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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-K/A



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|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
|- | ---------------------------------------------

| | OF THE SECURITIES EXCHANGE ACT OF 1934
| | --------------------------------------



FOR THE FISCAL YEAR ENDED SEPTEMBER 25, 2004



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
|- | -------------------------------------------------

| | OF THE SECURITIES EXCHANGE ACT OF 1934
| | --------------------------------------



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COMMISSION FILE NUMBER 0-27677



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CHARLOTTE RUSSE HOLDING, INC.

(Exact Name of Registrant as Specified in Its
Charter)



|                                               |  |                                     
|---------------------------------------------- |  | ------------------------------------
|DELAWARE                                       |  | 33-0724325                          
|(State or Other Jurisdiction of Incorporation) |  | (I.R.S. Employer Identification No.)



4645 MORENA
BOULEVARD

SAN DIEGO, CA 92117

(Address, including Zip Code, of Registrants Principal Executive Offices)



(858) 587-1500

(Registrants Telephone Number, Including Area Code)



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SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE

SECURITIES
REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:

COMMON STOCK, PAR VALUE $0.01 PER SHARE

(Title of Each Class)



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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 the
Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act):    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 Annual Report on Form 10-K or any amendment to this Annual Report on Form 10-K. ̈



The aggregate market value of the Registrants Common
Stock held by non-affiliates of the Registrant as of March 26, 2004, the last business day of the Registrants most recently completed second fiscal quarter, was approximately $230,727,000.



Number of shares of common stock outstanding as of December 13, 2004 was
21,968,627.

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EXPLANATORY NOTE



This Annual Report on Form 10-K/A (Form 10-K/A) is being filed in order to correct the previously issued
consolidated financial statements of Charlotte Russe Holding, Inc., (the Company) as of September 25, 2004 and September 27, 2003, and for the fiscal years ended September 25, 2004, September 27, 2003 and September 28, 2002, initially
filed with the Securities and Exchange Commission (the SEC) on December 13, 2004 (the Original Filing). The corrections reflect changes to our lease accounting practices for landlord construction allowances and straight-line
rent during construction periods in accordance with accounting principles generally accepted in the United States of America as clarified by the Office of the Chief Accountant of the SEC on February 7, 2005 in a letter to the American Institute of
Certified Public Accountants. In addition, the Company concluded that is was appropriate to correct a previously identified immaterial inter-quarterly error by shifting this charge between appropriate quarterly periods. See Note 2: Restatement
of Financial Statements under Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data of this Form 10-K/A for additional discussion.



This Form 10-K/A amends and restates only Items 6, 7, 7A, 8 and 9A of Part II
and Item 15 of Part IV of the Original Filing to reflect the effects of this restatement of our financial statements for the period presented or as deemed necessary in connection with the completion of restated financial statements. The remaining
Items contained within this Form 10-K/A consist of all other Items originally contained on Form 10-K for the fiscal year ended September 25, 2004. These remaining Items are not amended hereby, but are included for the convenience of the reader.
Except for the forgoing amended information, this Form 10-K/A continues to describe conditions as of the date of the Original Filing, and we have not updated the disclosures contained herein to reflect events that occurred at a later date.



DOCUMENTS INCORPORATED BY REFERENCE



Part III incorporates information by reference from the definitive Proxy
Statement for the 2005 Annual Meeting of Stockholders, to be filed with the Commission within 120 days after the end of the Registrants fiscal year covered by this Annual Report on Form 10-K/A.



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The stylized and non-stylized Charlotte Russe, Refuge and

LOGO trademarks
referred to in this Annual Report on Form 10-K/A are federally registered in the United States. These trademarks are the property of Charlotte Russe Holding, Inc. or its subsidiaries. The Rampage® trademark referred to in this Annual Report on Form 10-K/A is federally registered in
the United States and is used by Charlotte Russe under a license agreement with Rampage Licensing, LLC. The use of the Rampage trademark by other parties, including other apparel manufacturers and retailers, should not be attributed to our business.
All other trademarks or trade names referred to in this Annual Report on Form 10-K/A are the property of their respective owners.



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PART I



ITEM 1. BUSINESS



General



We are a
growing, mall-based specialty retailer of fashionable, value-priced apparel and accessories targeting young women in their teens and twenties. We have two distinct, established store concepts: Charlotte Russe and Rampage. As
of September 25, 2004, we operated a total of 360 stores throughout 39 states and Puerto Rico. Through our fashion content, merchandise mix, exciting store layout and design, and striking merchandise presentation, we project fashion attitudes that
appeal to customers across age and socioeconomic boundaries, with a core emphasis on the fashion and lifestyle needs of young women. Our Charlotte Russe stores offer fashionable, affordable apparel and accessories that have been tested and accepted
by the marketplace, thus appealing to women who prefer established fashion trends. Our Rampage stores feature trendsetting apparel and accessories and thus appeal to women who have a flair for making fashion statements and who want runway-inspired
fashion, quality and value.



Our Charlotte Russe and Rampage
stores are located predominantly in high-visibility, center court mall locations in spaces that average approximately 7,000 square feet. Our stores are designed to create an environment that is exciting to shop and accentuates the fashion, breadth
and value of our merchandise selection.



Our broad assortment
of merchandise is centered on styles that are affordable, feminine and reflect the latest fashion trends. Our breadth of merchandise enables our customers to assemble coordinated and complete outfits that satisfy many of their lifestyle needs. Both
our Charlotte Russe and Rampage store concepts offer merchandise at value-oriented prices, generally below most of our direct mall-based competitors. We estimate that over 80% of our Charlotte Russe merchandise is sold under our proprietary
Charlotte Russe labels and over 80% of our Rampage merchandise is sold under our proprietary

LOGO label. The remainder of our merchandise at these stores consists of nationally-recognized brands popular with our customers.



We are a growing national specialty retailer.



As of September 25, 2004, we operated 360 stores throughout 39 states and Puerto Rico. Based on our successful track record, favorable demographic trends
and a solid infrastructure, we believe we are positioned for continued growth over the next several years. We plan to continue to open new Charlotte Russe and Rampage stores at a measured rate, with up to 60 new Charlotte Russe and Rampage stores
planned for fiscal year 2005. We have already opened 8 of these stores and have substantially completed our lease negotiation and evaluation process for 44 of the remainder. We expect to open these new stores in existing markets as well as in
markets in which we currently do not have a presence.



We rely
on exciting in-store graphics and window displays to convey our fashion-forward orientation in both our Charlotte Russe and Rampage stores. We have also leveraged these successful marketing efforts to promote awareness of our Charlotte Russe brands
on a national level through a national print marketing campaign.



Our
business strategy differentiates us from our competitors.



The elements of our business strategy combine to create a merchandise assortment that appeals to consumers from a broad range of socioeconomic, demographic and cultural profiles and



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that differentiates us from our competitors. We believe this broad consumer appeal, coupled with our superior new store cash returns on investment, creates a
highly portable store concept and a significant opportunity for growth. The principal elements of our business strategy include the following:



Offer Consistent Value Pricing. We offer a broad assortment of fashionable, quality merchandise at prices generally below most of our direct
mall-based competitors. We employ this value-pricing strategy across both of our established store concepts, with an average sales price for apparel items at our Charlotte Russe and Rampage stores of approximately $16.00 and $28.00, respectively.
Because our prices are affordable and our merchandise quality is comparable to higher priced specialty retailers and department stores, we create a strong perception of value that we believe has enabled us to build a broad and loyal base of
customers.



Maintain Distinct Brand Images. We have
created focused and differentiated brand images based on fashion attitude, value pricing and quality. These images are consistently communicated through all aspects of our business, including merchandise assortments, in-store visual merchandising
and marketing materials. We also enhance brand recognition by offering an estimated 80% of our Charlotte Russe merchandise under our proprietary Charlotte Russe labels and approximately 80% of our Rampage merchandise under our proprietary

LOGO label. We believe that both of our established brands provide opportunities for expansion of our current merchandise categories and entry into new product categories.



Target a Highly Desirable Market. Our Charlotte Russe and Rampage
stores target young women in their teens and twenties, a large and growing demographic. The teenage and early twenties population is expected to grow at a rate faster than that of the overall United States population according to the United States
Census Bureau.



Offer Broad, Exciting Merchandise
Assortment. Our merchandising strategy is founded on offering a broad assortment of apparel and accessories that conveys a consistent fashion attitude. Our merchandise includes ready-to-wear apparel such as knit and woven tops, dresses, shorts,
pants and skirts, as well as accessories such as shoes, handbags and jewelry that enable our customers to create distinct ensembles complemented by color coordinated and fashion-forward items. Our merchandise assortment is voguish enough to attract
teenage customers and yet stylish enough to retain those women as they mature into young adults. We maintain a fresh and exciting shopping environment by frequently introducing new merchandise into our stores and by regularly updating our
merchandise displays. In addition, our stores provide a comfortable and spacious environment that accentuates the breadth of our merchandise offerings.



Capitalize on Strong Store Economics. Based on our experience with store openings for our two established concepts, we estimate that the average
net investment to open these new stores is approximately $400,000, which includes capital expenditures, net of landlord contributions, and initial inventory, net of payables. All new stores opened since our acquisition in fiscal 1996 that have
operated for more than a year generated average net sales of approximately $1.7 million and store-level operating cash flow in excess of $350,000, or approximately 20.3% of net sales. Accordingly, these stores generated an average cash return on
investment of over 90% in their first year of operation. For the 131 stores opened in fiscal 2002 and 2003, we achieved average net sales of $1.6 million per store and store-level operating cash flow of approximately $295,000, or 18.8% of net sales.
This group of newer stores generated an average cash return on investment of approximately 89% in their first year of operations. In light of recent economic conditions, we are targeting future store openings that will generate, on average, cash
returns on investment in excess of 80% for the first year of operation.



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Leverage Highly Experienced Management Team. We believe our management is positioned to capitalize
on the strong economics of the Charlotte Russe and Rampage concepts and to successfully execute our national expansion program. Our two executive officers and our active Chairman of the Board have an average of more than 25 years of retailing
experience, including experience with national retailers such as Contempo Casuals, Guess?, Pacific Sunwear, Claires Stores and Price Club. In addition, our 15 Vice Presidents average over 21 years of retailing experience, and our total of 18
executives have been with us for an average of 8 years.



Actively Manage Inventory. A key aspect of our merchandising strategy is our test-and-reorder philosophy. This strategy allows us to minimize our inventory risk by ordering small quantities of fashion merchandise to test customer
acceptance before placing larger purchase commitments. Our test-and-reorder strategy is successful in large part because we deal primarily with domestic vendors, which in our experience has generally resulted in short lead times of three to six
weeks. These short lead times, together with our ability to monitor store sales on a daily basis, permit us to quickly react to sell-through trends and fashion preferences. We have one of the higher inventory turn rates in the industry, and we
believe that our approach to managing our merchandise mix has contributed to strong merchandise gross margins.



Our target customers are young, fashion-conscious women.



We target young, fashion-conscious women. Our Charlotte Russe customer is a woman who desires established trends at substantial value. She is a hip
teenager seeking the current fashion trends, as well as the fashionable working woman looking for career dressing. Regardless of her age, the Charlotte Russe customer is feminine and body conscious. Our Rampage stores cater to women with definitive
fashion sense who set rather than follow trends. Our Rampage customer is hip, eclectic, body conscious and tapped into pop culture. She wants her look to be cutting-edge, while recognizing the value of competitive pricing.



We offer established fashion and cutting-edge merchandise.



Charlotte Russe. Our Charlotte Russe stores provide an exciting,
fashionable assortment of merchandise that complements virtually every facet of our customers lifestyle. Our merchandise reflects established fashion trends and includes a broad offering of ready-to-wear apparel, including knit and woven tops,
dresses, shorts, pants and skirts, as well as seasonal items such as prom dresses and outerwear. This product assortment allows us to be fashionable enough to attract teenage customers and yet stylish enough to retain customers as they become young
working women. We believe Charlotte Russe stores offer a higher percentage of dresses as compared to other specialty retailers to better meet our customers broad lifestyle needs for casual, social and special occasion wear. Our typical dresses
range in price from $19.99 to $60.00. By offering a product mix that reflects a more mature stage of the fashion cycle, our Charlotte Russe stores are able to learn from the experience of our Rampage stores with emerging trends in order to more
quickly identify fashion that has a broad market appeal. Charlotte Russe stores also offer a broad assortment of accessories, such as lingerie, shoes, jewelry, handbags and cosmetics. Our expansive accessories category enables us to offer the
convenience of one-stop shopping to our customers, enabling them to complement their ready-to-wear clothing with color coordinated items and fashion-forward accessories. Over 80% of the merchandise sold in our stores carries our proprietary
Charlotte Russe labels. Our average sales price for apparel items is $16.00, and the average sales price for all of our merchandise, including accessories, is $12.00.



Rampage. Our Rampage stores offer essentially the same breadth of ready-to-wear apparel as our Charlotte Russe
stores, but the merchandise reflects emerging trends and therefore a more



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cutting-edge look. The retail prices for our typical dresses range from $69.00 to $89.00. There is also less emphasis on the career customer in our Rampage
stores. Over 80% of the Rampage merchandise is offered under our proprietary

LOGO label. We work with our vendors to design a majority of the merchandise that is carried in our Rampage stores. We also have established a standard fit for all of our apparel to ensure consistent sizing among our
merchandise. Our Rampage stores also offer specialty accessories that complement our higher-end merchandise. By offering the latest in emerging fashions, our Rampage stores are able to command price points that are higher than those of Charlotte
Russe, but still below those of its competitors. The average sales price for apparel items in our Rampage stores is $28.00, and the average sales price for all of our merchandise, including accessories, is $23.00.



Our visual merchandising strengthens our brand name and creates an exciting shopping
environment.



Our merchandising presentation for our
retail apparel concepts communicates a clear fashion point-of-view to our customers and encourages the purchase of coordinated outfits. Our visual merchandising team for the Charlotte Russe and Rampage stores also makes use of body forms in store
windows as well as on the selling floor to enhance our merchandise presentation.



Within our Charlotte Russe stores, we seek to create an inviting environment for our broad product offerings. We generally group our apparel merchandise by fashion casual, wear-to-work and going-out lifestyles. Our
offerings are complemented with lingerie, shoes and other accessories. We believe that presenting apparel merchandise by lifestyles, when accompanied with boutiques of various accessories, creates an attractive atmosphere for our customers and that
the breadth and depth of our product offerings makes us a destination location for their shopping needs.



At our Rampage stores, we employ an equally effective visual merchandising strategy in order to capture the interest of our customers. Our Rampage
merchandise is generally grouped by lifestyles with an emphasis on color and fashion trends to keep the stores vibrant, hip and visually stimulating. Our store size allows us to provide an expansive and diverse offering of merchandise. Our store
window displays and in-store graphics accentuate the fashion, quality and cutting-edge style of our merchandise.



We order primarily from domestic sources and utilize a test-and-reorder strategy.



We purchase all of our inventory from third party vendors. A key aspect of our merchandising strategy is our
test-and-reorder philosophy. Our experienced buying staff uses sophisticated information systems to track the weekly sell-through of each merchandise item by classification, style, color and size, and then places appropriate reorders for popular
merchandise. Accordingly, our test-and-reorder strategy enables us to quickly react to sell-through trends and fashion preferences.



Our test-and-reorder strategy is successful in large part because we deal with domestic vendors, which has generally resulted in short lead times of three
to six weeks. We have established relationships with over 600 vendors to meet our ongoing fashion and inventory needs. We are beginning an initiative to optimize our purchasing by decreasing our number of vendors. We believe that we generally are
able to obtain attractive pricing and other terms from vendors because of their desire to be associated with the Charlotte Russe and Rampage images and the rapid consumer feedback provided by our test-and-reorder philosophy. We maintain a buying
office in the CaliforniaMart in Los Angeles, the primary apparel center in southern California, to facilitate constant dialogue and feedback between our buying staff and our vendors. During the



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fiscal year ended September 25, 2004, our top five vendors accounted for approximately 14.3% of our total purchases and no single vendor accounted for more
than 3.4% of our total purchases.



We manage our inventory through
merchandise planning and allocation.



Our merchandise
planning and allocation team works closely with our merchants and store personnel to meet the requirements of individual stores for appropriate merchandise in sufficient quantities. This team is also responsible for managing inventory levels,
allocating merchandise to stores and replenishing inventory based upon information generated by our management information systems. Our planning department allocates merchandise for new store openings based on estimated units per square foot, and
all new stores are fully stocked prior to opening. Our inventory control systems monitor current inventory levels at each store and for our operations as a whole. If necessary, we shift slow moving inventory to other stores for sell-through prior to
instituting corporate-wide markdowns. We also monitor recent selling history within each store by merchandise classification, style, color and size.



We distribute merchandise through our modern facilities.



Our merchandise is distributed through two modern distribution facilities: our 265,000 square foot distribution facility in Ontario, California, which we
opened in April 2002, and our 125,000 square foot distribution facility (which includes our corporate offices) in San Diego, California, which we opened in April 1998. Both of these facilities use automated systems for sorting apparel by store and
facilitating packaging for display in our stores. In addition, our Ontario facility also uses an automated system for sorting accessories by store. Our Ontario facility services the Charlotte Russe stores, and our San Diego facility (which until
April 2002 served all our stores) services Rampage stores. We estimate that we have the distribution capacity to service at least 700 stores.



We estimate that over 90% of our apparel merchandise is currently pre-ticketed by our vendors. This pre-ticketing by vendors allows us to ship merchandise
more quickly, reduces labor costs and enhances inventory management. Our merchandise is generally shipped to stores within 24 hours of receipt at the distribution center for delivery on common carrier within one to five business days. Our
merchandise is available for sale in our stores the same day it is received and, accordingly, the time period from receipt of goods at our distribution center to display in our stores is typically less than seven days. Each store generally receives
three to five merchandise shipments per week. We believe our current distribution operations are sufficient to accommodate our expected store growth and expanded product offerings through the next several years.



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We have stores throughout the United States.



As of September 25, 2004, we operated 294 Charlotte Russe stores and 66 Rampage stores throughout 39 states and Puerto Rico.
The number of our stores located in each state is shown in the following map:



LOGO



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The following table highlights the number of stores, by geographic region, opened in each of the last
five fiscal years:



|                                  |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|--------------------------------- |  | ---------- | - |  | --------- | - |  | --------- | - |  | --------- | - |  | -------------- |  | ----- | -
|                                  |  | California |   |  | Northeast |   |  | Southwest |   |  | Southeast |   |  | Midwest& Other |  | Total |  
|Store count at September 25, 1999 |  | 40         |   |  | 9         |   |  | 19        |   |  | 23        |   |  | 5              |  | 96    |  
|Fiscal 2000                       |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|Stores opened                     |  | 4          |   |  | 14        |   |  | 9         |   |  | 6         |   |  | 7              |  | 40    |  
|                                  |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|                                  |  | 44         |   |  | 23        |   |  | 28        |   |  | 29        |   |  | 12             |  | 136   |  
|Fiscal 2001                       |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|Stores opened                     |  | 7          |   |  | 13        |   |  | 8         |   |  | 8         |   |  | 18             |  | 54    |  
|Stores closed                     |  | (1         | ) |  |          |   |  |          |   |  | (1        | ) |  |               |  | (2    | )
|                                  |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|                                  |  | 50         |   |  | 36        |   |  | 36        |   |  | 36        |   |  | 30             |  | 188   |  
|Fiscal 2002                       |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|Stores opened                     |  | 2          |   |  | 15        |   |  | 15        |   |  | 12        |   |  | 19             |  | 63    |  
|                                  |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|                                  |  | 52         |   |  | 51        |   |  | 51        |   |  | 48        |   |  | 49             |  | 251   |  
|Fiscal 2003                       |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|Stores opened                     |  | 4          |   |  | 19        |   |  | 11        |   |  | 12        |   |  | 24             |  | 70    |  
|Stores closed (Charlottes Room)  |  | (4         | ) |  | (1        | ) |  | (4        | ) |  | (1        | ) |  |               |  | (10   | )
|                                  |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|                                  |  | 52         |   |  | 69        |   |  | 58        |   |  | 59        |   |  | 73             |  | 311   |  
|Fiscal 2004                       |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|Stores opened                     |  | 5          |   |  | 10        |   |  | 6         |   |  | 12        |   |  | 16             |  | 49    |  
|                                  |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  
|Store count at September 25, 2004 |  | 57         |   |  | 79        |   |  | 64        |   |  | 71        |   |  | 89             |  | 360   |  
|                                  |  |            |   |  |           |   |  |           |   |  |           |   |  |                |  |       |  



We seek to locate our stores in
large, commanding spaces in high traffic areas of strong regional malls.



Our stores, which average approximately 7,000 square feet, provide a comfortable and spacious shopping environment that accentuates the breadth of our merchandise offering. The target square footage for our new
Charlotte Russe stores is 6,500 to 7,000 and the target square footage for our new Rampage stores is 4,500 to 5,000. To distinguish our stores, we also seek prominent center court locations with distinctive architectural features, such as high
angled ceilings, which our store designers and visual merchandisers can use to create striking displays, facades and entrances. We believe that specialized store design features, including finished ceilings, classic lighting and detailed features,
help create a differentiated store environment unique to young women apparel retailers in the mall. We have historically been able to locate and profitably operate our stores in a variety of malls catering to different socioeconomic, demographic and
cultural profiles.



We seek to identify favorable store
locations in existing or new markets with criteria that include:



| |  |  | a careful assessment of mall traffic;
| | - |  | -------------------------------------



| |  |  | the performance of other retailers within the mall and in particular those serving our target customers;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | the proposed location within the mall;
| | - |  | --------------------------------------



| |  |  | population and demographic characteristics of the area; and
| | - |  | -----------------------------------------------------------



| |  |  | projected profitability and cash return on investment.
| | - |  | ------------------------------------------------------



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Immediately after site approval, we simultaneously negotiate lease terms and begin planning the store
layout and design. We typically open a new store within three months after lease execution and delivery of space. We also continually evaluate our stores to assess the need for remodeling or possible closure based on economic factors.



Although we currently engage an independent real estate consultant to assist
us in site selection and lease negotiations, we expect to develop the capabilities to perform these functions internally.



Store Operations



Our store operations are currently organized into four regions: a Western region with 7 districts; a Northeastern region with 14 districts; a Southeastern
and Texas region with 17 districts; and a Midwestern region with 10 districts. Each region is managed by a regional manager and each district is managed by a district manager. Each district manager is responsible for from six to eleven stores in his
or her district. Individual store personnel generally consist of a store manager, one or two assistant managers and seven to ten sales associates, the number of which generally increases during our peak selling seasons. Our store managers are
responsible primarily for customer service training and hiring store level staff. Merchandise selections, inventory management and visual merchandising strategies for each store are determined at the corporate level. Our regional, district, and
store managers receive a base compensation plus incentive compensation based on sales goals.



Our commitment to customer satisfaction and service is an integral part of building customer loyalty. We strive to hire enthusiastic sales personnel and provide them with extensive training to create a sales staff
with a strong fashion sense, a focus on customer service and a willingness to assist customers with assembling, accessorizing and coordinating outfits.



Our standard training program for store managers includes an initial three week session at a store managed by one of our training managers, as well as
frequent regional and district meetings. In addition, our training manual provides practical information and skill development for all store level positions. We develop new store managers by promoting from within and selectively hiring from other
retail organizations. In anticipation of our continued store expansion, we will continue to increase the number of people in our store manager training program as appropriate to support our proposed expansion strategy.



We continually invest in and upgrade our information technology systems.



We are committed to investing in and continually upgrading our
information technology systems, as we believe those systems are critical to implementing our expansion strategy in an efficient manner and to maintaining a competitive industry position. Our information technology systems address an array of
operations information, including among others things, our stock keeping unit and classification inventory tracking, purchase order management, merchandise distribution, automated ticket making, general ledger, sales audit, accounts payable, fixed
asset management, payroll, integrated financials and point-of-sale information. Through automated nightly two-way electronic communication with each store, we upload sales information, payroll hours, carton receipts and messages to our host system
and download new merchandise pricing, price changes for existing merchandise, and system maintenance tasks to the point-of-sale devices. Our planning department evaluates information obtained through daily polling and, accordingly, implements
merchandising decisions regarding inventory levels, reorders, price changes and allocation of merchandise to stores. In 2003, we implemented a new planning and reporting



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software system, and we are currently implementing a new inventory software system that became operational for our Rampage stores at the end of fiscal 2004
and that we anticipate will become operational for our Charlotte Russe stores after the 2004 holiday season.



We compete with other retailers primarily on the basis of timeliness of fashions, breadth of merchandise, brand recognition, pricing and quality.



We currently compete against a diverse group of retailers, including national and local specialty retail stores, regional
retail chains, traditional retail department stores and, to a lesser extent, mass merchandisers. The primary competitors of Charlotte Russe are Forever 21, Express and Wet Seal. The primary competitors of Rampage are bebe, Arden B and Guess?. Our
competitors sell a broad assortment of apparel and accessories that are similar and often identical to those we sell. Furthermore, our competitors may at times sell their merchandise at prices lower than what we charge for comparable merchandise. We
believe that the principal bases upon which we compete in our industry are timeliness of fashions, breadth of merchandise, brand recognition, pricing and quality. We believe that we have a significant competitive advantage over our competitors
because of our exciting shopping environment. Our stores provide a feminine look that is exciting to shop and accentuates the value and breadth of our merchandise selection. We also believe that we have a competitive advantage because of high
consumer recognition and acceptance of our brands, our strong presence in major shopping malls throughout the United States, our relationship with our vendors and the experience of our management. The retail and apparel industries, however, are
highly competitive and characterized by relatively low barriers to entry.



Our intellectual property is important to our success.



We believe that our trademarks are important to our success. Our Charlotte Russe, Refuge and

LOGO trademarks are registered with the United States Patent and Trademark Office.



In connection with the acquisition of our Rampage stores in September 1997, we acquired the exclusive right within the United States to use the Rampage
trademark on exterior and interior signage identifying our Rampage stores, as well as the non-exclusive right within the United States to use the Rampage trademark for promotional and advertising materials. The right to market merchandise under the
Rampage trademark was retained by Rampage Clothing Company and subsequently transferred to an affiliate, Rampage Licensing, LLC (Rampage Clothing Company and Rampage Licensing, LLC are collectively referred to herein as Rampage Clothing Company);
and, accordingly, we do not have the right to use the Rampage trademark on our merchandise. Further, nothing in our license agreement prohibits the sale of merchandise bearing the Rampage trademark by other parties or the licensing of the Rampage
trademark to other parties, and Rampage Clothing Company, in fact, has licensed the trademark to other parties. If the product quality or activities of the Rampage Clothing Company or these other parties substantially negatively impact our business
reputation, we have the right to terminate the license agreement, subject to certain contractual notice obligations. We pay a royalty under the license agreement equal to the greater of a stated dollar amount or a percentage of net sales during the
calendar year at stores operating under the Rampage name. The license agreement has an initial term that expires in 2012 and may be extended for six additional five-year periods provided that net sales under the license exceeds an annual goal for
the year ending immediately prior to the beginning of such extension period. In the event we decide to terminate the license agreement prior to the end of the term, we may be required to pay a termination fee as specified in the licensing agreement.



11



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We consider the relationship with our employees to be good.



As of September 25, 2004, we employed 1,726 full-time and 4,751 part-time
employees. Of our full-time employees, 213 were employed at our corporate offices, 126 were employed at our distribution centers and 1,387 were employed at our store locations. The number of part-time employees fluctuates depending on our seasonal
needs. None of our employees is represented by a labor union, and we consider the relationship with our employees to be good.



Available Information



We are subject to the information requirements of the Securities Exchange Act of 1934 (the Exchange Act). Therefore, we file periodic reports,
proxy statements, and other information with the Securities and Exchange Commission (the SEC). Such reports, proxy statements, and other information may be obtained by visiting the Public Reference Room of the SEC at 450 Fifth Street,
NW, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330. In addition, 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.



Our Internet address is
http://www.charlotte-russe.com. We make available through our Internet website our Annual Report on form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act, as amended, as soon as reasonably practicable after such reports and amendments are electronically filed with or furnished to the SEC.



We have adopted a code of ethics for our principal executive officer, principal financial officer and other individuals
performing similar accounting and finance functions for us. This code of ethics is available via the Internet on our website. In the future, should amendments to the code of ethics be required, such amendments will also be posted on our website.



ITEM 2. PROPERTIES



We operated 360 stores throughout 39 states and Puerto Rico as of September
25, 2004. We currently lease all of our store locations. Most leases have an initial term of at least ten years and do not contain options to extend the lease. Our leases, however, often allow for termination by us after three years if sales at that
site do not exceed specified levels, although in many instances we are required to pay back a portion of any landlord allowances received. We lease space containing approximately 125,000 square feet for our executive offices and distribution center
in San Diego, California. This lease is for a term of twelve years and is scheduled to expire on August 31, 2009. We have entered into a ten and a half year lease, scheduled to expire on July 17, 2012, for space containing approximately 265,000
square feet for our Ontario, California distribution center. We believe our distribution capacity at the San Diego facility and the Ontario, California facility should be sufficient to accommodate our expected store growth through the next several
years. We also lease approximately 16,200 square feet, which includes an allocation of adjoining common area space, at the CaliforniaMart in Los Angeles. This lease expires April 30, 2010.



12



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The following table highlights the number of stores, by concept, in each state:



|                                  |  |           |  |         |  |      
|--------------------------------- |  | --------- |  | ------- |  | -----
|                                  |  | Charlotte |  |         |  |      
|                                  |  | Russe     |  | Rampage |  | Total
|Alabama                           |  | 1         |  |        |  | 1    
|Arizona                           |  | 11        |  | 3       |  | 14   
|California                        |  | 45        |  | 12      |  | 57   
|Colorado                          |  | 4         |  | 1       |  | 5    
|Connecticut                       |  | 5         |  | 1       |  | 6    
|Delaware                          |  | 1         |  |        |  | 1    
|Florida                           |  | 33        |  | 10      |  | 43   
|Georgia                           |  | 9         |  | 3       |  | 12   
|Hawaii                            |  | 2         |  |        |  | 2    
|Iowa                              |  | 1         |  | 1       |  | 2    
|Illinois                          |  | 16        |  | 5       |  | 21   
|Indiana                           |  | 5         |  |        |  | 5    
|Kansas                            |  | 2         |  |        |  | 2    
|Kentucky                          |  | 2         |  |        |  | 2    
|Louisiana                         |  | 2         |  |        |  | 2    
|Maryland                          |  | 3         |  | 2       |  | 5    
|Massachusetts                     |  | 4         |  | 2       |  | 6    
|Michigan                          |  | 14        |  | 1       |  | 15   
|Minnesota                         |  | 6         |  | 1       |  | 7    
|Missouri                          |  | 6         |  | 1       |  | 7    
|Nebraska                          |  | 2         |  |        |  | 2    
|Nevada                            |  | 6         |  | 2       |  | 8    
|New Hampshire                     |  | 3         |  |        |  | 3    
|New Jersey                        |  | 10        |  | 4       |  | 14   
|New Mexico                        |  | 1         |  |        |  | 1    
|New York                          |  | 16        |  | 6       |  | 22   
|North Carolina                    |  | 4         |  |        |  | 4    
|Ohio                              |  | 11        |  | 1       |  | 12   
|Oklahoma                          |  | 5         |  |        |  | 5    
|Oregon                            |  | 2         |  |        |  | 2    
|Pennsylvania                      |  | 12        |  | 2       |  | 14   
|Puerto Rico                       |  | 4         |  | 1       |  | 5    
|Rhode Island                      |  | 1         |  |        |  | 1    
|South Carolina                    |  | 4         |  |        |  | 4    
|Tennessee                         |  | 5         |  |        |  | 5    
|Texas                             |  | 23        |  | 5       |  | 28   
|Utah                              |  | 3         |  |        |  | 3    
|Vermont                           |  | 1         |  |        |  | 1    
|Virginia                          |  | 5         |  | 1       |  | 6    
|Wisconsin                         |  | 4         |  | 1       |  | 5    
|                                  |  |           |  |         |  |      
|Store count at September 25, 2004 |  | 294       |  | 66      |  | 360  
|                                  |  |           |  |         |  |      



ITEM 3. LEGAL PROCEEDINGS



From time to time, we may be involved in litigation
relating to claims arising out of our operations. As of the date of this filing, we are not engaged in any legal proceedings that are expected, individually or in the aggregate, to have a material adverse effect on our business, financial condition
or results of operations.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS



Not applicable.



13



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PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | ---------------------------------------------------------------------



Market Information and Holders



Our common stock began trading on the Nasdaq National Market under the symbol CHIC on October 20, 1999, following our initial public offering.
The following table sets forth the range of high and low closing sales prices of the common stock as reported by the Nasdaq National Market:



|                                     |  |      |       |     |   |      
|------------------------------------ |  | ---- | ----- | --- | - | -----
|                                     |  | High |       | Low
|Fiscal Year Ended September 25, 2004 |  |      |       |     |   |      
|First Quarter                        |  | $    | 15.15 |     | $ | 10.15
|Second Quarter                       |  | $    | 18.70 |     | $ | 12.16
|Third Quarter                        |  | $    | 21.75 |     | $ | 16.21
|Fourth Quarter                       |  | $    | 21.76 |     | $ | 11.09
|Fiscal Year Ended September 27, 2003 |  |      |       |     |   |      
|First Quarter                        |  | $    | 14.48 |     | $ | 7.86 
|Second Quarter                       |  | $    | 12.80 |     | $ | 7.83 
|Third Quarter                        |  | $    | 11.28 |     | $ | 8.03 
|Fourth Quarter                       |  | $    | 12.85 |     | $ | 10.40



As of December 13,
2004, the number of holders of record of our common stock was approximately 18 and the number of beneficial holders of our common stock was estimated to be in excess of 1,500. On December 13, 2004, the closing price of our common stock as reported
by the Nasdaq National Market was $10.38 per share.



Dividends



We have never declared nor paid dividends on our common
stock and we do not intend to pay any dividends on our common stock in the foreseeable future. We currently intend to retain earnings to finance future operations; and, under the terms of our revolving credit facility, we are prohibited from making
any dividends, distributions or capital stock redemptions.



Securities
Authorized for Issuance Under Equity Compensation Plans



The shares disclosed in column (c) in the schedule below include 234,683 shares of common stock issuable under the 1999 Employee Stock Purchase Plan.



|                                                           |  |                                                                                             |  |                                                                             |      |                                                                                                                                             |        
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------------- | -------
|                                                           |  | Equity Compensation Plan Information                                                       
|Plan category                                              |  | Number of securities tobe issued upon exerciseof outstanding optionswarrants and
rights (a) |  | Weighted-averageexercise price ofoutstandingoptions, warrantsand rights (b) |      | Number of securitiesremaining available for futureissuance under
equitycompensation plans (excludingsecurities reflected in column (a)) (c)
|Equity compensation plans approved by security holders     |  | 3,655,610                                                                                   |  | $                                                                           | 5.41 |                                                                                                                                             | 986,483
|Equity compensation plans not approved by security holders |  |                                                                                            |  |                                                                             |     |                                                                                                                                             |       
|                                                           |  |                                                                                             |  |                                                                             |      |                                                                                                                                             |        
|Total                                                      |  | 3,655,610                                                                                   |  | $                                                                           | 5.41 |                                                                                                                                             | 986,483
|                                                           |  |                                                                                             |  |                                                                             |      |                                                                                                                                             |        



Please see Note 7 in
the notes to the consolidated financial statements for more information regarding our equity compensation plans.



14



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ITEM 6. SELECTED FINANCIAL DATA



The following selected consolidated financial data has been restated to reflect adjustments to the original Form 10-K that
are further discussed in Explanatory Note in the forepart of this Form 10-K/A and in the Note 2: Restatement of Financial Statements under Notes to Consolidated Financial Statements included in Item 8, Financial
Statements and Supplementary Data of this Form 10-K/A. The data set forth below should be read in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations and the consolidated
financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K/A.



|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|--------------------------------------------- |  | ---------------------------------------------------------------- | - |  | ------------- | -- |  | ------------- | -- |  | ------------- | -- |  | ------------- | --
|                                              |  | Fiscal Year Ended (1)                                            |  
|                                              |  | Sept. 30,2000                                                    |   |  | Sept. 29,2001 |    |  | Sept. 28,2002 |    |  | Sept. 27,2003 |    |  | Sept. 25,2004 |   
|                                              |  | (dollars in thousands, except per share and sales per foot data) |  
|                                              |  | (Restated)                                                       |  
|Statement of Income Data:                     |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Net sales                                     |  | $245,260                                                         |   |  | $324,825      |    |  | $409,382      |    |  | $456,622      |    |  | $539,404      |   
|Cost of goods sold                            |  | 167,828                                                          |   |  | 228,145       |    |  | 297,250       |    |  | 344,133       |    |  | 403,760       |   
|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Gross profit                                  |  | 77,432                                                           |   |  | 96,680        |    |  | 112,132       |    |  | 112,489       |    |  | 135,644       |   
|Selling, general and administrative expenses  |  | 46,122                                                           |   |  | 63,181        |    |  | 76,516        |    |  | 90,896        |    |  | 111,270       |   
|Store closing costs                           |  |                                                                 |   |  |              |    |  |              |    |  | 4,900         |    |  | (325          | ) 
|Amortization of goodwill                      |  | 828                                                              |   |  | 828           |    |  |              |    |  |              |    |  |              |   
|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Operating income                              |  | 30,482                                                           |   |  | 32,671        |    |  | 35,616        |    |  | 16,693        |    |  | 24,699        |   
|Interest income (expense), net                |  | (593                                                             | ) |  | 425           |    |  | 164           |    |  | 118           |    |  | 303           |   
|Other charges, net                            |  | (270                                                             | ) |  | (314          | )  |  | (290          | )  |  | (270          | )  |  | (275          | ) 
|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Income before income taxes                    |  | 29,619                                                           |   |  | 32,782        |    |  | 35,490        |    |  | 16,541        |    |  | 24,727        |   
|Provision for income taxes                    |  | 12,109                                                           |   |  | 12,559        |    |  | 13,841        |    |  | 6,451         |    |  | 9,643         |   
|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Net income                                    |  | $17,510                                                          |   |  | $20,223       |    |  | $21,649       |    |  | $10,090       |    |  | $15,084       |   
|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Earnings per share (2):                       |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Basic                                         |  | $0.87                                                            |   |  | $0.98         |    |  | $1.03         |    |  | $0.48         |    |  | $0.70         |   
|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Diluted                                       |  | $0.77                                                            |   |  | $0.86         |    |  | $0.91         |    |  | $0.43         |    |  | $0.63         |   
|                                              |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Weighted average shares outstanding (2):      |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Basic (000s)                                 |  | 20,084                                                           |   |  | 20,596        |    |  | 21,045        |    |  | 21,240        |    |  | 21,567        |   
|Diluted (000s)                               |  | 22,845                                                           |   |  | 23,428        |    |  | 23,694        |    |  | 23,507        |    |  | 23,993        |   
|Selected Operating Data:                      |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Number of stores open at end of period        |  | 136                                                              |   |  | 188           |    |  | 251           |    |  | 311           |    |  | 360           |   
|Average square footage per store (3)          |  | 7,380                                                            |   |  | 7,169         |    |  | 7,087         |    |  | 7,149         |    |  | 7,034         |   
|Sales per square foot (4)                     |  | $286                                                             |   |  | $277          |    |  | $259          |    |  | $229          |    |  | $228          |   
|Comparable store salesincrease (decrease) (5) |  | 2.80                                                             | % |  | (1.7          | )% |  | (5.4          | )% |  | (10.1         | )% |  | (0.4          | )%
|Average store sales (6)                       |  | $2,129                                                           |   |  | $2,010        |    |  | $1,839        |    |  | $1,629        |    |  | $1,619        |   
|Balance Sheet Data:                           |  |                                                                  |   |  |               |    |  |               |    |  |               |    |  |               |   
|Cash and cash equivalents                     |  | $3,829                                                           |   |  | $10,031       |    |  | $13,553       |    |  | $22,967       |    |  | $30,713       |   
|Working capital (deficiency).                 |  | (4,722                                                           | ) |  | 2,357         |    |  | 12,917        |    |  | 26,055        |    |  | 43,091        |   
|Total assets                                  |  | 132,337                                                          |   |  | 181,387       |    |  | 227,070       |    |  | 261,444       |    |  | 301,680       |   
|Total long-term debt                          |  |                                                                 |   |  |              |    |  |              |    |  |              |    |  |              |   
|Total stockholders equity                    |  | 71,986                                                           |   |  | 98,415        |    |  | 124,025       |    |  | 134,929       |    |  | 155,613       |   



15



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|(1) | Our results of operations for fiscal 2000 included 53 weeks. All other periods presented included 52 weeks.
|--- | -----------------------------------------------------------------------------------------------------------

|(2) | See Notes 1 and 11 of the notes to the consolidated financial statements for the method used to calculate the earnings per share and weighted average shares outstanding.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Our average square footage per store is based on all open stores at the end of the period.
|--- | ------------------------------------------------------------------------------------------

|(4) | Our sales per square foot consist of net sales divided by the time weighted average of gross square footage of all open stores.
|--- | -------------------------------------------------------------------------------------------------------------------------------

|(5) | Our comparable store percentages are based on net sales, and stores are considered comparable beginning on the first day of the month following the fourteenth full month of sales.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Our average store sales are based on the time weighted average of all open stores in the period.
|--- | ------------------------------------------------------------------------------------------------



|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



The following Managements Discussion and Analysis of Financial Condition and Results of Operations should be read in
conjunction with the Financial Statements and Notes thereto of the company included elsewhere in this Annual Report on Form 10-K/A. The following Managements Discussion and Analysis of Financial Condition and Results of Operations contains
forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under Risks
Relating to Our Business in this section.



OVERVIEW



We were founded in 1975 and opened our first store in
Carlsbad, California. In September 1996, two funds managed by Saunders Karp & Megrue Partners, LLC, a private equity firm, together with Bernard Zeichner, acquired the business. Mr. Zeichner undertook several strategic initiatives for a national
new store expansion program, including hiring a number of other senior executives with national retail experience, and upgrading our information systems, distribution systems and facilities. In September 1997, we launched our second distinct retail
concept by acquiring 16 stores and a license to use the Rampage name on retail stores. In August 2001, we further enhanced our management team with the addition of Mark Hoffman as Chief Operating Officer. Mr. Hoffman began a strategic evaluation of
our infrastructure needs, including senior management, systems, distribution facilities and merchandising strategy. In July 2003, Mr. Hoffman was promoted to Chief Executive Officer, and Mr. Zeichner became Chairman of the Board of Directors.



In the five fiscal years ended September 25, 2004, we grew
from 96 stores to 360 stores, representing a compound annual growth rate of 30.3%, and increased our annual revenues from $177.5 million in fiscal 1999 to $539.4 million in fiscal 2004, representing a compound annual growth rate of 24.9%. Beginning
in the third quarter of fiscal 2001, we experienced successive quarters of comparable store sales declines through the first quarter of fiscal 2004 that resulted in a 23.5% decline in average annual sales per store. As a result, beginning in late
fiscal 2003, we began to initiate a series of management and operational changes intended to improve our merchandise assortments, in-store presentation and financial performance.



16



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Our sales trends improved during the second and third quarters of fiscal 2004 which contributed to
improved profitability. During the fourth quarter ending in September, however, sales slowed down as offerings at the Charlotte Russe stores failed to reflect enough wear-now Summer fashion due to an early conversion to early-Fall assortments. At
the same time, the repositioning of the Rampage brand had become more difficult as more of the merchandise reflected elevated initial retail prices and corresponding elevations of product quality, fabrication, fit and detailing. Management
acknowledged that it would take time to attract targeted customers to the elevated assortments, and it estimated that the Rampage stores would continue to experience negative comparable sales trends during the first half of fiscal 2005.



Sales for October 2004 and November 2004, the first two months of the
first quarter of fiscal 2005, have been disappointing. Offerings at the Charlotte Russe stores have not met with customer acceptance and the anticipated progression of improvements at the Rampage stores has not materialized. The negative comparable
store sales trend that re-emerged in the fourth quarter of fiscal 2004 is expected to continue through the first quarter of fiscal 2005. With the resulting decline in average store volumes, significant pressure on operating margins is expected and
earnings for the first quarter of fiscal 2005 are expected to be down sharply from the prior year levels. In addition, Donna Desrosiers, General Merchandise Manager for the Charlotte Russe chain, resigned effective December 6, 2004. We have
initiated an executive search for her replacement.



RESTATEMENT OF FINANCIAL STATEMENTS



We
reviewed our lease accounting practices in response to the letter issued on February 7, 2005 by the Office of the Chief Accountant of the SEC to the American Institute of Certified Public Accountants (the SEC Letter) expressing its views
regarding certain operating lease accounting issues and their application under generally accepted accounting principles (GAAP). Our lease accounting practices had not changed materially over the years. Our external independent auditors
had been aware of our lease accounting practices, similar to those used by many other companies in the retail and restaurant industries, and had not suggested that they were not in accordance with GAAP. When reviewed against GAAP as set forth in the
SEC Letter, we determined that our historical method of accounting for construction period straight-line rent and landlord construction allowances was not in accordance with GAAP.



Specifically, we previously reflected the unamortized portion of construction allowances as a reduction of capital
expenditures rather than recording those transactions as a deferred rent credit. In addition, we previously recognized straight-line rent expense for leases beginning on the rent commencement date (i.e., store opening date), which had the effect of
excluding the build-out period from the calculation of the period over which rent is expensed.



As a result, we restated our previously issued audited financial statements, as follows:



| |  |  | We no longer offset construction allowances against capital expenditures. The unamortized portion of construction allowances is recorded as a deferred rent credit rather than as a
reduction to the cost of leasehold improvements. Depreciation expense has been increased to reflect the adjustment to capital expenditures with an equal and offsetting credit against rent expense during the contractual lease term.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17



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| |  |  | We no longer recognize rent in accordance with the contractual lease commencement dates. Straight-line rent is imputed starting when we receive possession of the leased property for
construction purposes. Preopening expense is recognized during the construction period with an equal and offsetting credit against rent expense during the contractual lease term.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As a result, excluding tax impacts, the correction of this accounting
required us to record additional deferred rent, increase fixed assets and adjust retained earnings on the consolidated balance sheets. In connection with the restatement of all prior periods for these changes in lease accounting practices, we also
corrected for a previously identified immaterial inter-quarterly error by shifting this charge between appropriate quarters. See Note 2: Restatement of Financial Statements under Notes to Consolidated Financial Statements included in
Item 8, Financial Statements and Supplementary Data of this Form 10-K/A for additional disclosures.



18



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RESULTS OF OPERATIONS



The following table sets forth our operating results, expressed as a percentage of sales, and store information for the
periods indicated.



|                                             |  |             |   |  |       |   |  |       |  
|-------------------------------------------- |  | ----------- | - |  | ----- | - |  | ----- | -
|                                             |  | Fiscal Year |  
|                                             |  | 2002        |   |  | 2003  |   |  | 2004  |  
|Net sales                                    |  | 100.0       | % |  | 100.0 | % |  | 100.0 | %
|Cost of goods sold                           |  | 72.6        |   |  | 75.4  |   |  | 74.9  |  
|                                             |  |             |   |  |       |   |  |       |  
|Gross profit                                 |  | 27.4        |   |  | 24.6  |   |  | 25.1  |  
|                                             |  |             |  
|Selling, general and administrative expenses |  | 18.7        |   |  | 19.8  |   |  | 20.5  |  
|Store closing costs                          |  | 0.0         |   |  | 1.1   |   |  | 0.0   |  
|                                             |  |             |   |  |       |   |  |       |  
|Operating income                             |  | 8.7         |   |  | 3.7   |   |  | 4.6   |  
|                                             |  |             |  
|Interest income, net                         |  | 0.1         |   |  | 0.0   |   |  | 0.1   |  
|Other charges, net                           |  | (0.1        | ) |  | (0.1  | ) |  | (0.1  | )
|                                             |  |             |   |  |       |   |  |       |  
|Income before income taxes                   |  | 8.7         |   |  | 3.6   |   |  | 4.6   |  
|                                             |  |             |  
|Income taxes                                 |  | 3.4         |   |  | 1.4   |   |  | 1.8   |  
|                                             |  |             |   |  |       |   |  |       |  
|Net income                                   |  | 5.3         | % |  | 2.2   | % |  | 2.8   | %
|                                             |  |             |   |  |       |   |  |       |  
|Number of stores open at end of period       |  | 251         |   |  | 311   |   |  | 360   |  
|                                             |  |             |   |  |       |   |  |       |  



Fiscal Year Ended September 25,
2004 Compared to Fiscal Year Ended September 27, 2003



Net Sales. Our net sales increased to $539.4 million from $456.6 million, an increase of $82.8, or 18.1%, over the prior fiscal year. This increase reflects $84.5 million of additional net sales from the 49 new stores opened during
fiscal 2004 as well as other stores opened in prior fiscal years that did not qualify as comparable stores. This increase was partially offset by a 0.4% decrease in comparable store sales, which resulted in decreased sales of $1.7 million compared
to the prior fiscal year.



Gross Profit. Gross profit
represents net sales less cost of goods sold, which includes buying, distribution and occupancy costs. Our gross profit increased to $135.6 million from $112.5 million, an increase of $23.1 million, or 20.6%, over the prior fiscal year. This
increase was primarily the result of higher net sales. As a percentage of net sales, gross profit increased to 25.1% from 24.6%. The increase as a percentage of net sales was principally due to improved product gross margins as higher initial markup
more than offset a higher markdown expense.



Selling,
General and Administrative Expenses. Our selling, general and administrative expenses increased to $111.3 million from $90.9 million, an increase of $20.4 million, or 22.4%, over the prior fiscal year. This increase was attributable to new store
expansion and increased corporate expenses, specifically higher store payroll and operating expenses and higher central office payroll and related expenses. As a percentage of net sales, selling, general and administrative expenses increased to
20.5% from 19.8% primarily due to higher store payroll expenses.



19



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Store Closing Costs. Fiscal 2004 includes a pre-tax reversal of $325,000 of costs previously
incurred in fiscal 2003 associated with the closure of 10 Charlottes Room stores.



Income Taxes. Our effective tax rate of 39.0% approximates our statutory income tax rates.



Net Income. Our net income increased to $15.1 million from $10.1 million, an increase of $5.0 million, or 49.5%, over the prior fiscal year. The
increase was primarily due to an increase in gross profit which was partially offset by an increase in selling, general and administrative expenses, reduction in store closing costs, and an increase in income taxes.



Fiscal Year Ended September 27, 2003 Compared to Fiscal Year Ended September 28, 2002



Net Sales. Our net sales increased to $456.6
million from $409.4 million, an increase of $47.2 million or 11.5%, over the prior fiscal year. This increase reflects $85.4 million of additional net sales from 70 new stores opened during fiscal 2003 as well as other stores opened in prior fiscal
years that did not qualify as comparable stores. This increase was partially offset by a 10.1% decline in comparable store sales, which resulted in decreased sales of $38.2 million compared to the prior fiscal year.



Gross Profit. Gross profit represents net sales less cost of goods
sold, which includes buying, distribution and occupancy costs. Our gross profit increased to $112.5 million from $112.1 million, an increase of $0.4 million, or 0.3%, over the prior fiscal year. This increase was the result of higher net sales,
offset in part by decreased gross profit margins. As a percentage of net sales, gross profit decreased to 24.6% from 27.4%. The decrease in gross profit as a percentage of net sales was principally due to higher occupancy expenses as these
relatively fixed charges were spread over a smaller average store sales base.



Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased to $90.9 million from $76.5 million, an increase of $14.4 million, or 18.8%, over the prior fiscal year.
This increase was attributable to new store expansion and increased corporate expenses, specifically higher store payroll and operating expenses and higher central office payroll and related expenses. As a percentage of net sales, selling, general
and administrative expenses increased to 19.8% from 18.7% primarily due to higher store operating expenses as these charges were spread over a smaller average store sales base.



Store Closing Costs. Fiscal 2003 includes a $4.9 million pre-tax charge associated with the closure of 10
Charlottes Room stores. No such charges were incurred in the prior fiscal year.



Income Taxes. Our effective tax rate of 39.0% approximates our statutory income tax rates.



Net Income. Our net income decreased to $10.1 million from $21.6 million, a decrease of $11.5 million, or 53.4%, over the prior fiscal year. The
decrease was primarily due to a decrease in gross profit as a percentage of sales, an increase in selling, general and administrative expenses, store closing costs, offset by a decrease in income taxes.





20



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QUARTERLY RESULTS AND SEASONALITY



We have historically experienced and expect to continue to experience seasonal and quarterly fluctuations in our net sales
and operating income. As is the case with many retailers of apparel and related merchandise, our business is subject to seasonal influences, characterized by strong sales during the back-to-school, Easter and winter holiday seasons. The strength of
each of these three seasons generally provides relatively balanced sales during our first, third and fourth fiscal quarters. We typically experience lower net sales and net income during the second quarter of each fiscal year. Our quarterly results
of operations may fluctuate significantly as a result of a variety of factors, including the timing of new store openings, fashion trends and shifts in timing of certain holidays, as well as other factors discussed in the section entitled
Risks Relating to Our Business.



The following
table includes our unaudited quarterly results of operations data for each of the eight quarters during the two-year period ended September 25, 2004. This data has been derived from our unaudited consolidated financial statements. We believe that
this information has been prepared on the same basis as our audited consolidated financial statements and that all necessary adjustments, consisting only of normal recurring adjustments, have been included to present fairly the selected quarterly
information when read in conjunction with our audited consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K/A.



|                                  |  |                                               |    |  |                    |    |  |              |    |  |              |    |  |              |    |  |              |   |  |              |   |  |               |   
|--------------------------------- |  | --------------------------------------------- | -- |  | ------------------ | -- |  | ------------ | -- |  | ------------ | -- |  | ------------ | -- |  | ------------ | - |  | ------------ | - |  | ------------- | --
|                                  |  | Fiscal Year 2003                              |    |  | Fiscal Year 2004   |   
|                                  |  | Three Months Ended                            |    |  | Three Months Ended |   
|                                  |  | Dec. 28,2002                                  |    |  | Mar. 29,2003       |    |  | Jun. 28,2003 |    |  | Sep. 27,2003 |    |  | Dec. 27,2003 |    |  | Mar. 27,2004 |   |  | Jun. 26,2004 |   |  | Sept. 25,2004 |   
|                                  |  | (dollars in thousands, except per share data) |   
|Statement of Operations Data:     |  |                                               |    |  |                    |    |  |              |    |  |              |    |  |              |    |  |              |   |  |              |   |  |               |   
|Net sales                         |  | $133,329                                      |    |  | $93,098            |    |  | $107,186     |    |  | $123,009     |    |  | $149,291     |    |  | $118,776     |   |  | $133,044     |   |  | $138,293      |   
|Gross profit                      |  | 36,647                                        |    |  | 17,576             |    |  | 25,870       |    |  | 32,396       |    |  | 39,027       |    |  | 25,115       |   |  | 36,179       |   |  | 35,323        |   
|Operating income (loss)           |  | 12,314                                        |    |  | (8,676             | )  |  | 4,154        |    |  | 8,901        |    |  | 10,661       |    |  | 118          |   |  | 8,875        |   |  | 5,045         |   
|Net income (loss)                 |  | 7,479                                         |    |  | (5,322             | )  |  | 2,516        |    |  | 5,417        |    |  | 6,480        |    |  | 76           |   |  | 5,424        |   |  | 3,104         |   
|Earnings Per Share:               |  |                                               |    |  |                    |    |  |              |    |  |              |    |  |              |    |  |              |   |  |              |   |  |               |   
|Basic earnings (loss) per share   |  | $0.35                                         |    |  | ($0.25             | )  |  | $0.12        |    |  | $0.25        |    |  | $0.30        |    |  | $0.00        |   |  | $0.25        |   |  | $0.14         |   
|Diluted earnings (loss) per share |  | $0.32                                         |    |  | ($0.25             | )  |  | $0.11        |    |  | $0.23        |    |  | $0.27        |    |  | $0.00        |   |  | $0.23        |   |  | $0.13         |   
|As a Percentage of Net Sales:     |  |                                               |    |  |                    |    |  |              |    |  |              |    |  |              |    |  |              |   |  |              |   |  |               |   
|Net sales                         |  | 100.0                                         | %  |  | 100.0              | %  |  | 100.0        | %  |  | 100.0        | %  |  | 100.0        | %  |  | 100.0        | % |  | 100.0        | % |  | 100.0         | % 
|Gross profit                      |  | 27.5                                          |    |  | 18.9               |    |  | 24.1         |    |  | 26.3         |    |  | 26.1         |    |  | 21.1         |   |  | 27.2         |   |  | 25.5          |   
|Operating income (loss)           |  | 9.2                                           |    |  | (9.3               | )  |  | 3.9          |    |  | 7.2          |    |  | 7.1          |    |  | 0.1          |   |  | 6.7          |   |  | 3.6           |   
|Net income (loss)                 |  | 5.6                                           |    |  | (5.7               | )  |  | 2.3          |    |  | 4.4          |    |  | 4.3          |    |  | 0.1          |   |  | 4.1          |   |  | 2.2           |   
|Operating Data:                   |  |                                               |    |  |                    |    |  |              |    |  |              |    |  |              |    |  |              |   |  |              |   |  |               |   
|Comparable store sales (decrease) |  | (3.6                                          | )% |  | (11.6              | )% |  | (16.1        | )% |  | (9.5         | )% |  | (7.6         | )% |  | 3.5          | % |  | 7.1          | % |  | (2.3          | )%
|Stores open at end of period      |  | 268                                           |    |  | 280                |    |  | 293          |    |  | 311          |    |  | 329          |    |  | 335          |   |  | 342          |   |  | 360           |   



21



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LIQUIDITY AND CAPITAL RESOURCES



Our working capital requirements vary consistent with the seasonality of our business. Our capital requirements result
primarily from capital expenditures related to new store openings. We have historically satisfied our cash requirements principally through cash flow from operations, although we have also used borrowings under prior credit facilities in the past
for acquisitions, including our acquisition and the acquisition of the Rampage stores. Due to the rapid turnover of our inventory, we generate trade payables and other accrued liabilities sufficient to offset most, if not all, of our working capital
requirements, and this allows us to generally operate with limited working capital. As of September 25, 2004, we had working capital of approximately $43.0 million which included cash and cash equivalents of $30.7 million.



During fiscal years 2002, 2003 and 2004, our net cash provided by operations
amounted to approximately $52.3 million, $56.7 million and $48.1 million, respectively. In fiscal year 2004, our net cash provided by operations decreased as a result of lower landlord construction allowances offset by higher net income and changes
in working capital accounts. Our net cash used in investing activities amounted to approximately $49.4 million, $47.8 million and $42.6 million in fiscal years 2002, 2003 and 2004, respectively. The primary component related to purchases of fixed
assets, which consists of new store openings, the upgrade of our information systems and other corporate expenditures. We opened a total of 63, 70 and 49 new stores during the fiscal years 2002, 2003 and 2004, respectively. The decrease in capital
expenditures in fiscal year 2003 as compared to fiscal 2002 primarily relates to the $9.9 million expenditure in fiscal 2002 for the Ontario distribution center. We expect to continue to invest in capital to support our growth.



Based on our experience with store openings for our two concepts, we estimate
that the average net investment to open these new stores is approximately $400,000, which includes capital expenditures, net of landlord contributions, and initial inventory, net of payables. All new stores opened since our acquisition that have
operated for more than one year generated average net sales of approximately $1.7 million and store-level operating cash flow in excess of $350,000, or approximately 20.3% of net sales. Accordingly, these stores generated an average cash return on
investment of approximately 90% in their first year of operation. For the 131 stores opened in fiscal 2002 and 2003, we achieved average net sales of $1.6 million per store and store-level operating cash flow of approximately $295,000, or 18.8% of
net sales. This group of newer stores generated an average cash return on investment of approximately 89% in their first year of operations. In light of recent economic conditions, we are targeting future store openings that will generate, on
average, cash returns on investment in excess of 80% for the first year of operation. After taking into account new store construction, existing store remodeling, distribution center expenditures, and other corporate capital projects, total capital
expenditures for fiscal year 2005 are projected to range from approximately $49 to $53 million.



Net cash provided by financing activities amounted to approximately $0.6 million, $0.6 million and $2.2 million for fiscal years 2002, 2003 and 2004,
respectively. Financing activities primarily consist of the proceeds of stock option exercises.



Effective February 28, 2003, we obtained a $25.0 million unsecured revolving credit facility with Bank of America, N.A. to replace a previous $15.0
million unsecured revolving credit facility with another lender. The new facility, as amended, is subject to certain restrictions and covenants and expires on March 1, 2006. Interest on the revolving credit facility is payable quarterly, at the
Companys option, at either (i) the Banks Base Rate, as defined, or (ii) the Banks Eurodollar Rate plus 1.00%, subject to certain adjustments. At September 25, 2004, there



22



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was no outstanding debt under the revolving credit facility. The agreement requires that the Company maintain certain financial ratios on a quarterly basis,
sets limits on stock repurchases and capital spending and restricts future liens and indebtedness, sales of assets and dividend payments. As of September 25, 2004, we were in compliance with the terms of the bank credit agreement.



We believe that cash flows from operations, our current cash balance and
funds available under our revolving credit facility will be sufficient to meet our working capital needs and contemplated capital expenditure requirements for fiscal 2005. If our cash flow from operations should decline significantly, it may be
necessary for us to seek additional sources of capital.



LETTERS OF CREDIT



Pursuant to the terms of the
unsecured revolving credit facility, the Company can issue up to $15.0 million of documentary or standby letters of credit. The outstanding commitments under this agreement at September 25, 2004 totaled approximately $9.4 million, including $2.6
million in standby letters of credit.



CONTRACTUAL
OBLIGATIONS



The Companys commitment to make future
payments under long-term contractual obligations was as follows, as of September 25, 2004:



|                            |  |                        |         |                  |   |           |  |           |         |               |   |         |  |   |        
|--------------------------- |  | ---------------------- | ------- | ---------------- | - | --------- |  | --------- | ------- | ------------- | - | ------- |  | - | -------
|Contractual Obligations     |  | Total                  |         | Less Than 1 Year |   | 1-3 Years |  | 3-5 Years |         | After 5 Years
|                            |  | (dollars in thousands)
|Operating leases            |  | $                      | 480,184 |                  | $ | 64,839    |  | $         | 129,910 |               | $ | 121,725 |  | $ | 165,710
|Other long-term obligations |  |                        | 14,799  |                  |   | 9,361     |  |           | 1,500   |               |   | 1,500   |  |   | 2,438  
|                            |  |                        |         |                  |   |           |  |           |         |               |   |         |  |   |        
|                            |  | $                      | 496,983 |                  | $ | 74,200    |  | $         | 131,410 |               | $ | 123,225 |  | $ | 168,148
|                            |  |                        |         |                  |   |           |  |           |         |               |   |         |  |   |        



23



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CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Managements Discussion and Analysis of Financial Condition and
Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reported periods.



On an on-going basis, management evaluates its estimates and judgments
regarding inventories, receivables, fixed assets, intangible assets, accrued liabilities, income taxes and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances. The results from this evaluation form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Under different assumptions
or conditions, alternative estimates and judgments could be derived which would differ from the estimates being used by management. Actual results could differ from any or all of these estimates.



As a retailer of womens apparel and accessories, our financial
statements are affected by several critical accounting policies, many of which affect managements use of estimates and judgments, as described in the Notes to the Consolidated Financial Statements. We sell merchandise directly to retail
customers and recognize revenue at the point of sale. Customers have the right to return merchandise to us, and we maintain a reserve for the financial impact of returns which occur subsequent to the current reporting period.



Our merchandise is initially offered for sale at a regular price, but is
often marked down prior to the ultimate sale of all such units. We utilize the retail method of accounting for our inventory valuation that inherently reduces the inventories carrying value as markdowns are initiated. In addition, we maintain
a reserve for the financial impact of markdowns that we believe are likely to be encountered in the future. If actual demand or market conditions are more or less favorable than those projected by management, the level of the reserve for future
markdowns would be subject to change in subsequent reporting periods.



We also provide for estimated inventory losses for damaged, lost or stolen inventory for the period from the last physical inventory to the financial statement date. These estimates are based on historical experience and other factors.



We have recorded a goodwill asset that arose from the
acquisition of our business in September 1996. This asset is tested for possible impairment on at least an annual basis in accordance with SFAS No. 142, Goodwill and Other Intangibles. The carrying value of investments in our
stores, principally leasehold improvements and equipment, and other operations is reviewed for impairment on at least an annual basis in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets
In prior years, we established reserves for stores which have been closed, and no other stores are contemplated for closure at this time.



During fiscal 2003, we decided to exit the Charlottes Room concept and closed 10 Charlottes Room stores. In accordance with SFAS No. 146, the
Company recorded a liability of $2.6 million and recognized an impairment charge of $2.9 million for total store closing costs of



24



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$5.5 million, before the effect of income taxes. The final settlement of charges is currently estimated to be $4,575,000; accordingly, $600,000 and $325,000
was reversed into income during the fourth quarter of fiscal 2003 and the second quarter of fiscal 2004, respectively. The $2.9 million impairment charge reflected the difference between the carrying value and fair value of Charlottes Room
assets. Fair value was based on estimated market valuations for those assets since their carrying value was not anticipated to be recoverable through future cash flows. These assets were disposed of during the third quarter at approximately the
estimated fair value. The asset impairment charge of $2.9 million is included in the $4.9 million shown in the store closing costs line item on the accompanying statement of income for the fiscal year ended September 27, 2003.



Rent expense on noncancellable leases containing known future scheduled rent
increases are recorded on a straight-line basis over the respective leases beginning when we receive possession of the leased property for construction purposes. The difference between rent expense and rent paid is accounted for as deferred rent.
Landlord construction allowances and other such lease incentives are recorded as deferred lease credits, and are amortized on a straight-line basis as a reduction to rent expense.



25



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RECENT ACCOUNTING PRONOUNCEMENTS



In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and supersedes EITF No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for a cost associated with an exit of disposal activity be recognized when the liability is incurred. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at fair value. We applied the provisions of SFAS No. 146 for exit or disposal activities that initiated after December 31, 2002. The adoption of SFAS No. 146 results in
recognizing the cost of future restructuring activities over a period of time rather than in one reporting period. The adoption of SFAS No. 146 did not have a significant impact on our consolidated financial position or results of operations.



In October 2004, the FASB concluded that the proposed
Statement 123R, Share-Based Payment, would be effective for interim or annual periods beginning after June 15, 2005; thereby, becoming effective beginning in the fourth quarter of fiscal 2005 for the company. As currently
proposed, Statement 123R would require all share-based payments to employees, including grants of employee stock options and purchases under employee stock purchase plans, to be recognized as an operating expense in the income statement. The cost
would be recognized over the requisite service period based on fair values measured on grant dates. The FASB has tentatively concluded that the new standard may be adopted using either the modified prospective transition method or the modified
retrospective transition method. The final standard is expected to be issued during December 2004; and, we are currently evaluating our share-based employee compensation programs, potential impact of this statement on our consolidated financial
position and results of operations, and alternative adoption methods which may be available.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. This statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective for the first
interim period beginning after June 15, 2003, with certain exceptions. We adopted SFAS No. 150 in the fourth quarter of fiscal 2003, and it did not have an impact on our consolidated financial position or results of operations.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------



Our market risks relate primarily to changes in interest rates. We bear this risk in two specific ways. First, our revolving credit facility carries a
variable interest rate that is tied to market indices and, therefore, our statement of income and our cash flows will be exposed to changes in interest rates. As of September 25, 2004, we had no borrowings against our credit facility. However, we
may borrow additional funds under our revolving credit facility as needed.



The second component of interest rate risk involves the short-term investment of excess cash in short-term, investment-grade interest-bearing securities. These investments are considered to be cash equivalents and are
shown that way on our balance sheet. If there are changes in interest rates, those changes would affect the investment income we earn on these investments and, therefore, impact our cash flows and results of operations.



We believe our market risk exposure is immaterial.



26



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FORWARD-LOOKING STATEMENTS



We have made statements under the captions, Business, Managements Discussion and Analysis of
Financial Condition and Results of Operations, Quantitative and Qualitative Disclosures About Market Risk and Risks Relating to Our Business, as well as in other sections of this Annual Report on Form 10-K/A, that are
forward-looking statements. You can identify these statements by forward-looking words such as may, will, expect, intend, anticipate, believe, estimate and
continue or similar words. These forward-looking statements may also use different phrases. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements,
which are subject to risks, uncertainties, and assumptions about us, may include, among other things, projections of our future results of operations or of our financial condition, our anticipated growth strategies, successful repositioning of our
Rampage brand, integration of our recently hired senior executives, and general and regional economic conditions, industry trends, consumer demands and preferences, competition from other retailers and uncertainties generally associated with
womens apparel and accessory retailing.



There may be
events in the future that we are not able to accurately predict or which we do not fully control that could cause actual results to differ materially from those expressed or implied in our forward-looking statements. Because these forward-looking
statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including shopping mall traffic and shopping patterns,
timing of openings for new shopping malls or our stores, fashion trends, national or regional economic influences, and weather.



We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Annual Report on Form 10-K/A might not occur.



27



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RISKS RELATING TO OUR BUSINESS



We intend to continue to open new stores, which could strain our resources and cause us to operate our business less effectively.



Our growth will largely depend on successfully
opening and operating new stores. During fiscal 2004, we opened 49 new stores representing a 16% increase from the number of stores open at the end of fiscal 2003. We plan to open up to 60 new Charlotte Russe and Rampage stores during fiscal 2005,
an increase of 17% from total stores opened as of September 25, 2004. We intend to continue to increase our number of Charlotte Russe and Rampage stores by approximately 15% to 20% per year for at least the next several years.



In order to support our planned expansion we will need to continually monitor
and upgrade our management information and other systems. This expansion also will place increased demand on our managerial, operational, and administrative resources. These increased demands and operating complexities could cause us to operate our
business less effectively, which in turn could cause deterioration in the financial performance of our individual stores and slow our new store growth.



Our planned expansion involves a number of risks that could prevent or delay the successful opening of new stores as well as impact the performance of our existing
stores.



Our ability to open and operate new stores
successfully depends on many factors, including, among others, our ability to:



| |  |  | identify suitable store locations, the availability of which is outside of our control;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | negotiate acceptable lease terms, including desired tenant improvement allowances;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | source sufficient levels of inventory to meet the needs of new stores;
| | - |  | ----------------------------------------------------------------------



| |  |  | hire, train and retain store personnel;
| | - |  | ---------------------------------------



| |  |  | successfully integrate new stores into our existing operations; and
| | - |  | -------------------------------------------------------------------



| |  |  | identify and satisfy the fashion preferences of new geographic areas.
| | - |  | ---------------------------------------------------------------------



In addition, many of our new stores will be opened in regions of the United States in which we currently have few or no stores. The expansion into new
markets may present competitive, merchandising and distribution challenges that are different from those currently encountered in our existing markets. Any of these challenges could adversely affect our business and results of operations. In
addition, to the extent our new store openings are in existing markets, we may experience reduced net sales volumes in existing stores in those markets.



The decline in general economic conditions has led to reduced consumer demand for our apparel and accessories.



Consumer spending habits, including spending for the fashionable apparel and
related accessories that we sell, are affected by, among other things, prevailing economic conditions, levels of employment, salaries and wage rates, consumer confidence and consumer perception of economic conditions. The general slowdown in the
United States economy and the uncertain economic outlook has adversely affected consumer spending habits and mall traffic, which has resulted in, and may continue to result in, lower net sales than expected and has caused us to



28



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somewhat slow our expansion plans. We are unlikely to return to our historical expansion rate until we achieve improved sales trends, and further erosion of
sales trends could cause us to further delay or slow our expansion plans.



Our success depends on our ability to identify and rapidly respond to consumer fashion tastes.



The apparel industry is subject to rapidly evolving fashion trends and shifting consumer demands. Accordingly, our success is heavily dependent both on
the priority our target customers place on fashion and on our ability to anticipate, identify and capitalize upon emerging fashion trends in a timely manner. Current fashion tastes place significant emphasis on a fashionable look. In the past this
emphasis has increased and decreased through fashion cycles and decreased emphasis has adversely affected our results. If we do not anticipate, identify or react appropriately and timely to changes in styles, trends, desired images or brand
preferences, it may lead to, among other things, excess inventories and higher markdowns, as well as decreased appeal of our brands.



Our stores are heavily dependent on the customer traffic generated by shopping malls.



Most of our store locations are not sufficiently concentrated to make significant marketing expenditures cost effective. As
a result, we depend heavily on locating our stores in prominent locations within successful shopping malls in order to generate customer traffic. We cannot control the development of new shopping malls, the availability or cost of appropriate
locations within existing or new shopping malls or the success of individual shopping malls.



Our market share may be adversely impacted at any time by a significant number of competitors.



We operate in a highly competitive environment characterized by low barriers to entry. We compete against a diverse group of retailers, including national
and local specialty retail stores, regional retail chains, traditional department stores and, to a lesser extent, mass merchandisers. Our market share and results of operations may be adversely impacted by this significant number of competitors.
Many of our competitors also are larger and have substantially greater resources than we do.



We rely on our good relationships with vendors to implement our business strategy successfully.



Our business is dependent on continued good relations with our vendors. In particular, we believe that we generally are able to obtain attractive pricing
and other terms from vendors because we are perceived as a desirable customer. Our test-and-reorder merchandise strategy also relies in large part on our ability to obtain much of our merchandise from our vendors within three to six weeks from the
date of order. Our failure to maintain good relations with our vendors could increase our exposure to changing fashion cycles, which may in turn lead to increased inventory markdown rates.



Certain members of our senior management team have limited tenure with us.



Our business requires disciplined execution at all
levels of our organization in order to timely deliver and display fashionable merchandise in appropriate quantities in our stores. This execution requires experienced and talented management. If we fail to attract, motivate and retain qualified and
talented key personnel, it may adversely affect our business and inhibit our plans for future growth.



29



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Our Chief Executive Officer recently assumed that role after approximately two years of service as our
Chief Operations Officer. In addition, during fiscal 2004 we hired new General Merchandise Managers for our Charlotte Russe and Rampage chains and three Senior Vice Presidents for Supply Chain & Systems, Store Operations and Real Estate &
Construction. In December 2004, the GMM for the Charlotte Russe chain resigned and an executive search is underway to find her replacement. Each of the other individuals has significant experience in these and similar roles with other apparel
retailers, although they have limited tenure with our company.



If at any
time our comparable store sales and quarterly results of operations decline or do not meet the expectations of research analysts, the price of our common stock could decline substantially.



Our quarterly results of operations for our individual stores have
fluctuated in the past and can be expected to continue to fluctuate in the future. For instance, our quarterly comparable store sales percentages have ranged as high as positive 7.1% and as low as negative 16.1% over the past two years. Our net
sales and operating results are typically lower in the second quarter of our fiscal year due to the traditional retail slowdown immediately following the winter holiday season. Our comparable store sales and quarterly results of operations are
affected by a variety of factors, including:



| |  |  | the timing of new store openings and the relative proportion of new stores to mature stores;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | efforts to reposition the targeted customer for our Rampage stores;
| | - |  | -------------------------------------------------------------------



| |  |  | fashion trends;
| | - |  | ---------------



| |  |  | calendar shifts of holiday or seasonal periods;
| | - |  | -----------------------------------------------



| |  |  | the effectiveness of our test-and-reorder strategy in maintaining appropriate inventory levels;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | changes in our merchandise mix;
| | - |  | -------------------------------



| |  |  | timing of promotional events;
| | - |  | -----------------------------



| |  |  | general economic conditions and, in particular, the retail sales environment;
| | - |  | -----------------------------------------------------------------------------



| |  |  | actions by competitors or mall anchor tenants;
| | - |  | ----------------------------------------------



| |  |  | weather conditions; and
| | - |  | -----------------------



| |  |  | the level of pre-opening expenses associated with new stores.
| | - |  | -------------------------------------------------------------



Our business and reputation may be adversely affected if our Rampage stores are associated with negative publicity related to the use of the Rampage trademark by
other parties.



In connection with the acquisition of
our Rampage stores, we acquired the exclusive right within the United States to use the Rampage trademark on exterior and interior signage identifying our Rampage stores, as well as the non-exclusive right within the United States to use the Rampage
trademark for promotional and advertising materials. We do not, however, have the right to use the Rampage trademark on our merchandise. The right to market merchandise under the Rampage trademark was retained by Rampage Clothing Company. Further,
nothing in our license agreement with Rampage Clothing Company prohibits the sale of merchandise bearing the Rampage trademark by other parties or the licensing of the Rampage trademark to other parties. In fact, Rampage Clothing Company has
licensed the trademark to other parties. We believe a positive Rampage brand image is important to our success. Accordingly, if the merchandise sold by the Rampage Clothing Company or other parties under the Rampage trademark is of low quality or if
the Rampage Clothing Company or these parties otherwise engage in activities that



30



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negatively affect the Rampage trademark or are otherwise inconsistent with our Rampage store concept, consumers could lose confidence in our merchandise and
our reputation and business could be materially adversely affected.



The
failure to efficiently complete the planned replacement of certain of our technology and information systems could negatively impact our business.



The efficient operation of our business is heavily dependent on information systems. In particular, we rely upon technology and information systems for
inventory control and other critical information. We periodically review, improve and, under certain circumstances, replace information systems to provide enhanced support to all operating areas. If such upgrades and enhancements are not
successfully implemented, then the current systems may not be able to continue to adequately support our information requirements. We have recently initiated the replacement of our existing inventory software systems. If we are unable to complete
this conversion in an efficient and timely manner, our business could be negatively impacted.



Our operations, as well as a substantial number of our stores, are concentrated in the Southwest, which makes us susceptible to adverse conditions in this region.



Our headquarters and distribution centers are located in California, and a
substantial number of our stores are located in California and the Southwest. As a result, our business may be more susceptible to regional factors than the operations of more geographically diversified competitors. These factors include, among
others, economic and weather conditions, demographic and population changes, and fashion tastes. Further, a natural disaster or other catastrophic event, such as an earthquake affecting southern California, could significantly disrupt our
operations.



The loss of, or disruption of operations in, either of our
two distribution centers could negatively impact our business.



Our merchandise is distributed through two modern facilities that use automated systems for sorting apparel and shipping merchandise. We depend on the orderly operation of our facilities and distribution processes, as well as sufficient
shipping resources. Disruptions in these operations due to fire, earthquake or other catastrophic events, employee matters (including work stoppages), shipping problems or other events could result in delays in the delivery of merchandise to our
stores.



The removal of quotas may adversely impact our business.



On January 1, 2005, in accordance with an agreement
reached in the General Agreement on Tariffs and Trade (GATT) ten years ago, the quota on textiles imported from China will be eliminated. While the impact of the quota removal is uncertain, the increased access to the Chinese textile market could
create logistical delays arising from the surge of imported goods. In addition, the quota removal may alter the cost differential between vendors that source domestically and vendors that more extensively import from China.



The effects of war or acts of terrorism could adversely affect our business.



The continued threat of terrorism, heightened
security measures and military action in response to an act of terrorism has disrupted commerce and has intensified the uncertainty of the United States economy. Any further acts of terrorism, particularly directed at malls, or new or extended
hostilities may disrupt commerce and undermine consumer confidence, which could negatively impact our sales by causing mall traffic or consumer spending to decline.



31



---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



Information with respect to this Item is indexed on page F-1 of this Report
and is contained on pages F-3 through F-24.



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE



Not applicable.



ITEM 9A. CONTROLS AND PROCEDURES



Disclosure Controls and Procedures



The
Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Companys reports under the Securities Exchange Act of 1934, as amended (the Exchange Act), is
recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and that such information is accumulated and communicated to the management of Charlotte Russe Holding, Inc. (the
Management), including the Companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.



An evaluation was performed under the supervision and with the participation
of the Companys Management, including the CEO and CFO, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act). In performing
this evaluation, Management reviewed the Companys lease accounting practices in response to the letter issued on February 7, 2005 by the Office of the Chief Accountant of the SEC to the American Institute of Certified Public Accountants (the
SEC Letter) expressing its views regarding certain operating lease accounting issues and their application under generally accepted accounting principles (GAAP). The Companys lease accounting practices had not changed
materially over the years. The Companys external independent auditors had been aware of our lease accounting practices, similar to those used by many other companies in the retail and restaurant industries, and had not suggested that they were
not in accordance with GAAP. When reviewed against GAAP as set forth in the SEC Letter, the Company determined that its historical method of accounting for construction period straight-line rent and landlord construction allowances was not in
accordance with GAAP. As a result of changing its historical lease accounting practices to conform to GAAP as set forth in the SEC Letter, Management concluded that the Companys previously reported fixed assets and deferred lease credits had
been understated and that previously issued financial statements should be restated. Because of this change in its lease accounting practices, the Company concluded that it had a material weakness in the effectiveness of controls over the selection
and monitoring of appropriate practices used in accounting for leases and tenant allowances during the fiscal year. As a result, the Chief Executive Officer and the Chief Financial Officer each concluded that, based solely on this change in lease
accounting practices, that the Companys disclosure controls and procedures were not effective as of September 25, 2004.



In the second quarter of fiscal 2005, the Company remediated the material weakness in internal control and the ineffectiveness of its disclosure controls
and procedures by conducting a



32



---

review of its lease accounting practices, establishing new lease-related accounting policies, and correcting its method of accounting for landlord
construction allowances and construction period straight-line rent.



Changes
in Internal Control Over Financial Reporting



During the
fiscal year ended September 25, 2004, there have been no significant changes in the Companys internal controls over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect, internal
controls over financial reporting, nor were there any corrective actions required with regard to significant deficiencies and material weaknesses.



ITEM 9B. OTHER INFORMATION



Not applicable.



33



---

PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT



Information with respect to this item is incorporated by reference to the Registrants definitive Proxy Statement to be filed with the Commission not
later than 120 days after the end of the Registrants fiscal year.



ITEM 11. EXECUTIVE COMPENSATION



Information
with respect to this item is incorporated by reference to the Registrants definitive Proxy Statement to be filed with the Commission not later than 120 days after the end of the Registrants fiscal year.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | --------------------------------------------------------------



Information with respect to this item is incorporated by reference to the Registrants definitive Proxy Statement to be filed with the Commission not
later than 120 days after the end of the Registrants fiscal year.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS



Information with respect to this item is incorporated by reference to the Registrants definitive Proxy Statement to be filed with the Commission not later than 120 days after the end of the Registrants
fiscal year.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------



Information with respect to this item is incorporated by reference to the Registrants definitive Proxy Statement to be filed with the Commission not
later than 120 days after the end of the Registrants fiscal year.



PART IV



|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
|-------- | ---------------------------------------------------------------



|    |  |                                                                                                                                                                                                                               
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | 1.      The financial statements listed in the Index to Financial
Statements at page F-1 are filed as part of this report.  2.      The exhibits are listed in the Exhibit Index, which is incorporated herein by reference.





34



---

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Annual Report on Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Diego, State of California, on the 5th day of May, 2005.



CHARLOTTE RUSSE HOLDING, INC.By:

/s/    DANIEL T. CARTERDaniel T. Carter Executive Vice President
and Chief Financial Officer




POWER OF
ATTORNEY



KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below hereby constitutes and appoints Mark A. Hoffman and Daniel T. Carter, and each of them acting individually, as his true and lawful attorneys-in-fact and agents, each with full power of substitution, for him in
any and all capabilities, to sign any and all amendments to this Annual Report on Form 10-K/A and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, with full power of each to act alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities
Exchange Act of 1934, this Annual Report on Form 10-K/A has been signed by the following persons in the capacities and on the dates indicated:



|                                          |  |                                                                                                      |  |            
|----------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | -----------
|Signature                                 |  | Title                                                                                                |  | Date       
|                                          |  |                                                                                                     
|/s/    MARK A. HOFFMANMark A. Hoffman     |  | Chief Executive Officer and Director (Principal Executive Officer)                                   |  | May 5, 2005
|                                          |  |                                                                                                     
|/s/     DANIEL T. CARTERDaniel T. Carter  |  | Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |  | May 5, 2005
|                                          |  |                                                                                                     
|/s/    BERNARD ZEICHNERBernard Zeichner   |  | Chairman of the Board                                                                                |  | May 5, 2005
|                                          |  |                                                                                                     
|/s/    PAUL R. DEL ROSSIPaul R. Del Rossi |  | Director                                                                                             |  | May 5, 2005



35



---

|                                        |  |          |  |            
|--------------------------------------- |  | -------- |  | -----------
|Signature                               |  | Title    |  | Date       
|                                        |  |         
|/s/    W. THOMAS GOULDW. Thomas Gould   |  | Director |  | May 5, 2005
|                                        |  |         
|/s/    ALLAN W. KARPAllan W. Karp       |  | Director |  | May 5, 2005
|                                        |  |         
|/s/    LEONARD H. MOGILLeonard H. Mogil |  | Director |  | May 5, 2005
|                                        |  |         
|/s/     MARK J. RIVERSMark J. Rivers    |  | Director |  | May 5, 2005



36



---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                         |  |     
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Charlotte Russe Holding, Inc.                                                                                                            |  | Page
|Report of Ernst & Young LLP, Independent Registered Public Accounting Firm                                                               |  | F-3 
|Consolidated Balance Sheets as of September 25, 2004 and September 27, 2003                                                              |  | F-4 
|Consolidated Statements of Income for the fiscal years ended September 25, 2004, September 27, 2003 and September 28, 2002               |  | F-5 
|Consolidated Statements of Stockholders Equity for the fiscal years ended September 25, 2004, September 27, 2003 and September 28, 2002 |  | F-6 
|Consolidated Statements of Cash Flows for the fiscal years ended September 25, 2004, September 27, 2003 and September 28, 2002           |  | F-7 
|Notes to Consolidated Financial Statements                                                                                               |  | F-8 



F-1



---



This Page Intentionally Left
Blank



---

REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors

Charlotte Russe Holding Inc.



We have audited the accompanying consolidated balance sheets of Charlotte Russe Holding, Inc. as of September 25, 2004 (as
restated) and September 27, 2003 (as restated), and the related consolidated statements of income, stockholders equity, and cash flows for each of the three years in the period ended September 25, 2004 (as restated). These financial statements
are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements 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. We were not engaged to perform an audit of the Companys 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, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As described in Note 2, Restatement of the Financial Statements, the Company has corrected its accounting for leases and restated previously issued
financial statements.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated
financial position of Charlotte Russe Holding, Inc at September 25, 2004 (as restated) and September 27, 2003 (as restated), and the consolidated results of its operations and its cash flows for each of the three years in the period ended September
25, 2004 (as restated), in conformity with U.S. generally accepted accounting principles.



ERNST & YOUNG LLP



San Diego, California

October 20, 2004



F-3



---

CHARLOTTE RUSSE HOLDING, INC.



CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | ----------------- | - | ----------- | -
|                                                                                                                                                                                 |  | September 25,2004 |             | September 27,2003 |  
|ASSETS                                                                                                                                                                           |  |                   | (Restated)  |                   |   | (Restated)  |  
|Current assets:                                                                                                                                                                  |  |                   |             |                   |   |             |  
|Cash and cash equivalents                                                                                                                                                        |  | $                 | 30,713,343  |                   | $ | 22,967,317  |  
|Inventories                                                                                                                                                                      |  |                   | 49,154,877  |                   |   | 34,506,912  |  
|Other current assets                                                                                                                                                             |  |                   | 8,019,487   |                   |   | 5,410,123   |  
|Deferred tax assets                                                                                                                                                              |  |                   | 6,300,000   |                   |   | 5,300,000   |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|Total current assets                                                                                                                                                             |  |                   | 94,187,707  |                   |   | 68,184,352  |  
|                                                                                                                                                                                 |  |                  
|Fixed assets, net                                                                                                                                                                |  |                   | 177,518,053 |                   |   | 163,097,927 |  
|Goodwill                                                                                                                                                                         |  |                   | 28,790,000  |                   |   | 28,790,000  |  
|Other assets                                                                                                                                                                     |  |                   | 1,184,227   |                   |   | 1,371,894   |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|Total assets                                                                                                                                                                     |  | $                 | 301,679,987 |                   | $ | 261,444,173 |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|                                                                                                                                                                                
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                             | 
|Current liabilities:                                                                                                                                                             |  |                   |             |                   |   |             |  
|Accounts payable, trade                                                                                                                                                          |  | $                 | 25,703,097  |                   | $ | 20,928,264  |  
|Accounts payable, other                                                                                                                                                          |  |                   | 8,749,782   |                   |   | 6,457,132   |  
|Accrued payroll and related expense                                                                                                                                              |  |                   | 4,124,136   |                   |   | 2,526,756   |  
|Income and sales taxes payable                                                                                                                                                   |  |                   | 1,970,903   |                   |   | 2,330,930   |  
|Other current liabilities                                                                                                                                                        |  |                   | 10,548,758  |                   |   | 9,886,267   |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|Total current liabilities                                                                                                                                                        |  |                   | 51,096,676  |                   |   | 42,129,349  |  
|                                                                                                                                                                                 |  |                  
|Deferred rent                                                                                                                                                                    |  |                   | 91,226,297  |                   |   | 81,973,448  |  
|Other liabilities                                                                                                                                                                |  |                   | 43,894      |                   |   | 312,777     |  
|Deferred tax liabilities                                                                                                                                                         |  |                   | 3,700,000   |                   |   | 2,100,000   |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|Total liabilities                                                                                                                                                                |  |                   | 146,066,867 |                   |   | 126,515,574 |  
|                                                                                                                                                                                 |  |                  
|Commitments and contingencies                                                                                                                                                    |  |                   |             |                   |   |             |  
|                                                                                                                                                                                 |  |                  
|Stockholders equity:                                                                                                                                                            |  |                   |             |                   |   |             |  
|Preferred stock, $0.01 par value, 3,000,000 shares authorized, none issued and outstanding                                                                                       |  |                   |            |                   |   |            |  
|Common stock, $0.01 par value, 100,000,000 shares authorized; issued and outstanding shares 21,950,927 and 21,290,182 at September 25, 2004
and September 27, 2003, respectively |  |                   | 219,509     |                   |   | 212,902     |  
|Additional paid-in capital                                                                                                                                                       |  |                   | 50,029,794  |                   |   | 44,498,540  |  
|Deferred compensation                                                                                                                                                            |  |                   |            |                   |   | (63,000     | )
|Retained earnings                                                                                                                                                                |  |                   | 105,363,817 |                   |   | 90,280,157  |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|Total stockholders equity                                                                                                                                                       |  |                   | 155,613,120 |                   |   | 134,928,599 |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  
|Total liabilities and stockholders equity                                                                                                                                       |  | $                 | 301,679,987 |                   | $ | 261,444,173 |  
|                                                                                                                                                                                 |  |                   |             |                   |   |             |  



See accompanying notes.



F-4



---

CHARLOTTE RUSSE HOLDING, INC.



CONSOLIDATED STATEMENTS OF INCOME



|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|---------------------------------------------------------------------- |  | ----------------- | ----------- | - | ----------------- | - | ----------- | ----------------- |  | - | ----------- | -
|                                                                       |  | Years Ended       |            
|                                                                       |  | September 25,2004 |             |   | September 27,2003 |   |             | September 28,2002 | 
|                                                                       |  | (Restated)        |             |   | (Restated)        |   |             | (Restated)        | 
|Net sales                                                              |  | $                 | 539,403,949 |   |                   | $ | 456,622,115 |                   |  | $ | 409,381,895 |  
|Cost of goods sold, including buying, distribution and occupancy costs |  |                   | 403,760,365 |   |                   |   | 344,133,481 |                   |  |   | 297,249,785 |  
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Gross profit                                                           |  |                   | 135,643,584 |   |                   |   | 112,488,634 |                   |  |   | 112,132,110 |  
|Selling, general and administrative expenses                           |  |                   | 111,269,438 |   |                   |   | 90,896,124  |                   |  |   | 76,516,238  |  
|Store closing costs                                                    |  |                   | (325,000    | ) |                   |   | 4,900,000   |                   |  |   |            |  
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Operating income                                                       |  |                   | 24,699,146  |   |                   |   | 16,692,510  |                   |  |   | 35,615,872  |  
|Other income (expense):                                                |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Interest income, net                                                   |  |                   | 303,067     |   |                   |   | 118,718     |                   |  |   | 164,062     |  
|Other charges, net                                                     |  |                   | (274,901    | ) |                   |   | (269,933    | )                 |  |   | (289,625    | )
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Total other income (expense)                                           |  |                   | 28,166      |   |                   |   | (151,215    | )                 |  |   | (125,563    | )
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Income before income taxes                                             |  |                   | 24,727,312  |   |                   |   | 16,541,295  |                   |  |   | 35,490,309  |  
|Income taxes                                                           |  |                   | 9,643,652   |   |                   |   | 6,451,104   |                   |  |   | 13,841,221  |  
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Net income                                                             |  | $                 | 15,083,660  |   |                   | $ | 10,090,191  |                   |  | $ | 21,649,088  |  
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Earnings per share:                                                    |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Basic                                                                  |  |                   | $0.70       |   |                   |   | $0.48       |                   |  |   | $1.03       |  
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Diluted                                                                |  |                   | $0.63       |   |                   |   | $0.43       |                   |  |   | $0.91       |  
|                                                                       |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Weighted average shares outstanding:                                   |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Basic                                                                  |  |                   | 21,567,205  |   |                   |   | 21,239,569  |                   |  |   | 21,045,318  |  
|Diluted                                                                |  |                   | 23,993,019  |   |                   |   | 23,507,028  |                   |  |   | 23,693,564  |  



See accompanying notes.



F-5



---

CHARLOTTE RUSSE HOLDING, INC.



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY



|                                                     |  |              |  |                           |         |  |                      |            |   |                  |   |                          |   |  |   |             |  |   |             |  
|---------------------------------------------------- |  | ------------ |  | ------------------------- | ------- |  | -------------------- | ---------- | - | ---------------- | - | ------------------------ | - |  | - | ----------- |  | - | ----------- | -
|                                                     |  | Common Stock |  | AdditionalPaid-in Capital |         |  | DeferredCompensation |            |   | RetainedEarnings |   | TotalStockholdersEquity |  
|                                                     |  | Shares       |  | Amount                    |         |  |                      |           
|Balance atSeptember 29, 2001(as restated)            |  | 20,802,747   |  | $                         | 208,028 |  | $                    | 40,038,464 |   |                  | $ | (372,000                 | ) |  | $ | 58,540,878  |  | $ | 98,415,370  |  
|Stock option transactions, including tax benefits    |  | 388,230      |  |                           | 3,882   |  |                      | 3,985,370  |   |                  |   |                         |   |  |   |            |  |   | 3,989,252   |  
|Amortization and adjustment of deferred compensation |  |             |  |                           |        |  |                      | (93,000    | ) |                  |   | 201,000                  |   |  |   |            |  |   | 108,000     |  
|Issuance of stock under employee stock purchase plan |  | 19,730       |  |                           | 197     |  |                      | 312,663    |   |                  |   |                         |   |  |   |            |  |   | 312,860     |  
|Stock offering costs                                 |  |             |  |                           |        |  |                      | (450,000   | ) |                  |   |                         |   |  |   |            |  |   | (450,000    | )
|Net income and comprehensive income                  |  |             |  |                           |        |  |                      |           |   |                  |   |                         |   |  |   | 21,649,088  |  |   | 21,649,088  |  
|                                                     |  |              |  |                           |         |  |                      |            |   |                  |   |                          |   |  |   |             |  |   |             |  
|Balance atSeptember 28, 2002(as restated)            |  | 21,210,707   |  | $                         | 212,107 |  | $                    | 43,793,497 |   |                  | $ | (171,000                 | ) |  | $ | 80,189,966  |  | $ | 124,024,570 |  
|Stock option transactions, including tax benefits    |  | 53,000       |  |                           | 530     |  |                      | 467,646    |   |                  |   |                         |   |  |   |            |  |   | 468,176     |  
|Amortization of deferred compensation                |  |             |  |                           |        |  |                      |           |   |                  |   | 108,000                  |   |  |   |            |  |   | 108,000     |  
|Issuance of stock under employee stock purchase plan |  | 26,475       |  |                           | 265     |  |                      | 237,397    |   |                  |   |                         |   |  |   |            |  |   | 237,662     |  
|Net income and comprehensive income                  |  |             |  |                           |        |  |                      |           |   |                  |   |                         |   |  |   | 10,090,191  |  |   | 10,090,191  |  
|                                                     |  |              |  |                           |         |  |                      |            |   |                  |   |                          |   |  |   |             |  |   |             |  
|Balance atSeptember 27, 2003(as restated)            |  | 21,290,182   |  | $                         | 212,902 |  | $                    | 44,498,540 |   |                  | $ | (63,000                  | ) |  | $ | 90,280,157  |  | $ | 134,928,599 |  
|Stock option transactions, including tax benefits    |  | 641,100      |  |                           | 6,411   |  |                      | 5,630,549  |   |                  |   |                         |   |  |   |            |  |   | 5,636,960   |  
|Amortization of deferred compensation                |  |             |  |                           |        |  |                      |           |   |                  |   | 63,000                   |   |  |   |            |  |   | 63,000      |  
|Issuance of stock under employee stock purchase plan |  | 19,645       |  |                           | 196     |  |                      | 200,705    |   |                  |   |                         |   |  |   |            |  |   | 200,901     |  
|Stock offering costs                                 |  |             |  |                           |        |  |                      | (300,000   | ) |                  |   |                         |   |  |   |            |  |   | (300,000    | )
|Net income and comprehensive income                  |  |             |  |                           |        |  |                      |           |   |                  |   |                         |   |  |   | 15,083,660  |  |   | 15,083,660  |  
|                                                     |  |              |  |                           |         |  |                      |            |   |                  |   |                          |   |  |   |             |  |   |             |  
|Balance atSeptember 25, 2004(as restated)            |  | 21,950,927   |  | $                         | 219,509 |  | $                    | 50,029,794 |   |                  |   |                         |   |  | $ | 105,363,817 |  | $ | 155,613,120 |  
|                                                     |  |              |  |                           |         |  |                      |            |   |                  |   |                          |   |  |   |             |  |   |             |  



See accompanying notes.



F-6



---

CHARLOTTE RUSSE HOLDING, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS



|                                                                                  |  |                   |             |   |                   |   |             |                   |  |   |             |  
|--------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ----------------- | - | ----------- | ----------------- |  | - | ----------- | -
|                                                                                  |  | Years Ended       |            
|                                                                                  |  | September 25,2004 |             |   | September 27,2003 |   |             | September 28,2002 | 
|                                                                                  |  | (Restated)        |             |   | (Restated)        |   |             | (Restated)        | 
|Operating Activities                                                              |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Net income                                                                        |  | $                 | 15,083,660  |   |                   | $ | 10,090,191  |                   |  | $ | 21,649,088  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Depreciation and amortization                                                     |  |                   | 27,738,947  |   |                   |   | 23,396,212  |                   |  |   | 18,373,753  |  
|Amortization of construction allowances                                           |  |                   | (8,193,468  | ) |                   |   | (7,052,558  | )                 |  |   | (4,861,193  | )
|Landlord construction allowances                                                  |  |                   | 15,140,208  |   |                   |   | 23,865,180  |                   |  |   | 17,662,096  |  
|Deferred rent                                                                     |  |                   | 2,306,109   |   |                   |   | 3,082,344   |                   |  |   | 4,046,414   |  
|Amortization of deferred compensation                                             |  |                   | 63,000      |   |                   |   | 108,000     |                   |  |   | 108,000     |  
|Loss on disposal of assets                                                        |  |                   | 586,805     |   |                   |   | 3,264,869   |                   |  |   | 13,708      |  
|Deferred income taxes                                                             |  |                   | 600,000     |   |                   |   | 2,400,000   |                   |  |   | (1,400,000  | )
|Changes in operating assets and liabilities:                                      |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Inventories                                                                       |  |                   | (14,647,965 | ) |                   |   | (1,187,898  | )                 |  |   | (9,782,594  | )
|Other current assets                                                              |  |                   | (2,609,364  | ) |                   |   | (2,907,922  | )                 |  |   | 57,952      |  
|Accounts payable, trade                                                           |  |                   | 4,774,833   |   |                   |   | (4,000,479  | )                 |  |   | 5,321,606   |  
|Accounts payable, other                                                           |  |                   | 2,292,650   |   |                   |   | 1,012,326   |                   |  |   | 618,860     |  
|Accrued payroll and related expense                                               |  |                   | 1,597,380   |   |                   |   | 154,622     |                   |  |   | 440,296     |  
|Income and sales taxes payable                                                    |  |                   | 2,968,080   |   |                   |   | 1,201,473   |                   |  |   | (720,407    | )
|Other current liabilities                                                         |  |                   | 662,491     |   |                   |   | 3,134,132   |                   |  |   | 868,741     |  
|Other liabilities                                                                 |  |                   | (268,883    | ) |                   |   | 103,894     |                   |  |   | (60,587     | )
|                                                                                  |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Net cash provided by operating activities                                         |  |                   | 48,094,483  |   |                   |   | 56,664,386  |                   |  |   | 52,335,733  |  
|                                                                                  |  |                   |            
|Investing Activities                                                              |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Purchases of fixed assets                                                         |  |                   | (42,657,356 | ) |                   |   | (47,733,032 | )                 |  |   | (49,381,298 | )
|Other assets                                                                      |  |                   | 99,145      |   |                   |   | (92,827     | )                 |  |   | (42,377     | )
|                                                                                  |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Net cash used in investing activities                                             |  |                   | (42,558,211 | ) |                   |   | (47,825,859 | )                 |  |   | (49,423,675 | )
|                                                                                  |  |                   |            
|Financing Activities                                                              |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Payments on capital leases                                                        |  |                   |            |   |                   |   |            |                   |  |   | (45,017     | )
|Payments on notes payable to bank and revolving credit facility                   |  |                   |            |   |                   |   |            |                   |  |   | (11,000,000 | )
|Proceeds from notes payable to bank and revolving credit facility                 |  |                   |            |   |                   |   |            |                   |  |   | 11,000,000  |  
|Proceeds from issuance of common stock                                            |  |                   | 2,509,754   |   |                   |   | 575,310     |                   |  |   | 1,105,041   |  
|Stock offering costs                                                              |  |                   | (300,000    | ) |                   |   |            |                   |  |   | (450,000    | )
|                                                                                  |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Net cash provided by financing activities                                         |  |                   | 2,209,754   |   |                   |   | 575,310     |                   |  |   | 610,024     |  
|                                                                                  |  |                   |             |   |                   |   |             |                   |  |   |             |  
|                                                                                  |  |                   |            
|Net increase in cash and cash equivalents                                         |  |                   | 7,746,026   |   |                   |   | 9,413,837   |                   |  |   | 3,522,082   |  
|Cash and cash equivalents at beginning of the year                                |  |                   | 22,967,317  |   |                   |   | 13,553,480  |                   |  |   | 10,031,398  |  
|                                                                                  |  |                   |             |   |                   |   |             |                   |  |   |             |  
|Cash and cash equivalents at end of the year                                      |  | $                 | 30,713,343  |   |                   | $ | 22,967,317  |                   |  | $ | 13,553,480  |  
|                                                                                  |  |                   |             |   |                   |   |             |                   |  |   |             |  



See accompanying notes.



F-7



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements



1. Organization
and Summary of Significant Accounting Policies



Organization



Charlotte Russe Holding, Inc.
(the Company) was incorporated in Delaware in July 1996. On September 27, 1996, the Company was capitalized through the issuance of Common Stock and long-term debt. Effective September 27, 1996, the Company acquired all of the stock of
Lawrence Merchandising Corporation, a California corporation, and its affiliates, Lawrence Merchandising Corporation of Nevada and Lawrence Merchandising Corporation of Nevada II, both Nevada corporations, (collectively, the Predecessor
companies) for approximately $35.0 million in cash. In addition, the Company repaid $5.0 million of the Predecessors short-term borrowings concurrent with the consummation of the purchase transaction. The acquisition was accounted for using
the purchase method of accounting. The excess of the aggregate purchase price over the fair value of net assets acquired of approximately $32.9 million was recognized as goodwill.



Description of Business



The Company operates in a single segment, selling clothing, accessories and footwear for women through its mall-based retail stores that operate under the
names Charlotte Russe and Rampage. As of September 25, 2004, the Company operated 360 retail stores in 39 states and Puerto Rico.



Principles of Consolidation



The accompanying consolidated financial statements, prepared in accordance with accounting principles generally accepted in the United States of America,
include the assets, liabilities, revenues and expenses of all wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.



Fiscal Year



The Companys fiscal year is the 52/53 week period ending on the last Saturday in September. All years presented contained 52 weeks.



Use of Estimates



The preparation of the accompanying consolidated financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and disclosed in the accompanying notes.
Actual results could differ from these estimates.



Cash
Equivalents



The Company considers all liquid investments
with maturities of three months or less when purchased to be cash equivalents.



Inventories



Inventories consist primarily of apparel and accessories purchased for resale. Inventories are accounted for by the retail inventory method. The cost of inventory is determined at the lower of the first-in, first-out (FIFO) method or
market.



F-8



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



Fixed Assets



Fixed assets are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of
the assets, generally five to seven years. Leasehold improvements are amortized on a straight-line basis over the estimated useful lives of the respective assets or the term of the lease, whichever is shorter. Maintenance, repairs and minor renewals
are charged to expense when incurred. Upon disposition of an asset, its accumulated depreciation is deducted from the original cost, and any gain or loss is reflected in current operations. Depreciation expense for the fiscal years ended September
25, 2004, September 27, 2003 and September 28, 2002 amounted to $27,650,425, $23,269,351, and $18,284,917, respectively.



Goodwill



Goodwill represents the excess of the cost over the fair value of net assets acquired. The Company adopted Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible Assets, at the beginning of fiscal 2002, which supercedes Accounting Principles Board Opinion (APB) No. 17, Intangible Assets, and eliminated
the requirement to amortize goodwill and indefinite-lived intangible assets. SFAS No. 142 requires that goodwill be tested annually for impairment or more frequently if events and circumstances warrant, utilizing a test that begins with an estimate
of the fair value of the reporting unit or intangible asset. The Company tests goodwill annually and whenever events or circumstances occur indicating that goodwill might be impaired.



Prior to fiscal year 2002, when goodwill amortization was ceased under SFAS No. 142, goodwill was amortized on a
straight-line basis over a 40-year period. The amortization period was determined based upon the following factors, among others: operating history, brand name recognition, merchandising strategy, vendor network, proven portability to new markets
and demographics of the junior womens market.



Other
Assets



Other assets include intangibles that resulted
from the Companys acquisition of assets from Rampage Retailing Inc. including a license to utilize the Rampage name and other intangibles. This intangible asset is stated at a cost of approximately $1.3 million and is amortized using the
straight-line method over the estimated useful life of 20 years. The amortization period was primarily determined based on the expectation that the Rampage license renewal options would be exercised (see Note 5). Accumulated amortization at
September 25, 2004 and September 27, 2003 amounted to $468,880 and $401,896, respectively. Straight-line amortization on the intangible asset amounts to $66,984 each year.



Impairment of Long-lived Assets



In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, whenever
events or changes in circumstances indicate that the carrying amount of its assets might not be recoverable, the Company, using its best estimates based upon reasonable and supportable assumptions and projections, reviews the carrying value of
long-lived assets for impairment.



F-9



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



Impairment for long-lived assets to be held is measured by comparing the carrying amount of the asset
to its fair value. Impairment is reviewed at the lowest levels for which there are identifiable cash flows that are independent of the cash flows of other groups of assets. The Company performs such analysis on an individual store basis and
estimates fair values based on sales prices for comparable assets. The Company measures impairment for long-lived assets to be disposed of at the lower of the carrying amount or net realizable value (fair market value less cost to dispose).



Deferred Rent



Rent expense on noncancellable leases containing known future scheduled rent
increases are recorded on a straight-line basis over the term of the respective leases beginning when we receive possession of the leased property for construction purposes. The difference between rent expense and rent paid is accounted for as
deferred rent. Landlord construction allowances and other such lease incentives are recorded as deferred lease credits and are amortized on a straight-line basis as a reduction to rent expense.



Income Taxes



The Company accounts for income taxes under SFAS No. 109,
Accounting for Income Taxes, which requires the use of the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded to reflect the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.



Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.



Revenue Recognition



Retail merchandise sales are recognized at the point of sale. A reserve is
provided for the impact of anticipated returns based on historical experience.



Advertising Costs



Advertising costs are expensed as incurred and amounted to $497,486, $863,330, and $680,441 for the fiscal years ended September 25, 2004, September 27, 2003, and September 28, 2002, respectively.



Store Pre-opening Costs



Costs incurred in connection with the opening of a new store are expensed as
incurred.



Earnings Per Share



Basic earnings per share is calculated based on the weighted average
outstanding common shares. Diluted earnings per share is calculated based on the weighted average outstanding shares and potentially dilutive stock options and warrants.



F-10



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



Stock-Based Compensation



The Company has stock-based compensation plans, which are described more fully in Note 8. SFAS No. 123, Accounting
for Stock-Based Compensation, encourages, but does not require the Company to record compensation cost for stock-based employee compensation plans at fair value. The Company has adopted the disclosure-only provision of SFAS No. 123.
Accordingly, compensation expense has only been recognized for stock options granted to employees when the exercise price was below fair market value on the date of grant. Had compensation expense been recorded for options granted in fiscal 2004,
2003 and 2002 using the fair value method under SFAS No. 123, the Companys net income and basic and diluted earnings per share would have been decreased to the following proforma amounts:



|                                                                                  |  |                   |   |  |                   |   |  |                   |  
|--------------------------------------------------------------------------------- |  | ----------------- | - |  | ----------------- | - |  | ----------------- | -
|                                                                                  |  | Years Ended       |  
|                                                                                  |  | September 25,2004 |   |  | September 27,2003 |   |  | September 28,2002 |  
|Net income (as restated)                                                          |  | $15,083,660       |   |  | $10,090,191       |   |  | $21,649,088       |  
|Less: Stock-based compensation expense for all awards, net of related tax effects |  | (1,230,555        | ) |  | (861,320          | ) |  | (1,371,860        | )
|                                                                                  |  |                   |   |  |                   |   |  |                   |  
|Pro forma net income                                                              |  | $13,853,105       |   |  | $9,228,871        |   |  | $20,277,228       |  
|                                                                                  |  |                   |   |  |                   |   |  |                   |  
|Basic earnings per share                                                          |  | $0.70             |   |  | $0.48             |   |  | $1.03             |  
|Pro forma                                                                         |  | $0.64             |   |  | $0.43             |   |  | $0.96             |  
|Diluted earnings per share                                                        |  | $0.63             |   |  | $0.43             |   |  | $0.91             |  
|Pro forma                                                                         |  | $0.58             |   |  | $0.39             |   |  | $0.86             |  



Pro forma information
regarding net income is required by SFAS No. 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. For options granted through October 18, 1999, the fair value of
options granted were estimated at the date of grant using the minimum value option pricing model. Following the Companys initial public offering, the fair value of the options granted was estimated at the date of grant using the Black-Scholes
option-pricing model. The following weighted average assumptions were used for those periods:



|                               |  |                   |   |  |                   |   |  |                   |  
|------------------------------ |  | ----------------- | - |  | ----------------- | - |  | ----------------- | -
|                               |  | Years Ended       |  
|                               |  | September 25,2004 |   |  | September 27,2003 |   |  | September 28,2002 |  
|Risk free interest rate        |  | 3.30              | % |  | 2.75              | % |  | 4.00              | %
|Dividend yield                 |  | 0                 | % |  | 0                 | % |  | 0                 | %
|Expected volatility            |  | 55                | % |  | 65                | % |  | 60                | %
|Weighted average expected life |  | 4 years           |   |  | 4 years           |   |  | 4 years           |  



The minimum value
option-pricing model is similar to the Black-Scholes option-pricing model except that it excludes the factor of volatility. In addition, option valuation models require the input of highly subjective assumptions. Because the Companys employee
stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in managements opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its employee stock options.



F-11



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



Fair Value of Financial Instruments



Financial instruments, including cash equivalents, accounts payable, accrued
expenses and income tax payable are carried at cost, which management believes approximates fair value because of the short-term maturity of these instruments. There was no long-term debt at September 25, 2004 or September 27, 2003.



Recent Accounting Pronouncements



In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and supersedes EITF No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for a cost associated with an exit of disposal activity be recognized when the liability
is incurred. SFAS No. 146 also establishes that the liability should initially be measured and recorded at fair value. We applied the provisions of SFAS No. 146 for exit or disposal activities that initiated after December 31, 2002. The adoption of
SFAS No. 146 results in recognizing the cost of future restructuring activities over a period of time rather than in one reporting period. The adoption of SFAS No. 146 did not have a significant impact on the Companys consolidated financial
position or results of operations.



In October 2004, the FASB
concluded that the proposed Statement 123R, Share-Based Payment, would be effective for interim or annual periods beginning after June 15, 2005; thereby, becoming effective beginning in the fourth quarter of fiscal 2005 for the
company. As currently proposed, Statement 123R would require all share-based payments to employees, including grants of employee stock options and purchases under employee stock purchase plans, to be recognized as an operating expense in the income
statement. The cost would be recognized over the requisite service period based on fair values measured on grant dates. The FASB has tentatively concluded that the new standard may be adopted using either the modified prospective transition method
or the modified retrospective transition method. The final standard is expected to be issued during December 2004; and, we are currently evaluating our share-based employee compensation programs, potential impact of this statement on our
consolidated financial position and results of operations, and alternative adoption methods which may be available.



In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and
Equity. This statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. This statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective for the first interim period beginning after June 15, 2003, with certain exceptions. The Company adopted SFAS No. 150 in the fourth quarter of fiscal 2003, and it did not have an impact on the
Companys consolidated financial position or results of operations.



F-12



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



2. Restatement of Financial Statements



We reviewed our lease accounting practices in response to the letter issued on February 7, 2005 by the Office of the Chief
Accountant of the SEC to the American Institute of Certified Public Accountants (the SEC Letter) expressing its views regarding certain operating lease accounting issues and their application under generally accepted accounting
principles (GAAP). Our lease accounting practices had not changed materially over the years. Our external independent auditors had been aware of our lease accounting practices, similar to those used by many other companies in the retail
and restaurant industries, and had not suggested that they were not in accordance with GAAP. When reviewed against GAAP as set forth in the SEC Letter, we determined that our historical method of accounting for construction period straight-line rent
and landlord construction allowances was not in accordance with GAAP.



Specifically, we previously reflected the unamortized portion of construction allowances as a reduction of capital expenditures rather than recording those transactions as a deferred rent credit. In addition, we previously recognized
straight-line rent expense for leases beginning on the rent commencement date (i.e., store opening date), which had the effect of excluding the build-out period from the calculation of the period over which rent is expensed.



As a result, we restated our previously issued audited financial statements,
as follows:



| |  |  | We no longer offset construction allowances against capital expenditures. The unamortized portion of construction allowances is recorded as a deferred rent credit rather than as a
reduction to the cost of leasehold improvements. Depreciation expense has been increased to reflect the adjustment to capital expenditures with an equal and offsetting credit against rent expense during the contractual lease term.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We no longer recognize rent in accordance with the contractual lease commencement dates. Straight-line rent is imputed starting when we receive possession of the leased property for
construction purposes. Preopening expense is recognized during the construction period with an equal and offsetting credit against rent expense during the contractual lease term.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As a result, excluding tax impacts, the correction of this accounting
required us to record additional deferred rent, increase fixed assets and adjust retained earnings on the consolidated balance sheets. In connection with the restatement of all prior periods for these changes in lease accounting practices, we also
corrected for a previously identified immaterial inter-quarterly error by shifting this charge between appropriate quarters.



F-13



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



Following is a summary of the significant effects of these corrections on the Companys
consolidated balance sheets as of September 25, 2004 and September 27, 2003, as well as on the Companys consolidated statements of income and cash flows for the fiscal years September 25, 2004, September 27, 2003 and September 28, 2002:



Consolidated Statements of Income



|                                     |  |                        |             |             |   |            |             |  |   |             |  
|------------------------------------ |  | ---------------------- | ----------- | ----------- | - | ---------- | ----------- |  | - | ----------- | -
|Fiscal Year Ended September 25, 2004 |  | As Previously Reported |             | Adjustments |   |            | As Restated | 
|Cost of goods sold                   |  | $                      | 403,453,723 |             | $ | 306,642    |             |  | $ | 403,760,365 |  
|Gross profit                         |  |                        | 135,950,226 |             |   | (306,642   | )           |  |   | 135,643,584 |  
|Operating income                     |  |                        | 25,005,788  |             |   | (306,642   | )           |  |   | 24,699,146  |  
|Income before income taxes           |  |                        | 25,033,954  |             |   | (306,642   | )           |  |   | 24,727,312  |  
|Income taxes                         |  |                        | 9,763,242   |             |   | (119,590   | )           |  |   | 9,643,652   |  
|Net income                           |  |                        | 15,270,712  |             |   | (187,052   | )           |  |   | 15,083,660  |  
|Earnings per sharebasic             |  | $                      | 0.71        |             | $ | (0.01      | )           |  | $ | 0.70        |  
|Earnings per sharediluted           |  | $                      | 0.64        |             | $ | (0.01      | )           |  | $ | 0.63        |  
|                                     |  |                        |            
|Fiscal Year Ended September 27, 2003 |  |                        |             |             |   |            |             |  |   |             |  
|                                     |  |                        |            
|Cost of goods sold                   |  | $                      | 342,621,003 |             | $ | 1,512,478  |             |  | $ | 344,133,481 |  
|Gross profit                         |  |                        | 114,001,112 |             |   | (1,512,478 | )           |  |   | 112,488,634 |  
|Operating income                     |  |                        | 18,204,988  |             |   | (1,512,478 | )           |  |   | 16,692,510  |  
|Income before income taxes           |  |                        | 18,053,773  |             |   | (1,512,478 | )           |  |   | 16,541,295  |  
|Income taxes                         |  |                        | 7,040,971   |             |   | (589,867   | )           |  |   | 6,451,104   |  
|Net income                           |  |                        | 11,012,802  |             |   | (922,611   | )           |  |   | 10,090,191  |  
|Earnings per sharebasic             |  | $                      | 0.52        |             | $ | (0.04      | )           |  | $ | (0.48       | )
|Earnings per sharediluted           |  | $                      | 0.47        |             | $ | (0.04      | )           |  | $ | (0.43       | )
|                                     |  |                        |            
|Fiscal Year Ended September 28, 2002 |  |                        |             |             |   |            |             |  |   |             |  
|                                     |  |                        |            
|Cost of goods sold                   |  | $                      | 296,005,383 |             | $ | 1,244,402  |             |  | $ | 297,249,785 |  
|Gross profit                         |  |                        | 113,376,512 |             |   | (1,244,402 | )           |  |   | 112,132,110 |  
|Operating income                     |  |                        | 36,860,274  |             |   | (1,244,402 | )           |  |   | 35,615,872  |  
|Income before income taxes           |  |                        | 36,734,711  |             |   | (1,244,402 | )           |  |   | 35,490,309  |  
|Income taxes                         |  |                        | 14,326,537  |             |   | (485,316   | )           |  |   | 13,841,221  |  
|Net income                           |  |                        | 22,408,174  |             |   | (759,086   | )           |  |   | 21,649,088  |  
|Earnings per sharebasic             |  | $                      | 1.06        |             | $ | (0.03      | )           |  | $ | 1.03        |  
|Earnings per sharediluted           |  | $                      | 0.95        |             | $ | (0.04      | )           |  | $ | 0.91        |  





F-14



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



Consolidated Balance Sheets



|                                           |  |                        |             |             |   |            |             |  |   |            
|------------------------------------------ |  | ---------------------- | ----------- | ----------- | - | ---------- | ----------- |  | - | -----------
|September 25, 2004                         |  | As Previously Reported |             | Adjustments |   |            | As Restated
|Fixed assets, net                          |  | $                      | 107,491,922 |             | $ | 70,026,131 |             |  | $ | 177,518,053
|Total assets                               |  |                        | 231,653,856 |             |   | 70,026,131 |             |  |   | 301,679,987
|Income and sales taxes payable             |  |                        | 1,979,900   |             |   | (8,997     | )           |  |   | 1,970,903  
|Other current liabilities                  |  |                        | 10,620,758  |             |   | (72,000    | )           |  |   | 10,548,758 
|Total current liabilities                  |  |                        | 51,177,673  |             |   | (80,997    | )           |  |   | 51,096,676 
|Deferred rent                              |  |                        | 11,874,327  |             |   | 79,351,970 |             |  |   | 91,226,297 
|Deferred tax liabilities                   |  |                        | 7,300,000   |             |   | (3,600,000 | )           |  |   | 3,700,000  
|Total liabilities                          |  |                        | 70,395,894  |             |   | 75,670,973 |             |  |   | 146,066,867
|Retained earnings                          |  |                        | 111,008,659 |             |   | (5,644,842 | )           |  |   | 105,363,817
|Total stockholders equity                 |  |                        | 161,257,962 |             |   | (5,644,842 | )           |  |   | 155,613,120
|Total liabilities and stockholders equity |  |                        | 231,653,856 |             |   | 70,026,131 |             |  |   | 301,679,987
|                                           |  |                        |            
|September 27, 2003                         |  |                        |             |             |   |            |             |  |   |            
|                                           |  |                        |            
|Fixed assets, net                          |  | $                      | 100,018,536 |             | $ | 63,079,391 |             |  | $ | 163,097,927
|Total assets                               |  |                        | 198,364,782 |             |   | 63,079,391 |             |  |   | 261,444,173
|Income and sales taxes payable             |  |                        | 2,320,337   |             |   | 10,593     |             |  |   | 2,330,930  
|Total current liabilities                  |  |                        | 42,118,756  |             |   | 10,593     |             |  |   | 42,129,349 
|Deferred rent                              |  |                        | 9,946,860   |             |   | 72,026,588 |             |  |   | 81,973,448 
|Deferred tax liabilities                   |  |                        | 5,600,000   |             |   | (3,500,000 | )           |  |   | 2,100,000  
|Total liabilities                          |  |                        | 57,978,393  |             |   | 68,537,181 |             |  |   | 126,515,574
|Retained earnings                          |  |                        | 95,737,947  |             |   | (5,457,790 | )           |  |   | 90,280,157 
|Total stockholders equity                 |  |                        | 140,386,389 |             |   | (5,457,790 | )           |  |   | 134,928,599
|Total liabilities and stockholders equity |  |                        | 198,364,782 |             |   | 63,079,391 |             |  |   | 261,444,173



Consolidated Statements of Cash
Flows



|                                          |  |                        |             |   |             |   |             |             |  |   |             |  
|----------------------------------------- |  | ---------------------- | ----------- | - | ----------- | - | ----------- | ----------- |  | - | ----------- | -
|Fiscal Year Ended September 25, 2004      |  | As Previously Reported |             |   | Adjustments |   |             | As Restated | 
|Net cash provided by operating activities |  | $                      | 32,954,275  |   |             | $ | 15,140,208  |             |  | $ | 48,094,483  |  
|Net cash used in investing activities     |  |                        | (27,418,003 | ) |             |   | (15,140,208 | )           |  |   | (42,558,211 | )
|                                          |  |                        |            
|Fiscal Year Ended September 27, 2003      |  |                        |             |   |             |   |             |             |  |   |             |  
|                                          |  |                        |            
|Net cash provided by operating activities |  |                        | 32,799,206  |   |             |   | 23,865,180  |             |  |   | 56,664,386  |  
|Net cash used in investing activities     |  |                        | (23,960,679 | ) |             |   | (23,865,180 | )           |  |   | (47,825,859 | )
|                                          |  |                        |            
|Fiscal Year Ended September 28, 2002      |  |                        |             |   |             |   |             |             |  |   |             |  
|                                          |  |                        |            
|Net cash provided by operating activities |  |                        | 34,673,637  |   |             |   | 17,662,096  |             |  |   | 52,335,733  |  
|Net cash used in investing activities     |  |                        | (31,761,579 | ) |             |   | (17,662,096 | )           |  |   | (49,423,675 | )



Consolidated Statements of
Stockholders Equity



|                                     |  |                        |            |             |   |            |             |  |   |           
|------------------------------------ |  | ---------------------- | ---------- | ----------- | - | ---------- | ----------- |  | - | ----------
|Fiscal Year Ended September 29, 2001 |  | As Previously Reported |            | Adjustments |   |            | As Restated
|Retained earnings                    |  | $                      | 62,316,971 |             | $ | (3,776,093 | )           |  | $ | 58,540,878



F-15



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



3. Fixed Assets



A summary of fixed assets is as follows:



|                                                |  |                   |              |   |                   |   |             |  
|----------------------------------------------- |  | ----------------- | ------------ | - | ----------------- | - | ----------- | -
|                                                |  | September 25,2004 |              |   | September 27,2003 |  
|Leasehold improvements                          |  | $                 | 218,517,800  |   |                   | $ | 189,391,556 |  
|Furniture and fixtures                          |  |                   | 28,847,047   |   |                   |   | 24,381,457  |  
|Equipment and other                             |  |                   | 33,046,538   |   |                   |   | 27,291,164  |  
|                                                |  |                   |              |   |                   |   |             |  
|                                                |  |                   | 280,411,385  |   |                   |   | 241,064,177 |  
|Less: Accumulated depreciation and amortization |  |                   | (102,893,332 | ) |                   |   | (77,966,250 | )
|                                                |  |                   |              |   |                   |   |             |  
|                                                |  | $                 | 177,518,053  |   |                   | $ | 163,097,927 |  
|                                                |  |                   |              |   |                   |   |             |  



4. Credit Arrangements



Effective February 28, 2003, the Company obtained a $25.0
million unsecured revolving credit facility (the new credit facility) to replace the previous $15.0 million unsecured revolving credit agreement with another lender. The new credit facility, as amended on July 9, 2003, is subject to
certain restrictions and covenants and matures on March 1, 2006. Interest on the new credit facility is payable quarterly, at the Companys option, at either (i) the Banks Base Rate, as defined, or (ii) the Banks Eurodollar Rate
plus 1.00%, subject to certain adjustments. At September 25, 2004, there was no outstanding debt under the new credit facility. The new credit facility requires that the Company maintain certain financial ratios on a quarterly basis and restricts
future liens and indebtedness, sales of assets and prohibits dividend payments. As of September 25, 2004, the Company is in compliance with the terms of the credit facility.



Pursuant to the terms of the new credit facility, the Company can issue up to $15.0 million of documentary or standby
letters of credit. The Company is charged a fee equal to the Banks Eurodollar Rate for the average daily face amount of outstanding letters of credit and customary issuance and amendment charges. Fees are paid quarterly in arrears and charges
are paid as incurred. At September 25, 2004, there were outstanding letters of credit in the amount of $9.4 million.



5. Store Closing Costs



During fiscal 2003, the Company decided to exit the Charlottes Room concept and closed all 10 Charlottes Room stores. In accordance with SFAS
No. 146, the Company recorded a liability of $2.6 million and recognized an impairment charge of $2.9 million for total store closing costs of $5.5 million, before the effect of income taxes. The final settlement of charges is currently estimated to
be $4,575,000; accordingly, $600,000 and $325,000 was reversed into income during the fourth quarter of fiscal 2003 and the second quarter of fiscal 2004, respectively. The $4.9 million in closing costs and the subsequent $325,000 partial reversal
are included in the accompanying consolidated statements of income.



The $2.9 million impairment charge reflected the difference between the carrying value and fair value of Charlottes Room assets, principally leasehold improvements. Fair value was based on estimated market valuations for those assets
since their carrying value was not anticipated to be



F-16



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



recoverable through future cash flows. The majority of these assets were disposed of during the third quarter at approximately the estimated fair value. The
asset impairment charge of $2.9 million is included in the $4.9 million shown in the store closing costs line item on the accompanying statement of income for the fiscal year ended September 27, 2003.



A reconciliation of the initial reserve to the ending liability included in
the accompanying consolidated balance sheets at September 25, 2004 is as follows:



|                           |  |                        |           |                                         |   |          |                      |  |   |                  |   |  |               |         |   |  |   |       
|-------------------------- |  | ---------------------- | --------- | --------------------------------------- | - | -------- | -------------------- |  | - | ---------------- | - |  | ------------- | ------- | - |  | - | ------
|Description                |  | InitialReserveEstimate |           | Revision toEstimateBasedUpon FinalCosts |   |          | Costs Paid orSettled |  |   | OtherAdjustments |   |  | EndingReserve
|Contract termination costs |  | $                      | 1,787,100 |                                         | $ | (490,677 | )                    |  | $ | (1,215,524       | ) |  | $             |        |   |  | $ | 80,899
|Employee termination       |  |                        | 100,000   |                                         |   |         |                      |  |   | (18,055          | ) |  |               | (81,945 | ) |  |   |      
|Other associated costs     |  |                        | 712,900   |                                         |   | (434,323 | )                    |  |   | (434,737         | ) |  |               | 160,171 |   |  |   | 4,011 
|                           |  |                        |           |                                         |   |          |                      |  |   |                  |   |  |               |         |   |  |   |       
|Store closing costs        |  | $                      | 2,600,000 |                                         | $ | (925,000 | )                    |  | $ | (1,668,316       | ) |  | $             | 78,226  |   |  | $ | 84,910
|                           |  |                        |           |                                         |   |          |                      |  |   |                  |   |  |               |         |   |  |   |       



The remaining balance
of the reserve is expected to be paid or settled during fiscal 2005.



6.
Commitments and Contingencies



Leases



The Company leases its retail stores, distribution centers, and office
facilities under various non-cancelable operating leases that expire between 2005 and 2016. Under certain retail store leases, the Company is required to pay the greater of a minimum lease payment or 5% to 11% of annual sales volume. Rent expense,
including reimbursement of the Companys proportional share of common area maintenance expenses, for the years ended September 25, 2004, September 27, 2003 and September 28, 2002 amounted to $90,258,119, $76,120,584 and $61,204,476,
respectively, including $4,839,557, $3,834,060 and $1,617,494, respectively, of contingent rentals.



As of September 25, 2004, aggregate future minimum rentals are as follows:



|                                    |  |                 |            
|----------------------------------- |  | --------------- | -----------
|                                    |  | OperatingLeases
|Fiscal Year Ending September:       |  |                 |            
|2005                                |  | $               | 64,838,922 
|2006                                |  |                 | 63,804,450 
|2007                                |  |                 | 64,105,312 
|2008                                |  |                 | 62,369,800 
|2009                                |  |                 | 59,354,951 
|Thereafter                          |  |                 | 165,710,178
|                                    |  |                 |            
|Total future minimum lease payments |  | $               | 480,183,614
|                                    |  |                 |            



F-17



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



License agreement



In conjunction with the acquisition of Rampage assets on September 30, 1997, the Company entered into a license agreement
enabling the Company to operate stores under the Rampage name. As amended in fiscal 2002, the license fee is calculated as the greater of an annual fee (ranging between $600,000 to $750,000) or a percent of sales at stores operating under the
Rampage name (ranging between 0.5% and 1.0%).



The license
agreement has an initial term that expires in 2012 and may be extended for six additional five-year periods provided that net sales under the license exceeds an annual goal for the year ending immediately prior to the beginning of such extension
period. In the event the Company decides to terminate the license agreement prior to the end of the term, the Company may be required to pay a termination fee as specified in the licensing agreement. License fees incurred during the fiscal years
ended September 25, 2004, September 27, 2003, and September 28, 2002 were $902,781, $849,405, and $926,492, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of income.



Litigation



The Company is involved from time to time in various claims and lawsuits
incidental to the business. Management believes that the outcome of these matters individually and in the aggregate will not have a material adverse effect on the Companys consolidated financial position or results of operations.



7. Income Taxes



Income taxes consist of the following:



|          |  |                   |           |                   |   |                   |  |   |            |  
|--------- |  | ----------------- | --------- | ----------------- | - | ----------------- |  | - | ---------- | -
|          |  | Years Ended       |          
|          |  | September 25,2004 |           | September 27,2003 |   | September 28,2002 | 
|Current:  |  |                   |           |                   |   |                   |  |   |            |  
|Federal   |  | $                 | 7,422,552 |                   | $ | 3,178,204         |  | $ | 15,626,421 |  
|State     |  |                   | 1,700,000 |                   |   | 872,900           |  |   | 1,980,000  |  
|          |  |                   |           |                   |   |                   |  |   |            |  
|          |  |                   | 9,122,552 |                   |   | 4,051,104         |  |   | 17,606,421 |  
|Deferred: |  |                   |           |                   |   |                   |  |   |            |  
|Federal   |  |                   | 335,700   |                   |   | 2,300,000         |  |   | (3,193,800 | )
|State     |  |                   | 185,400   |                   |   | 100,000           |  |   | (571,400   | )
|          |  |                   |           |                   |   |                   |  |   |            |  
|          |  |                   | 521,100   |                   |   | 2,400,000         |  |   | (3,765,200 | )
|          |  |                   |           |                   |   |                   |  |   |            |  
|          |  | $                 | 9,643,652 |                   | $ | 6,451,104         |  | $ | 13,841,221 |  
|          |  |                   |           |                   |   |                   |  |   |            |  



F-18



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



A reconciliation of the calculated income tax provision based on statutory tax rates in effect and
the effective tax rate follows:



|                                               |  |                   |           |   |                   |   |           |                   |  |   |           
|---------------------------------------------- |  | ----------------- | --------- | - | ----------------- | - | --------- | ----------------- |  | - | ----------
|                                               |  | Years Ended      
|                                               |  | September 25,2004 |           |   | September 27,2003 |   |           | September 28,2002
|Tax at U.S. statutory rates                    |  | $                 | 8,654,559 |   |                   | $ | 5,789,454 |                   |  | $ | 12,421,608
|State income taxes, net of federal tax benefit |  |                   | 1,181,347 |   |                   |   | 612,855   |                   |  |   | 1,211,107 
|Non-deductible expenses                        |  |                   | 44,386    |   |                   |   | 70,608    |                   |  |   | 36,229    
|Other, net                                     |  |                   | (236,640  | ) |                   |   | (21,813   | )                 |  |   | 172,277   
|                                               |  |                   |           |   |                   |   |           |                   |  |   |           
|                                               |  | $                 | 9,643,652 |   |                   | $ | 6,451,104 |                   |  | $ | 13,841,221
|                                               |  |                   |           |   |                   |   |           |                   |  |   |           



Deferred income taxes
reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company has not recorded a valuation allowance for all
periods presented as the utilization of the deferred tax assets is deemed to be more likely than not.



Significant components of the Companys deferred tax liabilities and assets are as follows:



|                           |  |                   |             |   |                   |   |             |  
|-------------------------- |  | ----------------- | ----------- | - | ----------------- | - | ----------- | -
|                           |  | September 25,2004 |             |   | September 27,2003 |  
|Deferred tax assets:       |  |                   |             |   |                   |   |             |  
|Inventory                  |  | $                 | 2,854,432   |   |                   | $ | 2,395,526   |  
|Deferred rent              |  |                   | 36,442,785  |   |                   |   | 30,203,884  |  
|Employee benefit programs  |  |                   | 991,966     |   |                   |   | 477,267     |  
|State income taxes         |  |                   | 194,077     |   |                   |   | 111,444     |  
|Other accrued expenses     |  |                   | 2,259,525   |   |                   |   | 2,315,763   |  
|                           |  |                   |             |   |                   |   |             |  
|                           |  |                   | 42,742,785  |   |                   |   | 35,503,884  |  
|Deferred tax liabilities:  |  |                   |             |   |                   |   |             |  
|Tax over book depreciation |  |                   | (38,347,501 | ) |                   |   | (30,941,313 | )
|Intangibles                |  |                   | (1,795,284  | ) |                   |   | (1,362,571  | )
|                           |  |                   |             |   |                   |   |             |  
|                           |  |                   | (40,142,785 | ) |                   |   | (32,303,884 | )
|                           |  |                   |             |   |                   |   |             |  
|Net deferred tax assets    |  | $                 | 2,600,000   |   |                   | $ | 3,200,000   |  
|                           |  |                   |             |   |                   |   |             |  



8. Equity



Stock Options



In 1996, the Company established a Long-Term Incentive Plan (the 1996
Plan). The 1996 Plan provides for the issuance of shares of Common Stock under incentive stock options and non-qualified stock options. Options vest ratably at 20% per year over five years from the date of the grant, subject to certain
acceleration provisions and are exercisable for a period of up to ten years from the date of grant. Incentive stock options are granted at prices that approximate the fair value of the common shares at the date of grant as determined by the Board of
Directors.



F-19



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



In May 1999, the Company established a 1999 Long-Term Incentive Plan (the 1999 Plan). The
1999 Plan provides for the issuance of shares of Common Stock under non-qualified stock options and stock appreciation rights. The exercise price of options shall not be less than 85% of the fair market value at the date of grant, or 110% in the
case of any person possessing 10% combined voting power of all classes of stock of the Company. The Companys Board of Directors determines the vesting and other provisions of option and stock appreciation rights granted under the 1999 Plan. In
July 1999, the Companys Board of Directors resolved that no further stock option grants will be made from the 1996 Plan or the 1999 Plan.



The Companys Board of Directors and stockholders adopted the 1999 Equity Incentive Plan, effective as of the completion of its initial public
offering. The 1999 Equity Incentive Plan permits the grant of options that qualify as incentive stock options and non-qualified options. The option exercise price of each option shall be determined by the compensation committee of the Board of
Directors. In the case of incentive stock options, however, the exercise price shall not be less than 100% of the fair market value of the shares on the date of grant, or 110% in the case of incentive stock options granted to an individual with
ownership in excess of certain limits. Subject to adjustment for stock splits and similar events, the total number of shares of Common Stock that can be issued under the 1999 Equity Incentive Plan is 2,250,000 shares. The terms of these options are
substantially the same as other options previously issued.



A
summary of the Companys stock option activity and related information for the plans is as follows:



|                                  |  |           |   |  |                              |      
|--------------------------------- |  | --------- | - |  | ---------------------------- | -----
|                                  |  | Options   |   |  | WeightedAverageExercisePrice
|Outstanding at September 29, 2001 |  | 1,986,200 |   |  | $                            | 5.82 
|Granted                           |  | 586,500   |   |  |                              | 11.84
|Cancelled                         |  | (66,600   | ) |  |                              | 10.27
|Exercised                         |  | (388,230  | ) |  |                              | 2.04 
|                                  |  |           |   |  |                              |      
|Outstanding at September 28, 2002 |  | 2,117,870 |   |  |                              | 8.04 
|Granted                           |  | 438,000   |   |  |                              | 10.88
|Cancelled                         |  | (197,300  | ) |  |                              | 11.22
|Exercised                         |  | (53,000   | ) |  |                              | 5.90 
|                                  |  |           |   |  |                              |      
|Outstanding at September 27, 2003 |  | 2,305,570 |   |  |                              | 8.35 
|Granted                           |  | 185,000   |   |  |                              | 14.34
|Cancelled                         |  | (159,300  | ) |  |                              | 11.29
|Exercised                         |  | (641,100  | ) |  |                              | 3.60 
|                                  |  |           |   |  |                              |      
|Outstanding at September 25, 2004 |  | 1,690,170 |   |  | $                            | 10.54
|                                  |  |           |   |  |                              |      



F-20



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



The following table summarizes information about stock options outstanding as of September 25, 2004:



|                |  |                     |  |                              |  |                              |       |             |         |                              |   |      
|--------------- |  | ------------------- |  | ---------------------------- |  | ---------------------------- | ----- | ----------- | ------- | ---------------------------- | - | -----
|                |  | Options Outstanding |  | Options Exercisable         
|Exercise Prices |  | Outstanding         |  | WeightedAverageRemainingLife |  | WeightedAverageExercisePrice |       | Outstanding |         | WeightedAverageExercisePrice
|$1.00$4.00     |  | 384,170             |  | 2.23                         |  | $                            | 2.06  |             | 384,170 |                              | $ | 2.06 
|$7.00$13.50    |  | 1,021,500           |  | 7.66                         |  |                              | 11.32 |             | 366,500 |                              |   | 11.30
|$18.90$27.00   |  | 284,500             |  | 7.62                         |  |                              | 19.18 |             | 134,200 |                              |   | 20.29
|                |  |                     |  |                              |  |                              |       |             |         |                              |   |      
|Total           |  | 1,690,170           |  | 6.42                         |  | $                            | 10.54 |             | 884,870 |                              | $ | 8.65 
|                |  |                     |  |                              |  |                              |       |             |         |                              |   |      



The weighted average
fair value of options granted was $6.09, $5.41, and $5.58 for the fiscal years ended September 25, 2004, September 27, 2003 and September 28, 2002, respectively.



Deferred compensation relating to options granted prior to the Companys initial public offering was amortized ratably
over the vesting period of the respective options subject to adjustment for cancellations.



Stock Purchase Plan



On
September 27, 1999, the Company approved the adoption of the 1999 Employee Stock Purchase Plan (the Plan), which authorized up to 350,000 shares of Common Stock available for employee purchase through payroll deductions at 85% of fair
market value. All eligible employees of the Company may participate. Eligibility is defined as those employees who have completed at least six months of employment and work at least 20 hours per week, except for employees who own Common Stock or
options on such Common Stock that represents 5% or more of the Company total equity ownership. There were 19,645, 26,475 and 19,730 shares issued under the Plan during the fiscal years ended September 25, 2004, September 27, 2003 and September 28,
2002, respectively.



Warrants



In conjunction with the issuance of two senior subordinated note agreements
with affiliated investors that were paid off in June 1999, the Company issued warrants to purchase 1,964,410 shares of Common Stock at $1.00 per share. The number of shares of Common Stock issuable under these warrants was increased by an aggregate
of 1,030 shares pursuant to certain anti-dilution provisions. The warrants are fully exercisable and expire on September 27, 2006.



Shares Reserved for Future Issuance



|                                                                  |  |                   |  |                  
|----------------------------------------------------------------- |  | ----------------- |  | -----------------
|                                                                  |  | September 25,2004 |  | September 27,2003
|Warrants issued and outstanding                                   |  | 1,965,440         |  | 1,965,440        
|Stock options issued and outstanding                              |  | 1,690,170         |  | 2,305,570        
|Common shares authorized for future stock option grants           |  | 751,800           |  | 779,500          
|Shares authorized for issuance under Employee Stock Purchase Plan |  | 234,683           |  | 254,328          
|                                                                  |  |                   |  |                  
|Shares reserved for future issuance                               |  | 4,642,093         |  | 5,304,838        
|                                                                  |  |                   |  |                  



F-21



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



9. Supplemental Cash Flows Disclosures



|                                                |  |                   |           |                   |   |                   |  |   |           
|----------------------------------------------- |  | ----------------- | --------- | ----------------- | - | ----------------- |  | - | ----------
|                                                |  | Years Ended      
|                                                |  | September 25,2004 |           | September 27,2003 |   | September 28,2002
|Income tax benefit of stock option transactions |  | $                 | 3,328,107 |                   | $ | 130,528           |  | $ | 3,197,071 
|Cash paid during the year for:                  |  |                   |           |                   |   |                   |  |   |           
|Interest                                        |  | $                 | 50,607    |                   | $ | 39,231            |  | $ | 39,447    
|Income taxes                                    |  | $                 | 7,418,618 |                   | $ | 7,081,428         |  | $ | 15,955,371



10. Related Party Transactions



The Company, its Chairman of the Board and two funds
managed by Saunders Karp & Megrue Partners, LLC (SKM), entered into a stockholders agreement in 1996. This agreement provides that: (1) as long as SKM owns more than 25% but less than 50% of the Companys outstanding
shares, they will have the right to nominate three directors, and (2) as long as SKM owns at least 1,820,735 shares of Common Stock, including shares of Common Stock issuable upon exercise of outstanding warrants, it will have the right to nominate
two directors.



The stockholders agreement grants the
Companys Chairman of the Board certain tag along rights in the event of a private sale by SKM of their shares of Common Stock. The stockholders agreement also grants, subject to limitations and exceptions, demand and piggyback registration
rights to SKM and piggyback registration rights to the Chairman of the Board. The Company is responsible for certain costs of registered offerings in which shares are sold by SKM and the Chairman of the Board. Costs attributable to shares sold by
SKM were $300,000 and $450,000 for the fiscal years ended September 25, 2004 and September 28, 2002, respectively, and there were no such costs during the year ended September 27, 2003. Given the historical nature of this obligation, these costs are
treated as reductions to stockholders equity as an offset to proceeds received from shares sold by the Company, if any.



The Company expensed a management fee of $250,000 to SKM during each of the three years presented. This fee terminates when SKM owns less than 1,820,735
shares of Common Stock, including shares of Common Stock issuable upon exercise of outstanding warrants.



For the fiscal years ended September 25, 2004, September 27, 2003 and September 28, 2002, the Company purchased approximately $235,000, $821,000 and
$664,000, respectively, of merchandise from a company primarily owned by family members of the Companys Chairman of the Board. Related accounts payable balances at September 25, 2004 and September 27, 2003 were zero and $14,786, respectively,
and they are included with accounts payable (trade) in the accompanying consolidated balance sheets.



F-22



---

CHARLOTTE RUSSE HOLDING, INC.



Notes to Consolidated Financial Statements(Continued)



11. Employee Savings Plan



The Company has an Internal Revenue Code Section 401(k) profit-sharing plan (the Plan) for eligible employees. The Plan is
funded by employee contributions and provides for the Company to make discretionary contributions. The Company matches 25% of participants contributions up to 4% of eligible compensation. Amounts contributed and expensed under this plan were
approximately $113,300, $108,500 and $89,500 for the fiscal years ended September 25, 2004, September 27, 2003 and September 28, 2002, respectively.



12. Earnings Per Share



|                                   |  |                   |            |   |                   |   |            |                   |  |   |            |  
|---------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ---------- | ----------------- |  | - | ---------- | -
|                                   |  | Years Ended       |           
|                                   |  | September 25,2004 |            |   | September 27,2003 |   |            | September 28,2002 | 
|Net income (as restated)           |  | $                 | 15,083,660 |   |                   | $ | 10,090,191 |                   |  | $ | 21,649,088 |  
|                                   |  |                   |            |   |                   |   |            |                   |  |   |            |  
|Earnings per share:                |  |                   |            |   |                   |   |            |                   |  |   |            |  
|Basic                              |  | $                 | 0.70       |   |                   | $ | 0.48       |                   |  | $ | 1.03       |  
|Effect of dilutive warrants        |  |                   | (0.05      | ) |                   |   | (0.04      | )                 |  |   | (0.08      | )
|Effect of dilutive stock options   |  |                   | (0.02      | ) |                   |   | (0.01      | )                 |  |   | (0.04      | )
|                                   |  |                   |            |   |                   |   |            |                   |  |   |            |  
|Diluted                            |  | $                 | 0.63       |   |                   | $ | 0.43       |                   |  | $ | 0.91       |  
|                                   |  |                   |            |   |                   |   |            |                   |  |   |            |  
|Weighted average number of shares: |  |                   |            |   |                   |   |            |                   |  |   |            |  
|Basic                              |  |                   | 21,567,205 |   |                   |   | 21,239,569 |                   |  |   | 21,045,318 |  
|Effect of dilutive warrants        |  |                   | 1,840,567  |   |                   |   | 1,781,661  |                   |  |   | 1,862,812  |  
|Effect of dilutive stock options   |  |                   | 585,247    |   |                   |   | 485,798    |                   |  |   | 785,434    |  
|                                   |  |                   |            |   |                   |   |            |                   |  |   |            |  
|Diluted                            |  |                   | 23,993,019 |   |                   |   | 23,507,028 |                   |  |   | 23,693,564 |  
|                                   |  |                   |            |   |                   |   |            |                   |  |   |            |  



The calculation of
dilutive shares excludes the effect of the following options that are considered anti-dilutive:



|                      |  |                   |  |                   |  |                  
|--------------------- |  | ----------------- |  | ----------------- |  | -----------------
|                      |  | Years Ended      
|                      |  | September 25,2004 |  | September 27,2003 |  | September 28,2002
|Anti-dilutive options |  | 217,908           |  | 902,452           |  | 196,272          



F-23



---

SCHEDULE II



CHARLOTTE RUSSE HOLDING, INC.

VALUATION AND QUALIFYING ACCOUNTS

Three fiscal years ended September 25, 2004

(amounts in thousands)



|                                      |  |                              |       |                        |   |                        |  |   |      
|------------------------------------- |  | ---------------------------- | ----- | ---------------------- | - | ---------------------- |  | - | -----
|                                      |  | Balance atbeginningof period |       | AdditionsandReductions |   | Balance atendof period
|Fiscal year ended September 28, 2002: |  |                              |       |                        |   |                        |  |   |      
|Reserve for markdown of inventory     |  | $                            | 2,100 |                        | $ | 400                    |  | $ | 2,500
|Allowance for effect of sales returns |  |                              | 600   |                        |   | 150                    |  |   | 750  
|Fiscal year ended September 27, 2003: |  |                              |       |                        |   |                        |  |   |      
|Reserve for markdown of inventory     |  | $                            | 2,500 |                        | $ | 1,000                  |  | $ | 3,500
|Allowance for effect of sales returns |  |                              | 750   |                        |   | 0                      |  |   | 750  
|Fiscal year ended September 25, 2004: |  |                              |       |                        |   |                        |  |   |      
|Reserve for markdown of inventory     |  | $                            | 3,500 |                        | $ | 300                    |  | $ | 3,800
|Allowance for effect of sales returns |  |                              | 750   |                        |   | 100                    |  |   | 850  



F-24



---

EXHIBIT INDEX



|        |  |                                                                                                                                                                                                                                                                                                                                    
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a)     |  | Exhibits marked with an asterisk are filed herewith. The remainder of the exhibits have heretofore been filed with the Commission and are incorporated herein by reference.                                                                                                                                                        
|        | 
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                        
|2.1     |  | Stock Purchase Agreement dated as of August 26, 1996 by and among Charlotte Russe Holding, Inc., Daniel Lawrence, Frank Lawrence and Larry Lawrence (Exhibit 2.1 to Registration Statement
333-84297 filed October 19, 1999)                                                                                                       
|        | 
|3.1     |  | Certificate of Incorporation of Charlotte Russe Holding, Inc., as amended (Exhibit 3.1 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                                                 
|        | 
|3.2     |  | Certificate of Amendment to the Certificate of Incorporation of Charlotte Russe Holding, Inc. (Exhibit 3.2 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                             
|        | 
|3.3     |  | Amended and Restated By-laws of Charlotte Russe Holding, Inc. (Exhibit 3.3 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                                                             
|        | 
|4.1     |  | Form of Common Stock Certificate (Exhibit 4.1 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                                                                                          
|        | 
|10.1    |  | Revolving Credit Agreement, dated as of December 23, 1999, by and among Charlotte Russe, Inc., as Borrower, Charlotte Russe Holding, Inc., as Guarantor, and BankBoston, N.A., as Agent
(Exhibit 10.1 to Form 10-Q filed on February 8, 2000)                                                                                      
|        | 
|10.2    |  | Guaranty, dated as of December 23, 1999, by Charlotte Russe Holding, Inc., Charlotte Russe Merchandising, Inc. and certain other Subsidiaries of the Borrower (as therein defined) which may
become parties thereto, each as Guarantor, in favor of BankBoston, N.A. as Agent (Exhibit 10.2 to Form 10-Q filed on February 8, 2000)
|        | 
|10.3    |  | Stockholders Agreement by and among Charlotte Russe Holding, Inc., The SK Equity Fund, L.P., SK Investment Fund, L.P. and Bernard Zeichner (Exhibit 10.7 to Registration Statement
333-84297 filed October 19, 1999)                                                                                                               
|        | 
|10.4    |  | Employment Agreement by and between Charlotte Russe, Inc. and Bernard Zeichner dated October 1, 1996 (Exhibit 10.9 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                     
|        | 
|10.5    |  | Amendment No. 1 to Employment Agreement by and between Charlotte Russe, Inc. and Bernard Zeichner (Exhibit 10.10 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                       
|        | 
|10.6    |  | Trade Secret and Confidentiality Agreement dated as of October 1, 1996 by and between Charlotte Russe Holding, Inc. and Bernard Zeichner (Exhibit 10.11 to Registration Statement 333-84297
filed October 19, 1999)                                                                                                                
|        | 
|10.7    |  | Charlotte Russe Holding, Inc. 1999 Long-Term Incentive Plan (Exhibit 10.12 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                                                             
|        | 
|10.8    |  | Charlotte Russe Holding, Inc. 1996 Long-Term Incentive Plan (Exhibit 10.13 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                                                             
|        | 
|10.9    |  | Lease Agreement for San Diego Distribution Center dated July 24, 1997 by and between Price Enterprises, Inc. and Charlotte Russe, Inc. (Exhibit 10.14 to Registration Statement 333-84297 filed
October 19, 1999)                                                                                                                  
|        | 
|10.10   |  | Charlotte Russe Holding, Inc. 1999 Equity Incentive Plan (Exhibit 10.15 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                                                                



---

|        |  |                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | 
|Exhibit |  | Description                                                                                                                                                                                                                                                    
|        | 
|10.11   |  | License Agreement dated September 30, 1997 by and between Rampage Clothing Company and Charlotte Russe, Inc. (Exhibit 10.16 to Registration Statement 333-84297 filed October 19,
1999)                                                                        
|        | 
|10.12   |  | Charlotte Russe Holding, Inc. 1999 Employee Stock Purchase Plan (Exhibit 10.17 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                     
|        | 
|10.13   |  | Common Stock Purchase Warrant No. 2 by and between Charlotte Russe Holding, Inc. and The SK Equity Fund, L.P., dated as of September 27, 1996 (Exhibit 10.19 to Registration
Statement 333-84297 filed October 19, 1999)                                       
|        | 
|10.14   |  | Common Stock Purchase Warrant No. 3 by and between Charlotte Russe Holding, Inc. and SK Investment Fund, L.P., dated as of September 27, 1996 (Exhibit 10.20 to Registration
Statement 333-84297 filed October 19, 1999)                                       
|        | 
|10.15   |  | First Amendment dated October 1, 1999 to the Common Stock Purchase Warrant by and between Charlotte Russe Holding, Inc. and The SK Equity Fund, L.P., dated as of September 27, 1996
(Exhibit 10.22 to Registration Statement 333-84297 filed October 19, 1999)
|        | 
|10.16   |  | First Amendment dated October 1, 1999 to the Common Stock Purchase Warrant by and between Charlotte Russe Holding, Inc. and SK Investment Fund, L.P., dated as of September 27, 1996
(Exhibit 10.23 to Registration Statement 333-84297 filed October 19, 1999)
|        | 
|10.17   |  | Form of Indemnification Agreement for Directors and Officers of Charlotte Russe Holding, Inc. (Exhibit 10.24 to Registration Statement 333-84297 filed October 19, 1999)                                                                                       
|        | 
|10.18   |  | Stockholders Agreement dated as of October 1, 1999 by and among Charlotte Russe Holdings, Inc., The SK Equity Fund, L.P. and SK Investment Fund, L.P. (Exhibit 10.25 to Registration
Statement 333-84297 filed October 19, 1999)                               
|        | 
|10.19   |  | Amendment No. 2 to Employment Agreement by and between Charlotte Russe, Inc. and Bernard Zeichner (Exhibit 10.19 to Form 10-K filed on December 12, 2001)                                                                                                      
|        | 
|10.21   |  | Employment Agreement by and between Charlotte Russe Holding, Inc. and Mark A. Hoffman dated August 20, 2001(Exhibit 10.21 to Form 10-K filed on December 12, 2001)                                                                                             
|        | 
|10.22   |  | Employment Agreement by and between Charlotte Russe Holding, Inc. and Daniel T. Carter dated October 11, 2001(Exhibit 10.22 to Form 10-K filed on December 12, 2001)                                                                                           
|        | 
|10.24   |  | Amendment #1 to Revolving Credit Agreement, dated as of December 23, 1999, by and among Charlotte Russe, Inc., as Borrower, Charlotte Russe Holding, Inc., as Guarantor, and BankBoston, N.A.,
as Agent (Exhibit 10.24 to Form 10-K filed on December 13, 2001)
|        | 
|10.25   |  | Amendment #2 to Revolving Credit Agreement, dated as of December 31, 1999, by and among Charlotte Russe, Inc., as Borrower, Charlotte Russe Holding, Inc., as Guarantor, and BankBoston, N.A.
as Agent (Exhibit 10.25 to Form 10-Q filed on April 19, 2002)    



---

|        |  |                                                                                                                                                                                                                                                                                                                                                            
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        | 
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                                                
|        | 
|10.26   |  | Amendment #3 to Revolving Credit Agreement, dated as of December 31, 1999, by and among Charlotte Russe, Inc., as Borrower, Charlotte Russe Holding, Inc., as Guarantor, and BankBoston, N.A.,
as Agent (Exhibit 10.26 to Form 10-K filed on December 13, 2002)                                                                                            
|        | 
|10.27   |  | Amendment #1 to License Agreement, dated September 30, 1997, by and between Rampage Clothing Company and Charlotte Russe, Inc. (Exhibit 10.27 to Form 10-K filed on December 13,
2002)                                                                                                                                                                     
|        | 
|10.28   |  | Business Loan Agreement, dated as of February 28, 2003, between Bank of America, N.A and Charlotte Russe, Inc. (Exhibit 10.28 to Form 10-Q filed on April 21, 2003)                                                                                                                                                                                        
|        | 
|10.29   |  | First Amendment dated as of July 9, 2003, between Bank of America, N.A and Charlotte Russe, Inc. amending the Business Loan Agreement dated as of February 28, 2003. (Exhibit 10.29 to Form
10-Q filed on July 17, 2003)                                                                                                                                   
|        | 
|10.30   |  | Employment Agreement by and between Charlotte Russe Holding, Inc. and Mark A. Hoffman dated July 9, 2003. (Exhibit 10.30 to Form 10-K filed on December 19, 2003)                                                                                                                                                                                          
|        | 
|10.31   |  | Employment Agreement by and between Charlotte Russe, Inc. and Bernard Zeichner dated August 31, 2003. (Exhibit 10.31 to Form 10-K filed on December 19, 2003)                                                                                                                                                                                              
|        | 
|10.32   |  | Employment Agreement by and between Charlotte Russe, Inc. and Donna Desrosiers dated October 13, 2003. (Exhibit 10.32 to Form 10-K filed on December 19, 2003)                                                                                                                                                                                             
|        | 
|21      |  | Subsidiaries (Exhibit 21 to Registration Statement 333-84297 filed October 19, 1999)                                                                                                                                                                                                                                                                       
|        | 
|23.1    |  | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm*                                                                                                                                                                                                                                                                               
|        | 
|24      |  | Power of Attorney (See Signature Page)                                                                                                                                                                                                                                                                                                                     
|        | 
|31.1    |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*                                                                                                                                                                                                                                                                                   
|        | 
|31.2    |  | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*                                                                                                                                                                                                                                                                                   
|        | 
|32.1    |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*                                                                                                                                                                                                                                                                                   
|        | 
|32.2    |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*                                                                                                                                                                                                                                                                                   
|        | 
|(b)     |  | Financial Statement Schedules                                                                                                                                                                                                                                                                                                                              
|        | 
|        |  | All financial statement schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because they are not
required under the related instructions or are inapplicable as the information has been provided in the consolidated financial statements or related notes thereto.