
    
    197,145
    
    
    
    32,660Internal Gross Income
    
    $
    599,186
    
    
    $
    531,113
    
    
    $
    68,073
  2007 vs. 2006
    
    
    2007 vs. 2006Changes in:
    
    Dollar change
    
    
    Change in bpsInternal Gross Income
    
    $
    68,073
    
    
    
    (100
    )Sales Volume $78.3 million improvement
Internal Gross Income Rate $10.2 million declineBuying & Occupancy Costs
    
    
    (32,660
    )
    
    
    (40
    )Total Change
    
    $
    35,413
    
    
    
    (140
    )
    2006
    
    
    2005
    
    
    Dollar ChangeGross Income
    
    $
    333,968
    
    
    $
    291,297
    
    
    $
    42,671Add Back: Buying & Occupancy Costs
    
    
    197,145
    
    
    
    173,358
    
    
    
    23,787Internal Gross Income
    
    $
    531,113
    
    
    $
    464,655
    
    
    $
    66,458
 28




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##### Table of Contents



2006 vs. 2005
    
    
    2006 vs. 2005Changes in:
    
    Dollar change
    
    
    Change in bpsInternal Gross Income
    
    $
    66,458
    
    
    
    (120
    )Sales Volume $77.1 million improvement
Internal Gross Income Rate $10.6 million declineBuying & Occupancy Costs
    
    
    (23,787
    )
    
    
    60Total Change
    
    $
    42,671
    
    
    
    (60
    )
  Store Operating, General and Administrative Expenses
   2007 vs. 2006
    
    
    2007 vs. 2006Changes in:
    
    Dollar change
    
    
    Change in bpsStore operating expenses
    
    $
    22,039
    
    
    
    (10
    )Home Office
    
    
    10,841
    
    
    
    20Marketing
    
    
    6,084
    
    
    
    50Distribution center
    
    
    691
    
    
    
    Other
    
    
    7,126
    
    
    
    50Total Change
    
    $
    46,781
    
    
    
    110
  29




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##### Table of Contents



2006 vs. 2005
    
    
    2006 vs. 2005Changes in:
    
    Dollar change
    
    
    Change in bpsStore operating expenses
    
    $
    22,556
    
    
    
    Home Office
    
    
    11,710
    
    
    
    40Marketing
    
    
    (3,944
    )
    
    
    (80
    )Distribution center & other
    
    
    (382
    )
    
    
    (10
    )Total Change
    
    $
    29,940
    
    
    
    (50
    )
 Share-Based Payment
 Interest Expense/Income, Net
     Provision for Income Taxes
     30




---



##### Table of Contents



Our Outlook for the Future
       31




---



##### Table of Contents



Financial Condition and Liquidity
 Financial Condition
   Liquidity and Capital Resources
    February 2, 2008
    
    
    February 3, 2007
    
    
    January 28, 2006Working capital
    
    $
    141.0
    
    
    $
    172.8
    
    
    $
    185.1Capitalization:Long-term debt
    
    
    175.0
    
    
    
    
    
    
    
    Shareholders equity
    
    
    195.0
    
    
    
    371.3
    
    
    
    350.8Total capitalization
    
    $
    370.0
    
    
    $
    371.3
    
    
    $
    350.8Amounts available under the credit
facility
    
    $
    98.9
    
    
    $
    99.4
    
    
    $
    98.8Restricted assets
    
    $
    1.3
    
    
    $
    1.2
    
    
    $
    1.2
  Tween Brands, Inc.
    
    ApparelFebruary 2, 2008
    
    February 3, 2007
    
    Industry*
    
    S&P 500Current Ratio
    
    
    2.1
    
    
    
    2.6
    
    
    
    2.2
    
    
    
    0.9Debt/Equity Ratio
    
    
    0.9
    
    
    
    
    
    
    
    0.4
    
    
    
    1.2
 
 *
    
    Information reflects the latest apparel stores industry financial ratios found
on MSN© money 32




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##### Table of Contents



Net Change in Cash and Cash Equivalents
  Fiscal Year2007
    
    
    2006
    
    
    2005Net cash provided by operating activities
    
    $
    111.7
    
    
    $
    87.4
    
    
    $
    95.9Net cash used for investing activities
    
    $
    (57.2
    )
    
    $
    (16.6
    )
    
    $
    (58.1
    )Net cash used for financing activites
    
    $
    (56.9
    )
    
    $
    (44.7
    )
    
    $
    (41.7
    )Net (decrease)/increase in cash and cash
equivalents
    
    $
    (2
    )
    
    $
    26
    
    
    $
    (4
    )
 Operating Activities
   2007 vs 2006Changes in:
    
    increase/(decrease)Net income, net of non-cash expenses
    
    $
    (6.9
    )Income taxes
    
    
    (0.4
    )Inventory
    
    
    10.0Accounts payable and accrued expenses
    
    
    13.6Tenant allowances received
    
    
    12.9Other
    
    
    (4.9
    )Total change in cash flows from operating
activities
    
    $
    24.3
 33




---



##### Table of Contents



2006 vs 2005Changes in:
    
    increase/(decrease)Net income, net of non-cash expenses
    
    $
    13.5Income taxes
    
    
    1.1Inventory
    
    
    (22.1
    )Accounts payable and accrued expenses
    
    
    (1.9
    )Tenant allowances received
    
    
    2.1Other
    
    
    (1.2
    )Total change in cash flows from operating
activities
    
    $
    (8.5
    )
    34




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##### Table of Contents



Investing Activities
   2007 vs 2006Changes in:
    
    increase/(decrease)Investments
    
    $
    9.6Capital expenditures
    
    
    35.6Funding of nonqualified benefit plans
    
    
    (4.6
    )Total change in cash flows from investing activities
    
    $
    40.6
    2006 vs 2005Changes in:
    
    increase/(decrease)Investments
    
    $
    (62.3
    )Capital expenditures
    
    
    15.2Change in restricted assets
    
    
    (0.2
    )Funding of nonqualified benefit plans
    
    
    4.8Other
    
    
    1.0Total change in cash flows from investing activities
    
    $
    (41.5
    )
  35




---



##### Table of Contents



Financing Activities
   2007 vs 2006Changes in:
    
    increase/(decrease)Purchases of treasury stock
    
    $
    176.0Proceeds from issuance of long-term debt
    
    
    (175.0
    )Tax benefit from stock option exercises
    
    
    0.7Change in cash overdraft position
    
    
    4.6Stock options and other equity changes
    
    
    5.9Total change in cash flows from financing activities
    
    $
    12.2
    FY 2006 vs FY 2005Changes in:
    
    increase/(decrease)Purchases of treasury stock
    
    $
    3.8Tax benefit from stock option exercises
    
    
    (2.3
    )Change in cash overdraft position
    
    
    (5.0
    )Stock options and other equity changes
    
    
    6.5Total change in cash flows from financing activities
    
    $
    3.0
  Future Capital Expenditures
  Its a Girls World
 36




---



##### Table of Contents



Transitional Services and Separation Agreements
  Trademark and Service Mark Licensing Agreement
  Store Leases Agreement
   37




---



##### Table of Contents



Minimum
    
    
    OptionalCash
    
    
    LoanRemaining Lease Term
    
    Payment
    
    
    AmountLess than one year
    
    $
    
    
    
    $
    100,000One to two years
    
    
    50,000
    
    
    
    100,000Three to four years
    
    
    100,000
    
    
    
    100,000Greater than four years
    
    
    100,000
    
    
    
    150,000
   Off-Balance Sheet Arrangements
  Contractual Obligations and Commercial Commitments
  Contractual Obligations
 Payments Due by Fiscal PeriodTotal
    
    
    2008
    
    
    2009 & 2010
    
    
    2011 & 2012
    
    
    2013 & beyondOperating lease obligations
(1)
    
    $
    637,048
    
    
    $
    91,624
    
    
    $
    169,414
    
    
    $
    141,318
    
    
    $
    234,692Purchase obligations (2)
    
    
    108,889
    
    
    
    108,889
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt
    
    
    175,000
    
    
    
    8,750
    
    
    
    17,500
    
    
    
    148,750
    
    
    
    FIN 48 (3)
    
    
    5,743
    
    
    
    5,743
    
    
    
    
    
    
    
    
    
    
    
    Interest on long-term debt (4)
    
    
    33,169
    
    
    
    7,371
    
    
    
    13,636
    
    
    
    12,162
    
    
    
    Total (5)
    
    $
    959,849
    
    
    $
    222,377
    
    
    $
    200,550
    
    
    $
    302,230
    
    
    $
    234,692
 
 (1)
    
    Primarily consists of future minimum lease payments under our
store operating leases. The above commitments do not include
contingent rents or executory costs, such as common area maintenance,
real estate taxes and landlord charges.(2)
    
    Represents outstanding purchase orders for merchandise and store construction.(3)
    
    The future cash flows for income tax contingencies under FIN 48 of $9,977 is excluded from the table above because
a reasonable estimate for the time period of cash settlement could not be determined.(4)
    
    Represents the interest we are contractually obligated to pay under our long-term debt and does not include any
consideration for our interest rate swap agreement.(5)
    
    The Nonqualified Supplemental Retirement obligation of $21,290 is excluded from the table above because
a reasonable estimate for the time period of cash settlement could not be determined. 38




---



##### Table of Contents



Commercial Commitments:
 Commitments by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 YearsOutstanding letters of
credit (1)
    
    $
    1,144
    
    
    $
    1,144
    
    
    $
    
    
    
    $
    
    
    
    $
    Standby letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,144
    
    
    $
    1,144
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Consists of outstanding letter of credit commitments for the purchase of merchandise. Credit Facility
  Impact of Inflation
  Critical Accounting Policies
  Revenue Recognition
   39




---



##### Table of Contents



Accounting by a
Customer (Including a Reseller) for Certain Consideration Received from a Vendor.
 Gift Card Breakage
  Operating Leases
  Tenant Allowances
  Derivatives
 Accounting for Derivative Instruments and Hedging Activities.
 Cash Equivalents
  40




---



##### Table of Contents



Store Supplies
  Investments
    Restricted Assets
  Store Opening Costs
  Inventories, Net
   41




---



##### Table of Contents



Accounts Receivable, Net
  Property and Equipment, Net
    Catazine and Advertising Costs
  Advertising Barter Transactions
 Accounting for Advertising Barter Transactions.
 42




---



##### Table of Contents



Income Taxes
    Self-Insurance
  Recently Issued Accounting Standards
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be
Presented in the Income Statement (That is, Gross versus Net Presentation).
 Accounting for Uncertainty in
Income Taxes
 Fair Value Measurements.
 Accounting for
Purchases of Life Insurance  Determining the amount that could be realized in accordance with
FASB Technical Bulletin 85-4
 43




---



##### Table of Contents



The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an
amendment of FASB Statement No. 115
  Seasonality
  Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
  
    
    Ability to grow or maintain comparable store sales;
    
    Decline in the demand for our merchandise;
    
    Ability to develop new merchandise;
    
    The impact of competition and pricing;
 44




---



##### Table of Contents




    
    Level of mall and power center traffic;
    
    Effectiveness of expansion into new or existing markets;
    
    Effectiveness of store remodels;
    
    Availability of suitable store locations at appropriate terms;
    
    Effectiveness of our brand awareness and marketing programs;
    
    Ability to enforce our licenses and trademarks;
    
    Ability to hire and train associates;
    
    Ability to successfully launch a new brand;
    
    A significant change in the regulatory environment applicable to our business;
    
    Risks associated with our sourcing and logistics functions;
    
    Changes in existing or potential trade restrictions, duties, tariffs or quotas;
    
    Currency and exchange risks;
    
    Changes in consumer spending patterns, consumer preferences and overall economic conditions;
    
    The potential impact of health concerns relating to severe infectious diseases,
particularly on manufacturing operations of our vendors in Asia and elsewhere;
    
    The security of our computer network;
    
    Outcome of various legal proceedings;
    
    Impact of product recalls;
    
    Acts of terrorism in the U.S. or worldwide; and
    
    Other risks that may be described in Item 1A or elsewhere in this Form 10-K and other
reports and filings we make with the Securities and Exchange Commission.
  
 Item 7A. Quantitative And Qualitative Disclosures About Market Risk
   45




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##### Table of Contents



Interest Rate Sensitivity
  As of February 2, 2008Expected Maturity Date by Fiscal Year2008
    
    2009
    
    2010
    
    2011
    
    2012
    
    Thereafter
    
    Total
    
    Fair ValueLiabilitiesLong-term debt
    
    $
    8,750
    
    
    $
    8,750
    
    
    $
    8,750
    
    
    $
    8,750
    
    
    $
    140,000
    
    
    
    
    
    
    $
    175,000
    
    
    $
    175,000Average interest
rate
    
    
    3.3
    %
    
    
    2.8
    %
    
    
    3.1
    %
    
    
    3.1
    %
    
    
    2.1
    %
    
    
    Interest rate derivativesInterest rate swapsVariable to fixed
    
    $
    24,500
    
    
    $
    14,875
    
    
    $
    21,438
    
    
    $
    5,687
    
    
    $
    91,000
    
    
    
    
    
    
    $
    157,500
    
    
    $
    4,582Average receive
rate
    
    
    3.1
    %
    
    
    2.8
    %
    
    
    3.4
    %
    
    
    4.0
    %
    
    
    4.3
    %
    
    
    Average pay rate
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    
 46




---



##### Table of Contents



Item 8. Financial Statements And Supplementary Data.
 Index to Consolidated Financial Statements
 Reports of Independent Registered Public Accounting Firms
    
    
    48Consolidated Statements of Operations
    
    
    50Consolidated Balance Sheets
    
    
    51Consolidated Statements of Changes in Shareholders Equity
    
    
    52Consolidated Statements of Cash Flows
    
    
    53Notes to Consolidated Financial Statements
    
    
    54
 47




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     Share Based Payment
 Internal ControlIntegrated Framework
  
 48




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
    
 49




---



##### Table of Contents



TWEEN BRANDS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Fiscal Year2007
    
    
    2006
    
    
    2005Net sales
    
    $
    1,013,971
    
    
    $
    883,683
    
    
    $
    757,936Costs of goods sold, buying and
occupancy costs
    
    
    644,590
    
    
    
    549,715
    
    
    
    466,639Gross income
    
    
    369,381
    
    
    
    333,968
    
    
    
    291,297Store operating, general and
administrative expenses
    
    
    285,059
    
    
    
    238,278
    
    
    
    208,338Operating income
    
    
    84,322
    
    
    
    95,690
    
    
    
    82,959Interest (expense) income, net
    
    
    (1,665
    )
    
    
    5,138
    
    
    
    2,025Earnings before income taxes
    
    
    82,657
    
    
    
    100,828
    
    
    
    84,984Provision for income taxes
    
    
    30,083
    
    
    
    36,007
    
    
    
    30,533Net income
    
    $
    52,574
    
    
    $
    64,821
    
    
    $
    54,451Earnings per share:Basic
    
    $
    1.84
    
    
    $
    1.99
    
    
    $
    1.62Diluted
    
    $
    1.81
    
    
    $
    1.95
    
    
    $
    1.60Weighted average common shares:Basic
    
    
    28,548
    
    
    
    32,521
    
    
    
    33,603Diluted
    
    
    29,099
    
    
    
    33,198
    
    
    
    33,960
  50




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##### Table of Contents



TWEEN BRANDS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 February 2,
    
    
    February 3,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    46,009
    
    
    $
    48,394Investments
    
    
    70,215
    
    
    
    99,164Restricted assets
    
    
    1,295
    
    
    
    1,235Accounts receivable, net
    
    
    12,557
    
    
    
    13,878Inventories, net
    
    
    107,483
    
    
    
    91,742Store supplies
    
    
    16,949
    
    
    
    14,806Prepaid expenses and other current assets
    
    
    19,087
    
    
    
    15,236Total current assets
    
    
    273,595
    
    
    
    284,455Property and equipment, net
    
    
    301,405
    
    
    
    235,516Long-term investments
    
    
    
    
    
    
    17,054Deferred income taxes
    
    
    10,302
    
    
    
    8,166Assets held in trust and other
    
    
    26,335
    
    
    
    24,486Total assets
    
    $
    611,637
    
    
    $
    569,677LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    37,749
    
    
    $
    37,150Accrued expenses
    
    
    56,810
    
    
    
    38,849Deferred revenue
    
    
    16,077
    
    
    
    13,584Current portion long-term debt
    
    
    8,750
    
    
    
    Income taxes payable and unrecognized tax benefits
    
    
    11,909
    
    
    
    20,879Total current liabilities
    
    
    131,295
    
    
    
    110,462Long-term debt
    
    
    166,250
    
    
    
    Deferred tenant allowances from landlords
    
    
    66,377
    
    
    
    53,687Supplemental retirement and deferred compensation liability
    
    
    21,289
    
    
    
    20,362Accrued straight-line rent, unrecognized tax benefits and other
    
    
    31,427
    
    
    
    13,840Commitments and contingenciesShareholders equity:Preferred stock, $.01 par value, 50 million shares authorizedCommon stock, $.01 par value, 100 million shares authorized,
37.0 million and 36.6 million shares issued,
24.7 million and 32.1 million shares outstanding
at February 2, 2008 and February 3, 2007, respectively
    
    
    370
    
    
    
    366Treasury stock, at cost,12.3 million and 4.5 million shares
at February 2, 2008 and February 3, 2007, respectively
    
    
    (356,545
    )
    
    
    (120,554
    )Paid in capital
    
    
    185,893
    
    
    
    173,394Retained earnings
    
    
    368,108
    
    
    
    318,120Accumulated other comprehensive income
    
    
    (2,827
    )
    
    
    Total shareholders equity
    
    
    194,999
    
    
    
    371,326Total liabilities and shareholders equity
    
    $
    611,637
    
    
    $
    569,677
  51




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##### Table of Contents



TWEEN BRANDS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY
(in thousands)
 AccumulatedOther
    
    
    TotalCommon Stock
    
    
    Treasury Stock
    
    
    Paid in
    
    
    Retained
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    EquityJanuary 29, 2005
    
    
    34,701
    
    
    $
    349
    
    
    
    166
    
    
    $
    (4,391
    )
    
    $
    127,718
    
    
    $
    198,848
    
    
    $
    
    
    
    $
    322,524Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,451
    
    
    
    
    
    
    
    54,451Issuance of common stock under
stock option plans and accrued
restricted stock expense
    
    
    1,198
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    22,093
    
    
    
    
    
    
    
    
    
    
    
    22,105Purchases of treasury stock
    
    
    (2,555
    )
    
    
    
    
    
    
    2,555
    
    
    
    (56,204
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (56,204
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,907
    
    
    
    
    
    
    
    
    
    
    
    7,907January 28, 2006
    
    
    33,344
    
    
    $
    361
    
    
    
    2,721
    
    
    $
    (60,595
    )
    
    $
    157,718
    
    
    $
    253,299
    
    
    $
    
    
    
    $
    350,783Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,821
    
    
    
    
    
    
    
    64,821Issuance of common stock under
stock option plans and accrued
restricted stock expense
    
    
    515
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    17,143
    
    
    
    
    
    
    
    
    
    
    
    17,148Purchases of treasury stock
    
    
    (1,743
    )
    
    
    
    
    
    
    1,743
    
    
    
    (59,959
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59,959
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,467
    )
    
    
    
    
    
    
    
    
    
    
    (1,467
    )February 3, 2007
    
    
    32,116
    
    
    $
    366
    
    
    
    4,464
    
    
    $
    (120,554
    )
    
    $
    173,394
    
    
    $
    318,120
    
    
    $
    
    
    
    $
    371,326Adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,586
    )
    
    
    
    
    
    
    (2,586
    )February 4, 2007
    
    
    32,116
    
    
    $
    366
    
    
    
    4,464
    
    
    $
    (120,554
    )
    
    $
    173,394
    
    
    $
    315,534
    
    
    $
    
    
    
    $
    368,740Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,574
    
    
    
    
    
    
    
    52,574Effective portion of hedge
position, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,827
    )
    
    
    (2,827
    )Comprehensive Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    49,747Issuance of common stock under
stock option plans and accrued
restricted stock expense
    
    
    383
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    10,902
    
    
    
    
    
    
    
    
    
    
    
    10,906Purchases of treasury stock
    
    
    (7,825
    )
    
    
    
    
    
    
    7,825
    
    
    
    (235,991
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (235,991
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,597
    
    
    
    
    
    
    
    
    
    
    
    1,597February 2, 2008
    
    
    24,674
    
    
    $
    370
    
    
    
    12,289
    
    
    $
    (356,545
    )
    
    $
    185,893
    
    
    $
    368,108
    
    
    $
    (2,827
    )
    
    $
    194,999
  52




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##### Table of Contents



TWEEN BRANDS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Fiscal Year2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    52,574
    
    
    $
    64,821
    
    
    $
    54,451Impact of other operating activities on cash flows:Depreciation and amortization expense
    
    
    37,615
    
    
    
    31,229
    
    
    
    27,558Amortization of tenant allowances
    
    
    (9,670
    )
    
    
    (8,548
    )
    
    
    (7,959
    )Loss on disposal of fixed assets
    
    
    1,438
    
    
    
    1,344
    
    
    
    1,344Deferred income taxes
    
    
    4,916
    
    
    
    (2,471
    )
    
    
    (2,231
    )Tax benefit from stock option exercises
    
    
    (1,596
    )
    
    
    (2,283
    )
    
    
    Stock-based compensation expense
    
    
    7,745
    
    
    
    8,252
    
    
    
    4,993Changes in assets and liabilities:Inventories
    
    
    (15,741
    )
    
    
    (25,709
    )
    
    
    (3,592
    )Accounts payable and accrued expenses
    
    
    18,305
    
    
    
    4,725
    
    
    
    6,615Income taxes payable
    
    
    (2,706
    )
    
    
    5,644
    
    
    
    1,689Income taxes receivable
    
    
    
    
    
    
    
    
    
    
    368Other assets
    
    
    (6,864
    )
    
    
    (6,853
    )
    
    
    169Tenant allowances received
    
    
    24,341
    
    
    
    11,383
    
    
    
    9,247Other long-term liabilities
    
    
    1,381
    
    
    
    5,897
    
    
    
    3,206Net cash provided by operating activities
    
    $
    111,738
    
    
    $
    87,431
    
    
    $
    95,858Investing activities:Capital expenditures
    
    
    (101,647
    )
    
    
    (66,012
    )
    
    
    (50,807
    )Funding of nonqualified benefit plans
    
    
    (1,222
    )
    
    
    (5,838
    )
    
    
    (1,000
    )Purchase of investments
    
    
    (164,602
    )
    
    
    (395,888
    )
    
    
    (522,258
    )Sale of investments
    
    
    210,328
    
    
    
    451,154
    
    
    
    515,253Proceeds from sale of fixed assets
    
    
    
    
    
    
    26
    
    
    
    916Change in restricted assets
    
    
    (59
    )
    
    
    (43
    )
    
    
    (239
    )Net cash used for investing activities
    
    $
    (57,202
    )
    
    $
    (16,601
    )
    
    $
    (58,135
    )Financing activities:Purchases of treasury stock
    
    
    (235,991
    )
    
    
    (59,959
    )
    
    
    (56,204
    )Proceeds from issuance of long-term debt
    
    
    175,000
    
    
    
    
    
    
    
    Excess tax benefit from stock option exercises
    
    
    1,597
    
    
    
    2,283
    
    
    
    Change in cash overdraft
    
    
    (689
    )
    
    
    3,943
    
    
    
    (1,088
    )Stock options and other equity changes
    
    
    3,162
    
    
    
    9,049
    
    
    
    15,605Net cash used for financing activities
    
    
    (56,921
    )
    
    
    (44,684
    )
    
    
    (41,687
    )Net (decrease)/increase in cash and equivalents
    
    
    (2,385
    )
    
    
    26,146
    
    
    
    (3,964
    )Cash and cash equivalents, beginning of year
    
    
    48,394
    
    
    
    22,248
    
    
    
    26,212Cash and cash equivalents, end of year
    
    $
    46,009
    
    
    $
    48,394
    
    
    $
    22,248Supplemental disclosures of cash flow informationCash paid for income taxes
    
    $
    20,583
    
    
    $
    33,022
    
    
    $
    30,756Cash paid for interest
    
    $
    3,658
    
    
    $
    214
    
    
    $
    634Supplemental disclosures of non-cash items:Fixed asset additions in accounts payable
    
    $
    3,295
    
    
    $
    120
    
    
    $
    545Issuance of restricted stock
    
    $
    5,104
    
    
    $
    2,788
    
    
    $
    638
  53




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary Of Significant Accounting Policies
 Nature of Business
  Principles of Consolidation
  Disclosures about
Segments of an Enterprise and Related Information
 Fiscal Year
  Use of Estimates in the Preparation of the Consolidated Financial Statements
  Cash Equivalents
  54




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##### Table of Contents



Investments
  Restricted Assets
  Store Opening Costs
  Accounts Receivable, Net
  Inventories, Net
   Store Supplies
  Catazine and Advertising Costs
  55




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##### Table of Contents



Advertising Barter Transactions
 Accounting for Advertising Barter Transactions.
 Property and Equipment, Net
    Income Taxes
  Revenue Recognition
  56




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##### Table of Contents



Accounting by a
Customer (Including a Reseller) for Certain Consideration Received from a Vendor.
 Gift Card Breakage
  Costs of Goods Sold, Buying and Occupancy Costs
  
    
    Cost of merchandise
    
    Inventory shrink
    
    Freight (includes outbound freight from the distribution center to our stores, as well
as store-to-store transfers)
    
    Payroll and related costs associated with merchandise design and procurement, real
estate and store planning
    
    Store rents and other real estate costs (including store pre-opening rents expensed as
incurred)
    
    Store asset depreciation
    
    Amortization of tenant allowances
    
    Limited Too catazine production and mailing costs
 Operating Leases
  57




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##### Table of Contents



Derivatives
 Accounting for Derivative Instruments and Hedging Activities.
 Self-Insurance
  Store Operating, General and Administrative Expenses
  
    
    Store payroll and expenses
    
    Home office payroll and expenses (not related to design and merchandise procurement)
    
    Marketing, including television advertising and direct marketing costs
    
    Distribution center costs, including receiving and warehouse costs
  Share-Based Compensation
  58




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##### Table of Contents



Share-Based Payment Accounting for Stock Issued to Employees
  59




---



##### Table of Contents



Accounting for Stock-Based Compensation Accounting for Stock-Based Compensation  Transition and Disclosure
 Fiscal Year2005Net income, as reported
    
    $
    54,451Stock-based compensation expense recorded
under APB Opinion No. 25, net of tax
    
    
    3,071Stock-based compensation expense
determined under fair value based
method, net of tax
    
    
    (5,542
    )Pro forma net income
    
    $
    51,980Earnings per share:Basic  as reported
    
    $
    1.62Basic  pro forma
    
    $
    1.55Diluted  as reported
    
    $
    1.60Diluted  pro forma
    
    $
    1.53
  Fiscal Year2007
    
    2006
    
    2005Expected life (in years)
    
    
    5.3
    
    
    
    5.3
    
    
    
    5.3Dividend rate
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Price volatility
    
    
    44
    %
    
    
    47
    %
    
    
    48
    %Risk-free interest rate
    
    
    4.7
    %
    
    
    4.4
    %
    
    
    4.0
    %
  60




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##### Table of Contents



Weighted
    
    
    Weighted AverageAverage
    
    
    Remaining Contractual
    
    
    Aggregate IntrinsicNumber of Shares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    Value (in thousands)Fifty-Two weeks ended February 2, 2008:Outstanding, February 3, 2007
    
    
    1,620,849
    
    
    $
    25.57Granted
    
    
    274,757
    
    
    
    36.11Exercised
    
    
    (204,564
    )
    
    
    19.85Cancelled
    
    
    (78,667
    )
    
    
    34.46Outstanding, February 2, 2008
    
    
    1,612,375
    
    
    $
    27.65
    
    
    
    5.9
    
    
    $
    8,497Vested or expected to vest, February
2, 2008
    
    
    1,563,080
    
    
    $
    27.52
    
    
    
    5.8
    
    
    $
    8,441Exercisable, February 2, 2008
    
    
    1,008,919
    
    
    $
    25.14
    
    
    
    4.3
    
    
    $
    7,847
   Weighted Average GrantNumber of Shares
    
    
    Date Fair ValueOutstanding, beginning
of year
    
    
    588,158
    
    
    $
    28.28Granted
    
    
    178,953
    
    
    
    35.69Vested
    
    
    (203,002
    )
    
    
    25.32Cancelled
    
    
    (52,471
    )
    
    
    35.02Outstanding, end of year
    
    
    511,638
    
    
    $
    29.52
  Earnings Per Share
 Earnings per Share.
  Fiscal Year2007
    
    
    2006
    
    
    2005Net income as reported
    
    $
    52,574
    
    
    $
    64,821
    
    
    $
    54,451Weighted average common shares  basic
    
    
    28,548
    
    
    
    32,521
    
    
    
    33,603Dilutive effect of stock options and
restricted stock
    
    
    440
    
    
    
    677
    
    
    
    357Dilutive effect of accelerated share
repurchase
    
    
    111
    
    
    
    
    
    
    
    Weighted average common shares  diluted
    
    
    29,099
    
    
    
    33,198
    
    
    
    33,960
 61




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##### Table of Contents



Recently Issued Accounting Standards
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be
Presented in the Income Statement (That is, Gross versus Net Presentation).
 Accounting for Uncertainty in
Income Taxes
 Fair Value Measurements.
 Accounting for
Purchases of Life Insurance  Determining the amount that could be realized in accordance with
FASB Technical Bulletin 85-4
 The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an
amendment of FASB Statement No. 115
  62




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##### Table of Contents



2. Investments
   February 2, 2008
    
    
    February 3, 2007Maturity of
    
    
    Maturity ofLess than
    
    
    
    
    
    
    Less than1 Year
    
    
    1 to 5 Years
    
    
    1 Year
    
    
    1 to 5 YearsFair value
    
    $
    21,381
    
    
    $
    
    
    
    $
    14,308
    
    
    $
    16,982Gross unrecognized
holding gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross unrecognized
holding losses
    
    
    (61
    )
    
    
    
    
    
    
    32
    
    
    
    72Net carrying amount
    
    $
    21,320
    
    
    $
    
    
    
    $
    14,340
    
    
    $
    17,054
    February 2, 2008
    
    
    February 3, 2007Maturity of
    
    
    Maturity ofLess than 1 Year
    
    
    Less than 1 YearFair value
    
    $
    48,895
    
    
    $
    84,824Net gains in accumulated other comprehensive income
    
    
    
    
    
    
    Net losses in accumulated other comprehensive
income
    
    
    
    
    
    
    Net carrying amount
    
    $
    48,895
    
    
    $
    84,824
  63




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##### Table of Contents



3. Property And Equipment
  February 2,
    
    
    February 3,2008
    
    
    2007Land
    
    $
    16,424
    
    
    $
    14,963Buildings
    
    
    55,093
    
    
    
    43,836Furniture, fixtures and equipment
    
    
    248,371
    
    
    
    210,522Leaseholds improvements
    
    
    164,228
    
    
    
    134,238Construction-in-progress
    
    
    12,917
    
    
    
    10,680Total
    
    
    497,033
    
    
    
    414,239Less: accumulated depreciation
    
    
    (195,628
    )
    
    
    (178,723
    )Property and equipment, net
    
    $
    301,405
    
    
    $
    235,516
 4. Derivative Instruments
 Accounting
for Derivative Instruments and Hedging Activities.
   64




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5. Leased Facilities And Commitments
     Fiscal Year2007
    
    
    2006
    
    
    2005Fixed minimum
    
    $
    84,756
    
    
    $
    71,754
    
    
    $
    63,726Contingent
    
    
    3,310
    
    
    
    3,312
    
    
    
    2,357Amortization of tenant
allowances
    
    
    (9,670
    )
    
    
    (8,548
    )
    
    
    (7,959
    )Total store rent
    
    
    78,396
    
    
    
    66,518
    
    
    
    58,124Equipment and other
    
    
    5,482
    
    
    
    2,345
    
    
    
    2,595Total rent expense
    
    $
    83,878
    
    
    $
    68,863
    
    
    $
    60,719
  2008
    
    $
    91,6242009
    
    $
    88,5662010
    
    $
    80,8482011
    
    $
    73,7432012
    
    $
    67,575Thereafter
    
    $
    234,692
 65




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6. Accrued Expenses
  February 2,
    
    
    February 3,2008
    
    
    2007Compensation, payroll taxes and benefits
    
    $
    20,256
    
    
    $
    12,617Rent and store expenses
    
    
    18,972
    
    
    
    14,439Taxes, other than income and payroll
    
    
    6,109
    
    
    
    6,375Severance and restructuring
    
    
    4,661
    
    
    
    1,024Other
    
    
    6,812
    
    
    
    4,394Total
    
    $
    56,810
    
    
    $
    38,849
 7. Deferred Revenue
  February 2,
    
    
    February 3,2008
    
    
    2007Unearned revenue from sale of gift cards
and gift certificates
    
    $
    14,446
    
    
    $
    11,727Unearned catazine advertising revenue
    
    
    1,631
    
    
    
    1,857Total
    
    $
    16,077
    
    
    $
    13,584
 8. Credit Facility
  66




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Fiscal Year
    
    Annual Principal Payment2008
    
    $
    8,7502009
    
    $
    8,7502010
    
    $
    8,7502011
    
    $
    8,7502012
    
    $
    140,000
  9. Income Taxes
  Fiscal Year2007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    26,277
    
    
    $
    34,508
    
    
    $
    28,929State
    
    
    1,432
    
    
    
    3,636
    
    
    
    3,556Foreign
    
    
    938
    
    
    
    334
    
    
    
    279Total current
    
    
    28,647
    
    
    
    38,478
    
    
    
    32,764Deferred:Federal
    
    
    986
    
    
    
    (2,140
    )
    
    
    (1,244
    )State
    
    
    509
    
    
    
    (250
    )
    
    
    (971
    )Foreign
    
    
    (59
    )
    
    
    (81
    )
    
    
    (16
    )Total deferred
    
    
    1,436
    
    
    
    (2,471
    )
    
    
    (2,231
    )Total income tax provision
    
    $
    30,083
    
    
    $
    36,007
    
    
    $
    30,533
  67




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Fiscal Year2007
    
    2006
    
    2005Federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    3.7
    
    
    
    3.3
    
    
    
    3.1State tax settlements
    
    
    (2.2
    )
    
    
    (1.1
    )
    
    
    (1.1
    )Municipal interest income and other items, net
    
    
    (0.1
    )
    
    
    (1.5
    )
    
    
    (1.1
    )Total effective income tax rate
    
    
    36.4
    %
    
    
    35.7
    %
    
    
    35.9
    %
   February 2, 2008
    
    
    February 3, 2007Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    TotalProperty Related
    
    $
    
    
    
    $
    (17,453
    )
    
    $
    (17,453
    )
    
    $
    
    
    
    $
    (10,954
    )
    
    $
    (10,954
    )Rent
    
    
    6,885
    
    
    
    
    
    
    
    6,885
    
    
    
    5,343
    
    
    
    
    
    
    
    5,343Inventory
    
    
    3,546
    
    
    
    
    
    
    
    3,546
    
    
    
    1,977
    
    
    
    
    
    
    
    1,977Accrued expenses (current and
non-current)
    
    
    17,366
    
    
    
    
    
    
    
    17,366
    
    
    
    12,861
    
    
    
    
    
    
    
    12,861Store supplies  basis differential
    
    
    
    
    
    
    (6,254
    )
    
    
    (6,254
    )
    
    
    
    
    
    
    (5,410
    )
    
    
    (5,410
    )Other, net
    
    
    8,992
    
    
    
    
    
    
    
    8,992
    
    
    
    2,847
    
    
    
    
    
    
    
    2,847Total deferred income taxes
    
    $
    36,789
    
    
    $
    (23,707
    )
    
    $
    13,082
    
    
    $
    23,028
    
    
    $
    (16,364
    )
    
    $
    6,664
     68




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##### Table of Contents



Total UnrecognizedTax BenefitsBalance at February 4, 2007 date of adoption
    
    $
    12,623Additions for tax positions of prior years
    
    
    520Reductions for tax positions of prior years
    
    
    (2,180
    )Additions for tax positions of current year
    
    
    4,396Reductions for tax positions of current year
    
    
    Settlements with tax authorities
    
    
    (1,824
    )Reductions due to lapse of applicable statutes
of limitation
    
    
    (118
    )Balance at February 2, 2008
    
    $
    13,417
     10. Share Repurchase Program
  69




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11. Retirement Benefits
    Accounting for Deferred Compensation Arrangements Where Amounts
Earned Are Held in a Rabbi Trust
 70




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12. Restructuring
  13. Legal Matters
     71




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14. Quarterly Financial Data (unaudited, in thousands, except per share amounts)
 FY 2007
    
    First
    
    Second
    
    Third
    
    FourthNet sales
    
    $
    223,228
    
    
    $
    213,703
    
    
    $
    260,910
    
    
    $
    316,130Gross income
    
    
    84,558
    
    
    
    68,508
    
    
    
    93,926
    
    
    
    122,389Store operating, general and
administrative expenses
    
    
    66,530
    
    
    
    66,383
    
    
    
    72,699
    
    
    
    79,447Net income
    
    
    12,466
    
    
    
    2,107
    
    
    
    13,002
    
    
    
    24,999Earnings per share  basic
    
    $
    0.40
    
    
    $
    0.07
    
    
    $
    0.47
    
    
    $
    1.01Earnings per share  diluted
    
    $
    0.39
    
    
    $
    0.07
    
    
    $
    0.46
    
    
    $
    1.00
 FY 2006
    
    First
    
    Second
    
    Third
    
    Fourth(1)Net sales
    
    $
    195,136
    
    
    $
    185,801
    
    
    $
    230,481
    
    
    $
    272,264Gross income
    
    
    73,746
    
    
    
    62,822
    
    
    
    92,495
    
    
    
    104,906General, administrative and
store operating expenses
    
    
    56,299
    
    
    
    55,603
    
    
    
    62,999
    
    
    
    63,379Net income
    
    
    11,689
    
    
    
    5,912
    
    
    
    19,004
    
    
    
    28,215Earnings per share  basic
    
    $
    0.35
    
    
    $
    0.18
    
    
    $
    0.59
    
    
    $
    0.88Earnings per share  diluted
    
    $
    0.35
    
    
    $
    0.18
    
    
    $
    0.58
    
    
    $
    0.86(1) Includes 14 weeks
  
 Item 9. Changes In And Disagreements With Accountants On Accounting and Financial Disclosure.
  72




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Item 9A.
    
    Controls And Procedures.
 Disclosure Controls and Procedures:
   Managements Report of Internal Control over Financial Reporting
  i.
    
    Pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;ii.
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America, and that receipts and expenditures recorded by us
are being made only in accordance with authorizations of our management and board of
directors of the Company; andiii.
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the
financial statements.
 Internal Control  Integrated Framework,
  73




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Changes in Internal Control Over Financial Reporting:
  Inherent Limitations:
  74




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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING
 
 Internal
Control  Integrated Framework
    Internal Control
 Integrated Framework
 75




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##### Table of Contents



Share Based Payment
  
 
 Item 9B.
    
    Other Information.
  76




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##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance.
   
 Item 11.
    
    Executive Compensation.
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence.
  
 Item 14.
    
    Principal Accounting Fees And Services.
  77




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##### Table of Contents



PART IV
 
 Item 15.
    
    Exhibits, Financial Statement Schedules.
 List of Financial Statements
  
    
    Consolidated Statements of Operations for the fiscal years ended February 2, 2008,
February 3, 2007 and January 28, 2006.
    
    Consolidated Balance Sheets as of February 2, 2008 and February 3, 2007.
    
    Consolidated Statements of Changes in Shareholders Equity for the fiscal years ended
February 2, 2008, February 3, 2007 and January 28, 2006.
    
    Consolidated Statements of Cash Flows for the fiscal years ended February 2, 2008,
February 3, 2007 and January 28, 2006.
    
    Notes to Consolidated Financial Statements.
 List of Financial Statement Schedules.
  List of Exhibits.
 2.1
    
    Distribution Agreement dated as of August 23, 1999 between The Limited, Inc. and
Too, Inc. (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K
filed October 1, 1999).3.1
    
    Amended and Restated Certificate of Incorporation of Too, Inc. (incorporated by
reference to Exhibit 3.1 to the Current Report on Form 8-K filed October 1, 1999).3.2
    
    Amended and Restated Bylaws of Too, Inc. (incorporated by reference to Exhibit
3.2 to the Current Report on Form 8-K filed October 1, 1999).3.3
    
    Certificate of Designations of Series A Junior Participating Cumulative Preferred
Stock of Too, Inc. as filed with the Delaware Secretary of State on August 27, 2001
(incorporated by reference to Exhibit 4.1 to Registration Statement on Form 8-A filed
August 27, 2001).3.4
    
    Amended and Restated Certificate of Incorporation of Too, Inc. (now known as
Tween Brands, Inc.) (incorporated by reference to Exhibit 3.1 to the Quarterly Report on
Form 10-Q filed September 1, 2006).3.5
    
    Certificate of Ownership Merging Tween Brands, Inc. into Too, Inc., as filed with
the Delaware Secretary of State on July 7, 2006 (incorporated by reference to Exhibit
3.2 to the Quarterly Report on Form 10-Q filed September 1, 2006).4.1
    
    Specimen Certificate of Common Stock of Too, Inc. (incorporated by reference to
Exhibit 4.1 to the Current Report on Form 8-K filed October 1, 1999).4.2
    
    Rights Agreement, dated as of August 14, 2001, by and between the Company and
EquiServe Trust Company, N.A., as Rights Agent, and which includes as Exhibit A thereto
the form of
 78




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##### Table of Contents



Certificate of Designations of Series A Junior Participating Cumulative
Preferred Stock, as Exhibit B thereto the form of Right Certificate and as
Exhibit C thereto the Summary of Rights (incorporated by reference to Exhibit
4.1 to Registration Statement on Form 8-A filed August 27, 2001).
 4.3
    
    Agreement of Substitution and Amendment of Rights Agreement, dated as of November
11, 2003, to be effective as of October 20, 2003, between the Company and American Stock
Transfer & Trust Company, a New York banking corporation, as Rights Agent (incorporated
by reference to Exhibit 4.2 to Registration Statement on Form 8-A/A No.1 filed December
17, 2003).10.1
    
    Store Leases Agreement dated as of August 23, 1999 by and among The Limited
Stores, Inc., Victorias Secret Stores, Inc., Lerner New York, Inc., Express, LLC,
Structure, Inc., The Limited, Inc. and Too, Inc. (incorporated by reference to Exhibit
10.2 to the Current Report on Form 8-K filed October 1, 1999).10.2
    
    Trademark and Service Mark Licensing Agreement dated as of August 23, 1999
between Limco, Inc. and LimToo, Inc. (incorporated by reference to Exhibit 10.3 to the
Current Report on Form 8-K filed October 1, 1999).10.3
    
    Tax Separation Agreement dated August 23, 1999 between The Limited, Inc., on
behalf of itself and the members of The Limited Group, and Too, Inc., on behalf of
itself and the members of the Too Group. (incorporated by reference to Exhibit 10.5 to
the Current Report on Form 8-K filed October 1, 1999).10.4
    
    Too, Inc. Second Amended and Restated 1999 Stock Option and Performance Incentive
Plan (incorporated by reference to Exhibit 10.23 to the Quarterly Report on Form 10-Q
filed on June 14, 2001).10.5
    
    Too, Inc. Third Amended and Restated 1999 Stock Option Plan for Non-Associate
Directors (incorporated by reference to Exhibit 10.24 to the Quarterly Report on Form
10-Q filed on June 14, 2001).10.6
    
    Too, Inc. Second Amended and Restated Savings and Retirement Plan (incorporated
by reference to Exhibit 10.11 to the Annual Report on Form 10-K filed on April 13,
2005).10.7
    
    Too, Inc. First Amended and Restated Supplemental Retirement and Deferred
Compensation Plan. (incorporated by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q filed on September 11, 2000).10.8
    
    Employment Agreement, dated as of September 15, 2003, between the Company and
Michael W. Rayden (incorporated by reference to Exhibit 10.13 to the Annual Report on
Form 10-K filed on April 7, 2004).10.9
    
    Executive Agreement, dated as of September 15, 2000, between the Company and
Michael W. Rayden (incorporated by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q filed on December 14, 2000).10.10
    
    Employment Agreement, dated as of February 23, 2004, between the Company and
William E. May, Jr. (incorporated by reference to Exhibit 10.25 to the Annual Report on
Form 10-K filed on April 7, 2004).
 79




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##### Table of Contents



10.11
    
    Executive Agreement, dated as of February 23, 2004, between the Company and
William E. May, Jr. (incorporated by reference to Exhibit 10.21 to the Annual Report on
Form 10-K filed on April 7, 2004).10.12
    
    Employment Agreement, dated as of September 15, 2003, between the Company and
Scott M. Bracale (incorporated by reference to Exhibit 10.21 to the Annual Report on
Form 10-K filed on April 7, 2004).10.13
    
    Executive Agreement, dated as of September 15, 2000, between the Company and
Scott M. Bracale (incorporated by reference to Exhibit 10.25 to the Annual Report on
Form 10-K filed on April 9, 2003).10.14
    
    Too, Inc. Incentive Compensation Plan (incorporated by reference to the
Companys Definitive Proxy Statement for the 2004 Annual Meeting of Stockholders filed
on April 7, 2004).10.15
    
    Form of Notice of Grant of Stock Options (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed on February 11, 2005).10.16
    
    Form of Notice of Grant of Restricted Stock (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K filed on February 11, 2005).10.17
    
    2005 Stock Plan for Non-Associate Directors (incorporated by reference to
Appendix B to the Definitive Proxy Statement for the Companys 2005 Annual Meeting of
Stockholders held May 19, 2005, filed April 20, 2005).10.18
    
    2005 Stock Option and Performance Incentive Plan (incorporated by reference to
Appendix A to the Definitive Proxy Statement for the Companys Special Meeting of
Stockholders held October 31, 2005, filed September 28, 2005).10.19
    
    Credit Agreement, dated October 28, 2005, by and among Too, Inc.s domestic
subsidiaries, as Guarantors, National City Bank, as Lead Arranger and Administrative
Agent, Fifth Third Bank, as Syndication Agent, Bank of America, as Documentation Agent,
LaSalle Bank National Association, as Managing Agent, and Citicorp USA, Inc. as Lender
(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on
November 3, 2005).10.20
    
    Form of Notice of Grant of Stock Options (incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed February 21, 2006).10.21
    
    Form of Notice of Grant of Restricted Stock (incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K filed February 21, 2006).10.22
    
    General Release and Severance Agreement by and between Poe A. Timmons and Tween
Brands, Inc., dated as of August 29, 2006 (incorporated by reference to the Current
Report on Form 8-K filed August 30, 2006).10.23
    
    Letter Agreement between William E. May, Jr. and the Company dated January 18,
2007 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed
January 23, 2007).10.24
    
    Kenneth T. Stevens Offer Letter dated January 8, 2007 (incorporated by reference
to Exhibit 10.2 to the Current Report on Form 8-K filed January 23, 2007).
 80




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##### Table of Contents



10.25
    
    Employment Agreement, effective as of January 29, 2007, between the Company and
Kenneth T. Stevens (incorporated by reference to Exhibit 10.3 to the Current Report on
Form 8-K filed January 23, 2007).10.26
    
    Executive Agreement, effective as of January 29, 2007, between the Company and
Kenneth T. Stevens (incorporated by reference to Exhibit 10.4 to the Current Report on
Form 8-K filed January 23, 2007).10.27
    
    Form of Notice of Grant of Stock Award Agreement Acknowledgement of Receipt
(incorporated by reference to Exhibit 10.38 to the Annual Report on Form 10-K filed April 3, 2007).10.28
    
    Separation Pay, Confidentiality & Non-Competition Agreement, dated July 26,
2006, between the Company and Paul C. Carbone (incorporated by reference to Exhibit
10.39 to the Annual Report on Form 10-K filed April 3, 2007).10.29
    
    Credit Agreement, dated as of September 12, 2007, by and
among Tween Brands, Inc., and each
of Tween Brands, Inc.s domestic subsidiaries. As Guarantors, Bank of America, N.A., as
Administrative Agent, and the various Lenders party thereto (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed September 14, 2007).10.30
    
    Enhanced Overnight Share Repurchase Agreement, dated September 13, 2007, by and between
Tween Brands, Inc. and Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed September 14, 2007).10.31
    
    Michael Keane Offer Letter Dated July 12, 2007.*10.32
    
    ISDA Master Agreement, dated as of December 27, 2007, by and between Tween
Brands, Inc. and JP Morgan Chase Bank, National Association.*21
    
    Subsidiaries of the Registrant (incorporated by reference to Exhibit 21 to the
Annual Report on Form 10-K filed April 3, 2007).23.1
    
    Consent of Independent Registered Public Accounting Firm  Deloitte & Touche,
LLP. *23.2
    
    Consent of Independent Registered Public Accounting Firm 
PricewaterhouseCoopers LLP. *24
    
    Powers of Attorney.*31.1
    
    Certification of Periodic Report by the Principal Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Periodic Report by the Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Periodic Report by the Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.**32.2
    
    Certification of Periodic Report by the Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.**
 
 *
    
    Filed with this report.**
    
    Furnished with this report. (b)
    
    Exhibits.The exhibits to this report are listed in section (a) (3) of Item 15 above.(c)
    
    Financial Statement Schedules.None.
 81




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##### Table of Contents



SIGNATURES
  Date: March 28, 2008
    TWEEN BRANDS, INC.
(registrant)/s/ Kenneth T. StevensKenneth T. StevensPresident and Chief Operating Officer
(Principal Financial and Accounting Officer)  Signature
    
    Title/s/ MICHAEL W. RAYDEN*

Michael W. Rayden
    
    Chairman of the Board of Directors and
Chief Executive Officer
(Principal Executive Officer)/s/ KENNETH T. STEVENS*

Kenneth T. Stevens
    
    Director, President, Chief Operating Officer and Secretary
(Principal Financial and Accounting Officer)/s/ ELIZABETH M. EVEILLARD*
    
    DirectorElizabeth M. Eveillard/s/ NANCY J. KRAMER*
    
    DirectorNancy J. Kramer/s/ DAVID A. KRINSKY*
    
    DirectorDavid A. Krinsky/s/ PHILIP E. MALLOTT*
    
    DirectorPhilip E. Mallott/s/ FREDRIC M. ROBERTS*
    
    DirectorFredric M. Roberts/s/ KENNETH J. STROTTMAN*
    
    DirectorKenneth James Strottman
 
 *
    
    The undersigned, by signing his/her name hereto, does hereby sign this report on behalf of
each of the above-indicated directors of the registrant pursuant to powers of attorney
executed by such directors. /s/ Kenneth T. StevensKenneth T. StevensAttorney-in-fact 82