**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        DC 20549**
 
  **FORM
        10-K**
 
  **x**
              **ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**
  **For
        the fiscal year ended June 2, 2007**
  **OR**
  ** ̈**
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934**
  **For
        the transition period from

        to**
  **1-37917**
 **(Commission
        File
        Number)**
 
  
  
 **BURLINGTON
          COT FACTORY INVESTMENTS HOLDINGS, INC.**
 **(Exact
        name of registrant
        as specified in its charter)**
 
  **Delaware**
              
              **20-4663833****(State
                  or other jurisdiction**
                **of
                  incorporation)**
              
              **(IRS
                  Employer**
                **Identification
                  No.)**
  **1830
                  Route 130 North**
                **Burlington,
                  New Jersey**
              
              **08016****(Address
                  of principal executive offices)**
              
              **(Postal
                  Code)**
  **(609)
        387-7800**
 **(Registrant’s
        telephone number, including area code)**
  **Not
        Applicable**
 **(Former
        name, former address and former fiscal year, if changed since last
        report)**
  **Securities
        Registered Pursuant to Section 12(b) or 12(g) of the
        Act:  None**
  ***Title
                    of Each Class***
              
              ***Name of Each Exchange on Which Registered*****Not
                  applicable**
              
              **Not
                  applicable**
  **Securities
        Registered Pursuant to Section 12(g) of the Act:**
  ***Title
                    of Each Class***
              
              ***Name of Each Exchange on Which Registered*****Not
                  applicable**
              
              **Not
                  applicable**
  Indicate
        by check mark if the registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act.    Yes   ̈    No  x
  Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the
        Act.    Yes   ̈    No  x
  Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
        during the preceding 12 months (or for such shorter period that the registrant
        was required to file such reports), and (2) has been subject to such filing
        requirements for the past 90 days.     Yes x     No  ̈
  Indicate
        by check mark if disclosure of delinquent filers pursuant to Item 405 of
        Regulation S-K is not contained herein, and will not be contained, to the
        best
        of registrant's knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to this
        Form 10-K.  x
  Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).    Yes   ̈    No  x
  State
        the
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates of the registrant.
 Not
        applicable
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer, per Rule 12b-2 of the Exchange
        Act.    Large accelerated filer   ̈    Accelerated
        filer   ̈    Non-accelerated
        filer  x
  As
        of
        June 2, 2007, the registrant has 1,000 shares of common stock outstanding
        (all
        of which are owned by Burlington Coat Factory Holdings, Inc., our holding
        company) and are not publicly traded.
 
  
 
  
  **Forward-Looking
        Statements**
  This
        Annual Report on Form 10-K contains “forward-looking” statements within the
        meaning of Section 27A of the Securities Act of 1933, as amended, and
        Section 21E of the Securities Exchange Act of 1934, as amended, which are
        intended to be covered by the safe harbors created thereby. All statements
        herein that are not historical facts, including statements about our beliefs
        or
        expectations, are forward-looking statements. We generally identify these
        statements by words or phrases, such as “anticipate,” “estimate,” “plan,”
“expect,” “believe,” “intend,” “foresee,” “will,” “may,” and similar words or
        phrases. These statements discuss, among other things, our strategy, store
        openings, future financial or operational performance, results of store closings
        and restructurings, anticipated business developments, future financings,
        and
        other goals and targets. These statements are subject to risks, uncertainties,
        and other factors, including, among others, competition in the retail industry,
        seasonality of our business, changes in consumer preferences and consumer
        spending patterns, general economic conditions in the United States in states
        where we conduct our business, our ability to implement our strategy, our
        substantial level of indebtedness and related debt-service obligations,
        restrictions imposed by covenants in our debt agreements, availability of
        adequate financing, our dependence on vendors for our merchandise, domestic
        events affecting the delivery of merchandise to our stores, existence of
        adverse
        litigation and risks, uncertainties and factors set forth under “Item 1A. Risk
        Factors” and in our reports and documents filed with the Securities Exchange
        Commission. We believe that all forward-looking statements are based on
        reasonable assumptions when made; however, we caution that it is impossible
        to
        predict actual results or outcomes or the effects of risks, uncertainties
        or
        other factors on anticipated results or outcomes and that, accordingly, one
        should not place undue reliance on these statements. Forward-looking statements
        speak only as of the date they were made. We undertake no obligation to update
        these statements in light of subsequent events or developments. Actual results
        may differ materially from anticipated results or outcomes discussed in any
        forward-looking statement.
  2
  
 **PAGE****PART
                  I.**Item
                  1.
              Business
              4Item
                  1A.
              Risk
                  Factors
              7Item
                  1B.
              Unresolved
                  Staff Comments
              12Item
                  2.
              Properties
              12Item
                  3.
              Legal
                  Proceedings
              12Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              12**PART
                  II.**Item
                  5.
              Market
                  for the Registrant’s Common Equity and Related Stockholder Matters and
                  Issuer Purchases of Equity Securities
              13Item
                  6.
              Selected
                  Financial Data
              14Item
                  7.
              Management’s
                  Discussion and Analysis of Financial Condition and Results of
                  Operations
              15Item
                  7 A.
              Quantitative
                  and Qualitative Disclosures About Market Risk
              27Item
                  8.
              Financial
                  Statements and Supplementary Data
              28Item
                  9.
              Changes
                  in and Disagreements with Accountants on Accounting and Financial
                  Disclosure
              70Item
                  9 A.
              Controls
                  and Procedures
              70**PART
                  III.**Item
                  10.
              Directors
                  and Executive Officers of the Registrant
              70Item
                  11.
              Executive
                  Compensation
              72Item
                  12.
              Security
                  Ownership of Certain Beneficial Owners and Management and Related
                  Stockholder Matters
              80Item
                  13.
              Certain
                  Relationships and Related Transactions
              81Item
                  14.
              Principal
                  Accounting Fees and Services
              83**PART
                  IV.**Item
                  15.
              Exhibits
                  and Financial Statement Schedules
              85**INDEX
                  TO EXHIBITS**
              86**SIGNATURES**
              89
 
  3
  **Item
        1.  Business**
 
 **Overview**
 
 Burlington
        Coat Factory (BCF) is a value priced department store that offers a complete
        line of apparel, including ladies sportswear, menswear, coats, family footwear,
        and accessories as well as baby furniture, home décor and
        gifts.  BCF’s broad selection provides a wide range of apparel,
        accessories and furnishings for all ages.  BCF purchases merchandise
        both pre-season and in-season merchandise, and responds to changing market
        conditions and consumer fashion preferences. Furthermore, we believe BCF’s
        substantial selection of staple, destination products, such as coats, Baby
        Depot
        products as well as men’s and boys’ suits, attracts customers from greater
        distances than the average retailer. These products drive incremental
        store-traffic and differentiate us from our main competitors.
 
 As
        used
        herein, the terms “Company”, “we”, “us”, or “our” refers to Burlington Coat
        Factory Investments Holdings, Inc. and all its
        subsidiaries.  Burlington Coat Factory Investments Holdings, Inc. has
        no operations and its only asset is all of the stock of Burlington Coat Factory
        Warehouse Corporation.  All discussions of business operations relate
        to Burlington Coat Factory Warehouse Corporation and its subsidiaries, its
        consolidated subsidiaries and predecessors. The Company’s fiscal year ends on
        the Saturday closest to May 31. Fiscal 2007 ended on June 2, 2007 and was a
        52 week year. Fiscal 2006 ended on June 3, 2006 and was a 53 week
        year.  Fiscal 2005 ended on May 28, 2005, and was a 52 week year.
        Burlington Coat Factory Investments Holdings, Inc. was incorporated on April
        10,
        2006 in the State of Delaware.
 
 **Company
        History**
  Burlington
        Coat Factory Warehouse Corporation (“BCFWC”) was founded in 1972, and we have
        grown to become a leading nationwide apparel retailer generating sales in
        excess
        of $3 billion annually. In 1983, we conducted our initial public offering,
        expanding from 31 to 68 stores by the end of the following fiscal year. We
        launched our family footwear department in 1996, which expanded to 54 stores
        by
        1997 and 152 stores in 1998. We were acquired on April 13, 2006 by
        affiliates of Bain Capital in a take-private transaction. The total transaction
        value was $2.1 billion, or $45.50 per share in cash.
  **The
        Stores**
  As
        of
        June 2, 2007, we operated 379 stores under the names: “Burlington Coat
        Factory Warehouse” (359 stores), “MJM Designer Shoes” (17 stores), “Cohoes
        Fashions” (2 stores), and “Super Baby Depot” (1 store). Our store base is
        geographically diversified with stores located in 44 states. We believe that
        our
        customers are attracted to our stores principally by the availability of
        a large
        assortment of first-quality current brand-name merchandise at every day low
        prices.
  We
        opened
        our first MJM Designer Shoes store in 2002. MJM Designer Shoes offers an
        extensive collection of men’s, women’s and children’s moderate- to higher-priced
        designer and fashion shoes, sandals, boots and sneakers. MJM Designer Shoes
        stores also carry accessories such as handbags, wallets, belts, socks, hosiery
        and novelty gifts. MJM Designer Shoes stores provide a superior shoe shopping
        experience for the value conscious consumer by offering a broad selection
        of
        quality goods at discounted prices in stores with a convenient self-service
        layout. As of June 2, 2007, there were 17 MJM Designer Shoes stores in seven
        states.
  Cohoes
        Fashions offers a broad selection of designer label merchandise for men and
        women similar to that carried in Burlington Coat Factory stores.  In
        addition, the stores carry decorative gifts and home
        furnishings.  Cohoes Fashions, Inc. was acquired by us in 1989 and
        presently operates one store each in Rhode Island and New Jersey.
  The
        table
        below details our four store concepts:
  **BCFWC
        Store Concepts (as of
        June 2, 2007)**
 **Concept**
              
              **# Stores
                  at
                  6/2/07**
              
              
              **Avg.
                  Size**
                **(sq.
                  ft. in**
                **thousands)**
              
              
              **Net Sales**
                **%
                  of Total**
                **(dollars
                  in**
                **millions)
                  (1)**
              
              **Merchandise
                  Focus****BCF**
              
              
              359
              
              
              
              84
              
              
              $
              3,31197.3
              %
              Value-priced
                  women’s, men’s, children’s apparel and accessories. Most stores include
                  linens, bath items, gifts, luggage, family footwear, baby apparel
                  and
                  furniture.**MJM
                  Designer Shoes**
              
              
              17
              
              
              
              28
              
              
              $
              571.7
              %
              Moderate-
                  to higher-priced designer and fashion men’s, women’s and children’s
                  footwear, handbags and other accessories.**Cohoes
                  Fashions**
              
              
              2
              
              
              
              45
              
              
              $
              310.9
              %
              Broad
                  selection brand-name merchandise for men and women, decorative
                  gifts and
                  home furnishings similar to merchandise in BCFWC
                  stores.**Super
                  Baby Depot**
              
              
              1
              
              
              
              25
              
              
              $
              40.1
              %
              Brand-name
                  merchandise including apparel, furniture and accessories for newborns,
                  infants and toddlers.
 
 (1)
              Net
                  sales exclude Other Revenue, consisting of rental income, layaway
                  and
                  alteration charges. Represents net sales for the fiscal year ended
                  June 2, 2007.
  4
  The
        stores are generally located in close proximity to population centers, other
        department stores and other retail operations and are usually established
        near a
        major highway or thoroughfare, making them easily accessible by
        automobile.
  Some
        stores contain departments licensed to unaffiliated parties for the sale
        of
        items such as lingerie, fragrances, and jewelry. During fiscal 2007, our
        rental
        income from all of our licensed departments aggregated less than 1% of our
        total
        revenues.
  **Store
        Expansion**
  Since
        1972 when our first store was opened in Burlington, New Jersey, we have expanded
        to three hundred fifty nine BCF stores, two Cohoes Fashions stores,
        seventeen MJM Designer Shoes stores, and one stand-alone Super Baby Depot
        store.
  We
        believe our real estate locations represent a competitive
        advantage.  Most of our stores are approximately 80,000 square feet,
        occupying significantly larger boxes than our typical off-price or specialty
        store competitors. Major landlords frequently seek us as a tenant because
        the
        appeal of our apparel merchandise profile attracts a desired customer base
        and
        because we occupy larger facilities than most of our competitors. In
        addition, we have built long-standing relationships with major shopping center
        developers. At June 2, 2007, we operated stores in 44 states, and we are
        exploring expansion opportunities both within our current market areas and
        in
        other regions.
  We
        believe that our ability to find satisfactory locations for our stores is
        essential for the continued growth of our business. The opening of stores
        generally is contingent upon a number of factors, including the availability
        of
        desirable locations with suitable structures and the negotiation of acceptable
        lease terms. There can be no assurance, however, that we will be able to
        find
        suitable locations for new stores or that even if such locations are found
        and
        acceptable lease terms are obtained, we will be able to open the number of
        new
        stores presently planned.
  **Real
        Estate Strategy**
  During
        the fiscal year ended June 2, 2007, we owned the land and/or building for
        41 of
        our 379 stores. Generally, however, our policy has been to lease our
        stores, with average rents per square foot that are below off-price competitors’
rents. Our large average store size (generally twice that of our off-price
        competitors), ability to attract foot traffic and our disciplined real estate
        strategy enable us to secure these lower rents. Most of our stores are located
        in malls, strip shopping centers, regional power centers or are freestanding.
        We
        lease 89% of our store base and own the remaining 11%.
  We
        have
        revised our lease model to provide on some of our new leases for a ten year
        initial term with a number of five year options
        thereafter.  Typically, our new lease strategy includes landlord
        allowances for leasehold improvements.  We believe our new lease model
        makes us more competitive with other retailers for desirable
        locations.
  We
        have a
        proven track record of successful new store expansion. Our store base grew
        from
        13 stores in 1980 to 379 stores as of June 2,
        2007.   As part of our growth strategy, we plan to open 20-35 new
        Burlington Coat Factory stores each year.  Assuming that appropriate
        locations are identified, we believe that the Company will be able to execute
        this growth strategy since most of our competitors have at least twice as
        many
        store locations across the country than we do.
  **Store
        Openings and Closings**
 **Fiscal
                  Year**
              
              **2002**
              
              
              **2003**
              
              
              **2004**
              
              
              **2005**
              
              
              **2006**
              
              
              **2007**Stores
                  (Beginning of Period)
              
              
              295
              
              
              
              319
              
              
              
              335
              
              
              
              349
              
              
              
              362
              
              
              
              368Stores
                  Opened
              
              
              29
              
              
              
              22
              
              
              
              24
              
              
              
              16
              
              
              
              12
              
              
              
              19Stores
                  Closed
              
              
              (5
              )
              
              
              (6
              )
              
              
              (10
              )
              
              
              (3
              )
              
              
              (6
              )
              
              
              (8
              )Stores
                  (End of Period)
              
              
              319
              
              
              
              335
              
              
              
              349
              
              
              
              362
              
              
              
              368
              *
              
              
              379
 
 *
              Inclusive
                  of three stores that closed because of hurricane damage, which
                  reopened in
                  2007.
  **Distribution**
  The
        Company has four distribution centers that occupy an aggregate of 1,830,000
        square feet, each of which includes processing and storage
        capacity.  Our distribution centers are located in (1) Burlington, New
        Jersey, (2) Edgewater Park, New Jersey, (3) Bristol, Pennsylvania, and (4)
        San
        Bernardino, California.  Our newest distribution center, in San
        Bernardino, opened in May 2006, and is fully operational.  The
        facility is 440,000 square feet and has allowed us to increase our percentage
        of
        centrally received merchandise.  Historically, we have centrally
        received 50% of merchandise while shipping 50% direct to
        store.  During fiscal year 2007, we were able to transition our mix to
        approximately 70% of merchandise units through the distribution centers,
        reducing our direct to store shipments to 30%.
  Our
        distribution center network leverages automated sorting units to process
        and
        ship product to stores.  We believe that the use of automated sorting
        units optimizes our cost efficiencies, improves accuracy, and improves our
        overall turn of product within our distribution network.
  
 5
  We
        currently use a legacy warehouse management system to receive, track, and
        control our product flow. During fiscal years 2008-2009, the Company plans
        to
        replace this warehouse management system. We believe that the use of this
        new
        system will have a positive impact on efforts to optimize our supply chain
        efforts.
  **Calendar**
                **Year**
                **Operational**
              
              **Size**
                **(thousands of**
                **sq.
                  ft.)**
              
              **Leased/**
                **Owned**Burlington,
                  NJ
              1987
              
              
              402
              
              OwnedBristol,
                  PA
              2001
              
              
              340
              
              LeasedEdgewater
                  Park, NJ
              2004
              
              
              648
              
              OwnedSan
                  Bernardino, CA
              2006
              
              
              440
              
              Leased
 
 **Customer
                  Demographic**
  Our
        core
        customer is the 18–49 year-old woman. The core customer is educated, resides in
        mid- to large-sized metropolitan areas and has an annual household income
        of
        $35,000 to $100,000. This customer shops for herself, her family and her
        home.
        We appeal to value seeking and fashion conscious customers who are price-driven
        but enjoy the style and fit of high-quality, branded merchandise. These core
        customers are drawn to us not only by our value proposition, but also by
        our
        broad selection of styles, our brands and our highly appealing product selection
        for families.
  **Customer
        Service**
  We
        are
        committed to providing our customers with an enjoyable shopping experience.
        In
        training our employees, we emphasize knowledgeable and friendly customer
        service. We train specialized employees who work in departments where customers
        benefit from more hands-on assistance. For example, the men’s suits departments
        are staffed with trained men’s suit sales experts and professional tailors.
        Additionally, we offer Baby Depot customers access to highly-trained personnel
        who can advise parents on apparel, furniture and accessory
        selection.
  **Employees**
  As
        of
        June 2, 2007, we employed 28,005 people, including part-time and seasonal
        employees. Our staffing requirements fluctuate during the year as a result
        of
        the seasonality of the apparel industry. We hire additional employees and
        increase the hours of part-time employees during seasonal peak selling periods.
        As of June 2, 2007, employees at only two of our stores are subject to
        collective bargaining agreements.
  **Competition**
  The
        retail business is highly competitive. Competitors include off-price retailers,
        department stores, mass merchants and specialty apparel stores. At various
        times
        throughout the year, traditional full-price department store chains and
        specialty shops offer brand-name merchandise at substantial markdowns, which
        can
        result in prices approximating those offered by us at our BCF
        stores.
 
 **Merchandise
        Vendors**
  The
        Company purchases merchandise from many suppliers, none of which accounted
        for
        more than 5% of the Company’s net purchases during fiscal 2007. The Company has
        no long-term purchase commitments or arrangements with any of its suppliers,
        and
        believes that it is not dependent on any one supplier. The Company continues
        to
        have good working relationships with its suppliers.
  **Seasonality**
  The
        Company’s business, like that of most retailers, is subject to seasonal
        influences, with the major portion of sales and income typically realized
        during
        the back-to-school and holiday seasons (September through January). Because
        of
        the seasonality of the Company’s business, results for any quarter are not
        necessarily indicative of the results that may be achieved for the fiscal
        year.
  6
   
  **Tradenames**
  The
        Company has tradename assets such as Burlington Coat Factory, Baby Depot,
        Luxury
        Linens and MJM Designs.  The Company considers these tradenames and
        the accompanying name recognition to be valuable to its business.
  **AVAILABLE
        INFORMATION**
  We
        have
        agreed that, whether or not required to do so by the rules and regulations
        of
        the SEC, for so long as any of the notes remain outstanding, we will furnish
        to
        the holders of the notes (i) all quarterly and annual financial information
        that would be required to be contained in a filing with the SEC on Form 10-Q
        and
        Form 10-K as if we were required to file such forms, including a “Management’s
        Discussion and Analysis of Financial Condition and Results of Operation” and,
        with respect to the annual information only, a report thereon by our independent
        accountants and (ii) all reports that would be required to be filed with
        the SEC on Form 8-K as if we were required to file such reports. We will
        make
        available to the trustee and holders of the notes, the annual reports,
        information, documents and other reports that are required by Sections 13
        and
        15(d) of the Exchange Act within the time periods specified therein. Information
        filed with the SEC may be read and copied by the public at the Public Reference
        Room of the SEC at 100 F Street NE, Washington, D.C. 20549. The public may
        obtain information on the operation of the Public Reference Room by calling
        the
        SEC at 1-800-SEC-0330. The SEC maintains an Internet site at http://www.sec.gov
        that contains reports, proxy and information statements and other information
        regarding issuers that file electronically with the SEC.
  Under
        the
        indenture governing the notes we are required to file with the trustee annual,
        quarterly and other reports after we file these reports with the Securities
        and
        Exchange Commission. Annual reports delivered to the trustee and the holders
        of
        notes will contain financial statements that have been reported upon, with
        an
        opinion expressed by an independent public accountant. We will also furnish
        such
        other reports as may be required by law.
 
 **Item
        1A.  Risk Factors**
 
 The
        risks and uncertainties described
        in this Annual Report on Form 10-K are not the only ones facing the
        Company.  Additional risks and uncertainties not presently known to
        the Company or that it currently deems immaterial may also impair the Company’s
        business and operations.  If any of the following risks actually
        occur, the Company’s business, financial condition, cash flows or results of
        operations could be materially adversely affected.
  **Risks
        Related to Our Business**
  ***Our
        growth strategy includes the addition of a significant number of new stores
        each
        year. We may not be able to implement this strategy successfully, on a timely
        basis, or at all.***
  Our
        growth will largely depend on our ability to open and operate new stores
        successfully. We intend to continue to open a significant number of new stores
        in future years, while remodeling a portion of our existing store base annually.
        During our 2008 fiscal year, we plan to open 25 new stores, and in subsequent
        fiscal years, we anticipate opening between 20 to 35 new stores per fiscal
        year.
        The success of this strategy is dependent upon, among other things, the
        identification of suitable markets and sites for store locations, the
        negotiation of acceptable lease terms, the hiring, training and retention
        of
        competent sales personnel, and the effective management of inventory to meet
        the
        needs of new and existing stores on a timely basis. Our proposed expansion
        also
        will place increased demands on our operational, managerial and administrative
        resources. These increased demands could cause us to operate our business
        less
        effectively, which in turn could cause deterioration in the financial
        performance of our existing stores. In addition, to the extent that our new
        store openings are in existing markets, we may experience reduced net sales
        volumes in existing stores in those markets. We expect to fund our expansion
        through cash flow from operations and, if necessary, by borrowings under
        our ABL
        Credit Facility; however, if we experience a decline in performance, we may
        slow
        or discontinue store openings. We may not be able to execute any of these
        strategies successfully, on a timely basis, or at all. If we fail to implement
        these strategies successfully, our financial condition and results of operations
        would be adversely affected.
  ***If
        we are unable to renew or replace our store leases or enter into leases for
        new
        stores on favorable terms, or if one or more of our current leases are
        terminated prior to the expiration of their stated term and we cannot find
        suitable alternate locations, our growth and profitability could be
        harmed.***
  We
        currently lease 89% of our store locations. Most of our current leases expire
        at
        various dates after five-year terms, or ten-year terms in the case of our
        newer
        leases, each subject to our option to renew such leases for several additional
        five-year periods.  Our ability to renew any expiring lease or, if
        such lease cannot be renewed, our ability to lease a suitable alternate
        location, and our ability to enter into leases for new stores on favorable
        terms
        will depend on many factors which are not within our control, such as conditions
        in the local real estate market, competition for desirable properties and
        our
        relationships with current and prospective landlords. If we are unable to
        renew
        existing leases or lease suitable alternate locations, or enter into leases
        for
        new stores on favorable terms, our growth and our profitability may be
        significantly harmed.
  7
   ***Our
        net sales, operating income and inventory levels fluctuate on a seasonal
        basis
        and decreases in sales or margins during our peak seasons could have a
        disproportionate effect on our overall financial condition and results of
        operations.***
  Our
        net
        sales and operating income fluctuate seasonally, with a significant portion
        of
        our operating income typically realized during our second and third quarters.
        Any decrease in sales or margins during this period could have a
        disproportionate effect on our financial condition and results of operations.
        Seasonal fluctuations also affect our inventory levels. We must carry a
        significant amount of inventory, especially before the holiday season selling
        period. If we are not successful in selling our inventory, we may have to
        write
        down our inventory or sell it at significantly reduced prices or we may not
        be
        able to sell such inventory at all, which could have a material adverse effect
        on our financial condition and results of operations.
  ***Fluctuations
        in comparative store sales and results of operations could cause our business
        performance to decline substantially.***
  Our
        results of operations for our individual stores have fluctuated in the past
        and
        can be expected to continue to fluctuate in the future. Since the beginning
        of
        fiscal 2004, our quarterly comparative store sales growth rates have ranged
        from
        8.9% to (5.1%).
  Our
        comparative store sales and results of operations are affected by a variety
        of
        factors, including:
  •
              fashion
                  trends;
  •
              calendar
                  shifts of holiday or seasonal
                  periods;
  •
              the
                  effectiveness of our inventory
                  management;
  •
              changes
                  in our merchandise mix;
  •
              weather
                  conditions; availability of suitable real estate locations at desirable
                  prices and our ability to locate
                  them;
  •
              the
                  timing of promotional events;
  •
              changes
                  in general economic conditions and consumer spending
                  patterns;
  •
              our
                  ability to understand and meet consumer preferences;
                  and
  •
              actions
                  of competitors.
  If
        our
        future comparative store sales fail to meet expectations, then our cash flow
        and
        profitability could decline substantially. You should refer to the section
        entitled “Management’s Discussion and Analysis of Financial Condition and
        Results of Operations” for more information.
  ***Because
        inventory is both fashion and season sensitive, extreme and/or unseasonable
        weather conditions could have a disproportionately large effect on our business,
        financial condition and results of operations because we would be forced
        to mark
        down inventory.***
  Extreme
        weather conditions in the areas in which our stores are located could have
        a
        material adverse effect on our business, financial condition and results
        of
        operations. For example, heavy snowfall or other extreme weather conditions
        over
        a prolonged period might make it difficult for our customers to travel to
        our
        stores. Our business is also susceptible to unseasonable weather conditions.
        For
        example, extended periods of unseasonably warm temperatures during the winter
        season or cool weather during the summer season could render a portion of
        our
        inventory incompatible with those unseasonable conditions. These prolonged
        unseasonable weather conditions could adversely affect our business, financial
        condition and results of operations. For the past five fiscal years, a majority
        of our net sales have occurred during the five-month period from September
        through January. Unseasonably warm weather during these months could adversely
        affect our business.
  ***We
        do not have long-term contracts with any of our vendors and if we are unable
        to
        purchase suitable merchandise in sufficient quantities at competitive prices,
        we
        may be unable to offer a merchandise mix that is attractive to our customers
        and
        our sales may be harmed.***
  All
        of
        the products that we offer are manufactured by third party vendors. Many
        of our
        key vendors limit the number of retail channels they use to sell their
        merchandise and competition among retailers to obtain and sell these goods
        is
        intense. In addition, nearly all of the brands of our top vendors are sold
        by
        competing retailers and some of our top vendors also have their own dedicated
        retail stores. Moreover, we typically buy products from our vendors on a
        purchase order basis. We have no long term purchase contracts with any of
        our
        vendors and, therefore, have no contractual assurances of continued supply,
        pricing or access to products, and any vendor could change the terms upon
        which
        they sell to us or discontinue selling to us at any time.
  If
        our
        relationships with our vendors are disrupted, we may not be able to acquire
        the
        merchandise we require in sufficient quantities or on terms acceptable to
        us.
        Any inability to acquire suitable merchandise would have a negative effect
        on
        our business and operating results because we would be missing products from
        our
        merchandise mix unless and until alternative supply arrangements were made,
        resulting in deferred or lost sales.
  8
   ***Increases
        in freight costs could result in lower profitability.***
  The
        cost
        of delivering our merchandise from the warehouses to the stores could continue
        to increase if gasoline prices continue to rise. Although we are seeking
        to have
        more of our inventory distributed to our stores through our distribution
        centers, a substantial portion of our inventory is still shipped directly
        to our
        stores from our vendors via the more expensive “drop shipment” method, whereby
        vendors ship items directly to our stores rather than to our distribution
        centers. Increases in fuel costs will result in costly surcharges added to
        the
        cost of drop shipment and reduce our ability to maintain profit
        margins.
  ***Although
        we purchase most of our inventory from vendors domestically, apparel production
        is located primarily overseas.***
  Factors
        which affect overseas production could affect our suppliers and vendors and,
        in
        turn, our ability to obtain inventory and the price levels at which they
        may be
        obtained. Although such factors apply equally to our competitors, factors
        that
        cause an increase in merchandise costs or a decrease in supply could lead
        to
        lower sales in the retail industry generally.
  Such
        factors include:
  •
              political
                  or labor instability in countries where suppliers are located or
                  at
                  foreign and domestic ports which could result in lengthy shipment
                  delays,
                  which if timed ahead of the fall and winter peak selling periods
                  could
                  materially and adversely affect our ability to stock inventory
                  on a timely
                  basis;
  •
              political
                  or military conflict involving the apparel producing countries,
                  which
                  could cause a delay in the transportation of our products to us
                  and an
                  increase in transportation costs;
  •
              heightened
                  terrorism security concerns, which could subject imported goods
                  to
                  additional, more frequent or more thorough inspections, leading
                  to delays
                  in deliveries or impoundment of goods for extended
                  periods;
  •
              disease
                  epidemics and health related concerns, such as the outbreaks of
                  SARS, bird
                  flu and other diseases, which could result in closed factories,
                  reduced
                  workforces, scarcity of raw materials and scrutiny or embargoing
                  of goods
                  produced in infected areas;
  •
              the
                  migration and development of manufacturers, which can affect where
                  our
                  products are or will be produced;
  •
              fluctuation
                  in our suppliers’ local currency against the dollar, which may increase
                  our cost of goods sold;
  •
              imposition
                  of regulations and quotas relating to imports;
                  and
  •
              imposition
                  of duties, taxes and other charges on
                  imports.
  Any
        of
        the foregoing factors, or a combination thereof could have a material adverse
        effect on our business.
  ***Our
        business would be disrupted severely if our distribution centers were to
        shut
        down.***
  During
        fiscal 2007, central distribution and warehousing services were extended
        to
        approximately 70% of our merchandise units through our warehouse/distribution
        facilities in Burlington, New Jersey, Edgewater, New Jersey, Bristol,
        Pennsylvania, and San Bernardino, California. During fiscal 2008, we expect
        this
        percentage to increase as more merchandise is distributed through our new
        distribution center in San Bernardino, California which opened in May 2006.
        Most
        of the merchandise we purchase is shipped directly to our distribution centers,
        where it is prepared for shipment to the appropriate stores. If any distribution
        center were to shut down or lose significant capacity for any reason, our
        operations would likely be disrupted. Although in such circumstances our
        stores
        are capable of receiving inventory directly from the supplier via drop shipment,
        we would incur significantly higher costs and a reduced control of inventory
        levels during the time it takes for us to reopen or replace any of the
        distribution centers.
  ***Software
        developed for our management information systems may become obsolete or conflict
        with the requirements of newer hardware and may cause disruptions in our
        business.***
  We
        rely
        on our existing management information systems, including some software programs
        that were developed in-house by our employees, in operating and monitoring
        all
        major aspects of our business, including sales, warehousing, distribution,
        purchasing, inventory control, merchandising planning and replenishment,
        as well
        as various financial systems. If we fail to update such software to meet
        the
        demands of changing business requirements or if we decide to modify or change
        our hardware and/or operating systems and the software programs that were
        developed in-house are not compatible with the new hardware or operating
        systems, disruption to our business may result.
  ***Unauthorized
        disclosure of sensitive or confidential customer information, whether through
        a
        breach of our computer system or otherwise, could severely hurt our
        business.***
  As
        part
        of our normal course of business, we collect, process and retain sensitive
        and
        confidential customer information in accordance with industry
        standards.  Despite the security measures we have in place, our
        facilities and systems, and those of our third party service providers may
        be
        vulnerable to security breaches, acts of vandalism and theft, computer viruses,
        misplaced or lost data, programming and/or human errors, or other similar
        events.  Any security breach involving misappropriation, loss
        or
   9
  other
        unauthorized disclosure of confidential information, whether by us or our
        vendors, could severely damage our reputation, expose us to litigation and
        liability risks, disrupt our operations and harm our business.
  ***Disruptions
        in the Company’s information systems could adversely affect its operating
        results.***
  The
        efficient operation of the Company’s business is dependent on its information
        systems. If an act of God or other event caused our information systems to
        not
        function properly, major business disruptions could occur.  In particular,
        the Company relies on its information systems to effectively manage sales,
        distribution, merchandise planning and allocation functions. The Company’s
        disaster recovery site is located within 15 miles of the Company’s
        headquarters.  If a disaster impacts both locations, the Company could
        be affected. The failure of the Company’s information systems to perform as
        designed could disrupt its business and harm sales and
        profitability.
  ***Acts
        of terrorism could adversely affect our business.***
  The
        economic downturn that followed the terrorist attacks of September 11, 2001
        had an adverse impact on our business. Any further acts of terrorism or other
        future conflict may disrupt commerce and undermine consumer confidence, cause
        a
        downturn in the economy generally, cause consumer spending or shopping center
        traffic to decline or reduce the desire of our guests to make discretionary
        purchases. Any of the foregoing factors could impact our sales revenue
        negatively, particularly in the case of any terrorist attack targeting retail
        space such as a shopping center. Furthermore, an act of terrorism or war,
        or the
        threat thereof, could impact our business negatively by interfering with
        our or
        our vendors’ ability to obtain merchandise from foreign manufacturers. Any
        future inability to obtain merchandise from our or our vendors’ foreign
        manufacturers or to substitute other manufacturers, at similar costs and
        in a
        timely manner, could adversely affect our business.
  ***Our
        future growth and profitability could be adversely affected if our advertising
        and marketing programs are not effective in generating sufficient levels
        of
        customer awareness and traffic.***
  We
        rely
        heavily on print and television advertising to increase consumer awareness
        of
        our product offerings and pricing to drive store traffic. In addition, we
        rely
        and will increasingly rely on other forms of media advertising. Our future
        growth and profitability will depend in large part upon the effectiveness
        and
        efficiency of our advertising and marketing programs. In order for our
        advertising and marketing programs to be successful, we must:
  •
              manage
                  advertising and marketing costs effectively in order to maintain
                  acceptable operating margins and return on our marketing investment;
                  and
  •
              convert
                  customer awareness into actual store visits and product
                  purchases.
  Our
        planned advertising and marketing expenditures may not result in increased
        total
        or comparable net sales or generate sufficient levels of product awareness.
        We
        may not be able to manage our advertising and marketing expenditures on a
        cost-effective basis.
  There
        are
        a limited number of companies capable of distributing our direct mail
        advertising at the volume levels we require. If any of these companies cease
        operations, or if their expenses (e.g., postage, printing and paper costs)
        increase substantially, then it is likely that our advertising expenses will
        increase, which will have a negative effect on our business and operating
        results.
  ***We
        are in the process of transitioning to new leadership team which may cause
        business interruptions.***
  We
        may
        experience unforeseen difficulties as we transition to a new leadership team.
        Our success is dependent on the continued efforts of our executive officers
        who
        have been with the Company for many years before the Merger Transaction and
        new
        additions to our management team.  Although we entered into employment
        agreements with certain executives, we may not be able to retain all of our
        executives and other key employees.  These executives and other
        key employees may be hired by our competitors, some of which have considerably
        more financial resources than we do. The loss of key personnel, or the inability
        to hire and retain qualified employees, could adversely affect our business,
        financial condition and results of operations.
  ***The
        interests of our controlling stockholders may conflict with yours as a holder
        of
        the notes.***
  Funds
        associated with Bain Capital own over approximately 98.5% of Parent’s basic
        common stock, with the remainder held by existing members of management.
        Additionally, management holds options to purchase 7.3% of the basic shares
        outstanding.
  The
        controlling stockholders may have an incentive to increase the value of its
        investment or cause us to distribute funds at the expense of our financial
        condition and impact our ability to make payments on the outstanding notes.
        In
        addition, the affiliates of Bain Capital have the power to elect a majority
        of
        our board of directors and appoint new officers and management and, therefore,
        effectively control many major decisions regarding our operations. The interests
        of Bain Capital or its associated funds may conflict with the interests of
        holders of our outstanding notes. For more information, see “Security Ownership
        of Certain Beneficial Owners and Management” and “Certain Relationships and
        Related Transactions.”
   10
  **Risk
        Factors Related to Our Substantial Indebtedness**
  ***Our
        substantial indebtedness will require a significant amount of
        cash.****Our ability to generate sufficient cash depends on
        numerous factors beyond our control, and we may be unable to generate sufficient
        cash flow to service our debt obligations, including making payments on the
        notes.***
  We
        are
        highly leveraged.  As of June 2, 2007, our total indebtedness was
        $1.462 billion including $299.7 million of senior notes due 2014, $88.0 million
        of senior unsecured notes, $884.3 million under the Term Loan, and $159.0
        million under the ABL Credit Facility. Estimated cash required to make minimum
        debt service payments (including principal and interest) for these debt
        obligations amounts to $108.3 million for the fiscal year ending May 31,
        2008,
        exclusive of the ABL Credit Facility. The ABL Credit Facility has no annual
        minimum principal payment requirement.
  Our
        ability to make payments on and to refinance our debt and to fund planned
        capital expenditures will depend on our ability to generate cash in the future.
        To some extent, this is subject to general economic, financial, competitive,
        legislative, regulatory and other factors that are beyond our control. If
        we are
        unable to generate sufficient cash flow to service our debt and meet our
        other
        commitments, we will be required to adopt one or more alternatives, such
        as
        refinancing all or a portion of our debt, including the notes, selling material
        assets or operations or raising additional debt or equity capital. We may
        not be
        able to effect any of these actions on a timely basis, on commercially
        reasonable terms or at all, or that these actions would be sufficient to
        meet
        our capital requirements. In addition, the terms of our existing or future
        debt
        agreements, including the credit agreement governing our senior secured credit
        facilities and each indenture governing the notes, may restrict us from
        effecting any of these alternatives.
  If
        we
        fail to make scheduled payments on our debt or otherwise fail to comply with
        our
        covenants, we will be in default and, as a result:
  •
              our
                  debt holders could declare all outstanding principal and interest
                  to be
                  due and payable,
  •
              our
                  secured debt lenders could terminate their commitments and commence
                  foreclosure proceedings against our assets,
                  and
  •
              we
                  could be forced into bankruptcy or
                  liquidation.
  ***The
        indenture governing the senior notes and the credit agreement governing our
        senior secured credit facilities imposes significant operating and financial
        restrictions on us and our subsidiaries, which may prevent us from capitalizing
        on business opportunities.***
  The
        indenture governing the senior notes and our senior secured credit facilities
        imposes significant operating and financial restrictions on us. These
        restrictions limit our ability, among other things, to:
  •
              incur
                  additional indebtedness or enter into sale and leaseback
                  obligations;
  •
              pay
                  certain dividends or make certain distributions on capital stock
                  or
                  repurchase capital stock;
  •
              make
                  certain capital expenditures;
  •
              make
                  certain investments or other restricted
                  payments;
  •
              have
                  our subsidiaries pay dividends or make other payments to
                  us;
  •
              engage
                  in certain transactions with stockholders or
                  affiliates;
  •
              sell
                  certain assets or merge with or into other
                  companies;
  •
              guarantee
                  indebtedness; and
  •
              create
                  liens.
  As
        a
        result of these covenants and restrictions, we are limited in how we conduct
        our
        business and we may be unable to raise additional debt or equity financing
        to
        compete effectively or to take advantage of new business opportunities. The
        terms of any future indebtedness we may incur could include more restrictive
        covenants. If we fail to maintain compliance with these covenants in the
        future,
        we may not be able to obtain waivers from the lenders and/or amend the
        covenants.
  Our
        failure to comply with the restrictive covenants described above, as well
        as
        others that may be contained in our senior secured credit facilities from
        time,
        to time could result in an event of default, which, if not cured or waived,
        could result in us being required to repay these borrowings before their
        due
        date. If we are forced to refinance these borrowings on less favorable terms,
        our results of operations and financial condition could be adversely
        affected.
  ***Our
        failure to comply with the agreements relating to our outstanding indebtedness,
        including as a result of events beyond our control, could result in an event
        of
        default that could materially and adversely affect our results of operations
        and
        our financial condition.***
  If
        there
        were an event of default under any of the agreements relating to our outstanding
        indebtedness, the holders of the defaulted debt could cause all amounts
        outstanding, with respect to that debt, to be due and payable immediately.
        Our
        assets or cash flow may not be sufficient to fully repay borrowings under
        our
        outstanding debt instruments if accelerated upon an event of default. Further,
        if we are unable to repay, refinance or restructure our indebtedness under
        our
        secured debt, the holders of such
   11
 
  debt
          could proceed against the collateral securing that indebtedness. In addition,
          any event of default or declaration of acceleration under one debt instrument
          could also result in an event of default under one or more of our other
          debt
          instruments.
 
 **Item
        1B.  Unresolved Staff Comments**
 None.
 
 **Item
        2.                        Properties**
 
 **Properties**
  As
        of
        June 2, 2007, we operated 379 stores in 44 states throughout the United
        States.  We own the land and/or building for 41 of our stores and
        lease the other 338 stores.  Store leases generally provide for fixed
        monthly rental payments, plus the payment, in most cases, of real estate
        taxes
        and other charges with escalation clauses. In many locations, our store leases
        contain formulas providing for the payment of additional rent based on
        sales.
  We
        own
        five buildings in Burlington, New Jersey. Of these buildings, two are used
        by us
        as retail space. In addition, we own approximately 97 acres of land in the
        townships of Burlington and Florence, New Jersey on which we have constructed
        our corporate headquarters and a warehouse/distribution facility. We lease
        warehouse facilities of approximately 340,000 square feet in Bristol,
        Pennsylvania. We lease approximately 20,000 square feet of office space in
        New
        York City. We own approximately 46 acres of land in Edgewater Park, New Jersey
        on which we have constructed a warehouse and office facility of approximately
        648,000 square feet. The facility began processing merchandise in August
        of 2003
        and has been fully operational since August 2004. An additional 440,000 square
        foot distribution facility opened in April 2006 in San Bernardino, California.
        These facilities have significantly expanded our warehousing and distribution
        capabilities.
 
 The
        following table shows the years in which store leases existing at June 2,
        2007
        expire:
 
 Fiscal
                  Year
                Ending
              
              
              Number
                  of Leases
                Expiring
              
              
              Expiring
                  with
                Renewal
                  Options2008-2009
              
              
              
              11
              
              
              
              822010-2011
              
              
              
              4
              
              
              
              932012-2013
              
              
              
              2
              
              
              
              502014-2015
              
              
              
              8
              
              
              
              322016-2017
              
              
              
              2
              
              
              
              36Thereafter
                  to 2035
              
              
              
              14
              
              
              
              22Total
              
              
              
              41
              
              
              
              315
 
 **Item
        3.                      Legal
        Proceedings**
 
 We
        are
        party to various  litigation matters, in most cases involving ordinary
        and routine claims incidental to our business. We cannot estimate with certainty
        our ultimate legal and financial liability with respect to such pending
        litigation matters. However, we believe, based on our examination of such
        matters, that our ultimate liability will not have a material adverse effect
        on
        our financial position, results of operations or cash flows.
 
 **Item
        4.                        Submission
        of Matters to a Vote of Security Holders**
 None.
  12
  
 
 
  **PART
        II**
  
 **Item
                  5.**
              **Market
                  Price of and Dividends on the Registrant's Common Equity and Related
                  Stockholder Matters**
 
 There
        is
        no market for the common stock of Parent or Holdings.  As of June 2,
        2007, Parent was the only holder of record of Holdings’ common stock, and 98.5%
        of Parent’s common stock is held by various Bain Capital
        funds.   Payment of dividends is prohibited under our credit
        agreements, except for certain limited circumstances.
  13
  
  **Item 6.**
              **Selected
                  Financial Data**
  The
        following table presents selected historical consolidated statements of
        operations, balance sheet and other data for the periods presented and should
        only be read in conjunction with our audited consolidated financial statements
        and the related notes thereto, and “Management’s Discussion and Analysis of
        Financial Condition and Results of Operations,” which are included elsewhere in
        this Form 10-K. The historical financial data for the periods April 13, 2006
        to
        June 3, 2006, May 29, 2005 to April 12, 2006 and for the years ended May
        28,
        2005, May 29, 2004 and May 31, 2003 have been derived from our historical
        audited combined or consolidated financial statements.
  *Predecessor/Successor
        Presentation.*Although Burlington Coat Factory Warehouse
        Corporation continued as the same legal entity after the Merger Transaction,
        the
        Selected Financial Data for fiscal year 2006 provided below is presented
        for two
        periods: Predecessor and Successor, which relate to the period preceding
        the
        Merger Transaction, May 29, 2005 to April 12, 2006, and the period succeeding
        the Merger Transaction, April 13, 2006 to June 3, 2006, and for the twelve
        months ended June 3, 2007, respectively. The financial data provided refers
        to
        the operations of the Company and its subsidiaries for both the Predecessor
        and
        Successor periods.
 
 The
        following table sets forth certain selected financial data in thousands,
        which
        has been adjusted to give effect to the reclassification of the fiscal 2005
        discontinued store operations, as discussed in Note A28 to the consolidated
        financial statements:
 
 **Predecessor**
              
              
              **Successor**
              
              
              **Combined
                  (1)**
              
              
              **Successor**Twelve
                  Months Ended
                5/31/03
              
              
              Twelve
                  Months Ended
                5/29/04
              
              
              Twelve
                  Months Ended
                5/28/05
              
              
              Period
                  from 5/29/05 to 4/12/06
              
              
              Period
                  from 4/13/06 to 06/03/06
              
              
              Twelve
                  Months Ended 6/03/06
              
              
              Twelve
                  Months Ended
                6/02/07Revenues
                  from
                Continuing
                Operations
              
              $
              2,678,128
              
              
              $
              2,859,960
              
              
              $
              3,199,840
              
              
              $
              3,045,308
              
              
              $
              425,246
              
              
              $
              3,470,554
              
              
              $
              3,441,645Income
                  (Loss) from Continuing
                Operations
                  Net of Provision for Income Tax
              
              
              70,512
              
              
              
              72,339
              
              
              
              106,047
              
              
              
              94,339
              
              
              
              (27,166
              )
              
              
              67,173
              
              
              
              (47,199
              )Discontinued
                Operations,
                  Net  of Tax Benefit (2)
              
              
              (4,393
              )
              
              
              (4,363
              )
              
              
              (1,014
              )
              
              
              -----
              
              
              
              -----
              
              
              
              -----
              
              
              
              -----Net
                  Income (Loss)
              
              
              66,119
              
              
              
              67,977
              
              
              
              105,033
              
              
              
              94,339
              
              
              
              (27,166
              )
              
              
              67,173
              
              
              
              (47,199
              )Balance
                  Sheet DataTotal
                  Assets
              
              $
              1,337,049
              
              
              $
              1,579,178
              
              
              $
              1,673,268
              
              
              
              (3
              )
              
              $
              3,213,500
              
              
              
              -----
              
              
              $
              3,036,521Working
                  Capital
              
              
              195,211
              
              
              
              330,007
              
              
              
              407,240
              
              
              
              (3
              )
              
              
              233,165
              
              
              
              -----
              
              
              
              283,398Long-Term
                  Debt
              
              
              34,587
              
              
              
              133,538
              
              
              
              132,347
              
              
              
              (3
              )
              
              
              1,508,119
              
              
              
              -----
              
              
              
              1,456,330Stockholders
                  Equity
              
              $
              777,152
              
              
              $
              845,432
              
              
              $
              926,153
              
              
              
              (3
              )
              
              $
              419,512
              
              
              
              -----
              
              
              $
              380,470
 
 (1)
              Our
                  combined results for the year ended June 3, 2006 represent the
                  addition of
                  the Predecessor period from May 29, 2005 through April 12, 2006
                  and the
                  Successor period from April 13, 2006 through June 3, 2006. This
                  combination does not comply with generally accepted accounting
                  principles
                  (GAAP) or with the rules for pro forma presentation, but is presented
                  because we believe it provides the most meaningful comparison of
                  our
                  results.(2)
              Discontinued
                  operations include the after-tax operations of stores closed by
                  the
                  Company during the fiscal years listed.(3)
              Information
                  not available for interim period.
  
  14
   
 **Item 7.**
              **Management
                  Discussion and Analysis of Financial Condition and Results of
                  Operations**
  *For
        purposes of the following “Management’s Discussion and Analysis of Financial
        Condition and Results of Operations” unless indicated otherwise or the context
        requires, “we,” “us,” “our,” and “Company” refers to the operations of
        Burlington Coat Factory Warehouse Corporation and its consolidated subsidiaries,
        and the financial statements of Burlington Coat Factory Investments Holdings,
        Inc. and its subsidiaries. We maintain our records on the basis of a 52 or
        53
        week fiscal year ending on the Saturday closest to
        May 31.   The following discussion and analysis should be
        read in conjunction with the “Selected Historical Consolidated Financial and
        Other Data” and our financial statements, including the notes thereto, appearing
        elsewhere herein.*
  **General**
  Based
        on
        retail industry reports, we are a nationally recognized retailer of
        high-quality, branded apparel at every day low prices. We opened our first
        store
        in Burlington, New Jersey in 1972, selling primarily coats and outerwear.
        Since
        then, we have expanded our store base to 379 stores in 44 states, and
        diversified our product categories by offering an extensive selection of
        in-season, fashion-focused merchandise, including: ladies sportswear, menswear,
        coats, family footwear, baby furniture and accessories, as well as home décor
        and gifts. We employ a hybrid business model which enables us to offer the
        low
        prices of off-price retailers and the branded merchandise, product breadth
        and
        product diversity of department stores. We acquire desirable, first-quality,
        current-brand, labeled merchandise directly from nationally-recognized
        manufacturers such as Liz Claiborne, Ralph Lauren, Jones New York, Calvin
        Klein,
        Nine West, and Nautica.
  As
        of
        June 2, 2007, we operated 379 stores under the names “Burlington Coat Factory
        Warehouse” (359 stores), “MJM Designer Shoes” (17 stores), “Cohoes Fashions” (2
        stores), and “Super Baby Depot” (1 store) in 44 states. For the latest
        fiscal year ended June 2, 2007, we generated revenues of approximately $3.4
        billion.
  **Executive
        Summary**
  *Overview
        of Fiscal 2007 Operating Results*
  Burlington
        Coat Factory experienced a
        decrease in net sales for the 52 week period ended June 2, 2007 compared
        with
        the 53 week period ended June 3, 2006. Net sales were $3.40 billion for fiscal
        2007 (52 weeks) and $3.44 billion for fiscal 2006 (53 weeks), a 1.0% decrease.
        However, comparing the period ended June 2, 2007 with the corresponding 52
        week
        period ended June 3, 2006 would show that net sales for the fiscal 2007 period
        increased $14.9 million (0.4%).
  The
        Company experienced a 2.2%
        comparative store sales decrease from the comparative period of a year ago
        due
        to unseasonably warm weather in November and December, unseasonably cool
        weather
        in April and the impact of the Company’s new cash back return
        policy.
  Gross
        margin as a percentage of sales
        increased to 37.6% from 36.5% during the period ended June 2, 2007 compared
        with
        the period ended June 3, 2006, due to higher initial margins and reduced
        freight
        costs.
 
 The
        Company recorded a net loss of $47.2 million for the period ended June 2,
        2007
        compared with net income of $67.2 million for the 53 week period ended June
        3,
        2006. The primary drivers of this net loss were increases in interest,
        depreciation, and amortization expenses incurred in connection with the
        financing of the Merger Transaction, as well as impairment charges recorded
        related to underperforming stores.
  The
        following is a list of operating
        highlights for Fiscal 2007:
  *§*
              19
                  Burlington Coat Factory stores were opened and the Company expanded
                  operations into two new markets:  North Dakota and
                  Mississippi.
  §
              The
                  majority of inventory units (approximately 70%) now move through
                  our
                  distribution centers allowing the Company to reduce freight costs
                  associated with the conversion from drop shipment to central
                  distribution.
  §
              A
                  successful launch of the private men’s label, Fumagalli ®, with Allyn
                  Saint George International, Inc.
 
 *Management
        Initiatives for Fiscal 2008*
 
 In
        Fiscal
        2008, management plans to undertake the following initiatives in order to
        address the recent decline in comparative store sales and to prepare the
        Company
        for sustainable growth.  These initiatives concentrate on specific
        strategies as they relate to merchandising, inventory planning and management
        and the in-store shopping experience. The objective of the merchandising
        strategies is to focus each of our merchandising categories on the right
        brands,
        the right items and trend right fashions
        at a great value in order to provide a compelling assortment of merchandise
        to
        our core customers.  This will be accomplished through disciplined
        planning, buying and allocation.  The objective of the marketing focus is
        to increase the number of trips to our stores by our core customers and to
        encourage our shoppers to shop across more divisions.  The Company will
   15
   continue
        to use print, television, and radio media to execute a marketing strategy
        which
        highlights our great everyday values, our brands, and our trend right fashions
        as well as our overall message of Burlington Coat Factory as a value department
        store.
 
 With
        respect to inventory management, the Company is focused on improving processes,
        tools and systems to enhance merchandise flow and to “freshen” inventory on a
        more regular basis while reducing the amount of undesirable merchandise on
        our
        selling floors.   The Company currently uses a legacy warehouse
        management system to receive, track, and control our product flow. During
        fiscal
        years 2008-2009, the Company will be replacing this warehouse management
        system.
        We believe that the use of this new system will have a positive impact on
        efforts to optimize our supply chain efforts.
 
 Management is also focused on improving the in-store shopping experience
        for our
        core customers by providing an easy and convenient shopping experience through
        an uncluttered presentation of our stores.   Management is working to
        improve our customers’ ability to navigate our stores by improving signage and
        setting the store regularly with seasonally relevant merchandise.  Through
        joint efforts of the merchandising, planning, and store support teams,
        management is looking to coordinate the availability of season essentials
        and
        fashion right key items across divisions with seasonal
        floorsets.
 
 Through
        these initiatives, management
        believes it can improve comparative store sales by increasing the Company’s
        share of our core customers’ spend.
  **Uncertainties
        and Challenges**
  As
        management looks to increase profitability through achieving positive
        comparative store sales and leveraging productivity initiatives focused on
        improving the in-store experience, more efficient movement of products from
        the
        vendors to the selling floors, and modifying our marketing plans to increase
        our
        core customer base and increase our share of our current customer’s spend, there
        are uncertainties and challenges that we face as a value department store
        of
        apparel and accessories for men, women and children and home furnishings
        that
        could have a material impact on our revenues or income.
  *Competition,
        Resale Price Maintenance, and Price Deflation.*****We
        believe that in order to remain competitive with off-price retailers and
        discount stores, we must continue to offer brand-name merchandise at a discount
        from initial mark-ups of traditional department stores as well as an assortment
        of merchandise that is appealing to our customers.
  In
        June
        2007, the US Supreme Court determined that resale price maintenance by
        manufacturers is not per se illegal but that such vertical price restraints
        are
        to be judged by the rule of reason in the *Leegin Creative Leather Products,
        Inc. v. PSKS, Inc.* case.  While as a result of the holding of
        this case, certain manufacturers may decide to enforce manufacturer’s suggested
        retail price (MSRP), the Company has not found that this decision has had
        any
        impact on its ability to purchase merchandise from its vendors on customer
        friendly terms.  At this point in time, it is difficult to determine
        what impact, if any, this case will have on the Company’s ability to execute its
        off-price strategy.  The Company does not believe the case will have
        any immediate or long term impact on its operations because it believes that
        it
        is an integral part of its vendors’ distribution strategies, and as such, these
        vendors will continue to sell to the Company on mutually agreeable
        terms.
  The
        U.S.
        retail apparel market and home furnishings market are highly fragmented and
        competitive. We compete for business with department stores, off-price
        retailers, specialty stores, discount stores, wholesale clubs, and outlet
        stores. We anticipate that competition will increase in the future. Therefore,
        the Company will continue to look for ways to differentiate its stores from
        those of its competitors.
  In
        the
        recent past, we have seen price deflation affect the retail industry with
        the
        increase of imports from China and other parts of the world capable of
        production at lower costs. To date, we have been able to compensate for price
        deflation by increasing unit sales to maintain the level of sales in terms
        of
        dollars. While there has been price deflation in the costs of inventory,
        gross
        margin on sales is kept in check by the high level of competition. These
        conditions can be expected to continue for so long as excess production of
        inventory by lesser developed countries continues. In addition, net profit
        can
        be affected by the rising costs of freight, payroll and employee benefits.
        Our
        liquidity, however, is not expected to be affected in any material respect
        so
        long as we increase total sales. Moreover, we expect the availability under
        our
        credit facilities to be sufficient for our cash needs.
  Changes
        to import and export laws could have a direct impact on our operating expenses
        and an indirect impact on consumer prices and we cannot predict any future
        changes in such laws.
  *Seasonality
        of Sales and Weather Conditions*. Our sales, like most other retailers, are
        subject to seasonal influences, with the majority of our sales and net income
        derived during the months of September, October, November, December and January,
        which includes the back-to-school and holiday seasons.
  Additionally,
        our sales continue to be affected by weather. Generally, our sales are higher
        if
        the weather is cold during the Fall and warm during the early Spring. Sales
        of
        cold weather clothing are increased by early cold weather during the Fall,
        while
        sales of warm weather clothing are improved by early warm weather conditions
        in
        the Spring. Although we have diversified our product offerings over the past
        ten
        years, we believe traffic to our stores is still driven in part by weather
        patterns.
   16
  **The
        Merger Transaction**
  On
        January 18, 2006, we entered into the Merger Agreement among our Company,
        Parent and Merger Sub to sell our entire company to affiliates of Bain
        Capital.
  On
        April 13, 2006, the Merger transaction was consummated through a $2.1
        billion merger of a merger sub into BCFWC with BCFWC being the surviving
        corporation in the Merger. Under the Merger Agreement, former holders of
        our
        common stock, par value $1.00 per share, received $45.50 per share, or
        approximately $2.1 billion. Approximately $13.8 million of the $2.1 billion
        was
        used, among other things, to settle the outstanding equity options. The Merger
        consideration was funded through the use of our available cash, cash equity
        contributions from affiliates of Bain Capital and management and the debt
        financings as described more fully below.
  Following
        the consummation of the Merger, the Parent entered into a Contribution Agreement
        with Holdings to effectuate an exchange of shares under Section 351(a) of
        the Internal Revenue Code of 1986, as amended. The Parent delivered to Holdings
        all of our outstanding shares, and Holdings simultaneously issued and delivered
        all of its authorized and outstanding shares of common stock to the
        Parent.
  In
        connection with the Merger we entered into other definitive agreements as
        further described in Note 2 to the Consolidated Financial Statements entitled
        “Basis of Presentation.”
  **Burlington
        Coat Factory Warehouse Corporation Corporate Structure**
  The
        chart
        below summarizes our corporate structure prior to the Merger and related
        transactions.
  
  
 
    17
   The
        chart
        below summarizes our corporate structure following the consummation of the
        Merger and related transactions.
    
  **Key
        Performance Measures**
  Management
        considers numerous factors in assessing our Company’s performance. Key
        performance measures used by management include comparative store sales,
        inventory turnover, inventory levels, gross margin, and liquidity.
 
 *Comparative
        store sales*. Comparative store sales measure performance of a store during
        the current reporting period against the performance of the same store in
        the
        corresponding period of the previous year. The Company defines its comparative
        store sales as sales (net of sales discounts) of those stores that are beginning
        their four hundred and twenty-fifth day of operation (approximately 1 year
        and 2
        months). Existing stores whose square footage has been changed by more than
        20%
        and relocated stores are classified as new stores (unless the store remains
        in
        the same shopping complex) for comparative store sales purposes. This method
        is
        used in this section in comparing the results of operations for the fiscal
        period ended June 2, 2007 with the results of operations for the fiscal period
        ended June 3, 2006.  The Company experienced a decrease in comparative
        store sales of 2.2% for the fiscal year ended June 2, 2007 compared with
        similar
        period ended June 3, 2006.  This decrease is primarily due to
        unseasonable shifts in the weather and an offsetting increase in sales returns
        as a result of our change in cash refund policy without an increase in
        sales.
  *Inventory
        turnover.*   Inventory turnover is a measure that indicates
        how efficiently inventory is bought and sold.  It measures the length
        of time the Company owns its inventory.  This is significant because
        usually the longer the inventory is owned, the more likely markdowns may
        be
        required to sell the inventory.  Inventory turnover is calculated by
        dividing the retail sales before sales discounts by the average retail value
        of
        the inventory for the period being measured.  The Company's inventory
        turnover rate was 2.4 and 2.5 in fiscal 2007 and fiscal 2006,
        respectively.  This decrease in inventory turnover is primarily
        related to our decrease in comparative store sales.
  Inventory
        levels are monitored by management to ensure that the stores are properly
        stocked to service customer needs while at the same time ensuring that stores
        are not over-stocked which would necessitate increased markdowns to move
        slow-selling merchandise.  We have undertaken initiatives to improve
        inventory turnover by reducing over-all inventory levels in our
        stores.  We are in the process of evaluating the effectiveness of
        markdown optimization software as an inventory management tool.  At
        June 2, 2007, inventory was $710.6 million versus $708.2 at June 3, 2006. 
Average inventory per store amounted to $1.7 million at June 2, 2007 and
        $1.8
        million at June 3, 2006.
   18
   *Gross
        Margin.* Gross margin is a measure used by management to indicate whether we
        are selling merchandise at an appropriate gross profit. Gross margin is the
        difference between net sales and the cost of sales.   The Company
        experienced an increase in gross margin percentage for fiscal 2007 to 37.6%,
        from 36.5% for fiscal 2006.  This increase is primarily related to
        decreased freight costs and improvement in initial margins.
  *Liquidity.*Liquidity measures our ability to generate cash. Management measures
        liquidity through cash flow and working capital. Cash flow is the measure
        of
        cash generated from operating, financing and investing activities. We
        experienced a decrease in cash flow of $34.9 million during the fiscal year
        ended June 2, 2007 compared with the fiscal year ended June 3, 2006 primarily
        due to principal payments made by the Company to pay down its outstanding
        debt.  Changes in working capital also impact our cash flows. Working
        capital equals current assets minus current liabilities. Working capital
        at June
        2, 2007 was $283.4 million compared with $233.2 million at June 3,
        2006.  This increase in working capital is due primarily to a decrease
        in our accounts payable and to a reclassification of certain long-lived assets
        as “Held for Disposal” as of June 2, 2007 compared with June 3,
        2006.
 
 **Items
        Affecting Comparability**
  *Predecessor/Successor
        bases of accounting.*
  Although
        BCFWC continued as the same legal entity after the Merger Transaction, the
        discussion regarding fiscal year 2006 reflects two periods: Predecessor and
        Successor, which relate to the period preceding the Merger and the period
        succeeding the Merger, respectively. We refer to the operations of the Company
        and subsidiaries for both the Predecessor and Successor periods. We have
        prepared our discussion of the results of operations for the fiscal year
        ended
        June 3, 2006 by comparing the mathematical combination, without making pro
        forma
        adjustments.
  As
        a
        result of the Merger, our assets and liabilities have been adjusted to their
        fair value as of the closing date, April 13, 2006. Depreciation and amortization
        expenses are higher in the successor accounting period due to these fair
        value
        assessments resulting in increases to the carrying value of our property,
        plant
        and equipment and intangible assets. Interest expense has increased
        substantially in the successor accounting periods in connection with our
        financing arrangements, which includes a $800 million senior secured ABL
        Credit
        Facility, a $900 million secured Term Loan, $305 million senior notes and
        $99.3
        million Holdings Senior Discount Notes, each of which are further described
        in
        the liquidity section that follows.
  **Results
        of Operations**
  The
        following table sets forth certain items in the Consolidated Statements of
        Operations as a percentage of net sales for periods indicated that are used
        in
        connection with the discussion herein.
  **Fiscal
                  Year Ended****June
                  2,**
                **2007**
              
              
              **June
                  3,**
                **2006**
              
              
              **May 28,**
                **2005****Statement
                  of Operations Data:**Net
                  Sales
              
              
              100
              %
              
              
              100.0
              %
              
              
              100.0
              %Cost
                  of Sales (Exclusive of Depreciation and Amortization)
              
              
              62.4
              
              
              
              63.5
              
              
              
              62.7Selling &
                  Administrative Expenses
              
              
              31.2
              
              
              
              30.6
              
              
              
              30.2Depreciation
              
              
              3.8
              
              
              
              2.8
              
              
              
              2.8Amortization
              
              
              1.3
              
              
              
              0.3
              
              
              
              -Impairment
                  Charges
              
              
              0.7
              
              
              
              -
              
              
              
              -Interest
                  Expense
              
              
              3.9
              
              
              
              0.6
              
              
              
              0.2Other
                  (Income) Loss, Net
              
              
              (0.2
              )
              
              
              (0.2
              )
              
              
              (0.5
              )Other
                  Revenue
              
              
              1.1
              
              
              
              0.9
              
              
              
              0.9Income
                  (Loss) from Continuing Operations Before Income Taxes
              
              
              (2.1
              )
              
              
              3.3
              
              
              
              5.4Income
                  Tax Expense (Benefit)
              
              
              (0.7
              )
              
              
              1.3
              
              
              
              2.1Net
                  Income (Loss)
              
              
              (1.4
              %)
              
              
              2.0
              %
              
              
              3.3
              %
 
 
 ***Performance
        for the Fiscal Year (52 weeks) Ended June 2, 2007 Compared with the Fiscal
        Year
        (53 weeks) Ended June 3, 2006***
 
 *Sales.*  Consolidated
        net sales decreased $35.4 million (1.0%) to $3.40 billion for the fiscal
        year
        ended June 2, 2007 (52 weeks) compared with the fiscal year ended June 3,
        2006
        (53 weeks). As previously noted, the Company’s prior fiscal year ended June 3,
        2006 was a 53 week fiscal year and as a result, the first three fiscal quarters
        of fiscal 2007 began and ended one week later than the corresponding period
        of
        the prior fiscal year and the fourth fiscal quarter began one week later
        and
        ended the same week as last year.  Net sales for the fifty-two week
        period of fiscal 2006 ended June 3, 2006 were $3.39 billion. Comparative
        stores
        sales decreased 2.2% for the fiscal year ended June 2, 2007, due primarily
        to
        unseasonably warm weather in November and December, unseasonably cool weather
        in
        April, and increased returns resulting from the implementation of a new cash
        refund return policy. In addition, Company supply chain issues, primarily
        related to shifting direct store shipments into our distribution centers,
        which
        affected merchandise flow and in turn impacted sales.
 
 Nineteen
        new Burlington Coat Factory department stores opened during fiscal 2007,
        contributing $86.5 million to net sales for the fiscal year ended June 2,
        2007.
   19
 
 The
        Cohoes Fashions stores contributed $30.9 million to consolidated sales for
        the
        fiscal year ended June 2, 2007 compared with $48.5 million for the fiscal
        year
        ended June 3, 2006. This decrease is due to a comparative store sales decreases
        of 23.8% during the 2007 fiscal year compared with the period ended June
        3,
        2006.  During fiscal 2007, the Company closed three of its Cohoes
        stores and converted two others to Burlington Coat Factory stores.
 
 The
        MJM
        Designer Shoes stores contributed $56.7 million to sales for the fiscal year
        ended June 2, 2007 compared with
 $59.6
        million for the fiscal year ended June 3, 2006. Comparative store sales
        decreased 2.5% during the fiscal year ended June 2, 2007 compared with the
        fiscal period ended June 3, 2006.  The decrease in comparative store
        sales is primarily due to underperformance of seasonal product such as boots
        in
        the cooler months and sandals in the warmer months.
 
 *Other
        Revenue*.Other
        Revenue (consisting of rental income from leased departments, sublease rental
        income, layaway, alteration and other service charges and miscellaneous revenue
        items) increased to $38.2 million for the fiscal year ended June 2, 2007
        compared with $31.7 million for the fiscal year ended June 3, 2006. This
        increase is primarily related to gift card service fees.
 *Cost
        of Sales*.Cost
        of Sales decreased $58.1 million (2.7%) for the fiscal year ended June 2,
        2007
        compared with the fiscal year ended June 3, 2006. Cost of sales, as a percentage
        of net sales, decreased to 62.4% in fiscal 2007 period from 63.5% in fiscal
        2006.  The decrease in cost of sales as a percentage of sales was due
        primarily to reduced initial merchandise costs and reduced freight costs
        partly
        offset by increased markdown costs during the fiscal year ended June 2, 2007
        compared with the period ended June 3, 2006.  The Company's cost of
        sales and gross margin may not be comparable to those of other entities,
        since
        some entities include all of the costs related to their buying and distribution
        functions in cost of sales. The Company includes these costs in the Selling
        and
        Administrative Expenses, Depreciation, and Amortization line items in the
        Consolidated Statements of Operations. The Company includes in its definition
        of
        Cost of Sales all costs of merchandise (net of purchase discounts and certain
        vendor allowances), inbound freight, warehouse outbound freight and freight
        related to internally transferred merchandise and certain merchandise
        acquisition costs, primarily commissions and import fees.
 
 *Selling
        and Administrative Expenses*.  Selling and Administrative Expenses for
        the 52 week year ended June 2, 2007 amounted to $1,062.5 million compared
        to
        $1,051.9 million for the 53 week year ended June 3, 2006, a 1.0%
        increase.  This  increase was due primarily to the increase
        in expenses of approximately $22.2 million related to new stores opened in
        fiscal 2007 and approximately $15 million in expenses related to non-cash
        rent
        expense, stock option expense resulting from the adoption of SFAS 123(R)
        and the
        payment of the advisory fee to Bain Capital.  The increase was partially
        offset by approximately $10.2 million from the Company’s decision not to make a
        contribution to the employee profit sharing program and from the effect of
        the
        53rd week
        in
        the prior year.  As a percentage of Net Sales, Selling and Administrative
        Expenses were 31.2% for the period ended June 2, 2007 compared with 30.6%
        for
        the period ended June 3, 2006.
 
 *Depreciation.*******Depreciation
        expense amounted to $130.4 million in the period ended June 2, 2007 compared
        with $96.9 million in the period ended June 3, 2006. This increase of $33.5
        million is attributable primarily to increased depreciation expenses as it
        relates to the step up in basis of the Company’s fixed assets related to the
        Merger Transaction of approximately $421 million and to capital additions
        made
        subsequent to fiscal 2006.
 
 *Amortization*.Amortization
        expense related to the amortization of net favorable leases and deferred
        debt
        charges amounted to $43.7 million for the fiscal year ended June 2, 2007
        compared with $10.3 million for the fiscal year ended June 3, 2006. The increase
        in amortization expense is attributable to increased deferred debt charges
        and
        favorable lease assets recorded as part of the Merger Transaction.
 
 *Impairment
        Charges.*  The Company reviews, at least on an annual basis,
        whether events or circumstances have changed such that the carrying value
        of its
        long-lived assets may not be recoverable.  For the fiscal year ended
        June 2, 2007, the Company recorded impairment charges of $24.4 million related
        to certain long-lived assets and intangible assets of sixteen of its
        stores.  There were no impairment charges recorded for the fiscal year
        ended June 2, 2006.
 
 *Interest
        Expense*.Interest
        expense was $134.3 million and $22.7 million for the fiscal ended June 2,
        2007and June 3, 2006, respectively. The increase in interest expense is
        primarily related to our ABL Credit Facility, our secured term loan, BCFWC
        senior notes and our senior discount notes which all relate to financing
        activities related to the Merger.
 
 *Other
        (Income), Net*.  Other (Income), Net (consisting of investment
        income, gains and losses on disposition of assets and other miscellaneous
        items)
        decreased $2.3 million to $6.2 million for the period ended June 2, 2007
        compared with the period ended June 3, 2006.  The decrease is
        primarily related to decreases in investment income of $3.6 million for the
        fiscal year ended June 2, 2007 compared with the fiscal year ended June 3,
        2006.  Losses on write-offs of fixed assets from closed stores for the
        fiscal year ended June 2, 2007 amounted to $3.6 million compared with $2.7
        million for the fiscal year ended June 3, 2006.  These losses were
        offset in part by higher insurance claim recoveries in fiscal 2007 compared
        with
        fiscal 2006.  Insurance recoveries were $2.9 million and $1.0 million
        for the fiscal years ended June 2, 2007 and June 3, 2006,
        respectfully.
 
 *Income
        Tax*.  Income tax benefit was $25.4 million for the fiscal
        year ended June 2, 2007, compared with income tax expense of $46.8 million
        for
        the twelve month period ended June 3, 2006.  The effective tax rate
        for fiscal 2007 and fiscal 2006 were 35.0% and 41.1%, respectively.
   20
 
 *Net
        Loss*.Net
        loss amounted to $47.2 million for the fiscal year ended June 2, 2007 compared
        with net income of $67.2 million for the comparative period of last year.
        The
        decrease in earnings of $114.4 million is due primarily to continuing expenses
        resulting from the Merger Transaction of April 13, 2006, including increased
        depreciation, amortization and interest expense.
 
 
 ***Performance
        for the Fiscal Year (53 weeks) Ended June 3, 2006 Compared with the Fiscal
        Year
        (52 weeks) Ended May 28, 2005***
  *Sales*.
        Consolidated net sales from continuing operations increased $267.6 million
        (8.4%) for fiscal year 2006 compared with fiscal 2005.  Comparative
        stores sales increased 4.3% for fiscal 2006 compared with the comparative
        53
        week period of fiscal 2005. We define our comparative store sales as sales
        of
        those stores that have operated at least 425 days for the entire comparative
        period. Existing stores whose square footage has been changed by more than
        20%
        and relocated stores are classified as new stores for comparative store sales
        purposes.  Sales during the non-comparative 53rd week
        of fiscal
        2006 amounted to $51.0 million.
  Nine
        new
        Burlington Coat Factory department stores opened during fiscal 2006 and
        contributed $66.0 million to net sales in fiscal 2006. Burlington Coat Factory
        stores opened during fiscal 2005 contributed $32.8 million to this years
        net
        sales in their non-comparative periods.
  The
        Cohoes Fashions stores contributed $48.5 million to consolidated sales in
        fiscal
        2006 compared with $46.4 million in fiscal 2005. Comparative store sales
        increased 0.2% for fiscal 2006 compared with the comparative fiscal 2005
        period.
  The
        MJM
        Designer Shoes stores contributed $59.6 million to sales for the fiscal year
        ended June 3, 2006 compared with $44.6 million for the comparative period
        of
        fiscal 2005. This increase is due to a comparative store sales increase of
        6.8%
        in fiscal 2006. Sales of our three MJM Designer Shoes stores opened during
        fiscal 2006 amounted to $6.5 million and the sales of four MJM Designer Shoes
        stores opened during fiscal 2005 amounted to $5.1 million, during their
        non-comparative periods.
  *Other
        Revenue*. Other Revenue (consisting of rental income from leased
        departments, sublease rental income, layaway and alteration service charges
        and
        miscellaneous revenue items) increased to $31.7 million in fiscal 2006 compared
        with $28.6 million for the 12 month period of fiscal 2005. The increase is
        related primarily to increases in rental income received from leased
        departments.
  *Cost
        of Sales*. Cost of sales increased $196.1 million (9.9%) for the 12
        month period ended June 3, 2006 compared with the 12 month period ended May
        28,
        2005. The dollar increase in cost of sales was due primarily to the increase
        in
        net sales during fiscal 2006 compared with fiscal 2005 and to increased freight
        costs. Cost of sales as a percentage of net sales increased from 62.7% in
        fiscal
        2005 to 63.5% in fiscal 2006. The increase in cost of sales as a percentage
        of
        net sales for fiscal 2006 compared with fiscal 2005 was primarily the result
        of
        lower initial margins, increased freight charges, increases in inventory
        shrinkage and increases in markdowns. The increase in freight charges was
        due
        primarily to fuel surcharges resulting from increased gasoline and oil
        prices.  Our cost of sales and gross margin may not be comparable to
        those of other entities, since some entities include all of the costs related
        to
        their buying and distribution functions in cost of sales. We include these
        costs
        in the Selling and Administrative Expenses line item in the Consolidated
        Statements of Operations. We include in our Cost of Sales line item all costs
        of
        merchandise (net of purchase discounts and certain vendor allowances), inbound
        freight, warehouse outbound freight and freight related to internally
        transferred merchandise and certain merchandise acquisition costs, primarily
        commissions and import fees.
  *Selling
        and Administrative Expense*. Selling and Administrative Expenses, including
        amortization of leasehold purchases, were $1,051.9 million for the fiscal
        year
        ended June 3, 2006, compared with $957.8 million for the 12 month period
        ended
        May
 28,
        2005.
        The increase in Selling and Administrative Expenses was due primarily to
        expenditures related to the Merger Transaction of $14.6 million, an increase
        in
        the number of stores in operation during this fiscal year compared with fiscal
        2005, increases in utility costs, advertising expenditures and employee
        benefits.  As a percentage of Net Sales, Selling and Administrative
        Expenses were 30.6% for the 12 month period ended June 3, 2006; excluding
        the
        $14.6 million in merger related costs, Selling and Administrative Expenses
        costs
        as a percentage of sales were 30.1%. For the 12 month period ended May 28,
        2005,
        Selling and Administrative Expenses were 30.2% of sales.
  *Depreciation
        Expense.* For the twelve month period ended June 3, 2006, depreciation
        expense amounted to $96.9 million compared with $89.9 million for the 12
        month
        period ended May 28, 2005. This increase is attributable primarily to
        depreciation recognized on capital additions relating to new store purchases,
        improvements, expansions and remodelings over the past two fiscal years and
        to
        depreciation related to the step up in basis of fixed assets resulting from
        the
        valuation of assets completed in connection with the Merger
        Transaction.
   21
  *Interest
        Expense*. Interest expense increased to $22.7 million from $7.3 million for
        the 12 months ended June 3, 2006 compared with the 12 months ended May 28,
        2005.
        This increase in interest expense is primarily related to our ABL Credit
        Facility, our new secured term loan, our Senior Notes due 2014 and our new
        Senior Discount Notes which all relate to financing activities related to
        the
        Merger Transaction.
 
 *Income
        from Continuing Operations*.  Income from continuing operations
        amounted to $67.2 million for the 12 month period ended June 3, 2006 compared
        with $106.0 million for the 12 month period ended May 28, 2005.
  *Discontinued
        Operations*. There were no discontinued operations recorded in fiscal 2006.
        During fiscal 2005, we discontinued the operations of three stores and one
        partnership investment. During fiscal 2005, net sales for these stores amounted
        to $11.2 million. Gross margin amounted to $2.4 million for the same period
        and
        loss from discontinued operations amounted to $1.0 million for the 12 month
        period of fiscal 2005.
  *Stores
        Damaged by Hurricanes.*****As a result of the effects of
        Hurricane Katrina on August 29, 2005 and Hurricane Wilma on
        October 23, 2005, three of our stores (two in Louisiana and one in Florida)
        were damaged and closed. All merchandise inventories in these three stores,
        totaling $14.0 million at retail and approximately $7.6 million at cost,
        were
        destroyed. We were insured at the selling price of the inventory less a
        deductible and have been reimbursed in excess of the net book value of the
        merchandise inventory. All of our long-lived assets at these three stores,
        which
        had a net book value of approximately $3.8 million, were damaged or destroyed.
        We were insured at replacement cost for these assets, except for certain
        leasehold improvements. During fiscal 2006, we received partial payments
        on this
        claim of $12.4 million. During fiscal 2006, the Company recognized as income
        $1.0 million in insurance recoveries in excess of the book value of assets
        damaged.
  **Liquidity
        and Capital Resources**
  We
        fund
        inventory expenditures during normal and peak periods through cash flows
        from
        operating activities, available cash, and our revolving credit facility.
        Our
        working capital needs follow a seasonal pattern, peaking in the second quarter
        of our fiscal year when inventory is received for the Fall selling season.
        Our
        largest source of operating cash flows is cash collections from our customers.
        In general, our primary uses of cash are opening of new stores and remodeling
        of
        existing stores, debt servicing, payment of operating expenses and providing
        for
        working capital, which principally represents the purchase of
        inventory.
  We
        believe that cash generated from operations, along with our existing cash
        and
        revolving credit facilities, will be sufficient to fund our expected cash
        flow
        requirements, and planned capital expenditures for at least the next 12
        months.
  ***Cash
        Flow for the Twelve Months Ended June 2, 2007 Compared with Twelve Months
        Ended June 3, 2006***
 
 Net
        cash
        provided by continuing operations amounted to $96.0 million for fiscal 2007
        which reflected a decrease of $282.1 million from $378.1 million of
        net cash provided by continuing operations for the comparative period of
        fiscal
        2006. This decrease in net cash from continuing operations was due primarily
        to
        less cash being generated from the sale of short term investments than was
        generated in fiscal year 2006, and from a decrease in net income of $114.4
        million.  The decrease in net income is primarily due to interest
        expenses and other Merger related expenses such as the payment of retention
        bonuses incurred during fiscal 2007.
  Net
        cash
        (used in) investing activities decreased from $2.12 billion for fiscal 2006
        to
        $52.6 million for fiscal 2007. This decrease was primarily attributable to
        acquisition costs related to the Merger recorded during fiscal
        2006.
  Net
        cash
        used in financing activities amounted to $67.9 million for fiscal 2007
        compared with $1.75 billion of net cash provided by financing activities
        for fiscal 2006. This decrease is related to the net debt/equity proceeds
        related to the financing of the Merger Transaction received during fiscal
        2006.
  Working
        capital increased to $283.4 million at June 2, 2007 from
        $233.2 million at June 3, 2006.  This increase in working capital
        is primarily attributed to a decrease in accounts payable of  $62.5
        million due to fewer purchases in May 2007 compared with May of 2006,
        offset in part by a $27.4 million increase in Assets Held for Disposal given
        the
        anticipated sale of certain fixed assets.
  ***Twelve
        Months Ended June 3, 2006 Compared with Twelve Months Ended May 28,
        2005***
  Net
        cash
        provided by continuing operations of $378.1 million for fiscal 2006
        increased by $236.1 million from $142.0 million of net cash provided
        by continuing operations for the comparative period of fiscal 2005. This
        increase in net cash from continuing operations was due primarily to an increase
        in the sale of short term investments and to lower expenditures for inventory
        purchases during fiscal 2006 compared with fiscal 2005.
  Net
        cash
        (used in) investing activities increased from $(98.5) million for fiscal
        2005 to
        $(2,121.6) million for fiscal 2006. This increase was primarily
        attributable to acquisition costs related to the Merger.
  Net
        cash
        provided by financing activities amounted to $1,753.9 million for fiscal
        2006 compared with $25.4 million of net cash used in financing activities
        for fiscal 2005. This increase is related to the net debt/equity proceeds
        related to the financing of the Merger. Working capital decreased to
        $233.2 million at June 3, 2006 from $407.2 million at
        May 28, 2005. This decrease in
   22
 
  working
          capital and the increase in net cash used in financing activities were
          due
          primarily to the prepayment of our $100 million senior notes in November
          2005.
  ***Debt***
  Our
        credit agreements and debt indentures contain customary covenants, including,
        among other things, covenants that restrict our ability to incur certain
        additional indebtedness, create or permit liens on assets, or engage in mergers
        or consolidations. Our credit agreements and debt indentures also contain
        various and customary events of default with respect to the loans, including,
        without limitation, the failure to pay interest or principal when the same
        is
        due under the credit agreements, cross default provisions, the failure of
        representations and warranties contained in the credit agreements to be true
        and
        certain insolvency events. If an event of default occurs and is continuing,
        the
        principal amounts outstanding thereunder, together with all accrued unpaid
        interest and other amounts owed thereunder, may be declared immediately due
        and
        payable by the lenders. Were such an event to occur, we would be forced to
        seek
        new financing that may not be on as favorable terms as our current
        facilities.
  As
        of
        June 2, 2007, we were in compliance with our financial covenants relating
        to our
        debt.  As of June 2, 2007, we had: $159.0 million outstanding under
        the ABL Credit Facility and unused availability of $291.3 million.  We
        had $884 million outstanding under our term loan facility.  During
        fiscal 2007, the Company paid down $13 million of its outstanding obligations
        under the Term Loan, of which $4 million was an optional prepayment without
        penalty.  In addition, during fiscal 2007, the Company paid $53
        million toward its outstanding obligations under the ABL Credit
        Facility.
  Please
        refer to Note L. Long-Term Debt in the footnotes to the Company’s Consolidated
        Financial Statements for a description of all outstanding debt.
  ***Capital
        Expenditures***
  During
        fiscal
        2007, we opened 19 new Burlington Coat Factory Warehouse department stores
        and
        relocated three stores to new locations within their trading
        areas.  We incurred $37.9 million, net of landlord allowances, in
        capital expenditures during fiscal 2007, including $20.7 million for store
        fixtures and improvements (which include expenses related to the re-opening
        of
        three stores closed due to Hurricane damage), $3.0 million for upgrades
        to our warehouse/distribution facilities and $14.2 million for
        information technology improvements and equipment expenditures.  For
        fiscal 2008, the Company estimates that it will spend approximately $61.1
        million, net of landlord allowances, for store openings, improvements to
        warehouse/distribution facilities, information technology upgrades, and other
        capital expenditures.  Of the $61.1 million, approximately $28.8
        million has been allocated for expenditures related to new stores, relocations
        and other store requirements; $19.7 million for information technology
        initiatives (including $6.2 million for a new warehouse management system);
        and
        $12.6 million for corporate office improvements and warehouse infrastructure
        upgrades (of which $9.7 million is for additional and replacement equipment
        for
        the New Jersey warehouse facilities).
 We
          monitor the availability of desirable locations for our stores from such
          sources
          as dispositions by other retail chains and bankruptcy auctions. We may
          seek to
          acquire a number of such locations in one or more transactions. If we undertake
          such transactions, we may seek additional financing to fund acquisition
          and
          carrying charges (i.e., the cost of rental, maintenance, tax and other
          obligations associated with such properties from the time of commitment
          to
          acquire to the time that such locations can be readied for opening as Company
          stores) related to these stores. There can be no assurance, however, that
          any
          additional locations will become available from other retailers or that,
          if
          available, we will undertake to bid or be successful in bidding for such
          locations. Furthermore, to the extent that we decide to purchase additional
          store locations, it may be necessary to finance such acquisitions with
          additional long-term borrowings.
  ***Dividends***
  Payment
        of dividends is prohibited under our credit agreements, except for certain
        limited circumstances.  Dividends equal to $100,080 were paid in
        fiscal 2007 to our Parent in order to repurchase capital stock of the Parent
        from a retiring manager.
 
 **Certain
        Information Concerning Contractual Obligations**
  The
        following table sets forth certain information regarding our contractual
        obligations as of June 2, 2007 (in millions):
  **Payments
                  During Fiscal
                  Years****Contractual
                  Obligations**
              
              **Total**
              
              
              **Less Than**
                **1
                  Year**
              
              
              **2-3
                  Years**
              
              
              **4-5
                  Years**
              
              
              **Thereafter**Long-Term
                  Debt(1)
              
              $
              1,453.1
              
              
              $
              5.7
              
              
              $
              20.6
              
              
              $
              192.1
              
              
              $
              1,234.7Interest
              
              
              743.2
              
              
              
              116.6
              
              
              
              258.8
              
              
              
              240.5
              
              
              
              127.3Capital
                  Lease Obligations(2)
              
              
              54.0
              
              
              
              2.5
              
              
              
              5.1
              
              
              
              5.3
              
              
              
              41.1Operating
                  Leases
              
              
              705.6
              
              
              
              144.7
              
              
              
              216.7
              
              
              
              132.2
              
              
              
              212.0Purchase
                  Obligations
              
              
              635.5
              
              
              
              626.0
              
              
              
              9.0
              
              
              
              0.5
              
              
              
              ---Total
              
              $
              3,591.4
              
              
              $
              895.5
              
              
              $
              510.2
              
              
              $
              570.6
              
              
              $
              1,615.1
 
 (1)
              Excludes
                  interest on Long-Term Debt.
 (2)
              Capital
                  Lease Obligations include future interest
                  payments.
  During
        fiscal 2007, we sold lease rights for three store locations that were operated
        by the Company.  In the event of default, the Company could be liable
        for obligations associated with these real estate leases which have future
        lease
        related
   23
 
  payments
          (not discounted to present value) of approximately $9.6 million through
          the end
          of fiscal 2012, and which are not reflected in the table above. The scheduled
          future minimum rentals for these leases over the next five fiscal years
          and
          thereafter are $1.9 million, $1.9 million, $ 1.6 million, $1.4 million,
          and $2.8
          million, respectively.  We believe the likelihood of a material
          liability being triggered under these leases is remote, and no liability
          has
          been accrued for these contingent lease obligations as of June 2,
          2007.
  **Critical
        Accounting Policies and Estimates**
  Our
        consolidated financial statements have been prepared in accordance with
        accounting principles generally accepted in the United States of America.
        The
        preparation of these financial statements requires management to make estimates
        and assumptions that affect (i) the reported amounts of assets and liabilities;
        (ii) the disclosure of contingent assets and liabilities at the date of the
        consolidated financial statements; and (iii) the reported amounts of revenues
        and expenses during the reporting period. On an on-going basis, management
        evaluates its estimates and judgments, including those related to revenue
        returns, bad debts, inventories, income taxes, financing operations, asset
        impairment, retirement benefits, risk participation agreements, vendor
        promotional allowances, reserves for closed store contingencies and litigation.
        Historical experience and various other factors, that are believed to be
        reasonable under the circumstances, form the basis for making estimates and
        judgments about the carrying values of assets and liabilities that are not
        readily apparent from other sources. Actual results may differ from these
        estimates under different assumptions or conditions.
  We
        believe that the following represent the more critical estimates and assumptions
        used in the preparation of the condensed consolidated financial
        statements:
  *Intangible
        Assets and Purchase Accounting.*******As discussed
        above, the Merger was completed on April 13, 2006 and was financed by a
        combination of borrowings under our senior secured credit facilities, the
        issuance of the senior notes, the issuance of the Holdings Senior Discount
        Notes
        and the equity investment of affiliates of Bain Capital and management. The
        purchase price, including transaction costs was approximately $2.1 billion.
        Purchase accounting requires that all assets and liabilities be recorded
        at fair
        value on the acquisition date, including identifiable intangible assets separate
        from goodwill. Identifiable intangible assets include trade names, and net
        favorable lease positions. Goodwill represents the excess of cost over the
        fair
        value of net assets acquired. For the Merger, we obtained independent appraisals
        and valuations of the intangible (and certain tangible) assets acquired as
        well
        as for the equity. The fair values and useful lives of identified intangible
        assets are based on many factors, including estimates and assumptions of
        future
        operating performance, estimates of cost avoidance, the specific characteristics
        of the identified intangible assets and our historical experience.
  When
        circumstances change, or at least annually, we compare the carrying value
        of our
        intangible assets to their estimated fair value. If the carrying value is
        greater than the respective estimated fair value, we then determine if the
        asset
        is impaired, and whether some or all of the asset should be written off as
        a
        charge to operations, which could have a material adverse effect on our
        financial results.
  *Goodwill
        Impairment.*******Goodwill represents the excess
        of cost over the fair value of net assets acquired. SFAS No. 142,
“*Goodwill and Other Intangible Assets*,” requires periodic tests of the
        impairment of Goodwill. SFAS No. 142 requires a comparison, at least
        annually, of the net book value of the assets and liabilities associated
        with a
        reporting unit, including goodwill, with the fair value of the reporting
        unit,
        which corresponds to the discounted cash flows of the reporting unit, in
        the
        absence of an active market. When this comparison indicates that impairment
        must
        be recorded, the impairment recognized is the amount by which the carrying
        amount of the assets exceeds the fair value of these assets. Our annual goodwill
        impairment review is conducted during the last month of each fiscal
        year.  There were no impairment charges recorded on our $46.2 million
        carrying value of Goodwill for the fiscal year ended June 2, 2007.
  *Inventory.*
        Our inventory is valued at the lower of cost or market using the retail average
        cost method. Under the retail inventory method, the valuation of inventory
        at
        cost and resulting gross margin are calculated by applying a calculated cost
        to
        retail ratio to the retail value of inventory. The retail inventory method
        is an
        averaging method that has been widely used in the retail industry due to
        its
        practicality. Additionally, the use of the retail inventory method will result
        in valuing inventory at the lower of cost or market if markdowns are currently
        taken as a reduction of the retail value of inventory. Inherent in the retail
        inventory method calculation are certain significant management judgments
        and
        estimates including, merchandise markon, markups, markdowns and shrinkage
        which
        significantly impact the ending inventory valuation at cost as well as the
        resulting gross margin. Management believes that our retail inventory method
        and
        application of the average cost method provides an inventory valuation which
        approximates cost using a first-in, first-out assumption and results in carrying
        value at the lower of cost or market. Estimates are used to charge inventory
        shrinkage for the first three fiscal quarters of the fiscal year. An actual
        physical inventory is conducted at the end of the fiscal year to calculate
        actual shrinkage. We also estimate the required markdown allowances. If actual
        market conditions are less favorable than those projected by management,
        additional markdowns may be required. While we make estimates on the basis
        of
        the best information available to us at the time estimates are made, over
        accruals or under accruals may be uncovered as a result of the physical
        inventory requiring fourth quarter adjustments.
  *Insurance.*
        We have risk participation agreements with insurance carriers with respect
        to
        workers’ compensation, liability insurance and health insurance. Pursuant to
        these arrangements, we are responsible for paying individual claims up to
        designated dollar limits. The amounts included in our costs related to these
        claims are estimated and can vary based on changes in assumptions or claims
        experience included in the associated insurance programs. For example, changes
        in legal trends and
   24
 
   interpretations,
          as well as changes in the nature and method of how claims are settled can
          impact
          ultimate costs.  An increase in worker’s compensation claims by
          employees, health insurance claims by employees or liability claims will
          result
          in a corresponding increase in our costs related to these claims. Insurance
          reserves amounted to $33.7 million and $30.8 million at June 2, 2007 and
          June 3,
          2006, respectively.
  *Reserves
        for Revenue Returns.* We record reserves for future revenue returns. The
        reserves are based on current revenue volume and historical claim experience.
        If
        claims experience differs from historical levels, revisions in our estimates
        may
        be required. Sales reserves amounted to $5.5 million and $1.9 million at
        June 2,
        2007 and June 3, 2006.  This increase is due to the change in the
        Company’s return policy which starting in fiscal 2007 which provided for cash
        back returns in addition to store merchandise credit for returns.
  *Long-Lived
        Assets.*We test for recoverability of long-lived assets whenever events or
        changes in circumstances indicate that their carrying amount may not be
        recoverable. This includes performing an analysis of anticipated undiscounted
        future net cash flows of long-lived assets. If the carrying value of the
        related
        assets exceeds the undiscounted cash flow, we reduce the carrying value to
        its
        fair value, which is generally calculated using discounted cash flows. Various
        factors including future sales growth and profit margins are included in
        this
        analysis. To the extent these future projections change, the conclusion
        regarding impairment may differ from the estimates. Future adverse changes
        in
        market conditions or poor operating results of underlying assets could result
        in
        losses or an inability to recover the carrying value of the assets that may
        not
        be reflected in an asset’s current carrying value, thereby possibly requiring an
        impairment charge in the future.  In Fiscal 2007, we recorded $24.4
        million in impairment charges related to long-lived assets and intangible
        assets
        at sixteen of our stores.  There were no impairment charges related to
        long-lived assets in Fiscal 2006.
  *Allowance
        for Doubtful Accounts.* We maintain allowances for bad checks, miscellaneous
        receivables and losses on credit card accounts. This reserve is calculated
        based
        upon historical collection activities adjusted for known
        uncollectibles.
  *Estimates
        Related to Certain Employee Benefit Plans.*The Company has
        significant employee benefit expenses related to its discretionary,
        noncontributory profit-sharing plan for certain employees who meet age and
        service requirements and its match of employee contributions to the Company’s
        401(k) plan.  The Company estimates its expenses related to these
        plans on a quarterly basis based on historical employee contribution rates,
        estimated eligible wages and estimated plan forfeitures.  In the
        period ended June 2, 2007, the Company decided not to make a contribution
        to the
        profit sharing plan for the plan year end December 31, 2006.  As a
        result, $9.4 million of previously recorded employee benefit costs were reversed
        and recorded in the year as an offset to selling and administrative
        costs.  An additional $0.8 million was recorded as an offset to
        selling and administrative costs related to the variance between estimated
        and
        actual plan forfeitures for calendar year 2006.
  *Income
        Taxes****.***We account for income taxes in
        accordance with SFAS 109, *“Accounting for Income Taxes.”* Our provision
        for income taxes and effective tax rates are based on a number of factors,
        including our income, tax planning strategies, differences between tax laws
        and
        accounting rules, statutory tax rates and credits, uncertain tax positions,
        and
        valuation allowances, by legal entity and jurisdiction. We use significant
        judgment and estimations in evaluating our tax positions.
  U.S.
        federal and state tax authorities regularly audit our tax returns. We establish
        tax reserves when, despite our belief that our tax return positions are
        supportable, it is probable we may not succeed in defending our positions.
        We
        adjust these tax reserves, as well as the related interest and penalties,
        based
        on the latest facts and circumstances, including recently published rulings,
        court cases, and outcomes of tax audits. To the extent our actual tax liability
        differs from our established tax reserves, our effective tax rate may be
        materially impacted. While it is often difficult to predict the final outcome
        of, the timing of, or the tax treatment of any particular tax position or
        deduction, we believe that our tax reserves reflect the probable outcome
        of
        known tax contingencies. Beginning in the first quarter of fiscal 2008, we
        will
        adopt Financial Accounting Standards Board (“FASB”) Interpretation No. 48
        (as amended) – “Accounting for Uncertainty in Income Taxes – an interpretation
        of FASB Statement No. 109” (“FIN 48”). Any adjustments related to the
        adoption of FIN 48 will be reflected as an adjustment to retained earnings
        in
        fiscal 2008.
  We
        record
        deferred tax assets and liabilities for any temporary differences between
        the
        tax reflected in our financial statements and tax presumed rates. We establish
        valuation allowances for our deferred tax assets when we believe it is more
        likely than not that the expected future taxable income or tax liabilities
        thereon will not support the use of a deduction or credit. For example, we
        would
        establish a valuation allowance for the tax benefit associated with a loss
        carryover in a tax jurisdiction if we did not expect to generate sufficient
        taxable income to utilize the loss carryover.
 
 **Recent
        Accounting Pronouncements**
 
 a.           In
        September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*
        which defines fair value, establishes a framework for measurement and expands
        disclosure about fair value measurements. Where applicable, SFAS No. 157
        simplifies and codifies related guidance within generally accepted accounting
        principles. This statement shall be effective for financial statements issued
        for fiscal years beginning after November 15, 2007. The Company is in the
        process of evaluating the impact of SFAS No. 157 on its financial
        statements.
 
 b.           In
        June 2006, the FASB ratified the consensus reached by the Emerging Issues
        Task
        Force (EITF) on Issue 06-3, *How*
   25
  *Taxes
        Collected from Customers and Remitted to Governmental Authorities Should
        be
        Presented in the Income Statement*. The scope of this consensus includes any
        tax assessed by a governmental authority that is directly imposed on a
        revenue-producing transaction between a seller and a customer and may include,
        but is not limited to sales, use, value added and some excise
        taxes. Additionally, this consensus seeks to address how a company should
        address the disclosure of such items in interim and annual financial statements,
        either gross or net pursuant to APB Opinion No. 22, *Disclosure of
        Accounting Policies*. EITF Issue 06-3 is effective for all financial
        reports for interim and annual reporting periods beginning after December
        15,
        2006. The Company presents sales net of sales taxes in its consolidated
        statement of operations. No change in presentation is anticipated as a result
        of
        EITF 06-3.
  c.           In
        September 2006, the SEC issued SAB No. 108, *Considering Effects of Prior
        Year Misstatements When Quantifying Misstatements in Current Year
        Financials*. SAB No. 108 provides interpretive guidance on the consideration
        of the effects of prior year misstatements in quantifying current year financial
        statement misstatements for the purpose of a materiality assessment. The
        Company
        was required to adopt the provisions of SAB No. 108 in its first year ending
        after November 15, 2006. The adoption of SAB No. 108 did not have a material
        impact on our consolidated financial statements.
  d.           In
        February 2007, the FASB issued SFAS No. 159, *“The Fair Value Option for
        Financial Assets and Financial Liabilities-including an amendment of FASB
        Statement No. 115.*SFAS No. 159 permits entities to choose to measure many
        financial instruments and certain other items at fair value that are not
        currently required to be measured at fair value, with unrealized gains and
        losses related to these financial instruments reported in earnings at each
        subsequent reporting date.  This statement is effective as of the
        beginning of an entity’s first fiscal year that begins after November 15,
        2007.  The Company is in the process of evaluating the impact of SFAS
        No. 159 on its consolidated financial statements.
 
 e.           In
        July 2006, the FASB issued FASB Interpretation (“FIN”) No. 48 – Accounting for
        Uncertainty in Income Taxes – an interpretation of FASB Statement No.
        109.  FIN 48 prescribes a recognition threshold and measurement
        attribute for the financial statement recognition and measurement of a tax
        position taken or expected to be taken in a tax return.  FIN 48 also
        provides guidance on accounting for derecognition, interest, penalties,
        accounting in interim periods, disclosure and classification of matters related
        to uncertainty in income taxes and transitional requirements upon adoption
        of
        FIN 48.  FIN 48 is effective for fiscal years beginning after December
        15, 2006.  The Company will adopt FIN 48 on the first day of its
        fiscal year ended May 31, 2008.  Any adjustments related to the
        adoption of FIN48 will be reflected as an adjustment to retained earnings
        in
        fiscal 2008.
 
 ***Fluctuations
        in Operating Results***
  We
        expect
        that our revenues and operating results may fluctuate from quarter to quarter
        or
        over the longer term. Certain of the general factors that may cause such
        fluctuations are discussed under “Risk Factors.”
  ***Seasonality***
  Our
        business is seasonal, with our highest sales occurring in the months of
        September, October, November, December and January of each year. For the
        past
        five fiscal years, an average 51% of our net sales have occurred during the
        period from September through January. Weather, however, continues to be
        an
        important contributing factor to the sale of clothing in the fall, winter
        and
        spring seasons. Generally, our sales are higher if the weather is cold during
        the fall and warm during the early spring.
  ***Inflation***
  We
        do not
        believe that our operating results have been materially affected by inflation
        during the past year. Historically, we have been able to increase our selling
        prices as the costs of merchandising and related operating expenses have
        increased, and therefore, inflation has not had a significant effect on
        operations.
  ***Market
        Risk***
  We
        are
        exposed to market risks relating to fluctuations in interest rates. Our senior
        secured credit facilities will contain floating rate obligations and will
        be
        subject to interest rate fluctuations. The objective of our financial risk
        management is to minimize the negative impact of interest rate fluctuations
        on
        our earnings and cash flows. Interest rate risk is managed through the use
        of a
        combination of fixed and variable interest debt as well as the periodic use
        of
        interest rate cap agreements.
  As
        previously described, the Company entered into two interest rate cap agreements
        effective as of May 30, 2006, to manage interest rate risks associated with
        its
        long-term debt obligations. Gains and losses associated with these contracts
        are
        accounted for as interest expense and are recorded under the caption “Interest
        Expense” on the Company’s Consolidated Statement of Operations. We continue to
        have exposure to interest rate risks to the extent they are not
        hedged.
  **Off-Balance
        Sheet Transactions**
  Other
        than operating leases consummated
        in the normal course of business, we do not have any material off-balance
        sheet
        arrangements.
  26
  
 **Item
                  7A.Quantitative and Qualitative Disclosures About Market
                  Risks**
   We
        are
        exposed to certain market risks as part of our ongoing business operations.
        Primary exposures include changes in interest rates, as borrowings under
        BCFWC’s
        ABL Credit Facility and term loan which bear interest at floating rates based
        on
        LIBOR or the base rate, in each case plus an applicable borrowing margin.
        We
        will manage our interest rate risk by balancing the amount of fixed-rate
        and
        floating-rate debt. For fixed-rate debt, interest rate changes do not affect
        earnings or cash flows. Conversely, for floating-rate debt, interest rate
        changes generally impact our earnings and cash flows, assuming other factors
        are
        held constant.
  At
        June
        2, 2007, we had $392.2 million principal amount of fixed-rate debt and $1,043.3
        million of available floating-rate debt. Based on $1,043.3 million outstanding
        as floating rate debt, an immediate increase of one percentage point would
        cause
        an increase to cash interest expense of approximately $10.4 million per
        year.
  If
        a one point increase in interest
        rate were to occur over the next four quarters (excluding the interest rate
        cap), such an increase would result in the following additional interest
        expenses (assuming current borrowing level remain constant) (all amounts
        in
        thousands):
  
  **Floating
                  Rate Debt (amounts in thousands)**
              
              **Principal
                  Outstanding at June 2, 2007**
              
              
              **Additional
                  Interest Expense**
                **Q1
                  2007**
              
              
              **Additional
                  Interest Expense**
                **Q2
                  2007**
              
              
              **Additional
                  Interest Expense**
                **Q3
                  2007**
              
              
              **Additional
                  Interest Expense**
                **Q4
                  2008**ABL
                  Credit Facility
              
              $
              159,000
              
              
              $
              398
              
              
              $
              398
              
              
              $
              398
              
              
              $
              398Term
                  Loan
              
              
              884,250
              
              
              
              2,211
              
              
              
              2,211
              
              
              
              2,211
              
              
              
              2,205Total
              
              $
              1,043,250
              
              
              $
              2,609
              
              
              $
              2,609
              
              
              $
              2,609
              
              
              $
              2,603
 
  BCFWC
        has
        two interest rate cap agreements for a maximum principal amount of $1.0 billion
        which limit our interest rate exposure to 7% for our first billion of borrowings
        under our variable rate debt obligations and if interest rates were to increase
        above the 7% cap rate, then the maximum interest rate exposure for the Company
        would be $17.8 million assuming constant current borrowing levels of $1
        billion.  Currently, the Company has unlimited interest rate risk
        related to its variable rate debt in excess of $1 billion.  At June 2,
        2007, BCFWC’s borrowing rates related to its ABL Credit Facility averaged
        7.16%.  At June 2, 2007, the borrowing rate related to its term loan
        was 7.61%.
  Our
        ability to satisfy our interest
        payment obligations on our outstanding debt will depend largely on our future
        performance, which, in turn, is subject to prevailing economic conditions
        and to
        financial, business and other factors beyond our control. If we do not have
        sufficient cash flow to service interest payment obligations on our outstanding
        indebtedness and if we cannot borrow or obtain equity financing to satisfy
        those
        obligations, our business and results of operations will be materially adversely
        affected. We cannot be assured that any replacement borrowing or equity
        financing could be successfully completed.
  A
        change
        in interest rates generally does not have an impact upon our future earnings
        and
        cash flow for fixed-rate debt instruments. As fixed-rate debt matures, however,
        and if additional debt is acquired to fund the debt repayment, future earnings
        and cash flow may be affected by changes in interest rates. This effect would
        be
        realized in the periods subsequent to the periods when the debt
        matures.
   27
  **Item
        8.** **INDEX TO FINANCIAL STATEMENTS**
   **Page****Consolidated
                  Financial Statements**Report
                  of Independent Registered Public Accounting Firm
              29Consolidated
                  Balance Sheets as of June 2, 2007 and June 3, 2006
              30Consolidated
                  Statements of Operations for the year ended June 2, 2007, the periods
                  from
                  April 13, 2006 to June 3, 2006, May 29, 2005 to
                  April 12, 2006 and the year ended May 28, 2005
              31Consolidated
                  Statements of Cash Flows for the year ended June 2, 2007, the periods
                  from
                  April 13, 2006 to June 3, 2006, May 29, 2005 to
                  April 12, 2006 and the year ended May 28, 2005
              32Consolidated
                  Statements of Stockholders’ Equity for the year ended June 2, 2007, the
                  periods from April 13, 2006 to June 3, 2006, May 29,
                  2005 to April 12, 2006 and the year ended May 28,
                  2005
              34Notes
                  to Consolidated Financial Statements for the year ended June 2,
                  2007, the
                  periods from April 13, 2006 to June 3, 2006, May 29,
                  2005 to April 12, 2006 and the year ended May 28,
                  2005
              36
 
 
 
 
 
  28
  **REPORT
        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
 
 
 To
        the
        Board of Directors and Stockholders of
 Burlington
        Coat Factory Investments Holdings, Inc.
 Burlington,
        New Jersey
 
 We
        have
        audited the accompanying consolidated balance sheets of Burlington Coat Factory
        Investments Holdings, Inc. and Subsidiaries as of June 2, 2007 and June 3,
        2006
        (the “Successor”) and the related consolidated statements of operations,
        stockholders’ equity, and cash flows for the year ended June 2, 2007 and for the
        period from April 13, 2006 to June 3, 2006.  We have also audited the
        accompanying consolidated statements of operations, stockholders’ equity, and
        cash flows for the period from May 29, 2005 to April 12, 2006 and for the
        year
        ended May 28, 2005 of Burlington Coat Factory Investments Holdings, Inc.
        and
        Subsidiaries (the “Predecessor”).  Our audits also included the
        financial statement schedule listed in the Index at Item 15(a)(2). These
        financial statements and the financial statement schedule are the responsibility
        of Burlington Coat Factory Investments Holdings, Inc.’s (the “Company’s”)
        management.  Our responsibility is to express an opinion on these
        financial statements and the financial statement schedule based on our
        audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States).  Those standards require
        that we plan and perform the audit to obtain reasonable assurance about whether
        the financial statements are free of material misstatement.  The
        Company is not required to have, nor were we engaged to perform, an audit
        of its
        internal control over financial reporting.  Our audits included
        consideration of internal control over financial reporting as a basis for
        designing audit procedures that are appropriate in the circumstances, but
        not
        for the purpose of expressing an opinion on the effectiveness of the Company’s
        internal control over financial reporting.  Accordingly, we express no
        such opinion.  An audit also includes examining, on a test basis,
        evidence supporting the amounts and disclosures in the financial statements,
        assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall financial statement
        presentation.  We believe that our audits provide a reasonable basis
        for our opinion.
 
 In
        our
        opinion, the Successor’s consolidated financial statements present fairly, in
        all material respects, the financial position of the Company as of June 2,
        2007
        and June 3, 2006, and the results of its operations, stockholders’ equity, and
        its cash flows for the year ended June 2, 2007 and for the period from April
        13,
        2006 to June 3, 2006, in conformity with accounting principles generally
        accepted in the United States of America.  Further, in our opinion,
        the Predecessor’s consolidated financial statements present fairly, in all
        material respects, the results of its operations and its cash flows for the
        period from May 29, 2005 to April 12, 2006 and for the year ended May 28,
        2005,
        in conformity with accounting principles generally accepted in the United
        States
        of America. Also, in our opinion, such financial statement schedule, when
        considered in relation to the basic consolidated financial statements taken
        as a
        whole, presents fairly, in all material respects, the information set forth
        therein.
 
 
 
 DELOITTE
        & TOUCHE LLP
 
 
 
 Philadelphia,
        Pennsylvania
 August
        30, 2007
  29
  **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
 **Consolidated
        Balance Sheets**
 **(All
        amounts in thousands, except share data)**
  **June
                    2, 2007**
              
              
              **June
                    3, 2006**ASSETSCurrent
                  Assets:Cash
                  and Cash Equivalents
              
              $
              33,878
              
              
              $
              58,376Restricted
                  Cash and Cash Equivalents
              
              
              2,753
              
              
              
              13,816Investments
              
              
              —
              
              
              
              591Accounts
                  Receivable (Net of Allowances for Doubtful Accounts of $969 in
                  2007; $199
                  in 2006
              
              
              30,590
              
              
              
              42,083Merchandise
                  Inventories
              
              
              710,571
              
              
              
              708,185Deferred
                  Tax Assets
              
              
              35,143
              
              
              
              27,916Prepaid
                  and Other Current Assets
              
              
              34,257
              
              
              
              30,786Prepaid
                  Income Taxes
              
              
              1,109
              
              
              
              -Assets
                  Held for Disposal
              
              
              35,073
              
              
              
              7,661Total
                  Current Assets
              
              
              883,374
              
              
              
              889,414Property
                  and Equipment—Net of Accumulated Depreciation
              
              
              948,334
              
              
              
              1,042,398Tradename
              
              
              526,300
              
              
              
              526,300Favorable
                  Leases—Net of Accumulated Amortization
              
              
              574,879
              
              
              
              626,676Goodwill
              
              
              46,219
              
              
              
              58,985Other
                  Assets
              
              
              57,415
              
              
              
              69,727Total
                  Assets
              
              $
              3,036,521
              
              
              $
              3,213,500LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCurrent
                  Liabilities:Accounts
                  Payable
              
              $
              395,375
              
              
              $
              457,855Income
                  Taxes Payable
              
              
              -
              
              
              
              6,274Other
                  Current Liabilities
              
              
              198,627
              
              
              
              181,760Current
                  Maturities of Long Term Debt
              
              
              5,974
              
              
              
              10,360Total
                  Current Liabilities
              
              
              599,976
              
              
              
              656,249Long
                  Term Debt
              
              
              1,456,330
              
              
              
              1,508,119Other
                  Liabilities
              
              
              48,447
              
              
              
              21,974Deferred
                  Tax Liability
              
              
              551,298
              
              
              
              607,646Commitments
                  and Contingencies (See Footnote S)Stockholders’
                  Equity:Common
                  Stock, Par Value $0.01; Authorized 1,000 shares; 1,000 issued and
                  outstanding at June 2, 2007 and June 3, 2006
              
              
              —
              
              
              
              —Capital
                  in Excess of Par Value
              
              
              454,935
              
              
              
              446,678Accumulated
                  Deficit
              
              
              (74,465
              )
              
              
              (27,166
              )Total
                  Stockholders’ Equity
              
              
              380,470
              
              
              
              419,512Total
                  Liabilities and Stockholders’ Equity
              
              $
              3,036,521
              
              
              $
              3,213,500
 
 See
        Notes
        to Consolidated Financial Statements
  30
  
 **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Consolidated
        Statements of Operations**
 **(All
        amounts in thousands)**
   **(Successor)**
                  
                  
                  **(Predecessor)****Year
                         Ended**
                    **June
                      2, 2007**
                  
                  
                  **April 13, 2006**
                    **to
                      June 3, 2006**
                  
                  
                  **May 29, 2005**
                    **to
                      April 12, 2006**
                  
                  
                  **Year
                      Ended**
                    **May 28, 2005**REVENUES:Net
                      Sales
                  
                  $
                  3,403,407
                  
                  
                  $
                  421,180
                  
                  
                  $
                  3,017,633
                  
                  
                  $
                  3,171,242Other
                      Revenue
                  
                  
                  38,238
                  
                  
                  
                  4,066
                  
                  
                  
                  27,675
                  
                  
                  
                  28,5983,441,645
                  
                  
                  
                  425,246
                  
                  
                  
                  3,045,308
                  
                  
                  
                  3,199,840COSTS
                      AND EXPENSES:Cost
                      of Sales (Exclusive of Depreciation and Amortization)
                  
                  
                  2,125,160
                  
                  
                  
                  266,465
                  
                  
                  
                  1,916,798
                  
                  
                  
                  1,987,159Selling
                      and Administrative Expenses
                  
                  
                  1,062,468
                  
                  
                  
                  154,691
                  
                  
                  
                  897,231
                  
                  
                  
                  957,759Depreciation
                  
                  
                  130,398
                  
                  
                  
                  18,097
                  
                  
                  
                  78,804
                  
                  
                  
                  88,995Amortization
                  
                  
                  43,689
                  
                  
                  
                  9,758
                  
                  
                  
                  494
                  
                  
                  
                  98Impairment
                      Charges
                  
                  
                  24,421
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  863Interest
                      Expense
                  
                  
                  134,313
                  
                  
                  
                  18,093
                  
                  
                  
                  4,609
                  
                  
                  
                  7,334Other
                      Income, Net
                  
                  
                  (6,180
                  )
                  
                  
                  (4,876
                  )
                  
                  
                  (3,572
                  )
                  
                  
                  (14,619
                  )3,514,269
                  
                  
                  
                  462,228
                  
                  
                  
                  2,894,364
                  
                  
                  
                  3,027,589Income
                      (Loss) from Continuing Operations Before Provision (Benefit)
                      for Income
                      Tax
                  
                  
                  (72,624
                  )
                  
                  
                  (36,982
                  )
                  
                  
                  150,944
                  
                  
                  
                  172,251Provision
                      for (Benefit from) Income Tax
                  
                  
                  (25,425
                  )
                  
                  
                  (9,816
                  )
                  
                  
                  56,605
                  
                  
                  
                  66,204Income
                      (Loss) from Continuing Operations
                  
                  
                  (47,199
                  )
                  
                  
                  (27,166
                  )
                  
                  
                  94,339
                  
                  
                  
                  106,047Loss
                      From Discontinued Operations, Net of Tax Benefit of $112 in
                      2005
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (1,014
                  )Net
                      Income (Loss)
                  
                  
                  (47,199
                  )
                  
                  
                  (27,166
                  )
                  
                  
                  94,339
                  
                  
                  
                  105,033Net
                      Unrealized Gain (Loss) on Investments, Net of tax
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (4
                  )
                  
                  
                  2Total
                      Comprehensive Income (Loss)
                  
                  $
                  (47,199
                  )
                  
                  
                  (27,166
                  )
                  
                  $
                  94,335
                  
                  
                  $
                  105,035
    See
        Notes
        to Consolidated Financial Statements
  
  31
  
 **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
 
 **Consolidated
        Statements of Cash Flows**
 **(All
        amounts in thousands)**
   
 **(Successor)**
                  
                  
                  **(Predecessor)****Year**
                    **Ended**
                    **June
                      2, 2007**
                  
                  
                  **April
                      13**
                    **to**
                    **June
                      3, 2006**
                  
                  
                  **May 29, 2005**
                    **to**
                    **April
                      12, 2006**
                  
                  
                  **Year**
                    **Ended**
                    **May 28, 2005**OPERATING
                      ACTIVITIESNet
                      Income (Loss)
                  
                  $
                  (47,199
                  )
                  
                  $
                  (27,166
                  )
                  
                  $
                  94,339
                  
                  
                  $
                  105,033Net
                      Loss from Discontinued Operations
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  1,014Net
                      Income (Loss) from Continuing Operations
                  
                  
                  (47,199
                  )
                  
                  
                  (27,166
                  )
                  
                  
                  94,339
                  
                  
                  
                  106,047Adjustments
                      to Reconcile Net Income (Loss) to Net Cash Provided by (Used
                      in) Operating
                      Activities:Depreciation
                  
                  
                  130,398
                  
                  
                  
                  18,097
                  
                  
                  
                  78,804
                  
                  
                  
                  88,995Amortization
                  
                  
                  43,689
                  
                  
                  
                  9,758
                  
                  
                  
                  494
                  
                  
                  
                  98Impairment
                      Charges
                  
                  
                  24,421
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  863Accretion
                  
                  
                  11,948
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Interest
                      Rate Cap Contract-Adjustment to Market
                  
                  
                  1,971
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Provision
                      for Losses on Accounts Receivable
                  
                  
                  2,826
                  
                  
                  
                  374
                  
                  
                  
                  3,479
                  
                  
                  
                  7,501Provision
                      for Deferred Income Taxes
                  
                  
                  (61,834
                  )
                  
                  
                  (11,305
                  )
                  
                  
                  (11,328
                  )
                  
                  
                  (5,503
                  )Loss
                      (Gain) on Disposition of Fixed Assets and Leaseholds
                  
                  
                  3,637
                  
                  
                  
                  1
                  
                  
                  
                  2,742
                  
                  
                  
                  (750
                  )Unrealized
                      Loss on Investments
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  108Stock
                      Option Expense and Deferred
                      Compensation  Amortization
                  
                  
                  7,957
                  
                  
                  
                  847
                  
                  
                  
                  —
                  
                  
                  
                  —Non-Cash
                      Rent Expense and Other
                  
                  
                  10,185
                  
                  
                  
                  2,537
                  
                  
                  
                  1,438
                  
                  
                  
                  3,355Changes
                      in Assets and LiabilitiesInvestments
                  
                  
                  591
                  
                  
                  
                  183
                  
                  
                  
                  133,890
                  
                  
                  
                  33,702Accounts
                      Receivable
                  
                  
                  (4,258
                  )
                  
                  
                  (2,296
                  )
                  
                  
                  2,059
                  
                  
                  
                  (8,540
                  )Merchandise
                      Inventories
                  
                  
                  (2,386
                  )
                  
                  
                  48,971
                  
                  
                  
                  (36,274
                  )
                  
                  
                  (98,344
                  )Prepaid
                      and Other Current Assets
                  
                  
                  910
                  
                  
                  
                  9,154
                  
                  
                  
                  (8,098
                  )
                  
                  
                  (1,725
                  )Accounts
                      Payable
                  
                  
                  (62,480
                  )
                  
                  
                  (62,176
                  )
                  
                  
                  116,189
                  
                  
                  
                  26,556Accrued
                      and Other Current Liabilities
                  
                  
                  3,683
                  
                  
                  
                  (39,759
                  )
                  
                  
                  50,193
                  
                  
                  
                  (8,687
                  )Deferred
                      Rent Incentives
                  
                  
                  31,957
                  
                  
                  
                  (113
                  )
                  
                  
                  3,052
                  
                  
                  
                  (1,652
                  )Net
                      Cash Provided by (Used in) Continuing Operations
                  
                  
                  96,016
                  
                  
                  
                  (52,893
                  )
                  
                  
                  430,979
                  
                  
                  
                  142,024Net
                      Cash Provided by Discontinued Operations
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  67Net
                      Cash Provided by (Used in) Operating Activities
                  
                  
                  96,016
                  
                  
                  
                  (52,893
                  )
                  
                  
                  430,979
                  
                  
                  
                  142,091INVESTING
                      ACTIVITIESAcquisition
                      Costs
                  
                  
                  —
                  
                  
                  
                  (2,055,747
                  )
                  
                  
                  —
                  
                  
                  
                  —Cash
                      Paid for Property and Equipment
                  
                  
                  (69,188
                  )
                  
                  
                  (6,275
                  )
                  
                  
                  (68,923
                  )
                  
                  
                  (93,115
                  )Change
                      in Restricted Cash and Cash Equivalents
                  
                  
                  11,063
                  
                  
                  
                  6
                  
                  
                  
                  1,135
                  
                  
                  
                  (5,653
                  )Proceeds
                      from Insurance Recoveries
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  3,822
                  
                  
                  
                  —Proceeds
                      From Sale of Fixed Assets and Leaseholds
                  
                  
                  4,669
                  
                  
                  
                  4,337
                  
                  
                  
                  697
                  
                  
                  
                  4,507Proceeds
                      From Sale of Partnership Interest
                  
                  
                  850
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Lease
                      Acquisition Costs
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  (635
                  )
                  
                  
                  (4,225
                  )Issuance
                      of Notes Receivable
                  
                  
                  —
                  
                  
                  
                  (9
                  )
                  
                  
                  (55
                  )
                  
                  
                  (58
                  )Receipts
                      Against Long Term Notes Receivable
                  
                  
                  (67
                  )
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  35


32
 
 
 Other
                
                
                82
                
                
                
                19
                
                
                
                39
                
                
                
                16Net
                    Cash Used in Investing Activities—Continuing Operations
                
                
                (52,591
                )
                
                
                (2,057,669
                )
                
                
                (63,920
                )
                
                
                (98,493
                )Net
                    Cash Used in Investing Activities—Discontinuing Operations
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (78
                )Net
                    Cash Used in Investing Activities
                
                
                (52,591
                )
                
                
                (2,057,669
                )
                
                
                (63,920
                )
                
                
                (98,571
                )
  FINANCING
                  ACTIVITIESProceeds
                  from Long Term Debt- Term Debt
              
              
              —
              
              
              
              —
              
              
              
              470
              
              
              
              —Proceeds
                  from Long Term Debt—Term Loan
              
              
              —
              
              
              
              900,000
              
              
              
              —
              
              
              
              —Proceeds
                  from Long Term Debt - Senior Discount Notes
              
              
              —
              
              
              
              75,000
              
              
              
              —
              
              
              
              —Proceeds
                  from Long Term Debt—Senior Notes
              
              
              —
              
              
              
              299,114
              
              
              
              —
              
              
              
              —Proceeds
                  from Long Term Debt—ABL Line of Credit
              
              
              649,655
              
              
              
              428,000
              
              
              
              —
              
              
              
              —Principal
                  Payments on Long Term Debt
              
              
              (1,384
              )
              
              
              (46
              )
              
              
              (101,167
              )
              
              
              (1,048
              )Principal
                  Payments on Long Term Debt—Term Loan
              
              
              (13,500
              )
              
              
              (2,250
              )
              
              
              —
              
              
              
              —Principal
                  Payments on Long Term Debt—ABL Line of Credit
              
              
              (702,894
              )
              
              
              (215,761
              )
              
              
              —
              
              
              
              —Equity
                  Investment
              
              
              300
              
              
              
              —
              
              
              
              —
              
              
              
              —Proceeds
                  from Issuance of Common Stock
              
              
              —
              
              
              
              445,830
              
              
              
              —
              
              
              
              —Purchase
                  of Interest Rate Cap Contract
              
              
              —
              
              
              
              (2,500
              )
              
              
              —
              
              
              
              —Treasury
                  Stock Transactions
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              1,083Issuance
                  of Common Stock Upon Exercise of Stock Options
              
              
              —
              
              
              
              —
              
              
              
              425
              
              
              
              1,364Debt
                  Issuance Costs
              
              
              —
              
              
              
              (71,398
              )
              
              
              —
              
              
              
              —Payment
                  of Dividends
              
              
              (100
              )
              
              
              —
              
              
              
              (1,791
              )
              
              
              (26,783
              )Net
                  Cash Provided by (Used in) Financing Activities
              
              
              (67,923
              )
              
              
              1,855,989
              
              
              
              (102,063
              )
              
              
              (25,384
              )Increase
                  (Decrease) in Cash and Cash Equivalents
              
              
              (24,498
              )
              
              
              (254,573
              )
              
              
              264,996
              
              
              
              18,136Cash
                  and Cash Equivalents at Beginning of Period
              
              
              58,376
              
              
              
              312,949
              
              
              
              47,953
              
              
              
              29,817Cash
                  and Cash Equivalents at End of Period
              
              $
              33,878
              
              
              $
              58,376
              
              
              $
              312,949
              
              
              $
              47,953Supplemental
                  Disclosure of Cash Flow InformationInterest
                  Paid
              
              $
              124,631
              
              
              $
              6,223
              
              
              $
              5,538
              
              
              $
              9,363Income
                  Taxes Paid
              
              $
              38,389
              
              
              $
              26,814
              
              
              $
              43,351
              
              
              $
              86,498Accruals
                  Related to Purchases of Property and Equipment
              
              $
              4,175
              
              
              $
              (987
              )
              
              $
              (1,506
              )
              
              $
              (805
              )
   See
        Notes
        to Consolidated Financial Statements
  
  33
  
 **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Consolidated
        Statements of Stockholders’ Equity**
 **(All
        amounts in thousands, except share data)**
  **Common**
                **Stock**
              
              
              **Capital
                  in**
                **Excess
                  of**
                **Par
                  Value**
              
              
              **Retained**
                **Earnings**
              
              
              **Accumulated**
                **Other**
                **Comprehensive
                  Income (Loss)**
              
              
              **Note**
                **Receivable**
                **From
                  Options**
                **Exercised**
              
              
              **Treasury**
                **Stock**
              
              
              **Total**Predecessor:Balance
                  at May 29, 2004
              
              $
              49,809
              
              
              $
              23,016
              
              
              $
              831,926
              
              
              $
              2
              
              
              $
              (63
              )
              
              $
              (59,258
              )
              
              $
              845,432Comprehensive
                  Income:Net
                  Income
              
              
              
              
              
              
              
              
              
              
              105,033
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              105,033Net
                  Unrealized Loss on Non-currentMarketable
                  Securities, Net of Taxes
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              2
              
              
              
              
              
              
              
              
              
              
              
              2Total
                  Comprehensive Income:
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              105,035Stock
                  Options Exercised
              
              
              89
              
              
              
              1,275
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,364Repayment
                  of Note receivable from Options Exercised
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              22
              
              
              
              
              
              
              
              22Treasury
                  Stock Transactions
              
              
              
              
              
              
              485
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              598
              
              
              
              1,083Dividend
              
              
              
              
              
              
              
              
              
              
              (26,783
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (26,783
              )Balance
                  at May 28, 2005
              
              
              49,898
              
              
              
              24,776
              
              
              
              910,176
              
              
              
              4
              
              
              
              (41
              )
              
              
              (58,660
              )
              
              
              926,153Comprehensive
                  Income:Net
                  Income
              
              
              
              
              
              
              
              
              
              
              94,339
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              94,339Net
                  Unrealized Loss on Non-currentMarketable
                  Securities, Net of Taxes
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (4
              )
              
              
              
              
              
              
              
              
              
              
              (4
              )Total
                  Comprehensive Income:
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              94,335Stock
                  Options Exercised
              
              
              3
              
              
              
              422
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              425Repayment
                  of Note receivable from Options Exercised
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              41
              
              
              
              
              
              
              
              41Dividend
              
              
              
              
              
              
              
              
              
              
              (1,791
              )
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,791
              )Balance
                  at April 12, 2006
              
              $
              49,901
              
              
              $
              25,198
              
              
              $
              1,002,724
              
              
              $
              —
              
              
              $
              —
              
              
              $
              (58,660
              )
              
              $
              1,019,163
   
 34
  
 **Successor:**
                    
                    **Common**
                      **Stock**
                    
                    
                    **Capital
                        in**
                      **Excess
                        of**
                      **Par
                        Value**
                    
                    
                    **Accumulated
                        (Deficit)**
                    
                    
                    **Total**Balance
                        at April 13, 2006
                    
                    $
                    
                    
                    
                    $
                    445,830
                    
                    
                    $
                    
                    
                    
                    $
                    445,830Net
                        Loss
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (27,166
                    
                    
                    
                    (27,166
                    )Deferred
                        Compensation—Amortization
                    
                    
                    
                    
                    
                    
                    848
                    
                    
                    
                    
                    
                    
                    
                    848Balance
                        at June 3, 2006
                    
                    
                    
                    
                    
                    
                    446,678
                    
                    
                    
                    (27,166
                    )
                    
                    
                    419,512Net
                        Loss
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (47,199
                    )
                    
                    
                    (47,199
                    )Stock
                        Option Expense
                    
                    
                    
                    
                    
                    
                    2,855
                    
                    
                    
                    
                    
                    
                    
                    2,855Deferred
                        Compensation-Amortization
                    
                    
                    
                    
                    
                    
                    5,102
                    
                    
                    
                    
                    
                    
                    
                    5,102Equity
                        Investment
                    
                    
                    
                    
                    
                    
                    300
                    
                    
                    
                    
                    
                    
                    
                    300Dividend
                        ($10,000 per share)
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (100
                    )
                    
                    
                    (100
                    )Balance
                        at June 2, 2007
                    
                    $
                    —
                    
                    
                    $
                    454,935
                    
                    
                    $
                    (74,465
                    )
                    
                    $
                    380,470
 
   See
        Notes to Consolidated Financial
        Statements
 
 35
  Burlington
        Coat Factory Investments Holdings,
        Inc. and Subsidiaries  **Notes
          to Consolidated Financial Statements**
  **A.  Summary
        of Significant Accounting Policies**
  **1.
        Business**
  Burlington
        Coat Factory Investments Holdings, Inc. and its subsidiaries (the “Company” or
“Holdings”) operate stores, in 44 states, which sell apparel, shoes and
        accessories for men, women and children. A majority of those stores offer
        a home
        furnishings and linens department and a juvenile furniture department. As
        of
        June 2, 2007, the Company operates stores under the names “Burlington Coat
        Factory” (three hundred fifty-nine stores), “Cohoes Fashions” (two stores), “MJM
        Designer Shoes” (seventeen stores), and “Super Baby Depot” (one store). Cohoes
        Fashions offers products similar to that of Burlington Coat
        Factory.  MJM Designer Shoes offers moderately priced designer and
        fashion shoes. The Super Baby Depot store offers baby clothing, accessories,
        furniture and other merchandise in the middle to higher price range. During
        fiscal 2007, the Company opened nineteen Burlington Coat Factory
        stores.  Two stores previously operated as Cohoes Fashions stores were
        converted to Burlington Coat Factory stores and three existing Burlington
        Coat
        Factory stores were relocated to new sites within their existing selling
        markets.  In addition, the Company reopened all stores which were
        closed due to Hurricane Katrina and Wilma damage.  During the fiscal
        year, three Burlington Coat Factory stores, three Cohoes Fashions stores,
        one
        MJM Designer Shoes store and one Super Baby Depot store were
        closed.
 
 **2.
        Basis of
        Presentation**
 
 The
        consolidated financial statements include the accounts of Burlington Coat
        Factory Investments Holdings, Inc. and all its subsidiaries (“Company” or
“Holdings”). Burlington Coat Factory Investments Holdings, Inc. has no
        operations and its only asset is all of the stock in Burlington Coat Factory
        Warehouse Corporation. All discussions of operations in this report relate
        to
        Burlington Coat Factory Warehouse Corporation and its subsidiaries (“BCFWC”),
        which are reflected in the financial statements of the
        Company.  Except as expressly indicated or unless the context
        otherwise requires, as used herein the “Company”, “we”, “us”, or “our” means
        Burlington Coat Factory Investments Holdings, Inc. and its
        subsidiaries.
 
 Although
        BCFWC continued as the same legal entity after the Merger Transaction (described
        below in Note 3), the accompanying consolidated statements of operations
        and
        cash flows are presented for the Predecessor and Successor periods, which
        relate
        to the period preceding the Merger and the period succeeding the Merger,
        respectively. We refer to the operations of BCFWC and subsidiaries for both
        the
        Predecessor and Successor periods.
 
 **3. Merger
        Transaction**
 
 On
        January 18, 2006, BCFWC entered into an Agreement and Plan of Merger, dated
        as
        of January 18, 2006 (the “Merger Agreement”), by and among BCFWC, Burlington
        Coat Factory Holdings, Inc. (f/k/a BCFWC Acquisition, Inc.) (“Parent”) and BCFWC
        Mergersub, Inc. (“Merger Sub”) to sell all of the outstanding common stock of
        BCFWC to Parent through a merger with Merger Sub, which were entities directly
        and indirectly owned by entities affiliated with Bain Capital Partners, LLC
        (collectively, the “Equity Sponsors” or “Investors”).
  On
        April
        13, 2006, the transaction was consummated by the Equity Sponsors through
        a $2.1
        billion merger of Acquisition Sub with and into BCFWC, with BCFWC being the
        surviving corporation in the merger (the “Merger”). Under the Merger Agreement,
        the former holders of BCFWC’s common stock, par value $1.00 per share, received
        $45.50 per share. The Merger consideration was funded through the use of
        BCFWC’s
        available cash, cash equity contributions from the Equity Sponsors and the
        debt
        financings as described more fully below. We refer to the April 13, 2006
        Merger
        as the “Merger Transaction.”
 
 Immediately
        following the consummation of the Merger Transaction, Parent entered into
        a
        Contribution Agreement with Holdings to effectuate an exchange of shares
        whereby
        Parent delivered to Holdings all of the outstanding shares in BCFWC, and
        Holdings simultaneously issued and delivered to the parent 1,000 shares of
        common stock constituting all of Holdings’ issued and outstanding
        stock.
  The
        following principal equity capitalization and financing transactions occurred
        in
        connection with the Merger Transaction:
    36
  •
              
              Aggregate
                  cash equity contributions of approximately $445 million were made
                  by the
                  Equity Sponsors and $0.8 million in cash from members of management;
                  and
  
 •
              
              BCFWC
                  (1) entered into an $800 million secured ABL Credit Facility, of
                  which $225 million was drawn at closing, (2) entered into a $900
                  million secured term loan agreement, all of which was drawn at
                  closing,
                  (3) issued $305 million face amount 11 1/8% Senior Notes due 2014
                  at a
                  discount of which all the $299 million proceeds were used to finance
                  the
                  Merger Transactions and (4) received a cash contribution from
                  Holdings of $75 million from an issuance of $99.3 million 14 1/2%
                  Senior
                  Discount Notes due 2014, all of which was also used to finance
                  the Merger
                  Transaction.
  The
        proceeds from the equity capitalization and financing transactions, together
        with $193 million of our available cash, were used to fund the:
  •
              
              Purchase
                  of common stock outstanding of approximately $2.1
                  billion;
  •
              
              Settlement
                  of all stock options of BCFWC under the terms of the Merger Agreement
                  of
                  approximately $13.8 million; and
  •
              
              Fees
                  and expenses related to the Merger Transaction and the related
                  financing
                  transactions of approximately $90.8
                  million.
 
 Immediately
        following the
        consummation of the Merger Transaction, the Equity Sponsors indirectly owned
        98.5% of the Parent and management owned 1.5% of the Parent.
  In
        connection with the Merger Transaction, effective as of April 13, 2006, the
        Certificate of Incorporation of BCFWC Mergersub, Inc. became BCFWC’s Certificate
        of Incorporation which resulted in the following changes to BCFWC’s authorized
        capital stock from 5,000,000 preferred shares, par value $1.00 per share,
        and
        100,000,000 common shares, par value $1.00 per share to 1,000 preferred shares,
        par value $0.01 per share, and 10,000 common shares, par value $1.00 per
        share,
        authorized shares of capital stock. As of June 2, 2007, 1,000 shares of BCFWC
        common stock were held by Holdings and all 1,000 shares of Holdings were
        held by
        Parent.
  **4. Principles
        of Consolidation**
 
 The
        consolidated financial statements include the accounts of Burlington Coat
        Factory Investments Holdings, Inc. and all its subsidiaries in which it has
        the
        controlling financial interest through direct ownership of a majority voting
        interest or a controlling managerial interest. All subsidiaries are wholly
        owned
        except one, of which we own seventy-five percent. The investment is
        consolidated, net of its minority interest. All significant intercompany
        accounts and transactions have been eliminated.
 Holdings
        was incorporated in the State of Delaware on April 10, 2006. Holdings’
Certificate of Incorporation authorizes 1,000 shares of common stock, par
        value
        of $0.01 per share. All 1,000 shares are issued and outstanding and Parent
        is
        the only holder of record of this stock.
 
 **5.  Use
        of Estimates**
 
 The
        Company's consolidated financial statements have been prepared in conformity
        with accounting principles generally accepted in the United States of
        America.  Certain amounts included in the consolidated financial
        statements are estimated based on currently available information and
        management's judgment as to the outcome of future conditions and
        circumstances.  While every effort is made to ensure the integrity of
        such estimates, actual results could differ from these estimates.
  
 **6.  Cash
        and Cash Equivalents**
 
 Cash
        and
        cash equivalents represent cash and short-term, highly liquid investments
        with
        maturities of three months or less at the time of purchase.
  
 37
 
 
 **7.
        Inventories**
 
 Merchandise
        inventories as of June 2, 2007 and June 3, 2006 are valued at the lower of
        cost,
        on an average cost basis, or market, as determined by the retail inventory
        method. The Company records its cost of merchandise (net of purchase discounts
        and certain vendor allowances), certain merchandise acquisition costs (primarily
        commissions and import fees), inbound freight, warehouse outbound freight,
        and
        freight on internally transferred merchandise in the line item "Cost of Sales"
        in the Company's Consolidated Statement of Operations. Costs associated with
        the
        Company's warehousing, distribution, buying, and store receiving functions
        are
        included in the line items "Selling and Administrative Expenses", "Depreciation”
and “Amortization” in the Company's Consolidated Statement of Operations.
        Warehousing and purchasing costs included in “Selling and Administrative
        Expenses” amounted to $57.7 million, $7.5 million, $45.4 million and $47.5
        million for the fiscal year ended June 2, 2007, the fiscal period from April
        13,
        2006 to June 3, 2006, the fiscal period from May 29, 2005 to April 12, 2006,
        and
        the fiscal year ended May 28, 2005, respectively. Depreciation related to
        the
        warehousing and purchasing functions amounted to $10.4 million, $0.1 million,
        $7.8 million, and $8.8 million, for the fiscal year ended June 2, 2007, the
        fiscal period from April 13, 2006 to June 3, 2006, the fiscal period from
        May
        29, 2005 to April 12, 2006, and the fiscal year ended May 28, 2005,
        respectively.  Also included in “Selling and Administrative Expenses”
are payroll and payroll related expenses, occupancy related expenses,
        advertising expenses, store operating expenses and corporate overhead
        expenses.
 
 **8.
        Investments**
 
 The
        Company classifies its investments in debt and equity securities into
        held-to-maturity, available-for-sale or trading categories in accordance
        with
        the provisions of Statement of Financial Accounting Standards ("SFAS") No.
        115,
*Accounting For Certain Investments in Debt and Equity Securities.*Debt
        securities are classified as held-to-maturity when the Company has the positive
        intent and ability to hold the securities to maturity. Held-to-maturity
        securities are stated at amortized cost. Debt securities not classified as
        held-to-maturity are classified as trading securities and are carried at
        fair
        market value, with unrealized gains and losses included in net income (loss).
        The Company's investments not classified as held-to-maturity or trading
        securities are classified as available-for-sale and are carried at fair market
        value, with unrealized gains and losses, net of tax, reported as a separate
        component of stockholders' equity.
  **9.** **Assets
        Held for Disposal**
 
 Assets
        Held for Disposal represents
        assets owned by the Company that management has committed to sell in the
        near
        term.  The Company has either identified or is actively seeking out
        potential buyers for these assets as of the balance sheet dates.  The
        assets listed as “Assets Held for Disposal” are comprised of buildings related
        to store operations and store leases held by the Company.
 
 **10.  Property
        & Equipment**
 
 Property
        and equipment are recorded at
        cost, and depreciation is computed using the straight line method over the
        estimated useful lives of the assets.  The estimated useful lives are
        between 20 and 40 years for buildings, depending upon the expected useful
        life
        of the facility, and three to ten years for store fixtures and
        equipment.  Leasehold improvements are depreciated over the lease term
        including any reasonably assured renewal options or the expected economic
        life
        of the improvement, whichever is less.  Repairs and maintenance
        expenditures are charged to expense as incurred.  Renewals and
        betterments, which significantly extend the useful lives of existing property
        and equipments, are capitalized.  Assets recorded under capital leases
        are recorded at the present value of minimum lease payments and are amortized
        over the lease term.  Amortization of assets recorded as capital
        leases is included in “Depreciation” in the Company’s Consolidated Statements of
        Operations.
 
 The
        carrying value of all long-lived
        assets are reviewed for impairment whenever events or changes in circumstances
        indicate that the carrying value of an asset may not be recoverable, in
        accordance with SFAS No.144, “*Accounting for the Impairment of Disposal of
        Long Lived  Assets*.”  An impairment charge is recorded
        when an asset’s carrying value exceeds its fair value.
 
 **11.
        Intangible Assets**
  The
        Company accounts for intangible assets in compliance with SFAS No. 142,
*Goodwill and Other Intangible Assets*. The Company’s intangible assets
        primarily represent a tradename and net favorable lease positions. The tradename
        asset, the trademark Burlington Coat Factory, is expected to generate cash
        flows
        indefinitely and does not have an estimable or finite useful life; and
        therefore, is accounted for as an indefinite-lived asset not subject to
        amortization. The values of favorable and unfavorable lease positions are
        amortized on a straight-line basis over the expected lease terms. Amortization
        of net favorable lease positions are
   38
 
   included
          in “Amortization” in the Company’s  Consolidated Statement of
          Operations.
  The
        Company tests identifiable intangible assets with an indefinite life for
        impairment at a minimum on an annual basis, relying on a number of factors,
        including operating results, business plans and projected future cash flows.
        The
        impairment test consists of a comparison of the fair value of the intangible
        asset with its carrying amount.  The Company tested these assets for
        impairment during the last month of fiscal 2007.  Based upon the
        Company’s review, impairment charges were not required.
 
 Identifiable
        intangible assets that are subject to amortization are evaluated for impairment
        using a process similar to that used to evaluate other long-lived assets
        as
        described in Note A 27. An impairment loss is recognized for the amount by
        which
        the carrying value exceeds the fair value of the asset.
 
 **12.
        Goodwill**
 
 Goodwill
        represents the excess of the acquisition cost over the estimated fair value
        of
        tangible assets and other identifiable assets acquired less liabilities assumed.
        Other identifiable intangible assets include tradenames and net favorable
        leases. SFAS No. 142 replaces the amortization of goodwill and
        indefinite-lived intangible assets with periodic tests for the impairment
        of
        these assets. SFAS No. 142 requires a comparison, at least annually, of the
        carrying value of the assets and liabilities associated with a reporting
        unit,
        including goodwill, with the fair value of the reporting unit.  If the
        carrying value exceeds the fair value, we would calculate the implied fair
        value
        of our reporting unit goodwill as compared to the carrying value of our
        reporting unit goodwill to determine the appropriate impairment
        charge.  We estimate the fair value of our reporting unit using widely
        accepted valuation techniques such as comparable transactions and market
        multiple analyses.  These techniques use a variety of assumptions to
        include projected market conditions, discount rates and future cash
        flows.  Although we believe our assumptions are reasonable, actual
        results may vary significantly and may expose us to material impairment charges
        in the future.  The Company’s annual impairment test was conducted
        during the last month of fiscal 2007 and no impairment was recorded as result
        of
        these tests.
 
 **13.
        Other Assets**
 
 Other
        assets consist primarily of deferred financing fees, notes receivable and
        the
        net accumulation of excess rent income, accounted for on a straight-line
        basis,
        over actual rental income receipts.  Deferred financing fees are
        amortized over the life of the related debt facility.  Amortization of
        deferred financing fees is recorded in the line item “Amortization” in the
        Company’s  Consolidated Statement of Operations.
 
 **14.
        Other Current Liabilities**
 
 Other
        current liabilities primarily consist of sales tax payable, unredeemed store
        credits and gift cards, accrued payroll costs, accrued insurance costs ($33.7
        million and $30.8 million as of June 2, 2007 and June 3, 2006, respectively),
        accrued operating expenses, layaway deposits, payroll taxes payable, current
        portion of deferred rent expense and other miscellaneous items.
 
 **15.
        Other Liabilities**
 
 Other
        liabilities primarily consist of deferred lease incentives and the net
        accumulation of excess straight-line rent expense over actual rental payments.
        Deferred lease incentives are funds received or receivable from landlords
        used
        primarily to offset the costs of store remodelings. These deferred lease
        incentives are amortized over the expected lease term including rent holiday
        periods and option periods where the exercise of the option can be reasonably
        assured.  Amortization of deferred lease incentives is included in the
        line item “Selling and Administrative Expenses” on the Company’s Consolidated
        Statement of Operations.
 
 **16.  Common
        Stock**
 
 Burlington
        Coat Factory Investments
        Holdings, Inc. has 1,000 shares of common stock issued and outstanding, which
        are all owned by Burlington Coat Factory Holdings, Inc.  Burlington
        Coat Factory Holdings, Inc., the parent company of Burlington Coat Factory
        Investments Holdings, Inc., has authorized 49,700,000 shares of Class A common
        stock, par value $0.001 and 5,550,000 shares of Class L common stock, par
        value
        $0.001.  Burlington Coat Factory Holdings, Inc. has outstanding as of
        June 2, 2007:    45,198,117 shares of Class A common stock
        and 5,022,013 shares of Class L common stock.  As of June 3, 2006,
        shares outstanding were 45,178,119 shares of Class A common stock and 5,019,791
        shares of Class L common stock.
 
 39
 
 **17.  Store
        Opening Expense**
 
 Expenses
        related to new store openings are charged to operations in the period
        incurred.
 
 **18.
        Income Taxes**
 
 The
        company accounts for income taxes in accordance with SFAS No. 109,
*Accounting for Income Taxes*.  Deferred income taxes for 2007
        and 2006 reflect the impact of “temporary differences” between amounts of assets
        and liabilities for financial reporting purposes and such amounts as measured
        by
        tax laws.
 
 **19.
        Revenue Recognition**
 
 The
        Company records revenue at the time of sale and delivery of merchandise,
        net of
        allowances for estimated future returns. The Company accounts for layaway
        sales
        and leased department revenue in compliance with Staff Accounting Bulletin
        ("SAB") No. 101, *Revenue Recognition in Financial Statements,*as
        revised and rescinded by SAB No. 104, *Revenue Recognition.* Layaway
        sales are recognized upon delivery of merchandise to the customer. The amount
        of
        cash received upon initiation of the layaway is recorded as a deposit liability
        within “Other Current Liabilities” in the Company’s Consolidated Balance
        Sheets.  Gift cards are recorded as a liability at the time of
        issuance, and the related sale is recorded upon redemption. Except where
        prohibited by law, after 12 months of non-use, a monthly maintenance fee
        is
        deducted from the remaining balance of the gift card and is recorded as other
        revenue.  The Company presents sales, net of sales taxes, in its
        Consolidated Statement of Operations.
 
 **20.  Other
        Income (Loss), Net**
 
 Other
        Income (Loss), Net, consists of investment income gains (losses), net losses
        from disposition of fixed assets ($3.6 million, $2.7 million and $0.8 million
        for the fiscal year ended June 2, 2007, the period from May 29, 2005 to April
        12, 2006, and the fiscal year ended May 28, 2005) and other miscellaneous
        income
        items.  There was a one thousand dollar net loss on disposition of
        fixed assets for the period from April 13, 2006 to June 3, 2006.
 
 
 **21.  Comprehensive
        Income**
 
 The
        Company presents comprehensive income (loss) as a component of stockholders'
        equity in accordance with SFAS No. 130, *Reporting Comprehensive Income.*
        For the fiscal year ended June 2, 2007, the period from April 13, 2006 to
        June
        3, 2006, the period from May 29, 2005 to April 13, 2006 and the fiscal year
        ended May 28, 2005, comprehensive income (loss) consisted of net income
        (loss).
 
 
 **22.
        Other Revenue**
 
 Other
        Revenue consists of rental income received from leased departments, subleased
        rental income, layaway, alteration and other service charges and other
        miscellaneous items. Layaway, alteration and other service fees amounted
        to
        $16.1 million, $0.9 million, $7.8 million and $8.4 million for the fiscal
        year
        ended June 2, 2007, the period from April 13, 2006 to June 3, 2006, the period
        from May 29, 2005 to April 12, 2006 and the fiscal year ended May 28, 2005,
        respectively.  Rental income from leased departments amounted to $9.9
        million, $1.4 million, $9.7 million and $9.2 million for the fiscal year
        ended
        June 2, 2007, the period from April 13, 2006 to June 3, 2006, the period
        from
        May 29, 2005 to April 12, 2006 and the fiscal year ended May 28, 2005,
        respectively. Subleased rental income and other miscellaneous revenue items
        amounted to $12.2 million, $1.8 million, $10.2 million and $11.0
        million  for the fiscal year ended June 2, 2007, April 13, 2006 to
        June 3, 2006, the period from May 29, 2005 to April 12, 2006 and the fiscal
        year
        ended May 28, 2005.
 
 **23.
        Vendor Rebates and Allowances**
 
 Rebates
        and allowances received from vendors are accounted for in compliance with
        Emerging Issues Task Force ("EITF") Issue No. 02-16, *Accounting by a
        Customer (including a Reseller) for Certain Consideration Received from a
        Vendor*. EITF Issue No. 02-16 specifically addresses whether a reseller
        should account for cash consideration received from a vendor as an adjustment
        of
        cost of sales, revenue, or as a reduction to a cost incurred by the reseller.
        Rebates and allowances received from vendors that are dependent on purchases
        of
        inventories are recognized as a reduction of cost of goods sold when the
        related
        inventory is sold or marked down.
   40
 
 Rebates
        and allowances that are reimbursements of specific expenses are recognized
        as a
        reduction of selling and administrative expenses when earned, up to the amount
        of the incurred cost. Any vendor reimbursement in excess of the related incurred
        cost is recorded as a reduction of cost of sales. Reimbursements of expenses
        amounted to $0.9 million, $0.1 million, $0.8 million and $1.0 million for
        the
        fiscal year ended June 2, 2007, the period from April 13, 2006 to June 3,
        2006,
        the period from May 29, 2005 to April 12, 2006, and for the fiscal year ended
        May 28, 2005, respectively.
 
 **24.  Capitalized
        Computer Software Costs**
 
 The
        Company accounts for capitalized software in accordance with Statement of
        Position ("SOP") 98-1, *Accounting For the Costs of Computer Software
        Developed For or Obtained for Internal-Use*. The SOP requires the
        capitalization of certain costs incurred in connection with developing or
        obtaining software for internal use. The Company capitalized $12.5 million,
        $4.1
        million, $0.3 million and $4.2 million relating to these costs during the
        fiscal
        year ended June 2, 2007, the period from May 29, 2005 to April
 12,
        2006,
        the period from April 13, 2006 to June 3, 2006, and for the fiscal year ended
        May 28, 2005, respectively.
 
 As
        part of the Merger Transaction, the
        Company recorded $42.0 million for internally developed software.
 
 Purchased
        and internally developed software is amortized on a straight line basis over
        a
        three-year life.  The net carrying value of software is included in
        the line item “Property and Equipment” on the Company’s Consolidated Balance
        Sheets and software amortization is included in the line item “Depreciation” on
        the Company’s Consolidated Statement of Operations
 
 **25.   Stock
        Option and Award Plans and Stock-Based Compensation**
 
 On
        April
        13, 2006, the Parent’s Board of Directors adopted the 2006 Management Incentive
        Plan (the “Plan”). The Plan provides for the granting of service-based and
        performance-based stock options and restricted stock to executive officers
        and
        other key employees of the Company and its subsidiaries. Pursuant to the
        Plan,
        employees are granted options to purchase “units” of common stock in the Parent.
        Each unit consists of nine shares of Class A common stock and one share of
        Class L common stock of the Parent. The shares comprising a unit are in the
        same
        proportion as the shares of Class A and Class L common stock held by all
        stockholders of the Parent. The options are exercisable only for whole units
        and
        cannot be separately exercised for the individual classes of the Parent common
        stock. There are 511,122 units reserved under the Plan consisting of 4,600,098
        shares of Class A common stock of Parent and 511,122 shares of Class L common
        stock of Parent.
  The
        units
        were granted in three tranches with exercise prices as follows: Tranche 1:
        $90
        per unit; Tranche 2: $180 per Unit; and Tranche 3: $270 per unit. The
        service-based awards cliff vest 40% on the second anniversary of the award
        with
        the remaining ratably over the subsequent three years. All options become
        exercisable upon a change of control and unless determined otherwise by the
        plan
        administrator. Upon cessation of employment, options that have not vested
        will
        terminate immediately, units issued upon the exercise of vested options will
        be
        callable and unexercised vested options will be exercisable for a period
        of 60
        days. The final exercise date for any option granted is the tenth anniversary
        of
        the grant date.
  As
        of
        June 2, 2007, the Parent granted
        422,000****options****to purchase
        units.  All options granted to date are service-based awards. On June
        4, 2006, we adopted SFAS No. 123R (Revised 2004), *“Share-Based Payment,”*using the modified prospective method, which requires companies
        to record
        stock compensation expense for all non-vested and new awards beginning as
        of the
        adoption date. Accordingly, prior period amounts presented herein have not
        been
        restated. For the fiscal year ended June 2, 2007, we recognized non-cash
        stock
        compensation expense of $2.9 million, which is included in the line item
        “Selling and Administrative Expense” on our Company’s Consolidated Statements of
        Operations. The adoption of SFAS 123R had no impact on our cash flow from
        operations or financing activities. The Company made an election to use the
        simplified method of calculating the adoption date APIC Pool.  At June
        2, 2007, there is approximately $11.1 million of unearned non-cash stock-based
        compensation that we expect to recognize as expense over the next 3.9 years.
        The
        service-based awards are expensed on a straight-line basis over the requisite
        service period of five years.  As of June 2, 2007, ninety-five percent
        of outstanding units are expected to vest.
 
 
 
  41
  Stock
        Option Unit Transactions are summarized as follows:
 
 
 Number
                  of
                Units
              
              
              Average
                  Exercise Price Per UnitOptions
                    Outstanding June 3, 2006
              
              
              347,500
              
              
              $
              180.00Options
                    Issued
              
              
              74,500
              
              
              $
              180.00Options
                    Forfeited
              
              
              (55,000
              )
              
              $
              180.00Options
                    CancelledOptions
                    ExercisedOptions
                    Outstanding June 2, 2007
              
              
              367,000
              
              
              $
              180.00
 
 
 The
        following table summarizes information about the stock options outstanding
        under
        Parent’s 2006 Plan as of June 2, 2007:
 
 Stock
                    Option Units Outstanding
                
                Option
                    Units ExercisableRange
                    of
                  Exercise
                  Prices
                
                
                Number
                  Outstanding
                  At
                    June 2, 2007
                
                Weighted
                  Average
                  Remaining
                  Contractual
                  Life
                
                Weighted
                  Average
                  Exercise
                  Price
                
                
                Number
                  Exercisable
                  June
                    2, 2007Tranche
                      1
                
                $
                90
                
                
                
                122,333
                
                8.9
                      years
                
                $
                90
                
                
                
                0Tranche
                      2
                
                $
                180
                
                
                
                122,333
                
                8.9
                      years
                
                $
                180
                
                
                
                0Tranche
                      3
                
                $
                270
                
                
                
                122,334
                
                8.9
                      years
                
                $
                270
                
                
                
                0367,000
                
                
                
                
                
                
                
                
                0
 The
        fair
        value of each stock option granted is estimated on the date of grant using
        the
        Black-Scholes option pricing model with the following weighted average
        assumptions used for grants under Parent’s 2006 Plan in fiscal 2006 and fiscal
        2007:
 
 Risk-Free
                    Interest Rate
              
              
              4.75
              %Expected
                    Volatility
              
              
              70
              %Expected
                    Life
              
              
              4.5
                    yearsContractual
                    Life
              
              
              10
                    yearsExpected
                    Dividend Yield
              
              
              0.0
              %Fair
                    Value of Option Units GrantedTranche
                    1
              
              $
              53.13Tranche
                    2
              
              $
              38.79Tranche
                    3
              
              $
              30.53
 
 
 42
 
 **Pre-Transaction
        Stock-Based Compensation Accounting**
 
 Prior
        to
        the closing of the Merger transaction, BCFWC applied Accounting Principles
        Board
        (“APB”) No. 25 in accounting for its stock option awards. Accordingly,
        compensation expense has not been recorded for the fiscal period from April
        13,
        2006 to June 3, 2006, the period from May 29, 2005 to April 12, 2005 and
        the
        fiscal year ended May 28, 2005 for the stock options for which the exercise
        period of the options was equal to or greater then the fair market value
        of the
        options at the grant date. The following table illustrates the effect had
        the
        Company applied the fair value recognition provisions of SFAS No. 123 (in
        thousands):
 
 
 -Successor-
              
              
              -----------Predecessor---------Period
                  from 4/13/06 to 6/3/06
              
              
              Period
                  from 5/29/05 to 4/12/06
              
              
              Year
                  Ended
                5/28/05Net
                  income (loss) as reported
              
              $
              (27,166
              )
              
              $
              94,339
              
              
              $
              105,033Expense
                  under fair value method, net
                of
                  tax effect
              
              
              (297
              )
              
              
              (567
              )
              
              
              (252
              )Pro
                  forma net income (loss)
              
              $
              (27,463
              )
              
              $
              93,772
              
              
              $
              104,781
 
 
 
 The
        fair
        value of each stock option granted was estimated on the date of grant using
        the
        Black-Scholes option pricing model with the following weighted average
        assumptions used for grants in fiscal 2005 (no options were granted during
        fiscal 2004 or fiscal 2006):
  
 Grant
                  1
              
              
              Grant
                  2Number
                    of Shares
              
              
              87,700
              
              
              
              73,600Risk-Free
                    Interest Rate
              
              
              4.10
              %
              
              
              4.10
              %Expected
                    Volatility
              
              
              37.65
              %
              
              
              38.00
              %Expected
                    Life
              
              5.5
                    years
              
              
              5.5
                    yearsContractual
                    Life
              
              10
                    years
              
              
              10
                    yearsExpected
                    Dividend Yield
              
              
              0.20
              %
              
              
              0.20
              %Fair
                    Value of Options Granted
              
              $
              6.79
              
              
              $
              9.85
 
 Any
        unexercised stock options at the time of the consummation of the Merger
        transaction were cancelled and each holder received an amount in cash, less
        applicable withholding taxes, equal to $45.50 per share less the exercise
        price
        of each option.
 
 **26.  Non-Vested
        Stock**
 
 At
        their option , in lieu of receiving
        an all cash retention bonus, members of management collectively received
        $5.9
        million in shares of non-vested stock (66,122 units) in the form of common
        stock
        of the Parent.  These shares vested on April 13, 2007.  No
        shares were granted or forfeited during the year.  Non-vested stock
        compensation was amortized over a one year vesting period and amounted to
        $5.1
        million and $ 0.8 million for the fiscal year ended June 2, 2007 and for
        the
        period from April 13, 2006 to June 3, 2006.  Compensation expense
        related to non-vested stock is recorded by the Company as additional
        paid-in-capital.
 
 **27.
        Impairment of Long-Lived Assets**
 
 The
        Company accounts for impaired long-lived assets in accordance with SFAS No.
        144,
*Accounting for the Impairment or Disposal of Long-Lived Assets*. This
        statement requires that long-lived assets and certain identifiable intangibles
        be reviewed for impairment whenever events or changes in circumstances indicate
        that the carrying amount of an asset may not be recoverable. Also, long-lived
        assets and certain intangibles to be disposed of should be reported at the
        lower
        of the carrying amount or fair value less cost to sell. The Company considers
        historical performance and future estimated results in its evaluation of
        potential impairment and then compares the carrying amount of the asset to
        the
        estimated future cash flows expected to result from the use of the asset.
        If the
   43
 
  carrying
          amount of the asset exceeds the estimated expected undiscounted future
          cash
          flows, the Company measures the amount of the impairment by comparing the
          carrying amount of the asset to its fair value. The estimation of fair
          value is
          measured by discounting expected future cash flows at the rate the Company
          utilizes to evaluate potential investments.
  **28.
        Discontinued Operations**
 
 The
        Company continuously monitors and evaluates store profitability. Based upon
        these evaluations, the decision to permanently close a store or to relocate
        a
        store within its same trading market is made. Only those stores permanently
        closed, where sales by another store will not absorb a significant amount
        of the
        closed store's sales, are included in the Company's calculation of discontinued
        operations. There were no discontinued operations recorded during the fiscal
        year ended June 2, 2007, for the period from May 29, 2005 to April 12, 2006
        or
        for the period from April 13, 2006 to June 3, 2006.
 
 In
        accordance with SFAS No. 144, during fiscal 2005, the Company’s discontinued
        operations reflect the operating results for three stores and the Company’s
        seventy-five percent investment closed during fiscal 2005. The following
        table
        summarizes the operating results of discontinued operations.
  
 **Predecessor**
                **Year
                  Ended**May
                  28, 2005(all
                  amounts in thousands)Revenues
              
              $
              11,301Gross
                  Margin
              
              
              2,377Selling
                  and Administrative Expenses
              
              
              3,990Depreciation
              
              
              289Loss
                  from Discontinued Operations  Before Income Tax
                  Benefit
              
              
              (1,127
              )Loss
                  from Discontinued Operations, Net of Tax Benefit
              
              $
              (1,014
              )
 
 
 **29.
        Advertising Costs**
 
 The
        Company's net advertising costs consist primarily of newspaper and television
        costs. The production costs of net advertising are charged to expense as
        incurred.  Net advertising expenses, included in Selling and
        Administrative Expenses on the Company's Consolidated Statements of Operations,
        for the fiscal year ended June 2, 2007, the period from April 13, 2006 to
        June
        3, 2006, the period and from May 29, 2005 to April 12, 2006, and fiscal year
        ended May 28, 2005 were $72.3 million, $9.4 million, $64.2 million, and $64.0
        million, respectively.  Vendor rebates netted against advertising
        expenses were $0.6 million, $1.1 million, ($0.1 million), and $0.8 million,
        for
        the fiscal year ended June 2, 2007, for the period from April 13, 2006 to
        June
        3, 2006, the period from May 29, 2005 to April 12, 2006, and the fiscal year
        ended May 28, 2005, respectively.  The Company nets certain
        cooperative advertising reimbursements received from vendors against specific,
        incremental, identifiable costs incurred in connection with selling the vendors'
        products.  Any excess reimbursement is characterized as a reduction of
        inventory and is recognized as a reduction to cost of sales as inventories
        are
        sold.
  
 **30.
        Lease Accounting**
 
 The
        Company leases store locations, distribution centers and office space used
        in
        its operations.  We account for our leases under the provisions of
        SFAS No. 13, “*Accounting for Leases*” and subsequent amendments, which
        requires that leases be evaluated and classified as operating or capital
        leases
        for financial reporting purposes.  Assets held under capital leases
        are included in property and equipment.  For leases classified as
        operating, the Company calculates rent expense on a straight line basis over
        the
        lesser of the lease term including renewal options, if reasonably assured,
        or
        the economic life of the leased premises, taking into consideration rent
        escalation clauses, rent holidays and other lease concessions. The Company
        expenses rent during the construction or build-out phase of the leased
        property.
 
 
 **31.
        Derivatives and Hedging Activities**
 
 SFAS
        No. 133, *“Accounting for Derivative Instruments and Hedging Activities”*as amended, establishes accounting and
   44
 
  reporting
          standards for derivative instruments, including certain derivative instruments
          embedded in other contracts, and for hedging activities. It requires the
          recording of all derivatives as either assets or liabilities on the balance
          sheet, measured at estimated fair value and the recognition of any unrealized
          gains and losses.
  The
        Company entered into two interest rate cap agreements to manage interest
        rate
        risk associated with its long-term debt obligations. These agreements are
        classified as “Intangible Assets” within our Consolidated Balance Sheets. Each
        agreement became effective on May 12, 2006. One interest rate cap agreement
        has
        a notional principal amount of $300,000,000 with a cap rate of seven percent,
        and terminates on May 31, 2011. The other agreement has a notional principal
        amount of $700,000,000 with a cap rate of seven percent, and terminates on
        May
        29, 2009. We do not monitor these interest rate cap agreements for hedge
        effectiveness. Gains and losses associated with these contracts are classified
        as “Interest Expense” on the Company’s Consolidated Statements of
        Operations.  The fair market value of the interest rate contracts at
        June 2, 2007 and June 3, 2006 amounted to $0.3 and $2.3 million,
        respectively.
 
 **32.
        Credit Risk**
 
 Financial
        instruments that potentially subject the Company to concentrations of credit
        risk consist principally of cash, cash equivalents and investments. The Company
        manages the credit risk associated with cash equivalents and investments
        by
        investing with high-quality institutions and, by policy, limiting investments
        only to those which meet prescribed investment guidelines. The Company has
        a
        policy of making investments in debt securities with short-term ratings of
        A-1
        (or equivalent) or long-term ratings of A and A-2 (or equivalent). The Company
        maintains cash accounts that, at times, may exceed federally insured limits.
        The
        Company has not experienced any losses from maintaining cash accounts in
        excess
        of such limits. Management believes that it is not exposed to any significant
        risks on its cash and cash equivalent accounts.
 
 
 **33.
        Reclassifications**
 
 Certain
        reclassifications have been made to the prior years’ consolidated financial
        statements to conform to the classifications used in the 2007 consolidated
        financial statements. Impairment charges previously recorded in the line
        item
“Depreciation” have been reclassified and included in the line item “Impairment
        Charges.”  Prepaid rent related balances previously recorded in the
        line item “Accounts Payable” have been reclassified and included in the line
        item “Prepaid and Other Current Assets” on the Company’s Consolidated Balance
        Sheets.
 
 **34.
        Recent Accounting Pronouncements**
 
 a.           In
        September 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*
        which defines fair value, establishes a framework for measurement and expands
        disclosure about fair value measurements. Where applicable, SFAS No. 157
        simplifies and codifies related guidance within generally accepted accounting
        principles. This statement shall be effective for financial statements issued
        for fiscal years beginning after November 15, 2007, and interim periods within
        those fiscal years. The Company is in the process of evaluating the impact
        of
        SFAS No. 157 on its financial statements.
 
 b.           In
        June 2006, the FASB ratified the consensus reached by the Emerging Issues
        Task
        Force (EITF) on Issue 06-3, *How Taxes Collected from Customers and
        Remitted to Governmental Authorities Should be Presented in the Income
        Statement*. The scope of this consensus includes any tax assessed by a
        governmental authority that is directly imposed on a revenue-producing
        transaction between
 a
        seller
        and a customer and may include, but is not limited to sales, use, value added
        and some excise taxes. Additionally, this consensus seeks to address how a
        company should address the disclosure of such items in interim and annual
        financial statements, either gross or net pursuant to APB Opinion No. 22,
*Disclosure of Accounting Policies*. EITF Issue 06-3 is effective
        for all financial reports for interim and annual reporting periods beginning
        after December 15, 2006. The Company presents sales net of sales taxes in
        its
        consolidated statement of operations. No change in presentation is anticipated
        as a result of EITF 06-3.
  c.           In
        September 2006, the SEC issued SAB No. 108, *Considering Effects of Prior
        Year Misstatements When Quantifying Misstatements in Current Year
        Financials*. SAB No. 108 provides interpretive guidance on the consideration
        of the effects of prior year misstatements in quantifying current year financial
        statement misstatements for the purpose of a materiality assessment. The
        Company
        was required to adopt the provisions of SAB No. 108 in its first year ending
        after November 15, 2006. The adoption of SAB No. 108 did not have a material
        impact on our consolidated financial statements.
  d.           In
        February 2007, the FASB issued SFAS No. 159, *“The Fair Value Option for
        Financial Assets and Financial Liabilities-*
   45
   *including
        an amendment of FASB Statement No. 115.*SFAS No. 159 permits entities to
        choose to measure many financial instruments and certain other items at fair
        value that are not currently required to be measured at fair value, with
        unrealized gains and losses related to these financial instruments reported
        in
        earnings at each subsequent reporting date.  This Statement is
        effective as of the beginning of an entity’s first fiscal year that begins after
        November 15, 2007.  The Company is in the process of evaluating the
        impact of SFAS No. 159 on its consolidated financial statements.
 
 e.           In
        July 2006, the FASB issued FASB Interpretation (“FIN”) No. 48 – Accounting for
        Uncertainty in Income Taxes – an interpretation of FASB Statement No.
        109.  FIN 48 prescribes a recognition threshold and measurement
        attribute for the financial statement recognition and measurement of a tax
        position taken or expected to be taken in a tax return.  FIN 48 also
        provides guidance on accounting for derecognition, interest, penalties,
        accounting in interim periods, disclosure and classification of matters related
        to uncertainty in income taxes and transitional requirements upon adoption
        of
        FIN 48.  FIN 48 is effective for fiscal years beginning after December
        15, 2006.  The Company will adopt FIN 48 on the first day of its
        fiscal year ended May 31, 2008.  The Company is in the process of
        assessing the impact of the adoption of FIN 48 on its consolidated financial
        statements
 
  **B.           Acquisitions**
 
 As
        described in Note 2, on April 13, 2006, affiliates of Bain Capital Partners,
        LLC
        purchased all of the outstanding capital stock of BCFWC from its existing
        stockholders for an aggregate purchase price of approximately $2.1
        billion.  The aggregate cost together with the costs and fees
        necessary to consummate the transaction were financed by equity contributions
        of
        $445.8 million, borrowings from an $800 million ABL Credit Facility, of which
        $225 million was drawn at the closing of the Merger Transaction, borrowings
        from
        a $900 million secured term loan agreement, issuance of $305 million of Senior
        Notes, of which $299 million of proceeds was used in the financing of the
        Merger
        Transaction, a cash contribution from Holdings of $75 million from an issuance
        of $99.3 million Senior Discount Notes and from BCFWC’s available
        cash.
 
 The
        acquisition of the Company has been accounted for in accordance with SFAS
        No.
        141, *Business Combinations*.  The purchase price was allocated
        to the assets acquired and liabilities assumed based on the estimates of
        their
        respective values at the date of acquisition.
  Assets
        acquired and liabilities assumed in an acquisition are valued based on fair
        market value measures as determined by management with the assistance of
        third
        parties. The method used to determine the asset values include a variety
        of
        valuation techniques. With respect to trademarks, management under the
        advisement of a third party, adopted the income approach to value these
        intangible assets. Under the income approach, the value of our trademarks
        was
        determined by the present value of potential future revenues from such
        trademarks based on a discounted royalty rate.
  With
        respect to internally developed software, we determined the value based on
        the
        assumed dollar value of the cost of recreating the source code of such software.
        The cost of recreating the source code was based on the labor costs for the
        man
        hours assumed to be required to create such source code.
  In
        order
        to determine the value of our leases, we compared our leases with comparable
        leases available in the market and discounted current lease rates over the
        life
        of our existing leases.
  In
        order
        to determine the step-up in basis for our assets, we applied either the cost
        approach or market approach, as management determined appropriate under the
        advisement of third party valuators. Under the cost approach the step-up
        in
        basis is determined by the current cost of replacement less estimated applicable
        depreciation. Under the market approach, the step-up is determined by the
        market
        value of comparable assets less applicable depreciation.
  The
        following table summarizes the allocation of the purchase price to assets
        acquired and liabilities assumed at the date of acquisition after revisions
        to
        estimated allocations had been made.
   46
   **April
                  13,**
                **2006**
                **(in
                  thousands)**Total
                  acquisition consideration:Cash
                  paid upon acquisition
              
              $
              2,050,918Liabilities
                  assumed
              
              
              769,251Acquisition
                  related costs
              
              
              4,8492,825,018Less:
                  book value of net assets acquired
              
              
              1,785,818$
              1,039,200Fair
                  value adjustment for property, plant and equipment
              
              $
              421,675Tradenames
              
              
              526,300Net
                  favorable lease positions
              
              
              637,112Internally
                  developed software
              
              
              42,000Deferred
                  taxes related to valuations
              
              
              (634,106
              )Goodwill
              
              
              46,219$
              1,039,200
  
 
 The
        following table reflects the pro forma revenue and net income for the periods
        presented as though the acquisition and related transactions had taken place
        at
        the beginning of each period (amounts in thousands):
 
 
 
 **Year
                  Ended**
                **June
                  3, 2006**
              
              
              **Year
                  Ended May 28, 2005**Revenue
              
              $
              3,470,554
              
              
              $
              3,199,840Net
                  Loss
              
              $
              (67,780
              )
              
              $
              (22,922
              )
 
 
 
 **C.           Restricted
        Cash and Cash Equivalents**
 
 At
        June
        2, 2007, restricted cash and cash equivalents consisted of $0.4 million pledged
        as collateral for certain insurance contracts and $2.4 million restricted
        contractually for the acquisition and maintenance of a building related to
        a
        store operated by the Company.  At June 3, 2006, restricted cash and
        cash equivalents consisted of $11.4 million pledged as collateral for certain
        insurance contracts, for which the related liability is classified in the
“Other
        Current Liabilities” line item in the Company’s Consolidated Balance Sheets, and
        $2.4 million restricted contractually for the acquisition and maintenance
        of a
        building related to a store operated by the Company.  During fiscal
        2007, the Company replaced approximately $11.0 million of restricted cash
        with
        letters of credit agreements as collateral for the insurance
        contracts.
 
  47
  
 **D.           Investments**
 
 Investments
        consist of (in thousands):
 
 **June
                  3, 2006****Cost**
              
              
              **Unrealized**
                **Gains**
              
              
              **Fair**
                **Market**
                **Value**Trading
                  Securities (Current):Equity
                  Investments
              
              $
              431
              
              
              $
              160
              
              
              $
              591
 
 
 During
        fiscal 2007, the Company sold equity investments for $0.7 million for a realized
        gain of $0.1 million.  The gain on sale of investments is included in
        the line item “Other Income, Net” on the Company’s Consolidated Statement of
        Operations.
 
 
 **E.           Assets
        Held for Disposal**
 
 Assets
        held for disposal are valued at their fair value as follows (in
        thousands):
 
 
 **June
                  2, 2007**
              
              
              **June
                  3, 2006**Fixed
                  Assets
              
              $
              32,320
              
              
              $
              6,035Favorable
                  Leases
              
              
              2,753
              
              
              
              1,626$
              35,073
              
              
              $
              7,661
 
 A
        loss of
        $0.8 million was recorded during the fiscal year ended June 2, 2007, related
        to
        the write-down of certain of these assets to their fair value.  This
        loss was recorded under the caption “Impairment Charges” in the Company’s
        Consolidated Statements of Operation.
 
 
 **F.           Property
        and Equipment**
 
 Property
        and equipment consist of (in thousands):
 
 **Successor****June
                  2, 2007****Owned**
              
              
              **Capital**
                **Leases**
              
              
              **Total**Land
              
              $
              163,595
              
              
              
              -
              
              
              $
              163,595Buildings
              
              
              307,424
              
              
              $
              36,191
              
              
              
              343,615Store
                  Fixtures and Equipment
              
              
              298,976
              
              
              
              -
              
              
              
              298,976Leasehold
                  Improvements
              
              
              323,226
              
              
              
              -
              
              
              
              323,226Construction
                  in Progress
              
              
              4,642
              
              
              
              -
              
              
              
              4,6421,097,863
              
              
              
              36,191
              
              
              
              1,134,054Less
                  Accumulated Depreciation
              
              
              (151,587
              )
              
              
              (1,813
              )
              
              
              (153,400
              )$
              946,276
              
              
              $
              34,378
              
              
              
              980,654Less
                  Assets Held for Disposal
              
              
              
              
              
              
              
              
              
              
              (32,320
              )Total
              
              
              
              
              
              
              
              
              
              $
              948,334
  
 48
 
 **Successor****June
                  3, 2006****Owned**
              
              
              **Capital**
                **Leases**
              
              
              **Tota**lLand
              
              $
              182,830
              
              
              
              -
              
              
              $
              182,830Buildings
              
              
              276,751
              
              
              $
              36,409
              
              
              
              313,160Store
                  Fixtures and Equipment
              
              
              262,820
              
              
              
              -
              
              
              
              262,820Leasehold
                  Improvements
              
              
              304,610
              
              
              
              -
              
              
              
              304,610Construction
                  in Progress
              
              
              1,283
              
              
              
              -
              
              
              
              1,2831,028,294
              
              
              
              36,409
              
              
              
              1,064,703Less
                  Accumulated Depreciation
              
              
              (16,159
              )
              
              
              (111
              )
              
              
              (16,270
              )$
              1,012,135
              
              
              $
              36,298
              
              
              
              1,048,433Assets
                  Held for Disposal
              
              
              
              
              
              
              
              
              
              
              (6,035
              )Total
              
              
              
              
              
              
              
              
              
              $
              1,042,398
 
 For
        the
        fiscal year ended June 2, 2007, the Company recorded impairment charges related
        to Property and Equipment of $8.0 million.  There were no impairment
        charges in fiscal 2006.  Impairment charges of $0.9 million were
        recorded for the fiscal year ended May 29, 2005.
 
 Internally
        developed software is being amortized on a straight line basis over three
        years
        and is being recorded in the line item “Depreciation” on the Company’s
        Consolidated Statements of Operations.  Amortization of internally
        developed software amounted to $14.0 million and $1.9 million for the fiscal
        year ended June 2, 2007 and for the period from April 13, 2006 through June
        3,
        2006, respectively.
 
 **G.           Intangible
        Assets**
 
 Intangible
        assets, at June 2, 2007, consisted primarily of a tradename and net favorable
        leases positions.  Net favorable leases are amortized over their
        expected lease term.
 
 Intangible
        assets as of June 2, 2007 and June 3, 2006 are as follows (in
        thousands):
 
 **June
                    2, 2007**
              
              
              **June
                    3, 2006**Gross
                    Carrying Amount
              
              
              Accumulated
                    Amortization
              
              
              Net
                    Amount
              
              
              Gross
                    Carrying Amount
              
              
              Accumulated
                    Amortization
              
              
              Net
                    AmountTradename
              
              $
              526,300
              
              
              $
              —
              
              
              $
              526,300
              
              
              $
              526,300
              
              
              $
              —
              
              
              $
              526,300Favorable
                    Leases
              
              $
              631,149
              
              
              $
              (53,517
              )
              
              
              577,632
              
              
              $
              631,149
              
              
              $
              (4,473
              )
              
              $
              626,676Less:
                    Favorable Leases Classified as
                  Assets Held for Disposal
              
              
              
              
              
              
              
              
              
              
              (2,753
              )Net
                    Favorable Leases
              
              
              
              
              
              
              
              
              
              $
              574,879
 
 Amortization
        expense related to net favorable leases amounted to $33.4 million and $4.5
        million for the fiscal year ended June 2, 2007 and for the period from April
        13,
        2006 to June 3, 2006, respectively.  Amortization expense of net
        favorable leases for each of the next five fiscal years is estimated to be
        as
        follows: fiscal 2008 - $32.6 million; fiscal 2009 - $32.6 million; fiscal
        2010 -
        $32.6 million; fiscal 2011 - $32.6 million; and fiscal 2012 - $32.3
        million.
 
 For
        the
        fiscal year ended June 2, 2007, impairment charges of $15.6 million were
        recorded in connection with impairment of net favorable lease positions
        of  twelve stores.
  49
  
 **H.**
              **Goodwill**
 
 Goodwill
        amounted to $59.0 million as of June 3, 2006, based upon the Company’s
        preliminary valuation performed as part of the Company’s purchase accounting at
        April 12, 2006.  Final purchase accounting valuations were concluded
        during fiscal 2007.
 As
        a
        result, the Company recorded a reduction to goodwill of $12.8 million in
        connection with the final valuation of fixed
        assets,    deferred income taxes, and the impact of the tax
        benefit associated with the exercise by employees of non-qualified stock
        options.
 
 SFAS
        No. 142 requires an impairment test
        be performed at least annually on the carrying value of goodwill.  The
        Company performed its review for goodwill impairment during the fourth quarter
        of fiscal 2007.  No impairment charge was deemed
        necessary.
 
 
 **I.**
              **Accounts
                  Payable**
 
 Accounts
        payable consist of (in thousands):
 
 **Successor****June
                  2, 2007**
              
              
              **June
                  3, 2006**Accounts
                  Payable-Trade
              
              $
              343,070
              
              
              $
              403,097Other
              
              
              52,305
              
              
              
              54,758Total
              
              $
              395,375
              
              
              $
              457,855
 
 
 **J.           Store
        Exit Costs**
 
 The
        Company establishes reserves covering future lease obligations of closed
        stores.  These reserves are included in the line item “Other
        Liabilities” and “Other Current Liabilities” in the Company’s Consolidated
        Balance Sheets and are recorded under the line item “Selling and Administrative
        Expenses” on the Company’s Consolidated Statement of
        Operations.  Reserves at June 2, 2007 and June 3, 2006 consisted of
        (in thousands):
 
 Fiscal
                  Year Reserve Established
              
              Balance
                  at
                June
                  3, 2006
              
              
              Additions
              
              
              Payments
              
              
              Balance
                  at
                June
                  2, 20072005
              
              $
              377
              
              
              
              —
              
              
              $
              (136
              )
              
              $
              2412006
              
              
              494
              
              
              
              —
              
              
              
              (494
              )
              
              
              —2007
              
              
              —
              
              
              
              1,357
              
              
              
              (279
              )
              
              
              1,078$
              871
              
              
              $
              1,357
              
              
              $
              (909
              )
              
              $
              1,319
 
 
 The
        Company believes that these reserves are adequate to cover the expected
        contractual lease payments and other ancillary costs related to the closings.
        Scheduled rent related payments for the costs over the next three years are
        as
        follows: fiscal 2008 - $0.8 million; fiscal 2009 - $0.4 million; and fiscal
        2010
        - $0.1 million.
 
 
 **K.           Lines
        of Credit**
 
 In
        connection with the Merger Transaction, the Company entered into an $800
        million
        Available Business Line (ABL) senior secured revolving credit
        facility.  The facility is for a five year period at an interest rate
        of LIBOR plus a spread which is determined by the Company’s annual average
        borrowings outstanding.  At the date of the Merger Transaction, the
        Company drew $225 million from this credit facility.   The
        maximum borrowing under the facility during the period ended June 2, 2007
        was
        $365.0 million.  Average borrowings during the period amounted to
        $194.5 million at an average interest rate of 7.19%.  At June 2, 2007,
        $159.0 million was outstanding under this credit facility.  Commitment
        fees of .25% are charged on the unused portion of the facility and are included
        in the line item “Interest Expense” in the Company’s Consolidated Statements of
        Operations.
 
  50
 
 **L.           Long-Term
        Debt**
 
 Long-term
        debt consists of (in thousands):
 **June
                  2, 2007**
              
              
              **June
                  3, 2006**Industrial
                    Revenue Bonds, 6.0% due in semi-annual payments of various amounts
                    from
                September
                    1, 2007 to September 1, 2010
              
              $
              4,190
              
              
              $
              5,000Promissory
                    Note, 4.43% due in monthly payments of $8 through December
                    23, 2011
              
              
              375
              
              
              
              447Promissory
                    Note, non-interest bearing, due in monthly payments of $17
                    through January 1,
                2012
              
              
              934
              
              
              
              1,133Senior
                    Notes, 111⁄8% due at maturity on April 15, 2014, semi-annual
                    interest payments from
                October
                    15, 2006 to April 15, 2014
              
              
              299,665
              
              
              
              299,179Senior
                    Discount Notes, 14.5% due at maturity on October 15, 2014,
                    semi-annual discount
                accretion
                    to maturity amount from October 15, 2006 to April  15, 2008 and
                    semi-annual
                interest
                    payments from October 15, 2008 to October 15, 2014.2008 and semi-annual
                    interest payments from October 15, 2008 to October 15,
                    2014.
              
              
              87,978
              
              
              
              76,517$900
                    million senior secured term loan facility, Libor plus 2.25% due
                    in
                    quarterly payments
                of
                    $2,250 from May 30, 2006 to May 28, 2012 with remaining balance
                    payable
                    quarterly
                in
                    equal amounts through May 28, 2013.
              
              
              884,250
              
              
              
              897,750$800
                    million ABL senior secured revolving facility, Libor plus spread
                    based
                    on average
                outstanding
                    balance.
              
              
              159,000
              
              
              
              212,239Capital
                    Lease Obligations
              
              
              25,912
              
              
              
              26,214Subtotal
              
              
              1,462,304
              
              
              
              1,518,479Less
                    Current Portion
              
              
              (5,974
              )
              
              
              (10,360
              )Long-Term
                    Debt and Obligations Under Capital Leases
              
              $
              1,456,330
              
              
              $
              1,508,119
 
 
 
 On
        April
        13, 2006, the Company was acquired by affiliates of Bain Capital Partners,
        LLC
        (Bain Capital).  As part of the financing of the acquisition, the
        Company entered into agreements with several lenders to establish a $900
        million
        senior secured term loan facility and an $800 million Available Business
        Line
        (“ABL”) senior secured revolving credit facility.  The $900 million
        senior secured term loan is for a seven year period at an interest rate of
        LIBOR
        plus 2.25%.  The loan is to be repaid in quarterly payments of $2.3
        million from May 30, 2006 to May 28, 2013.  The Company is also
        required to make an additional payment based on 50% of the available free
        cash
        flow (as defined in the credit agreement), at the end of each fiscal year
        end. The $800 million ABL senior secured revolving credit facility is for a
        five year period at an interest rate of LIBOR plus a spread which is based
        on
        the Company’s annual average borrowings outstanding.  Approximately
        $225 million of the line was drawn down to fund the sale
        transaction.  Both facilities are guaranteed by substantially all of
        our U.S subsidiaries.  At June 2, 2007, the Company’s borrowing rate
        related to its ABL Credit Facility averaged 7.16%.  At June 2, 2007,
        the borrowing rate related to its Term loan was 7.61%.  At June 2,
        2007, the Company had $291.3 million available under its ABL Credit
        Facility.
 
 As
        part
        of the financing arrangement, the Company entered into agreements with several
        lenders to borrow a $305 million aggregate principal amount of senior unsecured
        notes and a $99.3 million aggregate principal amount of senior unsecured
        discount notes.  The $305 million senior unsecured notes, issued at a
        $5.9 million discount, accrues interest at a rate of 111⁄8% payable semi-annually
        on October 15th & April 15th of each year, beginning on October 15,
        2006.  The note is scheduled to mature on April 15, 2014 and is
        guaranteed by Holdings and each of our existing and future
        subsidiaries.  The $99.3 million senior unsecured discount note was
        issued at a substantial discount and generated gross proceeds of approximately
        $75 million.  The note accretes at a rate of 14.5%, compounded
        semi-annually up to the accreted value of $99.3 million for the first two
        years
        through April 15, 2008.  Accretion amounted to $11.5 million, and $1.5
        million for the fiscal year ended June 2, 2007 and for the period from April
        13,
        2006 to June 3, 2006, respectively.  Accretion of the note is included
        in the line “Interest Expense” in the Company’s Consolidated Statement of
        Operations.  Interest will be paid semi-annually on October 15th and
        April 15th of each year beginning October 15, 2008 at a rate of
        14.5%.  The note is scheduled to mature on October 15, 2014 and is not
        guaranteed by the Company or any of its subsidiaries.
 
 As
        of
        June 2, 2007, the Company is in compliance with all of its debt
        covenants.**The agreements regarding the ABL Credit Facility and
        the Term Loan as well as indenture governing the BCFWC Senior Notes and Holdings
        Senior Discount Notes contain covenants that, among other things, limit our
        ability and the ability of our restricted subsidiaries to pay dividends on,
        redeem or
   51
 
  repurchase
          capital stock; make investments and other restricted payments; incur additional
          indebtedness or issue preferred stock; create liens; permit dividend or
          other
          payment restrictions on our restricted subsidiaries; sell all or substantially
          all of our assets or consolidate or merge with or into other companies;
          and
          engage in transactions with affiliates.
 
 In
        January 2006, the Company purchased the ground lease and sublease related
        to one
        of its store locations.  The Company financed this purchase partially
        through the issuance of a promissory note in the principal amount of $0.5
        million.  The note bears interest at 4.43% per annum and matures on
        December 23, 2011.  The loan evidenced by the note is to be repaid in
        equal monthly installments of $7,539 which began on February 23,
        2006.
 
 The
        Industrial Revenue Bonds were issued in connection with the construction
        of the
        Company’s existing distribution center.  The bonds are secured by a
        first mortgage on the Company’s existing distribution
        center.  Indebtedness, totaling $5.0 million, is collateralized by
        land and buildings with a net book of $42.8 million at June 2, 2007, and
        payment of interest and principal is guaranteed under an irrevocable letter
        of
        credit in the amount of $4.3 million.
 
 On
        December 5, 2001, the Company borrowed $2.0 million from the Burlington County
        Board of Chosen Freeholders.  The proceeds were used for part of the
        acquisition and development costs of its warehouse facility in Edgewater
        Park,
        New Jersey.  The loan is interest-free and matures on January 1,
        2012.  The loan is to be repaid in monthly installments of $16,667
        which began on February 1, 2002.
 
 Long-term
        debt scheduled maturities in each of the next five fiscal years is as follows:
        **2008**- $5.7 million; **2009**- $10.3 million;
**2010**- $10.4 million; and
**2011**
        - $182.9
        million and **2012** - $9.2 million.
 
 Schedule
        maturities of the Company’s capital lease obligations in each of the next five
        fiscal years are as follows: **2008** - $0.3 million;
**2009** - $0.3 million; **2010** - $0.4 million;
**2011**
        - $0.5 million and **2012**- $0.6
        million.
 
 The
        Company has $55.6 million and $66.3 million in deferred financing fees related
        to its long term debt instruments recorded in the line item “Other Assets” on
        the Company’s Consolidated Balance Sheets as of June 2, 2007 and June 3, 2006,
        respectively.   Amortization of deferred financing fees amounted
        to $10.3 million for the fiscal year ended June 2, 2007, $5.3 million from
        the
        period April 13, 2006 to June 3, 2006, $0.5 million from the period May 29,
        2005
        to April 12, 2006, and $0.1 million for the fiscal year ended May 28, 2005,
        respectively.  Amortization expense for each of the next five fiscal
        years is estimated to be as follows: fiscal 2008 - $10.3 million; fiscal
        2009 -
        $10.4 million; fiscal 2010 - $10.3 million; fiscal 2011 - $9.8 million and
        fiscal 2012 - $6.7 million.  Deferred financing fees have a weighted
        average amortization period of approximately seven years.
  **M.           Note
        Receivable from Stock Options Exercised**
  During
        fiscal 2000, the Company made a loan to an officer of the Company in the
        amount
        of $204,345.  The loan was made in the form of a demand note having an
        annual interest rate of 5.57% for the purpose of enabling the officer to
        purchase shares of the Company's Common Stock pursuant to expiring
        options.  During fiscal 2002, the demand note was replaced with a
        five-year term note with a principal balance of $204,345 and an annual interest
        rate of 4.64%.  The loan was collateralized by a mortgage on the
        officer's residence.  At May 28, 2005, the portion of the loan related
        to the exercise price of the options exercised is reflected in Stockholders'
        Equity in the Company's Consolidated Balance Sheets as Note Receivable from
        Stock Options Exercised.  The balance of the loan was repaid during
        fiscal 2006.
  **N.           Lease
        Commitments**
 
 The
        Company leases 338 stores, warehousing and distribution facilities and office
        spaces under operating and capital leases that will expire principally during
        the next thirty years.  The leases typically include renewal options
        and escalation clauses and provide for contingent rentals based on a percentage
        of gross sales.
 
 The
        following is a schedule of future minimum lease payments (excluding renewal
        options) under the operating and capital leases (in thousands):
    52
 **Fiscal
                  Year**
              
              **Operating**
                **Leases**
              
              
              **Capital**
                **Leases**2008
              
              $
              144,671
              
              
              $
              2,4972009
              
              
              121,432
              
              
              
              2,4972010
              
              
              95,277
              
              
              
              2,5562011
              
              
              73,142
              
              
              
              2,6162012
              
              
              59,036
              
              
              
              2,655Thereafter
              
              
              212,067
              
              
              
              41,147Total
                  minimum lease payments
              
              $
              705,625
              
              
              
              53,968Amount
                  representing interest
              
              
              
              
              
              
              (28,056
              )Present
                  value of minimum lease payments
              
              
              
              
              
              $
              25,912
 
 
 The
        above
        schedule of future minimum lease payments has not been reduced by future
        minimum
        sublease rental income of $46.6 million and $4.1 million relating to operating
        leases and capital leases, respectively, under non-cancelable subleases and
        other contingent rental agreements.
 
 Total
        rental expenses, included in Selling and Administrative Expenses on the
        Company's Consolidated Statements of Operations, under operating leases for
        the
        fiscal year ended June 2, 2007, the periods from April 13, 2006 to June 3,
        2006,
        the period from May 29, 2005 to April 12, 2006, and the fiscal year ended
        May
        28, 2005, were $142.9 million, $18.8 million, $113.8 million, and $125.3
        million, respectively, including contingent rentals of $2.5 million, $0.5
        million, $2.5 million, and $1.9 million, respectively.  Rent expense
        for the above periods has not been reduced by rental income of $20.8
        million,  $2.9 million, $18.4 million, and $18.9 million, which has
        been included in Other Income, Net for fiscal year ended June 2, 2007, the
        period from April 13, 2006 to June 3, 2006, the period from May 29, 2005
        to
        April 12, 2006, and the fiscal year ended May 28, 2005,
        respectively.
 
 The
        Company has irrevocable letters of credit in the amount of $36.1 million
        to
        guarantee payment and performance under certain leases, insurance contracts
        and
        utility agreements.
 
 **O.           Employee
        Retirement Plans**
 
 The
        Company has a discretionary noncontributory profit-sharing plan covering
        employees who meet age and service requirements. The Company also provides
        additional retirement security to participants through a cash or deferred
        (salary deferral) feature qualifying under Section 401(k) of the Internal
        Revenue Code.   Participation in the salary deferment feature is
        voluntary.  Employees may, up to certain prescribed limits, contribute
        to the 401(k) plan and a portion of these contributions are matched by the
        Company.  Under the profit sharing feature, the Company's contribution
        to the plan is determined annually by the Board of Directors.  During
        fiscal year 2007, the Company determined that a discretionary contribution
        to
        the employee profit sharing plan for the plan year ended December 31, 2006
        would
        not be made.  The provision for Company profit sharing and 401(k)
        contributions for the year ended June 2, 2007, for the periods April 13,
        2006 to
        June 3, 2006, May 29, 2005 to April 12, 2006, and year ended May 28, 2005
        were
        $2.1 million, $1.6 million, $10.7 million, and $9.9 million,
        respectively.
   
 53
   **P.           Income
        Taxes**
 
  The
        provision for income taxes includes federal and state taxes currently payable
        and those deferred due to temporary differences between the financial statement
        and the tax bases of assets and liabilities.  The components of the
        provision for income taxes are as follows (in thousands):
  
  **Period
                  Ended**
              
              **June
                  2, 2007**
              
              
              **April
                  13, 2006 to June 3, 2006**
              
              
              **May
                  29,2005 to April 12, 2006**
              
              
              **May
                  28, 2005**Current:Federal
              
              $
              33,558
              
              
              $
              1,262
              
              
              $
              58,725
              
              
              $
              58,643State
                  and other
              
              
              2,851
              
              
              
              229
              
              
              
              9,206
              
              
              
              12,954Subtotal
              
              
              36,409
              
              
              
              1,491
              
              
              
              67,931
              
              
              
              71,597Deferred
              
              
              (61,834
              )
              
              
              (11,307
              )
              
              
              (11,326
              )
              
              
              (5,505
              )Total
              
              $
              (25,425
              )
              
              $
              (9,816
              )
              
              $
              56,605
              
              
              $
              66,092
 
 
 
 
 The
        provision (benefit) for income taxes is allocated between continuing and
        discontinued operations as summarized below (in thousands):
 
 
 **Period
                    Ended**
                
                **June
                    2, 2007**
                
                
                **April
                    13, 2006 to June 3, 2006**
                
                
                **May
                    29, 2005 to April 12, 2006**
                
                
                **May
                    28, 2005**Continuing
                    operations
                
                $
                (25,425
                )
                
                $
                (9,816
                )
                
                $
                56,605
                
                
                $
                66,204Discontinued
                    operations
                
                
                —
                
                
                
                —
                
                
                
                —
                
                
                
                (112
                )Total
                
                $
                (25,425
                )
                
                $
                (9,816
                )
                
                $
                56,605
                
                
                $
                66,092
  
  
 
  54
  A
        reconciliation of the Company's effective tax rate with the statutory federal
        tax rate is as follows:
 
 
 
 
 **Period
                  Ended**
              
              **June
                  2, 2007**
              
              
              **April
                  13, 2006 to June 3, 2006**
              
              
              **May
                  29, 2005 to**
                **April
                  12, 2006**
              
              
              **May
                  28, 2005**Tax
                  at statutory rate
              
              
              (35.0
              %)
              
              
              (35.0
              %)
              
              
              35.0
              %
              
              
              35.0
              %State
                  income taxes, net of federal benefit
              
              
              (5.3
              )
              
              
              (2.1
              )
              
              
              3.1
              
              
              
              4.9State
                  tax benefit of net operating losses
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (6.6
              )Change
                  in valuation allowance
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              6.2Capitalized
                  acquisition costs
              
              
              (3.4
              )
              
              
              10.7
              
              
              
              0.2Other
                  charges
              
              
              1.3
              
              
              
              —
              
              
              
              (0.2
              )
              
              
              (0.5
              )Tax
                  credits
              
              
              (1.3
              )
              
              
              (0.1
              )
              
              
              (0.6
              )
              
              
              (0.4
              )Tax
                  reserves
              
              
              8.7
              
              
              
              —
              
              
              
              —
              
              
              
              —Effective
                  tax rate
              
              
              (35.0
              %)
              
              
              (26.5
              %)
              
              
              37.5
              %
              
              
              38.6
              %
  
   
   Deferred
        income taxes for the fiscal year ended June 2, 2007, the period from April
        13,
        2006 to June 3, 2006, the period from May 29, 2005 to April 12, 2006 and
        the
        fiscal year ended May 28, 2005 reflect the impact of "temporary differences"
        between amounts of assets and liabilities for financial reporting purposes
        and
        such amounts as measured by tax laws. These temporary differences are determined
        in accordance with SFAS No. 109.
   55
  Temporary
        differences which give rise to deferred tax assets and liabilities at June
        2,
        2007 and June 3, 2006 are as follows (in thousands):
 
 **Period
                  Ended**
              
              **June
                  2, 2007**
              
              
              **June
                  3, 2006****Tax**
                **Assets**
              
              
              **Tax**
                **Liabilities**
              
              
              **Tax**
                **Assets**
              
              
              **Tax**
                **Liabilities**Current:Allowance
                  for doubtful accounts
              
              $
              383
              
              
              
              
              
              $
              619Compensated
                  absences
              
              
              1,556
              
              
              
              
              
              
              1,521Inventory
                  costs and reserves
                capitalized
                  for tax purposes
              
              
              16,245
              
              
              
              
              
              
              12,369Insurance
                  reserves
              
              
              13,344
              
              
              
              
              
              
              12,186Prepaid
                  items deductible
                for
                  tax purposes
              
              
              
              
              
              
              2,024
              
              
              
              
              
              
              $
              1,836Sales
                  return reserves
              
              
              3,259
              
              
              
              
              
              
              
              2,104Reserve
                  for lawsuits
              
              
              1,153
              
              
              
              
              
              
              
              517Employee
                  benefit accrual
              
              
              706Other
              
              
              521
              
              
              
              
              
              
              
              436$
              37,167
              
              
              $
              2,024
              
              
              $
              29,752
              
              
              $
              1,836Non-Current:Property
                  and Equipment Basis
                Adjustments
              
              
              
              
              
              
              125,114
              
              
              
              
              
              
              $
              153,865Deferred
                  Rent
              
              
              13,591
              
              
              
              
              
              
              $
              11,349Pre-opening
                  costs
              
              
              2,750
              
              
              
              
              
              
              
              5,743Intangibles
              
              
              
              
              
              
              446,941
              
              
              
              
              
              
              
              472,517Employee
                  benefit compensation
              
              
              1,130
              
              
              
              
              
              
              
              1,264State
                  net operating losses (net
                of
                  federal benefit)
              
              
              11,341
              
              
              
              
              
              
              
              10,781Valuation
                  allowance (net of
                federal
                  benefit)
              
              
              (8,298
              )
              
              
              
              
              
              
              (10,632
              )Other
              
              
              243
              
              
              
              
              
              
              
              231$
              20,757
              
              
              $
              572,055
              
              
              $
              18,736
              
              
              $
              626,382
 
 As
        a
        result of the merger in 2006, the Company incurred a change in ownership
        as
        defined by Section 382 of the Internal Revenue Code.  Section 382
        imposes limitations on a corporation’s ability to utilize its NOL carryforwards
        if it experiences an “ownership change”. In general terms, an ownership change
        results from transactions increasing the ownership of certain stockholders
        in
        the stock of a corporation by more than 50% over a three-year
        period.  The Company’s ability to utilize its state net operating loss
        carryforwards are subject to similar state income tax law
        restrictions.
  The
        Company determined that, as of June 2, 2007 and June 3, 2006, a valuation
        allowance against a substantial majority of the deferred tax assets associated
        with state net operating losses was appropriate. Generally Accepted Accounting
        Principles require companies to weigh both positive and negative evidence
        in
        determining the need for a valuation allowance. Management has determined
        that
        valuation allowances of $8.3 million and $10.6 million are required against
        the
        $11.3 million and $10.8 million of tax benefits associated with these state
        net
        operating losses. The Company believes that it is more likely than not that
        a
        majority of the benefit of the state net operating losses will not be realized.
        The state net operating losses have been generated in a number of taxing
        jurisdictions and are subject to various expiration periods ranging from
        five to
        twenty years beginning with the Company's 2008 fiscal year.  Any
        future tax benefit recognized by the use of an NOL established prior to the
        merger, where a valuation allowance has been established, will be recorded
        first
        to reduce to zero the goodwill related to the merger, second to reduce to
        zero
        other noncurrent intangible assets and third to reduce income tax
        expense.
   **Q.**
              **Fair
                  Value of Financial
                  Instruments**
  
 The
        carrying values of cash and cash equivalents, short and long term investments,
        accounts receivable and accounts payable approximate fair value. Interest
        rates
        that are currently available to the Company for issuance of notes payable
        (including current maturities) with similar terms and remaining maturities
        are
        used to estimate fair value for notes payable. Fair value of the Company’s
        Senior Notes and Senior Discount Notes was determined based on quoted market
        prices. The estimated fair value of long-term debt (including current
        maturities) is as follows (in thousands):
    56
  
 **June
                  2, 2007**
              
              
              **June
                  3, 2006****Carrying**
                **Amount**
              
              
              **Fair**
                **Value**
              
              
              **Carrying**
                **Amount**
              
              
              **Fair**
                **Value**Long-Term
                  Debt
                (including
                  capital lease
                obligation
                  and current
                maturities)
              
              $
              1,462,304
              
              
              $
              1,476,150
              
              
              $
              1,518,479
              
              
              $
              1,518,648
 
 The
        fair
        values presented herein are based on pertinent information available to
        management as of the respective year ends. Since the balance sheet date,
        there has been volatility in the credit markets and the quoted market prices
        on
        the Company's Senior Notes and Senior Dscount Notes have declined.  The
        fair value amounts have not been revalued for purposes of these financial
        statements since that date, and current estimates of fair value may differ
        from
        amounts presented herein.
  **R.           Segment
        Information**
  
 The
        Company reports segment information in accordance with SFAS No.131,
*Disclosure about Segments of an Enterprise and Related
        Information*.  The Company has one reportable segment, operating
        within the United States.  Sales by major product categories are as
        follows (in thousands):
 
 **Successor**
                  
                  
                  **Predecessor****Period
                      Ended**
                  
                  **June
                      2, 2007**
                  
                  
                  **April
                      13, 2006 to**
                    **June
                      3, 2006**
                  
                  
                  **May
                      29, 2005 to April 12, 2006**
                  
                  
                  **May
                      28, 2005**Apparel
                  
                  $
                  2,728,402
                  
                  
                  $
                  333,969
                  
                  
                  $
                  2,412,005
                  
                  
                  $
                  2,525,006Home
                      Products
                  
                  
                  675,005
                  
                  
                  
                  87,211
                  
                  
                  
                  605,628
                  
                  
                  
                  646,236$
                  3,403,407
                  
                  
                  $
                  421,180
                  
                  
                  $
                  3,017,633
                  
                  
                  $
                  3,171,242
 
 Apparel
        includes all clothing items for men, women and children and apparel accessories
        such as shoes, jewelry, perfumes and watches.  Home products include
        linens, home furnishings, gifts, baby furniture and baby
        furnishings.
 
  **S.           Commitments
        and Contingencies**
  
 The
        Company establishes reserves for the settlement amount, as well as reserves
        relating to legal claims in connection with litigation to which the Company
        is
        party from time to time in the ordinary course of business.  The
        aggregate amount of such reserves was $2.9 million and $1.3 million as of
        June
        2, 2007 and June 3, 2006, respectively.  The Company believes that
        potential liabilities in excess of those recorded will not have a material
        adverse effect on the Company's consolidated financial statements; however,
        there can be no assurances to this effect.
 
  **T.           Related
        Party Transactions**
  
 In
        connection with the Merger Transaction, we entered into an advisory agreement
        with Bain Capital pursuant to which Bain Capital provides us with management
        and
        consulting services and financial and other advisory
        services.  Pursuant to the agreement, we pay Bain Capital a periodic
        fee of $1 million per fiscal quarter plus reimbursement for reasonable
        out-of-pocket fees, and a fee equal to 1% of the transaction value of each
        financing, acquisition, disposition or change of control or similar transaction
        by or involving us.  The advisory fee amounted to $4 million and $0.5
        million for the fiscal year ended June 2, 2007 and for the period from April
        13,
        2006 to June 3, 2006, respectively.  The advisory fee is included in
        the line item “Selling and Administrative Expenses” in the Company’s
        Consolidated Statement of Operations.  Bain Capital received a fee of
        approximately $21.4 million in consideration for financial advisory services
        related to the Merger Transaction.  The advisory agreement has a
        10-year initial term, and thereafter is subject to automatic one-year extensions
        unless we or Bain Capital provides written notice of termination, except
        that
        the agreement
   57
 
  terminates
          automatically upon an initial public offering or a change of
          control.  If the agreement is terminated early, then Bain Capital will
          be entitled to receive all unpaid fees and unreimbursed out-of-pocket fees
          and
          expenses, as well as the present value of the periodic fee that would otherwise
          have been payable through the end of the term.  The agreement includes
          customary indemnities in favor of Bain Capital.
 
 As
        of
        June 2, 2007, the Company had $1.3 million of prepaid advisory fees recorded
        within the line item “Prepaid and Other Current Assets” on the Company’s
        Consolidated Balance Sheets.
 
 
 **U.           Dividends**
 
 ***Post-Merger
        Transaction***
 
 Neither
        the Company nor any of its subsidiaries may declare or pay cash dividends
        or
        make other distributions of property to any affiliate unless such dividends
        are
        used for certain specified purposes including, among others, to pay general
        corporate and overhead expenses incurred by Investments or Holdings in the
        ordinary course of business, or the amount of any indemnification claims
        made by
        any director or officer of Investments or Holdings, to pay taxes that are
        due
        and payable by Holdings or any of its direct or indirect subsidiaries, or
        to pay
        interest on Investment’s Senior Discount Notes, provided that no event of
        default under the Company’s debt agreements has occurred or will occur as the
        result of such interest payment.
 
 ***Pre-Merger
        Transaction***
 
 Previously,
        cash dividends were declared at the discretion of the Company's Board of
        Directors depending upon the financial condition, capital requirements and
        earnings of the Company as well as other factors which the Board of Directors
        may have deemed relevant.  On January 10, 2005 the Board of Directors
        of the Company declared a special cash dividend of fifty-six cents ($0.56)
        per
        share payable on February 21, 2005 to stockholders of record on January 20,
        2005. The paid dividend amounted to $25.0 million. The Board of Directors
        of the
        Company declared an annual cash dividend of four cents ($0.04) per share
        on
        August 5, 2004, payable on December 15, 2004, to stockholders of record on
        November 22, 2004. The paid dividend amounted to $1.8 million. A cash dividend
        of three cents ($0.03) per share for fiscal 2004 was declared on August 14,
        2003, and was paid on December 8, 2003, to stockholders of record on November
        14, 2003. The paid dividend amounted to $1.3 million.
 
 
 **V.           Condensed
        Guarantor Data**
  On
        April
        13, 2006, BCFWC issued $305 million aggregate principal amount of 111⁄8% Senior
        Notes
        due 2014. The notes were issued under an indenture issued on April 13, 2006.
        Holdings and subsidiaries of BCFWC have fully and unconditionally guaranteed
        these notes. In addition, Holdings and certain subsidiaries of BCFWC fully
        and
        unconditionally guarantee BCFWC’s obligations under the $800 million ABL Credit
        Facility and $900 million term loan. These guarantees are both joint and
        several. The following condensed consolidating financial statements present
        the
        financial position, results of operations and cash flows of Holdings, BCFWC,
        and
        the guarantor subsidiaries. The Company has one non-guarantor subsidiary
        that is
        not wholly-owned and is considered to be “minor” as defined in Rule 3-10 of
        Regulation S-X promulgated by the Securities and Exchange
        Commission.
  Neither
        the Company nor any of its
        subsidiaries may declare or pay cash dividends or make other distributions
        of
        property to any affiliate unless such dividends are used for certain specified
        purposes including, among others, to pay general corporate and overhead expenses
        incurred by Holdings or Parent in the ordinary course of business, or the
        amount
        of any indemnification claims made by any director or officer of Holdings
        or
        Parent, to pay taxes that are due and payable by Holdings or any of its direct
        or indirect subsidiaries, or to pay interest on Holdings Senior Discount
        Notes,
*provided*that no event of default under BCFWC’s debt agreements has
        occurred or will occur as the result of such interest payment.
 
 Certain
        reclassifications related to
        store credit and gift card balances, included within the line item “Other
        Current Liabilities,” have been made to the Condensed Consolidating Balance
        Sheet as of June 3, 2006 to conform to the classifications used in the current
        period.
  58
  
 
 **BURLINGTON
                  COAT FACTORY INVESTMENTS HOLDINGS, INC. AND
                  SUBSIDIARIES****CONDENSED
                  CONSOLIDATING BALANCE SHEETS (SUCCESSOR)****As
                  of June 2, 2007**ASSETS
              
              Holdings
              
              
              BCFWC
              
              
              Guarantors
              
              
              Eliminations
              
              
              Consolidated**(All
                  amounts in thousands)**Current
                  Assets:Cash
                    and Cash Equivalents
              
              $
              —
              
              
              $
              20,035
              
              
              $
              13,843
              
              
              $
              —
              
              
              $
              33,878Restricted
                    Cash and Cash Equivalents
              
              
              —
              
              
              
              —
              
              
              
              2,753
              
              
              
              —
              
              
              
              2,753Investments
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Accounts
                    Receivable
              
              
              —
              
              
              
              28,787
              
              
              
              1,803
              
              
              
              —
              
              
              
              30,590Merchandise
                    Inventories
              
              
              —
              
              
              
              1,275
              
              
              
              709,296
              
              
              
              —
              
              
              
              710,571Deferred
                    Tax Asset
              
              
              —
              
              
              
              13,233
              
              
              
              21,910
              
              
              
              —
              
              
              
              35,143Prepaid
                    and Other Current Assets
              
              
              —
              
              
              
              24,741
              
              
              
              13,849
              
              
              
              (3,224
              )
              
              
              35,366Assets
                    Held for Sale
              
              
              —
              
              
              
              
              
              
              
              35,073
              
              
              
              —
              
              
              
              35,073Total
                    Current Assets
              
              
              —
              
              
              
              88,071
              
              
              
              798,527
              
              
              
              (3,224
              )
              
              
              883,374Property
                    and Equipment - Net of Accumulated Depreciation
              
              
              —
              
              
              
              59,856
              
              
              
              888,478
              
              
              
              —
              
              
              
              948,334Goodwill
              
              
              —
              
              
              
              46,219
              
              
              
              —
              
              
              
              —
              
              
              
              46,219Trademark
              
              
              —
              
              
              
              526,300
              
              
              
              —
              
              
              
              —
              
              
              
              526,300Net
                    Favorable Leases
              
              
              —
              
              
              
              0
              
              
              
              574,879
              
              
              
              
              
              
              
              574,879Other
                    Assets
              
              
              380,470
              
              
              
              1,738,583
              
              
              
              9,231
              
              
              
              (2,070,869
              )
              
              
              57,415Total
                    Assets
              
              $
              380,470
              
              
              $
              2,459,029
              
              
              $
              2,271,115
              
              
              $
              (2,074,093
              )
              
              $
              3,036,521LIABILITIES
                    AND STOCKHOLDERS' EQUITYCurrent
                    Liabilities:Accounts
                    Payable
              
              $
              —
              
              
              $
              395,375
              
              
              $
              —
              
              
              $
              —
              
              
              $
              395,375Income
                    Taxes Payable
              
              
              —
              
              
              
              3,224
              
              
              
              —
              
              
              
              (3,224
              )
              
              
              —Other
                    Current Liabilities
              
              
              —
              
              
              
              111,879
              
              
              
              86,748
              
              
              
              —
              
              
              
              198,627Current
                    Maturities of Long Term Debt
              
              
              
              
              
              
              4,500
              
              
              
              1,474
              
              
              
              
              
              
              
              5,974Total
                    Current Liabilities
              
              
              
              
              
              
              514,978
              
              
              
              88,222
              
              
              
              (3,224
              )
              
              
              599,976Long
                    Term Debt
              
              
              
              
              
              
              1,338,415
              
              
              
              117,915
              
              
              
              
              
              
              
              1,456,330Other
                    Liabilities
              
              
              
              
              
              
              10,622
              
              
              
              47,825
              
              
              
              (10,000
              )
              
              
              48,447Deferred
                    Tax Liability
              
              
              
              
              
              
              214,544
              
              
              
              336,754
              
              
              
              
              
              
              
              551,298Stockholders'
                    Equity:Common
                    StockCapital
                    in Excess of Par Value
              
              
              454,935
              
              
              
              454,935
              
              
              
              1,522,383
              
              
              
              (1,977,318
              )
              
              
              454,935Retained
                    Earnings (Accumulated Deficit)
              
              
              (74,465
              )
              
              
              (74,465
              )
              
              
              158,016
              
              
              
              (83,551
              )
              
              
              (74,465
              )Total
                    Stockholders' Equity
              
              
              380,470
              
              
              
              380,470
              
              
              
              1,680,399
              
              
              
              (2,060,869
              )
              
              
              380,470Total
                    Liabilities and Stockholders' Equity
              
              $
              380,470
              
              
              $
              2,459,029
              
              
              $
              2,271,115
              
              
              $
              (2,074,093
              )
              
              $
              3,036,521
  59
  **BURLINGTON
        COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATING BALANCE SHEETS (SUCCESSOR)**
   **As
                    of June 3, 2006****Holdings**
                
                
                **BCFWC**
                
                
                **Guarantors**
                
                
                **Eliminations**
                
                
                **Consolidated****(All
                    amounts in thousands)**ASSETSCurrent
                    Assets:Cash
                      and Cash Equivalents
                
                $
                —
                
                
                $
                48,865
                
                
                $
                9,511
                
                
                $
                —
                
                
                $
                58,376Restricted
                      Cash and Cash Equivalents
                
                
                —
                
                
                
                —
                
                
                
                13,816
                
                
                
                —
                
                
                
                13,816Investments
                
                
                —
                
                
                
                —
                
                
                
                591
                
                
                
                —
                
                
                
                591Accounts
                      Receivable
                
                
                —
                
                
                
                41,133
                
                
                
                950
                
                
                
                —
                
                
                
                42,083Merchandise
                      Inventories
                
                
                —
                
                
                
                1,416
                
                
                
                706,769
                
                
                
                —
                
                
                
                708,185Deferred
                      Tax Asset
                
                
                —
                
                
                
                12,091
                
                
                
                15,825
                
                
                
                —
                
                
                
                27,916Prepaid
                      and Other Current Assets
                
                
                —
                
                
                
                22,771
                
                
                
                12,443
                
                
                
                (4,428
                
                
                
                30,786Assets
                      Held for Disposal
                
                
                
                
                
                
                
                
                
                
                7,661
                
                
                
                
                
                
                
                7,661Total
                      Current Assets
                
                
                —
                
                
                
                126,276
                
                
                
                767,566
                
                
                
                (4,428
                
                
                
                889,414Property
                      and Equipment—Net of Accumulated Depreciation
                
                
                —
                
                
                
                46,521
                
                
                
                995,877
                
                
                
                —
                
                
                
                1,042,398Goodwill
                
                
                —
                
                
                
                58,985
                
                
                
                —
                
                
                
                —
                
                
                
                58,985Trademark
                
                
                —
                
                
                
                526,300
                
                
                
                —
                
                
                
                —
                
                
                
                526,300Net
                      Favorable Leases
                
                
                —
                
                
                
                —
                
                
                
                626,676
                
                
                
                —
                
                
                
                626,676Other
                      Assets
                
                
                419,512
                
                
                
                1,883,828
                
                
                
                470
                
                
                
                (2,234,083
                )
                
                
                69,727Total
                      Assets
                
                $
                419,512
                
                
                $
                2,641,910
                
                
                $
                2,390,589
                
                
                $
                (2,238,511
                )
                
                $
                3,213,500LIABILITIES
                      AND STOCKHOLDERS’ EQUITYCurrent
                      Liabilities:Accounts
                      Payable
                
                $
                —
                
                
                $
                454,762
                
                
                $
                3,093
                
                
                $
                —
                
                
                $
                457,855Income
                      Taxes Payable
                
                
                —
                
                
                
                10,702
                
                
                
                —
                
                
                
                (4,428
                
                
                
                6,274Other
                      Current Liabilities
                
                
                —
                
                
                
                110,464
                
                
                
                71,296
                
                
                
                —
                
                
                
                181,760
 Current
                    Maturities of Long Term Debt
              
              
              —
              
              
              
              9,000
              
              
              
              1,360
              
              
              
              —
              
              
              
              10,360Total
                    Current Liabilities
              
              
              —
              
              
              
              584,928
              
              
              
              75,749
              
              
              
              (4,428
              )
              
              
              656,249Long
                    Term Debt
              
              
              —
              
              
              
              1,398,073
              
              
              
              110,046
              
              
              
              —
              
              
              
              1,508,119Other
                    Liabilities
              
              
              —
              
              
              
              10,000
              
              
              
              21,974
              
              
              
              (10,000
              )
              
              
              21,974Deferred
                    Tax Liability
              
              
              —
              
              
              
              229,397
              
              
              
              378,249
              
              
              
              —
              
              
              
              607,646Stockholders’
                    Equity:Preferred
                    Stock
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Common
                    Stock
              
              
              —
              
              
              
              —
              
              
              
              1,568
              
              
              
              (1,568
              )
              
              
              —Capital
                    in Excess of Par Value
              
              
              446,678
              
              
              
              446,678
              
              
              
              1,796,527
              
              
              
              (2,243,205
              )
              
              
              446,678Retained
                    Earnings (Accumulated Deficit)
              
              
              (27,166
              )
              
              
              (27,166
              )
              
              
              6,476
              
              
              
              20,690
              
              
              
              (27,166
              )Total
                    Stockholders’ Equity
              
              
              419,512
              
              
              
              419,512
              
              
              
              1,804,571
              
              
              
              (2,224,083
              )
              
              
              419,512Total
                    Liabilities and Stockholders’ Equity
              
              $
              419,512
              
              
              $
              2,641,910
              
              
              $
              2,390,589
              
              
              $
              (2,238,511
              )
              
              $
              3,213,500
 
 
 60
 
 
 **BURLINGTON
                  COAT FACTORY INVESTMENTS HOLDINGS, INC. AND
                  SUBSIDIARIES****CONDENSED
                  CONSOLIDATING STATEMENT OF OPERATIONS (SUCCESSOR)****For
                  the Year Ended June 2, 2007**Holdings
              
              
              BCFWC
              
              
              Guarantors
              
              
              Eliminations
              
              
              Consolidated**(All
                  amounts in thousands)**REVENUES:Net
                    Sales
              
              $
              —
              
              
              $
              4,470
              
              
              $
              3,398,937
              
              
              $
              —
              
              
              $
              3,403,407Other
                    Revenue
              
              
              —
              
              
              
              5,476
              
              
              
              32,762
              
              
              
              —
              
              
              
              38,238—
              
              
              
              9,946
              
              
              
              3,431,699
              
              
              
              —
              
              
              
              3,441,645COSTS
                    AND EXPENSES:Cost
                    of Sales (Exclusive of Depreciation and
                Amortization)
              
              
              —
              
              
              
              2,785
              
              
              
              2,122,375
              
              
              
              —
              
              
              
              2,125,160Selling
                    and Administrative Expenses
              
              
              —
              
              
              
              160,324
              
              
              
              902,144
              
              
              
              —
              
              
              
              1,062,468Depreciation
              
              
              —
              
              
              
              28,331
              
              
              
              102,067
              
              
              
              —
              
              
              
              130,398Amortization
              
              
              —
              
              
              
              6,668
              
              
              
              37,021
              
              
              
              —
              
              
              
              43,689Impairment
                    Charges
              
              
              —
              
              
              
              —
              
              
              
              24,421
              
              
              
              —
              
              
              
              24,421Interest
                    Expense
              
              
              —
              
              
              
              120,134
              
              
              
              14,179
              
              
              
              —
              
              
              
              134,313Other
                    Income, Net
              
              
              —
              
              
              
              (2,501
              )
              
              
              (3,679
              )
              
              
              —
              
              
              
              (6,180
              )Equity
                    in Earnings (Loss) of subsidiaries
              
              
              47,199
              
              
              
              (151,540
              )
              
              
              —
              
              
              
              104,341
              
              
              
              —47,199
              
              
              
              164,201
              
              
              
              3,198,528
              
              
              
              104,341
              
              
              
              3,514,269Income
                    (Loss) Before Provision (Benefit) for Income
                Taxes
              
              
              (47,199
              )
              
              
              (154,255
              )
              
              
              233,171
              
              
              
              (104,341
              )
              
              
              (72,624
              )Provision
                    (Benefit) for Income Taxes
              
              
              —
              
              
              
              (107,056
              )
              
              
              81,631
              
              
              
              —
              
              
              
              (25,425
              )Net
                    Income (Loss)
              
              $
              (47,199
              )
              
              $
              (47,199
              )
              
              $
              151,540
              
              
              $
              (104,341
              )
              
              $
              (47,199
              )
 
 
 
 
 
  61
  **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Condensed
        Consolidating Statement of Operations**
 **(Predecessor)**
  **Period
                  from May 29, 2005 to April 12, 2006****Holdings**
              
              
              **BCFWC**
              
              
              **Guarantors**
              
              
              **Eliminations**
              
              
              **Consolidated****(All
                  amounts in thousands)**REVENUES:Net
                  Sales
              
              $
              —
              
              
              $
              4,168
              
              
              $
              3,013,465
              
              
              $
              —
              
              
              $
              3,017,633Other
                  Revenue
              
              
              —
              
              
              
              —
              
              
              
              27,675
              
              
              
              —
              
              
              
              27,675—
              
              
              
              4,168
              
              
              
              3,041,140
              
              
              
              —
              
              
              
              3,045,308COSTS
                  AND EXPENSES:Cost
                  of Sales (Exclusive of Depreciation and Amortization)
              
              
              —
              
              
              
              2,680
              
              
              
              1,914,118
              
              
              
              —
              
              
              
              1,916,798Selling
                  and Administrative Expenses
              
              
              —
              
              
              
              130,038
              
              
              
              767,193
              
              
              
              —
              
              
              
              897,231Depreciation
              
              
              —
              
              
              
              9,346
              
              
              
              69,458
              
              
              
              —
              
              
              
              78,804Amortization
              
              
              —
              
              
              
              494
              
              
              
              —
              
              
              
              —
              
              
              
              494Interest
                  Expense
              
              
              —
              
              
              
              2,362
              
              
              
              2,247
              
              
              
              —
              
              
              
              4,609Other
                  Income, Net
              
              
              —
              
              
              
              1,367
              
              
              
              (4,939
              )
              
              
              —
              
              
              
              (3,572
              )Equity
                  in (Earnings) Loss in Subsidiaries
              
              
              —
              
              
              
              (187,712
              )
              
              
              —
              
              
              
              187,712
              
              
              
              —(41,425
              )
              
              
              2,748,077
              
              
              
              187,712
              
              
              
              2,894,364Income
                  (Loss) Before Provision (Benefit) for Income Taxes
              
              
              —
              
              
              
              45,593
              
              
              
              293,063
              
              
              
              (187,712
              )
              
              
              150,944Provision
                  (Benefit) for Income Taxes
              
              
              —
              
              
              
              (48,746
              )
              
              
              105,351
              
              
              
              —
              
              
              
              56,605Net
                  Income (Loss)
              
              
              —
              
              
              
              94,339
              
              
              
              187,712
              
              
              
              (187,712
              )
              
              
              94,339Net
                  Unrealized Gain on Non-Marketable Securities, Net of Tax
              
              
              —
              
              
              
              (4
              )
              
              
              —
              
              
              
              —
              
              
              
              (4
              )Total
                  Comprehensive Income (Loss)
              
              $
              —
              
              
              $
              94,335
              
              
              $
              187,712
              
              
              $
              (187,712
              )
              
              $
              94,335
 
 
 
  62
  **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Condensed
        Consolidating Statement of Operations**
 **(Successor)**
  **Period
                  from April 13, 2006 to June 3, 2006****Holdings**
              
              
              **BCFWC**
              
              
              **Guarantors**
              
              
              **Eliminations**
              
              
              **Consolidated****(All
                  amounts in thousands)**REVENUES:Net
                  Sales
              
              $
              —
              
              
              $
              553
              
              
              $
              420,627
              
              
              $
              —
              
              
              $
              421,180Other
                  Revenue
              
              
              —
              
              
              
              558
              
              
              
              3,508
              
              
              
              —
              
              
              
              4,066—
              
              
              
              1,111
              
              
              
              424,135
              
              
              
              —
              
              
              
              425,246COSTS
                  AND EXPENSES:Cost
                  of Sales (Exclusive of Depreciation and Amortization)
              
              
              —
              
              
              
              361
              
              
              
              266,104
              
              
              
              —
              
              
              
              266,465Selling
                  and Administrative Expenses
              
              
              —
              
              
              
              27,338
              
              
              
              127,353
              
              
              
              —
              
              
              
              154,691Depreciation
              
              
              —
              
              
              
              1,183
              
              
              
              16,914
              
              
              
              —
              
              
              
              18,097Amortization
              
              
              —
              
              
              
              5,285
              
              
              
              4,473
              
              
              
              —
              
              
              
              9,758Interest
                  Expense
              
              
              —
              
              
              
              15,764
              
              
              
              2,329
              
              
              
              —
              
              
              
              18,093Other
                  Income, Net
              
              
              —
              
              
              
              2,385
              
              
              
              (7,261
              )
              
              
              —
              
              
              
              (4,876
              )Equity
                  in (Earnings) Loss in Subsidiaries
              
              
              27,166
              
              
              
              (6,476
              )
              
              
              —
              
              
              
              (20,690
              )
              
              
              —27,166
              
              
              
              45,840
              
              
              
              409,912
              
              
              
              (20,690
              )
              
              
              462,228Income
                  (Loss) Before Provision (Benefit) for Income Taxes
              
              
              (27,166
              )
              
              
              (44,729
              )
              
              
              14,223
              
              
              
              20,690
              
              
              
              (36,982
              )Provision
                  (Benefit) for Income Taxes
              
              
              —
              
              
              
              (17,563
              )
              
              
              7,747
              
              
              
              —
              
              
              
              (9,816
              )Net
                  Income (Loss)
              
              
              (27,166
              )
              
              
              (27,166
              )
              
              
              6,476
              
              
              
              20,690
              
              
              
              (27,166
              )Net
                  Unrealized Gain on Non-Marketable Securities, Net of Tax
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              —Total
                  Comprehensive Income (Loss)
              
              $
              (27,166
              )
              
              $
              (27,166
              )
              
              $
              6,476
              
              
              $
              20,690
              
              
              $
              (27,166
              )
  63
  **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Condensed
        Consolidating Statement of Operations**
 **(Predecessor)**
  **Year
                  Ended May 28, 2005****Holdings**
              
              
              **BCFWC**
              
              
              **Guarantors**
              
              
              **Eliminations**
              
              
              **Consolidated****(All
                  amounts in thousands)**REVENUES:Net
                  Sales
              
              $
              —
              
              
              $
              4,715
              
              
              $
              3,166,527
              
              
              $
              —
              
              
              $
              3,171,242Other
                  Revenue
              
              
              —
              
              
              
              852
              
              
              
              27,746
              
              
              
              —
              
              
              
              28,598—
              
              
              
              5,567
              
              
              
              3,194,273
              
              
              
              —
              
              
              
              3,199,840COSTS
                  AND EXPENSES:Cost
                  of Sales (Exclusive of Depreciation and Amortization)
              
              
              —
              
              
              
              3,303
              
              
              
              1,983,856
              
              
              
              —
              
              
              
              1,987,159Selling
                  and Administrative Expenses
              
              
              —
              
              
              
              115,591
              
              
              
              842,168
              
              
              
              —
              
              
              
              957,759Depreciation
              
              
              —
              
              
              
              11,722
              
              
              
              78,136
              
              
              
              —
              
              
              
              89,858Amortization
              
              
              —
              
              
              
              67
              
              
              
              31
              
              
              
              —
              
              
              
              98Interest
                  Expense
              
              
              —
              
              
              
              4,663
              
              
              
              2,671
              
              
              
              —
              
              
              
              7,334Other
                  Income, Net
              
              
              —
              
              
              
              (6,031
              )
              
              
              (8,588
              )
              
              
              —
              
              
              
              (14,619
              )Equity
                  in (Earnings) Loss in Subsidiaries
              
              
              —
              
              
              
              (186,459
              )
              
              
              —
              
              
              
              186,459
              
              
              
              ——
              
              
              
              (57,144
              )
              
              
              2,898,274
              
              
              
              186,459
              
              
              
              3,027,589Income
                  (Loss) Before Provision (Benefit) for Income Taxes
              
              
              —
              
              
              
              62,711
              
              
              
              295,999
              
              
              
              (186,459
              )
              
              
              172,251Provision
                  (Benefit) for Income Taxes
              
              
              —
              
              
              
              (42,322
              )
              
              
              108,526
              
              
              
              —
              
              
              
              66,204Income
                  (Loss) From Continuing Operations
              
              
              —
              
              
              
              105,033
              
              
              
              187,473
              
              
              
              (186,459
              )
              
              
              106,047Net
                  Loss From Discontinued Operations, Net of Tax Benefit
              
              
              —
              
              
              
              —
              
              
              
              (1,014
              )
              
              
              —
              
              
              
              (1,014
              )Net
                  Income (Loss)
              
              
              
              
              
              
              105,033
              
              
              
              186,459
              
              
              
              (186,459
              )
              
              
              105,033Net
                  Unrealized Gain on Non-Marketable Securities, Net of Tax
              
              
              —
              
              
              
              2
              
              
              
              —
              
              
              
              —
              
              
              
              2Total
                  Comprehensive Income (Loss)
              
              $
              —
              
              
              $
              105,035
              
              
              $
              186,459
              
              
              $
              (186,459
              )
              
              $
              105,035
  64
  
 
 
 
 **BURLINGTON
                  COAT FACTORY INVESTMENTS HOLDINGS, INC. AND
                  SUBSIDIARIES****CONDENSED
                  CONSOLIDATING STATEMENT OF CASH FLOWS (SUCCESSOR)****For
                  the Year Ended June 2, 2007**Holdings
              
              
              BCFWC
              
              
              Guarantors
              
              
              Elimination
              
              
              Consolidated**(All
                  amounts in thousands)**OPERATING
                  ACTIVITIESNet
                    Cash Provided by Operating Activities
              
              $
              —
              
              
              $
              55,229
              
              
              $
              40,787
              
              
              $
              —
              
              
              $
              96,016INVESTING
                    ACTIVITIESAcquisition
                    of Property and Equipment
              
              
              —
              
              
              
              (17,453
              )
              
              
              (51,735
              )
              
              
              —
              
              
              
              (69,188
              )Proceeds
                    Received from Sales of Assets
              
              
              —
              
              
              
              
              
              
              
              4,669
              
              
              
              —
              
              
              
              4,669Proceeds
                    Received from Sale of Partnership Interest
              
              
              —
              
              
              
              
              
              
              
              850
              
              
              
              —
              
              
              
              850Change
                    in Restricted Cash and Cash Equivalents
              
              
              —
              
              
              
              
              
              
              
              11,063
              
              
              
              —
              
              
              
              11,063Investing
                    Activity-Other
              
              
              —
              
              
              
              (67
              )
              
              
              82
              
              
              
              —
              
              
              
              15Net
                    Cash Used in Investing Activities
              
              
              —
              
              
              
              (17,520
              )
              
              
              (35,071
              )
              
              
              —
              
              
              
              (52,591
              )FINANCING
                    ACTIVITIESProceeds
                    from ABL
              
              
              —
              
              
              
              649,655
              
              
              
              —
              
              
              
              —
              
              
              
              649,655Principal
                    Payments on Long Term Debt
              
              
              —
              
              
              
              —
              
              
              
              (1,384
              )
              
              
              —
              
              
              
              (1,384
              )Principal
                    Payments on Long Term Loan
              
              
              —
              
              
              
              (13,500
              )
              
              
              —
              
              
              
              —
              
              
              
              (13,500
              )Principal
                    Payments on ABL
              
              
              —
              
              
              
              (702,894
              )
              
              
              —
              
              
              
              —
              
              
              
              (702,894
              )Equity
                    Investment
              
              
              —
              
              
              
              300
              
              
              
              —
              
              
              
              —
              
              
              
              300Receipt
                    of Dividends
              
              
              100
              
              
              
              
              
              
              
              —
              
              
              
              (100
              )
              
              
              —Payment
                    of Dividends
              
              
              (100
              )
              
              
              (100
              )
              
              
              —
              
              
              
              100
              
              
              
              (100
              )Net
                    Cash Used in Financing Activities
              
              
              —
              
              
              
              (66,539
              )
              
              
              (1,384
              )
              
              
              
              
              
              
              (67,923
              )(Decrease)
                    Increase in Cash and Cash Equivalents
              
              
              —
              
              
              
              (28,830
              )
              
              
              4,332
              
              
              
              —
              
              
              
              (24,498
              )Cash
                    and Cash Equivalents at Beginning of Period
              
              
              —
              
              
              
              48,865
              
              
              
              9,511
              
              
              
              —
              
              
              
              58,376Cash
                    and Cash Equivalents at End of Period
              
              $
              ——
              
              
              $
              20,035
              
              
              $
              13,843
              
              
              $
              —
              
              
              $
              33,878
 
  65
  **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Condensed
        Consolidating Statements of Cash Flows**
 **(Predecessor)**
  **Period
                  from May 29, 2005 to April 12, 2006****Holdings**
              
              
              **BCFWC**
              
              
              **Guarantors**
              
              
              **Elimination**
              
              
              **Consolidated****(All
                  amounts in thousands)**OPERATING
                  ACTIVITIESNet
                  Cash Provided by Operating Activities
              
              $
              —
              
              
              $
              177,093
              
              
              $
              253,886
              
              
              $
              —
              
              
              $
              430,979INVESTING
                  ACTIVITIESAcquisition
                  of Property and Equipment—Continuing Operations
              
              
              —
              
              
              
              (9,280
              )
              
              
              (59,643
              )
              
              
              —
              
              
              
              (68,923
              )Proceeds
                  Received from Insurance
              
              
              —
              
              
              
              —
              
              
              
              3,822
              
              
              
              —
              
              
              
              3,822Investing
                  Activity—Other
              
              
              —
              
              
              
              (31
              )
              
              
              1,212
              
              
              
              —
              
              
              
              1,181Net
                  Cash Used in Investing Activities
              
              
              —
              
              
              
              (9,311
              )
              
              
              (54,609
              )
              
              
              —
              
              
              
              (63,920
              )FINANCING
                  ACTIVITIESProceeds
                  from Long—Term Debt
              
              
              —
              
              
              
              —
              
              
              
              470
              
              
              
              —
              
              
              
              470Principal
                  Payments on Long Term Debt
              
              
              —
              
              
              
              (100,000
              )
              
              
              (1,167
              )
              
              
              —
              
              
              
              (101,167
              )Issuance
                  of Common Stock Upon Exercise of Stock Options
              
              
              —
              
              
              
              425
              
              
              
              —
              
              
              
              —
              
              
              
              425Payment
                  of Dividends
              
              
              —
              
              
              
              (1,791
              )
              
              
              —
              
              
              
              —
              
              
              
              (1,791
              )Net
                  Cash Used in Financing Activities
              
              
              —
              
              
              
              (101,366
              )
              
              
              (697
              )
              
              
              —
              
              
              
              (102,063
              )Increase
                  in Cash and Cash Equivalents
              
              
              —
              
              
              
              66,416
              
              
              
              198,580
              
              
              
              —
              
              
              
              264,996Cash
                  and Cash Equivalents at Beginning of Period
              
              
              —
              
              
              
              43,942
              
              
              
              4,011
              
              
              
              —
              
              
              
              47,953Cash
                  and Cash Equivalents at End of Period
              
              $
              —
              
              
              $
              110,358
              
              
              $
              202,591
              
              
              $
              —
              
              
              $
              312,949
 
 
 
  66
  **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Condensed
        Consolidating Statements of Cash Flows**
 **(Successor)**
  **Period
                  from April 13, 2006 to June 3, 2006****Holdings**
              
              
              **BCFWC**
              
              
              **Guarantors**
              
              
              **Elimination**
              
              
              **Consolidated****(All
                  amounts in thousands)**OPERATING
                  ACTIVITIESNet
                  Cash Provided by Operating Activities
              
              $
              —
              
              
              $
              138,638
              
              
              $
              (191,531
              )
              
              $
              —
              
              
              $
              (52,893
              )INVESTING
                  ACTIVITIESAcquisition
                  Cost
              
              
              —
              
              
              
              (2,055,747
              )
              
              
              —
              
              
              
              —
              
              
              
              (2,055,747
              )Acquisition
                  of Property and Equipment
              
              
              —
              
              
              
              (410
              )
              
              
              (5,865
              )
              
              
              —
              
              
              
              (6,275
              )Proceeds
                  from Sale of Fixed assets and Leaseholds
              
              
              —
              
              
              
              —
              
              
              
              4,337
              
              
              
              —
              
              
              
              4,337Investing
                  Activity—Other
              
              
              —
              
              
              
              (9
              )
              
              
              25
              
              
              
              —
              
              
              
              16Net
                  Cash Used in Investing Activities
              
              
              —
              
              
              
              (2,056,166
              )
              
              
              (1,503
              )
              
              
              —
              
              
              
              (2,057,669
              )FINANCING
                  ACTIVITIESProceeds
                  from Long—Term Debt
              
              
              —
              
              
              
              1,702,114
              
              
              
              —
              
              
              
              —
              
              
              
              1,702,114Principal
                  Payments on Long Term Debt
              
              
              —
              
              
              
              (218,011
              )
              
              
              (46
              )
              
              
              —
              
              
              
              (218,057
              )Issuance
                  of Common Stock
              
              
              —
              
              
              
              445,830
              
              
              
              —
              
              
              
              —
              
              
              
              445,830Purchase
                  of Interest Rate Cap Contract
              
              
              —
              
              
              
              (2,500
              )
              
              
              —
              
              
              
              —
              
              
              
              (2,500
              )Debt
                  Issuance Cost
              
              
              —
              
              
              
              (71,398
              )
              
              
              —
              
              
              
              —
              
              
              
              (71,398
              )Net
                  Cash Used in Financing Activities
              
              
              —
              
              
              
              1,856,035
              
              
              
              (46
              )
              
              
              —
              
              
              
              1,855,989Increase
                  in Cash and Cash Equivalents
              
              
              —
              
              
              
              (61,493
              )
              
              
              (193,080
              )
              
              
              —
              
              
              
              (254,573
              )Cash
                  and Cash Equivalents at Beginning of Period
              
              
              —
              
              
              
              110,358
              
              
              
              202,591
              
              
              
              —
              
              
              
              312,949Cash
                  and Cash Equivalents at End of Period
              
              $
              —
              
              
              $
              48,865
              
              
              $
              9,511
              
              
              $
              —
              
              
              $
              58,376
 
  67
  **Burlington
        Coat Factory Investments Holdings, Inc. and Subsidiaries**
  **Condensed
        Consolidating Statement of Cash Flows**
 **(Predecessor)**
  **Year
                  Ended May 28,
                  2005****Holdings**
              
              
              **BCFWC**
              
              
              **Guarantors**
              
              
              **Elimination**
              
              
              **Consolidated****(All
                  amounts in thousands)**OPERATING
                  ACTIVITIESNet
                  Cash Provided by Operating Activities
              
              $
              —
              
              
              $
              45,314
              
              
              $
              96,777
              
              
              $
              —
              
              
              $
              142,091INVESTING
                  ACTIVITIESAcquisition
                  of Property and Equipment—Continuing Operations
              
              
              —
              
              
              
              (5,312
              )
              
              
              (87,803
              )
              
              
              —
              
              
              
              (93,115
              )Proceeds
                  From Sale of Fixed Assets and Leaseholds
              
              
              —
              
              
              
              —
              
              
              
              4,507
              
              
              
              —
              
              
              
              4,507Investing
                  Activity—Other
              
              
              —
              
              
              
              (23
              )
              
              
              (9,862
              )
              
              
              —
              
              
              
              (9,885
              )Net
                  Cash Used in Investing Activities—Continuing Operations
              
              
              —
              
              
              
              (5,335
              )
              
              
              (93,158
              )
              
              
              —
              
              
              
              (98,493
              )Net
                  Cash Used in Investing Activities—Discontinuing Operations
              
              
              —
              
              
              
              —
              
              
              
              (78
              )
              
              
              —
              
              
              
              (78
              )Net
                  Cash Used in Investing Activities
              
              
              —
              
              
              
              (5,335
              )
              
              
              (93,236
              )
              
              
              —
              
              
              
              (98,571
              )FINANCING
                  ACTIVITIESPrincipal
                  Payments on Long Term Debt
              
              
              —
              
              
              
              —
              
              
              
              (1,048
              )
              
              
              —
              
              
              
              (1,048
              )Issuance
                  of Common Stock Upon Exercise of Stock Options
              
              
              —
              
              
              
              1,364
              
              
              
              —
              
              
              
              —
              
              
              
              1,364Treasury
                  Stock Transactions
              
              
              —
              
              
              
              1,083
              
              
              
              —
              
              
              
              —
              
              
              
              1,083Payment
                  of Dividends
              
              
              —
              
              
              
              (26,783
              )
              
              
              —
              
              
              
              —
              
              
              
              (26,783
              )Net
                  Cash Used in Financing Activities
              
              
              —
              
              
              
              (24,336
              )
              
              
              (1,048
              )
              
              
              —
              
              
              
              (25,384
              )Increase
                  in Cash and Cash Equivalents
              
              
              —
              
              
              
              15,643
              
              
              
              2,493
              
              
              
              —
              
              
              
              18,136Cash
                  and Cash Equivalents at Beginning of Period
              
              
              —
              
              
              
              28,299
              
              
              
              1,518
              
              
              
              —
              
              
              
              29,817Cash
                  and Cash Equivalents at End of Period
              
              $
              —
              
              
              $
              43,942
              
              
              $
              4,011
              
              
              $
              —
              
              
              $
              47,953
  68
  
  
 **BURLINGTON
        COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES**
 **Schedule
        II - Valuation and Qualifying Accounts and Reserves**
 **(All
        amounts in thousands)**
 
 DESCRIPTION
              
              **BALANCE
                  AT**
                **BEGINNING**
                **OF
                  PERIOD**
              
              
              **CHARGED
                  TO**
                **EXPENSE**
              
              
              **CHARGED
                  TO**
                **OTHER**
                **ACCOUNTS**
              
              
              **BALANCE**
                **ACCOUNTS**
                **WRITTEN
                  OFF**
              
              
              **AT
                  END OF**
                **PERIOD**Successor:Year
                  ended 6/2/07ALLOWANCE
                  FOR DOUBTFUL ACCOUNTS – ACCOUNTS RECEIVABLE
              
              $
              199
              
              
              $
              2,826
              
              
              $
              0
              
              
              $
              2,056
              
              
              $
              969Period
                  from 4/13/2006 to 6/3/2006ALLOWANCE
                  FOR DOUBTFUL ACCOUNTS -  ACCOUNTS RECEIVABLE
              
              
              -0-
              
              
              $
              789
              
              
              $
              0
              
              
              $
              590
              
              
              $
              199Predecessor:Period
                  from 5/29/2005 to 4/12/2006ALLOWANCE
                  FOR DOUBTFUL ACCOUNTS -  ACCOUNTS RECEIVABLE
              
              $
              762
              
              
              $
              3,905
              
              
              $
              0
              
              
              $
              3,300
              
              
              $
              1,367
 
 DESCRIPTION
              
              **BALANCE
                  AT**
                **BEGINNING**
                **OF
                  PERIOD**
              
              
              **CHARGED
                  TO**
                **EXPENSE**
              
              
              **CHARGED
                  TO**
                **OTHER**
                **ACCOUNTS
                  (1)**
              
              
              **DEDUCTIONS
                  (2)**
              
              
              **AT
                  END OF**
                **PERIOD**Successor:Year
                  ended 6/2/07SALES
                  RESERVES
              
              $
              1,900
              
              
              $
              0
              
              
              $
              165,932
              
              
              $
              162,332
              
              
              $
              5,500Successor:Period
                  from 4/13/2006 to 6/3/06SALES
                  RESERVE
              
              $
              2,100
              
              
              $
              0
              
              
              $
              7,199
              
              
              $
              7,399
              
              
              $
              1,900Predecessor:Period
                  from 5/29/2005 to 4/12/2006SALES
                  RESERVE
              
              $
              2,000
              
              
              $
              0
              
              
              $
              49,699
              
              
              $
              49,599
              
              
              $
              2,100
 
 Charged
                  to merchandise sales.
 Actual
                  returns and allowances.
  
 69
  
 **Item
                  9.**
              **Changes
                  in and Disagreements with Accountants on**
                **Accounting
                  and Financial Disclosure**
  None.
  **Item
                  9A.**
              **Controls
                  and Procedures**
 
 
 Under
        the
        supervision and with the participation of management, including our principal
        executive officer and principal financial officer, we evaluated the
        effectiveness of the design and operation of our disclosure controls and
        procedures (as defined in Rule 13a-15(e) or 15d-15e under the Securities
        Exchange Act of 1934 (the “Exchange Act”)). Based upon that evaluation, the
        principal executive officer and principal financial officer have concluded
        that,
        as of the end of the period covered by this report, our disclosure controls
        and
        procedures were effective.
 
 There
        were no changes in our internal control over financial reporting during the
        period covered by this report that has materially affected, or is reasonably
        likely to materially affect, our internal control over financial
        reporting.
 
 This
        annual report does not include a report of management’s assessment regarding
        internal control over financial reporting due to a transition period established
        by the rules of the SEC for newly established public companies.
 
 **Part
        III**
 **Item
                  10.**
              **Directors
                  and Executive Officers of the
                  Registrant**
 
  Below
        is
        a list of the names and ages of our directors and executive officers as of
        June
        2, 2007 and a brief account of the business experience of each of them. On
        June
        4, 2007, Jack Moore joined the Company as President of Merchandising, Planning
        and Allocation and Marketing, and on July 6, 2007, Elizabeth Williams left
        the
        Company.
  **Name**
              **Age**
              **Position**Mark
                  A. Nesci
              51
              Chief
                  Executive Officer, President and DirectorThomas
                  J. Fitzgerald
              46
              Executive
                  Vice President, Chief Financial OfficerJack
                  Moore.
              52
              President
                  of Merchandising, Planning and Allocation and MarketingPaul
                  C. Tang
              54
              Executive
                  Vice President, General Counsel and SecretaryElizabeth
                  Williams
              53
              Executive
                  Vice President, Chief Merchandising OfficerSteve
                  Koster
              58
              Vice
                  President, Senior Divisional Merchandise Manager for
                  MenswearRobert
                  LaPenta, Jr.
              53
              Vice
                  President, Chief Accounting Officer, TreasurerJoshua
                  Bekenstein
              48
              DirectorJordan
                  Hitch
              40
              DirectorJohn
                  Tudor
              37
              DirectorNicholas
                  Nomicos
              44
              Director
  **Mark
        A. Nesci—Chief Executive Officer and Director**. Mr. Nesci became
        our Chief Executive Officer and Director upon closing of the Merger Transaction
        on April 13, 2006. Previously, Mr. Nesci was an Executive Vice President,
        Chief Operating Officer and Director from 1999. Mr. Nesci has been employed
        by us since 1972, beginning his career as a part-time Stock Associate while
        in
        high school. In 1976 he was promoted to Store Manager, followed by District
        Manager in 1980. He became Vice President of Real Estate in 1982, and Vice
        President of Store Operations in 1983. Mr. Nesci was elected to the Board
        of Directors in 1989 and gained the title of Chief Operating Officer in 1990.
        In
        1999, he was promoted to Executive Vice President.
  **Thomas
        J. Fitzgerald—Executive Vice President, Chief Financial Officer**.
        Mr. Fitzgerald joined us on September 25, 2006 as our Executive Vice
        President, Chief Financial Officer and on August 17, 2007, Mr. Fitzgerald
        announced that he would be leaving the Company in September 2007. Prior to
        joining us, since 2005, Mr. Fitzgerald was the Chief Operating Officer of
        Bath & Body Works of Limited Brands, Inc. Mr. Fitzgerald also
        served as Chief Financial Officer of Bath & Body Works from 2000 to
        2005. Mr. Fitzgerald began his career in 1984 with PepsiCo, Inc. During his
        16-year tenure with PepsiCo, Mr. Fitzgerald was responsible for finance,
        marketing and business planning functions. Mr. Fitzgerald has over 22 years
        of financial and business experience.
    70
 
  Mr. Fitzgerald
          received a Bachelor’s Degree in Finance from the University of Florida and an
          MBA in Finance from the Indiana University School of
          Business.
 
 **Jack
        Moore— President of Merchandising, Planning and Allocation and
        Marketing**. Mr. Moore joined us on June 4, 2007 as our as President of
        Merchandising, Planning and Allocation, and Marketing.  Prior to joining
        us, Mr. Moore served as President and Chief Operating Officer of Linens ‘N
        Things, a retailer of home textiles, housewares and home accessories. 
Prior to that, Jack held various management positions at Kohl's Department
        Stores from 1997 to 2004 including: Vice President-Divisional Merchandise
        Manager, Senior Vice President of Merchandise Planning and Allocation and
        Executive Vice President, General Merchandise Manager. Prior to his seven
        years
        at Kohl's, Jack spent 20 years at the department store division of the Target
        Corporation where he held significant merchandising and store management
        positions.  Mr. Moore received a Bachelor’s Degree in Business
        Administration from the University of North Dakota in 1977.
  **Paul
        C. Tang—Executive Vice President, General Counsel and Secretary**.
        Mr. Tang has been our Executive Vice President, General Counsel and
        Secretary since 1993. He was named Vice President in 1995, Executive Vice
        President in 1999 and Secretary in 2001. From 1989 to 1993, Mr. Tang was a
        partner in the law firm of Reid & Priest. From 1987 to 1988, he was a
        partner of the law firm of Milstein & Tang. From 1980 to 1987,
        Mr. Tang was an attorney at the law firm of Phillips Nizer, where he became
        a partner in 1985. Mr. Tang received an A.B. from Harvard University and
        holds J.D. and M.B.A. degrees from Columbia University.
  **Elizabeth
        Williams—Executive Vice President, Chief Merchandising Officer**. Ms.
        Williams left the Company on July 6, 2007.  Ms. Williams was our
        Executive Vice President, Chief Merchandising Officer since June 2006. Prior
        to
        joining us, Ms. Williams was President of Fashion Bug, a division of
        Charming Shoppes from July 1999 to January 2006. She joined Charming Shoppes
        in
        1995 and held the position of Executive Vice President and President of Fashion
        Bug. Charming Shoppes owns and operates women’s apparel specialty stores.
        Ms. Williams has over 30 years of retailing experience. Ms. Williams
        received a B.A. in Sociology from the University of California,
        Berkeley.
  **Steven
        Koster —Vice President, Senior Divisional Merchandise Manager for
        Menswear.**Mr. Koster has been our Vice President and
        Senior Divisional Merchandise Manager since 1995. He was hired by us as a
        Buyer
        in 1981 and was promoted to a Merchandise Manager in 1987. Prior to joining
        us,
        Mr. Koster worked for Allied Stores from 1979 through 1980. He also worked
        for R.H. Macy Corp. as a Menswear Buyer from 1973 to 1979. Steven Koster
        received a Bachelors degree in Business Administration from Bernard M. Baruch
        College in 1971.
  **Robert
        L. LaPenta Jr.— Vice President, Chief Accounting Officer, Treasurer**.
        Prior to Mr. Fitzgerald joining the Company, Mr. LaPenta was our principal
        financial officer during the first and second quarters of fiscal
        2007.  Mr. LaPenta has been a Vice President since 1999 and Chief
        Accounting Officer since 1986.  He was appointed Treasurer in 2003. He
        joined us as Controller in 1984. From 1978 to 1984, Mr. LaPenta was the
        Corporate Financial Reporting and Tax Manager at Spencer Gifts. From 1976
        to
        1978, Mr. LaPenta was an accountant at Touche Ross & Co.
        Mr. LaPenta is a certified public accountant. He received a B.S. in
        Accounting from the University of Delaware.
  **Joshua
        Bekenstein—Director**. Mr. Bekenstein, a Managing Director of Bain
        Capital, joined the firm at its inception in 1984. Mr. Bekenstein serves as
        a board member of Bombardier Recreational Products, Bright Horizons Family
        Solutions, Dollarama, Toys “R” Us and Waters Corporation. Previously,
        Mr. Bekenstein spent two years as a consultant at Bain & Company.
        Mr. Bekenstein received an M.B.A. from Harvard Business School and a B.A.
        from Yale University.
  **Jordan
        Hitch—Director**. Mr. Hitch, a Managing Director of Bain Capital,
        joined the firm in 1997. Mr. Hitch serves as a board member of Bombardier
        Recreational Products and MC Communications. Prior to joining the firm,
        Mr. Hitch was a consultant at Bain & Company where he worked in
        the financial services, healthcare and utility industries. Mr. Hitch
        received an M.B.A., with distinction, from the University of Chicago Graduate
        School of Business. He received a B.S. in Mechanical Engineering from Lehigh
        University.
  **John
        Tudor—Director**. Mr. Tudor, a Principal of Bain Capital, joined the
        firm in 2000. Previously, Mr. Tudor was a consultant at the Monitor Group.
        Mr. Tudor received an M.B.A. from Harvard Business School, where he was a
        Baker Scholar. He is a graduate of the University of Cape Town in South Africa,
        and the University of Oxford in the United Kingdom, where he was a Rhodes
        Scholar.
  **Nicholas
        Nomicos—Director**. Mr. Nomicos, an Executive Vice President in the
        Portfolio Group of Bain Capital, joined the firm in 1999. Mr. Nomicos
        serves as a board member of Bombardier Recreational Products and Dollarama.
        Prior to joining the firm, Mr. Nomicos held several senior corporate and
        division management positions at Oak Industries where he headed the WDM business
        unit of Lasertron, a semiconductor laser manufacturer serving the
        telecommunications industry. Previously, Mr. Nomicos was a
   71
 
  manager
          at Bain & Company. Mr. Nomicos received an M.B.A. from Harvard
          Business School and a B.S.E., Phi Beta Kappa and magna cum laude, from
          Princeton
          University.
  **Nomination
        of Directors**
  In
        connection with the Merger Transaction, Parent entered into a stockholders
        agreement with its stockholders, including funds associated with Bain Capital,
        which established the composition of our Board of Directors. Pursuant to
        the
        agreement, Bain Capital Fund IX, LLC has the authority to nominate one member
        of
        the Board of Directors and the other members are nominated by the holders
        of the
        majority of the shares held by other funds associated with Bain Capital which
        are party to the agreement.
  **Code
        of Business Conduct and Ethics**
  We
        adopted a Code of Business Conduct and Ethics (which includes our Code of
        Ethics
        for our Chief Executive Officer and senior financial
        officers).   The Company will provide any person, without charge,
        upon request, a copy of such Code of Business Conduct and
        Ethics.  Such requests should be made in writing to the attention of
        Corporate Counsel, Burlington Coat Factory Warehouse Corporation, 1830 Route
        130
        North, New Jersey  08016.
  **Audit
        Committee**
 Our
        Board
        of Directors has separately designated an audit committee and the functions
        of a
        traditional audit committee are carried out by two of the members of the
        Board.
        Our Board has determined that each member of the Board is financially literate
        but no determination has been made as to the ability of any director to qualify
        as a “financial expert” within the meaning of the regulations adopted by the
        Securities and Exchange Commission. Neither of our directors who serve on
        the
        Audit Committee is independent due to their affiliations with Bain
        Capital.
 
 
 **Item
        11.   Executive Compensation**
 
 **Compensation
        Committee Report**
  The
        Compensation Committee of the Board of Directors (the “Committee”) of the
        Company has reviewed and discussed the Compensation Discussion and Analysis
        section (the “CD&A”) required by Item 402(b) of Regulation S-K with
        management. Based on such review and discussions, the Committee recommended
        to
        the Board that the CD&A be included in this Annual Report on Form
        10-K.
  THE
        COMPENSATION COMMITTEE
 
 Jordan
        Hitch
 Joshua
        Bekenstein
  **Compensation
        Discussion and Analysis**
  **Overview**
  The
        Compensation Committee (the
“Committee”) is tasked with discharging the Board of Directors’ responsibilities
        related to oversight of the compensation of our officers and ensuring that
        our
        executive compensation program meets our corporate objectives. Our compensation
        program is administered by management in accordance with the policies developed
        by the Committee. This disclosure is a discussion and analysis of the various
        policies, programs and practices developed and administered by the
        Committee.
  The
        Committee makes decisions and recommendations regarding salaries, annual
        bonuses
        and equity incentive compensation for our executive officers. It is also
        responsible for reviewing and approving corporate goals and objectives relevant
        to the compensation of the chief executive officer and our other executive
        officers, as well as evaluating their performance in light of those goals
        and
        objectives. Based on this evaluation, the Committee, as authorized by the
        Board
        of Directors, determines and approves the chief executive officer’s and other
        executive officers’ compensation. The Committee solicits input from our chief
        executive officer regarding the performance of the Company’s other executive
        officers. The Committee also administers our incentive compensation and certain
        benefit plans.
   72
 
 The
        chief
        executive officer reviews our compensation plan. Based on his analysis, the
        chief executive officer recommends a level of compensation to the Committee
        which he views as appropriate to attract, retain and motivate executive talent.
        Our Board of Directors acting through the Committee determines and approves
        the
        chief executive officer’s, other executive officers’ and other officers’
compensation.
 
 **Our
        Compensation Objective**
  Our
        compensation practices are designed to retain, motivate and reward our executive
        officers for their performance and contributions to our long-term success.
        Our
        Board of Directors acting through the Committee seeks to compensate our
        executive officers by combining cash and long-term equity incentives. It
        also
        seeks to reward the achievement of corporate and individual performance
        objectives, and to align executives’ incentives with stockholder value
        creation.
  **Compensation
        Components**
  Our
        compensation consists primarily of three elements: base salary, annual bonus
        and
        long-term equity incentives. We describe each element of compensation in
        more
        detail below.
  *Base
        Salary*
  Base
        salaries for our executives are established based on the scope of their
        responsibilities and their prior relevant experience, taking into account
        competitive market compensation paid by other companies in our industry for
        similar positions and the overall market demand for such executives at the
        time
        of hire. An executive’s base salary is also determined by reviewing the
        executive’s other compensation to ensure that the executive’s total compensation
        is in line with our overall compensation philosophy.
  *Annual
        Incentive Awards*
  Annual
        incentive awards are an important part of the overall compensation we pay
        our
        executive officers. Unlike base salary, which is fixed, the annual incentive
        awards are paid only if specified performance levels are achieved during
        the
        year. We believe that annual incentive awards encourage our executive officers
        to focus on specific short-term business and financial goals of the Company.
        Our
        executive officers receive annual cash incentive awards under the Management
        Incentive Bonus Plan (the “Management Bonus Plan”).
  Under
        the
        Management Bonus Plan, each executive officer has an annual bonus target
        of up
        to 50% of his or her salary based on the EBITDA results for the
        Company.  We calculate EBITDA, for this purpose, as earnings before
        interest, tax, depreciation and amortization with certain adjustments. We
        believe that focusing on EBITDA more closely aligns the executive officers’
interests with the stockholders’ interests, as we believe that EBITDA is a more
        accurate indicator of the Company’s financial performance. The EBITDA goals for
        the Company are established at the beginning of each year by the Committee
        in
        consultation with the chief executive officer.
 
 At
        the
        beginning of each fiscal year, the Committee sets the threshold EBITDA level
        and
        the target EBITDA level.  The Committee generally sets the EBITDA
        threshold and target levels based on the business plan EBITDA target for
        the
        Company determined through our annual financial planning process, and this
        financial plan is presented to the Board of Directors for
        approval.  Achievement at the target EBITDA would result in a payout
        at the target level (i.e., 50% executive officer’s base salary).  If
        actual EBITDA performance is less than the EBITDA target but is greater than
        the
        threshold EBITDA, each named executive officer would be eligible for an
        incentive bonus equivalent to a fractional share of his of her target bonus
        determined by the proportion of the actual EBITDA achieved in relation to
        target EBITDA.  If actual EBITDA is greater than target EBITDA, each
        executive officer would be eligible for the target bonus plus an additional
        bonus payment equivalent to a percentage of every dollar above the EBITDA
        target, subject to a maximum determined each year.  If actual EBITDA
        is less than the threshold EBITDA, no bonus will be earned by any executive
        officer.
  Notwithstanding
        the formulas described above for the Management Bonus Plan, the Committee
        has
        the discretion to pay more or less than the formula amount to any executive
        officer.
  ***Long-Term
        Incentives***
  We
        believe that long-term incentives are a component of compensation that helps
        us
        to attract and retain our executive officers. These incentives also align
        the
        financial rewards paid to our executive officers with the Company’s long-term
        performance, thereby encouraging our executive officers to focus on long-term
        goals. We offer long-term incentives under our 2006 Management Incentive
        Plan
        (the “Management Incentive Plan”) which our Parent adopted concurrently with the
        Merger Transaction.
   73
   Under
        the
        Management Incentive Plan, executive officers are eligible to receive restricted
        stock or stock options to purchase common stock. Awards of restricted shares
        and
        stock options under the Management Incentive Plan generally are expressed
        in
        terms of “units”. Each unit consists of nine shares of Class A common stock
        and one share of Class L common stock of the Parent. Stock options to purchase
        units are granted without consideration with a vesting period designed to
        encourage retention of the executive officer.
 
 Stock
        options granted under the Management Incentive Plan are exercisable in three
        tranches.  The first tranche has an exercise price equal to the fair
        market value of the underlying unit on the grant date. The exercise prices
        of
        the other tranches are set at an escalating scale.  These
        service-based awards cliff vest 40% on the second anniversary of the award
        with
        the remaining options vesting ratably over the subsequent three
        years.  All options become exercisable upon a change of control and
        unless determined otherwise by the plan administrator, upon cessation of
        employment, options that have not vested will terminate immediately, units
        issued upon the exercise of vested options will be callable and unexercised
        vested options will be exercisable for a period of 60 days.  The final
        exercise date for any option granted is the tenth anniversary of the grant
        date.
  ***Perquisites***
  We
        provide our executive officers with perquisites that we believe are reasonable
        and consistent with the perquisites that would be available to them at companies
        with whom we compete for experienced senior management. We provide each of
        our
        executive officers with the use of a company car, company paid car maintenance,
        including gas expenses, and if applicable, reimbursement of relocation
        expenses.
  For
        more
        information regarding perquisites for our executive officers, see the Summary
        Compensation Table on this Annual Report on Form 10-K. For information on
        the
        incremental costs of these perquisites, see the footnotes to the Summary
        Compensation Table.
  ***Tax
        and Accounting Considerations***
  In
        making
        decisions about executive compensation, we take into account certain tax
        and
        accounting considerations. For example, we take into account Section 409A
        of the Internal Revenue Code regarding non-qualified deferred
        compensation.  In making decisions about executive compensation, we
        also consider how various elements of compensation will affect our financial
        reporting. For example, we consider the impact of Statement of Financial
        Accounting Standards No. 123(R), “Share-Based Payment (“SFAS 123(R)”),”
which requires us to recognize the cost of employee services received in
        exchange for awards of equity instruments based upon the grant date fair
        value
        of those awards.
  ***Termination
        Based Compensation***
  *Severance
        and acceleration of vesting of equity-based awards.* For payments due to our
        executive officers upon a change in control, and the acceleration of vesting
        of
        equity-based awards in the event of a change of control under our option
        plan,
        please see “Payments Upon Termination Events and Change of Control”
below.
  **Compensation
        of Named Executive Officers**
  ***Summary
        Compensation Table for Fiscal Year 2007***
  The
        following table provides information concerning the compensation of our chief
        executive officer, chief financial officer and the three most highly compensated
        officers of our company serving as executive officers as of June 2, 2007.
        We
        refer to such officers throughout this report as our named executive
        officers.
  74
   
  
 **Name
                  and Principal Position**
              **Year**
              
              **Salary**
                **($)**
              
              
              **Bonus**
                **($)**
              
              **Stock
                  Awards**
                **($)**
                **(4)**
              
              **Option
                  Awards ($)**
              
              **Non-**
                **Equity
                  Incentive Plan Compensation**
                **($)**
              **Change
                  in Pension Value and Nonqualified Deferred
                  Compensation**
                **Earnings**
                **($)**
              
              **All
                  Other Compensation**
                **($)**
              
              
              **Total**
                **($)****Mark
                  A. Nesci, President and Chief Executive Officer**
              2007
              
              $
              600,000
              
              
              $
              6,500,000
              (1)
              _
              
              $
              571,433
              
              _
              _
              
              $
              29,650
              (5)
              
              $
              7,701,083**Thomas
                  Fitzgerald. Executive Vice President and Chief Financial
                  Officer**
              2007
              
              $
              500,000
              
              
              $
              350,000
              (2)
              _
              
              $
              168,201
              
              _
              _
              
              $
              1,130,528
              (6)
              
              $
              2,148,729**Robert
                  LaPenta, Vice President Chief Accounting Officer, former Principal
                  Financial Officer**
              2007
              
              $
              250,000
              
              
              $
              250,000
              (1)
              _
              
              $
              163,267
              
              _
              _
              
              $
              13,102
              (7)
              
              $
              676,369**Elizabeth
                  Williams, Executive Vice President and Chief Merchandising
                  Officer**
              2007
              
              $
              450,000
              
              
              $
              275,000
              (3)
              _
              
              $
              230,098
              
              _
              _
              
              $
              505,462
              (8)
              
              $
              1,460,560**Paul
                  Tang, Executive Vice President, General Counsel and
                  Secretary**
              2007
              
              $
              320,000
              
              
              $
              100,000
              (1)
              _
              
              $
              163,267
              
              _
              _
              
              $
              13,615
              (9)
              
              $
              596,882**Steven
                  Koster, Vice President, Senior Divisional Merchandise Manager for
                  Menswear**
              2007
              
              $
              325,000
              
              
              $
              250,000
              (1)
              _
              
              $
              163,267
              
              _
              _
              
              $
              14,268
              (10)
              
              $
              752,535
  (1)
              Retention
                  bonus per employment agreement paid on the one year anniversary
                  of the
                  Merger Transaction, April 13, 2007.
  (2)
              Represents
                  a sign-on bonus of which fifty percent, net of taxes, was
                  forfeited when Mr. Fitzgerald announced his departure from the
                  Company.
  (3)
              Represents
                  a $50,000 sign on bonus and $225,000 guaranteed first year
                  bonus.
   75
  (4)
              Restricted
                  stock awards were made in fiscal 2006 at the time of the Merger
                  Transaction to Messrs. Nesci, LaPenta, Tang and Koster and fully-vested
                  on
                  the one year anniversary of the Merger Transaction, April 13,
                  2007.  See “OPTIONS EXERCISED AND STOCK VESTED” Table
                  below.
 
 (5)
              Includes
                  $8,800 for the 401(k) contribution made by the Company, and the
                  following
                  incremental costs associated with the provision of the use of a
                  company
                  car:  $7,220 for gas expenses, $1000 for car insurance and
                  $12,630 for maintenance expenses.
 
 (6)
              Includes
                  an accrued $225,000 representing his guaranteed bonus of which
                  $187,500
                  was paid in July 2007and $63,500 was forfeited upon his
                  resignation, and also $23,465 for temporary housing, including
                  expenses
                  for furniture and utilities, $7,063 for weekend air travel expense
                  to his
                  residence in Ohio during his relocation period, and accrued make
                  whole
                  provision payment of up to $850,000 on the sale of his Ohio
                  residence.  The make whole provision was forfeited upon his
                  resignation.
 
 (7)
              Includes
                  $8,800 for the 401(k) contribution made by the Company, and the
                  following
                  incremental costs associated with the provision of the use of a
                  company
                  car:  $2,751 for gas expenses, $1,000 for car insurance and $551
                  for maintenance expenses.
 
 (8)
              Includes
                  $450,000 for an accrued severance payment that she will receive
                  in 26
                  equal payments over the twelve month period that began on July
                  7, 2007,
                  $37,703 as the cost to the Company for the purchase of the Company
                  car
                  used by Ms. Williams during her employment with the Company, $1,100
                  for
                  gas expenses, $1,000 for car insurance, $122 for maintenance expenses
                  and
                  $15,536 for the continuation of her health and medical benefits
                  during her
                  severance period of one year.
 
 (9)
              Includes
                  $8,800 for the 401(k) contribution made by the Company and the
                  following
                  incremental costs associated with the provision of the use of a
                  company
                  car: $2,397 for gas expenses, $1,000 for car insurance and $1,418
                  for
                  maintenance expenses.
 
 (10)
              Includes
                  $8,800 for the 401(k) contribution made by the Company and the
                  following
                  incremental costs associated with the provision of the use of a
                  company
                  car: $3,166 for gas expenses, $1,000 for car insurance, and $1,302
                  for
                  maintenance expenses.
 
 **Grants
        of Plan-Based Awards**
 
 The
        following table shows target non-equity incentive plan awards for the last
        completed fiscal year to each of the executive officers named in the Summary
        Compensation Table.  Since the EBITDA target for fiscal year 2007 was
        not achieved, no future payouts under the non-equity incentive plan awards
        will
        be made to the named executive officers, except for the guaranteed bonuses
        payable to Thomas Fitzgerald and paid to Elizabeth Williams pursuant to each
        of
        their employment agreements.
  76
  
 
 **Name**
                **Grant
                    Date**
                
                **Estimated
                    Future Payouts**
                  **Under
                    Non-Equity Incentive**
                  **Plan
                    Awards**
                  Target
                  ($)
                
                **All
                    Other Option Awards: Number of Securities Underlying
                    Options**
                  **(#)**
                **Exercise
                    or Base Price of Option Awards ($/Unit)****Mark
                    A. Nesci**
                
                
                $
                300,000**Thomas
                    Fitzgerald**
                9/25/06
                
                $
                250,000
                (1)
                10,000
                    units  (2)
                  10,000
                    units
                  10,000
                    units
                $90/
                    unit
                  $180/unit
                  $270/unit**Robert
                    LaPenta**
                
                
                $
                125,000**Elizabeth
                    Williams**
                6/29/06
                
                $
                225,000
                (1)
                10,000
                    units  (3)
                  10,000
                    units
                  10,000
                    units
                $90/
                    unit
                  $180/unit
                  $270/unit**Paul
                    Tang**
                
                
                $
                160,000**Steven
                    Koster**
                
                
                $
                162,500
                (4)
 (1)  Paid
        or payable pursuant to the terms of his or her Employment Agreement and
        forfeited upon resignation.
 (2)  Granted
        at the time of commencement of his employment with the Company on September
        25,
        2006 and will be cancelled on his last day of employment.
 (3)
        Option grant was forfeited on June 29, 2007 pursuant to her Severance
        Agreement.
 (4)  Mr.
        Koster, as a buyer for our Company, is also eligible for a buyer’s bonus
        primarily based on merchandise sales for his division, Menswear.  The
        amount of this potential bonus is equivalent to $81,250.
 **Outstanding
        Equity Awards at Fiscal Year-End**
 
 
 
 **Option
                  Awards**
              
              **Stock
                  Awards****Name**
              Number
                  of Units Underlying Unexercised Options
                (#)
                  Exercisable
              Number
                  of Units Underlying Unexercised Options
                (#)
                Unexercisable
              
              Equity
                  Incentive Plan Awards: Number of Units Underlying Unexercised Unearned
                  Options
                (#)
                (1)
              
              
              Option
                  Exercise Price
                ($)
              
              
              Option
                  Expiration Date
              
              Number
                  of Units of Stock that Have Not Vested
                (#)
              Market
                  Value of Units of Stock That Have Not Vested
                ($)
              Equity
                  Incentive Plan Awards: Number of Unearned Shares, Units or Other
                  Rights
                  That Have Not Vested
                (#)
              Equity
                  Incentive Plan Awards:
                Market
                  or Payout Value of Unearned Shares, Units or Other Rights That
                  Have Not
                  Vested
                ($)**Mark
                  A. Nesci**
              
              
              
              
              23,334
                23,333
                23,333
              
              
              
              90.00
                180.00
                270.00
              
              
              4/13/2016**Thomas
                  Fitzgerald**
              
              
              
              
              10,000
                10,000
                10,000
              
              
              
              90.00
                180.00
                270.00
              
              
              
              (2
              )**Robert
                  LaPenta**
              
              
              
              
              6,667
                6,666
                6,666
              
              
              
              90.00
                180.00
                270.00
              
              
              4/13/2016







77
  
 **Elizabeth
                      Williams**
                  
                  
                  10,000
                    10,000
                    10,000
                  
                  
                  
                  90.00
                    180.00
                    270.00
                  
                  
                  
                  (3
                  )**Paul
                      Tang**
                  
                  
                  6,667
                    6,666
                    6,666
                  
                  
                  
                  90.00
                    180.00
                    270.00
                  
                  
                  4/13/2016**Steven
                      Koster**
                  
                  
                  6,667
                    6,666
                    6,666
                  
                  
                  
                  90.00
                    180.00
                    270.00
                  
                  
                  4/13/2016


(1)
              The
                  options time vest 40% on the second anniversary of the grant date,
                  20% on
                  the third anniversary of the grant date, 20% on the fourth anniversary
                  of
                  the grant date and 20% on the fifth anniversary of the grant
                  date.
 (2)
              Mr.
                  Fitzgerald forfeited his options when he announced his decision
                  to leave
                  the Company.  None of his option rights
                  vested.
 (3)   Ms.
        Williams forfeited her options when she left the Company on July 6,
        2007.  At that time, none of her option rights had
        vested.
 
 **Option
        Exercises and Stock Vested**
 
 None
        of
        our Named Executive Officers exercised any options in fiscal 2007.
 
 **Option
                  Awards**
              
              **Stock
                  Awards****Name**
              Number
                  of
                Shares
                Acquired
                  on Exercise
                (#)
              Value
                Realized
                  on
                Exercise
                ($)
              
              Number
                  of
                Units
                Acquired
                  on
                Vesting
                (#)
                  (1)
              
              
              Value
                Realized
                  on
                Vesting
                ($)
                  (2)**Mark
                  A. Nesci**
              _
              **_**
              
              
              38,889
              
              
              $
              3,888,900**Thomas
                  Fitzgerald**
              _
              **_**
              
              _
              
              
              _**Robert
                  LaPenta**
              
              
              
              
              2,778
              
              
              $
              277,800**Elizabeth
                  Williams**
              _
              **_**
              
              _
              
              
              _**Paul
                  Tang**
              _
              **_**
              
              
              4,445
              
              
              $
              444,500**Steven
                  Koster**
              _
              **_**
              
              
              2,778
              
              
              **$**
              277,800
 (1)  The
        restricted stock awards that were granted in connection with the Merger
        Transaction on April 13, 2006 to Messrs. Nesci, LaPenta, Tang and Koster
        all
        vested on April 13, 2007.
 (2)  As
        we are a privately held company, the value of units is only available when
        a
        valuation is performed. The units were  valued as of our fiscal year
        end, June 2, 2007 at $100 per unit.
 
 ***2006
        Management Incentive Plan***
 
 On
        April
        13, 2006, Burlington Coat Factory Holdings, Inc.’s Board of Directors adopted
        the 2006 Management Incentive Plan (“Plan”). The Plan provides for the granting
        of service-based stock options and restricted stock to executive officers
        and
        other key employees of the Company and its subsidiaries.  Pursuant to
        the Plan employees are granted options to purchase “units” of common stock in
        Parent. Each unit consists of nine shares of Class A common stock and one
        share of Class L common stock of Parent. The shares comprising a unit are
        in the
        same proportion as the shares of Class A and Class L common stock held by
        all stockholders of Parent.  The options are exercisable only for
        whole units and cannot be separately exercised for the individual classes
        of
        Parent common stock.
 
 The
        units
        granted were granted in three tranches with separate exercise
        prices.  The option awards cliff vest 40% on the second anniversary of
        the award with the remaining options vesting ratably over the subsequent
        three
        years.  All options become exercisable upon a change of control and
        unless determined otherwise by the plan administrator. Upon termination of
        employment, options that have not vested will terminate immediately, shares
        issued upon the exercise of vested options will be callable and unexercised
        vested
   78
 
  options
          will be exercisable for a period of 60 days.  The final exercise date
          for any option granted is the tenth anniversary of the grant
          date.
  ***Payments
        Upon Termination Events and a Change of Control***
 
 *Severance
        Arrangements.*  Each executive’s employment agreement provides for
        severance payments, if the executive’s employment is terminated by us without
“cause” or by him for “good reason” (as those terms are defined in the
        agreement), he will be entitled to receive:
  •
              
              certain
                  rights accrued through the date of termination, including salary
                  and prior
                  year’s unpaid bonus,
  •
              
              a
                  pro-rated portion of the then current year’s annual bonus through the date
                  of termination, based on actual
                  results,
  •
              
              a
                  severance payment equal to the then current base salary (in
                  Mr. Nesci’s case, two times his then current base
                  salary).  The “Severance Period” is initially the one-year
                  period commencing on the date of termination (in Mr. Nesci’s case a two
                  year period commencing on the date of
                  termination),  and
  •
              
              continued
                  coverage during the Severance Period under our health and medical
                  benefits.
 As
        a
        condition to receiving the severance payment under the agreement, each executive
        must execute a release of claims in respect of his employment with
        us.
 
 *Change
        of Control Provisions*.  None of our executives are entitled to
        receive any payments upon a change of control; however, pursuant to the 2006
        Management Incentive Plan Option Agreement, all outstanding options will
        fully
        vest upon a change of control.
 
 **Name**
              
              **Payments Due in**
                **Connection with**
                **Termination
                  of**
                **Employment**
                **without
                  Cause or**
                **for
                  Good Reason (1)**
              
              
              **Payments Due in**
                **Connection with**
                **Termination
                  of**
                **Employment**
                **without
                  Cause or**
                **for
                  Good Reason (2)**
              
              
              **Payments Due in**
                **Connection with**
                **Termination
                  of**
                **Employment**
                **with
                  Cause, due to death, voluntary resignation other than
                  for**
                **Good
                  Reason**
              
              
              **Payments
                  Due in**
                **Connection
                  with a**
                **Change
                  of Control**
                **from
                  full vesting of outstanding Options regardless of termination of
                  employment (5)**Mark
                  A. Nesci
              
              $
              1,200,000
              
              
              $
              1,800,000
              
              
              $
              1,000,000
              (4)
              
              $
              233,340Thomas
                  Fitzgerald
              
              $
              500,000
              
              
              $
              750,000
              
              
              $
              0
              
              
              $
              100,000Robert
                  LaPenta
              
              $
              250,000
              
              
              $
              375,000
              
              
              $
              0
              
              
              $
              66,670Elizabeth
                  Williams
              
              _
              
              
              _
              
              
              _
              
              
              _Paul
                  Tang
              
              $
              320,000
              
              
              $
              480,000
              
              
              $
              0
              
              
              $
              66,670Steve
                  Koster
              
              $
              325,000
              
              
              $
              487,500
              (3)
              
              $
              0
              
              
              $
              66,670
 
 (1)  Assumes
        that no bonus would be payable to the executive because the EBITDA target
        was
        not achieved.  This payment calculation does not include the cost of
        continuing health and medical benefits which is approximately $14,600 per
        year
        per executive.
 
 (2)
        Assumes the full amount of the bonus is paid to executive because the EBITDA
        target was achieved.
 
 (3)  Assumes
        buyer’s bonus in addition to the management EBITDA bonus would be payable to Mr.
        Koster.
 
 (4)  If
        Mr. Nesci’s termination is caused by his death, pursuant to his Death Benefit
        Agreement with the Company, Mr. Nesci’s estate will receive $1,000,000 from the
        Company.  However, this $1,000,000 is not payable to Mr. Nesci under
        any other reason for termination of his employment.
   79
 
 (5)  Upon
        a change of control, all outstanding options will vest.  This
        potential payment assumes a per unit price of $100 based on the most recent
        valuation of the Company and that the option to purchase units under the
        first
        tranche with an exercise price of $90 per unit were exercised, thus realizing
        $10 per unit.
 
 **Death
        Benefit Agreements**
  On
        November 8, 2005, we entered into death benefit agreements with each of
        Mark Nesci, and now former executives Andrew Milstein and Stephen Milstein.
        Each
        such agreement provides that, subject to certain conditions set forth in
        the
        agreement, we will pay to the executive’s estate or designated beneficiary a
        death benefit in the amount of $1,000,000 (less applicable withholding taxes)
        payable at the election of the payee in either (i) a single lump sum,
        (ii) five equal annual installments (together, in the case of each
        installment after the first, with interest on the unpaid balance) or
        (iii) the form of an annuity selected by the payee to be purchased by us.
        Each death benefit agreement also provides that, in the event that the
        applicable executive is terminated without “cause” (as defined in such
        agreement), the death benefit will continue to be payable. Accordingly, if
        any
        of the executives named above are terminated without cause following the
        Merger,
        the death benefit would continue to be payable to them.
  **Director
        Compensation**
  The
        members of our board of directors are not separately compensated for their
        services as directors, other than reimbursement for out-of-pocket expenses
        incurred in connection with rendering such services.
 
 
 
 
 **Item 12.**
              **Security
                  Ownership of Certain Beneficial Owners and
                  Management and Related Stockholder
                  Matters**
  **Beneficial
        Ownership of Holdings**
  As
        a
        result of the Merger Transaction, all of BCFWC’s outstanding stock is
        beneficially owned by Holdings, which is wholly-owned by Parent. The following
        table presents information regarding beneficial ownership of the common stock
        of
        Parent, as of June 2, 2007, by the Named Executive Officers, each of our
        directors, our current Chief Executive Officer, all of our directors and
        executive officers as a group and each person who is known by us to beneficially
        own more than 5% of the common stock of Parent. The table also sets forth
        ownership information for these persons regarding unvested stock options
        for
        which these persons are not deemed to beneficially own the underlying shares
        of
        common stock. Each share or option to purchase shares (as listed below) is
        comprised of “units” of common stock in Holdings. Each unit consists of nine
        shares of Class A common stock and one share of Class L common stock of
        Holdings.
 
 Beneficial
        ownership is based upon
        5,022,013 shares of Class L Common Stock and 45,198,117****shares
        of Class A Common Stock
        outstanding as of June 2, 2007.
 
 **Name
                      and Address of Beneficial Holder(1)**
                
                **Number
                      of**
                    **Class
                      L**
                    **Equity
                      Interests Beneficially Owned**
                
                
                **Percentage
                      of Class**
                
                
                **Number
                      of**
                    **Class
                      A**
                    **Equity
                      Interests Beneficially Owned**
                
                
                **Percentage
                      of Class**
                
                
                **Options
                      to Purchase Units not Exercisable within the next 60
                      days****Principal
                    Equityholders:**Bain
                    Capital, LLC(2)
                
                
                4,944,444
                
                
                
                98.5
                %
                
                
                44,499,996
                
                
                
                98.5
                %**Executive
                    Officers and Directors:**Mark
                    A. Nesci (3)
                
                
                38,889
                
                
                
                *
                
                
                
                350,001
                
                
                
                *
                
                
                
                70,000Paul
                    C. Tang (3)
                
                
                4,445
                
                
                
                *
                
                
                
                40,005
                
                
                
                *
                
                
                
                20,000Robert
                    L. LaPenta, Jr. (3)
                
                
                2,778
                
                
                
                *
                
                
                
                25,002
                
                
                
                *
                
                
                
                20,000Steven
                    Koster (3)
                
                
                2,778
                
                
                
                *
                
                
                
                25,002
                
                
                
                *
                
                
                
                20,000Joshua
                    Bekenstein (4)
                
                
                
                
                
                
                *
                
                
                
                
                
                
                
                *
    80
  
 Jordan
                    Hitch (4)
                
                
                
                
                
                *
                
                
                
                
                
                
                *John
                    Tudor (5)
                
                
                
                
                
                *
                
                
                
                
                
                
                *Laki
                    Nomicos (5)
                
                
                
                
                
                *
                
                
                
                
                
                
                *Thomas
                    Fitzgerald (6)
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                30,000Elizabeth
                    Williams (7)
                
                
                3,334
                
                
                
                *
                
                
                
                30,006
                
                
                
                *
                
                
                
                30,000Executive
                    Offers and Directors as Group (8 Persons)
                
                
                52,224
                
                
                
                1.0
                %
                
                
                470,016
                
                
                
                1.0
                %
                
                
                190,000
 *
                  Less than 1%
 (1)           “Beneficial
        ownership” is determined in accordance with Rule 13d-3 under the Exchange Act
        and generally means any person who, directly or indirectly, has or shares
        voting
        or investment power with respect to a security or has the right to acquire
        such
        power within 60 days. In computing the number of shares beneficially owned
        by a
        person and the percentage ownership of that person, shares of common stock
        subject to options held by that person that are currently exercisable or
        exercisable within 60 days of closing of the offering are deemed
        outstanding.
  (2)           Includes
          shares held by each of Bain Capital Integral Investors, LLC (“Integral”), Bain
          Capital Fund IX, LLC (“Fund IX”), BCIP TCV, LLC (“BCIP TCV”) and BCIP-G
          Associates (“BCIP-G”).  Bain Capital Investors, LLC (“BCI”) is the
          administrative member of Integral and BCIP TCV, the managing general partner
          of
          BCIP-G, and the general partner of Bain Capital Partner IX, L.P., which
          is the
          general partner of Bain Capital Fund IX, L.P., which is the sole member
          of Fund
          IX.  The address of each entity is 111 Huntington Avenue, Boston, MA
          02199.
 
 **Name
                  of Fund**
              
              **Class
                  L Common**
              
              
              **Class
                  A Common**Bain
                  Capital Integral Investors, LLC
              
              
              2,523,111
              
              
              
              23,077,824Bain
                  Capital Fund IX, LLC
              
              
              2,361,567
              
              
              
              21,254,078BCP
                  TCV, LLC
              
              
              58,596
              
              
              
              157,560BCIP
                  Associates - G
              
              
              1,170
              
              
              
              10,534
 
 (3)           Interests
        in the common shares held by the Named Executive Officer vested on April
        13,
        2007.  40% of the options shall vest on the April 13, 2008, and then
        one-third of the remaining 60% shall vest on April 13, 2009, 2010 and 2011,
        respectively.  All options become exercisable upon a change of control
        and unless determined otherwise by the plan administrator, upon cessation
        of
        employment, options that have not vested will terminate immediately, units
        issued upon the exercise of vested options will be callable and unexercised
        vested options will be exercisable for a period of 60 days.  The final
        exercise date for any option granted is April 13, 2016.
 
 (4)           Each
        of Mr. Bekenstein and Mr. Hitch is a managing director of BCI and therefore
        may
        therefore be deemed to share voting and dispositive power with respect to
        the
        shares held by BCI. Mr. Bekenstein and Mr. Hitch each disclaim any beneficial
        ownership of any such shares, except to the extent of his pecuniary interest
        therein.  The address of each person is 111 Huntington Avenue, Boston,
        MA 02199.
 
 (5)           Each
        of Mr. Tudor and Mr. Nomicos is a general partner of BCIP Associates III,
        which
        is one of the members of Integral, and a beneficial owner of a general partner
        of BCIP Trust Associates III, which is one of the members of BCIP TCV, and
        therefore may be deemed to share voting and dispositive power with respect
        to
        some of the shares held by BCI.  Mr. Tudor and Mr. Nomicos each
        disclaim any beneficial ownership of any such shares, except to the extent
        of
        his pecuniary interest therein.  The address of each person is 111
        Huntington Avenue, Boston, MA 02199.
 
 (6)           40%
        of the options shall vest on the September 29, 2008, and then one-third of
        the
        remaining 60% shall vest on September 29, 2009, 2010 and 2011,
        respectively.  All options become exercisable upon a change of control
        and unless determined otherwise by the plan administrator, upon cessation
        of
        employment, options that have not vested will terminate immediately, units
        issued upon the exercise of vested options will be callable and unexercised
        vested options will be exercisable for a period of 60 days.  The final
        exercise date for any option granted is September 29, 2016.
 
 (7)           On
        June 29, 2007, Ms. Williams sold to Parent her 3,334 shares of Class L and
        30,006 shares of Class A common stock and she forfeited her 30,000 options
        to
        purchase units when she left the Company on July 6, 2007.
 
 **Item 13.**
              **Certain
                  Relationships and Related
                  Transactions**
 
 Except
        as described below, since the
        beginning of our last fiscal year, we have not been a party to, nor have
        we
        currently proposed, any transaction or series of similar transactions in
        which
        the amount exceeds $120,000, and in which any director, executive officer,
        holder of more than 5% of our common stock or any member of the immediate
        family
        of any of the foregoing persons had or will have a direct or indirect material
        interest, other than compensation agreements and other agreements, which
        are
        described under Item 11. Executive Compensation.  We believe that each
        of the following transactions is on terms no less favorable than we could
        obtain
        from an unrelated third party.
   81
 
 Set
        forth below is a summary of certain
        agreements and arrangements, as well as other transactions between us and
        related parties which have taken place during our most recent fiscal year
        or
        agreements with respect to transactions entered into in our prior fiscal
        year
        among related parties and other material agreements.
 
 **Merchandise
        Purchase Orders**
 During
        Fiscal 2007, the Company had
        cash expenditures with Fashion Options, Inc. for merchandise orders for an
        aggregate approximate total of $3.8 million.  Steven Koster, Vice
        President, Senior Divisional Merchandise Manager for Menswear, has a son-in-law
        who is a salesperson for Fashion Options, Inc.
 
 **The
        Transactions**
 On
        January 18, 2006, BCFWC entered
        into the Merger Agreement, pursuant to which Merger Sub, a wholly-owned
        subsidiary of Holdings, merged with and into the Company.  As
        consideration for the Merger, each current holder of our common stock was
        entitled to receive an amount equal to $45.50 per common share.  The
        Merger closed on April 13, 2006.  See Item 7 - “THE MERGER
        TRANSACTION.”
 
 **2006
        Management Incentive Plan**
 In
        connection with the Merger
        Transaction, Holdings adopted the 2006 Management Incentive Plan, which provides
        for grants of stock options to designated employees subject to the terms
        and
        conditions set forth in the plan. 511,122 shares of Class L common stock
        and
        4,600,098 shares of Class A common stock are reserved for issuance under
        the
        2006 Management Incentive Plan.
 
 **Stockholders
        Agreement**
 In
        connection with the Merger
        Transaction, Holdings entered into a stockholders’ agreement with its
        stockholders, including funds associated with Bain Capital, which established
        the composition of our board of directors, which provides certain restrictions
        and rights with respect to sale and issuance of Holdings’ common stock and
        provides for limited approval rights in favor of Bain Capital.  In
        particular, the stockholders’ agreement provides that no stockholder may
        transfer his or her common stock except to permitted transferees and except
        in
        compliance with certain restrictions on transfer. Holdings’ stockholders have
        the right to sell a pro rata portion of their common stock if funds associated
        with Bain Capital elect to sell all or a portion of its common
        stock.  The holders of a majority of Holdings’ outstanding common
        stock (and in some cases funds associated with Bain Capital acting alone)
        also
        have the right to cause a sale of the Company to occur and to require the
        other
        holders of our common stock to participate in such a sale.  If
        Holdings or any affiliate of Holdings proposes to issue new equity securities,
        each holder of Holdings’ common stock will have the right to purchase its
*pro rata* share of such new securities.  In addition, under
        the stockholders agreement, funds associated with Bain Capital and other
        holders
        of common stock will have the ability to cause Holdings to register their
        shares
        of common stock and to participate in registrations by us of Holdings’ or any
        other affiliate’s common stock.  We will be responsible for paying
        expenses of holders of Holdings’ common stock in connection with any such
        registration.
 
 **Advisory
        Agreement**
 In
        connection with the Merger
        Transaction, we entered into an advisory agreement with Bain Capital pursuant
        to
        which Bain Capital provides us with management and consulting services and
        financial and other advisory services.  Pursuant to the agreement, we
        pay Bain Capital a periodic fee of $1 million per fiscal quarter plus
        reimbursement for reasonable out-of-pocket fees, and a fee equal to 1% of
        the
        transaction value of each financing, acquisition, disposition or change of
        control or similar transaction by or involving us.  Bain Capital
        received a fee of approximately $21 million in consideration for financial
        advisory services related to the Merger Transaction.  The advisory
        agreement has a 10-year initial term, and thereafter is subject to automatic
        one-year extensions unless we or Bain Capital provides written notice of
        termination, except that the agreement terminates automatically upon an initial
        public offering or a change of control.  If the agreement is
        terminated early, then Bain Capital will be entitled to receive all unpaid
        fees
        and unreimbursed out-of-pocket fees and expenses, as well as the present
        value
        of the periodic fee that would otherwise have been payable through the end
        of
        the term.  The agreement includes customary indemnities in favor of
        Bain Capital.
 
 **Indemnification**
 The
        Merger Agreement provides that,
        after the Merger, Holdings and BCFWC will, jointly and severally, and Holdings
        will cause BCFWC to, indemnify and hold harmless the individuals who are
        now, or
        have been at any time prior to the execution of the Merger Agreement or who
        become such prior to the effective time of the Merger, our directors or officers
        or any of our subsidiaries, or our employees or any of its subsidiaries
        providing services to or for such a director or officer in connection with
        the
        Merger Agreement or any of the transactions contemplated by the Merger
        Agreement, against costs and liabilities incurred in connection with any
        pending, threatened or completed claim, action, suit, proceeding or
        investigation arising out of or pertaining to (i) the fact that such
        individual is or was an officer, director, employee, fiduciary or agent of
        BCFWC
        or any of its subsidiaries, or (ii) matters
   82
  occurring
        or existing at or prior to the effective time of the Merger (including acts
        or
        omissions occurring in connection with the Merger Agreement and the transactions
        contemplated thereby), whether asserted or claimed prior to, at or after
        the
        effective time of the Merger.
 
 The
        Merger Agreement provides that we
        will provide, for a period of six years after the Merger becomes effective,
        directors’ and officers’ liability insurance for the benefit of those persons
        covered under our officers’ and directors’ liability insurance policy on terms
        with respect to coverage and amounts no less favorable than those of the
        policy
        in effect as of the execution of the Merger Agreement, *provided* that,
        subject to certain exceptions, the surviving corporation will not be obligated
        to pay premiums in excess of 300% of the annualized policy premium based
        on a
        rate as of the execution of the Merger Agreement.  Notwithstanding the
        foregoing, prior to the effective time of the Merger we are permitted to
        purchase prepaid “tail” policies in favor of such indemnified persons with
        respect to the matters referred to above (*provided* that the annual
        premium for such tail policy may not exceed 300% of the annualized policy
        premium based on a rate as of the execution of the Merger Agreement), in
        which
        case Holdings has agreed to maintain such tail policies in effect and continue
        to honor the obligations under such policies.
 
 Holdings
        and BCFWC have also agreed (i) to continue in effect for at least six years
        after the effective time of the Merger all rights to indemnification existing
        in
        favor of, and all exculpations and limitations of the personal liability
        of, the
        directors, officers, employees, fiduciaries and agents of BCFWC and its
        subsidiaries in our certificate of incorporation as of the effective time
        of the
        Merger with respect to matters occurring at or prior to the effective time
        of
        the Merger and (ii) to honor our indemnification agreements with our
        directors (including one former director, Harvey Morgan) and with certain
        officers, including Messrs. Nesci, Tang and LaPenta.  Each such
        indemnification agreement provides, among other things, that we will indemnify
        such indemnified person to the fullest extent permitted by the DGCL, including
        advancement of legal fees and other expenses incurred by the indemnified
        person
        in connection with any legal proceedings arising out the indemnified person’s
        service as director and/or officer, subject to certain exclusions and procedures
        set forth in the indemnification agreement.
 
 In
        addition, our officers and directors under our Certificate of Incorporation
        and
        Bylaws are indemnified and held harmless against any and all claims alleged
        against any of them in their official capacities to the fullest extent
        authorized by the Delaware General Corporation Law as it exists today or
        as it
        may be amended but only to the extent that such amendment permits the Company
        to
        provide broader indemnification rights than previously permitted.
 
 **Review
        of Transactions with Related Persons**
  Under
        the
        Company’s Code of Business Conduct and Ethics, which was approved by the Board
        of Directors, employees are asked to avoid potential, or the appearance of,
        conflicts of interest, and if the avoidance of such conflict of interest
        is not
        possible, then the employee is required to make full written disclosure of
        the
        proposed transaction for review by the employee’s manager and if required, by
        the Corporate Compliance Officer.
  **Director
        Independence**
  None
        of
        the members of our Board of Directors is independent due to their affiliation
        with Bain Capital, LLP or in the case of Mark Nesci, his position as Chief
        Executive Officer of the Company.
 
 **Item
        14.     Principal Accounting Fees and
        Services**
 
 **Audit
        Fees**
  The
        following table presents fees for services provided to Burlington Coat Factory
        Investments Holdings, Inc. and Burlington Coat Factory Warehouse Corporation
        by
        Deloitte & Touche, LLP for fiscal years ended June 2, 2007 and June 3, 2006,
        including fees for Holdings.
  83
  
 
 Year
                  EndedJune
                  2, 2007
              
              
              June
                  3, 2006Audit
                  Fees
              
              $
              1,700,258
              
              
              $
              1,662,269Audit
                  Related Fees
              
              
              -
              
              
              
              410,103
              (1)Tax
                  Fees
              
              
              -
              
              
              
              -All
                  Other Fees
              
              
              -
              
              
              _________-Total
              
              $
              1,700,258
              
              
              $
              2,072,372
 
 (1)
              Consists
                  of fees related to review of the offering memorandum for privately
                  placed
                  debt securities.
 
 **Audit
        Committee Pre-Approval of Audit and Permissible Non-Audit Services of
        Independent Auditors**
 
 The
        Audit Committee pre-approves all
        audit and permissible non-audit services provided by Deloitte & Touche
        LLP. These services may include audit services, audit-related services, tax
        services and other services. In addition, the Audit Committee may also
        pre-approve particular services on a case-by-case basis.
 
  84
  
 
 **PART
        IV**
  **Item 15.    Exhibits
        and Financial Statements Schedules**
  (a)
              *Financial
                  Statements and financial statement
                  schedules*
  (1)
        and
        (2) The financial statements and financial statement schedules required to
        be filed as part of this report are set forth in Item 8 of Part II of this
        report.
  (3)
        Exhibits. See Item 15(b) below.
  (b)
              *Exhibits
                  required by Item 601 of Regulation
                  S-K*
  The
        information required by this item is incorporated herein by reference from
        the
        Index to Exhibits beginning on Page 86 of this report on Form 10-K. We will
        furnish to any stockholder or noteholder, upon written request, any exhibit
        listed in the accompanying Index to Exhibits upon payment by such stockholder
        of
        our reasonable expenses in furnishing any such exhibit. Written requests
        should
        be sent to Corporate Counsel, Burlington Coat Factory Warehouse Corporation,
        1830 Route 130 North, New Jersey 08016.
  85
  Item 15.   The
        following is a list of exhibits filed as part of this Report:
 **EXHIBIT NO.**
                **DESCRIPTION**1.1
                Senior
                    Discount Note Purchase Agreement, dated as of April 10, 2006,
                    among
                    Burlington Coat Factory Investments Holdings, Inc. and the Initial
                    Purchasers.††1.2
                Joinder
                    to the Senior Note Purchase Agreement, dated as of April 10,
                    2006, among
                    Burlington Coat Factory Warehouse Corporation and the Guarantors
                    party
                    thereto.†2.1
                Non-Competition
                    and Confidentiality Agreement, dated April 13, 2006, between
                    Burlington
                    Coat Factory Holdings, Inc and Monroe Milstein.††2.2
                Non-Competition
                    and Confidentiality Agreement, dated April 13, 2006, between
                    Burlington
                    Coat Factory Holdings, Inc and Andrew Milstein.††2.3
                Non-Competition
                    and Confidentiality Agreement, dated April 13, 2006, between
                    Burlington
                    Coat Factory Holdings, Inc and Stephen Milstein.††3.1
                Certificate
                    of Incorporation of Burlington Coat Factory Investments Holdings,
                    Inc.†3.2
                By-laws
                    of Burlington Coat Factory Investments Holdings, Inc.†4.1
                Senior
                    Discount Notes Indenture, dated as of April 13, 2006, by and
                    among
                    Burlington Coat Factory Investments Holdings, Inc. and Wells
                    Fargo Bank,
                    N.A., as Trustee.††4.2
                Registration
                    Rights Agreement, dated as of April 13, 2006, by and among Burlington
                    Coat
                    Factory Investments Holdings, Inc. and the Initial
                    Purchasers.††4.3
                Form
                    of 141/2%
                    Senior
                    Discount Note due 2014 (included in Exhibit 4.1).††4.4
                Senior
                    Notes Indenture, dated as of April 13, 2006, by and among Burlington
                    Coat
                    Factory Warehouse Corporation, the Guarantors party thereto and
                    Wells
                    Fargo Bank, N.A., as Trustee.†10.1
                Credit
                    Agreement, dated as of April 13, 2006, among Burlington Coat
                    Factory
                    Warehouse Corporation, as the Borrower, the Facility Guarantors
                    party
                    thereto, Bear Stearns Corporate Lending Inc., as Administrative
                    Agent and
                    as Collateral Agent, the Lenders party thereto, Banc of America
                    Securities
                    LLC, as Syndication Agent, Wachovia Bank, National Association
                    and
                    JPMorgan Chase Bank, N.A., as Co-Documentation Agents.†10.2
                Guaranty,
                    dated as of April 13, 2006, by Burlington Coat Factory Holdings,
                    Inc.,
                    Burlington Coat Factory Investments Holdings, Inc. and each of
                    the
                    Facility Guarantors party thereto in favor of Bear Stearns Corporate
                    Lending Inc., as Administrative Agent and Bear Stearns Corporate
                    Lending
                    Inc., as Collateral Agent.†10.3
                Security
                    Agreement, dated as of April 13, 2006, by and among Burlington Coat
                    Factory Warehouse Corporation, as the Borrower, Burlington Coat
                    Factory
                    Holdings, Inc., Burlington Coat Factory Investments Holdings,
                    Inc., and
                    each of the Facility Guarantors party thereto, and Bear Stearns
                    Corporate
                    Lending Inc., as Collateral Agent.†10.4
                Intellectual
                    Property Security Agreement, dated as of April 13, 2006, by and
                    among
                    Burlington Coat Factory Warehouse Corporation, as the Borrower,
                    Burlington
                    Coat Factory Holdings, Inc., Burlington Coat Factory Investments
                    Holdings,
                    Inc., and each of the Facility Guarantors party thereto, and
                    Bear Stearns
                    Corporate Lending Inc., as Collateral Agent.†10.5
                Pledge
                    Agreement, dated as of April 13, 2006, by and among Burlington
                    Coat
                    Factory Warehouse Corporation, Burlington Coat Factory Holdings,
                    Inc.,
                    Burlington Coat Factory Investments Holdings, Inc., Burlington
                    Coat
                    Factory Realty Corp., Burlington Coat Factory Purchasing, Inc.,
                    and
                    K&T Acquisition Corp., as the Pledgors, and Bear Stearns Corporate
                    Lending Inc., as Collateral Agent.†10.6
                Credit
                    Agreement, dated as of April 13, 2006 among Burlington Coat Factory
                    Warehouse Corporation, as Lead Borrower, the Borrowers and the
                    Facility
                    Guarantors party thereto, and Bank of America, N.A., as Administrative
                    Agent and as collateral agent, the Lenders party thereto, Bear
                    Stearns
                    Corporate Lending Inc., as Syndication Agent, and Wachovia Bank,
                    National
                    Association, The CIT Group/Business Credit, Inc., General Electric
                    Capital
                    Corporation, JPMorgan Chase Bank, N.A., as Co-Documentation
                    Agents.†10.7
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of PNC Bank, National Association.†
  86
  
 10.8
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of Siemens Financial Services, Inc.†10.9
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of Wells Fargo Retail Finance, LLC.†10.10
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of National City Business Credit, Inc.†10.11
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of Citizens Bank of Pennsylvania.†10.12
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of HSBC Business Credit (USA), Inc.†10.13
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of Sovereign Bank.†10.14
                Revolving
                    Credit Note, dated as of April 13, 2006, by the Borrowers party
                    thereto in
                    favor of North Fork Business Capital Corporation.†10.15
                Form
                    of Swingline Note. †10.16
                Guaranty,
                    dated as of April 13, 2006, by the Facility Guarantors party
                    thereto in
                    favor of Bank of America, N.A., as Administrative Agent and Bank
                    of
                    America, N.A., as Collateral Agent. †10.17
                Security
                    Agreement, dated as of April 13, 2006, by and among each of the
                    Borrowers
                    party thereto, each of the Facility Guarantors party thereto,
                    and Bank of
                    America, N.A., as Collateral Agent. †10.18
                Intellectual
                    Property Security Agreement, dated as of April 13, 2006, by and
                    among each
                    of the Borrowers party thereto, each of the Facility Guarantors
                    party
                    thereto, and Bank of America, N.A., as Collateral
                    Agent.†10.19
                Pledge
                    Agreement, dated as of April 13, 2006, by and between Burlington Coat
                    Factory Holdings, Inc., Burlington Coat Factory Investments Holdings,
                    Inc., Burlington Coat Factory Warehouse Corporation, Burlington
                    Coat
                    Factory Realty Corp., Burlington Coat Factory Purchasing, Inc.,
                    K&T
                    Acquisition Corp., Burlington Coat Factory of New York, LLC,
                    Burlington
                    Coat Factory Warehouse of Baytown, Inc., Burlington Coat Factory
                    of Texas,
                    Inc., as the Pledgors, and Bank of America, N.A., as Collateral Agent.
                    †10.20
                Employment
                    Agreement, dated as of April 13, 2006, by and between Burlington
                    Coat
                    Factory Warehouse Corporation and Mark Nesci.*†10.21
                Employment
                    Agreement, dated as of April 13, 2006, by and between Burlington
                    Coat
                    Factory Warehouse Corporation and Paul Tang.*†10.22
                Employment
                    Agreement, dated as of April 13, 2006, by and between Burlington
                    Coat
                    Factory Warehouse Corporation and Robert LaPenta, Jr.*†10.23
                Employment
                    Agreement, dated as of June 26, 2006, by and between Burlington
                    Coat
                    Factory Warehouse Corporation and Elizabeth Williams.*†10.24
                Separation
                    Agreement, dated as of June 1, 2007, by and between Burlington
                    Coat
                    Factory Warehouse Corporation and Elizabeth Williams.*10.25
                Employment
                    Agreement, dated as of August 30, 2006, by and between Burlington
                    Coat
                    Factory Warehouse Corporation and Thomas Fitzgerald.*†10.26
                Employment
                    Agreement, dated as of June 1, 2007, by and between Burlington
                    Coat
                    Factory Warehouse Corporation and Kristine Breuer.*10.27
                Form
                    of Employment Agreement.*†10.28
                Form
                    of Amendment to Employment Agreement.*10.29
                Employment
                  Agreement, dated as of August 16, 2007, by and between Burlington
                  Coat
                  Factory Warehouse Corporation and Todd Weyhrich.*††††10.30
                Advisory
                    Agreement, dated as of April 13, 2006, by and among Burlington
                    Coat
                    Factory Holdings, Inc., Burlington Coat Factory Warehouse Corporation
                    and
                    Bain Capital Partners, LLC. †10.31
                Form
                    of Restricted Stock Grant Agreement Pursuant to Burlington Coat
                    Factory
                    Holdings, Inc. 2006 Management Incentive
                    Plan.*†
  87
  
 10.32
                Form
                    of Non-Qualified Stock Option Agreement, dated as of April 13,
                    2006,
                    between Burlington Coat Factory Holdings, Inc. and Employees
                    without
                    Employment Agreements.*†10.33
                Form
                    of Non-Qualified Stock Option Agreement, dated as of April 13,
                    2006,
                    between Burlington Coat Factory Holdings, Inc. and Employees
                    with
                    Employment Agreements.*†10.34
                Burlington
                    Coat Factory Holdings, Inc. 2006 Management Incentive
                    Plan.*†10.35
                Amendment
                    to Credit Agreement, dated as of December 12, 2006 among Burlington
                    Coat
                    Factory Warehouse Corporation, as Lead Borrower, the Borrowers
                    and the
                    Facility Guarantors party thereto, and Bank of America, N.A.,
                    as
                    Administrative Agent and as collateral agent, the Lenders party
                    thereto,
                    Bear Stearns Corporate Lending Inc., as Syndication Agent, and
                    Wachovia
                    Bank, National Association, The CIT Group/Business Credit, Inc.,
                    General
                    Electric Capital Corporation, JPMorgan Chase Bank, N.A., as
                    Co-Documentation Agents.†††10.36
                Amendment
                    to Credit Agreement, dated as of December 12, 2006 among Burlington
                    Coat
                    Factory Warehouse Corporation, as the Borrower, the Facility
                    Guarantors
                    party thereto, Bear Stearns Corporate Lending Inc., as Administrative
                    Agent and as Collateral Agent, the Lenders party thereto, Banc
                    of America
                    Securities LLC, as Syndication Agent, Wachovia Bank, National
                    Association
                    and JPMorgan Chase Bank, N.A., as Co-Documentation
                    Agents.†††12.1
                Statement
                    re Calculation of Ratio of Earnings to Fixed Charges.21.1
                Subsidiaries
                    of the Registrant.24.1
                Power
                    of Attorney.31.1
                Certification
                    of Mark A. Nesci.31.2
                Certification
                    of  Thomas Fitzgerald.32.1
                Certification
                    of Mark A. Nesci pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002, 18 U.S.C. Section 1350.32.2
                Certification
                    of Thomas Fitzgerald pursuant to Section 906 of the Sarbanes-Oxley
                    Act of 2002, 18 U.S.C.
                    Section 1350.
 
 †
              Incorporated
                  by reference to the Exhibit to Burlington Coat Factory Warehouse
                  Corporation Registration Statement No. 333-137916 on Form S-4 filed
                  on October 10, 2006.
 ††
              Previously
                  filed as an Exhibit to Registration Statement No. 333-137917 on
                  Form S-4
                  filed on October 10, 2006.
 †††
              Incorporated
                  by reference to the Exhibit to Amendment No. 2 to Burlington Coat
                  Factory
                  Warehouse Corporation Registration Statement No. 333-137916 on Form
                  S-4 filed on December 29, 2006.
 ††††
              Incorporated
                  by reference to the Exhibit to Current Report on Form 8-K
                  filed on August 17, 2007. *
              Management
                Contract or Compensation Plan or
                Arrangement.
 
  88
  
 **SIGNATURES**
  Pursuant
        to the requirements of Section 13 or 15(d) of the Securities Exchange Act
        of 1934, the registrant has duly caused this report to be signed on its behalf
        by the undersigned, thereunto duly authorized.
  **BURLINGTON
                  COAT FACTORY INVESTMENTS HOLDINGS, INC.**(Registrant)/s/    Mark
                  A. Nesci**President
                  and Chief Executive
                  Officer**
  Date:
                  August 30,  2007
  Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities indicated on the 30th day of August 2007.
 **Signature**
              
              **Title**/s/    Mark
                  A. Nesci
              
              President
                  and Chief Executive Officer and Director (Principal Executive
                  Officer)**Mark
                  A. Nesci**/s/    Thomas
                  Fitzgerald
              
              Executive
                  Vice President – Chief Financial Officer (Principal Financial
                  Officer)**Thomas
                  Fitzgerald**/s/    Robert
                  L. LaPenta, Jr.
              Vice
                  President – Treasurer**Robert
                  L. La Penta, Jr.***
              
              Director**Joshua
                  Bekenstein***
              
              Director**Jordan
                  Hitch***
              
              Director**John
                  Tudor*****Laki
                  Nomicos**
              
              Director*****     By:  /s/:
                  Mark A. Nesci
              
              Attorney-In-Fact**Mark
                  A. Nesci**
 The
        foregoing constitutes all of the Board of Directors and the Principal Executive
        and Financial Officers of the Registrant.
 
  89