##### Table of Contents





Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 29, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Transition Period
    From          to   Commission file number 001-33070
 Eddie Bauer Holdings,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

42-1672352(State of or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization)

Identification
    No.)   10401 NE
    8th
    Street, Suite 500
    Bellevue, WA 98004(425) 755-6544 (Address
    and telephone number, including area code, of registrants
    principal executive offices)
  Securities
    Registered Pursuant to Section 12(b) of the Act: Common
    Stock, Par Value $0.01 per share
  Name of
    each exchange on which registered The
    NASDAQ Stock Market LLC
  Securities
    Registered Pursuant to Section 12(g) of the Act:
    None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated filer
    o

Accelerated filer
    þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
    þ o
    DOCUMENTS
    INCORPORATED BY REFERENCE:
  Form 10-K.




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##### 





TABLE OF
    CONTENTS
   
 PageSafe Harbor Statement


(iii
)PART IItem 1.


Business


1Item 1A


Risk Factors


16Item 1B


Unresolved Staff Comments


25Item 2.


Properties


25Item 3.


Legal Proceedings


26Item 4.


Submission of Matters to a Vote of Security
    Holders


27PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Repurchases of Equity
    Securities


27Item 6.


Selected Financial Data


29Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


36Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


69Item 8.


Financial Statements and Supplementary Data


71Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


71Item 9A.


Controls and Procedures


71Item 9B.


Other Information


74PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


74Item 11.


Executive Compensation


74Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


74Item 13.


Certain Relationships and Related Transactions
    and Director Independence


74Item 14.


Principal Accounting Fees and Services


74PART IVItem 15.


Exhibits, Financial Statement Schedules


75EXHIBIT 10.29EXHIBIT 10.34EXHIBIT 10.35EXHIBIT 10.47EXHIBIT 10.48EXHIBIT 10.49EXHIBIT 10.50EXHIBIT 23EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2   (ii)




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SAFE
    HARBOR STATEMENT UNDER THE PRIVATE
    SECURITIES LITIGATION ACT OF 1995    
    our ability to implement new marketing, merchandising, sourcing
    and operations plans to rebuild the Eddie Bauer brand and
    increase retail sales;
    our ability to effectively complete the organizational
    realignments of responsibilities commenced in 2008;
    consumer acceptance of our products and our ability to keep up
    with fashion trends, develop new merchandise, launch new product
    lines successfully, offer products at the appropriate price
    points and enhance our brand image;
    the highly competitive nature of the retail industry generally
    and the segment in which we operate particularly;
    our ability to hire, train and retain key personnel and
    management;
    the possible lack of availability of suitable store locations on
    appropriate terms;
    our reliance on foreign sources of production, including risks
    related to the disruption of imports by labor disputes,
    political instability, legal and regulatory matters, duties,
    taxes, other charges and quotas on imports, local business
    practices and political issues and risks related to currency and
    exchange rates;
    our ability to service our current debt and to continue to
    remain in compliance with the covenants under our term loan and
    revolving loan facilities;
    our ability to utilize net loss carryforwards in future years;
    shifts in general economic conditions, consumer confidence and
    consumer spending patterns;
    the seasonality of our business;
    the ability of our manufacturers to deliver products in a timely
    manner or meet quality standards;
    the lack of effectiveness of our disclosure controls and
    procedures currently or in the future;
    increases in the costs of paper for and printing and mailing of
    our catalogues;
    the price and supply volatility of energy supplies;
    our reliance on information technologies, including risks
    related to the lack of functionality of older systems and
    software, the implementation of new information technology
    systems, service interruptions and unauthorized access to third
    party information;
    natural disasters;
    the potential impact of national and international security
    concerns on the retail environment, including any possible
    military action, terrorist attacks or other hostilities; and
    the other risks identified in this Annual Report on Form
    10-K.   (iii)




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PART I  Item 1.
    BUSINESS  The Spiegel
    Bankruptcy
  Company
    History
  (1899-1986)
      Business 
    The Spiegel Bankruptcy
  Our mission
  Our creed
   To give you such outstanding quality, value, service and
    guarantee
    that we may be worthy of your high
    esteem.®
 1




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Executive
    Overview
  30-54 years Womens
    Wear Daily Womens Wear Daily Top 100 Brands
    
    retail stores, which sell our premium Eddie Bauer merchandise;
    outlet stores, which sell high quality Eddie Bauer merchandise
    and inventory overstocks at value or clearance price
    points; and
    direct, which consists of our Eddie Bauer catalogs and our
    website www.eddiebauer.com .  www.eddiebauer.com www.eddiebaueroutlet.com
  Joint Ventures Licensing
    Retail


Outlet


TotalStores as of December 30, 2006


279



115



394Stores Opened in 2007


21



8



29Stores Closed in 2007


(29
)


(3
)


(32
)Stores as of December 29, 2007


271



120



391     Major Developments in 2007.
   2




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2008 and Beyond: Five Key Initiatives. 18-month
    
    clarify the brand position and rebuild brand identity
    upgrade the quality of the merchandise and align the assortment
    strategy to the new brand position
    revamp the creative marketing function and fully exploit our
    marketing advantage as a direct multi-channel retailer
    cut costs to become more competitive and profitable
    realign the organization and build talent to accomplish our goals  Brand Identity. tm
  Merchandising Strategies and
    Execution.
  Marketing.
  Costs.
  Talent and Organization.
  
    appointing a new Senior Vice President of Merchandising
    splitting our design group into two core groups: Outerwear,
    Active Wear and Gear; and Sportwear  both reporting
    to the CEO 3




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
    moving all customer facing service functions under
    the Senior Vice President of Retail, to provide end-to-end
    accountability for customer service under one leader
    realigning our marketing groups to two separate groups:
    Creative; and Marketing Programs, in order to improve decision
    making and focus
    creating a separate group specifically charged with building a
    talent pool for the organization
    establishing a separate sourcing and supply group under our new
    Senior Vice President of Sourcing and Supply to improve product
    quality and reduce product cost  Our
    Products
    
    Rebuilding our strength in outerwear.  Eddie
    Bauer has a long history of leadership in outerwear, from the
    first patented down jacket to Air Force parkas in World
    War II to outfitting over 30 major expeditions to the
    worlds most extreme mountains. Eddie Bauer was ranked as
    the number four outerwear brand in a Womens Wear Dailysurvey in July 2007, and 27th in a companion
    Womens Wear Daily Top 100 Brands survey, also in
    July 2007. As an active, outdoor lifestyle brand, we are
    committed to building a category-leading outerwear assortment.
    Leveraging our heritage.  We plan to infuse
    products with heritage elements, while modernizing many of our
    historic best sellers. These heritage pieces reinforce our
    positioning as The Original Outdoor Outfitter.
    Focusing on the fundamentals.We plan to
    improve our core programs as the foundation for seasonal
    collections and fashion. We are making a concerted effort to
    improve our top selling items and key programs through better
    fit, fabrics, detailing, color and style.
    Focusing the assortment.  We believe we have a
    significant opportunity to narrow the assortment, cut
    unproductive styles and make fewer, clearer merchandising
    statements.
    Rebuilding the mens business.  We plan to
    add product with an active, rugged, adventure-oriented
    sensibility.
    Driving better perceptions of valuethrough more
    competitive opening price points, and better quality for the
    price paid.
    Differentiate on style.  We see a significant
    opportunity to increase the styling of our products and
    differentiate our assortment from our competitors.    Target
    Customers
  30-54 years
 4




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Our
    Performance
    The Fall/Holiday 2005 Re-Launch of the
    Brand.
  Fall/Holiday 2006.
  Fall/Holiday 2007.
  2008 and Beyond.
  Risk
    Factors 12-18 months.
 5




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Design
    and Merchandising
              Product
    Sourcing
  Sourcing Strategy.
  
    retain close control over our product quality and design costs
    by designing and developing most clothing and accessory products
    in-house;
    working with a select group of sourcing agents and vendors,
    directly negotiate product cost with our vendors and send
    detailed specification packages to these sourcing agents and
    vendors; 6




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
    inspect pre-production samples, make periodic site visits to our
    vendors factories and selectively inspect inbound
    shipments at our distribution center; and
    establish quality standards at our headquarters in Bellevue,
    Washington, that are included in our policies with these
    sourcing agents and vendors and enforced by our associates.    Sourcing Agents.
  
    approximately 76% of our products through our main sourcing
    agent, Eddie Bauer International, Ltd. (EBI). EBI is
    a subsidiary of Otto International (Hong Kong) Ltd.
    (OIHK), a former affiliate of Spiegel;
    approximately 14% of our merchandise (primarily non-apparel and
    swimwear) direct or from domestic importers; and
    the remainder (primarily footwear and home products) through
    other buying agents.    Vendors.
  Global Labor Practices Program.
 7




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Sales
    Channels
  www.eddiebauer.com www.eddiebaueroutlet.com. www.eddiebauer.com Websites
  Retail Stores.
      Outlet Stores.
 8




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Item 2. Properties.
    Direct Channel.
  e-mail e-mails
  Catalogs.
  Websites. www.eddiebauer.com www.eddiebaueroutlet.com Internet
    Retailer www.eddiebauer.com
  Protecting
    and Developing Our Brand Name
  Trademarks.
 9




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®
  and/or cease-and-desist
  Joint Ventures.
    Eddie Bauer Japan.
  Eddie Bauer Germany.
  Licensing
     10




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Name of Licensee

Licensed ProductsCosco Management, Inc.

Infant/juvenile car seats and strollersFord Motor Company

SUVsAmerican Recreation Products

Camping gearLowes Companies

Interior paint and products     Marketing
    
    Creating a single powerful brand message across all channels
    Ensuring our stores are a compelling shopping destination via
    powerful graphics, props and product displays that amplify our
    monthly product news
    Using 82 million distributed catalogs that influence sales
    in all channels and establish our brand image amongst existing
    and new customers
    Building our membership in our new Eddie Bauer Friends loyalty
    program to 2.9 million customers as of the end of fiscal
    2007 and leveraging our private label credit card customers
    Limited time promotional offers and incentives that drive
    seasonal traffic and sales  Our Marketing Strategy. ages 30-54, e-mail Cosmopolitan,
    Womens Wear Daily the New York Times Magazine
    Fashion Edition.
    Loyalty Program. www.eddiebauerfriends.com www.eddiebauerfriends.com www.eddiebauerfriends.com
 11




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Our Private-Label Credit Card.
    Our
    Support Functions
  Distribution Centers.
  non-U.S. shipments
  Information Technology.
      
    upgraded our mainframe processing infrastructure to get to
    supported levels and reduce software and hardware maintenance
    costs
    converted the majority of our stores network to higher speed,
    lower cost DSL technology
    established roles-based access security as part of our identity
    and access management SOX efforts 12




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
    established the infrastructure required for the move to a new
    headquarters building in Bellevue, Washington.    
    launching our new website, under development since the beginning
    of 2005, to provide a significantly enhanced customer experience
    and more flexibility to modify the website, move us to a long
    term technology platform, and improve the integration of the
    website to our back end systems
    completing the roll out of DSL to our stores    Call Center.
  Competition
       13




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Risk
    Factors  Risks Relating to Our Industry If we cannot compete effectively in the
    apparel industry our business and financial condition may be
    adversely affected
  Seasonality
    Associates
    Government
    Regulation
  U.S.
    Regulation
    Non-U.S.
    Regulation
    year-by-year
 14




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The
    Spiegel Bankruptcy
  The Spiegel Group.
  tm tm
  parties-in-interest
    Plan of Reorganization.
 15




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Item 7  Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Liquidity and Capital
    Resources  Sources of Liquidity
  Item 1A.
    RISK
    FACTORS  Any of the risks discussed below, as well as any of the other
    risks described in this
    Form 10-K,
    could materially affect our business, financial condition,
    results of operations and cash flows.
  Industry
    Risks
  If we
    cannot compete effectively in the apparel industry our business
    and financial condition may be adversely affected.
    Adverse
    changes in the economy may adversely affect consumer spending,
    which could negatively impact our business.
    Results
    of operations could be hurt if new trade restrictions are
    imposed or existing trade restrictions become more
    burdensome.
    Reduced
    pricing by competitors in the retail apparel industry has
    affected and may continue to affect our results of
    operations.
   16




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The
    retail apparel business is seasonal in nature, and any decrease
    in our sales or margins during these periods could have a
    material adverse effect on our company.
    The
    apparel industry is characterized by rapidly changing customer
    demands and our failure to anticipate and respond to changing
    customer style preferences in a timely manner will adversely
    affect our business and financial condition.
    Risks
    Relating to Our Business
  If we
    cannot revitalize the Eddie Bauer brand, our business will be
    adversely impacted.
  Item 1. Business  2008 and
    Beyond: Five Key Initiatives,
  
    our desire to attract additional male customers may result in
    the loss of existing female customers;
    our addition of higher priced merchandise may drive away
    existing customers and may not attract new customers;
    our efforts to increase traffic and sales in our retail and
    outlet stores may not be cost effective; or
    our marketing efforts to promote our revitalized brand may not
    be effective.   17




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We
    face numerous challenges as a result of our involvement in the
    Spiegel bankruptcy process which, if not addressed, could have a
    material adverse effect on our business.
    
    distributing a significant portion of our cash flow and the
    proceeds of the $300 million senior secured term loan to
    the creditors of Spiegel in June 2005, instead of reinvesting
    that capital in our business and infrastructure during the
    bankruptcy process;
    borrowing significant amounts (including $300 million under
    our senior secured term loan and amounts from time to time under
    our senior secured revolving credit facility of up to
    $150 million) and as a result becoming subject to the
    restrictions and limitations imposed by the lenders under our
    financing facilities;
    assuming ongoing obligations equal to approximately
    $17 million associated with Spiegels former pension
    and other retirement plans;
    assuming the obligations of Spiegel and its subsidiaries to
    indemnify officers or employees for liability associated with
    their service; and
    inheriting support facilities that were not optimally suited for
    our operations and, as a result, having to sell, streamline,
    consolidate or relocate some of these facilities.    If our
    management team cannot integrate effectively or if we cannot
    attract and retain qualified senior and middle management and
    motivate our retail associates, our business will be adversely
    affected.
    Our
    disclosure controls and procedures and internal control pursuant
    to Section 404 of the Sarbanes-Oxley Act over financial
    reporting may not be effective in future periods, as a result of
    previously identified weaknesses in internal
    controls.
     18




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If we
    are not successful in improving profitability of our retail and
    outlet stores, our business will be adversely
    affected.
    If we
    cannot negotiate leases on reasonable terms, our business would
    be adversely affected.
    We
    depend on a high volume of mall traffic, the lack of which would
    hurt our business.
    If our
    catalogs are not successful, it could adversely affect all of
    our sales channels.
    Our
    website operations may not be successful, which could adversely
    affect our business.
    Our
    processing, storage and use of personal data could give rise to
    liabilities as a result of governmental regulation, conflicting
    legal requirements or differing views of personal privacy
    rights.
   19




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We may
    be subject to significant liability if we are required to recall
    any product or should any of our products cause injury or
    death.
    We
    rely on one sourcing agent for a substantial majority of our
    sourcing needs.
    A
    significant disruption in back-end operations could adversely
    affect our business.
    If we
    cannot protect our trademarks and other proprietary intellectual
    property rights, our business may be adversely
    affected.
  and/or
 20




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and/or
  If our
    independent vendors do not use ethical business practices or
    comply with applicable laws and regulations, our business and
    our reputation could be harmed.
    Unseasonable
    or severe weather conditions may adversely impact our net
    merchandise sales and our operating results.
    Risks
    Relating to Our Financial Condition and Results of
    Operations
  Our
    substantial amount of debt may limit the cash flow available for
    our operations and place us at a competitive
    disadvantage.
     21




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We may
    not have sufficient available cash necessary to settle
    conversion of the 5.25% senior convertible notes or to
    purchase the notes upon a fundamental change, and our other debt
    may contain limitations on our ability to pay cash upon
    conversion or repurchase of the notes.
    We
    experience fluctuations in our quarterly comparable store
    sales.
    Unexpected
    outcomes in legal proceedings could have a material adverse
    impact on our financial conditions.
  class-action
  Our
    reorganization valuation was based in part on estimates of
    future performance. If actual results do not meet or exceed the
    projections in our long term plan, we could experience
    additional impairment charges that could adversely affect our
    operating results.
  90-7, SOP 90-7. Business Combinations
 22




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We may
    not be able to realize the full amount of our net loss
    carryforwards, which could impact our financial results and
    available cash for debt paydown and operations.
    Risks
    Relating to Our Common Stock
  An
    active trading market for our common stock may not develop, and
    there can be no assurance as to the market price for our common
    stock if an active trading market develops.
  Risk Factors
  As a
    public company we may incur substantial costs to comply with
    securities laws, rules and regulations, including, in
    particular, Section 404 of the Sarbanes-Oxley Act of 2002.
    Future disagreements with our auditors may damage investor
    confidence.
   23




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Provisions
    of our Certificate of Incorporation, Bylaws and Senior Officer
    Change in Control Compensation Benefits Plan could discourage
    potential acquirers and could deter or prevent a change in
    control.
    
    our ability to issue blank check preferred stock;
    provisions restricting stockholders from calling a special
    meeting of stockholders;
    provisions that set forth advance notice procedures for meetings
    of stockholders; and
    payments of certain bonus and severance amounts to covered
    employees in certain circumstances.    Our
    ability to utilize our NOLs and certain other tax attributes may
    be limited.
    Future
    issuances or sales of our securities could cause our stock price
    to fall.
   24




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Our
    dividend policies and other restrictions on the payment of
    dividends prevent the payment of dividends for the foreseeable
    future.
    Item 1B.
    UNRESOLVED
    STAFF COMMENTS    Item 2.
    PROPERTIES    Corporate Headquarters.
  Retail and Outlet Stores.
   25




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Retail


Outlet


TotalStores as of December 30, 2006


279



115



394Stores Opened in 2007


21



8



29Stores Closed in 2007


(29
)


(3
)


(32
)Stores as of December 29, 2007


271



120



391     Support
    Facilities
  Distribution Centers.
  Customer Contact Center.
  Information Technology Center.
  Item 3.
    LEGAL
    PROCEEDINGS  Tara Hill v.
    Eddie Bauer, Inc. Scherer v. Eddie Bauer, Inc.
  Kristal Scherer, on behalf of herself, all others similarly
    situated v. Eddie Bauer, Inc. and Does 1 to 100
   26




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Item 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  Item 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER REPURCHASES OF EQUITY SECURITIES  (A) Market
    Information
    High


LowFiscal 2006First Quarter Ended March 31, 2006

$
16.00


$
11.75Second Quarter Ended July 1, 2006

$
15.00


$
6.00Third Quarter Ended September 30, 2006

$
15.00


$
8.30Fourth Quarter Ended December 30, 2006

$
11.00


$
6.88Fiscal 2007First Quarter Ended March 31, 2007

$
11.56


$
6.50Second Quarter Ended June 30, 2007

$
14.27


$
10.11Third Quarter Ended September 29, 2007

$
14.25


$
7.29Fourth Quarter Ended December 29, 2007

$
9.42


$
5.56   (B)
    Holders    (C)
    Dividends   27




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(D)
    Securities
    Authorized for Issuance Under Equity Compensation
    Plans  Item 12  Security Ownership of Certain
    Beneficial Owners and Management and Related Stockholders
    Matters
  (E)
    Performance
    Graph    COMPARISON
    OF 30 MONTH CUMULATIVE TOTAL RETURN*
    Among Eddie Bauer Holdings Inc., The NASDAQ Composite Index
    And A Peer Group
  
  Peer Group
        (F)
    Unregistered
    Sales of Equity Securities and Use of Proceeds and Issuer
    Purchases of Equity Securities   28




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Item 6.
    SELECTED
    FINANCIAL DATA  Overview
  The
    Bankruptcy
      
    Eddie Bauer, Inc., including its subsidiaries;
    Two non-operating subsidiaries (FSAC and SAC) that held
    securitization interests in certain pre-petition securitization
    transactions to which Spiegel and its subsidiaries (including
    FSAC and SAC, as applicable) were a party;
    A distribution center in Groveport, Ohio (EBFS), which provides
    catalog and retail distribution services for us; and
    A call center in Saint John, New Brunswick, Canada (EBCS), which
    provides call center support for us (Saint John).    Predecessor
    and Successor Entities
      The Predecessors results of operations for periods
    prior to our emergence from bankruptcy are not comparable to the
    Successors results of operations for periods after our
    emergence from bankruptcy. The primary differences include:
  Reorganization costs and expenses, net: 90-7, Financial Reporting by Entities in Reorganization under the
    Bankruptcy Code (SOP 90-7),
  Allocations of certain costs of Spiegel: Allocation
    of Expenses and Related Disclosure in Financial
 29




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Statements of Subsidiaries, Divisions or Lesser Business
    Components of Another Entity,
  Discontinuation of Eddie Bauer Home
  Fresh
    Start Accounting
  SOP 90-7, Business Combinations
  Fiscal
    2005 Presentation
  As a result of applying fresh start accounting,
    the Successors results of operations for periods after our
    emergence from bankruptcy are not comparable to the
    Predecessors results of operations for periods prior to
    our emergence from bankruptcy, and therefore, the combined
    results for fiscal 2005 should not be taken as indicative of our
    historical or future results.
  Financial
    Operations Overview
    
    Net merchandise sales Net merchandise sales
    include sales of merchandise from our retail and outlet stores
    and our direct business, which includes sales from our catalogs
    and website, less discounts and sales return allowances. Upon
    the sale of a gift card or gift certificate, we defer the
    revenue and record a liability. We reduce the liability and
    record merchandise sales when the gift card or gift certificate
    is redeemed by the customer. A significant percentage of our
    customers make purchases through more than one sales channel.
    Comparable store sales Comparable store sales
    include net merchandise sales from retail and outlet stores that
    have been open for one complete fiscal year. We exclude new
    store locations from our comparable store sales until they have
    been in operation for one complete fiscal year. Similarly,
    stores that are expanded or down-sized by more than 30% are also
    excluded from our comparable store base until they have been in
    operation in their new configuration for one complete fiscal
    year. Stores that are closed for more than 10 consecutive days
    are also excluded from our comparable store base. Certain
    financial adjustments, including the sales impact from our
    customer loyalty program, are excluded from our comparable store
    sales. Comparable store sales do not include net sales from our
    catalogs and website. 30




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
    Average sales per square foot Average sales
    per square foot is determined on an annual basis by dividing net
    merchandise sales from our retail and outlet stores for the
    fiscal year by the monthly average of the gross square feet
    during such fiscal year. References to square feet represent
    gross square feet and not net selling space.
    Other revenues Other revenues include
    revenues associated with the royalties we receive from licensing
    agreements for the use of the Eddie Bauer trademark, royalties
    we receive from our international joint ventures and shipping
    revenues from shipments to customers from our direct channel.
    Gross margin Gross margin is equal to our net
    merchandise sales less our costs of sales. We include in our
    costs of sales the direct cost of purchased merchandise, inbound
    freight, inventory write downs, design, buying and production
    costs and occupancy costs related to store operations and
    warehouses. We record costs of sales expense related to our
    customer loyalty program as points are earned by the customer,
    net of estimated breakage. We reduce costs of sales expense and
    record a reduction to revenue, which therefore has no impact to
    our gross margin, when the reward certificates are redeemed by
    the customer. Costs of sales also include the amortization
    expenses associated with our finite-lived intangible assets. As
    noted below, our warehousing and distribution expenses
    (excluding occupancy costs related to our warehouses) and
    shipping costs are included in selling, general and
    administrative expenses and are therefore excluded from our
    calculation of gross margin and gross margin percentage. As a
    result, our gross margin and gross margin percentages may not be
    comparable to those of other retailers.
    Gross margin% Gross margin% is calculated as
    our gross margin as a percentage of our net merchandise sales.
    Impairment of indefinite-lived intangible assets  These expenses include impairment charges
    related to our goodwill and trademarks.
    Selling, general and administrative (SG&A) These expenses include all operating expenses
    not included within costs of sales, such as store expenses other
    than occupancy costs, administrative expenses, marketing and
    advertising expenses, catalog production and mailing costs,
    program costs related to our customer loyalty program,
    warehousing and distribution expenses (excluding occupancy costs
    related to our warehouses, which are reflected in costs of
    sales), call center expenses (excluding occupancy costs related
    to our call center), shipping costs associated with our catalog
    and Internet sales and depreciation and amortization of our
    non-store related property and equipment and computer software
    costs. Selling, general and administrative expenses also include
    gift card breakage related to gift cards purchased, which is the
    estimated amount of gift cards and gift certificates that will
    go unredeemed. Gift card breakage is recorded as a reduction to
    selling, general and administrative expenses for amounts when
    redemption is determined to be remote, based upon historical
    breakage percentages.
    Interest expense Interest expense for periods
    prior to July 2, 2005 represents interest charged by our
    former parent, Spiegel, on our intercompany borrowings. Interest
    expense for periods subsequent to July 2, 2005 includes
    interest on our senior secured revolving credit facility;
    interest on our senior secured term loan, which was amended in
    April 2006 and April 2007; interest expense and discount
    amortization on our 5.25% convertible notes issued in April
    2007; and amortization of our deferred financing fees. Interest
    expense is reduced for interest we capitalize.
    Other income, net Other income, net primarily
    includes interest income earned on our cash and cash
    equivalents; gains or losses on our derivative instruments,
    including fair value adjustments we are required to make on the
    embedded derivative liability associated with our convertible
    notes; the net accretion on the financing receivables and
    liabilities associated with our securitization interests; and
    other non-operating items, which included the loss of
    extinguishment of debt and gain on the sale of our net financing
    receivables during fiscal 2007.
    Equity in earnings (losses) of foreign joint ventures  This includes our proportionate share of the
    earnings or losses of our joint ventures in Germany and Japan.
    We own a 30% interest in Eddie Bauer 31




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##### Table of Contents



Japan, Inc. and a 40% interest in Eddie Bauer GmbH &
    Co. We account for these investments under the equity method of
    accounting as we do not control these entities.  
    Gain on discharge of liabilities In
    conjunction with our emergence from bankruptcy, we recognized a
    net gain of $107.6 million for the six months ended
    July 2, 2005 associated with the discharge of our
    liabilities in accordance with the Plan of Reorganization.
    Reorganization costs and expenses, net In
    accordance with
    SOP 90-7,
    our financial statements prior to our emergence from bankruptcy
    reflected our revenues, expenses, realized gains and losses, and
    provisions for losses resulting from the reorganization
    separately as reorganization costs and expenses, net
    in our combined statements of operations.
    Discontinuation of Eddie Bauer Home In
    February 2005 we announced our plan to discontinue operating our
    Eddie Bauer Home concept. As such, we have reflected
    the historical results of the Eddie Bauer Home group within
    discontinued operations in our financial statements. All Eddie
    Bauer Home store locations were closed by September 2005. 32




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##### Table of Contents



SELECTED
    HISTORICAL FINANCIAL INFORMATION
  Because of our emergence from bankruptcy and our
    corresponding adoption of fresh start accounting and for the
    reasons stated above in Predecessor and Successor
    Entities,our financial information for any period
    prior to July 2, 2005 will not be comparable to financial
    information for periods after that date.
     33




---



##### Table of Contents



Managements Discussion and Analysis of Financial
    Condition and Results of Operations.
  Successor


PredecessorSix Months


Six MonthsEnded


EndedSuccessor


Successor


December 31,


July 2,


Combined


Predecessor


Predecessor2007


2006


2005


2005


2005


2004


2003($ in thousands, except per share data)Statement of Operations Information:Net sales and other revenues

$
1,044,353


$
1,013,447


$
593,711


$
465,723


$
1,059,434


$
1,120,761


$
1,243,927Revenue from Spiegel-affiliated parties






















37,154



73,288Total revenues


1,044,353



1,013,447



593,711



465,723



1,059,434



1,157,915



1,317,215Costs of sales, including buying and occupancy


630,853



603,171



337,318



259,536



596,854



604,864



695,872Impairment of indefinite-lived intangible assets(a)






117,584



40,000







40,000







Selling, general and administrative expenses


441,875



411,300



214,125



185,225



399,350



452,603



531,101Total operating expenses


1,072,728



1,132,055



591,443



444,761



1,036,204



1,057,467



1,226,973Operating income (loss)


(28,375
)


(118,608
)


2,268



20,962



23,230



100,448



90,242Interest expense


26,698



26,928



11,064



761



11,825



316



2,513Other income, net(b)


23,695



3,031



1,919







1,919







Equity in earnings (losses) of foreign joint ventures


(1,147
)


(3,413
)


174



(95
)


79



3,590



1,606Income (loss) from continuing operations before reorganization
    items and income tax expense


(32,525
)


(145,918
)


(6,703
)


20,106



13,403



103,722



89,335Gain on discharge of liabilities(c)














(107,559
)


(107,559
)






Reorganization costs and expenses, net














13,686



13,686



26,871



91,022Income (loss) from continuing operations before income tax
    expense (benefit)


(32,525
)


(145,918
)


(6,703
)


113,979



107,276



76,851



(1,687
)Income tax expense(d)


69,193



65,531



14,645



50,402



65,047



36,080



4,803Income (loss) from continuing operations


(101,718
)


(211,449
)


(21,348
)


63,577



42,229



40,771



(6,490
)Income (loss) from discontinued operations, net of tax






(534
)


(1,440
)


(2,661
)


(4,101
)


2,893



6,171Net income (loss)

$
(101,718
)

$
(211,983
)

$
(22,788
)

$
60,916


$
38,128


$
43,664


$
(319
)Basic and Diluted Earnings Per Share Information(e):Loss from continuing operations per share

$
(3.33
)

$
(7.04
)

$
(0.71
)


n/a



n/a



n/a



n/aLoss from discontinued operations per share

$



$
(0.02
)

$
(0.05
)


n/a



n/a



n/a



n/aNet loss per share

$
(3.33
)

$
(7.06
)

$
(0.76
)


n/a



n/a



n/a



n/aWeighted average shares used to complete basic and diluted
    earnings per share


30,524,191



30,012,896



29,995,092



n/a



n/a



n/a



n/a 34




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##### Table of Contents



Successor


PredecessorSix Months


Six MonthsEnded


EndedSuccessor


Successor


December 31,


July 2,


Combined


Predecessor


Predecessor2007


2006


2005


2005


2005


2004


2003($ in thousands, except per share data)Operating Information  Unaudited(f):Percentage increase (decrease) in comparable store
    sales(g)


4.4
%


(2.0
)%


(6.0
)%


3.4
%


(2.2
)%


(1.7
)%


(5.3
)%Average sales per square foot

$
269


$
256



n/a



n/a


$
256


$
252


$
245Number of retail stores(h):Open at beginning of period


279



292



279



304



304



330



399Opened during the period


21



16



16







16



7



1Closed during the period


29



29



3



25



28



33



70Open at the end of the period


271



279



292



279



292



304



330Number of outlet stores(h):Open at beginning of period


115



108



103



101



101



103



102Opened during the period


8



8



5



3



8



2



2Closed during the period


3



1







1



1



4



1Open at the end of the period


120



115



108



103



108



101



103Total store square footage at end of period (in thousands)


2,653



2,752



2,897



n/a



2,897



2,960



3,220Gross margin

$
358,527


$
353,517


$
228,161


$
176,478


$
404,639


$
442,875


$
478,170Gross margin%


36.2
%


37.0
%


40.3
%


40.5
%


40.4
%


42.3
%


40.7
%Capital expenditures

$
56,636


$
45,814


$
30,214


$
8,641


$
38,855


$
13,906


$
6,313Depreciation and amortization

$
50,333


$
55,494


$
26,589


$
16,171


$
42,760


$
41,142


$
57,339   Successor


Successor


Successor


Successor


Predecessor


PredecessorAs of


As of


As of


As of


As of


As ofDecember 29,


December 30,


December 31,


July 2,


January 1,


January 3,2007


2006


2005


2005


2005


2004($ in thousands)Balance Sheet Information:Net Working Capital

$
71,821


$
105,067


$
107,297


$
115,087


$
112,577


$
12,805Goodwill(a)

$
107,748


$
114,765


$
220,481


$
220,481


$
76,601


$
76,601Trademarks(a)

$
185,000


$
185,000


$
185,000


$
225,000


$
58,756


$
58,756Total assets

$
811,432


$
855,910


$
1,153,236


$
1,186,005


$
591,975


$
643,137Due to (from) Spiegel

$



$



$



$



$
(37,751
)

$
90,688Total long-term debt(i)

$
262,275


$
274,500


$
298,500


$
300,000


$



$
Stockholders equity

$
256,272


$
346,641


$
545,020


$
564,900


$
292,391


$
248,013     (a)
    
    In conjunction with our impairment tests of indefinite-lived
    intangible assets, we recorded an impairment charge of
    $40 million related to our trademarks during the fourth
    quarter of 2005 and an impairment charge of $117.6 million
    related to our goodwill during the third quarter of 2006. See
    Note 8 to our annual financial statements for more detailed
    descriptions of the impairment tests performed.(b)
    
    Other income, net for fiscal 2007 includes a $10.5 million
    fair value adjustment related to the embedded derivative
    associated with our convertible notes we issued in April 2007
    and a $9.3 million gain on the sale of our financing
    receivables in December 2007.(c)
    
    In accordance with
    SOP 90-7,
    we recorded a net gain of $107.6 million related to the
    discharge of our liabilities upon our emergence from bankruptcy
    for the six months ended July 2, 2005. 35




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##### Table of Contents



(d)
    
    We recorded income tax expense associated with increases to our
    tax valuation allowances of $27.9 million,
    $71.3 million and $15.3 million during fiscal 2007,
    2006 and 2005, respectively. Additionally, fiscal 2007 included
    tax expense of $56.6 million related to cash collections
    and the sale proceeds from our financing receivables, which
    utilized net operating loss carryforward to offset income tax
    payments due. See further discussion in Note 14 to our
    annual financial statements for more detailed descriptions of
    our tax valuation allowance changes.(e)
    
    On June 21, 2005, in connection with the Effective Date of
    the Plan of Reorganization, we issued 30,000,000 shares of
    our common stock to certain unsecured creditors of the Debtors.
    Accordingly, earnings per share data have been included for
    periods subsequent to July 2, 2005. No earnings per share
    data have been presented for periods prior to July 2, 2005
    because there were no shares outstanding for the combined entity.(f)
    
    Represents unaudited financial measures used by our management
    to assess the performance of our business.(g)
    
    Represents increase (decrease) over respective prior year period.(h)
    
    Retail and outlet store count data excludes stores related to
    our discontinued Eddie Bauer Home business.(i)
    
    Includes current portion of long-term debt, which totaled
    $8.0 million as of December 30, 2006,
    $24.0 million as of December 31, 2005 and
    $3.0 million as of July 2, 2005. Total long-term debt
    as of December 29, 2007 includes $66.1 million related
    to $75 million in convertible notes we issued in April
    2007. The $66.1 million carrying value of our convertible
    notes is net of a $19.6 million discount and includes the
    fair value of the related embedded derivative of the conversion
    features of $10.7 million as of December 29, 2007. See
    further discussion in Note 10 to our annual financial
    statements for more detailed discussion of the convertible notes
    and the embedded derivative liability we recorded related to the
    notes conversion features.(j)
    
    The Companys results of operations and financial condition
    reflected above include the Companys adoption of
    SFAS No. 123(R), Share-Based Paymenteffective
    July 2, 2005; SFAS No. 158, Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans (an amendment of FASB Statements No. 87, 88, 106, and
    132R)effective fiscal 2006; and FASB Interpretation
    No. 48, Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109effective fiscal 2007.  Quarterly
    Comparable Sales Results
    Fiscal 2007


Fiscal 2006


Fiscal 2005Q4


Q3


Q2


Q1


Q4


Q3


Q2


Q1


Q4


Q3


Q2


Q14.8%




3.4
%


0.9
%


9.5
%


4.6
%


(1.5
)%


(5.9
)%


(10.0
)%


(7.1
)%


(4.3
)%


3.7
%


3.0
%   Item 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  The information in this Managements Discussion and
    Analysis contains certain forward-looking statements, which
    reflect our current view with respect to future events and
    financial performance. Any such forward-looking statements are
    subject to risks and uncertainties that could cause our actual
    results of operations to differ materially from historical
    results or current expectations. This discussion and analysis
    should be read in conjunction with our consolidated and combined
    financial statements and the related notes included elsewhere in
    this document.
  Executive
    Overview
  Business
    Summary
   36




---



##### Table of Contents



30-54 years Womens
    Wear Daily Womens Wear Daily Top 100 Brands
    
    retail stores, which sell our premium Eddie Bauer merchandise;
    outlet stores, which sell high quality Eddie Bauer merchandise
    and inventory overstocks at value or clearance price
    points; and
    direct, which consists of our Eddie Bauer catalogs and our
    website www.eddiebauer.com.        2007
    Business Developments
  Proposed
    Merger
    CEO
    Resignation and Appointment of New CEO and Other
    Executives
  2008 and Beyond: Five
    Key Initiatives
 37




---



##### Table of Contents



Term Loan
    Refinancing and Senior Convertible Notes
  Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Liquidity and
    Capital Resources.
  2008
    and Beyond: Five Key Initiatives
  18-month
    
    clarify the brand position and rebuild brand identity
    upgrade the quality of the merchandise and align the assortment
    strategy to the new brand position
    revamp the creative marketing function and fully exploit our
    marketing advantage as a direct multi-channel retailer
    cut costs to become more competitive and profitable
    realign the organization and build talent to accomplish our goals  Item 1. Business  2008 and
    Beyond:Five Key Initiatives
  Loyalty
    Program
  www.eddiebauerfriends.com
 38




---



##### Table of Contents



Real
    Estate
    Fiscal 2007


Fiscal 2006Number of retail stores:Open at beginning of period


279



292Opened during the period


21



16Closed during the period


29



29Open at the end of the period


271



279Number of outlet stores:Open at beginning of period


115



108Opened during the period


8



8Closed during the period


3



1Open at the end of the period


120



115     Industry
    Trends
    
    Activewear and outerwear  two categories that we
    intend to focus on in fiscal 2008  continue to show
    sales growth;
    A shift towards consumers being more willing to purchase either
    premium apparel at higher prices or value apparel with lower
    prices, and being less willing to purchase mid-priced apparel;
    The increased availability of quality, global low-cost sourcing
    for apparel due to the elimination of import quotas in the U.S.,
    which puts deflationary pressures on pricing and further lowers
    barriers to entry; and
    The maturation and fragmentation of the apparel industry by
    channel of distribution, age, gender, price points and
    classification, as well as the increase in brand proliferation,
    especially with the growth of private label brands, will
    increase competitive pressure on our sales. 39




---



##### Table of Contents



Fiscal
    and Fourth Quarter 2007 Overview
  Three


Three





Twelve


TwelveMonths


Months





Months


MonthsEnded


Ended





Ended


EndedDecember 29.


December 30,





December 29,


December 30,2007


2006


Change


2007


2006


Change(Unaudited)


(Unaudited)





(Unaudited)


(Unaudited)($ in thousands)Net merchandise sales

$
377,637


$
365,177


$
12,460


$
989,380


$
956,688


$
32,692Total revenues

$
392,430


$
381,919


$
10,511


$
1,044,353


$
1,013,447


$
30,906Gross margin

$
165,243


$
164,432


$
811


$
358,527


$
353,517


$
5,010Gross margin%


43.8
%


45.0
%


(1.2
)%


36.2
%


37.0
%


(0.8
)%SG&A

$
132,517


$
129,098


$
3,419


$
441,875


$
411,300


$
30,575     
    more focused marketing efforts, both in-store and through our
    catalogs, with bolder messages on annual events such as our Pant
    Event, Down Event, 12 Days of Giving and Ultimate
    Sale (a biannual event); and
    targeted merchandising emphasizing fewer colors and styles but
    rather historically successful merchandise, such as our down
    outerwear and gift items.       40




---



##### Table of Contents



Results of Operations
  Outlook
    Results
    of Operations
  Our historical results for
    periods prior to July 2, 2005 are not comparable with our
    results for periods subsequent to July 2, 2005 for several
    reasons. SOP 90-7
 41




---



##### Table of Contents



Fiscal
    2007 Compared to Fiscal 2006
  Revenues
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)($ in thousands)Retail & outlet store sales:Comparable store sales

$
591,393


$
566,451


$
24,942Non-comparable store sales


120,034



133,693



(13,659
)Total retail & outlet store sales


711,427



700,144



11,283Direct sales


277,916



256,463



21,453Other merchandise sales


37



81



(44
)Net Merchandise Sales


989,380



956,688



32,692Shipping revenues


34,220



34,022



198Licensing revenues


13,846



15,707



(1,861
)Foreign royalty revenues


6,341



6,626



(285
)Other revenues


566



404



162Net sales and other revenues


1,044,353



1,013,447



30,906Percentage increase (decrease) in comparable store sales


4.4
%


(2.0
)%


n/a      42




---



##### Table of Contents



Cost of
    goods sold, including buying and occupancy and gross margin and
    gross margin%
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)($ in thousands)Net merchandise sales

$
989,380


$
956,688


$
32,692Cost of sales, including buying and occupancy

$
630,853


$
603,171


$
27,682Gross margin

$
358,527


$
353,517


$
5,010Gross margin as a% of net merchandise sales


36.2
%


37.0
%


(0.8
)%          43




---



##### Table of Contents



Selling,
    general and administrative expenses
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)($ in thousands)Selling, general and administrative expenses (SG&A)

$
441,875


$
411,300


$
30,575SG&A as a% of net merchandise sales


44.7
%


43.0
%


1.7
%       
    $6.2 million in increased advertising expenses primarily
    related to brand advertising, website production and advertising
    and costs associated with changes to our store signage;
    $4.0 million in increased incentive plan expenses including
    guaranteed incentives for our new CEO;
    $5.2 million in increased professional services costs to
    support compliance with Sarbanes-Oxley, executive recruiting
    fees and operations consulting;
    $3.6 million of increased payroll and benefits costs
    resulting from an increase in headcount in our corporate
    offices, higher payroll rates in our stores, and a
    $0.6 million sign-on bonus for our recently hired CEO;
    $4.0 million of higher building rent and moving related
    expenses associated with the move of our corporate campus during
    2007;
    $3.1 million of increased shipping expenses due to an
    increase in shipping rates combined with more packages shipped
    due to increased sales and lower average units per package; and
    $1.8 million increase in program-related costs for our
    customer loyalty program.    
    a $3.5 million reduction in stock compensation expenses,
    excluding the impact of the accelerated expense related to our
    former CEOs resignation;
    a $3.1 million decrease in impairment charges associated
    with fewer planned store closures;
    a $2.3 million reduction in our warehousing and
    distribution costs primarily related to operating efficiencies
    and reduced headcount;
    a decrease of $2.7 million related to our depreciation and
    amortization expenses primarily due to the fair value
    adjustments we recorded in conjunction with our fresh start
    accounting that became fully depreciated during
    mid-2007; and
    a $1.5 million decrease in our information technology costs.   44




---



##### Table of Contents



Impairment
    of indefinite-lived intangible assets
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)($ in thousands)Impairment of indefinite-lived intangible assets

$



$
117,584


$
(117,584
)   Results of Operations  Fiscal 2006 Compared
    to Fiscal 2005
  Equity in
    earnings (losses) of foreign joint ventures
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)($ in thousands)Equity in earnings (losses) of foreign joint ventures

$
(1,147
)

$
(3,413
)

$
2,266     Interest
    expense
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)($ in thousands)Interest expense

$
26,698


$
26,928


$
(230
)   Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Liquidity and
    Capital Resources  Refinancing Transaction
 45




---



##### Table of Contents



Other
    income, net
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)Net accretion of financing receivables/payables

$
5,531


$
1,791


$
3,740Gain on fair value adjustment of net financing
    receivables/payables






466



(466
)Gain on sale of net financing receivables/payables


9,303







9,303Loss on extinguishment of debt


(3,284
)






(3,284
)Fair value adjustment of convertible note embedded derivative
    liability


10,483







10,483Interest rate swap gain


228







228Interest income and other


1,434



774



660Other income, net

$
23,695


$
3,031


$
20,664   Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Liquidity and Capital
    Resources  Refinancing Transaction
  Income
    tax expense
  Successor


SuccessorFiscal


Fiscal2007


2006


Change(Unaudited)


(Unaudited)($ in thousands)Income tax expense

$
69,193


$
65,531


$
3,662      46




---



##### Table of Contents



Fiscal 2006 Compared to Fiscal 2005 
    Income Tax Expense
  Fiscal
    2006 Compared to Fiscal 2005
  Revenues
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Retail & outlet store sales:Comparable store sales

$
559,549


$
570,838


$
(11,289
)Non-comparable store sales


140,595



162,325



(21,730
)Total retail & outlet store sales


700,144



733,163



(33,019
)Direct sales


256,463



268,135



(11,672
)Other merchandise sales


81



195



(114
)Net merchandise sales


956,688



1,001,493



(44,805
)Shipping revenues


34,022



35,726



(1,704
)Licensing revenues


15,707



15,300



407Foreign royalty revenues


6,626



6,100



526Other revenues


404



815



(411
)Net sales and other revenues


1,013,447



1,059,434



(45,987
)Percentage increase (decrease) in comparable store sales


(2.0
)%


(2.2
)%


n/a    47




---



##### Table of Contents



Cost of
    goods sold, including buying and occupancy and gross margin and
    gross margin%
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Net merchandise sales

$
956,688


$
1,001,493


$
(44,805
)Cost of sales, including buying and occupancy

$
603,171


$
596,854


$
6,317Gross margin

$
353,517


$
404,639


$
(51,122
)Gross margin as a % of net merchandise sales


37.0
%


40.4
%


(3.4
)%      48




---



##### Table of Contents



Selling,
    general and administrative expenses
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Selling, general and administrative expenses (SG&A)

$
411,300


$
399,350


$
11,950SG&A as a % of net merchandise sales


43.0
%


39.9
%


3.1
%     Impairment
    of indefinite-lived intangible assets
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Impairment of indefinite-lived intangible assets

$
117,584


$
40,000


$
77,584      49




---



##### Table of Contents



50




---



##### Table of Contents



Equity in
    earnings (losses) of foreign joint ventures
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Equity in earnings (losses) of foreign joint ventures

$
(3,413
)

$
79


$
(3,492
)     Interest
    expense
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Interest expense

$
26,928


$
11,825


$
15,103     Other
    income, net
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Net accretion of financing receivables/payables

$
1,791


$
873


$
918Gain on fair value adjustment of net financing
    receivables/payables


466







466Interest rate swap gain






787



(787
)Interest income and other


774



259



515Other income, net

$
3,031


$
1,919


$
1,112  51




---



##### Table of Contents



Income
    tax expense
  Successor


CombinedFiscal


Fiscal2006


2005


Change(Unaudited)


(Unaudited)($ in thousands)Income tax expense

$
65,531


$
65,047


$
484      52




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##### Table of Contents



Liquidity
    and Capital Resources
  Cash
    Flow Analysis
  Fiscal
    2007, Fiscal 2006 and Fiscal 2005
  Successor


Successor


CombinedFiscal


Fiscal


Fiscal2007


2006


2005(Unaudited)($ in thousands)Cash flow data:Net cash provided by operating activities

$
39,867


$
50,424


$
37,767Net cash used in investing activities

$
(56,248
)

$
(45,452
)

$
(39,179
)Net cash provided by (used in) financing activities

$
(10,011
)

$
(26,107
)

$
68,319   Net cash
    provided by operating activities
        Net cash
    used in investing activities
   53




---



##### Table of Contents



Net cash
    provided by (used in) financing activities
    Sources
    of Liquidity
    Senior
    Secured Revolving Credit Facility
     54




---



##### Table of Contents




    LIBOR plus 1.25% if the average aggregate outstanding (based
    upon the preceding calendar month) is less than
    $75 million; or
    LIBOR plus 1.50% if the average aggregate outstanding is greater
    than or equal to $75 million.        Senior
    Secured Term Loan
     55




---



##### Table of Contents



Refinancing
    Transaction
  Footnotes to
    Financial Statements  Note 7
       56




---



##### Table of Contents




    5.75 to 1.00 for the fiscal quarter ending December 31,
    2007;
    5.50 to 1.00 for the fiscal quarters ending March 31, 2008
    and June 30, 2008;
    5.25 to 1.00 for the fiscal quarter ending September 30,
    2008;
    5.00 to 1.00 for the fiscal quarter ending December 31,
    2008;
    4.00 to 1.00 for the fiscal quarters ending March 31, 2009
    and June 30, 2009;
    3.75 to 1.00 for the fiscal quarter ending September 30,
    2009;
    3.50 to 1.00 for the fiscal quarter ending December 31,
    2009; and
    thereafter being reduced on a graduated basis to 2.50 at
    March 31, 2012 and beyond.    
    0.75 to 1.00 for the fiscal quarters ending September 29,
    2007 and December 31, 2007;
    0.80 to 1.00 for the fiscal quarter ending March 31, 2008;
    0.90 to 1.00 for the fiscal quarters ending June 30, 2008
    through December 31, 2008; and
    thereafter increasing on a graduated basis to 1.10 to 1.00 at
    March 31, 2012 and beyond.      Convertible
    Notes
     57




---



##### Table of Contents



trading-day
    Accounting for Derivative Instruments
    and Hedging Activities
     58




---



##### Table of Contents



Interest
    Rate Swap Agreements
      Financial
    Condition
  At
    December 29, 2007 Compared to December 30,
    2006
  Liquidity and Capital
    Resources  Cash Flow Analysis
 59




---



##### Table of Contents



Footnotes to Financial Statements 
    Note 7
          Cash
    Requirements
     60




---



##### Table of Contents



Contractual
    Obligations
  Contractual Obligationsas of December 29,

Payments Due by Period2007




Less Than








After(unless otherwise noted)

Total


1 Year


1-3 Years


3-5 Years


5 Years($ in thousands)Long-term debt obligations(1)

$
196,162


$



$



$



$
196,162Interest on long-term debt(2)

$
97,773


$
15,374


$
30,349


$
31,760


$
20,290Convertible notes(3)

$
75,000


$



$



$



$
75,000Interest on convertible notes(3)

$
24,970


$
4,057


$
7,963


$
7,963


$
4,987Operating lease obligations(4)

$
443,941


$
75,271


$
126,629


$
86,470


$
155,571Purchase obligations(5)

$
150,009


$
150,009


$



$



$
Other contractual obligations(6)

$
10,992


$
8,924


$
2,068


$



$
Total

$
998,847


$
253,635


$
167,009


$
126,193


$
452,010     (1)
    
    Includes payments due under our senior term loan agreement
    excluding any mandatory prepayment provisions subsequent to
    December 29, 2007 discussed above under
     Sources of Liquidity  Senior
    Secured Term Loan.(2)
    
    Represents interest due under our term loan agreement discussed
    above under  Sources of
    Liquidity  Senior Secured Term Loan.
    Interest amounts include the impact of the interest rate swap
    agreement we entered into in April 2007. Interest payments
    include the assumption of approximately 50% of the outstanding
    loan at a fixed rate of 8.30% (interest rate swap rate of 5.05%
    plus margin of 3.25%) and 50% of the outstanding loan using
    implied forward LIBOR rates based upon Eurodollar futures rates
    plus a margin of 3.25%. See  Sources of
    Liquidity  Interest Rate Swap Agreementabove.(3)
    
    Interest and principal payments related to our convertible notes
    assume no conversion prior to their scheduled maturity date in
    April 2014. As more fully described above under
    Convertible Notes, the holders of the
    convertible notes have rights which may cause us to repurchase
    up to the entire aggregate face amount of the notes then
    outstanding at certain dates in the future prior to their
    scheduled maturity date.(4)
    
    Includes future minimum lease payments under non-cancelable
    operating leases for retail stores, corporate headquarters, call
    center and distribution facilities. Amounts do not include costs
    for maintenance, common areas or real estate taxes. 61




---



##### Table of Contents



(5)
    
    Includes open purchase orders with vendors for merchandise not
    yet received or recorded on our balance sheet.(6)
    
    Includes facility-related contracts, such as utility and
    telecommunication services; information technology contracts;
    printing services; and other miscellaneous business agreements.  Off-Balance Sheet Arrangements
  Other
    Contractual Obligations
  Insurance
    and Self-insurance
    Pension
    and Other Post-retirement Benefit Obligations
    Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans (an amendment of FASB Statements
    No. 87, 88, 106, and 132R)
     62




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Seasonality
    Critical
    Accounting Policies and Estimates
      
    It requires us to make assumptions because information was not
    available at the time or it included matters that were highly
    uncertain at the time we were making the estimate; and
    Changes in the estimate or different estimates that we could
    have selected may have had a material impact on our financial
    condition or results of operations. 63




---



##### Table of Contents



Revenue
    recognition
  Nature of
    Critical Estimate
  Merchandise sales.
  Sales returns.
  Licensing revenues.
  Assumptions/Approach
    Used
  Merchandise sales.
  Sales returns.
  Licensing revenue.
  Effect if
    Different Assumptions Used
  Merchandise sales.
  Sales returns.
  Licensing revenue.
  Inventory
    valuation
  Nature of
    Critical Estimate
  Inventory valuation.
 64




---



##### Table of Contents



Assumptions/Approach
    Used
  Inventory valuation.
  Effect if
    Different Assumptions Used
  Inventory valuation.
  Valuation
    of long-lived assets
  Nature of
    Critical Estimate
  Fair values of property and equipment. Accounting for the Impairment or
    Disposal of Long-lived Assets
  Fair values of indefinite-lived intangible
    assets. Goodwill and
    Other Intangible Assets
  Assumptions/Approach
    Used
  Fair values of property and equipment.
  Fair values of indefinite-lived intangible
    assets.
 65




---



##### Table of Contents



Results
    of Operations  Impairment of Indefinite-lived
    Intangible Assets.
  Effect if
    Different Assumptions Used
  Fair values of property and equipment and indefinite-lived
    intangible assets.
  Deferred
    tax valuation allowances
  Nature of
    Critical Estimate
    Assumptions/Approach
    Used
       66




---



##### Table of Contents



Effect if
    Different Assumptions Used
   67




---



##### Table of Contents



Stock
    Based Compensation
  Nature of
    Critical Estimate
  Share Based Payments
  Assumptions/Approach
    Used
    Volatility
  Risk-free interest rate
  Expected term
  Dividend yield
  Forfeitures
  Effect if
    Different Assumptions Used
    Valuation
    of Derivative Instruments
  Nature of
    Critical Estimate
   68




---



##### Table of Contents



Assumptions/Approach
    Used
    Volatility
  Risk-free interest rate
  Expected years to conversion
  Effect if
    Different Assumptions Used
    Inflation
    Recent
    Accounting Pronouncements
    Related
    Party Transactions
    Subsequent
    Events
    Item 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Market
    Risk  Interest Rates
   69




---



##### Table of Contents



Revolving
    Credit Facility
    Senior
    Secured Term Loan
  Managements Discussion and
    Analysis of Financial Condition  Sources of
    Liquidity  Refinancing Transaction
    Convertible
    Notes
    Market
    Risk  Change in Value of our Common Stock
  Managements Discussion and
    Analysis of Financial Condition  Sources of
    Liquidity  Refinancing Transaction
   70




---



##### Table of Contents



Market
    Risk  Foreign Exchange
    Item 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA    Item 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    Item 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e))
  Managements
    Report on Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15
 71




---



##### Table of Contents



Form 10-K Item 9A, Controls and Procedures Form 10-K
  Internal Control-Integrated
    Framework
    Changes
    in Internal Control over Financial Reporting
  Form 8-K
 72




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control 
    Integrated Framework
            
    73




---



##### Table of Contents



Item 9B.
    OTHER
    INFORMATION   PART III  Item 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE    http://www.eddiebauer.com. http://www.eddiebauer.com Form 8-K.
  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   74




---



##### 



PART IV  Item 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES  (a)
    Index to
    Financial Statements   
 PageFinancial StatementsReport of Independent Registered Public
    Accounting Firm


76Consolidated Balance Sheets  Successor
    Entity as of December 29, 2007 and December 30,
    2006


77Consolidated and Combined Statements of
    Operations  Successor Entity for the years ended
    December 29, 2007 and December 30, 2006 and for the
    six months ended December 31, 2005, Predecessor Entity for
    the six months ended July 2, 2005


78Consolidated and Combined Statements of
    Stockholders Equity and Comprehensive Income (Loss)
     Successor Entity for the years ended
    December 29, 2007 and December 30, 2006 and for the
    six months ended December 31, 2005, Predecessor Entity for
    the six months ended July 2, 2005


79Consolidated and Combined Statements of Cash
    Flows  Successor Entity for the years ended
    December 29, 2007 and December 30, 2006 and for the
    six months ended December 31, 2005, Predecessor Entity for
    the six months ended July 2, 2005


80Notes to Consolidated and Combined Financial
    Statements


82Financial Statement Schedules 
    Schedule II.


131Exhibits required as part of this report are listed in the
    Exhibit Index.   75




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM              Employers Accounting for
    Defined Benefit Pension and Other Postretirement Plans , Accounting for
    Uncertainty in Income Taxes  an interpretation of
    FASB Statement No. 109
  Internal Control 
    Integrated Framework
  
    76




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.



CONSOLIDATED
    BALANCE SHEETS  Successor


SuccessorAs of


As ofDecember 29,


December 30,2007


2006($ in thousands)Cash and cash equivalents

$
27,596


$
53,174Restricted cash


30,862



Accounts receivable, less allowances for doubtful accounts of
    $983 and $1,274, respectively


30,122



29,774Inventories


158,223



153,778Prepaid expenses


27,297



23,572Financing receivables






45,978Deferred tax assets  current






2,345Total Current Assets


274,100



308,621Property and equipment, net


195,103



177,344Goodwill


107,748



114,765Trademarks


185,000



185,000Other intangible assets, net


21,668



29,720Other assets


27,813



24,490Deferred tax assets  noncurrent






15,970Total Assets

$
811,432


$
855,910Trade accounts payable

$
45,102


$
40,092Bank overdraft


12,915



13,622Accrued expenses


107,036



100,460Deferred tax liabilities  current


6,356



Current liabilities related to securitization note






41,380Current liabilities to Spiegel Creditor Trust


30,870



Current portion of long-term debt






8,000Total Current Liabilities


202,279



203,554Deferred rent obligations


39,118



18,935Unfavorable lease obligations, net


3,693



4,679Deferred tax liabilities  noncurrent


30,490



Senior term loan


196,162



266,500Convertible note and embedded derivative liability, net of
    discount of $19,629


66,113



Other non-current liabilities


7,802



270Pension and other post-retirement benefit liabilities


9,503



15,331Total Liabilities


555,160



509,269Commitments and Contingencies (See Note 17)Common stock:$0.01 par value, 100 million shares authorized;
    30,672,631 and 30,309,931 shares issued and outstanding as
    of December 29, 2007 and December 30, 2006,
    respectively


307



303Treasury stock, at cost


(157
)


(157
)Additional paid-in capital


588,302



578,402Accumulated deficit


(336,818
)


(234,771
)Accumulated other comprehensive income, net of taxes of $2,848
    and $1,759, respectively


4,638



2,864Total Stockholders Equity


256,272



346,641Total Liabilities and Stockholders Equity

$
811,432


$
855,910    77




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.



CONSOLIDATED
    AND COMBINED STATEMENTS OF OPERATIONS  Successor



PredecessorSix



SixMonths Ended



Months EndedSuccessor


Successor


December 31,



July 2,Fiscal 2007


Fiscal 2006


2005



2005($ in thousands, except per share data)Net sales and other revenues


1,044,353



1,013,447



593,711




465,723Costs of sales, including buying and occupancy


630,853



603,171



337,318




259,536Impairment of indefinite-lived intangible assets






117,584



40,000




Selling, general and administrative expenses


441,875



411,300



214,125




185,225Total operating expenses


1,072,728



1,132,055



591,443




444,761Operating income (loss)


(28,375
)


(118,608
)


2,268




20,962Interest expense


26,698



26,928



11,064




761Other income, net


23,695



3,031



1,919




Equity in earnings (losses) of foreign joint ventures


(1,147
)


(3,413
)


174




(95
)Income (loss) from continuing operations before reorganization
    items and income tax expense


(32,525
)


(145,918
)


(6,703
)



20,106Gain on discharge of liabilities















(107,559
)Reorganization costs and expenses, net















13,686Income (loss) from continuing operations before income tax
    expense


(32,525
)


(145,918
)


(6,703
)



113,979Income tax expense


69,193



65,531



14,645




50,402Income (loss) from continuing operations


(101,718
)


(211,449
)


(21,348
)



63,577Income (loss) from discontinued operations (net of income tax
    expense (benefit) of $0, $0, $0 and $(1,686), respectively)






(534
)


(1,440
)



(2,661
)Net income (loss)

$
(101,718
)

$
(211,983
)

$
(22,788
)


$
60,916Income (loss) per basic and diluted share:Loss from continuing operations per share

$
(3.33
)

$
(7.04
)

$
(0.71
)



n/aLoss from discontinued operations pershare






(0.02
)


(0.05
)



n/aNet loss per share

$
(3.33
)

$
(7.06
)

$
(0.76
)



n/aWeighted average shares used to compute income (loss) per share:Basic


30,524,191



30,012,896



29,995,092




n/aDiluted


30,524,191



30,012,896



29,995,092




n/a    78




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.



CONSOLIDATED
    AND COMBINED STATEMENTS OF
    STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
    (LOSS)  CommonCommon











Stock


CommonStock


Common


Common





Eddie


StockEddie


Stock


Stock


Common


Bauer,


Eddie











AccumulatedBauer,


Eddie


EBFS


Stock


Holdings


Bauer,








Retained


OtherInc.


Bauer,


Inc.


EBFS


Inc.


Holdings





Additional


Earnings


Comprehensive(# of


Inc.


(# of


Inc.


(# of


Inc.


Treasury


Paid-In


(Accumulated


IncomeShares)


($)


Shares)


($)


Shares)


($)


Stock


Capital


Deficit)


(Loss)


Total($ in thousands)PredecessorBalances at January 1, 2005


5,000


$
500



1,000


$
100














$
261,595


$
31,437


$
(1,241
)

$
292,391Comprehensive Loss:Net loss


































(46,643
)






(46,643
)Foreign currency translation adjustments, net of income taxes of
    $126






































97



97Total comprehensive loss










































(46,546
)PredecessorBalances at July 2, 2005


5,000


$
500



1,000


$
100














$
261,595


$
(15,206
)

$
(1,144
)

$
245,845Gain on discharge of liabilities


































107,559







107,559Recapitalization and fresh start adjustments


(5,000
)


(500
)


(1,000
)


(100
)


30,000



300







303,005



(92,353
)


1,144



211,496SuccessorBalances at July 2, 2005


















30,000


$
300






$
564,600










$
564,900Comprehensive Loss:Net loss


































(22,788
)






(22,788
)Additional minimum pension liability, net of income taxes of
    ($179)






































(282
)


(282
)Foreign currency translation adjustment, net of income taxes of
    ($91)






































(258
)


(258
)Total comprehensive loss










































(23,328
)Stock based compensation expense






























3,605











3,605Treasury stock purchased


















(8
)






(157
)














(157
)SuccessorBalances at December 31, 2005


















29,992


$
300


$
(157
)

$
568,205


$
(22,788
)

$
(540
)

$
545,020Comprehensive Loss:Net loss


































(211,983
)






(211,983
)Foreign currency translation adjustment, net of income taxes of
    $91






































258



258Fair value adjustments of cash flow hedge, net of income taxes
    of $358






































583



583Total comprehensive loss










































(211,142
)Unrecognized obligations related to pension and post-retirement
    plans, net of income taxes of $1,401






































2,281



2,281Reversal of additional minimum pension liability, net of income
    taxes of $179






































282



282Shares issued for RSU awards


















318



3







(3
)










Stock based compensation expense






























10,200











10,200SuccessorBalances at December 30, 2006


















30,310


$
303


$
(157
)

$
578,402


$
(234,771
)

$
2,864


$
346,641Comprehensive Loss:Net loss


































(101,718
)






(101,718
)Reclassification of fair value adjustment of cash flow hedge,
    net of income taxes of ($358)






































(583
)


(583
)Fair value adjustment of cash flow hedge executed in April 2007,
    net of income taxes of $(1,571)






































(2,559
)


(2,559
)Foreign currency translation adjustment, net of income taxes of
    $1,332






































2,169



2,169Unrecognized obligations related to pension and post-retirement
    benefit obligations, net of income taxes of $1,686






































2,747



2,747Total comprehensive loss










































(99,944
)Shares issued for RSU awards


















363



4







(4
)










Stock based compensation expense






























9,904











9,904Cumulative effect of accounting change related to adoption of
    FIN 48


































(329
)






(329
)SuccessorBalances at December 29, 2007


















30,673


$
307


$
(157
)

$
588,302


$
(336,818
)

$
4,638


$
256,272    79




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.



CONSOLIDATED
    AND COMBINED STATEMENTS OF CASH FLOWS  Successor



PredecessorSix Months Ended



Six Months EndedSuccessor


Successor


December 31,



July 2,Fiscal 2007


Fiscal 2006


2005



2005($ in thousands)Cash flows from operating activities:Net income (loss)

$
(101,718
)

$
(211,983
)

$
(22,788
)


$
60,916Adjustments to reconcile net income (loss) to net cash provided
    from operating activities:Reorganization costs and expenses, net















(93,873
)Net cash used for reorganization items















(9,702
)Reorganization items non-cash















(103,575
)(Gain) loss on disposals of property and equipment


119



1,057



19




(388
)Impairment of property and equipment


1,255



3,451



2,536




Equity in (earnings) losses of foreign joint ventures


1,147



3,413



(174
)



95Depreciation and amortization


50,333



55,494



26,589




16,171Impairment of indefinite-lived intangible assets






117,584



40,000




Stock-based compensation expense


9,904



10,200



3,605




Gain on sale of net financing receivables


(9,303
)











Loss on extinguishment of debt


3,284












Other non-cash income


(5,759
)


(2,257
)


(1,661
)



Proceeds from settlement of interest rate swap agreement


1,015












Proceeds from sale of net financing receivables


7,420












Change in fair value of convertible note embedded derivative
    liability


(10,483
)











Deferred income taxes


61,284



58,487



8,093




4,168Changes in operating assets and liabilities:Accounts receivable


(1,648
)


1,057



(1,884
)



5,446Inventories


(2,090
)


(11,574
)


(6,464
)



4,783Prepaid expenses


(3,488
)


(1,011
)


78




(169
)Financing receivables and securitization interests


87,260



115,624



19,898




Other assets


(7
)


(2,110
)


1,049




(3,103
)Accounts payable


4,545



5,524



6,745




708Liabilities subject to compromise















(17,372
)Accrued expenses


4,491



1,385



10,674




(13,866
)Liabilities related to securitization note


(78,534
)


(104,061
)


(17,908
)



 80




---



##### Table of Contents



CONSOLIDATED
    AND COMBINED STATEMENTS OF CASH
    FLOWS  (Continued)
  Successor



PredecessorSix Months Ended



Six Months EndedSuccessor


Successor


December 31,



July 2,Fiscal 2007


Fiscal 2006


2005



2005($ in thousands)Pension and other post-retirement liabilities


(1,394
)


(1,273
)


597




Deferred rent and unfavorable lease obligations


18,681



10,919



6,059




(8,096
)Other non-current liabilities


3,553












Operating cash flows related to discontinued operations






498



8,075




8,911Net cash provided by (used in) operating activities


39,867



50,424



83,138




(45,371
)Cash flows from investing activities:Capital expenditures from continuing operations


(56,636
)


(45,814
)


(30,214
)



(8,641
)Capital proceeds (expenditures) from discontinued operations










320




(944
)Distributions from foreign joint ventures


388



362








300Net cash used in investing activities


(56,248
)


(45,452
)


(29,894
)



(9,285
)Cash flows from financing activities:Repayments of senior term loan, including refinancing fees


(80,662
)


(24,000
)


(1,500
)



Net proceeds from issuance of convertible notes


71,358












Treasury stock purchased










(157
)



Change in due to/from Spiegel















65,727Change in bank overdraft from continuing operations


(707
)


(2,107
)


4,525




797Change in bank overdraft from discontinued operations










(961
)



(112
)Net cash provided by (used in) financing activities


(10,011
)


(26,107
)


1,907




66,412Effect of exchange rate changes on cash


814



123



(1,328
)



74Net change in cash and cash equivalents


(25,578
)


(21,012
)


53,823




11,830Cash and cash equivalents at beginning of period


53,174



74,186



20,363




8,533Cash and cash equivalents at end of period

$
27,596


$
53,174


$
74,186



$
20,363Supplemental disclosures:Cash paid for income taxes

$
5,952


$
3,107


$
1,868



$
46,234Cash paid for interest


23,505



27,287



10,671




3,011Payments made in conjunction with Chapter 11:Professional service fees














$
9,702    81




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.



NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS

($ in thousands except per share amounts, unless otherwise
    noted)  (1)
    Description
    of Business  www.eddiebauer.com.
    (2)
    Basis of
    Presentation  Successor
    Entity
  90-7, Financial Reporting by Entities in Reorganization under the
    Bankruptcy Code,
 82




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Predecessor
    Entity
  Push Down Basis of Accounting
    Required in Certain Limited Circumstances, Allocation of Expenses and Related Disclosure in Financial
    Statements of Subsidiaries, Divisions or Lesser Business
    Components of Another Entity,
  Discontinued
    Operations
    (3)
    Proposed
    Merger Agreement and CEO Changes    Merger
    Termination Fee
   83




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  CEO
    Resignation
    Appointment
    of CEO
  30-day
  (4)
    Summary
    of Significant Accounting Policies  (a)
    Basis
    of Combination and Consolidation    (b)
    Fiscal
    Year    (c)
    Seasonality   84




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    (d)
    Use of
    Estimates    (e)
    Segments  Disclosures about Segments
    of an Enterprise and Related Information,
    (f)
    Revenue
    Recognition   85




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    (g)
    Cash
    and cash equivalents    (h)
    Accounts
    Receivable    (i)
    Inventories    (j)
    Advertising
    Costs  SOP 93-7, Reporting on Advertising Costs 93-7). SOP 93-7
 86




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  (k)
    Store
    Preopening Costs    (l)
    Gift
    Certificate Liability    (m)
    Customer
    Loyalty Programs    (n)
    Software
    Development Costs    (o)
    Property
    and Equipment   87




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    (p)
    Intangible
    Assets  Goodwill and Other Intangible Assets
    (q)
    Investments    (r)
    Deferred
    Financing Costs    (s)
    Income
    Taxes    Accounting for Income Taxes
  (t)
    Foreign
    Currency Translation and Exchange Rates   88




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    (u)
    Other
    Comprehensive Income (Loss)    (v)
    Impairment
    of Long-Lived Assets and Store Closing Costs  Accounting for the
    Impairment of Long-Lived Assets
  Accounting for Costs
    Associated with Exit or Disposal Activitie
  (w) Insurance/Self-Insurance
    (x)
    Operating
    leases, Deferred rent obligations and Unfavorable lease
    obligations  and/or
 89




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      SOP 90-7 Business Combinations
    (y)
    Guarantees  Guarantors Accounting
    and Disclosure Requirements for Guarantees of the Indebtedness
    of Others,
  (z)
    Derivative
    Instruments  Derivative Instruments and Hedging Activities
 90




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      (aa)
    Stock-Based
    Compensation Expense  Share-Based
    Payment Accounting for Stock-Based
    Compensation Accounting for Stock Issued to Employees
  (bb)
    SAC
    Financing Receivables and Related Promissory Note
    Obligation    Accounting for
    Transfers and Servicing of Financial Assets and Extinguishment
    of Liabilities, SOP 03-3, Accounting for Certain Loans or Debt Securities Acquired in a
    Transfer, (SOP 03-3). SOP 03-3,
 91




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      (5)
    Recent
    Accounting Pronouncements  FAS 157-2, Effective Date of FASB Statement No. 157 FAS 157-2). FAS 157-2 Fair Value Measurements FAS 157-2, FAS 157-2 FAS 157-2,
  FAS 157-1, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Other Accounting Pronouncements That Address
    Fair Value Measurements for Purposes of Lease Classification or
    Measurement under Statement 13 FAS 157-1). FAS 157-1 Fair Value
    Measurements Accounting for
    Leases FAS 157-1 FAS 157-1,
  Share-Based Payment
  ,
    Business Combinations Business Combinations
 92




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of Accounting Research
    Bulletin No. 51
  FIN 48-1, Definition of a Settlement in FASB Interpretation No. 48 FIN 48-1). 48-1 Accounting for Uncertainty in
    Income Taxes  an interpretation of FASB Statement
    No. 109 FIN 48-1, 48-1 FIN 48-1
  FIN 39-1, Amendment of FASB Interpretation No. 39 FIN 39-1). FIN 39-1 Accounting
    for Derivative and Hedging Activities FIN 39-1 FIN 39-1 FIN 39-1
  The
    Fair Value Option for Financial Assets and Financial Liabilities
 93




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value Measurements
  Accounting for Income Taxes
  (6)
    Earnings
    per Share   94




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    SuccessorSix MonthsSuccessor


Successor


EndedFiscal


Fiscal


December 31,2007


2006


2005Loss from continuing operations

$
(101,718
)

$
(211,449
)

$
(21,348
)Loss from discontinued operations






(534
)


(1,440
)Net loss

$
(101,718
)

$
(211,983
)

$
(22,788
)Weighted average common shares outstanding(a)


30,524,191



30,012,896



29,995,092Net effect of dilutive stock options(b)










Net effect of convertible notes(c)










Weighted average common shares and equivalents outstanding


30,524,191



30,012,896



29,995,092Income (loss) per basic and diluted share:Loss from continuing operations

$
(3.33
)

$
(7.04
)

$
(0.71
)Loss from discontinued operations






(0.02
)


(0.05
)Net loss

$
(3.33
)

$
(7.06
)

$
(0.76
)     (a)
    
    Weighted average common shares outstanding for fiscal 2007
    include the impact of 4,994 vested restricted stock units for
    which settlement has been deferred under the Companys
    deferred compensation plan. Settlement of the deferred
    restricted stock units is required with shares of the
    Companys common stock.(b)
    
    As of December 29, 2007, December 30, 2006 and
    December 31, 2005, there were 1,343,500, 590,375 and
    651,668, respectively, Eddie Bauer common stock options and
    390,739, 603,533 and 1,003,515, respectively, unvested
    restricted stock units outstanding that were antidilutive and
    therefore were excluded from the calculation of diluted earnings
    per share.(c)
    
    As discussed further in Note 10, on April 4, 2007, the
    Company issued $75 million in convertible notes. As a
    result of the Companys ownership limitations contained in
    its certificate of incorporation, the convertible notes are not
    convertible prior to the termination of the Companys
    ownership limitations contained in its certificate of
    incorporation, which will occur not later than January 4,
    2009, except upon the occurrence of certain specified corporate
    transactions. In the event that the certain specified corporate
    transactions result in a conversion of the notes prior to the
    expiration of the ownership limitations, the Company is required
    to settle the convertible notes for cash. Accordingly, the
    Company has and will continue to exclude the dilutive effect, if
    any, of the convertible notes from its earnings per share
    calculation until such ownership limitations lapse.  (7)
    FSAC and
    SAC Securitization Interests and Related Eddie Bauer Holdings
    Promissory Note   95




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    FSAC
    Securitization Interest    SAC
    Securitization Interest        SOP 03-3.
 96




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Accretable Yield Upon
    Settlement Trust Termination:Cash flows expected to be collected as of acquisition date

$
50,158Less: Carrying value as of acquisition date


45,978Accretable Yield as of December 30, 2006

$
4,180Reclassification from nonaccretable difference during fiscal
    2007(a)

$
207,823Accretion income recognized during fiscal 2007


(55,306
)Accretable Yield as of December 2007 (the sale date by the
    Company  see below)

$
156,697     (a)
    
    The reclassification from nonaccretable difference during fiscal
    2007 resulted from an increase in actual and projected
    collections related to financing charges, principal amounts of
    the receivables and higher collections of previously written off
    accounts.    SuccessorSuccessor


Successor


Six Months EndedFiscal


Fiscal


December 31,2007


2006


2005Statement of Operations:Accretion income related to receivables from securitization
    interests

$
55,306


$
17,898


$
8,724Accretion expense related to liabilities from securitization
    interests


(49,775
)


(16,107
)


(7,851
)Net accretion income recorded in other income, net

$
5,531


$
1,791


$
873    97




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    (8)
    Intangible
    Assets  Carrying
    Values of Intangible Assets and Amortization
    Expense
    Successor


SuccessorAt


AtDecember 29,


December 30,2007


2006Intangible assets subject to amortization:Customer lists  Useful life of 3.5 yearsGross amount

$
9,000


$
9,000Accumulated amortization


(7,750
)


(5,530
)Net carrying value

$
1,250


$
3,470Licensing agreements  Useful life of 6 yearsGross amount

$
35,000


$
35,000Accumulated amortization


(14,582
)


(8,750
)Net carrying value

$
20,418


$
26,250Intangible assets not subject to amortization:Goodwill

$
107,748


$
114,765Trademarks

$
185,000


$
185,000     Estimated Amortization Expense for Fiscal Years:2008

$
7,0852009

$
5,8332010

$
5,8332011

$
2,917$
21,668  98




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill balance as of January 1, 2005 (Predecessor)





$
76,601Net impact of fresh start adjustments recorded as of
    July 2, 2005






143,880Goodwill balance as of December 31, 2005 (Successor)





$
220,481Impairment charge recorded during three months ended
    September 30, 2006






(117,584
)Adjustment to goodwill balance recorded as of December 30,
    2006(a)






11,868Goodwill balance as of December 30, 2006 (Successor)





$
114,765Adjustment to goodwill balance recorded as of December 29,
    2007(b)






(7,017
)Goodwill balance as of December 29, 2007 (Successor)





$
107,748     (a)
    
    After discovering prior period errors in the Companys
    goodwill and deferred tax asset balances, the Company recorded
    an adjustment to its goodwill balance of $11,868 in the fourth
    quarter of 2006 as the Company determined that the cumulative
    impact of the errors were not material to prior periods.(b)
    
    During the course of preparing its 2006 state income tax
    returns during the fourth quarter of 2007, the Company received
    additional information from its prior parent company, Spiegel,
    related to certain state NOLs that existed as of the
    Companys fresh start reporting date. In accordance with
    SFAS 109, the Company recorded a reduction to its goodwill
    balance to recognize these tax benefits. See further discussion
    of these adjustments and the Companys income taxes in
    Note 14.  Impairment
    Charges of Indefinite-Lived Intangible Assets
    Fiscal
    2007
     99




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Fiscal
    2006
         100




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal
    2005
      (9)
    Investments
    in Foreign Joint Ventures       101




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
        Eddie Bauer


Eddie BauerJapan


GermanyAccounts receivable:December 29, 2007 (Successor)

$
1,671


$
987December 30, 2006 (Successor)


1,521



122Investment:December 29, 2007 (Successor)

$
12,717


$
3,786December 30, 2006 (Successor)


12,855



3,142Royalty income:2007 (Successor)

$
4,440


$
1,9012006 (Successor)


4,647



1,979Six months ended December 31, 2005 (Successor)


2,082



1,012Six months ended July 2, 2005 (Predecessor)


2,021



985   (10)
    Debt  Senior
    Secured Revolving Credit Facility
     102




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      
    LIBOR plus 1.25% if the average aggregate outstanding (based
    upon the preceding calendar month) is less than
    $75 million; or
    LIBOR plus 1.50% if the average aggregate outstanding is greater
    than or equal to $75 million.        Senior
    Secured Term Loan
     103




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Refinancing
    Transaction
     104




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
          
    5.75 to 1.00 for the fiscal quarter ending December 31,
    2007;
    5.50 to 1.00 for the fiscal quarters ending March 31, 2008
    and June 30, 2008;
    5.25 to 1.00 for the fiscal quarter ending September 30,
    2008;
    5.00 to 1.00 for the fiscal quarter ending December 31,
    2008;
    4.00 to 1.00 for the fiscal quarters ending March 31, 2009
    and June 30, 2009;
    3.75 to 1.00 for the fiscal quarter ending September 30,
    2009;
    3.50 to 1.00 for the fiscal quarter ending December 31,
    2009; and
    thereafter being reduced on a graduated basis to 2.50 at
    March 31, 2012 and beyond.    
    0.75 to 1.00 for the fiscal quarter ending December 31,
    2007;
    0.80 to 1.00 for the fiscal quarter ending March 31, 2008;
    0.90 to 1.00 for the fiscal quarters ending June 30, 2008
    through December 31, 2008; and 105




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
   
    thereafter increasing on a graduated basis to 1.10 to 1.00 at
    March 31, 2012 and beyond.    Convertible
    Notes
      trading-day
 106




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Accounting for Derivative
    Instruments and Hedging Activities
        (11)
    Derivatives   107




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      (12)
    Fair
    Value of Financial Instruments       108




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  (13)
    Supplemental
    Financial Information  Supplemental
    Statement of Operations Information:
  Depreciation
    and amortization:
  Successor



PredecessorSix Months



Six MonthsSuccessor


Successor


Ended



EndedFiscal


Fiscal


December 31,



July 2,2007


2006


2005



2005Depreciation

$
39,222


$
44,247


$
20,533



$
15,191Amortization of internal-use software


508



1,090



862




980Amortization of deferred financing costs


955



788



283




Amortization of convertible note discount


1,596












Amortization of intangible assets


8,052



9,369



4,911




Total depreciation and amortization

$
50,333


$
55,494


$
26,589



$
16,171   Other
    Income, Net:
  Successor



PredecessorSix Months



Six MonthsSuccessor


Successor


Ended



EndedFiscal


Fiscal


December 31,



July 2,2007


2006


2005



2005Net accretion of financing receivables/payables

$
5,531


$
1,791


$
873



$
Gain on fair value adjustment of net financing
    receivables/payables






466








Gain on sale of net financing receivables/payables


9,303












Loss on extinguishment of debt


(3,284
)











Fair value adjustment of convertible note embedded derivative
    liability


10,483












Interest rate swap gain


228







787




Interest income and other


1,434



774



259




Total other income, net

$
23,695


$
3,031


$
1,919



$
  109




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Supplemental
    Balance Sheet Information:
  Property
    and equipment:
  Successor


SuccessorDecember 29,


December 30,2007


2006Land

$
7,471


$
7,471Buildings and improvements


50,233



50,193Leasehold improvements


145,740



106,035Fixtures and equipment


67,889



60,510Construction in progress


14,327



10,990285,660



235,199Less: accumulated depreciation and amortization


(90,557
)


(57,855
)Property and equipment, net

$
195,103


$
177,344   Accrued
    Expenses:
  Successor


SuccessorDecember 29,


December 30,2007


2006Salaries and wages

$
16,904


$
11,901Sales, payroll and business taxes


12,301



14,113Allowance for sales returns


15,142



15,566Gift certificates and other customer deposits


45,322



46,620Other accrued expenses


17,367



12,260Total accrued expenses

$
107,036


$
100,460   Accumulated
    Other Comprehensive Income:
  Successor


SuccessorDecember 29,


December 30,2007


2006Net foreign currency translation, net of tax

$
2,169


$
Fair value adjustment of cash flow hedge, net of tax


(2,559
)


583Unrecognized obligations related to pension and post-retirement
    plans, net of tax


5,028



2,281Total accumulated other comprehensive income

$
4,638


$
2,864  110




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  (14)
    Income
    Taxes  Income
    Tax Expense (Benefit)
    Successor



PredecessorSix Months



Six MonthsSuccessor


Successor


Ended



EndedFiscal


Fiscal


December 31,



July 2,2007


2006


2005



2005Current:Federal

$
2,082


$
1,739


$
1,718



$
40,753State


632







1,774




4,397Foreign


5,195



5,305



3,060




1,084$
7,909


$
7,044


$
6,552



$
46,234Deferred:Federal

$
60,455


$
49,909


$
7,698



$
2,375State


1,436



9,211



1,150




1,173Foreign


(607
)


(633
)


(755
)



62061,284



58,487



8,093




4,168Total income tax expense

$
69,193


$
65,531


$
14,645



$
50,402       111




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Successor Six



PredecessorSuccessor


Successor


Months Ended



Six Months EndedFiscal


Fiscal


December 31,



July 2,2007


2006


2005



2005Income tax benefit at U.S. statutory rate

$
(11,384
)

$
(51,259
)

$
(2,346
)


$
41,434State income taxes (net of Federal income tax expense/benefit)


(865
)


(664
)


1,271




5,058Rate differential for foreign income taxes


263



343



519




2,184Increase in valuation allowances


30,598



71,265



14,695




Non-deductible goodwill impairment






41,154








Non-deductible interest expense and gain on sale of financing
    receivables


46,524



5,814



1,131




Non-deductible reorganization costs















781Increase to liabilities for unrecognized tax benefits


1,927












Basis difference in foreign subsidiaries


2,659



203








Nondeductible compensation


2,009



645








Fair value adjustment and discount amortization of convertible
    notes


(3,110
)











Other nondeductible items


572



(1,970
)


(625
)



945Income tax expense

$
69,193


$
65,531


$
14,645



$
50,402      Successor



PredecessorSix Months



Six MonthsSuccessor


Successor


Ended



EndedFiscal


Fiscal


December 31,



July 2,2007


2006


2005



2005Income (loss) from U.S. operations

$
(44,881
)

$
(158,287
)

$
(13,328
)


$
117,557Income (loss) from foreign operations


12,356



12,369



6,625




(3,578
)Income (loss) from continuing operations before income tax
    expense

$
(32,525
)

$
(145,918
)

$
(6,703
)


$
113,979  112




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Deferred
    Tax Assets and Liabilities
    Successor


SuccessorDecember 29,


December 30,2007


2006Deferred tax assets  current:Net operating loss carryforwards

$
88


$
9,000Allowance for sales returns


3,302



3,412Accrued vacation


2,387



2,018Accrued severance


1,080



Reserve for store closings


412



1,339Deferred revenue


1,084



1,580Other


3,241



1,411Subtotal


11,594



18,760Less: Valuation allowance


(7,371
)


(7,250
)Total deferred tax assets  current


4,223



11,510Deferred tax liabilities  current:Prepaid expenses


(3,198
)


(2,105
)Capitalized inventory costs


(7,381
)


(6,760
)Other






(300
)Total deferred tax liabilities  current


(10,579
)


(9,165
)Net deferred tax assets (liabilities)  current

$
(6,356
)

$
2,345Deferred tax assets  noncurrent:Net operating loss carryforwards

$
139,340


$
180,137Deferred rent obligations/ Unfavorable lease obligations, net


18,830



10,473Pension and other post-retirement benefit liabilities


4,038



6,180Stock-based compensation


2,713



2,802AMT credits


6,661



3,030Other


3,171



369Subtotal

$
174,753


$
202,991Less: Valuation allowance


(111,106
)


(77,590
)Total deferred tax assets  non-current

$
63,647


$
125,401Deferred tax liabilities  noncurrent:Other intangible assets, net

$
(79,910
)

$
(81,683
)Property and equipment, net


(7,195
)


(9,201
)Receivables related to securitization interests






(17,605
)Unremitted foreign earnings


(4,294
)


Equity investments in foreign joint ventures


(1,268
)


(942
)Other


(1,470
)


Total deferred tax liabilities  noncurrent


(94,137
)


(109,431
)Net deferred tax assets (liabilities)  noncurrent

$
(30,490
)

$
15,970   NOLs and
    Related Valuation Allowances
   113




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
             114




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
       115




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    FIN 48
    Adoption and Liabilities for Unrecognized Tax Benefits
    Successor2007Unrecognized tax benefits balance at January 1, 2007

$
467Increases for tax positions of prior years


279Decreases for tax positions of prior years


Increases for tax positions of current year


1,359Decreases for tax positions of current year


Settlements


Lapse in statute of limitations


Unrecognized tax benefits balance at December 29, 2007

$
2,105       2002-2003 2003-2004
  (15)
    Employee
    Benefit Plans   116




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    401(k)
    Savings Plans and Spiegel Group Value in Partnership Profit
    Sharing
    Post-retirement
    Healthcare and Life Insurance Plans
    Employers Accounting
    for Defined Benefit Pension and Other Postretirement Plans (an
    amendment of FASB Statements No. 87, 88, 106, and 132R)
  117




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Successor


SuccessorAs of


As ofDecember 29,


December 30,2007


2006Funded Status:Accumulated benefit obligation

$
7,954


$
8,399Fair value of plan assets






Funded status

$
(7,954
)

$
(8,399
)Unrecognized net actuarial (gain)/loss






Unrecognized net prior service cost






Accrued benefit cost

$
(7,954
)

$
(8,399
)   Successor


SuccessorAs of


As ofDecember 29,


December 30,2007


2006Amounts recognized in the balance sheet consist of:Prepaid benefit cost

$



$
Accrued benefit liability  current


(572
)


(654
)Accrued benefit liability  noncurrent


(7,382
)


(7,745
)Accumulated other comprehensive income, pre-tax


(3,124
)


(2,707
)Net amount recognized

$
(11,078
)

$
(11,106
)Successor


SuccessorFiscal


Fiscal2007


2006Projected Benefit Obligation:Benefit obligation as of beginning of period

$
8,475


$
10,370Service cost


250



247Interest cost


485



472Participant contributions


519



610Benefits paid


(1,098
)


(1,084
)Actuarial (gain)/loss


(570
)


(1,574
)Plan amendments/curtailment gain






(566
)Benefit obligation as of end of period

$
8,061


$
8,475     118




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##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Successor


SuccessorFiscal


Fiscal2007


2006Fair Value of Plan Assets:Fair value of plan assets as of beginning of period

$



$
Employer contributions


579



474Participant contributions


519



610Benefits paid


(1,098
)


(1,084
)Fair value of plan assets as of end of period

$



$
   Successor



PredecessorSix Months



Six MonthsSuccessor


Successor


Ended December



Ended July2007


2006


31, 2005



2, 2005Net benefit cost:Service cost

$
250


$
247


$
175



$
123Interest cost


485



472



274




88Amortization of prior service cost


(71
)


(71
)







(47
)Recognized net actuarial (gain)/loss


(82
)


(80
)







17Curtailment gain















Total expense

$
582


$
568


$
449



$
181   Successor


Successor2007


2006Other changes in Plan Assets and Benefit Obligations
    recognized in Other Comprehensive (Income) Loss:Transition obligation

$




Prior service cost (credit)


(424
)


(495
)Net actuarial (gain) loss


(2,700
)


(2,212
)Amortization of net transition obligation (asset)






Amortization of prior service cost






Amortization of net actuarial (gain) loss






Total recognized in other comprehensive income, pre-tax

$
(3,124
)

$
(2,707
)     Assumptions:
   119




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Contributions:
    Estimated
    Future Benefit Payments:
    Fiscal2008

$
5722009


5422010


5862011


5892012


5992013-2017


3,473$
6,361   Pension
    Plan
      120




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  Successor


SuccessorAs of


As ofDecember 29,


December 30,2007


2006Funded Status:Projected benefit obligation

$
48,275


$
52,056Fair value of plan assets


46,155



44,470Funded status

$
(2,120
)

$
(7,586
)Unrecognized net actuarial gain


(4,991
)


(974
)Accrued pension cost

$
(7,111
)

$
(8,560
)   Successor


SuccessorAs of


As ofDecember 29,


December 30,2007


2006Amounts recognized in the balance sheet consist of:Accrued benefit liability  current liabilities

$



$
Accrued benefit liability  non-current liabilities


(2,120
)


(7,586
)Accumulated other comprehensive income, pre-tax


(4,991
)


(974
)Net amount recognized

$
(7,111
)

$
(8,560
)   Successor


Successor2007


2006Projected Benefit Obligation:Projected benefit obligation at beginning of period

$
52,056


$
55,717Service cost






Interest cost


2,849



2,924Benefits paid


(4,897
)


(5,057
)Actuarial gain


(1,733
)


(1,528
)Projected benefit obligation at end of period

$
48,275


$
52,056   Successor


Successor2007


2006Fair value of Plan Assets:Fair value of plan assets at beginning of period

$
44,470


$
45,933Actual return on plan assets


5,891



3,594Employer contributions


691



Benefits paid


(4,897
)


(5,057
)Fair value of plan assets at end of period

$
46,155


$
44,470   121




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
  SuccessorSix Months EndedSuccessor


Successor


December 31,2007


2006


2005Net periodic pension cost:Service cost

$



$







$
Interest cost


2,849



2,924







1,546Expected return on plan assets


(3,607
)


(3,687
)






(1,875
)Total benefit

$
(758
)

$
(763
)





$
(329
)   Successor


Successor2007


2006Other changes in Plan Assets and Benefit Obligations
    recognized in Other Comprehensive (Income) Loss:Transition obligation

$




Prior service cost (credit)






Net actuarial (gain) loss


(4,991
)


(974
)Amortization of net transition obligation (asset)






Amortization of prior service cost






Amortization of net actuarial (gain) loss






Total recognized in other comprehensive income, pre-tax

$
(4,991
)

$
(974
)     Assumptions:
         122




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Plan
    Assets:
    As of


As ofSeptember 30,


September 30,2007


2006Asset Category:Equity securities


62
%


61
%Debt securities


37
%


38
%Real estate


0
%


0
%Other


1
%


1
%Total


100
%


100
%     Contributions:
    Estimated
    Future Benefit Payments:
    Fiscal:2008

$
4,7902009


4,7042010


4,5842011


4,4552012


4,3312013-2017


19,269   (16)
    Stock
    Based Compensation   123




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Stock
    Options
     124




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    SuccessorSuccessor


Successor


Six Months Ended2007


2006


December 31, 2005Time-vested options:Risk-free interest rate


3.54  5.06
%


4.47
%


4.52
%Expected term in years


6.25



6.25



5.8Dividend yield


0.0
%


0.0
%


0.0
%Expected volatility


37  45
%


46
%


46
%Weighted-average fair value of time-vested options granted

$
6.04


$
7.34


$
11.57Performance-vested options:Risk-free interest rate


3.28  5.07
%


n/a



n/aDividend yield


0.0
%


n/a



n/aExpected volatility


37  45
%


n/a



n/aRequisite service period in years
    (5-year
    performance-based options)


2.3  3.5



n/a



n/aRequisite service period in years
    (7-year
    performance-based options)


3.8  4.9



n/a



n/aWeighted-average fair value of
    5-year
    performance based options granted

$
5.02



n/a



n/aWeighted-average fair value of
    7-year
    performance based options granted

$
5.31



n/a



n/a     Successor 2007WeightedAverageExerciseShares


PriceOutstanding at beginning of year


590,375


$
23.28Awards granted


837,125


$
12.94Awards forfeited


(84,000
)

$
23.37Awards exercised






n/aOutstanding at end of year


1,343,500


$
16.83Exercisable at end of year


390,551


$
23.34      125




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Restricted
    Stock Units (RSUs)
      Successor 2007WeightedNonvested


AverageRestricted


Grant-DateStock Units


Fair ValueNonvested awards at beginning of year


603,533


$
23.13Granted


225,100


$
12.14Vested (a), (b)


(367,694
)

$
22.69Forfeited


(70,200
)

$
23.37Nonvested awards at end of year


390,739


$
17.18     (a)
    
    During the three months ended March 31, 2007, the Company
    issued 133,334 shares of common stock related to the
    accelerated vesting of RSUs of the Companys former CEO as
    discussed further in Note 3.(b)
    
    Of the vested RSUs during fiscal 2007, 4,994 shares were
    deferred under the Companys deferred compensation plan
    during the third quarter of 2007.    (17)
    Commitments
    and Contingencies  Lease
    Commitments
   126




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
      Successor



PredecessorSuccessor


Successor


Six Months Ended



Six Months Ended2007


2006


December 31, 2005



July 2, 2005Minimum rent  stores

$
76,479


$
74,197


$
37,763



$
36,607Percentage rent  stores


20



253



24




13Minimum rent  other


2,477



2,985



1,882




(2,523
)$
78,976


$
77,435


$
39,669



$
34,097     AmountFiscal:2008

$
75,2712009


67,4722010


59,1572011


48,5322012


37,938Thereafter


155,571$
443,941   Litigation
  Tara Hill v.
    Eddie Bauer, Inc., Scherer v. Eddie Bauer, Inc.
  Kristal Scherer, on behalf of herself, all others similarly
    situated v. Eddie Bauer, Inc. and Does 1 to 100
 127




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
        Registration
    Rights Agreement
  EITF 00-19-2, Accounting for Registration Payment Arrangements, EITF 00-19-2),
  (18)
    Concentrations   128




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    (19)
    Quarterly
    Information (Unaudited)    First


Second


Third


Fourth(b)($ in thousands, except per share data)2007Net sales and other revenues

$
213,985


$
226,986


$
210,952


$
392,430Operating income (loss)


(39,237
)


(10,119
)


(26,538
)


47,519Loss from continuing operations


(44,781
)


(22,248
)


(16,440
)


(18,249
)Loss from discontinued operations














Net loss


(44,781
)


(22,248
)


(16,440
)


(18,249
)Loss from continuing operations per basic and diluted share

$
(1.47
)

$
(0.73
)

$
(0.54
)

$
(0.59
)Loss from discontinued operations per basic and diluted share














Net loss per basic and diluted share


(1.47
)


(0.73
)


(0.54
)


(0.59
)   First


Second(b)


Third(a)(b)


Fourth($ in thousands, except per share data)2006Net sales and other revenues

$
194,501


$
225,742


$
211,285


$
381,919Operating income (loss)


(33,780
)


(2,762
)


(134,142
)


52,076Income (loss) from continuing operations


(35,037
)


(41,980
)


(197,585
)


63,153Loss from discontinued operations


(534
)










Net income (loss)


(35,571
)


(41,980
)


(197,585
)


63,153Income (loss) from continuing operations per basic and diluted
    share

$
(1.17
)

$
(1.40
)

$
(6.58
)

$
2.11Loss from discontinued operations per basic and diluted share


(0.02
)










Net income (loss) per basic and diluted share


(1.19
)


(1.40
)


(6.58
)


2.11     (a)
    
    Third quarter 2006 includes an impairment charge of $117,584
    related to the Companys goodwill. See further discussion
    in Note 8.(b)
    
    The Company recorded income tax expense associated with
    increases to its tax valuation allowance of $27,873, $23,462 and
    $52,662 during the fourth quarter of 2007, second quarter of
    2006 and third quarter of 2006, respectively. See further
    discussion in Note 14.  (20)
    Subsequent
    Events  Joint
    Venture Termination
   129




---



##### Table of Contents



EDDIE
    BAUER HOLDINGS, INC.
  NOTES TO
    CONSOLIDATED AND COMBINED FINANCIAL
    STATEMENTS  (Continued)
    Repayment
    of Senior Term Loan
   130




---



##### Table of Contents



SCHEDULE II



VALUATION
    AND QUALIFYING ACCOUNTS  Charged toBeginning


Costs and





EndingBalance


Expenses


Deduction


Balance($ in thousands)Inventory valuation allowanceFiscal 2007

$
4,118


$
12,359


$
(7,652
)

$
8,825Fiscal 2006


5,494



8,059



(9,435
)


4,118Six months ended December 31, 2005


2,286



14,356



(11,148
)


5,494Six months ended July 2, 2005


7,779



787
(b)


(6,280
)


2,286Allowance for sales returnsFiscal 2007

$
15,566


$
166,012


$
(166,436
)

$
15,142Fiscal 2006


14,592



174,806



(173,832
)


15,566Six months ended December 31, 2005


7,641



184,759



(177,808
)


14,592Six months ended July 2, 2005


14,992



80,958



(88,309
)


7,641Deferred tax valuation allowanceFiscal 2007

$
84,840


$
38,773
(d)

$
(5,136
)(e)

$
118,477Fiscal 2006


35,053



71,265



(21,478
)(c)


84,840Six months ended December 31, 2005


19,800



15,253







35,053Six months ended July 2, 2005






19,800
(a)






19,800     (a)
    
    Includes $19,800 established in conjunction with the
    Companys adoption of fresh start accounting effective
    July 2, 2005.(b)
    
    Amount is net of a $1,905 increase in fair value of inventory in
    conjunction with the Companys adoption of fresh start
    accounting effective July 2, 2005.(c)
    
    Includes reversal of original amount recorded in conjunction
    with fresh start accounting related to state NOLs and $1,678
    reduction due to immaterial error related to prior periods.(d)
    
    Includes $10,900 of valuation allowance related to state NOLs
    that the Company determined during fiscal 2007 existed as of the
    Companys fresh start reporting date. See further
    discussion in footnote 14 to the Companys audited
    financial statements which are included in this document.(e)
    
    Represents a reduction in the Companys Federal and state
    NOL valuation allowances related to unrecognized tax
    liabilities. See further discussion in footnote 14 to the
    Companys audited financial statements which are included
    in this document. 131




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##### Table of Contents



EXHIBIT INDEX
  Regulation S-K:
  Exhibit No.

Document2.1**

Modified First Amended Joint Plan of Reorganization of
    Affiliated Debtors pursuant to Chapter 11 of the Bankruptcy
    Code, dated as of May 23, 2005.(1)3.1**

Certificate of Incorporation of Eddie Bauer Holdings, Inc.(1)3.2**

Amended & Restated Bylaws of Eddie Bauer Holdings,
    Inc.(1)4.1**

Article V of the Certificate of Incorporation of Eddie
    Bauer Holdings, Inc., included in Exhibit 3.1.(1)10.1**

Term Loan Agreement, dated as of June 21, 2005, among Eddie
    Bauer Holdings, Inc., Eddie Bauer, Inc. as Borrower, the
    Lenders, General Electric Capital Corporation as Syndication
    Agent, Credit Suisse as Documentation Agent and JPMorgan Chase
    Bank, N.A. as Administrative Agent.(2)10.2**

Guarantee and Collateral Agreement made by Eddie Bauer Holdings,
    Inc., Eddie Bauer, Inc. and certain of its subsidiaries in favor
    of JPMorgan Chase Bank, N.A. as Administrative Agent, dated
    June 21, 2005.(2)10.3**

Pledge Agreement, dated as of June 21, 2005, by and between
    Eddie Bauer Holdings, Inc. as Pledgor, and Bank of America, N.A.
    as Agent.(1)10.4**

Pledge Agreement, dated as of June 21, 2005, by and between
    Eddie Bauer, Inc. as Pledgor and Bank of America, N.A. as
    Agent.(1)10.5**

First Amendment, Waiver and Agreement, dated as of
    April 13, 2006, to and under the Term Loan Agreement.(1)10.6**

Loan and Security Agreement, dated as of June 21, 2005,
    among the Lenders, Bank of America, N.A. as Agent, Banc of
    America Securities LLC as Sole Lead Arranger and Book Manager,
    Bank of America, N.A. and the CIT Group/Business Credit, Inc. as
    Co-Syndication Agents, GE Capital Corporation as Documentation
    Agent, Eddie Bauer, Inc. as Borrower and Eddie Bauer Holdings,
    Inc., Eddie Bauer Services, LLC, Distribution Fulfillment
    Services, Inc. (DFS) and Eddie Bauer Information Technology, LLC
    as Guarantors.(2)10.7**

Waiver, effective April 14, 2006, under the Loan and
    Security Agreement.(2)10.8**

Intercreditor Agreement, dated as of June 21, 2005, by and
    between Bank of America, N.A., as agent, JPMorgan Chase Bank,
    N.A. as administrative agent, Eddie Bauer Holdings, Inc., Eddie
    Bauer, Inc. and certain direct and indirect subsidiaries of
    Eddie Bauer, Inc.(1)10.9**

Amended and Restated Term Loan Agreement dated April 4,
    2007, among Eddie Bauer Holdings, Inc., Eddie Bauer, Inc., as
    Borrower, the Several Lenders from Time to Time Parties Thereto,
    Goldman Sachs Credit Partners L.P., as Syndication Agent and
    JPMorgan Chase Bank, N.A., as Administrative Agent.(2)10.10**

Amended and Restated Guarantee and Collateral Agreement dated
    April 4, 2007, among Eddie Bauer Holdings, Inc., Eddie
    Bauer, Inc. and certain of its subsidiaries in favor of JPMorgan
    Chase Bank, N.A., as Administrative Agent.(3)10.11**

First Amendment and Waiver to Loan and Security Agreement dated
    April 4, 2007, among Eddie Bauer, Inc., the guarantors, the
    Lenders, Bank of America, N.A., The CIT Group/Business Credit,
    Inc. and General Electric Capital Corporation.(3)10.12**

Indenture dated April 4, 2007, among Eddie Bauer Holdings,
    Inc. and The Bank of New York, as trustee.(3)10.13**

Registration Rights Agreement dated April 4, 2007, among
    Eddie Bauer Holdings, the subsidiaries of the Company listed on
    the signature page thereto and J.P. Morgan Securities Inc.
    and Goldman, Sachs & Co.(3)10.14**

Placement Agency Agreement dated March 28, 2007, among
    J.P. Morgan Securities Inc. and Goldman, Sachs &
    Co.(3)10.15**

Joint Venture Agreement, dated September 28, 1993, between
    Eddie Bauer, Inc. and Otto-Sumisho Inc.(1)10.16**

Joint Venture Agreement, dated June 6, 1995, by and between
    Eddie Bauer, Inc., Handelsgesellschaft Heinrich Heine GmbH and
    Sport-Scheck GmbH.(1) 132




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##### Table of Contents



Exhibit No.

Document10.17**

Buying Agency Agreement, dated June 29, 2005, by and
    between Eddie Bauer International, Ltd. and Eddie Bauer, Inc.(1)10.18**

Vendor Payment Services Agreement, dated June 29, 2005,
    between Eddie Bauer, Inc. and Otto International (Hong Kong)
    Limited.(1)10.19**

Private Label Credit Card Program Agreement, dated May 2,
    2003, between World Financial Network National Bank, Spiegel,
    Inc. and Eddie Bauer, Inc.(4)10.20**

Lease dated December 14, 2005 between Lincoln Square
    Office, LLC and Eddie Bauer, Inc.(1)10.21**

First Lease Addendum dated May 15, 2006 between Lincoln
    Square Office, LLC and Eddie Bauer, Inc.(2)10.22**

Lease dated January 23, 2001, by and among Plaza Corp
    Retail Properties, Spiegel Group Teleservices 
    Canada, Inc. and Spiegel, Inc., as guarantor, as amended by a
    First Amendment dated June 18, 2001 and a Second Amendment
    dated December 11, 2001.(1)10.23#**

Separation Agreement and General Release dated as of
    February 9, 2007 among Eddie Bauer Holdings, Inc., Eddie
    Bauer, Inc. and Fabian Månsson.(5)10.24#**

Letter Agreement dated February 9, 2007 by and between
    Eddie Bauer Holdings, Inc. and Howard Gross.(5)10.25#**

Letter Agreement dated March 5, 2007 by and between Eddie
    Bauer, Inc. and Kathy Boyer.(5)10.26#**

Letter Agreement dated April 5, 2007 by and between Eddie
    Bauer, Inc. and Shelley Milano.(5)10.27#**

Letter Agreement dated March 5, 2007 by and between Eddie
    Bauer, Inc. and Ann Perinchief.(5)10.28#**

Letter Agreement dated June 12, 2007 by and between Eddie
    Bauer Holdings, Inc. and Eddie Bauer, Inc. and Neil S. Fiske.(6)10.29#+

Employment Letter dated May 14, 2007 by and between Eddie Bauer,
    Inc. and Tom Helton.10.30**

Eddie Bauer Holdings, Inc. 2005 Stock Incentive Plan as amended
    and restated on April 29, 2007.(7)10.31**

Form of Stock Option Agreement.(1)10.32**

Form of Restricted Stock Unit Award Certificate.(1)10.33**

Form of Restricted Stock Award Certificate.(1)10.34#+

Form of Restricted Stock Unit Award for individual equity
    incentive plan inducement grant.10.35#+

Form of Stock Option Agreement for individual equity incentive
    plan inducement grant.10.36#**

Form of Non-Employee Director Stock Option Agreement.(1)10.37#**

Form of Non-Employee Director Restricted Stock Unit Award
    Certificate.(1)10.38#**

Form of Non-Employee Director Restricted Stock Award
    Certificate.(1)10.39#**

Eddie Bauer Holdings, Inc. Senior Officer Change in Control
    Compensation Benefits Plan (amended and restated effective
    June 23, 2006).(8)10.40#**

Form of Amended and Restated Senior Officer Change in Control
    Compensation Benefits Plan Participation Agreement.(1)10.41**

Eddie Bauer Holdings, Inc. Non-Qualified Deferred Compensation
    Plan.(1)10.42**

Eddie Bauer Holdings, Inc. 2005 Annual Incentive Plan.(1)10.43**

Eddie Bauer Holdings, Inc. 2006 Annual Incentive Plan.(1)10.44**

Spiegel Group Severance Plan.(1)10.45**

Form of Indemnification Agreement for Directors and Executive
    Officers of Eddie Bauer Holdings, Inc.(1)10.46**

Eddie Bauer 2004 Bridge Incentive Plan.(1)10.47+

Purchase and Sale Agreement between Spiegel Acceptance
    Corporation and RAC Trust, dated December 5, 2007.10.48+

Purchase and Sale Agreement between Spiegel Acceptance
    Corporation and Midland Funding LLC, dated December 4,
    2007. 133




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##### Table of Contents



Exhibit No.

Document10.49+

Purchase and Sale Agreement between Spiegel Acceptance
    Corporation and eCast Settlement Corporation, dated
    December 5, 2007.10.50+

Amendment to Purchase and Sale Agreement between Spiegel
    Acceptance Corporation and eCast Settlement Corporation, dated
    January 9, 2008.10.51#**

Amended and Restated Employment Agreement, dated
    December 14, 2005, by and between Eddie Bauer Holdings,
    Inc. and Fabian Mansson.(1)21**

Subsidiaries of Eddie Bauer Holdings, Inc.(9)23+

Consent of BDO Seidman, LLP31.1+

Rule 13a-14(a)/15-14(a)
    Certification of Chief Executive Officer31.2+

Rule 13a-14(a)/15-14(a)
    Certification of Chief Financial Officer32.1+

Section 1350 Certification of Chief Executive Officer32.2+

Section 1350 Certification of Chief Financial Officer     (1)
    
    Incorporated by reference to the companys registration
    statement on Form 10, filed on May 1, 2006 (SEC File
    No. 000-51676).(2)
    
    Incorporated by reference to the companys registration
    statement on Form 10G/A, filed on June 27, 2006 (SEC
    File
    No. 000-51676).(3)
    
    Incorporated by reference to the companys current report
    on Form 8-K
    dated April 4, 2007 (SEC File
    No. 001-33070).(4)
    
    Incorporated by reference to the companys registration
    statement on Form 10G/A, filed on October 12, 2006
    (SEC File
    No. 000-51676).(5)
    
    Incorporated by reference to the companys quarterly report
    on Form 10-Q
    for the period ended March 31, 2007 (SEC File
    No. 001-33070).(6)
    
    Incorporated by reference to the companys quarterly report
    on Form 10-Q
    for the period ended June 30, 2007 (SEC File
    No. 001-33070).(7)
    
    Incorporated by reference from Appendix A of the
    companys Schedule 14A Definitive Proxy Statement for the
    2007 Annual Meeting of Shareholders, filed on May 11, 2007
    (SEC File
    No. 001-33070).(8)
    
    Incorporated by reference to the companys quarterly report
    on Form 10-Q
    for the period ended July 1, 2006 (SEC File
    No. 000-51676).(9)
    
    Incorporated by reference to the companys annual report on
    Form 10-K
    for the year ended December 30, 2006 (SEC File
    No. 001-33070).#
    
    Management Compensation Plan.**
    
    Previously filed.+
    
    Included herewith. 134




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##### Table of Contents



SIGNATURES
      
          Signature

Title

Date/s/  McNeil
    S. Fiske, Jr.McNeil
    S. Fiske, Jr.

President and Chief Executive Officer and Director (Principal
    Executive Officer)

March 12, 2008/s/  Marvin
    Edward TolandMarvin
    Edward Toland

Chief Financial Officer (Principal Financial and Accounting
    Officer)

March 12, 2008/s/  William
    T. EndWilliam
    T. End

Chairman

March 12, 2008/s/  John
    C. BrouillardJohn
    C. Brouillard

Director

March 12, 2008/s/  Howard
    GrossHoward
    Gross

Director

March 12, 2008/s/  Paul
    E. KirincicPaul
    E. Kirincic

Director

March 12, 2008/s/  William
    E. Redmond, Jr.William
    E. Redmond, Jr.

Director

March 12, 2008/s/  Kenneth
    M. ReissKenneth
    M. Reiss

Director

March 12, 2008/s/  Laurie
    M. ShahonLaurie
    M. Shahon

Director

March 12, 2008/s/  Edward
    M. StrawEdward
    M. Straw

Director

March 12, 2008/s/  Stephen
    E. WatsonStephen
    E. Watson

Director

March 12, 2008  135