================================================


                                       SECURITIES AND EXCHANGE COMMISSION
                                             Washington, D.C. 20549

                                                  ============
                                                    FORM 10-Q
                                                  ============

                           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                                   THE SECURITIES EXCHANGE ACT OF 1934

                            For the quarterly period ended November 3, 2001



                                             ============

                                     Commission file number 1-11609

                                            TOYS "R" US, INC.
                             Incorporated pursuant to the Laws of Delaware

                                             ============
             Internal Revenue Service - Employer Identification No. 22-3260693
                               461 From Road, Paramus, New Jersey, 07652
                                            (201) 262-7800





Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes [X] No [ ]

196,713,430 shares of the registrant's Common Stock were outstanding on
December 10, 2001.


                             ==================================================


<PAGE>











                                                       INDEX



                                                                           PAGE

PART I - FINANCIAL INFORMATION


         Item 1. Financial Statements


                  Condensed Consolidated Balance Sheets.......................2


                  Condensed Consolidated Statements of Operations.............3


                  Condensed Consolidated Statements of Cash Flows.............4


                  Notes to Condensed Consolidated Financial
                  Statements..................................................5


         Item  2.   Management's   Discussion  and  Analysis  of  Results  of
                    Operations  and  Financial Condition.....................10


PART II - OTHER INFORMATION..................................................18


SIGNATURES...................................................................20





                                                         1


<PAGE>
<TABLE>





                              TOYS "R" US, INC. AND SUBSIDIARIES
                            CONDENSED CONSOLIDATED BALANCE SHEETS
                                        (Unaudited)
                         ==========================================
                                       (In millions)

ASSETS                                     November 3,  October 28, February 3,
------
                                                2001         2000        2001
                                         ------------- ------------- ----------
<CAPTION>
<S>                                             <C>          <C>          <C>

Current Assets:
 Cash and cash equivalents                  $    420      $     452     $   275
 Accounts and other receivables                  157            145         225
 Merchandise inventories                       3,547          3,296       2,307
 Prepaid expenses and other current assets       103             85         100
                                         ------------ ------------- -----------
   Total current assets                        4,227          3,978       2,907

Property and equipment, net                    4,484          4,132       4,257
Other assets                                     526            455         478
Goodwill, net                                    351            364         361
                                         ------------ ------------- -----------
                                           $   9,588     $    8,929    $  8,003
                                        ============= ============= ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
 Short-term borrowings                     $    966     $    1,495      $   121
 Accounts payable                             2,023          1,848        1,152
 Accrued expenses and
   other current liabilities                    576            531          837
 Income taxes payable                           177            154          241
                                         ------------ ------------- -----------
    Total current liabilities                 3,742          4,028        2,351

Long-term debt                                1,914          1,141        1,567
Deferred income taxes                           402            351          402
Other liabilities                               190            204          195

Minority interest in Toysrus.com                 59             53           70

Stockholders' equity                          3,281          3,152        3,418
                                        ------------- ------------- -----------
                                          $   9,588     $    8,929     $  8,003
                                        ============= ============= ===========

                See notes to condensed consolidated financial statements.
<FN>
</FN>
</TABLE>



                                                             2


<PAGE>
<TABLE>





                         TOYS "R" US, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
               ===================================================
                      (In millions, except per share data)
<CAPTION>

                                     13 Weeks Ended         39 Weeks Ended
                                  -------------------      ----------------
                               November 3,  October 28,  November 3, October 28,
                                   2001         2000          2001        2000
                              ------------  ------------  -----------  --------
<S>                               <C>            <C>          <C>         <C>

Net sales                      $   2,178    $   2,220    $   6,260    $   6,533
Cost of sales                      1,468        1,522        4,224        4,481
                               -----------  ------------  -----------  --------

  Gross Margin                       710          698        2,036        2,052

Selling, general and
  administrative expenses            670          703        1,864        1,844
Depreciation and amortization         79           68          225          207

                               -----------  ------------  -----------  --------
     Total Operating Expenses        749          771         2,089       2,051
                               -----------  ------------  -----------  --------

     Operating (Loss) / Earnings     (39)         (73)         (53)           1

Other income (expense):
     Interest expense - net          (30)         (29)         (90)        (75)
     Gain from IPO of Toys - Japan    -            -              -         315
                               -----------  ------------  -----------  --------

(Loss) / earnings before
  income taxes                       (69)        (102)        (143)         241
Income taxes                         (25)         (37)         (52)          88

                               -----------  ------------  -----------  --------

Net (loss) / earnings           $    (44)    $    (65)     $    (91)   $    153
                               ===========  ============  ===========  ========


Basic (loss) / earnings
per share                       $   (0.22)   $   (0.32)    $   (0.46) $    0.71

                               ===========  ============  ===========  ========
Weighted average
 basic shares outstanding          197.6        202.6         197.9       215.7
                               ===========  ============  ===========  ========


Diluted (loss) /
 earnings per share            $   (0.22)    $   (0.32)    $   (0.46) $    0.70

                              ===========  ============  ===========  =========
Weighted average
 diluted shares outstanding       204.6         207.9         206.8       219.6
                              ===========  ============  ============  ========




<FN>
</FN>
                     See notes to condensed consolidated financial statements.



</TABLE>


                                           3


<PAGE>
<TABLE>



                               TOYS "R" US, INC. AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                         (Unaudited)
                    ====================================================
                                       (In millions)
<CAPTION>

                                                         39 Weeks Ended
                                                       ------------------
                                                 November 3,        October 28,
                                                      2001              2000
                                                ------------      ------------

<S>                                                  <C>                <C>

Cash Flows from Operating Activities:
Net (loss) / earnings                             $   (91)             $    153
Adjustments to reconcile net (loss) / earnings
 to net cash from operating activities:
    Depreciation and amortization                     225                   207
    Deferred income taxes                              -                     33
    Minority interest in Toysrus.com                  (11)                 (25)
    Gain from initial public offering of Toys - Japan   -                 (315)
    Toysrus.com related non-cash charges                -                    81
    Changes in operating assets and liabilities:
      Merchandise inventories                      (1,253)              (1,492)
      Accounts payable and
       other operating liabilities                    548                   355
      Other operating assets                           22                  (74)
                                                   ------------    ------------
Net cash from operating activities                   (560)              (1,077)
                                                   ------------    ------------
Cash Flows from Investing Activities:
Capital expenditures, net                            (468)                (245)
Net proceeds from sale of Toys - Japan common stock    -                    267
Reduction in cash due to
 deconsolidation of Toys - Japan                       -                   (15)
                                                   ------------    ------------
Net cash from investing activities                   (468)                    7
                                                   ------------    ------------
Cash Flows from Financing Activities:
Short-term borrowings, net                            379                 1,326
Long-term borrowings                                1,214                   147
Long-term debt repayment                             (401)                 (37)
Exercise of stock options                              19                     -
Proceeds received from investors in Toysrus.com        -                     77
Issuance of stock warrants                             -                     10
Share repurchase program                              (44)                (618)
                                                   ------------    ------------
Net cash from financing activities                   1,167                  905
                                                   ------------    ------------

Effect of exchange rate changes on cash
 and cash equivalents                                    6                   33
Cash and cash equivalents:
Increase/ (decrease) during period                     145                (132)
Beginning of period                                    275                  584
                                                   ------------    ------------
End of period                                     $    420            $     452
                                                   ============    ============

Supplemental disclosures of cash flow information:
Net income tax refunds                            $    (6)           $     (22)

                                                   ============    ============
Interest paid                                     $    65            $       94
                                                   ============    ============
<FN>

                   See notes to condensed consolidated financial statements.

</FN>
</TABLE>
                                        4


<PAGE>


                  TOYS "R" US, INC. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               (Unaudited)
           ==========================================================

1.       Interim reporting
         The interim condensed consolidated financial statements are unaudited
         and are subject to year-end adjustments. However, in the opinion of
         management, all known adjustments (which consist primarily of normal
         recurring accruals), have been made and the interim financial
         statements present fairly the consolidated financial condition and
         operating results for the unaudited periods. Because of the seasonal
         nature of the company's business, results for interim periods are not
         indicative of results to be expected for the fiscal year.

         The financial statements and notes are presented in accordance with the
         rules and regulations of the Securities and Exchange Commission and do
         not contain certain information included in the company's annual
         report. Therefore, the interim statements should be read in conjunction
         with the company's annual report for the fiscal year ended February 3,
         2001.

2.       Reclassification
         Certain amounts in the financial statements for the quarter and nine
         months ended October 28, 2000 have been reclassified to conform to the
         financial statement presentation for the quarter and nine months ended
         November 3, 2001.

3.       Commercial paper
         Commercial paper of $368 million was classified as long-term debt at
         October 28, 2000 and February 3, 2001 as the company maintained
         long-term committed credit agreements to support these borrowings and
         intended to refinance them on a long-term basis through commercial
         paper borrowings. During July 2001, the company issued an aggregate of
         $750 million of notes and used the proceeds to repay a portion of its
         outstanding commercial paper, of which $368 million was classified as
         long-term. Additionally, commercial paper of $963 million and $1,464
         million are included in short-term borrowings at November 3, 2001 and
         October 28, 2000, respectively.

4.       Comprehensive income
         Comprehensive loss was $48 million and $132 million for the third
         quarters ended November 3, 2001 and October 28, 2000, respectively.
         Comprehensive loss was $124 million for the 39 weeks ended November 3,
         2001 and comprehensive income was $52 million for the 39 weeks ended
         October 28, 2000, respectively. Variances between comprehensive income
         / loss and net income / loss for each of the preceding periods is
         primarily due to the change in foreign currency translation.

5.       Gain from initial public offering of Toys - Japan, Ltd.
         -------------------------------------------------------
         The company recorded a pre-tax gain of $315 million in the first
         quarter of fiscal 2000 resulting from the initial public offering of
         shares of Toys - Japan. As a result of this transaction, the company's
         ownership percentage in the common stock of Toys - Japan was reduced
         from 80% to 48%. Toys - Japan is a licensee of the company.






                                        5
<PAGE>




                      TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)
              ==========================================================


6.       Investment in Toys - Japan
         The company accounts for its investment in the common stock of Toys -
         Japan on the "equity method" of accounting since the initial public
         offering of Toys - Japan on April 24, 2000. At November 3, 2001, the
         quoted market value of the company's investment in Toys - Japan was
         $372 million, which exceeds the carrying value of the investment. The
         valuation represents a mathematical calculation based on the closing
         quotation published by the Tokyo over-the-counter market and is not
         necessarily indicative of the amount that could be realized upon sale.

7.       Toysrus.com
         Toysrus.com has a 10-year strategic alliance with Amazon.com to operate
         a co-branded toy and video games on-line store, which was launched in
         the third quarter of 2000, a co-branded baby products on-line store,
         which was launched in May 2001, and a co-branded creative and learning
         products on-line store, which was launched in July 2001. Under this
         alliance each company is responsible for specific aspects of the
         on-line stores. Toysrus.com is responsible for merchandising and
         content for the co-branded stores. Toysrus.com also identifies, buys,
         owns and manages the inventory. Amazon.com handles web site
         development, order fulfillment, customer service, and the housing of
         Toysrus.com's inventory in Amazon.com's U.S. distribution centers.

         As a result of the transition to the co-branded site in fiscal 2000,
         the company's Toysrus.com subsidiary recorded non-recurring costs and
         charges, before minority interest, totaling approximately $118 million,
         $10 million of which were included in cost of sales and $108 million of
         which were included in selling, general and administrative expenses,
         primarily relating to the closure of three distribution centers, the
         write-off of web site assets, as well as other costs associated with
         migrating data and merchandise to the new site and facilities. At
         November 3, 2001, the company has remaining reserves of approximately
         $42 million, primarily related to exit costs for distribution centers.
         Management believes these reserves to be reasonable estimates of what
         is required to complete these initiatives.

8.       Replacement of certain stock option grants with restricted stock
         ------------------------------------------------------------------
         On March 24, 2000, the company authorized the exchange of certain stock
         options, having an exercise price above $22 per share, for an
         economically equivalent grant of restricted stock. The exchange, which
         was voluntary, replaced approximately 14.4 million options with
         approximately 1.7 million restricted shares. Shares of restricted stock
         resulting from the exchange vest over a period of three years, with
         one-half of the grant vesting on April 1, 2002 and the remainder
         vesting on April 1, 2003. Accordingly, the company recognizes
         compensation expense on a straight-line basis throughout the vesting
         period of the restricted stock. The company recorded $6 million and $5
         million of compensation expense related to this restricted stock during
         the nine months ended November 3, 2001 and October 28, 2000,
         respectively.







                                        6

<PAGE>


                     TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                ==========================================================


9.       Long-term Debt
         On July 19, 2001, the company issued $500 million of notes bearing
         interest at 7.625% per annum maturing on August 1, 2011 and $250
         million of notes bearing interest at 6.875% per annum maturing on
         August 1, 2006. Simultaneously, the company entered into interest rate
         swap agreements. As a result of the interest rate swap agreements,
         interest on the $500 million notes will accrue at the rate of LIBOR
         plus 1.5120% per annum and interest on the $250 million notes will
         accrue at the rate of LIBOR plus 1.1515% per annum. Interest is payable
         on both notes semi-annually on February 1 and August 1 of each year,
         commencing on February 1, 2002.

         On February 13, 2001, the company borrowed 500 million EURO through the
         public issuance of a EURO bond bearing interest at 6.375% per annum.
         This obligation was swapped into a $466 million fixed rate obligation
         at an effective rate of 7.43% per annum with interest payments due
         annually and principal due on February 13, 2004.

         On July 21, 2000, the company borrowed the yen equivalent of $147
         million, which is repayable in semi-annual installments of principal
         and interest, with the final installment due on August 17, 2005. The
         effective cost of this borrowing is 2.32% and is secured by expected
         future cash flows from license fees due from Toys - Japan.

10.      Financial Instruments
         In June 1998, the Financial Accounting Standards Board issued SFAS No.
         133 "Accounting for Derivative Instruments and Hedging Activities," as
         amended, which was adopted by the company effective February 4, 2001.
         This standard requires that all derivatives be recorded in the balance
         sheet at fair value and that all changes in fair value be recognized
         currently in earnings unless specific hedge criteria are met. The
         cumulative effect of adoption was not material to the company's
         consolidated financial condition, results of operations or cash flow.

         The countries in which the company owns assets and operates stores are
         politically stable. However the company is exposed to market risk from
         potential changes in interest rates and foreign exchange rates. The
         company regularly evaluates these risks and has taken the following
         measures to mitigate these risks: the company's foreign exchange risk
         management objectives are to stabilize cash flow from the effects of
         foreign currency fluctuation; the company will, whenever practical,
         offset local investments in foreign currencies with borrowings
         denominated in the same currencies; the company also enters into
         foreign exchange contracts or purchase options to eliminate specific
         transaction risk.

         The company purchases forward exchange contracts to minimize potential
         foreign currency exchange risk related to its import merchandise
         purchase program. These forward exchange contracts are designated as
         foreign currency cash flow hedges, as defined by SFAS No. 133, and are
         effective as hedges.





                                        7


<PAGE>


                       TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
              ==========================================================


         Changes in the effective portion of the fair value of these forward
         exchange contracts are included in other comprehensive income until the
         hedged transactions are completed. Once the hedged transaction is
         completed, the unrealized gain or loss on the forward contract is
         reclassified from accumulated other comprehensive income to earnings.
         The company had not realized any material gain or loss related to these
         transactions for either the third quarter or the nine months ended
         November 3, 2001.

         All forward exchange contracts that were designated as cash flow hedges
         as of November 3, 2001 will mature by the end of fiscal 2001. The
         related unrealized gain included in other comprehensive income at
         November 3, 2001 was not material to the company's consolidated
         financial condition.

         On July 19, 2001, the company entered into interest rate swap
         agreements on its $500 million outstanding 7.625% notes, due August 1,
         2011, and its $250 million outstanding 6.875% notes, due August 1,
         2006. Under these agreements, the company will pay interest at a
         variable rate in exchange for fixed rate payments, effectively
         transforming the debentures to floating rate obligations. This swap is
         designated as a perfectly effective fair value hedge, as defined by
         SFAS No. 133. Changes in the fair value of the interest rate swap
         perfectly offset changes in the fair value of the fixed rate debt due
         to changes in market interest rates. As such, there was no ineffective
         portion to the hedge recognized in earnings during the period.

         On February 13, 2001, the company borrowed 500 million EURO through the
         public issuance of a EURO bond bearing interest at 6.375% per annum.
         The obligation was swapped into a $466 million fixed rate obligation
         with an effective rate of 7.43% per annum with interest payments due
         annually and principal due February 13, 2004. This cross currency swap
         is designated as a cash flow hedge, as defined by SFAS No. 133, and is
         effective as a hedge.

         The company entered into a Swiss franc floating rate loan with a
         financial institution in January 1999, due January 2004. The company
         also entered into a contract to swap US dollars to Swiss francs, within
         exact terms of the loan. This cross currency swap has been designated
         as a foreign currency fair value hedge, as defined by SFAS No. 133, and
         is effective as a hedge.

11.      Restructuring and other charges
         In 1998, the company recorded restructuring and other non-recurring
         charges of $698 million ($508 million net of tax benefits) to
         strategically reposition its worldwide business. During the third
         quarter of 2001, the company completed the satisfaction of certain
         legal obligations, and accordingly, reversed an unused reserve of $5
         million. See the company's annual report for the year ended February 3,
         2001 for details on these charges. Also, see the section "Management's
         Discussion and Analysis of Results of Operations and Financial
         Condition" in this report for an update on the initiatives and the
         status of related reserves.






                                        8



<PAGE>
<TABLE>

                       TOYS "R" US, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
               ==========================================================

         During 2001, the company has closed certain under-performing toy stores
         in the United States and accordingly, has recorded operating charges of
         $8 million, $6 million of which were recorded in the third quarter of
         2001.

         The company believes all reserves are reasonable estimates of what is
         required to complete the foregoing initiatives.

12.      Segments
         Information related to the various company segments is as follows:
         (In millions)

          ---------------------------------------------------------------------
                                      13 Weeks Ended         39 Weeks Ended
          ---------------------------------------------------------------------
                                November 3,  October 28, November 3, October 28,
                                     2001        2000        2001        2000
          ---------------------------------------------------------------------
<S>                               <C>            <C>        <C>         <C>

 Net sales
  Toys "R" Us - USA            $  1,222       $ 1,323     $ 3,675     $ 3,803
  Toys "R" Us - International       373           339         974         965
  Toys "R" Us - Japan               -              -           -          277
  Babies "R" Us                     368           337       1,079         975
  Toysrus.com                        39            23         103          40
  Kids "R" Us                       176           198         429         473
  -----------------------------------------------------------------------------
  Total                        $  2,178       $ 2,220     $ 6,260     $ 6,533
   ----------------------------------------------------------------------------

 Operating (loss) / earnings
  Toys "R" Us - USA            $   (59)       $    9      $   (23)    $    96
  Toys "R" Us - International       12             7           -           (4)
  Babies "R" Us                     38            32          109          91
  Toysrus.com, net of
    minority interest              (17)         (124)         (59)       (158)
  Other                            (13)            3          (80)        (24)
  -----------------------------------------------------------------------------
  Operating (loss) / earnings      (39)          (73)         (53)          1

    Interest expense, net          (30)          (29)         (90)        (75)
    Gain from IPO of
     Toys "R" Us - Japan            -             -             -         315
  -----------------------------------------------------------------------------
 (Loss) / earnings before
   income taxes                $   (69)       $ (102)      $ (143)      $  241
  -----------------------------------------------------------------------------
<FN>
</FN>
</TABLE>

         Included in the category classified as "Other" are the results of the
         Kids "R" Us division and the company's share of the net earnings of
         Toys - Japan, as well as other corporate related items.

13.      Commitments and contingencies
         See Part II - Item I - Legal Proceedings






                                        9


<PAGE>


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

Results of Operations
Our net sales were $2.2 billion for both the third quarter of 2001 and 2000. For
the first nine months of 2001, our net sales were $6.3 billion versus $6.5
billion for the comparable period of 2000. Foreign currency exchange reduced our
net sales by approximately $45 million during the first nine months of 2001. Net
sales of Toys - Japan are included in our net sales in the first quarter of 2000
and excluded from our net sales thereafter. Our net sales declined 2% for the
third quarter and were unchanged for the first nine months of 2001 if both the
net sales of Toys - Japan and the impact of foreign currency translation are
excluded.

Total enterprise sales were $2.5 billion and $2.6 billion for the quarters ended
November 3, 2001 and October 28, 2000, respectively, and $7.3 billion for both
the first nine months of fiscal 2001 and 2000, respectively. Total enterprise
sales include sales by all stores, whether operated by us, by franchisees, or
under joint-venture agreements.

Our consolidated comparable store sales, in local currencies, declined 5% for
the third quarter of 2001 and declined 3% for the first nine months of 2001
compared with the same periods in 2000. Comparable store sales for the Toys "R"
Us - USA division declined 9% for the third quarter of 2001 and declined 4% for
the first nine months of 2001. During 2001, we have been retrofitting our U.S.A.
toy store chain to our Mission Possible format and have had a number of stores
under construction at any point in time this year. Our Mission Possible format
includes an enhanced store layout and improved customer service designed to
create a more dynamic selling environment. The disruption caused by this
construction, coupled with the events of the September 11th terrorist attacks,
as well as a soft retail environment, negatively impacted our sales results this
year. International comparable toy store sales, on a local currency basis,
increased 7% for the third quarter of 2001 and increased 4% for the nine months
of 2001. This increase was primarily driven by our toy stores in the United
Kingdom, which reported double-digit comparable store sales gains for the third
quarter and first nine months of fiscal 2001. Our Babies "R" Us division
reported low-single digit comparable store sales increases for both the third
quarter and first nine months of 2001. Toysrus.com reported net sales of $39
million and $103 million for the third quarter and the first nine months of
fiscal 2001, respectively, versus $23 million and $40 million for the same
periods last year.

For comparability purposes, the following discussion and analysis excludes the
impact of Toys - Japan and the non-recurring costs and charges relating to the
Toysrus.com/Amazon.com alliance in fiscal 2000.

Consolidated gross margin, as a percentage of sales, improved 70 basis points to
32.6% for the third quarter of 2001 and improved 80 basis points to 32.5% on a
year to date basis for 2001, as compared with the same periods last year. Gross
margin for the Toys "R" Us - USA division increased 40 basis points to 30.6% for
the third quarter and also increased 110 basis points to 31.3% on a year to date
basis. These increases were driven primarily by the expansion of our exclusive
merchandise programs.



                                       10


<PAGE>

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION
         ==================================================================
                                   (continued)

Gross margin for the International division remained flat at for both the
quarter and the first nine months of 2001 compared with 2000. Gross margin at
our Babies "R" Us division grew 230 basis points to 35.7% for the third quarter
and 150 basis points to 34.7% for the first nine months of 2001, primarily due
to a favorable shift in the sales mix.

Total selling, general and administrative expenses (SG&A), as a percentage of
sales, increased 290 basis points to 30.8% for the third quarter of 2001
compared with the third quarter of last year. On a year to date basis, SG&A
increased 270 basis points to 29.8% from the same period last year. SG&A for
Toys "R" Us - USA, increased 490 basis points to 31.1% for the third quarter and
also increased 360 basis points to 27.8% on a year to date basis, compared with
the same periods last year. These increases are primarily due to the investments
we are making in our business, such as Mission Possible, certain customer
focused initiatives and additional SG&A expenses resulting from the September
11th events, as well as a decline in net sales from 2000. SG&A for the
International division, decreased 160 basis points to 26.8% for the third
quarter and decreased 120 basis points to 29.6% for the nine months ended
November 3, 2001, as compared with the same periods last year. SG&A for the
Babies "R" Us division increased 120 basis points to 23.9% for the third quarter
2001 and increased 70 basis points to 23.3% on a year to date basis, compared
with the same periods last year. This increase is primarily due to increased
payroll costs related to supporting our customer focused initiatives.

Depreciation and amortization increased by $18 million for the first nine months
2001 from the first nine months of 2000, primarily due to the Mission Possible
store remodeling program, continued new store expansion and strategic
investments to improve management information systems.

Net interest expense increased by $15 million for the first nine months of 2001
from 2000. This increase is mainly attributable to the Mission Possible store
remodeling program, the funding of our stock repurchase program and the funding
of our Toysrus.com subsidiary.

Foreign currency exchange did not have a significant impact on net earnings for
either the third quarter or first nine months of 2001.

Restructuring and Other Charges
During 1998, we announced strategic initiatives to reposition our worldwide
business and other charges including the customer-focused reformatting of our
toy stores into the Mission Possible format, as well as the restructuring of our
International operations, which resulted in a charge of $353 million ($279
million net of tax benefits, or $1.05 per share). Details on the components of
our strategic initiatives and other charges are described in our annual report
for the year ended February 3, 2001. The reserve balances and subsequent
utilization are as follows:





                                       11
<PAGE>
<TABLE>
<CAPTION>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                            AND FINANCIAL CONDITION
        ==================================================================
                                   (continued)

                              Reserve Balance                   Reserve Balance
Description                       @ 2/03/01         Utilized         @ 11/03/01
--------------------------------------------------------------------------------
<S>                                  <C>               <C>               <C>

Closings/downsizings:
    Lease commitments                $ 49              $ 12                $ 37
    Severance and other closing costs   8                 4                   4
-------------------------------------------------------------------------------
Total restructuring                  $ 57              $ 16                $ 41
-------------------------------------------------------------------------------
Provisions for legal settlements     $ 11              $ 11  *             $  -
-------------------------------------------------------------------------------
<FN>
</FN>
</TABLE>

*Includes the reversal of a $5 million reserve, as described below.

During the third quarter of 2001, we completed the satisfaction of certain legal
obligations, and accordingly, we reversed an unused reserve of $5 million. In
1998, we also recorded charges for markdowns and other charges of $345 million
($229 million net of tax benefits, or $.86 per share), of which $6 million of
store closure markdowns remain at November 3, 2001.

During 2001, we have closed certain under-performing toy stores in the United
States and accordingly, we have recorded operating charges of $8 million, $6
million of which we recorded in the third quarter of 2001.

We believe all reserves are reasonable estimates of what is required to complete
the foregoing initiatives.






















                                       12


<PAGE>


       MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                           AND FINANCIAL CONDITION
       ==================================================================
                                   (continued)


Financial Condition
By February 2, 2002, we expect to operate approximately 1,600 stores, consisting
of: 702 toy stores in the United States, of which 433 will be in the Mission
Possible format; 507 International toy stores (including 224 franchise and joint
venture stores); 184 Kids "R" Us children's clothing stores; 165 Babies "R" Us
stores and 42 Imaginarium stores. In addition, we also sell merchandise through
our internet sites at www.toysrus.com, www.babiesrus.com and www.imaginarium.com
and through mail order catalogs.

During 2001, we replaced our prior unsecured committed revolving credit facility
by entering into a new unsecured committed revolving credit facility for $975
million from a syndicate of financial institutions. One third of this facility
expires on September 18, 2002 and two thirds expire on September 16, 2006. Cash
requirements for operations, capital expenditures and lease commitments will be
met primarily through operating activities, issuance of commercial paper and/or
additional medium-term financing.

On July 19, 2001, we issued $500 million notes bearing interest at 7.625% per
annum maturing on August 1, 2011 and $250 million notes bearing interest at
6.875% per annum maturing on August 1, 2006. Simultaneously, we entered into
interest rate swap agreements. As a result of the interest rate swap agreements,
interest on the $500 million notes will accrue at the rate of LIBOR plus 1.5120%
per annum and interest on the $250 million notes will accrue at the rate of
LIBOR plus 1.1515% per annum. Interest is payable on both notes semi-annually on
February 1 and August 1 of each year, commencing on February 1, 2002.

On February 13, 2001, we borrowed 500 million EURO through the public issuance
of a EURO bond bearing interest at 6.375% per annum. This obligation was swapped
into a $466 million fixed rate obligation at an effective rate of 7.43% per
annum with interest payments due annually and principal due on February 13,
2004.

On July 21, 2000, we borrowed the yen equivalent of $147 million, which is
repayable in semi-annual installments of principal and interest, with the final
installment due on August 17, 2005. The effective cost of this borrowing is
2.32% and is secured by expected future cash flows from license fees due from
Toys - Japan.

Net borrowings increased $308 million at November 3, 2001 from October 28, 2000.
This increase is due to the remodeling of the toy stores to the Mission Possible
format, share repurchases and inventory levels, and the funding of Toysrus.com.




                                       13


<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                            AND FINANCIAL CONDITION
          ==================================================================
                                   (continued)

For 2001, capital requirements for our expansion plans mentioned above, as well
as other capital requirements are estimated to be approximately $600 million.

The company repurchased 2 million shares of its common stock through its share
repurchase program for $44 million during the first nine months ended November
3, 2001, as compared with 41 million shares for $618 million in the same period
in 2000.

Weighted-average diluted shares outstanding decreased to 206.8 million during
the first nine months of fiscal 2001 from 219.6 million during the same period
in fiscal 2000, due primarily to the impact of shares repurchased under our
share repurchase program.

Toysrus.com has a 10-year strategic alliance with Amazon.com to operate a
co-branded toy and video games on-line store, which was launched in the third
quarter of 2000, a co-branded baby products on-line store, which was launched in
May 2001, and a co-branded creative and learning products on-line store, which
was launched in July 2001. Under this alliance, Toysrus.com and Amazon.com are
responsible for specific aspects of the on-line stores. Toysrus.com is
responsible for merchandising and content for the co-branded stores. Toysrus.com
also identifies, buys, owns and manages the inventory. Amazon.com handles web
site development, order fulfillment, customer service, and the housing of
Toysrus.com's inventory in Amazon.com's U.S. distribution centers.

As a result of the transition to the co-branded site in fiscal 2000, the
company's Toysrus.com subsidiary recorded non-recurring costs and charges,
before minority interest, totaling approximately $118 million, $10 million of
which were included in cost of sales and $108 million of which were included in
selling, general and administrative expenses, primarily relating to the closure
of three distribution centers, the write-off of web site assets, as well as
other costs associated with migrating data and merchandise to the new site and
facilities. At November 3, 2001, Toysrus.com has remaining reserves of
approximately $42 million, primarily related to exit costs for distribution
centers. Management believes these reserves to be reasonable estimates of what
is required to complete these initiatives.

We recorded a pre-tax gain of $315 million in the first quarter of 2000,
resulting from the initial public offering of shares of Toys - Japan. As a
result of this transaction, our ownership percentage in the common stock of Toys
- Japan was reduced from 80% to 48%. Toys - Japan is a licensee of ours.








                                       14
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                            AND FINANCIAL CONDITION
          ==================================================================
                                   (continued)

Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", which
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS 144 is
effective for fiscal years beginning after December 15, 2001, with earlier
application encouraged. The company will adopt SFAS 144 as of February 3, 2002
and does not expect that the adoption will have a significant effect on the
company's consolidated financial condition, results of operations and cash flow.

In July 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Goodwill and Other Intangible Assets". SFAS No. 142 stipulates that goodwill
and indefinite lived intangible assets will no longer be amortized, but instead
will be periodically reviewed for impairment. The amortization provisions of
SFAS No. 142 apply to goodwill and intangible assets acquired after June 30,
2001. For goodwill and intangible assets acquired prior to July 1, 2001, the
provisions of this statement will be effective at the beginning of our fiscal
year 2002, when we will be required to adopt SFAS No. 142. Application of the
nonamortization provisions of SFAS No. 142 is expected to result in an increase
in net income of $8 million ($0.04 per share) per year. The adoption of this
SFAS No. 142 is not expected to have a material impact on our consolidated
financial condition, results of operations or cash flows.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities," as amended,
which was adopted by us effective February 4, 2001. This standard requires that
all derivatives be recorded in the balance sheet at fair value and that all
changes in fair value be recognized currently in earnings unless specific hedge
criteria are met. The cumulative effect of adoption was not material to our
consolidated financial condition, results of operations or cash flow.

The countries in which we own assets and operate stores are politically stable.
However, we are exposed to market risk from potential changes in interest rates
and foreign exchange rates. We regularly evaluate these risks and have taken the
following measures to mitigate these risks: our foreign exchange risk management
objectives are to stabilize cash flow from the effects of foreign currency
fluctuation; we will, whenever practical, offset local investments in foreign
currencies with borrowings denominated in the same currencies; we also enter
into foreign exchange contracts or purchase options to eliminate specific
transaction risk.








                                       15
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION
           ==================================================================
                                   (continued)

We purchase forward exchange contracts to minimize potential foreign currency
exchange risk related to our import merchandise purchase program. These forward
exchange contracts are designated as foreign currency cash flow hedges, as
defined by SFAS No. 133, and are effective as hedges.

Changes in the effective portion of the fair value of these forward exchange
contracts are included in other comprehensive income until the hedged
transactions are completed. Once the hedged transaction is completed, the
unrealized gain or loss on the forward contract is reclassified from accumulated
other comprehensive income to earnings. We have not realized any material gain
or loss related to these transactions for either the third quarter or the nine
months ended November 3, 2001.

All forward exchange contracts that were designated as cash flow hedges as of
November 3, 2001 will mature by the end of fiscal 2001. The related unrealized
gain included in other comprehensive income at November 3, 2001 was not material
to our consolidated financial condition.

On July 19, 2001, we entered into interest rate swap agreements on our $500
million outstanding 7.625% notes, due August 1, 2011, and our $250 million
outstanding 6.875% notes, due August 1, 2006. Under these agreements, we will
pay interest at a variable rate in exchange for fixed rate payments, effectively
transforming the debentures to floating rate obligations. This swap is
designated as a perfectly effective fair value hedge, as defined by SFAS No.
133. Changes in the fair value of the interest rate swap perfectly offset
changes in the fair value of the fixed rate debt due to changes in market
interest rates. As such, there was no ineffective portion to the hedge
recognized in earnings during the period.

On February 13, 2001, we borrowed 500 million EURO through the public issuance
of a EURO bond bearing interest at 6.375% per annum. The obligation was swapped
into a $466 million fixed rate obligation with an effective rate of 7.43% per
annum with interest payments due annually and principal due February 13, 2004.
This cross currency swap is designated as a cash flow hedge, as defined by SFAS
No. 133, and is effective as a hedge.

We entered into a Swiss franc floating rate loan with a financial institution in
January 1999, due January 2004. We also entered into a contract to swap US
dollars to Swiss francs, within the exact terms of the original loan. This cross
currency swap has been designated as a foreign currency fair value hedge, as
defined by SFAS No. 133, and is effective as a hedge.








                                       16
<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                             AND FINANCIAL CONDITION
          ==================================================================
                                   (continued)


Forward-Looking Statements
This Form 10-Q contains "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, which are intended to be covered by
the safe harbors created thereby. We may also make forward-looking statements in
our other documents filed with the Securities and Exchange Commission, our
annual report to shareholders, our proxy statement and in our press releases.
All statements that are not historical facts, including statements about our
beliefs or expectations, are forward-looking statements. These statements
involve risks and uncertainties that exist in our business that could render
actual outcomes and results materially different than predicted. Our
forward-looking statements are based on assumptions about many factors,
including, but not limited to, ongoing competitive pressures in the retail
industry, changes in consumer spending, general economic conditions in the
United States and other jurisdictions in which we conduct business (such as
interest rates, inflation and consumer confidence) and normal business
uncertainty. While we believe that our assumptions are reasonable, we caution
that it is impossible to predict the actual outcome of numerous factors. The
forward-looking statements speak only as of the date they are made, and we
undertake no obligation to update these statements. Our actual results may
differ materially from those contained in any forward-looking statement.























                                       17



<PAGE>

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings

Class Action Suits against Toys "R" Us, Inc., et al.

As previously  reported in the our report on Form 10-K for the fiscal year ended
February 3, 2001, in August 2000 eleven  purported  class action  lawsuits were
filed (six in the United States  District  Court for the District of New Jersey,
three  in the  United  States  District  Court  for  the  Northern  District  of
California,  one in the United States District Court for the Western District of
Texas and one in the Superior  Court of the State of  California,  County of San
Bernardino),  against the  company  and its  affiliates  Toysrus.com,  Inc.  and
Toysrus.com,  LLC. In September 2000,  three  additional  purported class action
lawsuits were filed (two in the United States District Court for the District of
New Jersey and one in the United States District Court for the Western  District
of Texas).  These  actions  generally  purport to bring  claims on behalf of all
persons who have visited one or more of the  company's web sites and either made
an  online  purchase  or  allegedly  had   information   about  them  unlawfully
"intercepted,"  "monitored," "transmitted," or "used." All the suits (except one
filed in the United States  District  Court for the District of New Jersey) also
named Coremetrics,  Inc.  ("Coremetrics"),  an internet marketing company,  as a
defendant.

These lawsuits assert various claims under the federal privacy and computer
fraud statutes, as well as under state statutory and common law, arising out of
an agreement between the company and Coremetrics, alleging that the company
tracks its web site users' activities online and shares that information with
third parties in violation of the law. These suits seek damages in unspecified
amounts and other relief under state and federal law.

The company and Coremetrics filed a joint application with the Multidistrict
litigation panel (the "MDL Panel") to have all of the federal actions
consolidated and transferred to the United States District court for the
Northern District of California. A hearing on that application was held on
November 17, 2000, and all matters have now been consolidated in the United
States District Court for the Northern District of California.

The company moved for a stay of the action in the Superior Court of the State of
California,  County of San Bernardino pending resolution of the actions filed in
federal court.  The court granted the company's motion for stay on May 22, 2001.
Plaintiff's subsequently voluntarily dismissed the action without prejudice.


                                        18

<PAGE>



PART II - OTHER INFORMATION - (continued)


The company filed a motion to dismiss  plaintiff's  federal  causes of action on
August 3, 2001. On October 9, 2001 the United States  District  Court,  Northern
California District,  granted in part and denied in part the company's motion to
dismiss. The court's order dismissed one cause of action without leave to amend,
dismissed a second cause of action with leave to amend and denied the  company's
motion as to the third cause of action. On October 16, 2001 plaintiff's filed an
amended  complaint  to remedy  the  defects  in the  cause of action  previously
dismissed with leave to amend.





Item 5.           Other Information

                  Stockholder Proposals

                  Sec. 2.1(b) of the company's By-Laws provides for the company
                  to provide notice of an upcoming Annual Meeting of
                  Stockholders at least 100 days in advance of such meeting.
                  Notice is hereby given that the company's 2002 Annual Meeting
                  of Stockholders is expected to be held on June 5, 2002.
                  Pursuant to Sec. 2.1(b) of the By-Laws, stockholder
                  nominations of persons for election to the Board of Directors
                  of the company must be received by the company at its
                  executive office, 461 From Road, Paramus, New Jersey 07652,
                  Attention: Christopher K. Kay, Executive Vice President -
                  General Counsel and Secretary, no later than March 7, 2002 in
                  order to be considered timely.


Item 6.           Exhibits and Reports on Form 8-K

                  (a)      Exhibits:
                           None

(b)      Report on Form 8-K
                           None







                                       19

<PAGE>


                                   SIGNATURES



         Pursuant to the requirements of the Securities Exchange Act of 1934,
         the registrant has duly caused this report to be signed on its behalf
         by the undersigned thereunto duly authorized.










         Date:  December 18, 2001                           Toys "R" Us, Inc.
                                                     ------------------------
                                                              (Registrant)






                                                    s/ Louis Lipschitz
                                                    -----------------------
                                                   (Signature)
                                                   Louis Lipschitz
                                                   Executive Vice President and
                                                   Chief Financial Officer














                                       20