UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year-ended January 29, 2011
 Commission File No. 1-6695
 
 JO-ANN STORES, INC.
  Ohio
(State or other jurisdiction of 
incorporation or organization)
    
    34-0720629
(I.R.S. Employer Identification No.)5555 Darrow Road, Hudson, Ohio
(Address of principal executive offices)
    
    44236
(Zip Code)
 (330) 656-2600
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange on Which RegisteredCommon Shares, Without Par Value
    
    New York Stock Exchange
 
 þ o
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 þ o
 o o
 þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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PART I
  Item 1.
    
    Business
 Jo-Ann Fabric and Craft
        2




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##### 



Business Strategy
  Drive consistent same-store sales growth
    Expand Gross Margin
 Strategically grow and enhance our existing store base
  Improve store operations
  3




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Product Selection
  Fiscal Year-EndedJanuary 29,
    
    
    January 30,
    
    
    January 31,2011
    
    
    2010
    
    
    2009Principal product lines:Sewing
    
    
    52
    %
    
    
    52
    %
    
    
    51
    %Non-sewing
    
    
    48
    %
    
    
    48
    %
    
    
    49
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Sewing
  
    
    fashion and sportswear fabrics, used primarily in the construction of garments for the
customer seeking a unique, fashionable  look;
    
    special occasion fabrics used to construct evening wear,
bridal and special event attire;
    
    craft fabrics used primarily in the construction of quilts and craft and seasonal
projects for the home;
    
    fleece fabrics in both prints and solids used for the construction of sportswear,
blankets and craft projects for the home;
    
    home decorating fabrics and accessories used in home related projects such as window
treatments, furniture and bed coverings (in addition to the in-store assortment, we offer a
special order capability for additional designs);
    
    a wide array of notions, which represent items incidental to sewing-related projects 
including cutting implements, threads, zippers, trims, tapes, pins, elastics, buttons and
ribbons, as well as the patterns necessary for most sewing projects; and
    
    sewing-related accessories including lighting, organizers and
sewing machines. Most large-format
 stores offer a wider selection of sewing machines through leased
departments operated by
third parties.
 Non-sewing
  
    
    yarn and accessories, as well as needlecraft kits and supplies;
    
    paper crafting components, such as die cutting machines, albums, papers, stickers, stamps
and books used in the popular home based activities of scrapbooking and card making;
    
    craft materials, including items used for stenciling, jewelry making, decorative
painting, wall décor, food crafting and kids crafting;
    
    fine art materials, including items such as pastels, water colors, oil paints, acrylics,
easels, brushes, paper and canvas;
    
    a comprehensive assortment of books and magazines to provide inspiration for our
customer;
    
    framed art, photo albums and ready-made frames and full service in-store custom framing
departments;
 4




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
    
    floral products, including artificial flowers, dried flowers and artificial plants, sold
separately or in ready-made floral arrangements, and a broad selection of accessories
essential for floral arranging and wreath making; and
    
    home décor accessories including baskets, candles and accent collections designed to
complement our home décor fashions.
    Marketing
       Purchasing
  5




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Logistics
   Store Operations
 Site Selection.
 Costs of Opening Stores.
 Store Management.
  6




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##### 



Small-
    
    Large-format
    
    format
    
    TotalAlabama
    
    2
    
    2
    
    4Alaska
    
    4
    
    2
    
    6Arizona
    
    4
    
    10
    
    14Arkansas
    
    2
    
    
    
    2California
    
    59
    
    23
    
    82Colorado
    
    7
    
    7
    
    14Connecticut
    
    5
    
    5
    
    10Delaware
    
    2
    
    1
    
    3Florida
    
    28
    
    21
    
    49Georgia
    
    7
    
    6
    
    13Idaho
    
    7
    
    1
    
    8Illinois
    
    21
    
    12
    
    33Indiana
    
    18
    
    8
    
    26Iowa
    
    10
    
    
    
    10Kansas
    
    6
    
    2
    
    8Kentucky
    
    3
    
    1
    
    4Louisiana
    
    4
    
    
    
    4Maine
    
    4
    
    1
    
    5Maryland
    
    11
    
    5
    
    16Massachusetts
    
    23
    
    1
    
    24Michigan
    
    20
    
    21
    
    41Minnesota
    
    12
    
    6
    
    18Mississippi
    
    2
    
    
    
    2Missouri
    
    7
    
    4
    
    11Montana
    
    6
    
    1
    
    7Nebraska
    
    3
    
    1
    
    4Nevada
    
    2
    
    3
    
    5New Hampshire
    
    8
    
    
    
    8New Jersey
    
    11
    
    1
    
    12New Mexico
    
    6
    
    
    
    6New York
    
    27
    
    9
    
    36North Carolina
    
    6
    
    1
    
    7North Dakota
    
    4
    
    
    
    4Ohio
    
    32
    
    18
    
    50Oklahoma
    
    4
    
    
    
    4Oregon
    
    20
    
    4
    
    24Pennsylvania
    
    30
    
    12
    
    42Rhode Island
    
    
    
    1
    
    1South Carolina
    
    2
    
    
    
    2South Dakota
    
    1
    
    
    
    1Tennessee
    
    2
    
    6
    
    8Texas
    
    20
    
    15
    
    35Utah
    
    6
    
    4
    
    10Vermont
    
    4
    
    
    
    4Virginia
    
    18
    
    4
    
    22Washington
    
    18
    
    11
    
    29West Virginia
    
    5
    
    
    
    5Wisconsin
    
    13
    
    5
    
    18Total
    
    516
    
    235
    
    751
  Total Stores
 TotalSquare FootageIn Operation at
    
    Expanded
    
    at Year-EndFiscal Year
    
    Opened
    
    Closed
    
    Year-End
    
    or Downsized
    
    (000s)2007
    
    26
    
    (63)
    
    801
    
    
    
    16,2152008
    
    6
    
    (33)
    
    774
    
    1
    
    15,9322009
    
    21
    
    (31)
    
    764
    
    1
    
    16,0022010
    
    20
    
    (38)
    
    746
    
    1
    
    15,9432011
    
    30
    
    (25)
    
    751
    
    7
    
    16,183
   7




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##### 



Information Technology
    Status of Product or Line of Business
  Trademarks
 ® ® ® ® ® ®
 Seasonal Business
  Customer Base
  Backlog of Orders
  Regulation
  Competitive Conditions
  8




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
    
    brand recognition as the number one resource for fabric-related categories;
    
    purchasing power;
    
    ability to support efficient nationwide distribution; and
    
    the financial resources to execute our strategy going forward.
 Research and Development
  Environmental Disclosure
  Employees
   Foreign Operations and Export Sales
  9




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##### 



Other Available Information
   Item 1A.
    
    Risk Factors
   General economic factors may adversely affect our business, revenue and profitability
   Natural disasters and geo-political events could adversely affect our business operations and
financial performance
  10




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We may not be able to achieve the expected benefits from the implementation of marketing
initiatives
   Changes in newspaper subscription rates may result in reduced exposure to our circular
advertisements
  Failure to timely respond to changes in consumer trends could negatively impact our
business
  Competition could negatively impact our results
   Risks associated with our suppliers could adversely affect our operations and financial
performance
  11




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Our dependence on foreign suppliers subjects us to possible delays in receipt of merchandise
and to the risks involved in foreign operations
   Our business depends on shopping center traffic
  The seasonality of our sales may negatively impact our operating results
  Disruption to the transportation system or increases in transportation costs may negatively
impact our operating results
  The failure to attract and retain qualified employees could limit our growth and negatively
impact our operations
  12




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Failure to manage inventory effectively could negatively impact our operations
   The loss of, or disruption in, or our inability to efficiently operate our distribution network
could have a negative impact on our business
   Disruptions to our information systems, or our failure to adequately support, maintain and
upgrade these systems, could negatively impact our operations and financial results.
    13




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Financing needs could restrict our operations
  Failure to comply with the restrictions placed on us by our lenders could have a material
adverse effect on our business
  Failure to adequately maintain the security of our electronic and other confidential
information could materially adversely affect our financial condition and results of operations
   Failure to comply with various regulations, or increased litigation, may result in damage to
our business
  14




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We may not be able to successfully implement our store growth strategy
  We may not be able to maintain or negotiate favorable lease terms
  Changes in accounting standards
  Effective tax rate
  Inadequacy of our insurance coverage could have a material adverse effect on our company
  Cash and cash equivalents held at financial institutions exceed federally insured limits
  Our stock price is subject to significant volatility
  15




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Events harming our companys reputation could have a material adverse effect on our business
prospects, financial results and stock price
  The proposed merger with an affiliate of Leonard Green & Partners, L.P. is subject to certain
closing conditions that could result in the merger not being completed, which may in turn result in
a decline in the price of our common stock.
   Whether or not the proposed merger with an affiliate of Leonard Green & Partners, L.P. is
completed, the merger could cause disruptions in our operations, which could have an adverse effect
on our business and financial results.
  
    
    Managements attention may be diverted to completion of the merger and away from
execution of existing business plans, which could disrupt operations and have a material
adverse effect on our operating results; and
    
    Perceived uncertainties as to our future direction may result in the loss of employees
or business partners.
 Other Factors
  Item 1B.
    
    Unresolved Staff Comments
  Item 2.
    
    Properties
   16




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Number ofFiscal Year Lease Terms Expire
    
    Store LeasesMonth-to-month
    
    332012
    
    632013
    
    612014
    
    332015
    
    282016
    
    31Thereafter
    
    551Total
    
    800
 Item 3.
    
    Legal Proceedings
   Item 4.
    
    Reserved
 Executive Officers of the Registrant
   Name
    
    Age
    
    PositionDarrell Webb
    
    
    53
    
    
    Chairman of the Board and Chief Executive OfficerTravis Smith
    
    
    38
    
    
    President and Chief Operating OfficerKenneth Haverkost
    
    
    54
    
    
    Executive Vice President, Store OperationsJames Kerr
    
    
    48
    
    
    Executive Vice President, Chief Financial Officer
 Darrell Webb
 Travis Smith
 17




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##### 



Kenneth Haverkost
 James Kerr
 PART II
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
   Common SharesHigh
    
    LowQuarter Ended Fiscal 2011:January 29, 2011
    
    $
    60.80
    
    
    $
    42.03October 30, 2010
    
    
    46.16
    
    
    
    35.51July 31, 2010
    
    
    48.00
    
    
    
    36.20May 1, 2010
    
    
    48.24
    
    
    
    35.18Quarter Ended Fiscal 2010:January 30, 2010
    
    $
    38.14
    
    
    $
    25.44October 31, 2009
    
    
    31.32
    
    
    
    22.50August 1, 2009
    
    
    23.97
    
    
    
    18.25May 2, 2009
    
    
    19.07
    
    
    
    10.79
   Purchases of Equity Securities by Jo-Ann Stores, Inc.Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares that May YetAverage
    
    
    Part of Publicly
    
    
    Be Purchased UnderTotal Number of
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    the Plans orShares Purchased
    
    
    per Share
    
    
    Programs
    
    
    ProgramsOctober 31  November 27, 2010
    
    
    1,455
    
    
    $
    46.55
    
    
    
    2,944,415
    
    
    
    205,585November 28, 2010  January 1, 2011
    
    
    4,570
    
    
    $
    46.88
    
    
    
    2,948,985
    
    
    
    201,015January 2  29, 2011
    
    
    
    
    
    $
    
    
    
    
    2,948,985
    
    
    
    201,015Total
    
    
    6,025
    
    
    $
    46.80
    
    
    
    2,948,985
    
    
    
    201,015
   18




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##### 



STOCK PERFORMANCE GRAPH
   Prior Peer Group
    
    New Peer GroupA.C. Moore Arts & Crafts
    
    Big LotsBig 5 Sporting Goods
    
    Brown ShoeBorders Group
    
    CabelasBrown Shoe
    
    Charming ShoppesCabelas
    
    Collective Brands (formerly, Payless Shoesource)Charming Shoppes
    
    Dicks Sporting GoodsCollective Brands (formerly, Payless Shoesource)
    
    DSWDicks Sporting Goods
    
    FredsDSW
    
    Mens WearhouseMens Wearhouse
    
    Pep Boys  Manny, Moe & JackPep Boys  Manny, Moe & Jack
    
    Pier 1 ImportsPetSmart
    
    Sally BeautyPier 1 Imports
    
    Signet JewelersStage Stores
    
    Stage StoresUlta Salon Cosmetics & Fragrances
    
    Tractor SupplyWilliams-Sonoma
    
    Ulta Salon Cosmetics & FragrancesZale
    
    Williams-Sonoma
 19




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20




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##### 



Item 6. Selected Financial Data
 Managements
Discussion and Analysis of Financial Condition and Results of Operations,
 Fiscal Year-Ended (a)January 29,
    
    
    January 30,
    
    
    January 31,
    
    
    February 2,
    
    
    February 3,2011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007(Dollars in millions, except per share data)Operating Results:Net sales
    
    $
    2,079.0
    
    
    $
    1,990.7
    
    
    $
    1,901.1
    
    
    $
    1,878.8
    
    
    $
    1,850.6Total net sales percentage increase (decrease)
    
    
    4.4
    %
    
    
    4.7
    %
    
    
    1.2
    %
    
    
    1.5
    %
    
    
    (1.7
    )%Same-store sales percentage increase (decrease) (b)
    
    
    3.5
    %
    
    
    3.1
    %
    
    
    0.5
    %
    
    
    3.5
    %
    
    
    (5.9
    )%Gross margin
    
    
    1,040.6
    
    
    
    975.7
    
    
    
    882.5
    
    
    
    872.4
    
    
    
    859.8Selling, general and administrative expenses
    
    
    818.2
    
    
    
    793.6
    
    
    
    775.3
    
    
    
    774.8
    
    
    
    790.5Store pre-opening and closing costs
    
    
    11.3
    
    
    
    11.7
    
    
    
    12.3
    
    
    
    8.4
    
    
    
    11.1Depreciation and amortization
    
    
    57.4
    
    
    
    56.3
    
    
    
    54.2
    
    
    
    51.8
    
    
    
    49.2Operating profit
    
    
    153.7
    
    
    
    114.1
    
    
    
    40.7
    
    
    
    37.4
    
    
    
    9.0Operating profit as a percent of net sales
    
    
    7.4
    %
    
    
    5.7
    %
    
    
    2.1
    %
    
    
    2.0
    %
    
    
    0.5
    %Gain on purchase of senior subordinated notes (c)
    
    
    
    
    
    
    (1.3
    )
    
    
    (4.2
    )
    
    
    
    
    
    
    Interest expense
    
    
    2.4
    
    
    
    6.3
    
    
    
    9.4
    
    
    
    12.5
    
    
    
    15.6Income (loss) before cumulative effect of accounting
change
    
    
    93.1
    
    
    
    66.6
    
    
    
    21.9
    
    
    
    15.4
    
    
    
    (2.9
    )Cumulative effect of change in accounting principle,
net of tax (d)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.0Net income (loss)
    
    $
    93.1
    
    
    $
    66.6
    
    
    $
    21.9
    
    
    $
    15.4
    
    
    $
    (1.9
    )Net income (loss) as a percent of net sales
    
    
    4.5
    %
    
    
    3.3
    %
    
    
    1.2
    %
    
    
    0.8
    %
    
    
    (0.1
    )%Per Share Data:Income (loss) per common share  diluted:Income (loss) before cumulative effect of accounting
change
    
    $
    3.46
    
    
    $
    2.51
    
    
    $
    0.86
    
    
    $
    0.62
    
    
    $
    (0.12
    )Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.04Net income (loss)  diluted
    
    $
    3.46
    
    
    $
    2.51
    
    
    $
    0.86
    
    
    $
    0.62
    
    
    $
    (0.08
    )Weighted average shares outstanding  diluted (000s)
    
    
    26,924
    
    
    
    26,535
    
    
    
    25,483
    
    
    
    24,950
    
    
    
    23,519Financial Position:Cash and cash equivalents
    
    $
    214.8
    
    
    $
    217.1
    
    
    $
    80.6
    
    
    $
    25.4
    
    
    $
    18.4Inventories
    
    
    436.0
    
    
    
    416.8
    
    
    
    429.4
    
    
    
    472.2
    
    
    
    453.4Inventory turnover
    
    
    2.4
    x
    
    
    2.4
    x
    
    
    2.3
    x
    
    
    2.2
    x
    
    
    2.0
    xCurrent assets
    
    
    704.8
    
    
    
    686.1
    
    
    
    563.8
    
    
    
    547.8
    
    
    
    543.8Property, equipment and leasehold improvements, net
    
    
    295.7
    
    
    
    293.7
    
    
    
    314.8
    
    
    
    297.5
    
    
    
    311.8Total assets
    
    
    1,020.6
    
    
    
    1,000.4
    
    
    
    899.7
    
    
    
    869.4
    
    
    
    866.3Current liabilities (e)
    
    
    286.0
    
    
    
    327.2
    
    
    
    248.0
    
    
    
    228.7
    
    
    
    225.5
 21




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##### 



Fiscal Year-Ended (a)January 29,
    
    
    January 30,
    
    
    January 31,
    
    
    February 2,
    
    
    February 3,2011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007(Dollars in millions, except per share data)Long-term debt
    
    
    
    
    
    
    
    
    
    
    66.0
    
    
    
    100.0
    
    
    
    125.3Shareholders equity
    
    
    614.3
    
    
    
    565.6
    
    
    
    477.7
    
    
    
    440.0
    
    
    
    409.8Debt to total capitalization
    
    
    0.0
    %
    
    
    7.7
    %
    
    
    12.1
    %
    
    
    18.5
    %
    
    
    23.4
    %Debt to total capitalization, net of cash and
cash equivalents
    
    
    (53.8
    )%
    
    
    (42.8
    )%
    
    
    (3.2
    )%
    
    
    14.5
    %
    
    
    20.7
    %Per Share Data:Book value (f)
    
    $
    24.01
    
    
    $
    21.57
    
    
    $
    18.95
    
    
    $
    17.97
    
    
    $
    17.18Shares outstanding, net of treasury shares (000s)
    
    
    25,588
    
    
    
    26,216
    
    
    
    25,204
    
    
    
    24,485
    
    
    
    23,857Other Financial Information:Capital expenditures:Cash
    
    $
    49.8
    
    
    $
    29.2
    
    
    $
    63.6
    
    
    $
    28.6
    
    
    $
    44.6Cash  landlord reimbursement (g)
    
    
    11.8
    
    
    
    10.5
    
    
    
    11.1
    
    
    
    9.1
    
    
    
    13.5Total capital expenditures
    
    $
    61.6
    
    
    $
    39.7
    
    
    $
    74.7
    
    
    $
    37.7
    
    
    $
    58.1Store Count:Small-format stores
    
    
    516
    
    
    
    518
    
    
    
    554
    
    
    
    578
    
    
    
    615Large-format stores
    
    
    235
    
    
    
    228
    
    
    
    210
    
    
    
    196
    
    
    
    186Total
    
    
    751
    
    
    
    746
    
    
    
    764
    
    
    
    774
    
    
    
    801Store Square Footage (000s)(h)Small-format stores
    
    
    7,721
    
    
    
    7,619
    
    
    
    8,141
    
    
    
    8,477
    
    
    
    9,034Large-format stores
    
    
    8,462
    
    
    
    8,324
    
    
    
    7,861
    
    
    
    7,455
    
    
    
    7,181Total
    
    
    16,183
    
    
    
    15,943
    
    
    
    16,002
    
    
    
    15,932
    
    
    
    16,215
 
 (a)
    
    All years include 52 weeks except for the fiscal year-ended February 3, 2007, which includes 53 weeks.(b)
    
    Same-store sales are defined as net sales from stores that have been open one year or more. Net sales
are included in the same-store sales calculation on the first day of the first month following the
one-year anniversary of a stores opening. In conjunction with the expansion or relocation of a store,
the net sales results from that store is excluded from the same-store sales calculation until the first
day of the first month following the one-year anniversary of that stores expansion or relocation.
Further, in a 53-week year, net sales of the first 52 weeks are compared to the comparable 52 weeks of
the prior period.(c)
    
    Gain on purchase of senior subordinated notes includes the gain, net of related write-off of applicable
deferred financing costs, on the purchase of the companys senior subordinated notes. See Note 6 
Financing, contained in the notes to consolidated financial statements.(d)
    
    Effective January 29, 2006, the company changed its measurement of stock-based compensation using the
fair value method of accounting, resulting in a cumulative after-tax adjustment related to estimated
forfeitures.(e)
    
    On March 1, 2010, the company redeemed all outstanding principal amount of its 7.5 percent senior
subordinated notes of approximately $47.5 million at par early, which was announced on January 5, 2010.
As such, the company has classified the senior subordinated notes as short-term as of January 30, 2010.(f)
    
    Book value is calculated by dividing shareholders equity by shares outstanding, net of treasury shares.(g)
    
    Capital expenditures reimbursed by the landlord represent the cost of assets acquired through the
utilization of landlord lease incentives.(h)
    
    Total store square footage includes selling floor space and inventory storage areas. 22




---



##### 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
   
    
    Net sales.We closely monitor our net sales, including net sales from stores open one
year or more (same-store sales), by our two store formats, small-format stores and
large-format stores. Net sales in the aggregate and by store type are compared to previous
periods to measure our overall sales growth, and same-store sales are compared to previous
periods to determine whether existing stores are growing their sales volume. We also closely
monitor average ticket value, both in total and by store format. Average ticket represents
total sales divided by the total number of customer transactions. Customer transactions are
impacted by the number of customers that shop in our stores. These indicators help to
measure the effectiveness of our product assortments, promotions and service.
    
    Gross margin.Our management uses gross margin to evaluate merchandising, marketing and
operating effectiveness for the company. Merchandise selection and other future decisions
such as pricing and promotional activity are, in part, based on gross margin performance.
    
    Selling, general and administrative expense as a percent of sales.We monitor the
leveraging of selling, general and administrative expense in relation to our sales in order
to measure our effectiveness in managing expenses.
    
    Inventory.We closely monitor our inventory investment, which is our single largest
invested asset, and our inventory turnover rate. Due to the large investment in inventory,
changes in inventory levels can have a significant impact on our liquidity. Also, inventory
turnover is an indicator of how effectively we manage our inventory levels in relation to
our sales.
 An overview of our fiscal 2011 performance compared with fiscal 2010 performance follows:
 
    
    Net sales increased 4.4 percent to $2.079 billion. Same-store sales increased 3.5 percent
versus a 3.1 percent same-store sales increase for the prior year. The increase in
same-store sales was driven by a 2.8 percent increase in customer transactions, along with a
0.7 percent increase in average ticket. We continue to see the on-going benefits from store
remodels, performance on new products, continued benefits from modifications we made to our
marketing content to deliver a stronger value message and the benefit of competitive
withdrawals in the sewing business.
    
    Our gross margin rate, as a percentage of net sales, increased 110 basis points from 49.0
percent to 50.1 percent, primarily due to direct sourcing, and effective inventory
management.
    
    Our selling, general and administrative expenses (SG&A), as a percentage of net sales,
excluding those expenses separately identified in the statement of operations, decreased 50
basis points from 39.9 percent during fiscal 2010 to 39.4 percent during fiscal 2011. The
decrease is primarily due to expense leverage from the increase in sales as well as the
result of our continued efforts to control expenses. Included in SG&A are $3.2 million of
transaction related expenses associated with the proposed merger with an affiliate of
Leonard Green & Partners, L.P.
    
    Inventory increased by $19.2 million in fiscal 2011 primarily to support our expected
sales growth and our first quarter of fiscal 2012 new store openings, remodels and
optimizations. During fiscal 2011, we maintained consistent store in-stocks and had no
holiday merchandise carryover at year end. Our inventory turnover also remained consistent
at 2.4 turns for fiscal 2011 and 2010, respectively.
 23




---



##### 



Executive Overview of Fiscal 2011
 Qtr 1
    
    
    Qtr 2
    
    
    Qtr 3
    
    
    Qtr 4
    
    
    Total(dollars in millions)Net sales
    
    $
    480.3
    
    
    $
    439.3
    
    
    $
    535.3
    
    
    $
    624.1
    
    
    $
    2,079.0Same-store sales percent change
    
    
    4.1
    %
    
    
    4.4
    %
    
    
    4.1
    %
    
    
    2.0
    %
    
    
    3.5
    %Gross margin
    
    $
    242.4
    
    
    $
    221.7
    
    
    $
    276.2
    
    
    $
    300.3
    
    
    $
    1,040.6Gross margin percent
    
    
    50.5
    %
    
    
    50.5
    %
    
    
    51.6
    %
    
    
    48.1
    %
    
    
    50.1
    %Gross margin basis point change from prior year
    
    
    200
    
    
    
    120
    
    
    
    60
    
    
    
    50
    
    
    
    110Selling, general and administrative expenses
    
    $
    195.4
    
    
    $
    194.5
    
    
    $
    209.4
    
    
    $
    218.9
    
    
    $
    818.2SG&A percent to sales
    
    
    40.7
    %
    
    
    44.3
    %
    
    
    39.1
    %
    
    
    35.1
    %
    
    
    39.4
    %SG&A basis point change from prior year
    
    
    (70
    )
    
    
    (180
    )
    
    
    (60
    )
    
    
    60
    
    
    
    (50
    )Net income
    
    $
    18.2
    
    
    $
    5.4
    
    
    $
    29.1
    
    
    $
    40.4
    
    
    $
    93.1Net income percent to sales
    
    
    3.8
    %
    
    
    1.2
    %
    
    
    5.4
    %
    
    
    6.5
    %
    
    
    4.5
    %Net income basis point change from prior year
    
    
    190
    
    
    
    200
    
    
    
    70
    
    
    
    30
    
    
    
    120
         24




---



##### 



Recent Developments and Business Update
      Results of Operations
  Fiscal Year-EndedJan 29, 2011
    
    
    Jan 30, 2010
    
    
    Jan 31, 2009Net sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Gross margin
    
    
    50.1
    %
    
    
    49.0
    %
    
    
    46.4
    %Selling, general and administrative expenses
    
    
    39.4
    %
    
    
    39.9
    %
    
    
    40.8
    %Store pre-opening and closing costs
    
    
    0.5
    %
    
    
    0.6
    %
    
    
    0.6
    %Depreciation and amortization
    
    
    2.8
    %
    
    
    2.8
    %
    
    
    2.9
    %Operating profit
    
    
    7.4
    %
    
    
    5.7
    %
    
    
    2.1
    %
 Comparison of the 52 Weeks Ended January 29, 2011, January 30, 2010 and January 31, 2009
 Net sales.
 Consolidated Net Sales:
 Percentage
    
    
    PercentageChange
    
    
    Change(Dollars in millions)
    
    FY11
    
    
    FY10
    
    
    FY09
    
    
    FY11 vs. FY10
    
    
    FY10 vs. FY09Consolidated net sales
    
    $
    2,079.0
    
    
    $
    1,990.7
    
    
    $
    1,901.1
    
    
    
    4.4
    %
    
    
    4.7
    %Increase from prior year
    
    $
    88.3
    
    
    $
    89.6Same-store sales percentage change
    
    
    3.5
    %
    
    
    3.1
    %
    
    
    0.5
    %
 Fiscal 2011:
  25




---



##### 



Fiscal 2010:
    Sales by Segment:
 Percentage
    
    
    PercentageChange
    
    
    Change(Dollars in millions)
    
    FY11
    
    
    FY10
    
    
    FY09
    
    
    FY11 vs. FY10
    
    
    FY10 vs. FY09Large-format storesNet sales
    
    $
    1,110.1
    
    
    $
    1,075.5
    
    
    $
    1,000.3
    
    
    
    3.2
    %
    
    
    7.5
    %Increase from prior year
    
    $
    34.6
    
    
    $
    75.2Same-store sales percentage change
    
    
    1.9
    %
    
    
    1.4
    %
    
    
    (1.0
    )%Small-format storesNet sales
    
    $
    924.4
    
    
    $
    877.3
    
    
    $
    865.1
    
    
    
    5.4
    %
    
    
    1.4
    %Increase from prior year
    
    $
    47.1
    
    
    $
    12.2Same-store sales percentage change
    
    
    5.6
    %
    
    
    5.1
    %
    
    
    2.1
    %OtherNet sales
    
    $
    44.5
    
    
    $
    37.9
    
    
    $
    35.7
    
    
    
    17.4
    %
    
    
    6.2
    %Increase from prior year
    
    $
    6.6
    
    
    $
    2.2
 Fiscal 2011:
   26




---



##### 



Fiscal 2010:
      G ross Margin.
 Gross Margin:
 Percentage
    
    
    PercentageChange
    
    
    Change(Dollars in millions)
    
    FY11
    
    
    FY10
    
    
    FY09
    
    
    FY11 vs. FY10
    
    
    FY10 vs. FY09Gross margin
    
    $
    1,040.6
    
    
    $
    975.7
    
    
    $
    882.5
    
    
    
    6.7
    %
    
    
    10.6
    %Increase from prior year
    
    $
    64.9
    
    
    $
    93.2Percentage of consolidated net sales
    
    
    50.1
    %
    
    
    49.0
    %
    
    
    46.4
    %
    
    110
    bps
    
    260
    bps
 27




---



##### 



Selling, general and administrative expenses.
 Selling, general and administrative expenses:
 Percentage
    
    
    PercentageChange
    
    
    Change(Dollars in millions)
    
    FY11
    
    
    FY10
    
    
    FY09
    
    
    FY11 vs. FY10
    
    
    FY10 vs. FY09SG&A
    
    $
    818.2
    
    
    $
    793.6
    
    
    $
    775.3
    
    
    
    3.1
    %
    
    
    2.4
    %Increase from prior year
    
    $
    24.6
    
    
    $
    18.3Percentage of consolidated net sales
    
    
    39.4
    %
    
    
    39.9
    %
    
    
    40.8
    %
    
    (50
    bps)
    
    (90
    bps)
       Store pre-opening and closing costs.
 28




---



##### 



Store pre-opening and closing costs:
 Percentage
    
    
    PercentageChange
    
    
    Change(Dollars in millions)
    
    FY11
    
    
    FY10
    
    
    FY09
    
    
    FY11 vs. FY10
    
    
    FY10 vs. FY09Store pre-opening and closing costs
    
    $
    11.3
    
    
    $
    11.7
    
    
    $
    12.3
    
    
    
    (3.4
    )%
    
    
    (4.9
    )%Decrease from prior year
    
    $
    (0.4
    )
    
    $
    (0.6
    )Percentage of consolidated net sales
    
    
    0.5
    %
    
    
    0.6
    %
    
    
    0.6
    %
    
    (10
    bps)
    
    Store pre-opening costs
    
    $
    8.3
    
    
    $
    5.5
    
    
    $
    7.8
    
    
    
    50.9
    %
    
    
    (29.5
    )%Increase (decrease) from prior year
    
    $
    2.8
    
    
    $
    (2.3
    )Stores opened
    
    
    30
    
    
    
    20
    
    
    
    21Store closing costs
    
    $
    3.0
    
    
    $
    6.2
    
    
    $
    4.5
    
    
    
    (51.6
    )%
    
    
    37.8
    %(Decrease) increase from prior year
    
    $
    (3.2
    )
    
    $
    1.7Stores closed
    
    
    25
    
    
    
    38
    
    
    
    31
   Depreciation and amortization.
  Operating profit:
 Percentage
    
    
    PercentageChange
    
    
    Change(Dollars in millions)
    
    FY11
    
    
    FY10
    
    
    FY09
    
    
    FY11 vs. FY10
    
    
    FY10 vs. FY09Operating profit
    
    $
    153.7
    
    
    $
    114.1
    
    
    $
    40.7
    
    
    
    34.7
    %
    
    
    180.3
    %Increase from prior year
    
    $
    39.6
    
    
    $
    73.4Percentage of consolidated net sales
    
    
    7.4
    %
    
    
    5.7
    %
    
    
    2.1
    %
    
    170
    bps
    
    360
    bps
   29




---



##### 



Operating profit (loss) by Segment:
 Percentage
    
    
    PercentageChange
    
    
    Change(dollars in millions)
    
    FY11
    
    
    FY10
    
    
    FY09
    
    
    FY11 vs. FY10
    
    
    FY10 vs. FY09Large-format storesOperating profit
    
    $
    141.8
    
    
    $
    119.8
    
    
    $
    69.2
    
    
    
    18.4
    %
    
    
    73.1
    %Increase from prior year
    
    $
    22.0
    
    
    $
    50.6Small-format storesOperating profit
    
    $
    141.1
    
    
    $
    128.2
    
    
    $
    95.8
    
    
    
    10.1
    %
    
    
    33.8
    %Increase from prior year
    
    $
    12.9
    
    
    $
    32.4OtherOperating loss
    
    $
    (129.2
    )
    
    $
    (133.9
    )
    
    $
    (124.3
    )
    
    
    3.5
    %
    
    
    (7.7
    )%Decrease (increase) from prior year
    
    $
    4.7
    
    
    $
    (9.6
    )
 Fiscal 2011:
    Fiscal 2010:
    Gain on purchase of senior subordinated notes.
  Interest expense.
  30




---



##### 



Income taxes.
  Store Closing Charges
 Store
pre-opening and closing costs
  Liquidity and Capital Resources
   2011
    
    
    2010
    
    
    2009(In millions)Net cash provided by operating activities
    
    $
    162.4
    
    
    $
    183.2
    
    
    $
    157.3Net cash used for investing activities
    
    
    (64.1
    )
    
    
    (42.8
    )
    
    
    (77.8
    )Net cash used for financing activities
    
    
    (100.6
    )
    
    
    (3.9
    )
    
    
    (24.3
    )Net (decrease) increase in cash and cash equivalents
    
    $
    (2.3
    )
    
    $
    136.5
    
    
    $
    55.2Ending cash and cash equivalents
    
    $
    214.8
    
    
    $
    217.1
    
    
    $
    80.6
 Net Cash Provided By Operating Activities:
      31




---



##### 



Net Cash Used For Investing Activities
  Capital Expenditures
  2011
    
    
    2010
    
    
    2009Cash
    
    $
    49.8
    
    
    $
    29.2
    
    
    $
    63.6Cash  landlord-reimbursed
    
    
    11.8
    
    
    
    10.5
    
    
    
    11.1Total
    
    $
    61.6
    
    
    $
    39.7
    
    
    $
    74.7
     Net Cash Used For Financing Activities
    32




---



##### 



Common Share Repurchases
   Sources of Liquidity
    Secured Credit Facility.
   Senior Subordinated Notes.
 33




---



##### 



Off-Balance Sheet Transactions
  Contractual Obligation and Commitments
  Payments Due by Period (1)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 years(In millions)Standby letters of credit
    
    $
    14.3
    
    
    $
    14.3
    
    
    $
    
    
    
    $
    
    
    
    $
    Purchase commitments(1)
    
    
    13.3
    
    
    
    2.9
    
    
    
    9.7
    
    
    
    0.7
    
    
    
    Royalty commitments(2)
    
    
    0.1
    
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Agent fee commitments(3)
    
    
    6.8
    
    
    
    6.8
    
    
    
    
    
    
    
    
    
    
    
    Operating leases
    
    
    882.4
    
    
    
    158.4
    
    
    
    277.7
    
    
    
    203.1
    
    
    
    243.2Uncertain tax positions(4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amended Credit Facility(5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Contractual Cash Obligations
    
    $
    916.9
    
    
    $
    182.5
    
    
    $
    287.4
    
    
    $
    203.8
    
    
    $
    243.2
 
 (1)
    
    Purchase commitments include legally binding contracts such as firm commitments for
significant inventory purchases. Purchase orders that are not binding agreements
are excluded from the table.(2)
    
    Royalty commitments include guaranteed minimum royalty payments to various
designers for use of their name and product line and are based off a guaranteed
minimum sales figure per year.(3)
    
    Agent fee commissions include minimum commission fees for sourcing import purchases.(4)
    
    We have approximately $5.7 million in uncertain tax positions. However, we are
unable to make a reasonably reliable estimate of the period of cash settlement with
the respective taxing authorities and, therefore, have not included this amount in
the contractual obligations table. See Note 5 to the consolidated financial
statements.(5)
    
    The calculation of interest on the Amended Credit Facility is dependent on the
average borrowings during the year and a variable interest rate. See Liquidity and
Capital Resources  Sources of Liquidityfor further discussion of the Amended
Credit Facility. Seasonality and Inflation
   34




---



##### 



Fiscal 2011
    
    
    Fiscal 2010Qtr 1
    
    
    Qtr 2
    
    
    Qtr 3
    
    
    Qtr 4
    
    
    Qtr 1
    
    
    Qtr 2
    
    
    Qtr 3
    
    
    Qtr 4(In millions)Net sales
    
    $
    480.3
    
    
    $
    439.3
    
    
    $
    535.3
    
    
    $
    624.1
    
    
    $
    460.0
    
    
    $
    419.4
    
    
    $
    509.1
    
    
    $
    602.2Same-store sales percentage change
    
    
    4.1
    %
    
    
    4.4
    %
    
    
    4.1
    %
    
    
    2.0
    %
    
    
    1.0
    %
    
    
    1.8
    %
    
    
    4.3
    %
    
    
    4.4
    %Gross margin
    
    $
    242.4
    
    
    $
    221.7
    
    
    $
    276.2
    
    
    $
    300.3
    
    
    $
    222.9
    
    
    $
    206.6
    
    
    $
    259.8
    
    
    $
    286.4Gross margin percent to sales
    
    
    50.5
    %
    
    
    50.5
    %
    
    
    51.6
    %
    
    
    48.1
    %
    
    
    48.5
    %
    
    
    49.3
    %
    
    
    51.0
    %
    
    
    47.6
    %Operating profit (loss)
    
    $
    30.6
    
    
    $
    10.1
    
    
    $
    48.7
    
    
    $
    64.3
    
    
    $
    14.9
    
    
    $
    (3.4
    )
    
    $
    41.5
    
    
    $
    61.1Operating profit (loss) percent
to sales
    
    
    6.4
    %
    
    
    2.3
    %
    
    
    9.1
    %
    
    
    10.3
    %
    
    
    3.2
    %
    
    
    (0.8
    )%
    
    
    8.2
    %
    
    
    10.1
    %Net income (loss)
    
    $
    18.2
    
    
    $
    5.4
    
    
    $
    29.1
    
    
    $
    40.4
    
    
    $
    8.6
    
    
    $
    (3.2
    )
    
    $
    24.1
    
    
    $
    37.1Inventories
    
    
    405.0
    
    
    
    445.6
    
    
    
    504.3
    
    
    
    436.0
    
    
    
    406.6
    
    
    
    460.1
    
    
    
    485.4
    
    
    
    416.8Debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50.5
    
    
    
    50.5
    
    
    
    47.5
    
    
    
    47.5
  Critical Accounting Policies and Estimates
  Inventory Valuation
     Valuation of Long-Lived Assets and Goodwill
  35




---



##### 



Income Taxes
  Stock-Based Compensation
     36




---



##### 



Non-GAAP Financial Measures
    Fiscal Year Ended2011
    
    
    2010
    
    
    2009Dollars in millionsNet cash provided by operating activities (GAAP measure)
    
    $
    162.4
    
    
    $
    183.2
    
    
    $
    157.3Less operating activities not included in our definition of free cash flowDeferred income taxes
    
    
    (9.9
    )
    
    
    0.3
    
    
    
    (6.8
    )Amortization of deferred financing costs
    
    
    (0.5
    )
    
    
    (0.8
    )
    
    
    (0.8
    )Loss on disposal and impairment of fixed assets
    
    
    (2.2
    )
    
    
    (4.4
    )
    
    
    (2.9
    )Gain on purchase of senior subordinated notes
    
    
    
    
    
    
    1.3
    
    
    
    4.2Increase/(decrease) in lease obligations, net
    
    
    (4.0
    )
    
    
    0.5
    
    
    
    (9.1
    )Increase/(decrease) in other long-term liabilities
    
    
    (1.4
    )
    
    
    0.3
    
    
    
    3.6Other, net
    
    
    
    
    
    
    (0.1
    )
    
    
    (3.4
    )Adjusted net cash provided by operating activities
    
    
    144.4
    
    
    
    180.3
    
    
    
    142.1Less:Total capital expenditures
    
    
    (61.6
    )
    
    
    (39.7
    )
    
    
    (74.7
    )Landlord reimbursed capital expenditures
    
    
    11.8
    
    
    
    10.5
    
    
    
    11.1Capital expenditures, net of landlord allowances
    
    
    (49.8
    )
    
    
    (29.2
    )
    
    
    (63.6
    )Free cash flow (a non-GAAP measure)
    
    $
    94.6
    
    
    $
    151.1
    
    
    $
    78.5
 37




---



##### 



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    38




---



##### 



Item 8. Financial Statements and Supplementary Data
 Jo-Ann Stores, Inc.
 Index to Consolidated Financial Statements
 PageReport of Independent Registered Public Accounting Firm
    
    
    40Consolidated Balance Sheets as of January 29, 2011 and January 30, 2010
    
    
    41Consolidated Statements of Operations for each of the three fiscal years in the period ended January 29, 2011
    
    
    42Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended January 29, 2011
    
    
    43Consolidated Statements of Shareholders Equity for each of the three fiscal years in the period ended January 29, 2011
    
    
    44Notes to Consolidated Financial Statements
    
    
    45
  39




---



##### 



Report of Independent Registered Public Accounting Firm
      /s/  Ernst & Young LLP 
 40




---



##### 



Jo-Ann Stores, Inc.
 
 Consolidated Balance Sheets
 January 29,
    
    
    January 30,2011
    
    
    2010(Dollars in millions, exceptshare and per share data)AssetsCurrent assets:Cash and cash equivalents
    
    $
    214.8
    
    
    $
    217.1Inventories
    
    
    436.0
    
    
    
    416.8Deferred income taxes
    
    
    19.7
    
    
    
    22.3Prepaid expenses and other current assets
    
    
    34.3
    
    
    
    29.9Total current assets
    
    
    704.8
    
    
    
    686.1Property, equipment and leasehold improvements, net
    
    
    295.7
    
    
    
    293.7Goodwill, net
    
    
    11.6
    
    
    
    11.6Other assets
    
    
    8.5
    
    
    
    9.0Total assets
    
    $
    1,020.6
    
    
    $
    1,000.4Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    164.8
    
    
    $
    151.1Accrued expenses
    
    
    121.2
    
    
    
    128.6Senior subordinated notes  short term (Note 6)
    
    
    
    
    
    
    47.5Total current liabilities
    
    
    286.0
    
    
    
    327.2Long-term deferred income taxes
    
    
    9.5
    
    
    
    2.2Lease obligations and other long-term liabilities
    
    
    110.8
    
    
    
    105.4Commitments and contingencies (Note 10)Shareholders equity:Preferred stock, no par value, 5,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, stated value $0.05 per share; 150,000,000 authorized, issued
31,096,750 and 29,989,966, respectively
    
    
    1.6
    
    
    
    1.5Additional paid-in capital
    
    
    264.8
    
    
    
    234.7Retained earnings
    
    
    470.1
    
    
    
    377.0736.5
    
    
    
    613.2Treasury stock, at cost, 5,508,928 shares and 3,773,890 shares, respectively
    
    
    (122.2
    )
    
    
    (47.6
    )Total shareholders equity
    
    
    614.3
    
    
    
    565.6Total liabilities and shareholders equity
    
    $
    1,020.6
    
    
    $
    1,000.4
 See notes to consolidated financial statements
 41




---



##### 



Jo-Ann
Stores, Inc.
 
 Consolidated Statements of Operations
 Fiscal Year-EndedJanuary 29,
    
    
    January 30,
    
    
    January 31,2011
    
    
    2010
    
    
    2009(Dollars in millions,except earnings per share data)Net sales
    
    $
    2,079.0
    
    
    $
    1,990.7
    
    
    $
    1,901.1Cost of sales (exclusive of depreciation and amortization shown separately below)
    
    
    1,038.4
    
    
    
    1,015.0
    
    
    
    1,018.6Gross margin
    
    
    1,040.6
    
    
    
    975.7
    
    
    
    882.5Selling, general and administrative expenses
    
    
    818.2
    
    
    
    793.6
    
    
    
    775.3Store pre-opening and closing costs
    
    
    11.3
    
    
    
    11.7
    
    
    
    12.3Depreciation and amortization
    
    
    57.4
    
    
    
    56.3
    
    
    
    54.2Operating profit
    
    
    153.7
    
    
    
    114.1
    
    
    
    40.7Gain on purchase of senior subordinated notes
    
    
    
    
    
    
    (1.3
    )
    
    
    (4.2
    )Interest expense, net
    
    
    2.4
    
    
    
    6.3
    
    
    
    9.4Income before income taxes
    
    
    151.3
    
    
    
    109.1
    
    
    
    35.5Income tax provision
    
    
    58.2
    
    
    
    42.5
    
    
    
    13.6Net income
    
    $
    93.1
    
    
    $
    66.6
    
    
    $
    21.9Net income per common share  basic
    
    $
    3.58
    
    
    $
    2.60
    
    
    $
    0.88Net income per common share  diluted
    
    $
    3.46
    
    
    $
    2.51
    
    
    $
    0.86
 See notes to consolidated financial statements
 42




---



##### 



Jo-Ann Stores, Inc.
 
 Consolidated Statements of Cash Flows
 Fiscal Year-EndedJanuary 29,
    
    
    January 30,
    
    
    January 31,2011
    
    
    2010
    
    
    2009(Dollars in millions)Net cash flows from operating activities:Net income
    
    $
    93.1
    
    
    $
    66.6
    
    
    $
    21.9Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    57.4
    
    
    
    56.3
    
    
    
    54.2Deferred income taxes
    
    
    9.9
    
    
    
    (0.3
    )
    
    
    6.8Stock-based compensation expense
    
    
    8.7
    
    
    
    9.0
    
    
    
    9.4Amortization of deferred financing costs
    
    
    0.5
    
    
    
    0.8
    
    
    
    0.8Loss on disposal and impairment of fixed assets
    
    
    2.2
    
    
    
    4.4
    
    
    
    2.9Gain on purchase of senior subordinated notes
    
    
    
    
    
    
    (1.3
    )
    
    
    (4.2
    )Gross excess tax deficit on stock-based compensation
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.6
    )Changes in operating assets and liabilities:(Increase) decrease in inventories
    
    
    (19.2
    )
    
    
    12.6
    
    
    
    42.8(Increase) decrease in prepaid expenses and other current assets
    
    
    (4.4
    )
    
    
    1.8
    
    
    
    (7.9
    )Increase in accounts payable
    
    
    13.7
    
    
    
    6.0
    
    
    
    15.7(Decrease) increase in accrued expenses
    
    
    (4.9
    )
    
    
    28.8
    
    
    
    6.6Increase (decrease) in lease obligations, net
    
    
    4.0
    
    
    
    (0.5
    )
    
    
    9.1Increase (decrease) in other long-term liabilities
    
    
    1.4
    
    
    
    (0.3
    )
    
    
    (3.6
    )Other, net
    
    
    
    
    
    
    0.1
    
    
    
    3.4Net cash provided by operating activities
    
    
    162.4
    
    
    
    183.2
    
    
    
    157.3Net cash used for investing activities:Capital expenditures
    
    
    (61.6
    )
    
    
    (39.7
    )
    
    
    (74.7
    )Payment for acquisition
    
    
    (2.5
    )
    
    
    (3.1
    )
    
    
    (3.1
    )Net cash used for investing activities
    
    
    (64.1
    )
    
    
    (42.8
    )
    
    
    (77.8
    )Net cash flows used for financing activities:Purchase of senior subordinated notes
    
    
    (47.5
    )
    
    
    (17.0
    )
    
    
    (29.5
    )Proceeds from stock-based compensation plans
    
    
    13.2
    
    
    
    13.5
    
    
    
    6.0Purchase of Jo-Ann Stores, Inc. common stock
    
    
    (74.6
    )
    
    
    (1.8
    )
    
    
    (1.3
    )Gross excess tax benefit on stock-based compensation
    
    
    8.3
    
    
    
    1.4
    
    
    
    2.3Other
    
    
    
    
    
    
    
    
    
    
    (1.8
    )Net cash used for financing activities
    
    
    (100.6
    )
    
    
    (3.9
    )
    
    
    (24.3
    )Net (decrease) increase in cash and cash equivalents
    
    
    (2.3
    )
    
    
    136.5
    
    
    
    55.2Cash and cash equivalents at beginning of year
    
    
    217.1
    
    
    
    80.6
    
    
    
    25.4Cash and cash equivalents at end of year
    
    $
    214.8
    
    
    $
    217.1
    
    
    $
    80.6Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    3.2
    
    
    $
    5.9
    
    
    $
    9.4Income taxes, net of refunds
    
    
    45.1
    
    
    
    30.7
    
    
    
    2.3
 See notes to consolidated financial statements
 43




---



##### 



Jo-Ann Stores, Inc.
 
 Consolidated Statements of Shareholders Equity
 CommonNet
    
    
    
    
    
    
    
    Stock
    
    
    Additional
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Treasury
    
    
    
    Stated
    
    
    Paid-In
    
    
    Treasury
    
    
    Retained
    
    
    ShareholdersShares
    
    
    Shares
    
    
    
    Value
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Equity(Shares in thousands)
    
    
    
    (Dollars in millions)Balance, February 2, 2008
    
    
    24,485
    
    
    
    3,587
    
    
    
    $
    1.4
    
    
    $
    194.6
    
    
    $
    (44.5
    )
    
    $
    288.5
    
    
    $
    440.0Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.9
    
    
    
    21.9Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.9Exercise of stock options
    
    
    406
    
    
    
    
    
    
    
    
    
    
    
    
    4.1
    
    
    
    
    
    
    
    
    
    
    
    4.1Tax benefit on equity compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    1.7Stock-based compensation
    
    
    248
    
    
    
    
    
    
    
    
    
    
    
    
    9.4
    
    
    
    
    
    
    
    
    
    
    
    9.4Purchase of common stock
    
    
    (81
    )
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    
    (1.3
    )
    
    
    
    
    
    
    (1.3
    )Issuance of common stock 
Associate Stock Ownership Plan
    
    
    146
    
    
    
    
    
    
    
    
    
    
    
    
    1.9
    
    
    
    
    
    
    
    
    
    
    
    1.9Balance, January 31, 2009
    
    
    25,204
    
    
    
    3,668
    
    
    
    
    1.4
    
    
    
    211.7
    
    
    
    (45.8
    )
    
    
    310.4
    
    
    
    477.7Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66.6
    
    
    
    66.6Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66.6Exercise of stock options
    
    
    635
    
    
    
    
    
    
    
    
    
    
    
    
    11.8
    
    
    
    
    
    
    
    
    
    
    
    11.8Tax benefit on equity compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Stock-based compensation
    
    
    360
    
    
    
    
    
    
    
    
    0.1
    
    
    
    8.9
    
    
    
    
    
    
    
    
    
    
    
    9.0Purchase of common stock
    
    
    (106
    )
    
    
    106
    
    
    
    
    
    
    
    
    
    
    
    
    (1.8
    )
    
    
    
    
    
    
    (1.8
    )Issuance of common stock 
Associate Stock Ownership Plan
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    1.7Balance, January 30, 2010
    
    
    26,216
    
    
    
    3,774
    
    
    
    
    1.5
    
    
    
    234.7
    
    
    
    (47.6
    )
    
    
    377.0
    
    
    
    565.6Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93.1
    
    
    
    93.1Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93.1Exercise of stock options
    
    
    620
    
    
    
    
    
    
    
    
    
    
    
    
    11.4
    
    
    
    
    
    
    
    
    
    
    
    11.4Tax benefit on equity compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.3
    
    
    
    
    
    
    
    
    
    
    
    8.3Stock-based compensation
    
    
    423
    
    
    
    
    
    
    
    
    0.1
    
    
    
    8.6
    
    
    
    
    
    
    
    
    
    
    
    8.7Purchase of common stock
    
    
    (1,735
    )
    
    
    1,735
    
    
    
    
    
    
    
    
    
    
    
    
    (74.6
    )
    
    
    
    
    
    
    (74.6
    )Issuance of common stock 
Associate Stock Ownership Plan
    
    
    64
    
    
    
    
    
    
    
    
    
    
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    1.8Balance, January 29, 2011
    
    
    25,588
    
    
    
    5,509
    
    
    
    $
    1.6
    
    
    $
    264.8
    
    
    $
    (122.2
    )
    
    $
    470.1
    
    
    $
    614.3
 See notes to consolidated financial statements
 44




---



##### 



Jo-Ann Stores, Inc.
 
 Notes to Consolidated Financial Statements
 Note 1  Significant Accounting Policies
 Nature of Operations
    Basis of Presentation
  Use of Estimates
  Fiscal Year
  Cash and Cash Equivalents
  Inventories
   45




---



##### 



Property, Equipment and Leasehold Improvements
   Fiscal Year2011
    
    
    2010(Dollars in millions)Land and buildings
    
    $
    73.6
    
    
    $
    71.1Furniture, fixtures and equipment
    
    
    542.6
    
    
    
    523.7Leasehold improvements
    
    
    192.5
    
    
    
    169.8Construction in progress
    
    
    6.6
    
    
    
    11.3815.3
    
    
    
    775.9Less accumulated depreciation and amortization
    
    
    (519.6
    )
    
    
    (482.2
    )Property, equipment and leasehold improvements, net
    
    $
    295.7
    
    
    $
    293.7
 Software Development
  Goodwill
    46




---



##### 



Impairment of Long-Lived Assets
   Fiscal Year-Ended2011
    
    
    2010
    
    
    2009(Dollars in millions)SegmentLarge-format stores
    
    $
    0.3
    
    
    $
    2.3
    
    
    $
    1.9Small-format stores
    
    
    0.0
    
    
    
    0.1
    
    
    
    0.1Total
    
    $
    0.3
    
    
    $
    2.4
    
    
    $
    2.0
 Store Pre-Opening and Closing Costs
   Fiscal Year-Ended2011
    
    
    2010
    
    
    2009(Dollars in millions)Store pre-opening costs
    
    $
    8.3
    
    
    $
    5.5
    
    
    $
    7.8Store closing costs
    
    
    3.0
    
    
    
    6.2
    
    
    
    4.5$
    11.3
    
    
    $
    11.7
    
    
    $
    12.3
 Accrued Expenses
  47




---



##### 



Fiscal Year2011
    
    
    2010(Dollars in millions)Accrued taxes
    
    $
    27.5
    
    
    $
    28.9Accrued compensation
    
    
    36.0
    
    
    
    37.0Workers compensation and general liability insurance
    
    
    10.0
    
    
    
    9.3Capital expenditures payable
    
    
    6.3
    
    
    
    6.4Occupancy and rent-related liabilities
    
    
    16.6
    
    
    
    15.8Customer gift cards
    
    
    14.4
    
    
    
    13.2Other
    
    
    10.4
    
    
    
    18.0Total accrued expenses
    
    $
    121.2
    
    
    $
    128.6
 Lease obligations and other long-term liabilities
  Fiscal Year2011
    
    
    2010(Dollars in millions)Workers compensation and general liability insurance
    
    $
    16.7
    
    
    $
    15.2Occupancy and rent-related liabilities
    
    
    79.8
    
    
    
    75.7Other
    
    
    14.3
    
    
    
    14.5Total lease obligations and other long-term liabilities
    
    $
    110.8
    
    
    $
    105.4
  Fiscal Year-Ended
    
    Liability(Dollars in millions)2012
    
    $
    10.02013
    
    
    5.42014
    
    
    3.92015
    
    
    2.52016
    
    
    2.0Thereafter
    
    
    2.9Total workers compensation and general liability insurance
    
    $
    26.7
 Financial Instruments
  Fair Value Measurements
   48




---



##### 



Income Taxes
   Revenue Recognition
   49




---



##### 



Cost of Sales
   Operating Leases
   Advertising Costs
  Earnings Per Share
  Fiscal Year-Ended2011
    
    
    2010
    
    
    2009(Dollars in millions, except per share data)Net income
    
    $
    93.1
    
    
    $
    66.6
    
    
    $
    21.9Weighted average shares outstanding (shares in thousands):Basic
    
    
    26,016
    
    
    
    25,655
    
    
    
    24,886Incremental shares from assumed exercise of stock options
    
    
    374
    
    
    
    318
    
    
    
    200Incremental restricted shares
    
    
    534
    
    
    
    562
    
    
    
    397Diluted
    
    
    26,924
    
    
    
    26,535
    
    
    
    25,483Net income per common share  basic
    
    $
    3.58
    
    
    $
    2.60
    
    
    $
    0.88Net income per common share  diluted
    
    $
    3.46
    
    
    $
    2.51
    
    
    $
    0.86
 50




---



##### 



Stock-Based Compensation
    Fiscal Year-Ended2011
    
    
    2010
    
    
    2009(Dollars in millions)Stock option compensation expense(a)
    
    $
    1.5
    
    
    $
    2.5
    
    
    $
    4.3Restricted stock award amortization
    
    
    7.2
    
    
    
    6.5
    
    
    
    5.1Cash-settled Stock Value Bonus Plan
    
    
    3.5
    
    
    
    1.9
    
    
    
    $
    12.2
    
    
    $
    10.9
    
    
    $
    9.4
 
 (a)
    
    Included within stock option compensation expense is expense related
to the employee stock purchase plan (the Associate Stock Ownership
Plan or ASOP). The associated expense is not significant.   Fiscal Year-Ended2011
    
    
    2010
    
    
    2009Weighted average fair value of options granted
    
    $
    17.51
    
    
    $
    5.27
    
    
    $
    4.87Expected volatility of underlying stock
    
    
    .554 to .611
    
    
    
    .550 to .605
    
    
    
    .437 to .459Risk-free interest rates
    
    1.2% to 2.0%
    
    1.4% to 1.6%
    
    2.1% to 3.2%Expected life
    
    
    2.2 to 5.2 years
    
    
    
    2.2 to 5.2 years
    
    
    
    2.2 to 5.2 yearsExpected life  Associate Stock Ownership Plan
    
    6 months
    
    
    6 months
    
    
    6 months
  Note 2  Goodwill
   51




---



##### 



Note 3  Mergers and Acquisitions
    Note 4  Store Closings
  Fiscal Year-Ended2011
    
    
    2010
    
    
    2009(Dollars in millions)Store Closing Charges:Non-cancelable lease obligations
    
    $
    1.3
    
    
    $
    1.5
    
    
    $
    0.2Asset-related charges
    
    
    0.9
    
    
    
    1.5
    
    
    
    0.7Other store closing costs
    
    
    0.8
    
    
    
    3.2
    
    
    
    3.6Total
    
    $
    3.0
    
    
    $
    6.2
    
    
    $
    4.5
    Note 5  Income Taxes
   52




---



##### 



Fiscal Year2011
    
    
    2010
    
    
    2009(Dollars in millions)Balance at beginning of fiscal year
    
    $
    7.0
    
    
    $
    8.0
    
    
    $
    7.8Increases related to prior year tax positions
    
    
    
    
    
    
    
    
    
    
    0.2Decreases related to prior year tax positions
    
    
    
    
    
    
    
    
    
    
    (0.2
    )Increases related to current year tax positions
    
    
    
    
    
    
    0.4
    
    
    
    1.0Settlements
    
    
    (0.4
    )
    
    
    (0.9
    )
    
    
    Lapse of statute of limitations
    
    
    (0.9
    )
    
    
    (0.5
    )
    
    
    (0.8
    )Balance at end of fiscal year
    
    $
    5.7
    
    
    $
    7.0
    
    
    $
    8.0
  Fiscal Year-Ended2011
    
    
    2010
    
    
    2009(Dollars in millions)Current:Federal
    
    $
    44.0
    
    
    $
    36.0
    
    
    $
    5.6State and local
    
    
    4.3
    
    
    
    6.8
    
    
    
    1.248.3
    
    
    
    42.8
    
    
    
    6.8Deferred
    
    
    9.9
    
    
    
    (0.3
    )
    
    
    6.8Income tax provision
    
    $
    58.2
    
    
    $
    42.5
    
    
    $
    13.6
  Fiscal Year-Ended2011
    
    
    2010
    
    
    2009(Dollars in millions)Federal income tax at the statutory rate
    
    $
    53.0
    
    
    $
    38.2
    
    
    $
    12.4Effect of:State and local taxes
    
    
    5.1
    
    
    
    5.1
    
    
    
    1.3Other, net
    
    
    0.1
    
    
    
    (0.8
    )
    
    
    (0.1
    )Income tax provision
    
    $
    58.2
    
    
    $
    42.5
    
    
    $
    13.6
  53




---



##### 



Fiscal YearAsset/(Liability)2011
    
    
    2010(Dollars in millions)CurrentDeferred tax assets:Inventory items
    
    $
    7.5
    
    
    $
    8.6Lease obligations
    
    
    0.5
    
    
    
    0.5Employee benefits
    
    
    9.1
    
    
    
    7.9Valuation allowances
    
    
    (1.8
    )
    
    
    (1.6
    )Other
    
    
    4.4
    
    
    
    6.9Net current deferred tax asset
    
    $
    19.7
    
    
    $
    22.3Non-currentDeferred tax assets:Lease obligations
    
    $
    35.6
    
    
    $
    33.7Employee benefits
    
    
    6.8
    
    
    
    8.0Federal net operating loss carryforwards
    
    
    8.6
    
    
    
    9.5State net operating loss carryforwards
    
    
    1.9
    
    
    
    1.9State credits
    
    
    4.3
    
    
    
    4.4Other
    
    
    1.0
    
    
    
    3.6Valuation allowances
    
    
    (2.3
    )
    
    
    (2.5
    )55.9
    
    
    
    58.6Deferred tax liabilities:Depreciation
    
    
    (65.4
    )
    
    
    (60.2
    )Other
    
    
    
    
    
    
    (0.6
    )(65.4
    )
    
    
    (60.8
    )Net non-current deferred tax liability
    
    $
    (9.5
    )
    
    $
    (2.2
    )Total Deferred Taxes
    
    $
    10.2
    
    
    $
    20.1
  Note 6  Financing
  Secured Credit Facility
   54




---



##### 



Senior Subordinated Notes
     gain on purchase of senior
subordinated notes
 Note 7  Capital Stock
 Right to Acquire Shares
  Note 8  Stock-Based Compensation
   Plan
    
    Overview2008 Incentive Compensation Plan (the 2008 Plan)
    
    Approved by
Shareholders on
June 11, 2008.
Allows for the
grant of stock
appreciation
rights, stock
awards, stock
options, stock
purchase rights and
incentive
compensation awards
(payable in shares
or cash) to
employees and
non-employee
directors. It also
allows the
operation of a
deferred stock
program for
non-employee
directors. At
January 29, 2011,
285,711 stock
options, 682,721
restricted shares
and 2,744 deferred
stock units were
outstanding under
the 2008 Plan.
 55




---



##### 



Plan
    
    Overview2008 Associate Stock Ownership Plan
    
    Approved by
Shareholders on
June 11, 2008. It
allows the
operation of an
employee stock
purchase program.1998 Incentive Compensation Plan (the 1998 Plan)
    
    Previously used to
grant stock
appreciation
rights, stock
awards, stock
options, stock
purchase rights and
incentive
compensation awards
(payable in shares
or cash) to
employees and
non-employee
directors. It also
allowed the
operation of an
employee stock
purchase program
and a deferred
stock program for
non-employee
directors. At
January 29, 2011,
505,411 stock
options, 141,041
restricted shares
and 20,631 deferred
stock units were
outstanding under
the 1998 Plan. This
plan terminated on
June 3, 2008. The
termination of the
plan does not
affect awards that
are currently
outstanding under
the plan.
  Stock Options
    Weighted-Average
    
    
    Weighted-Average
    
    
    AggregateNumber of
    
    
    Exercise Price
    
    
    Remaining
    
    
    IntrinsicOptions
    
    
    Per Option
    
    
    Contractual Term
    
    
    Value(a)Outstanding at January 30, 2010
    
    
    1,336,284
    
    
    $
    17.47Granted
    
    
    72,345
    
    
    
    41.67Exercised
    
    
    (615,897
    )
    
    
    18.50Cancelled
    
    
    (1,610
    )
    
    
    21.41Outstanding at January 29, 2011
    
    
    791,122
    
    
    $
    18.87
    
    
    4.2 years
    
    
    $
    32,761,321Expected to vest
    
    
    766,126
    
    
    $
    18.82
    
    
    4.1 years
    
    
    $
    31,767,835Exercisable at January 29, 2011
    
    
    241,183
    
    
    $
    20.52
    
    
    3.0 years
    
    
    $
    9,589,202
 
 (a)
    
    The intrinsic value of a stock option is the amount by which the fair
value of the underlying stock exceeds the exercise price of the
option. Restricted Share Awards  Time-Based Awards
  56




---



##### 



Weighted-Number of
    
    
    Average GrantShares
    
    
    Date Fair ValueOutstanding at January 30, 2010
    
    
    1,120,901
    
    
    $
    14.22Granted  time-based
    
    
    85,578
    
    
    
    41.33Granted  performance-based (a)
    
    
    45,498
    
    
    
    40.33Vested
    
    
    (422,515
    )
    
    
    15.92Cancelled
    
    
    (5,700
    )
    
    
    27.74Outstanding at January 29, 2011
    
    
    823,762
    
    
    $
    17.51
 
 a 
    
    represents performance-based awards that became time-restricted share
awards upon the achievement of the performance criteria as of January
29, 2011.   Restricted Shares  Performance-Based Awards
    57




---



##### 



Stock Value Bonus Plan
      Shares Available to Grant
  Employee Stock Purchase Program
   58




---



##### 



Non-Employee Directors Deferred Stock Program
   Note 9  Savings Plan Retirement and Postretirement Benefits
   Note 10  Commitments and Contingencies
   Note 11  Leases
   59




---



##### 



MinimumFiscal Year-Ended
    
    Rentals(Dollars in millions)2012
    
    $
    158.42013
    
    
    147.92014
    
    
    129.82015
    
    
    112.52016
    
    
    90.6Thereafter
    
    
    243.2$
    882.4
  Fiscal Year-Ended
    
    2011
    
    
    2010
    
    
    2009(Dollars in millions)Minimum rent expense
    
    $
    151.9
    
    
    $
    149.6
    
    
    $
    147.9Contingent rent expense
    
    
    2.0
    
    
    
    1.7
    
    
    
    1.5Sublease rent expense
    
    
    (8.2
    )
    
    
    (8.7
    )
    
    
    (9.9
    )$
    145.7
    
    
    $
    142.6
    
    
    $
    139.5
 Note 12  Segment Reporting
    Large-format
    
    
    Small-formatStores
    
    
    Stores
    
    
    Other
    
    
    Consolidated(Dollars in millions)Fiscal 2011Net sales
    
    $
    1,110.1
    
    
    $
    924.4
    
    
    $
    44.5
    
    
    $
    2,079.0Store pre-opening and closing costs
    
    
    2.9
    
    
    
    8.4
    
    
    
    
    
    
    
    11.3Depreciation and amortization
    
    
    29.5
    
    
    
    12.4
    
    
    
    15.5
    
    
    
    57.4Operating profit (loss)
    
    
    141.8
    
    
    
    141.1
    
    
    
    (129.2
    )
    
    
    153.7Capital expenditures
    
    
    12.3
    
    
    
    31.8
    
    
    
    17.5
    
    
    
    61.6Property, equipment and leasehold improvements, net
    
    
    132.2
    
    
    
    73.7
    
    
    
    89.8
    
    
    
    295.7
 60




---



##### 



Large-format
    
    
    Small-formatStores
    
    
    Stores
    
    
    Other
    
    
    Consolidated(Dollars in millions)Fiscal 2010Net sales
    
    $
    1,075.5
    
    
    $
    877.3
    
    
    $
    37.9
    
    
    $
    1,990.7Store pre-opening and closing costs
    
    
    3.8
    
    
    
    7.9
    
    
    
    
    
    
    
    11.7Depreciation and amortization
    
    
    31.7
    
    
    
    10.4
    
    
    
    14.2
    
    
    
    56.3Operating profit (loss)
    
    
    119.8
    
    
    
    128.2
    
    
    
    (133.9
    )
    
    
    114.1Capital expenditures
    
    
    10.9
    
    
    
    17.6
    
    
    
    11.2
    
    
    
    39.7Property, equipment and leasehold improvements, net
    
    
    148.3
    
    
    
    53.3
    
    
    
    92.1
    
    
    
    293.7Fiscal 2009Net sales
    
    $
    1,000.3
    
    
    $
    865.1
    
    
    $
    35.7
    
    
    $
    1,901.1Store pre-opening and closing costs
    
    
    5.9
    
    
    
    6.4
    
    
    
    
    
    
    
    12.3Depreciation and amortization
    
    
    31.7
    
    
    
    9.2
    
    
    
    13.3
    
    
    
    54.2Operating profit (loss)
    
    
    69.2
    
    
    
    95.8
    
    
    
    (124.3
    )
    
    
    40.7Capital expenditures
    
    
    35.5
    
    
    
    13.2
    
    
    
    26.0
    
    
    
    74.7Property, equipment and leasehold improvements, net
    
    
    163.1
    
    
    
    49.1
    
    
    
    102.6
    
    
    
    314.8
 Note 13  Quarterly Financial Information (Unaudited)
  First
    
    
    Second
    
    
    Third
    
    
    FourthFiscal 2011
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Dollars in millions, except per share data)Net sales
    
    $
    480.3
    
    
    $
    439.3
    
    
    $
    535.3
    
    
    $
    624.1Gross margin
    
    
    242.4
    
    
    
    221.7
    
    
    
    276.2
    
    
    
    300.3Net income
    
    
    18.2
    
    
    
    5.4
    
    
    
    29.1
    
    
    
    40.4Net income per common share:Basic
    
    $
    0.69
    
    
    $
    0.21
    
    
    $
    1.12
    
    
    $
    1.58Diluted
    
    
    0.66
    
    
    
    0.20
    
    
    
    1.09
    
    
    
    1.53
 First
    
    
    Second
    
    
    Third
    
    
    FourthFiscal 2010
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(Dollars in millions, except per share data)Net sales
    
    $
    460.0
    
    
    $
    419.4
    
    
    $
    509.1
    
    
    $
    602.2Gross margin
    
    
    222.9
    
    
    
    206.6
    
    
    
    259.8
    
    
    
    286.4Net income (loss)
    
    
    8.6
    
    
    
    (3.2
    )
    
    
    24.1
    
    
    
    37.1Net income (loss) per common share:Basic
    
    $
    0.34
    
    
    $
    (0.13
    )
    
    $
    0.94
    
    
    $
    1.42Diluted
    
    
    0.33
    
    
    
    (0.13
    )
    
    
    0.90
    
    
    
    1.36
 61




---



##### 



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
  Managements Annual Report on Internal Control over Financial Reporting
   Changes in Internal Control Over Financial Reporting
 62




---



##### 



Report of Independent Registered Public Accounting Firm
        /s/  Ernst & Young LLP 
 63




---



##### 



Item 9B. Other Information
  PART III
 Item 10. Directors, Executive Officers and Corporate Governance
 CORPORATE GOVERNANCE AND BOARD MATTERS
 Board Independence
     
    
    Ms. Raff serves as the Chair and CEO of Helzberg Diamond Shops, Inc., a wholly-owned
subsidiary of Berkshire Hathaway Inc. (BH). Albecca Inc. (doing business as Larson-Juhl),
another wholly-owned subsidiary of BH, is a supplier to our company. Ms. Raff has no
involvement with Albecca, and her compensation is not influenced by Albeccas performance.
Our companys purchases from Albecca amount to less than one percent of our annual revenues
and less than 1/10 of one percent of BHs annual revenues.
    
    Purchases in the ordinary course of business by us from companies with which we share
Directors. In all cases such purchases represented 0.2% or less of our revenues and the
revenues of the other company and therefore such purchases would not impair a Directors
independence. The companies considered in this review were Alliant Energy Corporation (Mr.
Perdue is a Director); and three companies for which Dr. Cowen is a Director (American
Greetings Corporation, Forest City Enterprises, Inc. and Newell Rubbermaid Inc.).
    
    Ms. Travis is an executive officer of Polo Ralph Lauren Corporation. Our company began
selling Ralph Lauren licensed fabric sourced from a third party in fiscal 2011. Our
purchases result in the third party paying royalties to Polo Ralph Lauren Corporation. These
purchases amounted to a small fraction of one percent of our annual revenues, and we believe
that the royalties paid to Polo Ralph Lauren Corporation likewise amount to a small fraction
of one percent of its annual revenue.
 64




---



##### 



Code of Business Conduct and Ethics
  Committees of the Board
  The Audit Committee,
   The Compensation Committee
  65




---



##### 



The Corporate Governance Committee
  DIRECTORS
 General Nomination Right of All Shareholders
  Directors
  Principal Occupation for Past Five Years,
    
    DirectorName
    
    Other Directorships during Past Five Years and Age
    
    SinceScott Cowen(1)(3)
    
    President of Tulane University and the Seymour S
Goodman Professor of Management for more than
five years. Dr. Cowen is also a Director of
American Greetings Corporation, Forest City
Enterprises, Inc. and Newell Rubbermaid Inc. Age
64.
    
    
    1987Ira Gumberg
    
    President and Chief Executive Officer of J.J.
Gumberg Co., a real estate development and
investment company, for more than five years.
J.J. Gumberg Co. is a nationally ranked real
estate investment and development company that
manages approximately 20 shopping centers. Mr.
Gumberg served as a Director of Mellon Financial
Corporation from 1989 to 2007, when it merged
with the Bank of New York. Age 57.
    
    
    1992
 66




---



##### 



Principal Occupation for Past Five Years,
    
    DirectorName
    
    Other Directorships during Past Five Years and Age
    
    SincePatricia Morrison(2)(3)
    
    Executive Vice President and Chief Information
Officer for Cardinal Health, Inc., a global
company serving the health care industry, since
2009. Previously, she was Executive Vice Present
and Chief Information Officer, from 2007 to 2008,
and Senior Vice President and Chief Information
Officer, from 2005 to 2007, of Motorola, Inc., a
designer, manufacturer, marketer and seller of
mobility products. Prior to that, she was
Executive Vice President and Chief Information
Officer of Office Depot, Inc., a supplier of
office products and services, from 2002 to 2005.
Ms. Morrison formerly served on the Board of
SPSS, Inc. from 2008 to 2009 when it was
acquired. Age 51.
    
    
    2003Frank Newman(1)(3)
    
    Former Chairman and Chief Executive Officer of
Medical Nutrition USA, Inc., a nutrition-medicine
company, from 2003 to 2010. He is also a Director
of Jabil Circuit, Inc., and served as a Director
of Medical Nutrition USA, Inc. from 2002 to 2010.
Age 62.
    
    
    1991David Perdue(1)(2)
    
    Retired Chairman and Chief Executive Officer of
Dollar General Corporation, a Fortune 500
discount retailer, from 2003 to 2007. Mr. Perdue
currently serves on the Boards of Alliant Energy
Corporation and Liquidity Services, Inc. and
formerly served on the Board of Dollar General
Corporation from 2003 to 2007. Mr. Perdue was
Chairman and Chief Executive Officer of Pillowtex
Corporation, a producer and marketer of home
textiles from July 2002 to March 2003. Pillowtex
filed for bankruptcy in July 2003 after emerging
from a previous bankruptcy in May 2002. Age 61.
    
    
    2008Beryl Raff(2)(3)
    
    Chairman and Chief Executive Officer of Helzberg
Diamond Shops, Inc., a nationwide jewelry
retailer and indirect wholly owned subsidiary of
Berkshire Hathaway Inc., since April 2009.
Previously, Ms. Raff served as Executive Vice
President & General Merchandise Manager for the
Fine Jewelry Division of J.C. Penney Company,
Inc., a department store retailer from 2005 until
April 2009, and before that Ms. Raff served as
J.C. Penneys senior vice president and general
merchandise manager of Fine Jewelry from 2001 to
2005. Ms. Raff is also a Director of Group 1
Automotive Inc. Age 60.
    
    
    2001Alan Rosskamm
    
    Chief Executive Officer, Breakthrough Charter
Schools, a charter school management organization
in Cleveland, Ohio, since November 2009.
Previously, Mr. Rosskamm served as Non-Executive
Chairman of the Board of Charming Shoppes, Inc.,
a womens apparel retailer with approximately
2,200 stores, from June 2008 to June 2010. Mr.
Rosskamm also served as Charming Shoppes Interim
Chief Executive Officer from July 2008 to April
2009. Previously, Mr. Rosskamm served as our
Chief Executive Officer from 1985, and as our
Chairman of the Board from 1992, until his
resignation from these positions in 2006. He is a
member of one of our two founding families and
was employed by us from 1978 to 2006. Mr.
Rosskamm also serves as a Director of Charming
Shoppes, Inc. Age 61.
    
    
    1985Tracey Travis(1)(2)
    
    Senior Vice President and Chief Financial Officer
of Polo Ralph Lauren Corporation, a designer,
marketer and distributor of apparel, home and
fragrance products, since 2005. From 2002 to 2004
she was Senior Vice President, Finance for
Limited Brands, Inc., an apparel and personal
care products retailer. Age 48.
    
    
    2003Darrell Webb
    
    Our Chief Executive Officer and Chairman of the
Board since July 2006. He was also our President
from July 2006 until January 2010. Previously, he
was President of Fred Meyer Stores, a division of
The Kroger Company, a large supermarket retailer,
from 2002 until July 2006; and President of
Krogers Quality Food Center Division from 1999
to 2002. Age 53.
    
    
    2006
 
 (1)
    
    Member of the Audit Committee.(2)
    
    Member of the Corporate Governance Committee.(3)
    
    Member of the Compensation Committee. 67




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##### 



Director Qualifications
  
    
    Each Director shall be an individual who has demonstrated unquestioned integrity and
ethics and a commitment to legal compliance in his/her personal and professional life.
    
    Each Director shall have established a record of professional accomplishment and
leadership in his/her chosen field.
    
    Each Director should possess professional experiences and expertise relevant to the
Companys mission, vision and strategy, and which contribute significantly to the Boards
collective possession of the experiences and skill sets necessary for the Board to fulfill
its responsibilities.
    
    Each Director must have an inquisitive and objective perspective, practical wisdom,
sound judgment, independence and vision.
    
    A Director, his/her immediate family members (as defined in the NYSE rules), and his/her
affiliates and associates (each as defined in Rule 405 under the Securities Act of 1933, as
amended) shall not have any material personal, financial or professional interest in any
present or potential competitor of the Company.
    
    Directors must not have affiliations or relationships which could lead to a material
conflict of interest.
    
    Each Director shall be prepared to participate fully in Board activities, including
attendance at, and active participation in, meetings of the Board and the committees of
which he or she is a member, and shall be responsible for management of other personal or
professional commitments so as not to interfere with or materially limit his or her ability
to meet such Board and committee obligations.
    
    Directors should be committed to serving on the Board for an extended period of time,
subject to annual re-election by the shareholders.
    
    Directors should possess the ability to work constructively with other Board members in
an environment of collegiality and trust, contributing positively to the existing chemistry
and collaborative culture amongst the Board members.
    
    Directors must possess familiarity with and respect for corporate governance
requirements and practices.
    
    Directors must possess the capability to maintain confidentiality of Board deliberations
and the Companys proprietary information.
   
    
    Executive management, including current or recent CEO experience
    
    Experience with all aspects of retailing, including merchandising, marketing, supply
chain and store operations
    
    Financial management and reporting
    
    Corporate governance
 68




---



##### 




    
    Strategic planning
    
    Crisis and risk management
    
    Executive compensation
    
    Information technology
    
    Commercial real estate
    
    International business
  
    
    seven of our nine Directors are, or have been, CEOs or senior executives of significant
retail companies, providing them with leadership, executive management, consumer
branding/marketing and retail experience and skills
    
    three of our Directors currently serve as CEOs of significant companies, providing them
with executive management and leadership experience and skills
    
    seven of our Directors currently serve, or have served, as Directors of other public
companies, providing them with corporate governance and leadership experience and skills
    
    all of our Directors possess substantial financial skills gained through their business
experiences, with all four members of our Audit Committee formally having been determined to
be financially literate, and one of our Audit Committee members having been formally
determined to be an audit committee financial expert, as those terms are defined by the
SEC
    
    at least one of our Directors possesses extensive experience and strong skills with
respect to each of the other disciplines most important to our companys growth and success,
including strategic planning, crisis and risk management, retail operations, merchandising,
executive compensation, information technology, real estate, and international business.
   Scott Cowen:
 69




---



##### 



Ira Gumberg:
 Patricia Morrison:
 Frank Newman:
 David Perdue:
 Beryl Raff:
 Alan Rosskamm:
 Tracey Travis:
 Darrell Webb:
 70




---



##### 



Item 11. Executive Compensation
 COMPENSATION DISCUSSION AND ANALYSIS
 Background Context
       Executive Summary
 
    
    Pay-for-performance is our compensation philosophy. We tie compensation to performance
objectives that are aligned with our operating and strategic plans.
    
    We also align compensation with the creation of long-term value for our shareholders. Our
compensation program uses measurements and metrics which are intended to drive stock appreciation, and the
multi-year vesting periods used with our equity awards incentivize our executives to create
sustainable shareholder value.
    
    Our goal is to provide our executives with the opportunity (at the target level of
incentive performance) to earn total compensation at approximately the median of our peers.
If we perform better or worse than target, our executives generally will receive
compensation that is higher or lower than the median. Because we consider factors other than
peer group data, each executives compensation opportunity may be below or above the peer
group median.
    
    Our executives total compensation package includes three primary elements:
 
    
    Base salary, which is intended to recognize an individuals regular commitment to his
or her job and to provide a stable source of income to the individual.
    
    Short-term incentive compensation in the form of an annual performance-based cash
bonus, which is intended to focus our executives on achievement of financial goals
established by our Compensation Committee at the beginning of each year.
 71




---



##### 




    
    Long-term incentive compensation in the form of equity-based awards to incentivize
sustainable profitable growth, to align the interests of our executives with those of our
shareholders and promote a culture of share ownership.
 
    
    We also provide our executives with a competitive benefits package in order to attract
and retain high performing executives.
  Senior Management Team
  
    
    Darrell Webb, our Chairman and Chief Executive Officer
    
    Travis Smith, our President and Chief Operating Officer
    
    Kenneth Haverkost, our Executive Vice President, Store Operations
    
    James Kerr, our Executive Vice President, Chief Financial Officer
  How we make compensation decisions
 Executive compensation decisions are made by our Compensation Committee, with full Board approval
of decisions outside of the normal scope involving our Chief Executive Officer and Chief Operating
Officer.
  Involvement of company management
  Involvement of a compensation consultant
  72




---



##### 




    
    Overall compensation plan design
    
    Executive compensation trends
    
    Peer group composition
    
    Market competitiveness of total compensation, as well as of the various compensation
components
    
    Cost of the equity components of the compensation program
    
    Share usage and potential shareholder dilution
  Use of peer group data
    73




---



##### 



Prior Peer Group
    
    New Peer GroupA.C. Moore Arts & Crafts
    
    Big LotsBig 5 Sporting Goods
    
    Brown ShoeBorders Group
    
    CabelasBrown Shoe
    
    Charming ShoppesCabelas
    
    Collective Brands (formerly, Payless Shoesource)Charming Shoppes
    
    Dicks Sporting GoodsCollective Brands (formerly, Payless Shoesource)
    
    DSWDicks Sporting Goods
    
    FredsDSW
    
    Mens WearhouseMens Wearhouse
    
    Pep Boys  Manny, Moe & JackPep Boys  Manny, Moe & Jack
    
    Pier 1 ImportsPetSmart
    
    Sally BeautyPier 1 Imports
    
    Signet JewelersStage Stores
    
    Stage StoresUlta Salon Cosmetics & Fragrances
    
    Tractor SupplyWilliams-Sonoma
    
    Ulta Salon Cosmetics & FragrancesZale
    
    Williams-Sonoma
  th th th th
  74




---



##### 



Other sources of data
  Use of tally sheets
  Individual performance goals
     75




---



##### 



Annual Performance Assessments
    Tax considerations
  76




---



##### 



Our compensation philosophy and program objectives
     Total compensation and its components
  
    
    Base salary;
    
    Short-term incentive compensation in the form of an annual performance-based cash bonus;
and
    
    Long-term incentive compensation in the form of equity-based awards.
   77




---



##### 



Base salary
  Short-term incentive compensation
  Long-term incentive compensation
    78




---



##### 




    
    Performance shares are used to motivate our executive officers and other most senior
management team members to work collaboratively to achieve our performance targets, align
their interests with the interests of our shareholders, and motivate them to create
long-term shareholder value.
    
    Stock options are used to align our executive officers and other most senior managers
interests with those of our shareholders and reward them for generating shareholder returns.
    
    Time-based restricted shares are used to promote the long-term retention of our executive
officers and other most senior managers and to provide them with an ownership interest in
Jo-Ann Stores aligned with the interests of our shareholders.
    Retirement Plans, Deferred Compensation and Termination Payments
  
    
    A 401(k) defined contribution retirement plan in which most company employees, including
our executive officers, are eligible to participate.
    
    A deferred compensation plan in which our upper level management employees, including our
executive officers, are eligible to participate. This plan is described in further detail at
page 85 of this report.
    
    A Supplement Retirement Benefit Plan for our current executive officers, which is
described in further detail at page 85 of this report. Our Compensation Committee has
decided not to offer this plan to any additional employees in the future.
  Benefits and Limited Perquisites
  79




---



##### 



Fiscal Year 2011 Compensation Decisions and Results
 Overview
  Base salary
  Fiscal 2011
    
    
    % Increase 
Over Fiscal 2010Officer
    
    Base Salary
    
    
    Base SalaryDarrell Webb
    
    $
    920,000
    
    
    
    5.1
    %Travis Smith
    
    $
    625,000
    
    
    
    8.7
    %Kenneth Haverkost
    
    $
    415,000
    
    
    
    3.8
    %James Kerr
    
    $
    390,000
    
    
    
    8.3
    %
  Short-term incentive compensation
    Target
    
    
    Percent ofOfficer
    
    Amount
    
    
    Base SalaryDarrell Webb
    
    $
    920,000
    
    
    
    100
    %Travis Smith
    
    $
    468,750
    
    
    
    75
    %Kenneth Haverkost
    
    $
    207,500
    
    
    
    50
    %James Kerr
    
    $
    195,000
    
    
    
    50
    %
  Same-Store Sales Growth
    
    
    40
    %Earnings Before Interest & Taxes
    
    
    40
    %Return on Invested Capital
    
    
    20
    %
 80




---



##### 



Actual
    
    
    % ofThreshold
    
    
    Target
    
    
    Maximum
    
    
    Result
    
    
    PayoutSame-Store Sales Growth
    
    
    1.0
    %
    
    
    3.0
    %
    
    
    6.0
    %
    
    
    3.5
    %
    
    
    116.7
    %Earnings Before Interest & Taxes (in millions)
    
    $
    112.4
    
    
    $
    132.3
    
    
    $
    172.0
    
    
    $
    156.9
    
    
    
    159.9
    %Return on Invested Capital
    
    
    12.35
    %
    
    
    14.86
    %
    
    
    19.88
    %
    
    
    21.1
    %
    
    
    200.0
    %
  Officer
    
    AmountDarrell Webb
    
    $
    1,369,881Travis Smith
    
    $
    704,852Kenneth Haverkost
    
    $
    309,889James Kerr
    
    $
    288,457
  Long-term incentive compensation
   Time-Based
    
    
    Performance SharesExecutive
    
    Stock Options
    
    
    Restricted Shares
    
    
    (at Target)Mr. Smith
    
    $
    175,000
    
    
    $
    350,000
    
    
    $
    175,000Messrs. Haverkost, Kerr
    
    $
    125,000
    
    
    $
    250,000
    
    
    $
    125,000
 81




---



##### 




    
    Erroneous stock prices for two trading days were inserted into the computer program used
to make the Black-Scholes calculation, resulting in an under-calculation of the number of
options to be granted to the executive officers and all other employees receiving stock
option grants.
    
    Mr. Smiths grants were calculated on the basis of his prior year award ($600,000) rather
than his increased grant for fiscal 2011 ($700,000).
    Time-Based
    
    
    Performance Shares
    
    
    Performance SharesExecutive
    
    Grant Date
    
    
    Stock Options
    
    
    Restricted Shares
    
    
    (at Target)
    
    
    Actually EarnedMr. Smith
    
    March 15, 2010
    
    5,906 options
    
    8,087 shares
    
    4,044 shares
    
    
    6,066Messrs. Haverkost, Kerr
    
    March 15, 2010
    
    4,921 options
    
    6,739 shares
    
    3,370 shares
    
    
    5,055
 Time-Based
    
    
    Performance Shares
    
    
    Performance SharesExecutive
    
    Grant Date
    
    
    Stock Options
    
    
    Restricted Shares
    
    
    (at Target)
    
    
    Actually EarnedMr. Smith
    
    June 10, 2010
    
    5,315 options
    
    1,348 shares
    
    674 shares
    
    
    1,011Messrs. Haverkost, Kerr
    
    June 10, 2010
    
    3,094 options
    
    0 shares
    
    0 shares
    
    
    0
 
    
    Stock Options:All of these options are non-qualified stock options. In accordance with
our companys standard practice, they were granted on the third NYSE trading day following
an earnings release and with an exercise price equal to the closing NYSE price on the grant
date. The numbers of shares granted were based on the average of the NYSE closing prices
during the 90 day period preceding the grant date. The options will vest 25% per year over
four years and expire in seven years. These grants were made on the same days as grants were
made to all other company employees receiving options under our companys fiscal 2011
long-term incentive program. These options will have value only if the market price of our
common shares increases after the grant date, and thus they provide our executives with a
strong incentive to take actions which enhance long-term shareholder value.
    
    Time-Based Restricted Shares:The numbers of shares granted were based on the average of
the NYSE closing prices during the 90 day period preceding the grant date. The calculation
of Mr. Smiths additional June 10, 2010 grant is described above. The restrictions on these
shares lapse 25% each year over a four-year period. The Committee believes that the
restricted shares provide our executives with a strong incentive to enhance long-term
shareholder value since the ultimate value of the grant is directly related to changes in
our companys stock price. The substantial holding periods before the restrictions lapse
incentivize the executives to take actions which will create sustained shareholder value,
and also serve as a retention incentive.
    
    Performance Shares:Mr. Smith was granted performance shares with a targeted value of
$175,000 and each of the Executive Vice Presidents was granted performance shares with a
targeted value of $125,000. The numbers of shares granted were based on the average of the
NYSE closing prices during the 90 day period preceding the grant date. The performance
measure was 82




---



##### 



earnings per share (EPS), which the Committee believes to be an appropriate measure because
it is a key measure focused on by investors and analysts and generally is the key driver of
stock prices (and thus shareholder value). Target performance was set at EPS of $2.90, with
threshold performance set at EPS of $2.48 and maximum performance set at EPS of $3.34. The
target metric was consistent with our operating plan at the start of the year, with threshold
set at 85% of target and maximum set at 115% of target. The Committee believed that these
metrics were appropriate because they were consistent with our operating plan and incentivized
our managers to achieve strong, improved performance which would create substantial shareholder
value in an uncertain and difficult economic and retail environment. Since our incentive plan
disregards gains from the buy-back of debt, the fiscal 2011 target represented a 16.9% increase
over the fiscal 2010 earnings of $2.48 per share (disregarding a $0.03 per share gain from the
buy-back of debt). The Committee capped the maximum payout at 150% of target in order to limit
expenses, potential share usage and dilution, and mitigate a potential incentive for company
managers to engage in imprudent risks in order to maximize incentive compensation. The
Committee decided to use a one-year performance period, rather than a multi-year period; the
Committee felt that the sometimes asserted advantages of multi-year performance periods would
be achieved by the multi-year vesting periods of the equity awards and the intended grant of
performance shares in future years.To the extent earned, the time restrictions on the performance shares lapse 25% per year over a
four-year period. If our company achieved target performance, the executive would receive the
full grant of the performance shares. If EPS was below the threshold amount, none of the
performance shares would be earned. If EPS was between threshold and target, some of the
performance shares would be earned. If EPS was above target, the executive would earn between
100% and 150% of the targeted performance shares.Fiscal 2011 EPS was $3.46 which exceeded maximum. As a result, the executive officers and other
employees receiving performance shares earned 150% of their target performance shares. This
amounted to 7,077 shares for Mr. Smith and 5,055 shares each for Messrs. Haverkost and Kerr.   Comparison of Fiscal Year 2011 Compensation to Peer Group Data
  83




---



##### 



Long-Term Incentive
    
    Total of Base Plus STIShort-Term Incentive
    
    Opportunity
    
    & LTI Opportunities atBase Salary
    
    Opportunity at Target
    
    (Performance Shares at Target)
    
    TargetMr. Webb*
    
    Between 25th
Percentile and Median
    
    Between 25th
Percentile and Median
    
    Slightly Below Median
    
    Slightly Below MedianMr. Smith
    
    Between 50th
and 75th
Percentile
    
    Between 50th
and 75th
Percentile
    
    Median
    
    MedianMr. Haverkost
    
    Between 25th
Percentile and Median
    
    Between 25th Percentile and Median
    
    Slightly Above Median
    
    25th PercentileMr. Kerr
    
    25th Percentile
    
    25th Percentile
    
    Between Median and
75th
Percentile
    
    Slightly Below Median
 
 *
    
    This table attributes half of Mr. Webbs March 16, 2009
additional grant of restricted shares to fiscal 2011. See
discussion of Mr. Webbs retention agreement at page 86 of
this report.  Board Policies.
 Equity granting policies:
 Re-pricing/Re-issuance of Options:
 Amended Performance Metrics; Accelerated Vesting:
 84




---



##### 



Hedging Policy:
 Share Ownership Guidelines:
 Clawback Policy/Recoupment of Compensation:
 Supplemental Retirement Benefit Plan.
   Deferred Compensation Plan.
 85




---



##### 



Other Executive Officer Benefits and Perquisites.
 Chief Executive Officer Retention Agreement.
     86




---



##### 



Executive Officer Employment Agreements.
   EXECUTIVE COMPENSATION
  SUMMARY COMPENSATION TABLE
 Change inCash
    
    
    Value ofStock
    
    
    Option
    
    
    Incentive
    
    
    SERP
    
    
    All OtherFiscal
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Benefits
    
    
    Compensation
    
    
    TotalName and Principal Position
    
    Year
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)(3)(4)
    
    
    ($)(4)(5)
    
    
    ($)(6)
    
    
    ($)(7)
    
    
    ($)(8)
    
    
    ($)(9)Darrell Webb(10)
    
    
    2011
    
    
    $
    910,481
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    1,369,881
    
    
    $
    10,210
    
    
    $
    72,004
    
    
    $
    2,362,576Chairman of the Board and
    
    
    2010
    
    
    $
    875,000
    
    
    $
    0
    
    
    $
    4,400,011
    
    
    $
    400,002
    
    
    $
    1,750,000
    
    
    $
    9,282
    
    
    $
    50,238
    
    
    $
    7,484,533Chief Executive Officer
    
    
    2009
    
    
    $
    859,135
    
    
    $
    0
    
    
    $
    1,000,003
    
    
    $
    609,362
    
    
    $
    0
    
    
    $
    8,874
    
    
    $
    30,042
    
    
    $
    2,507,416Travis Smith(10)
    
    
    2011
    
    
    $
    624,279
    
    
    $
    0
    
    
    $
    577,362
    
    
    $
    232,917
    
    
    $
    704,852
    
    
    $
    2,151
    
    
    $
    21,269
    
    
    $
    2,162,830President and Chief Operating Officer
    
    
    2010
    
    
    $
    575,000
    
    
    $
    0
    
    
    $
    450,013
    
    
    $
    150,001
    
    
    $
    860,337
    
    
    $
    1,955
    
    
    $
    24,348
    
    
    $
    2,061,6542009
    
    
    $
    500,000
    
    
    $
    62,500
    
    
    $
    250,012
    
    
    $
    249,999
    
    
    $
    0
    
    
    $
    1,696
    
    
    $
    34,491
    
    
    $
    1,098,698Kenneth Haverkost(10)
    
    
    2011
    
    
    $
    411,827
    
    
    $
    0
    
    
    $
    407,696
    
    
    $
    173,257
    
    
    $
    309,889
    
    
    $
    9,884
    
    
    $
    44,034
    
    
    $
    1,356,587Executive Vice President,
    
    
    2010
    
    
    $
    400,000
    
    
    $
    0
    
    
    $
    375,024
    
    
    $
    125,000
    
    
    $
    400,000
    
    
    $
    8,985
    
    
    $
    36,222
    
    
    $
    1,345,231Store Operations
    
    
    2009
    
    
    $
    397,597
    
    
    $
    49,639
    
    
    $
    250,012
    
    
    $
    249,999
    
    
    $
    0
    
    
    $
    85,747
    
    
    $
    64,975
    
    
    $
    1,097,969James Kerr
    
    
    2011
    
    
    $
    383,654
    
    
    $
    0
    
    
    $
    407,696
    
    
    $
    173,257
    
    
    $
    288,457
    
    
    $
    5,579
    
    
    $
    35,100
    
    
    $
    1,293,743Executive Vice President,
    
    
    2010
    
    
    $
    360,000
    
    
    $
    0
    
    
    $
    375,024
    
    
    $
    125,000
    
    
    $
    360,000
    
    
    $
    5,072
    
    
    $
    27,023
    
    
    $
    1,252,119Chief Financial Officer
    
    
    2009
    
    
    $
    351,539
    
    
    $
    43,846
    
    
    $
    250,012
    
    
    $
    249,999
    
    
    $
    0
    
    
    $
    4,611
    
    
    $
    28,485
    
    
    $
    928,492
 
 (1)
    
    Includes amounts earned but deferred under our Deferred Compensation Plan and under Section
401(k) of the Internal Revenue Code. Fiscal 2011, 2010 and 2009 were 52-week years.(2)
    
    For fiscal 2009,  these executive officers received the following discretionary cash
bonuses: Mr. Smith  $62,500; 87




---



##### 



Mr. Haverkost  $49,639; and Mr. Kerr  $43,846.(3)
    
    Stock Awards include the aggregate grant date fair value of stock awards granted in the
fiscal year indicated computed in accordance with Financial Accounting Standards Board
Accounting Standards Codification Topic 718 (ASC 718) (formerly Statement of Financial
Accounting Standards No. 123 (Revised 2004), Share-Based Payment (FAS No. 123R). The
grant date fair value of performance shares included in the table is based on the probable
outcome with respect to the performance conditions as of the grant date, and represents the
target value. The fiscal year 2009 stock awards have been restated to conform with the
current fiscal year presentation.On March 15, 2010 (and also on June 10, 2010 in the
case of Mr. Smith  see page 82 of this
report), we granted each of our executive officers performance shares that were converted to
stock awards. Based upon the performance achieved by our company during fiscal 2011, each of
these executive officers earned the following maximum number of performance shares (150%
of target), with a parenthetical indication of the grant date fair value of the maximum
number of performance shares computed in accordance with ASC 718: Mr. Smith  7,077 shares
($288,701); Mr. Haverkost  5,055 shares ($203,868); and Mr. Kerr  5,055 shares
($203,868).On March 16, 2009, we granted each of our executive officers performance shares that were
converted to stock awards. Based upon the performance achieved by our company during fiscal
2010, each of these executive officers earned the following maximum number of performance
shares (150% of target), with a parenthetical indication of the grant date fair value of
the maximum number of performance shares computed in accordance with ASC 718: Mr. Webb 
47,319 shares ($600,005); Mr. Smith  17,745 shares ($225,007); Mr. Haverkost  14,789
shares ($187,525); and Mr. Kerr  14,789 shares ($187,525).On April 1, 2008, we granted Mr. Webb performance shares and on March 17, 2008, we granted
each of our other executive officers performance shares that were converted to stock awards.
Based upon the performance achieved by our company during fiscal 2009, each of these
executive officers earned the following number of performance shares (77.8% of target),
with a parenthetical indication of the grant date fair value of the number of performance
shares earned computed in accordance with ASC 718: Mr. Webb  5,499 shares and 9,339 stock
equivalent units ($233,402); Mr. Smith  7,193 shares ($97,249); Mr. Haverkost  7,193
shares ($97,249); and Mr. Kerr  7,193 shares ($97,249). The maximum number of
performance shares and grant date fair value were 38,144 shares ($600,005) for Mr. Webb and
18,492 shares ($250,012) each for Messrs. Smith, Haverkost and Kerr.For Mr. Webb, for fiscal 2010, stock awards include the grant date value of his early fiscal
2011 and 2012 awards pursuant to his retention agreement, discussed
further at page 86 of
this report.(4)
    
    For a discussion of the assumptions we made in valuing the stock and option awards, see
Note 1  Significant Accounting Policies  Stock-Based Compensation and Note 8 
Stock-Based Compensation in the notes to our consolidated financial statements contained in
this report.(5)
    
    Option Awards include the aggregate grant date fair value of option awards granted in the
fiscal year indicated computed in accordance with ASC 718. The fiscal year 2009 option
awards have been restated to conform with the current fiscal year presentation.For fiscal 2011, each of these executive officers received stock option grants to purchase
the following number of shares, on March 15, 2010: Mr. Smith  5,906 shares; Mr. Haverkost
 4,921 shares; and Mr. Kerr  4,921 shares and on June 10, 2010: Mr. Smith  5,315
shares; Mr. Haverkost  3,094 shares; and Mr. Kerr  3,094 shares.For fiscal 2010, each of these executive officers received stock option grants to purchase
the following number of shares, on March 16, 2009: Mr. Webb  76,253 shares; Mr. Smith 
28,595 shares; Mr. Haverkost  23,829 shares; and Mr. Kerr  23,829 shares.For fiscal 2009, each of these executive officers received stock option grants to purchase
the following number of shares, on April 1, 2008: Mr. Webb  110,210 shares; and on March
17, 2008: Mr. Smith  53,427 shares; Mr. Haverkost  53,427 shares; and Mr. Kerr  53,427
shares.(6)
    
    These amounts reflect the amounts earned by the named executive officer under the Management
Incentive Plan, the terms of which are described in the Compensation Discussion and Analysis
at pages 78 and 80-81 of this report.(7)
    
    The SERP provides benefits, subject to forfeiture, to designated employees upon retirement
at age 65, early retirement, total disability or death. Under this plan, we expensed the
following amounts for fiscal 2011: Mr. Webb  $10,210; Mr. Smith  $2,151; Mr. Haverkost
 $9,884; and Mr. Kerr  $5,579; the following amounts for fiscal 2010: Mr. Webb 
$9,282; Mr. Smith  $1,955; Mr. Haverkost  $8,985; and Mr. Kerr  $5,072; and the
following amounts for fiscal 2009: Mr. Webb  $8,874; Mr. Smith  $1,696; Mr. Haverkost 
$85,747; and Mr. Kerr  $4,611.(8)
    
    The amounts in the All Other Compensation Column consist of the following compensation items: 88




---



##### 



Executive
    
    
    
    
    
    
    Tax Planning
    
    
    MatchingSupplemental
    
    
    
    
    
    
    Reimbursements
    
    
    Contributions
    
    
    MatchingGroup
    
    
    Long Term
    
    
    
    
    
    
    and Pre-fiscal
    
    
    Under
    
    
    Contributions
    
    
    
    
    
    
    RelocationLife
    
    
    Disability
    
    
    Insurance
    
    
    2010 Gross-Up
    
    
    Deferred
    
    
    Under 401(k)
    
    
    Car
    
    
    ReimbursementsFiscal
    
    
    Insurance
    
    
    Benefit
    
    
    Premiums
    
    
    Payments
    
    
    Compensation
    
    
    Savings Plan
    
    
    Allowance
    
    
    and Gross-Up
    
    
    OtherName
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    Paid ($)
    
    
    ($)(a)
    
    
    Plan ($)
    
    
    ($)
    
    
    ($)
    
    
    Payments ($)(b)
    
    
    ($)(c)
    
    
    Total ($)Darrell Webb
    
    
    2011
    
    
    $
    2,376
    
    
    $
    3,797
    
    
    $
    675
    
    
    $
    3,000
    
    
    $
    0
    
    
    $
    2,821
    
    
    $
    17,400
    
    
    $
    0
    
    
    $
    41,935
    
    
    $
    72,0042010
    
    
    $
    2,280
    
    
    $
    3,797
    
    
    $
    615
    
    
    $
    4,409
    
    
    $
    0
    
    
    $
    2,113
    
    
    $
    16,800
    
    
    $
    0
    
    
    $
    20,224
    
    
    $
    50,2382009
    
    
    $
    2,232
    
    
    $
    3,797
    
    
    $
    548
    
    
    $
    4,307
    
    
    $
    0
    
    
    $
    2,358
    
    
    $
    16,800
    
    
    $
    0
    
    
    $
    0
    
    
    $
    30,042Travis Smith
    
    
    2011
    
    
    $
    620
    
    
    $
    2,001
    
    
    $
    198
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    16,800
    
    
    $
    0
    
    
    $
    1,650
    
    
    $
    21,2692010
    
    
    $
    565
    
    
    $
    2,001
    
    
    $
    192
    
    
    $
    4,651
    
    
    $
    0
    
    
    $
    0
    
    
    $
    15,600
    
    
    $
    0
    
    
    $
    1,339
    
    
    $
    24,3482009
    
    
    $
    487
    
    
    $
    2,001
    
    
    $
    180
    
    
    $
    1,223
    
    
    $
    0
    
    
    $
    0
    
    
    $
    15,600
    
    
    $
    0
    
    
    $
    15,000
    
    
    $
    34,491Kenneth Haverkost
    
    
    2011
    
    
    $
    1,068
    
    
    $
    2,557
    
    
    $
    660
    
    
    $
    2,500
    
    
    $
    16,231
    
    
    $
    2,461
    
    
    $
    16,800
    
    
    $
    0
    
    
    $
    1,757
    
    
    $
    44,0342010
    
    
    $
    969
    
    
    $
    2,557
    
    
    $
    612
    
    
    $
    3,674
    
    
    $
    8,993
    
    
    $
    2,429
    
    
    $
    15,600
    
    
    $
    0
    
    
    $
    1,388
    
    
    $
    36,2222009
    
    
    $
    958
    
    
    $
    2,557
    
    
    $
    113
    
    
    $
    2,412
    
    
    $
    11,942
    
    
    $
    2,589
    
    
    $
    15,600
    
    
    $
    26,316
    
    
    $
    2,488
    
    
    $
    64,975James Kerr
    
    
    2011
    
    
    $
    600
    
    
    $
    0
    
    
    $
    366
    
    
    $
    0
    
    
    $
    14,862
    
    
    $
    2,472
    
    
    $
    16,800
    
    
    $
    0
    
    
    $
    0
    
    
    $
    35,1002010
    
    
    $
    560
    
    
    $
    0
    
    
    $
    336
    
    
    $
    0
    
    
    $
    8,077
    
    
    $
    2,450
    
    
    $
    15,600
    
    
    $
    0
    
    
    $
    0
    
    
    $
    27,0232009
    
    
    $
    543
    
    
    $
    0
    
    
    $
    306
    
    
    $
    0
    
    
    $
    9,706
    
    
    $
    2,330
    
    
    $
    15,600
    
    
    $
    0
    
    
    $
    0
    
    
    $
    28,485
 
 (a)
    
    The company ceased making tax gross-up payments for tax planning
services effective at the start of fiscal 2011. For fiscal 2010, for
Mr. Webb  $1,409 out of $4,409 represents tax gross-up payments for
tax planning services; for Mr. Smith  $1,486 out of $4,651
represents tax gross-up payments for tax planning services; for Mr.
Haverkost  $1,174 out of $3,674 represents tax gross-up payments
for tax planning services.For fiscal 2009, for Mr. Webb  $1,807 out of $4,307 represents tax
gross-up payments for tax planning services; for Mr. Smith  $513
out of $1,223 represents tax gross-up payments for tax planning
services; for Mr. Haverkost  $1,012 out of $2,412 represents tax
gross-up payments for tax planning services.(b)
    
    For Mr. Haverkost  For fiscal 2009, the total amount of $26,316
consists of $18,549 paid as relocation reimbursements and $7,767
representing tax gross-up payments for relocation reimbursements.
These were fiscal 2008 expenses but paid in fiscal 2009.(c)
    
    With Board approval, Mr. Webb began spending approximately one-half
of his business time on the West Coast as of August 2009. For fiscal
2011, $12,000 and for fiscal 2010, $6,000 represents our cost to rent
a small, unstaffed office for Mr. Webbs use while on the West Coast.
For fiscal 2011, $29,935 and for fiscal 2010, $14,224 is travel
expense between our Ohio corporate headquarters and Mr. Webbs West
Coast office reimbursed by us with Board approval. For fiscal 2009,
Mr. Smith received a lump sum payment of $15,000 in lieu of a merit
increase. All other amounts in the Other column pertain to expenses
paid for executive physicals.(9)
    
    As required by SEC disclosure rules, the Summary Compensation Table
reflects not only compensation earned and paid, but also (a) amounts
subject to performance conditions which might not be met or which
might be exceeded (resulting in higher payments subject to a cap),
and (b) amounts representing the opportunity to earn future
compensation under equity grants that may be forfeited based on
service-based vesting conditions. As a result of mixing earned/paid
and contingent compensation, the total shown in the Summary
Compensation Table includes amounts that the named executive officers
may never receive and may exclude amounts earned due to performance
better than anticipated on grant date. Moreover, the value of the
equity grants will be dependent on our stock performance, whereas the
amounts reflected in the Summary Compensation Table are valued in
accordance with SEC regulations and applicable accounting rules.(10)
    
    Mr. Webb relinquished the title of President at the beginning of
fiscal 2011, on January 31, 2010. Mr. Smith was promoted to Chief
Operating Officer (from his prior position of Executive Vice
President, Merchandising and Marketing) subsequent to the end of
fiscal 2009, on February 1, 2009, and to President and Chief
Operating Officer at the beginning of fiscal 2011, on January 31,
2010. Mr. Haverkost joined us and assumed the position of Executive
Vice President, Store Operations as of October 15, 2007. 89




---



##### 



FISCAL 2011 GRANTS OF PLAN-BASED AWARDS
 All OtherOptionAll Other
    
    Awards:Stock
    
    Number of
    
    Exercise or
    
    Grant DateAwards:
    
    Common
    
    Base Price
    
    Fair ValueEstimated Future Payouts Under
    
    Estimated Future Payouts Under
    
    Number of
    
    Shares
    
    of Option
    
    of Stock andGrant
    
    Approval
    
    Cash Incentive Plan Awards ($)
    
    Performance Share Grants (#)
    
    Common
    
    Underlying
    
    Awards
    
    OptionName
    
    Date
    
    Date
    
    Threshold
    
    Target
    
    Maximum
    
    Threshold
    
    Target
    
    Maximum
    
    Shares (#)
    
    Options (#)
    
    ($/Sh)(1)
    
    Awards(2)Darrell Webb
    
    03/15/10
    
    03/02/10
    
    $
    230,000
    
    
    $
    920,000
    
    
    $
    1,840,000Travis Smith
    
    03/15/10
    
    03/02/10
    
    $
    117,188
    
    
    $
    468,750
    
    
    $
    937,50003/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    4,044
    
    
    
    6,066
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    163,09506/10/10
    
    06/09/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16
    
    
    
    674
    
    
    
    1,011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    29,37303/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,087
    
    
    
    
    
    
    
    
    
    
    $
    326,14906/10/10
    
    06/09/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,348
    
    
    
    
    
    
    
    
    
    
    $
    58,74603/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,906
    
    
    $
    40.33
    
    
    $
    100,13306/10/10
    
    06/09/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,315
    
    
    $
    43.58
    
    
    $
    97,710Kenneth Haverkost
    
    03/15/10
    
    03/02/10
    
    $
    51,875
    
    
    $
    207,500
    
    
    $
    415,00003/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    3,370
    
    
    
    5,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    135,91203/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,739
    
    
    
    
    
    
    
    
    
    
    $
    271,78403/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,921
    
    
    $
    40.33
    
    
    $
    83,43306/10/10
    
    06/09/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,094
    
    
    $
    43.58
    
    
    $
    56,882James Kerr
    
    03/15/10
    
    03/02/10
    
    $
    48,750
    
    
    $
    195,000
    
    
    $
    390,00003/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    3,370
    
    
    
    5,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    135,91203/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,739
    
    
    
    
    
    
    
    
    
    
    $
    271,78403/15/10
    
    03/02/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,921
    
    
    $
    40.33
    
    
    $
    83,43306/10/10
    
    06/09/10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,094
    
    
    $
    43.58
    
    
    $
    56,882
 
 (1)
    
    Closing market price on the day of the award.(2)
    
    Stock and Option Awards are valued in accordance with ASC 718 and
the grant date fair value of performance shares is based upon the
probable outcome of the performance conditions as of the grant
date (i.e., target performance). See the narrative below for
the maximum value of performance shares on the grant date. NARRATIVE INFORMATION RELATING TO GRANTS OF PLAN-BASED AWARDS TABLE
    90




---



##### 



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END (2011)
 Stock Awards
    
    
    Performance SharesMarket
    
    
    
    
    
    
    MarketOption Awards
    
    
    Number of
    
    
    Value of
    
    
    Number of
    
    
    Value ofNumber of
    
    
    
    
    
    
    
    
    
    
    Restricted
    
    
    Restricted
    
    
    Unearned
    
    
    UnearnedCommon Shares
    
    
    
    
    
    
    
    
    
    
    Common
    
    
    Common
    
    
    Performance
    
    
    PerformanceUnderlying Unexercised
    
    
    Option
    
    
    Option
    
    
    Shares That
    
    
    Shares That
    
    
    Shares That
    
    
    Shares ThatGrant
    
    
    Options (#)
    
    
    Exercise
    
    
    Expiration
    
    
    Have Not
    
    
    Have Not
    
    
    Have Not
    
    
    Have NotName
    
    Date(1)
    
    
    Exercisable
    
    
    Unexercisable
    
    
    Price ($)
    
    
    Date
    
    
    Vested (#)(2)
    
    
    Vested ($)(3)
    
    
    Vested (#)
    
    
    Vested ($)(3)Darrell Webb(4)(8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    381,048
    
    
    $
    22,969,573
    
    
    
    0
    
    
    $
    003/15/2007
    
    
    
    0
    
    
    
    17,085
    
    
    $
    25.00
    
    
    
    03/15/201404/01/2008
    
    
    
    0
    
    
    
    55,106
    
    
    $
    15.73
    
    
    
    04/01/201503/16/2009
    
    
    
    0
    
    
    
    57,190
    
    
    $
    12.68
    
    
    
    03/16/2016Travis Smith(5)(8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,889
    
    
    $
    2,947,029
    
    
    
    4,718
    
    
    $
    284,40103/15/2007
    
    
    
    0
    
    
    
    7,119
    
    
    $
    25.00
    
    
    
    03/15/201403/17/2008
    
    
    
    0
    
    
    
    26,714
    
    
    $
    13.52
    
    
    
    03/17/201503/16/2009
    
    
    
    0
    
    
    
    21,447
    
    
    $
    12.68
    
    
    
    03/16/201603/15/2010
    
    
    
    0
    
    
    
    5,906
    
    
    $
    40.33
    
    
    
    03/15/201706/10/2010
    
    
    
    0
    
    
    
    5,315
    
    
    $
    43.58
    
    
    
    06/10/2017Kenneth Haverkost (6)(8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,802
    
    
    $
    2,941,785
    
    
    
    3,370
    
    
    $
    203,14412/03/2007
    
    
    
    11,443
    
    
    
    11,443
    
    
    $
    15.70
    
    
    
    12/03/201403/17/2008
    
    
    
    0
    
    
    
    26,714
    
    
    $
    13.52
    
    
    
    03/17/201503/16/2009
    
    
    
    0
    
    
    
    17,872
    
    
    $
    12.68
    
    
    
    03/16/201603/15/2010
    
    
    
    0
    
    
    
    4,921
    
    
    $
    40.33
    
    
    
    03/15/201706/10/2010
    
    
    
    0
    
    
    
    3,094
    
    
    $
    43.58
    
    
    
    06/10/2017James Kerr(7)(8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41,019
    
    
    $
    2,472,625
    
    
    
    3,370
    
    
    $
    203,14411/18/2005
    
    
    
    8,000
    
    
    
    0
    
    
    $
    12.42
    
    
    
    11/18/201207/28/2006
    
    
    
    6,250
    
    
    
    0
    
    
    $
    14.05
    
    
    
    07/28/201303/15/2007
    
    
    
    21,355
    
    
    
    7,119
    
    
    $
    25.00
    
    
    
    03/15/201403/17/2008
    
    
    
    26,713
    
    
    
    26,714
    
    
    $
    13.52
    
    
    
    03/17/201503/16/2009
    
    
    
    5,957
    
    
    
    17,872
    
    
    $
    12.68
    
    
    
    03/16/201603/15/2010
    
    
    
    0
    
    
    
    4,921
    
    
    $
    40.33
    
    
    
    03/15/201706/10/2010
    
    
    
    0
    
    
    
    3,094
    
    
    $
    43.58
    
    
    
    06/10/2017
 
 (1)
    
    Stock options vest 25% each year over four years, beginning one year after the grant date.(2)
    
    Mr. Webbs unvested shares include the 252,366 shares with a grant date fair value of
$3.2 million granted on March 16, 2009 in lieu of his fiscal 2011 and 2012 long-term
incentive grants. Mr. Webb received this grant pursuant to his retention agreement
discussed at page 86 of this report. The Committee made no additional long-term incentive
grants to Mr. Webb with respect to fiscal year 2011.(3)
    
    The market value of our common shares at our fiscal year-end was $60.28.(4)
    
    From prior year grants, Mr. Webb has unvested option awards and unvested restricted stock
awards at the end of fiscal 2011 that will vest as described in the tables below.(5)
    
    During fiscal 2011, Mr. Smith was granted 11,221 option awards, 9,435 restricted stock
awards and 7,077 performance shares (maximum payout), which were converted to restricted
stock awards (the table reflects target payout of the performance shares in the amount of
4,718 shares). The option awards granted become exercisable in four equal annual
installments commencing one year after the date of grant. The restricted stock awards
granted will vest in four equal annual installments commencing one year after the grant
date. From prior year grants, Mr. Smith also has unvested option awards and unvested
restricted stock awards at the end of fiscal 2011 that will vest as described in the
tables below.(6)
    
    During fiscal 2011, Mr. Haverkost was granted 8,015 option awards, 6,739 restricted stock
awards and 5,055 performance shares (maximum payout), which were converted to restricted
stock awards (the table reflects target payout of the performance shares in the amount of
3,370 shares). The option awards granted become exercisable in four equal annual
installments commencing one year after the date of grant. The restricted stock awards
granted will vest in four equal annual installments commencing one year after the date of
grant. From prior year grants, Mr. Haverkost also has unvested option awards and unvested
restricted stock awards at the end of fiscal 2011 that will vest as described in the
tables below.(7)
    
    During fiscal 2011, Mr. Kerr was granted 8,015 option awards, 6,739 restricted stock
awards and 5,055 performance shares (maximum payout), which were converted to restricted
stock awards (the table reflects target payout of the performance shares in the amount of
3,370 shares). The option awards granted become exercisable in four equal annual
installments commencing one year after the date of grant. The restricted stock awards
granted will vest in four equal annual installments commencing one year after the grant
date. From prior year grants, Mr. Kerr also has unvested option awards and unvested
restricted stock awards at the end of fiscal 2011 that will vest as described in the
tables below.(8)
    
    The following tables set forth vesting terms of unvested option awards and unvested
restricted stock awards granted to each of our named executive officers in prior years. 91




---



##### 



Unvested Option Awards From Prior Year Grants  At Fiscal Year-End (2011)
 Unvested Option AwardsVesting in Fiscal Year 2012
    
    
    Vesting in Fiscal Year 2013
    
    
    Vesting in Fiscal Year 2014Vest
    
    
    Number
    
    
    Vest
    
    
    Number
    
    
    Vest
    
    
    NumberName
    
    Date
    
    
    of Shares
    
    
    Date
    
    
    of Shares
    
    
    Date
    
    
    of SharesDarrell Webb
    
    March 15, 2011
    
    
    17,085March 16, 2011
    
    
    19,063
    
    
    March 16, 2012
    
    
    19,063
    
    
    March 16, 2013
    
    
    19,064April 1, 2011
    
    
    27,553
    
    
    April 1, 2012
    
    
    27,553Travis Smith
    
    March 15, 2011
    
    
    7,119March 16, 2011
    
    
    7,149
    
    
    March 16, 2012
    
    
    7,149
    
    
    March 16, 2013
    
    
    7,149March 17, 2011
    
    
    13,357
    
    
    March 17, 2012
    
    
    13,357Kenneth Haverkost
    
    March 16, 2011
    
    
    5,957
    
    
    March 16, 2012
    
    
    5,957
    
    
    March 16, 2013
    
    
    5,958March 17, 2011
    
    
    13,357
    
    
    March 17, 2012
    
    
    13,357December 3, 2011
    
    
    11,443James Kerr
    
    March 15, 2011
    
    
    7,119March 16, 2011
    
    
    5,957
    
    
    March 16, 2012
    
    
    5,957
    
    
    March 16, 2013
    
    
    5,958March 17, 2011
    
    
    13,357
    
    
    March 17, 2012
    
    
    13,357
 Unvested Restricted Stock Awards From Prior Year Grants
At Fiscal Year-End (2011)
 Unvested Restricted Stock AwardsVesting in Fiscal Year 2012
    
    
    Vesting in Fiscal Year 2013
    
    
    Vesting in Fiscal Year 2014Vest
    
    
    Number
    
    
    Vest
    
    
    Number
    
    
    Vest
    
    
    NumberName
    
    Date
    
    
    of Shares
    
    
    Date
    
    
    of Shares
    
    
    Date
    
    
    of SharesDarrell Webb
    
    March 15, 2011
    
    
    429March 16, 2011
    
    
    210,305
    
    
    March 16, 2012
    
    
    105,153March 16, 2011
    
    
    11,830
    
    
    March 16, 2012
    
    
    11,830
    
    
    March 16, 2013
    
    
    11,830April 1, 2011
    
    
    11,125
    
    
    April 1, 2012
    
    
    11,126April 1, 2011
    
    
    1,375
    
    
    April 1, 2012
    
    
    1,375April 1, 2011
    
    
    2,335
    
    
    April 1, 2012
    
    
    2,335Travis Smith
    
    March 15, 2011
    
    
    179March 16, 2011
    
    
    5,915
    
    
    March 16, 2012
    
    
    5,915
    
    
    March 16, 2013
    
    
    5,915March 16, 2011
    
    
    4,436
    
    
    March 16, 2012
    
    
    4,436
    
    
    March 16, 2013
    
    
    4,437March 17, 2011
    
    
    2,312
    
    
    March 17, 2012
    
    
    2,312March 17, 2011
    
    
    1,798
    
    
    March 17, 2012
    
    
    1,799Kenneth
    
    March 16, 2011
    
    
    4,929
    
    
    March 16, 2012
    
    
    4,929
    
    
    March 16, 2013
    
    
    4,930Haverkost
    
    March 16, 2011
    
    
    3,697
    
    
    March 16, 2012
    
    
    3,697
    
    
    March 16, 2013
    
    
    3,698March 17, 2011
    
    
    2,312
    
    
    March 17, 2012
    
    
    2,312March 17, 2011
    
    
    1,798
    
    
    March 17, 2012
    
    
    1,799December 3, 2011
    
    
    7,962James Kerr
    
    March 15, 2011
    
    
    179March 16, 2011
    
    
    4,929
    
    
    March 16, 2012
    
    
    4,929
    
    
    March 16, 2013
    
    
    4,930March 16, 2011
    
    
    3,697
    
    
    March 16, 2012
    
    
    3,697
    
    
    March 16, 2013
    
    
    3,698March 17, 2011
    
    
    2,312
    
    
    March 17, 2012
    
    
    2,312March 17, 2011
    
    
    1,798
    
    
    March 17, 2012
    
    
    1,799
 92




---



##### 



FISCAL 2011 OPTION EXERCISES AND STOCK VESTED
 Stock AwardsOption Awards
    
    
    Number ofNumber of Common
    
    
    
    
    
    
    CommonShares Acquired
    
    
    Value Realized
    
    
    Shares Acquired
    
    
    Value RealizedName
    
    On Exercise (#)
    
    
    on Exercise ($)(1)
    
    
    on Vesting (#)
    
    
    on Vesting ($)(2)Darrell Webb
    
    
    200,387
    
    
    $
    5,239,924
    
    
    
    52,093
    
    
    $
    2,182,496Travis Smith
    
    
    40,124
    
    
    $
    1,134,974
    
    
    
    24,639
    
    
    $
    1,004,194Kenneth Haverkost
    
    
    19,314
    
    
    $
    516,439
    
    
    
    20,697
    
    
    $
    888,091James Kerr
    
    
    0
    
    
    $
    0
    
    
    
    17,914
    
    
    $
    732,823
 
 (1)
    
    The value realized on the exercise of stock options is based on the
difference between the exercise price and the market price of our
common stock on the date of exercise, multiplied by the number of
shares acquired.(2)
    
    The value realized on the vesting of our restricted stock is
determined by multiplying the number of shares acquired by the market
price of our common stock on the date of vesting.  FISCAL 2011 PENSION BENEFITS
 PaymentsNumber of
    
    
    Present Value of
    
    
    DuringYears
    
    
    Accumulated
    
    
    LastCredited
    
    
    Benefit
    
    
    Fiscal YearName
    
    Plan Name
    
    
    Service
    
    
    ($)(1)
    
    
    ($)Darrell Webb
    
    Supplemental Retirement Benefit Plan
    
    
    4
    
    
    $
    112,314
    
    
    $
    0Travis Smith
    
    Supplemental Retirement Benefit Plan
    
    
    4
    
    
    $
    23,661
    
    
    $
    0Kenneth Haverkost
    
    Supplemental Retirement Benefit Plan
    
    
    3
    
    
    $
    108,720
    
    
    $
    0James Kerr
    
    Supplemental Retirement Benefit Plan
    
    
    13
    
    
    $
    61,370
    
    
    $
    0
 
 (1)
    
    The present value represents the required balance when the participant
reaches age 65, discounted at an interest rate of 10%.  93




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##### 



FISCAL 2011 NONQUALIFIED DEFERRED COMPENSATION
 Executive
    
    
    Matching
    
    
    Aggregate
    
    
    Aggregate
    
    
    AggregateContributions
    
    
    Contributions in
    
    
    Earnings in
    
    
    Withdrawals/
    
    
    Balance atName
    
    in Last FY ($)(1)
    
    
    Last FY ($)(2)
    
    
    Last FY ($)
    
    
    Distributions ($)
    
    
    Last FYE ($)Darrell Webb
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aTravis Smith
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aKenneth Haverkost
    
    $
    64,692
    
    
    $
    16,231
    
    
    $
    23,681
    
    
    $
    0
    
    
    $
    203,319James Kerr
    
    $
    29,723
    
    
    $
    14,862
    
    
    $
    3,502
    
    
    $
    (28,671
    )
    
    $
    66,504
 
 (1)
    
    Amounts earned but deferred under our Deferred Compensation Plan also
appear in the Summary Compensation Table at page 87 of this report in
the column titled Salary.(2)
    
    Matching Contributions also appear in the Summary Compensation Table
at page 87 of this report in the column titled All Other
Compensation.  POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
 Current Executive Officer Severance/Change of Control Agreements.
     94




---



##### 



95




---



##### 



Severance/Change of Control Agreement Tables  Current Executive Officers
 Darrell Webb
 Before Change in
    
    
    After Change in
    
    
    Death and TotalPayment or Benefit Upon Termination
    
    Control ($)
    
    
    Control ($)
    
    
    Disability Payments ($)Salary(1)
    
    $
    1,840,000
    
    
    $
    2,760,000
    
    
    $
    0Bonus(2)
    
    $
    920,000
    
    
    $
    3,680,000
    
    
    $
    0SERP(3)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Value Realized Upon Vesting of Equity-Based Awards(4)
    
    $
    0
    
    
    $
    28,750,754
    
    
    $
    19,214,483All Other(5)
    
    $
    69,966
    
    
    $
    117,448
    
    
    $
    0Tax Gross-Ups(6)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Total
    
    $
    2,829,966
    
    
    $
    35,308,202
    
    
    $
    19,214,483
 Travis Smith
 Before Change in
    
    
    After Change in
    
    
    Death and TotalPayment or Benefit Upon Termination
    
    Control ($)
    
    
    Control ($)
    
    
    Disability Payments ($)Salary(1)
    
    $
    937,500
    
    
    $
    1,875,000
    
    
    $
    0Bonus(2)
    
    $
    468,750
    
    
    $
    1,875,000
    
    
    $
    0SERP(3)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Value Realized Upon Vesting of Equity-Based Awards(4)
    
    $
    0
    
    
    $
    5,959,197
    
    
    $
    2,122,161All Other(5)
    
    $
    72,267
    
    
    $
    119,535
    
    
    $
    0Tax Gross-Ups(6)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Total
    
    $
    1,478,517
    
    
    $
    9,828,732
    
    
    $
    2,122,161
 96




---



##### 



Kenneth Haverkost
 Before Change in
    
    
    After Change in
    
    
    Death and TotalPayment or Benefit Upon Termination
    
    Control ($)
    
    
    Control ($)
    
    
    Disability Payments ($)Salary(1)
    
    $
    622,500
    
    
    $
    830,000
    
    
    $
    0Bonus(2)
    
    $
    207,500
    
    
    $
    622,500
    
    
    $
    0SERP(3)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Value Realized Upon Vesting of Equity-Based Awards(4)
    
    $
    0
    
    
    $
    5,904,815
    
    
    $
    2,177,842All Other(5)
    
    $
    25,597
    
    
    $
    25,796
    
    
    $
    0Tax Gross-Ups(6)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Total
    
    $
    855,597
    
    
    $
    7,383,111
    
    
    $
    2,177,842
 James Kerr
 Before Change in
    
    
    After Change in
    
    
    Death and TotalPayment or Benefit Upon Termination
    
    Control ($)
    
    
    Control ($)
    
    
    Disability Payments ($)Salary(1)
    
    $
    585,000
    
    
    $
    780,000
    
    
    $
    0Bonus(2)
    
    $
    195,000
    
    
    $
    585,000
    
    
    $
    0SERP(3)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Value Realized Upon Vesting of Equity-Based Awards(4)
    
    $
    0
    
    
    $
    5,176,685
    
    
    $
    1,804,400All Other(5)
    
    $
    71,928
    
    
    $
    87,571
    
    
    $
    0Tax Gross-Ups(6)
    
    $
    0
    
    
    $
    0
    
    
    $
    0Total
    
    $
    851,928
    
    
    $
    6,629,256
    
    
    $
    1,804,400
 
 (1)
    
    Represents salary received upon separation from service. If separation
from service occurs prior to a Change of Control, Mr. Webb will
receive continued payments of base salary for two years and Messrs.
Smith, Kerr and Haverkost will receive continued payments of base
salary for eighteen months. If separation from service occurs after a
Change of Control, Mr. Webb and Mr. Smith will receive a lump sum
equal to three times their base salary and Mr. Kerr and Mr. Haverkost
will receive a lump sum equal to two times their base salary. There is
no salary payment, other than earned but unpaid salary, if separation
from service is due to death or disability.(2)
    
    Represents bonus received upon separation from service. If separation
from service occurs prior to a Change of Control, each Executive will
receive a pro rata bonus for that part of the current year that ends
on the termination date. If separation from service occurs after a
Change of Control, Mr. Webb and Mr. Smith will receive a lump sum
equal to three times their bonus (calculated as provided in their
agreements) and Mr. Kerr and Mr. Haverkost will receive a lump sum
equal to two times their bonus (calculated as provided in their
agreements). In addition, each Executive will receive a pro rata bonus
for that part of the current year that ends on the separation from
service date. There is no bonus payment if separation from service is
due to death or disability.(3)
    
    The SERP provides benefits, subject to forfeiture, to designated
employees upon retirement at age 65, early retirement, total
disability or death. None of our executive officers have met the
eligibility criteria for a SERP payout at our fiscal year end.(4)
    
    Represents value realized upon vesting of equity-based awards. If
separation from service occurs after a Change of Control, all unvested
stock options and stock awards held by the Executives will vest. For
the performance shares granted on March 15, 2010, value realized is at
target. Unless otherwise determined by the Compensation Committee, all
grantees, including each of our executive officers, unvested stock
options and stock awards will vest upon a change of control. If termination is due to
death or disability, a pro rata portion of the unvested stock awards
will vest.(5)
    
    Represents continued life insurance coverage and outplacement
services. Pursuant to the agreements, if termination occurs prior to a
Change of Control, Mr. Webb will receive continued life insurance
coverage for two years and Messrs. Smith, Haverkost and Kerr will
receive continued life insurance coverage for eighteen months. If
termination occurs after a Change of Control, Messrs. Webb and Smith
will receive continued life insurance coverage for three years and
Messrs. Haverkost and Kerr will receive continued life insurance
coverage for two years. As discussed above, under the amended
agreements that became effective in February 2008, Messrs. Webb, Smith
and Kerr will receive additional severance compensation in lieu of the
continued medical and dental coverage they would have received under
their prior agreements. There is no continuation of life insurance
coverage if separation from service is due to death or disability.
Following separation from service, each executive will receive
outplacement services.(6)
    
    Tax gross-up estimates were provided by the Boards outside
compensation consultant. For a description of the calculation of 97




---



##### 



gross-up payments, see the section of this report titled Potential
Payments Upon Termination or Change in Control beginning at
page 94.
The actual gross-up payments that may be made will depend upon the
facts and circumstances existing at the time of the related separation
from service. COMPENSATION RISK MONITORING
    
    
    A substantial portion of the total compensation opportunity is base salary, so our
employees are not dependent on achieving high incentive compensation in order to meet their
basic financial needs. Base salary constitutes 26% of our CEOs compensation opportunity, at
target. The base salary percentage is 36% for our other executive officers, 44% for our
senior vice presidents and over 50% at the Vice President level and below.
    
    Incentive opportunities are weighted more heavily towards long-term equity-based awards
versus short-term cash incentive awards, limiting motivation to inappropriately manage for
short-term goals at the expense of long-term performance. For our CEO, short-term incentive
represents 26%, and long-term incentive represents 48%, of the total compensation
opportunity, at target. The percentages are 27% short-term incentive, 37% long-term
incentive for our President; 18% short-term incentive, 46% long-term incentive for our
Executive Vice Presidents; 17% short-term incentive, 39% long-term incentive at the Senior
Vice President level; and 17% short-term incentive, 27% long-term incentive at the Vice
President level.
    
    Our short-term incentive plan structure is based on multiple measures which promote
sustained profitable growth. The bonus measures for our store support center and
distribution center employees are comparable same store sales and earnings before income
taxes (EBIT), incentivizing employees to balance growth and profits. Our CEO and other
executive officers also were measured on return on invested capital, which measures how well
companies generate earnings from invested capital and encourages investments in projects
that have solid long-term returns. For our district managers and store managers, bonuses are
based on sales, and other factors important to profitable store operations, again
encouraging sustained profitable growth.
    
    The measures for both our short-term and long-term incentive plans are aligned with
achievable operating and strategic plans, which also serve as the basis for our investor
guidance, and the payout curves to achieve a threshold payout and an above target payout are
at reasonable levels that do not encourage management to achieve short-term goals that are
adverse to the long-term health of the company.
    
    Both the short-term incentive opportunity and the performance share component of the
long-term incentive opportunity are capped, the short-term incentive plan at two times
target and performance shares at 1.5 times target.
    
    Our long-term incentive grants for employees at the Vice President level and above are in
the form of performance and restricted shares, and stock options, with vesting over three
years for Vice Presidents and four years for higher level officers, and thus the value of
these grants is dependent on achieving sustainable long-term shareholder value. Moreover,
stock options only represent 25% of these awards, at target, lessening any incentive to
manage for short-term stock price gains at the expense of long-term value.
 Other company policies also mitigate against excessive risk taking:
 
    
    The Board has adopted a claw-back policy, discussed at page 85 of this report.
    
    We prohibit officers and director level employees from engaging in hedging, derivative,
margin account purchases, and similar transactions in our stock.
 98




---



##### 



DIRECTOR COMPENSATION
   Cash compensation:
 Additional Lead Director, Committee Chair and Audit Committee Member Cash Retainers:
 Restricted Stock Units:
 Stock Options:
  
    
    for non-employee Directors whose service as a Director commenced on or prior to September
9, 1999 (Scott Cowen, Ira Gumberg and Frank Newman), the tenth anniversary grant was made
on September 9, 2009 (which was during one of our window periods) and future tenth
anniversary grants will be made during the first Window Period Date on or after each tenth
anniversary of September 9, 2009 unless the Compensation Committee decides on a different
grant date.
    
    for non-employee Directors whose service as a Director commenced subsequent to September
9, 1999, the tenth anniversary grant will be made on the first Window Period Date on or
after the tenth anniversary of the Directors election to the Board, and on the first Window
Period Date on or after each tenth anniversary thereof, unless the Compensation Committee
decides on a different grant date. There were no tenth anniversary grants during fiscal
2011.
   99




---



##### 



Deferred stock:
 Employee Director:
 Annual Review of Director Compensation:
 Share Ownership Guidelines:
 FISCAL 2011 DIRECTOR COMPENSATION
  Grant Date FairValue ofRestrictedFees Earned or
    
    
    Stock Units
    
    
    All OtherName
    
    Paid in Cash ($)(1)
    
    
    ($)(2)(3)
    
    
    Compensation ($)
    
    
    Total ($)Scott Cowen
    
    $
    110,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    230,673Joseph DePinto(4)
    
    $
    35,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    155,673Ira Gumberg
    
    $
    70,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    190,673Patricia Morrison
    
    $
    80,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    200,673Frank Newman
    
    $
    75,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    195,673David Perdue
    
    $
    75,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    195,673Beryl Raff
    
    $
    85,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    205,673Alan Rosskamm
    
    $
    70,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    190,673Tracey Travis
    
    $
    90,000
    
    
    $
    120,673
    
    
    $
    0
    
    
    $
    210,673
 
 (1)
    
    Each non-employee Director received a retainer fee in the amount
of $70,000 for fiscal 2011 with the exception of Mr. DePinto who
received a retainer fee in the amount of $35,000 for the period
prior to his resignation from the Board. Dr. Cowen received an
additional Lead Director retainer fee in the amount of $35,000
and an Audit Committee retainer fee in the amount of $5,000. Ms.
Travis received an additional Audit Committee chairperson
retainer fee in the amount of $20,000; Ms. Raff received an
additional Compensation Committee chairperson retainer fee in the
amount of $15,000; and Ms. Morrison received an additional
Corporate Governance Committee chairperson retainer fee in the
amount of $10,000. Mr. Newman and Mr. Perdue received Audit
Committee retainer fees in the amount of $5,000 each. The
following non-employee Directors elected to convert a portion of
their cash compensation into deferred stock units for calendar
year 2010: Mr. DePinto  50% cash, 50% stock and Ms. Travis 
75% cash, 25% stock.The grants of restricted stock units are made on the date of the
Annual Shareholders Meeting at which the Directors are elected or
re-elected, and relate to the following year of service; thus
they represent compensation for service rendered during roughly
the last seven months of fiscal 2011 and the first five months of
fiscal 2012.(2)
    
    The grant date fair value for all restricted stock units granted
during fiscal 2011 was $120,673 per Director, except that Mr.
DePinto forfeited 2,539 of the 2,769 shares granted upon his
resignation from the Board. At fiscal year-end the number of
outstanding restricted stock units were as follows: Dr. Cowen 
2,769, Mr. Gumberg  2,769, Ms. Morrison  2,769, Mr. Newman 
2,769, Mr. Perdue  2,769, Ms. Raff  2,769, Mr. Rosskamm 
2,769, and Ms. Travis  2,769. 100




---



##### 



(3)
    
    For a discussion of the assumptions we made in valuing these
stock awards, see Note 1  Significant Accounting Policies 
Stock-Based Compensation and Note 8  Stock-Based
Compensation in the notes to our consolidated financial
statements contained in this report.(4)
    
    Mr. DePinto resigned from the Board effective August 1, 2010. COMPENSATION COMMITTEE REPORT
    Compensation Committee
 Beryl Raff (Chairperson)  Scott Cowen
Patricia Morrison
Frank Newman
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
   PRINCIPAL SHAREHOLDERS
  101




---



##### 



Number of
    
    
    Percent ofName of
    
    Common Shares
    
    
    Class if 1%Beneficial Owner
    
    Beneficially Owned
    
    
    or More5% OwnersBlackRock, Inc.(1)
    
    
    2,208,093
    
    
    
    8.38
    %Michael W.
Cook Asset Management, Inc., d/b/a SouthernSun Asset Management(2)
    
    
    1,650,313
    
    
    
    6.27
    %DirectorsAlan Rosskamm (3)(4)
    
    
    553,226
    
    
    
    2.10
    %Scott Cowen(5)
    
    
    50,519
    
    
    
    
    *Ira Gumberg(6)
    
    
    9,597
    
    
    
    
    *Patricia Morrison(7)
    
    
    46,178
    
    
    
    
    *Frank Newman(8)
    
    
    78,247
    
    
    

    
    *David Perdue(9)
    
    
    24,806
    
    
    
    
    *Beryl Raff(10)
    
    
    9,984
    
    
    
    
    *Tracey Travis(11)
    
    
    35,719
    
    
    
    
    *Executive OfficersDarrell Webb(12)
    
    
    510,429
    
    
    
    1.93
    %Travis Smith(13)
    
    
    122,467
    
    
    
    
    *Kenneth Haverkost(14)
    
    
    133,792
    
    
    
    
    *James Kerr(15)(16)
    
    
    183,743
    
    
    
    
    *All Current Executive Officers and Directors as a Group (12 persons)(15)(17)
    
    
    1,758,707
    
    
    
    6.55
    %
 
 *
    
    Less than 1%(1)
    
    The common shares listed are reported on Schedule 13G/A, filed with the SEC on
February 4, 2011 with respect to holdings as of December 31, 2010. The subsidiaries
of BlackRock, Inc. (BlackRock) that hold shares reported by BlackRock include
BlackRock Japan Co. Ltd., BlackRock Asset Management Ireland Limited, BlackRock
Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Asset
Management Australia Limited, BlackRock Advisors, LLC, BlackRock Investment
Management, LLC and BlackRock International Limited. The Schedule 13G does not
specify positions of various subsidiaries but a majority of shares are held by
BlackRock Institutional Trust Company, N.A. The Schedule 13G does not specify, and we
are not able to determine, who has the ultimate voting or investment control over the
common shares held by BlackRock. The mailing address of BlackRock, Inc. is 40 East
52nd Street, New York, NY 10022.(2)
    
    The shares of Company common stock listed are reported on Schedule 13G, filed with
the SEC on February 14, 2011 with respect to holdings as of December 31, 2010.
Michael W. Cook Asset Management, Inc., d/b/a SouthernSun Asset Management
(SouthernSun), reports the beneficial ownership of 1,405,503 shares of Company
common stock with regard to which it has sole voting power and 1,650,313 shares of
Company common stock with regard to which it has sole dispositive power. The
Schedule 13G does not disclose, and we are unable to determine, who has the ultimate
voting or investment control over the shares of Company common stock held by
SouthernSun. The mailing address of SouthernSun is 6000 Poplar Avenue, Suite 220,
Memphis, TN 38119.(3)
    
    Mrs. Betty Rosskamm (the mother of Alan Rosskamm), the
three children of  Mrs. Alma Zimmerman (a member of
one of our companys original founding families and who is now deceased) and our
company are parties to an agreement, dated October 30, 2003, as amended on February
22, 2007, relating to their Jo-Ann Stores common shares. Under this agreement, Mrs.
Rosskamm and her lineal descendants and permitted holders (the Rosskamms) and Mrs.
Zimmerman and her lineal descendants and permitted holders (the Zimmermans) may
each sell up to 400,000 common shares in any calendar year but may not sell more than
200,000 of those shares in any 180-day period. If either the Rosskamms or Zimmermans
plan to sell a number of their respective common shares in excess of the number
permitted under the agreement, they must first offer to sell those shares to our
company. Each of the Rosskamms and the Zimmermans are permitted to sell an unlimited
number of shares to each other free of our companys right of first refusal. The
company agreed to waive any right of first refusal arising under this agreement in
connection with our merger agreement with Leonard Green & Partners.(4)
    
    Mr. Rosskamms beneficial ownership includes 2,769 RSUs, 74,125 common shares held by
Mr. Rosskamm as trustee for the benefit of family members and charities with regard
to which he has shared voting and dispositive power, 165,328 common shares held by
Rosskamm Family Partners, L.P. with regard to which he has shared voting and
dispositive power and 112,583 common shares held by Rosskamm Family Partners, L.P. II
with regard to which he has shared voting and dispositive power. The mailing address
for Mr. Rosskamm is 1417 E. 36th Street, Cleveland, Ohio 44114. 102




---



##### 



(5)
    
    Dr. Cowens beneficial ownership includes 3,551 common shares subject to a deferred
compensation arrangement and 2,769 common shares held as restricted stock.(6)
    
    Mr. Gumbergs beneficial ownership includes 6,828 common shares subject to a deferred
compensation arrangement and 2,769 common shares held as restricted stock.(7)
    
    Ms. Morrisons beneficial ownership includes 17,200 common shares subject to stock
options and 2,769 common shares held as restricted stock.(8)
    
    Mr. Newmans beneficial ownership includes 22,575 common shares subject to stock
options, 8,525 common shares subject to a deferred compensation arrangement and 2,769
common shares held as restricted stock.(9)
    
    Mr. Perdues beneficial ownership includes 10,000 common shares subject to stock
options, 312 common shares subject to a deferred compensation arrangement and 2,769
common shares held as restricted stock.(10)
    
    Ms. Raffs beneficial ownership includes 2,769 common shares held as restricted stock.(11)
    
    Ms. Travis beneficial ownership includes 8,600 common shares subject to stock
options, 4,644 common shares subject to a deferred compensation arrangement and 2,769
common shares held as restricted stock.(12)
    
    Mr. Webbs beneficial ownership includes 129,381 common shares subject to stock
options, 4,670 stock equivalent units and 376,378 common shares held as restricted
stock.(13)
    
    Mr. Smiths beneficial ownership includes 66,501 common shares subject to stock
options, 48,889 common shares held as restricted stock and 7,077 restricted stock
units (which are subject to both performance and time restrictions).(14)
    
    Mr. Haverkosts beneficial ownership includes 75,487 common shares subject to stock
options, 48,802 common shares held as restricted stock and 5,055 restricted stock
units (which are subject to both performance and time restrictions).(15)
    
    The number of common shares beneficially owned by such persons under our Jo-Ann
Stores, Inc. 401(k) Savings Plan is included as of January 31, 2011, the latest date
for which statements are available.(16)
    
    Mr. Kerrs beneficial ownership includes 127,995 common shares subject to stock
options, 41,019 common shares held as restricted stock and 5,055 restricted stock
units (which are subject to both performance and time restrictions).(17)
    
    Beneficial ownership for all current executive officers and Directors as a group
includes 457,739 common shares subject to stock options granted under our stock
option plans, 23,860 common shares subject to deferred compensation arrangements,
22,152 restricted stock units, 4,670 stock equivalent units, 515,088 common shares
held as restricted stock and 17,187 restricted stock units (which are subject to both
performance and time restrictions). 103




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##### 



EQUITY COMPENSATION PLAN INFORMATION
 Number of CommonShares RemainingAvailable for FutureNumber of Common
    
    
    
    
    
    
    Issuance Under EquityShares to be Issued Upon
    
    
    Weighted-Average
    
    
    Compensation PlansExercise of
    
    
    Exercise Price of
    
    
    (ExcludingOutstanding Options,
    
    
    Outstanding Options,
    
    
    Securities ReflectedPlan Category
    
    Warrants and Rights(a)
    
    
    Warrants and Rights(b)
    
    
    in Column (a))(c)Equity
compensation plans
approved by
security
holders(1),(2),(3)
    
    
    841,319
    
    
    $
    18.87
    
    
    
    2,310,121
 
 (1)
    
    Column (a) represents the number of common shares that may be issued
in connection with the exercise or conversion of 285,711 outstanding
stock options, 22,152 restricted stock units and 2,744 deferred stock
units granted under our 2008 Plan, and 505,411 outstanding stock
options, 4,670 stock equivalent units and 20,631 deferred stock units
granted under our 1998 Plan. Our 1998 Plan has terminated, but the
termination does not affect awards that are currently outstanding
under this plan. The shares subject to outstanding awards under the
1998 Plan could be forfeited and therefore become available for
issuance under the 2008 Plan.(2)
    
    The weighted average exercise price of $18.87 is solely for
outstanding stock options. The common shares issuable upon vesting of
22,152 restricted stock units and 2,744 deferred stock units issued to
our Directors under our 2008 Plan and the common shares issuable upon
vesting of 4,670 stock equivalent units issued to Mr. Webb and 20,631
deferred stock units issued to our Directors under our 1998 Plan have
no exercise price.(3)
    
    Column (c) includes 1,897,229 common shares under our 2008 Plan and
412,892 common shares that were available under the 2008 ASOP at the
end of our fiscal 2011. Item 13. Certain Relationships and Related Transactions, and Director Independence
 RELATIONSHIPS
  RELATED PARTY TRANSACTIONS
  104




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##### 



Item 14. Principal Accountant Fees and Services
 AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND
PERMITTED NON-AUDIT SERVICES
     PRINCIPAL ACCOUNTING FIRM FEES
  Fiscal Year2011
    
    
    2010(In thousands)Audit Fees(1)
    
    $
    784
    
    
    $
    746Audit-Related Fees(2)
    
    
    43
    
    
    
    42Tax Fees(3)(4)
    
    
    7
    
    
    
    48All Other Fees(5)
    
    
    
    
    
    
    Total
    
    $
    834
    
    
    $
    836
 105




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##### 



(1)
    
    Audit Fees include fees for professional services rendered by the principal accountant for the
audit of our annual financial statements, review of financial statements included in our Form 10-Q
filings, the audit of the effectiveness of our internal control over financial reporting as
required by the Sarbanes-Oxley Act of 2002, and services that are normally provided in connection
with statutory and regulatory filings or engagements.(2)
    
    Audit-Related Fees include fees for assurance and related services performed that are reasonably
related to the performance of the audit or review of our financial statements. These fees include
consultation on SEC registration statements and filings, and consultations on other financial
accounting and reporting matters.(3)
    
    Tax Fees include fees billed for professional services relating to tax compliance, tax planning and
consultations, reviews of tax returns and audit support.(4)
    
    The Audit Committee has considered and concluded that the provision of these services is compatible
with maintaining the principal accountants independence.(5)
    
    All Other Fees are fees for other permissible work that do not meet the above category descriptions. PART IV
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this report:(1)
    
    Financial StatementsThe consolidated financial statements filed as part of this Form 10-K are located as set forth
in the index on page 39 of this report.(2)
    
    Financial Statement SchedulesAll schedules have been omitted because they are not applicable or the required information is
included in the consolidated financial statements or notes thereto.(3)
    
    ExhibitsThe exhibits listed in the Index to Exhibits, which appears in this Form 10-K below, are filed
as part of this Form 10-K.
 106




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##### 



Index to Exhibits
 ExhibitNumber
    
    Exhibit Description2.1
    
    Agreement and Plan of Merger, dated December 23, 2010, by and among Jo-Ann Stores,
Inc., Needle Holdings Inc. and Needle Merger Sub Corp. (filed as Exhibit 2.1 to the
companys Form 8-K filed with the Commission on December 23, 2010 and incorporated
herein by reference) +3.1
    
    Amended and Restated Articles of Incorporation of Jo-Ann Stores, Inc. (filed as Exhibit
3.1 to the companys Form 10-K filed with the Commission on April 17, 2008 and
incorporated herein by reference)3.2
    
    Amended and Restated Code of Regulations (filed as Exhibit 3.1 to the companys Form
8-K filed with the Commission on June 11, 2010 and incorporated herein by reference)4.1
    
    Indenture between the company and Jo-Ann Stores Supply Chain Management, Inc., Team
Jo-Ann, Inc., FCA of Ohio, Inc., and House of Fabrics, Inc., as guarantors, and
National City Bank, as trustee, relating to the 7.50% Senior Subordinated Notes due
2012, including the form of note (filed as Exhibit 4.4 to the companys Form 10-K filed
with the Commission on April 15, 2004 and incorporated herein by reference)4.2
    
    Third Amended and Restated Rights Agreement, dated as of February 26, 2007, by and
between Jo-Ann Stores, Inc. and National City Bank, as Rights Agent (filed as Exhibit
4.1 to the companys Form 8-A/A filed with the Commission on March 2, 2007 and
incorporated herein by reference)10.1
    
    Jo-Ann Stores, Inc. Supplemental Retirement Benefit Plan, as amended (filed as Exhibit
10.3 to the companys Form 10-Q filed with the Commission on December 13, 2007 and
incorporated herein by reference)*10.2
    
    Schedule to Jo-Ann Stores, Inc. Supplemental Retirement Benefit Plan, effective as of
November 13, 2007 (filed as Exhibit 10.4 to the companys Form 10-Q filed with the
Commission on December 13, 2007 and incorporated herein by reference)*10.3
    
    Schedule to Jo-Ann Stores, Inc. Supplemental Retirement Benefit Plan, effective as of
October 15, 2008 (filed as Exhibit 10.2 to the companys Form 8-K filed with the
Commission on October 15, 2008 and incorporated herein by reference)*10.4
    
    Jo-Ann Stores, Inc. Compensation Clawback Policy (filed as Exhibit 10.1 to the
companys Form 8-K filed with the Commission on January 6, 2010 and incorporated herein
by reference)*10.5
    
    Form of Compensation Clawback Policy Acknowledgement and Agreement, dated December 31,
2009 (filed as Exhibit 10.2 to the companys Form 8-K filed with the Commission on
January 6, 2010 and incorporated herein by reference)*10.6
    
    Jo-Ann Stores, Inc. (formerly Fabri-Centers of America, Inc.) 1998 Incentive
Compensation Plan, as amended, dated November 13, 2007 (filed as Exhibit 10.6 to the
companys Form 10-Q filed with the Commission on December 13, 2007 and incorporated
herein by reference)*10.7
    
    Agreement dated October 30, 2003 among Jo-Ann Stores, Inc., Betty Rosskamm and Alma
Zimmerman, a member of one of the companys original founding families and who is now
deceased (Second Amended and Restated) (filed as Exhibit 10.10 to the companys Form
10-K filed with the Commission on April 15, 2004 and incorporated herein by reference)*10.8
    
    Amendment to the Second Amended and Restated Agreement dated February 22, 2007 among
and between Jo-Ann Stores, Inc., Betty Rosskamm, and Joan Wittenberg, Sandra Zucker and
Larry Zimmerman (the successors to Alma Zimmerman, a member of one of the companys
original founding families and who is now deceased) (filed as Exhibit 10.8 to the
companys Form 10-K filed with the Commission on April 19, 2007 and incorporated herein
by reference)*10.9
    
    Credit Agreement dated as of April 24, 2001 among the company, as borrower, Fleet
National Bank, as Issuing Bank, Fleet Retail Finance Inc., as Administrative Agent and
Collateral Agent, Congress Financial Corporation, as Documentation Agent, GMAC
Commercial Credit, LLC, National City Commercial Finance, Inc. and The CIT
Group/Business Credit, Inc., as Co-Agents, and Fleet Securities Inc., as Arranger and
Syndication Agent (filed as Exhibit 10.9 to the companys Form 10-K filed with the
Commission on April 19, 2007 and incorporated herein by reference)10.10
    
    First Amendment to Credit Agreement dated as of April 24, 2001 (filed as Exhibit 10.10
to the companys Form 10-K filed with the Commission on April 19, 2007 and incorporated
herein by reference)10.11
    
    Second Amendment to Credit Agreement dated as of March 17, 2003 (filed as Exhibit 10.13
to the companys Form 10-K filed with the Commission on April 15, 2004 and incorporated
herein by reference)10.12
    
    Third Amendment to Credit Agreement dated as of February 18, 2004 (filed as Exhibit
10.14 to the companys Form 10-K filed with the Commission on April 15, 2004 and
incorporated herein by reference)
 107




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##### 



ExhibitNumber
    
    Exhibit Description10.13
    
    Fourth Amendment to Credit Agreement dated April 16, 2004 (filed as Exhibit 10.15 to
the companys Form S-4 filed with the Commission on May 24, 2004 and incorporated
herein by reference)10.14
    
    Fifth Amendment to Credit Agreement dated February 23, 2006 (filed as Exhibit 10.14 to
the companys Form 10-K filed with the Commission on April 13, 2006 and incorporated
herein by reference)10.15
    
    Sixth Amendment to Credit Agreement dated November 5, 2007 (filed as Exhibit 10.1 to
the companys Form 10-Q filed with the Commission on December 13, 2007 and incorporated
herein by reference)10.16
    
    Jo-Ann Stores, Inc. Deferred Compensation Plan, as amended on January 30, 2008 (filed
as Exhibit 10.16 to the companys Form 10-K filed with the Commission on April 17, 2008
and incorporated herein by reference)*10.17
    
    Form of Restricted Stock Award Agreement of the company (filed as Exhibit 10.1 to the
companys Form 8-K filed with the Commission on November 23, 2005 and incorporated
herein by reference)*10.18
    
    Form of Notice of Grant of Non-Qualified Stock Option (filed as Exhibit 10.2 to the
companys Form 8-K filed with the Commission on November 23, 2005 and incorporated
herein by reference)*10.19
    
    Letter Agreement entered into on June 29, 2006 between the company and Darrell Webb
regarding Mr. Webbs employment with the company (filed as Exhibit 10.1 to the
companys Form 10-Q filed with the Commission on September 7, 2006 and incorporated
herein by reference)*10.20
    
    Amended Employment Agreement dated February 19, 2008 between the company and Darrell
Webb (filed as Exhibit 10.25 to the companys Form 10-K filed with the Commission on
April 17, 2008 and incorporated herein by reference)*10.21
    
    Letter Agreement entered into on July 10, 2006 between the company and Travis Smith
regarding Mr. Smiths employment with the company (filed as Exhibit 10.3 to the
companys Form 10-Q filed with the Commission on September 7, 2006 and incorporated
herein by reference)*10.22
    
    Amended Employment Agreement dated February 19, 2008 between the company and Travis
Smith (filed as Exhibit 10.27 to the companys Form 10-K filed with the Commission on
April 17, 2008 and incorporated herein by reference)*10.23
    
    Letter Agreement entered into on July 27, 2006 between the company and James Kerr
regarding Mr. Kerrs employment with the company (filed as Exhibit 10.5 to the
companys Form 10-Q filed with the Commission on September 7, 2006 and incorporated
herein by reference)*10.24
    
    Amended Employment Agreement dated February 19, 2008 between the company and James Kerr
(filed as Exhibit 10.29 to the companys Form 10-K filed with the Commission on April
17, 2008 and incorporated herein by reference)*10.25
    
    Split Dollar Insurance Agreement dated July 27, 2006 between the company and James Kerr
(filed as Exhibit 10.7 to the companys Form 10-Q filed with the Commission on
September 7, 2006 and incorporated herein by reference)*10.26
    
    Lease Agreement dated October 19, 2006 between BPVisalia LLC, as Landlord, and Jo-Ann
Stores Supply Chain Management, Inc., as Tenant (filed as Exhibit 10.1 to the companys
Form 8-K filed with the Commission on October 25, 2006 and incorporated herein by
reference)10.27
    
    Split Dollar Insurance Agreement dated August 14, 2007 between the company and Darrell
Webb (filed as Exhibit 10.1 to the companys Form 8-K filed with the Commission on
August 20, 2007 and incorporated herein by reference)*10.28
    
    Split Dollar Insurance Agreement dated August 14, 2007 between the company and Travis
Smith (filed as Exhibit 10.2 to the companys Form 8-K filed with the Commission on
August 20, 2007 and incorporated herein by reference)*10.29
    
    Employment Agreement dated November 19, 2007 between the company and Kenneth Haverkost
(filed as Exhibit 10.2 to the companys Form 10-Q filed with the Commission on December
13, 2007 and incorporated herein by reference)*10.30
    
    Form of Director Indemnification Agreements (filed as Exhibit 10.37 to the companys
Form 10-K filed with the Commission on April 17, 2008 and incorporated herein by
reference)10.31
    
    Amended and Restated Credit Agreement, dated as of September 5, 2008, among the company
as Lead Borrower, the Lenders party thereto, Bank of America, N.A., as Issuing Bank,
Administrative Agent and Collateral Agent, Wells Fargo Retail Finance, LLC, National
City Business Credit, Inc. and U.S. Bank National Association, as Co-Documentation
Agents, and Banc of America Securities LLC, as Sole Lead Arranger and Book Manager
(filed as Exhibit 10.1 to the companys Form 10-Q filed with the Commission on December
11, 2008 and incorporated herein by reference)10.32
    
    Split Dollar Insurance Agreement dated October 15, 2008 between the company and Kenneth
Haverkost (filed as Exhibit 10.1 to the companys Form 8-K filed with the Commission on
October 15, 2008 and incorporated herein by reference)*
 108




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##### 



ExhibitNumber
    
    Exhibit Description10.33
    
    Jo-Ann Stores, Inc. 2008 Incentive Compensation Plan, as amended and restated (filed as
Exhibit 10.1 to the companys Form 8-K filed with the Commission on June 11, 2010 and
incorporated herein by reference)*10.34
    
    Jo-Ann Stores, Inc. 2008 Associate Stock Ownership Plan (filed as Appendix B to the
companys 2008 Proxy Statement filed with the Commission on April 28, 2008 and
incorporated herein by reference)*10.35
    
    Employment Agreement dated March 16, 2009 between the company and Darrell Webb (filed
as Exhibit 10.1 to the companys Form 8-K filed with the Commission on March 18, 2009
and incorporated herein by reference)*10.36
    
    Letter Agreement dated April 5, 2010 between the company and Darrell Webb amending Mr.
Webbs employment agreement dated March 16, 2009 (filed as Exhibit 10.1 to the
companys Form 8-K filed with the Commission on April 5, 2010 and incorporated herein
by reference)*21
    
    Subsidiaries of Jo-Ann Stores, Inc.23
    
    Consent of Ernst & Young LLP, Independent Auditors24
    
    Power of Attorney31.1
    
    Section 302 Certification By Chief Executive Officer31.2
    
    Section 302 Certification By Chief Financial Officer32.1
    
    Section 906 Certification of Principal Executive Officer and Principal Financial Officer
 
 *
    
    Indicates a management contract or compensatory plan or arrangement+
    
    Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The
company agrees to furnish supplementally a copy of any omitted
schedules to the SEC upon request. 109




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##### 



SIGNATURES
  Jo-Ann Stores, Inc.By:
    /s/  Darrell Webb
    March 10, 2011Darrell WebbChief Executive Officer  Signature
    
    Title/s/ Darrell Webb

Darrell Webb
    
    Chairman of the Board,
Chief Executive Officer and Director
(Principal Executive Officer)/s/ James Kerr

James Kerr
    
    Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)/s/ Scott Cowen*

Scott Cowen
    
    Director/s/ Ira Gumberg*

Ira Gumberg
    
    Director/s/ Patricia Morrison*

Patricia Morrison
    
    Director/s/ Frank Newman*

Frank Newman
    
    Director/s/ David Perdue*

David Perdue
    
    Director/s/ Beryl Raff*

Beryl Raff
    
    Director/s/ Alan Rosskamm*

Alan Rosskamm
    
    Director/s/ Tracey Travis*

Tracey Travis
    
    Director
 
 *
    
    The undersigned, by signing his name hereto, does hereby sign this Form 10-K Annual Report on
behalf of the above-named directors of Jo-Ann Stores, Inc., pursuant to powers of attorney executed
on behalf of each of such directors. By:
    /s/  James Kerr
    March 10, 2011James Kerr, Attorney-in-Fact 110