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 31, 2009oro

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
    incorporation or organization

(I.R.S. Employer
    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-K Form 10-K Form 10-K. þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    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 31, 2009
  PagePART IItem 1.


Business


2Item 1A.


Risk Factors


12Item 1B.


Unresolved Staff Comments


21Item 2.


Properties


21Item 3.


Legal Proceedings


22Item 4.


Submission of Matters to a Vote of Security Holders


22PART IIItem 5.


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


22Item 6.


Selected Financial Data


25Item 7.


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


26Item 7A.


Quantitative and Qualitative Disclosures About Market Risk


52Item 8.


Financial Statements and Supplementary Data


53Item 9.


Changes in and Disagreements with Accountants on Accounting and
    Financial Disclosure


53Item 9A.


Controls and Procedures


53Item 9B.


Other Information


56PART IIIItem 10.


Directors, Executive Officers and Corporate Governance


56Item 11.


Executive Compensation


56Item 12.


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


56Item 13.


Certain Relationships and Related Transactions, and Director
    Independence


57Item 14.


Principal Accounting Fees and Services


57PART IVItem 15.


Exhibits, Financial Statement Schedules


58  1




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PART I  Item 1.
    Business.  General
        
    Reinventing Talbots brand image.  During
    2008, our creative and merchandising teams have reinvented our
    Talbots brand image. Our brand strategy is built on honoring the
    classics, which are modern and relevant to our consumers.
    Tradition transformed is our brand vision and we
    have made significant progress in ensuring that our product
    resembles our reinvented image and that our consumers are
    provided a constant flow of our compelling merchandise across
    all channels.
    Improving inventory management.  During
    late 2007, we changed our promotional cadence to monthly
    markdowns rather than conducting our historical four clearance
    sale events per year. During 2008, we also focused on leaner
    inventory positions, improving our supply management process,
    better product flows, adoption of a new price optimization tool,
    and stronger visual presentation of our merchandise across all
    channels. These actions contributed to our improved merchandise
    gross margin for the Talbots brand in the first half of 2008.
    Despite the continued deterioration of the U.S. economy
    into the back half of the year and our dramatic decline in
    fourth quarter sales, with our efforts in inventory management,
    we were able to remain essentially flat in merchandise gross
    margin for the full year in comparison to 2007, even with our
    promotional activity during the year in response to economic
    conditions.
    Improving product content.  In the third
    quarter of 2008, we presented our first product deliveries under
    the leadership of our new creative and merchandising teams. The
    Talbots brand fall 2008 consumer purchase plan study revealed
    that customer reaction to the new redesigned fall merchandise
    improved 10% over the fall of 2007. Additionally, our study that
    was performed in January 2009 revealed that our new redesigned
    merchandise improved 5% over the fall of 2008. These were the
    first positive gains in customer sentiment since 2004.
    Innovating marketing and customer contact
    programs.  We are contacting our customer with
    greater frequency and with a variety of innovative offerings. In
    the fall of 2008, we increased total catalog circulation by
    approximately 15% to strengthen relations with our existing
    customers, prospect new customers, and drive reactivation of our
    lapsed customers. Our efforts yielded a solid increase in the
    response rate of our existing and lapsed customers.
    Improved design of catalogs.  In 2008,
    our new creative design team redesigned our Talbots catalogs
    beginning with our June 2008 catalog. We believe that our
    refreshed image presented throughout our catalogs has delivered
    a positive response from our existing and lapsed customers.
    Additionally, we have 2




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aligned our creative improvements across all visual media
    presented to our customer, including catalog, store visual,
    signage, and our website.  
    New
    e-commerce
    design.  We made major enhancements to our
    Talbots brand website in 2008 to provide enhanced visuals and
    greater ease of functionality to our consumers. In 2009, we
    allocated a portion of our capital budget to refresh our
    e-commerce
    platform for further improvements.
    Concentrating on our core Talbots brand which includes
    Talbots Misses, Petites, Woman, and Accessories &
    Shoes concepts.  In June 2008, we completed
    the closing of our operations in the United Kingdom which
    consisted of three stores. In September 2008, we completed the
    closing of our Talbots Kids and Talbots Mens business concepts.
    In light of the current economic environment and after a
    thorough review of the businesses, we concluded that these
    non-core businesses were not demonstrating enough potential to
    deliver an acceptable long-term return on investment.
    Additionally, in October 2008, our Board of Directors approved
    the plan to sell the J. Jill business and our decision to pursue
    the sale was publicly announced in November 2008. Overall, we
    felt it was in our best interest to focus solely on executing
    the successful turnaround of our core Talbots brand. We believe
    that by redirecting all of our resources and capital towards our
    core Talbots concepts, we can better position ourselves for
    long-term increased shareholder value.  Business
  
    Introduction of upscale outlet
    stores.  We currently plan to open 12 upscale
    outlet stores in 2009. We are currently designing merchandise
    specifically for sale in these outlet locations. We believe the
    upscale outlet opportunity will allow us to create an assortment
    with lower price points that will appeal to a new unique
    customer base.    
    New Financing.  In April of 2009, we
    obtained a new $150.0 million secured revolving loan
    facility from AEON Co., Ltd. (AEON), our indirect
    majority shareholder, which matures 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. Funding under this facility is subject to mortgage and
    lien recordings and all necessary consents or waivers by
    existing lenders to the transactions contemplated by the
    agreement, including the granting of liens and mortgages in
    favor of AEON under the facility, without such lender requiring
    prepayment of its indebtedness or the establishment of a pari
    passu lien on the collateral in favor of such lender. Amounts
    may be borrowed, repaid, and reborrowed under the facility and
    may be used for working capital and other general corporate
    purposes
    Refinancing of our $200 million term
    loan.  In February 2009, we obtained a new
    $200 million term loan facility from AEON. The term loan
    facility was used to repay all of the outstanding indebtedness
    under the Acquisition Term Loan Agreement related to our 2006 J.
    Jill acquisition. The new facility does not contain any
    financial ratio covenants. Since the facility requires
    interest-only payments until maturity, we anticipate that our
    fiscal 2009 cash flow will improve by approximately
    $75 million as a result of this debt restructuring.
    Expense reduction program in the anticipated amount of
    $150 million.  We plan on implementing
    major cost cutting initiatives in 2009 designed to further
    streamline our organization, substantially reduce selling,
    general, and administrative and other costs, and drive greater
    operating efficiencies. Such initiatives include reduction of
    approximately 17% of our corporate headcount which occurred in
    February 2009 in addition to 3




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the approximate 9% reduction of our corporate level headcount in
    June 2008; changes to employee related benefits including
    suspension of our matching contributions to the 401(k) plan,
    increased employee health care contributions, and elimination of
    2009 merit increases; broad-based, non-employee overhead actions
    primarily in the areas of administration, marketing, and store
    operations; continued rationalization of the hourly workforce in
    our stores and call center; and the planned reduction of
    approximately 40% of capital expenditures in 2009 in comparison
    to 2008. We have acted upon these key initiatives in 2009 and we
    expect that they will contribute to cost savings of at least
    $100 million in 2009. We anticipate that the remaining
    expected savings will be realized in 2010.  
    Other liquidity and cash flow
    improvements.  In March 2009 we announced the
    indefinite suspension of dividends, which is expected to result
    in $29 million of cash savings in fiscal 2009, and the
    freeze of the Talbots defined benefit pension plans, effective
    May 1, 2009, which is expected to result in approximately
    $9 million of expense savings in 2009. Additionally, as of
    March 2009, we have successfully converted all of our working
    capital facilities to committed lines through December 2009. We
    continue to evaluate other means to achieve further cash savings
    to improve our liquidity position.  Managements Discussion and
    Analysis of Financial Condition and Results of
    Operations  Business Overview
  Description
    of Operations
  Talbots brand.
      Retail Stores.
    
    Talbots Petites.  We offer Talbots brand
    merchandise in petites sizes in our catalogs and stores.
    Virtually every item of womens apparel in our catalog and
    online is offered in both misses and petites sizes.
    Talbots 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 12W to 24W. We also offer Talbots Woman Petites, which
    focuses on fuller figured women 54 and under.
    Talbots Woman and Talbots Woman Petites are available in stores,
    through our catalogs, and online.
    Talbots Accessories & Shoes.  A
    limited collection of accessories and shoes merchandise is
    offered in each major catalog and online and in virtually all
    stores. In 2008, we selectively increased accessory inventory 4




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levels based on apparel volume and developed a more cohesive
    accessory offering to enhance apparel product lines. We have
    merchandised accessories, especially scarves, to every single
    brand moment which has accelerated sell through in every single
    delivery for the year. In 2009, we plan on continuing to pursue
    the accessory opportunity as well as reinventing our shoe
    business.  Talbots Collection.
  Talbots Upscale Outlets. non-upscale
    U.S.
    Retail Stores
  Number of


Approximate Average StoreStores


Size (Square Feet)Talbots Misses, Petites, Woman, Collection, and
    Accessories & Shoes


544



7,060Talbots Outlet


22



11,630Total


566   Canadian
    Retail Stores
  Number of


Approximate Average StoreStores


Size (Square Feet)Talbots Misses, Petites, and Woman


20



5,350Talbots Outlet


1



5,10021     non-upscale non-upscale
    Optimization
    of Store Productivity
   5




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2009
    Plan
  e-commerce
  Direct Marketing.
              Segment and Geographic Information Form 10-K.
 6




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Merchandising,
    Inventory Control and Distribution
  Merchandising
  head-to-toe.
  Branded Merchandise Design and Purchasing.
    Sourcing.
          Offshore SourcesHong Kong

India

Eralda

Other

Total

U.S.Sourcing

Sourcing

(Exclusive

Offshore

Offshore

BasedOffice

Office

Agent)

Sources

Sources

Sources

Total41
%


0
%


26
%


17
%


84
%


16
%


100
%  7




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Inventory
    Control and Distribution
    Customer
    Credit
  third-party
    Management
    Information Systems
    point-of-sale
 8




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Seasonality
  Managements Discussion and Analysis of Financial
    Condition and Results of Operations  Seasonality and
    Quarterly Fluctuations
  Marketing
    Competition
      Employees
  Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations  Business Overview
 9




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Executive
    Officers of the Company
    Name

Age

PositionTrudy F. Sullivan


59


President and Chief Executive Officer, and a DirectorMichael Scarpa


53


Chief Operating Officer, Chief Financial Officer, and TreasurerMichael Smaldone


44


Chief Creative Officer, Talbots brandPaula Bennett


59


President, J. Jill brandBasha Cohen


48


Executive Vice President, Chief Merchandising Officer, Talbots
    brandBenedetta I. Casamento


42


Executive Vice President, FinanceJohn Fiske, III


45


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


58


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


47


Executive Vice President, Chief Supply Chain OfficerLori Wagner


44


Executive Vice President, Chief Marketing Officer, Talbots brand   direct-to-consumer
         10




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Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
  (781) 741-4500,
 11




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e-mail
  Item 1A.
    Risk
    Factors  Managements Discussion
    and Analysis of Financial Condition and Results of Operations
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  The
    sustained and expanding adverse U.S. economic conditions
    continue to substantially impact our business.
      We
    continue to incur net operating losses which may continue until
    U.S. economic conditions improve.
    
    In April of 2009, we obtained a new $150.0 million secured
    revolving loan facility from AEON which matures 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. Funding under this facility is subject to mortgage and
    lien recordings and all necessary consents or waivers by
    existing lenders to the transactions contemplated by the
    agreement, including the granting of liens and mortgages in
    favor of AEON under the facility, without such lender requiring
    prepayment of its indebtedness or the establishment of a pari
    passu lien on the collateral in favor of such lender. Amounts
    may be borrowed, repaid, and reborrowed under the facility and
    may be used for working capital and other general corporate
    purposes. 12




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
    In February of 2009 we refinanced through AEON our outstanding
    $200 million term loan, which now no longer requires
    scheduled principal amortization prior to the loan maturity
    date, which greatly added to our liquidity and financial
    flexibility, resulting in anticipated fiscal 2009 cash flow
    improvement of approximately $75 million. The facility
    matures on August 31, 2009, provided that we will have the
    option to extend the maturity for additional six month periods,
    up to the third anniversary of the loan closing date, which is
    February 27, 2012.
    In February of 2009, AEON guaranteed our outstanding debt under
    our existing working capital facilities totaling
    $165 million, our existing revolving credit facilities
    totaling $80 million, and our existing $20 million
    term loan facility. In April of 2009 AEON also agreed
    (i) that it would agree to continue to provide a guaranty
    for a refinancing of any of that debt, which currently matures
    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 existing maturity date, or if any other
    condition occurred that required AEON to make a payment under
    its existing guaranty, AEON would make a loan to us, due on or
    after April 16, 2010 and within the limits of AEONs
    existing loan guaranty, to avoid any lack of our financial
    resources caused by any such failure of refinancing. In April of
    2009 AEON also confirmed its support for our working capital
    improvements initiatives for our merchandise payables management
    and that it will use commercially reasonable effort to provide
    us with financial support through loan or guarantee up to
    $25 million only if, and to the extent that, we may
    possibly fall short in achieving our targeted cash flow
    improvement for fall 2009 merchandise payables.
    In July of 2008, we entered into a $50 million subordinated
    working capital term loan facility with AEON (U.S.A.), Inc.
    (AEON (U.S.A.)), our majority shareholder and a
    wholly-owned subsidiary of AEON;
    In early 2009, we eliminated all financial covenants ratios from
    our debt agreements.      We may
    not be able to achieve our expected improvement in operating
    results, working capital and cash flows.
    
    In April of 2009 we obtained new working capital financing;
    In February of 2009 we began to implement our $150 million
    expense reduction program;
    We have indefinitely suspended our quarterly dividend and frozen
    our defined benefit pension plans;
    We have reduced our fiscal 2009 planned capital expenditures by
    approximately 40% over fiscal 2008, and continue to control
    spending; and 13




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
    We have been effectively managing our inventory, with year end
    fiscal 2008 inventories down 21.3% over the prior year, and we
    plan to continue to lower our inventory levels through
    effectively managing our inventory throughout fiscal 2009.    
    the continuation or further worsening of general economic
    conditions;
    our ability to obtain additional financing in the amounts we may
    need to fund our strategic plans, outstanding debt and operating
    losses;
    extensions of the commitment and maturity dates of our existing
    credit facilities;
    our ability to successfully execute other liquidity enhancing
    plans or transactions;
    achieving our sales plan for fiscal 2009;
    achieving our cash flow plan for fiscal 2009, particularly
    during our peak inventory
    build-ups in
    advance of principal selling seasons;
    adequate and uninterrupted supply of merchandise, and
    continuation of merchandise purchases on open account purchase
    terms from merchandise vendors at expected levels and with
    extended invoice payment dates;
    our ability to sell our J. Jill brand business on acceptable
    terms;
    whether our strategic and cost saving actions will sufficiently
    improve our results, operating efficiencies, cash flows and
    liquidity;
    our ability to reduce cash spending in amounts and at the times
    needed;
    effective inventory management;
    any unanticipated changes in expected cash flows and liquidity;
    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 in response to
    changing economic conditions.    We may
    not be able to extend the maturity dates of our existing credit
    facilities.
     14




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Our
    2009 financial and strategic plans are based on a number of
    material assumptions which may not occur.
    Any
    disruption in our supply of merchandise would materially impact
    us.
   15




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If our
    goodwill or other intangible assets become further impaired, we
    may need to record significant
    non-cash
    impairment charges.
      We
    will need sufficient liquidity to fund the closing of our
    underperforming stores.
    There
    can be no assurance of our success in selling our J. Jill
    business, nor the price or terms of such sale, and if a sale is
    consummated we may remain contingently responsible for certain
    risks and obligations.
   16




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Our
    level of indebtedness impacts our ability to respond to the
    changes in the economy.
    We are
    subject to credit risk and to potential increased defaults and
    delinquencies on our customer charge card account
    portfolio.
    Any
    customer concerns with our long term sustainability as a
    business may impact our merchandise sales.
    If we
    do not meet the NYSE continued listing requirements, our common
    stock may be delisted.
  trading-day
 17




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case-by-case
  Our
    loan agreements contain provisions which may restrict our
    operations and proposed financing and strategic
    transactions.
            We
    recently suspended payment of dividends on our common stock and
    we cannot predict when payment of dividends may resume, if at
    all.
   18




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We may
    not be able to maintain proper inventory levels.
      We may
    continue to experience fluctuations in operating
    results.
  period-to-period
  Our
    overseas merchandise purchasing strategy makes it vulnerable to
    a number of risks.
    
    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.   19




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If we
    fail to maintain the value of our brand, sales are likely to
    decline.
    Talented
    personnel are critical to our success. We cannot assure that the
    current management team or the additions to our executive
    leadership team will result in increased profitability for
    us.
    A
    major failure of our information systems could harm the
    business.
    Certain
    members of our Board of Directors are affiliated with our
    majority shareholder, which may create potential conflicts of
    interest.
  Form 8-K
 20




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

Square Feet


Primary Function

InterestHingham, Massachusetts


313,000


Talbots brand headquarters

Own (44 acres)Quincy, Massachusetts


126,869


J. Jill brand headquarters

LeaseLakeville, Massachusetts


933,000


Talbots brand distribution center and fulfillment center

Own (115 acres)Tilton, New Hampshire


573,000


J. Jill brand distribution center, fulfillment center,
    and telemarketing center

Own (360 acres)Tampa, Florida


51,736


Systems center

LeaseKnoxville, Tennessee


37,656


Telemarketing center

LeaseNew York, New York


55,697


Product development office

LeaseHong Kong


10,455


Merchandise sourcing liaison office

LeaseIndia


3,913


Merchandise sourcing liaison office

LeaseLincoln, Rhode Island


9,645


Credit and banking facilities

LeaseOntario, Canada


1,350


Canadian regional office

Lease587 Talbots brand stores throughout the U.S. and Canada


4,207,528


Retail stores

Own and lease (a)283 J. Jill brand stores throughout the U.S.


1,090,546


Retail stores

Lease     (a)
    
    We own the property for five of our 587 Talbots stores.     21




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Years Lease

Number ofTerms Expire

Store Leases (a)(b)(c)2009-2010


842011-2013


2212014-2016


2092017 and later


383     (a)
    
    Certain leases have more than one concept included within the
    leased premises.(b)
    
    Includes 283 J. Jill store leases.(c)
    
    Includes nine Talbots and five J. Jill executed leases related
    to future stores not yet opened at January 31, 2009.  Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Quarterly Results
  Quarterly Results
   22




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Approximate DollarValue of Sharesthat May Yet BeTotal Number of


Average


Purchased Under theShares


Price Paid


Equity AwardPeriod

Purchased(1)


per Share


Programs(2)November 2, 2008 through November 29, 2008


2,100


$
0.01


$
18,900November 30, 2008 through January 3, 2009


8,207



1.71



20,377January 4, 2009 through January 31, 2009


94,233



0.25



18,957Total


104,540


$
0.66


$
18,957     (1)
    
    We repurchased 88,525 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.We also repurchased 16,015 shares of common stock from
    certain employees to cover tax withholding obligations from the
    vesting of stock, at a weighted average acquisition price of
    $2.32 per share.(2)
    
    As of January 31, 2009, there were 1,895,660 shares of
    nonvested stock that were subject to buyback at $0.01 per share,
    or $18,957 in the aggregate, that we have the option to
    repurchase if employment is terminated prior to vesting.   23




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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

1/30/04

1/28/05

1/27/06

2/02/07

2/01/08

1/30/09The Talbots, Inc.

$
100.00


$
80.64


$
89.95


$
78.02


$
31.35


$
7.38S&P 500 Index

$
100.00


$
105.34


$
117.59


$
135.22


$
132.78


$
80.51Dow Jones U.S. General Retailers Index

$
100.00


$
106.49


$
112.80


$
123.93


$
111.33


$
76.82    24




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##### 



Item 6.
    Selected
    Financial Data.  Managements Discussion and Analysis of Financial
    Condition and Results of Operations
  Year EndedJanuary 31,


February 2,


February 3,


January 28,


January 29,2009


2008


2007


2006


2005(52 weeks)


(52 weeks)


(53 weeks)


(52 weeks)


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

$
1,495,170


$
1,708,115


$
1,772,306


$
1,703,014


$
1,595,206Operating (loss) income from continuing operations


(98,389
)


35,204



114,596


$
169,367


$
166,170Net (loss) income from continuing operations


(139,521
)(a)(d)


43
(a)


56,876



166,202



110,981Net (loss) income

$
(555,659
)(b)(d)

$
(188,841
)(b)

$
31,576



93,151



95,366Per share data:Basic(Loss) income per share from continuing operations

$
(2.61
)

$



$
1.08


$
1.97


$
2.02Net (loss) income per share

$
(10.40
)

$
(3.56
)

$
0.60


$
1.76


$
1.73Diluted(Loss) income per share from continuing operations

$
(2.61
)

$



$
1.06


$
1.93


$
1.97Net (loss) income per share

$
(10.40
)

$
(3.56
)

$
0.59


$
1.72


$
1.70Weighted average number of shares of common stock outstandingBasic


53,436



53,006



52,651



52,882



54,969Diluted


53,436



53,006



53,485



54,103



56,252Cash dividends per share(c)

$
0.52


$
0.52


$
0.51


$
0.47


$
0.43Balance Sheet Information:Working capital (deficiency)

$
(13,680
)

$
208,803


$
262,609


$
376,204


$
324,759Total assets


971,293



1,502,979



1,748,688



1,146,144



1,062,130Total long-term debt, including current portion


308,377



389,027



469,643



100,000



100,000Stockholders (deficiency) equity

$
(178,097
)

$
454,779


$
643,311


$
626,968


$
588,588     (a)
    
    During 2008 and 2007, we recorded charges of $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 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.(c)
    
    In February 2009, our Board of Directors approved the indefinite
    suspension of our quarterly dividends.(d)
    
    In the fourth quarter of 2008, we recorded a valuation allowance
    of $61.0 million on substantially all of our deferred tax
    assets which is included in net loss from continuing operations.
    We also recorded a valuation allowance of $129.4 million
    which is included in discontinued operations. 25




---



##### 



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.          Business
    Overview
    Recent
    Developments
    Liquidity and Capital Resource
  Progress
    on our strategic plan
   26




---



##### 



Redirecting resources and concentrating on reinvigorating and
    rebuilding our core Talbots brand.
  Streamlining operations and improving overall reduction in
    cost structure.
  Improving inventory management.
  Improving product content.
  Innovating marketing and customer contact
    programs.
 27




---



##### 



Financing and cost reduction plan
  Financing
    and cost reduction plan
  New Financing.
  Refinancing.
    Expense reduction program in the amount of
    $150 million.
  Other liquidity and cash flow improvements.
 28




---



##### 



Looking
    ahead to 2009 and beyond
      Results
    of Operations
          Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007Net sales


100.0
%


100.0
%


100.0
%Cost of sales, buying and occupancy expenses


70.2
%


66.9
%


65.1
%Selling, general and administrative expenses


35.0
%


30.6
%


28.5
%Restructuring charges


1.2
%


0.2
%


0.0
%Impairment of store assets


0.2
%


0.2
%


0.0
%Operating (loss) income from continuing operations


(6.6
)%


2.1
%


6.4
%Interest expense, net


1.4
%


2.0
%


1.4
%(Loss) income before taxes


(8.0
)%


0.1
%


5.0
%Income tax expense


1.3
%


0.1
%


1.8
%Net (loss) income from continuing operations


(9.3
)%


(0.0
)%


3.2
%  29




---



##### 



2008
    Compared to 2007
  Continuing
    Operations
  Net
    Sales
    January 31,


February 2,2009


2008Net retail store sales

$
1,261.6


$
1,445.4Net direct marketing sales


233.6



262.7Total net sales

$
1,495.2


$
1,708.1     Retail
    Stores
      Direct
    Marketing Sales
     30




---



##### 



Cost of
    Sales, Buying, and Occupancy Expenses
        Selling,
    General and Administrative Expenses
    Restructuring
    Charges
    Impairment
    of Store Assets
   31




---



##### 



Goodwill
    and Other Intangible Assets
    Net
    Interest Expense
    Income
    Tax Expense
    Discontinued
    Operations
     32




---



##### 



2007
    Compared to 2006
  Continuing
    Operations
  Net
    Sales
    February 2,


February 3,2008


2007Net retail store sales

$
1,445.4


$
1,511.0Net direct marketing sales


262.7



261.3Total net sales

$
1,708.1


$
1,772.3     Retail
    Stores
      Direct
    Marketing Sales
    Cost of
    Sales, Buying, and Occupancy Expenses
    Selling,
    General and Administrative Expenses
   33




---



##### 



Goodwill
    and Other Intangible Assets
  Goodwill
    and Other Intangible Assets
  Impairment
    of Store Assets
    Restructuring
    Charges
    Net
    Interest Expense
      Income
    Tax Expense
   34




---



##### 



Seasonality
    and Quarterly Fluctuations
      Quarter EndedMay 3,


August 2,


November 1,


January 31,2008


2008


2008


2009Net sales


100.0
%


100.0
%


100.0
%


100.0
%Cost of sales, buying and occupancy expenses


59.3
%


70.5
%


68.4
%


85.4
%Selling, general and administrative expenses


31.5
%


31.5
%


35.6
%


42.9
%Restructuring charges


1.1
%


1.0
%


0.4
%


2.3
%Impairment of store assets


0.2
%


0.0
%


0.6
%


0.1
%Operating income (loss) from continuing operations


7.8
%


(3.0
)%


(5.0
)%


(30.7
)%   Quarter EndedMay 5,


August 4,


November 3,


February 2,2007


2007


2007


2008Net sales


100.0
%


100.0
%


100.0
%


100.0
%Cost of sales, buying and occupancy expenses


61.0
%


72.0
%


64.4
%


70.3
%Selling, general and administrative expenses


31.5
%


27.6
%


33.5
%


30.1
%Restructuring charges


0.0
%


0.0
%


0.0
%


0.9
%Impairment of store assets


0.0
%


0.0
%


0.5
%


0.1
%Operating income (loss) from continuing operations


7.5
%


0.4
%


1.6
%


(1.4
)%      35




---



##### 



Liquidity
    and Capital Resources
  Current
    Liquidity Position
        
    In July of 2008, we entered into a $50 million subordinated
    working capital term loan facility with AEON (U.S.A.) which
    matures in 2012 and is interest only until maturity. As of
    January 31, 2009, we had drawn $20 million on this
    facility and subsequent to January 31, 2009 we borrowed the
    remaining $30 million available under the facility.
    In February of 2009, we obtained a new $200 million term
    loan facility from AEON 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 million. The new $200 million loan from AEON is
    interest- only until maturity. The term loan facility matures on
    August 31, 2009, provided that we will have the option to
    extend the maturity for additional six month periods, up to the
    third anniversary of the loan closing date, which is
    February 27, 2012. There are no financial covenants
    associated with this debt.
    As of February 2009, we had converted all of our working capital
    lines, amounting to $165 million in the aggregate, to
    committed lines with maturities in December 2009. We, with AEON,
    are currently in discussions with our lenders to extend the
    commitment expiration dates of these facilities, although there
    can be no assurance that this will be achieved.
    In February of 2009, AEON guaranteed our outstanding debt under
    our existing working capital facilities totaling
    $165 million, our existing revolving credit facilities
    totaling $80 million, and our existing $20 million
    term loan facility. In April 2009 AEON also agreed (i) that
    it would agree to continue to provide a guaranty for a
    refinancing of any of that debt, which currently matures 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 existing maturity date, or if any other condition occurred
    that required AEON to make a payment under its existing
    guaranty, AEON would make a loan to us, due on or after
    April 16, 2010 and within the limits of AEONs
    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 will use commercially reasonable effort to provide
    us with 36




---



##### 



financial support through loan or guarantee up to
    $25 million only if, and to the extent that, we may
    possibly fall short in achieving our targeted cash flow
    improvement for fall 2009 merchandise payables.  
    In April of 2009, we entered into a $150.0 million secured
    revolving loan facility with AEON. The facility matures 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. Funding under this facility is subject to mortgage and
    lien recordings and all necessary consents or waivers by
    existing lenders to the transactions contemplated by the
    agreement, including the granting of liens and mortgages in
    favor of AEON under the facility, without such lender requiring
    prepayment of its indebtedness or the establishment of a pari
    passu lien on the collateral in favor of such lender. Amounts
    may be borrowed, repaid, and reborrowed under the facility and
    may be used for working capital and other general corporate
    purposes.
    We have eliminated all financial covenant ratios from our debt
    agreements.      
    During the third quarter of 2008 we completed the closing of our
    Kids, Mens, and U.K. business concepts. These business concepts
    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. This business was not
    considered strategic to ongoing operations.
    In June of 2008 we reduced our corporate headcount by
    approximately 9% across multiple locations at all levels.
    In February of 2009 we further reduced our corporate headcount
    by approximately 17%.
    We have reduced the planned hours worked in our stores for 2009.
    During 2008 and 2009, we took the following actions in an effort
    to seek to improve our gross margins: changed our promotional
    cadence to monthly markdowns rather than our historical four
    clearance sales events per year, held a leaner inventory
    position, concentrated on better product flow and content, and
    adopted a new price optimization tool. We have decreased our
    planned inventory commitments for 2009.
    During 2008 we eliminated advertising in television and national
    print, contributing to $14.8 million less in spending from
    2007. We currently do not plan to resume advertising in
    television and national print in 2009.
    For 2009, we plan to decrease catalog circulation to
    approximately 34 million catalogs, down from approximately
    55 million in 2008.
    In 2008, our gross capital expenditures (excluding construction
    allowances received from landlords) were $44.7 million,
    which was down from 2007 by $12.9 million. For 2009, we
    plan to further reduce our capital expenditures by approximately
    40%. We currently expect to spend approximately $27 million
    in gross capital expenditures in 2009.
    We have eliminated our matching contributions to our 401(k) plan
    for 2009.
    We have increased employee health care contributions in 2009.
    We have eliminated merit increases for 2009. 37




---



##### 




    We have frozen our defined benefit pension plans effective
    May 1, 2009.
    In February of 2009 our Board approved the indefinite suspension
    of our quarterly dividend.        
    $28 million in December 2009
    $34 million in January 2010, and
    $18 million in April 2010.         38




---



##### 



Debt
    Facilities
         39




---



##### 



Cash
    Flows
        January 31,


February 2,


February 3,2009


2008


2007Net cash provided by operating activities


16,260



213,708



152,301Net cash used in investing activities


(42,143
)


(57,597
)


(570,889
)Net cash provided by (used in) financing activities


57,763



(152,456
)


379,566  40




---



##### 



Cash
    provided by operating activities
          Cash
    used in investing activities
  e-commerce
  Cash
    provided by financing activities
       41




---



##### 



Critical
    Accounting Policies
      Inventory Markdown Reserve. end-of-season
        Sales Return Reserve.
   42




---



##### 



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.
    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.
 43




---



##### 



Impairment of Long-lived Assets. Accounting for the Impairment or Disposal of Long-Lived
    Assets
 44




---



##### 



Impairment of Goodwill and Other Intangible
    Assets.
    Summary of
    Significant Accounting Policies
     45




---



##### 



Summary of Significant Accounting
    Policies,
    AdditionalImpairment Charge1% increase in discount rate


no effect50 basis point decrease in royalty rate

$
3.0 million1% decrease in revenue growth rate


no effect     Income Taxes. Accounting for Income Taxes
       46




---



##### 



Stock  Based Compensation. Share-Based Payment
         47




---



##### 



Contractual Commitments.
  Less Than


1 to 3


3 to 5


More ThanContractual Obligations

Total


1 year


Years


Years


5 YearsDebt, including estimated interest payments*

$
525,929


$
232,091


$
72,050


$
221,788


$
Letter of credit agreements


12,603



12,603











Unrecognized tax benefits


12,589



12,589











Operating leases:Real estate


954,690



173,705



322,497



231,022



227,466Equipment


8,900



5,019



3,770



111



Merchandise purchases


291,413



291,413











Construction contracts


5,896



5,896











Other contractual commitments


29,517



27,067



2,439



11



Long-term obligations:Non-qualified retirement plans


29,658



7,063



5,031



5,407



12,157Total Commitments

$
1,871,195


$
767,446


$
405,787


$
458,339


$
239,623     *
    
    Interest payments were estimated using our current borrowing
    rates as of January 31, 2009.    Debt.
      10-year
 48




---



##### 



20-year
        Letters of Credit.
  Operating Leases.
  Merchandise Purchases.
  Construction Contracts.
 49




---



##### 



Other Contractual Commitments.
  Long-Term Obligations.
    Unrecognized Tax Benefits.
  Inflation
    and Changing Prices
    Exchange
    Rates
    New
    Accounting Pronouncements
  , Summary of Significant
    Accounting Policies
  Forward-looking
    Information
   50




---



##### 




    the material impact on our business, continuing operations and
    financial results of the significant deterioration in the
    U.S. economic environment, including continued 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, the expectations of
    deepening and long-term recessionary pressures, significantly
    increasing unemployment levels, and fluctuations in the value of
    the U.S. dollar, all of which continue to exert significant
    pressure on our business, continuing operations, liquidity and
    results of operations and which, if such macro-economic
    conditions continue or worsen, can be expected to continue to
    have an increasing impact on our business, continuing
    operations, liquidity, and results of operations;
    ability to access on satisfactory terms or at all adequate
    additional 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;
    satisfaction of all conditions to funding under our new secured
    credit facility;
    our ability to generate sufficient liquidity whether through
    additional debt financing or other liquidity generating
    transactions to meet our near term and longer term cash needs;
    consummation of any asset securitization, asset
    collateralization or other similar financing transaction or
    transactions;
    ability to obtain extensions of commitment expiration dates and
    maturity dates of our existing credit facilities;
    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;
    ability to successfully execute, fund, and achieve the benefits
    from our strategic initiatives including supply chain
    initiatives, anticipated lower inventory levels, expected
    operating expense and other cost reductions, the success of the
    new promotional cadence for the Talbots brand, reduced markdown
    exposure and improved gross margins;
    future store closings and success of and necessary funding for
    closing underperforming stores;
    ability to reduce spending as needed;
    ability to achieve our 2009 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;
    risk of ability to continue to purchase merchandise on open
    account purchase terms at existing or future expected levels and
    risks and uncertainties in connection with any need to source
    merchandise from alternate vendors;
    any disruption in our supply of merchandise;
    our decision concerning, and the risks and uncertainties
    associated with, the decision to pursue a sale or disposition of
    the J. Jill brand business, including the timing, ultimate
    consummation if any, consideration which may be received, and
    other terms of any such sale or disposition;
    ability to accurately estimate and forecast future regular-price
    and markdown selling, operating cash flows and other future
    financial results and financial position; 51




---



##### 




    the success and customer acceptance of our new merchandise
    offerings including our spring, summer and other seasonal
    fashions and merchandise offerings;
    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; and
    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.    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.       52




---



##### 



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 31, 2009, February 2, 2008,
    and February 3, 2007


F-3Consolidated Balance Sheets as of
    January 31, 2009 and February 2, 2008


F-4Consolidated Statements of Cash Flows for the
    Years Ended January 31, 2009, February 2, 2008, and
    February 3, 2007


F-5Consolidated Statements of Stockholders
    (Deficit) Equity for the Years Ended January 31, 2009,
    February 2, 2008, and February 3, 2007


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)
   53




---



##### 



Changes
    in Internal Controls over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  Remediation
    of Material Weakness
    
    Expand training for tax, accounting and finance personnel to
    further develop the knowledge base resident within the Company
    and ensure the adequacy of qualified, trained staff to address
    complex, non routine transactions;
    Further enhance procedures to help ensure that the proper
    accounting for all complex, non routine transactions is
    researched, detailed in memoranda and reviewed by senior
    management prior to recording;
    Strengthen the communication and collaboration amongst the
    various departments within the Company; and
    Supplement the Companys internal resources with external
    advisors with specialized expertise as non routine or complex
    issues arise.   54




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal Control  Integrated Framework
          Internal
    Control  Integrated Framework
    
    55




---



##### 



Item 9B.
    Other
    Information.   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.      Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.   56




---



##### 



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


11,414,613


$
25.32



2,882,108Equity compensation plans not approved by security holders










Total


11,414,613


$
25.32



2,882,108   Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accounting Fees and Services.   57




---



##### 



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





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





Agreement and Plan of Merger, by and among The Talbots, Inc.,
    Jack Merger Sub, Inc. and The J. Jill Group, Inc., dated
    February 5, 2006.(31)(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.(1)(4)





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





Form of Common Stock Certificate of Talbots.(1)(10)





Material Contracts.10.1





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) 58




---



##### 



10.10





Continuing Commercial Letter of Credit and Security Agreement
    dated May 15, 1996 between Talbots and HSBC.(5)10.11





Letter Agreement concerning credit facilities between HSBC and
    The Talbots, Inc. and The J. Jill Group, Inc., dated July 20,
    2006.(41)10.12





Letter Agreement concerning credit facilities between HSBC and
    The Talbots, Inc. and The J. Jill Group, Inc., dated July 16,
    2007.(53)10.13





Letter Agreement concerning credit facilities between HSBC and
    The Talbots, Inc. and The Talbots Group Limited Partnership,
    dated January 31, 2008.(18)(61)10.14





Sixth Amended and Restated Loan Agreement dated May 3, 2006
    between The J. Jill Group, Inc. and Citizens Bank of
    Massachusetts, HSBC Bank USA, National Association, and TD
    Banknorth, N.A.(35)10.15





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)10.16





Guarantee of Lease, made as of May 3, 2006, by The Talbots, Inc.
    to National Fire Protection Association.(35)10.17





Revolving Loan Credit Agreement, dated April 17, 2003, between
    Mizuho Corporate Bank, Ltd. and Talbots. (17)(21)(38)(48)(71)10.18





Revolving Loan Credit Agreement, dated January 28, 2004, between
    Talbots and Mizuho Corporate Bank, Ltd. (19)(26)(28)(44)(63)10.19





Revolving Loan Credit Agreement by and between The Talbots, Inc.
    and Mizuho Corporation, Ltd. dated February 2, 2006.(29)10.20





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)10.21





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)10.22





General Financing Agreement between The Talbots, Inc. and Mizuho
    Corporate Bank, Ltd., dated as of August 24, 2007.(56)10.23





Amended and Restated Promissory Note between The Talbots, Inc.
    and Mizuho Corporate Bank, Ltd., dated January 28, 2008.(64)10.24





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)10.25





Uncommitted Lines of Credit Letter dated February 15, 2006
    between The Talbots, Inc. and Bank of America.(27)10.26





Uncommitted Line of Credit Facility dated March 26, 2007 between
    The Talbots, Inc. and Bank of America.(47)(60)10.27





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)10.28





Stock Purchase Agreement, dated as of November 26, 1993, between
    Talbots and AEON (U.S.A.), Inc.(2)10.29





Amended Repurchase Program, dated as of April 29, 2005, between
    Talbots and AEON (U.S.A.), Inc.(20)10.30





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)10.31





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)10.32





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) 59




---



##### 



10.33





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)10.34





Services Agreement, dated as of October 29, 1989, between
    Talbots and AEON (U.S.A.), Inc.(3)10.35





Services Agreement, dated as of November 18, 1993, between
    Talbots Japan Co., Ltd. and Talbots.(2)10.36





Consulting and Advisory Services Contract between AEON (U.S.A.),
    Inc. and Talbots dated as of November 1, 1999.(9)10.37





The Talbots, Inc. Supplemental Retirement Plan, as amended and
    restated effective January 1, 2009. (82)(70)*10.38





The Talbots, Inc. Supplemental Savings Plan, as amended and
    restated effective January 1, 2009.(82)*10.39





The Talbots, Inc. Deferred Compensation Plan, as amended and
    restated effective January 1, 2009.(82)*10.40





The Talbots, Inc. Amended and Restated 1993 Executive Stock
    Based Incentive Plan.(15)*10.41





The Talbots, Inc. 2003 Executive Stock Based Incentive Plan, as
    amended through March 2, 2007.(50)*10.42





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Nonqualified Stock Option Agreement.(67)*10.43





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Restricted Stock Agreement.(67)*10.44





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Restricted Stock Agreement (prior form).(24)*10.45





Form of The Talbots, Inc. 2003 Executive Stock Based Incentive
    Plan Nonqualified Stock Option Agreement (prior form).(24)*10.46





The Talbots, Inc. Directors Deferred Compensation Plan restated
    as of May 27, 2004.(23)*10.47





The Talbots, Inc. Restated Directors Stock Plan as amended
    through March 5, 2005.(13)*10.48





Form of Restricted Stock Unit Award under The Talbots, Inc.
    Restated Directors Stock Plan.(33)*10.49





Form of Option Agreement pursuant to The Talbots, Inc. Restated
    Director Stock Plan (prior form).(45)*10.50





Form of Performance Accelerated Option Agreement pursuant to The
    Talbots, Inc. Restated Directors Stock Plan.(76)*10.51





Form of Option Agreement pursuant to The Talbots, Inc. Restated
    Directors Stock Plan.(82)*10.52





Director Compensation Arrangements, adopted September 25, 2008.
    (76)(82)*10.53





The Talbots, Inc. Management Incentive Plan Performance
    Criteria.(52)*10.54





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)*10.55





Employment Agreement by and between The Talbots, Inc. and Trudy
    F. Sullivan, dated August 6, 2007.(55)*10.56





Restricted Stock Agreement by and between The Talbots, Inc. and
    Trudy F. Sullivan, dated August 7, 2007.(55)*10.57





Stock Option Agreement by and between The Talbots, Inc. and
    Trudy F. Sullivan, dated August 7, 2007.(55)*10.58





Employment Agreement, dated as of October 22, 1993, between
    Arnold B. Zetcher and The Talbots, Inc. amended through
    September 28, 2006.(2)(3)(32)(43)*10.59





The Talbots, Inc. Umbrella Supplemental Retirement Plan
    effective as of May 25, 2005 between The Talbots, Inc. and
    Arnold B. Zetcher.(32)*10.60





Compensation arrangements in connection with transition of
    Arnold B. Zetcher.(54)*10.61





Employment Agreement by and between The Talbots, Inc. and Philip
    H. Kowalczyk, dated November 20, 2007.(58)*10.62





Term Sheet between The Talbots, Inc. and Philip H. Kowalczyk,
    dated October 4, 2007, subsequently superseded by definitive
    employment agreement signed on November 20, 2007.(57)*10.63





Employment Agreement, dated November 3, 2004, between Philip H.
    Kowalczyk and The Talbots, Inc., amended through May 3, 2006,
    subsequently superseded by definitive employment agreement
    signed on November 20, 2007.(25)(35)(46)* 60




---



##### 



10.64





Restricted Stock Agreement by and between The Talbots, Inc. and
    Philip H. Kowalczyk, dated November 20, 2007.(58)*10.65





Grant Agreement by and between The Talbots, Inc. and John
    Fiske, III, dated March 1, 2007.(51)*10.66





Change in Control Agreement by and between The Talbots, Inc. and
    John Fiske, III, effective April 1, 2007.(51)*10.67





Offer Letter between The Talbots, Inc. and Paula Bennett, dated
    January 3, 2008.(69)*10.68





Change in Control Agreement between The Talbots, Inc. and Paula
    Bennett, dated January 28, 2008.(69)*10.69





Severance Agreement between The Talbots, Inc. and Paula Bennett,
    dated January 28, 2008.(69)*10.70





Retention Agreement between The Talbots, Inc. and Paula Bennett
    dated November 11, 2008.(82)10.71





Offer Letter between The Talbots, Inc. and Basha Cohen, dated
    December 11, 2007.(69)*10.72





Change in Control Agreement between The Talbots, Inc. and Basha
    Cohen, dated December 17, 2007.(69)*10.73





Severance Agreement between The Talbots, Inc. and Basha Cohen,
    dated December 17, 2007.(69)*10.74





Offer Letter between The Talbots, Inc. and Lori Wagner, dated
    February 19, 2008.(69)*10.75





Change in Control Agreement between The Talbots, Inc. and Lori
    Wagner, dated March 31, 2008.(69)*10.76





Severance Agreement between The Talbots, Inc. and Lori Wagner,
    dated March 31, 2008.(69)*10.77





Change in Control Agreements between Talbots and certain
    officers of Talbots. (2)(3)*10.78





Severance Agreement by and between The Talbots, Inc. and each of
    Richard T. OConnell, Jr. (form of), John Fiske, III
    (form of), Edward L. Larsen and Michele M. Mandell, dated August
    6, 2007.(55)*10.79





Letter Agreement between The Talbots, Inc. and Edward L. Larsen,
    dated December 5, 2008.(82)*10.80





Offer Letter between The Talbots, Inc. and Michael Scarpa, dated
    December 4, 2008.(82)*10.81





Severance Agreement between The Talbots, Inc. and Michael
    Scarpa, dated December 4, 2008.(82)*10.82





Change in Control Agreement between The Talbots, Inc. and
    Michael Scarpa, dated December 4, 2008.(82)*10.83





Letter Notification, dated April 21, 2008, concerning letter of
    credit facilities between HSBC and The Talbots, Inc. and The
    Talbots Group Limited Partnership.(73)10.84





Summary of Proposed $50,000,000 Term Loan Credit Facility
    between The Talbots, Inc. and one or more subsidiaries of AEON,
    Co., Ltd. (as Lender), dated June 10, 2008.(72)10.85





Term Loan Agreement, dated as of July 16, 2008, between The
    Talbots, Inc. (as Borrower) and AEON (U.S.A.), Inc. (as
    Lender).(74)10.86





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)10.87





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)10.88





Offer Letter between The Talbots, Inc. and Gregory I. Poole,
    dated June 5, 2008.(75)*10.89





Change in Control Agreement between The Talbots, Inc. and
    Gregory I. Poole, dated June 5, 2008 (filed to correct clerical
    error in previously filed agreement).(82)*10.90





Severance Agreement between The Talbots, Inc. and Gregory I.
    Poole, dated June 5, 2008.(75)*10.91





Revolving Credit Agreement, dated as of December 29, 2008,
    between The Talbots, Inc. and Mizuho Corporate Bank, Ltd.(77)10.92





Revolving Credit Agreement, dated as of December 30, 2008,
    between The Talbots, Inc. and Sumitomo Mitsui Banking
    Corporation.(77)10.93





Revolving Credit Agreement, dated as of January 2, 2009, between
    The Talbots, Inc. and The Norinchukin Bank.(77)10.94





Revolving Credit Agreement, dated as of February 26, 2009,
    between The Talbots, Inc. and The Bank of Tokyo-Mitsubishi UFJ,
    Ltd.(79)10.95





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) 61




---



##### 



10.96





Term Loan Facility Agreement between The Talbots, Inc. and AEON
    Co., Ltd., dated as of February 25, 2009.(79)10.97





Form of 409A Letter Agreement, dated December 31, 2008, between
    The Talbots, Inc. and the Michele M. Mandell, Richard T.
    OConnell, Jr., John Fiske, III, Michael Smaldone,
    Lori Wagner, Basha Cohen and Gregory I. Poole.(82)*10.98





Offer Letter between The Talbots, Inc. and Michael Smaldone,
    dated December 13, 2007.(82)*10.99





Severance Agreement between The Talbots, Inc. and Michael
    Smaldone, dated December 17, 2007.(82)*10.100





Change in Control Agreement between The Talbots, Inc. and
    Michael Smaldone, dated December 17, 2007.(82)*10.101





Letter Agreement between the Talbots, Inc. and Michelle M.
    Mandell, dated April 10, 2009.(82)*10.102





Offer Letter between The Talbots, Inc. and Benedetta I.
    Casamento, dated March 6, 2009.(82)*10.103





Severance Agreement between The Talbots, Inc. and Benedetta I.
    Casamento, dated April 6, 2009.(82)*10.104





Change in Control Agreement between The Talbots, Inc. and
    Benedetta I. Casamento, dated April 6, 2009.(82)*10.105





Support Letters from Aeon Co., Ltd., dated April 9, 2009.(82)10.106





Secured Revolving Credit Agreement dated as of April 10, 2009
    between Talbots and Aeon Co., Ltd.(83)     *
    
    Management contract and compensatory plan or arrangement.  (11)
    
    Statement re: Computation of Per Share Earnings.11.1
    
    Incorporated by reference to Note 17, Net (Loss)
    Income Per Share, of the Companys consolidated
    financial statements for the fiscal year ended January 31,
    2009, included in this Report.(21)
    
    Subsidiaries.21.1
    
    List of Subsidiaries of The Talbots, Inc.(82)(23)
    
    Consents of Experts and Counsel.23.1
    
    Consent of Independent Registered Public Accounting Firm,
    Deloitte & Touche LLP.(82)(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).(82)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).(82)  (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.(82)    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
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated May 15, 1996 (SEC file number reference
    001-12552).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). 62




---



##### 



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, 2005.14
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated March 6, 2001 (SEC file number reference
    001-12552).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).17
    
    [Intentionally omitted.]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, 2005.22
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated June 4, 2004.23
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended July 31, 2004.24
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated November 18, 2004.25
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated December 23, 2004.26
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated January 26, 2005.27
    
    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, 2005.31
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K/A
    dated February 5, 2006.32
    
    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, 2005.34
    
    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. 63




---



##### 



41
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated July 27, 2006.42
    
    [Intentionally omitted.]43
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated September 22, 2006.44
    
    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
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K/A
    dated May 3, 2006.47
    
    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 19, 2007.50
    
    Incorporated by reference to the 2007 Proxy Statement
    (Exhibit A) dated April 23, 2007.51
    
    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, 2007.53
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated July 30, 2007.54
    
    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
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated November 20, 2007.59
    
    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
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated February 8, 2008.62
    
    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
    
    Incorporated by reference to the exhibits filed with Current
    Report on
    Form 8-K
    dated June 10, 2008.73
    
    Incorporated by reference to the exhibits filed with Quarterly
    Report on
    Form 10-Q
    for the period ended May 3, 2008.74
    
    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. 64




---



##### 



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
    
    Filed with this
    Form 10-K.83
    
    Incorporated by reference to the exhibit filed with the Current
    Report on
    Form 8-K
    dated April 10, 2009. 65




---



##### 



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/  Tsutomu
    KajitaTsutomu
    KajitaDirector

Motoya
    OkadaDirector/s/  Gary
    M. PfeifferGary
    M. PfeifferDirector

Yoshihiro
    SanoDirector/s/  Susan
    M. SwainSusan
    M. SwainDirector

/s/  Isao
    TsurutaIsao
    TsurutaDirector  66




---



##### 



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


F-2Consolidated Statements of Operations for the Years Ended
    January 31, 2009, February 2, 2008, and
    February 3, 2007


F-3Consolidated Balance Sheets as of January 31, 2009 and
    February 2, 2008


F-4Consolidated Statements of Cash Flows for the Years Ended
    January 31, 2009, February 2, 2008, and
    February 3, 2007


F-5Consolidated Statements of Stockholders (Deficit) Equity
    for the Years Ended January 31, 2009, February 2,
    2008, and February 3, 2007


F-6Notes to Consolidated Financial Statements


F-7  F-1




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM           Accounting for Uncertainty in Income
    Taxes  an interpretation of FASB Statement
    No. 109
  Internal Control  Integrated Framework
  /s/ Deloitte &
    Touche LLP
    F-2




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 Amounts
    in thousands except per share data
  Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(52 weeks)


(52 weeks)


(53 weeks)Net Sales

$
1,495,170


$
1,708,115


$
1,772,306Costs and ExpensesCost of sales, buying and occupancy


1,049,785



1,143,309



1,152,886Selling, general and administrative


523,136



523,286



504,775Restructuring charges


17,793



3,710



Impairment of store assets


2,845



2,606



49Operating (Loss) Income from Continuing Operations


(98,389
)


35,204



114,596InterestInterest expense


20,589



35,400



31,114Interest income


299



1,289



6,612Interest Expense  net


20,290



34,111



24,502(Loss) Income Before Taxes from Continuing Operations


(118,679
)


1,093



90,094Income Tax Expense


20,842



1,050



33,218(Loss) Income from Continuing Operations


(139,521
)


43



56,876Loss from Discontinued Operations, net of taxes


(416,138
)


(188,884
)


(25,300
)Net (Loss) Income

$
(555,659
)

$
(188,841
)

$
31,576Net (Loss) Income Per ShareBasic (loss) income per share from continuing operations

$
(2.61
)

$



$
1.08Basic loss per share from discontinued operations


(7.79
)


(3.56
)


(0.48
)Basic (loss) income per share

$
(10.40
)

$
(3.56
)

$
0.60Diluted (loss) income per share from continuing operations

$
(2.61
)

$



$
1.06Diluted loss per share from discontinued operations


(7.79
)


(3.56
)


(0.47
)Diluted (loss) income per share

$
(10.40
)

$
(3.56
)

$
0.59Weighted Average Number of Shares ofCommon Stock OutstandingBasic


53,436



53,006



52,651Diluted


53,436



53,006



53,485    F-3




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
 Amounts
    in thousands except share data
  January 31,


February 2,2009


2008ASSETSCurrent Assets:Cash and cash equivalents

$
16,718


$
25,476Customer accounts receivable  net


169,406



210,853Merchandise inventories


206,593



262,603Deferred catalog costs


4,795



6,249Due from related party


376



3,040Deferred income taxes






25,084Income tax refundable


26,646



Prepaid and other current assets


35,277



34,524Assets held for sale  current


109,966



84,018Total current assets


569,777



651,847Property and equipment  net


277,363



329,360Goodwill


35,513



35,513Trademarks


75,884



75,884Other assets


12,756



30,545Assets held for sale  long-term






379,830Total Assets

$
971,293


$
1,502,979LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent Liabilities:Accounts payable

$
122,034


$
143,611Accrued income taxes






4,829Accrued liabilities


148,356



151,476Notes payable to banks


148,500



Current portion of long-term debt


70,377



80,650Liabilities held for sale  current


94,190



62,478Total current liabilities


583,457



443,044Long-term debt less current portion


238,000



308,377Related party debt


20,000



Deferred rent under lease commitments


115,282



116,897Deferred income taxes


28,456



5,646Other liabilities


164,195



144,672Liabilities held for sale  long-term






29,564CommitmentsStockholders (Deficit) Equity:Common stock, $0.01 par value; 200,000,000 authorized;
    81,125,526shares and 79,755,443 shares issued, respectively, and
    55,376,371shares and 54,921,777 shares outstanding, respectively


811



797Additional paid-in capital


492,932



485,629Retained (deficit) earnings


(19,278
)


565,805Accumulated other comprehensive loss


(67,079
)


(13,474
)Treasury stock, at cost: 25,749,155 shares and
    24,833,666 shares, respectively


(585,483
)


(583,978
)Total stockholders (deficit) equity


(178,097
)


454,779Total Liabilities and Stockholders (Deficit) Equity

$
971,293


$
1,502,979    F-4




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 Amounts
    in thousands
  Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(52 weeks)


(52 weeks)


(53 weeks)CASH FLOWS FROM OPERATING ACTIVITIES:Net (loss) income

$
(555,659
)

$
(188,841
)

$
31,576Loss from discontinued operations, net of tax


(416,138
)


(188,884
)


(25,300
)Net (loss) income from continuing operations


(139,521
)


43



56,876Adjustments to reconcile net (loss) income from continuing
    operations to net cash provided by operating activities:Depreciation and amortization


84,526



88,940



87,346Impairment of store assets


2,845



2,606



49Amortization of debt issuance costs


399



271



325Deferred rent


(242
)


944



5,702Compensation expense related to stock-based awards


8,562



17,522



17,334(Gain) loss on disposal of property and equipment


(28
)


1,113



(46
)Tax benefit from options exercised


76



347



1,109Excess tax benefit from options exercised






(347
)


(1,156
)Deferred income taxes


44,769



(22,732
)


(19,091
)Changes in assets and liabilities:Customer accounts receivable


41,156



(6,119
)


5,061Merchandise inventories


41,325



40,469



(55,698
)Deferred catalog costs


1,453



(148
)


(80
)Due from affiliates


2,664



2,632



2,220Prepaid and other current assets


(2,653
)


5,425



1,740Income tax refundable


(26,646
)






Accounts payable


(20,898
)


38,085



19,560Accrued income taxes


(4,308
)


15,659



19,667Accrued liabilities


(3,665
)


18,126



8,445Other assets


13,047



(2,265
)


(7,146
)Other liabilities


(26,601
)


13,137



10,084Net cash provided by operating activities


16,260



213,708



152,301CASH FLOWS FROM INVESTING ACTIVITIES:Additions to property and equipment


(44,698
)


(57,597
)


(77,555
)Proceeds from disposal on property and equipment


2,555







612Acquisition of J. Jill, net of cash acquired










(493,946
)Net cash used in investing activities


(42,143
)


(57,597
)


(570,889
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds (payments) on working capital notes payable, net


106,500



(45,000
)


45,000Proceeds from working capital notes payable


57,000







Payments on working capital notes payable


(15,000
)






Proceeds from related party borrowings


20,000







Payments on long-term borrowings


(80,502
)


(80,469
)


(40,358
)Proceeds from financing relating to acquisition










400,000Proceeds from options exercised


888



1,550



3,785Excess tax benefit from options exercised






347



1,156Payment of debt issuance costs


(866
)






(1,414
)Cash dividends


(28,752
)


(28,363
)


(27,490
)Purchase of treasury stock


(1,505
)


(521
)


(1,113
)Net cash provided by (used in) financing activities


57,763



(152,456
)


379,566EFFECT OF EXCHANGE RATE CHANGES ON CASH


(464
)


1,424



(404
)CASH FLOWS FROM DISCONTINUED OPERATIONSOperating activities


(20,119
)


11,677



(17,909
)Investing activities


(18,684
)


(27,215
)


(9,924
)Effect of exchange rate changes on cash


(154
)


12



162(38,957
)


(15,526
)


(27,671
)NET DECREASE IN CASH AND CASH EQUIVALENTS


(7,541
)


(10,447
)


(67,097
)CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR


24,280



34,819



100,813INCREASE IN CASH AND CASH EQUIVALENTS OF DISCONTINUED
    OPERATIONS


(188
)


(92
)


(1,368
)CASH AND CASH EQUIVALENTS, END OF YEAR

$
16,551


$
24,280


$
32,348    F-5




---



##### 



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


Deferred


Treasury


Comprehensive


StockholdersShares


Amount


Capital


(Deficit)


Loss


Compensation


Stock


(Loss) Income


(Deficit) EquityBALANCE AT JANUARY 29, 2006


77,861,128



779



455,221



783,397



(16,682
)


(13,403
)


(582,344
)






626,968Cash dividends paid














(27,490
)


















(27,490
)Common stock issued as stock award


439,091



4



























4Adoption of SFAS No. 123R










(13,403
)










13,403











Compensation expense related to stock options










12,492























12,492Compensation expense related to nonvested commonstock awards










5,504























5,504Stock options exercised, including tax benefit


267,168



3



4,887























4,890Purchase of 66,554 shares of vested and nonvestedcommon stock awards


























(1,113
)






(1,113
)Adoption of SFAS No. 158


















(17,345
)














(17,345
)Comprehensive income:Net income














31,576














$
31,576



31,576Translation adjustment


















(315
)










(315
)


(315
)Change in pension and postretirement liabilities, net of tax


















8,140











8,140



8,140Comprehensive income





























$
39,401BALANCE AT FEBRUARY 3, 2007


78,567,387



786



464,701



787,483



(26,202
)






(583,457
)






643,311Adjustment to retained earnings upon the adoption of
    FIN No. 48














(4,674
)


















(4,674
)Cash dividends paid










(200
)


(28,163
)


















(28,363
)Common stock issued as stock award


1,014,336



10



























10Compensation expense related to stock options










10,946























10,946Compensation expense related to nonvested commonstock awards










8,296























8,296Stock options exercised, including tax benefit


173,720



1



1,886























1,887Purchase of 265,540 shares of vested and nonvestedcommon 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
)






454,779Adjustment to retained earnings upon the adoption of
    SFAS No. 158














(897
)


















(897
)Cash dividends paid










(225
)


(28,527
)


















(28,752
)Common stock issued as stock award


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


















(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
)    F-6




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Description
    of Business      Discontinued Operations
  2.
    Recent
    Events and Managements Plan  Debt
    
    In July of 2008 the Company entered into a $50 million
    subordinated working capital term loan facility with AEON
    (U.S.A.) which matures in 2012 and requires interest-only
    payments until maturity. As of January 31, 2009, the
    Company had drawn $20 million on this facility and
    subsequent to January 31, 2009 has borrowed the remaining
    $30 million available under the facility.
    In February of 2009, the Company obtained a $200 million
    term loan facility from AEON which was used to repay all
    outstanding indebtedness under the Acquisition Debt Agreement
    related to the 2006 J. Jill acquisition. The Acquisition Debt
    Agreement had required quarterly principal payments of
    $20 million and, in addition, the Company was in default on
    certain covenants as of January 31, 2009. The
    $200 million loan from AEON is interest-only until it
    matures, which is at the Companys option in 2012. There
    are no financial covenants associated with this debt.
    As of February 2009, the Company had converted all of its
    working capital lines, amounting to $165 million in the
    aggregate, to committed lines with maturities in December 2009.
    Management, with AEON, is F-7




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    In February of 2009, AEON guaranteed the Companys
    outstanding debt under its existing working capital facilities
    totaling $165 million, its existing revolving credit
    facilities totaling $80 million, and its existing
    $20 million term loan facility. In April of 2009 AEON also
    agreed (i) that it would agree to continue to provide a
    guaranty for a refinancing of any of that debt, which currently
    matures 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 existing maturity date, or if any other
    condition occurred that required AEON to make a payment under
    its existing guaranty, AEON would make a loan to the Company,
    due on or after April 16, 2010 and within the limits of
    AEONs existing loan guaranty, to avoid any lack of the
    Companys financial resources caused by any such failure of
    refinancing. In April of 2009 AEON also confirmed its support
    for the Companys working capital improvements initiatives
    for its merchandise payables management and that it will use
    commercially reasonable effort to provide the Company with
    financial support through loan or guarantee up to
    $25 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 of 2009 the Company entered into a $150 million
    secured revolving loan facility with AEON. The facility matures
    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 and in form and substance
    satisfactory to the lender. Funding under this facility is
    subject to mortgage and lien recordings and all necessary
    consents or waivers by existing lenders to the transactions
    contemplated by the agreement, including the granting of liens
    and mortgages in favor of AEON under the facility; without such
    lender requiring prepayment of its indebtedness or the
    establishment of a pari passu lien on the collateral in favor of
    such lender. Amounts may be borrowed, repaid, and reborrowed
    under the facility and may be used for working capital and other
    general corporate purposes.
    The Company has eliminated all financial covenant ratios from
    its debt agreements.    
    During the third quarter of 2008 management completed the
    closing of its Kids, Mens, and U.K. business concepts. These
    business concepts 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. This business is not
    considered strategic to ongoing operations.
    In June of 2008 management reduced the Companys corporate
    headcount by approximately 9% across multiple locations at all
    levels.
    In February of 2009 management further reduced the
    Companys corporate headcount by approximately 17%.
    Management has reduced the planned hours worked in its stores
    for 2009.
    During 2008 and into 2009, management took a number of actions
    in an effort to seek to improve gross margins including
    (i) changing its promotional cadence to monthly markdowns
    rather than its historical four clearance sales events per year;
    (ii) holding a leaner inventory position, concentrating on
    better product flow and content resulting in decreased planned
    inventory commitments into 2009; and (iii) adopting a new
    price optimization tool. F-8




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    During 2008 management eliminated advertising in television and
    national print, contributing to $14.8 million less in
    spending from 2007.
    For 2009, management currently plans to decrease catalog
    circulation levels, subject to continuing review.
    In 2008, the Companys gross capital expenditures
    (excluding construction allowances received from landlords) were
    $44.7 million, which was down from 2007 by
    $12.9 million. For 2009, management plans to further reduce
    capital expenditures from 2008 levels, subject to continuing
    review.
    Management has eliminated matching contributions to its 401(k)
    plan for 2009.
    Management has increased employee health care contributions in
    2009.
    Management has eliminated merit increases for 2009.
    Management has frozen its defined benefit pension plans
    effective May 1, 2009.
    In February of 2009 the Companys Board approved the
    indefinite suspension of the quarterly dividend.      3.
    Summary
    of Significant Accounting Policies  Use of Estimates 
  Principles of Consolidation 
 F-9




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal Year 
  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  F-10




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Preopening Expenses 
  Goodwill and Trademarks 
         F-11




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Impairment of Long-lived Assets 
  Grantor Trust 
  Deferred Rent Obligations 
 F-12




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair Value of Financial Instruments 
  Foreign Currency Translation 
  Revenue Recognition 
  Gift Cards and Merchandise Credits 
  Cost of Sales, Buying and Occupancy 
  Selling, General and Administrative Expenses 
  Finance Charge Income 
  Advertising 
  Income Taxes 
 F-13




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for
    Uncertainty in Income Taxes an interpretation of FASB
    Statement No. 109 Income Taxes,
  Stock-Based Compensation  Share  Based Payment Stock-Based Compensation
  Comprehensive (Loss) Income 
  January 31,


February 2,


February 3,2009


2008


2007(In thousands)Cumulative translation adjustment, net of taxes of
    $0.7 million, $0, and $0, respectively

$
(1,125
)

$
91


$
(2,437
)Pension and postretirement plan liabilities, net of taxes of
    $9.0 million, $9.0 million, and $15.8 million,
    respectively


(65,954
)


(13,565
)


(23,765
)Accumulated other comprehensive loss

$
(67,079
)

$
(13,474
)

$
(26,202
)   Employers Accounting for Defined Benefit Pension and
    Other Postretirement Plans  An Amendment of FASB
    Statements No. 87, 88, 106 and 132(R)
  Basic and Diluted Net (Loss) Income Per Share 
 F-14




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Supplemental Cash Flow Information 
  Recently Adopted Accounting Pronouncements  Fair Value Measurements 157-2 FSP 157-2 Fair Value Measurements
  Employers Accounting for Defined Benefit Pensions and
    Other Postretirement Plans, an Amendment of FASB Statements No,
    87, 88, 106, and 132 (R)
  The
    Fair Value Option for Financial Assets and Financial Liabilities
  Recently Issued Accounting Pronouncements  Employers Disclosures about Postretirement Benefit Plan
    Assets Employers Disclosures about Pension
 F-15




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and Other Postretirement Benefits  an Amendment of
    FASB Statements No. 87,88, and 106
  No. EITF 03-6-1, Determining whether Instruments Granted in Share-Based
    Payment Transactions are Participating Securities (FSP 03-6-1). FSP 03-6-1 Earnings Per Share FSP 03-6-1 FSP 03-6-1
  The
    Hierarchy of Generally Accepted Accounting Principles The Meaning of Present Fairly in
    Conformity With Generally Accepted Accounting Principles The Meaning of Present
    Fairly in Conformity With Generally Accepted Accounting
    Principles.
  4.
    Discontinued
    Operations        Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Net Sales

$
470,815


$
581,182


$
458,727Loss before taxes


(416,138
)


(222,050
)


(39,572
)Income tax benefit






(33,166
)


(14,272
)Loss from Discontinued Operations, net of taxes

$
(416,138
)

$
(188,884
)

$
(25,300
)  F-16




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting for the Impairment or
    Disposal of Long-Lived Assets
        F-17




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  January 31,


February 2,2009


2008(In thousands)Merchandise inventories

$
50,250


$
66,500Other current assets


9,217



17,518Assets held for sale  current


59,467



84,018Property and equipment  net


15,899



157,373Goodwill






77,977Trademarks


30,200



63,500Other intangible assets  net


4,400



80,980Assets held for sale  long-term


50,499



379,830Total assets held for sale

$
109,966


$
463,848Current liabilities

$
57,152


$
62,478Current portion of long-term debt






Liabilities held for sale  current


57,152



62,478Long-term debt less current portion






Other liabilities


37,038



29,564Liabilities held for sale  long-term


37,038



29,564Total liabilities held for sale

$
94,190


$
92,042   5.
    Restructuring
    Charges     F-18




---



##### 



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


Consulting


charges (Income)


Total(In thousands)Charges


714



2,732



264



3,710Cash payment


(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 payment


(5,717
)


(5,574
)






(11,291
)Non-cash items










2,170



2,170Balance at January 31, 2009

$
10,882


$



$



$
10,882     6.
    Equity
    Transactions         F-19




---



##### 



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




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Cost of sales, buying and occupancy

$
(129
)

$
1,603


$
2,331Selling, general, and administrative


10,861



15,919



15,003Restructuring charges


(2,170
)






Compensation expense related to stock-based awards

$
8,562


$
17,522


$
17,334              F-21




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Stock
    Options
    Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007Weighted average risk-free interest rate


2.6
%


4.5
%


4.7
%Weighted average expected life of option grants


5.3 years



4.6 years



4.5 yearsWeighted average expected volatility of underlying stock


50.8
%


38.5
%


41.8
%Weighted average expected dividend paymentrate, as a percentage
    of the stock price on the date of grant


7.8
%


2.4
%


2.0
%       Weighted


WeightedAverage


Average Remaining


AggregateNumber of


Exercise Price


Contractual Term


IntrinsicShares


per Share


(In Years)


Value(In thousands)Outstanding at beginning of year


9,491,706


$
27.96Granted


628,650



9.54Exercised


(71,668
)


7.46Forfeited


(521,270
)


20.77Expired


(116,465
)


30.91Outstanding at end of year


9,410,953


$
27.24



3.4


$
2Exercisable at end of year


8,145,967


$
28.68



2.6


$
    F-22




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Nonvested
    Stock Awards and RSUs
    WeightedAverage GrantNumber of


Date Fair ValueShares


per ShareNonvested at beginning of year


1,930,298


$
24.95Granted


1,318,415



9.05Vested


(487,878
)


21.50Forfeited


(757,175
)


22.54Nonvested at end of year


2,003,660


$
16.28       8.
    Related
    Party and Affiliates  30-days.
    Debt
 F-23




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Debt
      9.
    Accounts
    Receivable    January 31,


February 2,2009


2008(In thousands)Due from customers

$
173,406


$
213,553Less allowance for doubtful accounts


(4,000
)


(2,700
)Customer accounts receivable, net

$
169,406


$
210,853    F-24




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Balance, beginning of year

$
2,700


$
2,200


$
2,400Charges to costs and expenses


5,987



3,443



1,360Charge-offs, net of recoveries


(4,687
)


(2,943
)


(1,560
)Balance, end of year

$
4,000


$
2,700


$
2,200   10.
    Property
    and Equipment    January 31,


February 2,2009


2008(In thousands)Land

$
10,817


$
10,817Buildings


69,279



69,090Fixtures and equipment


379,895



408,435Software


56,140



49,518Leasehold improvements


312,797



333,139Construction in progress


12,715



15,961Property and
    equipment-gross


841,643



886,960Less accumulated depreciation and amortization


(564,280
)


(557,600
)Property and
    equipment-net

$
277,363


$
329,360     11.
    Accrued
    Liabilities    January 31,


February 2,2009


2008(In thousands)Gift cards, merchandise credits, sales return reserve and other
    customer related liabilities

$
55,022


$
68,287Employee compensation, related tax and benefits


29,453



33,134Taxes other than income and withholding


5,422



8,984Other accrued liabilities


58,459



41,071Total accrued liabilities

$
148,356


$
151,476  F-25




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Sales return reserve balance, beginning of year

$
9,486


$
8,961


$
10,283Provision for merchandise returns


348,359



379,788



382,824Merchandise returned


(353,108
)


(379,263
)


(384,146
)Sales return reserve balance, end of year

$
4,737


$
9,486


$
8,961   12.
    Debt    January 31,


February 2,2009


2008(In thousands)Acquisition Debt

$
200,000


$
280,000Revolving Credit Agreements


80,000



80,000Term Loan


20,000



20,000Related Party Term Loan


20,000



Working Capital Lines of Credit (Notes payable to banks)


148,500



Tilton Facility Loan


8,377



9,027Total long-term debt


476,877



389,027Less current maturities


(218,877
)


(80,650
)Long term-debt, less current portion

$
258,000


$
308,377   Acquisition Debt 
     F-26




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revolving Credit Agreements 
  Term Loan 
  Related Party Term Loan with AEON (U.S.A.) 
  Working Capital Lines of Credit (Notes payable to
    banks) 
 F-27




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Secured Revolving Loan Facility with AEON 
  AEON Guarantees 
  Tilton Loan Facility  10-year 20-year
 F-28




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Letters of Credit 
    (In thousands)2009

$
218,8772010


18,0002011


20,0002012


220,000Total

$
476,877   13.
    Income
    Taxes    January 31,


February 2,


February 3,2009


2008


2007(In thousands)Domestic

$
(118,749
)

$
(3,293
)

$
84,410Foreign


70



4,386



5,684Total

$
(118,679
)

$
1,093


$
90,094     January 31,


February 2,


February 3,2009


2008


2007(In thousands)Current provision (benefit):Federal

$
(24,104
)

$
19,284


$
49,103State


398



3,610



1,515Foreign






1,216



1,691Total current


(23,706
)


24,110



52,309Deferred provision:Federal


42,651



(17,918
)


(16,252
)State


1,897



(5,108
)


(3,007
)Foreign






(34
)


168Total deferred


44,548



(23,060
)


(19,091
)Total

$
20,842


$
1,050


$
33,218  F-29




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    January 31,


February 2,


February 3,2009


2008


2007(In thousands)Tax at federal statutory rate

$
(41,538
)

$
382


$
31,533Adjustments resulting from:State income taxes, net of federal tax benefit


(706
)


(2,478
)


1,824Foreign tax


(361
)






(130
)Valuation allowance


60,975







Employment related obligations


2,541



1,640



Foreign income inclusion






3,529



In kind donations


(1,138
)


(1,248
)


(1,314
)Other


1,069



(775
)


1,305Actual tax expense

$
20,842


$
1,050


$
33,218     Deferred
    tax assets (liabilities)
    January 31,


February 2,2009


2008(In thousands)Deferred tax assets:Merchandise inventories

$
16,191


$
15,138Lease commitments


14,224



12,179Accrued vacation pay


3,139



6,029Deferred compensation


23,917



25,856Stock-based compensation


16,208



15,761Pension and postretirement liabilities


30,348



9,044Charitable contribution carryforward


6,423



2,911Net operating loss carryforwards


31,318



3,327Tax credit carryforwards


2,006



Depreciation and amortization


35,388



Deferred unrecognized tax benefits


26,414



23,251Restructuring charges


13,580



1,350Other


8,073



5,892Total deferred tax assets


227,229



120,738Deferred tax liabilities:Deferred catalog costs


(2,918
)


(3,157
)Depreciation and amortization






(20,554
)Identifiable intangibles


(41,019
)


(77,589
)Total deferred tax liabilities


(43,937
)


(101,300
)Less: Valuation allowance


(211,748
)


Net deferred tax asset (liability)

$
(28,456
)

$
19,438  F-30




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Uncertain
    tax positions
     F-31




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    January 31,


February 2,2009


2008(In thousands)Balance, at beginning of year

$
37,908


$
41,545Increases related to prior year tax positions


3,704



Decreases related to prior year tax positions


(2,243
)


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


1,597



711Decreases related to settlements with taxing authorities


(2,166
)


(761
)Decreases related to lapsing of statute of limitations


(280
)


(294
)Balance, at end of year

$
38,520


$
37,908       14.
    Segment
    and Geographic Information         F-32




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      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   February 2, 2008Stores


Direct Marketing


TotalNet sales

$
1,445,406


$
262,709


$
1,708,115Direct profit


154,499



43,329



197,828Depreciation and amortization


74,300



1,036



75,336   February 3, 2007Stores


Direct Marketing


TotalNet sales

$
1,510,980


$
261,326


$
1,772,306Direct profit


210,007



48,544



258,551Depreciation and amortization


72,581



1,317



73,898       Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Total direct profit for reportable segments

$
90,555


$
197,828


$
258,551Less: indirect expenses


188,944



162,624



143,955Operating (loss) income from continuing operations


(98,389
)


35,204



114,596Interest
    expense-net


20,290



34,111



24,502(Loss) Income before taxes from continuing operations


(118,679
)


1,093



90,094Income tax expense


20,842



1,050



33,218Consolidated net (loss) income from continuing operations

$
(139,521
)

$
43


$
56,876    F-33




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Sales:United States

$
1,449,399


$
1,653,576


$
1,717,802Canada


45,771



54,539



54,504Total consolidated revenues

$
1,495,170


$
1,708,115


$
1,772,306Long-lived assets:United States

$
274,962


$
325,861Canada


2,401



3,499Total long-lived assets

$
277,363


$
329,360   15.
    Benefit
    Plans         F-34




---



##### 



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


SERP


Medical PlansJanuary 31,


February 2,


January 31,


February 2,


January 31,


February 2,2009


2008


2009


2008


2009


2008(In thousands)Change in benefit obligations:Projected benefit obligations at beginning of year

$
146,691


$
140,418


$
20,122


$
19,662


$
1,231


$
1,305Service cost


9,494



9,742



398



478



1



2Interest cost


9,636



8,615



1,270



1,140



70



82Actuarial loss (gain)


3,103



(9,730
)


(335
)


(1,020
)


46



(237
)Curtailment


(5,905
)






(709
)










Benefits paid


(3,215
)


(2,354
)


(1,709
)


(138
)


(114
)


(176
)Adoption of SFAS No. 158


1,594







142







1



Plan change






















255Projected benefit obligations at end of year

$
161,398


$
146,691


$
19,179


$
20,122


$
1,235


$
1,231Changes in assets:Fair value at beginning of year

$
110,150


$
99,660


$



$



$



$
Actual return (loss) on plan assets


(45,379
)


12,844















Employer contributions


11,514







1,709



138



114



176Benefits paid


(3,215
)


(2,354
)


(1,709
)


(138
)


(114
)


(176
)Fair value at end of year

$
73,070


$
110,150


$



$



$



$
  F-35




---



##### 



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


SERP


Medical PlansJanuary 31,


February 2,


January 31,


February 2,


January 31,


February 2,2009


2008


2009


2008


2009


2008(In thousands)Funded status:Projected benefit obligations
    in excess of plan assets

$
88,329


$
36,540


$
19,179


$
20,084


$
1,235


$
1,225Net amounts recognized in the
    consolidated balance sheet:

$
88,329


$
36,540


$
19,179


$
20,084


$
1,235


$
1,225Net amounts recognized in the consolidated balance
    sheet
    consist of:Accrued liabilities (current)

$



$



$
1,300


$



$
55


$
Other liabilities (non-current)


88,329



36,540



17,879



20,084



1,180



1,225Net amounts recognized in the consolidated balance sheets

$
88,329


$
36,540


$
19,179


$
20,084


$
1,235


$
1,225Net amounts recognized in 
    accumulated other comprehensive income consist of:Net actuarial loss

$
67,123


$
14,841


$
123


$
1,170


$
408


$
1,030Prior service cost (credit)


78



133



13



39



(1,809
)


(3,647
)Net amounts recognized in accumulated other comprehensive income

$
67,201


$
14,974


$
136


$
1,209


$
(1,401
)

$
(2,617
)     Pension Plan


SERPJanuary 31,


February 2,


January 31,


February 2,2009


2008


2009


2008(In thousands)Projected benefit obligation

$
161,398


$
146,691


$
19,179


$
20,122Accumulated benefit obligation

$
136,059


$
115,070


$
18,017


$
17,681Fair value of plan assets

$
73,070


$
110,150


$



$
  F-36




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Service expense-benefits earned during the period

$
9,494


$
9,742


$
10,543Interest expense on projected benefit obligation


9,636



8,615



7,575Expected return on plan assets


(10,263
)


(9,331
)


(8,160
)Curtailment


17







Prior service cost net amortization


69



69



109Net amortization of loss


1,254



2,726



3,983Net pension expense

$
10,207


$
11,821


$
14,050     Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Service expense-benefits earned during the period

$
398


$
478


$
453Interest expense on projected benefit obligation


1,270



1,140



1,045Curtailment


15Prior service cost net amortization


26



901



1,337Net amortization of loss


21



59



259Net SERP expense

$
1,730


$
2,578


$
3,094     Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007(In thousands)Service expense-benefits earned during the period

$
1


$
2


$
378Interest expense on accumulated postretirement benefit obligation


70



82



204Prior service cost net amortization


(1,696
)


(1,696
)


(1,131
)Net amortization of loss


633



606



445Net postretirement medical expense (credit)

$
(992
)

$
(1,006
)

$
(104
)  F-37




---



##### 



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


SERP


Medical Plans2008


2007


2008


2007


2008


2007(In thousands)Net loss (gain)

$
52,291


$
(9,578
)

$
(1,047
)

$
(664
)

$
(622
)

$
(384
)Prior service (credit) cost


(55
)


(41
)


(26
)


(540
)


1,838



1,017Total recognized in other comprehensive loss (income)


52,236



(9,619
)


(1,073
)


(1,204
)


1,216



633Total recognized in net periodic (benefit) cost and other
    comprehensive loss (income)

$
62,443


$
2,202


$
657


$
1,374


$
224


$
(373
)      F-38




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year EndedJanuary 31,


February 2,


February 3,2009


2008


2007Pension Plan:Discount rate


6.50
%


6.00
%


5.50
%Discount rate used to determine projected benefit obligation at
    end of year


6.50
%


6.50
%


6.00
%Expected long-term rate of return on plan assets


9.00
%


9.00
%


9.00
%Rate of future compensation increases


4.00
%


4.00
%


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


4.00
%


4.00
%


4.00
%SERP:Discount rate


7.00
%


6.00
%


5.50
%Discount rate used to determine projected benefit obligation at
    end of year


6.50
%


6.25
%


6.00
%Rate of future compensation increases


4.00
%


4.00
%


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


4.00
%


4.00
%


4.00
%Postretirement Medical Plans:Discount rate


6.25
%


6.00
%


5.50
%Discount rate used to determine projected benefit obligation at
    end of year


6.50
%


6.25
%


6.00
%Initial healthcare cost trend rate-projected benefit obligations


9.00
%


10.00
%


11.00
%Initial healthcare cost trend rate-periodic expense


10.00
%


11.00
%


12.00
%Ultimate health care cost trend rate


5.00
%


5.00
%


5.00
%      F-39




---



##### 



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


January 31, 2009


December 31, 2007Allocation


Amount


Percent


Amount


Percent(In thousands)Equity securities, including $5,967 of foreign securities at
    January 31, 2009


70
%

$
55,445



76
%

$
78,070



71
%Debt securities


30
%


13,992



19



26,907



24Cash and money market






3,633



5



5,173



5Total





$
73,070



100
%

$
110,150



100
%     Pension





PostretirementPlan


SERP


Medical Plans(In thousands)Expected benefit payments:2009

$
3,183


$
1,316


$
552010


3,607



1,326



282011


4,107



1,347



2012


4,773



1,368



2013


5,561



1,405



2014 to 2018


44,831



7,957



       Pension





PostretirementPlan


SERP


Medical Plans(In thousands)Net actuarial loss

$
929


$



$
440Prior service cost

$
6


$
1


$
(1,500
)    F-40




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    16.
    Commitments    ContractualObligations

Total


2009


2010


2011


2012


2013


Thereafter(In thousands)Operating leases:Real estate

$
954,690


$
173,705


$
168,748


$
153,749


$
127,909


$
103,113


$
227,466Equipment


8,900



5,019



3,150



620



111







Merchandise purchases


291,413



291,413



















Construction contracts


5,896



5,896



















Other contractual
    commitments


29,517



27,067



2,383



56



6



5



Total Commitments

$
1,290,416


$
503,100


$
174,281


$
154,425


$
128,026


$
103,118


$
227,466   Operating Leases
    Merchandise Purchases
  Construction Contracts
  Other Contractual Commitments
 F-41




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    17.
    Net
    (Loss) Income Per Share    Year EndedJanuary 31


February 2,


February 3,2009


2008


2007(In thousands)Shares for computation of basic net (loss) income per share


53,436



53,006



52,651Effect of stock compensation plans










834Shares for computation of diluted net (loss) income per share


53,436



53,006



53,485   18.
    Fair
    Value Measurements  FSP 157-2.
  Benefit
    Plans
  19.
    Quarterly
    Results (unaudited)  Form 10-Q Discontinued Operations,
  F-42




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  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



47,844Net income (loss) from continuing operations


18,506



(11,951
)


(14,763
)


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


(16,865
)


(13,057
)


(155,996
)(1)


(230,220
)Net income (loss)

$
1,641


$
(25,008
)

$
(170,759
)

$
(361,533
)(2)Net income (loss) per share:Basic income (loss) per share from continuing operations

$
0.35


$
(0.22
)

$
(0.28
)

$
(2.45
)Basic loss per share from discontinued operations


(0.32
)


(0.25
)


(2.92
)


(4.30
)Basic income (loss) per share

$
0.03


$
(0.47
)

$
(3.20
)

$
(6.75
)Diluted income (loss) per share from continuing operations

$
0.35


$
(0.22
)

$
(0.28
)

$
(2.45
)Diluted loss per share from discontinued operations


(0.32
)


(0.25
)


(2.92
)


(4.30
)Diluted income (loss) per share

$
0.03


$
(0.47
)

$
(3.20
)

$
(6.75
)Weighted average number of shares of common stock 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     (1)
    
    In the third quarter of 2008, the Company recorded impairment
    charges related to J. Jill of $185.9 million, which is
    included in the loss from discontinued operations, net of tax.(2)
    
    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 $7.6 million of restructuring
    charges, which is included in the net 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 is included in
    the loss from discontinued operations, net of tax.  F-43




---



##### 



THE
    TALBOTS, INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fiscal 2007 Quarter EndedMay 5,


August 4,


November 3,


February 2,2007


2007


2007


2008(In thousands)Net sales

$
432,295


$
434,167


$
413,972


$
427,681Gross profit


168,622



121,597



147,437



127,150Net income (loss) from continuing operations


15,273



(4,015
)


(893
)


(10,322
)Loss from discontinued operations, net of tax


(10,033
)


(9,301
)


(8,494
)


(161,056
)Net income (loss)

$
5,240


$
(13,316
)

$
(9,387
)

$
(171,378
)(3)Net income (loss) per share:Basic income (loss) per share from continuing operations

$
0.29


$
(0.08
)

$
(0.02
)

$
(0.19
)Basic loss per share from discontinued operations


(0.20
)


(0.17
)


(0.16
)


(3.03
)Basic income (loss) per share

$
0.09


$
(0.25
)

$
(0.18
)

$
(3.22
)Diluted income (loss) per share from continuing operations

$
0.29


$
(0.08
)

$
(0.02
)

$
(0.19
)Diluted loss per share from discontinued operations


(0.20
)


(0.17
)


(0.16
)


(3.03
)Diluted income (loss) per share

$
0.09


$
(0.25
)

$
(0.18
)

$
(3.22
)Weighted average number of shares of common stock outstanding:Basic


52,928



52,980



53,032



53,085Diluted


53,908



52,980



53,032



53,085Cash dividends declared per share:

$
0.13


$
0.13


$
0.13


$
0.13Market price data:High

$
26.18


$
25.70


$
24.97


$
16.35Low

$
20.95


$
19.58


$
13.66


$
6.96     (3)
    
    In the fourth quarter of 2007, the Company recorded
    restructuring charges of $3.7 million included in
    continuing operations. Additionally the Company recorded an
    impairment charge related to J. Jill of $149.6 million
    and restructuring charges of $5.6 million, which are
    included in the loss from discontinued operations, net of tax. F-44