##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
  Form 10-Q
  (Mark One)þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    October 29, 2005ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission file number:
    001-31314
  Aéropostale,
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Delaware

31-1443880(State of
    incorporation)

(I.R.S. Employer Identification
    No.)112 W. 34th Street,
    New York, NY

10120(Address of Principal Executive
    Offices)

(Zip
    Code)   (646) 485-5398
 (Registrants Telephone
    Number, Including Area Code)
   þ o
  Rule 12b-2).  Yes þ o
  Rule 12b-2).  Yes o þ




---



AÉROPOSTALE,
    INC.
  TABLE OF
    CONTENTS
  PART I  FINANCIAL
    INFORMATION


2Item 1.


Financial
    Statements (unaudited)


2Condensed
    Consolidated Balance Sheets


2Condensed
    Consolidated Statements of Income and Comprehensive Income


3Condensed
    Consolidated Statements of Cash Flows


4Notes to Condensed
    Consolidated Financial Statements


5Item 2.


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


11Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


16Item 4.


Controls and
    Procedures


16Cautionary Note
    Regarding Forward-Looking Statements and Risk Factors


16PART II  OTHER
    INFORMATION


21Item 1.


Legal
    Proceedings


21Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


22Item 3.


Defaults Upon
    Senior Securities


22Item 4.


Submission of
    Matters to a Vote of Security Holders


22Item 5.


Other
    Information


22Item 6.


Exhibits


22SIGNATURES


23EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION   1




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##### Table of Contents



PART I
    FINANCIAL INFORMATIONItem 1.  Financial Statements 
    AÉROPOSTALE, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) October 29,


January 29,


October 30,2005


2005


2004(In Thousands)ASSETSCurrent Assets:Cash and cash equivalents

$
114,317


$
106,128


$
65,620Short-term investments


20,062



76,224



55,040Merchandise inventory


159,873



81,238



114,515Tenant allowances receivable


10,712



4,809



11,411Miscellaneous receivables


5,258



923



868Prepaid expenses and other current
    assets


12,460



10,165



9,529Total current assets


322,682



279,487



256,983Fixtures, equipment and
    improvements, net


162,325



122,651



121,845Intangible assets


2,529



2,529



1,400Other assets


1,937



1,152



2,127TOTAL ASSETS

$
489,473


$
405,819


$
382,355LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
95,064


$
44,858


$
69,075Accrued compensation


7,818



14,580



12,303Income taxes payable


8,085



6,322



1,752Accrued expenses


33,874



31,234



25,782Total current liabilities


144,841



96,994



108,912Deferred rent and tenant allowances


81,409



63,065



59,579Retirement benefit plan liability


7,347



6,158



4,425Deferred income taxes


4,321



1,351



Commitments and contingent
    liabilitiesStockholders
    Equity:Preferred
    stock  par value, $0.01 per share;
    5,000 shares authorized, no shares issued or outstanding










Common stock  par
    value, $0.01 per share; 200,000 shares authorized,
    58,558, 58,115 and 58,168 shares issued


586



581



582Additional paid-in capital


87,567



79,069



78,709Accumulated other comprehensive
    loss


(817
)


(817
)


(672
)Deferred compensation


(2,968
)


(1,271
)


(1,441
)Retained earnings


266,463



224,315



189,047Treasury stock at cost (4,203,
    2,749 and 2,499 shares)


(99,276
)


(63,626
)


(56,789
)Total stockholders equity


251,555



238,251



209,439TOTAL LIABILITIES AND
    STOCKHOLDERS EQUITY

$
489,473


$
405,819


$
382,355    2




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AÉROPOSTALE,
    INC.CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    AND COMPREHENSIVE INCOME(Unaudited)
  13 weeks ended


39 weeks endedOctober 29,


October 30,


October 29,


October 30,2005


2004


2005


2004(In Thousands, Except Per Share
    Data)Net sales

$
324,657


$
274,616


$
769,101


$
637,122Cost of sales (includes certain
    buying, occupancy and warehousing expenses)


229,938



176,415



552,584



430,328Gross profit


94,719



98,201



216,517



206,794Selling, general and
    administrative expenses


52,411



46,775



149,455



127,805Income from operations


42,308



51,426



67,062



78,989Interest income, net


781



336



2,362



796Income before income taxes


43,089



51,762



69,424



79,785Income taxes


17,004



20,076



27,276



30,941Net income and comprehensive income

$
26,085


$
31,686


$
42,148


$
48,844Basic earnings per share

$
0.48


$
0.57


$
0.76


$
0.88Diluted earnings per share

$
0.47


$
0.55


$
0.75


$
0.85Weighted average basic shares


54,913



55,894



55,243



55,792Weighted average diluted shares


55,711



57,210



56,217



57,399    3




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##### Table of Contents



AÉROPOSTALE,
    INC.
  CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited)
  39 weeks endedOctober 29,


October 30,2005


2004(In Thousands)CASH FLOWS FROM OPERATING
    ACTIVITIES:Net income

$
42,148


$
48,844Adjustments to reconcile net
    income to net cash from operating activities:Depreciation and amortization


15,046



11,407Other


3,446



(2,049
)Changes in operating assets and
    liabilities:Merchandise inventory


(78,635
)


(52,708
)Accounts payable


50,206



38,598Other assets and liabilities


3,070



18,412Net cash from operating
    activities


35,281



62,504CASH FLOWS FROM INVESTING
    ACTIVITIES:Purchases of fixtures, equipment
    and improvements


(48,783
)


(40,674
)Purchase of short-term investments


(166,376
)


(322,623
)Proceeds from sale of short-term
    investments


222,538



267,583Purchase of intangible assets






(1,400
)Net cash from investing
    activities


7,379



(97,114
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Purchase of treasury stock


(35,650
)


(39,091
)Proceed from exercise of stock
    options


1,179



965Net cash from financing
    activities


(34,471
)


(38,126
)Net increase (decrease) in cash
    and cash equivalents


8,189



(72,736
)Cash and cash equivalents,
    beginning of year


106,128



138,356Cash and cash equivalents, end of
    period

$
114,317


$
65,620Supplemental Disclosure of Cash
    Flow Information:Tax benefit related to exercise of
    stock options included in change in other assets and liabilities

$
4,346


$
12,597    4




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AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Basis of
    Presentation  e-commerce www.aeropostale.com Form 10-Q Form 10-Q).
  Regulation S-X
  back-to-school Form 10-K
  52-week 52-week
  2.
    Stock
    Based Compensation  Accounting for Stock Issued to Employees Accounting for Stock-Based
    Compensation  Transition and Disclosure
 5




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AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    13 weeks ended


39 weeks endedOctober 29,


October 30,


October 29,


October 30,2005


2004


2005


2004(In Thousands, Except Per Share
    Data)Net income:As reported

$
26,085


$
31,686


$
42,148


$
48,844Add: Restricted stock amortization
    net of taxes


306



101



782



261Deduct: Total stock based
    compensation expense determined under the fair value method, net
    of taxes


(746
)


(380
)


(2,054
)


(1,024
)Pro-forma

$
25,645


$
31,407


$
40,876


$
48,081Basic earnings per share:As reported

$
0.48


$
0.57


$
0.76


$
0.88Pro-forma

$
0.47


$
0.56


$
0.74


$
0.86Diluted earnings per share:As reported

$
0.47


$
0.55


$
0.75


$
0.85Pro-forma

$
0.46


$
0.55


$
0.73


$
0.84       3.
    Reclassification
    of Auction Rate Securities   6




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    As Previously


AsReported


Reclassified(In Thousands)Cash and cash equivalents

$
120,660


$
65,620Short-term investments

$



$
55,040Cash flows from investing
    activities

$
(42,074
)

$
(97,114
)   4.
    Cost of
    Sales and Selling, General and Administrative Expenses      5.
    Recent
    Accounting Developments  Accounting
    Changes and Error Corrections
  Share-Based Payment, a revision of SFAS No. 123,
    Accounting for Stock Based Compensation
   7




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    6.
    Earnings
    Per Share    13 weeks ended


39 weeks endedOctober 29,


October 30,


October 29,


October 30,2005


2004


2005


2004(In Thousands, Except Per Share
    Data)Net income

$
26,085


$
31,686


$
42,148


$
48,844Weighted average basic shares


54,913



55,894



55,243



55,792Impact of dilutive securities


798



1,316



974



1,607Weighted average diluted shares


55,711



57,210



56,217



57,399Earnings per basic share

$
0.48


$
0.57


$
0.76


$
0.88Earnings per diluted share

$
0.47


$
0.55


$
0.75


$
0.85     7.
    Revolving
    Credit Facility   8




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Retirement
    Benefit Plans        13 weeks ended


39 weeks endedOctober 29,


October 30,


October 29,


October 30,2005


2004


2005


2004(In Thousands)Service cost

$
106


$
70


$
316


$
209Interest cost


183



140



549



486Amortization of prior service cost


19



19



56



56Amortization of net loss


138



66



413



254Loss recognized due to settlement














1,396Net periodic pension benefit cost

$
446


$
295


$
1,334


$
2,401         9.
    Stock
    Repurchase Program   9




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    10.
    Commitments
    and Contingent Liabilities   10




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Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Introduction
  e-commerce e-commerce www.aeropostale.com
  Form 10-K
  Overview
     11




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13 weeks ended


39 weeks endedOctober 29,


October 30,


October 29,


October 30,2005


2004


2005


2004Net sales (in millions)

$
324.7


$
274.6


$
769.1


$
637.1Total store count at end of period


668



560



668



560Comparable store sales count at
    end of period


508



413



508



413Net sales growth


18.2
%


24.8
%


20.7
%


37.8
%Comparable store sales (decrease)
    increase


(1.5
)%


5.4
%


(0.1
)%


12.8
%Net sales per average square foot

$
140


$
144


$
351


$
356Gross profit (in millions)

$
94.7


$
98.2


$
216.5


$
206.8Income from operations (in
    millions)

$
42.3


$
51.4


$
67.1


$
79.0Diluted earnings per share

$
0.47


$
0.55


$
0.75


$
0.85Square footage growth


20
%


22
%


20
%


22
%Increase in total inventory over
    comparable period


40
%


1
%


40
%


1
%Increase (decrease) in inventory
    per square foot over comparable period


17
%


(17
)%


17
%


(17
)%Percentages of net sales by
    category:Womens


66
%


65
%


62
%


62
%Mens


23
%


23
%


25
%


25
%Accessories


11
%


12
%


13
%


13
%     13 weeks ended


39 weeks endedOctober 29,


October 30,


October 29,


October 30,2005


2004


2005


2004Net sales


100.0
%


100.0
%


100.0
%


100.0
%Gross profit


29.2
%


35.8



28.2
%


32.5Selling, general and
    administrative expenses


16.1
%


17.0



19.4
%


20.1Income from operations


13.1
%


18.8



8.8
%


12.4Interest income, net


0.1
%


0.1



0.2
%


0.1Income before income taxes


13.2
%


18.9



9.0
%


12.5Income taxes


5.2
%


7.4



3.5
%


4.8Net income


8.0
%


11.5



5.5
%


7.7   Results
    of Operations
  Sales
   12




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Gross profit
    SG&A
      Interest income and income
    taxes
    Net income
  Liquidity
    and Capital Resources
   13




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39 weeks endedOctober 29,


October 30,2005


2004(In Thousands)Net cash from operating activities

$
35,281


$
62,504Net cash from investing activities


7,379



(97,114
)Net cash from financing activities


(34,471
)


(38,126
)Net increase (decrease) in cash
    and cash equivalents

$
8,189


$
(72,736
)   Operating activities period-over-period
      Capital requirements
  available-for-sale
 14




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##### Table of Contents



Financing activities and capital
    resources
    Contractual
    Obligations
    Payments DueBalance of


In 2006


In 2008


AfterTotal


2005


and 2007


and 2009


2009(In Thousands)Contractual ObligationsEmployment agreements

$
3,807


$
603


$
3,204


$



$
Event sponsorship agreement


1,810







1,810







Operating leases


482,139



15,855



124,440



122,797



219,047Total contractual obligations

$
487,756


$
16,458


$
129,454


$
122,797


$
219,047     Off-Balance
    Sheet Arrangements
   15




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Critical
    Accounting Estimates
  Form 10-K
  Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk    Item 4.
    Controls
    and Procedures  Evaluation of Disclosure Controls and
    Procedures: Rule 13a-15(b) Rule 13a-15(e)
  Changes in internal
    controls:
 Cautionary
    Note Regarding Forward-Looking Statements and Risk
    Factors  Form 10-Q
 16




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Fluctuations
    in comparable store sales and quarterly results of operations
    may cause the price of our common stock to decline
    substantially.
    
    fashion trends;
    changes in our merchandise mix;
    the effectiveness of our inventory management;
    actions of competitors or mall anchor tenants;
    calendar shifts of holiday or seasonal periods;
    the timing of promotional events;
    weather conditions; and
    changes in general economic conditions and consumer spending
    patterns.    If we are
    unable to identify and respond to consumers fashion
    preferences in a timely manner, our profitability would
    decline.
    Our
    business could suffer as a result of a manufacturers
    inability to produce merchandise on time and to
    specifications.
    Our
    business could suffer if a manufacturer fails to use acceptable
    labor practices.
   17




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We rely
    on a small number of vendors to supply a significant amount of
    our merchandise.
    Failure
    of a new business concept could have a material adverse effect
    on our results of operations and our business
  e-commerce e-commerce
  Foreign
    suppliers manufacture most of our merchandise and the
    availability and costs of these products may be negatively
    affected by risks associated with international trade.
    Our
    storeline growth strategy relies on the continued addition of a
    significant number of new stores each year, which could strain
    our resources and cause the performance of our existing stores
    to suffer.
   18




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Our
    continued expansion plan is dependent on a number of factors
    which, if not implemented, could delay or prevent the successful
    opening of new stores and penetration into new
    markets.
    
    identify suitable markets and sites for new store locations;
    negotiate acceptable lease terms;
    hire, train and retain competent store personnel;
    foster current relationships and develop new relationships with
    vendors that are capable of supplying a greater volume of
    merchandise;
    manage inventory effectively to meet the needs of new and
    existing stores on a timely basis;
    expand our infrastructure to accommodate growth; and
    generate sufficient operating cash flows or secure adequate
    capital on commercially reasonable terms to fund our expansion
    plans.    The loss
    of the services of key personnel could have a material adverse
    effect on our business.
    Our net
    sales and inventory levels fluctuate on a seasonal
    basis.
   19




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A
    downturn in the United States economy may affect consumer
    spending habits.
    Our
    ability to attract customers to our stores depends heavily on
    the success of the shopping malls in which we are
    located.
    We rely
    on a single distribution center.
    We rely
    on a third party to manage our distribution center.
    We rely
    on a third party to administer to certain aspects of our
    e-commerce
    business.
  e-commerce e-commerce
  Failure
    to protect our trademarks adequately could negatively impact our
    brand image and limit our ability to penetrate new
    markets.
   20




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The
    effects of war or acts of terrorism could have a material
    adverse effect on our operating results and financial
    condition.
   PART II



OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings   21




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##### Table of Contents



Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Total Number of


Approximate DollarTotal





Shares Purchased


Value of SharesNumber of





as Part of


that May Yet BeShares (or


Average


Publicly


Purchased UnderUnits)


Price Paid


Announced Plans


the Plans orPeriod

Purchased


per Share


or Programs


Programs(In Thousands)August 2005


270,000


$
24.57



270,000


$
68,551September 2005


540,000


$
23.88



540,000


$
55,655October 2005


259,000


$
19.04



259,000


$
50,724Total


1,069,000


$
22.88



1,069,000


$
50,724   Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information    Item 6.
    Exhibits  31.1

Certification by Julian R. Geiger,
    Chairman and Chief Executive Officer, pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification by Michael J.
    Cunningham, Executive Vice President and Chief Financial
    Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32.1

Certification by Julian R. Geiger
    pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification by Michael J.
    Cunningham pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.  22




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##### Table of Contents



SIGNATURES    Aeropostale, Inc.
  Julian
    R. Geiger
   Chairman of the Board and Chief Executive Officer
 (Principal Executive Officer)
  Michael
    J. Cunningham
   Executive Vice President  Chief Financial
    Officer
 (Principal Financial Officer)
   23