##### Table of Contents



FORM 10-K
 SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended February 3, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 019774
 United Retail Group, Inc.
  Delaware
    
    51 0303670State or other jurisdiction of 
incorporation or organization
    
    (I.R.S. Employer Identification No.)365 West Passaic Street, Rochelle Park, NJ
    
    07662(Address of principal executive offices)
    
    (Zip Code)
 (201) 845-0880
  Title of each class
    
    Name of each exchange on which registered
  Common Stock, $.001 par value per share, with Stock Purchase Right attached
 o þ
 o þ
 þ o
 o
  o þ o
 o þ
 The aggregate market value of all the voting and non-voting common equity of the registrant
(the Corporation also referred to herein, together with its subsidiaries, as the Company) held
by non-affiliates on April 6, 2007 was approximately $168.6 million computed by reference to the
$14.39 price per share at which the common equity was last sold as of July 28,2006. Solely for the
purpose of this calculation, the number of shares held by non-affiliates was deemed to have been
11,714,127, which is the number of shares held by stockholders other than Raphael Benaroya, the
Corporations Chairman of the Board, President and Chief Executive Officer, on April 6, 2007.
 APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
  o o
 APPLICABLE ONLY TO CORPORATE REGISTRANTS:
 There were 13,868,698 shares of the registrants common stock, $.001 par value per share,
outstanding on April 6, 2007. One Stock Purchase Right is attached to each outstanding share.
 DOCUMENTS INCORPORATED BY REFERENCE
 Certain information in Part III of this Annual Report on Form 10-K (this Report) is
incorporated therein by reference to the registrants proxy statement on Schedule 14A for its 2007
annual meeting of stockholders (the Proxy Statement) to be filed with the Securities and Exchange
Commission (the SEC) on or before June 4, 2007.




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TABLE OF CONTENTS  Part IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9A(T). CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPart IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS OF THE REGISTRANT AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEXHIBIT INDEXEX-23.1: CONSENT OF INCUMBENT INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMEX-23.2: CONSENT OF PREDECESSOR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMEX-31: CERTIFICATIONSEX-32: CERTIFICATIONSEX-99: SCHEDULE II  - VALUATION AND QUALIFYING ACCOUNTS    Table of Contents  
 Part I
 
  Overview
 ® ® ® ® ® ®
 History
 ®
 Website
  Customer Base
  Merchandising and Marketing
 ® ®




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®
 ®
    Channel of Distribution
 ®
   Merchandise Distribution and Inventory Management




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Management Information Systems
    Purchasing




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Credit Sales
 ®
 Increased Competition
    Trade Name and Trademarks
 ® ® ® ® ® ®
 Employees




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Executive Officers of the Registrant and Subsidiaries




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Fashion Risk
  Inventory Fluctuations
  Brand Development Costs
  Increased Competition
  Key Personnel




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Other Operational Factors
  Other External Influences




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Alabama
    
    
    7Arizona
    
    
    5Arkansas
    
    
    2California
    
    
    71Connecticut
    
    
    7Delaware
    
    
    2Florida
    
    
    29Georgia
    
    
    17Illinois
    
    
    34Indiana
    
    
    7Kansas
    
    
    2Kentucky
    
    
    3Louisiana
    
    
    6Maryland
    
    
    12Massachusetts
    
    
    12Michigan
    
    
    23Minnesota
    
    
    3Mississippi
    
    
    2Missouri
    
    
    5North Carolina
    
    
    7Nebraska
    
    
    2New Hampshire
    
    
    1New Jersey
    
    
    37New Mexico
    
    
    2Nevada
    
    
    3New York
    
    
    48Ohio
    
    
    25Oklahoma
    
    
    3Oregon
    
    
    5Pennsylvania
    
    
    20Rhode Island
    
    
    2South Carolina
    
    
    4Tennessee
    
    
    6Texas
    
    
    47Virginia
    
    
    9Washington
    
    
    10Wisconsin
    
    
    4




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##### Table of Contents



PART II
 
    2005
    
    2006High
    
    Low
    
    High
    
    LowFirst Quarter
    
    $
    6.69
    
    
    $
    4.78
    
    
    $
    20.78
    
    
    $
    15.03Second Quarter
    
    $
    8.50
    
    
    $
    4.86
    
    
    $
    19.04
    
    
    $
    13.51Third Quarter
    
    $
    9.69
    
    
    $
    7.20
    
    
    $
    20.00
    
    
    $
    14.02Fourth Quarter
    
    $
    15.71
    
    
    $
    8.98
    
    
    $
    19.95
    
    
    $
    12.06
    th
  Number of sharesremaining availableNumber of shares to
    
    
    
    
    
    for future issuancebe issued upon
    
    Weighted-average
    
    under equityexercise of
    
    exercise price of
    
    compensation plansoutstanding
    
    outstanding
    
    (excluding sharesoptions, warrants
    
    options, warrants
    
    reflected inPlan category
    
    and rights
    
    and rights
    
    column(a))(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
stockholders
    
    
    1,496,200
    *
    
    $
    9.83
    
    
    
    79,000Equity compensation
plans not approved
by stockholders
    
    
    20,000
    **
    
    $
    11.99
    
    
    
    -0-Total
    
    
    1,516,200
    *
    
    $
    9.86
    
    
    
    79,000
 
 *
    
    The number of shares to be issued upon the exercise of a stock appreciation right settled in stock
is assumed to be equal to the number of shares used to measure the amount of price appreciation.
Includes 175,000 shares of restricted stock.**
    
    Vested stock options held by an incumbent non-management Director that were not issued under a
plan approved by the stockholders. In 1998, the Board issued him an option to purchase 17,000
shares at a price of $12.08 per share and an option to purchase 3,000
shares at a price of $11.50 per share. (He had not received any
equity-based compensation




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during his service on the
Companys Board of Directors from 1992 through 1997.)   STOCKHOLDER RETURN GRAPH
  1/02
    
    1/03
    
    1/04
    
    1/05
    
    1/06
    
    1/07United Retail Group, Inc.
    
    
    100.0
    
    
    
    40.00
    
    
    
    40.57
    
    
    
    70.78
    
    
    
    219.72
    
    
    
    185.53S & P 500
    
    
    100.0
    
    
    
    76.98
    
    
    
    103.60
    
    
    
    110.05
    
    
    
    121.47
    
    
    
    139.11S & P RETAIL (SPECIALTY APPAREL)
    
    
    100.0
    
    
    
    88.46
    
    
    
    116.36
    
    
    
    140.85
    
    
    
    133.53
    
    
    
    153.63PEER GROUP CUMULATIVE
TOTAL RETURN WEIGHTED AVERAGE
BY MARKET VALUE
    
    
    100.0
    
    
    
    75.20
    
    
    
    128.66
    
    
    
    136.66
    
    
    
    216.65
    
    
    
    224.52
 ©




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##### Table of Contents



(1)
 Fiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    Fiscal YearEnded
    
    Ended
    
    Ended
    
    Ended
    
    EndedFeb. 1,
    
    Jan. 31,
    
    Jan. 29,
    
    Jan. 28,
    
    Feb. 3,2003
    
    2004
    
    2005
    
    2006
    
    2007(Shares and dollars in thousands, except per share data)Statement of Operations Data:Net sales
    
    $
    431,964
    
    
    $
    396,265
    
    
    $
    399,250
    
    
    $
    438,738
    
    
    $
    462,134Cost of goods sold,
including buying
and occupancy costs
    
    
    344,197
    
    
    
    314,131
    
    
    
    315,394
    
    
    
    327,312
    
    
    
    344,651Gross profit
    
    
    87,767
    
    
    
    82,134
    
    
    
    83,856
    
    
    
    111,426
    
    
    
    117,483General, administrative
and store operating expenses
    
    
    104,927
    
    
    
    100,923
    
    
    
    96,838
    
    
    
    99,810
    
    
    
    102,467Goodwill impairment
    
    
    5,611
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating income (loss)
    
    
    (22,771
    )
    
    
    (18,789
    )
    
    
    (12,982
    )
    
    
    11,616
    
    
    
    15,016Interest income(2)
    
    
    339
    
    
    
    103
    
    
    
    1,344
    
    
    
    483
    
    
    
    1,289Interest expense
    
    
    (1,166
    )
    
    
    (1,020
    )
    
    
    (870
    )
    
    
    (652
    )
    
    
    (683
    )Income (loss) before taxes
    
    
    (23,598
    )
    
    
    (19,706
    )
    
    
    (12,508
    )
    
    
    11,447
    
    
    
    15,622Provision for (benefit from)
income taxes(3)
    
    
    (521
    )
    
    
    (636
    )
    
    
    (2,028
    )
    
    
    (16,804
    )
    
    
    3,020Net income (loss)
    
    
    (23,077
    )
    
    
    (19,070
    )
    
    
    (10,480
    )
    
    
    28,251
    
    
    
    12,602Net income (loss) per common share:Basic
    
    $
    (1.77
    )
    
    $
    (1.47
    )
    
    $
    (0.82
    )
    
    $
    2.18
    
    
    $
    0.93Diluted
    
    $
    (1.77
    )
    
    $
    (1.47
    )
    
    $
    (0.82
    )
    
    $
    2.11
    
    
    $
    0.89Weighted average number
of common shares outstanding:Basic
    
    
    13,047
    
    
    
    12,937
    
    
    
    12,749
    
    
    
    12,958
    
    
    
    13,545Diluted
    
    
    13,047
    
    
    
    12,937
    
    
    
    12,749
    
    
    
    13,360
    
    
    
    14,140Balance Sheet Data (at period end):Working capital
    
    $
    28,688
    
    
    $
    18,324
    
    
    $
    16,336
    
    
    $
    46,551
    
    
    $
    62,273Total assets
    
    
    210,667
    
    
    
    182,314
    
    
    
    166,054
    
    
    
    197,496
    
    
    
    205,572Long-term capital lease obligations
    
    
    5,764
    
    
    
    3,646
    
    
    
    1,735
    
    
    
    
    
    
    
    Long-term distribution center financing
    
    
    3,961
    
    
    
    3,326
    
    
    
    2,633
    
    
    
    1,877
    
    
    
    1,060Total stockholders equity
    
    
    98,995
    
    
    
    80,020
    
    
    
    70,049
    
    
    
    103,163
    
    
    
    119,393
 
 (1)
    
    The Selected Financial Data should be read in conjunction with Item 7. Managements Discussion
and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements
and Supplementary Data of this Report. Balance sheet data at February 3, 2007 and January 28,
2006 and statements of operations data for each of the three fiscal years in the period ended
February 3, 2007 were derived from the audited consolidated financial statements.(2)
    
    Includes interest income of $1.3 million related to an Internal Revenue Service settlement for
the year ended January 29, 2005.(3)
    
    Includes for fiscal 2004, federal tax benefit of $0.4 million related to an Internal Revenue
Service settlement and for fiscal 2004 and 2003, increases to valuation allowances of $4.3 million
and $12.6 million, respectively, related to net operating loss (NOL) carryforwards, other net
deferred tax assets and other tax attributes and $1.8 million and $0.9 million, respectively, in
reversals of previous accruals for potential tax liabilities arising from various settlements. The
benefit from income taxes increased to $16.8 million in fiscal 2005 from $2.0 million in fiscal
2004, principally from the reversal of the $22.6 million valuation allowance for the Companys NOL
carryforwards, other net deferred tax assets and other tax attributes. The provision for income
taxes in fiscal 2006 was reduced by the reversal of a $2.4 million valuation allowance for the
Companys charitable contribution carryforward.




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Introduction
  Products and Purchasing
 ® ® ® ® ® ®
  Customer Base
  Merchandising and Marketing
 ® ®
  Channel of Distribution
 ®
 Increased Competition




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Price Trend in Apparel Industry
 st
 Company Sales Fluctuations
   Spring
    
    
    Fall2004
    
    
    2005
    
    
    2006
    
    
    2004
    
    
    2005
    
    
    2006Total store sales
($millions)*
    
    $
    196.0
    
    
    $
    215.6
    
    
    $
    221.4
    
    
    $
    196.9
    
    
    $
    209.0
    
    
    $
    212.1Sales per average store
($000s)
    
    $
    368
    
    
    $
    422
    
    
    $
    445
    
    
    $
    372
    
    
    $
    412
    
    
    $
    432Average number of stores
    
    
    532
    
    
    
    511
    
    
    
    497
    
    
    
    529
    
    
    
    507
    
    
    
    491Comparable store sales**
    
    
    -2.2
    %
    
    
    +12.8
    %
    
    
    +4.8
    %
    
    
    +6.8
    %
    
    
    +10.2
    %
    
    
    +3.2
    %
 
 *
    
    Fall 2006 total store sales are shown for the first 26 weeks of a fiscal period that included 27
weeks.**
    
    A store that is relocated within the same shopping center or mall is considered comparable.
However, if the store is relocated elsewhere, it is considered a new store and not comparable. A
store that is expanded or contracted is still comparable, i.e., the sales from the remodeled store
are considered comparable. Stores that are closed are not considered comparable. The comparable
store sales calculation is not adjusted for changes in the store sales return reserve and excludes
sales on the Internet. For Fall 2006, the percentage increase is derived from sales during the
first 26 weeks of a fiscal period that included 27 weeks. See, also, Price Trend in Apparel
Industry.




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Store Count
   Liquidity
    Growth Strategy




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Fiscal 2006 Versus Fiscal 2005
   Amount
    
    
    Attributable to$
    16.6
    million
    
    4.0% increase in comparable store sales during the first 52 weeks of the fiscal year6.9
    million
    
    net sales in the last week of 53-week fiscal year0.5
    million
    
    new stores(9.5
    ) million
    
    closed stores8.9
    million
    
    www.avenue.com and other$
    23.4
    million
    
    Total




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Fiscal 2005 Versus Fiscal 2004
   Amount
    
    Attributable to$
    43.8
    million
    
    11.5% increase in comparable store sales1.3
    million
    
    new store(12.3
    ) million
    
    closed stores6.7
    million
    
    www.avenue.com and other$
    39.5
    million
    
    Total




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February 2007  March 2007 Sales
  Comparable Store Sales
  2004
    
    2005
    
    2006
    
    2007Spring
    
    Fall
    
    Spring
    
    Fall
    
    Spring
    
    Fall
    
    February
    
    March-2.2%
    
    +6.8%
    
    +12.8%
    
    +10.2%
    
    +4.8%
    
    +3.2%
    
    -3.6%
    
    +10.6%**
 
 *
    
    A store that is relocated within the same shopping center or mall is considered comparable.
However, if the store is relocated elsewhere, it is considered a new store and not comparable. A
store that is expanded or contracted is still comparable, i.e., the sales from the remodeled store
are considered comparable. Stores that are closed are not considered comparable. The comparable
store sales calculation is not adjusted for changes in the store sales return reserve and excludes
sales on the Internet.**
    
    Easter week occurred in March of fiscal 2007 and in April of fiscal 2006. The shift of Easter
week benefited comparable store sales for March of fiscal 2007. Increased Competition
  Liquidity and Capital Resources
  Cash Flow




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Balance Sheet Sources of Liquidity
     Other Liquidity Sources




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® ®
      Capital Expenditures




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Principal Contractual Obligations and Certain Other Commercial Commitments
  Total
    
    Payments Due by Period (000s omitted)Principal Contractual
    
    Payments Due
    
    Less than
    
    
    
    
    
    
    
    
    
    OverObligations
    
    (000s omitted)
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsDistribution Center
Mortgage(1)
    
    $
    1,877
    
    
    $
    817
    
    
    $
    1,060
    
    
    
    
    
    
    
    Fixture Capital Leases(1)
    
    
    404
    
    
    
    404
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    2,281
    
    
    $
    1,221
    
    
    $
    1,060
    
    
    
    
    
    
    
    Total Amounts
    
    Amount of Commitment per Period (000s omitted)Certain Other
    
    Committed
    
    Less than
    
    
    
    
    
    
    
    
    
    OverCommercial Commitments
    
    (000s omitted)
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsOperating Leases(2)
    
    $
    250,390
    
    
    $
    43,886
    
    
    $
    75,827
    
    
    $
    64,040
    
    
    $
    66,637Trade Letters of Credit(3)
    
    
    25,890
    
    
    
    25,890
    
    
    
    
    
    
    
    
    
    
    
    Standby Letters of Credit
    
    
    7,245
    
    
    
    7,245
    
    
    
    
    
    
    
    
    
    
    
    Customs Duties Bond
    
    
    2,000
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    Purchase Orders(4)
    
    
    32,167
    
    
    
    32,167
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    317,692
    
    
    $
    111,188
    
    
    $
    75,827
    
    
    $
    64,040
    
    
    $
    66,637
 
 (1)
    
    The proceeds of the distribution center mortgage were principally used to partially finance the
construction cost of the Companys national distribution center, which was completed in fiscal
1993. The proceeds of the fixture capital leases were principally used in fiscal 2001 to partially
finance new stores.(2)
    
    Landlord charges other than rent are not included. Additional landlord charges for taxes,
maintenance and similar expenses were equivalent to approximately 30% to 35% of the rent paid
historically.(3)
    
    Trade letters of credit support Company obligations under certain purchase orders for
merchandise directly imported for which payment is not yet due.(4)
    
    Purchase orders for merchandise not supported by trade letters of credit. Pending Litigation
  Meeting Cash Requirements




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Critical Accounting Policies
 Introduction
   Inventory




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Incurred But Not Reported Claims For Personal Injuries and Medical Benefits




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Long Lived Assets
      Deferred Tax Assets




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Private Label Credit Cards Issued By The Bank




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Stock-Based Compensation




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Stores
 ®
      E-Commerce
  Shares of Company Stock Held in Supplemental Retirement Savings Plan




---



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Growth Strategy
  Off-Balance Sheet Arrangements
  Future Results




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Stockholder Rights Plan
  Managements Annual Report On Internal Control Over Financial Reporting




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##### Table of Contents



Assumed Price Per Share
    
    Pro Forma(Decrease) Increase In Expense$
    9.50
    
    
    $
    (0.5
    ) million$
    12.00
    
    
    $
    (0.3
    ) million$
    17.00
    
    
    $
    0.3
    million$
    19.50
    
    
    $
    0.5
    million




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UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting FirmsConsolidated Balance Sheets as of January 28, 2006 and
February 3, 2007Consolidated Statements of Operations for each of the three fiscal years
in the period ended February 3, 2007Consolidated Statements of Cash Flows for each of the three fiscal
years in the period ended February 3, 2007Consolidated Statements of Stockholders Equity for each of the three
fiscal years in the period ended February 3, 2007Notes to Consolidated Financial Statements




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 United Retail Group, Inc.:




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL
REPORTING




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 United Retail Group, Inc.:




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##### Table of Contents





UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)


January 28,
    
    
    February 3,2006
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    32,268
    
    
    $
    36,394Accounts receivable
    
    
    3,899
    
    
    
    3,813Inventory
    
    
    62,801
    
    
    
    70,738Prepaid rents
    
    
    4,607
    
    
    
    4,656Restricted cash
    
    
    846
    
    
    
    910Current deferred taxes
    
    
    9,350
    
    
    
    4,295Other prepaid expenses
    
    
    1,448
    
    
    
    2,028Total current assets
    
    
    115,219
    
    
    
    122,834Property and equipment, net
    
    
    66,791
    
    
    
    62,887Deferred compensation plan assets
    
    
    4,086
    
    
    
    5,148Long-term deferred taxes
    
    
    9,473
    
    
    
    13,147Deferred charges and other intangible assets, net of
accumulated amortization of $517 and $575
    
    
    366
    
    
    
    307Other assets
    
    
    1,561
    
    
    
    1,249Total assets
    
    $
    197,496
    
    
    $
    205,572LIABILITIESCurrent liabilities:Current portion of distribution center financing
    
    $
    756
    
    
    $
    817Current portion of capital leases
    
    
    1,695
    
    
    
    404Accounts payable and other
    
    
    29,466
    
    
    
    25,335Disbursement accounts
    
    
    10,240
    
    
    
    9,430Accrued expenses
    
    
    26,511
    
    
    
    24,575Total current liabilities
    
    
    68,668
    
    
    
    60,561Long-term distribution center financing
    
    
    1,877
    
    
    
    1,060Deferred lease incentives
    
    
    10,636
    
    
    
    10,383Deferred compensation plan liabilities
    
    
    4,086
    
    
    
    5,148Other long-term liabilities
    
    
    9,066
    
    
    
    9,027Total liabilities
    
    
    94,333
    
    
    
    86,179STOCKHOLDERS EQUITYPreferred stock, $.001 par value; authorized
1,000,000 shares; none issuedSeries A junior participating preferred stock,
$.001 par value; authorized 150,000 shares;
none issuedCommon stock, $.001 par value; authorized
30,000,000 shares; issued 14,652,400 shares
and 15,265,100 shares
    
    
    15
    
    
    
    15Additional paid-in capital
    
    
    87,743
    
    
    
    92,861Deferred compensation obligation (279,870 shares)
    
    
    1,353
    
    
    
    1,353Retained earnings
    
    
    21,757
    
    
    
    34,359Treasury stock (1,312,955 shares and 1,404,902
shares), at cost
    
    
    (7,705
    )
    
    
    (9,195
    )Total stockholders equity
    
    
    103,163
    
    
    
    119,393Total liabilities and stockholders equity
    
    $
    197,496
    
    
    $
    205,572






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##### Table of Contents





UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)


Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal YearEnded
    
    
    Ended
    
    
    EndedJanuary 29,
    
    
    January 28,
    
    
    February 3,2005
    
    
    2006
    
    
    2007Net sales
    
    $
    399,250
    
    
    $
    438,738
    
    
    $
    462,134Cost of goods sold, including
buying and occupancy costs
    
    
    315,394
    
    
    
    327,312
    
    
    
    344,651Gross profit
    
    
    83,856
    
    
    
    111,426
    
    
    
    117,483General, administrative and
store operating expenses
    
    
    96,838
    
    
    
    99,810
    
    
    
    102,467Operating (loss) income
    
    
    (12,982
    )
    
    
    11,616
    
    
    
    15,016Interest income
    
    
    1,344
    
    
    
    483
    
    
    
    1,289Interest expense
    
    
    (870
    )
    
    
    (652
    )
    
    
    (683
    )(Loss) income before income taxes
    
    
    (12,508
    )
    
    
    11,447
    
    
    
    15,622(Benefit from) provision for income
taxes
    
    
    (2,028
    )
    
    
    (16,804
    )
    
    
    3,020Net (loss) income
    
    $
    (10,480
    )
    
    $
    28,251
    
    
    $
    12,602Net (loss) income per shareBasic
    
    $
    (0.82
    )
    
    $
    2.18
    
    
    $
    0.93Diluted
    
    $
    (0.82
    )
    
    $
    2.11
    
    
    $
    0.89Weighted average number of
shares outstandingBasic
    
    
    12,748,878
    
    
    
    12,957,910
    
    
    
    13,544,742Common stock equivalents
    
    
    
    
    
    
    402,119
    
    
    
    595,630Diluted
    
    
    12,748,878
    
    
    
    13,360,029
    
    
    
    14,140,372






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##### Table of Contents





UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)


Fiscal Year
    
    
    Fiscal Year
    
    
    Fiscal YearEnded
    
    
    Ended
    
    
    EndedJanuary 29,
    
    
    January 28,
    
    
    February 3,2005
    
    
    2006
    
    
    2007Cash Flows From Operating Activities:Net (loss) income
    
    $
    (10,480
    )
    
    $
    28,251
    
    
    $
    12,602Adjustments to reconcile net (loss) income to net cash provided
by operating activities:Depreciation and amortization of property and equipment
    
    
    14,315
    
    
    
    13,322
    
    
    
    12,020Amortization of deferred charges and other
intangible assets
    
    
    343
    
    
    
    96
    
    
    
    91Loss on disposal of assets
    
    
    309
    
    
    
    697
    
    
    
    1,036Share based compensation expense
    
    
    729
    
    
    
    624
    
    
    
    846Excess tax benefit from exercise of stock options
    
    
    
    
    
    
    462
    
    
    
    (1,423
    )Gain on insurance proceeds
    
    
    
    
    
    
    (247
    )
    
    
    Deferred income taxes
    
    
    
    
    
    
    (18,823
    )
    
    
    2,803Deferred lease assumption revenue amortization
    
    
    (2
    )
    
    
    
    
    
    
    Internal Revenue Service settlement related to warrants
    
    
    1,157
    
    
    
    
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    285
    
    
    
    (2,179
    )
    
    
    269Income taxes
    
    
    43
    
    
    
    97
    
    
    
    (281
    )Inventory
    
    
    208
    
    
    
    (2,452
    )
    
    
    (7,937
    )Accounts payable and accrued expenses
    
    
    73
    
    
    
    2,757
    
    
    
    (5,969
    )Other current assets
    
    
    (183
    )
    
    
    152
    
    
    
    (693
    )Deferred lease incentives
    
    
    (2,085
    )
    
    
    (2,272
    )
    
    
    (253
    )Other assets and liabilities
    
    
    (1,540
    )
    
    
    75
    
    
    
    241Net Cash Provided by Operating Activities
    
    
    3,172
    
    
    
    20,560
    
    
    
    13,352Investing Activities:Capital expenditures
    
    
    (1,963
    )
    
    
    (1,784
    )
    
    
    (9,152
    )Deferred payment for property and equipment
    
    
    (10
    )
    
    
    
    
    
    
    Gain on insurance proceeds
    
    
    
    
    
    
    31
    
    
    
    Net Cash Used in Investing Activities
    
    
    (1,973
    )
    
    
    (1,753
    )
    
    
    (9,152
    )Financing Activities:Repayments of long-term debt
    
    
    (635
    )
    
    
    (693
    )
    
    
    (756
    )Payments on capital lease obligations
    
    
    (2,124
    )
    
    
    (1,913
    )
    
    
    (1,291
    )(Decrease) Increase in disbursement accounts
    
    
    (368
    )
    
    
    1,174
    
    
    
    (810
    )Net borrowings (repayments) under line-of-credit agreement
    
    
    100
    
    
    
    (100
    )
    
    
    Excess tax benefit from exercise of stock options
    
    
    0
    
    
    
    
    
    
    
    1,423Treasury stock acquired
    
    
    0
    
    
    
    
    
    
    
    (196
    )Proceeds from exercise of stock options
    
    
    3
    
    
    
    2,397
    
    
    
    1,556Net Cash (Used in) Provided by Financing Activities
    
    
    (3,024
    )
    
    
    865
    
    
    
    (74
    )Net (decrease) increase in cash and cash equivalents
    
    
    (1,825
    )
    
    
    19,672
    
    
    
    4,126Cash and cash equivalents, beginning of period
    
    
    14,421
    
    
    
    12,596
    
    
    
    32,268Cash and cash equivalents, end of period
    
    $
    12,596
    
    
    $
    32,268
    
    
    $
    36,394






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##### Table of Contents



UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(shares and dollars in thousands, except per share amounts)
 Common
    
    
    Common
    
    
    
    
    
    
    RetainedStock
    
    
    Stock
    
    
    Additional
    
    
    Earnings /
    
    
    Treasury
    
    
    Deferred
    
    
    TotalShares
    
    
    $.001
    
    
    Paid-in
    
    
    Accumulated
    
    
    Stock,
    
    
    Compensation
    
    
    Stockholders'Outstanding
    
    
    Par Value
    
    
    Capital
    
    
    Deficit
    
    
    at Cost
    
    
    Obligation
    
    
    EquityBalance, January 31, 2004
    
    
    12,937
    
    
    $
    14
    
    
    $
    83,696
    
    
    $
    3,986
    
    
    $
    (7,676
    )
    
    $
    0
    
    
    $
    80,020Exercise of stock options
    
    
    2
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Tax benefit from stock warrants
    
    
    
    
    
    
    
    
    
    
    1,157
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,157Shares in deferred compensation
plan
    
    
    (280
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (651
    )
    
    
    
    
    
    
    (651
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,480
    )
    
    
    
    
    
    
    
    
    
    
    (10,480
    )Balance, January 29, 2005
    
    
    12,659
    
    
    
    14
    
    
    
    84,856
    
    
    
    (6,494
    )
    
    
    (8,327
    )
    
    
    0
    
    
    
    70,049Purchase price of shares held
in the
deferred compensation plan
    
    
    280
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    651
    
    
    
    
    
    
    
    651Deferred compensation obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,353
    
    
    
    1,353Exercise of stock options
    
    
    400
    
    
    
    1
    
    
    
    2,425
    
    
    
    
    
    
    
    (29
    )
    
    
    
    
    
    
    2,397Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    462
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    462Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,251
    
    
    
    
    
    
    
    
    
    
    
    28,251Balance, January 28, 2006
    
    
    13,339
    
    
    
    15
    
    
    
    87,743
    
    
    
    21,757
    
    
    
    (7,705
    )
    
    
    1,353
    
    
    
    103,163Exercise of stock options
    
    
    346
    
    
    
    
    
    
    
    2,849
    
    
    
    
    
    
    
    (1,490
    )
    
    
    
    
    
    
    1,359Tax benefit from exercise of
stock options
    
    
    
    
    
    
    
    
    
    
    1,423
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,423Restricted stock granted and
related
compensation expense
    
    
    175
    
    
    
    
    
    
    
    254
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    254Share based compensation expense
    
    
    
    
    
    
    
    
    
    
    592
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    592Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,602
    
    
    
    
    
    
    
    
    
    
    
    12,602Balance, February 3, 2007
    
    
    13,860
    
    
    $
    15
    
    
    $
    92,861
    
    
    $
    34,359
    
    
    $
    (9,195
    )
    
    $
    1,353
    
    
    $
    119,393




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##### Table of Contents



UNITED RETAIL GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Company Description and Basis of Presentation
 ®
   2. Summary of Significant Accounting Policies
 Fiscal Year
  Net Revenues
  Sales Return Reserve
  Shipping and Handling
  Vendor Discounts
  Cost of Goods Sold, Buying and Occupancy




---



##### Table of Contents



Marketing Costs
  Rent Expense
   Earnings Per Share
   Cash and Cash Equivalents
  Restricted Cash
  Inventory




---



##### Table of Contents



Long-Lived Assets
   Concentration of Credit Risk
  Private Label Credit Card Agreement




---



##### Table of Contents



Incurred But Not Reported Claims For Personal Injuries and Medical Benefits
   Income Taxes
  Share
Based Compensation




---



##### Table of Contents



Estimates
  Recent Accounting Pronouncements




---



##### Table of Contents








---



##### Table of Contents



3. Property and Equipment
  January 28,
    
    
    February 3,2006
    
    
    2007Land
    
    $
    2,176
    
    
    $
    2,176Buildings
    
    
    10,574
    
    
    
    10,574Furniture, fixtures and equipment (1)
    
    
    88,213
    
    
    
    87,458Leasehold improvements
    
    
    84,775
    
    
    
    85,350Construction in process
    
    
    
    
    
    
    2,976185,738
    
    
    
    188,534Accumulated depreciation and amortization
    
    
    (118,947
    )
    
    
    (125,647
    )Property and equipment, net
    
    $
    66,791
    
    
    $
    62,887
 
 (1)
    
    Includes approximately $8.2 million of assets under capital leases resulting from a sale and
leaseback agreement. 4. Accrued Expenses
  January 28,
    
    
    February 3,2006
    
    
    2007Payroll related expenses
    
    $
    6,682
    
    
    $
    5,098Gift cards and other customer credits
    
    
    4,137
    
    
    
    4,844Insurance payables
    
    
    4,009
    
    
    
    4,051Other
    
    
    11,683
    
    
    
    10,582$
    26,511
    
    
    $
    24,575
 5. Leases
 Operating Leases
   Fiscal
    
    
    Fiscal
    
    
    Fiscal2004
    
    
    2005
    
    
    2006Real estate rent
    
    $
    43,019
    
    
    $
    42,556
    
    
    $
    43,155Equipment and other
    
    
    518
    
    
    
    533
    
    
    
    536Total rent expense
    
    $
    43,537
    
    
    $
    43,089
    
    
    $
    43,691




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##### Table of Contents



Operating2007
    
    $
    43,8862008
    
    
    39,4952009
    
    
    36,3322010
    
    
    33,4652011
    
    
    30,575Thereafter
    
    
    66,637Total minimum lease payments
    
    $
    250,390
 Capital Lease
  6. Long-term Debt
   January 28,
    
    
    February 3,2006
    
    
    20078.64% Mortgage due 2009
    
    $
    2,633
    
    
    $
    1,877Less: current maturities
    
    
    756
    
    
    
    817Long-term debt
    
    $
    1,877
    
    
    $
    1,060
  DebtMaturities2007
    
    $
    8172008
    
    
    8972009
    
    
    163Total
    
    $
    1,877




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##### Table of Contents



7. Financing Agreement (See Note 15)
        8. Fair Value of Financial Instruments




---



##### Table of Contents



9. Income Taxes
  Fiscal
    
    
    Fiscal
    
    
    Fiscal2004
    
    
    2005
    
    
    2006Current:
    
    $
    (2,165
    )
    
    $
    1,573
    
    
    $
    1,121Federal
    
    
    137
    
    
    
    446
    
    
    
    519State
    
    
    (2,028
    )
    
    
    2,019
    
    
    
    1,640Deferred:Federal
    
    
    
    
    
    
    (12,204
    )
    
    
    1,774State
    
    
    
    
    
    
    (6,619
    )
    
    
    (394
    )
    
    
    
    (18,823
    )
    
    
    1,380(Benefit from) / provision for income taxes
    
    $
    (2,028
    )
    
    $
    (16,804
    )
    
    $
    3,020
  Fiscal
    
    
    Fiscal
    
    
    Fiscal2004
    
    
    2005
    
    
    2006Statutory Federal income
tax rate
    
    
    (34.0
    %)
    
    
    34.0
    %
    
    
    34.3
    %State income taxes, net of
Federal benefit
    
    
    1.1
    
    
    
    4.6
    
    
    
    4.6Permanent differences including credits
    
    
    
    
    
    
    (1.5
    )
    
    
    (1.0
    )Reversal of previously accrued
income taxes
    
    
    (14.5
    )
    
    
    9.1
    
    
    
    (2.8
    )IRS refund settlement
    
    
    (2.8
    )
    
    
    
    
    
    
    Other
    
    
    (0.3
    )
    
    
    4.8
    
    
    
    (0.3
    )Sub-total
    
    
    (50.5
    )
    
    
    51.0
    
    
    
    34.8Change in deferred tax valuation allowance
    
    
    34.3
    
    
    
    (197.8
    )
    
    
    (15.5
    )Effective tax rate
    
    
    (16.2
    %)
    
    
    (146.8
    %)
    
    
    19.3
    %




---



##### Table of Contents



January 28,
    
    
    February 3,2006
    
    
    2007Current deferred tax assets:Federal NOLs and other tax attributes
    
    $
    5,809
    
    
    $
    547State NOLs
    
    
    1,400
    
    
    
    1,119Inventory
    
    
    1,129
    
    
    
    1,810Accruals and reserves
    
    
    1,012
    
    
    
    819Total current deferred tax assets
    
    $
    9,350
    
    
    $
    4,295Non-current deferred tax assets:State NOLs
    
    $
    4,097
    
    
    $
    3,885Federal NOLs and other tax attributes
    
    
    3,749
    
    
    
    3,202Depreciation
    
    
    3,348
    
    
    
    5,626Compensation
    
    
    1,492
    
    
    
    1,791Total non-current deferred tax assets
    
    $
    12,686
    
    
    $
    14,504Non-current deferred tax liabilities:Accruals and reserves
    
    $
    (790
    )
    
    $
    (1,357
    )Total non-current deferred
tax liabilities
    
    $
    (790
    )
    
    $
    (1,357
    )Valuation allowance
    
    $
    (2,423
    )
    
    $
    Net deferred tax asset
    
    $
    18,823
    
    
    $
    17,442
   10. Retirement Plans




---



##### Table of Contents



11. Stockholders Equity




---



##### Table of Contents



12. Share Based Compensation




---



##### Table of Contents



Award activity
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOutstanding
    
    
    Price
    
    
    Term
    
    
    Value(in years)
    
    
    (in thousands)Outstanding at January 28, 2006
    
    
    1,502,300
    
    
    $
    6.86Granted
    
    
    288,500
    
    
    
    16.20Exercised
    
    
    (437,700
    )
    
    
    6.51Forfeited or expired
    
    
    (11,900
    )
    
    
    4.29Outstanding at February 3, 2007
    
    
    1,341,200
    
    
    $
    9.01
    
    
    
    4.5
    
    
    $
    7,875Exercisable at February 3, 2007
    
    
    832,000
    
    
    $
    7.63
    
    
    
    3.0
    
    
    $
    5,724
  WeightedAverageNumber of
    
    
    Grant Dateawards
    
    

    Fair ValueOutstanding at January 28, 2006
    
    397,200
    
    $
    2.94Granted
    
    463,500
    
    $
    12.41Vested
    
    (164,700
    )
    $
    3.79Forfeited
    
    (11,800
    )

    $
    2.11Outstanding at February 3, 2007
    
    684,200
    

    $
    9.17




---



##### Table of Contents



WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicOutstanding
    
    
    Price
    
    
    Term
    
    
    Value(in years)
    
    
    (in thousands)Outstanding at January 28, 2006
    
    
    174,000
    
    
    $
    5.89Granted
    
    
    120,000
    
    
    
    15.25Exercised
    
    
    (15,400
    )
    
    
    6.29Forfeited or expired
    
    
    
    
    
    
    Outstanding at February 3, 2007
    
    
    278,600
    
    
    $
    9.90
    
    
    
    6.6
    
    
    $
    1,395Exercisable at February 3, 2007
    
    
    77,000
    
    
    $
    6.29
    
    
    
    5.6
    
    
    $
    632
  WeightedAverageNumber
    
    

    Grant DateCash SARs
    
    

    Fair ValueOutstanding at January 28, 2006
    
    112,800
    

    $
    12.76Granted
    
    120,000
    

    $
    8.01Vested
    
    (31,200
    )

    $
    12.40Forfeited
    
    
    

    
    Outstanding at February 3, 2007
    
    201,600
    

    $

    9.37
     WeightedAverageRemaining
    
    
    AggregateNumber
    
    
    Grant Date
    
    
    Contractual
    
    
    IntrinsicOutstanding
    
    
    Price
    
    
    Term
    
    
    Value(in years)
    
    
    (in thousands)Outstanding at January 28, 2006
    
    
    
    
    
    
    Granted
    
    
    175,000
    
    
    $
    16.33Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at February 3, 2007
    
    
    175,000
    
    
    $
    16.33
    
    
    
    6.5
    
    
    
    




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##### Table of Contents



Fiscal
    
    
    Fiscal(dollars in thousands except per share data)
    
    2004
    
    
    2005Reported net (loss) income
    
    $
    (10,480
    )
    
    $
    28,251Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects
    
    
    (465
    )
    
    
    (405
    )Pro forma net (loss) income
    
    $
    (10,945
    )
    
    $
    27,846Net (loss) income per share:Basic  as reported
    
    $
    (0.82
    )
    
    $
    2.18Basic  pro forma
    
    $
    (0.86
    )
    
    $
    2.15Diluted  as reported
    
    $
    (0.82
    )
    
    $
    2.11Diluted  pro forma
    
    $
    (0.86
    )
    
    $
    2.08
  Fiscal
    
    Fiscal
    
    Fiscal2004
    
    2005
    
    2006Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Risk-free interest rate
    
    
    3.71
    %
    
    
    4.38
    %
    
    
    4.37%  4.97
    %Expected stock price volatility of options and
stock SARs
    
    
    50
    %
    
    
    50
    %
    
    
    71  74
    %Expected stock price volatility of cash SARs
    
    
    n/a
    
    
    
    n/a
    
    
    
    61  72
    %Expected life of options and stock SARs (in years)
    
    
    5
    
    
    
    5
    
    
    
    4.756.5Expected life of cash SARs (in years)
    
    
    n/a
    
    
    
    n/a
    
    
    
    4.05  5




---



##### Table of Contents



13. Supplemental Cash Flow Information
  Fiscal
    
    
    Fiscal
    
    
    Fiscal2004
    
    
    2005
    
    
    2006Cash interest paid
    
    $
    854
    
    
    $
    614
    
    
    $
    644Cash interest received
    
    
    (1,344
    )
    
    
    (395
    )
    
    
    (1,377
    )Net cash interest (received) paid
    
    $
    (490
    )
    
    $
    219
    
    
    $
    (733
    )Income taxes paid
    
    $
    118
    
    
    $
    758
    
    
    $
    938Income taxes refunded
    
    
    (1,531
    )
    
    
    (340
    )
    
    
    (52
    )Net income taxes (refunded) paid
    
    $
    (1,413
    )
    
    $
    418
    
    
    $
    886
  14. Contingencies
  Erik Stanford vs.
United Retail Incorporated Stanford
 Stanford
 15. Subsequent Event




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##### Table of Contents



16. Supplemental Financial Data (Unaudited)
  Fiscal 2005Qtr 1
    
    
    Qtr 2
    
    
    Qtr 3
    
    
    Qtr 4Net sales
    
    $
    106,531
    
    
    $
    114,702
    
    
    $
    98,061
    
    
    $
    119,444Gross profit
    
    
    25,691
    
    
    
    30,703
    
    
    
    25,066
    
    
    
    29,966Operating income
    
    
    864
    
    
    
    4,634
    (1)
    
    
    1,644
    
    
    
    4,474Net income
    
    $
    1,004
    
    
    $
    4,054
    
    
    $
    1,854
    
    
    $
    21,339
    (2)Net income per common share:Basic
    
    $
    0.08
    
    
    $
    0.32
    
    
    $
    0.14
    
    
    $
    1.61Diluted
    
    $
    0.08
    
    
    $
    0.31
    
    
    $
    0.14
    
    
    $
    1.54
 Fiscal 2006Qtr 1
    
    
    Qtr 2
    
    
    Qtr 3
    
    
    Qtr 4(3)Net sales
    
    $
    109,420
    
    
    $
    120,912
    
    
    $
    104,230
    
    
    $
    127,572Gross profit
    
    
    28,426
    
    
    
    31,876
    
    
    
    25,663
    
    
    
    31,518Operating income
    
    
    3,036
    
    
    
    6,254
    
    
    
    2,393
    
    
    
    3,333Net income
    
    $
    1,936
    
    
    $
    4,957
    
    
    $
    1,089
    
    
    $
    4,620
    (4)Net income per common share:Basic
    
    $
    0.14
    
    
    $
    0.37
    
    
    $
    0.08
    
    
    $
    0.34Diluted
    
    $
    0.14
    
    
    $
    0.35
    
    
    $
    0.08
    
    
    $
    0.33
 
 (1)
    
    Includes a reduction of $0.5 million for settlement costs related to the
Stanford case (See Note 14.)(2)
    
    Includes a $22.6 million tax benefit for reversals of valuation allowances.(3)
    
    The fiscal quarter ended February 3, 2007 included 14 weeks. The
corresponding period in the previous year included 13 weeks.(4)
    
    Includes a $2.6 million tax benefit for reversals of valuation allowances.




---



##### Table of Contents



Disclosure Controls
    Internal Control Over Financial Reporting




---



##### Table of Contents



Part III
 
  Incumbent Directors of the Registrant
  Executive Officers of the Registrant and Subsidiaries
  Compliance With Section 16(a) of the Exchange Act
  Codes of Ethics
  Audit Committee
  Nominating Committee




---



##### Table of Contents








---



##### Table of Contents








---



##### Table of Contents



PART IV
 
   (1)
    
    Consolidated Financial Statements of the Corporation for fiscal 2006 are included herein.(2)
    
    Schedule II  Valuation and Qualifying Accounts, together with the related report of the
predecessor Independent Registered Public Accounting Firm for the Corporation, are filed
herewith and designated as Exhibit No. 99.
   Number
    
    Description23.1
    
    Consent of incumbent Independent Registered Public Accounting Firm
for the Corporation23.2
    
    Consent of Predecessor Independent Registered Public Accounting
Firm for the Corporation31
    
    Certifications pursuant to Section 302
    Number in Filing
    
    Description3
    
    Restated By-laws of the Corporation, as amended on March
2, 200710
    
    Amendment, dated as of March 2, 2007, to the Financing
Agreement between the Corporation, United Retail
Incorporated and Cloudwalkers, Inc. and The CIT
Group/Business Credit, Inc. (CIT)99.1
    
    Restated Audit Committee Charter, as amended March 2, 2007
  Number in Filing
    
    Description10*
    
    Form of Severance Pay Agreement14
    
    Code of Ethics for Principal Executive and Senior
Financial Officers pursuant to Section 406




---



##### Table of Contents



Number in Filing
    
    Description10*
    
    Form of Stock Appreciation Rights Settled in Cash Award
Agreement under 2006 Equity-Based Compensation and
Performance Incentive Plan (2006 Plan)
  Number in Filing
    
    Description10.1*
    
    Amendment, dated as of August 25, 2006, to Employment
Agreement, dated September 3, 2004, between the
Corporation and Raphael Benaroya (Benaroya Employment
Agreement)10.2*
    
    Amendment, dated as of August 25, 2006, to Employment
Agreement, dated September 3, 2004, between the
Corporation and George R. Remeta (Remeta Employment
Agreement)10.3*
    
    Form of Incentive Stock Option Award Agreement under 2006
Plan
  Number in Filing
    
    Description10*
    
    Amendment, dated as of August 25, 2006, to Employment
Agreement, dated September 3, 2004, between the
Corporation and Kenneth P. Carroll (Carroll Employment
Agreement)
  Number in Filing
    
    Description10.1*
    
    Form of Incentive Compensation Award Agreement under 2006
Plan10.2*
    
    Form of Stock Appreciation Rights Settled in Stock Award
Agreement under 2006 Plan10.3*
    
    Form of Restricted Stock Award Agreement under 2006 Plan
  Number in Filing
    
    Description10*
    
    Bonus Agreement, dated June 1, 2006, between the
Corporation and Ellen Demaio (Confidential portions filed
separately with the Secretary of the Commission)




---



##### Table of Contents



Number in Filing
    
    Description10.1*
    
    Form of Nonqualified Stock Option award agreement under
2006 Plan10.2*
    
    Form of Stock Appreciation Right settled in cash award
agreement under the 2006 Plan10.3*
    
    Form of Stock Appreciation Right settled in cash granted
to nonmanagement Directors under the Corporations former
Stock Appreciation Rights Plan10.4*
    
    Tax Accounting Fee Reimbursement Plan
   Number in Filing
    
    Description10
    
    Private Label Credit Card Program Agreement between the
Corporation and United Retail Incorporated and World
Financial Network National Bank (Private Label Credit
Card Program Agreement) (Confidential portions filed
separately with the Secretary of the Commission)
  Number in Filing
    
    Description10.1*
    
    Spring 2006 Incentive Compensation Plan Agreement
  Number in Filing
    
    Description10.2*
    
    Amendment to Supplemental Retirement Savings Plan10.3*
    
    Amendment, dated August 29, 2005, to Benaroya Employment
Agreement10.4*
    
    Amendment, dated August 29, 2005, to Remeta Employment
Agreement10.5*
    
    Amendment, dated August 29, 2005, to Carroll Employment
Agreement10.6*
    
    Form of Severance Pay Agreements, dated August 26, 2005,
between the Corporation and Terence Puffer and Rose
Panicali, respectively10.9*
    
    Bonus Agreement, dated August 22, 2005, between the
Corporation and Rose Panicali




---



##### Table of Contents



Number in Filing
    
    Description10.1*
    
    Supplemental Retirement Savings Plan10.2*
    
    Form of Severance Pay Agreement10.3*
    
    Amendment to 2003 Stock Option Plan10.4*
    
    Amendment to 2001 Stock Option Plan10.5*
    
    Amendment to 1999 Stock Option Plan10.6*
    
    Amendment to 1996 Stock Option Plan10.7*
    
    Amendment to 1990 Stock Option Plan10.8*
    
    Amendment to Stock Option Agreement, dated May 21, 1998,
between the Corporation and Raphael Benaroya (Benaroya
Stock Option)10.9*
    
    Amendment to Stock Option Agreement, dated May 21, 1998,
between the Corporation and George R. Remeta (Remeta
Stock Option)10.10*
    
    Amendment to Benaroya Employment Agreement10.11*
    
    Amendment to Remeta Employment Agreement10.12*
    
    Amendment to Carroll Employment Agreement
  Number in Filing
    
    Description10*
    
    Restated Stock Appreciation Rights Plan
  Number in Filing
    
    Description21
    
    Subsidiaries of the Corporation
  Number in Filing
    
    Description10.1*
    
    Benaroya Employment Agreement10.2*
    
    Remeta Employment Agreement10.3*
    
    Carroll Employment Agreement
  Number in Filing
    
    Description10*
    
    Bonus agreement, dated May 28, 2004, between the
Corporation and Joann Fielder
  Number in Filing
    
    Description10.2*
    
    Form of Indemnification Agreement between the Corporation
and each of its Directors




---



##### Table of Contents



Number in Filing
    
    Description10
    
    Amendment, dated December 23, 2003, to Financing
Agreement among the Corporation, United Retail
Incorporated, Cloudwalkers, Inc. and CIT
   Number in Filing
    
    Description10.1
    
    Amendment, dated January 31, 2003, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT
  Number in Filing
    
    Description10.1
    
    Amendment, dated August 2, 2002, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT
  Number in Filing
    
    Description10.1
    
    Amendment, dated April 5, 2002, to Private Label Credit
Card Program Agreement, dated January 27, 199810.2
    
    Amendment, dated December 29, 1999, to Private Label
Credit Card Program Agreement10.3
    
    Amendment, dated August 19, 1999, to Private Label Credit
Card Program Agreement
  Number in Filing
    
    Description10.4*
    
    Summary Plan Description for United Retail Group, Inc.
Incentive Compensation Program for Executives10.5
    
    Amendment, dated October 1, 2001, to Private Label Credit
Card Program Agreement




---



##### Table of Contents



Number in Filing
    
    Description10
    
    Amendment, dated August 21, 2000, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT
  Number in Filing
    
    Description10.2
    
    Amendment, dated December 28, 1999, to Financing
Agreement among the Corporation, United Retail
Incorporated and CIT (Financing Agreement)10.3
    
    Amendment, dated January 31, 2000, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT
  Number in Filing
    
    Description10.1
    
    Amendment, dated October 6, 1999, to Financing Agreement
  Number in Filing
    
    Description3
    
    Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock
   Number in Filing
    
    Description10.1
    
    Amendment, dated March 29, 1999, to Financing Agreement
   Number in Filing
    
    Description10.1*
    
    Benaroya Stock Option10.2*
    
    Remeta Stock Option




---



##### Table of Contents



Number in Filing
    
    Description10.1
    
    Restated Stockholders Agreement, dated December 23,
1992, between the Corporation and certain of its
stockholders and Amendment No. 1, Amendment No. 2 and
Amendment No. 3 thereto10.2
    
    Private Label Credit Card Program Agreement10.4*
    
    Restated 1990 Stock Option Plan as of March 6, 199810.5*
    
    Restated 1990 Stock Option Plan as of May 28, 199610.6*
    
    Restated 1996 Stock Option Plan as of March 6, 1998
  Number in Filing
    
    Description10.1
    
    Amendment, dated September 15, 1997, to Financing
Agreement
  Number in Filing
    
    Description10.1
    
    Financing Agreement
 
 *
    
    A compensatory plan for the benefit of the Corporations management or a management contract.  Number in Filing
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of the
Corporation4.1
    
    Specimen Certificate for Common Stock of the
Corporation




---



##### Table of Contents



SIGNATURES
   UNITED RETAIL GROUP, INC.(Registrant) Date: April 19, 2007
    By:
    /s/  Raphael BenaroyaRaphael Benaroya,Chairman of the Board,
President and Chief Executive Officer Limited Power of Attorney
 Known All Men By These Presents, Raphael Benaroya George R. Remeta,
  Signature
    
    Title/s/ RAPHAEL BENAROYA

Raphael Benaroya
Principal Executive Officer
    
    Chairman of the Board,
President, Chief Executive
Officer and Director/s/ GEORGE R. REMETA

George R. Remeta
Principal Financial Officer
    
    Vice Chairman,
Chief Administrative
Officer and Director/s/ JON GROSSMAN

Jon Grossman
Principal Accounting Officer
    
    Vice President-Finance/s/ JOSEPH A. ALUTTO

Joseph A. Alutto
    
    Director/s/ JOSEPH CIECHANOVER

Joseph Ciechanover
    
    DirectorRoss B. Glickman
    
    Director/s/ MICHAEL GOLDSTEIN

Michael Goldstein
    
    Director/s/ ILAN KAUFTHAL

Ilan Kaufthal
    
    Director/s/  VINCENT P. LANGONE

Vincent P. Langone
    
    Director/s/  RICHARD W. RUBENSTEIN

Richard W. Rubenstein
    
    Director




---



##### Table of Contents



EXHIBIT INDEX
 (1)
    
    Consolidated Financial Statements of the Corporation for fiscal 2006 are included herein.(2)
    
    Schedule II  Valuation and Qualifying Accounts, together with the related report of the
predecessor Independent Registered Public Accounting Firm for the Corporation, are filed
herewith and designated as Exhibit No. 99.(3)
    
    The following additional exhibits are filed herewith:
 Number
    
    Description23.1
    
    Consent of incumbent Independent Registered Public Accounting Firm
for the Corporation23.2
    
    Consent of Predecessor Independent Registered Public Accounting
Firm for the Corporation31
    
    Certifications pursuant to Section 302
    Number in Filing
    
    Description3
    
    Restated By-laws of the Corporation, as amended on March
2, 200710
    
    Amendment, dated as of March 2, 2007, to the Financing
Agreement between the Corporation, United Retail
Incorporated and Cloudwalkers, Inc. and The CIT
Group/Business Credit, Inc. (CIT)99.1
    
    Restated Audit Committee Charter, as amended March 2, 2007
  Number in Filing
    
    Description10*
    
    Form of Severance Pay Agreement14
    
    Code of Ethics for Principal Executive and Senior
Financial Officers pursuant to Section 406
  Number in Filing
    
    Description10*
    
    Form of Stock Appreciation Rights Settled in Cash Award
Agreement under 2006 Equity-Based Compensation and
Performance Incentive Plan (2006 Plan)




---



##### Table of Contents



Number in Filing
    
    Description10.1*
    
    Amendment, dated as of August 25, 2006, to Employment
Agreement, dated September 3, 2004, between the
Corporation and Raphael Benaroya (Benaroya Employment
Agreement)10.2*
    
    Amendment, dated as of August 25, 2006, to Employment
Agreement, dated September 3, 2004, between the
Corporation and George R. Remeta (Remeta Employment
Agreement)10.3*
    
    Form of Incentive Stock Option Award Agreement under 2006
Plan
  Number in Filing
    
    Description10*
    
    Amendment, dated as of August 25, 2006, to Employment
Agreement, dated September 3, 2004, between the
Corporation and Kenneth P. Carroll (Carroll Employment
Agreement)
  Number in Filing
    
    Description10.1*
    
    Form of Incentive Compensation Award Agreement under 2006
Plan10.2*
    
    Form of Stock Appreciation Rights Settled in Stock Award
Agreement under 2006 Plan10.3*
    
    Form of Restricted Stock Award Agreement under 2006 Plan
  Number in Filing
    
    Description10*
    
    Bonus Agreement, dated June 1, 2006, between the
Corporation and Ellen Demaio (Confidential portions filed
separately with the Secretary of the Commission)
  Number in Filing
    
    Description10.1*
    
    Form of Nonqualified Stock Option award agreement under
2006 Plan10.2*
    
    Form of Stock Appreciation Right settled in cash award
agreement under the 2006 Plan10.3*
    
    Form of Stock Appreciation Right settled in cash granted
to nonmanagement Directors under the Corporations former
Stock Appreciation Rights Plan10.4*
    
    Tax Accounting Fee Reimbursement Plan




---



##### Table of Contents



Number in Filing
    
    Description10
    
    Private Label Credit Card Program Agreement between the
Corporation and United Retail Incorporated and World
Financial Network National Bank (Private Label Credit
Card Program Agreement) (Confidential portions filed
separately with the Secretary of the Commission)
  Number in Filing
    
    Description10.1*
    
    Spring 2006 Incentive Compensation Plan Agreement
  Number in Filing
    
    Description10.2*
    
    Amendment to Supplemental Retirement Savings Plan10.3*
    
    Amendment, dated August 29, 2005, to Benaroya Employment
Agreement10.4*
    
    Amendment, dated August 29, 2005, to Remeta Employment
Agreement10.5*
    
    Amendment, dated August 29, 2005, to Carroll Employment
Agreement10.6*
    
    Form of Severance Pay Agreements, dated August 26, 2005,
between the Corporation and Terence Puffer and Rose
Panicali, respectively10.9*
    
    Bonus Agreement, dated August 22, 2005, between the
Corporation and Rose Panicali
  Number in Filing
    
    Description10.1*
    
    Supplemental Retirement Savings Plan10.2*
    
    Form of Severance Pay Agreement10.3*
    
    Amendment to 2003 Stock Option Plan10.4*
    
    Amendment to 2001 Stock Option Plan10.5*
    
    Amendment to 1999 Stock Option Plan10.6*
    
    Amendment to 1996 Stock Option Plan10.7*
    
    Amendment to 1990 Stock Option Plan10.8*
    
    Amendment to Stock Option Agreement, dated May 21, 1998,
between the Corporation and Raphael Benaroya (Benaroya
Stock Option)10.9*
    
    Amendment to Stock Option Agreement, dated May 21, 1998,
between the Corporation and George R. Remeta (Remeta
Stock Option)10.10*
    
    Amendment to Benaroya Employment Agreement10.11*
    
    Amendment to Remeta Employment Agreement10.12*
    
    Amendment to Carroll Employment Agreement




---



##### Table of Contents



Number in Filing
    
    Description10*
    
    Restated Stock Appreciation Rights Plan
  Number in Filing
    
    Description21
    
    Subsidiaries of the Corporation
  Number in Filing
    
    Description10.1*
    
    Benaroya Employment Agreement10.2*
    
    Remeta Employment Agreement10.3*
    
    Carroll Employment Agreement
  Number in Filing
    
    Description10*
    
    Bonus agreement, dated May 28, 2004, between the
Corporation and Joann Fielder
  Number in Filing
    
    Description10.2*
    
    Form of Indemnification Agreement between the Corporation
and each of its Directors
  Number in Filing
    
    Description10
    
    Amendment, dated December 23, 2003, to Financing
Agreement among the Corporation, United Retail
Incorporated, Cloudwalkers, Inc. CIT
   Number in Filing
    
    Description10.1
    
    Amendment, dated January 31, 2003, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT




---



##### Table of Contents



Number in Filing
    
    Description10.1
    
    Amendment, dated August 2, 2002, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT
  Number in Filing
    
    Description10.1
    
    Amendment, dated April 5, 2002, to Private Label Credit
Card Program Agreement, dated January 27, 199810.2
    
    Amendment, dated December 29, 1999, to Private Label
Credit Card Program Agreement10.3
    
    Amendment, dated August 19, 1999, to Private Label Credit
Card Program Agreement
  Number in Filing
    
    Description10.4*
    
    Summary Plan Description for United Retail Group, Inc.
Incentive Compensation Program for Executives10.5
    
    Amendment, dated October 1, 2001, to Private Label Credit
Card Program Agreement
   Number in Filing
    
    Description10
    
    Amendment, dated August 21, 2000, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT
  Number in Filing
    
    Description10.2
    
    Amendment, dated December 28, 1999, to Financing
Agreement among the Corporation, United Retail
Incorporated and CIT (Financing Agreement)10.3
    
    Amendment, dated January 31, 2000, to Financing Agreement
among the Corporation, United Retail Incorporated,
Cloudwalkers, Inc. and CIT




---



##### Table of Contents



Number in Filing
    
    Description10.1
    
    Amendment, dated October 6, 1999, to Financing Agreement
  Number in Filing
    
    Description3
    
    Certificate of Designation, Preferences and Rights of
Series A Junior Participating Preferred Stock
   Number in Filing
    
    Description10.1
    
    Amendment, dated March 29, 1999, to Financing Agreement
 
  Number in Filing
    
    Description10.1*
    
    Benaroya Stock Option10.2*
    
    Remeta Stock Option
  Number in Filing
    
    Description10.1
    
    Restated Stockholders Agreement, dated December 23,
1992, between the Corporation and certain of its
stockholders and Amendment No. 1, Amendment No. 2 and
Amendment No. 3 thereto10.2
    
    Private Label Credit Card Program Agreement10.4*
    
    Restated 1990 Stock Option Plan as of March 6, 199810.5*
    
    Restated 1990 Stock Option Plan as of May 28, 199610.6*
    
    Restated 1996 Stock Option Plan as of March 6, 1998




---



##### Table of Contents



Number in Filing
    
    Description10.1
    
    Amendment, dated September 15, 1997, to Financing
Agreement
  Number in Filing
    
    Description10.1
    
    Financing Agreement
 
 *
    
    A compensatory plan for the benefit of the Corporations management or a management contract.  Number in Filing
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of the
Corporation4.1
    
    Specimen Certificate for Common Stock of the
Corporation