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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended January 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Nos. 1-8899 and 333-148108
 Claires Stores, Inc.
  Florida
    
    59-0940416(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 2400 West Central Road,Hoffman Estates, Illinois
    
    60195(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (847) 765-1100
 None
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ
(Do not check if a smaller reporting company)
Smaller reporting company o o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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TABLE OF CONTENTS
 Item
    
    
    
    Page No.PART I.
    
    
    
    
    3Item 1.
    
    Business
    
    
    5Item 1A.
    
    Risk Factors
    
    
    13Item 1B.
    
    Unresolved Staff Comments
    
    
    23Item 2.
    
    Properties
    
    
    23Item 3.
    
    Legal Proceedings
    
    
    24Item 4.
    
    Reserved
    
    
    24PART II
    
    
    
    
    24Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    24Item 6.
    
    Selected Financial Data
    
    
    25Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    26Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    46Item 8.
    
    Financial Statements and Supplementary Data
    
    
    48Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    99Item 9A(T).
    
    Controls and Procedures
    
    
    99Item 9B.
    
    Other Information
    
    
    99PART III.
    
    
    
    
    99Item 10.
    
    Directors, Executive Officers and Corporate Governance

    
    
    99Item 11.
    
    Executive Compensation
    
    
    99Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    99Item 13.
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    99Item 14.
    
    Principal Accountant Fees and Services
    
    
    99PART IV.
    
    
    
    
    100Item 15.
    
    Exhibits, Financial Statement Schedules
    
    
    100Signatures
    
    
    
    
    103EX-21.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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PART I.
 Explanatory Notes
       Statement Regarding Forward-Looking Disclosures
  3




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4




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Item 1.
    
    Business
 The Company
         
    
    Accessories  includes fashion accessories for year-round use, including legwear,
armwear, headwear, scarves, attitude glasses, and belts, and seasonal use, including
sunglasses, hats, scarves, sandals, boots and slippers; and other accessories, including
hairgoods, handbags, and small leather goods, as well as cosmetics
 5




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
    
    Jewelry  includes earrings, necklaces, bracelets, body jewelry and rings, as well as
ear piercing
  Our Competitive Strengths
 Strong Claires Name Brand Recognition Across the Globe.
 Cost-Efficient Global Sourcing Capabilities.
 Diversification Across Geographies and Merchandise Categories.
  Compelling Unit Economics.
 Strong and Experienced Senior Management Team.
 Business Strategy
  6




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Recap of Fiscal 2009 Priorities
  Deliver Same Store Sales with Commensurate Merchandise Margin.
   Achieve Expense Reduction Objectives and Build a Cost Conscious Culture.
  Refine and Strengthen our Merchandise Offense While Undertaking Other Supporting Initiatives.
  7




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Build on the Established Foundation to Further Develop our Pan-European Business
 Develop our Organization into Top Performers and Execute as a Management Team.
  Strategic Business Plan
  
    
    Exploit opportunities to drive same store sales
    
    Open new Company-owned stores in existing and adjacent markets
    
    Open new stores through the growth of international franchising
    
    Pursue targeted initiatives to deliver additional growth
    
    Enhance our customer relationships through an integrated multi-channel customer
experience, including e-commerce
 8




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Fiscal 2010 Priorities
  Deliver On-Trend Merchandise Assortment for Each Targeted Customer Group.
   Strengthen the In-Store Experience.
  Leverage the Foundational Improvements in Digital and Store Marketing.
  Expand our Global Footprint.
  9




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Maintain Strong Financial Discipline.
  Develop our Team Members into a Top Performing Global Organization.
  Stores
  Store Management
    10




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Store Openings, Closings and Future Growth
  Store Count as of:
    
    January 30,
2010
    
    January 31,
2009
    
    February 2,
2008North America
    
    
    1,993
    
    
    
    2,026
    
    
    
    2,135Europe
    
    
    955
    
    
    
    943
    
    
    
    905Subtotal Company-Owned
    
    
    2,948
    
    
    
    2,969
    
    
    
    3,040Joint Venture
    
    
    211
    
    
    
    214
    
    
    
    198Franchise
    
    
    195
    
    
    
    196
    
    
    
    166Subtotal Non-Owned
    
    
    406
    
    
    
    410
    
    
    
    364Total
    
    
    3,354
    
    
    
    3,379
    
    
    
    3,404
  Purchasing and Distribution
  Trademarks and Service Marks
  Information Technology
  11




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Competition
  Seasonality
  Employees
  Further Information
 www.clairestores.com
 12




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Item 1A. Risk Factors
 These risks could have a material adverse effect on our business, financial position or results of
operations. The following risk factors may not include all of the important factors that could
affect our business or our industry or that could cause our future financial results to differ
materially from historic or expected results.
 Risks Relating to Current Economic Conditions
 Current economic conditions may adversely impact demand for our merchandise, reduce access to
credit and cause our customers and others with whom we do business to suffer financial hardship,
all of which could adversely impact our business, results of operations, financial condition and
cash flows.
   The global economic crisis could have a material adverse effect on our liquidity and capital
resources.
   Risks Relating to Our Company
 Fluctuations in consumer preference may adversely affect the demand for our products and result in
a decline in our sales.
  13




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Advance purchases of our merchandise make us vulnerable to changes in consumer preferences and
pricing shifts and may negatively affect our results of operations.
  A disruption of imports from our foreign suppliers may increase our costs and reduce our supply of
merchandise.
  Fluctuations in foreign currency exchange rates could negatively impact our results of operations.
  14




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Our business depends on the willingness of vendors and service providers to supply us with goods
and services pursuant to customary credit arrangements which may not be available to us in the
future.
  The failure to grow our store base in Europe or expand our international franchising may adversely
affect our business.
   Our cost of doing business could increase as a result of changes in federal, state, local and
international regulations regarding the content of our merchandise.
   Recalls, product liability claims, and government, customer or consumer concerns about product
safety could harm our reputation, increase costs or reduce sales.
  15




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If we are unable to renew or replace our store leases or enter into leases for new stores on
favorable terms, or if any of our current leases are terminated prior to the expiration of their
stated term and we cannot find suitable alternate locations, our growth and profitability could be
adversely harmed.
  Natural disasters or unusually adverse weather conditions or potential emergence of disease or
pandemic could adversely affect our net sales or supply of inventory.
  Information technology systems changes may disrupt our supply of merchandise.
  If we experience a data security breach and confidential customer information is disclosed, we may
be subject to penalties and experience negative publicity, which could affect our customer
relationships and have a material adverse effect on our business.
  16




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Changes in the anticipated seasonal business pattern could adversely affect our sales and profits
and our quarterly results may fluctuate due to a variety of factors.
  A decline in number of people who go to shopping malls, particularly in North America, could reduce
the number of our customers and reduce our net sales.
  Our industry is highly competitive.
  If the Employee Free Choice Act is adopted, it would be easier for our employees to obtain union
representation and our business could be adversely impacted.
  17




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Higher health care costs and labor costs could adversely affect our business.
 U.S. Patient Protection and Affordable Care Act
 Our profitability could be adversely affected by high petroleum prices.
  The possibility of war and acts of terrorism could disrupt our information or distribution systems
and increase our costs of doing business.
  We depend on our key personnel.
  Litigation matters incidental to our business could be adversely determined against us.
  Goodwill and indefinite-lived intangible assets comprise a significant portion of our total assets.
We must test goodwill and indefinite-lived intangible assets for impairment at least annually or
whenever events or changes in circumstances indicate that their carrying amounts may not be
recoverable; which could result in a material, non-cash write-down of goodwill or indefinite-lived
intangible assets and could have a material adverse impact on our results of operations.
  18




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There are factors that can affect our provision for income taxes.
  If our independent manufacturers or franchisees or joint venture partners do not use ethical
business practices or comply with applicable laws and regulations, our brand name could be harmed
due to negative publicity and our results of operations could be adversely affected.
  We rely on third parties to deliver our merchandise and if these third parties do not adequately
perform this function, our business would be disrupted.
  We depend on single North American and single European distribution facilities.
  We may be unable to protect our tradenames and other intellectual property rights.
  19




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Our success depends on our ability to maintain the value of our brands.
  We may be unable to rely on liability indemnities given by foreign vendors which could adversely
affect our financial results.
  We are indirectly owned and controlled by Apollo, a private equity firm, and its interests as an
equity holder may conflict with the interest of our creditors.
  20




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Risks Relating to Our Indebtedness
 Our substantial leverage could adversely affect our ability to raise additional capital to fund our
operations, limit our ability to react to changes in the economy or our industry and prevent us
from meeting our obligations under the Notes and Credit Facility.
   
    
    increasing our vulnerability to adverse economic, industry or competitive developments;
    
    requiring a substantial portion of cash flow from operations to be dedicated to the
payment of principal and interest on our indebtedness, therefore reducing our ability to
use our cash flow to fund our operations, capital expenditures and future business
opportunities;
    
    exposing us to the risk of increased interest rates because certain of our borrowings,
including borrowings under our Credit Facility, will be at variable rates of interest;
    
    making it more difficult for us to satisfy our obligations with respect to our
indebtedness, including the Notes, and any failure to comply with the obligations of any of
our debt instruments, including restrictive covenants and borrowing conditions, could
result in an event of default under the indentures governing the Notes and the agreements
governing such other indebtedness;
    
    restricting us from making strategic acquisitions or causing us to make non-strategic
divestitures;
    
    limiting our ability to obtain additional financing for working capital, capital
expenditures, product development, debt service requirements, acquisitions and general
corporate or other purposes; and
    
    limiting our flexibility in planning for, or reacting to, changes in our business or
market conditions and placing us at a competitive disadvantage compared to our competitors
who are less highly leveraged and who therefore, may be able to take advantage of
opportunities that our leverage prevents us from exploiting.
 Despite our high indebtedness level, we and our subsidiaries are still able to incur significant
additional amounts of debt, which could further exacerbate the risks associated with our
substantial indebtedness.
   21




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Our debt agreements contain restrictions that limit our flexibility in operating our business.
  
    
    incur additional indebtedness or issue certain preferred shares;
    
    pay dividends on, repurchase or make distributions in respect of our capital stock or
make other restricted payments;
    
    make certain investments;
    
    sell certain assets;
    
    create liens;
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
and
    
    enter into certain transactions with our affiliates.
  We may not be able to generate sufficient cash to service all of our indebtedness, and may be
forced to take other actions to satisfy our obligations under our indebtedness, which may not be
successful.
   Repayment of our debt is dependent on cash flow generated by our subsidiaries.
  22




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To service our debt obligations, we may need to increase the portion of the income of our foreign
subsidiaries that is expected to be remitted to the United States, which could increase our income
tax expense.
  If we default on our obligations to pay our other indebtedness, the holders of our debt could
exercise rights that could have a material effect on us.
  
    
    the holders of such indebtedness may be able to cause all of our available cash flow to
be used to pay such indebtedness and, in any event, could elect to declare all the funds
borrowed thereunder to be due and payable, together with accrued and unpaid interest;
    
    the lenders under our Credit Facility could elect to terminate their commitments
thereunder, cease making further loans and institute foreclosure proceedings against our
assets; and
    
    we could be forced into bankruptcy or liquidation.
 
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   23




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Item 3. Legal Proceedings
  
 Item 4. Reserved
 
 PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market Information
  Holders
  Dividends
  24




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Item 6. Selected Financial Data
   Successor Entity
    
    
    
    Predecessor EntityFiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    May 29, 2007
    
    
    
    Feb. 4, 2007
    
    
    Fiscal Year Ended
    
    
    Fiscal Year EndedJanuary 30,
    
    
    January 31,
    
    
    Through
    
    
    
    Through
    
    
    February 3,
    
    
    January 28,2010 (1)
    
    
    2009 (1)
    
    
    Feb. 2, 2008
    
    
    
    May 28, 2007
    
    
    2007 (1)
    
    
    2006 (1)(In thousands, except for ratios and store data)Statement of Operations Data:Net sales
    
    $
    1,342,389
    
    
    $
    1,412,960
    
    
    $
    1,085,932
    
    
    
    $
    424,899
    
    
    $
    1,480,987
    
    
    $
    1,369,752Cost of sales, occupancy and buying expenses
    
    
    659,796
    
    
    
    720,351
    
    
    
    521,384
    
    
    
    
    206,438
    
    
    
    691,646
    
    
    
    625,866Gross profit
    
    
    682,593
    
    
    
    692,609
    
    
    
    564,548
    
    
    
    
    218,461
    
    
    
    789,341
    
    
    
    743,886Other expenses (income):Selling, general and administrative
    
    
    469,179
    
    
    
    518,233
    
    
    
    354,875
    
    
    
    
    154,409
    
    
    
    481,979
    
    
    
    449,430Depreciation and amortization
    
    
    71,471
    
    
    
    85,093
    
    
    
    61,451
    
    
    
    
    19,652
    
    
    
    56,771
    
    
    
    48,900Impairment of assets
    
    
    3,142
    
    
    
    523,990
    
    
    
    3,478
    
    
    
    
    73
    
    
    
    
    
    
    
    Severance and transaction-related costs
    
    
    921
    
    
    
    15,928
    
    
    
    7,319
    
    
    
    
    72,672
    
    
    
    
    
    
    
    Other income, net
    
    
    (4,234
    )
    
    
    (4,499
    )
    
    
    (3,088
    )
    
    
    
    (1,476
    )
    
    
    (3,484
    )
    
    
    (4,622
    )540,479
    
    
    
    1,138,745
    
    
    
    424,035
    
    
    
    
    245,330
    
    
    
    535,266
    
    
    
    493,708Operating income (loss)
    
    
    142,114
    
    
    
    (446,136
    )
    
    
    140,513
    
    
    
    
    (26,869
    )
    
    
    254,075
    
    
    
    250,178Gain on early debt extinguishment
    
    
    36,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense (income), net
    
    
    177,418
    
    
    
    195,947
    
    
    
    147,892
    
    
    
    
    (4,876
    )
    
    
    (14,575
    )
    
    
    (9,493
    )Income (loss) from continuing operations before
income taxes
    
    
    1,108
    
    
    
    (642,083
    )
    
    
    (7,379
    )
    
    
    
    (21,993
    )
    
    
    268,650
    
    
    
    259,671Income tax expense (benefit)
    
    
    11,510
    
    
    
    1,509
    
    
    
    (8,020
    )
    
    
    
    21,779
    
    
    
    79,888
    
    
    
    87,328Income (loss) from continuing operations
    
    $
    (10,402
    )
    
    $
    (643,592
    )
    
    $
    641
    
    
    
    $
    (43,772
    )
    
    $
    188,762
    
    
    $
    172,343Other Financial Data:Capital expenditures:New stores and remodels
    
    $
    16,557
    
    
    $
    36,270
    
    
    $
    46,225
    
    
    
    $
    24,231
    
    
    $
    77,021
    
    
    $
    64,275Other
    
    
    8,395
    
    
    
    23,135
    
    
    
    12,259
    
    
    
    
    3,757
    
    
    
    18,171
    (2)
    
    
    9,169Total capital expenditures
    
    
    24,952
    
    
    
    59,405
    
    
    
    58,484
    
    
    
    
    27,988
    
    
    
    95,192
    
    
    
    73,444Cash interest expense (4)
    
    
    126,733
    
    
    
    168,567
    
    
    
    123,620
    
    
    
    
    86
    
    
    
    118
    
    
    
    125Ratio of earnings to fixed charges (3)
    
    
    1.0
    x
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.2
    x
    
    
    5.3
    xStore Data:Number of stores (at period end)North America
    
    
    1,993
    
    
    
    2,026
    
    
    
    2,135
    
    
    
    
    2,124
    
    
    
    2,133
    
    
    
    2,106Europe
    
    
    955
    
    
    
    943
    
    
    
    905
    
    
    
    
    879
    
    
    
    859
    
    
    
    772Total number of stores (at period end)
    
    
    2,948
    
    
    
    2,969
    
    
    
    3,040
    
    
    
    
    3,003
    
    
    
    2,992
    
    
    
    2,878Total gross square footage (000s) (at period end)
    
    
    2,982
    
    
    
    3,011
    
    
    
    3,105
    
    
    
    
    3,043
    
    
    
    3,021
    
    
    
    2,883Net sales per store (000s) (5)
    
    $
    454
    
    
    $
    461
    
    
    $
    359
    
    
    
    $
    142
    
    
    $
    504
    
    
    $
    479Net sales per square foot (6)
    
    
    448
    
    
    
    453
    
    
    
    353
    
    
    
    
    140
    
    
    
    500
    
    
    
    480Balance Sheet Data (at period end)Cash and cash equivalents
    
    $
    198,708
    
    
    $
    204,574
    
    
    $
    85,974
    
    
    
    $
    350,476
    
    
    $
    340,877
    
    
    $
    431,122Total assets
    
    
    2,834,105
    
    
    
    2,881,095
    
    
    
    3,348,497
    
    
    
    
    1,119,047
    
    
    
    1,091,266
    
    
    
    1,090,701Total debt
    
    
    2,521,878
    
    
    
    2,581,772
    
    
    
    2,377,750
    
    
    
    
    
    
    
    
    
    
    
    
    Total stockholders equity (deficit)
    
    
    (34,642
    )
    
    
    (55,843
    )
    
    
    605,200
    
    
    
    
    792,071
    
    
    
    847,662
    
    
    
    868,318
 
 (1)
    
    Fiscal 2006 was a fifty-three week period and Fiscal 2009, Fiscal 2008, Fiscal 2007 and
Fiscal 2005 were fifty-two week periods.(2)
    
    Includes management information system expenditures of $5.2 million in Fiscal 2006 for
strategic projects of POS, merchandising systems, business intelligence, technology and the
logistics system for the new distribution center in the Netherlands.(3)
    
    For purposes of calculating the ratio of earnings to fixed charges, earnings represent
income from continuing operations before income taxes plus fixed charges. Fixed charges
include interest expense, including amortization of debt issuance costs, and the portion of
rental expense which management believes is representative of the interest component of
rental expense. Due to the Companys loss during Fiscal 2008 and the combined period from
May 29, 2007 through February 2, 2008 and February 4, 2007 through May 28, 2007, the ratio
coverage was less than 1:1. The Company must generate additional earnings of $642.4
million, $7.5 million and $22.7 million during Fiscal 2008, the period from May 29, 2007
through February 2, 2008 and the period from February 4, 2007 through May 28, 2007,
respectively, to achieve coverage of 1:1.(4)
    
    Cash interest expense does not include amortization of debt issuance costs or interest
expense paid in kind.(5)
    
    Net sales per store are calculated based on the average number of stores during the
period.(6)
    
    Net sales per square foot are calculated based on the average gross square feet during
the period. 25




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    Acquisition of the Company by Apollo Management VI, L.P.
  
    
    the closing of the offering of the Notes;
    
    the closing of our $1.65 billion Credit Facility; and
    
    the equity investment of approximately $595.7 million by Apollo Management VI, L.P. on
behalf of certain affiliated co-investment partnerships.
  Effect of the Transactions
    26




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Results of Consolidated Operations
  Management overview
  
    
    We continued the implementation of our Cost Savings Initiative (CSI) project. This
project identified areas for cost savings and implemented actions late Fiscal 2008 and
early Fiscal 2009 to achieve significant savings.
    
    We continued the implementation of our Pan European Transformation (PET) project. As
the European market continues to grow and become an increasingly larger share of our
operations, we believe we need to have the resources close at hand to the European
operations. In Fiscal 2008, we transitioned an integrated merchandising team to Europe to
focus solely on our European operations. This also allowed our North American
merchandising team to focus on our North American operations. In Fiscal 2009, we
centralized our European finance and operations into one central location in Birmingham,
England.
    
    We improved our inventory management. Notwithstanding the unprecedented level of
promotional activity in the overall retail sector, we successfully managed our inventory
levels throughout the year, carefully considering the desire to maximize sales with the
potential cost (markdown risk).
    
    We also focused on preserving cash and reduced our capital expenditures to $25 million
in Fiscal 2009. We ended Fiscal 2009 with $198.7 million in cash and cash equivalents.
  27




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Successor Entity
    
    Successor Entity
    
    Combined
    
    Successor Entity
    
    Predecessor EntityFiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    May 29, 2007
    
    Feb. 4, 2007Ended
    
    Ended
    
    Ended
    
    Through
    
    ThroughJan. 30, 2010
    
    Jan. 31, 2009
    
    Feb. 2, 2008
    
    Feb. 2, 2008
    
    May 28, 2007Net sales
    
    $
    1,342,389
    
    
    $
    1,412,960
    
    
    $
    1,510,831
    
    
    $
    1,085,932
    
    
    $
    424,899Increase (decrease) in same store sales
    
    
    (1.7
    )%
    
    
    (6.9
    )%
    
    
    (1.8
    )%
    
    
    (2.8
    )%
    
    
    0.5
    %Gross profit percentage
    
    
    50.8
    %
    
    
    49.0
    %
    
    
    51.8
    %
    
    
    52.0
    %
    
    
    51.4
    %Selling, general and administrative expenses
as a percentage of net sales
    
    
    35.0
    %
    
    
    36.7
    %
    
    
    33.7
    %
    
    
    32.7
    %
    
    
    36.3
    %Depreciation and amortization as a
percentage of net sales
    
    
    5.3
    %
    
    
    6.0
    %
    
    
    5.4
    %
    
    
    5.7
    %
    
    
    4.6
    %Severance and transaction-related costs as
percentage of net sales
    
    
    0.1
    %
    
    
    1.1
    %
    
    
    5.3
    %
    
    
    0.7
    %
    
    
    17.1
    %Impairment of assets
    
    $
    3,142
    
    
    $
    523,990
    
    
    $
    3,551
    
    
    $
    3,478
    
    
    $
    73Operating income (loss)
    
    $
    142,114
    
    
    $
    (446,136
    )
    
    $
    113,644
    
    
    $
    140,513
    
    
    $
    (26,869
    )Gain on early debt extinguishment
    
    $
    36,412
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net income (loss)
    
    $
    (10,402
    )
    
    $
    (643,592
    )
    
    $
    (43,131
    )
    
    $
    641
    
    
    $
    (43,772
    )Number of stores at the end of the period (1)
    
    
    2,948
    
    
    
    2,969
    
    
    
    3,040
    
    
    
    3,040
    
    
    
    3,003
 
 (1)
    
    Number of stores excludes stores operated under franchise agreements and joint venture stores. Net sales
       Fiscal Year Ended
    
    Fiscal Year Ended
    
    Fiscal Year EndedJanuary 30,
    
    January 31,
    
    February 2,% of Total
    
    2010
    
    2009
    
    2008Accessories
    
    
    53.6
    
    
    
    48.4
    
    
    
    45.8Jewelry
    
    
    46.4
    
    
    
    51.6
    
    
    
    54.2100.0
    
    
    
    100.0
    
    
    
    100.0
 28




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Gross profit
    Selling, general and administrative expenses
   Depreciation and amortization expense
   29




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##### Table of Contents



Impairment of assets
  Severance and transaction-related costs
  Gain on early debt extinguishment
  Principal
    
    
    Purchase
    
    
    RecognizedNote Purchased
    
    Amount
    
    
    Price
    
    
    Gain (1)Senior Subordinated Notes
    
    $
    52,763
    
    
    $
    26,347
    
    
    $
    25,115Senior Toggle Notes
    
    
    30,500
    
    
    
    19,744
    
    
    
    11,297$
    83,263
    
    
    $
    46,091
    
    
    $
    36,412
 
 (1)
    
    Net of deferred issuance cost write-offs of $1,301 and $603 for the Senior Subordinated
Notes and Senior Toggle Notes, respectively, and accrued interest write-off of $1,144 for the
Senior Toggle Notes. Other income, net
  Successor Entity
    
    
    Successor Entity
    
    
    Combined
    
    
    Successor Entity
    
    
    Predecessor EntityFiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    Fiscal Year Ended
    
    
    May 29, 2007 Through
    
    
    Feb. 4, 2007 ThroughJanuary 30,
    
    
    January 31,
    
    
    February 2,
    
    
    February 2,
    
    
    May 28,2010
    
    
    2009
    
    
    2008
    
    
    2008
    
    
    2007Gain on sale of assets
    
    $
    (1,935
    )
    
    $
    (1,287
    )
    
    $
    
    
    
    $
    
    
    
    $
    Equity (income) loss
    
    
    1,014
    
    
    
    (320
    )
    
    
    (1,415
    )
    
    
    (751
    )
    
    
    (664
    )Write down of JV investment
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    650
    
    
    
    Royalty income
    
    
    (1,943
    )
    
    
    (2,309
    )
    
    
    (2,309
    )
    
    
    (1,710
    )
    
    
    (599
    )Other income
    
    
    (1,370
    )
    
    
    (583
    )
    
    
    (1,490
    )
    
    
    (1,277
    )
    
    
    (213
    )$
    (4,234
    )
    
    $
    (4,499
    )
    
    $
    (4,564
    )
    
    $
    (3,088
    )
    
    $
    (1,476
    )
 Interest expense (income), net
   30




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##### Table of Contents



Income taxes
    Segment Operations
  North America
  Successor Entity
    
    Successor Entity
    
    Combined
    
    Successor Entity
    
    Predecessor EntityFiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    May 29, 2007
    
    Feb. 4, 2007Ended
    
    Ended
    
    Ended
    
    Through
    
    ThroughJanuary 30,
    
    January 31,
    
    February 2,
    
    February 2,
    
    May 28,2010
    
    2009
    
    2008
    
    2008
    
    2007Net sales
    
    $
    850,313
    
    
    $
    907,486
    
    
    $
    995,469
    
    
    $
    702,986
    
    
    $
    292,483Increase (decrease) in
same store sales
    
    
    (3.2
    )%
    
    
    (9.2
    )%
    
    
    (2.6
    )%
    
    
    (4.2
    )%
    
    
    1.3
    %Gross profit percentage
    
    
    50.4
    %
    
    
    48.5
    %
    
    
    52.0
    %
    
    
    51.5
    %
    
    
    53.1
    %Number of stores at
the end of the period
(1)
    
    
    1,993
    
    
    
    2,026
    
    
    
    2,135
    
    
    
    2,135
    
    
    
    2,124
 
 (1)
    
    Number of stores excludes stores operated under franchise agreements and joint venture stores. Net sales
  31




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Gross profit
    Fiscal Year
    
    Fiscal Year
    
    Fiscal YearEnded
    
    Ended
    
    EndedJanuary 30,
    
    January 31,
    
    February 2,% of Total
    
    2010
    
    2009
    
    2008Accessories
    
    
    48.5
    
    
    
    43.3
    
    
    
    41.8Jewelry
    
    
    51.5
    
    
    
    56.7
    
    
    
    58.2100.0
    
    
    
    100.0
    
    
    
    100.0
 32




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Europe
  Successor Entity
    
    Successor Entity
    
    Combined
    
    Successor Entity
    
    Predecessor EntityFiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    May 29, 2007
    
    Feb. 4, 2007Ended
    
    Ended
    
    Ended
    
    Through
    
    ThroughJanuary 30,
    
    January 31,
    
    February 2,
    
    February 2,
    
    May 28,2010
    
    2009
    
    2008
    
    2008
    
    2007Net sales
    
    $
    492,076
    
    
    $
    505,474
    
    
    $
    515,362
    
    
    $
    382,946
    
    
    $
    132,416Increase (decrease) in
same store sales
    
    
    1.1
    %
    
    
    (2.5
    )%
    
    
    (0.2
    )%
    
    
    0.2
    %
    
    
    (1.2
    )%Gross profit percentage
    
    
    51.6
    %
    
    
    50.0
    %
    
    
    51.5
    %
    
    
    52.8
    %
    
    
    47.8
    %Number of stores at
the end of the period
(1)
    
    
    955
    
    
    
    943
    
    
    
    905
    
    
    
    905
    
    
    
    879
 
 (1)
    
    Number of stores excludes stores operated under franchise agreements and joint venture stores. Net sales
     Gross profit
    Fiscal Year
    
    Fiscal Year
    
    Fiscal YearEnded
    
    Ended
    
    EndedJanuary 30,
    
    January 31,
    
    February 2,% of Total
    
    2010
    
    2009
    
    2008Accessories
    
    
    62.2
    
    
    
    57.3
    
    
    
    53.5Jewelry
    
    
    37.8
    
    
    
    42.7
    
    
    
    46.5100.0
    
    
    
    100.0
    
    
    
    100.0
 33




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Liquidity and Capital Resources
  Credit Facility
      34




---



##### Table of Contents




    
    a perfected pledge of all the equity interests held by us or any subsidiary guarantor,
which pledge, in the case of any foreign subsidiary, is limited to 100% of the non-voting
equity interests and 65% of the voting equity interests of such foreign subsidiary held
directly by us and the subsidiary guarantors; and
    
    perfected security interests in, and mortgages on, substantially all material tangible
and intangible assets owned by us and each subsidiary guarantor, subject to certain
exceptions.
   Notes
    35




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##### Table of Contents




    
    incur additional indebtedness;
    
    pay dividends or distributions on our capital stock, repurchase or retire our capital
stock and redeem, repurchase or defease any subordinated indebtedness;
    
    make certain investments;
    
    create or incur certain liens;
    
    create restrictions on the payment of dividends or other distributions to us from our
subsidiaries;
    
    transfer or sell assets;
    
    engage in certain transactions with our affiliates; and
    
    merge or consolidate with other companies or transfer all or substantially all of our
assets.
   Pre-Transaction Credit Facilities
  36




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Analysis of Consolidated Financial Condition
  Successor Entity
    
    Successor Entity
    
    Combined
    
    Successor Entity
    
    Predecessor EntityFiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    May 29, 2007
    
    Feb. 4, 2007Ended
    
    Ended
    
    Ended
    
    Through
    
    ThroughJanuary 30,
    
    January 31,
    
    February 2,
    
    February 2,
    
    May 28,2010
    
    2009
    
    2008
    
    2008
    
    2007Operating activities
    
    $
    75,476
    
    
    $
    1,373
    
    
    $
    6,795
    
    
    $
    (35,851
    )
    
    $
    42,646Investing activities
    
    
    (21,259
    )
    
    
    (60,756
    )
    
    
    (3,140,441
    )
    
    
    (3,112,372
    )
    
    
    (28,069
    )Financing activities
    
    
    (60,591
    )
    
    
    179,500
    
    
    
    2,874,807
    
    
    
    2,880,810
    
    
    
    (6,003
    )
  Cash flows from operating activities
   Cash flows from investing activities
    Cash flows from financing activities
  37




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Cash position
   Current market conditions
  Critical Accounting Policies and Estimates
  38




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Inventory Valuation
  Valuation of Long-Lived Assets
  Goodwill Impairment
 Intangibles  Goodwill and Other
 39




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##### Table of Contents



40




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##### Table of Contents



Intangible Asset Impairment
   Income Taxes
     41




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Stock-Based Compensation
  Compensation  Stock Compensation
     42




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Derivatives and Hedging
 Derivatives and
Hedging
  Fair Value Measurements and Disclosures,
  Contractual Obligations and Off Balance Sheet Arrangements
  43




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##### Table of Contents



Payments Due by PeriodContractual Obligations
    
    
    
    
    
    
    
    
    
    2-3
    
    
    4-5
    
    
    More than 5(in millions)
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    yearsOperating leases for stores,
distribution centers and
offices
    
    $
    1,047.3
    
    
    $
    190.1
    
    
    $
    327.9
    
    
    $
    248.5
    
    
    $
    280.8Operating leases for equipment
    
    
    1.9
    
    
    
    0.9
    
    
    
    0.7
    
    
    
    0.3
    
    
    
    Long-term debt obligations
    
    
    2,576.7
    
    
    
    14.5
    
    
    
    29.0
    
    
    
    1,564.3
    (1)
    
    
    968.9Letters of credit
    
    
    6.0
    
    
    
    6.0
    
    
    
    
    
    
    
    
    
    
    
    Interest (2)
    
    
    729.0
    
    
    
    110.7
    
    
    
    265.0
    
    
    
    246.6
    
    
    
    106.7Total
    
    $
    4,360.9
    
    
    $
    322.2
    
    
    $
    622.6
    
    
    $
    2,059.7
    
    
    $
    1,356.4
 
 (1)
    
    Includes $1,370.3 million under our senior secured term loan facility and $194.0 million
under our senior secured revolving credit facility.(2)
    
    Represents interest expected to be paid on our debt and does not assume any debt repurchases
or prepayments, other than scheduled amortization of our Credit Facility. Projected interest
on variable rate debt is based on the 90 day LIBOR rate in effect on January 30, 2010, plus
the applicable LIBOR margin of 2.75%, and the impact through June 2010 of interest rate swaps
discussed in Note 9 to the Consolidated Financial Statements.  Seasonality and Quarterly Results
  Impact of Inflation
  Recent Accounting Pronouncements
 Accounting Standards Codification
  44




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Business Combinations, Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51, Investments  Equity Method and Joint Ventures Investments  Equity
Method and Joint Ventures
  Fair Value
Measurements and Disclosures  Measuring Liabilities at Fair Value Fair Value Measurements and Disclosures
 Fair Value Measurements and Disclosures  Improving
Disclosures about Fair Value Measurements Fair Value Measurements and
Disclosures
 45




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##### Table of Contents



Subsequent Events: Amendments to Certain Recognition
and Disclosure Requirements Subsequent Events
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Cash and Cash Equivalents
  Foreign Currency
    46




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Interest Rates
   General Market Risk
  47




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 Page No.Report of Independent Registered Public Accounting Firm
    
    
    49Consolidated Balance Sheets as of January 30, 2010 and January 31, 2009
    
    
    50Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal years ended January
30, 2010 and January 31, 2009 (Successor Entity), the period from May 29, 2007 through February 2, 2008
(Successor Entity) and the period from February 4, 2007 through May 28, 2007 (Predecessor Entity)
    
    
    51Consolidated Statements of Changes in Stockholders Equity (Deficit) for the fiscal years ended January
30, 2010 and January 31, 2009 (Successor Entity), the period from May 29, 2007 through February 2, 2008
(Successor Entity) and the period from February 4, 2007 through May 28, 2007 (Predecessor Entity)
    
    
    52Consolidated Statements of Cash Flows for the fiscal years ended January 30,
2010 and January 31, 2009 (Successor Entity), the period from May 29, 2007
through February 2, 2008 (Successor Entity) and the period from February 4,
2007 through May 28, 2007 (Predecessor Entity)
    
    
    53Notes to Consolidated Financial Statements
    
    
    55
 48




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Report of Independent Registered Public Accounting Firm
 
    /s/ KPMG LLP 
 49




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##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 January 30, 2010
    
    
    January 31, 2009(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    198,708
    
    
    $
    204,574Inventories
    
    
    110,338
    
    
    
    103,691Prepaid expenses
    
    
    32,873
    
    
    
    31,837Other current assets
    
    
    28,236
    
    
    
    27,079Total current assets
    
    
    370,155
    
    
    
    367,181Property and equipment:Land and building
    
    
    19,318
    
    
    
    22,288Furniture, fixtures and equipment
    
    
    162,602
    
    
    
    143,702Leasehold improvements
    
    
    228,503
    
    
    
    214,007410,423
    
    
    
    379,997Less accumulated depreciation and amortization
    
    
    (182,439
    )
    
    
    (113,926
    )227,984
    
    
    
    266,071Intangible assets, net of accumulated amortization of $32,532 and
$19,371, respectively
    
    
    580,027
    
    
    
    587,125Deferred financing costs, net of accumulated amortization of
$29,949 and $17,646, respectively
    
    
    47,641
    
    
    
    59,944Other assets
    
    
    58,242
    
    
    
    56,428Goodwill
    
    
    1,550,056
    
    
    
    1,544,3462,235,966
    
    
    
    2,247,843Total assets
    
    $
    2,834,105
    
    
    $
    2,881,095LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Trade accounts payable
    
    $
    45,660
    
    
    $
    53,237Current portion of long-term debt
    
    
    14,500
    
    
    
    14,500Income taxes payable
    
    
    10,272
    
    
    
    6,477Accrued interest payable
    
    
    14,644
    
    
    
    13,316Accrued expenses and other current liabilities
    
    
    96,436
    
    
    
    107,974Total current liabilities
    
    
    181,512
    
    
    
    195,504Long-term debt
    
    
    2,313,378
    
    
    
    2,373,272Revolving credit facility
    
    
    194,000
    
    
    
    194,000Deferred tax liability
    
    
    122,145
    
    
    
    112,829Deferred rent expense
    
    
    22,082
    
    
    
    18,462Unfavorable lease obligations and other long-term liabilities
    
    
    35,630
    
    
    
    42,8712,687,235
    
    
    
    2,741,434Commitments and contingenciesStockholders deficit:Common stock par value $0.001 per share; authorized 1,000 shares;
issued and outstanding 100 shares
    
    
    
    
    
    
    Additional paid-in capital
    
    
    616,086
    
    
    
    609,427Accumulated other comprehensive income (loss), net of tax
    
    
    2,625
    
    
    
    (22,319
    )Retained deficit
    
    
    (653,353
    )
    
    
    (642,951
    )(34,642
    )
    
    
    (55,843
    )Total liabilities and stockholders deficit
    
    $
    2,834,105
    
    
    $
    2,881,095
  50




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##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 PredecessorSuccessor Entity
    
    
    
    EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    
    Feb. 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    
    ThroughJanuary 30,
    
    
    January 31,
    
    
    February 2,
    
    
    
    May 28,2010
    
    
    2009
    
    
    2008
    
    
    
    2007Net sales
    
    $
    1,342,389
    
    
    $
    1,412,960
    
    
    $
    1,085,932
    
    
    
    $
    424,899Cost of sales, occupancy and buying
expenses
    
    
    659,796
    
    
    
    720,351
    
    
    
    521,384
    
    
    
    
    206,438Gross profit
    
    
    682,593
    
    
    
    692,609
    
    
    
    564,548
    
    
    
    
    218,461Other expenses (income):Selling, general and administrative
    
    
    469,179
    
    
    
    518,233
    
    
    
    354,875
    
    
    
    
    154,409Depreciation and amortization
    
    
    71,471
    
    
    
    85,093
    
    
    
    61,451
    
    
    
    
    19,652Impairment of assets
    
    
    3,142
    
    
    
    523,990
    
    
    
    3,478
    
    
    
    
    73Severance and transaction-related costs
    
    
    921
    
    
    
    15,928
    
    
    
    7,319
    
    
    
    
    72,672Other income, net
    
    
    (4,234
    )
    
    
    (4,499
    )
    
    
    (3,088
    )
    
    
    
    (1,476
    )540,479
    
    
    
    1,138,745
    
    
    
    424,035
    
    
    
    
    245,330Operating income (loss)
    
    
    142,114
    
    
    
    (446,136
    )
    
    
    140,513
    
    
    
    
    (26,869
    )Gain on early debt extinguishment
    
    
    36,412
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense (income), net
    
    
    177,418
    
    
    
    195,947
    
    
    
    147,892
    
    
    
    
    (4,876
    )Income (loss) before income tax expense
(benefit)
    
    
    1,108
    
    
    
    (642,083
    )
    
    
    (7,379
    )
    
    
    
    (21,993
    )Income tax expense (benefit)
    
    
    11,510
    
    
    
    1,509
    
    
    
    (8,020
    )
    
    
    
    21,779Net income (loss)
    
    $
    (10,402
    )
    
    $
    (643,592
    )
    
    $
    641
    
    
    
    $
    (43,772
    )Net income (loss)
    
    $
    (10,402
    )
    
    $
    (643,592
    )
    
    $
    641
    
    
    
    $
    (43,772
    )Foreign currency
translation and interest
rate swap adjustments, net
of tax
    
    
    24,944
    
    
    
    (25,677
    )
    
    
    3,358
    
    
    
    
    8,440Comprehensive income (loss)
    
    $
    14,542
    
    
    $
    (669,269
    )
    
    $
    3,999
    
    
    
    $
    (35,332
    )
  51




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CLAIRES STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
 AccumulatedNumber of
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    othershares of
    
    
    Class A
    
    
    shares of
    
    
    
    
    
    
    Additional
    
    
    comprehensive
    
    
    RetainedClass A
    
    
    common
    
    
    common
    
    
    Common
    
    
    paid-in
    
    
    income (loss),
    
    
    earningscommon stock
    
    
    stock
    
    
    stock
    
    
    stock
    
    
    capital
    
    
    net
    
    
    (deficit)
    
    
    TotalPredecessor EntityBalance: February 3, 2007
    
    
    4,869
    
    
    
    243
    
    
    
    88,203
    
    
    
    4,410
    
    
    
    75,486
    
    
    
    33,956
    
    
    
    733,567
    
    
    
    847,662Net loss for period from Feb. 4, 2007 to May 28, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43,772
    )
    
    
    (43,772
    )Cash dividends ($0.18 per common share and $0.09 per
Class A common share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,317
    )
    
    
    (16,317
    )Stock options exercised, including tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    177Restricted stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,851
    
    
    
    
    
    
    
    
    
    
    
    1,851Option conversion payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,924
    )
    
    
    
    
    
    
    
    
    
    
    (7,924
    )Tax benefit options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,885
    
    
    
    
    
    
    
    
    
    
    
    2,885Long-term incentive plan, net of amount reclassified
as liabilities upon acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    (933
    )
    
    
    
    
    
    
    
    
    
    
    (931
    )Foreign currency translation adjustment, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,440
    
    
    
    
    
    
    
    8,440Balance: May 28, 2007 (prior to acquisition)
    
    
    4,869
    
    
    
    243
    
    
    
    88,203
    
    
    
    4,412
    
    
    
    71,542
    
    
    
    42,396
    
    
    
    673,478
    
    
    
    792,071Successor EntityAcquisition transaction
    
    
    (4,869
    )
    
    
    (243
    )
    
    
    (88,103
    )
    
    
    (4,412
    )
    
    
    524,133
    
    
    
    (42,396
    )
    
    
    (673,478
    )
    
    
    (196,396
    )Capital contribution
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    595,675
    
    
    
    
    
    
    
    
    
    
    
    595,675Net income for period May 29, 2007 to February 2, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    641
    
    
    
    641Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,092
    
    
    
    
    
    
    
    
    
    
    
    5,092Restricted stock, net of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    434
    
    
    
    
    
    
    
    
    
    
    
    434Foreign currency translation adjustment and
unrealized loss on interest rate swaps, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,358
    
    
    
    
    
    
    
    3,358Balance: February 2, 2008
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    601,201
    
    
    
    3,358
    
    
    
    641
    
    
    
    605,200Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (643,592
    )
    
    
    (643,592
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,783
    
    
    
    
    
    
    
    
    
    
    
    7,783Restricted stock, net of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    443
    
    
    
    
    
    
    
    
    
    
    
    443Foreign currency translation adjustment and
unrealized loss on interest rate swaps, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,677
    )
    
    
    
    
    
    
    (25,677
    )Balance: January 31, 2009
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    609,427
    
    
    
    (22,319
    )
    
    
    (642,951
    )
    
    
    (55,843
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,402
    )
    
    
    (10,402
    )Stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,518
    
    
    
    
    
    
    
    
    
    
    
    6,518Restricted stock, net of unearned compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    
    
    
    
    
    
    
    
    141Foreign currency translation adjustment and
unrealized gain on interest rate swaps, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,944
    
    
    
    
    
    
    
    24,944Balance: January 30, 2010
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    $
    616,086
    
    
    $
    2,625
    
    
    $
    (653,353
    )
    
    $
    (34,642
    )
  52




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##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 PredecessorSuccessor Entity
    
    
    
    EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    
    Feb. 4. 2007Ended
    
    
    Ended
    
    
    Through
    
    
    
    ThroughJanuary 30, 2010
    
    
    January 31, 2009
    
    
    Feb. 2, 2008
    
    
    
    May 28, 2007Cash flows from operating activities:Net income (loss)
    
    $
    (10,402
    )
    
    $
    (643,592
    )
    
    $
    641
    
    
    
    $
    (43,772
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    71,471
    
    
    
    85,093
    
    
    
    61,451
    
    
    
    
    19,652Impairment of assets
    
    
    3,142
    
    
    
    523,990
    
    
    
    3,478
    
    
    
    
    73Amortization of lease rights and other assets
    
    
    2,199
    
    
    
    2,059
    
    
    
    1,313
    
    
    
    
    622Amortization of debt issuance costs
    
    
    10,398
    
    
    
    10,567
    
    
    
    7,079
    
    
    
    
    Payment in kind interest expense
    
    
    39,013
    
    
    
    24,522
    
    
    
    
    
    
    
    
    Net accretion of favorable (unfavorable) lease
obligations
    
    
    (2,151
    )
    
    
    (1,856
    )
    
    
    
    
    
    
    
    (Gain) loss on sale/retirement of property and
equipment, net
    
    
    (1,389
    )
    
    
    (183
    )
    
    
    592
    
    
    
    
    1,201Gain on early debt extinguishment
    
    
    (36,412
    )
    
    
    
    
    
    
    
    
    
    
    
    Gain on sale of intangible assets/lease rights
    
    
    (506
    )
    
    
    (1,372
    )
    
    
    
    
    
    
    
    Excess tax benefit from stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,885
    )Stock compensation expense
    
    
    6,659
    
    
    
    8,226
    
    
    
    5,526
    
    
    
    
    8,946(Increase) decrease in:Inventories
    
    
    (4,081
    )
    
    
    6,482
    
    
    
    16,838
    
    
    
    
    (10,932
    )Prepaid expenses
    
    
    1,797
    
    
    
    (1,087
    )
    
    
    (6,551
    )
    
    
    
    6,389Other assets
    
    
    (5,519
    )
    
    
    (9,085
    )
    
    
    (31,144
    )
    
    
    
    (2,941
    )Increase (decrease) in:Trade accounts payable
    
    
    (9,247
    )
    
    
    7,372
    
    
    
    (32,987
    )
    
    
    
    31,202Income taxes payable
    
    
    5,510
    
    
    
    (10,710
    )
    
    
    4,076
    
    
    
    
    (11,732
    )Accrued interest payable
    
    
    1,328
    
    
    
    (6,219
    )
    
    
    19,531
    
    
    
    
    Accrued expenses and other liabilities
    
    
    (3,626
    )
    
    
    3,032
    
    
    
    (73,060
    )
    
    
    
    39,727Deferred income taxes
    
    
    4,114
    
    
    
    (4,809
    )
    
    
    (18,508
    )
    
    
    
    6,723Deferred rent expense
    
    
    3,178
    
    
    
    8,943
    
    
    
    5,874
    
    
    
    
    373Net cash provided by (used in) operating activities
    
    
    75,476
    
    
    
    1,373
    
    
    
    (35,851
    )
    
    
    
    42,646Cash flows from investing activities:Acquisition of property and equipment, net
    
    
    (24,952
    )
    
    
    (59,405
    )
    
    
    (58,484
    )
    
    
    
    (27,988
    )Acquisition of Predecessor Entity, net of cash
acquired
    
    
    
    
    
    
    
    
    
    
    (3,053,334
    )
    
    
    
    Proceeds from sale of property and equipment
    
    
    1,830
    
    
    
    104
    
    
    
    
    
    
    
    
    Acquisition of intangible assets/lease rights
    
    
    (546
    )
    
    
    (1,971
    )
    
    
    (554
    )
    
    
    
    (81
    )Proceeds from sale of intangible assets/lease rights
    
    
    2,409
    
    
    
    516
    
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (21,259
    )
    
    
    (60,756
    )
    
    
    (3,112,372
    )
    
    
    
    (28,069
    )Cash flows from financing activities:Credit facility proceeds
    
    
    
    
    
    
    194,000
    
    
    
    1,450,000
    
    
    
    
    Credit facility payments
    
    
    (14,500
    )
    
    
    (14,500
    )
    
    
    (7,250
    )
    
    
    
    Note purchases
    
    
    (46,091
    )
    
    
    
    
    
    
    
    
    
    
    
    Note offerings proceeds
    
    
    
    
    
    
    
    
    
    
    935,000
    
    
    
    
    Capital contribution
    
    
    
    
    
    
    
    
    
    
    595,675
    
    
    
    
    Exercised stock option proceeds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177Excess tax benefit from stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,885Option conversion payment
    
    
    
    
    
    
    
    
    
    
    (7,924
    )
    
    
    
    Financing fees paid
    
    
    
    
    
    
    
    
    
    
    (77,439
    )
    
    
    
    Dividends paid
    
    
    
    
    
    
    
    
    
    
    (7,252
    )
    
    
    
    (9,065
    )Net cash (used in) provided by financing activities:
    
    
    (60,591
    )
    
    
    179,500
    
    
    
    2,880,810
    
    
    
    
    (6,003
    )Effect of foreign currency exchange rate changes on cash and
cash equivalents
    
    
    508
    
    
    
    (1,517
    )
    
    
    2,911
    
    
    
    
    1,025Net increase (decrease) in cash and cash equivalents
    
    
    (5,866
    )
    
    
    118,600
    
    
    
    (264,502
    )
    
    
    
    9,599Cash and cash equivalents at beginning of period
    
    
    204,574
    
    
    
    85,974
    
    
    
    350,476
    
    
    
    
    340,877Cash and cash equivalents at end of period
    
    $
    198,708
    
    
    $
    204,574
    
    
    $
    85,974
    
    
    
    $
    350,476
 53




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##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 PredecessorSuccessor Entity
    
    
    EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    Feb. 4. 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJanuary 30, 2010
    
    
    January 31, 2009
    
    
    Feb. 2, 2008
    
    
    May 28, 2007Supplemental disclosure of cash flow information:Income taxes paid
    
    $
    3,159
    
    
    $
    14,227
    
    
    $
    10,464
    
    
    $
    22,820Interest paid
    
    
    126,733
    
    
    
    168,567
    
    
    
    123,620
    
    
    
    86
  54




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##### Table of Contents



CLAIRES STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. NATURE OF OPERATIONS AND ACQUISITION OF CLAIRES STORES, INC.
 Nature of Operations
 Acquisition of Claires Stores, Inc.
   
    
    the closing of the Companys offering for the senior notes (Notes) in the aggregate
principal amount of $935.0 million;
    
    the closing of the Companys senior secured term loan facility and revolving Credit
Facility (collectively the Credit Facility) of $1.65 billion; and
    
    the equity investment by the Sponsors, collectively, of approximately $595.7 million.
       55




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##### Table of Contents




    
    Tradenames  $646.1 million.
    
    Lease rights  $73.6 million (including residual value of approximately $62 million).
    
    Franchise agreements  $53.0 million.
    
    Favorable lease obligations  $31.9 million.
    
    Covenants not to compete  $4.5 million.
  Fiscal Year EndedFebruary 2, 2008(in thousands)(unaudited)Net sales
    
    $
    1,510,831Depreciation and amortization
    
    
    92,177Transaction-related costs
    
    
    7,319Operating income
    
    
    175,682Interest expense, net
    
    
    218,133Income (loss) before income taxes
    
    
    (42,451
    )Net income (loss)
    
    
    (18,054
    )
 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
 Use of Estimates
 56




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##### Table of Contents



Fiscal Year
 Cash and Cash Equivalents
  Inventories
 Prepaid Expenses
 January 30,
    
    
    January 31,2010
    
    
    2009Prepaid rent and occupancy
    
    $
    30,444
    
    
    $
    28,183Prepaid insurance
    
    
    193
    
    
    
    1,585Other
    
    
    2,236
    
    
    
    2,069Total prepaid expenses
    
    $
    32,873
    
    
    $
    31,837
 Other Current Assets
 January 30,
    
    
    January 31,2010
    
    
    2009Credit card receivables
    
    $
    4,617
    
    
    $
    4,784Franchise receivables
    
    
    6,457
    
    
    
    2,767Store supplies
    
    
    6,794
    
    
    
    6,533Deferred tax assets, net of valuation allowance
    
    
    2,839
    
    
    
    3,815Income taxes receivable
    
    
    2,556
    
    
    
    3,788Other
    
    
    4,973
    
    
    
    5,392Total other current assets
    
    $
    28,236
    
    
    $
    27,079
 Property and Equipment
 57




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##### Table of Contents



Impairment of Long-Lived Assets
 Goodwill
  Other Assets
 January 30,
    
    
    January 31,2010
    
    
    2009Investment in Claires Nippon joint venture
    
    $
    17,758
    
    
    $
    18,907Initial direct costs of leases
    
    
    16,905
    
    
    
    16,047Prepaid lease payments
    
    
    7,098
    
    
    
    11,034Deferred tax assets, non-current
    
    
    2,362
    
    
    
    2,117Other
    
    
    14,119
    
    
    
    8,323Total other assets
    
    $
    58,242
    
    
    $
    56,428
   58




---



##### Table of Contents



Intangible Assets
 Deferred Financing Costs
 Accrued Expenses and Other Current Liabilities
 January 30,
    
    
    January 31,2010
    
    
    2009Compensation and benefits
    
    $
    40,517
    
    
    $
    40,964Interest rate swaps
    
    
    8,752
    
    
    
    19,734Sales and local taxes
    
    
    8,036
    
    
    
    9,639Gift cards and certificates
    
    
    20,989
    
    
    
    19,772Store rent
    
    
    3,759
    
    
    
    4,678Other
    
    
    14,383
    
    
    
    13,187Total accrued expenses and other current liabilities
    
    $
    96,436
    
    
    $
    107,974
 Revenue Recognition
   Cost of Sales
 59




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##### Table of Contents



Advertising Expenses
 Leasing
 Income Taxes Income Taxes,
  Foreign Currency Translation
 60




---



##### Table of Contents



Accumulated Other Comprehensive Income (Loss)
 Foreign Currency
    
    
    DerivativeTranslation
    
    
    Instruments
    
    
    TotalPredecessor EntityBalance as of February 3, 2007
    
    $
    33,956
    
    
    $
    
    
    
    $
    33,956Foreign currency translation adjustment
    
    
    8,440
    
    
    
    
    
    
    
    8,440Balance as of May 28, 2007
    
    
    42,396
    
    
    
    
    
    
    
    42,396Acquisition transaction
    
    
    (42,396
    )
    
    
    
    
    
    
    (42,396
    )Successor EntityForeign currency translation adjustment
    
    
    17,191
    
    
    
    
    
    
    
    17,191Unrealized loss on interest rate swaps
    
    
    
    
    
    
    (13,833
    )
    
    
    (13,833
    )Balance as of February 2, 2008
    
    
    17,191
    
    
    
    (13,833
    )
    
    
    3,358Foreign currency translation adjustment
    
    
    (27,052
    )
    
    
    
    
    
    
    (27,052
    )Unrealized gain on interest rate swaps
    
    
    
    
    
    
    1,375
    
    
    
    1,375Balance as of January 31, 2009
    
    
    (9,861
    )
    
    
    (12,458
    )
    
    
    (22,319
    )Foreign currency translation adjustment
    
    
    15,507
    
    
    
    
    
    
    
    15,507Unrealized gain on interest rate swaps
    
    
    
    
    
    
    9,437
    
    
    
    9,437Balance as of January 30, 2010
    
    $
    5,646
    
    
    $
    (3,021
    )
    
    $
    2,625
 Fair Value Measurements
    61




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##### Table of Contents



Fair Value Measurements at January 30, 2010 UsingQuoted Prices inActive Markets for
    
    Significant
    
    SignificantIdentical Assets
    
    Other Observable
    
    Unobservable(Liabilities)
    
    Inputs
    
    InputsCarrying Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Debt and Credit Facility
    
    $
    (2,521,878
    )
    
    $
    (1,952,832
    )
    
    $
    
    
    
    $
    Interest rate swaps
    
    $
    (8,752
    )
    
    $
    
    
    
    $
    (8,752
    )
    
    $
    
 Fair Value Measurements at January 31, 2009 UsingQuoted Prices inActive Markets for
    
    Significant
    
    SignificantIdentical Assets
    
    Other Observable
    
    Unobservable(Liabilities)
    
    Inputs
    
    InputsCarrying Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Debt and Credit Facility
    
    $
    (2,581,772
    )
    
    $
    (734,000
    )
    
    $
    
    
    
    $
    Interest rate swaps
    
    $
    (19,734
    )
    
    $
    
    
    
    $
    (19,734
    )
    
    $
    
  Fair Value Measurements at January 30, 2010 UsingQuoted Prices in
    
    Significant
    
    SignificantActive Markets for
    
    Other Observable
    
    UnobservableIdentical Assets
    
    Inputs
    
    Inputs
    
    ImpairmentCarrying Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3) (1)
    
    ChargesLong-lived assets
    
    $
    17,000
    
    
    $
    
    
    
    $
    
    
    
    $
    17,000
    
    
    $
    3,142
 
 (1)
    
    See Note 3 for discussion of the valuation techniques used to measure fair value, the
description of the inputs and information used to develop those inputs. 62




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##### Table of Contents



Derivative Financial Instruments
 Stock-Based Compensation
 Predecessor Entity
 Compensation  Stock Compensation
   Successor Entity
   Subsequent Events Evaluation
 Recent Accounting Pronouncements
 Accounting Standards Codification
 63




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##### Table of Contents



Business Combinations, Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51, Investments  Equity Method and Joint Ventures Investments  Equity Method and Joint Ventures
  Fair Value
Measurements and Disclosures  Measuring Liabilities at Fair Value Fair Value Measurements and Disclosures
 64




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##### Table of Contents



Fair Value Measurements and Disclosures  Improving
Disclosures about Fair Value Measurements Fair Value Measurements
and Disclosures
 Subsequent Events: Amendments to Certain Recognition
and Disclosure Requirements Subsequent Events
 Reclassifications
 3. IMPAIRMENT OF ASSETS
  PredecessorSuccessor Entity
    
    
    EntityPeriod From
    
    
    Period FromFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    February 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJanuary 30,
    
    
    January 31,
    
    
    February 2,
    
    
    May 28,2010
    
    
    2009
    
    
    2008
    
    
    2007Goodwill
    
    $
    
    
    
    $
    297,000
    
    
    $
    
    
    
    $
    Tradenames
    
    
    
    
    
    
    199,000
    
    
    
    
    
    
    
    Investment in Claires
Nippon (Note 2)
    
    
    
    
    
    
    25,500
    
    
    
    
    
    
    
    Long-lived assets
    
    
    3,142
    
    
    
    2,490
    
    
    
    3,478
    
    
    
    73Total impairment charges
    
    $
    3,142
    
    
    $
    523,990
    
    
    $
    3,478
    
    
    $
    73
   65




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##### Table of Contents



66




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##### Table of Contents



North America
    
    
    Europe
    
    
    TotalGoodwill acquired through the
Acquisition
    
    $
    1,401,959
    
    
    $
    438,908
    
    
    $
    1,840,867Balance as of February 2, 2008:Goodwill
    
    $
    1,401,959
    
    
    $
    438,908
    
    
    $
    1,840,867Accumulated impairment losses
    
    
    
    
    
    
    
    
    
    
    $
    1,401,959
    
    
    $
    438,908
    
    
    $
    1,840,867Goodwill adjustments within one year
    
    $
    7,982
    
    
    $
    (7,503
    )
    
    $
    479Impairment of goodwill
    
    
    (180,000
    )
    
    
    (117,000
    )
    
    
    (297,000
    )Balance as of January 31, 2009:Goodwill
    
    $
    1,409,941
    
    
    $
    431,405
    
    
    $
    1,841,346Accumulated impairment losses
    
    
    (180,000
    )
    
    
    (117,000
    )
    
    
    (297,000
    )$
    1,229,941
    
    
    $
    314,405
    
    
    $
    1,544,346Reclassification adjustment (1)
    
    
    5,710
    
    
    
    
    
    
    
    5,710Balance as of January 30, 2010:Goodwill
    
    $
    1,415,651
    
    
    $
    431,405
    
    
    $
    1,847,056Accumulated impairment losses
    
    
    (180,000
    )
    
    
    (117,000
    )
    
    
    (297,000
    )$
    1,235,651
    
    
    $
    314,405
    
    
    $
    1,550,056
 
 (1)
    
    Reclassification of valuation allowance on deferred tax assets.  Property, Plant, and
Equipment
 4. INTANGIBLE ASSETS
  67




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##### Table of Contents



January 30, 2010
    
    
    January 31, 2009Estimated
    
    
    Gross
    
    
    
    
    
    
    GrossLife
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Accumulatedin Years
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationIntangible assets subject to amortization:Lease rights (1)
    
    Lease terms ranging from 4.5 to 16.5
    
    $
    77,074
    
    
    $
    (4,145
    )
    
    $
    71,307
    
    
    $
    (2,245
    )Franchise agreements
    
    
    15
    
    
    
    53,000
    
    
    
    (9,291
    )
    
    
    53,000
    
    
    
    (5,758
    )Favorable lease obligations
    
    
    10
    
    
    
    30,501
    
    
    
    (14,493
    )
    
    
    30,332
    
    
    
    (7,580
    )Non-compete agreements
    
    
    2
    
    
    
    4,500
    
    
    
    (4,500
    )
    
    
    4,500
    
    
    
    (3,750
    )Other
    
    
    5
    
    
    
    372
    
    
    
    (103
    )
    
    
    261
    
    
    
    (38
    )Total intangible assets subject to
amortization
    
    
    
    
    
    
    165,447
    
    
    
    (32,532
    )
    
    
    159,400
    
    
    
    (19,371
    )Indefinite-lived tradenames
    
    
    
    
    
    
    447,112
    
    
    
    
    
    
    
    447,096
    
    
    
    Total intangible assets
    
    
    
    
    
    $
    612,559
    
    
    $
    (32,532
    )
    
    $
    606,496
    
    
    $
    (19,371
    )
 
 (1)
    
    Amounts include lease rights not subject to amortization of $63,393 and $57,525 for Fiscal 2009 and Fiscal 2008, respectively.  Weighted Average AmortizationPeriod for AmortizableIntangible Asset Acquisitions (in 000's)
    
    Amortizable
    
    
    Intangible Asset AcquisitionsOther:Fiscal 2009
    
    $
    111
    
    
    
    5.0Fiscal 2008
    
    
    176
    
    
    
    5.0Lease rights:Fiscal 2009
    
    
    435
    
    
    
    9.9Fiscal 2008
    
    
    1,794
    
    
    
    8.7Period from May 29, 2007 through February 2, 2008
    
    
    554
    
    
    
    9.2Period from February 4, 2007 through May 28, 2007
    
    
    81
    
    
    
    9.0
  68




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##### Table of Contents



Fiscal Year
    
    Amortization2010
    
    $
    10,4882011
    
    
    9,1452012
    
    
    7,5462013
    
    
    6,6482014
    
    
    5,9722015 and thereafter
    
    
    29,723Total
    
    $
    69,522
 5. DEBT
  January 30, 2010
    
    
    January 31, 2009Senior secured term loan facility due 2014
    
    $
    1,413,750
    
    
    $
    1,428,250Senior notes due 2015
    
    
    250,000
    
    
    
    250,000Senior toggle notes due 2015
    
    
    381,891
    
    
    
    374,522Senior subordinated notes due 2017
    
    
    282,237
    
    
    
    335,0002,327,878
    
    
    
    2,387,772Less: current portion of long-term debt
    
    
    (14,500
    )
    
    
    (14,500
    )Long-term debt
    
    $
    2,313,378
    
    
    $
    2,373,272Senior secured revolving credit facility
due 2013
    
    $
    194,000
    
    
    $
    194,000
  Term
    
    
    Revolving
    
    
    
    
    
    
    Senior
    
    
    SeniorLoan
    
    
    Credit
    
    
    Senior
    
    
    Toggle
    
    
    SubordinatedFiscal Year
    
    Facility
    
    
    Facility
    
    
    Notes
    
    
    Notes
    
    
    Notes
    
    
    Total2010
    
    $
    14,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    14,5002011
    
    
    14,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,5002012
    
    
    14,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,5002013
    
    
    14,500
    
    
    
    194,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    208,5002014
    
    
    1,355,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,355,750Thereafter
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    381,891
    
    
    
    282,237
    
    
    
    914,128Total maturities
    
    $
    1,413,750
    
    
    $
    194,000
    
    
    $
    250,000
    
    
    $
    381,891
    
    
    $
    282,237
    
    
    $
    2,521,878
 69




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##### Table of Contents



Successor Entity
    
    
    Predecessor EntityPeriod From
    
    
    Period FromFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    February 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJanuary 30,
    
    
    January 31,
    
    
    February 2,
    
    
    May 28,2010
    
    
    2009
    
    
    2008
    
    
    2007Term loan facility
    
    $
    66,348
    
    
    $
    88,216
    
    
    $
    81,021
    
    
    $
    Revolving credit facility
    
    
    5,708
    
    
    
    4,835
    
    
    
    
    
    
    
    Senior notes
    
    
    23,154
    
    
    
    23,074
    
    
    
    15,623
    
    
    
    Senior toggle notes
    
    
    39,021
    
    
    
    35,671
    
    
    
    22,753
    
    
    
    Senior subordinated notes
    
    
    32,913
    
    
    
    35,090
    
    
    
    23,757
    
    
    
    Amortization of deferred
debt issue costs
    
    
    10,398
    
    
    
    10,567
    
    
    
    7,079
    
    
    
    Other interest expense
    
    
    82
    
    
    
    (17
    )
    
    
    83
    
    
    
    86Interest income
    
    
    (206
    )
    
    
    (1,489
    )
    
    
    (2,424
    )
    
    
    (4,962
    )Net interest expense (income)
    
    $
    177,418
    
    
    $
    195,947
    
    
    $
    147,892
    
    
    $
    (4,876
    )
  January 30, 2010
    
    
    January 31, 2009Term loan facility
    
    $
    5,474
    
    
    $
    2,899Revolving credit facility
    
    
    328
    
    
    
    697Senior notes
    
    
    3,875
    
    
    
    3,854Senior subordinated notes
    
    
    4,966
    
    
    
    5,863Other
    
    
    1
    
    
    
    3Total accrued interest payable
    
    $
    14,644
    
    
    $
    13,316
 Credit Facility
     70




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##### Table of Contents




    
    a perfected pledge of all the equity interests held by us or any subsidiary
guarantor, which pledge, in the case of any foreign subsidiary, is limited to 100% of the
non-voting equity interests and 65% of the voting equity interests of such foreign
subsidiary held directly by us and the subsidiary guarantors; and
    
    perfected security interests in, and mortgages on, substantially all material tangible
and intangible assets owned by us and each subsidiary guarantor, subject to certain
exceptions.
   
    
    incur additional indebtedness or issue certain preferred shares;
    
    pay dividends on, repurchase or make distributions in respect of our capital stock or
make other restricted payments;
    
    make certain investments;
    
    sell certain assets;
    
    create liens;
    
    consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
and
    
    enter into certain transactions with our affiliates.
  71




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##### Table of Contents



Senior Notes
  1)
    
    $250.0 million of 9.25% Senior Notes due 2015 (the Senior Cash Pay Notes), and2)
    
    $350.0 million of 9.625%/10.375% Senior Toggle Notes due 2015 (the Senior Toggle
Notes and together with the Senior Cash Pay Notes, the Senior Notes)
        72




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##### Table of Contents



Senior Subordinated Notes
      
    
    incur additional indebtedness;
    
    pay dividends or distributions on capital stock, repurchase or retire capital stock
and redeem, repurchase or defease any subordinated indebtedness;
    
    make certain investments;
    
    create or incur certain liens;
    
    create restrictions on the payment of dividends or other distributions to the Company
from its subsidiaries;
    
    transfer or sell assets;
    
    engage in certain transactions with its affiliates; and
    
    merge or consolidate with other companies or transfer all or substantially all of its
assets.
   73




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##### Table of Contents



Note Purchases
  Principal
    
    
    PurchaseNote Purchased
    
    Amount
    
    
    PriceSenior Subordinated Notes
    
    $
    52,763
    
    
    $
    26,347Senior Toggle Notes
    
    
    30,500
    
    
    
    19,744$
    83,263
    
    
    $
    46,091
 6. COMMITMENTS AND CONTINGENCIES
 Leasing
 Successor Entity
    
    
    Predecessor EntityPeriod From
    
    
    Period FromFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    Feb. 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJanuary 30,
    
    
    January 31,
    
    
    February 2,
    
    
    May 28,2010
    
    
    2009
    
    
    2008
    
    
    2007Minimum store rentals
    
    $
    199,908
    
    
    $
    205,807
    
    
    $
    137,236
    
    
    $
    60,751Store rentals based on net sales
    
    
    1,454
    
    
    
    2,398
    
    
    
    2,332
    
    
    
    1,938Other rental expense
    
    
    13,181
    
    
    
    16,745
    
    
    
    7,929
    
    
    
    4,078Total rental expense
    
    $
    214,543
    
    
    $
    224,950
    
    
    $
    147,497
    
    
    $
    66,767
  2010
    
    $
    191,0702011
    
    
    173,3982012
    
    
    155,1992013
    
    
    134,8392014
    
    
    113,972Thereafter
    
    
    280,724Total
    
    $
    1,049,202
  Asset Retirement and Environmental Obligations,
 74




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##### Table of Contents



Legal
  Employment Agreements
 Other
  7. STOCKHOLDERS EQUITY
 Predecessor Entity
 Preferred Stock
 Class A Common Stock
 Rights to Purchase Series A Junior Participating Preferred Stock
 75




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##### Table of Contents



8. STOCK OPTIONS AND STOCK-BASED COMPENSATION
 Predecessor
  Compensation  Stock Compensation,
   76




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##### Table of Contents



Stock Options
  Period from February 4, 2007through May 28, 2007WeightedAverageNumber of
    
    
    ExerciseShares
    
    
    PriceOptions Outstanding at beginning of period
    
    
    484,000
    
    
    $
    16.31Options granted
    
    
    
    
    
    
    Options exercised
    
    
    (10,000
    )
    
    
    17.72Options canceled
    
    
    
    
    
    
    Options converted
    
    
    (474,000
    )
    
    
    16.28Options Outstanding at end of period
    
    
    
    
    
    $
    Options Exercisable at end of period
    
    
    
    
    
    $
    
  Time-Vested Stock Awards
    Period From February 4, 2007Through May 28, 2007WeightedAverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueNon-vested at beginning of period
    
    
    93,400
    
    
    $
    22.64Granted
    
    
    
    
    
    
    Vested
    
    
    (93,400
    )
    
    
    22.64Forfeited
    
    
    
    
    
    
    Non-vested at end of period
    
    
    
    
    
    $
    
 77




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##### Table of Contents



Long-Term Incentive Stock Plans
    Successor Entity
     78




---



##### Table of Contents



.
   WeightedWeighted
    
    AverageAverage
    
    Remaining
    
    AggregateNumber of
    
    Exercise
    
    Contractual
    
    IntrinsicShares
    
    Price
    
    Life (Years)
    
    ValueOutstanding as of date of Acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options granted
    
    
    6,204,872
    
    
    $
    10.00
    
    
    
    5.4
    
    
    
    Options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options forfeited or expired
    
    
    (62,250
    )
    
    $
    10.00
    
    
    
    5.9
    
    
    
    Outstanding as of February 2, 2008
    
    
    6,142,622
    
    
    $
    10.00
    
    
    
    5.4
    
    
    
    Options granted
    
    
    2,216,800
    
    
    $
    10.00
    
    
    
    5.4
    
    
    
    Options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options forfeited or expired
    
    
    (1,551,866
    )
    
    $
    10.00
    
    
    
    5.3
    
    
    
    Outstanding as of January 31, 2009
    
    
    6,807,556
    
    
    $
    10.00
    
    
    
    4.5
    
    
    
    Options granted
    
    
    827,600
    
    
    $
    10.00
    
    
    
    6.4
    
    
    
    Options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options forfeited or expired
    
    
    (1,385,046
    )
    
    $
    10.00
    
    
    
    5.0
    
    
    
    Outstanding as of January 30, 2010
    
    
    6,250,110
    
    
    $
    10.00
    
    
    
    4.5
    
    
    
    Exercisable at end of period
    
    
    1,697,844
    
    
    $
    10.00
    
    
    
    4.7
    
    
    
    
  79




---



##### Table of Contents



May 29, 2007ThroughTime Options and BOGO Options (Black-Scholes)
    
    Fiscal 2009
    
    Fiscal 2008
    
    February 2, 2008Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Weighted average expected stock price
volatility
    
    
    55.53
    %
    
    
    45.26
    %
    
    
    47.56
    %Weighted average risk-free interest rate
    
    
    2.15
    %
    
    
    3.18
    %
    
    
    4.55
    %Range of risk-free interest rate
    
    
    1.38% - 2.98
    %
    
    
    2.50% - 3.44
    %
    
    
    2.99% - 5.01
    %Weighted average expected life of
options (years)
    
    
    4.39
    
    
    
    4.75
    
    
    
    4.92
 May 29, 2007ThroughPerformance Options (Monte Carlo)
    
    Fiscal 2009
    
    Fiscal 2008
    
    February 2, 2008Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Weighted average expected stock price
volatility
    
    
    53.50
    %
    
    
    48.00
    %
    
    
    52.00
    %Weighted average risk-free interest rate
    
    
    2.05
    %
    
    
    3.21
    %
    
    
    4.71
    %Range of risk-free interest rate
    
    
    0.18% - 4.25
    %
    
    
    1.56% - 4.38
    %
    
    
    2.97% - 5.16
    %Weighted average expected life of
options (years)
    
    
    N/A
    
    
    
    N/A
    
    
    
    N/A
 Share-Based Payment
   Time-Vested Stock Awards
  80




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##### Table of Contents



Weighted AverageShares
    
    
    Grant Date Fair ValueNonvested at date of Acquisition of May 29, 2007
    
    
    
    
    
    
    Granted
    
    
    125,000
    
    
    $
    10.00Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested as of February 2, 2008
    
    
    125,000
    
    
    $
    10.00Granted
    
    
    
    
    
    
    Vested
    
    
    (31,250
    )
    
    $
    10.00Forfeited
    
    
    
    
    
    
    Nonvested as of January 31, 2009
    
    
    93,750
    
    
    $
    10.00Granted
    
    
    
    
    
    
    Vested
    
    
    (31,250
    )
    
    $
    10.00Forfeited
    
    
    
    
    
    
    Cancelled
    
    
    (12,500
    )
    
    $
    10.00Nonvested as of January 30, 2010
    
    
    50,000
    
    
    $
    10.00
 9. DERIVATIVES AND HEDGING ACTIVITIES
      81




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##### Table of Contents



Location of Gainor (Loss)
    
    Amount of Gain or (Loss)Amount of Gain or (Loss)
    
    Reclassified from
    
    Reclassified fromDerivatives in Cash
    
    Recognized in OCI on
    
    Accumulated OCI
    
    Accumulated OCI intoFlow Hedging
    
    Derivative
    
    into Income
    
    IncomeRelationships
    
    (Effective Portion)
    
    (Effective Portion)
    
    (Effective Portion) (1)Fiscal
    
    Fiscal
    
    
    
    
    
    Fiscal
    
    Fiscal2009
    
    2008
    
    
    
    
    
    2009
    
    2008Interest Rate Swaps
    
    $
    9,437
    
    
    $
    1,375
    
    
    Interest expense, net
    
    $
    (19,011
    )
    
    $
    (8,440
    )
 
 (1)
    
    Represents reclassification of amounts from accumulated other comprehensive income (loss) to earnings as interest expense
is recognized on the senior secured term loan facility. No ineffectiveness is associated with these interest rate cash flow
hedges.   10. EMPLOYEE BENEFIT PLANS
  82




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Predecessor Entity
  11. INCOME TAXES
  PredecessorSuccessor Entity
    
    
    EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    Feb. 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJan. 30, 2010
    
    
    Jan. 31, 2009
    
    
    Feb. 2, 2008
    
    
    May 28, 2007U.S.
    
    $
    (76,154
    )
    
    $
    (501,248
    )
    
    $
    (75,357
    )
    
    $
    (27,568
    )Foreign
    
    
    77,262
    
    
    
    (140,835
    )
    
    
    67,978
    
    
    
    5,575Total income (loss)
before income taxes
    
    $
    1,108
    
    
    $
    (642,083
    )
    
    $
    (7,379
    )
    
    $
    (21,993
    )
  PredecessorSuccessor Entity
    
    
    EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    Feb. 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJan. 30, 2010
    
    
    Jan. 31, 2009
    
    
    Feb. 2, 2008
    
    
    May 28, 2007Federal:Current
    
    $
    378
    
    
    $
    509
    
    
    $
    (460
    )
    
    $
    16,408Deferred
    
    
    3,541
    
    
    
    12,440
    
    
    
    (10,838
    )
    
    
    6,4163,919
    
    
    
    12,949
    
    
    
    (11,298
    )
    
    
    22,824StateCurrent
    
    
    437
    
    
    
    225
    
    
    
    (381
    )
    
    
    314Deferred
    
    
    63
    
    
    
    (11,413
    )
    
    
    (5,283
    )
    
    
    599500
    
    
    
    (11,188
    )
    
    
    (5,664
    )
    
    
    913ForeignCurrent
    
    
    5,552
    
    
    
    5,532
    
    
    
    8,768
    
    
    
    (1,670
    )Deferred
    
    
    1,539
    
    
    
    (5,784
    )
    
    
    174
    
    
    
    (288
    )7,091
    
    
    
    (252
    )
    
    
    8,942
    
    
    
    (1,958
    )Total income tax expense (benefit)
    
    $
    11,510
    
    
    $
    1,509
    
    
    $
    (8,020
    )
    
    $
    21,779
 83




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##### Table of Contents



PredecessorSuccessor Entity
    
    
    EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    Feb. 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJan. 30, 2010
    
    
    Jan. 31, 2009
    
    
    Feb. 2, 2008
    
    
    May 28, 2007U.S. income taxes at statutory federal rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Valuation allowance
    
    
    1,577.1
    
    
    
    (15.6
    )
    
    
    
    
    
    
    Nondeductible impairment charges
    
    
    
    
    
    
    (17.6
    )
    
    
    
    
    
    
    Foreign rate differential
    
    
    (1,927.8
    )
    
    
    (0.4
    )
    
    
    237.8
    
    
    
    28.6State and local income taxes, net of federal tax
benefit
    
    
    (92.1
    )
    
    
    1.1
    
    
    
    12.0
    
    
    
    (0.1
    )Transaction related costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45.3
    )Repatriation of foreign earnings
    
    
    1,674.7
    
    
    
    (2.1
    )
    
    
    (70.7
    )
    
    
    (100.1
    )Change in accrual for estimated tax contingencies
    
    
    199.6
    
    
    
    (0.4
    )
    
    
    (24.9
    )
    
    
    (5.3
    )Other, net
    
    
    (427.7
    )
    
    
    (0.2
    )
    
    
    (80.5
    )
    
    
    (11.8
    )1,038.8
    %
    
    
    (0.2
    )%
    
    
    108.7
    %
    
    
    (99.0
    )%
    84




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##### Table of Contents



Jan. 30, 2010
    
    
    Jan. 31, 2009Deferred tax assets:Accrued expenses
    
    $
    4,055
    
    
    $
    4,770Deferred rent
    
    
    6,892
    
    
    
    5,983Compensation & benefits
    
    
    11,595
    
    
    
    8,813Depreciation
    
    
    2,874
    
    
    
Inventory
    
    
    1,125
    
    
    
    1,297Gift cards
    
    
    2,064
    
    
    
    1,740Tax carry forwards
    
    
    85,737
    
    
    
    89,774Debt related
    
    
    15,812
    
    
    
    7,126Other
    
    
    4,106
    
    
    
    8,105Total gross deferred tax assets
    
    
    134,260
    
    
    
    127,608Valuation allowance
    
    
    (130,620
    )
    
    
    (110,228
    )Total deferred tax assets, net
    
    
    3,640
    
    
    
    17,380Deferred tax liabilities:Depreciation
    
    

    
    
    
    3,229Tradename intangibles
    
    
    110,359
    
    
    
    109,713Other
    
    
    10,225
    
    
    
    11,335Total deferred tax liabilities
    
    
    120,584
    
    
    
    124,277Net deferred tax liability
    
    $
    (116,944
    )
    
    $
    (106,897
    )
  Jan. 30, 2010
    
    
    Jan. 31, 2009Current deferred tax assets, net of
valuation allowance
    
    $
    2,839
    
    
    $
    3,815Current deferred tax liabilities
    
    

    
    
    
Non-current deferred tax assets, net of
valuation allowance
    
    
    2,362
    
    
    
    2,117Non-current deferred tax liabilities
    
    
    (122,145
    )
    
    
    (112,829
    )Net
    
    $
    (116,944
    )
    
    $
    (106,897
    )
  Amount
    
    
    Expiration DateU.S. federal net operating loss carryforwards
    
    $
    49,008
    
    
    
    2028 - 2029Non-U.S. net operating loss carryforwards
    
    
    9,993
    
    
    IndefiniteNon-U.S. net operating loss carryforwards
    
    
    6,127
    
    
    
    2015  2025State net operating loss carryforwards
    
    
    6,481
    
    
    
    2013  2030U.S. foreign tax credits
    
    
    14,128
    
    
    
    2019  2020Total
    
    $
    85,737
   85




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##### Table of Contents



May 29, 2007
    
    
    Feb. 4, 2007Through
    
    
    ThroughFiscal 2009
    
    
    Fiscal 2008
    
    
    Feb. 2, 2008
    
    
    May 28, 2007Beginning balance
    
    $
    11,043
    
    
    $
    9,617
    
    
    $
    7,386
    
    
    $
    6,481Additions based on tax positions related
to the current year
    
    
    1,987
    
    
    
    2,070
    
    
    
    1,418
    
    
    
    748Additions for tax positions of prior years
    
    
    58
    
    
    
    1
    
    
    
    1,754
    
    
    
    174Reductions for tax positions of prior
years
    
    
    
    
    
    
    
    
    
    
    (517
    )
    
    
    (17
    )Statute expirations
    
    
    (351
    )
    
    
    (154
    )
    
    
    (239
    )
    
    
    Settlements
    
    
    (494
    )
    
    
    (491
    )
    
    
    (185
    )
    
    
    Ending balance
    
    $
    12,243
    
    
    $
    11,043
    
    
    $
    9,617
    
    
    $
    7,386
   86




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##### Table of Contents



12. RELATED PARTY TRANSACTIONS
   87




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##### Table of Contents



13. SELECTED QUARTERLY FINANCIAL DATA
  Fiscal Year Ended January 30, 20101st Qtr
    
    2nd Qtr
    
    3rd Qtr
    
    4th Qtr
    
    Total YearNet sales
    
    $
    293,098
    
    
    $
    314,196
    
    
    $
    324,404
    
    
    $
    410,691
    
    
    $
    1,342,389Gross profit
    
    
    141,919
    
    
    
    156,108
    
    
    
    166,110
    
    
    
    218,456
    
    
    
    682,593Impairment of assets (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,142
    
    
    
    3,142Severance and transaction
related costs
    
    
    349
    
    
    
    25
    
    
    
    32
    
    
    
    515
    
    
    
    921Gain on early debt extinguishment
    
    
    
    
    
    
    17,104
    
    
    
    16,096
    
    
    
    3,212
    
    
    
    36,412Interest expense, net
    
    
    45,234
    
    
    
    45,329
    
    
    
    43,716
    
    
    
    43,139
    
    
    
    177,418Income taxes (b)
    
    
    (1,679
    )
    
    
    2,797
    
    
    
    2,187
    
    
    
    8,205
    
    
    
    11,510Net Income (loss)
    
    
    (29,023
    )
    
    
    (3,733
    )
    
    
    2,889
    
    
    
    19,465
    
    
    
    (10,402
    )
 
 (a)
    
    Represents impairment charges related to long-lived assets. See Note 3 for detail of
impairment charges.(b)
    
    Includes a $17.5 million charge for an increase in the valuation allowance related to deferred
tax assets. Fiscal Year Ended January 31, 20091st Qtr
    
    2nd Qtr
    
    3rd Qtr
    
    4th Qtr
    
    Total YearNet sales
    
    $
    327,003
    
    
    $
    359,973
    
    
    $
    332,971
    
    
    $
    393,013
    
    
    $
    1,412,960Gross profit
    
    
    155,021
    
    
    
    179,706
    
    
    
    161,992
    
    
    
    195,890
    
    
    
    692,609Impairment of assets (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    523,990
    
    
    
    523,990Severance and
transaction related
costs
    
    
    5,968
    
    
    
    296
    
    
    
    (569
    )
    
    
    10,233
    
    
    
    15,928Interest expense (income)
    
    
    48,657
    
    
    
    48,739
    
    
    
    50,462
    
    
    
    48,089
    
    
    
    195,947Income taxes (b)
    
    
    (16,910
    )
    
    
    (6,831
    )
    
    
    (12,880
    )
    
    
    38,130
    
    
    
    1,509Net loss
    
    
    (35,570
    )
    
    
    (16,931
    )
    
    
    (21,554
    )
    
    
    (569,537
    )
    
    
    (643,592
    )
 
 (a)
    
    Represents impairment charges related to goodwill, tradenames, investment in joint venture
and long-lived assets. See Note 3 for detail of impairment charges.(b)
    
    Includes a $95.8 million charge for an increase in the valuation allowance related to deferred
tax assets. 14. SEGMENT REPORTING
  88




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##### Table of Contents

x

Successor Entity
    
    
    Predecessor EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    Feb. 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJan. 30, 2010
    
    
    Jan. 31, 2009
    
    
    Feb. 2, 2008
    
    
    May 28, 2007Net sales:North America
    
    $
    850,313
    
    
    $
    907,486
    
    
    $
    702,986
    
    
    $
    292,483Europe
    
    
    492,076
    
    
    
    505,474
    
    
    
    382,946
    
    
    
    132,416Total net sales
    
    $
    1,342,389
    
    
    $
    1,412,960
    
    
    $
    1,085,932
    
    
    $
    424,899Depreciation and amortization:North America
    
    $
    47,574
    
    
    $
    57,516
    
    
    $
    42,846
    
    
    $
    12,823Europe
    
    
    23,897
    
    
    
    27,577
    
    
    
    18,605
    
    
    
    6,829Total depreciation and amortization
    
    $
    71,471
    
    
    $
    85,093
    
    
    $
    61,451
    
    
    $
    19,652Segment operating income (loss):North America
    
    $
    88,890
    
    
    $
    63,490
    
    
    $
    98,716
    
    
    $
    46,569Europe
    
    
    57,287
    
    
    
    30,292
    
    
    
    52,594
    
    
    
    (693
    )Total segment operating income (loss)
    
    $
    146,177
    
    
    $
    93,782
    
    
    $
    151,310
    
    
    $
    45,876Impairment of assets:North America
    
    $
    3,142
    
    
    $
    339,500
    
    
    $
    3,478
    
    
    $
    Europe
    
    
    
    
    
    
    184,490
    
    
    
    
    
    
    
    73Total impairment charges
    
    $
    3,142
    
    
    $
    523,990
    
    
    $
    3,478
    
    
    $
    73Interest expense (income), net:North America
    
    $
    177,496
    
    
    $
    196,732
    
    
    $
    148,616
    
    
    $
    (3,898
    )Europe
    
    
    (78
    )
    
    
    (785
    )
    
    
    (724
    )
    
    
    (978
    )Total interest expense (income), net
    
    $
    177,418
    
    
    $
    195,947
    
    
    $
    147,892
    
    
    $
    (4,876
    )Income (loss) before income taxes:North America
    
    $
    (56,257
    )
    
    $
    (482,670
    )
    
    $
    (59,468
    )
    
    $
    (22,205
    )Europe
    
    
    57,365
    
    
    
    (159,413
    )
    
    
    52,089
    
    
    
    212Total income (loss) before income taxes
    
    $
    1,108
    
    
    $
    (642,083
    )
    
    $
    (7,379
    )
    
    $
    (21,993
    )Income taxes:North America
    
    $
    4,559
    
    
    $
    1,613
    
    
    $
    (17,444
    )
    
    $
    25,189Europe
    
    
    6,951
    
    
    
    (104
    )
    
    
    9,424
    
    
    
    (3,410
    )Total income taxes
    
    $
    11,510
    
    
    $
    1,509
    
    
    $
    (8,020
    )
    
    $
    21,779Net income (loss):North America
    
    $
    (60,816
    )
    
    $
    (484,283
    )
    
    $
    (42,024
    )
    
    $
    (47,394
    )Europe
    
    
    50,414
    
    
    
    (159,309
    )
    
    
    42,665
    
    
    
    3,622Net income (loss)
    
    $
    (10,402
    )
    
    $
    (643,592
    )
    
    $
    641
    
    
    $
    (43,772
    )Goodwill:North America
    
    $
    1,235,651
    
    
    $
    1,229,941
    
    
    $
    1,401,959
    
    
    $
    170,650Europe
    
    
    314,405
    
    
    
    314,405
    
    
    
    438,908
    
    
    
    30,902Total goodwill
    
    $
    1,550,056
    
    
    $
    1,544,346
    
    
    $
    1,840,867
    
    
    $
    201,552Long lived assets:North America
    
    $
    161,648
    
    
    $
    197,839
    
    
    $
    217,230
    
    
    $
    189,226Europe
    
    
    66,336
    
    
    
    68,232
    
    
    
    92,379
    
    
    
    87,249Total long lived assets
    
    $
    227,984
    
    
    $
    266,071
    
    
    $
    309,609
    
    
    $
    276,475Total assets:North America
    
    $
    1,505,727
    
    
    $
    1,687,952
    
    
    $
    2,600,540
    
    
    $
    746,996Europe
    
    
    1,328,378
    
    
    
    1,193,143
    
    
    
    747,957
    
    
    
    372,051Total assets
    
    $
    2,834,105
    
    
    $
    2,881,095
    
    
    $
    3,348,497
    
    
    $
    1,119,047
 89




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##### Table of Contents



Successor Entity
    
    
    Predecessor EntityFiscal Year
    
    
    Fiscal Year
    
    
    May 29, 2007
    
    
    Feb. 4, 2007Ended
    
    
    Ended
    
    
    Through
    
    
    ThroughJan. 30, 2010
    
    
    Jan. 31, 2009
    
    
    Feb. 2, 2008
    
    
    May 28, 2007Capital ExpendituresNorth America
    
    $
    13,731
    
    
    $
    42,623
    
    
    $
    38,105
    
    
    $
    19,697Europe
    
    
    11,221
    
    
    
    16,782
    
    
    
    20,379
    
    
    
    8,291Total capital expenditures
    
    $
    24,952
    
    
    $
    59,405
    
    
    $
    58,484
    
    
    $
    27,988
     15. SUPPLEMENTAL FINANCIAL INFORMATION
   90




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##### Table of Contents



Condensed Consolidating Balance Sheet
January 30, 2010  (in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    109,138
    
    
    $
    (10,604
    )
    
    $
    100,174
    
    
    $
    
    
    
    $
    198,708Inventories
    
    
    
    
    
    
    73,902
    
    
    
    36,436
    
    
    
    
    
    
    
    110,338Prepaid expenses
    
    
    509
    
    
    
    14,217
    
    
    
    18,147
    
    
    
    
    
    
    
    32,873Other current assets
    
    
    1,030
    
    
    
    19,527
    
    
    
    7,679
    
    
    
    
    
    
    
    28,236Total current assets
    
    
    110,677
    
    
    
    97,042
    
    
    
    162,436
    
    
    
    
    
    
    
    370,155Property and equipment:Land and building
    
    
    
    
    
    
    19,318
    
    
    
    
    
    
    
    
    
    
    
    19,318Furniture, fixtures and equipment
    
    
    2,137
    
    
    
    109,405
    
    
    
    51,060
    
    
    
    
    
    
    
    162,602Leasehold improvements
    
    
    1,113
    
    
    
    138,706
    
    
    
    88,684
    
    
    
    
    
    
    
    228,5033,250
    
    
    
    267,429
    
    
    
    139,744
    
    
    
    
    
    
    
    410,423Less accumulated depreciation and amortization
    
    
    (1,746
    )
    
    
    (117,101
    )
    
    
    (63,592
    )
    
    
    
    
    
    
    (182,439
    )1,504
    
    
    
    150,328
    
    
    
    76,152
    
    
    
    
    
    
    
    227,984Intercompany receivables
    
    
    
    
    
    
    148,072
    
    
    
    
    
    
    
    (148,072
    )
    
    
    Investment in subsidiaries
    
    
    2,200,694
    
    
    
    (7,069
    )
    
    
    
    
    
    
    (2,193,625
    )
    
    
    Intangible assets, net
    
    
    286,000
    
    
    
    13,017
    
    
    
    281,010
    
    
    
    
    
    
    
    580,027Deferred financing costs, net
    
    
    47,641
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,641Other assets
    
    
    18,099
    
    
    
    3,230
    
    
    
    36,913
    
    
    
    
    
    
    
    58,242Goodwill
    
    
    
    
    
    
    1,235,651
    
    
    
    314,405
    
    
    
    
    
    
    
    1,550,0562,552,434
    
    
    
    1,392,901
    
    
    
    632,328
    
    
    
    (2,341,697
    )
    
    
    2,235,966Total assets
    
    $
    2,664,615
    
    
    $
    1,640,271
    
    
    $
    870,916
    
    
    $
    (2,341,697
    )
    
    $
    2,834,105LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Trade accounts payable
    
    $
    2,335
    
    
    $
    19,202
    
    
    $
    24,123
    
    
    $
    
    
    
    $
    45,660Current portion of long-term debt
    
    
    14,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,500Income taxes payable
    
    
    
    
    
    
    101
    
    
    
    10,171
    
    
    
    
    
    
    
    10,272Accrued interest payable
    
    
    14,644
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,644Accrued expenses and other current liabilities
    
    
    22,380
    
    
    
    33,559
    
    
    
    40,497
    
    
    
    
    
    
    
    96,436Total current liabilities
    
    
    53,859
    
    
    
    52,862
    
    
    
    74,791
    
    
    
    
    
    
    
    181,512Intercompany payables
    
    
    137,913
    
    
    
    
    
    
    
    10,159
    
    
    
    (148,072
    )
    
    
    Long-term debt
    
    
    2,313,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,313,378Revolving Credit Facility
    
    
    194,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194,000Deferred tax liability
    
    
    
    
    
    
    106,386
    
    
    
    15,759
    
    
    
    
    
    
    
    122,145Deferred rent expense
    
    
    107
    
    
    
    14,957
    
    
    
    7,018
    
    
    
    
    
    
    
    22,082Unfavorable lease obligations and other long-term
liabilities
    
    
    
    
    
    
    33,347
    
    
    
    2,283
    
    
    
    
    
    
    
    35,6302,645,398
    
    
    
    154,690
    
    
    
    35,219
    
    
    
    (148,072
    )
    
    
    2,687,235Stockholders equity (deficit):Common stock
    
    
    
    
    
    
    367
    
    
    
    2
    
    
    
    (369
    )
    
    
    Additional paid in capital
    
    
    616,086
    
    
    
    1,445,795
    
    
    
    876,798
    
    
    
    (2,322,593
    )
    
    
    616,086Accumulated other comprehensive income (loss),
net of tax
    
    
    2,625
    
    
    
    2,101
    
    
    
    (4,134
    )
    
    
    2,033
    
    
    
    2,625Retained deficit
    
    
    (653,353
    )
    
    
    (15,544
    )
    
    
    (111,760
    )
    
    
    127,304
    
    
    
    (653,353
    )(34,642
    )
    
    
    1,432,719
    
    
    
    760,906
    
    
    
    (2,193,625
    )
    
    
    (34,642
    )Total liabilities and stockholders equity (deficit)
    
    $
    2,664,615
    
    
    $
    1,640,271
    
    
    $
    870,916
    
    
    $
    (2,341,697
    )
    
    $
    2,834,105
 91




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##### Table of Contents



Condensed Consolidating Balance Sheet
January 31, 2009
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    154,414
    
    
    $
    211
    
    
    $
    49,949
    
    
    $
    
    
    
    $
    204,574Inventories
    
    
    
    
    
    
    73,445
    
    
    
    30,246
    
    
    
    
    
    
    
    103,691Prepaid expenses
    
    
    434
    
    
    
    14,641
    
    
    
    16,762
    
    
    
    
    
    
    
    31,837Other current assets
    
    
    6
    
    
    
    16,104
    
    
    
    10,969
    
    
    
    
    
    
    
    27,079Total current assets
    
    
    154,854
    
    
    
    104,401
    
    
    
    107,926
    
    
    
    
    
    
    
    367,181Property and equipment:Land and building
    
    
    
    
    
    
    22,288
    
    
    
    
    
    
    
    
    
    
    
    22,288Furniture, fixtures and equipment
    
    
    2,025
    
    
    
    103,571
    
    
    
    38,106
    
    
    
    
    
    
    
    143,702Leasehold improvements
    
    
    1,704
    
    
    
    136,554
    
    
    
    75,749
    
    
    
    
    
    
    
    214,0073,729
    
    
    
    262,413
    
    
    
    113,855
    
    
    
    
    
    
    
    379,997Less accumulated depreciation and amortization
    
    
    (1,250
    )
    
    
    (77,042
    )
    
    
    (35,634
    )
    
    
    
    
    
    
    (113,926
    )2,479
    
    
    
    185,371
    
    
    
    78,221
    
    
    
    
    
    
    
    266,071Intercompany receivables
    
    
    
    
    
    
    26,876
    
    
    
    58,416
    
    
    
    (85,292
    )
    
    
    Investment in subsidiaries
    
    
    2,139,955
    
    
    
    (4,061
    )
    
    
    
    
    
    
    (2,135,894
    )
    
    
    Intangible assets, net
    
    
    286,750
    
    
    
    17,960
    
    
    
    282,415
    
    
    
    
    
    
    
    587,125Deferred financing costs
    
    
    59,944
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,944Other assets
    
    
    19,392
    
    
    
    2,602
    
    
    
    34,434
    
    
    
    
    
    
    
    56,428Goodwill
    
    
    
    
    
    
    1,229,940
    
    
    
    314,406
    
    
    
    
    
    
    
    1,544,3462,506,041
    
    
    
    1,273,317
    
    
    
    689,671
    
    
    
    (2,221,186
    )
    
    
    2,247,843Total assets
    
    $
    2,663,374
    
    
    $
    1,563,089
    
    
    $
    875,818
    
    
    $
    (2,221,186
    )
    
    $
    2,881,095LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Trade accounts payable
    
    $
    2,347
    
    
    $
    21,112
    
    
    $
    29,778
    
    
    $
    
    
    
    $
    53,237Current portion of long-term debt
    
    
    14,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,500Income taxes payable
    
    
    
    
    
    
    
    
    
    
    6,477
    
    
    
    
    
    
    
    6,477Accrued interest payable
    
    
    13,313
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    13,316Accrued expenses and other current liabilities
    
    
    35,795
    
    
    
    35,782
    
    
    
    36,397
    
    
    
    
    
    
    
    107,974Total current liabilities
    
    
    65,955
    
    
    
    56,894
    
    
    
    72,655
    
    
    
    
    
    
    
    195,504Intercompany payables
    
    
    85,292
    
    
    
    
    
    
    
    
    
    
    
    (85,292
    )
    
    
    Long-term debt
    
    
    2,373,272
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,373,272Revolving Credit Facility
    
    
    194,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194,000Deferred tax liability
    
    
    
    
    
    
    99,122
    
    
    
    13,707
    
    
    
    
    
    
    
    112,829Deferred rent expense
    
    
    698
    
    
    
    12,532
    
    
    
    5,232
    
    
    
    
    
    
    
    18,462Unfavorable lease obligations and other long-term
liabilities
    
    
    
    
    
    
    39,074
    
    
    
    3,797
    
    
    
    
    
    
    
    42,8712,653,262
    
    
    
    150,728
    
    
    
    22,736
    
    
    
    (85,292
    )
    
    
    2,741,434Stockholders equity (deficit):Common stock
    
    
    
    
    
    
    367
    
    
    
    2
    
    
    
    (369
    )
    
    
    Additional paid in capital
    
    
    609,427
    
    
    
    1,445,795
    
    
    
    876,798
    
    
    
    (2,322,593
    )
    
    
    609,427Accumulated other comprehensive loss, net of tax
    
    
    (22,319
    )
    
    
    (2,326
    )
    
    
    (20,597
    )
    
    
    22,923
    
    
    
    (22,319
    )Retained deficit
    
    
    (642,951
    )
    
    
    (88,369
    )
    
    
    (75,776
    )
    
    
    164,145
    
    
    
    (642,951
    )(55,843
    )
    
    
    1,355,467
    
    
    
    780,427
    
    
    
    (2,135,894
    )
    
    
    (55,843
    )Total liabilities and stockholders equity (deficit)
    
    $
    2,663,374
    
    
    $
    1,563,089
    
    
    $
    875,818
    
    
    $
    (2,221,186
    )
    
    $
    2,881,095
 92




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##### Table of Contents



Successor Entity
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Fiscal Year Ended January 30, 2010
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,449,168
    
    
    $
    550,199
    
    
    $
    (656,978
    )
    
    $
    1,342,389Cost of sales, occupancy and buying expenses
    
    
    
    
    
    
    1,056,048
    
    
    
    260,726
    
    
    
    (656,978
    )
    
    
    659,796Gross profit
    
    
    
    
    
    
    393,120
    
    
    
    289,473
    
    
    
    
    
    
    
    682,593Other expenses (income):Selling, general and administrative
    
    
    31,786
    
    
    
    244,750
    
    
    
    192,643
    
    
    
    
    
    
    
    469,179Depreciation and amortization
    
    
    1,439
    
    
    
    43,182
    
    
    
    26,850
    
    
    
    
    
    
    
    71,471Impairment of assets
    
    
    
    
    
    
    3,142
    
    
    
    
    
    
    
    
    
    
    
    3,142Severance and transaction-related costs
    
    
    921
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    921Other (income) expense
    
    
    (16,756
    )
    
    
    19,714
    
    
    
    (7,192
    )
    
    
    
    
    
    
    (4,234
    )17,390
    
    
    
    310,788
    
    
    
    212,301
    
    
    
    
    
    
    
    540,479Operating income (loss)
    
    
    (17,390
    )
    
    
    82,332
    
    
    
    77,172
    
    
    
    
    
    
    
    142,114Gain on early debt extinguishment
    
    
    36,412
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,412Interest expense (income), net
    
    
    177,518
    
    
    
    (11
    )
    
    
    (89
    )
    
    
    
    
    
    
    177,418Income (loss) before income taxes
    
    
    (158,496
    )
    
    
    82,343
    
    
    
    77,261
    
    
    
    
    
    
    
    1,108Income tax expense (benefit)
    
    
    2,503
    
    
    
    1,916
    
    
    
    7,091
    
    
    
    
    
    
    
    11,510Income (loss) from continuing operations
    
    
    (160,999
    )
    
    
    80,427
    
    
    
    70,170
    
    
    
    
    
    
    
    (10,402
    )Equity in earnings (loss) of subsidiaries
    
    
    150,597
    
    
    
    7,101
    
    
    
    
    
    
    
    (157,698
    )
    
    
    Net income (loss)
    
    
    (10,402
    )
    
    
    87,528
    
    
    
    70,170
    
    
    
    (157,698
    )
    
    
    (10,402
    )Foreign currency translation adjustments and
interest rate swap adjustments, net
    
    
    24,944
    
    
    
    4,426
    
    
    
    16,457
    
    
    
    (20,883
    )
    
    
    24,944Comprehensive income
    
    $
    14,542
    
    
    $
    91,954
    
    
    $
    86,627
    
    
    $
    (178,581
    )
    
    $
    14,542
 Successor Entity
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
Fiscal Year Ended January 31, 2009
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,482,874
    
    
    $
    567,530
    
    
    $
    (637,444
    )
    
    $
    1,412,960Cost of sales, occupancy and buying expenses
    
    
    
    
    
    
    1,078,308
    
    
    
    279,487
    
    
    
    (637,444
    )
    
    
    720,351Gross profit
    
    
    
    
    
    
    404,566
    
    
    
    288,043
    
    
    
    
    
    
    
    692,609Other expenses (income):Selling, general and administrative
    
    
    32,720
    
    
    
    271,281
    
    
    
    214,232
    
    
    
    
    
    
    
    518,233Depreciation and amortization
    
    
    3,013
    
    
    
    50,584
    
    
    
    31,496
    
    
    
    
    
    
    
    85,093Impairment of assets
    
    
    159,500
    
    
    
    180,000
    
    
    
    184,490
    
    
    
    
    
    
    
    523,990Severance and transaction-related costs
    
    
    2,374
    
    
    
    7,553
    
    
    
    6,001
    
    
    
    
    
    
    
    15,928Other (income) expense
    
    
    (19,778
    )
    
    
    21,740
    
    
    
    (6,461
    )
    
    
    
    
    
    
    (4,499
    )177,829
    
    
    
    531,158
    
    
    
    429,758
    
    
    
    
    
    
    
    1,138,745Operating loss
    
    
    (177,829
    )
    
    
    (126,592
    )
    
    
    (141,715
    )
    
    
    
    
    
    
    (446,136
    )Interest expense (income), net
    
    
    197,089
    
    
    
    (261
    )
    
    
    (881
    )
    
    
    
    
    
    
    195,947Loss before income taxes
    
    
    (374,918
    )
    
    
    (126,331
    )
    
    
    (140,834
    )
    
    
    
    
    
    
    (642,083
    )Income tax expense (benefit)
    
    
    (18,143
    )
    
    
    19,904
    
    
    
    (252
    )
    
    
    
    
    
    
    1,509Loss from continuing operations
    
    
    (356,775
    )
    
    
    (146,235
    )
    
    
    (140,582
    )
    
    
    
    
    
    
    (643,592
    )Equity in earnings (loss) of subsidiaries
    
    
    (286,817
    )
    
    
    7,706
    
    
    
    
    
    
    
    279,111
    
    
    
    Net loss
    
    
    (643,592
    )
    
    
    (138,529
    )
    
    
    (140,582
    )
    
    
    279,111
    
    
    
    (643,592
    )Foreign currency translation adjustments and
interest rate swap adjustments, net
    
    
    (25,677
    )
    
    
    (5,285
    )
    
    
    (38,137
    )
    
    
    43,422
    
    
    
    (25,677
    )Comprehensive loss
    
    $
    (669,269
    )
    
    $
    (143,814
    )
    
    $
    (178,719
    )
    
    $
    322,533
    
    
    $
    (669,269
    )
 93




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##### Table of Contents



Successor Entity
Condensed Consolidating Statement of Operations and Comprehensive Income
For The Period May 29, 2007 Through February 2, 2008
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    1,224,858
    
    
    $
    431,615
    
    
    $
    (570,541
    )
    
    $
    1,085,932Cost of sales, occupancy and buying expenses
    
    
    
    
    
    
    893,847
    
    
    
    198,078
    
    
    
    (570,541
    )
    
    
    521,384Gross profit
    
    
    
    
    
    
    331,011
    
    
    
    233,537
    
    
    
    
    
    
    
    564,548Other expenses (income):Selling, general and administrative
    
    
    18,897
    
    
    
    188,066
    
    
    
    147,912
    
    
    
    
    
    
    
    354,875Depreciation and amortization
    
    
    2,136
    
    
    
    37,930
    
    
    
    21,385
    
    
    
    
    
    
    
    61,451Impairment of assets
    
    
    
    
    
    
    3,478
    
    
    
    
    
    
    
    
    
    
    
    3,478Severance and transaction-related costs
    
    
    6,090
    
    
    
    
    
    
    
    1,229
    
    
    
    
    
    
    
    7,319Other (income) expense
    
    
    (8,570
    )
    
    
    9,595
    
    
    
    (4,113
    )
    
    
    
    
    
    
    (3,088
    )18,553
    
    
    
    239,069
    
    
    
    166,413
    
    
    
    
    
    
    
    424,035Operating income (loss)
    
    
    (18,553
    )
    
    
    91,942
    
    
    
    67,124
    
    
    
    
    
    
    
    140,513Interest expense (income), net
    
    
    149,527
    
    
    
    (711
    )
    
    
    (924
    )
    
    
    
    
    
    
    147,892Income (loss) before income taxes
    
    
    (168,080
    )
    
    
    92,653
    
    
    
    68,048
    
    
    
    
    
    
    
    (7,379
    )Income tax expense (benefit)
    
    
    (56,335
    )
    
    
    38,035
    
    
    
    10,280
    
    
    
    
    
    
    
    (8,020
    )Income (loss) from continuing operations
    
    
    (111,745
    )
    
    
    54,618
    
    
    
    57,768
    
    
    
    
    
    
    
    641Equity in earnings of subsidiaries
    
    
    112,386
    
    
    
    6,371
    
    
    
    
    
    
    
    (118,757
    )
    
    
    Net income
    
    
    641
    
    
    
    60,989
    
    
    
    57,768
    
    
    
    (118,757
    )
    
    
    641Foreign currency translation adjustments and
interest rate swap
adjustments, net
    
    
    3,358
    
    
    
    2,959
    
    
    
    17,513
    
    
    
    (20,472
    )
    
    
    3,358Comprehensive income
    
    $
    3,999
    
    
    $
    63,948
    
    
    $
    75,281
    
    
    $
    (139,229
    )
    
    $
    3,999
 Predecessor Entity
Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)
For The Period February 4, 2007 Through May 28, 2007
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    540,394
    
    
    $
    149,666
    
    
    $
    (265,161
    )
    
    $
    424,899Cost of sales, occupancy and buying expenses
    
    
    
    
    
    
    397,435
    
    
    
    74,164
    
    
    
    (265,161
    )
    
    
    206,438Gross profit
    
    
    
    
    
    
    142,959
    
    
    
    75,502
    
    
    
    
    
    
    
    218,461Other expenses (income):Selling, general and administrative
    
    
    7,021
    
    
    
    84,633
    
    
    
    62,755
    
    
    
    
    
    
    
    154,409Depreciation and amortization
    
    
    367
    
    
    
    11,504
    
    
    
    7,781
    
    
    
    
    
    
    
    19,652Impairment of assets
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    73Severance and transaction-related costs
    
    
    72,672
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,672Other (income) expense
    
    
    (8,054
    )
    
    
    5,926
    
    
    
    652
    
    
    
    
    
    
    
    (1,476
    )72,006
    
    
    
    102,063
    
    
    
    71,261
    
    
    
    
    
    
    
    245,330Operating income (loss)
    
    
    (72,006
    )
    
    
    40,896
    
    
    
    4,241
    
    
    
    
    
    
    
    (26,869
    )Interest expense (income), net
    
    
    (3,235
    )
    
    
    (376
    )
    
    
    (1,265
    )
    
    
    
    
    
    
    (4,876
    )Income (loss) before income taxes
    
    
    (68,771
    )
    
    
    41,272
    
    
    
    5,506
    
    
    
    
    
    
    
    (21,993
    )Income tax expense (benefit)
    
    
    8,369
    
    
    
    15,361
    
    
    
    (1,951
    )
    
    
    
    
    
    
    21,779Income (loss) from continuing operations
    
    
    (77,140
    )
    
    
    25,911
    
    
    
    7,457
    
    
    
    
    
    
    
    (43,772
    )Equity in earnings of subsidiaries
    
    
    33,368
    
    
    
    2,775
    
    
    
    
    
    
    
    (36,143
    )
    
    
    Net income (loss)
    
    
    (43,772
    )
    
    
    28,686
    
    
    
    7,457
    
    
    
    (36,143
    )
    
    
    (43,772
    )Foreign currency translation adjustments
    
    
    8,440
    
    
    
    2,861
    
    
    
    8,478
    
    
    
    (11,339
    )
    
    
    8,440Comprehensive income (loss)
    
    $
    (35,332
    )
    
    $
    31,547
    
    
    $
    15,935
    
    
    $
    (47,482
    )
    
    $
    (35,332
    )
 94




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##### Table of Contents



Successor Entity
Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended January 30, 2010
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (10,402
    )
    
    $
    87,528
    
    
    $
    70,170
    
    
    $
    (157,698
    )
    
    $
    (10,402
    )Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Equity in (earnings) loss of subsidiaries
    
    
    (150,597
    )
    
    
    (7,101
    )
    
    
    
    
    
    
    157,698
    
    
    
    Depreciation and amortization
    
    
    1,439
    
    
    
    43,182
    
    
    
    26,850
    
    
    
    
    
    
    
    71,471Impairment of assets
    
    
    
    
    
    
    3,142
    
    
    
    
    
    
    
    
    
    
    
    3,142Amortization of lease rights and other assets
    
    
    
    
    
    
    49
    
    
    
    2,150
    
    
    
    
    
    
    
    2,199Amortization of debt issuance costs
    
    
    10,398
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,398Payment in kind interest expense
    
    
    39,013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,013Net accretion of favorable (unfavorable) lease obligations
    
    
    
    
    
    
    (2,550
    )
    
    
    399
    
    
    
    
    
    
    
    (2,151
    )(Gain) loss on sale/retirement of property and equipment,
net
    
    
    (1,430
    )
    
    
    20
    
    
    
    21
    
    
    
    
    
    
    
    (1,389
    )Gain on early debt extinguishment
    
    
    (36,412
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,412
    )Gain on sale of intangible assets/lease rights
    
    
    
    
    
    
    
    
    
    
    (506
    )
    
    
    
    
    
    
    (506
    )Stock compensation expense
    
    
    4,942
    
    
    
    
    
    
    
    1,717
    
    
    
    
    
    
    
    6,659(Increase) decrease in:Inventories
    
    
    
    
    
    
    (457
    )
    
    
    (3,624
    )
    
    
    
    
    
    
    (4,081
    )Prepaid expenses
    
    
    (76
    )
    
    
    425
    
    
    
    1,448
    
    
    
    
    
    
    
    1,797Other assets
    
    
    134
    
    
    
    (4,926
    )
    
    
    (727
    )
    
    
    
    
    
    
    (5,519
    )Increase (decrease) in:Trade accounts payable
    
    
    (8
    )
    
    
    (937
    )
    
    
    (8,302
    )
    
    
    
    
    
    
    (9,247
    )Income taxes payable
    
    
    
    
    
    
    248
    
    
    
    5,262
    
    
    
    
    
    
    
    5,510Accrued interest payable
    
    
    1,331
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    1,328Accrued expenses and other current liabilities
    
    
    (2,432
    )
    
    
    (2,223
    )
    
    
    1,029
    
    
    
    
    
    
    
    (3,626
    )Deferred income taxes
    
    
    2,483
    
    
    
    13
    
    
    
    1,618
    
    
    
    
    
    
    
    4,114Deferred rent expense
    
    
    (591
    )
    
    
    2,425
    
    
    
    1,344
    
    
    
    
    
    
    
    3,178Net cash provided by (used in) operating activities
    
    
    (142,208
    )
    
    
    118,838
    
    
    
    98,846
    
    
    
    
    
    
    
    75,476Cash flows from investing activities:Acquisition of property and equipment, net
    
    
    (120
    )
    
    
    (12,209
    )
    
    
    (12,623
    )
    
    
    
    
    
    
    (24,952
    )Proceeds from sale of property and equipment
    
    
    1,830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,830Acquisition of intangible assets/lease rights
    
    
    
    
    
    
    (111
    )
    
    
    (435
    )
    
    
    
    
    
    
    (546
    )Proceeds from sale of intangible assets/lease rights
    
    
    
    
    
    
    
    
    
    
    2,409
    
    
    
    
    
    
    
    2,409Net cash provided by (used in) investing activities
    
    
    1,710
    
    
    
    (12,320
    )
    
    
    (10,649
    )
    
    
    
    
    
    
    (21,259
    )Cash flows from financing activities:Credit Facility payments
    
    
    (14,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,500
    )Purchase of senior subordinated notes
    
    
    (46,091
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (46,091
    )Intercompany activity, net
    
    
    155,813
    
    
    
    (117,125
    )
    
    
    (38,688
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    95,222
    
    
    
    (117,125
    )
    
    
    (38,688
    )
    
    
    
    
    
    
    (60,591
    )Effect of foreign currency exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    (208
    )
    
    
    716
    
    
    
    
    
    
    
    508Net increase (decrease) in cash and cash equivalents
    
    
    (45,276
    )
    
    
    (10,815
    )
    
    
    50,225
    
    
    
    
    
    
    
    (5,866
    )Cash and cash equivalents at beginning of period
    
    
    154,414
    
    
    
    211
    
    
    
    49,949
    
    
    
    
    
    
    
    204,574Cash and cash equivalents at end of period
    
    $
    109,138
    
    
    $
    (10,604
    )
    
    $
    100,174
    
    
    $
    
    
    
    $
    198,708
 95




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##### Table of Contents



Successor Entity
Condensed Consolidating Statement of Cash Flows
Fiscal Year Ended January 31, 2009
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (643,592
    )
    
    $
    (138,529
    )
    
    $
    (140,582
    )
    
    $
    279,111
    
    
    $
    (643,592
    )Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:Equity in (earnings) loss of subsidiaries
    
    
    286,817
    
    
    
    (7,706
    )
    
    
    
    
    
    
    (279,111
    )
    
    
    Depreciation and amortization
    
    
    3,013
    
    
    
    50,584
    
    
    
    31,496
    
    
    
    
    
    
    
    85,093Impairment of assets
    
    
    159,500
    
    
    
    180,000
    
    
    
    184,490
    
    
    
    
    
    
    
    523,990Amortization of lease rights and other assets
    
    
    
    
    
    
    54
    
    
    
    2,005
    
    
    
    
    
    
    
    2,059Amortization of debt issuance costs
    
    
    10,567
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,567Payment in kind interest expense
    
    
    24,522
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,522Net accretion of favorable (unfavorable) lease
obligations
    
    
    
    
    
    
    (2,424
    )
    
    
    568
    
    
    
    
    
    
    
    (1,856
    )Gain on sale/retirement of property and equipment, net
    
    
    (23
    )
    
    
    (55
    )
    
    
    (105
    )
    
    
    
    
    
    
    (183
    )Gain on sale of intangible assets/lease rights
    
    
    
    
    
    
    
    
    
    
    (1,372
    )
    
    
    
    
    
    
    (1,372
    )Stock compensation expense
    
    
    6,203
    
    
    
    
    
    
    
    2,023
    
    
    
    
    
    
    
    8,226(Increase) decrease in:Inventories
    
    
    
    
    
    
    11,506
    
    
    
    (5,024
    )
    
    
    
    
    
    
    6,482Prepaid expenses
    
    
    (31
    )
    
    
    624
    
    
    
    (1,680
    )
    
    
    
    
    
    
    (1,087
    )Other assets
    
    
    (358
    )
    
    
    (822
    )
    
    
    (7,905
    )
    
    
    
    
    
    
    (9,085
    )Increase (decrease) in:Trade accounts payable
    
    
    1,582
    
    
    
    3,225
    
    
    
    2,565
    
    
    
    
    
    
    
    7,372Income taxes payable
    
    
    8,383
    
    
    
    (16,239
    )
    
    
    (2,854
    )
    
    
    
    
    
    
    (10,710
    )Accrued interest payable
    
    
    (6,222
    )
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    (6,219
    )Accrued expenses and other current liabilities
    
    
    4,507
    
    
    
    (3,271
    )
    
    
    1,796
    
    
    
    
    
    
    
    3,032Deferred income taxes
    
    
    
    
    
    
    716
    
    
    
    (5,525
    )
    
    
    
    
    
    
    (4,809
    )Deferred rent expense
    
    
    (558
    )
    
    
    7,182
    
    
    
    2,319
    
    
    
    
    
    
    
    8,943Net cash provided by (used in) operating activities
    
    
    (145,690
    )
    
    
    84,845
    
    
    
    62,218
    
    
    
    
    
    
    
    1,373Cash flows from investing activities:Acquisition of property and equipment, net
    
    
    (248
    )
    
    
    (41,013
    )
    
    
    (18,144
    )
    
    
    
    
    
    
    (59,405
    )Proceeds from sale of property and equipment
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104Acquisition of intangible assets/lease rights
    
    
    
    
    
    
    (177
    )
    
    
    (1,794
    )
    
    
    
    
    
    
    (1,971
    )Proceeds from sale of intangible assets/lease rights
    
    
    
    
    
    
    
    
    
    
    516
    
    
    
    
    
    
    
    516Net cash used in investing activities
    
    
    (144
    )
    
    
    (41,190
    )
    
    
    (19,422
    )
    
    
    
    
    
    
    (60,756
    )Cash flows from financing activities:Credit Facility proceeds
    
    
    194,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    194,000Credit Facility payments
    
    
    (14,500
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,500
    )Intercompany activity, net
    
    
    94,913
    
    
    
    (45,557
    )
    
    
    (49,356
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    274,413
    
    
    
    (45,557
    )
    
    
    (49,356
    )
    
    
    
    
    
    
    179,500Effect of foreign currency exchange rate changes on cash and
cash equivalents
    
    
    
    
    
    
    221
    
    
    
    (1,738
    )
    
    
    
    
    
    
    (1,517
    )Net increase (decrease) in cash and cash equivalents
    
    
    128,579
    
    
    
    (1,681
    )
    
    
    (8,298
    )
    
    
    
    
    
    
    118,600Cash and cash equivalents at beginning of period
    
    
    25,835
    
    
    
    1,892
    
    
    
    58,247
    
    
    
    
    
    
    
    85,974Cash and cash equivalents at end of period
    
    $
    154,414
    
    
    $
    211
    
    
    $
    49,949
    
    
    $
    
    
    
    $
    204,574
 96




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##### Table of Contents



Successor Entity
Condensed Consolidating Statement of Cash Flows
For The Period May 29, 2007 through February 2, 2008
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income
    
    $
    641
    
    
    $
    60,989
    
    
    $
    57,768
    
    
    $
    (118,757
    )
    
    $
    641Adjustments to reconcile net income to net
cash provided by (used in) operating activities:Equity in earnings of subsidiaries
    
    
    (112,386
    )
    
    
    (6,371
    )
    
    
    
    
    
    
    118,757
    
    
    
    Depreciation and amortization
    
    
    2,136
    
    
    
    37,930
    
    
    
    21,385
    
    
    
    
    
    
    
    61,451Impairment of assets
    
    
    
    
    
    
    3,478
    
    
    
    
    
    
    
    
    
    
    
    3,478Amortization of lease rights and other assets
    
    
    
    
    
    
    37
    
    
    
    1,276
    
    
    
    
    
    
    
    1,313Amortization of debt issuance costs
    
    
    7,079
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,079Loss on sale/retirement of property and
equipment, net
    
    
    23
    
    
    
    368
    
    
    
    201
    
    
    
    
    
    
    
    592Stock compensation expense
    
    
    5,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,526(Increase) decrease in:Inventories
    
    
    
    
    
    
    13,057
    
    
    
    3,781
    
    
    
    
    
    
    
    16,838Prepaid expenses
    
    
    596
    
    
    
    (13,403
    )
    
    
    6,256
    
    
    
    
    
    
    
    (6,551
    )Other assets
    
    
    18,942
    
    
    
    (12,039
    )
    
    
    (38,047
    )
    
    
    
    
    
    
    (31,144
    )Increase (decrease) in:Trade accounts payable
    
    
    (570
    )
    
    
    (10,579
    )
    
    
    (21,838
    )
    
    
    
    
    
    
    (32,987
    )Income taxes payable
    
    
    (9,252
    )
    
    
    11,508
    
    
    
    1,820
    
    
    
    
    
    
    
    4,076Accrued interest payable
    
    
    19,534
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    19,531Accrued expenses and other current liabilities
    
    
    (87,819
    )
    
    
    4,624
    
    
    
    10,135
    
    
    
    
    
    
    
    (73,060
    )Deferred income taxes
    
    
    
    
    
    
    (24,684
    )
    
    
    6,176
    
    
    
    
    
    
    
    (18,508
    )Deferred rent expense
    
    
    (372
    )
    
    
    4,971
    
    
    
    1,275
    
    
    
    
    
    
    
    5,874Net cash provided by (used in) operating activities
    
    
    (155,922
    )
    
    
    69,886
    
    
    
    50,185
    
    
    
    
    
    
    
    (35,851
    )Cash flows from investing activities:Acquisition of property and equipment, net
    
    
    (160
    )
    
    
    (40,224
    )
    
    
    (18,100
    )
    
    
    
    
    
    
    (58,484
    )Acquisition of Predecessor Entity
    
    
    (2,857,411
    )
    
    
    (79,065
    )
    
    
    (116,858
    )
    
    
    
    
    
    
    (3,053,334
    )Acquisition of intangible assets/lease rights
    
    
    
    
    
    
    20
    
    
    
    (574
    )
    
    
    
    
    
    
    (554
    )Net cash used in investing activities
    
    
    (2,857,571
    )
    
    
    (119,269
    )
    
    
    (135,532
    )
    
    
    
    
    
    
    (3,112,372
    )Cash flows from financing activities:Credit Facility proceeds
    
    
    1,450,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,450,000Credit Facility payments
    
    
    (7,250
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,250
    )Note offerings proceeds
    
    
    935,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    935,000Capital contribution
    
    
    595,675
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    595,675Option conversion payment
    
    
    (7,924
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,924
    )Financing fees paid
    
    
    (77,439
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77,439
    )Dividends paid
    
    
    (7,252
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,252
    )Intercompany activity, net
    
    
    (29,636
    )
    
    
    (79,809
    )
    
    
    109,445
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    2,851,174
    
    
    
    (79,809
    )
    
    
    109,445
    
    
    
    
    
    
    
    2,880,810Effect of foreign currency exchange rate changes on
cash and cash equivalents
    
    
    (253
    )
    
    
    (126
    )
    
    
    3,290
    
    
    
    
    
    
    
    2,911Net increase (decrease) in cash and cash equivalents
    
    
    (162,572
    )
    
    
    (129,318
    )
    
    
    27,388
    
    
    
    
    
    
    
    (264,502
    )Cash and cash equivalents at beginning of period
    
    
    188,407
    
    
    
    131,210
    
    
    
    30,859
    
    
    
    
    
    
    
    350,476Cash and cash equivalents at end of period
    
    $
    25,835
    
    
    $
    1,892
    
    
    $
    58,247
    
    
    $
    
    
    
    $
    85,974
 97




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##### Table of Contents



Predecessor Entity
Condensed Consolidating Statement of Cash Flows
For The Period February 4, 2007 Through May 28, 2007
(in thousands)
 Non-Issuer
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (43,772
    )
    
    $
    28,686
    
    
    $
    7,457
    
    
    $
    (36,143
    )
    
    $
    (43,772
    )Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Equity in earnings of subsidiaries
    
    
    (33,368
    )
    
    
    (2,775
    )
    
    
    
    
    
    
    36,143
    
    
    
    Depreciation and amortization
    
    
    367
    
    
    
    11,504
    
    
    
    7,781
    
    
    
    
    
    
    
    19,652Impairment of assets
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    73Amortization of lease rights and other assets
    
    
    
    
    
    
    39
    
    
    
    583
    
    
    
    
    
    
    
    622Loss on sale / retirement of property and
equipment, net
    
    
    
    
    
    
    873
    
    
    
    328
    
    
    
    
    
    
    
    1,201Excess tax benefit from stock compensation
    
    
    (2,885
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,885
    )Stock compensation expense
    
    
    8,946
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,946(Increase) decrease in:Inventories
    
    
    
    
    
    
    (9,551
    )
    
    
    (1,381
    )
    
    
    
    
    
    
    (10,932
    )Prepaid expenses
    
    
    465
    
    
    
    11,266
    
    
    
    (5,342
    )
    
    
    
    
    
    
    6,389Other assets
    
    
    (941
    )
    
    
    1,164
    
    
    
    (3,164
    )
    
    
    
    
    
    
    (2,941
    )Increase (decrease) in:Trade accounts payable
    
    
    (90
    )
    
    
    7,490
    
    
    
    23,802
    
    
    
    
    
    
    
    31,202Income taxes payable
    
    
    3,754
    
    
    
    (9,903
    )
    
    
    (5,583
    )
    
    
    
    
    
    
    (11,732
    )Accrued expenses and other current liabilities
    
    
    54,909
    
    
    
    (8,666
    )
    
    
    (6,516
    )
    
    
    
    
    
    
    39,727Deferred income taxes
    
    
    
    
    
    
    7,015
    
    
    
    (292
    )
    
    
    
    
    
    
    6,723Deferred rent expense
    
    
    
    
    
    
    634
    
    
    
    (261
    )
    
    
    
    
    
    
    373Net cash provided by (used in) operating activities
    
    
    (12,615
    )
    
    
    37,776
    
    
    
    17,485
    
    
    
    
    
    
    
    42,646Cash flows from investing activities:Acquisition
of property and equipment, net
    
    
    (171
    )
    
    
    (18,822
    )
    
    
    (8,995
    )
    
    
    
    
    
    
    (27,988
    )Acquisition
of intangible assets/lease rights
    
    
    
    
    
    
    (20
    )
    
    
    (61
    )
    
    
    
    
    
    
    (81
    )Net cash used in investing activities
    
    
    (171
    )
    
    
    (18,842
    )
    
    
    (9,056
    )
    
    
    
    
    
    
    (28,069
    )Cash flows from financing activities:Exercised stock option proceeds
    
    
    177
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177Excess tax benefit from stock compensation
    
    
    2,885
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,885Dividends paid
    
    
    (9,065
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,065
    )Intercompany
activity, net
    
    
    13,118
    
    
    
    96,485
    
    
    
    (109,603
    )
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    7,115
    
    
    
    96,485
    
    
    
    (109,603
    )
    
    
    
    
    
    
    (6,003
    )Effect of foreign currency exchange rate changes on
cash and cash equivalents
    
    
    (20
    )
    
    
    (16
    )
    
    
    1,061
    
    
    
    
    
    
    
    1,025Net increase (decrease) in cash and cash equivalents
    
    
    (5,691
    )
    
    
    115,403
    
    
    
    (100,113
    )
    
    
    
    
    
    
    9,599Cash and cash equivalents at beginning of period
    
    
    194,098
    
    
    
    15,807
    
    
    
    130,972
    
    
    
    
    
    
    
    340,877Cash and cash equivalents at end of period
    
    $
    188,407
    
    
    $
    131,210
    
    
    $
    30,859
    
    
    $
    
    
    
    $
    350,476
 98




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A(T). Controls and Procedures
 Disclosure Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting
 Internal
Control  Integrated Framework Internal Control  Integrated
Framework
  Changes in Internal Controls over Financial Reporting
  
 Item 9B. Other Information
  
 PART III.
  99




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##### Table of Contents



PART IV.
 
 Item 15. Exhibits, Financial Statement Schedules
  1.
    
    Financial Statements
 Page No.Report of Independent Registered Public Accounting Firm
    
    
    49Consolidated Balance Sheets as of January 30, 2010 and January 31, 2009
    
    
    50Consolidated Statements of Operations and Comprehensive Income
(Loss) for the fiscal years ended January 30, 2010 and
January 31, 2009 (Successor Entity), the period from May
29, 2007 through February 2, 2008 (Successor Entity) and
the period from February 4, 2007 through May 28, 2007
(Predecessor Entity)
    
    
    51Consolidated Statements of Changes in Stockholders Equity
(Deficit) for the fiscal years ending January 30, 2010 and
January 31, 2009 (Successor Entity), the period from May
29, 2007 through February 2, 2008 (Successor Entity) and
the period from February 4, 2007 through May 28, 2007
(Predecessor Entity)
    
    
    52Consolidated Statements of Cash Flows for the fiscal years
ending January 30, 2010 and January 31, 2009 (Successor
Entity), the period from May 29, 2007 through February 2,
2008 (Successor Entity) and the period from February 4,
2007 through May 28, 2007 (Predecessor Entity)
    
    
    53Notes to Consolidated Financial Statements
    
    
    55
 2.
    
    Financial Statement Schedules
  3.
    
    Exhibits
 3.1
    
    Articles of Incorporation of Claires Stores, Inc.*3.2
    
    By-laws of Claires Stores, Inc.*3.3
    
    Certificate of Incorporation of Afterthoughts Merchandising Corp.*3.4
    
    By-laws of Afterthoughts Merchandising Corp.*3.5
    
    Certificate of Incorporation of BMS Distributing Corp.*3.6
    
    By-laws of BMS Distributing Corp.*3.7
    
    Certificate of Incorporation of CBI Distributing Corp.*3.8
    
    By-laws of CBI Distributing Corp.*3.9
    
    Articles of Incorporation of Claires Boutiques, Inc.*
 100




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##### Table of Contents



3.10
    
    By-laws of Claires Boutiques, Inc.*3.11
    
    Certificate of Incorporation of Claires Canada Corp.*3.12
    
    By-laws of Claires Canada Corp.*3.13
    
    Certificate of Incorporation of Claires Puerto Rico Corp.*3.14
    
    By-laws of Claires Puerto Rico Corp.*3.15
    
    Certificate of Incorporation of Sassy Doo!, Inc.*3.16
    
    By-laws of Sassy Doo!, Inc.*4.1
    
    Senior Notes Indenture, dated as of May 29, 2007, between Bauble
Acquisition Sub, Inc. and The Bank of New York, as Trustee*4.2
    
    Senior Toggle Notes Indenture, dated as of May 29, 2007, between
Bauble Acquisition Sub, Inc. and The Bank of New York, as Trustee*4.3
    
    Senior Subordinated Notes Indenture, dated as of May 29, 2007,
between Bauble Acquisition Sub, Inc. and The Bank of New York, as Trustee*4.4
    
    Senior Notes Supplemental Indenture, dated as of May 29, 2007, by
and among Claires Stores, Inc., the guarantors listed on Exhibit A thereto and
The Bank of New York, as Trustee, to the Senior Notes Indenture, dated as of May
29, 2007, between Bauble Acquisition Sub, Inc. and The Bank of New York, as
Trustee*4.5
    
    Senior Toggle Notes Supplemental Indenture, dated as of May 29,
2007, by and among Claires Stores, Inc., the guarantors listed on Exhibit A
thereto and The Bank of New York, as Trustee, to the Senior Toggle Notes
Indenture, dated as of May 29, 2007, between Bauble Acquisition Sub, Inc. and The
Bank of New York, as Trustee*4.6
    
    Senior Subordinated Notes Supplemental Indenture, dated as of May
29, 2007, by and among Claires Stores, Inc., the guarantors listed on Exhibit A
thereto and The Bank of New York, as Trustee, to the Senior Subordinated Notes
Indenture, dated as of May 29, 2007, between Bauble Acquisition Sub, Inc. and The
Bank of New York, as Trustee*4.7
    
    Form of 9.25% Senior Notes due 2015*4.8
    
    Form of 9.625%/10.375% Senior Toggle Notes due 2015*4.9
    
    Form of 10.50% Senior Subordinated Notes due 2017*4.10
    
    Senior Notes Registration Rights Agreement, dated May 29, 2007, by
and among Claires Stores, Inc., the Guarantors listed on Schedule I thereto and
Bear, Stearns & Co. Inc., Credit Suisse Securities (USA) LLC, Lehman Brothers
Inc., ABN AMRO Incorporated, Mizuho Securities USA Inc. and Natexis Bleichroeder
Inc.*4.11
    
    Senior Subordinated Notes Registration Rights Agreement, dated May
29, 2007, by and among Claires Stores, Inc., the Guarantors listed on Schedule I
thereto and Bear, Stearns & Co. Inc., Credit Suisse Securities (USA) LLC, Lehman
Brothers Inc., ABN AMRO Incorporated, Mizuho Securities USA Inc. and Natexis
Bleichroeder Inc.*10.1
    
    Credit Agreement, dated as of May 29, 2007, among Bauble Holdings
Corp., Bauble Acquisition Sub, Inc. (to be merged with and into Claires Stores,
Inc.), as
 101




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##### Table of Contents



Borrower, the Lenders party thereto, Credit Suisse, as Administrative
Agent, Bear Stearns Corporate Lending Inc. and Mizuho Corporate Bank, Ltd., as
Co-Syndication Agents, Lehman Commercial Paper Inc. and LaSalle Bank National
Association, as Co-Documentation Agents, and Bear, Stearns & Co. Inc., Credit
Suisse Securities (USA) LLC, and Lehman Brothers Inc., as Joint Bookrunners
and Joint Lead Arrangers*10.2
    
    Management Services Agreement, dated as of May 29, 2007, among
Claires Stores, Inc., Bauble Holdings Corp. and Apollo Management VI, L.P. and
Tri-Artisan Capital Partners, LLC and TACP Investments  Claires LLC*10.3
    
    Claires Inc. Amended and Restated Stock Incentive Plan, dated June
29, 2007*10.4
    
    Standard Form of Option Grant Letter (Target Performance Option and
Stretch Performance Option)*10.5
    
    Standard Form of Option Grant Letter (Target Performance Option)*10.6
    
    Standard Form of Director Option Grant Letter*10.7
    
    Employment Agreement with Eugene S. Kahn*10.8
    
    Employment Agreement with James Conroy*10.9
    
    Amendment to Employment Agreement with James Conroy**10.10
    
    Employment Agreement with Kenny Wilson***10.11
    
    Lease Agreement, dated as of February 19, 2010, by and between
AGNL Bling, L.L.C. and Claires Boutiques, Inc. ****21.1
    
    Subsidiaries of Claires Stores, Inc.*****24
    
    Power of Attorney (included on signature page)31.1
    
    Certification of Chief Executive Officer pursuant to Rules
13a-14(a) and 15d-14(a)*****31.2
    
    Certification of Chief Financial Officer pursuant to Rules
13a-14(a) and 15d-14(a)*****32.1
    
    Certification of Chief Executive Officer pursuant to 18 USC Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002******32.2
    
    Certification of Chief Financial Officer pursuant to 18 USC Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002******
 
 (*)
    
    Filed previously as exhibit to the Registration Statement on Form S-4
(File No. 333-148108) by the Company on December 17, 2007.(**)
    
    Filed previously as exhibit to Form 8-K by the Company on April 22, 2009.(***)
    
    Filed previously as exhibit to Form 10-K/A by the Company on May 27, 2009.(****)
    
    Filed previously as exhibit to Form 8-K by the Company date February 25, 2010.(*****)
    
    Filed herewith.(******)
    
    Furnished herewith. 102




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##### Table of Contents



SIGNATURES
  CLAIRES STORES, INC.April 13, 2010
    By:
    /s/ Eugene S. KahnEugene S. Kahn, Chief Executive Officer (principal executive officer)April 13, 2010
    By:
    /s/ J. Per BrodinJ. Per Brodin, Senior Vice President and Chief Financial Officer (principal financial and accounting officer) POWER OF ATTORNEY
   April 13, 2010
    /s/ Peter CopsesPeter Copses, Chairman of the Board of DirectorsApril 13, 2010
    /s/ Eugene S. KahnEugene S. Kahn, Chief Executive Officer and DirectorApril 13, 2010
    /s/ Lance MilkenLance Milken, DirectorApril 13, 2010
    /s/ George GolleherGeorge Golleher, DirectorApril 13, 2010
    /s/ Robert J. DiNicolaRobert J. DiNicola, DirectorApril 13, 2010
    /s/ Rohit ManochaRohit Manocha, DirectorApril 13, 2010
    /s/ Ron MarshallRon Marshall, Director 103




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##### Table of Contents



INDEX TO EXHIBITS
 EXHIBIT NO.
    
    DESCRIPTION21.1
    
    Claires Stores, Inc. Subsidiaries.31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a).31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a).32.1
    
    Certification of Chief Executive Officer pursuant to 18 USC Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 USC Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 104