##### Table of Contents



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 January 31, 2009
 
 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
 
 (TWEENBRANDS, INC. LOGO)
  Delaware
    
    31-1333930(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)
 8323 Walton Parkway, New Albany, Ohio 43054
 (Address
of principal executive offices) (Zip Code)
 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 Yes o No
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    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
    
    
    10Item 1B. Unresolved Staff Comments
    
    
    18Item 2. Properties
    
    
    18Item 3. Legal Proceedings
    
    
    20Item 4. Submission of Matters to a Vote of Security Holders
    
    
    20PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    21Item 6. Selected Financial Data
    
    
    23Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    44Item 8. Financial Statements and Supplementary Data
    
    
    45Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    73Item 9A. Controls and Procedures
    
    
    74Item 9B. Other Information
    
    
    77PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    78Item 11. Executive Compensation
    
    
    78Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters
    
    
    78Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    78Item 14. Principal Accounting Fees and Services
    
    
    78PART IVItem 15. Exhibits, Financial Statement Schedules
    
    
    79SIGNATURES
    
    
    83Exhibit 10.29Exhibit 21Exhibit 23.1Exhibit 24Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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(This Page Intentionally Left Blank)
  3




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




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Our Brands
    
    
    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;
 
    
    swimwear, underwear, bras and sleepwear; and
 
    
    select Limited Too merchandise.
  Conversion to One Brand
    5




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Amended Credit Facility
    International
  Geographic Location
    
    Number of StoresKingdom of Saudi Arabia
    
    
    18United Arab Emirates
    
    
    6Kuwait
    
    
    4Qatar
    
    
    2Bahrain
    
    
    1Jordan
    
    
    1Russia
    
    
    2Sweden
    
    
    1Total
    
    
    35
 Product Development
  Sourcing
 Webkinz 
  6




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Distribution
  Inventory Management
  Seasonality
   7




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Stores
  Fiscal Year2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Number of stores:Beginning of year
    
    
    842
    
    
    
    722
    
    
    
    666
    
    
    
    603
    
    
    
    558Opened
    
    
    92
    
    
    
    140
    
    
    
    79
    
    
    
    70
    
    
    
    55Closed
    
    
    (20
    )
    
    
    (20
    )
    
    
    (23
    )
    
    
    (7
    )
    
    
    (10
    )End of year
    
    
    914
    
    
    
    842
    
    
    
    722
    
    
    
    666
    
    
    
    603Stores remodeled
    
    
    26
    
    
    
    33
    
    
    
    34
    
    
    
    25
    
    
    
    20Total square feet at
period end
(thousands)
    
    
    3,824
    
    
    
    3,510
    
    
    
    3,006
    
    
    
    2,777
    
    
    
    2,495Average store size at
period end
(gross square feet)
    
    
    4,184
    
    
    
    4,169
    
    
    
    4,163
    
    
    
    4,170
    
    
    
    4,138Number of Limited Too stores (1)
    
    
    576
    
    
    
    582
    
    
    
    563
    
    
    
    574
    
    
    
    568Number of Justice stores (1)
    
    
    338
    
    
    
    260
    
    
    
    159
    
    
    
    92
    
    
    
    35
 (1)
    
    For fiscal 2008, the number of Limited Too and Justice stores as of January 31, 2009 is based
on historical classification. Currently, we have approximately 84% of our 912 stores displaying the Justice signage.  Trademarks and Service Marks
     8




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Competition
  Associate Relations
  Being Tween
  Be Focused must
 Be Driven
 Be Creative
 Be Ethical
 Be Balanced
  Available Information
    9




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Fiscal Year Definitions
  Number of weeksFiscal Year
    
    Period Ending
    
    in Fiscal Year2008
    
    January 31, 2009
    
    52 weeks2007
    
    February 2, 2008
    
    52 weeks2006
    
    February 3, 2007
    
    53 weeks2005
    
    January 28, 2006
    
    52 weeks2004
    
    January 29, 2005
    
    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;
 
    
    customer response to our conversion to the Justice store brand;
 
    
    depth of our promotional activities;
 
    
    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.
  10




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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
   11




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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.
    12




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Talented personnel are critical to our success
  We may not be able to sustain a growth rate consistent with our past and this could impact our
ability to implement our business strategy
  
    
    convert former Limited Too
customers to Justice;
 
    
    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;
 
    
    maintain sufficient infrastructure to accommodate our business strategy, 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.
   13




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Our business fluctuates on a seasonal basis
   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.
  We source merchandise through our internal sourcing offices in Asia
   14




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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
  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
   15




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We may suffer negative publicity and our business may be harmed if we need to recall any products
we sell
  We many not be able to comply with restrictions and covenants in our Amended Credit Facility
 
 We may be unable to service our debt
  We may be adversely affected by the general economic conditions and the current financial crisis
  We may not be able to successfully convert Limited Too stores and customers to the Justice brand
   16




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The benefits expected from the brand conversion program may not be achieved or may take longer to
achieve than expected
  We may recognize impairment on long-lived assets
  Our common stock could be delisted from the New York Stock Exchange, which would adversely affect
the liquidity and market price of our common stock
   17




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Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
     18




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Geographic Location
    
    Limited Too
    
    
    Justice
    
    
    TotalTexas
    
    
    48
    
    
    
    42
    
    
    
    90California
    
    
    57
    
    
    
    23
    
    
    
    80Florida
    
    
    44
    
    
    
    26
    
    
    
    70Pennsylvania
    
    
    36
    
    
    
    14
    
    
    
    50New York
    
    
    29
    
    
    
    16
    
    
    
    45Illinois
    
    
    23
    
    
    
    18
    
    
    
    41Ohio
    
    
    22
    
    
    
    19
    
    
    
    41New Jersey
    
    
    21
    
    
    
    15
    
    
    
    36Georgia
    
    
    21
    
    
    
    11
    
    
    
    32Michigan
    
    
    20
    
    
    
    12
    
    
    
    32North Carolina
    
    
    15
    
    
    
    11
    
    
    
    26Indiana
    
    
    15
    
    
    
    9
    
    
    
    24Tennessee
    
    
    13
    
    
    
    9
    
    
    
    22Virginia
    
    
    15
    
    
    
    7
    
    
    
    22Massachusetts
    
    
    13
    
    
    
    8
    
    
    
    21Missouri
    
    
    12
    
    
    
    7
    
    
    
    19Arizona
    
    
    7
    
    
    
    11
    
    
    
    18Alabama
    
    
    10
    
    
    
    7
    
    
    
    17Maryland
    
    
    14
    
    
    
    3
    
    
    
    17Colorado
    
    
    9
    
    
    
    7
    
    
    
    16Connecticut
    
    
    11
    
    
    
    5
    
    
    
    16Minnesota
    
    
    12
    
    
    
    4
    
    
    
    16Kentucky
    
    
    11
    
    
    
    3
    
    
    
    14Washington
    
    
    8
    
    
    
    6
    
    
    
    14Nevada
    
    
    5
    
    
    
    8
    
    
    
    13South Carolina
    
    
    9
    
    
    
    4
    
    
    
    13Wisconsin
    
    
    9
    
    
    
    4
    
    
    
    13Louisiana
    
    
    9
    
    
    
    2
    
    
    
    11Utah
    
    
    5
    
    
    
    5
    
    
    
    10Mississippi
    
    
    5
    
    
    
    3
    
    
    
    8Oklahoma
    
    
    5
    
    
    
    3
    
    
    
    8Arkansas
    
    
    5
    
    
    
    2
    
    
    
    7Iowa
    
    
    4
    
    
    
    3
    
    
    
    7Kansas
    
    
    4
    
    
    
    3
    
    
    
    7Oregon
    
    
    3
    
    
    
    3
    
    
    
    6Nebraska
    
    
    3
    
    
    
    2
    
    
    
    5New Hampshire
    
    
    5
    
    
    
    
    
    
    
    5West Virginia
    
    
    3
    
    
    
    2
    
    
    
    5Delaware
    
    
    4
    
    
    
    
    
    
    
    4Maine
    
    
    2
    
    
    
    1
    
    
    
    3New Mexico
    
    
    2
    
    
    
    
    
    
    
    2North Dakota
    
    
    2
    
    
    
    
    
    
    
    2Rhode Island
    
    
    2
    
    
    
    
    
    
    
    2Idaho
    
    
    1
    
    
    
    
    
    
    
    1South Dakota
    
    
    1
    
    
    
    
    
    
    
    1Vermont
    
    
    1
    
    
    
    
    
    
    
    1Puerto Rico
    
    
    1
    
    
    
    
    
    
    
    1Total
    
    
    576
    
    
    
    338
    
    
    
    914
  19




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Item 3. Legal Proceedings.
     
 Item 4. Submission of Matters to a Vote of Security Holders.
   20




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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 and low sales and close prices
of our common stock as reported on the New York Stock Exchange for the 2008 and 2007 fiscal
years:
 Sales PriceHigh
    
    
    Low
    
    
    Close2008 Fiscal Year4th Quarter
    
    $
    8.52
    
    
    $
    2.23
    
    
    $
    2.693rd Quarter
    
    $
    15.11
    
    
    $
    6.90
    
    
    $
    8.522nd Quarter
    
    $
    21.75
    
    
    $
    12.90
    
    
    $
    13.751st Quarter
    
    $
    33.00
    
    
    $
    17.37
    
    
    $
    19.122007 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
    
    
    $
    39.56
  Shareholder Return Graph
   21




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Total Return To Shareholders
 Annual Return PercentageFiscal Years EndingCompany/Index
    
    1/29/05
    
    
    1/28/06
    
    
    2/3/07
    
    
    2/2/08
    
    
    1/31/09Tween Brands, Inc
    
    
    74.18
    
    
    
    7.32
    
    
    
    21.89
    
    
    
    (5.57
    )
    
    
    (91.83
    )S&P SmallCap 600 Index
    
    
    14.20
    
    
    
    21.10
    
    
    
    10.57
    
    
    
    (6.12
    )
    
    
    (38.28
    )S&P Apparel Retail
    
    
    19.69
    
    
    
    (7.04
    )
    
    
    18.56
    
    
    
    (2.61
    )
    
    
    (49.86
    )
 Indexed ReturnsFiscal Years EndingBase PeriodCompany/Index
    
    1/31/04
    
    
    1/29/05
    
    
    1/28/06
    
    
    2/3/07
    
    
    2/2/08
    
    
    1/31/09Tween Brands, Inc
    
    
    100
    
    
    
    174.18
    
    
    
    186.93
    
    
    
    227.84
    
    
    
    215.16
    
    
    
    17.58S&P SmallCap 600 Index
    
    
    100
    
    
    
    114.20
    
    
    
    138.29
    
    
    
    152.90
    
    
    
    143.55
    
    
    
    88.59S&P Apparel Retail
    
    
    100
    
    
    
    119.69
    
    
    
    111.27
    
    
    
    131.92
    
    
    
    128.48
    
    
    
    64.42
 Payments to Acquire Treasury StockFiscal Years Ending (in millions)1/29/05
    
    
    
    1/28/06
    
    
    
    2/3/07
    
    
    
    2/2/08
    
    
    
    1/31/09$
    3.5
    
    
    $
    56.1
    
    
    $
    59.9
    
    
    $
    236.0
    
    
    $
    5.9
 (b)
    
    Not applicable. No sales of unregistered securities.(c)
    
    Not applicable. No repurchases made within the fourth quarter of the fiscal year.
  22




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Item 6. Selected Financial Data.
  Fiscal Year2008
    
    
    2007
    
    
    2006 (1)
    
    
    2005
    
    
    2004Statement of Operations Data:Net sales (2)
    
    $
    995,062
    
    
    $
    1,013,971
    
    
    $
    883,683
    
    
    $
    757,936
    
    
    $
    675,834Gross income
    
    
    292,144
    
    
    
    369,381
    
    
    
    333,968
    
    
    
    291,297
    
    
    
    241,887Store operating, general and
administrative expenses
    
    
    287,996
    
    
    
    285,059
    
    
    
    238,278
    
    
    
    208,338
    
    
    
    177,508Operating (loss)/income
    
    
    (14,844
    )
    
    
    84,322
    
    
    
    95,690
    
    
    
    82,959
    
    
    
    64,379(Loss)/Earnings before income taxes
    
    
    (22,242
    )
    
    
    82,657
    
    
    
    100,828
    
    
    
    84,984
    
    
    
    65,686Net (loss)/income
    
    
    (17,145
    )
    
    
    52,574
    
    
    
    64,821
    
    
    
    54,451
    
    
    
    41,589(Loss)/Earnings per share  basic
    
    $
    (0.69
    )
    
    $
    1.84
    
    
    $
    1.99
    
    
    $
    1.62
    
    
    $
    1.21(Loss)/Earnings per share  diluted
    
    $
    (0.69
    )
    
    $
    1.81
    
    
    $
    1.95
    
    
    $
    1.60
    
    
    $
    1.19Balance Sheet Data:Cash and cash equivalents
    
    $
    72,154
    
    
    $
    46,009
    
    
    $
    48,394
    
    
    $
    22,248
    
    
    $
    26,212Inventories, net
    
    
    88,523
    
    
    
    107,483
    
    
    
    91,742
    
    
    
    66,033
    
    
    
    62,441Total assets
    
    
    545,458
    
    
    
    611,637
    
    
    
    569,677
    
    
    
    523,730
    
    
    
    493,696Total debt
    
    
    166,250
    
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    Total shareholders equity
    
    
    175,773
    
    
    
    194,999
    
    
    
    371,326
    
    
    
    350,783
    
    
    
    322,524Selected Operating Data:Comparable
store sales (decrease)/increase(3) (4)
    
    
    (12
    )%
    
    
    4
    %
    
    
    6
    %
    
    
    5
    %
    
    
    4
    %Total net sales (decline)/growth
    
    
    (1.9
    )%
    
    
    14.7
    %
    
    
    16.6
    %
    
    
    12.1
    %
    
    
    12.9
    %Gross income rate (5)
    
    
    29.4
    %
    
    
    36.4
    %
    
    
    37.8
    %
    
    
    38.4
    %
    
    
    35.8
    %Operating (loss)/income rate (5)
    
    
    (1.5
    )%
    
    
    8.3
    %
    
    
    10.8
    %
    
    
    10.9
    %
    
    
    9.5
    %Total number of stores open at year end
    
    
    914
    
    
    
    842
    
    
    
    722
    
    
    
    666
    
    
    
    603Total gross square feet at year end
    
    
    3,824
    
    
    
    3,510
    
    
    
    3,006
    
    
    
    2,777
    
    
    
    2,495Annual net store sales per average
gross square foot (6)
    
    $
    255
    
    
    $
    296
    
    
    $
    299
    
    
    $
    284
    
    
    $
    272
 (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; deferred 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 the purpose of this calculation.(4)
    
    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.(5)
    
    Calculated as a percentage of net sales.(6)
    
    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.  23




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Executive Overview
 2008 Performance
     Transition to a Single Store Brand
    24




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Growing the Direct Business
   International Expansion
  Results of Operations
 Financial Summary
   25




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Fiscal Year
    
    
    % Change2007-
    
    
    2006-2008
    
    
    2007
    
    
    2006 (1)
    
    
    2008
    
    
    2007Net sales (millions) (2)
    
    $
    995.1
    
    
    $
    1,014.0
    
    
    $
    883.7
    
    
    
    -2
    %
    
    
    15
    %Comparable store sales (3)(4)
    
    
    (12
    )%
    
    
    4
    %
    
    
    6
    %Annual net store sales per average gross square foot
(5)
    
    $
    255
    
    
    $
    296
    
    
    $
    299
    
    
    
    -14
    %
    
    
    -1
    %Net store sales per average store (thousands) (6)
    
    $
    1,068.9
    
    
    $
    1,229.0
    
    
    $
    1,246.1
    
    
    
    -13
    %
    
    
    -1
    %Average store size at period end (gross square feet)
    
    
    4,184
    
    
    
    4,169
    
    
    
    4,163
    
    
    
    0
    %
    
    
    0
    %Total gross square feet at period end (thousands)
    
    
    3,824
    
    
    
    3,510
    
    
    
    3,006
    
    
    
    9
    %
    
    
    17
    %Store inventory per gross square foot at period end (7)
    
    $
    19.8
    
    
    $
    25.8
    
    
    $
    27.3
    
    
    
    -23
    %
    
    
    -5
    %Store inventory per store at period end (7)
    
    $
    83,021
    
    
    $
    107,551
    
    
    $
    113,506
    
    
    
    -23
    %
    
    
    -5
    %Number of stores:Beginning of period
    
    
    842
    
    
    
    722
    
    
    
    666Opened
    
    
    92
    
    
    
    140
    
    
    
    79Closed
    
    
    (20
    )
    
    
    (20
    )
    
    
    (23
    )End of period
    
    
    914
    
    
    
    842
    
    
    
    722Limited Too stores remodeled
    
    
    26
    
    
    
    33
    
    
    
    34Number of Limited Too stores
    
    
    576
    
    
    
    582
    
    
    
    563Number of Justice stores
    
    
    338
    
    
    
    260
    
    
    
    159
 (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;
deferred 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.  Fiscal Year2008
    
    
    2007
    
    
    2006Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of goods sold, including buying and occupancy
costs
    
    
    70.6
    
    
    
    63.6
    
    
    
    62.2Gross income
    
    
    29.4
    
    
    
    36.4
    
    
    
    37.8Store operating, general and administrative expenses
    
    
    28.9
    
    
    
    28.1
    
    
    
    27.0Restructuring charges
    
    
    2.0
    
    
    
    0.0
    
    
    
    0.0Operating (loss) / income
    
    
    (1.5
    )
    
    
    8.3
    
    
    
    10.8Interest income
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    (0.6
    )Interest expense
    
    
    0.9
    
    
    
    0.4
    
    
    
    0.0(Loss) / Earnings before income taxes
    
    
    (2.2
    )
    
    
    8.2
    
    
    
    11.4(Benefit from) / Provision for income taxes
    
    
    (0.5
    )
    
    
    3.0
    
    
    
    4.1Net (loss) / income
    
    
    (1.7
    )%
    
    
    5.2
    %
    
    
    7.3
    %
  26




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##### Table of Contents



Net Sales
   Fiscal Year
    
    
    % Change2007-
    
    
    2006-Limited Too and Justice:
    
    2008
    
    
    2007
    
    
    2006 (1)
    
    
    2008
    
    
    2007Average dollar value of units sold at retail
(AUR) (2)
    
    $
    10.89
    
    
    $
    12.47
    
    
    $
    13.07
    
    
    
    -13
    %
    
    
    -5
    %Average number of units per transaction (UPT) (3)
    
    
    4.48
    
    
    
    4.20
    
    
    
    4.08
    
    
    
    7
    %
    
    
    3
    %Average dollar sales value per transaction (ADS)
(4)
    
    $
    48.80
    
    
    $
    52.42
    
    
    $
    53.32
    
    
    
    -7
    %
    
    
    -2
    %Number of transactions per average store (5)
    
    
    21,981
    
    
    
    23,666
    
    
    
    23,184
    
    
    
    -7
    %
    
    
    2
    %Sales from transactions over $50 (% of total sales)
    
    
    74.4
    %
    
    
    75.3
    %
    
    
    77.5
    %
    
    
    -1
    %
    
    
    -3
    %Transactions over $50 (% of total transactions)
    
    
    36.2
    %
    
    
    38.5
    %
    
    
    39.5
    %
    
    
    -6
    %
    
    
    -3
    %
 (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 number of units per transaction is the result of dividing the number of units sold in
the period by the number of store transactions.(4)
    
    Average dollar sales value per transaction is the result of dividing gross store sales
dollars for the period by the number of store transactions.(5)
    
    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.    27




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##### Table of Contents



Gross Income
   2008 vs 2007
    
    
    2008 vs 2007Dollar Change
    
    
    Change in bps2008
    
    
    2007
    
    
    favorable/(unfavorable)
    
    
    favorable/(unfavorable)Internal Gross Income
    
    $
    542,618
    
    
    $
    599,186
    
    
    $
    (56,568
    )
    
    
    (460
    )Buying & Occupancy Costs
    
    
    250,474
    
    
    
    229,805
    
    
    
    (20,669
    )
    
    
    (240
    )Gross Income
    
    $
    292,144
    
    
    $
    369,381
    
    
    $
    (77,237
    )
    
    
    (700
    )
     2007 vs 2006
    
    
    2007 vs 2006Dollar Change
    
    
    Change in bps2007
    
    
    2006
    
    
    favorable/(unfavorable)
    
    
    favorable/(unfavorable)Internal Gross Income
    
    $
    599,186
    
    
    $
    531,113
    
    
    $
    68,073
    
    
    $
    (100
    )Buying & Occupancy Costs
    
    
    229,805
    
    
    
    197,145
    
    
    
    (32,660
    )
    
    
    (40
    )Gross Income
    
    $
    369,381
    
    
    $
    333,968
    
    
    $
    35,413
    
    
    $
    (140
    )
     28




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##### Table of Contents



Store Operating, General and Administrative Expenses
   2008 vs. 2007favorable/(unfavorable)Changes in:
    
    in dollars
    
    
    in bpsStore operating expenses
    
    $
    (13,005
    )
    
    
    (160
    )Home Office
    
    
    7,658
    
    
    
    60Marketing
    
    
    (4,377
    )
    
    
    (40
    )Distribution center
    
    
    953
    
    
    
    10Other
    
    
    5,834
    
    
    
    50Total Change
    
    $
    (2,937
    )
    
    
    (80
    )
 Webkinz TM
   2007 vs. 2006favorable/(unfavorable)Changes in:
    
    in dollars
    
    
    in bpsStore operating expenses
    
    $
    (22,039
    )
    
    
    10Home Office
    
    
    (10,841
    )
    
    
    (20
    )Marketing
    
    
    (6,084
    )
    
    
    (50
    )Distribution center
    
    
    (691
    )
    
    
    Other
    
    
    (7,126
    )
    
    
    (50
    )Total Change
    
    $
    (46,781
    )
    
    
    (110
    )
   29




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##### Table of Contents



Restructuring
   Interest Income/Expense
     Provision for Income Taxes
     Financial Condition and Liquidity
 Financial Condition
   30




---



##### Table of Contents



Liquidity and Capital Resources
    January 31, 2009
    
    
    February 2, 2008
    
    
    February 3, 2007Working capital
    
    $
    138.6
    
    
    $
    141.0
    
    
    $
    172.8Capitalization:Long-term debt (including current portion)
    
    
    166.3
    
    
    
    175.0
    
    
    
    Shareholders equity
    
    
    175.8
    
    
    
    195.0
    
    
    
    371.3Total capitalization
    
    $
    342.1
    
    
    $
    370.0
    
    
    $
    371.3Amounts available under the credit facility (1)
    
    $
    100.0
    
    
    $
    98.9
    
    
    $
    99.4Letters of credit outstanding under the credit facility
    
    $
    
    
    
    $
    1.1
    
    
    $
    0.6Restricted assets
    
    $
    2.3
    
    
    $
    1.3
    
    
    $
    1.2
 (1)
    
    The maximum amount available under the amended credit facility is $50.0 million.  Tween Brands, Inc.
    
    
    ApparelJanuary 31, 2009
    
    
    February 2, 2008
    
    
    Industry*
    
    
    S&P 500Current Ratio
    
    
    2.4
    
    
    
    2.1
    
    
    
    2.1
    
    
    
    1.0Debt/Equity Ratio
    
    
    0.9
    
    
    
    0.9
    
    
    
    0.4
    
    
    
    1.0
 *
    
    Information reflects the
latest apparel stores industry financial ratios found on
MSN© money.  31




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##### Table of Contents



Net Change in Cash and Cash Equivalents
  Fiscal Year2008
    
    
    2007
    
    
    2006Net cash provided by operating activities
    
    $
    22.3
    
    
    $
    111.7
    
    
    $
    87.4Net cash used for investing activities
    
    $
    18.8
    
    
    $
    (57.2
    )
    
    $
    (16.6
    )Net cash used for financing activites
    
    $
    (15.0
    )
    
    $
    (56.9
    )
    
    $
    (44.7
    )Net increase/(decrease) in cash and cash
equivalents
    
    $
    26.1
    
    
    $
    (2.4
    )
    
    $
    26.1
 Operating Activities
   2008 vs 2007Changes in:
    
    increase/(decrease)Net income, net of non-cash expenses
    
    $
    (53.4
    )Deferred compensation liability
    
    
    (20.1
    )Inventory
    
    
    34.7Accounts payable and accrued expenses
    
    
    (33.3
    )Income taxes
    
    
    (25.2
    )Tenant allowances received
    
    
    (6.2
    )Other
    
    
    14.1Total change in cash flows from operating activities
    
    $
    (89.4
    )
  32




---



##### Table of Contents



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




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##### Table of Contents



Investing Activities
   2008 vs 2007Changes in:
    
    increase/(decrease)Investments
    
    $
    16.4Capital expenditures
    
    
    37.5Executive life insurance
    
    
    20.5Restricted assets
    
    
    (1.2
    )Funding of nonqualified benefit plans
    
    
    2.8Total change in cash flows from investing activities
    
    $
    76.0
    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
   34




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##### Table of Contents



Financing Activities
   2008 vs 2007Changes in:
    
    increase/(decrease)Purchases of treasury stock
    
    $
    (230.0
    )Repayment of / proceeds from long-term debt
    
    
    183.8Tax benefit from stock option exercises
    
    
    1.5Change in cash overdraft position
    
    
    (1.1
    )Stock options and other equity changes
    
    
    4.0Total change in cash flows from financing activities
    
    $
    (41.9
    )
    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
   35




---



##### Table of Contents



Future Capital Expenditures
    Transitional Services and Separation Agreements
  Trademark and Service Mark Licensing Agreement
  Off-Balance Sheet Arrangements
   36




---



##### Table of Contents



Contractual Obligations and Commercial Commitments
  Contractual Obligations
 Payments Due by Fiscal PeriodTotal
    
    
    2009
    
    
    2010 & 2011
    
    
    2012 & 2013
    
    
    2014 & beyondOperating lease obligations (1)
    
    $
    629,740
    
    
    $
    96,516
    
    
    $
    171,341
    
    
    $
    146,809
    
    
    $
    215,074Purchase obligations (2)
    
    
    83,796
    
    
    
    83,796
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt (3)
    
    
    166,250
    
    
    
    8,750
    
    
    
    17,500
    
    
    
    140,000
    
    
    
    FIN 48 (4)
    
    
    1,223
    
    
    
    1,223
    
    
    
    
    
    
    
    
    
    
    
    Interest on long-term debt (5)
    
    
    25,798
    
    
    
    7,002
    
    
    
    12,899
    
    
    
    5,897
    
    
    
    Total (6)
    
    $
    906,807
    
    
    $
    197,287
    
    
    $
    201,740
    
    
    $
    292,706
    
    
    $
    215,074
 (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)
    
    Represents the obligation as of January 31, 2009. Under our Amended Credit Facility, entered
into on February 23, 2009, we will be obligated to pay $14,250 in 2009, $28,500 in 2010 & 2011, and
$123,500 in 2012 & 2013.(4)
    
    The future cash flows for income tax contingencies under FIN 48 of $9,705 is excluded from the
table above because a reasonable estimate for the time period of cash settlement could not be
determined.(5)
    
    Represents the interest we are contractually obligated to pay as of January 31, 2009 under our
long-term debt and includes consideration for our interest rate swap agreement. Under our Amended
Credit Facility, entered into on February 23, 2009, we will be obligated to pay $12,648 in 2009,
$22,336 in 2010 & 2011, and $4,902 in 2012 & 2013.(6)
    
    The Nonqualified Supplemental Retirement obligation of $1,212 is excluded from the table above
because a reasonable estimate for the time period of cash settlement could not be determined. Commercial Commitments:
 Commitments by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 YearsOutstanding letters of credit (1)
    
    $
    38
    
    
    $
    38
    
    
    $
    
    
    
    $
    
    
    
    $
    Standby letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    38
    
    
    $
    38
    
    
    $
    
    
    
    $
    
    
    
    $
    
 (1)
    
    Consists of outstanding letter of credit commitments for the purchase of merchandise. Amended Credit Facility
  Impact of Inflation
   37




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##### Table of Contents



Critical Accounting Policies
  Revenue Recognition
    Accounting by a Customer
(Including a Reseller) for Certain Consideration Received from a Vendor.
 Gift Card Breakage
  Operating Leases
  Tenant Allowances
   38




---



##### Table of Contents



Derivatives
 Accounting for Derivative Instruments and Hedging Activities.
 Cash Equivalents
  Store Supplies
  Investments
     39




---



##### Table of Contents



Restricted Assets
  Store Opening Costs
  Inventories, net
   Accounts Receivable, net
  Property and Equipment, net
    40




---



##### Table of Contents



Impairment of Long-Lived Assets
  Catazine and Advertising Costs
  Advertising Barter Transactions
 Accounting for Advertising Barter Transactions.
 Income Taxes
    Self-Insurance
   41




---



##### Table of Contents



Recently Issued Accounting Standards
 Business Combinations Noncontrolling Interests in Consolidated Financial Statements  an
amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133 ,
  Seasonality
  42




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##### Table of Contents



Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
 
 
    
    Effectiveness of converting Limited Too stores to Justice stores;
 
    
    Ability to convert Limited Too customers to the Justice brand;
 
    
    Risk that the benefits expected from the brand conversion program will not be achieved or
may take longer to achieve than expected;
 
    
    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;
 
    
    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 security of our computer network;
 
    
    Outcome of various legal proceedings;
 
    
    Impact of product recalls;
 
    
    Ability to comply with restrictions and covenants in our credit facilities;
 
    
    Ability to service our debt;
 43




---



##### Table of Contents




    
    The potential impact of health concerns relating to severe infectious diseases,
particularly on manufacturing operations of our vendors in Asia and elsewhere;
 
    
    Potential impairment of long-lived assets;
 
    
    Ability to satisfy NYSE continued listing standards;
 
    
    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
   Interest Rate Sensitivity
  As of January 31, 2009Expected Maturity Date by Fiscal Year2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    Total
    
    
    Fair ValueLiabilitiesLong-term debt
    
    $
    8,750
    
    
    $
    8,750
    
    
    $
    8,750
    
    
    $
    140,000
    
    
    
    
    
    
    $
    166,250
    
    
    $
    166,250Average interest rate
    
    
    1.7
    %
    
    
    1.9
    %
    
    
    2.2
    %
    
    
    1.7
    %
    
    
    Interest rate derivativesInterest rate swapsVariable to fixed
    
    $
    21,438
    
    
    $
    5,687
    
    
    $
    91,000
    
    
    $
    0
    
    
    
    
    
    
    $
    118,125
    
    
    $
    (8,664
    )Average receive rate
    
    
    1.5
    %
    
    
    1.9
    %
    
    
    2.7
    %
    
    
    3.4
    %
    
    
    Average pay rate
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    4.2
    %
    
    
    
  44




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data.
 Index to Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    
    46Consolidated Statements of Operations
    
    
    47Consolidated Balance Sheets
    
    
    48Consolidated Statements of Changes in Shareholders Equity
    
    
    49Consolidated Statements of Cash Flows
    
    
    50Notes to Consolidated Financial Statements
    
    
    51
  45




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     Internal ControlIntegrated Framework
 /s/ Deloitte & Touche LLPColumbus, Ohio
March 31, 2009
  46




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##### Table of Contents



TWEEN BRANDS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)
 Fiscal Year2008
    
    
    2007
    
    
    2006Net sales
    
    $
    995,062
    
    
    $
    1,013,971
    
    
    $
    883,683Costs of goods sold, buying and
occupancy costs
    
    
    702,918
    
    
    
    644,590
    
    
    
    549,715Gross income
    
    
    292,144
    
    
    
    369,381
    
    
    
    333,968Store operating, general and
administrative expenses
    
    
    287,996
    
    
    
    285,059
    
    
    
    238,278Restructuring charges
    
    
    18,992
    
    
    
    
    
    
    
    Operating (loss)/income
    
    
    (14,844
    )
    
    
    84,322
    
    
    
    95,690Interest (income)
    
    
    (1,732
    )
    
    
    (3,254
    )
    
    
    (5,365
    )Interest expense
    
    
    9,130
    
    
    
    4,919
    
    
    
    227(Loss) / Earnings before income taxes
    
    
    (22,242
    )
    
    
    82,657
    
    
    
    100,828(Benefit from) / Provision for income taxes
    
    
    (5,097
    )
    
    
    30,083
    
    
    
    36,007Net (loss) / income
    
    $
    (17,145
    )
    
    $
    52,574
    
    
    $
    64,821(Loss) / Earnings per share:Basic
    
    $
    (0.69
    )
    
    $
    1.84
    
    
    $
    1.99Diluted
    
    $
    (0.69
    )
    
    $
    1.81
    
    
    $
    1.95Weighted average common shares:Basic
    
    
    24,759
    
    
    
    28,548
    
    
    
    32,521Diluted
    
    
    24,759
    
    
    
    29,099
    
    
    
    33,198
   47




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##### Table of Contents



TWEEN BRANDS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except share amounts)
 January 31,
    
    
    February 2,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    72,154
    
    
    $
    46,009Investments
    
    
    8,000
    
    
    
    70,215Restricted assets
    
    
    2,592
    
    
    
    1,295Accounts receivable, net
    
    
    35,607
    
    
    
    12,557Inventories, net
    
    
    88,523
    
    
    
    107,483Store supplies
    
    
    18,053
    
    
    
    16,949Prepaid expenses
    
    
    17,734
    
    
    
    19,087Total current assets
    
    
    242,663
    
    
    
    273,595Property and equipment, net
    
    
    301,085
    
    
    
    301,405Deferred income taxes
    
    
    22
    
    
    
    10,302Assets held in trust and other
    
    
    1,688
    
    
    
    26,335Total assets
    
    $
    545,458
    
    
    $
    611,637LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    29,782
    
    
    $
    37,749Accrued expenses
    
    
    44,418
    
    
    
    56,810Deferred revenue
    
    
    15,808
    
    
    
    16,077Current portion long-term debt
    
    
    8,750
    
    
    
    8,750Income taxes payable and unrecognized tax benefits
    
    
    2,748
    
    
    
    11,909Total current liabilities
    
    
    101,506
    
    
    
    131,295Long-term debt
    
    
    157,500
    
    
    
    166,250Deferred tenant allowances from landlords
    
    
    68,439
    
    
    
    66,377Supplemental retirement and deferred compensation liability
    
    
    1,213
    
    
    
    21,289Accrued straight-line rent, unrecognized tax benefits and other
    
    
    41,027
    
    
    
    31,427Commitments and contingenciesShareholders equity:Preferred stock, $.01 par value, 50 million shares authorizedCommon stock, $.01 par value, 100 million shares authorized,
37.1 million and 37.0 million shares issued,
24.8 million and 24.7 million shares outstanding
at January 31, 2009 and February 2, 2008, respectively
    
    
    371
    
    
    
    370Treasury stock, at cost, 12.3 million shares
at January 31, 2009 and February 2, 2008, respectively
    
    
    (362,459
    )
    
    
    (356,545
    )Paid in capital
    
    
    192,367
    
    
    
    185,893Retained earnings
    
    
    350,963
    
    
    
    368,108Accumulated other comprehensive loss
    
    
    (5,469
    )
    
    
    (2,827
    )Total shareholders equity
    
    
    175,773
    
    
    
    194,999Total liabilities and shareholders equity
    
    $
    545,458
    
    
    $
    611,637
   48




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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 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
    
    
    
    
    
    
    
    
    
    
    
    17,148Payment to acquire 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
    
    
    
    
    
    
    
    
    
    
    
    10,906Payment to acquire 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
    )
    
    $
    194,999Net (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,145
    )
    
    
    
    
    
    
    (17,145
    )Effective portion of hedge
position, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,642
    )
    
    
    (2,642
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (19,787
    )Issuance of common stock under
stock option plans and accrued
restricted stock expense
    
    
    128
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    5,085
    
    
    
    
    
    
    
    
    
    
    
    5,086Payment to acquire treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,914
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,914
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,389
    
    
    
    
    
    
    
    
    
    
    
    1,389January 31, 2009
    
    
    24,802
    
    
    $
    371
    
    
    
    12,289
    
    
    $
    (362,459
    )
    
    $
    192,367
    
    
    $
    350,963
    
    
    $
    (5,469
    )
    
    $
    175,773
   49




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##### Table of Contents



TWEEN BRANDS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Fiscal Year2008
    
    
    2007
    
    
    2006Cash flows from operating activities:Net (loss) / income
    
    $
    (17,145
    )
    
    $
    52,574
    
    
    $
    64,821Impact of other operating activities on cash flows:Depreciation expense
    
    
    44,047
    
    
    
    37,615
    
    
    
    31,229Amortization of tenant allowances
    
    
    (11,101
    )
    
    
    (9,670
    )
    
    
    (8,548
    )Deferred compensation
    
    
    (20,076
    )
    
    
    7,447
    
    
    
    3,455Loss on disposal of fixed assets
    
    
    775
    
    
    
    1,438
    
    
    
    1,344Writeoff of fixed assets related to restructuring charges
    
    
    11,586
    
    
    
    
    
    
    
    Impairment of long-lived assets
    
    
    361
    
    
    
    
    
    
    
    Deferred income taxes
    
    
    11,721
    
    
    
    4,916
    
    
    
    (2,471
    )Tax benefit from stock option exercises
    
    
    (100
    )
    
    
    (1,596
    )
    
    
    (2,283
    )Stock-based compensation expense
    
    
    5,741
    
    
    
    7,745
    
    
    
    8,252Changes in assets and liabilities:Inventories
    
    
    18,960
    
    
    
    (15,741
    )
    
    
    (25,709
    )Accounts payable and accrued expenses
    
    
    (14,951
    )
    
    
    18,305
    
    
    
    4,725Income taxes payable
    
    
    (9,061
    )
    
    
    (2,706
    )
    
    
    5,644Income taxes receivable
    
    
    (27,162
    )
    
    
    
    
    
    
    Other assets
    
    
    3,589
    
    
    
    (6,864
    )
    
    
    (6,853
    )Tenant allowances received
    
    
    18,149
    
    
    
    24,341
    
    
    
    11,383Other long-term liabilities
    
    
    6,964
    
    
    
    (6,066
    )
    
    
    2,442Net cash provided by operating activities
    
    $
    22,297
    
    
    $
    111,738
    
    
    $
    87,431Cash flows from investing activities:Capital expenditures
    
    
    (64,188
    )
    
    
    (101,647
    )
    
    
    (66,012
    )Executive life insurance
    
    
    20,523
    
    
    
    
    
    
    
    Funding of nonqualified benefit plans
    
    
    
    
    
    
    (1,222
    )
    
    
    (5,838
    )Purchase of investments
    
    
    (8,670
    )
    
    
    (164,602
    )
    
    
    (395,888
    )Sale / maturation of investments
    
    
    70,795
    
    
    
    210,328
    
    
    
    451,154Proceeds from sale of fixed assets
    
    
    1,657
    
    
    
    
    
    
    
    26Change in restricted assets
    
    
    (1,297
    )
    
    
    (59
    )
    
    
    (43
    )Net cash provided by/(used for) investing activities
    
    $
    18,820
    
    
    $
    (57,202
    )
    
    $
    (16,601
    )Cash flows from financing activities:Payments to acquire treasury stock
    
    
    (5,914
    )
    
    
    (235,991
    )
    
    
    (59,959
    )(Repayment of)/Proceeds from issuance of long-term debt
    
    
    (8,750
    )
    
    
    175,000
    
    
    
    Excess tax benefit from stock option exercises
    
    
    100
    
    
    
    1,597
    
    
    
    2,283Increase/(decrease) in cash overdraft
    
    
    405
    
    
    
    (689
    )
    
    
    3,943Stock options and other equity changes
    
    
    (813
    )
    
    
    3,162
    
    
    
    9,049Net cash used for financing activities
    
    
    (14,972
    )
    
    
    (56,921
    )
    
    
    (44,684
    )Net increase/(decrease) in cash and cash equivalents
    
    
    26,145
    
    
    
    (2,385
    )
    
    
    26,146Cash and cash equivalents, beginning of year
    
    
    46,009
    
    
    
    48,394
    
    
    
    22,248Cash and cash equivalents, end of year
    
    $
    72,154
    
    
    $
    46,009
    
    
    $
    48,394Supplemental disclosures of cash flow informationCash paid for income taxes
    
    $
    13,425
    
    
    $
    20,583
    
    
    $
    33,022Cash paid for interest
    
    $
    9,571
    
    
    $
    3,658
    
    
    $
    214Supplemental disclosures of non-cash items:Fixed asset additions in accounts payable and accrued expenses
    
    $
    124
    
    
    $
    3,295
    
    
    $
    120Issuance of restricted stock
    
    $
    3,924
    
    
    $
    5,104
    
    
    $
    2,788Change to deferred tax asset from spin-off
    
    $
    1,620
    
    
    $
    
    
    
    $
    (3,903
    )
   50




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary Of Significant Accounting Policies
 Nature of Business
 www.shopjustice.com
  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
   51




---



##### Table of Contents



Cash Equivalents
  Investments
    Restricted Assets
  Store Opening Costs
  Accounts Receivable, net
  Inventories, net
    52




---



##### Table of Contents



Store Supplies
  Catazine and Advertising Costs
  Advertising Barter Transactions
 Accounting for Advertising Barter Transactions.
 Property and Equipment, net
    53




---



##### Table of Contents



Impairment of Long-Lived Assets
  Income Taxes
  Revenue Recognition
    Accounting by a
Customer (Including a Reseller) for Certain Consideration Received from a Vendor.
  54




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##### Table of Contents



Gift Card Breakage
  Costs of Goods Sold, Buying and Occupancy Costs
  
    
    Cost of merchandise (including markdowns)
 
    
    Inventory shrinkage
 
    
    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
 
    
    Store asset depreciation
 
    
    Amortization of tenant allowances
 
    
    Long-lived asset impairment costs
 
    
    Limited Too catazine production and mailing costs
 
    
    Profit from our internal sourcing operations
 Operating Leases
   Derivatives
 Accounting for Derivative Instruments and Hedging Activities.
  55




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##### Table of Contents



Self-Insurance
  Store Operating, General and Administrative Expenses
  
    
    Store payroll and store operating expenses
 
    
    Home office payroll and other home office related expenses (not related to merchandise
and design procurement)
 
    
    Advertising and direct marketing costs
 
    
    Distribution center costs, including receiving and warehouse costs
  Share-Based Compensation
       56




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##### Table of Contents



Share-Based Payment Accounting for Stock Issued to Employees
      57




---



##### Table of Contents



Fiscal Year2008
    
    
    2007
    
    
    2006Expected life (in years)
    
    
    4.4
    
    
    
    5.3
    
    
    
    5.3Dividend rate
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Price volatility
    
    
    40
    %
    
    
    44
    %
    
    
    47
    %Risk-free interest rate
    
    
    3.2
    %
    
    
    4.7
    %
    
    
    4.4
    %
    Weighted
    
    
    Weighted Average
    
    
    Aggregate IntrinsicAverage
    
    
    Remaining Contractual
    
    
    ValueNumber of Shares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    (in thousands)Fifty-Two weeks ended January 31, 2009:Outstanding, February 2, 2008
    
    
    1,612,375
    
    
    $
    27.65Granted
    
    
    746,714
    
    
    
    15.28Exercised
    
    
    (12,762
    )
    
    
    17.21Cancelled/Expired
    
    
    (378,456
    )
    
    
    29.88Outstanding, January 31, 2009
    
    
    1,967,871
    
    
    $
    22.66
    
    
    
    6.3
    
    
    $
    Vested or expected to vest, January 31, 2009
    
    
    1,860,770
    
    
    $
    23.10
    
    
    
    6.1
    
    
    $
    Exercisable, January 31, 2009
    
    
    1,010,900
    
    
    $
    25.14
    
    
    
    3.8
    
    
    $
    
   58




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##### Table of Contents



Weighted Average GrantNumber of Shares
    
    
    Date Fair ValueOutstanding, beginning of year
    
    
    511,638
    
    
    $
    29.52Granted
    
    
    255,892
    
    
    
    26.88Vested
    
    
    (132,400
    )
    
    
    29.64Cancelled
    
    
    (149,893
    )
    
    
    33.28Outstanding, end of year
    
    
    485,237
    
    
    $
    28.95
  Earnings Per Share
 Earnings per Share.
  Fiscal Year2008
    
    
    2007
    
    
    2006Net (loss) / income as reported
    
    $
    (17,145
    )
    
    $
    52,574
    
    
    $
    64,821Weighted average common shares  basic
    
    
    24,759
    
    
    
    28,548
    
    
    
    32,521Dilutive effect of stock options and
restricted stock
    
    
    
    
    
    
    440
    
    
    
    677Dilutive effect of accelerated share repurchase
    
    
    
    
    
    
    111
    
    
    
    Weighted average common shares  diluted
    
    
    24,759
    
    
    
    29,099
    
    
    
    33,198
   59




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##### Table of Contents



Recently Issued Accounting Standards
 Business Combinations Noncontrolling Interests in Consolidated Financial Statements  an
amendment of ARB No. 51
 Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133 ,
  2. Investments
   January 31, 2009
    
    
    February 2, 2008Maturity of
    
    
    Maturity ofLess than 1
    
    
    
    
    
    
    Less than 1Year
    
    
    1 to 5 Years
    
    
    Year
    
    
    1 to 5 YearsFair value
    
    $
    
    
    
    $
    
    
    
    $
    21,381
    
    
    $
    Gross unrecognized holding gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross unrecognized holding losses
    
    
    
    
    
    
    
    
    
    
    (61
    )
    
    
    Net carrying amount
    
    $
    
    
    
    $
    
    
    
    $
    21,320
    
    
    $
    
    60




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##### Table of Contents



January 31, 2009
    
    
    February 2, 2008Maturity of
    
    
    Maturity ofLess than 1 Year
    
    
    Less than 1 YearFair value
    
    $
    8,000
    
    
    $
    48,895Net gains in accumulated other comprehensive income
    
    
    
    
    
    
    Net losses in accumulated other comprehensive income
    
    
    
    
    
    
    Net carrying amount
    
    $
    8,000
    
    
    $
    48,895
  3. Accounts Receivable
  January 31,
    
    
    February 2,2009
    
    
    2008Federal and state taxes
    
    $
    27,162
    
    
    $
    International
    
    
    2,315
    
    
    
    980Tenant allowances and landlord receivables
    
    
    2,163
    
    
    
    6,920Vendor claims
    
    
    1,121
    
    
    
    1,453Other
    
    
    2,846
    
    
    
    3,204Total
    
    $
    35,607
    
    
    $
    12,557
  4. Property and Equipment
  January 31,
    
    
    February 2,2009
    
    
    2008Land
    
    $
    16,424
    
    
    $
    16,424Buildings
    
    
    56,253
    
    
    
    55,093Furniture, fixtures and equipment
    
    
    250,205
    
    
    
    248,371Leaseholds improvements
    
    
    188,024
    
    
    
    164,228Construction-in-progress
    
    
    5,185
    
    
    
    12,917Total
    
    
    516,091
    
    
    
    497,033Less: accumulated depreciation
    
    
    (215,006
    )
    
    
    (195,628
    )Property and equipment, net
    
    $
    301,085
    
    
    $
    301,405
  61




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##### Table of Contents



5. Leased Facilities And Commitments
    Fiscal Year2008
    
    
    2007
    
    
    2006Fixed minimum
    
    $
    95,824
    
    
    $
    84,756
    
    
    $
    71,754Contingent
    
    
    3,117
    
    
    
    3,310
    
    
    
    3,312Amortization of tenant allowances
    
    
    (11,101
    )
    
    
    (9,670
    )
    
    
    (8,548
    )Total store rent
    
    
    87,840
    
    
    
    78,396
    
    
    
    66,518Equipment and other
    
    
    4,601
    
    
    
    5,482
    
    
    
    2,345Total rent expense
    
    $
    92,441
    
    
    $
    83,878
    
    
    $
    68,863
  2009
    
    $
    96,5162010
    
    $
    89,5442011
    
    $
    81,7972012
    
    $
    76,1702013
    
    $
    70,639Thereafter
    
    $
    215,074
 6. Accrued Expenses
  January 31,
    
    
    February 2,2009
    
    
    2008Compensation, payroll taxes and benefits
    
    $
    7,480
    
    
    $
    20,486Rent and store expenses
    
    
    15,715
    
    
    
    17,148Taxes, other than income and payroll
    
    
    4,799
    
    
    
    6,109Insurance
    
    
    3,820
    
    
    
    3,249Marketing
    
    
    1,728
    
    
    
    517Severance and restructuring
    
    
    5,211
    
    
    
    4,661Fabric cancellations
    
    
    1,249
    
    
    
    1,337Interest
    
    
    1,130
    
    
    
    1,570Other
    
    
    3,286
    
    
    
    1,733Total
    
    $
    44,418
    
    
    $
    56,810
  62




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7. Debt
        63




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##### Table of Contents



8. Derivative Instruments
 Accounting
for Derivative Instruments and Hedging Activities.
     64




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##### Table of Contents



9. Income Taxes
  Fiscal Year2008
    
    
    2007
    
    
    2006Current:Federal
    
    $
    (24,961
    )
    
    $
    26,277
    
    
    $
    34,508State
    
    
    (2,501
    )
    
    
    1,432
    
    
    
    3,636Foreign
    
    
    3,552
    
    
    
    938
    
    
    
    334Total current
    
    
    (23,910
    )
    
    
    28,647
    
    
    
    38,478Deferred:Federal
    
    
    16,875
    
    
    
    986
    
    
    
    (2,140
    )State
    
    
    2,254
    
    
    
    509
    
    
    
    (250
    )Foreign
    
    
    (316
    )
    
    
    (59
    )
    
    
    (81
    )Total deferred
    
    
    18,813
    
    
    
    1,436
    
    
    
    (2,471
    )Total income tax provision
    
    $
    (5,097
    )
    
    $
    30,083
    
    
    $
    36,007
   Fiscal Year2008
    
    
    2007
    
    
    2006Federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    1.5
    
    
    
    3.7
    
    
    
    3.3Executive compensation in excess of $1.0 million
    
    
    (9.0
    )
    
    
    0.5
    
    
    
    0.0Uncertain tax positions
    
    
    (3.7
    )
    
    
    0.4
    
    
    
    0.5State tax settlements
    
    
    3.4
    
    
    
    (2.2
    )
    
    
    (1.1
    )Corporate owned life insurance
    
    
    (3.1
    )
    
    
    0.2
    
    
    
    (0.5
    )Other
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    (1.5
    )Total effective income tax rate
    
    
    22.9
    %
    
    
    36.4
    %
    
    
    35.7
    %
  January 31, 2009
    
    
    February 2, 2008Assets
    
    
    Liabilities
    
    
    Total
    
    
    Assets
    
    
    Liabilities
    
    
    TotalProperty and equipment
    
    $
    
    
    
    $
    (27,173
    )
    
    $
    (27,173
    )
    
    $
    
    
    
    $
    (17,453
    )
    
    $
    (17,453
    )Rent
    
    
    7,945
    
    
    
    
    
    
    
    7,945
    
    
    
    6,885
    
    
    
    
    
    
    
    6,885Inventory
    
    
    3,062
    
    
    
    
    
    
    
    3,062
    
    
    
    3,546
    
    
    
    
    
    
    
    3,546Accrued expenses
    
    
    9,452
    
    
    
    
    
    
    
    9,452
    
    
    
    17,366
    
    
    
    
    
    
    
    17,366Store supplies  basis differential
    
    
    
    
    
    
    (6,231
    )
    
    
    (6,231
    )
    
    
    
    
    
    
    (6,254
    )
    
    
    (6,254
    )Interest rate swap in Other Comprehensive Income
    
    
    3,195
    
    
    
    
    
    
    
    3,195
    
    
    
    1,755
    
    
    
    
    
    
    
    1,755State and local income taxes
    
    
    3,023
    
    
    
    
    
    
    
    3,023
    
    
    
    3,556
    
    
    
    
    
    
    
    3,556Other, net
    
    
    5,061
    
    
    
    (1,177
    )
    
    
    3,884
    
    
    
    3,681
    
    
    
    
    
    
    
    3,681Total deferred income taxes
    
    $
    31,738
    
    
    $
    (34,581
    )
    
    $
    (2,843
    )
    
    $
    36,789
    
    
    $
    (23,707
    )
    
    $
    13,082
  65




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January 31,
    
    
    February 2,2009
    
    
    2008Included in accounts receivable (net)Current taxes receivable
    
    $
    27,162
    
    
    
    Included in prepaid expensesCurrent deferred tax assets
    
    
    469
    
    
    
    2,801Long-term deferred tax assets
    
    
    22
    
    
    
    10,302Included in income taxes payable and unrecognized tax benefitsCurrent taxes payable
    
    
    (2,197
    )
    
    
    (11,909
    )Current deferred taxes payable
    
    
    (551
    )
    
    
    Included in accrued straight line rent, unrecognized tax benefits and otherNon-current taxes payable
    
    
    (9,705
    )
    
    
    (9,977
    )Long-term deferred tax liabilities
    
    
    (2,783
    )
    
    
    (21
    )
    66




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##### Table of Contents



Total UnrecognizedTax BenefitsBalance at February 4, 2007
    
    
    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
    
    $
    13,417Additions for tax positions of prior years
    
    
    1,624Reductions for tax positions of prior years
    
    
    (1,226
    )Additions for tax positions of current year
    
    
    1,498Reductions for tax positions of current year
    
    
    (3,750
    )Settlements with tax authorities
    
    
    (2,418
    )Reductions due to lapse of applicable statutes of
limitation
    
    
    (132
    )Balance at January 31, 2009
    
    $
    9,013
      67




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10. Share Repurchase Program
   11. Retirement Benefits
   68




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##### Table of Contents



Accounting for Deferred Compensation Arrangements Where Amounts
Earned Are Held in a Rabbi Trust
  12. Restructuring
    January 31, 2009
    
    
    February 2, 2008Accrued restructuring charges, beginning of year
    
    $
    
    
    
    $
    Costs incurred and charged to expense
    
    
    18,992
    
    
    
    Costs paid or settled
    
    
    (15,419
    )
    
    
    Other adjustments
    
    
    
    
    
    
    Accrued restructuring charges, end of year
    
    $
    3,573
    
    
    $
    
  69




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13. Fair Value Measurements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 14. Impairment
   70




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##### Table of Contents



15. Legal Matters
     16. Quarterly Financial Data (unaudited, in thousands, except per share amounts)
 FY 2008
    
    First
    
    
    Second
    
    
    Third
    
    
    FourthNet sales
    
    $
    251,738
    
    
    $
    223,102
    
    
    $
    254,273
    
    
    $
    265,949Gross income
    
    
    86,341
    
    
    
    61,786
    
    
    
    85,643
    
    
    
    58,374Store operating, general and
administrative expenses
    
    
    77,893
    
    
    
    71,101
    
    
    
    72,276
    
    
    
    66,726Net income / (Loss)
    
    
    4,280
    
    
    
    (6,679
    )
    
    
    (831
    )
    
    
    (13,915
    )Earnings / (Loss) per share  basic
    
    $
    0.17
    
    
    $
    (0.27
    )
    
    $
    (0.03
    )
    
    $
    (0.56
    )Earnings / (Loss) per share  diluted
    
    $
    0.17
    
    
    $
    (0.27
    )
    
    $
    (0.03
    )
    
    $
    (0.56
    )
 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
  71




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17. Subsequent Events
      72




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##### Table of Contents



Payment Description
    
    Annual AmountAmount Outstanding as of January 31, 2009
    
    $
    166,250Fiscal 2009 Monthly Payments
    
    $
    5,500Fiscal 2009 Annual Principal Payment
    
    
    8,750Fiscal 2010 Monthly Payments
    
    
    5,500Fiscal 2010 Annual Principal Payment
    
    
    8,750Fiscal 2011 Monthly Payments
    
    
    5,500Fiscal 2011 Annual Principal Payment
    
    
    8,750Fiscal 2012 Monthly Payments
    
    
    3,500Fiscal 2012 Final Payment
    
    
    120,000Total Remaining after September 12, 2012
    
    $
    
  
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
   73




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##### Table of Contents



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; and
 iii.
    
    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,
   74




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Changes in Internal Control Over Financial Reporting:
  Inherent Limitations:
   75




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
Control  Integrated Framework Managements Report of Internal Control over
Financial Reporting
     76




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##### Table of Contents



Internal Control 
Integrated Framework
   
 
 Item 9B. Other Information.
   77




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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.
   78




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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 January 31, 2009,
February 2, 2008 and February 3, 2007.
 
    
    Consolidated Balance Sheets as of January 31, 2009 and February 2, 2008.
 
    
    Consolidated Statements of Changes in Shareholders Equity for the fiscal years ended
January 31, 2009, February 2, 2008 and February 3, 2007.
 
    
    Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2009,
February 2, 2008 and February 283 2007.
 
    
    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
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).
  79




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##### Table of Contents



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
    
    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).10.9
    
    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).10.10
    
    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).10.11
    
    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).
  80




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##### Table of Contents



10.12
    
    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).10.13
    
    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).10.14
    
    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).10.15
    
    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).10.16
    
    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).10.17
    
    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).10.18
    
    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).10.19
    
    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).10.20
    
    Michael Keane Offer Letter Dated July 12, 2007 (incorporated by reference to
Exhibit 10.31 to the Annual Report on Form 10-K filed March 28, 2008).10.21
    
    ISDA Master Agreement, dated as of December 27, 2007, by and between Tween
Brands, Inc. and JP Morgan Chase Bank, National Association (incorporated by reference
to Exhibit 10.32 to the Annual Report on Form 10-K filed March 28, 2008).10.21
    
    First Amendment to Credit Agreement, dated March 7, 2008, 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 Quarterly Report on Form 10-Q filed
June 9, 2008).10.22
    
    Second Amendment to Credit Agreement, dated May 14, 2008, 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 Quarterly Report on Form 10-Q filed
September 8, 2008).10.23
    
    Third Amendment to Credit Agreement, dated February 23, 2009, among Tween
Brands, Inc., 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
February 25, 2009).
  81




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10.24
    
    Employment Agreement between the Company and Michael W. Rayden, dated December
3, 2008 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K
filed December 9, 2008).10.25
    
    Executive Agreement between the Company and Michael W. Rayden, dated December 3,
2008 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed
December 9, 2008).10.26
    
    Executive Agreement between the Company and Rolando de Aguiar, dated September
26, 2008 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K
filed October 2, 2008).10.27
    
    Executive Agreement between the Company and Michael Keane, dated September 26,
2008 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed
October 2, 2008).10.28
    
    Executive Agreement between the Company and Gregory J. Henchel, dated September
26, 2008 (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K
filed October 2, 2008).10.29
    
    Executive Agreement between the Company and Ronnie Robinson, dated September 26,
2008.*10.30
    
    Letter Agreement between the Company and Paul C. Carbone, effective as of
February 19, 2008 (incorporated by reference to Exhibit 10.1 to the Current Report on
Form 8-K filed March 18, 2008).10.31
    
    Rolando de Aguiar Offer Letter Dated May 8, 2008 (incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed May 22, 2008).10.32
    
    Confidentiality, Non-Competition and Separation Pay Agreement between the
Company and Rolando de Aguiar, dated May 8, 2008 (incorporated by reference to Exhibit
10.2 to the Current Report on Form 8-K filed May 22, 2008).21
    
    Subsidiaries of the Registrant.*23.1
    
    Consent of Independent Registered Public Accounting Firm  Deloitte & Touche, 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.
  82




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##### Table of Contents



SIGNATURES
  Date: March 31, 2009
    TWEEN BRANDS, INC.
(registrant)/s/ Rolando de AguiarRolando de AguiarExecutive Vice President and Chief Financial 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/ ROLANDO DE AGUIAR*

Rolando de Aguiar
    
    Executive Vice President, Chief
Financial Officer and Treasurer (Principal
Financial and Accounting Officer)/s/ ELIZABETH M. EVEILLARD*

Elizabeth M. Eveillard
    
    Director/s/ DAVID A. KRINSKY*

David A. Krinsky
    
    Director/s/ PHILIP E. MALLOTT*

Philip E. Mallott
    
    Director/s/ FREDRIC M. ROBERTS*

Fredric M. Roberts
    
    Director/s/ KENNETH J. STROTTMAN*

Kenneth James Strottman
    
    Director
 *
    
    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/ Rolando de AguiarRolando de AguiarAttorney-in-fact  83




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##### Table of Contents



EXHIBIT INDEX
 10.29
    
    Executive Agreement between the Company and Ronnie Robinson, dated September 26,
2008.*21
    
    Subsidiaries of the Registrant.*23.1
    
    Consent of Independent Registered Public Accounting Firm  Deloitte & Touche, 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.  84