##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 FORM 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    January 30, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number 1-12552
  THE TALBOTS, INC.
 (Exact name of registrant as
    specified in its charter)
  Delaware

41-1111318State or other jurisdiction
    of

(I.R.S. Employerincorporation or
    organization

Identification No.)   One
    Talbots Drive, Hingham, Massachusetts 02043
 (Address of principal executive
    offices)
 Registrants telephone number, including area code
 781-749-7600
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of each class

Name of exchange on which registeredCommon stock, $.01 par value


New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
 (Title of class)
  o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
    Large accelerated filer o

Accelerated filer þ

Non-accelerated filero
    (Do not check if a smaller reporting company)

Smaller reporting company o   Rule 12b-2 o þ
      Documents
    Incorporated by Reference
  Form 10-K.




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##### 





The
    Talbots, Inc.
  Annual
    Report on
    Form 10-K
    for the Fiscal Year Ended January 30, 2010
   
 PagePART IItem 1.


Business


2Item 1A.


Risk Factors


10Item 1B.


Unresolved Staff Comments


17Item 2.


Properties


17Item 3.


Legal Proceedings


17Item 4.


Reserved


18PART IIItem 5.


Market for the Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


19Item 6.


Selected Financial Data


21Item 7.


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


22Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


46Item 8.


Financial Statements and Supplementary Data


48Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


48Item 9A.


Controls and Procedures


48Item 9B.


Other Information


51PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


51Item 11.


Executive Compensation


51Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


51Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


52Item 14.


Principal Accounting Fees and Services


52PART IVItem 15.


Exhibits, Financial Statement Schedules


53Signatures


62EX-10.108 Form of The Talbots, Inc. 2003 Executive Stock Based Incentive Plan Special Restricted Stock Unit Award AgreementEX-21.1 List of Subsidiaries of The Talbots, IncEX-23.1 Consent of Independent Registered Public Accounting Firm, Deloitte & Touche LLPEX-31.1 Certification of Trudy F. Sullivan, President and Chief Executive Officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)EX-31.2 Certification of Michael Scarpa, Chief Operating Officer, Chief Financial Officer, and Treasurer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)EX-32.1 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002   1




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##### Table of Contents



PART I  Item 1.
    Business  General
        best-in-class mark-ups
        
    Closed non-core businesses In 2008, we
    completed the closing of our Kids, Mens and U.K. businesses,
    which resulted in significant restructuring and impairment
    charges in 2008 and 2009.
    Sold J. Jill business On July 2, 2009,
    we sold certain J. Jill assets to Jill Acquisition LLC (the
    Purchaser), an affiliate of Golden Gate Capital and
    exited activities associated with the J. Jill business to focus
    our time, resources and attention exclusively on rejuvenating
    the core Talbots brand and return to profitable growth.
    Implemented a $150.0 million cost reduction
    program In 2009, we initiated a program to
    achieve a $150.0 million annual expense reduction to be
    completed by the end of fiscal 2010, and have substantially
    achieved that goal as of January 30, 2010. Key components
    are as follows:  
    Reduced corporate headcount by approximately 17% in February
    2009, and further again in June 2009, by approximately 20% 2




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
    Reduced hours worked in our stores, distribution center and call
    center for 2009
    Eliminated matching contributions to our 401(k) plan for 2009,
    increased employee health care contributions, eliminated merit
    increases for 2009 and froze our defined benefit pension plans
    Implemented broad-based non-employee overhead actions resulting
    in cost savings, primarily in the area of administration,
    marketing and store operations  
    Re-launched web-site In the fall of 2009, we
    re-launched our web-site with new functionality, features and
    personalization. With a sophisticated look and easy navigation,
    the updated site is designed to improve the online shopping
    experience. In addition, the new web platform further allows us
    to deliver targeted promotions and recommendations on timely,
    relevant products to our customers.
    Introduced new upscale outlet concept We
    launched our upscale outlet concept in May 2009, offering
    merchandise manufactured exclusively for this business at
    attractive price points. With the addition of this concept, we
    have the opportunity to gain market share, grow our top line and
    increase profitability by introducing the Talbots brand to new
    customers who value different price points. We ended the year
    with a total of 18 upscale outlet stores, including 11 new
    stores and 7 conversions. We expect to have the potential to
    open at least 60 stores over the next three years.
    Enhanced operating efficiency We made
    considerable improvements in sourcing and merchandising
    initiatives which resulted in significant merchandise gross
    margin improvement in 2009. This was accomplished through
    (i) better product flow and content, (ii) leaner
    inventory posture and (iii) a strategic change in
    promotional cadence to monthly markdowns versus our past
    practice of having four clearance events annually. In the 2009
    spring season, we began to implement a supply chain strategy,
    with margin improvements coming from country migration,
    competitive bidding and leveraging our vendors buying
    power.
    Formed strategic partnership with Li &
    Fung While we made great strides in improving
    our sourcing and merchandising practices, given the environment
    and expense of building a first class supply chain operation, we
    turned to industry leaders to outsource. In August 2009, we
    entered into a buying agency agreement with an affiliate of
    Li & Fung Limited, a Hong Kong-based global consumer
    goods exporter (Li & Fung), to act as the
    exclusive global apparel sourcing agent for substantially all
    Talbots apparel effective September 2009. As a result of this
    agreement, we closed our Hong Kong and India sourcing offices
    and reduced our corporate sourcing headcount.  best-in-class
  
    Store productivity initiative We implemented
    a set of key initiatives designed to further enhance customer
    service and drive improved in-store productivity. In 2009, we
    rolled-out to all stores a new selling skills program to
    reinvigorate the selling culture and formalized the productivity
    standard to measure store associates performance. These
    actions are expected to foster a stronger relationship with
    customers and create a positive and compelling shopping
    environment that should positively impact our sales and
    profitability.
    Implemented store segmentation initiative In
    the fourth quarter of 2009, we unveiled a strategic initiative
    to improve our sales per square foot productivity by
    rationalizing our existing square footage and embedding a
    customer-centric segmentation approach that delivers a
    customized assortment. This will be an ongoing business
    philosophy centered on a refined understanding of the variations
    in our customer and store base. Beginning with our fall and
    holiday 2010 deliveries, we expect to allocate merchandise based
    on location, customer shopping habits and climate, and
    customize/coordinate our approach in marketing, direct channel
    and retail channel to maintain a cohesive brand message. We
    expect that this will allow us to further optimize 3




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our resource investment and increase store sales, inventory
    turns, gross margin and customer loyalty. This is a key growth
    and profit initiative for Talbots going forward.  
    Comprehensive financing transaction On
    December 8, 2009, we announced a comprehensive financing
    transaction to deleverage our balance sheet and position us for
    future growth. It consists of three related transactions
    (collectively, the BPW Transactions): (i) a
    definitive agreement and plan of merger with BPW Acquisition
    Corp. (BPW), a special purpose acquisition company
    with approximately $350.0 million in cash held in a trust
    account for the benefit of its shareholders, to be used in
    connection with a business combination; (ii) the retirement
    of all common stock held by AEON U.S.A. Inc, (AEON
    (U.S.A.)), the issuance of warrants to purchase one
    million of our common shares by AEON (U.S.A.), and the repayment
    of all debt held by Talbots former majority stockholder,
    AEON (U.S.A.) and its parent company, AEON Co., Ltd.
    (AEON); and (iii) a commitment for a new senior
    secured revolving credit facility from a third-party lender
    which provides borrowing capacity up to $200.0 million,
    subject to satisfaction of all borrowing conditions.    Description
    of Operations
  Talbots brand.
      Retail Stores.
    
    Petites.  Virtually all apparel items are
    offered in both misses and petites sizes. Petites sizes are
    offered in our catalogs and all stores, with some store
    locations offering our complete product assortment in both
    misses and petites sizes. This allows us to better meet our
    customers needs for those who fall into one size range, or
    a combination.
    Woman.  Talbots Woman is our plus size concept
    which offers the same classic styling, high quality and fit as
    our misses and petites concepts to customers wearing sizes 14W
    to 24W. We also offer Talbots Woman Petites, which focuses on
    fuller figured women 54 in height and under. Talbots
    Woman and Talbots Woman Petites are available in stores, through
    our catalogs and online. At approximately 30% of our store
    locations, our size offering incorporates plus size ranges,
    allowing us to offer a range of sizes and styles to 4




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allow every customer to select from Talbots core product
    offerings and customize her fit to her individual
    body type. We believe our ability to service every woman,
    every size sets us apart.  
    Accessories & Shoes.  Beyond size
    ranges, we offer product categories that allow our customer to
    select items to complement her apparel selections. Whether
    head-to-toe
    wardrobe options, unique fashion jewelry, scarves, handbags or
    footwear to update previous purchases, our goal is to service
    all of her shopping needs  Upscale Outlets. non-upscale end-of-season
    Number of


Approximate Average StoreStores


Size (Square Feet)United StatesRetail stores, including surplus and upscale outlets


559



7,209CanadaRetail stores, including surplus outlets


21



5,327Total


580       Direct Marketing.
         5




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Segment and Geographic Information
  Merchandising,
    Inventory Control and Distribution
  Merchandising
  head-to-toe.
  Branded Merchandise Design and Purchasing.
  Sourcing.
     6




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Percent ofCountry

SourcingChina


40.5
%Indonesia


12.9
%Thailand


10.7
%Vietnam


10.1
%Brazil


4.2
%Other


21.6
%     Customer
    Credit
      Management
    Information Systems
  e-commerce,
  point-of-sale
 7




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Marketing
    Seasonality
      Competition
      Employees
  Managements Discussion and Analysis of
    Financial Condition and Results of Operations 
    Business Overview
 8




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Executive
    Officers of the Company
    Name

Age

PositionTrudy F. Sullivan


60


President and Chief Executive Officer, and a DirectorMichael Scarpa


54


Chief Operating Officer, Chief Financial Officer, and TreasurerMichael Smaldone


45


Chief Creative OfficerBenedetta I. Casamento


43


Executive Vice President, FinanceJohn Fiske, III


46


Executive Vice President, Chief Stores OfficerRichard T. OConnell, Jr.


59


Executive Vice President, Real Estate, Legal, Store Planning
    & Design and Construction, and SecretaryGregory I. Poole


48


Executive Vice President, Chief Supply Chain OfficerLori Wagner


45


Executive Vice President, Chief Marketing OfficerLizanne Kindler


40


Executive Vice President, General Merchandise Manager   direct-to-consumer
         9




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Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
  (781) 741-4500, e-mail
  Item 1A.
    Risk
    Factors  ,
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations
 10




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The
    uncertain economic conditions could materially adversely impact
    our financial condition and results of operations.
    Our
    ability to continue to have the liquidity necessary through cash
    flows from operations combined with our new senior secured
    revolving credit facility may not be sufficient to support
    operations.
           11




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We
    cannot assure the successful implementation and results of our
    long-term strategic initiatives and that we will continue to
    improve our operating results and return to long-term
    profitability.
    
    sufficiency at all times of available cash flows and other
    internal and external cash resources to satisfy all future
    operating needs and all other cash requirements;
    the continuation or any further worsening of economic conditions;
    adequate and uninterrupted supply of merchandise and
    continuation of merchandise purchases on open account purchase
    terms from merchandise vendors at expected levels and at
    acceptable accounts payable terms;
    achieving our 2010 financial plan for operating results, working
    capital, liquidity and cash flows;
    whether our strategic initiatives and cost saving actions will
    continue to improve our results, operating efficiencies and cash
    flows;
    effective inventory management and maintaining adequate levels
    of customer-appropriate inventory;
    our ability to adequately respond to greater competitive
    pressures;
    our ability to adequately respond to changing fashion trends and
    consumers response to our merchandise; and
    our ability to adjust our operating plans and cash expenditures
    in response to changing conditions.    The
    success of our business will depend on our ability to develop
    merchandise offerings that resonate with our existing customers
    and attract new customers as well as our ability to continue to
    develop, evolve and promote our brand.
      Our
    2010 operating plan is based on a number of material assumptions
    that may not occur.
   12




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There
    are risks associated with the recent appointment of and
    transition to a new exclusive global merchandise buying
    agent.
    Our
    overseas merchandise purchasing strategy makes it vulnerable to
    certain risks and any disruption in our supply of merchandise
    would materially impact us.
    
    political and economic instability;
    imposition of new legislation relating to import quotas that may
    limit the quantity of goods that may be imported into the
    U.S. from countries in a region where we do business;
    imposition of duties, taxes and other charges on imports;
    natural disasters and public health concerns;
    potential delays or disruption in shipping and related pricing
    impacts; and
    local business practices and political issues, including issues
    relating to compliance with domestic or international labor
    standards.     13




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If our
    goodwill or other intangible assets become impaired, we may need
    to record significant non-cash impairment charges.
    The
    costs to close underperforming stores may be significant and may
    negatively impact our cash flows and our results of
    operations.
    In
    connection with the sale in 2009 of the J. Jill business we
    remain contingently responsible for certain material risks and
    obligations.
   14




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We are
    subject to credit risk and to potential increased defaults and
    delinquencies on our customer charge card account
    portfolio.
    Our
    Credit Facility contains provisions which may restrict our
    operations and proposed financing and strategic
    transactions.
      Our
    success also depends upon our ability to maintain proper
    inventory levels.
    We may
    continue to experience fluctuations in operating
    results.
  period-to-period
  Talented
    personnel are critical to our success.
   15




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Our
    dependence on a single distribution facility.
    A
    major failure of our information systems could harm the
    business.
    The
    outcome of litigation and other claims is
    unpredictable.
  No. 5199-VCS,
         16




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Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    GrossLocation

Square Feet


Primary Function

InterestHingham, Massachusetts


313,000


Talbots headquarters

Own (44 acres)Lakeville, Massachusetts


933,000


Distribution and fullfilment center

Own (115 acres)Tampa, Florida


28,304


Systems center

LeaseKnoxville, Tennessee


37,656


Telemarketing center

LeaseNew York, New York


55,697


Creative studio

LeaseLincoln, Rhode Island


9,645


Credit and banking facilities

LeaseOntario, Canada


1,350


Canadian regional office

Lease580 Talbots stores
    throughout the U.S and
    Canada


4,141,744


Retail stores

Own and lease (a)Quincy, Massachusetts


126,869


Former subsidiary headquarters

Lease     (a)
    
    We own the property for five of our 580 Talbots stores.        Years Lease

Number ofTerms Expire

Store Leases (a)(b)2010-2011


952012-2014


1112015-2017


1042018- and later


323     (a)
    
    Includes two Talbots executed leases related to future stores
    not yet opened at January 30, 2010.(b)
    
    Includes certain stores that have multiple leases.  Item 3.
    Legal
    Proceedings  No. 5199-VCS,
 17




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Item 4.
    Reserved 18




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Unaudited Quarterly
    Results
  Unaudited Quarterly
    Results
  Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters.
    Approximate DollarValue of Sharesthat May Yet BeTotal Number of


Average


Purchased under theShares


Price Paid


Equity AwardPeriod

Purchased(1)


per Share


Programs(2)November 1, 2009 through November 28, 2009


19,362


$
0.25


$
12,859November 29, 2009 through January 2, 2010


16,012



7.62



12,385January 3, 2010 through January 30, 2010


32,857



0.96



12,009Total


68,231


$
2.94


$
12,009     (1)
    
    We repurchased 48,825 shares in connection with stock
    forfeited by employees upon termination prior to vesting under
    our equity compensation plan, at an acquisition price of $0.01
    per share.Our equity program permits employees to tender shares in order
    to satisfy the employees tax withholding obligations from
    the vesting of their restricted stock. During the period, we
    repurchased 19,406 shares of common stock from certain
    employees to cover such tax withholding obligations, at a
    weighted average acquisition price of $8.14 per share.(2)
    
    As of January 30, 2010, there were 1,200,890 shares of
    nonvested stock that were subject to buy-back at $0.01 per
    share, or $12,009 in the aggregate, that we have the option to
    repurchase if employment is terminated prior to vesting.   19




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Stock
    Performance Graph
    Comparison
    of Cumulative Five-Year Total Return of The Talbots, Inc.,
    S&P 500 Index, and Dow Jones General Retailers
    Index
  
  Base

Indexed ReturnsPeriod

for The Years EndedCompany/Index

1/28/05

1/27/06

2/02/07

2/01/08

1/30/09

1/29/10The Talbots, Inc.

$
100.00


$
111.54


$
96.75


$
38.87


$
9.15


$
50.75S&P 500 Index

$
100.00


$
111.63


$
128.37


$
126.05


$
76.43


$
101.76Dow Jones U.S. General Retailers Index

$
100.00


$
105.92


$
116.37


$
104.54


$
72.14


$
102.22    20




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  Year EndedJanuary 30,


January 31,


February 2,


February 3,


January 28,2010


2009


2008


2007


2006(52 weeks)


(52 weeks)


(52 weeks)


(53 weeks)


(52 weeks)(In thousands, except per share data)Statement of Operations Information:Net sales

$
1,235,632


$
1,495,170


$
1,708,115


$
1,772,306


$
1,703,014Operating (loss) income


(8,690
)


(98,389
)


35,204



114,596


$
169,367(Loss) income from continuing operations


(25,308
)(a)


(139,521
)(a)(b)


43
(a)


56,876



104,309Net (loss) income

$
(29,412
)

$
(555,659
)(b)(c)

$
(188,841
)(c)

$
31,576



93,151Per share data(d):BasicContinuing operations

$
(0.47
)

$
(2.63
)

$
(0.01
)

$
1.06


$
1.94Net (loss) income

$
(0.55
)

$
(10.41
)

$
(3.58
)

$
0.59


$
1.73DilutedContinuing operations

$
(0.47
)

$
(2.63
)

$
(0.01
)

$
1.05


$
1.91Net (loss) income

$
(0.55
)

$
(10.41
)

$
(3.58
)

$
0.58


$
1.70Weighted average shares outstandingBasic


53,797



53,436



53,006



52,651



52,882Diluted


53,797



53,436



53,006



53,092



53,876Cash dividends per share(e)

$



$
0.52


$
0.52


$
0.51


$
0.47Balance Sheet Information:Working capital (deficiency)

$
(261,942
)

$
(13,680
)

$
208,803


$
262,609


$
376,204Total assets


825,818



971,293



1,502,979



1,748,688



1,146,144Total long-term debt, including current portion(f)






328,377



389,027



469,643



100,000Stockholders (deficit) equity

$
(185,636
)

$
(178,097
)

$
454,779


$
643,311


$
626,968     (a)
    
    During 2009, 2008 and 2007, we recorded charges of
    $10.3 million, $17.8 million and $3.7 million
    relating to our restructuring activities, which are discussed in
    Note 5, Restructuring Charges, to our consolidated
    financial statements.(b)
    
    During 2008, we recorded a valuation allowance on substantially
    all of our deferred tax assets, including $61.0 million
    which is included in loss from continuing operations. We also
    recorded a valuation allowance of $129.4 million which is
    included in discontinued operations.(c)
    
    During 2008 and 2007, we recorded impairment charges relating to
    the J. Jill brand of $318.4 million and
    $149.6 million, respectively, which are included in
    discontinued operations. 21




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(d)
    
    Effective February 1, 2009, we adopted new accounting
    guidance regarding the calculation and reporting of earnings per
    share when nonvested share-based awards have participation
    rights to dividends. The new accounting guidance has been
    applied retrospectively to prior periods. As a result, prior
    period basic and diluted (loss) income per share amounts
    presented in the above table have been adjusted as follows:  Year EndedJanuary 31,

February 2,

February 3,

January 28,2009

2008

2007

2006Continuing operations:Basic loss per share  as currently reported

$
(2.63
)

$
(0.01
)

$
1.06


$
1.94 as previously reported


(2.61
)






1.08



1.97Diluted loss per share  as currently reported


(2.63
)


(0.01
)


1.05



1.91 as previously reported


(2.61
)






1.06



1.93Net loss:Basic loss per share  as currently reported

$
(10.41
)

$
(3.58
)

$
0.59


$
1.73 as previously reported


(10.40
)


(3.56
)


0.60



1.76Diluted loss per share  as currently reported


(10.41
)


(3.58
)


0.58



1.70 as previously reported


(10.40
)


(3.56
)


0.59



1.72   (e)
    
    In February 2009, our Board of Directors approved the indefinite
    suspension of our quarterly dividends.(f)
    
    Total long-term debt excludes notes payable to banks of
    $148.5 million at January 31, 2009 and
    $45.0 million at February 3, 2007.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations          Business
    Overview
      
    Achieved total revenues of $1,235.6 million
    Improved gross margin by approximately 370 basis points 22




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
    Reduced expenses by $146.7 million as part of our
    $150.0 million cost reduction program, including
    $119.9 million in selling, general and administrative and
    $26.8 million in cost of sales, buying and occupancy
    Improved inventory management and reduced inventory levels by
    31% compared to 2008
    Formed strategic alliance with global sourcing partner,
    Li & Fung
    Re-launched Talbots Internet shopping site with enhanced
    functionality, features and personalization
    Launched upscale outlets in May offering merchandise
    manufactured exclusively for this concept
    Reduced operating loss from $98.4 million in 2008 to
    $8.7 million in 2009
    Improved brand and merchandise perception according to consumer
    purchase plan study    Looking
    ahead to 2010 and beyond
    Results
    of Operations
       23




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##### Table of Contents



Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008Net sales


100.0
%


100.0
%


100.0
%Cost of sales, buying and occupancy expenses


66.5
%


70.2
%


66.9
%Selling, general and administrative expenses


32.6
%


35.0
%


30.6
%Restructuring charges


0.8
%


1.2
%


0.2
%Merger and related costs


0.7
%






Impairment of store assets


0.1
%


0.2
%


0.2
%Operating (loss) income


(0.7
)%


(6.6
)%


2.1
%Interest expense, net


2.3
%


1.4
%


2.0
%(Loss) income before taxes


(3.0
)%


(8.0
)%


0.1
%Income tax (benefit) expense


(1.0
)%


1.3
%


0.1
%(Loss) income from continuing operations


(2.0
)%


(9.3
)%


(0.0
)%   2009
    Compared to 2008
  Net
    Sales
    January 30,


January 31,


Decrease2010


2009


$


%(In millions)Net store sales

$
1,027.9


$
1,261.6


$
(233.7
)


(18.5
)%Net direct marketing sales


207.7



233.6



(25.9
)


(11.1
)Total

$
1,235.6


$
1,495.2


$
(259.6
)


(17.4
)%   Stores
       24




---



##### Table of Contents



Direct
    Marketing Sales
  year-over-year
  Cost of
    Sales, Buying, and Occupancy Expenses
    January 30,


January 31,2010


2009


Decrease(In millions)Cost of sales, buying and occupancy expense

$
821.3


$
1,049.8


$
(228.5
)Percentage of net sales


66.5
%


70.2
%


(3.7
)%     Selling,
    General and Administrative Expenses
    January 30,


January 31,2010


2009


Decrease(In millions)Selling, general and administrative expenses

$
403.2


$
523.1


$
(119.9
)Percentage of net sales


32.6
%


35.0
%


(2.4
)%    25




---



##### Table of Contents



Restructuring
    Charges
    January 30,


January 31,2010


2009


Decrease(In millions)Restructuring charges

$
10.3


$
17.8


$
(7.5
)Percentage of net sales


0.8
%


1.2
%


(0.4
)%     Merger
    costs
    Impairment
    of Store Assets
    January 30,


January 31,2010


2009


Decrease(In millions)Impairment of store assets

$
1.4


$
2.8


$
(1.4
)Percentage of net sales


0.1
%


0.2
%


(0.1
)%     Net
    Interest Expense
  January 30,


January 31,2010


2009


Increase(In millions)Net interest expense

$
28.1


$
20.3


$
7.8Average debt outstanding


498.7



474.5



24.2Average interest rate on borrowings


4.9
%


3.7
%


1.2
%     Income
    Tax (Benefit) Expense
    January 30,


January 31,2010


2009


Decrease(In millions)Income tax (benefit) expense

$
(11.5
)

$
20.8


$
(32.3
)  26




---



##### Table of Contents



2008
    Compared to 2007
  Net
    Sales
    January 31,


February 2,


Decrease2009


2008


$


%(In millions)Net retail store sales

$
1,261.6


$
1,445.4


$
(183.8
)


(12.7
)%Net direct marketing sales


233.6



262.7



(29.1
)


(11.1
)Total

$
1,495.2


$
1,708.1


$
(212.9
)


(12.5
)%   Retail
    Stores
      Direct
    Marketing Sales
   27




---



##### Table of Contents



e-commerce
  Cost of
    Sales, Buying, and Occupancy Expenses
    January 31,


February 2,


Increase2009


2008


(Decrease)(In millions)Cost of sales, buying and occupancy expense

$
1,049.8


$
1,143.3


$
(93.5
)Percentage of net sales


70.2
%


66.9
%


3.3
%         Selling,
    General and Administrative Expenses
    January 31,


February 2,


Increase2009


2008


(Decrease)(In millions)Selling, general and administrative expenses

$
523.1


$
523.3


$
(0.2
)Percentage of net sales


35.0
%


30.6
%


4.4
%    28




---



##### Table of Contents



Restructuring
    Charges
    January 31,


February 2,2009


2008


Increase(In millions)Restructuring charges

$
17.8


$
3.7


$
14.1Percentage of net sales


1.2
%


0.2
%


1.0     Impairment
    of Store Assets
    January 31,


February 2,2009


2008


Increase(In millions)Impairment of store assets

$
2.8


$
2.6


$
0.2Percentage of net sales


0.2
%


0.2
%


0.0     Goodwill
    and Other Intangible Assets
      Net
    Interest Expense
    January 31,


February 2,2009


2008


Decrease(In millions)Net interest expense

$
20.3


$
34.1


$
(13.8
)Average debt outstanding


474.5



541.2



(66.7
)Average interest rate on borrowings


3.7
%


5.8
%


(2.1
)    29




---



##### Table of Contents



Income
    Tax Expense
    January 31,

February 2,2009

2008

Increase(In millions)Income tax expense

$
20.8


$
1.1


$
19.7     DISCONTINUED
    OPERATIONS
          Liquidity
    and Capital Resources
       30




---



##### Table of Contents




    In July 2008, we entered into a $50.0 million subordinated
    working capital term loan facility with AEON (U.S.A.) (the
    AEON Facility) which was to mature in 2012 and was
    interest-only until maturity. As of January 31, 2009, we
    had drawn $20.0 million on this facility, and subsequent to
    January 31, 2009, we borrowed the remaining
    $30.0 million available under the facility.
    In February 2009, we obtained a new $200.0 million term
    loan facility from AEON (the AEON Loan) and borrowed
    $200.0 million which was used to repay all of our
    outstanding indebtedness under our Acquisition Debt Agreement
    related to the 2006 J. Jill acquisition. The Acquisition Debt
    Agreement required quarterly principal payments of
    $20.0 million. The $200.0 million loan from AEON was
    interest-only until maturity. The term loan facility initially
    matured on August 31, 2009, but provided us with the option
    to extend the maturity for additional six-month periods, up to
    the third anniversary of the loan closing date, which was
    February 27, 2012.
    As of February 2009, we converted all of our working capital
    lines of credit with our banks, amounting to $165.0 million
    in the aggregate, to committed lines with maturities in December
    2009.
    In April 2009, AEON guaranteed our outstanding debt under our
    then existing working capital facilities totaling
    $165.0 million, our then existing revolving credit
    facilities totaling $80.0 million, and our then existing
    $20 million term loan facility. AEON also agreed
    (i) that it would agree to continue to provide a guaranty
    for a refinancing of any of that debt, which then matured at
    various dates on and before April 16, 2010 and (ii) if
    the lender failed to agree to refinance that debt on or before
    the then existing maturity date, or if any other condition
    occurred that required AEON to make a payment under its then
    existing guaranty, AEON would make a loan to us, due on or after
    April 16, 2010 and within the limits of AEONs then
    existing loan guaranty, to avoid any lack of our financial
    resources caused by any such failure of refinancing. In April
    2009, AEON also confirmed its support for our working capital
    improvements initiatives for our merchandise payables management
    and that it would use commercially reasonable effort to provide
    us with financial support through loan or guarantee up to
    $25.0 million only if, and to the extent that, we fell
    short in achieving our targeted cash flow improvement for fall
    2009 merchandise payables.
    In April 2009, we entered into a $150.0 million secured
    revolving loan facility with AEON. The facility was to mature
    upon the earlier of (i) April 17, 2010 or
    (ii) one or more securitization programs or structured
    loans by us or our subsidiaries in an aggregate equivalent
    principal amount to the revolving loan commitment amount,
    approved in advance by AEON as lender and in form and substance
    satisfactory to the lender. The facility was secured by
    (i) a first priority security interest in substantially all
    of our consumer credit/charge card receivables and (ii) a
    first lien mortgage on our Hingham, Massachusetts headquarters
    and Lakeville, Massachusetts distribution facility. Amounts
    could be borrowed, repaid and reborrowed under the facility and
    could be used for working capital and other general corporate
    purposes.
    As of April 2009, we eliminated all financial covenant ratios
    from our debt agreements.
    On December 8, 2009, we entered into agreements for the
    proposed BPW Transactions.
    On December 28, 2009, we executed an Amended and Restated
    Secured Revolving Loan Agreement with AEON (the Amended
    Facility), which amended and restated the
    $150.0 million secured revolving loan facility executed
    with AEON in April 2009. Under the terms of the Amended
    Facility, the principal amount of the earlier
    $150.0 million secured credit facility was increased to
    $250.0 million. We could use funds borrowed under the
    Amended Facility solely (i) to repay our outstanding
    third-party bank indebtedness plus 31




---



##### Table of Contents



interest and other costs, (ii) to fund working capital and
    other general corporate purposes up to $10.0 million
    subject to satisfaction of all borrowing conditions and
    availability under the Amended Facility, and (iii) to pay
    related fees and expenses associated with the Amended Facility.
    This Amended Facility was secured by substantially all of our
    existing and after-acquired assets and properties, including the
    assets and properties which were collateral under our earlier
    $150.0 million AEON facility.      
    On December 29, 2009, we borrowed $245.0 million under
    the Amended Facility which we used to repay in full our
    outstanding third party bank indebtedness, related interest, and
    other costs and expenses. The Amended Facility was provided
    pursuant to AEONs April 9, 2009 financial support
    commitments, as referred to above, which were satisfied and
    discharged in full upon the December 29, 2009 funding under
    this Amended Facility for the repayment of all of our then
    outstanding third-party bank indebtedness.  mark-ups
  
    In June 2008, we reduced our corporate headcount by
    approximately 9% across multiple locations at all levels.
    During the third quarter of 2008, we completed the closing of
    our Kids, Mens and U.K. business concepts which were not
    considered strategic to ongoing operations.
    During the third quarter of 2008, our Board of Directors
    approved a plan to sell the J. Jill business which was not
    considered strategic to ongoing operations.
    During 2008, we eliminated advertising in television and
    national print, contributing to $14.8 million less in
    spending from 2007.
    During 2008 and 2009, we changed our promotional cadence to
    monthly markdowns rather than our historical four clearance
    sales events per year, held a leaner inventory position and
    concentrated on better product flow and content. We also
    decreased our inventory commitments for 2009.
    In 2008 and 2009, we reduced our annual gross capital
    expenditures (excluding construction allowances received from
    landlords) to $44.7 million and $21.0 million,
    respectively, from $57.6 million in 2007.
    In 2009, we initiated a program to achieve a $150.0 million
    annual expense reduction to be completed by the end of fiscal
    2010, and have substantially achieved that goal as of
    January 30, 2010, including a reduction of
    $119.9 million in selling, general and administrative
    expenses and $26.8 million in cost of sales, buying and
    occupancy costs. Key components are as follows:  
    Reduced corporate headcount by approximately 17% in February
    2009, and further again in June 2009 by approximately 20%.
    Reduced hours worked in our stores, distribution center and call
    center for 2009.
    Eliminated matching contributions to our 401(k) plan for 2009,
    increased employee health care contributions, eliminated merit
    increases for 2009 and froze our defined benefit pension plans.
    Implemented broad-based non-employee overhead actions resulting
    in cost savings, primarily in the area of administration,
    marketing and store operations  
    In February 2009, our Board approved the indefinite suspension
    of our quarterly dividend. 32




---



##### Table of Contents




    In July 2009, we completed the sale of the J. Jill business to
    Purchaser for net cash proceeds of $64.3 million and closed
    the 75 J. Jill stores not purchased in the transaction. As of
    January 30, 2010, the lease liabilities for 69 of the 75
    unsold stores are settled. Three additional store leases were
    settled subsequent to January 30, 2010.
    In August 2009, we reorganized our global sourcing activities
    and entered into a buying agency agreement with Li &
    Fung whereby, effective September 2009, Li & Fung is
    acting as our exclusive global sourcing agent for substantially
    all Talbots apparel. In connection with the reorganization, we
    closed our Hong Kong and India sourcing offices and reduced our
    corporate sourcing headcount.
    In 2009, we successfully managed our fall 2009 merchandise
    payables without the need to draw upon the $25.0 million
    working capital financial support commitment provided by AEON in
    April 2009
    In 2009, we closed 19 underperforming stores, some of which
    relate to store leases that expired during 2009 and some of
    which are pursuant to existing early termination right
    provisions.
    In 2009, we decreased our catalog circulation to approximately
    36.6 million catalogs, down from approximately
    55.0 million in 2008.           33




---



##### Table of Contents



Debt
    Facilities
    Contractual Obligations  Debt
    BPW
    Transactions
      sub-facility)
   34




---



##### Table of Contents



Fiscal
    2010
      Cash
    Flows
   35




---



##### Table of Contents



January 30,


January 31,


February 2,2010


2009


2008Net cash provided by operating activities

$
81,187


$
16,260


$
213,708Net cash used in investing activities


(20,919
)


(42,143
)


(57,597
)Net cash provided by (used in) financing activities


4,327



57,763



(152,456
)   Cash
    provided by operating activities
    Cash
    used in investing activities
  e-commerce
  Cash
    provided by (used in) financing activities
    Critical
    Accounting Policies
     36




---



##### Table of Contents



Inventory Markdown Reserve. end-of-season
        Sales Return Reserve.
    Customer Loyalty Program.
    
    Classic Awards Red Purchases are not required
    to be made on a Talbots charge card, and customers earn rewards
    for merchandise purchases regardless of their method of payment.
    Members receive a 0.5 point for every $1 spent. 37




---



##### Table of Contents




    Classic Awards Platinum Customers are
    enrolled automatically when they open a Talbots charge card, and
    customers earn rewards for merchandise purchases made with their
    Talbots charge card. Members receive 1 point for every $1 spent.
    Classic Awards Black Comprised of customers
    who spend a minimum of $1,000 annually on their Talbots charge
    card, and customers earn rewards for merchandise purchases made
    with their Talbots charge card. Members receive 1.25 points for
    every $1 spent.        Retirement Plans. st
     38




---



##### Table of Contents



Long-lived Assets.
    Goodwill and Other Intangible Assets.
   39




---



##### Table of Contents



relief-of-royalty
    Additional Impairment Charge2009

20081% Increase in discount rate

No effect

No effect50 Basis point decrease in royalty rate

No effect

$3.0 million1% Decrease in revenue growth rate

No effect

No effect   Summary of Significant Accounting
    Policies
  Income Taxes.
     40




---



##### Table of Contents



Stock-Based Compensation.
       41




---



##### Table of Contents



Contractual
    Commitments.
    Less than


1 to 3


3 to 5


More thanContractual Obligations

Total


1 year


Years


Years


5 Years(In thousands)Debt, including estimated interest payments*

$
492,600


$
492,600


$



$



$
Operating leases:Real estate


641,312



130,018



228,467



154,027



128,800Equipment


8,131



3,997



4,017



117



Merchandise purchases


206,263



206,263











Construction contracts


857



857











Other contractual commitments


6,493



6,229



259



5



Long-term obligations:Non-qualified retirement plans


23,858



2,775



4,780



4,422



11,881Unrecognized tax benefits


6,192



3,473



2,719







Total Commitments

$
1,385,706


$
846,212


$
240,242


$
158,571


$
140,681     *
    
    Interest payments were estimated using our current borrowing
    rates as of January 30, 2010. The table above does not
    include any debt payments related to our new Credit Facility
    entered into on April 7, 2010. See BPW Transactionsand Note 20, Subsequent Events, to our
    consolidated financial statements for more information related
    to the Credit Facility.  Debt.  $250.0 Million Secured Revolving Loan
    Facility with AEON
     42




---



##### Table of Contents



$200.0 Million Term Loan Facility with AEON
      Term Loan with AEON (U.S.A.)
 43




---



##### Table of Contents



Operating Leases.
      Merchandise Purchases.
  Construction Contracts.
  Other Contractual Commitments. 30-day
  Long-Term Obligations.
    Unrecognized Tax Benefits.
 44




---



##### Table of Contents



Inflation
    and Changing Prices
    Exchange
    Rates
    New
    Accounting Pronouncements
  , Summary of Significant Accounting
    Policies
  Forward-looking
    Information
    
    the continuing material impact of the deterioration in the
    U.S. economic environment on our business, continuing
    operations, liquidity, financing plans and financial results,
    including substantial negative impact on consumer discretionary
    spending and consumer confidence, substantial loss of household
    wealth and savings, the disruption and significant tightening in
    the U.S. credit and lending markets, and potential
    long-term unemployment levels;
    satisfaction of all borrowing conditions under our credit
    facilities including accuracy of all representations and
    warranties, no events of default, absence of material adverse
    effect or change, and all other borrowing conditions;
    any lack of sufficiency of available cash flows and other
    internal cash resources to satisfy all future operating needs
    and other cash requirements;
    ability to access on satisfactory terms, or at all, adequate
    financing and sources of liquidity necessary to fund our
    business and continuing operations and to obtain further
    increases in our credit facilities as may be needed from time to
    time;
    the success and customer acceptance of our new merchandise
    offerings;
    risks associated with our appointment of an exclusive global
    merchandise buying agent, the anticipated benefits and cost
    savings from this arrangement may not be realized or may take
    longer to realize than expected and the risk that upon any
    cessation of the relationship, for any reason, we would be
    unable to successfully transition to an internal or other
    external sourcing function; 45




---



##### Table of Contents




    ability to continue to purchase merchandise on open account
    purchase terms at existing or future expected levels and with
    acceptable payment terms and the risk that suppliers could
    require earlier or immediate payment or other security due to
    any payment or liquidity concerns;
    risks and uncertainties in connection with any need to source
    merchandise from alternate vendors;
    any disruption in our supply of merchandise;
    ability to successfully execute, fund, and achieve supply chain
    initiatives, anticipated lower inventory levels, cost
    reductions, and other initiatives;
    the risk that anticipated benefits from the sale of the J. Jill
    brand business may not be realized or may take longer to realize
    than expected, and the risk that estimated or anticipated costs,
    charges and liabilities to settle and complete the transition
    and exit from and disposal of the J. Jill brand business,
    including both retained obligations and contingent risk for
    assigned obligations, may materially differ from or be
    materially greater than anticipated;
    continuing satisfaction of all conditions to funding under our
    Credit Facility;
    future store closings and success of and necessary funding for
    closing underperforming stores;
    ability to reduce spending as needed;
    ability to achieve our 2010 financial plan for operating
    results, working capital and cash flows;
    any negative publicity concerning the specialty retail business
    in general or our business in particular;
    ability to accurately estimate and forecast future regular-price
    and markdown selling, operating cash flows and other future
    financial results and financial position;
    risk of impairment of goodwill and other intangible and
    long-lived assets;
    the risk of continued compliance with NYSE continued-listing
    conditions, including
    thirty-day
    average $1 trading price and $75 million market
    capitalization and stockholders equity, and other
    continued listing conditions;
    the impact of the deterioration in investment return and net
    asset values in the capital markets and the impact on increased
    expense and funding for pension and other postretirement
    obligations; and
    risks and uncertainties associated with the outcome of
    litigation, claims and proceedings and risk that actual
    liabilities, assessments and financial impact will exceed any
    estimated, accrued or expected amounts or outcomes.    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk   46




---



##### Table of Contents



47




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data    INDEX
  PageReport of Independent Registered Public Accounting Firm


F-2Consolidated Statements of Operations for the Years Ended
    January 30, 2010, January 31, 2009 and
    February 2, 2008


F-3Consolidated Balance Sheets as of January 30, 2010 and
    January 31, 2009


F-4Consolidated Statements of Cash Flows for the Years Ended
    January 30, 2010, January 31, 2009 and
    February 2, 2008


F-5Consolidated Statements of Stockholders (Deficit) Equity
    for the Years Ended January 30, 2010, January 31, 2009
    and February 2, 2008


F-6Notes to Consolidated Financial Statements


F-7   Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Disclosure
    Controls and Procedures
    Form 10-K, Rules 13a-15(e) 15d-15(e)
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
   48




---



##### Table of Contents



Internal Control-Integrated
    Framework
  Form 10-K.
  Changes
    in Internal Controls over Financial Reporting
    Form 10-K
    
    Expanded training for tax, accounting and finance personnel to
    further develop the knowledge base resident within the Company
    and ensured the adequacy of qualified, trained staff to address
    complex, non-routine transactions;
    Further enhanced procedures to help ensure that the proper
    accounting for all complex, non-routine transactions were
    researched, detailed in memoranda and reviewed by senior
    management prior to recording;
    Strengthened the communication and collaboration among the
    various departments within the Company; and
    Supplemented the Companys internal resources with external
    advisors with specialized expertise as non-routine or complex
    issues arose throughout the year.  Form 10-K
 49




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control  Integrated Framework
        Internal Control  Integrated Framework
    /s/ Deloitte &
    Touche llp
    50




---



##### Table of Contents



Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance    (781) 741-4500, e-mail
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   51




---



##### Table of Contents



Equity
    Compensation Plan Information
  (c)Number of Securities(a)


(b)


Remaining Available forNumber of Securities to


Weighted-Average


Future Issuance Underbe Issued Upon Exercise


Exercise Price of


Equity Compensation Plansof Outstanding Options,


Outstanding Options,


(Excluding SecuritiesPlan Category

Warrants and Rights


Warrants and Rights


Reflected in Column (a))Equity compensation plans approved by security holders


11,732,909


$
22.76



2,396,712Equity compensation plans not approved by security holders










Total


11,732,909


$
22.76



2,396,712   Stock-Based Compensation
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   52




---



##### Table of Contents



PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules    Financial Statements:
              Financial Statement Schedules:
        (2)





Plan of Acquisition, Reorganization, Arrangement, Liquidation
    or Succession.2.1





Asset Purchase Agreement, dated as of June 7, 2009, by and
    among The Talbots, Inc., The Talbots Group, Limited Partnership,
    J. Jill, LLC, Birch Pond Realty Corporation, and Jill
    Acquisition LLC.(31)2.2





Amendment No. 1 to Asset Purchase Agreement and Parent
    Disclosure Schedule, dated as of July 2, 2009, by and among
    The Talbots, Inc., The Talbots Group, Limited Partnership, J.
    Jill, LLC, Birch Pond Realty Corporation, and Jill Acquisition
    LLC.(88)2.3





Amendment No. 2 to Asset Purchase Agreement, dated as of
    September 30, 2009, by and among The Talbots, Inc., The
    Talbots Group, Limited Partnership, J. Jill, LLC, Birch Pond
    Realty Corporation, and Jill Acquisition LLC.(88)2.4





Agreement and Plan of Merger, by and among The Talbots, Inc.,
    Tailor Acquisition, Inc. and BPW Acquisition Corp., dated as of
    December 8, 2009.(89)2.5





First Amendment to the Agreement and Plan of Merger, dated as of
    February 16, 2010, by and among The Talbots, Inc., Tailor
    Acquisition, Inc. and BPW Acquisition Corp.(91)2.6





Second Amendment to Agreement and Plan of Merger, dated as of
    April 6, 2010, by and among The Talbots, Inc., Tailor
    Acquisition, Inc. and BPW Acquisition Corp.(94)(3)





Articles of Incorporation and By-laws.3.1





Certificate of Incorporation, as amended, of Talbots.(1)(12)(15)3.2





By-laws of Talbots and amendment thereto adopted on
    April 6, 2010.(1)(97)(4)





Instruments Defining the Rights of Security Holders,
    including Indentures.4.1





Form of Common Stock Certificate of Talbots.(1)4.2





Form of Warrant Agreement, by and between The Talbots, Inc.,
    Computershare Inc. and Computershare Trust Company, N.A.,
    including Form of Warrant to purchase shares of Talbots common
    stock(95)4.3





Warrant Agreement, including Form of Warrant, dated as of
    February 26, 2008, by and between BPW Acquisition Corp. and
    Mellon Investor Services LLC, and the First Amendment thereto,
    dated as of April 14, 2010, by and between The Talbots,
    Inc. (as successor to BPW Acquisition Corp.) and Mellon Investor
    Services LLC. (96)(98) 53




---



##### Table of Contents



(10)





Material Contracts10.1





Stockholders Agreement, dated as of November 18, 1993,
    between Talbots and AEON (U.S.A.), Inc.(2)10.2





Revolving Credit Agreement, dated as of January 25, 1994,
    between Talbots and The Bank of Tokyo-Mitsubishi UFJ
    Trust Company, as amended.(2)(4)(8)(19)(21)(26)(34)(44)10.3





Termination Agreement dated as of April 13, 2007 between
    The Talbots, Inc. and The Bank of Tokyo-Mitsubishi, Ltd.
    regarding the Credit Agreement dated as of January 25,
    1994.(49)10.4





Credit Agreement between Talbots and The Bank of
    Tokyo-Mitsubishi UFJ Trust Company, dated as of
    April 17, 1998, as amended.(7)(10)(17)(22)(30)(36)10.5





Termination Agreement dated as of April 13, 2007 between
    The Talbots, Inc. and The Bank of Tokyo-Mitsubishi, Ltd.
    regarding the Credit Agreement dated as of April 17,
    1998.(49)10.6





Credit Agreement dated as of March 28, 2007 between The
    Talbots, Inc. and The Bank of Tokyo-Mitsubishi, Ltd., as
    amended.(49)(65)10.7





Revolving Credit Agreement, dated as of January 25, 1994,
    between Talbots and The Norinchukin Bank, as
    amended(2)(7)(8)(17)(21)(37)(49)10.8





Revolving Credit Agreement, dated as of January 25, 1994,
    between Talbots and Sumitomo Mitsui Banking Corporation
    (formerly The Sakura Bank, Limited), as
    amended.(2)(7)(11)(16)(19)(26)(34)(44)(62)(68)10.9





Amendment, dated as of February 5, 2009, to Revolving
    Credit Agreement between The Talbots, Inc. and Sumitomo Banking
    Corporation.(80)10.10





Third Amendment to Lease Agreement, made as of May 3, 2006,
    by and between National Fire Protection Association and The J.
    Jill Group, Inc.(35)10.11





Guarantee of Lease, made as of May 3, 2006, by The Talbots,
    Inc. to National Fire Protection Association.(35)10.12





Revolving Loan Credit Agreement, dated April 17, 2003,
    between Mizuho Corporate Bank, Ltd. and
    Talbots.(17)(18)(21)(38)(48)(71)10.13





Revolving Loan Credit Agreement, dated January 28, 2004,
    between Talbots and Mizuho Corporate Bank,
    Ltd.(19)(26)(28)(44)(63)10.14





Revolving Loan Credit Agreement by and between The Talbots, Inc.
    and Mizuho Corporation, Ltd. dated February 2, 2006.(29)10.15





Term Loan Agreement, dated as of July 24, 2006, among The
    Talbots, Inc., the lenders from time to time party thereto and
    Mizuho Corporate Bank, Ltd., as arranger and administrative
    agent, as amended.(40)(51)(59)(66)10.16





Guaranty (in connection with the Term Loan Agreement dated as of
    July 24, 2006) dated December 31, 2007, made by
    The Talbots Group, Limited Partnership, in favor of each of the
    Lenders and Mizuho Corporate Bank, Ltd., as arranger and
    administrative agent for the Lenders.(66)10.17





General Financing Agreement between The Talbots, Inc. and Mizuho
    Corporate Bank, Ltd., dated as of August 24, 2007.(56)10.18





Amended and Restated Promissory Note between The Talbots, Inc.
    and Mizuho Corporate Bank, Ltd., dated January 28, 2008.(64)10.19





Uncommitted Letter of Credit Facility dated June 28, 2006
    between The Talbots, Inc., The J. Jill Group, Inc., J.J.
    Company, Inc., J. Jill LLC, and J. Jill GP (collectively
    Talbots) and Bank of America.(39)10.20





Uncommitted Lines of Credit Letter dated February 15, 2006
    between The Talbots, Inc. and Bank of America.(27)10.21





Uncommitted Line of Credit Facility dated March 26, 2007
    between The Talbots, Inc. and Bank of America.(47)(60)10.22





Uncommitted Letter of Credit Facility dated March 26, 2007
    between The Talbots, Inc., The J. Jill Group, Inc., J.J.
    Company, Inc., J. Jill LLC, J. Jill GP and Bank of America.(47)10.23





Stock Purchase Agreement, dated as of November 26, 1993,
    between Talbots and AEON (U.S.A.), Inc.(2)10.24





Amended Repurchase Program, dated as of April 29, 2005,
    between Talbots and AEON (U.S.A.), Inc.(20) 54




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##### Table of Contents



10.25





Trademark Purchase and License Agreement, dated as of
    November 26, 1993, between AEON Co. Ltd., (as successor in
    interest to JUSCO (Europe) B.V.) and The Classics Chicago,
    Inc.(2)10.26





License Agreement, dated as of November 26, 1993, between
    The Classics Chicago, Inc., Talbots, Talbots International
    Retailing Limited, Inc., Talbots (Canada), Inc. and Talbots
    (U.K.) Retailing Limited.(2)10.27





Amendment to License Agreement, dated January 29, 1997,
    among The Classics Chicago, Inc., Talbots, Talbots International
    Retailing Limited, Inc., Talbots (Canada), Inc., and Talbots
    (U.K.) Retailing, Ltd.(6)10.28





Tax Allocation Agreement, dated as of November 18, 1993,
    between AEON (U.S.A.), Inc., Talbots, Talbots International
    Retailing Limited, Inc., Talbots (U.K.) Retailing Limited and
    The Classics Chicago, Inc.(2)10.29





Services Agreement, dated as of November 18, 1993, between
    Talbots Japan Co., Ltd. and Talbots.(2)10.30





Consulting and Advisory Services Contract between AEON (U.S.A.),
    Inc. and Talbots dated as of November 1, 1999.(9)10.31





The Talbots, Inc. Supplemental Retirement Plan, as amended and
    restated effective January 1, 2009. (70)(82)*10.32





The Talbots, Inc. Supplemental Savings Plan, as amended and
    restated effective January 1, 2009.(82)*10.33





The Talbots, Inc. Deferred Compensation Plan, as amended and
    restated effective January 1, 2009.(82)*10.34





The Talbots, Inc. Amended and Restated 1993 Executive Stock
    Based Incentive Plan.(15)*10.35





The Talbots, Inc. 2003 Executive Stock Based Incentive Plan, as
    amended through February 28, 2008.(50)*10.36





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Nonqualified Stock Option Agreement.(67)*10.37





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Restricted Stock Agreement.(67)*10.38





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Restricted Stock Agreement (prior form).(24)*10.39





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Nonqualified Stock Option Agreement (prior form).(24)*10.40





The Talbots, Inc. Directors Deferred Compensation Plan restated
    as of May 27, 2004.(23)*10.41





The Talbots, Inc. Restated Directors Stock Plan as amended
    through March 5, 2005.(13)*10.42





Form of Restricted Stock Unit Award under The Talbots, Inc.
    Restated Directors Stock Plan.(33)*10.43





Form of Option Agreement pursuant to The Talbots, Inc. Restated
    Directors Stock Plan (prior form).(45)*10.44





Form of Performance Accelerated Option Agreement pursuant to The
    Talbots, Inc. Restated Directors Stock Plan.(76)*10.45





Form of Option Agreement pursuant to The Talbots, Inc. Restated
    Directors Stock Plan.(82)*10.46





Director Compensation Arrangements, adopted September 25,
    2008. (76)(82)*10.47





The Talbots, Inc. Management Incentive Plan Performance
    Criteria.(52)*10.48





Summary of executive officer annual cash incentive program
    (Management Incentive Plan and Turnaround Incentive Plan) and
    long-term equity incentive program structure for 2008.(67)*10.49





Employment Agreement by and between The Talbots, Inc. and Trudy
    F. Sullivan, dated August 6, 2007, and Amendment
    No. 1, dated as of June 16, 2009, thereto. (55)(86)*10.50





Stock Option Agreement by and between The Talbots, Inc. and
    Trudy F. Sullivan, dated August 7, 2007.(55)*10.51





Offer Letter between The Talbots, Inc. and Paula Bennett, dated
    January 3, 2008.(69)*10.52





Change in Control Agreement between The Talbots, Inc. and Paula
    Bennett, dated January 28, 2008.(69)*10.53





Severance Agreement between The Talbots, Inc. and Paula Bennett,
    dated January 28, 2008.(69)*10.54





Retention Agreement between The Talbots, Inc. and Paula Bennett
    dated November 11, 2008.(82)* 55




---



##### Table of Contents



10.55





Offer Letter between The Talbots, Inc. and Basha Cohen, dated
    December 11, 2007.(69)*10.56





Change in Control Agreement between The Talbots, Inc. and Basha
    Cohen, dated December 17, 2007.(69)*10.57





Severance Agreement between The Talbots, Inc. and Basha Cohen,
    dated December 17, 2007.(69)*10.58





Offer Letter between The Talbots, Inc. and Lori Wagner, dated
    February 19, 2008.(69)*10.59





Change in Control Agreement between The Talbots, Inc. and Lori
    Wagner, dated March 31, 2008.(69)*10.60





Severance Agreement between The Talbots, Inc. and Lori Wagner,
    dated March 31, 2008.(69)*10.61





Change in Control Agreements between Talbots and certain
    officers of Talbots.(2)(3)*10.62





Letter Agreement between The Talbots, Inc. and Edward L. Larsen,
    dated December 5, 2008.(82)*10.63





Offer Letter between The Talbots, Inc. and Michael Scarpa, dated
    December 4, 2008.(82)*10.64





Severance Agreement between The Talbots, Inc. and Michael
    Scarpa, dated December 4, 2008.(82)*10.65





Change in Control Agreement between The Talbots, Inc. and
    Michael Scarpa, dated December 4, 2008.(82)*10.66





Term Loan Agreement, dated as of July 16, 2008, between The
    Talbots, Inc. (as Borrower) and AEON (U.S.A.), Inc. (as
    Lender).(74)10.67





First Amendment, dated as of March 12, 2009, to the Term
    Loan Agreement between The Talbots, Inc. and AEON (U.S.A.),
    Inc., dated as of July 16, 2008.(81)10.68





Second Amendment, dated as of December 28, 2009, to the
    Term Loan Agreement between The Talbots, Inc. and AEON (U.S.A.),
    Inc., dated as of July 16, 2008.(90)10.69





Annex I, dated as of July 31, 2008, to the General
    Financing Agreement between The Talbots, Inc. and Mizuho
    Corporate Bank, Ltd., dated as of August 24, 2007.(75)10.70





Offer Letter between The Talbots, Inc. and Gregory I. Poole,
    dated June 5, 2008.(75)*10.71





Change in Control Agreement between The Talbots, Inc. and
    Gregory I. Poole, dated June 5, 2008.(82)*10.72





Severance Agreement between The Talbots, Inc. and Gregory I.
    Poole, dated June 5, 2008.(75)*10.73





Revolving Credit Agreement, dated as of December 29, 2008,
    between The Talbots, Inc. and Mizuho Corporate Bank, Ltd.(77)10.74





Revolving Credit Agreement, dated as of December 30, 2008,
    between The Talbots, Inc. and Sumitomo Mitsui Banking
    Corporation.(77)10.75





Revolving Credit Agreement, dated as of January 2, 2009,
    between The Talbots, Inc. and The Norinchukin Bank.(77)10.76





Revolving Credit Agreement, dated as of February 26, 2009,
    between The Talbots, Inc. and The Bank of Tokyo-Mitsubishi UFJ,
    Ltd.(79)10.77





Commitment Letter and Summary of Proposed $200,000,000 Loan
    Facility Agreement between The Talbots, Inc. (as Borrower) and
    AEON Co., Ltd. (as Lender), dated February 5, 2009.(78)10.78





Term Loan Facility Agreement between The Talbots, Inc. and AEON
    Co., Ltd., dated as of February 25, 2009.(79)10.79





First Amendment, dated as of December 28, 2009, to the Term
    Loan Facility Agreement between The Talbots, Inc. and AEON
    (U.S.A.), Inc., dated as of February 25, 2009.(90)10.80





Form of 409A Letter Agreement, dated December 31, 2008,
    between The Talbots, Inc. and Richard T. OConnell, Jr.,
    John Fiske, III, Michael Smaldone, Lori Wagner, Basha Cohen
    and Gregory I. Poole.(82)*10.81





Offer Letter between The Talbots, Inc. and Michael Smaldone,
    dated December 13, 2007.(82)*10.82





Severance Agreement between The Talbots, Inc. and Michael
    Smaldone, dated December 17, 2007.(82)*10.83





Change in Control Agreement between The Talbots, Inc. and
    Michael Smaldone, dated December 17, 2007.(82)*10.84





Letter Agreement between the Talbots, Inc. and Michelle M.
    Mandell, dated April 10, 2009.(82)*10.85





Offer Letter between The Talbots, Inc. and Benedetta I.
    Casamento, dated March 6, 2009.(82)* 56




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##### Table of Contents



10.86





Severance Agreement between The Talbots, Inc. and Benedetta I.
    Casamento, dated April 6, 2009.(82)*10.87





Change in Control Agreement between The Talbots, Inc. and
    Benedetta I. Casamento, dated April 6, 2009.(82)*10.88





Support Letters from AEON Co., Ltd., dated April 9,
    2009.(82)10.89





Secured Revolving Credit Agreement dated as of April 10,
    2009 between Talbots and AEON Co., Ltd.(83)10.90





Amended and Restated Secured Revolving Credit Agreement dated as
    of December 28, 2009 between The Talbots, Inc. and AEON
    Co., Ltd.(90)10.91





Amended and Restated Security Agreement dated as of
    December 28, 2009 entered into by The Talbots, Inc. in
    favor of AEON Co., Ltd.(90)10.92





Short Term Loan Agreement by and between The Talbots, Inc. and
    The Norinchukin Bank, dated as of April 17, 2009.(84)10.93





Amendments to Compensation Arrangements of Richard T.
    OConnell, Jr., effective April 30, 2009.(85)*10.94





Severance Agreement between The Talbots, Inc. and Richard T.
    OConnell, Jr., effective as of April 30, 2009.(87)*10.95





Summary of The Talbots, Inc. Executive Medical Plan dated
    June 19, 2007.(88)*10.96





Offer Letter between The Talbots, Inc. and John Fiske, III,
    dated as of March 20, 2009, executed on September 20,
    2009.(88)*10.97





Severance Agreement between The Talbots, Inc. and John
    Fiske, III, dated as of March 20, 2009, executed on
    September 20, 2009.(88)*10.98





Change in Control Agreement by and between The Talbots, Inc. and
    John Fiske, III, effective April 1, 2007.(51)*10.99





Repurchase, Repayment and Support Agreement, by and among The
    Talbots, Inc., BPW Acquisition Corp., AEON (U.S.A.), Inc. and
    AEON Co., Ltd., dated as of December 8, 2009.(89)10.100





Sponsors Agreement, by and among Perella Weinberg Partners
    Acquisition LP, BPW BNYH Holdings LLC, The Talbots, Inc. and BPW
    Acquisition Corp., dated as of December 8, 2009.(89)10.101





Commitment Letter, by and between General Electric Capital
    Corporation and The Talbots, Inc., dated as of December 7,
    2009.(89)10.102





Secured Revolving Credit Agreement, dated April 7, 2010, by
    and among The Talbots, Inc., Talbots Classics Finance Company,
    Inc., The Talbots Group Limited Partnership, each as a borrower,
    the subsidiaries of the Company from time to time party thereto,
    as guarantors, and General Electric Capital Corporation, as
    agent, for the financial institutions from time to time party
    thereto, and as a lender. (97)10.103





Guaranty and Security Agreement, dated as of April 7, 2010,
    by The Talbots, Inc., The Talbots Group, Limited Partnership,
    Talbots Classics Finance Company, Inc., and certain other
    parties thereto, in favor of General Electric Capital
    Corporation, as administrative agent for the lenders and each
    other secured party. (97)10.104





Private Label Credit Card Access and Monitoring Agreement, dated
    as of April 7, 2010, by and among The Talbots, Inc., each
    other Credit Party as defined in the Credit Agreement, Talbots
    Classics National Bank, and General Electric Capital
    Corporation. (97)10.105





Summary of financing incentive awards and operating performance
    incentive awards approved on February 25, 2010.(92)*10.106





Stipulation with respect to the action captioned
    Campbell v. The Talbots, Inc., et al., dated March 6,
    2010.(93)10.107





Amended and Restated Registration Rights Agreement, dated as of
    April 7, 2010, by and among The Talbots, Inc., BPW
    Acquisition Corp., Perella Weinberg Partners Acquisition LP,
    BNYH BPW Holdings LLC, Roger W. Einiger, J. Richard Fredericks
    and Wolfgang Schoellkopf.(97)10.108





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Special Restricted Stock Unit Award Agreement.(99)*     *
    
    Management contract and compensatory plan or arrangement. 57




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##### Table of Contents



(11)
    
    Statement re: Computation of Per Share Earnings.11.1
    
    Incorporated by reference to Note 17, Loss Per
    Share, of the Companys consolidated financial
    statements for the fiscal year ended January 30, 2010,
    included in this Report.(21)
    
    Subsidiaries.21.1
    
    List of Subsidiaries of The Talbots, Inc.(99)(23)
    
    Consents of Experts and Counsel.23.1
    
    Consent of Independent Registered Public Accounting Firm,
    Deloitte & Touche LLP.(99)(31)
    
    Rule 13a-14(a)/15d-14(a)
    Certifications.  31.1
    
    Certification of Trudy F. Sullivan, President and Chief
    Executive Officer of the Company, pursuant to Securities
    Exchange Act
    Rule 13a-14(a).(99)31.2
    
    Certification of Michael Scarpa, Chief Operating Officer, Chief
    Financial Officer, and Treasurer of the Company, pursuant to
    Securities Exchange Act
    Rule 13a-14(a).(99)  (32)
    
    Section 1350 Certifications.  32.1
    
    Certifications pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of The Sarbanes-Oxley Act
    of 2002, by Trudy F. Sullivan, President and Chief Executive
    Officer of the Company and Michael Scarpa, Chief Operating
    Officer, Chief Financial Officer, and Treasurer of the
    Company.(99)    1
    
    Incorporated by reference to the exhibits filed with Talbots
    Registration Statement on
    Form S-1
    (No. 33-69082),
    which Registration Statement became effective November 18,
    1993.2
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 26, 1994 (SEC file number reference
    001-12552).3
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 27, 1995 (SEC file number reference
    001-12552).4
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated December 23, 1995 (SEC file number reference
    001-12552).5
    
    Intentionally omitted.6
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated May 1, 1997 (SEC file number reference
    001-12552).7
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated May 1, 1998 (SEC file number reference
    001-12552).8
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 29, 1999 (SEC file number reference
    001-12552).9
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated July 1, 1999 (SEC file number reference
    001-12552).10
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated November 24, 1999 (SEC file number reference
    001-12552).11
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 25, 2000 (SEC file number reference
    001-12552).12
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated May 24, 2000 (SEC file number reference
    001-12552).13
    
    Incorporated by reference to the 2005 Proxy Statement
    (Exhibit A) dated April 21, 2005 (SEC file number
    reference
    001-12552).14
    
    Intentionally omitted.15
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated September 6, 2001 (SEC file number reference
    001-12552).16
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated March 13, 2003 (SEC file number reference
    001-12552). 58




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##### Table of Contents



17
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated July 24, 2003 (SEC file number reference
    001-12552).18
    
    Incorporated by reference to the Current Report on
    Form 8-K
    dated April 9, 2008.19
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated February 24, 2004 (SEC file number reference
    001-12552).20
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 29, 2005.21
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 12, 2005 (SEC file number reference
    001-12552).22
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated June 4, 2004 (SEC file number reference
    001-12552).23
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended July 31, 2004 (SEC file number
    reference
    001-12552).24
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated November 18, 2004 (SEC file number reference
    001-12552).25
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated December 23, 2004 (SEC file number reference
    001-12552).26
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 26, 2005 (SEC file number reference
    001-12552).27
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated February 22, 2006.28
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 20, 2006.29
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated February 2, 2006.30
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 6, 2005 (SEC file number reference
    001-12552).31
    
    Incorporated by reference to the exhibit filed with Current
    Report on
    Form 8-K
    filed on June 8, 2009.32
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated August 17, 2005.33
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated March 3, 2005 (SEC file number reference
    001-12552).34
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 26, 2006.35
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated May 3, 2006.36
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 7, 2006.37
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 17, 2006.38
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 18, 2006.39
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated July 7, 2006.40
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated July 24, 2006.41
    
     43 Intentionally omitted.44
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 24, 2007.   45
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated May 25, 2005.   46
    
    Intentionally omitted.   47
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated March 26, 2007.   48
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated March 22, 2007.49
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 16, 2007.50
    
    Incorporated by reference to the 2008 Proxy Statement
    (Appendix A) dated April 25, 2008.   51
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended May 5, 2007.   52
    
    Incorporated by reference to the Current Report on
    Form 8-K
    dated March 1, 2007. 59




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##### Table of Contents



53
    
    Intentionally omitted.54
    
    Incorporated by reference to the Current Report on
    Form 8-K
    dated August 6, 2007.55
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended August 4, 2007.56
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated August 27, 2007.57
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended November 3, 2007.58
    
    Intentionally omitted.59
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated November 26, 2007.60
    
    Incorporated by reference to the Current Report on
    Form 8-K
    dated December 5, 2007.61
    
    Intentionally omitted.62
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated February 1, 2008.63
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 23, 2008.64
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 28, 2008.65
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 4, 2008.66
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated December 31, 2007.67
    
    Incorporated by reference to the Current Report on
    Form 8-K
    dated February 28, 2008 and the exhibits filed therewith.68
    
    Incorporated by reference to the Current Report on
    Form 8-K
    dated March 13, 2008.69
    
    Incorporated by reference to the exhibits filed with Annual
    Report on
    Form 10-K
    for the period ended February 2, 2008.70
    
    Incorporated by reference to the Current Report on
    Form 8-K
    dated February 25, 2009.71
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated April 9, 2008.72
    
     73 Intentionally omitted.74
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated July 18, 2008.75
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended August 2, 2008.76
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended November 1, 2008.77
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated December 29, 2008.78
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated February 5, 2009.79
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated February 25, 2009.80
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated March 3, 2009.81
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated March 12, 2009.82
    
    Incorporated by reference to the exhibits filed with the Annual
    Report on
    Form 10-K
    dated April 16, 2009.83
    
    Incorporated by reference to the exhibit filed with the Current
    Report on
    Form 8-K
    dated April 10, 2009.84
    
    Incorporated by reference to the exhibit filed with the Current
    Report on
    Form 8-K
    filed on April 23, 2009.85
    
    Incorporated by reference to the Current Report on
    Form 8-K
    filed on May 6, 2009.86
    
    Incorporated by reference to the exhibit filed with the Current
    Report on
    Form 8-K
    filed on June 18, 2009.87
    
    Incorporated by reference to the exhibits filed with the
    Quarterly Report on
    Form 10-Q
    filed on September 10, 2009.88
    
    Incorporated by reference to the exhibits filed with the
    Quarterly Report on
    Form 10-Q
    filed on December 10, 2009. 60




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##### Table of Contents



89
    
    Incorporated by reference to the exhibits filed with the Current
    Report on
    Form 8-K
    filed on December 10, 2009.90
    
    Incorporated by reference to the exhibits filed with the Current
    Report on
    Form 8-K
    filed on January 4, 2010.91
    
    Incorporated by reference to the exhibit filed with the Current
    Report on
    Form 8-K
    filed on February 17, 2010.92
    
    Incorporated by reference to the Current Report on
    Form 8-K
    filed on March 3, 2010.93
    
    Incorporated by reference to the exhibit filed with the Current
    Report on
    Form 8-K
    filed on March 9, 2010.94
    
    Incorporated by reference to the exhibits filed with the Current
    Report on
    Form 8-K
    filed on April 6, 2010.95
    
    Incorporated by reference to Appendix H to the document
    included in the Registration Statement on
    Form S-4
    filed on March 1, 2010.96
    
    Incorporated by reference to Appendix A to the proxy
    statement filed by BPW Acquisition Corp. on April 6, 2010.97
    
    Incorporated by reference to the Current Report on
    Form 8-K
    filed on April 8, 2010.98
    
    Incorporated by reference to the exhibit filed with the Current
    Report on Form 8-K filed on April 14, 2010.99
    
    Filed with this
    Form 10-K. 61




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##### Table of Contents



SIGNATURES    The Talbots, Inc.
  By:
    /s/  Michael
    Scarpa   Chief Operating Officer,
 Chief Financial Officer, and Treasurer
 (Principal Financial and Accounting Officer)
      /s/  Trudy
    F. SullivanTrudy
    F. SullivanPresident and
    Chief Executive Officer (Principal Executive Officer)

/s/  John
    W. GleesonJohn
    W. GleesonDirector/s/  Gary
    M. PfeifferGary
    M. PfeifferDirector/s/  Susan
    M. SwainSusan
    M. SwainDirector  62




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##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Statements of Operations for the
    Years Ended January 30, 2010, January 31, 2009 and
    February 2, 2008


F-3Consolidated Balance Sheets as of
    January 30, 2010 and January 31, 2009


F-4Consolidated Statements of Cash Flows for the
    Years Ended January 30, 2010, January 31, 2009 and
    February 2, 2008


F-5Consolidated Statements of Stockholders
    (Deficit) Equity for the Years Ended January 30, 2010,
    January 31, 2009 and February 2, 2008


F-6Notes to Consolidated Financial Statements


F-7   F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Internal Control  Integrated Framework
  Deloitte
    & Touche LLP
    F-2




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##### Table of Contents



THE
    TALBOTS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS
 Amounts
    in thousands except per share data
   Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008Net Sales

$
1,235,632


$
1,495,170


$
1,708,115Costs and ExpensesCost of sales, buying and occupancy


821,278



1,049,785



1,143,309Selling, general and administrative


403,204



523,136



523,286Restructuring charges


10,273



17,793



3,710Merger costs


8,216







Impairment of store assets


1,351



2,845



2,606Operating (Loss) Income


(8,690
)


(98,389
)


35,204InterestInterest expense


28,394



20,589



35,400Interest income


271



299



1,289Interest Expense  net


28,123



20,290



34,111(Loss) Income Before Taxes


(36,813
)


(118,679
)


1,093Income Tax (Benefit) Expense


(11,505
)


20,842



1,050(Loss) Income from Continuing Operations


(25,308
)


(139,521
)


43Loss from Discontinued Operations, net of tax


(4,104
)


(416,138
)


(188,884
)Net Loss

$
(29,412
)

$
(555,659
)

$
(188,841
)Basic Loss Per Share:Continuing operations

$
(0.47
)

$
(2.63
)

$
(0.01
)Discontinued operations


(0.08
)


(7.78
)


(3.57
)Net loss

$
(0.55
)

$
(10.41
)

$
(3.58
)Diluted Loss Per Share:Continuing operations

$
(0.47
)

$
(2.63
)

$
(0.01
)Discontinued operations


(0.08
)


(7.78
)


(3.57
)Net loss

$
(0.55
)

$
(10.41
)

$
(3.58
)Weighted Average Shares Outstanding:Basic


53,797



53,436



53,006Diluted


53,797



53,436



53,006    F-3




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##### Table of Contents



THE
    TALBOTS, INC. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 Amounts
    in thousands except share data
   January 30,


January 31,2010


2009ASSETSCurrent Assets:Cash and cash equivalents

$
112,775


$
16,718Customer accounts receivable  net


163,587



169,406Merchandise inventories


142,696



206,593Deferred catalog costs


6,685



4,795Due from related party


959



376Prepaid and other current assets


48,139



35,277Income tax refundable


2,006



26,646Assets held for sale  current






109,966Total current assets


476,847



569,777Property and equipment  net


220,404



277,363Goodwill


35,513



35,513Trademarks


75,884



75,884Other assets


17,170



12,756Total Assets

$
825,818


$
971,293LIABILITIES AND STOCKHOLDERS DEFICITCurrent Liabilities:Accounts payable

$
104,118


$
122,034Accrued liabilities


148,177



148,356Current portion of related party debt


486,494



Notes payable to banks






148,500Current portion of long-term debt






70,377Liabilities held for sale  current






94,190Total current liabilities


738,789



583,457Related party debt less current portion






20,000Long-term debt less current portion






238,000Deferred rent under lease commitments


111,137



115,282Deferred income taxes


28,456



28,456Other liabilities


133,072



164,195Commitments and contingenciesStockholders Deficit:Common stock, $0.01 par value; 200,000,000 authorized;
    81,473,215 sharesand 81,125,526 shares issued, respectively; and
    55,000,142 sharesand 55,376,371 shares outstanding, respectively


815



811Additional paid-in capital


499,457



492,932Retained deficit


(48,690
)


(19,278
)Accumulated other comprehensive loss


(51,179
)


(67,079
)Treasury stock, at cost: 26,473,073 shares and
    25,749,155 shares, respectively


(586,039
)


(585,483
)Total stockholders deficit


(185,636
)


(178,097
)Total Liabilities and Stockholders Deficit

$
825,818


$
971,293    F-4




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##### Table of Contents



THE
    TALBOTS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 Amounts
    in thousands
  Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss

$
(29,412
)

$
(555,659
)

$
(188,841
)Loss from discontinued operations, net of tax


(4,104
)


(416,138
)


(188,884
)(Loss) income from continuing operations


(25,308
)


(139,521
)


43Adjustments to reconcile (loss) income from continuing
    operations to net cash provided by operating activities:Depreciation and amortization


74,309



84,526



88,940Compensation expense related to stock-based awards


6,423



8,562



17,522Amortization of debt issuance costs


2,335



399



271Impairment of store assets


1,351



2,845



2,606Deferred rent


(11,559
)


(242
)


944Deferred income taxes


(12,116
)


44,769



(22,732
)Loss (gain) on disposal of property and equipment


223



(28
)


1,113Tax benefit from options exercised






76



347Excess tax benefit from options exercised










(347
)Changes in assets and liabilities:Customer accounts receivable


5,950



41,156



(6,119
)Merchandise inventories


64,311



41,325



40,469Deferred catalog costs


(1,890
)


1,453



(148
)Due from related party


(583
)


2,664



2,632Prepaid and other current assets


(9,257
)


(2,653
)


5,425Income tax refundable


24,640



(26,646
)


Accounts payable


(17,275
)


(20,898
)


38,085Accrued income taxes






(4,308
)


15,659Accrued liabilities


(14,016
)


(3,665
)


18,126Other assets


(1,285
)


13,047



(2,265
)Other liabilities


(5,066
)


(26,601
)


13,137Net cash provided by operating activities


81,187



16,260



213,708CASH FLOWS FROM INVESTING ACTIVITIES:Additions to property and equipment


(20,980
)


(44,698
)


(57,597
)Proceeds from disposal of property and equipment


61



2,555



Net cash used in investing activities


(20,919
)


(42,143
)


(57,597
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from related party borrowings


475,000



20,000



Payments on related party borrowings


(8,506
)






Payments on long-term borrowings


(308,351
)


(80,502
)


(80,469
)Payments on working capital notes payable


(156,500
)


(15,000
)


Proceeds from working capital notes payable


8,000



57,000



Proceeds from (payments on) working capital notes payable, net






106,500



(45,000
)Payment of debt issuance costs


(4,760
)


(866
)


Proceeds from options exercised






888



1,550Excess tax benefit from options exercised










347Purchase of treasury stock


(556
)


(1,505
)


(521
)Cash dividends






(28,752
)


(28,363
)Net cash provided by (used in) financing activities


4,327



57,763



(152,456
)EFFECT OF EXCHANGE RATE CHANGES ON CASH


503



(464
)


1,424CASH FLOWS FROM DISCONTINUED OPERATIONSOperating activities


(34,110
)


(20,119
)


11,677Investing activities


63,827



(18,684
)


(27,215
)Effect of exchange rate changes on cash


23



(154
)


1229,740



(38,957
)


(15,526
)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


94,838



(7,541
)


(10,447
)CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR


16,551



24,280



34,819DECREASE (INCREASE) IN CASH AND CASH EQUIVALENTS OF
    DISCONTINUED OPERATIONS


1,386



(188
)


(92
)CASH AND CASH EQUIVALENTS, END OF YEAR

$
112,775


$
16,551


$
24,280    F-5




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##### Table of Contents



THE
    TALBOTS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    (DEFICIT) EQUITY
 Amounts
    in thousands except share data
  AccumulatedAdditional


Retained


Other








TotalCommon Stock


Paid-in


Earnings


Comprehensive


Treasury


Comprehensive


StockholdersShares


Amount


Capital


(Deficit)


Loss


Stock


Loss


(Deficit) EquityBALANCE AT FEBRUARY 3, 2007


78,567,387


$
786


$
464,701


$
787,483


$
(26,202
)

$
(583,457
)





$
643,311Adoption of accounting guidance related to accounting for
    uncertainty in income taxes














(4,674
)














(4,674
)Cash dividends paid










(200
)


(28,163
)














(28,363
)Common stock issued as stock awards


1,014,336



10























10Compensation expense related to stock options










10,946



















10,946Compensation expense related to nonvested common stock awards










8,296



















8,296Stock options exercised, including tax benefit


173,720



1



1,886



















1,887Purchase of 265,540 shares of vested and nonvested common
    stock awards






















(521
)






(521
)Comprehensive (loss) income:Net loss














(188,841
)









$
(188,841
)


(188,841
)Translation adjustment


















2,528







2,528



2,528Change in pension and postretirement liabilities, net of tax


















10,200







10,200



10,200Comprehensive loss

























$
(176,113
)BALANCE AT FEBRUARY 2, 2008


79,755,443



797



485,629



565,805



(13,474
)


(583,978
)






454,779Adoption of accounting guidance related to changing the
    measurement date of the benefit plans to January 31, 2009














(897
)














(897
)Cash dividends paid










(225
)


(28,527
)














(28,752
)Common stock issued as stock awards


1,298,415



13























13Compensation expense related to stock options










4,677



















4,677Compensation expense related to nonvested common stock awards










4,178



















4,178Tax deficiency on vested stock awards










(2,277
)


















(2,277
)Stock options exercised, including tax benefit


71,668



1



950



















951Purchase of 915,489 shares of vested and nonvested common
    stock awards






















(1,505
)






(1,505
)Comprehensive (loss) income:Net loss














(555,659
)









$
(555,659
)


(555,659
)Translation adjustment


















(1,216
)






(1,216
)


(1,216
)Change in pension and postretirement liabilities, net of tax


















(52,389
)






(52,389
)


(52,389
)Comprehensive loss

























$
(609,264
)BALANCE AT JANUARY 31, 2009


81,125,526



811



492,932



(19,278
)


(67,079
)


(585,483
)






(178,097
)Common stock issued as stock awards


347,689



4























4Compensation expense related to stock options










2,574



















2,574Compensation expense related to nonvested common stock awards










3,951



















3,951Purchase of 723,918 shares of vested and nonvested common
    stock awards






















(556
)






(556
)Comprehensive (loss) income:Net loss














(29,412
)









$
(29,412
)


(29,412
)Translation adjustment


















895







895



895Change in pension and postretirement liabilities, net of tax


















15,005







15,005



15,005Comprehensive loss

























$
(13,512
)BALANCE AT JANUARY 30, 2010


81,473,215


$
815


$
499,457


$
(48,690
)

$
(51,179
)

$
(586,039
)





$
(185,636
)    F-6




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##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Description
    of Business        Recent Events and Managements Plan Debt, Subsequent
    Events,
  2.
    Recent
    Events and Managements Plan      year-over-year mark-ups Discontinued
    Operations
    
    In June 2008, management reduced corporate headcount by
    approximately 9% across multiple locations at all levels. F-7




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##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    During the third quarter of 2008, management completed the
    closing of its Kids, Mens and U.K. businesses which were not
    considered strategic to ongoing operations.
    During the third quarter of 2008, the Board of Directors
    approved a plan to sell the J. Jill business which was not
    considered strategic to ongoing operations.
    During 2008, management eliminated advertising in television and
    national print, contributing to $14.8 million less in
    spending from 2007.
    During 2008 and 2009, management changed its promotional cadence
    to monthly markdowns rather than its historical four clearance
    sales events per year, held a leaner inventory position and
    concentrated on better product flow and content. Management also
    decreased its inventory commitments in 2009.
    In 2008 and 2009, management reduced its annual gross capital
    expenditures (excluding construction allowances received from
    landlords) to $44.7 million and $21.0 million,
    respectively, from $57.6 million in 2007.
    In 2009, management initiated a program to achieve a
    $150.0 million annual expense reduction to be completed by
    the end of fiscal 2010, and has substantially achieved that goal
    as of January 30, 2010, including a reduction of
    $119.9 million in selling, general and administrative
    expenses and $26.8 million in cost of sales, buying and
    occupancy costs. Key components are as follows:  
    Reduced corporate headcount by approximately 17% in February
    2009, and again in June 2009, by approximately 20%
    Reduced hours worked in the Companys stores, distribution
    center and call center for 2009
    Eliminated matching contributions to the 401(k) plan for 2009,
    increased employee health care contributions for 2009,
    eliminated merit increases for 2009 and froze the Companys
    defined benefit pension plans
    Implemented broad-based non-employee overhead actions resulting
    in cost savings, primarily in the area of administration,
    marketing and store operations.  
    In February 2009, the Board approved the indefinite suspension
    of the quarterly dividend.
    In July 2009, management completed the sale of the J. Jill
    business to Jill Acquisition LLC (the Purchaser) for
    net cash proceeds of $64.3 million and closed the 75 J.
    Jill stores not purchased in the transaction. As of
    January 30, 2010, the lease liabilities for 69 of the 75
    unsold stores are settled. Four additional store leases were
    settled subsequent to January 30, 2010.
    In August 2009, management reorganized the Companys global
    sourcing activities and entered into a buying agency agreement
    with an affiliate of Li & Fung Limited, a Hong
    Kong-based global consumer goods exporter (Li &
    Fung) which, effective September 2009, is acting as the
    Companys exclusive global sourcing agent for substantially
    all Talbots apparel. In connection with the reorganization,
    management closed its Hong Kong and India sourcing offices and
    reduced its corporate sourcing headcount.
    In 2009, the Company managed its fall 2009 merchandise payables
    without the need to draw upon the $25.0 million working
    capital financial support commitment provided by AEON in April
    2009.
    In 2009, management closed 19 underperforming stores, some of
    which relate to store leases that expired during 2009 and some
    of which were pursuant to existing early termination right
    provisions.
    In 2009, management decreased its catalog circulation to
    approximately 36.6 million catalogs, down from
    approximately 55.0 million in 2008. F-8




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##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Restructuring Charges
    
    In July 2008, the Company entered into a $50.0 million
    subordinated working capital term loan facility with AEON
    (U.S.A.) (the AEON Facility) which was to mature in
    2012 and was interest-only until maturity. As of
    January 31, 2009, the Company had drawn $20.0 million
    on this facility and borrowed the remaining $30.0 million
    in early February 2009.
    In February 2009, the Company obtained a $200.0 million
    term loan facility from AEON (the AEON Loan) and
    borrowed $200.0 million which was used to repay all
    outstanding indebtedness under the Acquisition Debt Agreement
    related to the 2006 J. Jill acquisition. The Acquisition Debt
    Agreement required quarterly principal payments of
    $20.0 million. The new $200.0 million loan from AEON
    was interest-only until maturity. The term loan facility
    initially matured on August 31, 2009, but provided the
    Company with the option to extend the maturity for additional
    six-month periods, up to the third anniversary of the loan
    closing date, which was February 27, 2012, subject to
    earlier termination under the loan terms.
    In April 2009, AEON guaranteed the Companys outstanding
    debt under its then existing working capital facilities totaling
    $165.0 million, its then existing revolving credit
    facilities totaling $80.0 million, and its then existing
    $20 million term loan facility. AEON also agreed
    (i) that it would continue to provide a guaranty for a
    refinancing of any of that debt, which then matured at various
    dates on and before April 16, 2010 and (ii) if the
    lender failed to agree to refinance that debt on or before the
    then existing maturity date, or if any other condition occurred
    that required AEON to make a payment under its then existing
    guaranty, AEON would make a loan to the Company, due on or after
    April 16, 2010 and within the limits of AEONs then
    existing loan guaranty, to avoid any lack of the Companys
    financial resources caused by any such failure of refinancing.
    In April 2009, AEON also confirmed its support for the
    Companys working capital improvement initiatives for its
    merchandise payables management and that it would use
    commercially reasonable effort to provide the Company with
    financial support through loan or guarantee up to
    $25.0 million only if, and to the extent that, the Company
    may possibly fall short in achieving its targeted cash flow
    improvement for fall 2009 merchandise payables.
    In April 2009, the Company entered into a $150.0 million
    secured revolving loan facility with AEON. The facility was to
    mature upon the earlier of (i) April 17, 2010 or
    (ii) one or more securitization programs or structured
    loans by the Company or its subsidiaries in an aggregate
    equivalent principal amount to the revolving loan commitment
    amount, approved in advance by AEON as lender and in form and
    substance satisfactory to the lender. The facility was secured
    by (i) a first priority security interest in substantially
    all of the Companys consumer credit/charge card
    receivables and (ii) a first lien mortgage on the
    Companys Hingham, Massachusetts headquarters and
    Lakeville, Massachusetts distribution facility. Amounts could be
    borrowed, repaid and reborrowed under the facility and could be
    used for working capital and other general corporate purposes.
    On December 8, 2009, the Company entered into agreements
    for the proposed BPW Transactions.
    On December 28, 2009, the Company executed an Amended and
    Restated Secured Revolving Loan Agreement with AEON (the
    Amended Facility), which amended and restated the
    $150.0 million secured revolving loan facility executed
    with AEON in April 2009. Under the terms of the Amended
    Facility, the principal amount of the earlier
    $150.0 million secured credit facility was increased to
    $250.0 million. The Company could use funds borrowed under
    the Amended Facility solely (i) to repay its outstanding
    third- F-9




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    On December 29, 2009, the Company borrowed
    $245.0 million under the Amended Facility which was used to
    repay in full the Companys outstanding third-party bank
    indebtedness, related interest, and other costs and expenses.
    The Amended Facility was provided pursuant to AEONs
    April 9, 2009 financial support commitments, which were
    satisfied and discharged in full upon the December 29, 2009
    funding under this Amended Facility for the repayment of all of
    the Companys outstanding third-party bank indebtedness.  Debt
  , Subsequent Events
    3.
    Summary
    of Significant Accounting Policies  Use of Estimates 
  Subsequent Events  Subsequent Events,
  Principles of Consolidation 
  Fiscal Year 
 F-10




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash and Cash Equivalents 
  Customer Accounts Receivable 
  Customer Loyalty Program 
  Merchandise Inventories  (first-in,
  Property and Equipment 
  Description

YearsBuildings

10-50Fixtures and equipment

3-10Software

3-7Leasehold improvements

3-10 or term of lease, if shorter     Preopening Expenses 
  Fair Value Measurements  Fair
    Value Measurements
 F-11




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    Level 1  Quoted market prices in active markets
    for identical assets or liabilities,
    Level 2  Observable inputs other than quoted
    market prices included in Level 1, such as quoted market prices
    for markets that are not active; or other inputs that are
    observable or can be corroborated by observable market
    data, and
    Level 3  Unobservable inputs that are supported
    by little or no market activity and that are significant to the
    fair value of the assets or liabilities, including certain
    pricing models, discounted cash flow methodologies and similar
    techniques that use significant unobservable inputs.    Goodwill and Indefinite-lived Trademarks 
      relief-of-royalty
   F-12




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Long-Lived Assets 
  Grantor Trust 
  Deferred Rent Obligations 
  Foreign Currency Translation 
  Revenue Recognition  point-of-sale
  Gift Cards and Merchandise Credits 
  Cost of Sales, Buying and Occupancy 
 F-13




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Selling, General and Administrative Expenses 
  Finance Charge Income 
  Advertising 
  Income Taxes 
    Stock-Based Compensation 
  Comprehensive (Loss) Income 
  F-14




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  January 30,


January 31,


February 2,2010


2009


2008(In thousands)Cumulative translation adjustment, net of tax benefit of
    $0.2 million, $0.7 million and $0 million,
    respectively

$
(230
)

$
(1,125
)

$
91Pension and postretirement plan liabilities, net of tax
    (expense) benefit of $(1.0) million, $9.0 million and
    $9.0 million, respectively


(50,949
)


(65,954
)


(13,565
)Accumulated other comprehensive loss

$
(51,179
)

$
(67,079
)

$
(13,474
)     Loss Per Share  Loss Per
    Share
  Supplemental Cash Flow Information 
  Recently Adopted Accounting Pronouncements  Fair Value Measurements,
  Loss Per Share
  Benefit Plans,
  Subequent Events
 F-15




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Discontinued
    Operations             F-16




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Net sales

$
178,297


$
470,815


$
581,182Loss before income taxes


(3,818
)


(416,138
)


(222,050
)Income tax benefit










(33,166
)Loss from operations


(3,818
)


(416,138
)


(188,884
)Loss on disposal


(286
)






Loss from discontinued operations, net of taxes

$
(4,104
)

$
(416,138
)

$
(188,884
)            F-17




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    January 31,2009(In thousands)Merchandise inventories

$
50,250Other current assets


9,217Property and equipment  net


15,899Trademarks


30,200Other intangible assets  net


4,400Assets held for sale  current

$
109,966Accounts payable

$
30,262Accrued liabilities


26,890Deferred rent under lease commitments


35,327Other liabilities


1,711Liabilities held for sale  current

$
94,190   5.
    Restructuring
    Charges     F-18




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Corporate - WideStrategic InitiativesNon-cashSeverance


Lease-Related


Consulting


Charges (Income)


Total(In thousands)Balance at February 3, 2007

$



$



$



$



$
Charges


714







2,732



264



3,710Cash payments


(36
)






(1,200
)






(1,236
)Non-cash items














(264
)


(264
)Balance at February 2, 2008


678







1,532







2,210Charges (income)


15,921







4,042



(2,170
)


17,793Cash payments


(5,717
)






(5,574
)






(11,291
)Non-cash items














2,170



2,170Balance at January 31, 2009


10,882















10,882Charges (income)


8,704



2,247



161



(839
)


10,273Cash payments


(16,497
)


(835
)


(148
)






(17,480
)Non-cash items






(641
)






839



198Balance at January 30, 2010

$
3,089


$
771


$
13


$



$
3,873     6.
    Equity
    Transactions         F-19




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Stock-Based
    Compensation  Amended
    2003 Executive Stock Based Incentive Plan
        Amended
    and Restated Directors Plan
         F-20




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Compensation
    Expense
    Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Cost of sales, buying and occupancy

$
692


$
(129
)

$
1,603Selling, general, and administrative


6,570



10,861



15,919Restructuring charges


(839
)


(2,170
)


Total

$
6,423


$
8,562


$
17,522         Stock
    Options
    Year EndedJanuary 30,

January 31,

February 2,2010

2009

2008Risk-free interest rate


2.0%



2.6%



4.5%Expected life of options


4.8 years



5.3 years



4.6 yearsExpected volatility of underlying stock


83.9%



50.8%



38.5%Expected dividend yield


0.0%



7.8%



2.4%    F-21




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Weighted


WeightedAverage


Average Remaining


AggregateNumber of


Exercise Price


Contractual Term


IntrinsicShares


per Share


(In Years)


Value(In thousands)Outstanding at beginning of year


9,410,953


$
27.24Granted


1,784,500



2.66Forfeited


(441,230
)


11.20Expired


(352,204
)


16.84Outstanding at end of year


10,402,019


$
24.06



3.2


$
14,686Exercisable at end of year


8,316,536


$
28.66



1.7


$
397       Nonvested
    Stock Awards and RSUs
    WeightedAverage GrantNumber of


Date Fair ValueShares


per ShareNonvested at beginning of year


2,003,660


$
16.28Granted


369,689



3.04Vested


(466,734
)


17.65Forfeited


(575,725
)


15.11Nonvested at end of year


1,330,890


$
12.62      F-22




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Related
    Party Transactions  Recent Events
    and Managements Plan Debt, ubsequent Events,
      9.
    Customer
    Accounts Receivable    January 30,


January 31,2010


2009(In thousands)Due from customers

$
168,887


$
173,406Less allowance for doubtful accounts


(5,300
)


(4,000
)Customer accounts receivable-net

$
163,587


$
169,406       Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Balance, beginning of year

$
4,000


$
2,700


$
2,200Charges to costs and expenses


8,097



5,987



3,443Charge-offs, net of recoveries


(6,797
)


(4,687
)


(2,943
)Balance, end of year

$
5,300


$
4,000


$
2,700  F-23




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Property
    and Equipment    January 30,


January 31,2010


2009(In thousands)Land

$
10,817


$
10,817Buildings


69,198



69,279Fixtures and equipment


375,692



379,895Software


57,508



56,140Leasehold improvements


307,123



312,797Construction in progress


5,292



12,715Property and equipment-gross


825,630



841,643Less accumulated depreciation and amortization


(605,226
)


(564,280
)Property and equipment-net

$
220,404


$
277,363     11.
    Accrued
    Liabilities    January 30,


January 31,2010


2009(In thousands)Gift cards, merchandise credits, sales return reserve and other
    customer related liabilities

$
56,032


$
55,022Employee compensation, related tax and benefits


21,018



29,453Taxes other than income and withholding


10,997



5,422Accrued interest due to related party


6,106



31Other accrued liabilities


54,024



58,428Total accrued liabilities

$
148,177


$
148,356     Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Balance, beginning of year

$
4,737


$
9,486


$
8,961Provision for merchandise returns


300,737



348,359



379,788Merchandise returned


(298,224
)


(353,108
)


(379,263
)Balance, end of year

$
7,250


$
4,737


$
9,486  F-24




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  12.
    Debt    January 30,


January 31,2010


2009(In thousands)Related Party Debt

$
486,494


$
20,000Acquisition Debt






200,000Working Capital Lines of Credit (Notes Payable to banks)






148,500Revolving Credit Agreements






80,000Term Loan






20,000Tilton Facility Loan






8,377Total debt


486,494



476,877Less current maturities


(486,494
)


(218,877
)Long-term debt, less current portion

$



$
258,000   Related
    Party Debt
  $250.0 Million Secured Revolving Loan Facility with
    AEON
       F-25




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Subsequent Events,
  $200.0 Million Term Loan Facility with
    AEON
    Subsequent Events,
  Term Loan with AEON (U.S.A.)
   F-26




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Subsequent
    Events,
  Third-Party
    Bank Debt
  Acquisition Debt 
  Working Capital Lines of Credit (Notes Payable to
    Banks)
  Revolving Credit Agreements
  Term Loan
  Tilton Loan Facility
  Letters of Credit
  13.
    Income
    Taxes    Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Domestic

$
(35,089
)

$
(118,749
)

$
(3,293
)Foreign


(1,724
)


70



4,386Total

$
(36,813
)

$
(118,679
)

$
1,093  F-27




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Current (benefit) expense:Federal

$
(2,006
)

$
(24,104
)

$
19,284State


4,665



398



3,610Foreign


(2,308
)






1,216Total current


351



(23,706
)


24,110Deferred (benefit) expense:Federal


(10,543
)


42,651



(17,918
)State


(1,313
)


1,897



(5,108
)Foreign










(34
)Total deferred


(11,856
)


44,548



(23,060
)Total

$
(11,505
)

$
20,842


$
1,050     Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Tax at federal statutory rate

$
(12,885
)

$
(41,538
)

$
382Adjustments resulting from:State income taxes, net of federal tax benefit


3,402



(706
)


(2,478
)Foreign tax


(1,704
)


(361
)


Valuation allowance


6,447



60,975



Employment related obligations


1,354



2,541



1,640Merger costs


2,800







Intraperiod tax allocation from other comprehensive income


(10,500
)






Foreign income inclusion










3,529In-kind donations






(1,138
)


(1,248
)Other


(419
)


1,069



(775
)Income tax (benefit) expense

$
(11,505
)

$
20,842


$
1,050    F-28




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Deferred
    tax assets (liabilities)
    January 30,


January 31,2010


2009(In thousands)Deferred tax assets:Merchandise inventories

$
11,993


$
16,191Deferred rent


18,787



14,224Lease commitments


27,184



Accrued vacation pay


65



3,139Deferred compensation


5,543



23,917Stock-based compensation


10,863



16,208Pension and postretirement liabilities


32,416



30,348Charitable contribution carryforward


6,755



6,423Net operating loss carryforwards


54,271



31,318Tax credit carryforwards






2,006Depreciation and amortization






35,388Deferred interest


7,172



Deferred unrecognized tax benefits


24,001



26,414Restructuring charges


3,242



13,580Bad debts


1,995



1,440Other


10,579



6,633Total deferred tax assets


214,866



227,229Deferred tax liabilities:Prepaid costs


(2,728
)


(2,918
)Depreciation and amortization


(11,890
)


Identifiable intangibles


(28,456
)


(41,019
)Total deferred tax liabilities


(43,074
)


(43,937
)Less: Valuation allowance


(200,248
)


(211,748
)Net deferred tax asset (liability)

$
(28,456
)

$
(28,456
)    F-29




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Uncertain
    tax positions
      January 30,


January 31,


February 2,2010


2009


2008(In thousands)Balance, beginning of year

$
38,520


$
37,908



41,545Increases related to prior year tax positions


7,666



3,704



Decreases related to prior year tax positions


(1,946
)


(2,243
)


(3,293
)Increases related to current year tax positions


293



1,597



711Decreases related to settlements with taxing authorities


(7,979
)


(2,166
)


(761
)Decreases related to lapsing of statute of limitations


(1,524
)


(280
)


(294
)Balance, end of year

$
35,030


$
38,520


$
37,908       Subsequent Events
 F-30




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    Segment
    and Geographic Information    
    Stores  derives revenues from the sale of
    womens apparel, accessories and shoes through its Talbots
    specialty retail and outlet stores in the United States and
    Canada, and
    Direct Marketing  derives revenues from the sale of
    womens apparel, accessories and shoes through its catalog
    and Internet operations (online at www.talbots.com).
    Approximately 19 distinct catalog mailings are conducted per
    year.          Year Ended January 30, 2010Stores

Direct Marketing

Total(In thousands)Net sales

$
1,027,887


$
207,745


$
1,235,632Direct profit


81,219



40,559



121,778Depreciation and amortization


61,855



3,303



65,158   Year Ended January 31, 2009Stores

Direct Marketing

Total(In thousands)Net sales

$
1,261,536


$
233,634


$
1,495,170Direct profit


65,866



24,689



90,555Depreciation and amortization


70,957



983



71,940   Year Ended February 2, 2008Stores

Direct Marketing

Total(In thousands)Net sales

$
1,445,406


$
262,709


$
1,708,115Direct profit


154,499



43,329



197,828Depreciation and amortization


74,300



1,036



75,336    F-31




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Direct profit for reportable segments

$
121,778


$
90,555


$
197,828Less: Indirect expenses


122,252



188,944



162,624Merger
    costs


8,216







Operating (loss) income


(8,690
)


(98,389
)


35,204Interest expense-net


28,123



20,290



34,111(Loss) income before taxes


(36,813
)


(118,679
)


1,093Income tax (benefit) expense


(11,505
)


20,842



1,050(Loss) income from continuing operations

$
(25,308
)

$
(139,521
)

$
43       Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Net sales:United States

$
1,200,973


$
1,449,399


$
1,653,576Canada


34,659



45,771



54,539Total

$
1,235,632


$
1,495,170


$
1,708,115Long-lived assets:United States

$
218,167


$
274,962Canada


2,237



2,401Total

$
220,404


$
277,363   15.
    Benefit
    Plans  Pension
    Plan
   F-32




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Supplemental
    Executive Retirement Plans
    Postretirement
    Medical Plans
        Plan
    Remeasurements
     F-33




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    PostretirementPension Plan


SERP


Medical PlansJanuary 30,


January 31,


January 30,


January 31,


January 30,


January 31,2010


2009


2010


2009


2010


2009(In thousands)Change in benefit obligations:Projected benefit obligations at beginning of year

$
161,398


$
146,691


$
19,179


$
20,122


$
1,235


$
1,231Service cost






9,494







398







1Interest cost


9,009



9,636



1,165



1,270



74



70Actuarial loss (gain)


14,725



3,103



3,415



(335
)


64



46Curtailment


(25,359
)


(5,905
)


(2,035
)


(709
)






Benefits paid


(4,016
)


(3,215
)


(1,661
)


(1,709
)


(116
)


(114
)Adoption of January 31, 2009 measurement date






1,594







142







1Projected benefit obligations at end of year

$
155,757


$
161,398


$
20,063


$
19,179


$
1,257


$
1,235Changes in assets:Fair value at beginning of year

$
73,070


$
110,150


$



$



$



$
Actual return (loss) on plan assets


24,063



(45,379
)














Employer contributions


4,116



11,514



1,661



1,709



116



114Benefits paid


(4,016
)


(3,215
)


(1,661
)


(1,709
)


(116
)


(114
)Fair value at end of year

$
97,233


$
73,070


$



$



$



$
  F-34




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    PostretirementPension Plan


SERP


Medical PlansJanuary 30,


January 31,


January 30,


January 31,


January 30,


January 31,2010


2009


2010


2009


2010


2009(In thousands)Funded status:Projected benefit obligations in excess of plan assets

$
58,524


$
88,329


$
20,063


$
19,179


$
1,257


$
1,235Net amounts recognized in the consolidated balance sheet:

$
58,524


$
88,329


$
20,063


$
19,179


$
1,257


$
1,235Net amounts recognized in the consolidated balance sheet
    consist of:Accrued liabilities (current)

$



$



$
1,450


$
1,300


$
33


$
55Other liabilities (non-current)


58,524



88,329



18,613



17,879



1,224



1,180Net amounts recognized in the consolidated balance sheets

$
58,524


$
88,329


$
20,063


$
19,179


$
1,257


$
1,235Net amounts recognized in accumulated other comprehensive
    income consist of:Net actuarial loss

$
50,233


$
67,123


$
1,234


$
123


$
114


$
408Prior service cost (credit)






78







13



(632
)


(1,809
)Net amounts recognized in accumulated other comprehensive loss
    (income)

$
50,233


$
67,201


$
1,234


$
136


$
(518
)

$
(1,401
)     Pension Plan

SERPJanuary 30,

January 31,

January 30,

January 31,2010

2009

2010

2009(In thousands)Projected benefit obligation

$
155,757


$
161,398


$
20,063


$
19,179Accumulated benefit obligation

$
155,757


$
136,059


$
20,063


$
18,017Fair value of plan assets

$
97,233


$
73,070


$



$
  F-35




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Service expense-benefits earned during the period

$



$
9,494


$
9,742Interest expense on projected benefit obligation


9,009



9,636



8,615Expected return on plan assets


(7,474
)


(10,263
)


(9,331
)Curtailment loss


124



17



Prior service cost net amortization


5



69



69Net amortization and deferral


978



1,254



2,726Net pension expense

$
2,642


$
10,207


$
11,821     Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Service expense-benefits earned during the period

$



$
398


$
478Interest expense on projected benefit obligation


1,165



1,270



1,140Curtailment (gain) loss


(451
)


15



Prior service cost net amortization


2



26



901Net amortization and deferral






21



59Net SERP expense

$
716


$
1,730


$
2,578     Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands)Service expense-benefits earned during the period

$



$
1


$
2Interest expense on accumulated postretirement benefit obligation


74



70



82Curtailment gain


(442
)






Prior service cost net amortization


(1,519
)


(1,696
)


(1,696
)Net amortization and deferral


555



633



606Net postretirement medical credit

$
(1,332
)

$
(992
)

$
(1,006
)  F-36




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    PostretirementPension Plan


SERP


Medical PlansJanuary 30,


January 31,


January 30,


January 31,


January 30,


January 31,2010


2009


2010


2009


2010


2009(In thousands)Net (gain) loss

$
(16,890
)

$
52,291


$
1,111


$
(1,047
)

$
(294
)

$
(622
)Prior service (credit) cost


(78
)


(55
)


(13
)


(26
)


1,177



1,838Total recognized in other comprehensive (income) loss


(16,968
)


52,236



1,098



(1,073
)


883



1,216Total expense (credit)


2,642



10,207



716



1,730



(1,332
)


(992
)Total recognized in net periodic (benefit) cost and other
    comprehensive (income) loss

$
(14,326
)

$
62,443


$
1,814


$
657


$
(449
)

$
224    F-37




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 30,

January 31,

February 2,2010

2009

2008Pension Plan:Discount rate


6.75
%


6.50
%


6.00
%Discount rate used to determine projected benefit obligation at
    end of year


6.00
%


6.50
%


6.50
%Expected long-term rate of return on plan assets


8.50
%


9.00
%


9.00
%Rate of future compensation increases


N/A



4.00
%


4.00
%Rate of future compensation increases used to determine
    projected benefit obligation at end of year


N/A



4.00
%


4.00
%SERP:Discount rate


6.75
%


7.00
%


6.00
%Discount rate used to determine projected benefit obligation at
    end of year


5.50
%


6.50
%


6.25
%Rate of future compensation increases


N/A



4.00
%


4.00
%Rate of future compensation increases used to determine
    projected benefit obligation at end of year


N/A



4.00
%


4.00
%Postretirement Medical Plans:Discount rate


6.50
%


6.25
%


6.00
%Discount rate used to determine projected benefit obligation at
    end of year


5.50
%


6.50
%


6.25
%Initial healthcare cost trend rate-projected benefit obligations


7.00
%


9.00
%


10.00
%Initial healthcare cost trend rate-periodic expense


8.00
%


10.00
%


11.00
%Ultimate health care cost trend rate


5.00
%


5.00
%


5.00
%        F-38




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Target


January 30, 2010


January 31, 2009Allocation


Amount


Percent


Amount


Percent(In thousands)Equity securites, including foreign securities of $10,892 and
    $5,967 at January 30, 2010 and January 31, 2009,
    respectively


70
%

$
68,344



70
%

$
55,445



76
%Debt securities


30
%


27,105



28
%


13,992



19
%Cash and money market investments






1,784



2
%


3,633



5
%Total





$
97,233



100
%

$
73,070



100
%       Pension



PostretirementPlan

SERP

Medical Plans(In thousands)Expected benefit payments:2010

$
3,915


$
1,447


$
342011


4,926



1,461



2012


4,739



1,550



2013


5,214



1,569



2014


5,790



1,606



2015 to 2019


37,712



8,021



      F-39




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Pension



PostretirementPlan

SERP

Medical Plans(In thousands)Net actuarial loss

$
418


$



$
400Prior service cost

$



$



$
(1,520
)     16.
    Commitments
    and Contingencies  Commitments
    ContractualObligations

Total


2010


2011


2012


2013


2014


Thereafter(In thousands)Operating leases:Real estate

$
641,312


$
130,018


$
123,804


$
104,663


$
86,486


$
67,541


$
128,800Equipment


8,131



3,997



2,233



1,784



117







Merchandise purchases


206,263



206,263



















Construction contracts


857



857



















Other contractual commitments


6,493



6,229



233



26



5







Total

$
863,056


$
347,364


$
126,270


$
106,473


$
86,608


$
67,541


$
128,800   Operating Leases
     F-40




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Merchandise Purchases
  Construction Contracts
  Other Contractual Commitments 30-day
  Guarantees
  Discontinued Operations
    Legal
    Proceedings
  No. 5199-VCS,
 F-41




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  17.
    Loss Per
    Share  Summary of Significant
    Accounting Policies
    Year EndedJanuary 30,


January 31,


February 2,2010


2009


2008(In thousands, except per share data)Continuing operations:Basic loss per share:(Loss) income

$
(25,308
)

$
(139,521
)

$
43Dividends paid to participating securities






(850
)


(673
)Loss associated with common stockholders

$
(25,308
)

$
(140,371
)

$
(630
)Weighted average shares outstanding


53,797



53,436



53,006Basic loss per share  as currently reported

$
(0.47
)

$
(2.63
)

$
(0.01
) as previously reported





$
(2.61
)

$
Diluted:(Loss) income

$
(25,308
)

$
(139,521
)

$
43Dividends paid to participating securities






(850
)


(673
)Loss associated with common stockholders

$
(25,308
)

$
(140,371
)

$
(630
)Weighted average shares outstanding


53,797



53,436



53,006Diluted loss per share  as currently reported

$
(0.47
)

$
(2.63
)

$
(0.01
) as previously reported





$
(2.61
)

$
Net loss:Basic:Net loss

$
(29,412
)

$
(555,659
)

$
(188,841
)Dividends paid to participating securities






(850
)


(673
)Loss associated with common stockholders

$
(29,412
)

$
(556,509
)

$
(189,514
)Weighted average shares outstanding


53,797



53,436



53,006Basic loss per share  as currently reported

$
(0.55
)

$
(10.41
)

$
(3.58
) as previously reported





$
(10.40
)

$
(3.56
)Diluted:Net loss

$
(29,412
)

$
(555,659
)

$
(188,841
)Dividends paid to participating securities






(850
)


(673
)Loss associated with common stockholders

$
(29,412
)

$
(556,509
)

$
(189,514
)Weighted average shares outstanding


53,797



53,436



53,006Diluted loss per share  as currently reported

$
(0.55
)

$
(10.41
)

$
(3.58
) as previously reported





$
(10.40
)

$
(3.56
)  F-42




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    18.
    Fair
    Value Measurements  Summary of Significant
    Accounting Policies
  Benefit Plans
      Fair Value Measurements UsingNet


Quoted Prices


SignificantCarrying


in Active


Other


Significant


Total LossesValue at


Markets for


Observable


Unobservable


Year EndedJanuary 30,


Identical Assets


Inputs


Inputs


January 30,2010


(Level 1)


(Level 2)


(Level 3)


2010(In thousands)Long-lived assets held and used

$
2,493


$



$



$
2,493


$
1,351















Total

$
2,493


$



$



$
2,493


$
1,351  F-43




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  19.
    Unaudited
    Quarterly Results    Fiscal 2009 Quarter EndedMay 2,


August 1,


October 31,


January 30,2009


2009


2009


2010(In thousands)Net sales

$
306,175


$
304,641


$
308,891


$
315,925Gross profit


95,019



84,402



123,300



111,633(Loss) income from continuing operations


(18,818
)


(20,481
)


15,464



(1,473
)(Loss) income from discontinued operations, net of tax


(4,752
)


(4,004
)


(911
)


5,563Net (loss) income

$
(23,570
)

$
(24,485
)

$
14,553


$
4,090Basic (loss) income per share:Continuing operations

$
(0.35
)

$
(0.38
)

$
0.29


$
(0.03
)Discontinued operations


(0.09
)


(0.07
)


(0.02
)


0.10Net (loss) income

$
(0.44
)

$
(0.45
)

$
0.27


$
0.07Diluted (loss) income per share:Continuing operations

$
(0.35
)

$
(0.38
)

$
0.28


$
(0.03
)Discontinued operations


(0.09
)


(0.07
)


(0.02
)


0.10Net (loss) income

$
(0.44
)

$
(0.45
)

$
0.26


$
0.07Weighted average shares outstanding:Basic


53,621



53,827



53,856



53,884Diluted


53,621



53,827



55,081



54,497Market price data:High

$
4.57


$
6.96


$
11.80


$
11.26Low

$
2.01


$
2.05


$
5.10


$
6.61   F-44




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal 2008 Quarter EndedMay 3,


August 2,


November 1,


January 31,2008


2008


2008


2009(In thousands)Net sales

$
414,774


$
395,209


$
357,275


$
327,912Gross profit


168,062



116,708



112,771



47,844Income (loss) from continuing operations


18,506



(11,951
)


(14,763
)


(131,313
)(b)Loss from discontinued operations, net of tax


(16,865
)


(13,057
)


(155,996
)(a)


(230,220
)(b)Net income (loss)

$
1,641


$
(25,008
)

$
(170,759
)

$
(361,533
)Basic income (loss) per share:Continuing operations

$
0.35


$
(0.22
)

$
(0.28
)

$
(2.45
)Discontinued operations


(0.32
)


(0.25
)


(2.92
)


(4.30
)Net income (loss)

$
0.03


$
(0.47
)

$
(3.20
)

$
(6.75
)Diluted income (loss) per share:Continuing operations

$
0.35


$
(0.22
)

$
(0.28
)

$
(2.45
)Discontinued operations


(0.32
)


(0.25
)


(2.92
)


(4.30
)Net income (loss)

$
0.03


$
(0.47
)

$
(3.20
)

$
(6.75
)Weighted average shares outstanding:Basic


53,302



53,442



53,489



53,512Diluted


53,505



53,442



53,489



53,512Cash dividends declared per share:

$
0.13


$
0.13


$
0.13


$
0.13Market price data:High

$
14.11


$
14.70


$
15.48


$
9.21Low

$
7.26


$
7.08


$
7.67


$
1.19     (a)
    
    In the third quarter of 2008, the Company recorded impairment
    charges related to J. Jill of $185.9 million, which are
    included in the loss from discontinued operations, net of tax.(b)
    
    In the fourth quarter of 2008, the Company recorded a valuation
    allowance of $61.0 million for substantially all of its net
    deferred tax assets and restructuring charges of
    $7.6 million, which are included in the loss from
    continuing operations. The Company also recorded an additional
    impairment charge related to J. Jill of $131.7 million and
    a valuation allowance of $129.4 million which are included
    in the loss from discontinued operations, net of tax.  20.
    SUBSEQUENT
    EVENTS  Merger
    with BPW and Related Transactions
   F-45




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Amount(In thousands)Cash and cash equivalents

$
112Prepaid expenses


84Investment in trust account


333,448Total assets acquired at fair value


333,644Less liabilities assumed:Accounts payable and accrued liabilities


544Net assets acquired

$
333,100            F-46




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Amount(In thousands)Merger costs:Investment banking

$
4,941Accounting and legal


2,598Other costs


677Total merger costs

$
8,216     F-47




---



##### Table of Contents



THE
    TALBOTS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended

Year EndedJanuary 30, 2010

January 31, 2009Actual

Pro Forma

Actual

Pro Forma(In thousands, except per share amounts)Net sales

$
1,235,632


$
1,235,632


$
1,495,170


$
1,495,170Operating loss


(8,690
)


(10,370
)


(98,389
)


(98,858
)Loss from continuing operations


(25,308
)


(8,133
)


(139,521
)


(132,523
)Loss from continuing operations per share:Basic

$
(0.47
)

$
(0.12
)

$
(2.63
)

$
(2.05
)Diluted

$
(0.47
)

$
(0.12
)

$
(2.63
)

$
(2.05
)Weighted average shares outstanding:Basic


53,797



65,344



53,436



64,983Diluted


53,797



65,344



53,436



64,983  F-48