##### 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 February 3, 2007
 
 o TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 
  
 
 
  Delaware
    
    31-1333930(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 8323 Walton Parkway, New Albany, Ohio 43054
  614-775-3500
 
 Title of each class
    
    Name of each exchange on which registeredCommon Shares, $.01 par value
    
    New York Stock ExchangePreferred Stock Purchase Rights
    
    New York Stock Exchange
 
 þ o
 o þ
 þ o
 o
  Large accelerated filer þ
    Accelerated filer o
    Non-accelerated filer o o þ
 
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TWEEN BRANDS, INC.
 TABLE OF CONTENTS
 PART IItem 1.
    
    Business
    
    
    4Item 1A.
    
    Risk Factors
    
    
    8Item 1B.
    
    Unresolved Staff Comments
    
    
    14Item 2.
    
    Properties
    
    
    14Item 3.
    
    Legal Proceedings
    
    
    17Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    17PART II.Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    18Item 6.
    
    Selected Financial Data
    
    
    20Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    21Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 8.
    
    Financial Statements and Supplementary Data
    
    
    40Item 9.
    
    Changes in and Disagreements With Accountants on Accounting And Financial Disclosure
    
    
    61Item 9A.
    
    Controls and Procedures
    
    
    62Item 9B.
    
    Other Information
    
    
    65PART III.Item 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    66Item 11.
    
    Executive Compensation
    
    
    66Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    66Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    66Item 14.
    
    Principal Accounting Fees and Services
    
    
    66PART IV.Item 15.
    
    Exhibits, Financial Statement Schedules
    
    
    67SIGNATURESEX-10.38EX-10.39EX-21EX-23.1EX-23.2EX-24EX-31.1EX-31.2EX-32.1EX-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
    Limited Too Retail Operations
   4




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
 
 
 
 
 
  Justice Retail Operations
   
 
 
 
 
   Product Development
  5




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Sourcing
    Distribution
  Inventory Management
  Seasonality
  6




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Stores
  Fiscal Year2006
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Number of stores:Beginning of year
    
    
    666
    
    
    
    603
    
    
    
    558
    
    
    
    510
    
    
    
    459Opened
    
    
    79
    
    
    
    70
    
    
    
    55
    
    
    
    54
    
    
    
    56Closed
    
    
    (23
    )
    
    
    (7
    )
    
    
    (10
    )
    
    
    (6
    )
    
    
    (5
    )End of year
    
    
    722
    
    
    
    666
    
    
    
    603
    
    
    
    558
    
    
    
    510Stores remodeled
    
    
    34
    
    
    
    25
    
    
    
    20
    
    
    
    4
    
    
    
    9Total square feet at period end (thousands)
    
    
    3,006
    
    
    
    2,777
    
    
    
    2,495
    
    
    
    2,307
    
    
    
    2,091Average store size at period end(gross square feet)
    
    
    4,163
    
    
    
    4,170
    
    
    
    4,138
    
    
    
    4,134
    
    
    
    4,100Number of Limited Too stores
    
    
    563
    
    
    
    574
    
    
    
    568
    
    
    
    553
    
    
    
    510Number of Justice stores
    
    
    159
    
    
    
    92
    
    
    
    35
    
    
    
    5
    
    
    
    -
  Trademarks and Service Marks
    Competition
  7




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Associate Relations
  Available Information
    Fiscal Year Definitions
  Number of weeksFiscal
Year
    
    Period Ending
    
    in Fiscal Year2006
    
    February 3, 2007
    
    53 weeks2005
    
    January 28, 2006
    
    52 weeks2004
    
    January 29, 2005
    
    52 weeks2003
    
    January 31, 2004
    
    52 weeks2002
    
    February 1, 2003
    
    52 weeks
 
 Item 1A. Risk Factors.
  8




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We may not be able to maintain comparable store sales growth
  
    
    economic conditions;
    
    weather conditions;
    
    changing fashion trends;
    
    competition;
    
    new store openings in existing markets;
    
    store remodeling and expansions;
    
    customer response to our marketing programs;
    
    procurement and management of merchandise inventory; and
    
    development and growth of our Justice brand.
  We must identify and respond to fashion 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
  9




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Expansion into new and existing markets creates challenges
  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
   10




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
    
    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.
   Talented personnel are critical to our success
  We may not be able to sustain a growth rate sufficient to implement our expansion strategy
  
    
    find suitable markets and sites for our stores and negotiate leases on
acceptable terms for those stores;
    
    fulfill our plans to open new stores and remodel or expand existing stores;
    
    continue to develop our sales channels, including our direct-to-consumer operations;
    
    identify suitable franchise operators for our international expansion initiative;
    
    expand our infrastructure to accommodate our growth, including maintaining
high levels of customer service;
    
    attract, train and retain qualified sales associates;
    
    manage our inventory effectively, maintain sufficient distribution
capacity and deliver our merchandise in a timely manner;
    
    keep up with constantly shifting fashion trends and develop new and appealing merchandise; and
    
    maintain continued success for our Justice brand.
  11




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There would be risks associated with launching and maintaining a new brand
  
    
    customer 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.
  Our business fluctuates on a seasonal basis
   Our business is sensitive to economic conditions and consumer spending patterns
  We rely on a single distribution center
  We rely on foreign sources of production
  12




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
    
    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 are pursuing a strategy of international expansion
  We source merchandise through our internal sourcing offices in Asia
  We utilize ports to import our products from Asia
  We will need to comply with existing and new laws and regulations that govern us
  13




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We rely on our manufacturers to enforce ethical labor practices
  We are implementing new information systems
   Our business may be harmed if our computer network security is compromised
  
 Item 1B. Unresolved Staff Comments.
  
 Item 2. Properties.
   14




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15




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Geographic Location
    
    Limited Too
    
    Justice
    
    TotalAlabama
    
    
    10
    
    
    
    4
    
    
    
    14Arkansas
    
    
    4
    
    
    
    -
    
    
    
    4Arizona
    
    
    9
    
    
    
    5
    
    
    
    14California
    
    
    56
    
    
    
    11
    
    
    
    67Colorado
    
    
    6
    
    
    
    2
    
    
    
    8Connecticut
    
    
    11
    
    
    
    1
    
    
    
    12Delaware
    
    
    4
    
    
    
    -
    
    
    
    4Florida
    
    
    44
    
    
    
    13
    
    
    
    57Georgia
    
    
    20
    
    
    
    8
    
    
    
    28Iowa
    
    
    4
    
    
    
    1
    
    
    
    5Idaho
    
    
    1
    
    
    
    -
    
    
    
    1Illinois
    
    
    21
    
    
    
    8
    
    
    
    29Indiana
    
    
    14
    
    
    
    5
    
    
    
    19Kansas
    
    
    5
    
    
    
    2
    
    
    
    7Kentucky
    
    
    11
    
    
    
    1
    
    
    
    12Louisiana
    
    
    9
    
    
    
    -
    
    
    
    9Massachusetts
    
    
    15
    
    
    
    2
    
    
    
    17Maryland
    
    
    16
    
    
    
    -
    
    
    
    16Maine
    
    
    1
    
    
    
    -
    
    
    
    1Michigan
    
    
    20
    
    
    
    7
    
    
    
    27Minnesota
    
    
    11
    
    
    
    2
    
    
    
    13Missouri
    
    
    14
    
    
    
    5
    
    
    
    19Mississippi
    
    
    5
    
    
    
    2
    
    
    
    7North Carolina
    
    
    15
    
    
    
    3
    
    
    
    18North Dakota
    
    
    2
    
    
    
    -
    
    
    
    2Nebraska
    
    
    3
    
    
    
    1
    
    
    
    4New Hampshire
    
    
    5
    
    
    
    -
    
    
    
    5New Jersey
    
    
    20
    
    
    
    10
    
    
    
    30New Mexico
    
    
    2
    
    
    
    -
    
    
    
    2Nevada
    
    
    4
    
    
    
    4
    
    
    
    8New York
    
    
    29
    
    
    
    3
    
    
    
    32Ohio
    
    
    21
    
    
    
    10
    
    
    
    31Oklahoma
    
    
    5
    
    
    
    1
    
    
    
    6Oregon
    
    
    3
    
    
    
    -
    
    
    
    3Pennsylvania
    
    
    33
    
    
    
    9
    
    
    
    42Rhode Island
    
    
    2
    
    
    
    -
    
    
    
    2South Carolina
    
    
    8
    
    
    
    1
    
    
    
    9South Dakota
    
    
    1
    
    
    
    -
    
    
    
    1Tennessee
    
    
    12
    
    
    
    2
    
    
    
    14Texas
    
    
    46
    
    
    
    27
    
    
    
    73Utah
    
    
    4
    
    
    
    2
    
    
    
    6Virginia
    
    
    16
    
    
    
    4
    
    
    
    20Vermont
    
    
    1
    
    
    
    -
    
    
    
    1Washington
    
    
    6
    
    
    
    2
    
    
    
    8Wisconsin
    
    
    9
    
    
    
    1
    
    
    
    10West Virginia
    
    
    3
    
    
    
    -
    
    
    
    3Puerto Rico
    
    
    2
    
    
    
    -
    
    
    
    2Total
    
    
    563
    
    
    
    159
    
    
    
    722
 16




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Item 3. Legal Proceedings.
  
 Item 4. Submission Of Matters To A Vote Of Security Holders.
  17




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PART II
 
 Item 5.
    
    Market For Registrants Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities.
 (a)
    
    Tween Brands, Inc. shares are traded on the New York Stock Exchange under the trading
symbol TWB (formerly TOO). The following is a summary of the high, low and close sales
prices of our common stock as reported on the New York Stock Exchange for the 2006 and 2005
fiscal years:
 Sales PriceHigh
    
    
    Low
    
    
    Close2006 Fiscal Year4th Quarter
    
    $
    44.53
    
    
    $
    33.00
    
    
    $
    34.863rd Quarter
    
    $
    41.59
    
    
    $
    31.05
    
    
    $
    41.462nd Quarter
    
    $
    43.34
    
    
    $
    34.91
    
    
    $
    36.671st Quarter
    
    $
    38.96
    
    
    $
    27.93
    
    
    $
    38.422005 Fiscal Year4th Quarter
    
    $
    32.65
    
    
    $
    25.75
    
    
    $
    28.603rd Quarter
    
    $
    29.90
    
    
    $
    24.29
    
    
    $
    27.262nd Quarter
    
    $
    27.05
    
    
    $
    18.85
    
    
    $
    25.791st Quarter
    
    $
    29.31
    
    
    $
    22.45
    
    
    $
    23.01
  Shareholder Return Graph
  Comparison
of Cumulative Five Year Total Return
 
 18




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##### Table of Contents



Total Return To Shareholders
 Annual Return PercentageYears EndingCompany/Index
    
    
    2/1/03
    
    
    
    1/31/04
    
    
    
    1/29/05
    
    
    
    1/28/06
    
    
    
    2/3/07Tween Brands, Inc
    
    
    -38.70
    
    
    
    -8.11
    
    
    
    74.18
    
    
    
    7.32
    
    
    
    21.89S&P SmallCap 600 Index
    
    
    -17.47
    
    
    
    47.86
    
    
    
    14.20
    
    
    
    21.10
    
    
    
    10.57S&P Apparel Retail
    
    
    2.18
    
    
    
    31.54
    
    
    
    19.69
    
    
    
    -7.04
    
    
    
    18.56
 Indexed ReturnsYears EndingBase PeriodCompany/Index
    
    2/2/02
    
    2/1/03
    
    1/31/04
    
    1/29/05
    
    1/28/06
    
    2/3/07Tween Brands, Inc
    
    
    100
    
    
    
    61.30
    
    
    
    56.33
    
    
    
    98.12
    
    
    
    105.30
    
    
    
    128.35S&P SmallCap 600 Index
    
    
    100
    
    
    
    82.53
    
    
    
    122.03
    
    
    
    139.35
    
    
    
    168.75
    
    
    
    186.58S&P Apparel Retail
    
    
    100
    
    
    
    102.18
    
    
    
    134.41
    
    
    
    160.88
    
    
    
    149.55
    
    
    
    177.31
 (b)
    
    Not applicable.
 (c)
    
    In November 2004, our Board of Directors authorized the repurchase of up to $125
million of our common stock as a means of further enhancing shareholder value over a two year
period beginning November 18, 2004. Between November 18, 2004 and November 16, 2005 we
repurchased $59.6 million of common stock. In November 2005 our Board of Directors restored
the amount available for share repurchases to $125 million over a two year period beginning
November 17, 2005. Between November 17, 2005 and August 20, 2006, we repurchased $40.0
million of common stock. In August 2006 our Board of Directors restored the amount available
for share repurchases to $125 million over a two year period beginning August 21, 2006.
Between August 21, 2006 and February 3, 2007, we repurchased $20.0 million of common stock.
Future purchases may occur from time to time, subject to market conditions, in open market or
privately negotiated transactions, and in accordance with Securities and Exchange Commission
requirements. We can provide no assurance that we will repurchase any shares under the
amended share repurchase program. The following table illustrates our purchases of equity
securities during the fourth quarter 2006:
 Total Number
    
    
    Average
    
    
    Total Number of Shares
    
    
    Maximum Dollar Value of Sharesof Shares
    
    
    Price Paid
    
    
    Purchased as Part of Publicly
    
    
    that may yet be purchased underPeriod
    
    Purchased
    
    
    per Share
    
    
    Announced Plans or Programs
    
    
    the Plans or ProgramsNovember (October 29, 2006
through November 25, 2006)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    $
    105,038,971December (November 26, 2006
through December 30, 2006)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    $
    105,038,971January (December 31, 2006
through February 3, 2007)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    $
    105,038,971Total
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    $
    105,038,971
  19




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Item 6. Selected Financial Data.
  Fiscal Year2006 (1)
    
    
    2005
    
    
    2004
    
    
    2003 (2)
    
    
    2002 (2)Statement of Operations Data:Net sales (3)
    
    $
    883,683
    
    
    $
    757,936
    
    
    $
    675,834
    
    
    $
    598,681
    
    
    $
    640,320Gross income
    
    
    333,968
    
    
    
    291,297
    
    
    
    241,887
    
    
    
    200,626
    
    
    
    237,917Store operating, general and
administrative expenses
    
    
    238,278
    
    
    
    208,338
    
    
    
    177,508
    
    
    
    154,275
    
    
    
    157,991Operating income
    
    
    95,690
    
    
    
    82,959
    
    
    
    64,379
    
    
    
    46,351
    
    
    
    79,926Income from continuing operations
    
    
    64,821
    
    
    
    54,451
    
    
    
    41,589
    
    
    
    29,114
    
    
    
    48,945Net income (4)
    
    
    64,821
    
    
    
    54,451
    
    
    
    41,589
    
    
    
    23,134
    
    
    
    47,759Earnings per
share - basic (4)
    
    $
    1.99
    
    
    $
    1.62
    
    
    $
    1.21
    
    
    $
    0.68
    
    
    $
    1.44Earnings per
share - diluted (4)
    
    $
    1.95
    
    
    $
    1.60
    
    
    $
    1.19
    
    
    $
    0.67
    
    
    $
    1.40Balance Sheet Data:Cash and equivalents
    
    $
    48,394
    
    
    $
    22,248
    
    
    $
    26,212
    
    
    $
    4,991
    
    
    $
    36,234Inventories
    
    
    91,742
    
    
    
    66,033
    
    
    
    62,441
    
    
    
    58,299
    
    
    
    61,405Total assets
    
    
    569,677
    
    
    
    523,730
    
    
    
    493,696
    
    
    
    441,253
    
    
    
    395,451Total debt
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Total shareholders equity
    
    
    371,326
    
    
    
    350,783
    
    
    
    322,524
    
    
    
    276,565
    
    
    
    247,889Selected Operating Data:Comparable store sales increase/(decrease) (5) (6)
    
    
    6
    %
    
    
    5
    %
    
    
    4
    %
    
    
    -13
    %
    
    
    -3
    %Total net sales growth/(decline)
    
    
    16.6
    %
    
    
    12.1
    %
    
    
    12.9
    %
    
    
    -6.5
    %
    
    
    6.6
    %Gross income rate (7)
    
    
    37.8
    %
    
    
    38.4
    %
    
    
    35.8
    %
    
    
    33.5
    %
    
    
    37.2
    %Operating income rate (7)
    
    
    10.8
    %
    
    
    10.9
    %
    
    
    9.5
    %
    
    
    7.7
    %
    
    
    12.5
    %Total number of stores open at
year end
    
    
    722
    
    
    
    666
    
    
    
    603
    
    
    
    558
    
    
    
    510Total gross square feet at year end
    
    
    3,006
    
    
    
    2,777
    
    
    
    2,495
    
    
    
    2,307
    
    
    
    2,091Annual net store sales per average
square foot (8)
    
    $
    299
    
    
    $
    284
    
    
    $
    272
    
    
    $
    268
    
    
    $
    318
 (1)
    
    Represents the 53-week fiscal year ended February 3, 2007.(2)
    
    Due to the discontinuation of mishmash in 2003, its results are excluded for all
periods presented.(3)
    
    Total net sales includes: store sales, net of associate discounts; direct sales;
shipping revenue; international revenue and partner advertising revenue.(4)
    
    Includes the impact of the loss on discontinued operations of mishmash, net of tax,
of $6.0 million and $1.2 million for fiscal 2003 and 2002, respectively.(5)
    
    A store is included in our comparable store sales calculation once it has completed
52 weeks of operation. Further, stores that have changed more than 20% in gross square
feet are treated as new stores for the purpose of this calculation.(6)
    
    Comparable store sales for fiscal 2006 are measured against a 53-week period ending
February 4, 2006.(7)
    
    Calculated as a percentage of net sales.(8)
    
    Annual net store sales per average square foot is the result of dividing net store
sales for the fiscal year by the average gross square feet, which reflects the impact of
opening and closing stores throughout the period. 20




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Item 7. Managements Discussion And Analysis of Financial Condition And Results of Operation.
  Executive Overview
 Record Sales and Earnings
  Limited Too  Still Going Strong
  Nintendo of America, Inc. Radica USA, Ltd.
   21




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##### Table of Contents



Justice  Moving Right Along
  Justice Shine Parties
  Justice Shine Parties
 Information Technology Initiative
  22




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##### Table of Contents



Stock Repurchase
  Capital Investment and Resources
  Home Office Expansion
  International Expansion
  Being Tween
  Be Focused must
 Be Driven
 Be Creative
 Be Ethical
 Be Balanced
  23




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##### Table of Contents



Our Twentieth Anniversary
  Results of Operations
   Fiscal Year2006
    
    2005
    
    2004Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Costs of goods sold, buying and
occupancy costs
    
    
    62.2
    
    
    
    61.6
    
    
    
    64.2Gross income
    
    
    37.8
    
    
    
    38.4
    
    
    
    35.8General, adminstrative and store
operating expenses
    
    
    27.0
    
    
    
    27.5
    
    
    
    26.3Operating income
    
    
    10.8
    
    
    
    10.9
    
    
    
    9.5Interest income, net
    
    
    0.6
    
    
    
    0.3
    
    
    
    0.2Earnings before income taxes
    
    
    11.4
    
    
    
    11.2
    
    
    
    9.7Provision for income taxes
    
    
    4.1
    
    
    
    4.0
    
    
    
    3.5Net income
    
    
    7.3
    %
    
    
    7.2
    %
    
    
    6.2
    %
 24




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##### Table of Contents



Financial Summary
  Fiscal Year
    
    % ChangeLimited Too and Justice:
    
    
    
    
    
    
    
    
    
    
    
    
    
    2005-
    
    2004-2006 (1)
    
    2005
    
    2004

    
    2006
    
    2005Net sales (millions) (2)
    
    $
    883.7
    
    
    $
    757.9
    
    
    $
    675.8
    
    
    
    17
    %
    
    
    12
    %Comparable store sales (3)(4)
    
    
    6
    %
    
    
    5
    %
    
    
    4
    %Annual net store sales per average
square foot (5)
    
    $
    299
    
    
    $
    284
    
    
    $
    272
    
    
    
    5
    %
    
    
    4
    %Sales per average store (thousands) (6)
    
    $
    1,245.9
    
    
    $
    1,181.3
    
    
    $
    1,148.1
    
    
    
    5
    %
    
    
    3
    %Average store size at period end
(gross square feet)
    
    
    4,163
    
    
    
    4,170
    
    
    
    4,138
    
    
    
    0
    %
    
    
    1
    %Total gross square feet at period end
(thousands)
    
    
    3,006
    
    
    
    2,777
    
    
    
    2,495
    
    
    
    8
    %
    
    
    11
    %Inventory per gross square foot at
period end (7)
    
    $
    30.5
    
    
    $
    23.8
    
    
    $
    25.0
    
    
    
    28
    %
    
    
    -5
    %Inventory per store at period end (7)
    
    $
    127,066
    
    
    $
    99,149
    
    
    $
    103,551
    
    
    
    28
    %
    
    
    -4
    %Number of stores:Beginning of period
    
    
    666
    
    
    
    603
    
    
    
    558Opened
    
    
    79
    
    
    
    70
    
    
    
    55Closed
    
    
    (23
    )
    
    
    (7
    )
    
    
    (10
    )End of period
    
    
    722
    
    
    
    666
    
    
    
    603Limited Too stores remodeled
    
    
    34
    
    
    
    25
    
    
    
    20Number of Limited Too stores
    
    
    563
    
    
    
    574
    
    
    
    568Number of Justice stores
    
    
    159
    
    
    
    92
    
    
    
    35
 (1)
    
    Represents the 53-week fiscal year ended February 3, 2007.(2)
    
    Net sales includes: store sales, net of associate discounts, direct sales, 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 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)
    
    Sales per average store is the result of dividing gross 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 stores, direct and all valuation adjustments. Analysis of Operations
 Sales Analysis
  Fiscal Year
    
    % ChangeLimited Too and Justice:
    
    
    
    
    
    
    
    
    
    
    
    
    
    2005-
    
    2004-2006 (1)
    
    2005
    
    2004
    
    2006
    
    2005Average dollar sales value per transaction
(ADS) (2)
    
    $
    53.24
    
    
    $
    51.08
    
    
    $
    44.83
    
    
    
    4
    %
    
    
    14
    %Average number of units per transaction (UPT)
    
    
    4.08
    
    
    
    3.94
    
    
    
    3.73
    
    
    
    4
    %
    
    
    6
    %Number of transactions per average store (3)
    
    
    23,605
    
    
    
    23,282
    
    
    
    25,237
    
    
    
    1
    %
    
    
    -8
    %Average dollar value of units sold at retail
(AUR) (4)
    
    $
    13.06
    
    
    $
    12.97
    
    
    $
    12.01
    
    
    
    1
    %
    
    
    8
    %Sales from transactions over $50 (% of total
sales)
    
    
    77.3
    %
    
    
    73.2
    %
    
    
    72.5
    %
    
    
    6
    %
    
    
    1
    %Transactions over $50 (% of total transactions)
    
    
    39.3
    %
    
    
    37.8
    %
    
    
    32.9
    %
    
    
    4
    %
    
    
    15
    %
 (1)
    
    Represents the 53-week fiscal year ended February 3, 2007.(2)
    
    Average dollar sales value per transaction is the result of dividing gross store sales
dollars for the period by the number of store transactions.(3)
    
    Number of transactions per average store is the result of dividing the total number of
transactions by for the fiscal period by average store count, which reflects the impact of
opening and closing stores throughout the period.(4)
    
    Average dollar value of unit sold at retail is the result of dividing gross store sales
dollars for the period by the number of units sold during the period. 25




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##### Table of Contents



rd
  Gross Income
     Store Operating, General and Administrative Expenses
   2006 vs. 2005
    
    2006 vs. 2005Changes in:
    
    Dollar change
    
    Change in bpsStore operating expenses
    
    $
    22,556
    
    
    
    -Home Office
    
    
    11,710
    
    
    
    40Marketing
    
    
    (3,944
    )
    
    
    (80
    )Distribution center & other
    
    
    (378
    )
    
    
    (10
    )Total Change
    
    $
    29,944
    
    
    
    (50
    )
  26




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##### Table of Contents



Share-Based Payment
   2005 vs. 2004
   
    2005 vs. 2004Changes in:
    
    Dollar change
    
    Change in bpsHome office
    
    $
    14,071
    
    
    
    130Store operating expenses
    
    
    11,437
    
    
    
    (50
    )Marketing
    
    
    7,640
    
    
    
    90Distribution center & other
    
    
    (2,318
    )
    
    
    (50
    )Total Change
    
    $
    30,830
    
    
    
    120
    Interest Income, net
     Provision for Income Taxes
   27




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##### Table of Contents



Our outlook for the future
      Analysis of Financial Condition and Liquidity
 Financial Condition
  28




---



##### Table of Contents



Liquidity and Capital Resources
    FY 2006
    
    
    FY 2005
    
    
    FY 2004Working capital
    
    $
    172,758
    
    
    $
    185,075
    
    
    $
    180,101Capitalization:Long-term debt
    
    
    -
    
    
    
    -
    
    
    
    -Shareholders equity
    
    
    375,229
    
    
    
    350,783
    
    
    
    322,524Total capitalization
    
    $
    375,229
    
    
    $
    350,783
    
    
    $
    322,524Amounts available under the credit facility
    
    $
    99,446
    
    
    $
    98,802
    
    
    $
    78,566Restricted assets
    
    $
    1,235
    
    
    $
    1,193
    
    
    $
    954
  Tween Brands, Inc.
    
    ApparelFebruary 3, 2007
    
    January 28, 2006
    
    Industry(2)
    
    S&P 500Current Ratio
    
    
    2.6
    
    
    
    2.9
    
    
    
    2.2
    
    
    
    1.0Debt/Equity Ratio
    
    
    -(1)
    
    
    
    -(1)
    
    
    
    0.2
    
    
    
    1.1
 (1)
    
    Tween Brands, Inc. is currently debt free(2)
    
    Information reflects the latest apparel stores industry financial ratios
found on MSN© money
  29




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##### Table of Contents



Net Change in Cash and Equivalents
  Fiscal Year2006
    
    2005
    
    2004Net cash provided by operating activities
    
    $
    87,431
    
    
    $
    95,858
    
    
    $
    77,306Net cash used for investing activities
    
    
    (16,601
    )
    
    
    (58,135
    )
    
    
    (59,260
    )Net cash
used for or provided by financing activities
    
    
    (44,684
    )
    
    
    (41,687
    )
    
    
    3,175Net increase in cash and equivalents
    
    $
    26,146
    
    
    $
    (3,964
    )
    
    $
    21,221
 Operating Activities
   FY 2006 vs FY 2005Changes in:
    
    increase/(decrease)Net income, net of non-cash expenses
    
    $
    13.5Income taxes
    
    
    1.1Inventory
    
    
    (22.1
    )Accounts payable and accrued expenses
    
    
    (1.9
    )Tenant allowances received
    
    
    2.1Other
    
    
    (1.2
    )Total change in cash flows from operating activities
    
    $
    (8.5
    )
    30




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##### Table of Contents



FY 2005 vs FY 2004Changes in:
    
    increase/(decrease)Net income, net of non-cash expenses
    
    $
    15.2Income taxes
    
    
    (14.5
    )Inventory
    
    
    0.6Accounts payable and accrued expenses
    
    
    7.0Tenant allowances received
    
    
    1.0Other
    
    
    9.3Total change in cash flows from operating activities
    
    $
    18.6
    Investing Activities
   FY 2006 vs FY 2005Changes in:
    
    increase/(decrease)Investments
    
    $
    (62.3
    )Capital expenditures
    
    
    15.2Change in restricted assets
    
    
    (0.2
    )Funding of nonqualified benefit plans
    
    
    4.8Other
    
    
    1.0Total change in cash used for investing activities
    
    $
    (41.5
    )
  31




---



##### Table of Contents



FY 2005 vs FY 2004Changes in:
    
    increase/(decrease)Investments
    
    $
    (47.5
    )Capital expenditures
    
    
    27.0Change in restricted assets
    
    
    20.1Other
    
    
    (0.8
    )Total change in cash used for investing activities
    
    $
    (1.2
    )
  Financing Activities
   FY 2006 vs FY 2005Changes in:
    
    increase/(decrease)Purchases of treasury stock
    
    $
    3.8Tax benefit from stock option exercises
    
    
    (2.3
    )Change in cash overdraft position
    
    
    (5.0
    )Stock options and other equity changes
    
    
    6.5Total change in cash flows from financing activities
    
    $
    3.0
    FY 2005 vs FY 2004Changes in:
    
    increase/(decrease)Purchases of treasury stock
    
    $
    52.8Tax benefit from stock option exercises
    
    
    -Change in cash overdraft position
    
    
    1.6Stock options and other equity changes
    
    
    (9.5
    )Total change in cash flows from financing activities
    
    $
    44.9
 32




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##### Table of Contents



Future Capital Expenditures
      Transitional Services and Separation Agreements
  Trademark and Service Mark Licensing Agreement
  33




---



##### Table of Contents



Store Leases Agreement
    Minimum
    
    OptionalCash
    
    LoanRemaining Lease Term
    
    Payment
    
    AmountLess than one year
    
    $
    -
    
    
    $
    100,000One to two years
    
    
    50,000
    
    
    
    100,000Three to four years
    
    
    100,000
    
    
    
    100,000Greater than four years
    
    
    100,000
    
    
    
    150,000
   Off-Balance Sheet Arrangements
  34




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##### Table of Contents



Contractual Obligations and Commercial Commitments
  Contractual Obligations
 Payments Due by Fiscal PeriodTotal
    
    
    2007
    
    
    2008 & 2009
    
    
    2010 & 2011
    
    
    2012 & beyondOperating lease
obligations (1)
    
    $
    488,013
    
    
    $
    73,567
    
    
    $
    134,822
    
    
    $
    109,965
    
    
    $
    169,659Purchase obligations (2)
    
    
    100,358
    
    
    
    100,358
    
    
    
    -
    
    
    
    -
    
    
    
    -Total
    
    $
    588,371
    
    
    $
    173,925
    
    
    $
    134,822
    
    
    $
    109,965
    
    
    $
    169,659
 (1)
    
    Primarily consists of future minimum lease payments under our store operating leases.(2)
    
    Represents outstanding purchase orders for merchandise and store construction. Commercial Commitments:
 Commitments by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    Years
    
    
    Years
    
    
    5 YearsOutstanding letters of credit (1)
    
    $
    554
    
    
    $
    554
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -Standby letters of credit
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Total
    
    $
    554
    
    
    $
    554
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
 (1)
    
    Consists of outstanding letter of credit commitments for the purchase of merchandise. Credit Facility
  Impact of Inflation
  Critical Accounting Policies
  Revenue Recognition
  35




---



##### Table of Contents



Operating Leases
  Tenant Allowances
  Cash Equivalents
  Investments
    Inventories
   36




---



##### Table of Contents



Property and Equipment
   Income Taxes
 Accounting for Income Taxes
 Recently Issued Accounting Standards
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be
Presented in the Income Statement (That is, Gross versus Net Presentation).
 Accounting for Uncertainty in
Income Taxes
 Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements.
 37




---



##### Table of Contents



Fair Value Measurements
 Accounting for
Purchases of Life Insurance  Determining the amount that could be realized in accordance with FASB
Technical Bulletin 85-4
 The Fair Value Option for Financial Assets and Financial Liabilities  including an
amendment of FASB Statement No. 115.
 Seasonality
  Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
  38




---



##### Table of Contents




    
    Changes in consumer spending patterns, consumer preferences and overall economic conditions;
    
    Decline in the demand for our merchandise;
    
    The impact of competition and pricing;
    
    Effectiveness of our brand awareness and marketing programs;
    
    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;
    
    Availability of suitable store locations at appropriate terms;
    
    Ability to develop new merchandise;
    
    Ability to hire and train associates;
    
    The potential impact of health concerns relating to severe infectious diseases, particularly on
manufacturing operations of our vendors in Asia and elsewhere;
    
    The security of our computer network
    
    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.
 Form 10-K
 
 Item 7A. Quantitative And Qualitative Disclosures About Market Risk
  39




---



##### Table of Contents



Item 8. Financial Statements And Supplementary Data.
 Index to Consolidated Financial Statements
 Reports of Independent Registered Public Accounting Firms
    
    
    41Consolidated Statements of Operations
    
    
    43Consolidated Balance Sheets
    
    
    44Consolidated Statements of Changes in Shareholders Equity
    
    
    45Consolidated Statements of Cash Flows
    
    
    46Notes to Consolidated Financial Statements
    
    
    47
 40




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Share Based Payment
 Internal ControlIntegrated Framework
  
 41




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
    
 42




---



##### Table of Contents



TWEEN
BRANDS,
INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 Fiscal Year2006
    
    
    2005
    
    
    2004Net sales
    
    $
    883,683
    
    
    $
    757,936
    
    
    $
    675,834Costs of goods sold, buying and
occupancy costs
    
    
    549,715
    
    
    
    466,639
    
    
    
    433,947Gross income
    
    
    333,968
    
    
    
    291,297
    
    
    
    241,887Store operating, general and
administrative expenses
    
    
    238,278
    
    
    
    208,338
    
    
    
    177,508Operating income
    
    
    95,690
    
    
    
    82,959
    
    
    
    64,379Interest income, net
    
    
    5,138
    
    
    
    2,025
    
    
    
    1,307Earnings before income taxes
    
    
    100,828
    
    
    
    84,984
    
    
    
    65,686Provision for income taxes
    
    
    36,007
    
    
    
    30,533
    
    
    
    24,097Net income
    
    $
    64,821
    
    
    $
    54,451
    
    
    $
    41,589Net income per share:Basic
    
    $
    1.99
    
    
    $
    1.62
    
    
    $
    1.21Diluted
    
    $
    1.95
    
    
    $
    1.60
    
    
    $
    1.19Weighted average common shares:Basic
    
    
    32,521
    
    
    
    33,603
    
    
    
    34,512Diluted
    
    
    33,198
    
    
    
    33,960
    
    
    
    34,955
  43




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##### Table of Contents



TWEEN BRANDS, INC.
 
 CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 February 3,
    
    
    January 28,2007
    
    
    2006ASSETSCurrent assets:Cash and equivalents
    
    $
    48,394
    
    
    $
    22,248Investments
    
    
    99,164
    
    
    
    163,451Restricted assets
    
    
    1,235
    
    
    
    1,193Accounts receivable, net
    
    
    13,878
    
    
    
    8,040Inventories, net
    
    
    91,742
    
    
    
    66,033Store supplies
    
    
    14,806
    
    
    
    12,216Prepaid expenses and other current assets
    
    
    15,236
    
    
    
    11,932Total current assets
    
    
    284,455
    
    
    
    285,113Property and equipment, net
    
    
    235,516
    
    
    
    201,983Long-term investments
    
    
    17,054
    
    
    
    8,464Deferred income taxes
    
    
    8,166
    
    
    
    10,208Assets held in trust and other
    
    
    24,486
    
    
    
    17,962Total assets
    
    $
    569,677
    
    
    $
    523,730LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    37,150
    
    
    $
    30,223Accrued expenses
    
    
    38,849
    
    
    
    38,713Deferred revenue
    
    
    13,584
    
    
    
    11,859Income taxes payable
    
    
    20,879
    
    
    
    18,050Total current liabilities
    
    
    110,462
    
    
    
    98,845Deferred tenant allowances from landlords
    
    
    53,687
    
    
    
    45,817Supplemental retirement and deferred compensation liability
    
    
    20,362
    
    
    
    16,907Accrued straight-line rent and other
    
    
    13,840
    
    
    
    11,378Commitments and contingenciesSHAREHOLDERS EQUITYPreferred stock, $.01 par value, 50 million shares authorizedCommon stock, $.01 par value, 100 million shares authorized,
36.6 million and 36.1 million shares issued,
32.1 million and 33.3 million shares outstanding
at February 3, 2007 and January 28, 2006, respectively
    
    
    366
    
    
    
    361Treasury
stock, at cost, 4.5 million and 2.7 million shares at February 3, 2007 and January 28, 2006, respectively
    
    
    (120,554
    )
    
    
    (60,595
    )Paid in capital
    
    
    173,394
    
    
    
    157,718Retained earnings
    
    
    318,120
    
    
    
    253,299Total shareholders equity
    
    
    371,326
    
    
    
    350,783Total liabilities and shareholders equity
    
    $
    569,677
    
    
    $
    523,730
  44




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##### Table of Contents



TWEEN BRANDS, INC.
 
 CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY
(in thousands)
 TotalCommon Stock
    
    
    Treasury Stock
    
    
    Paid in
    
    
    Retained
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    EquityJanuary 31, 2004
    
    
    34,362
    
    
    $
    344
    
    
    
    30
    
    
    $
    (998
    )
    
    $
    119,960
    
    
    $
    157,259
    
    
    $
    276,565Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,589
    
    
    
    41,589Issuance of common stock under stock option
plans and accrued restricted stock expense
    
    
    475
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    6,664
    
    
    
    
    
    
    
    6,669Purchases of treasury stock
    
    
    (136
    )
    
    
    
    
    
    
    136
    
    
    
    (3,393
    )
    
    
    
    
    
    
    
    
    
    
    (3,393
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,094
    
    
    
    
    
    
    
    1,094January 29, 2005
    
    
    34,701
    
    
    $
    349
    
    
    
    166
    
    
    $
    (4,391
    )
    
    $
    127,718
    
    
    $
    198,848
    
    
    $
    322,524Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,451
    
    
    
    54,451Issuance of common stock under stock option
plans and accrued restricted stock expense
    
    
    1,198
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    22,093
    
    
    
    
    
    
    
    22,105Purchases of treasury stock
    
    
    (2,555
    )
    
    
    
    
    
    
    2,555
    
    
    
    (56,204
    )
    
    
    
    
    
    
    
    
    
    
    (56,204
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,907
    
    
    
    
    
    
    
    7,907January 28, 2006
    
    
    33,344
    
    
    $
    361
    
    
    
    2,721
    
    
    $
    (60,595
    )
    
    $
    157,718
    
    
    $
    253,299
    
    
    $
    350,783Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,821
    
    
    
    64,821Issuance of common stock under stock option
plans and stock based compensation expense
    
    
    515
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    17,143
    
    
    
    
    
    
    
    17,148Purchases of treasury stock
    
    
    (1,743
    )
    
    
    
    
    
    
    1,743
    
    
    
    (59,959
    )
    
    
    
    
    
    
    
    
    
    
    (59,959
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,467
    )
    
    
    
    
    
    
    (1,467
    )February 3, 2007
    
    
    32,116
    
    
    $
    366
    
    
    
    4,464
    
    
    $
    (120,554
    )
    
    $
    173,394
    
    
    $
    318,120
    
    
    $
    371,326
  45




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##### Table of Contents



TWEEN BRANDS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Fiscal Year2006

    
    2005

    
    2004Cash flows from operating activities:Net income
    
    $
    64,821
    
    
    $
    54,451
    
    
    $
    41,589Impact of other operating activities on cash flows:Depreciation and amortization expense
    
    
    31,229
    
    
    
    27,558
    
    
    
    24,820Amortization of tenant allowances
    
    
    (8,548
    )
    
    
    (7,959
    )
    
    
    (7,245
    )Loss on disposal of fixed assets
    
    
    1,344
    
    
    
    1,344
    
    
    
    994Deferred income taxes
    
    
    (2,471
    )
    
    
    (2,231
    )
    
    
    3,041Tax benefit from stock option exercices
    
    
    (2,283
    )
    
    
    -
    
    
    
    -Stock-based compensation expense
    
    
    8,252
    
    
    
    4,993
    
    
    
    1,262Changes in assets and liabilities:Inventories
    
    
    (25,709
    )
    
    
    (3,592
    )
    
    
    (4,142
    )Accounts payable and accrued expenses
    
    
    4,725
    
    
    
    6,615
    
    
    
    (413
    )Income taxes payable
    
    
    5,644
    
    
    
    1,689
    
    
    
    7,112Income taxes receivable
    
    
    -
    
    
    
    368
    
    
    
    4,192Other assets
    
    
    (6,853
    )
    
    
    169
    
    
    
    (2,274
    )Tenant allowances received
    
    
    11,383
    
    
    
    9,247
    
    
    
    8,274Other long-term liabilities
    
    
    5,897
    
    
    
    3,206
    
    
    
    96Net cash provided by operating activities
    
    $
    87,431
    
    
    $
    95,858
    
    
    $
    77,306Investing activities:Capital expenditures
    
    
    (66,012
    )
    
    
    (50,807
    )
    
    
    (23,823
    )Funding of nonqualified benefit plans
    
    
    (5,838
    )
    
    
    (1,000
    )
    
    
    (818
    )Purchase of investments
    
    
    (395,888
    )
    
    
    (522,258
    )
    
    
    (492,891
    )Sale of investments
    
    
    451,154
    
    
    
    515,253
    
    
    
    438,380Proceeds from sale of fixed assets
    
    
    26
    
    
    
    916
    
    
    
    -Change in restricted assets
    
    
    (43
    )
    
    
    (239
    )
    
    
    19,892Net cash (used for) investing activities
    
    $
    (16,601
    )
    
    $
    (58,135
    )
    
    $
    (59,260
    )Financing activities:Purchases of treasury stock
    
    
    (59,959
    )
    
    
    (56,204
    )
    
    
    (3,393
    )Excess tax benefit from stock option exercises
    
    
    2,283
    
    
    
    -
    
    
    
    -Change in cash overdraft
    
    
    3,943
    
    
    
    (1,088
    )
    
    
    437Stock options and other equity changes
    
    
    9,049
    
    
    
    15,605
    
    
    
    6,131Net cash (used for) provided by financing activities
    
    
    (44,684
    )
    
    
    (41,687
    )
    
    
    3,175Net increase (decrease) in cash and equivalents
    
    
    26,146
    
    
    
    (3,964
    )
    
    
    21,221Cash and equivalents, beginning of year
    
    
    22,248
    
    
    
    26,212
    
    
    
    4,991Cash and equivalents, end of year
    
    $
    48,394
    
    
    $
    22,248
    
    
    $
    26,212Supplemental disclosures of cash flow informationCash paid for income taxes
    
    $
    33,022
    
    
    $
    30,756
    
    
    $
    14,700Cash paid for interest
    
    $
    214
    
    
    $
    634
    
    
    $
    900Supplemental disclosures of non-cash items:Fixed asset additions in accounts payable
    
    $
    120
    
    
    $
    545
    
    
    $
    -Issuance of restricted stock
    
    $
    2,788
    
    
    $
    638
    
    
    $
    538
  46




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Summary Of Significant Accounting Policies
 Nature of Business
  Principles of Consolidation
  Disclosures about
Segments of an Enterprise and Related Information
 Fiscal Year
  Use of Estimates in the Preparation of the Consolidated Financial Statements
  Cash Equivalents
  47




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##### Table of Contents



Investments
  Restricted Assets
  Accounts Receivable
  Inventories
   Store Supplies
  Catazine and Advertising Costs
  48




---



##### Table of Contents



Advertising Barter Transactions
 Accounting for Advertising Barter Transactions.
 Property and Equipment
    Income Taxes
  Revenue Recognition
  49




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##### Table of Contents



Accounting by a
Customer (Including a Reseller) for Certain Consideration Received from a Vendor.
 Costs of Goods Sold, Buying and Occupancy Costs
  
    
    Cost of merchandise
    
    Inventory shrink
    
    Freight (includes outbound freight from the distribution center to our stores,
as well as store-to-store transfers)
    
    Payroll and related costs associated with merchandise design and procurement,
real estate and store planning
    
    Store rents and other real estate costs (including store pre-opening rents
expensed as incurred)
    
    Store asset depreciation
    
    Amortization of tenant allowances
    
    Limited Too catazine production and mailing costs
 Operating Leases
   50




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##### Table of Contents



Self-Insurance
  Store Operating, General and Administrative Expenses
  
    
    Store payroll and expenses
    
    Home office payroll and expenses (not related to design and merchandise
procurement)
    
    Marketing, including television advertising and Justice catazine production costs
    
    Distribution center costs, including receiving and warehouse costs
  Stock-Based Compensation
      51




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##### Table of Contents



Share-Based Payment Accounting for Stock Issued to Employees
    Fiscal Year2006
    
    
    2005
    
    
    2004Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average Option
    
    
    Number of
    
    
    Average Option
    
    
    Number of
    
    
    Average OptionShares

    
    Price/Share

    
    Shares

    
    Price/Share

    
    Shares

    
    Price/ShareOutstanding, beginning of year
    
    
    1,711,663
    
    
    $
    23.02
    
    
    
    2,767,422
    
    
    $
    18.25
    
    
    
    3,253,177
    
    
    $
    18.00Granted
    
    
    373,807
    
    
    $
    32.17
    
    
    
    223,622
    
    
    $
    27.32
    
    
    
    373,970
    
    
    $
    16.68Exercised
    
    
    (413,272
    )
    
    $
    21.53
    
    
    
    (1,170,445
    )
    
    $
    12.66
    
    
    
    (454,602
    )
    
    $
    13.49Cancelled
    
    
    (51,349
    )
    
    $
    23.97
    
    
    
    (108,936
    )
    
    $
    21.96
    
    
    
    (405,123
    )
    
    $
    22.34Outstanding, end of year
    
    
    1,620,849
    
    
    $
    25.57
    
    
    
    1,711,663
    
    
    $
    23.02
    
    
    
    2,767,422
    
    
    $
    18.25Options exercisable, end of
year
    
    
    901,089
    
    
    $
    24.78
    
    
    
    995,178
    
    
    $
    24.33
    
    
    
    1,724,630
    
    
    $
    17.66
 52




---



##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedRange of
    
    Number
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageExercise Price
    
    Outstanding
    
    
    Contractual Life
    
    
    Exercise Price
    
    
    Exercisable
    
    
    Exercise Price$5   - $10
    
    
    -
    
    
    
    0.0
    
    
    $
    -
    
    
    
    -
    
    
    $
    -$10 - $15
    
    
    5,235
    
    
    
    2.6
    
    
    $
    12.40
    
    
    
    5,235
    
    
    $
    12.40$15 - $20
    
    
    393,480
    
    
    
    6.1
    
    
    $
    16.36
    
    
    
    170,923
    
    
    $
    16.23$20 - $25
    
    
    37,750
    
    
    
    5.5
    
    
    $
    22.98
    
    
    
    29,750
    
    
    $
    23.01$25 - $35
    
    
    1,096,884
    
    
    
    6.3
    
    
    $
    27.94
    
    
    
    670,181
    
    
    $
    26.72$35 - $45
    
    
    87,500
    
    
    
    9.0
    
    
    $
    39.27
    
    
    
    25,000
    
    
    $
    36.061,620,849
    
    
    
    6.4
    
    
    $
    25.57
    
    
    
    901,089
    
    
    $
    24.78
 Accounting for Stock-Based
Compensation Accounting for Stock-Based Compensation  Transition
and Disclosure
 Fiscal Year2005
    
    
    2004Net income, as reported
    
    $
    54,451
    
    
    $
    41,589Stock-based compensation expense
recorded
under APB Opinion No. 25, net of tax
    
    
    3,071
    
    
    
    788Stock-based compensation expense
determined under fair value based
method, net of tax
    
    
    (5,542
    )
    
    
    (3,695
    )Pro forma net income
    
    $
    51,980
    
    
    $
    38,682Earnings per share:Basic - as reported
    
    $
    1.62
    
    
    $
    1.21Basic - pro forma
    
    $
    1.55
    
    
    $
    1.12Diluted - as reported
    
    $
    1.60
    
    
    $
    1.19Diluted -
pro forma
    
    $
    1.53
    
    
    $
    1.11
  Fiscal Year2006
    
    2005
    
    2004Expected life (in years)
    
    
    5.3
    
    
    
    5.3
    
    
    
    5.0Forfeiture rate
    
    
    15
    %
    
    
    13
    %
    
    
    20
    %Dividend rate
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Price volatility
    
    
    47
    %
    
    
    48
    %
    
    
    50
    %Risk-free interest rate
    
    
    4.4
    %
    
    
    4.0
    %
    
    
    3.5
    %
  53




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##### Table of Contents



Weighted
    
    
    Weighted Average
    
    
    Aggregate IntrinsicAverage
    
    
    Remaining Contractual
    
    
    ValueNumber of Shares
    
    
    Exercise Price
    
    
    Term (in years)
    
    
    (in thousands)Fifty-Three weeks ended February 3, 2007:Outstanding, January 28, 2006
    
    
    1,711,663
    
    
    $
    23.02Granted
    
    
    373,807
    
    
    
    32.17Exercised
    
    
    (413,272
    )
    
    
    21.53Cancelled
    
    
    (51,349
    )
    
    
    23.97Outstanding, February 3, 2007
    
    
    1,620,849
    
    
    $
    25.57
    
    
    
    6.4
    
    
    $
    15,058Vested or expected to vest, February 3, 2007
    
    
    901,089
    
    
    $
    24.78
    
    
    
    4.8
    
    
    $
    9,083Exercisable, February 3, 2007
    
    
    901,089
    
    
    $
    24.78
    
    
    
    4.8
    
    
    $
    9,083
   Weighted Average GrantNumber of Shares
    
    
    Date Fair ValueFifty-Three weeks ended February 3, 2007:Outstanding, January 29, 2006
    
    
    512,945
    
    
    $
    25.52Granted
    
    
    201,285
    
    
    
    32.46Vested
    
    
    (102,566
    )
    
    
    22.53Cancelled
    
    
    (23,506
    )
    
    
    28.81Outstanding, February 3, 2007
    
    
    588,158
    
    
    $
    28.28
  Earnings Per Share
 Earnings per Share.
  Fiscal Year2006
    
    
    2005
    
    
    2004Net income as reported
    
    $
    64,821
    
    
    $
    54,451
    
    
    $
    41,589Weighted average common shares
- basic
    
    
    32,521
    
    
    
    33,603
    
    
    
    34,512Dilutive effect of stock options
and restricted stock
    
    
    677
    
    
    
    357
    
    
    
    443Weighted average common shares
- diluted
    
    
    33,198
    
    
    
    33,960
    
    
    
    34,955
 54




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##### Table of Contents



Recently Issued Accounting Standards
 How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be
Presented in the Income Statement (That is, Gross versus Net Presentation).
 Accounting for Uncertainty in
Income Taxes
 Considering
the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements.
 Fair Value Measurements
 Accounting for
Purchases of Life Insurance  Determining the amount that could be realized in accordance with
FASB Technical Bulletin 85-4
 The Fair Value Option for Financial Assets and Financial Liabilities  including an
amendment of FASB Statement No. 115.
 55




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##### Table of Contents



2. Investments
  February 3, 2007
    
    
    January 28, 2006Maturity of

    
    Maturity ofLess than 1
    
    
    
    
    
    
    Less than 1Year

    
    1 to 5 Years

    
    Year

    
    1 to 5 YearsAggregate fair value
    
    $
    14,308
    
    
    $
    16,982
    
    
    $
    21,752
    
    
    $
    8,413Gross unrecognized holding gains
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    -Gross unrecognized holding losses
    
    
    32
    
    
    
    72
    
    
    
    55
    
    
    
    51Net carrying amount
    
    $
    14,340
    
    
    $
    17,054
    
    
    $
    21,807
    
    
    $
    8,464
    February 3, 2007
    
    
    January 28, 2006Maturity of
    
    
    Maturity ofLess than 1 Year
    
    
    Less than 1 YearAggregate fair value
    
    $
    84,824
    
    
    $
    141,644Net gains in accumulated other comprehensive income
    
    
    -
    
    
    
    -Net losses in accumulated other comprehensive income
    
    
    -
    
    
    
    -Net carrying amount
    
    $
    84,824
    
    
    $
    141,644
  56




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##### Table of Contents



3. Property And Equipment
  February 3,
    
    
    January 28,2007
    
    
    2006Land
    
    $
    14,963
    
    
    $
    8,181Buildings
    
    
    43,836
    
    
    
    43,836Furniture, fixtures and equipment
    
    
    210,522
    
    
    
    191,085Leaseholds improvements
    
    
    134,238
    
    
    
    117,061Construction-in-progress
    
    
    10,680
    
    
    
    7,932Total
    
    
    414,239
    
    
    
    368,095Less: accumulated depreciation
    
    
    (178,723
    )
    
    
    (166,112
    )Property and equipment, net
    
    $
    235,516
    
    
    $
    201,983
 4. Leased Facilities And Commitments
     Fiscal Year2006
    
    
    2005
    
    
    2004Fixed minimum
    
    $
    71,754
    
    
    $
    63,726
    
    
    $
    57,390Contingent
    
    
    3,312
    
    
    
    2,357
    
    
    
    2,411Amortization of tenant allowances
    
    
    (8,548
    )
    
    
    (7,959
    )
    
    
    (7,245
    )Total store rent
    
    
    66,518
    
    
    
    58,124
    
    
    
    52,556Equipment and other
    
    
    2,345
    
    
    
    2,595
    
    
    
    2,380Total rent expense
    
    $
    68,863
    
    
    $
    60,719
    
    
    $
    54,936
 57




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##### Table of Contents



2007
    
    $
    73,5672008
    
    $
    69,1612009
    
    $
    65,6612010
    
    $
    58,4392011
    
    $
    51,526Thereafter
    
    $
    169,659
 5. Accrued Expenses
  February 3,
    
    
    January 28,2007
    
    
    2006Compensation, payroll taxes and benefits
    
    $
    12,617
    
    
    $
    12,052Rent and store expenses
    
    
    14,439
    
    
    
    13,588Taxes, other than income and payroll
    
    
    6,375
    
    
    
    6,400Other
    
    
    5,418
    
    
    
    6,673Total
    
    $
    38,849
    
    
    $
    38,713
 6. Deferred Revenue
  February 3,
    
    
    January 28,2007
    
    
    2006Unearned revenue from sale of gift cards
and gift certificates
    
    $
    11,727
    
    
    $
    10,881Unearned catazine advertising revenue
    
    
    1,857
    
    
    
    978Total
    
    $
    13,584
    
    
    $
    11,859
 7. Credit Facility
  58




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##### Table of Contents



8. Income Taxes
  Fiscal Year2006
    
    
    2005
    
    
    2004Current:Federal
    
    $
    34,508
    
    
    $
    28,929
    
    
    $
    18,158State
    
    
    3,636
    
    
    
    3,556
    
    
    
    2,736Foreign
    
    
    334
    
    
    
    279
    
    
    
    162Total current
    
    
    38,478
    
    
    
    32,764
    
    
    
    21,056Deferred:Federal
    
    
    (2,140
    )
    
    
    (1,244
    )
    
    
    3,216State
    
    
    (250
    )
    
    
    (971
    )
    
    
    (175
    )Foreign
    
    
    (81
    )
    
    
    (16
    )
    
    
    -Total deferred
    
    
    (2,471
    )
    
    
    (2,231
    )
    
    
    3,041Total income tax provision
    
    $
    36,007
    
    
    $
    30,533
    
    
    $
    24,097
   Fiscal Year2006

    
    2005

    
    2004Federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal benefit
    
    
    3.3
    
    
    
    3.1
    
    
    
    3.3State tax settlements
    
    
    (1.1
    )
    
    
    (1.1
    )
    
    
    (0.8
    )Municipal interest income and other items, net
    
    
    (1.5
    )
    
    
    (1.1
    )
    
    
    (0.8
    )Total effective income tax rate
    
    
    35.7
    %
    
    
    35.9
    %
    
    
    36.7
    %
  February 3, 2007

    
    January 28, 2006Assets

    
    Liabilities

    
    Total

    
    Assets

    
    Liabilities

    
    TotalTax depreciation in excess of book
    
    $
    -
    
    
    $
    (10,954
    )
    
    $
    (10,954
    )
    
    $
    -
    
    
    $
    (6,125
    )
    
    $
    (6,125
    )Rent
    
    
    5,343
    
    
    
    -
    
    
    
    5,343
    
    
    
    4,429
    
    
    
    -
    
    
    
    4,429Inventory
    
    
    1,977
    
    
    
    -
    
    
    
    1,977
    
    
    
    1,821
    
    
    
    -
    
    
    
    1,821Accrued expenses (current and
non-current)
    
    
    12,861
    
    
    
    -
    
    
    
    12,861
    
    
    
    9,909
    
    
    
    -
    
    
    
    9,909Store
supplies - basis differential
    
    
    -
    
    
    
    (5,410
    )
    
    
    (5,410
    )
    
    
    -
    
    
    
    (4,558
    )
    
    
    (4,558
    )Other, net
    
    
    2,847
    
    
    
    -
    
    
    
    2,847
    
    
    
    2,620
    
    
    
    -
    
    
    
    2,620Total deferred income taxes
    
    $
    23,028
    
    
    $
    (16,364
    )
    
    $
    6,664
    
    
    $
    18,779
    
    
    $
    (10,683
    )
    
    $
    8,096
    59




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##### Table of Contents



9. Retirement Benefits
    Accounting for Deferred Compensation Arrangements Where Amounts
Earned Are Held in a Rabbi Trust
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10. Legal Matters
  11. Quarterly Financial Data (unaudited, in thousands, except per share amounts)
 FY 2006
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth(1)Net sales
    
    $
    195,136
    
    
    $
    185,801
    
    
    $
    230,481
    
    
    $
    272,264Gross income
    
    
    73,746
    
    
    
    62,822
    
    
    
    92,495
    
    
    
    104,906General, administrative and store operating expenses
    
    
    56,299
    
    
    
    55,603
    
    
    
    62,999
    
    
    
    63,379Net income
    
    
    11,689
    
    
    
    5,912
    
    
    
    19,004
    
    
    
    28,215Earnings per
share - basic
    
    $
    0.35
    
    
    $
    0.18
    
    
    $
    0.59
    
    
    $
    0.88Earnings per
share - diluted
    
    $
    0.35
    
    
    $
    0.18
    
    
    $
    0.58
    
    
    $
    0.86
 FY 2005
    
    First
    
    
    Second
    
    
    Third
    
    
    FourthNet sales
    
    $
    164,410
    
    
    $
    154,939
    
    
    $
    203,519
    
    
    $
    235,069Gross income
    
    
    61,603
    
    
    
    53,667
    
    
    
    80,524
    
    
    
    95,503General, administrative and store operating expenses
    
    
    50,386
    
    
    
    48,203
    
    
    
    56,232
    
    
    
    53,517Net income
    
    
    7,410
    
    
    
    3,967
    
    
    
    16,003
    
    
    
    27,072Earnings per
share - basic
    
    $
    0.21
    
    
    $
    0.12
    
    
    $
    0.48
    
    
    $
    0.81Earnings per
share - diluted
    
    $
    0.21
    
    
    $
    0.12
    
    
    $
    0.48
    
    
    $
    0.80
 (1)
    
    Includes 14 weeks
  
 Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.
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Item 9A. Controls And Procedures.
 Disclosure Controls and Procedures:
   Managements Report of Internal Control over Financial Reporting
  i.
    
    Pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;ii.
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America, and that receipts and expenditures recorded by us
are being made only in accordance with authorizations of our management and board of
directors of the Company; andiii.
    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the
financial statements.
 Internal Control  Integrated Framework,
 Changes in Internal Control Over Financial Reporting:
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Inherent Limitations:
  63




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##### Table of Contents



INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
 Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework Internal ControlIntegrated Framework
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Share Based Payment
  
 
 Item 9B. Other Information.
  65




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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.
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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules.
 List of Financial Statements
  
    
    Consolidated Statements of Operations for the fiscal years ended February 3, 2007,
January 28, 2006 and January 29, 2005.
    
    Consolidated Balance Sheets as of February 3, 2007 and January 28, 2006.
    
    Consolidated Statements of Changes in Shareholders Equity for the fiscal years ended
February 3, 2007, January 28, 2006 and January 29, 2005.
    
    Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2007,
January 28, 2006 and January 29, 2005.
    
    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
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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).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-Qfiled on June 14, 2001).10.6
    
    Too, Inc. Second Amended and Restated Savings and Retirement Plan (incorporated
by reference to Exhibit 10.11 to the Annual Report on Form 10-K filed on April 13,
2005).10.7
    
    Too, Inc. First Amended and Restated Supplemental Retirement and Deferred
Compensation Plan. (incorporated by reference to Exhibit 10.2 to the Quarterly Report
on Form 10-Q filed on September 11, 2000).10.8
    
    Employment Agreement, dated as of September 15, 2003, between the Company and
Michael W. Rayden (incorporated by reference to Exhibit 10.13 to the Annual Report on
Form 10-K filed on April 7, 2004).10.9
    
    Executive Agreement, dated as of September 15, 2000, between the Company and
Michael W. Rayden (incorporated by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q filed on December 14, 2000).10.10
    
    Employment Agreement, dated as of September 15, 2003, between the Company and
Ronald Sykes (incorporated by reference to Exhibit 10.17 to the Annual Report on Form
10-K filed on April 7, 2004).
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10.11
    
    Executive Agreement, dated as of October 30, 2000, between the Company and
Ronald Sykes (incorporated by reference to Exhibit 10.20 to the Annual Report on Form
10-K filed on May 2, 2001).10.12
    
    Employment Agreement, dated as of September 15, 2003, between the Company and
Sally A. Boyer (incorporated by reference to Exhibit 10.21 to the Quarterly Report on
Form 10-Q filed on September 8, 2004).10.13
    
    Executive Agreement, dated as of September 15, 2000, between the Company and
Sally A. Boyer (incorporated by reference to Exhibit 10.22 to the Quarterly Report on
Form 10-Q filed on December 14, 2000).10.14
    
    Employment Agreement, dated as of September 15, 2003, between the Company and
Scott M. Bracale (incorporated by reference to Exhibit 10.21 to the Annual Report on
Form 10-K filed on April 7, 2004).10.15
    
    Executive Agreement, dated as of September 15, 2000, between the Company and
Scott M. Bracale (incorporated by reference to Exhibit 10.25 to the Annual Report on
Form 10-K filed on April 9, 2003).10.16
    
    Employment Agreement, dated as of February 23, 2004, between the Company and
William E. May, Jr. (incorporated by reference to Exhibit 10.25 to the Annual Report on
Form 10-K filed on April 7, 2004).10.17
    
    Executive Agreement, dated as of February 23, 2004, between the Company and
William E. May, Jr. (incorporated by reference to Exhibit 10.21 to the Annual Report on
Form 10-K filed on April 7, 2004).10.18
    
    Credit Agreement, dated as of April 29, 2003, among the Company, as Borrower,
each of the Guarantors (as defined in the Credit Agreement), the Lenders (as defined in
the Credit Agreement), National City Bank, as Administrative Agent (incorporated by
reference to Exhibit 10.1 to the Current Report on Form 8-K filed May 7, 2003).10.19
    
    First Amendment to Credit Agreement among the Company, as Borrower, each of
the Guarantors (as defined in the Credit Agreement), the Lenders (as defined in the
Credit Agreement), National City Bank, as Agent, Fifth Third Bank, as co-syndication
agent, LaSalle Bank National Association, as co-syndication agent, Bank of America,
N.A., as co-documentation agent, and The Huntington National Bank, as co-documentation
agent (incorporated by reference to Exhibit 10.29 to the Quarterly Report on Form 10-Q
filed on September 16, 2003).10.20
    
    Second Amendment to Credit Agreement, dated as of October 29, 2004, among the
Company, as Borrower, each of the Guarantors (as defined in the Credit Agreement), the
Lenders (as defined in the Credit Agreement), National City Bank, as Agent, Fifth Third
Bank, as co-syndication agent, LaSalle Bank National Association, as co-syndication
agent, Bank of America, N.A., as co-documentation agent, and The Huntington National
Bank, as co-documentation agent (incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed on November 3, 2004).10.21
    
    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).
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10.22
    
    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).10.23
    
    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).10.24
    
    2005 Stock Plan for Non-Associate Directors (incorporated by reference to
Appendix B to the Definitive Proxy Statement for the Companys 2005 Annual Meeting of
Stockholders held May 19, 2005, filed April 20, 2005).10.25
    
    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).10.26
    
    Credit Agreement, dated October 28, 2005, by and among Too, Inc.s domestic
subsidiaries, as Guarantors, National City Bank, as Lead Arranger and Administrative
Agent, Fifth Third Bank, as Syndication Agent, Bank of America, as Documentation Agent,
LaSalle Bank National Association, as Managing Agent, and Citicorp USA, Inc. as Lender
(incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on
November 3, 2005).10.27
    
    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).10.28
    
    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).10.33
    
    General Release and Severance Agreement by and between Poe A. Timmons and
Tween Brands, Inc., dated as of August 29, 2006 (incorporated by reference to the
Current Report on Form 8-K filed August 30, 2006).10.34
    
    Letter Agreement between William E. May, Jr. and the Company dated January 18,
2007 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed
January 23, 2007).10.35
    
    Kenneth T. Stevens Offer Letter dated January 8, 2007 (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K filed January 23, 2007).10.36
    
    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).10.37
    
    Executive Agreement, effective as of January 29, 2007, between the Company and
Kenneth T. Stevens (incorporated by reference to Exhibit 10.4 to the Current Report on
Form 8-K filed January 23, 2007).10.38
    
    Form of Notice of Grant of Stock Award Agreement Acknowledgement of Receipt. *10.39
    
    Separation Pay, Confidentiality & Non-Competition Agreement, dated July 26,
2006, between the Company and Paul C. Carbone. *16.1
    
    Letter of PricewaterhouseCoopers LLP to the Securities and Exchange Commission,
dated February 22, 2006 (received by the Company on February 23, 2006) (incorporated by
reference to the Current Report on Form 8-K filed February 24, 2006).
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16.2
    
    Letter of PricewaterhouseCoopers LLP to the Securities and Exchange Commission,
dated April 14, 2006 (received by the Company on April 14, 2006) (incorporated by
reference to the Current Report on Form 8-K filed April 14, 2006).21
    
    Subsidiaries of the Registrant. *23.1
    
    Consent of Independent Registered Public Accounting Firm  Deloitte & Touche,
LLP. *23.2
    
    Consent of Independent Registered Public Accounting Firm 
PricewaterhouseCoopers LLP. *24
    
    Powers of Attorney.*31.1
    
    Certification of Periodic Report by the Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*31.2
    
    Certification of Periodic Report by the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.*32.1
    
    Certification of Periodic Report by the Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.**32.2
    
    Certification of Periodic Report by the Chief 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.
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##### Table of Contents



SIGNATURES
  Date: April 2, 2007
    TWEEN BRANDS, INC.
(registrant)/s/
Paul C. CarbonePaul C. CarboneSenior Vice President of Finance
(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/ PAUL C. CARBONE

Paul C. Carbone
    
    Senior Vice President of Finance
(Principal Financial and Accounting Officer)/s/ KENNETH T. STEVENS*

Kenneth T. Stevens
    
    Director, President, Chief Operating Officer, Secretary and
Treasurer/s/ ELIZABETH M. EVEILLARD*

Elizabeth M. Eveillard
    
    Director/s/ NANCY J. KRAMER*

Nancy J. Kramer
    
    Director/s/ DAVID A. KRINSKY*

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

Philip E. Mallott
    
    Director/s/ FREDRIC M. ROBERTS*
    
    DirectorFredric M. Roberts/s/ KENNETH J. STROTTMAN*

Kenneth James Strottman
    
    Director
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*
    
    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/
Paul C. CarbonePaul C. CarboneAttorney-in-fact 73