##### 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
    April 29, 2006ORo

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
  non-accelerated Rule 12b-2
 þ o o
  Rule 12b-2).  Yes o þ




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##### 



AÉROPOSTALE,
    INC.
  TABLE OF
    CONTENTS
  
  PART I  FINANCIAL
    INFORMATIONItem 1.

Financial
    Statements (unaudited)Condensed
    Consolidated Balance Sheets


3Condensed
    Consolidated Statements of Income and Comprehensive Income


4Condensed
    Consolidated Statements of Cash Flows


5Notes to Condensed
    Consolidated Financial Statements


6Item 2.

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


12Item 3.

Quantitative and
    Qualitative Disclosures About Market Risk


17Item 4.

Controls and
    Procedures


17PART II  OTHER
    INFORMATIONItem 1.

Legal
    Proceedings


17Item 1A.

Risk Factors


17Item 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   2




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##### Table of Contents



PART I  FINANCIAL
    INFORMATION  Item 1.  Financial
    Statements
  AÉROPOSTALE, INC.
  CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)
  April 29,


January 28,


April 30,2006


2006


2005(In Thousands)ASSETSCurrent Assets:Cash and cash equivalents

$
143,951


$
205,235


$
119,293Short-term investments


60,212



20,037



58,151Merchandise inventory


108,971



91,908



89,575Tenant allowances receivable


7,802



6,510



8,757Prepaid expenses


11,597



12,314



8,942Prepaid income taxes


5,614







Other current assets


2,587



3,335



990Total current assets


340,734



339,339



285,708Fixtures, equipment and
    improvements, net


170,228



160,229



133,337Intangible assets


2,455



2,455



2,529Other assets


1,986



1,928



1,129TOTAL ASSETS

$
515,403


$
503,951


$
422,703LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
71,104


$
57,165


$
63,607Accrued compensation


6,319



10,714



7,621Deferred income taxes


5,195



5,195



893Income taxes payable


1,770



14,159



1,793Accrued expenses


35,094



39,120



26,214Total current liabilities


119,482



126,353



100,128Deferred rent and tenant allowances


85,395



81,499



70,070Retirement benefit plan liability


9,229



8,654



6,669Deferred income taxes


2,344



2,655



1,351Commitments 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,
    59,147, 58,598 and 58,423 shares issued


592



586



584Additional paid-in capital


93,754



88,213



85,985Accumulated other comprehensive
    loss


(1,557
)


(1,557
)


(817
)Deferred compensation






(2,577
)


(3,762
)Retained earnings


316,632



308,269



232,929Treasury stock at cost (4,628,
    4,548 and 2,974 shares)


(110,468
)


(108,144
)


(70,434
)Total stockholders equity


298,953



284,790



244,485TOTAL LIABILITIES AND
    STOCKHOLDERS EQUITY

$
515,403


$
503,951


$
422,703    3




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AÉROPOSTALE,
    INC.
  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 AND COMPREHENSIVE INCOME
 (Unaudited)
  13 weeks endedApril 29,


April 30,2006


2005(In Thousands, ExceptPer Share Data)Net sales

$
246,292


$
211,674Cost of sales (includes certain
    buying, occupancy and warehousing expenses)


175,814



151,903Gross profit


70,478



59,771Selling, general and
    administrative expenses


58,265



46,437Income from operations


12,213



13,334Interest income, net


1,496



785Income before income taxes


13,709



14,119Income taxes


5,346



5,505Net income and comprehensive income

$
8,363


$
8,614Basic earnings per share

$
0.15


$
0.16Diluted earnings per share

$
0.15


$
0.15Weighted average basic shares


54,407



55,409Weighted average diluted shares


55,077



56,573    4




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AÉROPOSTALE,
    INC.
  CONDENSED CONSOLIDATED STATEMENTS OF CASH
    FLOWS
 (Unaudited)
  13 weeks endedApril 29,


April 30,2006


2005(In Thousands)CASH FLOWS FROM OPERATING
    ACTIVITIES:Net income

$
8,363


$
8,614Adjustments to reconcile net
    income to net cash (used in) provided by operating activities:Depreciation and amortization


6,740



4,535Stock-based compensation


1,315



335Excess tax benefits from stock
    options


(5,894
)


Other


(871
)


132Changes in operating assets and
    liabilities:Merchandise inventory


(17,063
)


(8,337
)Accounts payable


13,939



18,749Income taxes payable


(18,003
)


(4,529
)Other assets and liabilities


790



(3,125
)Net cash (used in) provided by
    operating activities


(10,684
)


16,374CASH FLOWS FROM INVESTING
    ACTIVITIES:Purchases of fixtures, equipment
    and improvements


(14,910
)


(15,200
)Purchase of short-term investments


(102,960
)


(73,837
)Proceeds from sale of short-term
    investments


62,785



91,910Net cash (used in) provided by
    investing activities


(55,085
)


2,873CASH FLOWS FROM FINANCING
    ACTIVITIES:Purchase of treasury stock


(2,324
)


(6,808
)Proceed from exercise of stock
    options


915



726Excess tax benefits from stock
    options


5,894



Net cash provided by (used in)
    financing activities


4,485



(6,082
)Net (decrease) increase in cash
    and cash equivalents


(61,284
)


13,165Cash and cash equivalents,
    beginning of year


205,235



106,128Cash and cash equivalents, end of
    period

$
143,951


$
119,293Supplemental Disclosure of Cash
    Flow Information:Non-cash operating and investing
    activities

$
1,829


$
    5




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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).
  Rule 10-01 Regulation S-X
  back-to-school Form 10-K
  53-week 52-week
  2.
    Stock
    Based Compensation  Share-Based Payment, a revision of
    SFAS No. 123, Accounting for Stock-Based
    Compensation Accounting for Stock Issued to
    Employees
 6




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AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
 STATEMENTS  (Continued)
     No. FAS 123R-3
      non-vested
    Weighted-Average


AggregateWeighted Average


Remaining


IntrinsicShares


Exercise Price


Contractual Term


Value(In Thousands)








(In Millions)(In Years)Outstanding, beginning of year


2,041


$
12.63Granted


290



28.88Exercised


(537
)


1.71






$
15.1Cancelled


(7
)


18.52Outstanding as of April 29,
    2006


1,787


$
18.52



5.62


$
22.5Exercisable as of April 29,
    2006


877


$
11.18



4.51


$
17.3  7




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
 STATEMENTS  (Continued)
       Weighted-AverageGrant-DateShares


Fair ValueOutstanding, beginning of year


167,650


$
28.48Granted


147,963



28.88Vested


(12,000
)


31.80Cancelled


(1,550
)


28.57Outstanding as of April 29,
    2006


302,063


$
28.54     (In Thousands, ExceptPer Share Data)Net income:As reported

$
8,614Add: Restricted stock
    amortization, net of taxes


204Less: Total stock based
    compensation expense determined under the fair value method, net
    of taxes


(600
)Pro-forma

$
8,218Basic earnings per share:As reported

$
0.16Pro-forma

$
0.15Diluted earnings per share:As reported

$
0.15Pro-forma

$
0.15      8




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AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
 STATEMENTS  (Continued)
    3.
    Cost of
    Sales and Selling, General and Administrative Expenses      4.
    Earnings
    Per Share    13 weeks endedApril 29,


April 30,2006


2005(In Thousands, Except Per Share
    Data)Net income

$
8,363


$
8,614Weighted average basic shares


54,407



55,409Impact of dilutive securities


670



1,164Weighted average diluted shares


55,077



56,573Earnings per basic share

$
0.15


$
0.16Earnings per diluted share

$
0.15


$
0.15     5.
    Revolving
    Credit Facility   9




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##### Table of Contents



AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
 STATEMENTS  (Continued)
    6.
    Retirement
    Benefit Plans        13 weeks endedApril 29,


April 30,2006


2005(In Thousands)Service cost

$
123


$
105Interest cost


233



183Amortization of prior experience
    cost


19



19Amortization of net loss


142



137Net periodic pension benefit cost

$
517


$
444    10




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AÉROPOSTALE,
    INC.
  NOTES TO
    UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
 STATEMENTS  (Continued)
     7.
    Stock
    Repurchase Program    8.
    Commitments
    and Contingent Liabilities   11




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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
  back-to-school Form 10-K
    Overview
  Share-Based Payment, a revision of SFAS No. 123,
    Accounting for Stock-Based Compensation
     12




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13 weeks endedApril 29,


April 30,2006


2005Net sales (in millions)

$
246.3


$
211.7Total store count at end of period


704



597Comparable store count at end of
    period


550



443Net sales growth


16.4
%


26.3
%(Decrease) increase in comparable
    store sales


(2.9
)%


4.4
%Increase (decrease) in comparable
    average dollar per unit sold


6.3
%


(9.5
)%(Decrease) increase in comparable
    units per sales transaction


(4.5
)%


6.1
%(Decrease) increase in comparable
    sales transaction


(4.4
)%


8.7
%Net sales per average square foot

$
100


$
104Gross profit (in millions)

$
70.5


$
59.8Income from operations (in
    millions)

$
12.2


$
13.3Diluted earnings per share

$
0.15


$
0.15Square footage growth


18.4
%


22.6
%Increase in total inventory over
    comparable period


21.7
%


26.2
%Increase in inventory per square
    foot over comparable period


2.7
%


2.9
%Percentages of net sales by
    category:Womens


58
%


58
%Mens


24
%


26
%Accessories


18
%


16
%     13 weeks endedApril 29,


April 30,2006


2005Net sales


100.0
%


100.0
%Gross profit


28.6
%


28.2
%Selling, general and
    administrative expenses


23.6
%


21.9
%Income from operations


5.0
%


6.3
%Interest income, net


0.6
%


0.3
%Income before income taxes


5.6
%


6.6
%Income taxes


2.2
%


2.5
%Net income


3.4
%


4.1
%   Results
    of Operations
  Sales
   13




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Gross profit
    SG&A
    Interest income and income
    taxes
    Net income
  Liquidity
    and Capital Resources
   14




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13 weeks endedApril 29,


April 30,2006


2005(In Thousands)Net cash (used in) provided by
    operating activities

$
(10,684
)

$
16,374Net cash (used in) provided by
    investing activities


(55,085
)


2,873Net cash provided by (used in)
    financing activities


4,485



(6,082
)Net (decrease) increase in cash
    and cash equivalents

$
(61,284
)

$
13,165   Operating activities
    Capital requirements point-of-sale
  available-for-sale
  Financing activities and capital
    resources
   15




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Contractual
    Obligations
    Payments DueBalance of


In 2007


In 2009


AfterTotal


2006


and 2008


and 2010


2010(In Thousands)Contractual ObligationsEmployment agreements

$
2,635


$
1,708


$
927


$



$
Big East Mens Basketball
    Tournament sponsorship agreement


1,810



900



910







Operating leases


536,825



52,204



140,804



131,662



212,155Total contractual obligations

$
541,270


$
54,812


$
142,641


$
131,662


$
212,155       Off-Balance
    Sheet Arrangements
    Critical
    Accounting Estimates
  Form 10-K
 16




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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:
  PART II  OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings    Item 1A.
    Risk
    factors  Cautionary
    Note Regarding Forward-Looking Statements
  Form 10-Q
  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; 17




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
    the effectiveness of our inventory management;
    actions of competitors or mall anchor tenants;
    calendar shifts of holiday or seasonal periods;
    changes in general economic conditions and consumer spending
    patterns;
    the timing of promotional events; and
    weather conditions.    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.    We rely
    on a small number of vendors to supply a significant amount of
    our merchandise.   18




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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
    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.    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.  and/or
  The loss
    of the services of key personnel could have a material adverse
    effect on our business.   19




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and/or
  Failure
    of new business concepts would have an effect on our results of
    operations.    Our net
    sales and inventory levels fluctuate on a seasonal
    basis.  back-to-school back-to-school back-to-school
  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.
   20




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We rely
    on a third party to manage our distribution center.
    Failure
    to protect our trademarks adequately could negatively impact our
    brand image and limit our ability to penetrate new
    markets.
  ® ® ®
  ® ®
 21




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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.
  and/or
  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)February 2006


20,000


$
29.41



20,000


$
41,267March 2006


20,000


$
29.68



20,000


$
40,673April 2006


40,000


$
28.55



40,000


$
39,531Total


80,000


$
29.05



80,000   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,
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification by Michael J.
    Cunningham, 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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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