TheTable table below summarizes the charges and payments related to the Company’s restructuring and separation costs, which are included in the line items “Other Current Liabilities” in the Company’s Condensed Consolidated Balance Sheet as of May 4, 2013 and April 28, 2012: Contents

SubsequentTable to May 4, 2013, the Compensation Committee of BHI’s Board of Directors, in an effort to align stock option exercise prices with changes in the Company’s enterprise value caused by the $336 million dividend, made adjustments to then outstanding stock options through a combination of exercise price reductions and cash payments to option holders. As a result of these adjustments, the Company will account for these modifications in accordance with Topic No. 718. Additionally, cash payments made by the Company to option holders will be recorded in the line item Selling and Administrative Expenses in the Company’s Condensed Consolidated Statement of Operations and Comprehensive Loss. At this time, the Company is evaluating the impact on the Company’s financial statements. Contents

OnTable February 14, 2013, Parent, and its principal shareholders (Bain Capital Integral Investors, LLC, Bain Capital Fund IX, LLC, BCIP Associates-G and BCIP TCV, LLC) entered into a Termination Agreement, pursuant to which the Stockholders Agreement among each of them and the other stockholders of Parent, dated as of April 13, 2006 (Prior Stockholders Agreement) was terminated. On February 14, 2013, Burlington Holdings, Inc. and the investors and managers from time to time party thereto, entered into a Stockholders Agreement (New Stockholders Agreement). The terms of the New Stockholders Agreement are substantially similar to the terms of the Prior Stockholders Agreement. Contents

TheTable table below summarizes the charges and payments related to the Company’s restructuring and separation costs, which are included in the line items “Other Current Liabilities” in the Company’s Condensed Consolidated Balance Sheet as of May 4, 2013 and April 28, 2012: Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~May~~August 43, 2013

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 333-137916-110

LOGO

BURLINGTON COAT FACTORY

INVESTMENTS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware		20-4663833
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1830 Route 130 North Burlington, New Jersey		08016
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (609) 387-7800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.* Yes ¨ No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~June 18~~September 19, 2013, the registrant has 1,000 shares of common stock outstanding, all of which are owned by Burlington Coat Factory Holdings, LLC, the registrant’s parent holding company, and are not publicly traded.

*	The Registrant has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934, but is not required to file such reports under such sections.

BURLINGTON COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES

INDEX

	Page
Part I—Financial Information		3
Item 1. Financial Statements (unaudited)		3
Condensed Consolidated Balance Sheets as of May 4, 2013, February 2, 2013 and April 28, 2012		3
Condensed Consolidated Balance Sheets as of August 3, 2013, February 2, 2013 and July 28, 2012		3
Condensed Consolidated Statements of Operations and Comprehensive Loss –Three Months Ended May 4, 2013 and April 28, 2012		4
Condensed Consolidated Statements of Operations and Comprehensive Loss –Six and Three Months Ended August 3, 2013 and July 28, 2012		4
Condensed Consolidated Statements of Cash Flows—Three Months Ended May 4, 2013 and April 28, 2012		5
Condensed Consolidated Statements of Cash Flows—Six Months Ended August 3, 2013 and July 28, 2012		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2428
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3950
Item 4. Controls and Procedures		4051
Part II—Other Information		4051
Item 1. Legal Proceedings		4051
Item 1A. Risk Factors		4051
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		4051
Item 3. Defaults Upon Senior Securities		4051
Item 4. Mine Safety Disclosures		4051
Item 5. Other Information		4051
Item 6. Exhibits		4052
SIGNATURES		4253

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

BURLINGTON COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(All amounts in thousands)

May 4, 2013

February 2, 2013

April 28, 2012

August 3,2013

February 2,2013

July 28,2012

ASSETS

Current Assets:

Cash and Cash Equivalents

~~102~~30,~~348~~556

43,336

5331,~~654~~670

Restricted Cash and Cash Equivalents

34,800

Accounts Receivable, Net of Allowances for Doubtful Accounts

4641,~~362~~640

41,734

3931,~~725~~389

Merchandise Inventories

~~727~~748,~~219~~308

680,190

~~660~~636,~~940~~848

Deferred Tax Assets

912,~~337~~411

6,133

2321,~~317~~190

Prepaid and Other Current Assets

74,~~103~~360

66,052

4347,~~327~~026

Prepaid Income Taxes

78,~~002~~530

7,218

1832,~~319~~628

Assets Held for Sale

~~191~~—

191

~~521~~—

Total Current Assets

1950,~~001,362~~605

879,654

~~874~~835,~~603~~551

Property and Equipment—Net of Accumulated Depreciation

~~871~~882,~~610~~190

878,305

~~854~~868,~~681~~030

Tradenames

238,000

Favorable Leases—Net of Accumulated Amortization

~~313~~306,~~200~~315

322,081

~~352~~345,~~636~~555

Goodwill

47,064

Other Assets

~~111~~121,~~209~~901

112,978

~~112~~109,~~203~~685

Total Assets

2,~~582~~546,~~445~~075

2,478,082

2,~~479~~443,~~187~~885

LIABILITIES AND STOCKHOLDER’S DEFICIT

Current Liabilities:

Accounts Payable

~~630~~555,~~660~~593

500,406

~~471~~446,~~122~~957

Other Current Liabilities

~~217~~255,~~544~~790

238,865

~~217~~236,~~806~~212

Current Maturities of Long Term Debt

9,~~737~~663

784

103,~~236~~122

Total Current Liabilities

~~857~~821,~~941~~046

740,055

~~699~~686,~~164~~291

Long Term Debt

1,~~328~~341,~~352~~020

1,335,532

1,~~406~~421,~~184~~169

Other Liabilities

~~230~~236,~~337~~708

229,425

~~215~~214,~~476~~479

Deferred Tax Liabilities

~~251~~247,~~167~~065

253,339

~~271~~265,~~690~~651

Commitments and Contingencies (Notes 3, 4, 10 and 11)

Stockholder’s Deficit:

Common Stock (Par Value $0.01; 1,000 Shares Issued and Outstanding)

—

Capital in Excess of Par Value

~~475~~480,~~191~~302

479,572

~~475~~476,~~754~~633

Accumulated Deficit

(~~560~~580,~~543~~066

)

(559,841

)

(~~589~~620,~~081~~338

)

Total Stockholder’s Deficit

(8599,~~352~~764

)

(80,269

)

(~~113~~143,~~327~~705

)

Total Liabilities and Stockholder’s Deficit

2,~~582~~546,~~445~~075

2,478,082

2,~~479~~443,~~187~~885

See Notes to Condensed Consolidated Financial Statements.

BURLINGTON COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(All amounts in thousands)

	Three Months Ended
	Six Months Ended						Three Months Ended
	May 4, 2013			April 28, 2012
	August 3,2013			July 28,2012			August 3,2013			July 28,2012
REVENUES:
Net Sales	$	12,~~065~~028,~~013~~724		$	~~982~~1,~~422~~846,603		$	963,711		$	864,181
Other Revenue		715,~~976~~745			715,~~534~~093			7,769			7,559
Total Revenue		12,~~072~~044,~~989~~469			~~989~~1,~~956~~861,696			971,480			871,740
COSTS AND EXPENSES:
Cost of Sales		667,653			619,885
Cost of Sales (Exclusive of Depreciation and Amortization)		1,267,973			1,163,434			600,320			543,549
Selling and Administrative Expenses		~~327~~654,~~704~~461			~~307~~610,~~137~~233			326,757			303,096
Costs Related to Debt Amendment		8,855			—
Costs Related to Debt Amendments		11,457			3,094			2,603			3,094
Restructuring and Separation Costs (Note 4)		1,625			1,478
Stock Option Modification Expense		7,263			—			7,263			—
Depreciation and Amortization		43,992			39,925
Restructuring and Separation Costs (Note 4)		2,179			1,806			554			328
Impairment Charges – Long-Lived Assets		51			13
Depreciation and Amortization		85,239			79,903			41,247			39,979
Other Income, Net		(2,548	)		(2,304	)
Impairment Charges – Long-Lived Assets		139			78			88			66
Interest Expense (Inclusive of Gain (Loss) on Interest Rate Cap Agreements)		26,589			29,479
Other Income, Net		(4,605	)		(4,415	)		(2,059	)		(2,113	)
Total Costs and Expenses		1,073,921			995,613
Loss on Extinguishment of Debt		617			3,413			617			3,413
Loss Before Income Tax Benefit		(932	)		(5,657	)
Interest Expense (Inclusive of Gain (Loss) on Interest Rate Cap Agreements)		51,140			57,108			24,551			27,629
Income Tax Benefit		(230	)		(1,717	)
Total Costs and Expenses		2,075,863			1,914,654			1,001,941			919,041
Net Loss	$	(702	)	$	(3,940	)
Loss Before Income Tax Benefit		(31,394	)		(52,958	)		(30,461	)		(47,301	)
Total Comprehensive Loss	$	(702	)	$	(3,940	)
Income Tax Provision		(11,169	)		(17,761	)		(10,938	)		(16,044	)
Net Loss	$	(20,225	)	$	(35,197	)	$	(19,523	)	$	(31,257	)
Total Comprehensive Loss	$	(20,225	)	$	(35,197	)	$	(19,523	)	$	(31,257	)

See Notes to Condensed Consolidated Financial Statements.

BURLINGTON COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(All amounts in thousands)

	Three Months Ended
	Six Months Ended
	May 4, 2013			April 28, 2012
	August 3,2013			July 28,2012
OPERATING ACTIVITIES
Net Loss	$	(~~702~~20,225	)	$	(335,~~940~~197	)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Depreciation and Amortization		4385,~~992~~239			3979,~~925~~903
Impairment Charges – Long-Lived Assets		51139			1378
Amortization of Debt Issuance Costs		13,~~520~~467			12,~~464~~724
Accretion of Senior Notes		~~488~~912			~~415~~765
Interest Rate Cap Agreement—Adjustment to Market		6055			(~~132~~66	)
Provision for Losses on Accounts Receivable		34103			2066
Deferred Income Tax Benefit		(512,~~376~~551	)		(59,~~446~~430	)
Loss on Retirement of Fixed Assets		(39	)		139
(Gain) Loss of Retirement of Fixed Assets		(57	)		139
Excess Tax Benefit from Stock Based Compensation		(64	)		(402	)
Loss on Extinguishment of Debt – Write-off of Deferred Financing Fees		466			3,413
Non-Cash Stock Based Compensation Expense		510			791
Excess Tax Benefit from Stock Based Compensation		—			(232	)
Non-Cash Rent Expense		(3,284	)		(3,019	)
Non-Cash Stock Based Compensation Expense		5,685			1,403
Non-Cash Rent Expense		(6,330	)		(4,770	)
Changes in Assets and Liabilities:
Accounts Receivable		(63,~~508~~243	)		(72,~~609~~349	)
Merchandise Inventories		(4768,~~029~~118	)		2145,~~319~~413
Prepaid and Other Current Assets		(79,~~835~~619	)		(~~264~~18,274	)
Accounts Payable		~~130~~55,~~254~~187			~~194~~170,~~837~~672
Other Current Liabilities and Income Tax Payable		~~(18~~7,~~732~~834	)		37,~~001~~879
Deferred Rent Incentives		718,~~386~~079			1117,~~967~~706
Other Long Term Assets and Long Term Liabilities		~~654~~560			(89,~~323~~249	)
Net Cash Provided by Operating Activities	$	9557,~~380~~583		$	~~244~~250,~~756~~594
INVESTING ACTIVITIES
Cash Paid for Property and Equipment		(2967,~~764~~999	)		(2862,~~137~~006	)
Proceeds (Expenses) From Sale of Property and Equipment and Assets Held for Sale		~~114~~393			~~(119~~634	)
Lease Acquisition Costs		—			(86430	)
Net Cash Used in Investing Activities	$	(2967,~~650~~606	)	$	(2861,~~342~~802	)
FINANCING ACTIVITIES
Proceeds from Long Term Debt – ABL Line of Credit		~~155~~339,000			55180,~~200~~800
Principal Payments on Long Term Debt – ABL Line of Credit		(155,000	)		(245,200	)
Proceeds from Long Term Debt – Term Loan		—			116,913
Principal Payments on Long Term Debt – Term Loan		—			(6,955	)
Principal Payments on Long Term Debt – ABL Line of Credit		(324,000	)		(352,600	)
Payment of Dividends		(4,955	)		(1,686	)
Principal Payments on Long Term Debt –		(453	)		(340	)
Repayment of Capital Lease Obligations		(253	)		(164	)
Principal Payments on Long Term Debt – Term Loan		(2,178	)		(135,749	)
Stock Option Exercise and Related Tax Benefits		64			394
Payment of Dividends		(4,955	)		(1,711	)
Debt Issuance Costs		(1,574	)		(13	)
Stock Option Exercise and Related Tax Benefits		—			661
Net Cash Used in Financing Activities	$	(6,718	)	$	(198,424	)
Debt Issuance Costs		(10,171	)		(760	)
Increase in Cash and Cash Equivalents		59,012			17,990
Net Cash Used in Financing Activities		(2,757	)		(192,786	)
Decrease in Cash and Cash Equivalents		(12,780	)		(3,994	)
Cash and Cash Equivalents at Beginning of Period		43,336			35,664
Cash and Cash Equivalents at End of Period	$	~~102~~30,~~348~~556		$	5331,~~654~~670
Supplemental Disclosure of Cash Flow Information
Interest Paid	$	3548,~~797~~053		$	3954,~~144~~236
Net Income Tax Payments	$	1,~~150~~632		$	212,720
Non-Cash Investing Activities:
Accrued Purchases of Property and Equipment	$	1021,~~427~~861		$	821,~~268~~444
Acquisition of Capital Lease	$	~~1,538~~887		$	—

See Notes to Condensed Consolidated Financial Statements.

BURLINGTON COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~May~~August 43, 2013

(UNAUDITED)

1. Summary of Significant Accounting Policies

Basis of Presentation

These unaudited Condensed Consolidated Financial Statements include the accounts of Burlington Coat Factory Investments Holdings, Inc. and all of its subsidiaries (Company or Holdings). Holdings has no operations and its only asset is all of the stock of Burlington Coat Factory Warehouse Corporation. All discussions of operations in this report relate to Burlington Coat Factory Warehouse Corporation and its subsidiaries (BCFWC), which are reflected in the financial statements of Holdings. The Condensed Consolidated Financial Statements are unaudited, but in the opinion of management reflect all adjustments (which are of a normal and recurring nature) necessary for the fair presentation of the results of operations for the interim periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted. It is suggested that these Condensed Consolidated Financial Statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2013 (Fiscal 2012 10-K). The balance sheet at February 2, 2013 presented herein has been derived from the audited Consolidated Financial Statements contained in the Fiscal 2012 10-K. Because the Company’s business is seasonal in nature, the operating results for the three and six month ~~period~~periods ended ~~May~~August 43, 2013 are not necessarily indicative of results for the fiscal year ending February 1, 2014 (Fiscal 2013).

Accounting policies followed by the Company are described in Note 1 to the audited Consolidated Financial Statements contained in the Fiscal 2012 10-K.

On February 28, 2013, the FASB issued Account Standards Update No. 2013-04, “Joint and Several Obligations,” (ASU 2013-04). In accordance with ASU 2013-04, an entity is required to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. Required disclosures include a description of the joint and several ~~arrangement~~arrangements and the total outstanding amount of the obligation for all joint parties. ASU 2013-04 is effective for all annual and interim periods in fiscal years beginning after December 15, 2013. However, early adoption is permitted. The Company has elected not to early adopt in the current fiscal year and does not expect ASU 2013-04, once adopted, to have a material impact on the Company’s financial position or results of operations.

There were no other new accounting standards that had a material impact on the Company’s Condensed Consolidated Financial Statements during the ~~three~~ six-month period ended ~~May~~August 43, 2013 and there were no new accounting standards or pronouncements that were issued but not yet effective as of ~~May~~ August 43, 2013 that the Company expects to have a material impact on its financial position or results of operations upon becoming effective.

2. Stockholder’s Deficit

Activity for the three and six month periods ended ~~May~~August 43, 2013 and ~~April~~July 28, 2012 in the Company’s common stock, capital in excess of par value, accumulated deficit, and total stockholder’s deficit are summarized below:

	(in thousands)
	CommonStock		Capital inExcess of ParValue			AccumulatedDeficit			Total
Balance at February 2, 2013	$	—	$	479,572		$	(559,841	)	$	(80,269	)
Net Loss		—		—			(~~702~~20,225	)		(~~702~~20,225	)
Stock Options Exercised and Related Tax Benefits		—		64			—			64
Stock Based Compensation		—		5,685			—			5,685
Stock Based Compensation		—		510			—			510
Dividends(a)		—		(4,955	)		—			(4,955	)
Dividends		—		(4,955	)		—			(4,955	)
Balance at August 3, 2013	$	—	$	480,302		$	(580,066	)	$	(99,764	)
Balance at May 4, 2013	$	—	$	475,191		$	(560,543	)	$	(85,352	)
Balance at January 28, 2012	$	—	$	474,569		$	(585,514	)	$	(110,945	)
Net Loss		—		—			(3,940	)		(3,940	)
Stock Options Exercised and Related Tax Benefits				394			—			394
Stock Based Compensation		—		791			—			791
Dividend Forfeitures		—		—			373			373
Balance at April 28, 2012	$	—	$	475,754		$	(589,081	)	$	(113,327	)


	*(in thousands)*
	Common Stock		Capital in Excess of Par Value		Accumulated Deficit			Total
Balance at January 28, 2012	$	—	$	474,569	$	(585,514	)	$	(110,945	)
Net Loss		—		—		(35,197	)		(35,197	)
Stock Options Exercised and Related Tax Benefits (b)				661		—			661
Stock Based Compensation		—		1,403		—			1,403
Dividends (a)		—		—		373			373

Balance at July 28, 2012		—		476,633		(620,338	)		(143,705	)

(a)	Represents dividends paid to the Issuers in order to pay fees in connection with the issuance of the 2018 Notes (each capitalized term is defined in Note 3 to the Company’s Condensed Consolidated Financial Statements entitled “Long Term Debt”).

(b)	Stock options exercised were contributed by Burlington Stores, Inc (f/k/a Burlington Holdings, Inc.) (Parent).

3. Long Term Debt

Long term debt consists of:

	(in thousands)
	May 4, 2013			February 2, 2013			April 28, 2012
	August 32013			February 2,2013			July 28,2012
$1,000,000 Senior Secured Term Loan Facility, LIBOR (with a floor of 1.3%) plus 4.3%, matures on February 23, 2017.	$	~~863~~862,~~572~~018		$	863,084		$	~~942~~932,~~583~~431
$450,000 Senior Notes, 10%, due at maturity on February 15, 2019, semi-annual interest payments on August 15 and February 15, from August 15, 2013 to February 15, 2019.		450,000			450,000			450,000
$600,000 ABL Senior Secured Revolving Facility, LIBOR plus spread based on average outstanding balance, expires September 2, 2016.		—15,000			—			—18,200
Capital Lease Obligations		2423,~~517~~665			23,232			23,~~837~~660
Total debt		1,~~338~~350,~~089~~683			1,336,316			1,~~416~~424,~~420~~291
Less: current maturities		(9,~~737~~663	)		(784	)		(103,~~236~~122	)
Long-term debt, net of current maturities	$	1,~~328~~341,~~352~~020		$	1,335,532		$	1,~~406~~421,~~184~~169

$1 Billion Senior Secured Term Loan Facility (Term Loan Facility)

On February 15, 2013, BCFWC entered into Amendment No. 2 (Second Amendment) to the credit agreement governing its $1,000.0 million Senior Secured Term Loan ~~Credit~~Facility ~~Agreement~~ (~~Second~~Term ~~Amendment~~Loan Credit Agreement). The Second Amendment creates a restricted payments basket of $25 million and permits the Company to use the “available amount” to make restricted payments (which basket includes retained excess cash flow, in an amount not to exceed 50% of BCFWC’s consolidated net income (as defined in the ~~existing~~indenture ~~Notes)~~governing ~~and~~the ~~permits~~10% ~~BCFWC~~Senior toNotes ~~use~~due 2019 (the ~~“available~~ ~~amount”~~2019 toNotes)) ~~make restricted payments~~ since the second quarter of Fiscal 2011), in each case so long as certain conditions are satisfied. In connection with ~~this~~the ~~amendment~~Second Amendment, the Company incurred a $1.6 million amendment fee that was capitalized and included in the line item “Other Assets” on the Company’s Condensed Consolidated Balance Sheet. Additionally, the Company incurred $8.9 million of additional fees, inclusive of an $8.6 million fee payable to Bain Capital, for various consulting and advisory services. These fees were included in the line item “Costs Related to Debt Amendment” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

~~The~~On ~~Term~~May 17, ~~Loan~~2013, ~~Credit~~BCFWC ~~Agreement~~entered ~~contains~~into ~~financial,~~Amendment ~~affirmative~~No. 3 ~~and~~(Third ~~negative~~Amendment) ~~covenants~~to ~~and~~the ~~requires~~Term ~~that~~Loan ~~BCFWC~~Credit Agreement, ~~exclusive~~in oforder ~~subsidiaries (referred~~ to ~~herein as “BCFW”)~~, among other things, ~~maintain~~reduce on the ~~last~~interest ~~day~~rates ofapplicable ~~each~~to ~~fiscal~~the ~~quarter~~Senior Secured aTerm ~~consolidated~~Loan ~~leverage~~Facility ~~ratio~~by ~~not~~100 tobasis ~~exceed~~points a(provided ~~maximum~~that ~~amount~~such ~~and~~interest ~~maintain~~rates ashall ~~consolidated~~be ~~interest~~further ~~coverage~~reduced ~~ratio~~by of25 atbasis ~~least~~points aif ~~certain amount.~~BCFWC’s ~~The~~ consolidated secured leverage ratio ~~compares~~is ~~our~~less ~~total~~than ~~debt~~or toequal ~~Adjusted EBITDA (as defined in the Term Loan Credit Agreement) for the trailing twelve months, and such ratios may not exceed 6.25~~ to ~~1 through November~~ 2~~, 2013; 5~~.~~50 to~~ 25:1 ~~through~~) ~~November 1, 2014; 5.00 to 1 through October 31, 2015;~~ and ~~4.75~~ to 1reduce atthe ~~January 30,~~LIBOR ~~2016~~floor ~~and~~by ~~thereafter~~25 basis points. The ~~consolidated~~Third ~~interest~~Amendment ~~coverage~~was ~~ratio~~accomplished ~~compares~~by ~~our~~replacing ~~consolidated interest expense to Adjusted EBITDA for~~ the ~~trailing twelve~~outstanding ~~months, and such ratios must exceed 1~~$871.850 tomillion 1principal ~~through~~amount ~~November 2,~~of ~~2013;~~term ~~2.00 to~~ B-1 ~~through~~loans ~~October 31,~~(the ~~2015;~~Term ~~and 2.10 to~~ B-1 atLoans) ~~January 30,~~with ~~2016~~a ~~and~~like ~~thereafter.~~aggregate ~~The~~principal ~~consolidated~~amount ~~leverage~~of ~~ratio~~term ~~and~~B-2 ~~interest~~loans ~~coverage ratio for~~ (the ~~three~~ ~~months~~Term ~~ended~~B-2 ~~May 4, 2013 were 3~~Loans).7 ~~and 3.5, respectively.~~

Adjusted EBITDA is a non-GAAP financial measure of our liquidity. Adjusted EBITDA starts with consolidated net income/loss for the period and adds back (i) depreciation, amortization, impairments and other non-cash charges that were deducted in arriving at consolidated net income/loss, (ii) the provision/benefit for taxes, (iii) interest expense, net, (iv) advisory fees, and (v) unusual, non-recurring or extraordinary expenses, losses or charges as reasonably approved by the administrative agent for such period. Adjusted EBITDA is used to calculate the consolidated leverage ratio. Adjusted EBITDA provides management, including the Company’s chief operating decision maker, with helpful information with respect to its operations such as its ability to meet its future debt service, fund its capital expenditures and working capital requirements, and comply with various covenants in each indenture governing its outstanding notes and the credit agreements governing its senior secured credit facilities which are material to its financial condition and financial statements.

The interest rates for the Term Loan Facility are based on: (i) for LIBO rate loans for any interest period, at a rate per annum equal to (a) the greater of (x) the LIBO rate, as determined by the Term Loan Facility Administrative Agent, for such interest period

~~multiplied~~The ~~by the Statutory Reserve Rate (as defined in the~~ Term ~~Loan~~B-2 ~~Credit~~Loans ~~Agreement)~~have ~~and (y) 1.50% (~~the ~~Term~~same ~~Loan~~maturity ~~Adjusted~~date ~~LIBO~~that ~~Rate),~~was ~~plus an~~ applicable ~~margin; and (ii) for prime rate loans, a rate per annum equal~~ to the ~~highest~~Term ofB-1 ~~(a) the variable annual rate of interest then announced by JPMorgan Chase Bank, N~~Loans.~~A. at its head office as its “prime rate,” (b) the federal funds rate in effect on such date~~ ~~plus~~The ~~0.50% per annum, and (c) the~~ Term Loan ~~Adjusted~~Credit ~~LIBO~~Agreement ~~Rate~~provisions ~~for~~relating to the ~~applicable~~representations ~~class~~and ~~of term loans for one-month plus 1.00%~~warranties, ~~plus,~~covenants inand ~~each~~events ~~case,~~of andefault applicable ~~margin. The~~to ~~interest~~the ~~rate~~Company onand the ~~Term~~guarantors ~~Loan~~were ~~Facility~~not ~~was~~modified ~~5.5%~~by asthe ~~of May 4,~~Third ~~2013~~Amendment.

InAs ~~conjunction~~a ~~with~~result of the ~~Second~~Third Amendment, onmandatory ~~February~~quarterly payments of $2.2 million are payable as of the last day of each quarter beginning with the quarter ended August 203, 2013,. ~~Burlington~~Mandatory ~~Holdings,~~quarterly ~~LLC~~payments ~~(Indirect Parent),~~for the ~~indirect~~next ~~parent~~12 ~~company~~months ofhave ~~Holdings,~~been ~~and~~recorded ~~Burlington~~in ~~Holdings~~our ~~Finance,~~Condensed ~~Inc.,~~Consolidated Balance Sheet in the ~~wholly-owned~~line ~~subsidiary~~item “Current Maturities of ~~Indirect~~Long ~~Parent~~Term ~~(collectively~~Debt.” ~~the~~In ~~Issuers)~~accordance with Topic 470, ~~completed~~we recognized a loss on the ~~offering~~extinguishment of debt of $~~350~~0.6 million, ~~aggregate~~which ~~principal~~was ~~amount~~recorded in the line item “Loss on the Extinguishment of ~~Senior~~Debt” ~~Notes~~in ~~due 2018~~our ~~(2018~~Condensed ~~Notes)~~Consolidated atStatements anof ~~issue~~Operations ~~price~~and Comprehensive Loss during the second quarter of 98Fiscal 2013.~~00%~~ In connection with the amendment, the Company paid an $8.7 ~~The~~million ~~2018~~prepayment ~~Notes~~premium ~~are~~which ~~senior~~resulted ~~unsecured~~in ~~obligations~~$8.6 million of ~~the~~that ~~Issuers,~~payment being capitalized and ~~the~~included ~~Issuers~~in ~~are~~the ~~not~~line ~~obligors~~item or“Other ~~guarantors~~Assets,” ~~under~~in ~~BCFWC~~the Company’s ~~existing~~Condensed ~~senior~~Consolidated ~~secured~~Balance ~~credit~~Sheet. ~~facilities~~In oraddition, ~~indenture.~~third Asparty ~~none~~fees of ~~the Issuers’~~$2.6 ~~subsidiaries,~~million ~~are~~were ~~obligors~~recorded orin ~~guarantors~~the ~~under~~line ~~the~~item ~~2018~~“Costs ~~Notes,~~Related ~~the~~to ~~debt~~Debt isAmendment” ~~recorded~~in onour ~~the~~Condensed ~~Issuers’~~Consolidated ~~financial~~Statements ~~statements~~of ~~only~~Operations and isComprehensive Loss ~~not~~during ~~included~~the insecond ~~the~~quarter ~~Company’s~~of ~~financial~~Fiscal ~~statements~~2013.

~~Interest~~The isTerm ~~payable~~Loan onCredit ~~the~~Agreement ~~Senior~~contains ~~Notes~~financial, onaffirmative ~~each~~and ~~February 15~~negative covenants and ~~August 15,~~requires ~~commencing~~that ~~August 15~~BCFWC, ~~2013.~~exclusive ~~The~~of ~~first~~subsidiaries ~~interest payment~~(referred onto ~~the~~herein ~~2018~~as ~~Notes~~“BCFW”), ~~will~~among beother ~~payable~~things, inmaintain ~~cash.~~on ~~For~~the ~~each~~last ~~interest~~day ~~period~~of ~~thereafter,~~each ~~the~~fiscal ~~Issuers~~quarter ~~will~~a beconsolidated ~~required~~leverage ratio not to ~~pay~~exceed ~~interest~~a onmaximum ~~the~~amount ~~2018~~and ~~Notes~~maintain ~~entirely~~a consolidated ininterest ~~cash,~~coverage ~~unless~~ratio ~~certain~~of ~~conditions~~at ~~are~~least ~~satisfied,~~a incertain ~~which~~amount. ~~case~~The ~~the~~consolidated ~~Issuers~~leverage ~~will~~ratio ~~be entitled~~compares toour ~~pay,~~total debt to ~~the~~Covenant ~~extent~~EBITDA ~~described~~(as defined in the ~~indenture~~Term ~~governing~~Loan ~~the~~Credit ~~2018~~Agreement) ~~Notes,~~for ~~interest on~~ the ~~2018~~trailing ~~Notes~~twelve bymonths, ~~increasing~~and ~~the~~such ~~principal~~ratios ~~amount~~may ofnot exceed ~~the~~6.25 ~~2018~~to ~~Notes~~1 orthrough byNovember 2, ~~issuing~~2013; ~~new~~5.50 ~~notes~~to ~~(such~~1 ~~increase~~through ~~being~~November 1, ~~referred~~2014; 5.00 to ~~herein~~1 asthrough ~~PIK~~October 31, ~~interest)~~2015; and 4. ~~Cash~~75 ~~interest~~to on1 ~~the~~at ~~2018~~January 30, ~~Notes~~2016 ~~will~~and ~~accrue~~thereafter. atThe ~~the~~consolidated ~~rate~~interest ofcoverage ~~9.00% per~~ratio ~~annum.~~compares ~~PIK~~our consolidated interest onexpense to Covenant EBITDA for the ~~2018~~trailing ~~Notes~~twelve ~~will~~months, ~~accrue~~and atsuch ~~the~~ratios ~~rate~~must ofexceed 91.~~75%~~85 to 1 through November ~~per~~2, ~~annum~~2013; 2.00 ~~The~~to ~~Company~~1 ~~intends~~through toOctober 31, ~~pay~~2015; ~~Indirect~~and ~~Parent~~2.10 ato ~~semi~~1 ~~annual~~at ~~dividend~~January 30, in2016 ~~order~~and ~~for~~thereafter. ~~Indirect~~The ~~Parent~~consolidated toleverage ~~make~~ratio ~~payment~~and oninterest ~~the~~coverage ~~semi~~ratio ~~annual~~as ~~cash~~of ~~interest~~August 3, 2013 were 3.5 and 3.9, respectively.

InCovenant EBITDA ~~February~~is ~~2013,~~a ~~the~~non-GAAP ~~Issuers~~financial ~~used~~measure ~~the~~of our liquidity. Covenant EBITDA starts with consolidated net ~~proceeds~~income/loss ~~from~~for the ~~offering~~ ofperiod ~~the~~and ~~2018~~adds ~~Notes~~back to(i) depreciation, ~~pay~~amortization, aimpairments ~~special~~and other non-cash ~~dividend~~charges ofthat ~~approximately~~were ~~$336~~deducted ~~million,~~ in arriving at consolidated net income/loss, (ii) the ~~aggregate~~provision/benefit for taxes, to(iii) interest ~~Indirect~~expense, ~~Parent’s~~net, ~~sole~~(iv) advisory ~~member~~fees, ~~Burlington~~and ~~Holdings~~(v) unusual, ~~Inc.~~non-recurring or extraordinary expenses, ~~which~~losses inor ~~turn~~charges ~~distributed~~as reasonably approved by the ~~proceeds~~administrative toagent ~~its~~for ~~stockholders~~such period. Covenant ~~BCFWC~~EBITDA ~~paid~~is ~~a dividend~~used to calculate the ~~Issuers~~consolidated ofleverage $5ratio and the interest coverage ratio.0 Covenant ~~million~~EBITDA inprovides ~~order~~management, toincluding ~~pay~~the ~~certain~~Company’s ~~fees~~chief inoperating ~~connection~~decision maker, with ~~the~~helpful ~~issuance~~information ofwith ~~the~~respect ~~2018~~to ~~Notes~~its operations such as its ability to meet its future debt service, ~~inclusive~~fund ofits acapital ~~$3.5~~expenditures ~~million~~and ~~fee~~working tocapital ~~Bain~~requirements, ~~Capital~~and ~~for~~comply with various ~~consulting~~covenants in each indenture governing its outstanding notes and ~~advisory~~the ~~services~~credit agreements governing its senior secured credit facilities which are material to its financial condition and financial statements.

~~ABL~~The ~~Line~~interest rates for the Senior Secured Term Loan Facility are based on: (i) for LIBO rate loans for any interest period, at a rate per annum equal to (a) the greater of (x) the LIBO rate, as determined by the Term Loan Facility Administrative Agent, for such interest period multiplied by the Statutory Reserve Rate (as defined in the Term Loan Credit Agreement) and (y) 1.00% (the Term Loan Adjusted LIBO Rate), plus an applicable margin; and (ii) for prime rate loans, a rate per annum equal to the highest of (a) the variable annual rate of interest then announced by JPMorgan Chase Bank, N.A. at its head office as its “prime rate,” (b) the federal funds rate in effect on such date plus 0.50% per annum, and (c) the Term Loan Adjusted LIBO Rate for the applicable class of term loans for one-month plus 1.00%, plus, in each case, an applicable margin. The interest rate on the Senior Secured Term Loan Facility was 4.3% as of August 3, 2013.

AtIn conjunction with the Second Amendment, on ~~May~~February 420, 2013, ~~the~~Burlington ~~Company~~Holdings, ~~had~~LLC ~~$484.8~~(Indirect ~~million~~Parent), ~~available under~~ the ~~ABL~~indirect ~~Line~~parent company of ~~Credit~~Holdings, and noBurlington ~~outstanding~~Holdings ~~borrowings~~Finance, Inc. ~~The~~, ~~maximum~~the ~~borrowings~~wholly-owned ~~under~~subsidiary of Indirect Parent (collectively the ~~facility~~Issuers), ~~during~~completed the ~~three~~offering ~~month~~of $350 ~~period~~million ~~ended~~aggregate ~~May 4,~~principal ~~2013~~amount ~~amounted~~of toSenior ~~$125~~Notes due 2018 (2018 Notes) at an issue price of 98.~~0 million~~00%. ~~Average~~ ~~borrowings~~The ~~during~~2018 ~~the~~Notes ~~three~~are ~~month~~senior ~~period~~unsecured ~~ended~~obligations ~~May 4~~of the Issuers, ~~2013~~and ~~amounted~~the toIssuers ~~$24.5~~are ~~million,~~not atobligors anor ~~average~~guarantors ~~interest~~under ~~rate~~BCFWC’s ofexisting senior 2secured credit facilities or indenture.~~0%.~~ ~~There~~As ~~was~~none noof ~~outstanding~~the ~~balance~~Issuers’ subsidiaries are obligors or guarantors under the ~~ABL~~2018 ~~Line~~Notes, ofthe ~~Credit~~debt ~~at February~~is 2,recorded ~~2013~~on the Issuers’ financial statements only and is not included in the Company’s financial statements.

AtInterest ~~April 28,~~is ~~2012,~~payable on the ~~Company~~2018 ~~had~~Notes ~~$472~~on each February 15 and August 15, commencing August 15, 2013.4 ~~million~~The ~~available~~first ~~under~~interest payment on the ~~ABL~~2018 ~~Line~~Notes ofwas ~~Credit~~required to be and nowas ~~outstanding~~paid ~~borrowings~~in cash. ~~The maximum~~ ~~borrowings~~For ~~under~~each interest period thereafter, the ~~facility~~Issuers ~~during~~will be required to pay interest on the ~~three~~2018 ~~month~~Notes ~~period~~entirely ~~ended~~in ~~April 28~~cash, ~~2012~~unless ~~amounted~~certain conditions are satisfied, in which case the Issuers will be entitled to ~~$213.7~~pay, ~~million. Average~~to ~~borrowings~~the ~~during~~extent described in the ~~three~~indenture ~~month~~governing ~~period~~the ~~ended~~2018 ~~April 28~~Notes, ~~2012~~interest ~~amounted~~on the 2018 Notes by increasing the principal amount of the 2018 Notes or by issuing new notes (such increase being referred to ~~$80~~herein as PIK interest).8 ~~million~~Cash interest on the 2018 Notes will accrue at ~~average~~the rate of 9.00% per annum. PIK interest ~~rates~~ on the 2018 Notes will accrue at the rate of 29.275% per annum. The Company intends to pay Indirect Parent a semiannual dividend in order for Indirect Parent to make semiannual cash interest payments.

The Term Loan Facility, ABL Line of Credit and 10% Senior Notes due 2019 (Notes) are fully, jointly, severally, unconditionally, and irrevocably guaranteed by all of the Company’s subsidiaries. The ABL Line of Credit is collateralized by a first lien on the Company’s inventory and receivables and a second lien on the Company’s real estate and property and equipment. The Term Loan Facility is collateralized by a first lien on the Company’s real estate, favorable leases, and machinery and equipment and a second lien on the Company’s inventory and receivables.

As of May 4, 2013, the Company was in compliance with all of its debt covenants. The agreements regarding the ABL Line of Credit and the Term Loan Facility, as well as the indenture governing the Notes, contain covenants that, among other things, limit the Company’s ability, and the ability of the Company’s restricted subsidiaries, to pay dividends on, redeem or repurchase capital stock; make investments; incur additional indebtedness or issue preferred stock; create liens; permit dividends or other restricted payments by the Company’s subsidiaries; sell all or substantially all of the Company’s assets or consolidate or merge with or into other companies; and engage in transactions with affiliates.

The Company had $24.9 million in deferred financing fees, net of accumulated amortization, as of both May 4, 2013 and February 2, 2013 and $30.1 million as of April 28, 2012, related to its debt instruments recorded in the line item “Other Assets” on the Company’s Condensed Consolidated Balance Sheets. The Company incurred new deferred financing fees of $1.5 million as a result of the Second Amendment as discussed above. Amortization of deferred financing fees amounted to $1.5 million and $1.4 million for the three month periods ended May 4, 2013 and April 28, 2012, respectively, and is included in the line item “Interest Expense” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

On May 17, 2013, the Company entered into Amendment No. 3 (Third Amendment) to the Term Loan Credit Agreement in order to, among other things, reduce the interest rates applicable to the Company’s Term Loan Facility. Refer to Note 11 to the Company’s Condensed Consolidated Financial Statements entitled “Subsequent Events” for further details of the amendment.

In February 2013, the Issuers used the net proceeds from the offering of the 2018 Notes to pay a special cash dividend of $336.0 million, in the aggregate, to Parent, which in turn distributed the proceeds to its stockholders. BCFWC paid a dividend to the Issuers of $5.0 million in order to pay certain fees in connection with the issuance of the 2018 Notes, inclusive of a $3.5 million fee to Bain Capital for various consulting and advisory services.

ABL Line of Credit

At August 3, 2013, the Company had $447.5 million available under the ABL Line of Credit and $15.0 million of outstanding borrowings. The maximum borrowings under the facility during the three and six month periods ended August 3, 2013 amounted to $75.0 million and $125.0 million. Average borrowings during the three and six month periods ended August 3, 2013 amounted to $22.4 million and $23.4 million, at an average interest rate of 2.4% and 2.2%. There was no outstanding balance under the ABL Line of Credit at February 2, 2013.

At July 28, 2012, the Company had $390.9 million available under the ABL Line of Credit and $18.2 million of outstanding borrowings. The maximum borrowings under the facility during the three and six month periods ended July 28, 2012 amounted to $50.0 million and $213.7 million, respectively. Average borrowings during the three and six month periods ended July 28, 2012 amounted to $10.9 million and $46.9 million, respectively, at average interest rates of 2.3% and 2.1%, respectively. At July 28, 2012 the Company’s borrowing rate related to the ABL Line of Credit was 4.0%.

The Senior Secured Term Loan Facility, ABL Line of Credit and the 2019 Notes are fully, jointly, severally, unconditionally, and irrevocably guaranteed by all of the Company’s subsidiaries. The ABL Line of Credit is collateralized by a first lien on the Company’s inventory and receivables and a second lien on the Company’s real estate and property and equipment. The Senior Secured Term Loan Facility is collateralized by a first lien on the Company’s real estate, favorable leases, and machinery and equipment and a second lien on the Company’s inventory and receivables.

As of August 3, 2013, the Company was in compliance with all of its debt covenants. The credit agreements governing the ABL Line of Credit and the Senior Secured Term Loan Facility, as well as the indenture governing the 2019 Notes, contain covenants that, among other things, limit the Company’s ability, and the ability of the Company’s restricted subsidiaries, to pay dividends on, redeem or repurchase capital stock; make investments; incur additional indebtedness or issue preferred stock; create liens; permit dividends or other restricted payments by the Company’s subsidiaries; sell all or substantially all of the Company’s assets or consolidate or merge with or into other companies; and engage in transactions with affiliates.

The Company had $31.3 million, $24.9 million and $27.5 million in deferred financing fees, net of accumulated amortization, as of August 3, 2013, February 2, 2013 and July 28, 2012, respectively, related to its debt instruments recorded in the line item “Other Assets” on the Company’s Condensed Consolidated Balance Sheets. Amortization of deferred financing fees amounted to $1.9 million and $3.5 million for the three and six month periods ended August 3, 2013 and $1.3 and $2.7 million for the three and six months ended July 28, 2012, respectively, and is included in the line item “Interest Expense” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

During the six months ended August 3, 2013, the Company incurred new deferred financing fees of $1.6 million and $8.6 million as a result of the Second Amendment and the Third Amendment, respectively, and wrote off $0.3 million deferred financing costs and accumulated amortization related to the Third Amendment.

4. Restructuring and Separation

The Company accounts for restructuring and separation costs in accordance with ASC Topic No. 420, “Exit or Disposal Cost Obligations” (Topic No. 420). In an effort to improve workflow efficiencies and realign certain responsibilities, the Company effected a reorganization of certain positions within its field and corporate locations. During the three and six months ended ~~May~~August 43, 2013, severance charges were $10.6 million and $2.2 million, respectively, and were recorded in the line item “Restructuring and Separation Costs” in the Company’s Condensed Consolidated Statement of Operations and Comprehensive Loss. In comparison, severance charges for the three and six months ended July 28, 2012 were $0.3 million and $1.8 million, respectively.

In9 comparison, severance charges for the three months ended April 28, 2012 were $1.5 million. Severance charges for the three months ended April 28, 2012 were also the result of the Company’s efforts to improve workflow efficiencies and realign certain responsibilities, which effected the reorganization of certain positions within its stores and corporate locations.

	(in thousands)
	February 2,2013		Charges		CashPayments			Other		May 4,2013
Severance – Restructuring	$	—	$	758	$	(127	)	$	—	$	631
Severance – Separation Cost		597		867		(420	)		—		1,044
Total	$	597	$	1,625	$	(547	)	$	—	$	1,675
	(in thousands)
	January 28,2012		Charges		CashPayments			Other		April 28,2012
Severance – Restructuring	$	—	$	400	$	(216	)	$	—	$	184
Severance – Separation Cost		979		1,078		(718	)		—		1,339
Total	$	979	$	1,478	$	(934	)	$	—	$	1,523

The table below summarizes the charges and payments related to the Company’s restructuring and separation costs, which are included in the line items “Other Current Liabilities” in the Company’s Condensed Consolidated Balance Sheet as of August 3, 2013 and July 28, 2012:


	*(in thousands)*
	February 2, 2013		Charges		Cash Payments			Other		August 3, 2013
Severance – Restructuring	$	—	$	924	$	(676	)	$	—	$	248
Severance – Separation Cost		597		1,255		(952	)		—		900

Total	$	597	$	2,179	$	(1,628	)	$	—	$	1,148


	*(in thousands)*
	January 28, 2012		Charges		Cash Payments			Other		July 28, 2012
Severance – Restructuring	$	—	$	728	$	(728	)	$	—	$	—
Severance – Separation Cost		979		1,078		(1,207	)		—		850

Total	$	979	$	1,806	$	(1,935	)	$	—	$	850

5. Fair Value Measurements

The Company accounts for fair value measurements in accordance with ASC Topic No. 820, “Fair Value Measurements and Disclosures,” (Topic No. 820) which defines fair value, establishes a framework for measurement and expands disclosure about fair value measurements. Topic No. 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price), and classifies the inputs used to measure fair value into the following hierarchy:

Level 1:		Quoted prices for identical assets or liabilities in active markets.
Level 2:		Quoted market prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3:		Pricing inputs that are unobservable for the assets and liabilities and include situations where there is little, if any, market activity for the assets and liabilities.

Level 1:

Quoted prices for identical assets or liabilities in active markets.

Level 2:

Quoted market prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3:

Pricing inputs that are unobservable for the assets and liabilities and include situations where there is little, if any, market activity for the assets and liabilities.

The inputs into the determination of fair value require significant management judgment or estimation.

Financial Assets

The Company’s financial assets as of ~~May~~August 43, 2013 included cash equivalents, interest rate cap agreements and a note receivable. The Company’s financial liabilities are discussed below. The carrying value of cash equivalents approximates fair value due to its short-term nature. The fair values of the interest rate cap agreements are determined using quotes that are based on models whose inputs are observable LIBOR forward interest rate curves. To comply with the provisions of Topic No. 820, the Company incorporates credit valuation adjustments to appropriately reflect both the Company’s non-performance risk and the respective counterparty’s non-performance risk in the fair value measurements. In adjusting the fair value of the Company’s interest rate cap agreements for the effect of non-performance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees. As a result, the Company has determined that the inputs used to value this investment fall within Level 2 of the fair value hierarchy.

9Although the Company has determined that the majority of the inputs used to value its interest rate cap agreements fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s interest rate cap agreements utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. As of August 3, 2013, the Company recorded credit valuation adjustments of less than $0.1 million to the overall valuation of the Company’s interest rate cap agreements. The credit valuation adjustment is not considered significant to the valuation of each of the individual interest rate cap agreements and as a result, the Company has determined that its interest rate cap agreement valuations in their entirety are classified as Level 2 within the fair value hierarchy.

Although the Company has determined that the majority of the inputs used to value its interest rate cap agreements fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with the Company’s interest rate cap agreements utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default. As of May 4, 2013, the Company recorded credit valuation adjustments of $0.1 million to the overall valuation of the Company’s interest rate cap agreements. The credit valuation adjustment is not considered significant to the valuation of each of the individual interest rate cap agreements and as a result, the Company has determined that its interest rate cap agreement valuations in their entirety are classified as Level 2 within the fair value hierarchy.

The fair value of the note receivable is based on a discounted cash flow analysis whose inputs are unobservable, and therefore it falls within Level 3 of the fair value hierarchy.

The fair values of the Company’s financial assets and the hierarchy of the level of inputs are summarized below:

	(in thousands)
	Fair Value Measurements at
	May 4, 2013		February 2, 2013		April 28, 2012
	August 3, 2013		February 2, 2013		July 28, 2012
Assets:
Level 1
Cash equivalents (including restricted cash)	$	34,~~985~~998	$	34,972	$	34,~~932~~946
Level 2
Interest rate cap agreements (a)	$	914	$	69	$	~~246~~180
Level 3
Note Receivable (b)	$	385	$	385	$	758

(a)

Included in “Other Assets” within the Company’s Condensed Consolidated Balance Sheets (refer to Note 6 of the Company’s Condensed Consolidated Financial Statements, entitled “Derivative Instruments and Hedging Activities,” for further discussion regarding the Company’s interest rate cap agreements).

(b) Included in “Prepaid and Other Current Assets” ~~and “Other Assets”~~ on the Company’s Condensed Consolidated Balance Sheets. The change in fair value of the Company’s Level 3 note receivable from ~~April~~July 28, 2012 to ~~May~~August 43, 2013 iswas primarily related to the Company receiving a partial payment in the amount of $0.5 million.

Financial Liabilities

The fair value of the Company’s debt as of ~~May~~August 43, 2013, February 2, 2013 and ~~April~~July 28, 2012 is noted in the table below:

	(in thousands)
	May 4, 2013				February 2, 2013				April 28, 2012
	August 3, 2013				February 2, 2013				July 28, 2012
	CarryingAmount(b)		FairValue (b)		CarryingAmount(b)		FairValue (b)		CarryingAmount(b)		FairValue (b)
	CarryingAmount (b)		FairValue (b)		CarryingAmount (b)		FairValue (b)		CarryingAmount (b)		FairValue (b)
$1,000,000 Senior Secured Term Loan Facility, LIBOR (with a floor of 1.3%) plus 4.3%, matures on February 23, 2017.	$	~~863~~862,~~572~~018	$	~~876~~869,~~526~~920	$	863,084	$	874,232	$	~~942~~932,~~583~~431	$	~~951~~932,~~208~~431
$450,000 Senior Notes, 10% due at maturity on February 15, 2019, semi-annual interest payments on August 15 and February 15, from August 15, 2013 to February 15, 2019.		450,000		~~504~~502,~~563~~875		450,000		489,938		450,000		~~479~~475,~~813~~875
$600,000 ABL Senior Secured Revolving Facility, LIBOR plus spread based on average outstanding balance, expires September 2, 2016. (a)		—15,000		—15,000		—		—		—18,200		—18,200
Total debt	$	1,~~313~~327,~~572~~018	$	1,~~381~~387,~~089~~795	$	1,313,084	$	1,364,170	$	1,~~392~~400,~~583~~631	$	1,~~431~~426,~~021~~506

(a)	The carrying value of the ABL Line of Credit approximates its fair value due to its short term nature (borrowings are typically done in increments of 30 days or less) and its variable interest rate.

(b)	Capital lease obligations are excluded from the table above.

10As of August 3, 2013, the fair value of the Company’s debt, exclusive of capital leases, was $1,387.8 million compared to the carrying value of $1,327.0 million. The fair values presented herein are based on pertinent information available to management as of the respective period end dates. The estimated fair values of the Company’s debt are classified as Level 2 in the fair value hierarchy. Although management is not aware of any factors that could significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these Condensed Consolidated Financial Statements since August 3, 2013, and current estimates of fair value may differ from amounts presented herein.

As of May 4, 2013, the fair value of the Company’s debt, exclusive of capital leases, was $1,381.1 million compared to the carrying value of $1,313.6 million. The fair values presented herein are based on pertinent information available to management as of the respective period end dates. The estimated fair values of the Company’s debt are classified as Level 2 in the fair value hierarchy. Although management is not aware of any factors that could significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these Condensed Consolidated Financial Statements since May 4, 2013, and current estimates of fair value may differ from amounts presented herein.

6. Derivative Instruments and Hedging Activities

As of ~~May~~August 43, 2013, February 2, 2013 and ~~April~~July 28, 2012, the Company was party to two outstanding interest rate cap agreements to manage the interest rate risk associated with future interest payments on variable-rate debt.

The Company accounts for derivatives and hedging activities in accordance with ASC Topic No. 815 “Derivatives and Hedging” (Topic No. 815). The Company is exposed to certain risks relating to its ongoing business operations, including market risks relating to fluctuations in interest rates. The Company’s senior secured credit facilities contain floating rate obligations and are subject to interest rate fluctuations. The Company uses interest rate cap agreements, which are designated as economic hedges, to manage interest rate risk associated with the Company’s variable-rate borrowings and to minimize the negative impact of interest rate fluctuations on its earnings and cash flows, thus reducing the Company’s exposure to variability in expected future cash flows. ~~attributable~~Topic No. 815 requires recognition of all derivative instruments as either assets or liabilities at fair value in the statement of financial position. Interest rate cap agreements are recorded at a fair value and adjusted to market on a quarterly basis. Gains or losses associated with the ~~changes~~interest rate cap agreements are recorded in ~~LIBOR~~the line item “Interest Expense” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss and in the line item “Interest Rate ~~rates~~Cap Contract – Adjustment to Market” on the Company’s Condensed Consolidated Statements of Cash Flows. The Company’s two interest rate cap agreements each have a notional principal amount of $450 million, a cap rate of 7.0% and terminate on May 31, 2015.

Topic No. 815 requires recognition of all derivative instruments as either assets or liabilities at fair value in the statement of financial position. Interest rate cap agreements are recorded at a fair value and adjusted to market on a quarterly basis. Gains or losses associated with the interest rate cap agreements are recorded in the line item “Interest Expense” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss and in the line item “Interest Rate Cap Contract – Adjustment to Market” on the Company’s Condensed Consolidated Statements of Cash Flows. The Company’s two interest rate cap agreements each have a notional principal amount of $450 million, a cap rate of 7.0% and terminate on May 31, 2015.

(in thousands)

Fair Values of Derivative Instruments

Asset Derivatives

August 3, 2013

February 2, 2013

July 28, 2012

Derivatives Not Designated as Hedging Instruments

Under Topic No. 815

Balance
Sheet
Location

Fair
Value

Balance
Sheet
Location

Fair
Value

Balance
Sheet
Location

Fair
Value

Interest Rate Cap Agreements

Other Assets

180

Liability Derivatives

August 3, 2013

February 2, 2013

July 28, 2012

Derivatives Not Designated as Hedging Instruments

Under Topic No. 815

Balance
Sheet
Location

Fair
Value

Balance
Sheet
Location

Fair
Value

Balance
Sheet
Location

Fair
Value

Interest Rate Cap Agreements

Other Liabilities

—

Other Liabilities

—

Other Liabilities

—

(in thousands)

(Gain) or Loss on Derivative Instruments

Fair Values of Derivative Instruments

Derivatives Not Designated as Hedging Instruments Under Topic No. 815

Location of Loss (Gain)Recognized inComprehensive Loss relatedto Derivatives

Amount of Loss (Gain)Recognized in Comprehensive Loss related toDerivatives

Asset Derivatives

Six Months Ended

Three Months Ended

May 4, 2013

February 2, 2013

April 28, 2012

August 3,2013

July 28,2012

August 3,2013

July 28,2012

Derivatives Not Designated as Hedging Instruments Under Topic No. 815

BalanceSheetLocation

FairValue

BalanceSheetLocation

FairValue

BalanceSheetLocation

FairValue

Interest Rate Cap Agreements

Interest Expense

(66

)

Interest Rate Cap Agreements

Other Assets

246

Liability Derivatives

May 4, 2013

February 2, 2013

April 28, 2012

Derivatives Not Designated as Hedging Instruments Under Topic No. 815

BalanceSheetLocation

FairValue

BalanceSheetLocation

FairValue

BalanceSheetLocation

FairValue

Interest Rate Cap Agreements

Other Liabilities

—

Other Liabilities

—

Other Liabilities

—

(Gain) or Loss on Derivative Instruments

Derivatives Not Designated as Hedging Instruments Under Topic No. 815

Location of (Gain)Loss Recognized inIncome on Derivatives

Amount of (Gain) Loss Recognized in Income onDerivatives

Three Months Ended

May 4, 2013

April 28, 2012

Interest Rate Cap Agreements

Interest Expense

(132

)

7. Income Taxes

May 4, 2013

February 2, 2013

April 28, 2012

August 3, 2013

February 2, 2013

July 28, 2012

Current Deferred Tax Asset

912,~~337~~411

6,133

2321,~~317~~190

Non-Current Deferred Tax Liability

~~251~~247,~~167~~065

253,339

~~271~~265,~~690~~651

Net Deferred Tax Liability

~~241~~234,~~830~~654

247,206

~~248~~244,~~373~~461

Current deferred tax assets consisted primarily of certain operating costs and inventory related costs not currently deductible for tax purposes. Non-current deferred tax liabilities primarily related to rent expense, intangible assets, and depreciation expense where the Company has a future obligation for tax purposes.

In accordance with ASC Topic No. 270, Interim Reporting (Topic No. 270) and ASC Topic No. 740, Income Taxes (Topic No. 740), at the end of each interim period the Company is required to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. As of May 4, 2013, the Company’s best estimate of its annual effective income tax rate was 37.2% (before discrete items). For the quarter ending April 28, 2012, the Company’s best estimate of its annual effective income tax rate was 41.8% (before discrete items).

As of both May 4, 2013 and February 2, 2013, valuation allowances amounted to $5.8 million, and $6.1 million at April 28, 2012, primarily related to state tax net operating losses. The Company believes that it is more likely than not that a portion of the benefit of the state tax net operating losses will not be realized. The state net operating losses have been generated in a number of taxing jurisdictions and are subject to various expiration periods ranging from five to twenty years beginning with Fiscal 2012.

In addition, management also determined that a full valuation allowance of $3.3 million and $3.1 million was required against the tax benefit associated with Puerto Rico deferred tax assets as of both May 4, 2013 and February 2, 2013, respectively.

8. Stock Option and Award Plans and Stock-Based Compensation

On May 1, 2013, the Board of Directors of Burlington Holdings, Inc. (BHI), the sole member of Indirect Parent, approved BHI’s assumption and adoption of the 2006 Management Incentive Plan (the Plan) that was previously sponsored by Burlington Coat Factory Holdings, LLC (Parent). The Plan provides for the granting of service-based and performance-based stock options, restricted stock and other forms of awards to key employees and directors of the Company or its affiliates. Grants made pursuant to the Plan are comprised of units of BHI’s common stock. Each “unit” consists of nine shares of BHI’s Class A common stock and one share of BHI’s Class L common stock. The shares comprising a unit are in the same proportion as the shares of Class A and Class L common stock held by all stockholders of the BHI. Options granted pursuant to the Plan are exercisable only for whole units and cannot be separately exercised for the individual classes of BHI’s common stock. As of May 4, 2013, there were 730,478 units reserved under the Plan consisting of 6,574,302 shares of BHI’s Class A common stock and 730,478 shares of BHI’s Class L common stock.

Non-cash stock compensation expense for the three months ended May 4, 2013 amounted to $0.5 million. In comparison, non-cash stock compensation expense for the three months end April 28, 2012 amounted to $0.8 million. The table below summarizes the types of stock compensation:

	(in thousands)
	Three Months Ended
	May 4, 2013		April 28, 2012
Type of Non-Cash Stock Compensation
Stock Option Compensation	$	490	$	367
Restricted Stock Compensation		20		424
Total	$	510	$	791

Stock Options

There were no options granted during the three month period ended May 4, 2013. Options granted during the three months ended April 28, 2012 were all service-based awards and were granted at exercise prices of $50 per unit and $120 per unit.

All of the service-based awards granted during the three month period ended April 28, 2012 vest 40% on the second anniversary of the award with the remaining amount vesting ratably over the subsequent three years. The final exercise date for any option granted is the tenth anniversary of the grant date.

All options awarded pursuant to the Plan become exercisable upon a change of control. Unless determined otherwise by the plan administrator and except as otherwise set forth in the option holders’ option agreement, upon cessation of employment, (1) options that have not vested will terminate immediately; (2) units previously issued upon the exercise of vested options will be callable at BHI’s option; and (3) unexercised vested options will be exercisable for a period of 60 days.

As of May 4, 2013, BHI had 409,063 options outstanding to purchase units, all of which are service-based awards. The Company accounts for awards issued under the Plan in accordance with ASC Topic No. 718, “Stock Compensation.” For the three months ended May 4, 2013, the Company recognized non-cash stock option compensation expense of $0.5 million ($0.4 million after tax), net of less than $0.1 million forfeiture adjustment. These forfeiture adjustments were the result of actual forfeitures being higher

~~than~~In ~~initially~~accordance ~~estimated~~with ASC Topic No. 270, ~~For~~Interim ~~the~~Reporting ~~three~~(Topic ~~months~~No. 270) ~~ended~~and ASC ~~April~~Topic No. 28740, ~~2012~~Income Taxes (Topic No. 740), at the end of each interim period the Company ~~recognized~~is ~~non-cash~~required ~~stock~~to ~~option~~determine ~~compensation~~the ~~expense~~best estimate of ~~$0.6~~its ~~million~~annual ~~before~~effective ~~the~~tax ~~adjustments~~rate and then apply that rate in providing for ~~forfeitures~~income taxes on a ofcurrent $0year-to-date (interim period) basis.2 ~~million~~As of August 3, ~~which~~2013, ~~resulted~~the inCompany’s ~~$0.4~~best ~~million~~estimate of ~~expense~~its ~~for~~annual ~~the~~effective ~~quarter~~income tax rate was 37.8% ~~These~~(before ~~forfeiture~~discrete ~~adjustments~~items). ~~were~~For the ~~result~~six months ending July 28, 2012, the Company’s best estimate of ~~actual~~its ~~forfeitures~~annual ~~being~~effective ~~higher~~income ~~than~~tax ~~initially~~rate ~~estimated~~was 38.2% (before discrete items).

As of ~~May~~August 43, 2013, February 2, ~~there~~2013 ~~was~~and ~~approximately~~July 28, 2012, valuation allowances amounted to $25.48 million, of$5.8 ~~unearned~~million ~~non-cash~~and ~~stock-based~~$6.1 ~~option~~million, ~~compensation~~respectively, ~~that~~primarily ~~the~~related to state tax net operating losses. The Company ~~expected~~ tobelieves ~~recognize~~that asit ~~expense~~is ~~over~~more likely than not that a portion of the ~~next~~benefit ~~4.7~~of ~~years~~the state tax net operating losses will not be realized. The ~~service-based~~state ~~awards~~net ~~are~~operating ~~expensed~~losses onhave been generated in a ~~straight-line~~number ~~basis~~of ~~over~~taxing ~~the~~jurisdictions ~~requisite~~and ~~service~~are ~~period~~subject ofto various expiration periods ranging from five to twenty years beginning with Fiscal 2012.

~~Stock~~In ~~option~~addition, ~~transactions~~management ~~during~~also determined that a full valuation allowance of $2.3 million and $2.0 million were required against the ~~three~~tax ~~month~~benefit ~~period~~associated ~~ended~~with ~~May~~Puerto Rico deferred tax assets as of August 43, 2013 ~~are~~and ~~summarized~~February 2, as2013, ~~follows:~~respectively.

	Number ofUnits			WeightedAverageExercisePrice PerUnit
Options Outstanding February 2, 2013		424,231		$	76.56
Options Forfeited		(15,168	)		77.51
Options Outstanding May 4, 2013		409,063		$	76.82

8. Stock Option and Award Plans and Stock-Based Compensation

~~Non~~On May 1, 2013, the Board of Directors of Parent approved Parent’s assumption and adoption of the 2006 Management Incentive Plan (the Plan) that was previously sponsored by Burlington Coat Factory Holdings, LLC. Board of Directors adopted the 2006 Management Incentive Plan (the Plan). The Plan provides for the granting of service-~~vested~~based and performance-based stock ~~option~~options, restricted stock and other forms of awards to key employees and directors of the Company or its affiliates. Grants made pursuant to the Plan are comprised of units of Parent’s common stock. Each “unit” ~~transactions~~consists ~~during~~of nine shares of Parent’s Class A common stock and one share of Parent’s Class L common stock. The shares comprising a unit are in the ~~three~~same ~~months~~proportion ~~ended~~as ~~May~~the shares of Class 4,A ~~2013~~and Class L common stock held by all stockholders of the Parent. Options granted pursuant to the Plan are ~~summarized~~exercisable only for whole units and cannot be separately exercised for the individual classes of Parent’s common stock. As of August 3, 2013, ~~below:~~there were 920,478 units reserved under the Plan consisting of 8,284,302 shares of Parent’s Class A common stock and 920,478 shares of Parent’s Class L common stock.

	Number ofUnits			WeightedAverageGrantDate FairValuePer Unit
Non-Vested Options Outstanding, February 2, 2013		255,457		$	33.70
Vested		(23,563	)		34.07
Forfeited		(15,168	)		29.69
Non-Vested Options Outstanding, May 4, 2013		216,726		$	33.95

Non-cash stock compensation expense for the three and six months ended August 3, 2013 amounted to $5.2 million and $5.7 million, respectively as compared to $0.6 million and $1.4 million for the three and six months ended July 28, 2012, respectively. The table below summarizes the types of stock compensation:

The following table summarizes information about the exercise price and weighted average remaining contractual life of options to purchase units that were outstanding under the Plan as well as options that were exercisable under the Plan as of May 4, 2013:


	*(in thousands)*
	Three Months Ended				Six Months Ended
Type of Non-Cash Stock Compensation	August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012
Stock Option Modification (a)	$	3,452	$	—	$	3,452	$	—
Stock Option Grants (b)		1,702		550		2,192		917
Restricted Stock Issuances(b)		21		62		41		486

Total (c )	$	5,175	$	612	$	5,685	$	1,403

	Options Outstanding				Options Exercisable
Exercise Prices	NumberOutstandingAtMay 4, 2013		WeightedAverageRemainingContractual Life(Years)		NumberExercisableAtMay 4, 2013		WeightedAverageRemainingContractual Life(Years)
$30.60		161,613		6.0		107,640		5.6
$50.00		47,000		8.3		—		—
$65.00		38,000		9.3		—		—
$120.00		42,500		8.7		—		—
$120.60		105,950		4.8		70,697		4.0
$270.00		14,000		0.2		14,000		0.2
		409,063				192,337

(a)	Represents non-cash compensation related to the modification of outstanding stock options during the three months ended August 3, 2013 which is included in the line item “Stock Option Modification Expense” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

(b)	Included in the line item “Selling and Administrative Expense” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

(c)

For the three and six months ended August 3, 2013, the tax benefit related to the Company’s non-cash stock compensation was $1.9 million and $2.1 million, respectively. For the three and six months ended July 28, 2012, the tax benefit related to the Company’s non-cash stock compensation was $0.2 million and $0.5 million, respectively

Stock Options

The Company accounts for awards issued under the Plan in accordance with ASC Topic No. 718, “Stock Compensation.” Options granted during the six month period ended August 3, 2013 were all service-based awards and were granted at exercise prices of $50.00 per unit. Options granted during the six months ended July 28, 2012 were all service-based awards and were granted at exercise prices of $65.00 and $120.00 per unit (subsequently modified in connection with the issuance of the 2018 Notes, as described below).

~~The~~During ~~following~~the ~~table~~six ~~summarizes~~months ~~information~~ended ~~about~~August 3, 2013, the ~~exercise~~Company ~~prices~~made ~~and~~a ~~weighted~~special ~~average~~one-time grant ~~remaining~~to ~~contractual~~certain ~~life~~members of ~~vested~~its management team which resulted in 145,000 options ~~and~~being granted. These one-time grants vest 20% on each of the first five anniversaries of the Trigger Date. The Trigger Date is defined as the date after the vesting of all other options ~~expected~~held by the grantee which were granted to ~~vest~~the grantee prior to May 2013 and remain outstanding and unvested as of the date of the one-time grant. All other service-based awards granted during the ~~contractual~~six ~~term:~~month periods ended August 3, 2013 and July 28, 2012 vest 40% on the second anniversary of the award with the remaining amount vesting ratably over the subsequent three years. The final exercise date for any option granted is the tenth anniversary of the grant date.

Exercise Prices	Options		WeightedAverageRemainingContractualLife (Years)		WeightedAverageExercisePrice
Vested and Expected to Vest as of May 4, 2013
$30.60		135,007		5.9	$	30.60
$50.00		37,600		8.3	$	50.00
$65.00		30,400		9.3	$	65.00
$120.00		34,000		8.7	$	120.00
$120.60		93,277		4.6	$	120.60
$270.00		14,000		0.2	$	270.00
		344,284

In May 2013, in order to mitigate the impact of the dividend on the option holders in connection with the issuance of our 2018 Notes and the related $336.0 million dividend in February 2013, our Board of Directors approved a modification to the outstanding options, through a combination of exercise price reductions and cash payments to the option holders. The reduction of the exercise prices of each outstanding option was as follows:

~~The~~• ~~fair~~From ~~value~~$30.60 ofper ~~each~~unit ~~option~~to ~~granted~~$8.71 is– ~~estimated~~$18.15 onper the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants under the Plan during the three months ended April 28, 2012 (There were no options granted during the three months ended May 4, 2013): unit

	Three MonthsEndedApril 28, 2012
Risk-Free Interest Rate		1.3	%
Expected Volatility		34.1	%
Expected Life (years)		6.6
Contractual Life (years)		10
Expected Dividend Yield		0.0	%
Weighted Average Grant Date Fair Value of Options Issued at an exercise price of:
$50.00	$	53.02
$120.00	$	28.86

•

From $50.00 per unit to $8.71 per unit

•

From $65.00 per unit to $8.71 - $10.35 per unit

•

From $120.00 per unit to $34.83 - $55.18 per unit, and

•

From $120.60 per unit to $34.83 - $55.78 per unit.

The modifications, which result in either reduced exercise prices or cash payments, did not affect the existing vesting schedules. The modification expense, which contemplates the fair value of awards both immediately before and after the modification will result in a total of $16.8 million of incremental compensation expense, and will be recorded over the remaining vesting periods. The $16.8 million is comprised of $11.3 million, which is non-cash, and $5.5 million, which will be paid in cash. During the three months ended August 3, 2013, based on vesting of the options as of the end of the quarter, the Company recorded compensation expense of $7.2 million, of which $3.7 million is payable in cash, in the line item “Stock Option Modification Expense” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

With the exception of the special one-time grants made during the six months ended August 3, 2013, all options awarded pursuant to the Plan become exercisable upon a change of control. Unless determined otherwise by the plan administrator and except as otherwise set forth in the option holders’ stock agreement, upon cessation of employment, (1) options that have not vested will terminate immediately; (2) units previously issued upon the exercise of vested options will be callable at the Company’s option; and (3) unexercised vested options will be exercisable for a period of 60 days.

As of August 3, 2013, the Company had 429,935 options outstanding to purchase units, all of which are service-based awards and there was approximately $17.4 million of unearned non-cash stock-based option compensation that the Company expected to recognize as expense over a weighted average period of 3.8 years. The service-based awards are expensed on a straight-line basis over the requisite service period. As of August 3, 2013, 18.3% of outstanding options to purchase units had vested.

Stock option transactions during the six month period ended August 3, 2013 are summarized as follows:


	Number of Units			Weighted Average Exercise Price Per Unit
Options Outstanding February 2, 2013		424,231		$	76.56
Options Granted		166,500			50.00
Options Forfeited		(56,402	)		78.48
Options Exercised (a)		(104,394	)		21.53

Options Outstanding August 3, 2013		429,935		$	32.01

(a)	Options exercised during the six months ended August 3, 2013 had a total intrinsic value of $8.2 million and represent shares of Parent.

Non-vested stock option unit transactions during the six months ended August 3, 2013 are summarized below:


	Number of Units			Weighted Average Grant Date Fair Value Per Unit
Non-Vested Options Outstanding, February 2, 2013		255,457		$	33.70
Granted		166,500			62.01
Vested		(48,356	)		32.92
Forfeited		(22,263	)		33.52

Non-Vested Options Outstanding, August 3, 2013		351,338		$	48.20


	Options Outstanding				Options Exercisable
Exercise Prices	Number Outstanding At August 3, 2013		Weighted Average Remaining Contractual Life (Years)		Number Exercisable At August 3, 2013		Weighted Average Remaining Contractual Life (Years)
$8.71 - $10.35		174,628		7.0		43,188		5.9
$18.15		1,334		4.1		—		—
$34.83		54,115		6.5		19,519		5.2
$50.00 - $65.00		199,858		9.3		15,890		5.3

		429,935				78,597

The following table summarizes information about the exercise prices and weighted average remaining contractual life of vested options and options expected to vest during the contractual term:


Exercise Prices	Options		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
Vested and Expected to Vest as of August 3, 2013
$8.71 - $10.35		140,969		7.0	$	8.81
$18.15		1,067		4.1	$	18.15
$34.83		45,144		6.5	$	34.83
$50.00 - $65.00		161,153		9.3	$	51.04

		348,333

The fair value of each option granted is estimated on the date of grant using the Monte Carlo Simulation option pricing model with the following weighted average assumptions used for grants under the Plan during the six months ended August 3, 2013 and July 28, 2012:


	Six Months Ended August 3, 2013			Six Months Ended July 28, 2012
Risk-Free Interest Rate		1.7	%		1.0 – 1.3	%
Expected Volatility		36.8	%		35.0	%
Expected Life (years)		7.4			6.6
Contractual Life (years)		10.0			10.0
Expected Dividend Yield		0.0	%		0.0	%
Weighted Average Grant Date Fair Value of Options Issued at an exercise price of:
$50.00	$	62.01		$	27.14
$65.00	$	n/a		$	54.51
$120.00	$	n/a		$	30.49

9. Other Liabilities

Other Current Liabilities

Other current liabilities primarily consist of sales tax payable, customer liabilities, accrued payroll costs, self-insurance reserves, accrued operating expenses, payroll taxes payable, current portion of straight -line rent liability and other miscellaneous items. Customer liabilities comprised of gift cards and layaway deposits totaled $3029.37 million, $30.0 million and $2928.43 million as of ~~May~~August 43, 2013, February 2, 2013 and ~~April~~July 28, 2012, respectively.

The Company has risk participation agreements with insurance carriers with respect to workers’ compensation, general liability insurance and health insurance. Pursuant to these arrangements, the Company is responsible for paying individual claims up to designated dollar limits. The amounts included in costs related to these claims are estimated and can vary based on changes in assumptions or claims experience included in the associated insurance programs. An increase in worker’s compensation or health insurance claims by employees or general liability claims may result in a corresponding increase in costs related to these claims. Self-insurance reserves were $53.07 million, $52.4 million and $4847.90 million, as of ~~May~~August 43, 2013, February 2, 2013 and ~~April~~July 28, 2012, respectively. At ~~May~~August 43, 2013, February 2, 2013 and ~~April~~July 28, 2012, the portion of self-insurance reserve expected to be paid in the next twelve months of $21.69 million, $21.2 million and $18.95 million, respectively, were ~~recorded~~ recorded in the line item “Other Current Liabilities” in the Company’s Condensed Consolidated Balance Sheets. The remaining ~~respective~~ balances at August 3, 2013, February 2, 2013 and July 28, 2012 of $31.48 million, $31.2 million and $3028.05 million, respectively, were recorded in the line item “Other Liabilities” in the Company’s Condensed Consolidated Balance Sheets.

Other Liabilities

Other liabilities primarily consist of deferred lease incentives, the long term portion of self-insurance reserves, the excess of straight-line rent expense over actual rental payments and tax liabilities associated with the uncertain tax positions recognized by the Company in accordance with Topic No. 740.

Deferred lease incentives are funds received or receivable from landlords used primarily to offset the costs incurred for remodeling of stores. These deferred lease incentives are amortized over the expected lease term including rent holiday periods and option periods where the exercise of the option can be reasonably assured. Amortization of deferred lease incentives is included in the line item “Selling and Administrative Expenses” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. At ~~May~~August 43, 2013, February 2, ~~and~~2013 ~~April~~and July 28, 2012, deferred lease incentives were $~~138~~142.6 million, $138.1 million, and $~~129~~127.02 million, respectively.

10. Commitments and Contingencies

Legal

The Company establishes reserves relating to legal claims, in connection with litigation to which the Company is party from time to time in the ordinary course of business. The aggregate amounts of such reserves were $1.0 million, $0.9 million and $2.9 million as of ~~both May~~August 43, 2013 ~~and~~, February 2, 2013 and ~~$5.5 million as of April~~July 28, 2012, respectively. The Company believes that potential liabilities in excess of those recorded will not have a material effect on the Company’s Condensed Consolidated Financial Statements. However, there can be no assurances to this effect.

There have been no significant changes in the Company’s commitments and contingencies from those disclosed in the Fiscal 2012 10-K, except as noted below:

Lease Agreements

The Company enters into lease agreements during the ordinary course of business in order to secure favorable store locations. As of ~~May~~ August 43, 2013, the Company was committed to 1619 new lease agreements for locations at which stores are expected to be opened during the remainder of Fiscal 2013. Inclusive of these new leases, the Company’s minimum lease payments for all operating leases are expected to be $~~164~~113.8 0 million, $~~228~~239.8 9 million, $~~207~~220.15 million, $~~191~~205.73 million, $184.9 million and $~~800~~673.07 million for the remainder of the fiscal year ended February 1, 2014, and the fiscal years ended January 31, 2015, January 30, 2016, January 28, 2017, ~~and~~ February 3, 2018 and February 2, 2019 and all subsequent years thereafter, respectively.

Letters of Credit

The Company had letters of credit arrangements with various banks in the aggregate amount of $4459.19 million and $3344.65 million as of ~~May~~ August 43, 2013 and ~~April~~July 28, 2012, respectively. Based on the terms of the credit agreement related to the ABL Line of Credit, the Company had the ability to enter into letters of credit up to $~~484~~447.85 million and $~~472~~390.49 million as of ~~May~~ August 43, 2013 and ~~April~~July 28, 2012, respectively. Among these arrangements as of ~~May~~August 43, 2013 and ~~April~~July 28, 2012, the Company had letters of credit in the amount of $31.54 million and $2926.18 million, respectively, guaranteeing performance under various insurance contracts and utility agreements. In addition, the Company had outstanding letters of credit agreements in the amounts of $1228.6 5 million and $417.57 million at ~~May~~August 43, 2013 and ~~April~~July 28, 2012, respectively, related to certain merchandising agreements.

The Company had irrevocable letters of credit in the amount of $35.3 million as of February 2, 2013. Based on the terms of the credit agreement relating to the ABL Line of Credit, the Company had the ability to enter into letters of credit up to $422.7 million as of February 2, 2013. Letters of credit outstanding at February 2, 2013 amounted to $26.7 million, guaranteeing performance under various lease agreements, insurance contracts and utility agreements. The Company also had letters of credit in the amount of $8.6 million at February 2, 2013 related to certain merchandising agreements.

11. ~~Subsequent~~Related ~~Events~~Parties

~~Term~~In ~~Loan~~connection ~~Amendment~~with the purchase of the Company by Bain Capital in April of 2006, the Company entered into an advisory agreement with Bain Capital (the Advisory Agreement) pursuant to which Bain Capital provides management, consulting, financial and other advisory services. Pursuant to the agreement, Bain Capital is paid a periodic fee of $1.0 million per fiscal quarter plus reimbursement for reasonable out-of-pocket fees, and a fee equal to 1% of the transaction value of certain financing, acquisition, disposition or change of control or similar transactions by or involving the Company. Fees paid to Bain Capital amounted to $1.1 million for both the three month periods ended August 3, 2013 and July 28, 2012, respectively. During the six months ended August 3, 2013 and July 28, 2012, fees paid to Bain Capital amounted to $2.2 million and $2.1 million respectively. These fees are included in the line item “Selling and Administrative Expenses” in the Company’s Consolidated Statements of Operations and Comprehensive Loss. The Advisory Agreement has a 10-year initial term, and thereafter is subject to automatic one-year extensions unless the Company or Bain Capital provides written notice of termination, except that the agreement terminates automatically upon an initial public offering or a change of control of the Company. If the Advisory Agreement is terminated early, Bain Capital will be entitled to receive all unpaid fees and unreimbursed out-of-pocket fees and expenses, as well as the present value of the periodic fee that would otherwise have been payable through the end of the 10-year term. As of both August 3, 2013 and July 28, 2012, the Company had $0.7 million of prepaid advisory fees related to the Advisory Agreement recorded within the line item “Prepaid and Other Current Assets” in the Company’s Condensed Consolidated Balance Sheets.

OnBain ~~May 17~~Capital, ~~2013,~~either ~~the~~directly ~~Company~~or through ~~entered~~affiliates, ~~into~~has ~~the~~ownership ~~Third~~interests ~~Amendment~~ in ~~order~~a ~~to,~~broad ~~among~~range ~~other~~of ~~things,~~companies ~~reduce the interest rates applicable to the Company’s Term Loan Facility by 100 basis points~~ (~~provided~~Portfolio ~~that~~Companies) ~~such~~with ~~interest~~whom ~~rates shall be further reduced by 25 basis points if~~ the Company’s ~~consolidated~~may ~~secured~~from ~~leverage~~time ~~ratio is less than or equal~~ to ~~2.25:1)~~time ~~and~~enter tointo ~~reduce~~commercial ~~the~~transactions ~~LIBOR~~in ~~floor by 25 basis points. The Third Amendment was accomplished by replacing~~ the ~~outstanding~~ordinary ~~$871.0~~course ~~million principal amount~~ of ~~term~~business, ~~B-1~~primarily ~~loans~~for ~~with~~the apurchase ~~like aggregate principal amount~~ of ~~term~~goods and ~~B-2 loans (the Term B-2 Loans)~~services. The ~~Term~~Company ~~B-2~~believes ~~Loans have the same maturity date~~ that ~~was~~none ~~applicable~~of to the ~~Term B-1~~Company’s ~~Loans.~~transactions ~~The~~or ~~Term~~arrangements ~~Loan~~with ~~Credit~~Portfolio ~~Agreement~~Companies ~~provisions~~is ~~relating~~significant enough to ~~the~~be ~~representations~~considered ~~and~~material ~~warranties,~~to ~~covenants~~Bain ~~and~~Capital ~~events~~or ~~of default applicable~~ to ~~the~~its ~~Company and the guarantors were not modified by the Amendment~~business.

AsThe abrother-in-law ~~result~~of one of ~~this~~the ~~transaction,~~Company’s ~~mandatory~~Executive ~~quarterly~~Vice ~~payments~~Presidents ofis ~~$2.2~~an ~~million~~independent ~~will~~sales berepresentative ~~payable~~of asone of the Company’s ~~last~~suppliers ~~day~~ of ~~each~~merchandise ~~quarter beginning~~inventory. ~~with~~This ~~the~~relationship ~~quarter~~predated ~~ended~~the ~~August 3,~~commencement ~~2013.~~of ~~These~~the ~~payments~~Executive ~~have~~Vice ~~been~~President’s ~~recorded~~employment bywith the Company. inThe ~~its~~Company ~~Condensed~~has ~~Consolidated~~determined ~~Balance~~that ~~Sheet in~~ the ~~line~~dollar ~~item~~amount ~~“Current Maturities~~ of ~~Long~~purchases ~~Term~~through ~~Debt.”~~such ~~The Company does not believe that~~supplier ~~this~~represents ~~transaction~~an ~~will~~insignificant ~~have~~amount aof ~~material effect on~~ its ~~financial~~inventory ~~statements~~purchases.

~~Stock~~17 ~~Option Modification~~

12. Condensed Guarantor Data

Holdings and subsidiaries of BCFWC have fully, jointly, severally, and unconditionally guaranteed BCF’s obligations under the ABL Line of Credit, Term Loan Facility and the Senior Note. The following condensed consolidating financial statements present the financial position, results of operations and cash flows of Holdings, BCFW and the guarantor subsidiaries.

Neither the Company nor any of its subsidiaries may declare or pay cash dividends or make other distributions of property to any affiliate unless such dividends are used for certain specified purposes including, among others, to pay general corporate and overhead expenses incurred by Holdings in the ordinary course of business, or the amount of any indemnification claims made by any director or officer of Holdings or the Company, or to pay taxes that are due and payable by Holdings or any of its direct or indirect subsidiaries.

1618

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Balance Sheets

(All amounts in thousands)

	As of May 4, 2013
	As of August 3, 2013
	Holdings			BCFW			Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and Cash Equivalents	$	—		$	9826,~~553~~635		$	3,~~795~~921	$	—		$	~~102~~30,~~348~~556
Restricted Cash and Cash Equivalents		—			34,800			—		—			34,800
Accounts Receivable		—			3231,~~100~~207			1410,~~262~~433		—			4641,~~362~~640
Merchandise Inventories		—			—			~~727~~748,~~219~~308		—			~~727~~748,~~219~~308
Deferred Tax Asset		—			910,~~331~~486			61,925		—			912,~~337~~411
Prepaid and Other Current Assets		—			4340,~~264~~599			3033,~~839~~761		—			74,~~103~~360
Prepaid Income Tax		—			56,~~052~~292			12,~~950~~238		—			78,~~002~~530
Intercompany Receivable		—			—			~~788~~792,~~022~~039		(~~788~~792,~~022~~039	)		—
Assets Held for Sale		—			—			191		—			191
Total Current Assets		—			150,019			1,592,625		(792,039	)		950,605
Total Current Assets		—			223,100			1,566,284		(788,022	)		1,001,362
Property and Equipment—Net of Accumulated Depreciation		—			71,127			811,063		—			882,190
Property and Equipment—Net of Accumulated Depreciation		—			72,936			798,674		—			871,610
Tradenames		—			238,000			—		—			238,000
Favorable Leases—Net of Accumulation Amortization		—			—			~~313~~306,~~200~~315		—			~~313~~306,~~200~~315
Goodwill		—			47,064			—		—			47,064
Investment in Subsidiaries		—			2,~~272~~314,~~794~~210			—		(2,~~272~~314,~~794~~210	)		—
Other Assets		—			2532,~~060~~503			8689,~~149~~398		—			~~111~~121,~~209~~901
Total Assets	$	—		$	2,~~878~~852,~~954~~923		$	2,~~764~~799,~~307~~401	$	(3,~~060~~106,~~816~~249	)	$	2,~~582~~546,~~445~~075
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Accounts Payable	$	—		$	~~630~~555,~~660~~593		$	—	$	—		$	~~630~~555,~~660~~593
Other Current Liabilities		—			90134,~~614~~501			~~126~~121,~~930~~289		—			~~217~~255,~~544~~790
Intercompany Payable		—			~~788~~792,~~022~~039			—		(~~788~~792,~~022~~039	)		—
Current Maturities of Long Term Debt		—			8,710			~~1,027~~953		—			9,~~737~~663
Total Current Liabilities		—			1,~~518~~490,~~006~~843			~~127~~122,~~957~~242		(~~788~~792,~~022~~039	)		~~857~~821,~~941~~046
Long Term Debt		—			1,~~304~~318,~~862~~307			2322,~~490~~713		—			1,~~328~~341,~~352~~020
Other Liabilities		—			5152,~~368~~071			~~178~~184,~~969~~637		—			~~230~~236,~~337~~708
Deferred Tax Liability		—			9091,~~070~~466			~~161~~155,~~097~~599		—			~~251~~247,~~167~~065
Investment in Subsidiaries		8599,~~352~~764			—			—		(8599,~~352~~764	)		—
Stockholder’s (Deficit) Equity:
Common Stock		—			—			—		—			—
Capital in Excess of Par Value		~~475~~480,~~191~~302			~~475~~480,~~191~~302			1,063,182		(1,~~538~~543,~~373~~484	)		~~475~~480,~~191~~302
(Accumulated Deficit) Retained Earnings		(~~560~~580,~~543~~066	)		(~~560~~580,~~543~~066	)		1,~~209~~251,~~612~~028		(~~649~~670,~~069~~962	)		(~~560~~580,~~543~~066	)
Total Stockholder’s (Deficit) Equity		(8599,~~352~~764	)		(8599,~~352~~764	)		2,~~272~~314,~~794~~210		(2,~~187~~214,~~442~~446	)		(8599,~~352~~764	)
Total Liabilities and Stockholder’s (Deficit) Equity	$	—		$	2,~~878~~852,~~954~~923		$	2,~~764~~799,~~307~~401	$	(3,~~060~~106,~~816~~249	)	$	2,~~582~~546,~~445~~075

1719

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(All amounts in thousands)


	As of February 2, 2013
	Holdings			BCFW			Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and Cash Equivalents	$	—		$	39,658		$	3,678	$	—		$	43,336
Restricted Cash and Cash Equivalents		—			34,800			—		—			34,800
Accounts Receivable		—			24,216			17,518		—			41,734
Merchandise Inventories		—			—			680,190		—			680,190
Deferred Tax Assets		—			1,223			4,910		—			6,133
Prepaid and Other Current Assets		—			35,293			30,759		—			66,052
Prepaid Income Taxes		—			5,268			1,950		—			7,218
Intercompany Receivable		—			—			747,405		(747,405	)		—
Assets Held for Disposal		—			—			191		—			191

Total Current Assets		—			140,458			1,486,601		(747,405	)		879,654
Property and Equipment – Net of Accumulated Depreciation		—			72,283			806,022		—			878,305
Tradenames					238,000			—		—			238,000
Favorable Leases – Net of Accumulated Amortization		—			—			322,081		—			322,081
Goodwill		—			47,064			—		—			47,064
Other Assets		—			24,968			88,010		—			112,978
Investment in Subsidiaries		—			2,219,139			—		(2,219,139	)		—

Total Assets	$	—		$	2,741,912		$	2,702,714	$	(2,966,544	)	$	2,478,082

LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Accounts Payable	$	—		$	500,406		$	—	$	—		$	500,406
Other Current Liabilities		—			119,277			119,588		—			238,865
Intercompany Payable		—			747,405			—		(747,405	)		—
Current Maturities of Long Term Debt		—			—			784		—			784

Total Current Liabilities		—			1,367,088			120,372		(747,405	)		740,055
Long Term Debt		—			1,313,084			22,448		—			1,335,532
Other Liabilities		—			50,955			178,470		—			229,425
Deferred Tax Liability		—			91,054			162,285		—			253,339
Investment in Subsidiaries		80,269			—			—		(80,269	)		—
Commitments and Contingencies
Stockholder’s (Deficit) Equity:
Common Stock		—			—			—		—			—
Capital in Excess of Par Value		479,572			479,572			1,063,182		(1,542,754	)		479,572
Accumulated (Deficit) / Retained Earnings		(559,841	)		(559,841	)		1,155,957		(596,116	)		(559,841	)

Total Stockholder’s (Deficit) Equity		(80,269	)		(80,269	)		2,219,139		(2,138,870	)		(80,269	)

Total Liabilities and Stockholder’s Equity (Deficit)	$	—		$	2,741,912		$	2,702,714	$	(2,966,544	)	$	2,478,082

1820

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Balance Sheets

(All amounts in thousands)

	As of April 28, 2012
	As of July 28, 2012
	Holdings			BCFW			Guarantors		Eliminations			Consolidated
ASSETS
Current Assets:
Cash and Cash Equivalents	$	—		$	274,~~159~~810		$	26,~~495~~860	$	—		$	5331,~~654~~670
Restricted Cash and Cash Equivalents		—			34,800			—		—			34,800
Accounts Receivable		—			2923,~~439~~931			107,~~286~~458		—			3931,~~725~~389
Merchandise Inventories		—			—			~~660~~636,~~940~~848		—			~~660~~636,~~940~~848
Deferred Tax Assets		—			11,~~725~~761			119,~~592~~429		—			2321,~~317~~190
Prepaid and Other Current Assets		—			1617,~~584~~802			2629,~~743~~224		—			4347,~~327~~026
Prepaid Income Taxes		—			1630,~~453~~548			12,~~866~~080		—			1832,~~319~~628
Intercompany Receivable					—			~~577~~625,~~459~~998		(~~577~~625,~~459~~998	)		—
Assets Held for Disposal		—			—			521		—			521
Total Current Assets		—			123,652			1,337,897		(625,998	)		835,551
Total Current Assets		—			136,160			1,315,902		(577,459	)		874,603
Property and Equipment—Net of Accumulated Depreciation		—			77,119			790,911		—			868,030
Property and Equipment—Net of Accumulated Depreciation		—			76,718			777,963		—			854,681
Tradenames		—			238,000			—		—			238,000
Favorable Leases—Net of Accumulated Amortization		—			—			~~352~~345,~~636~~555		—			~~352~~345,~~636~~555
Goodwill		—			47,064			—		—			47,064
Investment in Subsidiaries		—			2,~~049~~073,~~552~~574			—		(2,~~049~~073,~~552~~574	)		—
Other Assets		—			3027,~~457~~922			81,~~746~~763		—			~~112~~109,~~203~~685
Total Assets	$	—		$	2,~~577~~587,~~951~~331		$	2,~~528~~556,~~247~~126	$	(2,~~627~~699,~~011~~572	)	$	2,~~479~~443,~~187~~885
LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities:
Accounts Payable	$	—		$	~~471~~446,~~122~~957		$	—	$	—		$	~~471~~446,~~122~~957
Other Current Liabilities		—			~~111~~126,~~550~~060			~~106~~110,~~256~~152		—			~~217~~236,~~806~~212
Intercompany Payable					~~577~~625,~~459~~998			—		(~~577~~625,~~459~~998	)		—
Current Maturities of Long Term Debt		—			92,~~505~~376			~~731~~746		—			103,~~236~~122
Total Current Liabilities		—			1,~~169~~201,~~636~~391			~~106~~110,~~987~~898		(~~577~~625,~~459~~998	)		~~699~~686,~~164~~291
Long Term Debt		—			1,~~383~~398,~~078~~255			2322,~~106~~914		—			1,~~406~~421,~~184~~169
Other Liabilities		—			4846,~~184~~942			167,~~292~~537		—			~~215~~214,~~476~~479
Deferred Tax Liability		—			9084,~~380~~448			181,~~310~~203		—			~~271~~265,~~690~~651
Investment in Subsidiaries		~~113~~143,~~327~~705			—			—		(~~113~~143,~~327~~705	)		—
Commitments and Contingencies
Stockholder’s (Deficit) Equity:
Common Stock		—			—			—		—			—
Capital in Excess of Par Value		~~475~~476,~~754~~633			~~475~~476,~~754~~633			1,063,~~181~~182		(1,~~538~~539,~~935~~815	)		~~475~~476,~~754~~633
(Accumulated Deficit) Retained Earnings		(~~589~~620,~~081~~338	)		(~~589~~620,~~081~~338	)		~~986~~1,~~371~~010,392		(~~397~~390,~~290~~054	)		(~~589~~620,~~081~~338	)
Total Stockholder’s (Deficit) Equity		(~~113~~143,~~327~~705	)		(~~113~~143,~~327~~705	)		2,~~049~~073,~~552~~574		(1,~~936~~929,~~225~~869	)		(~~113~~143,~~327~~705	)
Total Liabilities and Stockholder’s Equity (Deficit)	$	—		$	2,~~577~~587,~~951~~331		$	2,~~528~~556,~~247~~126	$	(2,~~627~~699,~~011~~572	)	$	2,~~479~~443,~~187~~885

1921

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Statement of Operations and Comprehensive Loss (Income)

(All amounts in thousands)

	For the Three Months Ended May 4, 2013
	For the Six Months Ended August 3, 2013
	Holdings			BCFW			Guarantors			Eliminations			Consolidated
REVENUES:
Net Sales	$	—		$	—		$	12,~~065~~028,~~013~~724		$	—		$	12,~~065~~028,~~013~~724
Other Revenue		—			5638			715,~~920~~707			—			715,~~976~~745
Total Revenue		—			5638			12,~~072~~044,~~933~~431			—			12,~~072~~044,~~989~~469
COSTS AND EXPENSES:
Cost of Sales		—			—			~~667~~1,~~653~~267,973			—			~~667~~1,~~653~~267,973
Selling and Administrative Expenses		—			47106,~~310~~259			~~280~~548,~~394~~202			—			~~327~~654,~~704~~461
Costs Related to Debt Amendment		—			811,~~855~~457			—			—			811,~~855~~457
Restructuring and Separation Costs		—			1,531			94			—			1,625
Stock Option Modification Expense		—			7,263			—			—			7,263
Depreciation and Amortization		—			6,269			37,723			—			43,992
Restructuring and Separation Costs		—			2,179			—			—			2,179
Impairment Charges – Long-Lived Assets		—			—			51			—			51
Depreciation and Amortization		—			12,572			72,667			—			85,239
Other Income, Net		—			(1,319	)		(1,229	)		—			(2,548	)
Impairment Charges – Long-Lived Assets		—			68			71			—			139
Interest Expense		—			26,057			532			—			26,589
Other Income, Net		—			(2,221	)		(2,384	)		—			(4,605	)
Loss (Earnings) from Equity Investment		702			(53,655	)		—			52,953			—
Los on Extinguishment of Debt		—			617			—			—			617
Total Costs and Expenses		702			35,048			985,218			52,953			1,073,921
Interest Expense		—			50,121			1,019			—			51,140
(Loss) Income Before (Benefit) Provision for Income Taxes		(702	)		(34,992	)		87,715			(52,953	)		(932	)
Loss (Earnings) from Equity Investment		20,225			(95,070	)		—			74,845			—
(Benefit) Provision for Income Taxes		—			(34,290	)		34,060			—			(230	)
Total Costs and Expenses		20,225			93,245			1,887,548			74,845			2,075,863
Net (Loss) Income	$	(702	)	$	(702	)	$	53,655		$	(52,953	)	$	(702	)
(Loss) Income Before (Benefit) Provision for Income Taxes		(20,225	)		(93,207	)		156,883			(74,845	)		(31,394	)
Total Comprehensive (Loss) Income	$	(702	)	$	(702	)	$	53,655		$	(52,953	)	$	(702	)
(Benefit) Provision for Income Taxes		—			(72,982	)		61,813			—			(11,169	)
Net (Loss) Income	$	(20,225	)	$	(20,225	)	$	95,070		$	(74,845	)	$	(20,225	)
Total Comprehensive (Loss) Income	$	(20,225	)	$	(20,225	)	$	95,070		$	(74,845	)	$	(20,225	)

2022

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Statement of Operations and Comprehensive Loss (Income)

(All amounts in thousands)

	For the Three Months Ended April 28, 2012
	For the Three Months Ended August 3, 2013
	Holdings			BCFW			Guarantors			Eliminations			Consolidated
REVENUES:
Net Sales	$	—		$	—		$	~~982~~963,~~422~~711		$	—		$	~~982~~963,~~422~~711
Other Revenue		—			31(18	)		7,~~503~~787			—			7,~~534~~769
Total Revenue		—			31(18	)		~~989~~971,~~925~~498			—			~~989~~971,~~956~~480
COSTS AND EXPENSES:
Cost of Sales		—			—			~~619~~600,~~885~~320			—			~~619~~600,~~885~~320
Selling and Administrative Expenses		—			4758,~~512~~949			~~259~~267,~~625~~808			—			~~307~~326,~~137~~757
Restructuring and Separation Costs (Note 4)		—			1,265			213			—			1,478
Costs Related to Debt Amendment		—			2,603			—			—			2,603
Depreciation and Amortization		—			6,401			33,524			—			39,925
Stock Option Modification Expense		—			7,263			—			—			7,263
Impairment Charges – Long-Lived Assets		—			—			13			—			13
Restructuring and Separation Costs		—			647			(93	)		—			554
Other Income, Net		—			(1,265	)		(1,039	)		—			(2,304	)
Depreciation and Amortization		—			6,303			34,944			—			41,247
Interest Expense		—			28,957			522			—			29,479
Impairment Charges – Long-Lived Assets		—			68			20			—			88
Loss (Earnings) from Equity Investment		3,940			(53,756	)		—			49,816			—
Other Income, Net		—			(903	)		(1,156	)		—			(2,059	)
Total Costs and Expenses		3,940			29,114			912,743			49,816			995,613
Loss on Extinguishment of Debt		—			617			—			—			617
(Loss) Income Before (Benefit) Provision for Income Taxes		(3,940	)		(29,083	)		77,182			(49,816	)		(5,657	)
Interest Expense		—			24,064			487			—			24,551
(Benefit) Provision for Income Taxes		—			(25,143	)		23,426			—			(1,717	)
Loss (Earnings) from Equity Investment		19,523			(41,415	)		—			21,892			—
Net (Loss) Income	$	(3,940	)	$	(3,940	)	$	53,756		$	(49,816	)	$	(3,940	)
Total Costs and Expenses		19,523			58,196			902,330			21,892			1,001,941
Total Comprehensive (Loss) Income	$	(3,940	)	$	(3,940	)	$	53,756		$	(49,816	)	$	(3,940	)
(Loss) Income Before (Benefit) Provision for Income Taxes		(19,523	)		(58,214	)		69,168			(21,892	)		(30,461	)
(Benefit) Provision for Income Taxes		—			(38,691	)		27,753			—			(10,938	)
Net (Loss) Income	$	(19,523	)	$	(19,523	)	$	41,415		$	(21,892	)	$	(19,523	)
Total Comprehensive (Loss) Income	$	(19,523	)	$	(19,523	)	$	41,415		$	(21,892	)	$	(19,523	)

2123

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Statement of Operations

(All amounts in thousands)


	For the Six Months Ended July 28, 2012
	Holdings			BCFW			Guarantors			Eliminations			Consolidated
REVENUES:
Net Sales	$	—		$	—		$	1,846,603		$	—		$	1,846,603
Other Revenue		—			78			15,015			—			15,093

Total Revenue		—			78			1,861,618			—			1,861,696
COSTS AND EXPENSES:
Cost of Sales		—			—			1,163,434			—			1,163,434
Selling and Administrative Expenses		—			94,946			515,287			—			610,233
Costs Related to Debt Amendment		—			3,094			—			—			3,094
Restructuring and Separation Costs		—			1,370			436			—			1,806
Depreciation and Amortization		—			13,236			66,667			—			79,903
Impairment Charges – Long-Lived Assets		—			—			78			—			78
Other Income, Net		—			(2,080	)		(2,335	)		—			(4,415	)
Loss on Extinguishment of Debt					3,413			—			—			3,413
Interest Expense		—			56,081			1,027			—			57,108
Loss (Earnings) from Equity Investment		35,197			(77,777	)		—			42,580			—

Total Costs and Expenses		35,197			92,283			1,744,594			42,580			1,914,654
(Loss) Income Before (Benefit) Provision for Income Taxes		(35,197	)		(92,205	)		117,024			(42,580	)		(52,958	)
(Benefit) Provision for Income Taxes		—			(57,008	)		39,247			—			(17,761	)

Net (Loss) Income	$	(35,197	)	$	(35,197	)	$	77,777		$	(42,580	)	$	(35,197	)

Total Comprehensive (Loss) Income	$	(35,197	)	$	(35,197	)	$	77,777		$	(42,580	)	$	(35,197	)

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Statement of Operations

(All amounts in thousands)


	For the Three Months Ended July 28, 2012
	Holdings			BCFW			Guarantors			Eliminations			Consolidated
REVENUES:
Net Sales	$	—		$	—		$	864,181		$	—		$	864,181
Other Revenue		—			47			7,512			—			7,559

Total Revenue		—			47			871,693			—			871,740
COSTS AND EXPENSES:
Cost of Sales		—			—			543,549			—			543,549
Selling and Administrative Expenses		—			47,434			255,662			—			303,096
Costs Related to Debt Amendments		—			3,094			—			—			3,094
Restructuring and Separation Costs		—			106			222			—			328
Depreciation and Amortization		—			6,835			33,144			—			39,979
Impairment Charges – Long-Lived Assets		—			—			66			—			66
Other Income, Net		—			(816	)		(1,297	)		—			(2,113	)
Loss on Extinguishment of Debt					3,413			—			—			3,413
Interest Expense		—			27,124			505			—			27,629
Loss (Earnings) from Equity Investment		31,257			(24,021	)		—			(7,236	)		—

Total Costs and Expenses		31,257			63,169			831,851			(7,236	)		919,041
(Loss) Income Before (Benefit) Provision for Income Taxes		(31,257	)		(63,122	)		39,842			7,236			(47,301	)
(Benefit) Provision for Income Taxes		—			(31,865	)		15,821			—			(16,044	)

Net (Loss) Income	$	(31,257	)	$	(31,257	)	$	24,021		$	7,236		$	(31,257	)

Total Comprehensive (Loss) Income	$	(31,257	)	$	(31,257	)	$	24,021		$	7,236		$	(31,257	)

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Statements of Cash Flows

(All amounts in thousands)

	For the Three Months Ended May 4, 2013
	For the Six Months Ended August 3, 2013
	Holdings			BCFW			Guarantors			Elimination			Consolidated
OPERATING ACTIVITIES
Net Cash Provided by Operating Activities	$	—		$	31,560		$	63,820		$	—		$	95,380
Net Cash (Used in) Provided by Operating Activities	$	—		$	(38,963	)	$	96,546		$	—		$	57,583
INVESTING ACTIVITIES
Cash Paid For Property and Equipment		—			(616,~~817~~391	)		(2251,~~947~~608	)		—			(2967,~~764~~999	)
Proceeds Received from Sale of Fixed Assets		—			—			~~114~~393			—			~~114~~393
Net Cash Used in Investing Activities		—			(616,~~817~~391	)		(2251,~~833~~215	)		—			(2967,~~650~~606	)
FINANCING ACTIVITIES
Proceeds from Long Term Debt – ABL Line of Credit		—			~~155~~339,000			—			—			~~155~~339,000
Principal Payments on Long Term Debt – ABL Line of Credit		—			(~~155~~324,000	)		—			—			(~~155~~324,000	)
Repayment of Capital Lease Obligation		—			—			(253	)		—			(253	)
Principal Payments on Long Term Debt		—			—			(453	)		—			(453	)
Debt Issuance Cost		—			(1,574	)		—			—			(1,574	)
Principal Payments on Long Term Debt – Term Loan		—			(2,178	)		—			—			(2,178	)
Stock Option Exercise and Related Tax Benefits		—			64			—			—			64
Intercompany Borrowings (Payments)		—			40,617			(40,617	)					—
Payment of Dividends		(4,955	)		(4,955	)		—			4,955			(4,955	)
Receipt of Dividends		4,955			—			—			(4,955	)		—
Net Cash Used In Financing Activities		—			34,152			(40,870	)		—			(6,718	)
Debt Issuance Cost		—			(10,171	)		—			—			(10,171	)
Increase in Cash and Cash Equivalents		—			58,895			117			—			59,012
Intercompany Borrowings (Payments)		—			44,634			(44,634	)		—			—
Net Cash Provided by (Used In) Financing Activities		—			42,330			(45,087	)		—			(2,757	)
(Decrease) Increase in Cash and Cash Equivalents		—			(13,024	)		244			—			(12,780	)
Cash and Cash Equivalents at Beginning of Period		—			39,658			3,678			—			43,336
Cash and Cash Equivalents at End of Period	$	—		$	9826,~~553~~634		$	3,~~795~~922		$	—		$	~~102~~30,~~348~~556

2226

Burlington Coat Factory Investments Holdings, Inc. and Subsidiaries

Condensed Consolidating Statements of Cash Flows

(All amounts in thousands)

	For the Three Months Ended April 28, 2012
	For the Six Months Ended July 28, 2012
	Holdings			BCFW			Guarantors			Elimination			Consolidated
OPERATING ACTIVITIES
Net Cash Provided by Operating Activities	$	—		$	~~113~~46,~~787~~030		$	~~130~~204,~~969~~564		$	—		$	~~244~~250,~~756~~594
INVESTING ACTIVITIES
Cash Paid For Property and Equipment		—			(615,~~093~~039	)		(2246,~~044~~967	)		—			(2862,~~137~~006	)
Expenses from Sale of Fixed Assets		—			—			(119	)		—			(119	)
Proceeds Received from Sale of Fixed Assets		—			—			634			—			634
Lease Rights Acquired		—			—			(86430	)		—			(86430	)
Net Cash Used in Investing Activities		—			(615,~~093~~039	)		(2246,~~249~~763	)		—			(2861,~~342~~802	)
FINANCING ACTIVITIES
Proceeds from Long Term Debt — ABL Line of Credit		—			55,200			—			—			55,200
Proceeds from Long Term Debt – ABL Line of Credit		—			180,800			—			—			180,800
Principal Payments on Long Term Debt— ABL Line of Credit		—			(245,200	)		—			—			(245,200	)
Proceeds from Long Term Debt – Term Loan		—			116,913			—			—			116,913
Principal Payments on Long Term Debt		—			—			(164	)		—			(164	)
Principal Payments on Long Term Debt – ABL Line of Credit		—			(352,600	)		—			—			(352,600	)
Principal Payments on Long Term Debt — Term Loan		—			(6,955	)		—			—			(6,955	)
Principal Payments on Long Term Debt		—			—			(340	)		—			(340	)
Debt Issuance Cost		—			(13	)		—			—			(13	)
Principal Payments on Long Term Debt – Term Loan		—			(135,749	)		—			—			(135,749	)
Intercompany Borrowings (Payments)		—			106,204			(106,204	)		—			—
Debt Issuance Cost		—			(760	)		—			—			(760	)
Stock Options Exercised and Related Tax Benefits		—			394			—			—			394
Stock Option Exercise and Related Tax Benefits		—			661			—			—			661
Payment of Dividends		(1,686	)		(1,686	)		—			1,686			(1,686	)
Intercompany Borrowings (Payments)		—			154,743			(154,743	)					—
Receipt of Dividends		1,686			—			—			(1,686	)		—
Payment of Dividends		(1,711	)		(1,711	)		—			1,711			(1,711	)
Net Cash Used In Financing Activities		—			(92,056	)		(106,368	)		—			(198,424	)
Receipt of Dividends		1,711			—			—			(1,711	)		—
Increase in Cash and Cash Equivalents		—			15,638			2,352			—			17,990
Net Cash Used In Financing Activities		—			(37,703	)		(155,083	)		—			(192,786	)
(Decrease) Increase in Cash and Cash Equivalents		—			(6,712	)		2,718			—			(3,994	)
Cash and Cash Equivalents at Beginning of Period		—			11,522			24,142			—			35,664
Cash and Cash Equivalents at End of Period	$	—		$	274,~~160~~810		$	26,~~494~~860		$	—		$	5331,~~654~~670

2327

BURLINGTON COAT FACTORY INVESTMENTS HOLDINGS, INC. AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s management intends for this discussion to provide the reader with information that will assist in understanding the Company’s financial statements, the changes in certain key items in those financial statements from period to period, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. All discussions of operations in this report relate to Burlington Coat Factory Warehouse Corporation and its subsidiaries, which are reflected in the financial statements of Burlington Coat Factory Investments Holdings, Inc. and its subsidiaries (hereinafter we or our or Holdings). The following discussion contains forward-looking information and should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included elsewhere in this report and in our Annual Report on Form 10-K related to the fiscal year ended February 2, 2013 (Fiscal 2012 10-K). Our actual results could differ materially from the results contemplated by these forward-looking statements due to various factors, including those discussed under the section of this Item 2 entitled “Safe Harbor Statement.”

Fiscal Year

Fiscal 2013 is defined as the 52 week year ending February 1, 2014. We define the 2012 fiscal year (Fiscal 2012) and the 2011 fiscal year (Fiscal 2011) as the 53 and 52 week periods ending February 2, 2013 and January 29, 2011, respectively.

Overview

Three Month Period Ended ~~May~~August 43, 2013 Compared with the Three Month Period ended ~~April~~July 28, 2012

Consolidated net sales increased $8299.6 5 million, or 811.45%, to $~~1,065~~963.07 million ~~for~~during the ~~three~~Fiscal ~~months~~2013 ~~ended~~second ~~May 4,~~quarter ~~2013~~ from $~~982~~864.42 million ~~for~~during the ~~three~~comparative ~~months ended April 28, 2012~~period. This increase was primarily attributable to ana $68.1 million, or 7.8%, increase in comparable store sales and a $32.9 million increase in sales related to new stores and stores previously opened that are not included in our comparable store sales. asAs ~~well as~~ a ~~3.4%,~~result orof ~~$33.4~~the ~~million,~~53rd ~~increase~~week in Fiscal 2012, our comparative store sales have been calculated on a shifted basis by comparing comparable store sales for the 13 weeks ended August 3, 2013 to comparative store sales for the 13 weeks ended August 4, 2012. We believe the comparable store sales increase was due primarily to our ongoing initiatives as discussed in further detail below (refer to the sections below entitled “Ongoing Initiatives for Fiscal 2013” and “Three Month Period Ended ~~May~~August 43, 2013 compared with the Three Month Period Ended ~~April~~July 28, 2012” for further explanation).

Cost of sales ~~increased~~as ~~$47.8~~a ~~million,~~percentage orof 7net sales decreased to 62.73%, during the ~~three~~Fiscal ~~month~~2013 ~~period~~second ~~ended~~quarter ~~May 4, 2013~~ compared with ~~the~~62.9% ~~three~~during ~~month~~the comparative period ~~ended April 28, 2012~~. The ~~dollar~~decrease ~~increase~~ in cost of sales as a percentage of net sales was primarily ~~related~~driven toby ~~sales~~higher ~~from~~initial 21markups ~~net~~as ~~new~~a ~~stores~~result ~~that~~of ~~were~~the ~~opened~~improved ~~since~~execution ~~April 28,~~of ~~2012~~our asbuying ~~well~~model asand a lower shrink accrual rate based on our ~~3.4%,~~improved orshrink trend ~~$33.4~~during ~~million~~Fiscal 2012, ~~comparable~~ ~~store~~partially ~~sales~~offset ~~increase~~by increased markdown expense.

Cost of sales asincreased a$56.8 ~~percentage~~million, ofor ~~net sales decreased to 62~~10.74% , during the ~~three~~Fiscal ~~months~~2013 ~~ended May 4,~~second ~~2013~~quarter compared with ~~63.1% during~~ the ~~three~~second ~~months~~quarter ~~ended~~of ~~April 28,~~Fiscal 2012. The ~~decrease~~dollar increase in cost of sales ~~as a percentage of net sales~~ was primarily ~~driven~~related byto ~~lower~~sales ~~markdown~~from ~~expense~~20 ~~as a percentage of~~ net ~~sales~~new asstores athat ~~result~~were ~~of continued~~opened ~~improvements~~since inJuly 28, ~~the~~2012 ~~freshness~~as ofwell ~~inventory~~as ~~this year and a lower shrink accrual rate based on~~ our ~~improved~~7.8% comparable ~~shrink~~store ~~trend~~sales ~~during Fiscal 2012~~increase.

Total selling and administrative expenses increased $20.6 million, or 6.7%, during the three months ended May 4, 2013 compared with the three months ended April 28, 2012, primarily related to new stores and stores that were not operating for the full three months ended April 28, 2012 but did operate for the full three months ended May 4, 2013. Selling and administrative expenses as a percentage of sales decreased to 3033.89% during the second ~~three~~quarter ~~months~~of ~~ended~~Fiscal ~~May 4,~~ 2013 from 3135.31% during the ~~three~~comparative ~~months ended April 28, 2012~~period. The improvement in selling and administrative expenses as a percentage of net sales was primarily related to efficiencies realized in store operations as a result of our ongoing store initiatives (refer to the section below entitled “Ongoing Initiatives for Fiscal 2013”), and the leveraging of our 7.8% comparative store sales during the quarter.

WeTotal ~~recorded~~selling aand ~~net~~administrative ~~loss~~expenses ofincreased $023.7 million, ~~for~~or ~~the~~7.8%, ~~three~~during ~~month~~the ~~period~~second ~~ended~~quarter ~~May 4,~~of Fiscal 2013 compared with athe second ~~net~~quarter ~~loss~~ of ~~$3.9~~Fiscal ~~million for the three month period ended April 28~~2012, ~~2012. The improvement in our net loss position was~~ primarily ~~driven~~related byto ~~our~~new ~~3.4%~~stores ~~increase~~and instores ~~comparable~~that ~~store~~were ~~sales~~not asoperating ~~well~~for ~~as a decrease in interest expense as a result of our February 2013 Term Loan Amendment (refer to~~ the ~~section~~full ~~below~~three ~~entitled~~months ~~“Three~~ended ~~Month Period Ended May~~July 428, ~~2013~~2012 ~~compared~~but ~~with~~did operate for the ~~Three~~full ~~Month~~three ~~Period~~months ~~Ended~~ended ~~April~~August 283, ~~2012” for further explanation)~~2013.

Adjusted EBITDA and Adjusted Net Income (Loss) (as defined below under the caption “Key Performance Measures”) are non-GAAP financial measures of our performance~~, as defined below under the caption “Key Performance Measures~~.” ~~For~~During the ~~three~~second ~~months~~quarter ~~ended May 4,~~of Fiscal 2013, Adjusted EBITDA increased $519.90 million, or 968.21%, to $6946.69 asand aAdjusted ~~result~~Net ofLoss ~~increased~~improved ~~gross~~$13.9 ~~margin,~~million ~~partially offset by increased selling and administrative expenses, primarily related~~ to ~~new~~an ~~stores~~$8.0 ~~and~~million ~~stores~~loss. ~~that~~Both improvements were ~~operating~~as ~~for~~a ~~the~~result ~~full~~of ~~three~~increased ~~months~~gross ~~ended May 4~~margin, ~~2013~~partially ~~but~~offset ~~were~~by ~~not~~increased ~~operating~~selling ~~for~~and ~~the~~administrative ~~full~~expenses ~~three months ended April 28, 2012,~~ as ~~well~~discussed ~~as costs incurred related to the debt amendment during Fiscal 2013~~above.

24We recorded a net loss of $19.5 million during the second quarter of Fiscal 2013 compared with a net loss of $31.3 million during the comparative period. The improvement in our net loss position was primarily driven by increased gross margin dollars partially offset by increased selling and administrative costs as discussed above (refer to the section below entitled “Three Month Period Ended August 3, 2013 compared with the Three Month Period Ended July 28, 2012” for further explanation).

~~For~~Six ~~the~~Month ~~three~~Period ~~months~~Ended ~~ended May 4, 2013, Adjusted Net Income increased $10.~~August 3 ~~million to $11.1 million~~, as a result of improved gross margin, partially offset by increased selling and administrative expenses, primarily related to new stores and stores that were operating for the full three months ended May 4, 2013 ~~but~~Compared ~~were~~with ~~not operating for~~ the ~~full~~Six ~~three~~Month ~~months~~Period ended ~~April~~ July 28, 2012.

Consolidated net sales increased $182.1 million, or 9.9%, to $2,028.7 million for the first six months of Fiscal 2013 from $1,846.6 million during the comparative period last year. This increase was primarily attributable to an increase in comparative store sales of $101.5 million, or 5.5%, and sales related to new stores and stores previously opened that are not included in our comparable store sales of $77.5 million. As a result of the 53^rd week in Fiscal 2012, our comparative store sales have been calculated on a shifted basis by comparing comparable store sales for the 26 weeks ended August 3, 2013 to comparative store sales for the 26 weeks ended August 4, 2012. We believe the comparable store sales increase was due primarily to our ongoing initiatives as discussed in further detail below (refer to the sections below entitled “Ongoing Initiatives for Fiscal 2013” and “Six Month Period Ended August 3, 2013 compared with the Six Month Period Ended July 28, 2012” for further explanation).

Cost of sales as a percentage of net sales decreased to 62.5% during the first six months of Fiscal 2013 compared with 63.0% during the comparative period. The decrease in cost of sales as a percentage of net sales was primarily driven by higher initial markups as a result of the improved execution of our buying model and a lower shrink accrual rate based on our improved shrink trend during Fiscal 2012, partially offset by increased markdown expense.

Cost of sales increased $104.5 million, or 9.0%, during the first six months of Fiscal 2013 compared with the prior period. The dollar increase in cost of sales was primarily related to sales from 20 net new stores that were opened since July 28, 2012 as well as our 5.5%, or $101.5 million, comparable store sales increase.

Selling and administrative expenses as a percentage of sales decreased to 32.3% during the first six months of Fiscal 2013 from 33.0% during the comparative period. The improvement in selling and administrative expenses as a percentage of net sales was primarily related to efficiencies realized in store operations as a result of our ongoing store initiatives (refer to the section below entitled “Ongoing Initiatives for Fiscal 2013”) and the leverage benefit of our 5.5% comparative store sales increase.

Total selling and administrative expenses increased $44.2 million, or 7.2%, during the first six months of Fiscal 2013 compared with the prior year’s first six months, primarily related to new stores and stores that were not operating for the full six months ended July 28, 2012 but did operate for the full six months ended August 3, 2013.

For the first six months of Fiscal 2013, Adjusted EBITDA increased $33.8 million, or 36.5%, to $126.5 million and Adjusted Net Income (Loss) increased $24.1 million from a loss position of $21.1 million to income of $3.0 million, both as a result of increased gross margin, partially offset by increased selling and administrative expenses, as discussed above.

We recorded a net loss of $20.2 million for the first six months of Fiscal 2013 compared with a net loss of $35.2 million during the comparative period. The improvement in our net loss position was primarily driven by our increased gross margin dollars, partially offset by selling and administrative costs as discussed above (refer to the section below entitled “Six Month Period Ended August 3, 2013 compared with the Six Month Period Ended July 28, 2012” for further explanation).

Debt Refinancing

On February 15, 2013, BCFWC entered into Amendment No. 2 to our Term Loan Credit Agreement (Second Amendment). The Second Amendment creates a restricted payments basket of $25 million and permits BCFWC to use the “available amount” to make restricted payments (which basket includes retained excess cash flow, in an amount not to exceed 50% of BCFWC’s consolidated net income (as defined in the existing senior notes) since the second quarter of Fiscal 2011), in each case so long as certain conditions are satisfied. In connection with this amendment, the Company incurred a $1.56 million amendment fee that was capitalized and included in the line item “Other Assets” on the Company’s Condensed Consolidated Balance Sheet. Additionally, the Company incurred $8.9 million of additional fees, inclusive of an $8.6 million fee payable to Bain Capital, for consulting and advisory services. These fees are included in the line item “Costs Related to Debt Amendment” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

On February 20, 2013, Burlington Holdings, LLC (Indirect Parent), the indirect parent company of Holdings, and Burlington Holdings Finance, Inc., the wholly-owned subsidiary of Indirect Parent (collectively the Issuers), completed the offering of $350 million aggregate principal amount of Senior Notes due 2018 (2018 Notes) at an issue price of 98.00%. The 2018 Notes are senior unsecured obligations of the Issuers, and the Issuers are not obligors or guarantors under BCFWC’s existing senior secured credit facilities or indenture. Additionally, as none of the Issuers’ subsidiaries, are obligors or guarantors under the 2018 Notes, the debt is recorded on the Issuers’ financial statements only and is not included in the Company’s financial statements.

Interest is payable on the ~~Senior~~ 2018 Notes on each February 15 and August 15, commencing August 15, 2013. The first interest payment on the 2018 Notes ~~will~~was required to be ~~payable~~and was paid in cash. For each interest period thereafter, the Issuers will be required to pay interest on the 2018 Notes entirely in cash, unless certain conditions are satisfied, in which case the Issuers will be entitled to pay, to the extent described in the indenture governing the 2018 Notes, interest on the 2018 Notes by increasing the principal amount of the 2018 Notes or by issuing new notes (such increase being referred to herein as PIK interest). Cash interest on the 2018 Notes will accrue at the rate of 9.00% per annum. PIK interest on the 2018 Notes will accrue at the rate of 9.75% per annum. The Company intends to pay Indirect Parent a semi-annual dividend in order for Indirect Parent to make payment on the semi-annual cash interest.

In29 February 2013, the Issuers used the net proceeds from the offering of the 2018 Notes to pay a special cash dividend of approximately $336 million, in the aggregate, to Indirect Parent’s sole member, Burlington Holdings, Inc., which in turn distributed the proceeds to its stockholders. BCFWC paid a dividend to the Issuers of $5.0 million in order to pay certain fees in connection with the issuance of the 2018 Notes, inclusive of a $3.5 million fee to Bain Capital for various consulting and advisory services.

In February 2013, the Issuers used the net proceeds from the offering of the 2018 Notes to pay a special cash dividend of $336.0 million, in the aggregate, to Indirect Parent’s sole member, Burlington Stores, Inc. (f/k/a Burlington Holdings, Inc.), which in turn distributed the proceeds to its stockholders. BCFWC paid a dividend to the Issuers of $5.0 million in order to pay certain fees in connection with the issuance of the 2018 Notes, inclusive of a $3.5 million fee to Bain Capital for various consulting and advisory services.

On May 17, 2013, we entered into Amendment No. 3 (the Third Amendment) to the Term Loan Credit Agreement, in order to, among other things, reduce the interest rates applicable to our Term Loan Facility by 100 basis points (provided that such interest rates shall be further reduced by 25 basis points if our consolidated secured leverage ratio is less than or equal to 2.25:1) and to reduce the LIBOR floor by 25 basis points. The Third Amendment was accomplished by replacing the outstanding $871.0 million principal amount of term B-1 loans (the Term B-1 Loans) with a like aggregate principal amount of term B-2 loans (the Term B-2 Loans).

The Term B-2 Loans have the same maturity date that was applicable to the Term B-1 Loans. The Term Loan Credit Agreement provisions relating to the representations and warranties, covenants and events of default applicable to the Company and the guarantors were not modified by the Amendment.

As a result of the Third Amendment, mandatory quarterly payments of $2.2 million will be payable as of the last day of each quarter, which commenced this quarter ended August 3, 2013. These payments have been recorded in our Condensed Consolidated Balance Sheet in the line item “Current Maturities of Long Term Debt.” Additionally, we recognized a loss on the extinguishment of debt of $0.6 million, which was recorded in the line item “Loss on the Extinguishment of Debt” in our Condensed Consolidated Statements of Operations and Comprehensive Loss during the second quarter of Fiscal 2013. In addition, fees of $2.6 million were recorded in the line item “Costs Related to Debt Amendment” in our Condensed Consolidated Statements of Operations and Comprehensive Loss during the second quarter of Fiscal 2013.

Current Conditions

Store Openings, Closings, and Relocations.

During the ~~three~~six months ended ~~May~~August 43, 2013, we opened four Burlington Coat Factory Warehouse Stores (BCF Stores) and closed one store. As of ~~May~~August 43, 2013, we operated 503 stores under the names “Burlington Coat Factory Warehouse” (485 stores), “Cohoes Fashions” (two stores), “Super Baby Depot” (two stores) “MJM Designer Shoes” (13 stores) and “Burlington Shoes” (one store).

We continue to pursue our growth plans and invest in capital projects that meet our financial requirements. We currently plan to open ~~between~~19 ~~16 and 20~~ new stores during the remainder of Fiscal 2013.

Ongoing Initiatives for Fiscal 2013

We continue to focus on a number of ongoing initiatives aimed at increasing our overall profitability by improving our comparable store sales trends, total sales growth and reducing expenses. These initiatives include, but are not limited to:

I. Driving Comparable Store Sales Growth. We intend to continue to increase comparable store sales through the following initiatives:

~~(a)~~• Continue to Enhance Execution of the Off-Price Model. We plan to drive comparable store sales by ~~focusing~~ensuring ~~on product freshness to ensure~~ that we consistently deliver ~~newness~~fresh merchandise to ~~the~~our selling floors. We ~~will~~intend to continue to reduce comparable store inventories, which we believe will result in faster inventory ~~turnover~~turns and reduced markdowns. We regularly seek to take advantage of opportunistic buys of highly desirable branded products and key seasonal goods to sell in the current season or in a future season, which we refer to as “pack-and-hold” merchandise. We also continually use our business intelligence systems to identify sell-through rates by product, capitalize on strong performing categories, identify and buy into new fashion trends and opportunistically acquire products in the marketplace.

25• Improve Merchandising Localization. Our recent investments increasingly allow us to improve on delivering the right products to the right stores at the right time by refining our allocations of merchandise to the appropriate stores. Over time, we expect our efforts will result in an improved assortment of brands, sizes, price points and product attributes that cater to customer preferences at the store level.

~~plant~~• toIncrease ~~maintain~~Sales ~~our~~of ~~ability~~Women’s Ready-to-Wear ~~leverage~~Apparel, ~~our~~Shoes ~~pack~~ and ~~hold~~Accessories. ~~program,~~We ~~which~~plan isto ~~designed~~continue to ~~take~~improve ~~advantage~~our ~~of terrific buys of either highly desirable branded~~ product oroffering, ~~key~~store ~~seasonal~~merchandising ~~merchandise for the next year. While the amount of goods we purchase on pack~~ and ~~hold~~marketing isfocus ~~purely based~~ on ~~the~~women’s ~~right~~ready-to-wear ~~opportunities in the marketplace~~apparel, ~~this~~shoes ~~continues~~and toaccessories ~~be a great avenue~~ to ~~source~~capture ~~product.~~incremental Wesales ~~also~~from ~~intend to use~~ our ~~business~~core ~~intelligence~~female ~~systems~~customer ~~to identify sell-through rates by product, capitalize on strong performing categories, identify~~ and ~~buy~~become ~~into~~a ~~new~~destination ~~fashion~~for ~~trends~~her ~~and~~across ~~opportunistically~~all ~~acquire products in the marketplace~~categories.

~~(b)~~• ~~Sharpening~~Introduction ~~Focus~~of ona ~~Our~~New ~~Core~~Marketing ~~Female~~Campaign ~~Customer.~~for WeFall ~~have~~of ~~focused~~2013. onOver ~~better~~the ~~serving~~past ~~our~~few ~~core~~years, ~~female~~our ~~customer—a~~marketing ~~brand-conscious~~initiatives ~~fashion~~have ~~enthusiast,~~focused ~~aged~~on ~~25-49—by~~communicating ~~improving~~ our ~~product~~core ~~offering,~~value ~~store~~proposition ~~merchandising~~(a ~~and~~wide ~~marketing~~breadth ~~focus~~of ongreat ~~women’s~~branded ~~ready-to-wear~~values). ~~apparel~~This ~~and~~Fall ~~accessories~~we plan to ~~capture~~refine ~~incremental sales from~~ our ~~core~~marketing ~~female~~campaign ~~customer~~to ~~and~~develop ~~become~~ a ~~destination~~richer ~~for~~and ~~her~~more ~~across~~emotive ~~all~~relationship ~~categories.~~with Wecustomers ~~believe~~while ~~that~~continuing ~~these~~to ~~efforts~~reinforce ~~will~~our ~~increase~~core ~~the~~value ~~frequency~~proposition ofthat ~~her~~we ~~visits~~know ~~and~~drives ~~her~~customers ~~average~~to ~~spend,~~shop ~~further~~with ~~improving the comparable store sales performance in women’s categories~~us.

~~(c)~~• ~~Continuing~~Open toa ~~Improve~~West ~~Our~~Coast ~~Customer~~Buying ~~Experience~~Office. We ~~have~~expect ~~significantly~~to ~~enhanced~~open ~~the store experience and ease of shopping at all of~~ our ~~stores~~West byCoast ~~implementing~~buying aoffice ~~comprehensive~~during program focused on offering more brands and styles and simplifying store navigation. We have accomplished this by utilizing clear way-finding signs and distinct product signage, highlighting key brands and new arrivals, improving organization of the ~~floor~~Fall ~~space,~~2013 ~~reducing~~to ~~rack~~increase density, facilitating quicker checkouts and delivering better customer service. We have made particular improvements in product size visibility, queuing and fitting rooms. To ensure consistent execution of our ~~customer~~access ~~experience~~to ~~priorities,~~brands ~~we have improved our store associate training~~ and ~~reorganized~~vendors and ~~strengthened~~allow ~~our~~us ~~field~~to ~~management~~react ~~organization. Our improved customer experience, in conjunction with~~ more ~~consistent~~quickly ~~in-store execution, has contributed~~ to aattractive ~~significant~~merchandise ~~increase~~buying opportunities in ~~overall~~this ~~customer satisfaction scores over the last two years~~region. We have ~~also~~already ~~implemented~~begun ~~operational audits~~ to ~~measure~~build ~~performance~~a ~~against~~West ~~clearly~~Coast ~~articulated~~buying ~~operational~~team ~~standards.~~in Toadvance ~~date,~~of ~~stores~~the ~~that~~office ~~have achieved superior audit scores have generated materially higher comparable store sales~~opening.

~~(d)~~• ~~Increasing~~Increase Our e-Commerce Sales. We have been selling to our customers online for more than a decade. We plan to leverage this heritage, along with our ~~renewed~~newly ~~focus~~relaunched on e-commerce platform, to expand our online assortment and utilize e-commerce strategies to drive incremental traffic to our stores.

(e) Enhancing Existing Categories and Introduce New Ones. We have opportunities to expand the depth and breadth of certain existing categories such as ladies’ apparel, children’s products and home décor, while continuing to remain the destination for coats, and maintaining the flexibility to introduce new categories such as pet related merchandise.

II. Expanding and Enhancing Our Retail Store Base

~~(a)~~We ~~Adhere~~believe there is significant opportunity to anexpand ~~Opportunistic~~our ~~yet~~retail ~~Disciplined~~store ~~Real~~base ~~Estate~~in ~~Strategy~~the United States. WeIn ~~have~~line ~~grown~~with recent growth, our ~~store~~goal ~~base~~is ~~consistently~~to ~~since~~open ~~our~~approximately ~~founding~~25 new stores annually. The stores we have opened in ~~1972,~~the ~~developing~~last ~~more~~two ~~than~~years ~~99%~~are ofamong our stronger performing stores, ~~organically~~and, ~~rather~~aided ~~than~~by ~~through~~our ~~acquisition.~~enhanced Wereal ~~believe~~estate ~~there~~selection ismodel, ~~significant~~have ~~opportunity~~the tomost ~~expand~~consistent performance relative to our ~~retail~~underwriting ~~store~~model. ~~base~~Based inon ~~the~~a ~~United~~detail ~~States.~~market-by-market Inanalysis ~~line~~of ~~with~~internal ~~recent~~and ~~growth,~~third-party data and our ~~goal~~operating isexperience, towe ~~open~~believe ~~approximately~~the 20U.S. tomarket 25can ~~new~~support at least 1,000 stores. ~~annually~~In ~~and~~addition, we continue to doexplore the sogrowth ~~for~~potential ~~the~~of ~~foreseeable~~modified ~~future~~store formats that may offer incremental opportunity for growth.

(b) Maintaining Focus on Unit Economics and Returns. We have adopted a prudent approach to new store openings with a specific focus on achieving attractive unit economics and returns. This focus is demonstrated by the fact that the vast majority of our existing stores have positive EBITDA for Fiscal 2013. By focusing on opening stores with attractive unit economics we are able to minimize costs associated with store relocations and closures, achieve attractive returns on capital and continue to grow Company margins. We continue to explore the potential for modified store formats to provide incremental growth.

(c) Enhancing the Store Experience through Store Refreshes and Remodels. Approximately 64% of our stores are new or have been refreshed, remodeled or relocated since 2006. In our refreshed and remodeled stores, we have incorporated new flooring, painting, lighting and graphics, relocated our fitting rooms to maximize productive selling space and made various other improvements as appropriate by location. We continue to invest in store refreshes and remodels on a store-by-store basis where appropriate, taking into consideration the age, sales and profitability of a store, as well as the potential impact to the customer shopping experience.

III. Enhancing Operating Margins: We intend to increase our operating margins through the following initiatives:

~~(a)~~• ~~Improving~~Optimize ~~Inventory Management~~Markdowns. WeOur ~~continue~~new tomarkdown ~~improve~~system ~~inventory~~will ~~freshness~~allow byus ~~focusing~~to onmaximize ~~receipt~~sales ~~flows by month, optimizing our markdowns,~~ and ~~actively~~gross ~~reducing~~margin ~~the~~dollars ~~inventory~~based ~~that~~on ~~has~~forward ~~been~~looking onsales ~~the~~forecasts, ~~selling~~sell-through ~~floor~~targets, ~~more~~and ~~than~~exit ~~60 days~~dates. InThis ~~addition,~~allows weus ~~plan~~ to ~~continue~~optimize tomarkdowns ~~reduce~~at ~~comparable~~the ~~store~~style ~~inventories~~and ~~which~~color welevel ~~believe~~by ~~will~~store ~~result in continued faster inventory turnover and reduced markdowns~~cluster.

26• Enhance Purchasing Power. We believe that our growth and new West Coast buying office will provide us with the opportunity to capture incremental buying opportunities and realize economies of scale in our merchandising and non-merchandising purchasing activities.

~~Table~~• Drive Operating Leverage. We believe that we will be able to leverage our growing sales over the fixed costs of ~~Contents~~our business. In addition, we are focused on continuing to improve the efficiency of our corporate and in-store operations. Furthermore, we expect operating costs to grow less rapidly in the future as we approach the middle and latter stages of our organizational investments.

(b) Optimizing Logistics and Distribution. We believe executing the strategy to support more in-season and opportunistic buying as well as measured expansion of pack and hold initiatives will assist in maximizing sales and total margin dollars.

(c) Driving Operating Leverage. We believe that we will be able to leverage our growing sales over the fixed costs of our business. In addition, we are focused on continuing to improve the efficiency of our corporate and in-store operations through better people, processes and systems.

Uncertainties and Challenges

As management strives to increase profitability through achieving positive comparable store sales and leveraging productivity initiatives focused on improving the in-store experience, more efficient movement of products from the vendors to the selling floors, and modifying our marketing plans to increase our core customer base and increase our share of our current customers’ spending, there are uncertainties and challenges that we face as an off-price retailer of apparel and accessories for men, women and children and home furnishings that could have a material impact on our revenues or income.

Consumer spending habits, including spending for the merchandise that we sell, are affected by, among other things, prevailing economic conditions, inflation, levels of employment, salaries and wage rates, prevailing interest rates, housing costs, energy costs, commodities pricing, income tax rates and policies, consumer confidence and consumer perception of economic conditions. In addition, consumer purchasing patterns may be influenced by consumers’ disposable income, credit availability and debt levels.

A weakness in the U.S. economy, an uncertain economic outlook or a credit crisis could adversely affect consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis. Consumer confidence is also affected by the domestic international political situation. Our financial condition and operations could be impacted by changes in government regulations such as taxes, healthcare reform and other areas. The outbreak or escalation of war or the occurrence of terrorist acts or other hostilities in or affecting the U.S. could lead to a decrease in spending by consumers.

We closely monitor our net sales, gross margin, expenses and working capital. We have performed scenario planning such that if our net sales decline, we have identified variable costs that could be reduced to partially mitigate the impact of these declines. If adverse economic trends continue, or if our efforts to counteract the impacts of these trends are not sufficiently effective, there could be a negative impact on our financial performance and position in future fiscal periods. For further discussion of the risks to us regarding general economic conditions, please refer to the section below entitled “Liquidity and Capital Resources” and the risks discussed in the Fiscal 2012 10-K under the heading “Risk Factors.”

Key Performance Measures

We consider numerous factors in assessing our performance. Key performance measures used by management include Adjusted Net Income, Adjusted EBITDA, comparable store sales, gross margin, inventory, store payroll as a percentage of net sales and liquidity.

Adjusted Net Income and Adjusted EBITDA: Adjusted Net Income and Adjusted EBITDA are non-GAAP financial measures of our performance.

We present Adjusted Net Income and Adjusted EBITDA because we believe they are useful supplemental measures in evaluating the performance of our business and provide greater transparency into our results of operations. In particular, we believe that excluding certain items that may vary substantially in frequency and magnitude from operating income are useful supplemental measures that assist in evaluating our ability to generate earnings and leverage sales, respectively, and to more readily compare these metrics between past and future periods.

Adjusted Net Income (Loss) has limitations as an analytical tool, and should not be considered either in isolation or as a substitute for net income or other data prepared in accordance with GAAP. Some of these limitations include:

• Adjusted Net Income (Loss) does not reflect the amortization of net favorable leases which are amortized over the life of the lease;

• Adjusted Net Income (Loss) does not reflect costs related to debt amendments that are expensed during the fiscal periods;

• Adjusted Net Income (Loss) does not reflect ~~impairment~~expenses ~~charges~~related onto ~~long~~our ~~lived~~May ~~assets~~2013 stock option modification;

27• Adjusted Net Income (Loss) does not reflect impairment charges on long lived assets;

•

Adjusted Net Income (Loss) does not reflect annual advisory fees paid to Bain Capital that are expensed during the fiscal periods.

During the second quarter of Fiscal 2013, Adjusted Net Loss improved $13.9 million to an $8.0 million loss, as a result of improved gross margin, partially offset by increased selling and administrative expenses, primarily related to new stores and stores that were operating for the full three months ended August 3, 2013 but were not operating for the full three months ended July 28, 2012.

For the six months ended August 3, 2013, Adjusted Net Income (Loss) increased $24.1 million from a loss position of $21.1 million to income of $3.0 million. This improvement was primarily the result of improved gross margin, partially offset by increased selling and administrative expenses, primarily related to new stores and stores that were operating for the full six months ended August 3, 2013 but were not operating for the full six months ended July 28, 2012.

•The following table shows our reconciliation of Net Loss to Adjusted Net Income ~~does~~(Loss) ~~not~~for the ~~reflect~~three ~~annual~~and ~~advisory~~six ~~fees~~months ~~paid~~ended toAugust 3, ~~Bain~~2013 ~~Capital~~compared ~~that~~with ~~are~~the ~~expensed~~three ~~during~~and ~~the~~six ~~fiscal~~months ~~periods~~ended July 28, 2012:

For the three months ended May 4, 2013, Adjusted Net Income increased $10.3 million to $11.1 million, as a result of improved gross margin, partially offset by increased selling and administrative expenses, primarily related to new stores and stores that were operating for the full three months ended May 4, 2013 but were not operating for the full three months ended April 28, 2012.


	*(in thousands)*
	Six Months Ended						Three Months Ended
	August 3, 2013			July 28, 2012			August 3, 2013			July 28, 2012
Reconciliation of Net Loss to Adjusted Net Income (Loss):
Net Loss	$	(20,225	)	$	(35,197	)	$	(19,523	)	$	(31,257	)
Net Favorable Lease Amortization (a)		15,665			14,195			6,835			7,026
Costs Related to Debt Amendment (b)		11,457			3,094			2,603			3,094
Stock Option Modification Expense (c)		7,263			—			7,263			—
Loss on Extinguishment of Debt (d)		617			3,413			617			3,413
Impairment Charges (e)		139			78			88			66
Advisory Fees (f)		2,175			2,085			1,103			1,051
Tax Effect (g)		(14,106	)		(8,726	)		(6,997	)		(5,291	)

Adjusted Net Income (Loss)	$	2,985		$	(21,058	)	$	(8,011	)	$	(21,898	)

The following table shows our reconciliation of Net Loss to Adjusted Net Income for the three months ended May 4, 2013 compared with the three months ended April 28, 2012:

	(in thousands)
	Three Months Ended
	May 4, 2013			April 28, 2012
Reconciliation of Net Loss to Adjusted Net Income:
Net Loss	$	(702	)	$	(3,940	)
Net Favorable Lease Amortization (a)		8,830			7,169
Costs Related to Debt Amendment (b)		8,855			—
Impairment Charges (c)		51			13
Advisory Fees (d)		1,071			1,035
Tax Effect (e)		(6,996	)		(3,435	)
Adjusted Net Income	$	11,109		$	842

(a)

Net favorable lease amortization represents the non-cash amortization expense associated with favorable and unfavorable leases that were recorded as a result of purchase accounting related to the April 2006 Merger Transaction, and are recorded in the line item “Depreciation and Amortization” in our Condensed Consolidated Statement of Operations and Comprehensive Loss.

(b) Primarily related to advisory and professional fees associated with ~~the~~Amendment 1 in May 2012, Amendment 2 in February 2013 and Amendment 3 in May 2013 to our Term Loan ~~Amendment~~Facility.

(c) Represents ~~Impairment~~both ~~Charges~~cash onand ~~Long~~non ~~Lived~~cash ~~Assets~~expenses incurred as a result of our May 2013 stock option modification. Refer to Note 8 to our Condensed Consolidated Financial Statements entitled “Stock Option and Award Plans and Stock-Based Compensation” for further detail.

(d) Represents ~~the~~losses ~~annual~~incurred ~~advisory~~in ~~fee~~accordance ofwith ~~Bain~~ASC ~~Capital~~Topic ~~expensed~~No. ~~during~~470-50, ~~the~~“Debt ~~fiscal~~Modifications ~~periods~~ and ~~recorded~~Extinguishments” in(Topic ~~the~~470), ~~line~~related ~~item~~to ~~“Selling~~Amendments ~~and~~number ~~Administrative~~1 ~~Expenses”~~and in3 to our ~~Condensed~~Term ~~Consolidated~~Loan ~~Statement~~in ofMay ~~Operations~~2012 and ~~Comprehensive~~May ~~Loss~~2013 respectively.

(e) ~~Tax~~Represents ~~effect~~Impairment isCharges ~~calculated based~~ on ~~the~~Long ~~effective~~Lived ~~tax rates of 37~~Assets.~~2% and 41.8% (before discrete items), for the respective periods.~~

~~EBITDA~~ (~~earnings~~f) ~~before~~Represents ~~net~~the ~~interest~~annual ~~expense~~advisory ~~and~~fee ~~loss on extinguishment~~ of ~~debt,~~Bain ~~income~~Capital ~~tax~~expensed ~~expense~~during ~~and~~the ~~depreciation,~~fiscal ~~amortization~~periods and ~~impairment~~ ~~charges)~~recorded ~~has~~in ~~limitations~~the asline anitem ~~analytical~~“Selling ~~tool,~~ and ~~should~~Administrative ~~not~~Expenses” ~~be considered either~~ in ~~isolation~~our orCondensed asConsolidated aStatement ~~substitute for net income or other data prepared in accordance with GAAP. Some~~ of ~~these~~Operations ~~limitations~~and ~~include:~~Comprehensive Loss.

•(g) ~~EBITDA~~Tax ~~does~~effect ~~not~~is ~~reflect~~calculated ~~changes~~based ~~in,~~on orthe ~~cash~~effective ~~requirements~~tax ~~for,~~rates ~~our~~(before ~~working~~discrete ~~capital~~items) ~~needs;~~for the respective periods.

•Adjusted EBITDA ~~does~~has ~~not~~limitations ~~reflect~~as ~~our~~an ~~interest~~analytical ~~expense~~tool, orand ~~the~~should ~~cash~~not ~~requirements~~be ~~necessary~~considered either toin ~~service~~isolation ~~interest~~or as a substitute for net income or ~~principal~~other ~~payments,~~data onprepared ~~our~~in ~~debt;~~accordance with GAAP. Some of these limitations include:

• Adjusted EBITDA does not reflect our ~~income~~interest ~~tax~~ expense, or the cash requirements necessary to ~~pay~~service interest or principal payments, on our ~~taxes~~debt;

• Adjusted EBITDA does not reflect ~~historical~~our ~~cash~~income ~~expenditures~~tax expense or ~~future~~the cash requirements ~~for~~to ~~capital~~pay ~~expenditures~~our ~~or contractual commitments~~taxes; ~~and~~

• ~~Although~~Adjusted ~~depreciation~~EBITDA ~~and~~does ~~amortization~~not ~~are~~reflect ~~non-~~historical cash ~~charges,~~expenditures ~~the~~or ~~assets being depreciated and amortized will likely have to be replaced in the~~ future, ~~and~~requirements ~~EBITDA~~for ~~measures~~capital doexpenditures ~~not~~or ~~reflect~~contractual ~~any~~commitments; ~~cash requirements for such replacements.~~and

~~EBITDA~~• ~~for~~Although ~~the~~depreciation ~~three~~and ~~months ended~~amortization ~~May~~are 4,non-cash ~~2013 increased $5.9 million~~charges, ~~or 9.2%, to $69.6 million. The improvement in EBITDA was primarily~~ the ~~result~~assets ofbeing ~~increased~~depreciated ~~gross margin, partially offset by increased selling~~ and ~~administrative~~amortized ~~expenses,~~will ~~primarily~~likely ~~related~~have to ~~new~~be ~~stores~~replaced ~~and stores~~in ~~that were operating for~~ the ~~full~~future, ~~three~~and ~~months~~Adjusted ~~ended~~EBITDA ~~May~~measures 4,do ~~2013~~not ~~but~~reflect ~~were~~any ~~not~~cash ~~operating~~requirements for ~~the~~such ~~full three months ended April 28, 2012, as well as costs incurred related to the debt amendments during Fiscal 2013~~replacements.

~~The~~During ~~following~~the ~~table~~second quarter ~~shows~~of ~~our~~Fiscal ~~reconciliation~~2013, Adjusted EBITDA increased $19.0 million, or 68.1%, to $46.9 million as a result of ~~Net~~increased ~~Loss~~gross margin, partially offset by increased selling and administrative expenses, primarily related to new stores and stores that ~~EBITDA~~were operating for the full three months ended ~~May 4~~August 3, 2013 ~~compared~~but ~~with~~were not operating for the full three months ended ~~April~~ July 28, 2012:.

	(in thousands)
	Three Months Ended
	May 4, 2013			April 28, 2012
Reconciliation of Net Loss to EBITDA:
Net Loss	$	(702	)	$	(3,940	)
Interest Expense		26,589			29,479
Interest Income		(76	)		(22	)
Income Tax Benefit		(230	)		(1,717	)
Depreciation and Amortization		43,992			39,925
Impairment Charges		51			13
EBITDA	$	69,624		$	63,738

For the six months ended August 3, 2013, Adjusted EBITDA increased $33.8 million, or 36.5%, to $126.5 million as a result of increased gross margin, partially offset by increased selling and administrative expenses, primarily related to new stores and stores that were operating for the full six months ended August 3, 2013 but were not operating for the full six months ended July 28, 2012.

The following table shows our reconciliation of Net Loss to Adjusted EBITDA for the three and six months ended August 3, 2013 compared with the three and six months ended July 28, 2012:


	*(in thousands)*
	Six Months Ended						Three Months Ended
	August 3, 2013			July 28, 2012			August 3, 2013			July 28, 2012
Reconciliation of Net Loss to Adjusted EBITDA:
Net Loss	$	(20,225	)	$	(35,197	)	$	(19,523	)	$	(31,257	)
Interest Expense		51,140			57,108			24,551			27,629
Interest Income		(165	)		(46	)		(90	)		(25	)
Loss on Extinguishment of Debt		617			3,413			617			3,413
Costs Related to Debt Amendments		11,457			3,094			2,603			3,094
Stock Option Modification Expense		7,263			—			7,263			—
Advisory Fees		2,175			2,085			1,103			1,051
Depreciation and Amortization		85,239			79,903			41,247			39,979
Impairment		139			78			88			66
Tax Benefit		(11,169	)		(17,761	)		(10,938	)		(16,044	)

Adjusted EBITDA	$	126,471		$	92,677		$	46,921		$	27,906

Comparable Store Sales. Comparable store sales measure performance of a store during the current reporting period against the performance of the same store in the corresponding period of the previous year. The method of calculating comparable store sales varies across the retail industry. As a result, our definition of comparable store sales may differ from other retailers.

We define comparable store sales as sales of those stores, including online sales, commencing on the first day of the fiscal month one year after the end of their grand opening activities, which normally conclude within the first two months of operations. For the three and six months ended ~~May~~August 43, 2013, we ~~experienced~~ experienced increases in comparable store sales of 37.48% and 5.5%, respectively.

Various factors affect comparable store sales, including, but not limited to, weather conditions, current economic conditions, the timing of our releases of new merchandise and promotional events, the general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, competition, and the success of marketing programs.

Gross Margin. Gross margin is a measure used by management to indicate whether we are selling merchandise at an appropriate gross profit. Gross margin is the difference between net sales and the cost of sales. Our cost of sales and gross margin may not be comparable to those of other entities, since some entities include all of the costs related to their buying and distribution functions in cost of sales. We include certain of these costs in the line items “Selling and Administrative Expenses” and “Depreciation and Amortization” in our Condensed Consolidated Statements of Operations and Comprehensive Loss. We include in our “Cost of Sales” line item all costs of merchandise (net of purchase discounts and certain vendor allowances), inbound freight, distribution center outbound freight and certain merchandise acquisition costs, primarily commissions and import fees. Gross margin as a percentage of net sales during the three and six months ended ~~May~~ August 43, 2013 ~~increased~~was to37.7% and 37.35% compared with 3637.91% and 37.0% during the three and six months ended ~~April~~July 28, 2012. The increase in our gross margin as a percentage of net sales ~~for~~was ~~the three months ended May 4, 2013 compared with the three months ended April 28, 2012 is~~ due to ~~lower~~higher ~~markdown expense~~initial asmarkups ~~a percentage of net sales~~ as a result of ~~continued improvements in~~ the improved ~~freshness~~execution of ~~inventory~~our ~~this~~buying ~~year~~model and a lower shrink accrual rate based on our improved shrink trend during Fiscal 2012, partially offset by increased markdown expense. In accordance with our policy, physical inventories are ~~taken~~primarily taken during the fourth quarter of the fiscal year at which point our estimated shrink will be adjusted to actual.

~~Inventory. Inventory~~34 at May 4, 2013 was $727.2 million compared with $680.2 million at February 2, 2013. The increase of $47.0 million was primarily the result of the seasonality of our business and an increase in pack and hold inventory. Our store inventory is typically at its lowest levels in January, after the holiday selling season, and returns to normal levels during the first quarter of the fiscal year. Inventory at May 4, 2013 increased $66.3 million from $660.9 million at April 28, 2012 to $727.2 million at May 4, 2013. This increase was primarily driven by 21 net new stores opened since April 28, 2012 as well as increased pack and hold inventory. These increases were partially offset by an average inventory per comparable store decrease of 8.7% as a result of our ongoing initiative to reduce inventory levels which we believe will result in faster turns and reduced markdowns.

Inventory. Inventory at August 3, 2013 was $748.3 million compared with $680.2 million at February 2, 2013. The increase of $68.1 million was primarily the result of an increase in pack and hold inventory, the seasonality of our business and the impact of opening three net new stores since February 2, 2013. Our store inventory is typically at its lowest levels in January, after the holiday selling season, and builds up during the first half of the fiscal year as we prepare for the back to school and holiday selling seasons.

Inventory at August 3, 2013 increased $111.5 million from $636.8 million at July 28, 2012 to $748.3 million at August 3, 2013. This increase was primarily driven by 20 net new stores opened since July 28, 2012 as well as increased pack and hold inventory. These increases were partially offset by a comparable store inventory decrease of 2.0% as a result of our ongoing initiative to reduce inventory levels which we believe will result in faster turns and reduced markdowns.

In order to better serve our customers, and maximize sales, we continue to refine our merchandising mix and inventory levels within our stores. By appropriately managing our inventories, we believe we will be better able to deliver a continual flow of fresh merchandise to our customers. We continue to move toward more productive inventories by increasing the amount of current inventory as a percent of total inventory.

We continue to manage our merchandise flow based on a receipt-to-reduction ratio. By matching forecasted levels of receipts to forecasted inventory outflows (inclusive of sales, markdowns and inventory shrinkage) on a monthly basis, we believe we create a more normalized receipt cadence to support sales which will ultimately lead to an improved inventory turnover ratio.

Inventory turnover is a measure that indicates how efficiently inventory is bought and sold. It measures the length of time that we own our inventory. This is significant because usually the longer the inventory is owned, the more likely markdowns may be required to sell the inventory. Inventory turnover is calculated by dividing retail sales before sales discounts by the average retail value of the inventory for the period being measured. This inventory turnover calculation is based on a rolling 13 month average of inventory for the period being measured. Our annualized inventory turnover rate (inclusive of stores and warehouse inventory) as of ~~May~~August 43, 2013 and ~~April~~July 28, 2012 was 3.2 turns per year and 23.90 turns per year, respectively.

Store Payroll as a Percentage of Net Sales. Store payroll as a percentage of net sales measures our ability to manage our payroll in accordance with increases or decreases in net sales. The method of calculating store payroll varies across the retail industry. As a result, our store payroll as a percentage of net sales may differ from other retailers. We define store payroll as regular and overtime payroll for all store personnel as well as regional and territory personnel, exclusive of payroll charges to corporate and warehouse employees. Store payroll as a percentage of net sales was 910.4% and 9.9% during the three and six months ended ~~May~~ August 43, 2013 compared with 11.6% and 10.07% during the three and six months ended ~~April~~July 28, 2012. The improvement in store payroll as a percentage of net sales was primarily driven by efficiencies realized in our stores as we continue to improve the execution within store operations and benefit from the leverage of our comparative store sales.

Liquidity. Liquidity measures our ability to generate cash. Management measures liquidity through cash flow and working capital position. Cash flow is the measure of cash generated from operating, financing, and investing activities. WeCash ~~experienced~~and ~~an increase in~~ cash ~~flow~~equivalents ofdecreased $5912.08 million during the ~~three~~six month period ended ~~May~~August 43, 2013 resulting in a ~~cash~~ cash and cash equivalent balance of $~~102~~30.36 million as of ~~May~~August 43, 2013 compared with ana ~~increase~~decrease in cash ~~flow~~and cash equivalents of $4.0 million generated during the ~~three~~six months ended ~~April~~July 28, 2012 ~~of $18~~.~~0 million.~~ This ~~increase~~decrease was primarily driven by ~~fewer~~an ~~repayments,~~increase ~~net~~in ~~of borrowings, on~~ our ~~ABL~~inventories ~~Line~~from ~~of Credit during the three month period ended May~~February 42, 2013, ~~compared~~as ~~with~~a ~~the~~result ~~three~~of ~~month~~20 ~~period~~net ~~ended~~new ~~April 28,~~stores ~~2012,~~and ~~partially offset by~~ an increase in our ~~inventories~~pack ~~from~~and ~~February 2~~hold inventory, ~~2013~~ compared with a decrease in our merchandise inventory from January 28, 2012 to ~~April~~July 28, 2012. Additionally, ~~offsetting~~we ~~the~~experienced ~~increase was~~ a smaller increase in accounts payable during the period from February 2, 2013 to ~~May~~August 43, 2013 compared with the period from January 28, 2012 to ~~April~~July 28, ~~2013~~2012 as a result of our working capital management strategy that was employed at the end of Fiscal 2011 that did not repeat at the end of Fiscal 2012. Our working capital management strategy accelerated certain vendor payments at the end of Fiscal 2011 that typically would not have been made until the first quarter of the next fiscal year, which lowered our accounts payable balances at the end of Fiscal 2011. These decreases in our cash flow were partially offset by the change in our ABL borrowings, net of repayments. During the six months ended August 3, 2013, we borrowed $15.0 million, net of repayments, on our ABL compared to making repayments, net of borrowings of $171.8 million during the six months ended July 28, 2012. Again, this is a function of our working capital management strategy that was employed at the end of Fiscal 2011 that did not repeat in Fiscal 2012.

Changes in working capital also impact our cash flows. Working capital equals current assets (exclusive of restricted cash and cash equivalents) minus current liabilities. Working capital at ~~May~~August 43, 2013 decreased $3219.07 million from $~~140~~114.6 5 million at ~~April~~July 28, 2012 to $~~108~~94.68 million. The decrease ~~in working capital~~ was primarily attributable to an increase in ~~accounts~~other ~~payable,~~current ~~partially~~liabilities ~~offset~~as bya ~~increases~~result inof ~~inventory~~a ~~and~~higher ~~prepaid~~bonus ~~and~~accrual ~~other~~related ~~current~~to ~~assets~~our improved operating results over the prior year’s period. Working capital at ~~May~~August 43, 2013 was $~~108~~94.68 million compared with $104.8 million at February 2, 2013, again driven by the same increases in our accrued expenses.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities; (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and (iii) the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to inventories, long lived assets, intangible assets, goodwill impairment, insurance reserves and income taxes. Historical experience and various other factors, that are believed to be reasonable under the circumstances, form the basis for making estimates and judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies and estimates are consistent with those disclosed in our Fiscal 2012 10-K.

Results of Operations

The following table sets forth certain items in the Condensed Consolidated Statements of Operations and Comprehensive Loss as a percentage of net sales for the three and six month periods ended ~~May~~August 43, 2013 and ~~April~~July 28, 2012.

	Percentage of Net Sales
	Three Months Ended
	Six Months Ended						Three Months Ended
	May 4, 2013			April 28, 2012
	August 3,2013			July 28,2012			August 3,2013			July 28,2012
Net Sales		100.0	%		100.0	%		100.0	%		100.0	%
Other Revenue		0.8			0.8			0.8			0.9
Total Revenue		100.8			100.8			100.8			100.9
Cost of Sales		62.75			63.10			62.3			62.9
Selling and Administrative Expenses		3032.83			3133.30			33.9			35.1
Costs Related to Debt Amendment		0.8			—
Costs Related to Debt Amendments		0.6			0.2			0.3			0.3
Restructuring and Separation Costs		0.2			0.1
Stock Option Modification Expense		0.4			—			0.7			—
Depreciation and Amortization		4.1			4.1
Restructuring and Separation Costs		0.1			0.1			0.1			0.1
Impairment Charges – Long-Lived Assets		—			—
Depreciation and Amortization		4.2			4.3			4.3			4.6
Other (Income) Expense, Net		(0.2	)		(0.2	)
Impairment Charges – Long-Lived Assets		—			—			—			—
Interest Expense		2.5			3.0
Other (Income) Expense, Net		(0.2	)		(0.2	)		(0.2	)		(0.2	)
Total Expense		100.9			101.4
Loss on Extinguishment of Debt		—			0.2			0.1			0.4
Loss before Income Tax Benefit		(0.1	)		(0.6	)
Interest Expense		2.5			3.1			2.5			3.2
Income Tax Benefit		(0.0	)		(0.2	)
Total Expense		102.4			103.7			104.0			106.4
Net Loss		(0.1	)%		(0.4	)%
Loss before Income Tax Benefit		(1.6	)		(2.9	)		(3.2	)		(5.5	)
Income Tax Benefit		(0.6	)		(1.0	)		(1.1	)		(1.9	)
Net Loss		(1.0	)%		(1.9	)%		(2.1	)%		(3.6	)%

Three Month Period Ended ~~May~~August 43, 2013 ~~compared~~Compared ~~with~~With the Three Month Period Ended ~~April~~July 28, 2012

Net Sales

We experienced an increase in net sales for the ~~three~~second ~~months~~quarter ~~ended~~of ~~May 4,~~Fiscal 2013 compared with the ~~three~~comparative ~~months~~quarter ~~ended April 28, 2012~~ of $8299.65 million, or 811.45%, to $~~1,065~~963.07 million ~~for the three months ended May 4, 2013 from $982~~.~~4 million for the three months ended April~~ ~~28, 2012.~~ This increase was primarily attributable to the following:

• an increase in ~~net~~comparable store sales of $4468.41 million, ~~from~~or ~~new~~7.8%, ~~stores~~to ~~opened~~$935.8 ~~during~~million, ~~Fiscal~~on ~~2013~~a ~~and~~shifted ~~stores~~basis, ~~previously opened that were not included in our comparable store sales~~ and

• an increase in ~~comparable~~net ~~store~~ sales of $3332.49 million, orfrom ~~3.4%,~~new tostores ~~$1,012.6~~opened ~~million~~during Fiscal 2013 and stores previously opened that were not included in our comparable store sales.

We believe the comparable store sales increase for the three month period ended ~~May~~ August 43, 2013 was due primarily to our ongoing initiatives as discussed previously under the caption entitled “Ongoing Initiatives for Fiscal 2013.”

Other Revenue

Other revenue (consisting of rental income from leased departments, sublease rental income, layaway, alteration and other service charges, and miscellaneous revenue items) increased to $87.08 million for the ~~three~~second ~~month~~quarter ~~period~~of ~~ended~~Fiscal ~~May 4,~~ 2013 compared with $7.56 million for the ~~three~~comparative ~~month period ended April 28, 2012 primarily as a result of increased rental income from leased departments and increased layaway charges~~quarter.

Cost of Sales

Cost of sales increased $47.8 million, or 7.7%, during the three month period ended May 4, 2013 compared with the three month period ended April 28, 2012. The dollar increase in cost of sales was primarily related to the increase in net sales as ~~described above. Cost of sales as~~ a percentage of net sales decreased to 62.73% during the ~~three~~second ~~months~~quarter ~~ended~~of ~~May 4,~~ Fiscal 2013 compared with the ~~three~~prior ~~months~~year’s quarter ~~ended April 28, 2012~~ of 6362.19%. The decrease in cost of sales as a percentage of net sales was primarily driven by ~~lower~~higher ~~markdown~~initial ~~expense~~markups as a ~~percentage of net sales as a~~ result of ~~continued improvements in~~ the ~~freshness~~improved execution of ~~inventory~~our ~~this~~buying ~~year~~model and a lower shrink accrual rate based on our improved shrink trend during Fiscal 2012, partially offset by increased markdown expense.

30Cost of sales increased $56.8 million, or 10.4%, during the second quarter of Fiscal 2013 compared with the prior year’s quarter. The dollar increase in cost of sales was primarily related to the increase in net sales as described above.

Selling and Administrative Expenses

Selling and administrative expenses ~~increased~~as ~~$20.6~~a ~~million,~~percentage orof 6net sales decreased to 33.79%, for the ~~three~~second ~~month~~quarter ~~period~~of ~~ended~~Fiscal ~~May 4,~~ 2013 compared with ~~the three~~35.1% ~~month~~during ~~period~~the ~~ended~~comparative ~~April 28~~quarter, ~~2012. Selling~~primarily ~~and~~related ~~administrative~~to efficiencies ~~expenses~~realized in store operations as a ~~percentage~~result of ~~net~~our ~~sales~~ongoing ~~decreased~~store initiatives (refer to ~~30.8%~~the ofsection ~~net~~above ~~sales~~entitled ~~for~~“Ongoing ~~the~~Initiatives ~~three~~for ~~month~~Fiscal ~~period~~2013”) ~~ended~~and ~~May 4,~~the ~~2013~~leverage ~~compared~~benefit ~~with~~of 31our 7.38% ofcomparative ~~net~~store sales ~~for~~increase. Selling ~~the~~and ~~three month~~administrative ~~period~~expenses ~~ended~~increased ~~April 28~~$23.7 million, ~~2012~~or 7.8%, ~~The~~for ~~increase~~the insecond ~~selling~~quarter of Fiscal 2013 compared with the prior year’s quarter. Selling and administrative expenses isare summarized in the table below:

	(in thousands)
	Three Months Ended
	May 4, 2013		Percentage ofSales			April 28, 2012		Percentage ofSales			$ Variance			% Change
	August 3, 2013		Percentage ofSales			July 28, 2012		Percentage ofSales			$ Variance			% Change
Payroll and Payroll Related	$	~~157~~158,~~358~~442		1416.84	%	$	~~149~~147,~~311~~887		1517.21	%	$	810,~~047~~555			57.41	%
Occupancy		~~103~~111,~~638~~471		911.76			96104,~~981~~458		912.91			67,~~657~~013			6.97
Other		32,~~963~~367		3.14			2927,~~857~~499		3.12			34,~~106~~868			1017.47
Business Insurance		89,~~706~~078		0.89			6,~~327~~295		0.67			2,~~379~~783			3744.62
Benefit Costs		76,~~403~~525		0.7			6,~~883~~800		0.78			~~520~~(275	)		7(4.60	)
Advertising		178,~~636~~874		10.79			1710,~~778~~157		1.82			(~~142~~1,283	)		(012.86	)
Selling & Administrative Expenses	$	~~327~~326,~~704~~757		3033.89	%	$	~~307~~303,~~137~~096		3135.31	%	$	2023,~~567~~661			6.7.8	%

Payroll and payroll related costs as a percentage of net sales decreased to 1416.84% during the ~~three months~~second ~~ended~~quarter ~~May 4,~~of Fiscal 2013 from 1517.21% during the ~~three~~comparative ~~months ended April 28, 2012~~quarter. The decrease is primarily driven by efficiencies realized in our stores as a result of our ongoing store initiatives. The increase in payroll and payroll related expense of $8.0 million during the three months ended May 4, 2013 compared with the three months ended April 28, 2012 was primarily related to the $5.3 million of incremental payroll and payroll related costs incurred as ~~the result of the addition of three net new stores as~~ well as ~~stores that were operating for~~ the ~~full~~leverage ~~three~~benefit ~~months~~of ~~ended~~our ~~May 4, 2013 but were not operating for the full three months ended April 28, 2012~~7.8% ~~Also~~comparative ~~contributing to the increase in payroll dollars~~store ~~was~~sales ~~a planned incremental labor investment of $2~~increase.0 ~~million in logistics as part of our ongoing investments to drive sales.~~

The increase in ~~occupancy~~payroll and payroll related ~~costs~~expense of $610.76 million during the ~~three~~second ~~months~~quarter ~~ended~~of ~~May 4,~~Fiscal 2013 compared with the ~~three~~prior ~~months~~year’s ~~ended~~quarter ~~April 28, 2012~~ was primarily related to athe $64.39 million ~~increase~~of inincremental payroll and payroll related costs incurred as the result of the addition of three net new stores ~~and~~as well as stores that ~~operated~~were operating for the full three ~~month~~months ~~period~~ ended ~~May~~August 43, 2013 but were not operating for the full three months ended ~~April~~July 28, 2012. Also contributing to the increase in payroll dollars were the following items:

~~Other~~• ~~selling~~an ~~and~~increase ~~administrative~~in ~~expenses~~bonus ~~increased~~expense of $3.17 million ~~for the three months ended May 4, 2013 compared with the three months ended April 28, 2012,~~ primarily ~~attributable~~driven toby aour ~~$1.5~~improved ~~million~~operating ~~increase~~results ~~related~~ to ~~the~~date ~~operation~~during ~~of new stores and stores that were operating for~~ the ~~full~~current ~~three~~year ~~months~~compared ~~ended~~with ~~May 4, 2013 but were not operating for~~ the ~~full~~prior ~~three months~~year ~~ended April 28, 2012.~~ and

~~Business~~• ~~insurance~~a ~~increased~~planned incremental labor investment of $2.41 million ~~for~~in ~~the~~logistics ~~three~~as ~~months~~a ~~ended~~result ~~May 4,~~of ~~2013 compared~~increased ~~with~~units ~~the~~processed ~~three~~through ~~months~~the ~~ended~~distribution ~~April 28,~~centers ~~2012,~~and ~~primarily~~further ~~attributable~~refinement toof ~~increases in~~ the ~~number~~execution ~~and~~of ~~average~~our ~~value~~buying ofmodel ~~claims~~in ~~related~~order to ~~workers’~~drive ~~compensation~~incremental ~~and general liability insurance~~sales.

Occupancy costs as a percentage of net sales decreased to 11.6% during the second quarter of Fiscal 2013 from 12.1% during the comparative quarter, primarily driven by the leverage benefit of our 7.8% comparative store sales. The increase in occupancy related costs of $7.0 million during the second quarter of Fiscal 2013 compared with the prior year’s quarter was primarily related to a $4.2 million increase in new stores and stores that operated for the full three month period ended August 3, 2013 but were not operating for the full three months ended July 28, 2012. Also contributing to the increase in occupancy related costs was an increase in rent expense of $1.9 million.

Other selling and administrative expenses increased $4.9 million for the second quarter of Fiscal 2013 compared with the prior year’s quarter. This increase was primarily attributable to the following:

•

a $2.4 million legal reserve reversal during the prior year’s quarter which did not repeat during the second quarter of Fiscal 2013,

•

a $1.1 million increase related to the operation of new stores and stores that were operating for the full three months ended August 3, 2013 but were not operating for the full three months ended July 28, 2012,

•

a $0.6 million increase in selling supplies and

•

a $0.5 million increase in credit card fees as a result of our increased credit card sales.

Business insurance increased $2.8 million during the second quarter of Fiscal 2013 compared with the prior year’s quarter, primarily attributable to an increase in workers compensation due to higher payroll costs and an increase in general liability as a result of increased claims and higher average cost of claims.

Costs Related to Debt Amendment

~~Costs~~Refinancing fees related to ~~debt~~the various ~~amendment~~amendments to the Term Loan totaled $82.96 million during the ~~three~~second ~~months~~quarter ~~ended~~of ~~May 4,~~Fiscal 2013 compared with $3.1 ~~These~~million ~~costs~~during ~~were~~the ~~refinancing~~comparative ~~fees~~quarter. ~~related~~As noted above under the caption “Debt Refinancing,” we completed Amendment 3 to the Term Loan during the ~~February~~second quarter of Fiscal 2013 and Amendment 1 to the Term Loan ~~Amendment~~during the comparative quarter. Refer to Note 3 to our Condensed Consolidated Financial Statements entitled “Long Term Debt” for further details on our amendments to our Term Loan.

Stock Option Modification Expense

In May 2013, our Board of Directors, in order to mitigate the impact of the dividend on the option holders in connection with the issuance of our 2018 Notes and the related $336.0 million dividend in February 2013, approved a modification to the outstanding options, through a combination of exercise price reductions and cash payments to the option holders. Based on the terms of the modification, the Company will be required to make cash payments of $5.5 million over the option holders’ vesting periods, which vary over the next five years. During the second quarter of Fiscal 2013, we recorded $3.7 million of expense related to these payments. We expect to recognize the remaining expense of $0.6 million, $0.7 million, $0.4 million, $0.1 million and less than $0.1 million during the remainder of the fiscal year ended February 1, 2014, and the fiscal years ended January 31, 2015, January 30, 2016, January 28, 2017 and February 3, 2018.

Additionally, upon application of modification accounting for the reduction in strike prices, which contemplates fair value of awards both before and after the modification, $11.3 million of incremental non cash stock option expense is expected to be recognized over the option holders’ vesting period, which vary over the next five years. During the second quarter of Fiscal 2013, we recognized $3.5 million of that expense. We expect to recognize the remaining non-cash stock option modification expense of $2.6 million, $2.5 million, $1.6 million, $0.9 million and $0.2 million during the remainder of the fiscal year ended February 1, 2014, and the fiscal years ended January 31, 2015, January 30, 2016, January 28, 2017 and February 3, 2018.

Restructuring and Separation Costs

Restructuring and separation costs totaled $10.6 million and $10.53 million during the ~~three~~second ~~months~~quarter ~~ended~~of ~~May 4,~~Fiscal 2013 and the ~~three months ended April 28~~comparative quarter, ~~2012,~~ respectively. In an effort to improve workflow efficiencies and realign certain responsibilities, we effected a reorganization of certain positions within our store, field and corporate locations during both of the three month periods.

Depreciation and Amortization

Depreciation and amortization expense related to the depreciation of fixed assets and the amortization of favorable and unfavorable leases amounted to $4441.02 million during the ~~three~~second ~~month~~quarter ~~period~~of ~~ended~~Fiscal ~~May 4,~~ 2013 compared with $3940.90 million during the ~~three~~comparative ~~month period ended April 28, 2012~~quarter. The increase in depreciation and amortization expense is primarily driven by ~~accelerated amortization related to store closures as well as~~ capital expenditures related to investments in our warehouse functions and 2120 net new stores opened since ~~April~~ July 28, 2012.

Other Income, Net

Other Income, Net (consisting of investment income, gains and losses on disposition of assets, breakage income and other miscellaneous items) ~~increased~~remained ~~$0.2~~constant ~~million~~at to $2.51 million for the ~~three~~second ~~month~~quarter of ~~period~~Fiscal ~~ended May 4,~~ 2013 ~~compared~~and ~~with~~ the ~~three~~comparative ~~month period ended April 28, 2012~~quarter.

Loss on Extinguishment of Debt

As discussed above under the caption “Debt Refinancing,” in May of 2013, we entered into Amendment 3 to the Term Loan Credit Agreement. As a result of this transaction and in accordance with Topic 470, we recognized a non-cash loss on the extinguishment of debt of $0.6 million, which was recorded in the line item “Loss on the Extinguishment of Debt” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss during the second quarter of Fiscal 2013.

In May of 2012, we entered into Amendment 1 to the Term Loan Credit Agreement. As a result of this transaction and in accordance with Topic 470, we recognized a non-cash loss on the extinguishment of debt of $3.4 million, which was recorded in the line item “Loss on the Extinguishment of Debt” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss during the second quarter of Fiscal 2012.

Interest Expense

Interest expense was $2624.6 million for the ~~three~~second ~~month~~quarter ~~period~~of ~~ended~~Fiscal ~~May 4,~~ 2013 compared with $2927.56 million for the ~~three~~comparative ~~month period ended April 28, 2012~~quarter. The $23.90 million decrease in interest expense was primarily driven by lower average balances and lower interest rates related to our Term Loan Facility and ABL Line of Credit. Our average interest rates and average balances related to our Term Loan Facility and our ABL Line of Credit, for the ~~three months ended May 4, 2013 compared with the three months ended April 28, 2012 are summarized in the table below~~following:

	Three Months Ended
	May 4, 2013			April 28, 2012
Average Interest Rate – ABL Line of Credit		2.0	%		2.2	%
Average Interest Rate – Term Loan		5.5	%		6.3	%
Average Balance – ABL Line of Credit	$	24.5 million		$	80.8 million
Average Balance – Term Loan	$	871.0 million		$	957.4 million

•

a decrease in interest expense of $3.8 million related to the Company’s Term Loan as a result of the refinancing in May 2013 which reduced the interest rates associated with the Term Loan partially offset by

32• an increase in amortization of deferred debt fees of $0.7 million, primarily driven by increased deferred debt as a result of the issuance of the 2018 Notes

Our average interest rates and average balances related to our Term Loan and our ABL Line of Credit, for the second quarter of Fiscal 2013 compared with the prior year’s quarter are summarized in the table below:


	Three Months Ended
	August 3, 2013			July 28, 2012
Average Interest Rate – ABL Line of Credit		2.4	%		2.3	%
Average Interest Rate – Term Loan		4.4	%		5.7	%
Average Balance – ABL Line of Credit	$	22.4 million		$	10.9 million
Average Balance – Term Loan	$	871.0 million		$	943.4 million

Income Tax Benefit

Income tax benefit was $10.9 million and $16.0 million for the second quarter of Fiscal 2013 and the comparative quarter, respectively. The effective tax rates for the second quarter of Fiscal 2013 and the comparative quarter were 35.9% and 33.9%, respectively. In accordance with ASC Topic No. 270, “Interim Reporting” (Topic No. 270) and ASC Topic No. 740, “Income Taxes” (Topic No. 740), at the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. We used this methodology during the second quarter of Fiscal 2013, resulting in the annual effective income tax rate of 37.8% (before discrete items) being our best estimate. The effective tax rate for the second quarter of Fiscal 2013 was impacted by discrete adjustments that decreased the tax benefit by $0.6 million primarily related to the accrual of interest for unrecognized tax benefits established in prior years and write off of deferred tax assets relating to vested stock options forfeited during the quarter.

Our best estimate of the projected annual effective income tax rate for the second quarter of Fiscal 2012 was 38.2% (before discrete items). The effective tax rate was impacted by discrete adjustments that decreased the tax benefit by $1.8 million, primarily related to the accrual of interest for unrecognized tax benefits established in prior years in accordance with Topic No. 740, true-ups for income tax estimates in prior periods, and a true-up for a refund received on an amended return filed.

Net Loss

We recorded a net loss of $19.5 million for the second quarter of Fiscal 2012 compared with a net loss of $31.3 million for the comparative quarter. The reduction in our net loss was primarily driven by increased gross margin dollars partially offset by increased selling and administrative costs as described above.

Six Month Period Ended August 3, 2013 Compared With Six Month Period Ended July 28, 2012

Net Sales

We experienced an increase in net sales for the first six months of Fiscal 2013 compared with the prior year’s first six months. Consolidated net sales increased $182.1 million, or 9.9%, to $2,028.7 million for the first six months of Fiscal 2013. This increase was primarily attributable to the following:

•

an increase in comparable store sales of $101.5 million, or 5.5%, to $1,930.9 million, on a shifted basis, and

•

an increase in net sales of $77.5 million from new stores opened during Fiscal 2013 and stores previously opened that were not included in our comparable store sales.

We believe the comparative store sales increase was due primarily to our ongoing initiatives as discussed previously under the caption entitled “Ongoing Initiatives for Fiscal 2013.”

Other Revenue

Other revenue (consisting of rental income from leased departments, sublease rental income, layaway, alteration and other service charges, and miscellaneous revenue items) increased to $15.7 million for the first six months of Fiscal 2013 compared with $15.1 million for the comparative period, primarily driven by an increase in rental income from leased departments as a result of increased layaway volume.

Cost of Sales

Cost of sales as a percentage of net sales during the first six months of Fiscal 2013 decreased to 62.5% compared with 63.0% during the comparative period. The decrease in cost of sales as a percentage of net sales was primarily driven by higher initial markups as a result of the improved execution of our buying model and a lower shrink accrual rate based on our improved shrink trend during Fiscal 2012, partially offset by increased markdown expense.

Cost of sales increased $104.5 million, or 9.0%, during the first six months of Fiscal 2013 compared with the prior year’s six month period. The dollar increase in cost of sales was primarily related to the increase in net sales during the current period compared to the prior period.

Selling and Administrative Expenses

Selling and administrative expenses decreased to 32.3% of net sales for the first six months of Fiscal 2013 compared to 33.0% of net sales for the comparative period, primarily related to efficiencies realized in store operations as a result of our ongoing store initiatives (refer to the section above entitled “Ongoing Initiatives for Fiscal 2013”) and the leverage benefit of our 5.5% comparative store sales increase. Selling and administrative expenses increased $44.2 million, or 7.2%, for the first six months of Fiscal 2013 compared with the prior year’s period. The increase in selling and administrative expenses is summarized in the table below:


	*(in thousands)*
	Six Months Ended
	August 3, 2013		Percentage of Sales			July 28, 2012		Percentage of Sales			$ Variance			% Change
Payroll and Payroll Related	$	315,801		15.6	%	$	297,197		16.1	%	$	18,604			6.3	%
Occupancy		215,109		10.6			201,439		10.9			13,670			6.8
Other		65,330		3.2			57,357		3.1			7,973			13.9
Business Insurance		17,784		0.9			12,622		0.7			5,162			40.9
Benefit Costs		13,927		0.7			13,684		0.7			243			1.8
Advertising		26,510		1.3			27,934		1.5			(1,424	)		(5.1	)

Selling & Administrative Expenses	$	654,461		32.3	%	$	610,233		33.0	%	$	44,228			7.2	%

Payroll and payroll related costs as a percentage of net sales decreased to 15.6% during the first six months of Fiscal 2013 from 16.1% during the comparative period. The decrease is primarily driven by efficiencies realized in our stores as a result of our ongoing store initiatives as well as the leverage benefit of our 5.5% comparative store sales increase.

The increase in payroll and payroll related expense of $18.6 million during the first six months of Fiscal 2013 compared with the prior year’s period was primarily related to the addition of 20 net new stores as well as stores that were operating for the full six months ended August 3, 2013 that were not operating for the full six months ended July 28, 2012. Amounts related to these stores resulted in an increase in payroll and payroll related costs of $10.0 million. Also contributing to the increase in payroll and payroll related costs were:

•

an increase in bonus expense of $4.5 million primarily driven by our improved operating results to date during the current year compared with the prior year and

•

a planned incremental labor investment of $4.2 million in logistics as a result of increased traffic through the distribution centers and further refinement of the execution of our buying model in order to drive incremental sales.

Occupancy costs as a percentage of net sales decreased to 10.6% during the first six months of Fiscal 2013 from 10.9% during the comparative period, primarily driven by the leverage benefit of our 5.5% comparative store sales. The increase in occupancy related costs of $13.7 million during the first six months of Fiscal 2013 compared with the prior year’s period was primarily related to a $8.8 million increase in stores that operated for the full six month period ended August 3, 2013 that were not operating for the full six months ended July 28, 2012 and new store increases of $1.8 million. Also contributing to the increase in occupancy related costs was an increase in rent expense of $2.7 million.

The increase in other selling and administrative expenses of $8.0 million during the first six months of Fiscal 2013 compared with the prior year’s period was primarily attributable to:

•

a $2.4 million legal reserve reversal during the prior year’s six month period which did not repeat during the current year,

•

a $1.4 million increase in selling supplies,

•

a $1.7 million increase related to the operation of new stores and stores that were operating for the full six months ended August 3, 2013 but were not operating for the full six months ended July 28, 2012 and

•

a $1.0 million increase in credit card fees as a result of our increased credit card sales.

Business insurance increased $5.2 million for the first six months of Fiscal 2013 compared with the prior year’s period, primarily attributable to an increase in workers compensation due to higher payroll costs and an increase in general liability as a result of increased claims and higher average cost of claims.

Costs Related to Debt Amendment

Refinancing fees related to various amendments to the Term Loan totaled $11.5 million during the first six months of Fiscal 2013 compared with $3.1 million during the comparative period. As noted above under the Caption “Debt Refinancing,” we completed Amendment 2 and Amendment 3 to the Term Loan during the first six months of Fiscal 2013, while during the comparative period, we completed Amendment 1 to the Term Loan. Included in Amendment 2 to the Term Loan was a fee to Bain Capital representing 1% of the transaction or $8.6 million, which was not included in Amendment 1 or Amendment 3. Refer to Note 3 to our Condensed Consolidated Financial Statements entitled “Long Term Debt” for further details on our amendments to our Term Loan.

Stock Option Modification Expense

In May 2013, our Board of Directors, in order to mitigate the impact of the dividend on the option holders in connection with the issuance of our 2018 Notes and the related $336.0 million dividend in February 2013, approved a modification to the outstanding options, through a combination of exercise price reductions and cash payments to the option holders. Based on the terms of the modification, the Company will be required to make cash payments of $5.5 million over the option holders’ vesting periods, which vary over the next five years. During the first six months of Fiscal 2013, we recorded $3.7 million of expense related to these payments. We expect to recognize the remaining expense of $0.6 million, $0.7 million, $0.4 million, $0.1 million and less than $0.1 million during the remainder of the fiscal year ended February 1, 2014, and the fiscal years ended January 31, 2015, January 30, 2016, January 28, 2017 and February 3, 2018.

Additionally, upon application of modification accounting for the reduction in strike prices, which contemplates fair value of awards both before and after the modification, $11.3 million of incremental non cash stock option expense is expected to be recognized over the option holders’ vesting period, which vary over the next five years. During the first six months of Fiscal 2013, we recognized $3.5 million of that expense. We expect to recognize the remaining non cash stock option modification expense of $2.6 million, $2.5 million, $1.6 million, $0.9 million and $0.2 million during the remainder of the fiscal year ended February 1, 2014, and the fiscal years ended January 31, 2015, January 30, 2016, January 28, 2017 and February 3, 2018.

Restructuring and Separation Costs

Restructuring and separation costs totaled $2.2 million during the first six months of Fiscal 2013 compared with $1.8 million during the comparative period. During the first six months of Fiscal 2013, in an effort to improve workflow efficiencies and realign certain responsibilities, we effected a reorganization of certain positions within our stores and corporate locations. As a result of the reorganization, we incurred a charge of $2.2 million.

Depreciation and Amortization

Depreciation and amortization expense related to the depreciation of fixed assets and the amortization of favorable and unfavorable leases amounted to $85.2 million during the first six months of Fiscal 2013 compared with $79.9 million during the comparative period. The increase in depreciation and amortization expense is primarily driven by accelerated amortization related to store closures as well as capital expenditures related to investments in our corporate and warehouse functions as well as 20 net new stores that were opened since July 28, 2012.

Other Income, Net

Other Income, Net (consisting of investment income, gains and losses on disposition of assets, breakage income and other miscellaneous items) increased $0.2 million to $4.6 million for the first six months of Fiscal 2013 compared with the prior year’s period, primarily driven by a gain on the disposal of fixed assets.

Loss on Extinguishment of Debt

As discussed above under the caption “Debt Refinancing,” in May of 2013, we entered into the Amendment 3 to the Term Loan Credit Agreement. As a result of this transaction and in accordance with Topic 470, we recognized a loss on the extinguishment of debt of $0.6 million, which was recorded in the line item “Loss on the Extinguishment of Debt” in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss during the first six months of Fiscal 2013.

Interest Expense

Interest expense was $51.1 million for the first six months of Fiscal 2013 compared with $57.1 million for the comparative period. The $6.0 million decrease in interest expense was driven by the following:

•

a decrease in interest expense of $6.7 million related to the Company’s Term Loan as a result of the refinancing in May 2013 which reduced the interest rates associated with the Term Loan partially offset by

•

an increase in amortization of deferred debt fees of $0.7 million, also primarily driven by increased deferred debt as a result of the issuance of the 2018 Notes, partially offset by

Our average interest rates and average balances related to our Term Loan and our ABL Line of Credit, for the first six months of Fiscal 2013 compared with the prior year’s period are summarized in the table below:


	Six Months Ended
	August 3, 2013			July 28, 2012
Average Interest Rate – ABL Line of Credit		2.2	%		2.1	%
Average Interest Rate – Term Loan		5.0	%		6.0	%
Average Balance – ABL Line of Credit	$	23.4 million		$	46.9 million
Average Balance – Term Loan	$	871.0 million		$	950.4 million

Income Tax Benefit

Income tax benefit was $011.2 million ~~and~~for ~~$1.7~~the ~~million~~first ~~for~~six months of Fiscal 2013. For the ~~three~~comparative ~~month~~period ~~periods~~we ~~ended~~recorded ~~May 4,~~income ~~2013~~tax ~~and~~benefit ~~April 28,~~of ~~2012,~~$17.8 ~~respectively~~million. The effective tax rates for the ~~three~~six month periods ~~ended~~ ~~May~~ended August 43, 2013 and ~~April~~July 28, 2012 were 2435.76% and 3033.45%, respectively. In accordance with ~~ASC~~ Topic No. 270, ~~“Interim Reporting” (Topic No. 270)~~ and ~~ASC~~ Topic No. 740, ~~“Income Taxes” (Topic No. 740),~~ at the end of each interim period we are required to determine the best estimate of our annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis. WeOur ~~used~~best ~~this methodology~~estimate ~~during~~of the ~~first~~annual ~~quarter~~effective ofincome ~~Fiscal~~tax ~~2013,~~rate ~~resulting~~at in the ~~annual~~end ~~effective~~of ~~income~~first ~~tax~~six ~~rate~~months of Fiscal 2013 was 37.28% (before discrete items) ~~being our best estimate~~. The effective tax rate ~~for the three months ended May 4, 2013~~ was impacted by discrete adjustments that decreased the rate by 2.2% and the tax benefit by $0.17 million primarily related to the ~~reduction~~accrual inof interest for unrecognized tax benefits ~~(including~~established ~~interest~~in ~~and~~prior ~~penalties)~~years ~~upon~~in accordance ~~the~~with ~~closing~~Topic ofNo. 740, ~~ongoing~~true-ups ~~state~~for ~~audits~~income ~~related~~tax toestimates ~~filing~~in ~~positions~~prior ~~taken by the Company~~periods, and ~~true-ups~~write ~~for~~off ~~income~~of deferred tax ~~estimates~~assets inrelating ~~prior~~to ~~periods~~vested stock options forfeited during the quarter.

~~Our~~42 best estimate of the projected annual effective income tax rate for the three months ended April 28, 2012 was 41.8% (before discrete items). The effective tax rate for the three months ended April 28, 2012 was impacted by discrete adjustments that increased the tax benefit by $0.6 million predominantly relating to tax positions that are considered effectively settled as the result of the finalization of an IRS audit, offset by federal income tax true-ups as well as state tax assessments.

Our best estimate of the projected annual effective income tax rate for the first six months of Fiscal 2012 was 38.2% (before discrete items). The effective tax rate was impacted by discrete adjustments that decreased the rate by 4.7% and the tax benefit by $2.5 million primarily related to the accrual of interest for unrecognized tax benefits established in prior years in accordance with Topic No. 740, true-ups for income tax estimates in prior periods, and a true-up for a refund received on an amended return filed.

Net Loss

~~Net loss~~We ~~amounted~~recorded toa net loss of $020.72 million ~~for~~during the ~~three~~first six months ~~ended~~of ~~May 4,~~Fiscal 2013 compared with a net loss of $335.92 million for the ~~three~~comparative ~~months ended April 28, 2012~~period. The ~~improvement~~reduction in our net loss ~~position~~ was primarily driven by our ~~3.4% increase~~increased ingross ~~comparable~~margin ~~store sales and our reduction in interest expense as a result of our refinancing~~dollars, partially offset by ~~$8.9~~selling ~~million~~and ofadministrative ~~refinancing~~costs ~~fees~~as discussed ~~related to the February 2013 Term Loan Amendment~~above.

Liquidity and Capital Resources

Overview

We fund inventory expenditures during normal and peak periods through cash flows from operating activities, available cash, and our ABL Line of Credit. Liquidity may be affected by the terms we are able to obtain from vendors and their factors. Our working capital needs follow a seasonal pattern, peaking each October and November when inventory is received for the Fall selling season. Our largest source of operating cash flows is cash collections from our customers. In general, our primary uses of cash are providing for the purchase of inventory, the payment of operating expenses, debt servicing, the opening of new stores and the remodeling of existing stores. As of ~~May~~August 43, 2013, we had $~~484~~447.85 million available on our ABL Line of Credit. The maximum borrowings during the ~~three~~six months ended ~~May~~August 43, 2013 were $125.0 million. Average borrowings during the ~~three~~six months ended ~~May~~August 43, 2013 were $2423.54 million.

Our ability to satisfy interest payment obligations on our outstanding debt and maintain compliance with our debt covenants, as discussed below, will depend largely on our future performance which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control. If we do not have sufficient cash flow to service interest payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot be assured that any replacement borrowing or equity financing could be successfully completed on terms similar to our current financing agreements, or at all.

We closely monitor our net sales, gross margin, expenses and working capital. We have performed scenario planning such that if our net sales decline, we have identified variable costs that could be reduced to partially mitigate the impact of these declines and maintain compliance with our debt covenants. We believe that cash generated from operations, along with our existing cash and our ABL Line of Credit, will be sufficient to fund our expected cash flow requirements and planned capital expenditures for at least the next twelve months as well as the foreseeable future. However, there can be no assurance that we would be able to offset any declines in our comparable store sales with savings initiatives.

Our Term Loan Facility agreement contains financial, affirmative and negative covenants and requires that we, among other things, maintain on the last day of each fiscal quarter a consolidated leverage ratio not to exceed a maximum amount and maintain a consolidated interest coverage ratio of at least a certain amount. The consolidated leverage ratio compares our total debt to ~~Adjusted~~Covenant EBITDA, (as defined in our Term Loan Credit Agreement), for the trailing twelve months, and that ratio may not exceed 6.25 to 1 through November 2, 2013; 5.5 to 1 through November 1, 2014; 5.00 to 1 through October 31, 2015; and 4.75 to 1 January 30, 2016 and thereafter. The consolidated interest coverage ratio compares our consolidated interest expense to ~~Adjusted~~Covenant EBITDA, for the trailing twelve months, and that ratio must exceed 1.85 to 1 through November 2, 2013; 2.00 to 1 through October 31, 2015; and 2.10 to 1 at January 30, 2016 and thereafter. ~~Adjusted~~Covenant EBITDA is a non-GAAP financial measure of our liquidity. ~~Adjusted~~Covenant EBITDA starts with consolidated net income/loss for the period and adds back (i) depreciation, amortization, impairments and other non-cash charges that were deducted in arriving at consolidated net income/loss, (ii) the (benefit) provision for taxes, (iii) interest expense, (iv) advisory fees, and (v) unusual, non-recurring or extraordinary expenses, losses or charges as reasonably approved by the administrative agent for such period. ~~Adjusted~~Covenant EBITDA is used to calculate the consolidated leverage ratio and the interest coverage ratio. We present ~~Adjusted~~Covenant EBITDA because we believe it is a useful supplemental measure in evaluating the performance of our business and provides greater transparency into our results of operations. Covenant EBITDA provides management, including our chief operating decision maker, with helpful information with respect to our operations such as our ability to meet our future debt service, fund our capital expenditures and working capital requirements, and comply with various covenants in each indenture governing our outstanding notes and the credit agreements governing our senior secured credit facilities which are material to our financial condition and financial statements.

3343

Covenant EBITDA ~~because~~has welimitations ~~believe~~as itan isanalytical atool, ~~useful supplemental measure in evaluating the performance of our business~~ and ~~provides~~should ~~greater~~not ~~transparency~~be considered either ~~into~~in ~~our~~isolation ~~results~~or ofas ~~operations. Adjusted~~a ~~EBITDA provides~~substitute ~~management,~~for ~~including~~net ~~our~~income ~~chief~~or ~~operating~~other ~~decision~~data ~~maker,~~prepared ~~with~~in ~~helpful~~accordance ~~information~~ with ~~respect~~GAAP toor ~~our~~for ~~operations~~analyzing ~~such as~~ our ~~ability~~results toor ~~meet~~cash ~~our~~flows ~~future~~from ~~debt~~operating ~~service~~activities, ~~fund~~as ~~our~~reported ~~capital~~under ~~expenditures~~GAAP. Some ~~and~~of ~~working~~these ~~capital requirements, and~~limitations ~~comply~~include: with various covenants in each indenture governing our outstanding notes and the credit agreements governing our senior secured credit facilities which are material to our financial condition and financial statements.

~~Adjusted~~• Covenant EBITDA ~~has~~does ~~limitations as an analytical tool, and should~~ not bereflect ~~considered either~~cash inrequirements ~~isolation or as a substitute~~ for ~~net income or other data prepared in accordance with GAAP or for analyzing~~ our ~~results~~working orcapital ~~cash flows from operating activities, as reported under GAAP. Some of these limitations include:~~ needs;

• ~~Adjusted~~Covenant EBITDA does not reflect ~~changes~~our ininterest expense, or the cash requirements ~~for,~~necessary ~~our~~to ~~working~~service ~~capital~~interest ~~needs~~or principal payments, on our debt;

• ~~Adjusted~~Covenant EBITDA does not reflect our ~~interest~~income tax expense, or the cash requirements ~~necessary~~ to ~~service~~pay ~~interest or principal payments, on~~ our ~~debt~~taxes;

• ~~Adjusted~~Covenant EBITDA does not reflect ~~our~~historical ~~income~~cash ~~tax~~expenditures ~~expense~~ or ~~the~~future ~~cash~~ requirements tofor ~~pay~~capital ~~our~~expenditures ~~taxes~~or contractual commitments;

• ~~Adjusted~~Although ~~EBITDA~~depreciation ~~does~~and ~~not~~amortization ~~reflect~~are ~~historical~~ non-cash ~~expenditures~~charges, orthe assets being depreciated and amortized will likely have to be replaced in the future, ~~requirements~~and ~~for~~Covenant ~~capital~~EBITDA ~~expenditures~~measures ordo ~~contractual~~not ~~commitments~~reflect any cash requirements for such replacements; and

• ~~Although~~Other ~~depreciation~~companies ~~and~~in ~~amortization~~our ~~are~~industry ~~non-cash~~may ~~charges,~~calculate ~~the~~Covenant ~~assets~~EBITDA ~~being~~differently ~~depreciated~~such ~~and~~that ~~amortized~~our ~~will~~calculation ~~likely~~may ~~have~~not to be ~~replaced~~directly ~~in the future, and Adjusted EBITDA measures do not reflect any cash requirements for such replacements; and~~comparable.

•Covenant ~~Other~~EBITDA ~~companies~~for inthe ~~our~~three ~~industry~~months ~~may~~ended ~~calculate~~August 3, ~~Adjusted~~2013 increased $22.4 million, or 73.0%, to $53.1 million. Covenant EBITDA ~~differently~~for ~~such~~the six months ended August 3, 2013 increased $32.0 million, or 31.8%, to $132.6 million. The increase in Covenant EBITDA for both the three and six month periods was primarily the result of increased gross margin, partially offset by increased selling and administrative expenses, primarily driven by new stores and stores that ~~our~~were ~~calculation~~operating ~~may~~for the full three months ended August 3, 2013 but were not beoperating ~~directly~~for ~~comparable~~the full three months ended July 28, 2012.

~~Adjusted~~The ~~EBITDA~~consolidated ~~for~~leverage ~~the~~ratio ~~three~~as ~~months~~of ~~ended May~~August 43, 2013 ~~increased~~was $93.5 ~~million,~~compared orwith 134.~~6%,~~3 toas ~~$79.5 million. The increase in Adjusted EBITDA was primarily the result~~ of ~~increased gross margin~~July 28, ~~partially~~2012. ~~offset~~The interest bycoverage ~~increased~~ratio ~~selling~~as ~~and~~of ~~administrative expenses~~August 3, ~~primarily driven by new stores and stores that were operating for the full three months ended May 4,~~ 2013 ~~but~~was ~~were~~3.9 ~~not~~compared ~~operating~~with ~~for~~3.5 ~~the~~as ~~full~~of ~~three months ended April~~ July 28, 2012.

~~The~~44 consolidated leverage ratio for the three months ended May 4, 2013 was 3.7 compared with 4.4 as of April 28, 2012. The interest coverage ratio for the three months ended May 4, 2013 was 3.5 compared with 3.3 as of April 28, 2012.

The following table shows our calculation of ~~Adjusted~~Covenant EBITDA for the six and three months ~~ended~~ ~~May~~ended August 43, 2013 compared with the six and three months ended ~~April~~July 28, 2012:

	(in thousands)
	Three Months Ended
	Six Months Ended						Three Months Ended
	May 4, 2013			April 28, 2012
	August 3, 2013			July 28, 2012			August 3, 2013			July 28, 2012
Reconciliation of Net Loss to Adjusted EBITDA:
Reconciliation of Net Loss to Covenant EBITDA:
Net Loss	$	(~~702~~20,225	)	$	(335,~~940~~197	)	$	(19,523	)	$	(31,257	)
Interest Expense		2651,~~589~~140			2957,~~479~~108			24,551			27,629
Income Tax Benefit		(~~230~~11,169	)		(117,~~717~~761	)		(10,938	)		(16,044	)
Depreciation and Amortization		4385,~~992~~239			3979,~~925~~903			41,247			39,979
Impairment Charges – Long-Lived Assets		51139			1378			88			66
Interest Income		(76165	)		(2246	)		(90	)		(25	)
Non Cash Straight-Line Rent Expense (a)		14,~~544~~639			13,~~160~~812			3,095			2,649
Advisory Fees (b)		12,~~071~~175			12,~~035~~085			1,103			1,051
Stock Compensation Expense (c)		~~510~~2,232			~~791~~1,403			1,722			612
Amortization of Purchased Lease Rights (d)		~~227~~474			~~232~~483			247			252
Severance and Restructuring (e)		12,~~625~~179			1,~~478~~806			554			328
Franchise Taxes (f)		~~300~~450			~~348~~646			150			298
Advertising Expense Related to Barter (g)		~~664~~942			~~922~~1,326			277			404
Loss on Disposal of Fixed Assets (h)		16135			~~167~~795			119			628
Litigation Reserves (i)		—			69
Costs Related to Debt Amendment (i)		11,457			3,094			2,603			3,094
Costs Related to Debt Amendment (j)		8,855			—
Loss on Extinguishment of Debt (j)		617			3,413			617			3,413
Dividends Paid (k)		(4,955	)		—
Litigation Reserves (k)		—			(2,324	)		—			(2,393	)
Adjusted EBITDA	$	79,481		$	69,940
Stock Option Modification Expense (l)		7,263			—			7,263			—
Reconciliation of Adjusted EBITDA to Net Cash Provided by (Used In) Operating Activities:
Dividends Paid (m)		(4,955	)		—			—			—
Adjusted EBITDA	$	79,481		$	69,940
Covenant EBITDA	$	132,567		$	100,624		$	53,085		$	30,684
Interest Expense		(26,589	)		(29,479	)
Reconciliation of Covenant EBITDA to Net Cash Provided by (Used In) Operating Activities:
Changes in Operating Assets and Liabilities		49,162			209,937
Covenant EBITDA	$	132,567		$	100,624		$	53,085		$	30,684
Other Items, Net		(6,674	)		(5,642	)
Interest Expense		(51,140	)		(57,108	)		(24,551	)		(27,629	)
Net Cash Provided by (Used in) Operating Activities	$	95,380		$	244,756
Changes in Operating Assets and Liabilities		(16,041	)		201,402			(65,202	)		(8,537	)
Net Cash Used in Investing Activities	$	(29,650	)	$	(28,342	)
Other Items, Net		(7,803	)		5,676			(1,129	)		11,320
Net Cash (Used in) Provided by Financing Activities	$	(6,718	)	$	(198,424	)
Net Cash Provided by (Used in) Operating Activities	$	57,583		$	250,594		$	(37,797	)	$	5,838
Net Cash Used in Investing Activities	$	(67,606	)	$	(61,802	)	$	(37,956	)	$	(33,460	)
Net Cash (Used in) Provided by Financing Activities	$	(2,757	)	$	(192,786	)	$	3,961		$	5,638

(a)	Represents the difference between the actual base rent and rent expense calculated in accordance with GAAP (on a straight line basis), in accordance with the credit agreements governing the Term Loan Facility and ABL Line of Credit.

(b)	Represents the annual advisory fee of Bain Capital expensed during the fiscal periods, in accordance with the credit agreements governing the Term Loan Facility and ABL Line of Credit.

(c)	Represents expenses recorded under ASC Topic No. 718 “Stock Compensation” during the fiscal periods, in accordance with the credit agreements governing the Term Loan Facility and ABL Line of Credit.

(d)	Represents amortization of purchased lease rights which are recorded in rent expense within our selling and administrative line item, in accordance with the credit agreements governing the Term Loan Facility and ABL Line of Credit.

(e)

Represents a severance and restructuring charge resulting from a reorganization of certain positions within our field and corporate locations (refer to Note 4 to our Condensed Consolidated Financial Statements entitled “Restructuring and Separation Costs” for further discussion), in accordance with the credit agreements governing the Term Loan Facility and ABL Line of Credit.

(f)	Represents franchise taxes paid based on our equity, as approved by the administrative agents for the Term Loan Facility and ABL Line of Credit.

(g)	Represents non-cash advertising expense based on the usage of barter advertising credits obtained as part of a non-cash exchange of inventory, as approved by the administrative agents for the Term Loan Facility and ABL Line of Credit.

(h)	Represents the gross non-cash loss recorded on the disposal of certain assets in the ordinary course of business, in accordance with the credit agreements governing the Term Loan Facility and ABL Line of Credit.

35(i) Primarily related to advisory and professional fees associated with Amendment 1 in May 2012, Amendment 2 in February 2013 and Amendment 3 in May 2013 to our Term Loan.

(ij) Represents ~~reduction~~charges incurred in ~~legal~~accordance ~~assessment~~with Topic No. 470, whereby we incurred a loss on the settlement of the old debt instruments as a result of Amendment 3 in ~~conjunction~~May ~~with~~2013 ~~legal~~and ~~settlements~~Amendment 1 in May 2012, as approved by the administrative agents for the Term Loan Facility and the ABL Line of Credit.

(jk) Represents ~~advisory~~reduction ~~and~~in ~~professional~~legal ~~fees~~assessment ~~associated~~in conjunction with legal settlements as approved by the ~~February~~administrative ~~2013~~agents for the Term Loan ~~Amendment~~Facility and ABL Line of Credit.

(kl) Represents ~~dividends~~both ~~paid~~cash toand ~~the~~non ~~Issuers~~cash inexpenses ~~order~~incurred toas ~~pay~~a ~~certain~~result ~~fees~~of inour ~~connection~~May ~~with~~2013 ~~the~~stock ~~issuance~~option ofmodification. ~~the~~Refer ~~2018~~to ~~Notes~~Note in8 ~~accordance~~to ~~with~~our ~~the~~Condensed ~~credit~~Consolidated ~~agreements~~Financial ~~governing~~Statements ~~the~~entitled ~~Term~~“Stock ~~Loan~~Option ~~Facility~~and Award Plans and ~~ABL~~Stock-Based ~~Line~~Compensation” offor ~~Credit~~further detail.

~~Cash~~(m) ~~Flow~~Represents ~~for~~dividends paid to the ~~Three~~Issuers ~~Months~~in ~~Ended~~order ~~May 4,~~to ~~2013~~pay ~~Compared~~ certain fees in connection with the ~~Three~~issuance ~~Months~~of ~~Ended~~the ~~April 28,~~2018 ~~2012~~Notes in accordance with the credit agreements governing the Term Loan Facility and ABL Line of Credit.

We had a $59.0 million increase in cash flow for the three months ended May 4, 2013 compared with generating $18.0 million of cash flow for the three months ended April 28, 2012. Net cash provided by operating activities amounted to $95.4 million for the three months ended May 4, 2013. For the three months ended April 28, 2012, net cash provided by operating activities amounted to $244.8 million. The decrease in net cash provided by operating activities was primarily the result of changes in the Company’s working capital. The biggest driver of the decrease relates to cash flow from changes in merchandise inventories and accounts payable. Cash ~~flow~~Flow ~~from the change in merchandise inventories~~ for the ~~three~~Six ~~months~~Months ~~ended~~Ended ~~May~~August ~~4, 2013 decreased $68.~~3 million as a result of incremental inventory related to new stores and well as increases in our pack and hold inventory. The decrease in the cash flow from the change in accounts payable for the three months ended May 4, 2013 ~~of $64.6 million~~Compared ~~compared~~ with the ~~three~~Six ~~months~~Months ~~ended~~Ended ~~April~~July 28, 2012 was driven by a smaller increase in accounts payable from February 2, 2013 to May 4, 2013 compared with the accounts payable increase from January 28, 2012 to April 28, 2012 related to our working capital management strategy at the end of Fiscal 2011 that did not repeat in Fiscal 2012. Based on the working capital management strategy, we accelerated certain payments at the end of each fiscal year that typically would not have been made until the first quarter of the next fiscal year, which lowered our accounts payable balances at the end of each fiscal year. As our accounts payable balances return to historical levels this creates additional cash flow. The decrease in accounts payable that generates this item was primarily driven by the accelerated payments during January of Fiscal 2011 of $152.9 million that did not repeat in January of Fiscal 2012.

~~Net~~We used $12.8 million of cash ~~used~~flow infor ~~investing~~the ~~activities~~six ~~increased~~months toended August 3, 2013 compared with using $294.70 million of cash flow for the ~~three~~comparative ~~months~~period. Net ~~ended~~cash ~~May 4,~~provided ~~2013~~by ~~from~~operating activities amounted to $2857.36 million for the ~~three~~ first six months ~~ended~~of ~~April~~Fiscal 2013. 28During the prior year’s first six months, ~~2012~~net cash provided by operating activities amounted to $250.6 million. ~~This~~The ~~increase~~decrease ~~was~~in net cash provided by operating activities was primarily the result of achanges in the Company’s working capital. The biggest drivers of the decrease relate to cash flow from changes in merchandise inventories and accounts payable. Cash flow from the change in merchandise inventories decreased $1113.5 million ~~increase~~as a result of incremental inventory related to new stores as well as increases in our pack and hold inventory. The decrease in the cash ~~paid~~flow ~~for~~from ~~property~~the ~~and~~change ~~equipment~~in accounts payable of $115.5 million during the ~~three~~first six months ~~ended~~of ~~May~~Fiscal 2013, compared with the prior year’s period was 4driven by a smaller increase in accounts payable from February 2, 2013 asto August 3, 2013 compared with the ~~three~~accounts ~~months~~payable ~~ended April~~increase from January 28, 2012 to July 28, 2012 related to our working capital management strategy at the end of Fiscal 2011 that did not repeat in Fiscal 2012. Based on the working capital management strategy, we accelerated certain payments at the end of each fiscal year that typically would not have been made until the first quarter of the next fiscal year, which lowered our accounts payable balances at the end of each fiscal year. As our accounts payable balances return to historical levels, this creates additional cash flow. The decrease in accounts payable that generates this item was primarily driven by the accelerated payments during January of Fiscal 2011 of $152.9 million that did not repeat in January of Fiscal 2012.

~~Cash~~Net ~~flow~~cash used in ~~financing~~investing activities ~~decreased~~increased to $~~191~~67.76 million ~~during~~for the ~~three~~six months ended ~~May~~ August 43, 2013 ~~compared~~from ~~with~~$61.8 ~~the~~million ~~three~~for ~~months~~the ~~ended~~comparative ~~April 28, 2012~~period. This ~~decrease~~increase was primarily ~~driven~~the byresult ~~borrowings net~~ of a ~~repayments of~~ $~~190~~6.0 million ~~during~~increase ~~the~~in ~~three~~cash ~~months~~paid ~~ended~~for ~~April 28,~~property ~~2012~~and ~~compared~~equipment ~~with~~during nothe ~~borrowings,~~first ~~net of~~six ~~repayments~~months ~~during~~of ~~the~~Fiscal ~~three~~2013 ~~months~~versus ~~ended~~the ~~May 4,~~comparable ~~2013~~period.

Cash flow ~~and~~used ~~working~~in ~~capital~~financing ~~levels~~activities ~~assist~~decreased ~~management~~$190.0 ~~in measuring our~~million ~~ability~~during tothe ~~meet~~six ~~our~~months ~~cash~~ended ~~requirements.~~August ~~Working~~3, ~~capital~~2013 ~~measures~~compared ~~our~~with ~~current~~the ~~financial~~first ~~position~~six months of the prior year’s period. ~~Working~~This ~~capital~~decrease iswas primarily ~~defined~~driven asby ~~current~~borrowings, ~~assets~~net ~~(exclusive~~of repayments, of ~~restricted~~$15.0 ~~cash)~~million ~~less~~during ~~current~~the ~~liabilities. Working~~six ~~capital at~~months ~~May~~ended August 43, 2013 ~~was~~compared ~~$108.6~~with ~~million~~repayments, ~~compared~~net ~~with~~of borrowings of $~~104~~171.8 million during comparative period as a result of our working capital management strategy at ~~February 2,~~the ~~2013~~end of Fiscal 2011. .

Cash flow and working capital levels assist management in measuring our ability to meet our cash requirements. Working capital measures our current financial position. Working capital is defined as current assets (exclusive of restricted cash) less current liabilities. Working capital at August 3, 2013 was $94.8 million compared with $104.8 million at February 2, 2013.

Operational Growth

During the ~~three~~six months ended ~~May~~August 43, 2013, we opened four BCF stores, and closed one store. As of ~~May~~ August 43, 2013, we operated 503 stores primarily under the name “Burlington Coat Factory Warehouse”.” We estimate that we will spend between $150 and $160 million, net of approximately $3332 million of landlord allowances, in capital expenditures during Fiscal 2013, including approximately $5568 million, net of the previously mentioned landlord allowances for store expenditures, and approximately $2526 million ~~for~~to ~~information~~support ~~technology~~continued distribution facility enhancements. We expect to use the remaining capital to support ~~continued~~information ~~distribution~~technology ~~facility enhancements~~ and other initiatives, inclusive of $2520 million related to the construction of our new corporate headquarters. For the ~~three~~six months ended ~~May~~August 43, 2013, capital expenditures, net of landlord allowances, amounted to $2249.49 million.

We monitor the availability of desirable locations for our stores from such sources as presentations by brokers, real estate developers and existing landlords, evaluating dispositions by other retail chains and bankruptcy auctions. Most of our stores are located in malls, strip shopping centers, regional power centers or are freestanding. We also lease existing space and are opening some built-to-suit locations. For most of our new leases, our lease model provides for at least a ten year initial term with a number of five year options thereafter. Typically, our lease strategy includes landlord allowances for leasehold improvements. We believe our lease model makes us more competitive with other retailers for desirable locations. We may seek to acquire a number of such locations either through transactions to acquire individual locations or transactions that involve the acquisition of multiple locations simultaneously.

~~Additionally,~~46 we may consider strategic acquisitions. If we undertake such transactions, we may seek additional financing to fund acquisitions and carrying charges (i.e., the cost of rental, maintenance, tax and other obligations associated with such properties from the time of commitment to acquire to the time that such locations can be readied for opening as our stores) related to the newly acquired stores. There can be no assurance, however, that any additional locations will become available from other retailers or that, if available, we will undertake to bid or be successful in bidding for such locations. Furthermore, to the extent that we decide to purchase additional store locations, it may be necessary to finance such acquisitions with additional long term borrowings.

Additionally, we may consider strategic acquisitions. If we undertake such transactions, we may seek additional financing to fund acquisitions and carrying charges (i.e., the cost of rental, maintenance, tax and other obligations associated with such properties from the time of commitment to acquire to the time that such locations can be readied for opening as our stores) related to the newly acquired stores. There can be no assurance, however, that any additional locations will become available from other retailers or that, if available, we will undertake to bid or be successful in bidding for such locations. Furthermore, to the extent that we decide to purchase additional store locations, it may be necessary to finance such acquisitions with additional long term borrowings.

From time to time we make available for sale certain assets based on current market conditions. These assets are recorded in the line item “Assets Held for Sale” in our Condensed Consolidated Balance Sheets. Based on prevailing market conditions, we may determine that it is no longer advantageous to continue marketing certain assets and will reclassify those assets out of the line item “Assets Held for Sale” and into the respective asset category based on the lesser of their carrying value or fair value less cost to sell.

Dividends

During the ~~three~~six months ended ~~May~~August 43, 2013 , dividends ~~were~~of $5.0 million were paid to the Issuers in order to pay certain fees in connection with the issuance of the 2018 Notes. During the ~~three~~comparative ~~months ended April 28~~period, ~~2012~~ dividends of $1.7 million were paid in connection with the $300.0 million declared dividend as part of the 2011 Term Loan Facility refinancing.

Long Term Borrowings, Lines of Credit and Capital Lease Obligations

Holdings and each of our current and future subsidiaries, have fully, jointly, severally, unconditionally, and irrevocably guaranteed BCFWC’s obligations pursuant to the $600 million ABL Line of Credit, $1,000 million Term Loan Facility and the $450 million Notes due in 2019. As of ~~May~~August 43, 2013, we were in compliance with all of our debt covenants.

$1 Billion Senior Secured Term Loan Facility

As discussed previously under the caption “Debt Refinancing,” on February 15, 2013 we entered into the Second Amendment to the Term Loan Credit Agreement. The Second Amendment creates a restricted payments basket of $25 million and permits BCFWC to use the “available amount” to make restricted payments (which basket includes retained excess cash flow, in an amount not to exceed 50% of BCFWC’s consolidated net income (as defined in the existing senior notes) since the second quarter of Fiscal 2011), in each case so long as certain conditions are satisfied. In connection with this amendment, the Company incurred a $1.56 million amendment fee that was capitalized and included in the line item “Other Assets” on the Company’s Condensed Consolidated Balance Sheet. Additionally, the Company incurred $8.9 million of additional fees, inclusive of an $8.6 million fee payable to Bain Capital, for various consulting and advisory services. These fees were included in the line item “Costs Related to Debt Amendment” on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.

On May 17, 2013, we entered into ~~Amendment No. 3 (~~the Third Amendment) to the Term Loan Credit Agreement, in order to, among other things, reduce the interest rates applicable to our Term Loan Facility by 100 basis points (provided that such interest rates shall be further reduced by 25 basis points if our consolidated secured leverage ratio is less than or equal to 2.25:1) and to reduce the LIBOR floor by 25 basis points. The Third Amendment was accomplished by replacing the outstanding $871.0 million principal amount of term B-1 loans (the Term B-1 Loans) with a like aggregate principal amount of term B-2 loans (the Term B-2 Loans).

As a result of ~~this~~the ~~transaction~~Third Amendment, mandatory quarterly payments of $2.2 million will be payable as of the last day of each quarter, which ~~beginning~~commenced ~~with~~this ~~the~~ quarter ended August 3, 2013. These payments have been recorded by in our Condensed Consolidated Balance Sheet in the line item “Current Maturities of Long Term Debt.” We ~~expect~~recognized ~~to recognize~~ a loss on the extinguishment of debt of ~~approximately~~ $140.6 million, which ~~will~~was be recorded in the line item “Loss on the Extinguishment of Debt” in our Condensed Consolidated Statements of Operations and Comprehensive Loss during the second quarter of Fiscal 2013. In addition, ~~estimated~~ fees of ~~approximately~~ $12.6 million ~~are~~were ~~expected to be~~ recorded in the line item “Costs Related to Debt Amendment” in our Condensed Consolidated Statements of Operations and Comprehensive Loss during the second quarter of Fiscal 2013.

ABL Line of Credit

~~During~~As ~~the~~of ~~three month period ended May~~August 43, 2013 we had no$15.0 million in outstanding borrowings on our ABL Line of Credit and unused availability of $~~484~~447.85 million. AsDuring the first six months of ~~April 28~~Fiscal 2013, ~~2012~~ we ~~repaid~~borrowed $~~190~~15.0 million, net of repayments on our ABL Line of Credit. During the comparative period we repaid $171.8 million, net of borrowings ~~and~~which ~~had~~resulted in outstanding borrowings as of July 28, 2012 of $18.2 million and unused availability of $~~472~~390.4 9 million.

Off-Balance Sheet Arrangements

Other than operating leases consummated in the normal course of business and letters of credit, as more fully described below, we are not involved in any off-balance sheet arrangements that have or are reasonably likely to have a material current or future impact on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Contingencies and Contractual Obligations

Legal

We establish reserves for the settlement amounts, as well as reserves relating to legal claims, in connection with litigation to which we are party from time to time in the ordinary course of business. The aggregate amount of such reserves were $1.0 million, $0.9 million, and $2.9 million as of ~~both May~~August 43, 2013, ~~and~~ February 2, 2013, and ~~$5.5 million as of April~~July 28, 2012. We believe that potential liabilities in excess of those recorded will not have a material effect on our Condensed Consolidated Financial Statements. However, there can be no assurances to this effect.

There have been no significant changes to our contractual obligations and commercial commitments table as disclosed in our Fiscal 2012 10-K, except as follows:

Lease Agreements

We enter into lease agreements during the ordinary course of business in order to secure favorable store locations. As of ~~May~~August 43, 2013, we were committed to 1619 new lease agreements for locations at which stores are expected to be opened during the remainder of Fiscal 2013. Inclusive of these new leases, our minimum lease payments for all operating leases are expected to be $~~164~~113.8 0 million, $~~228~~239.89 million, $~~207~~220.15 million, $~~191~~205.73 million, $184.9 million and $~~800~~673.07 million for the remainder of the fiscal year ended February 1, 2014, and the fiscal years ended January 31, 2015, January 30, 2016, January 28, 2017 and February 3, 2018 and all subsequent years thereafter, respectively.

Letters of Credit

We had letters of credit arrangements with various banks in the aggregate amount of $4459.19 million and $3344.65 million as of ~~May~~August 43, 2013 and ~~April~~July 28, 2012, respectively. Based on the terms of the credit agreement related to the ABL Line of Credit, we had the ability to enter into letters of credit up to $~~484~~447.85 million and $~~472~~390.49 million as of ~~May~~August 43, 2013 and ~~April~~July 28, 2012, respectively. Among these arrangements as of ~~May~~August 43, 2013 and ~~April~~July 28, 2012, we had letters of credit in the amount of $31.54 million and $2926.18 million, respectively, guaranteeing performance under various insurance contracts and utility agreements. Additionally, we had outstanding letters of credit agreements in the amounts of $1228.65 million and $417.57 million at ~~May~~August 43, 2013 and ~~April~~July 28, 2012, respectively, related to certain merchandising agreements.

We had irrevocable letters of credit in the amount of $35.3 million as of February 2, 2013. Based on the terms of the credit agreement relating to the ABL Line of Credit, we had the ability to enter into letters of credit up to $422.7 million as of February 2, 2013. Letters of credit outstanding as of February 2, 2013 amounted to $26.7 million, guaranteeing performance under various lease agreements, insurance contracts, and utility agreements. We also had outstanding letters of credit arrangements in the aggregate amount of $8.6 million at February 2, 2013 related to certain merchandising agreements.

Safe Harbor Statement

This report contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, the industry in which we operate and other matters, as well as management’s beliefs and assumptions and other statements regarding matters that are not historical facts. For example, when we use words such as “projects,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “should,” “would,” “could,” “will,” “opportunity,” “potential” or “may,” variations of such words or other words that convey uncertainty of future events or outcomes, we are making forward looking statements within the meaning of Section 27A of the Securities Act of 1933 (Securities Act) and Section 21E of the Securities Exchange Act of 1934 (Exchange Act). Our forward-looking statements are subject to risks and uncertainties. Such statements include but are not limited to, proposed store openings and closings, proposed capital expenditures, projected financing requirements, proposed developmental projects, projected sales and earnings, our ability to maintain selling margins, and the effect of the adoption of recent accounting pronouncements on our consolidated financial position, results of operations and cash flows. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include: competition in the retail industry, seasonality of our business, adverse weather conditions, changes in consumer preferences and consumer spending patterns, import risks, inflation, general economic conditions, our ability to implement our strategy, our substantial level of indebtedness and related debt-service obligations, restrictions imposed by covenants in our debt agreements, availability of adequate financing, our dependence on vendors for our merchandise, events affecting the delivery of merchandise to our stores, existence of adverse litigation, availability of desirable locations on suitable terms, and other risks discussed from time to time in our filings with the Securities and Exchange Commission (SEC).

~~Many~~48 of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements, whether

asproposed adevelopmental ~~result~~projects, projected sales and earnings, our ability to maintain selling margins, and the effect of ~~new~~the ~~information~~adoption of recent accounting pronouncements on our consolidated financial position, ~~future~~results of operations and cash flows. Actual events or ~~otherwise,~~results ~~except~~may differ materially from the results anticipated in these forward-looking statements as ~~required~~a byresult ~~law~~of a variety of factors. InWhile ~~light~~it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include: competition in the retail industry, seasonality of ~~these~~our ~~risks~~business, adverse weather conditions, changes in consumer preferences and consumer ~~uncertainties~~spending patterns, ~~the~~import ~~forward-looking~~risks, ~~events~~inflation, general economic conditions, our ability to implement our strategy, our substantial level of indebtedness and ~~circumstances~~related ~~discussed~~debt-service obligations, restrictions imposed by covenants in ~~this~~our debt ~~report~~agreements, ~~might~~availability ~~not~~of ~~occur.~~adequate ~~Furthermore~~financing, weour ~~cannot~~dependence ~~guarantee~~on ~~future~~vendors ~~results~~for our merchandise, events affecting the delivery of merchandise to our stores, ~~levels~~existence of ~~activity~~adverse litigation, ~~performance~~availability orof ~~achievements~~desirable locations on suitable terms, and other risks discussed from time to time in our filings with the Securities and Exchange Commission (SEC).

Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report might not occur. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.

Recent Accounting Pronouncements

On February 28, 2013, the FASB issued Account Standards Update No. 2013-04, “Joint and Several Obligations,” (ASU 2013-04). In accordance with ASU 2013-04, an entity is required to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date. Required disclosures include a description of the joint and several arrangement and the total outstanding amount of the obligation for all joint parties. ASU 2013-04 is effective for all annual and interim periods in fiscal years beginning after December 15, 2013. However, early adoption is permitted. We have elected not to early adopt in the current fiscal year and do not expect ASU 2013-04, once adopted, to have a material impact on our financial position or results of operations.

There were no new accounting standards that had a material impact on our Condensed Consolidated Financial Statements during the period ended ~~May~~August 43, 2013 and there were no new accounting standards or pronouncements that were issued but not yet effective as of ~~May~~August 43, 2013 that we expect to have a material impact upon becoming effective.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to certain market risks as part of our ongoing business operations. Primary exposures include changes in interest rates, as borrowings under our ABL Line of Credit and Term Loan Facility bear interest at floating rates based on LIBOR or the base rate, in each case plus an applicable borrowing margin and investing activities. The Term Loan Facility interest is also dependent on the LIBOR, prime rate, and the federal funds rate as further discussed in Note 3 to our Condensed Consolidated Financial Statements entitled “Long Term Debt.”

We will manage our interest rate risk by balancing the amount of fixed-rate and floating-rate debt and through the use of interest rate cap agreements. For fixed-rate debt, interest rate changes do not affect earnings or cash flows. Conversely, for floating-rate debt, interest rate changes generally impact our earnings and cash flows, assuming other factors are held constant.

At ~~May~~August 43, 2013, we had $~~474~~473.57 million principal amount of fixed-rate debt and $~~863~~883.69 million of floating-rate debt. Based on $~~863~~883.69 million outstanding as floating-rate debt, an immediate increase of one percentage point, excluding the interest rate caps, would cause an increase to cash interest expense of approximately $8.68 million per year, resulting in $8.68 million less in our pre-tax earnings. This sensitivity analysis assumes our mix of financial instruments and all other variables will remain constant in future periods. These assumptions are made in order to facilitate the analysis and are not necessarily indicative of our future intentions.

If a one percentage point increase in interest rates were to occur over the next four quarters excluding the interest rate cap, such an increase would result in the following additional interest expenses (assuming current borrowing level remains constant):

	(in thousands)
Floating Rate Debt	PrincipalOutstandingat ~~May 4~~August3, 2013		AdditionalInterestExpenseQ2 2013		AdditionalInterestExpenseQ3 2013		AdditionalInterestExpenseQ4 2013		AdditionalInterestExpenseQ1 2014
Term Loan		863,572		2,160		2,155		2,151		2,146
ABL Line of Credit	$	15,000	$	38	$	38	$	38	$	38
	$	863,572	$	2,160	$	2,155	$	2,151	$	2,146
Term Loan (a)		868,862		2,168		2,164		2,159		2,155
	$	883,862	$	2,206	$	2,202	$	2,197	$	2,193

~~We have two interest rate cap agreements for~~ (a) ~~maximum~~Principle ~~principal~~balance ~~amount~~represents ofcarrying ~~$900.0~~value ~~million which limit our interest rate exposure to 7% on our first $863.6 million~~ of ~~borrowings~~term ~~under~~loan ~~our~~plus ~~variable~~original ~~rate~~issue ~~debt obligations~~discount. If interest rates were to increase above the 7% cap rates in effect as of May 4, 2013, for a full fiscal year, then our maximum interest rate exposure would be $13.1 million assuming constant borrowing levels of $900.0 million. Currently, we have unlimited interest rate risk related to our variable rate debt in excess of $900 million. As of May 4, 2013, the borrowing rate related to our Term Loan Facility was 5.5%.

We have two interest rate cap agreements for a maximum principal amount of $900.0 million which limit our interest rate exposure to 7% on our first $900 million of borrowings under our variable rate debt obligations. If interest rates were to increase above the 7% cap rates in effect as of August 3, 2013, for a full fiscal year, then our maximum interest rate exposure would be $24.5 million assuming constant borrowing levels of $883.9 million. Currently, we have unlimited interest rate risk related to our variable rate debt in excess of $900 million. As of August 3, 2013, the borrowing rate related to our Term Loan Facility was 4.25%.

Our ability to satisfy our interest payment obligations on our outstanding debt will depend largely on our future performance, which, in turn, is in part subject to prevailing economic conditions and to financial, business and other factors beyond our control. If we do not have sufficient cash flow to service our interest payment obligations on our outstanding indebtedness and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected. We cannot be assured that any replacement borrowing or equity financing could be successfully completed.

A change in interest rates generally does not have an impact upon our future earnings and cash flow for fixed-rate debt instruments. As fixed-rate debt matures, however, and if additional debt is acquired to fund the debt repayment, future earnings and cash flow may be affected by changes in interest rates. This effect would be realized in the periods subsequent to the periods when the debt matures.

3950

Item 4. Controls and Procedures.

Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of the last day of the fiscal period covered by this report, ~~May~~August 43, 2013. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of ~~May~~August 43, 2013.

During the three months ended ~~May~~August 43, 2013, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Like many retailers, we have been named in class or collective actions on behalf of various groups alleging violations of federal and state wage and hour and other labor statutes, and alleged violation of state consumer and/or privacy protection statutes. In the normal course of business, we are also party to various other lawsuits and regulatory proceedings including, among others, commercial, product, product safety, employee, customer, intellectual property and other claims. Actions against us are in various procedural stages. Many of these proceedings raise factual and legal issues and are subject to uncertainties.

Item 1A. Risk Factors.

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A of our Fiscal 2012 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit		Description
4.1 (1)		Indenture, dated February 20, 2013, among Burlington Holdings, LLC, Burlington Holdings Finance, Inc. and Wilmington Trust, National Association.
10.1 (1)		Amendment No. 3, dated May 17, 2013, by and among Burlington Coat Factory Warehouse Corporation, the facility guarantors signatory thereto, each lender party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
4.2 (1)		Form of 9.00%/9.75% Senior Notes due 2018 (included in Exhibit 4.1).
10.2 (2)		Burlington Holdings, Inc. 2006 Management Incentive Plan (Amended and Restated June 15, 2013).
10.3 (2)		Form of Non-Qualified Stock Option Agreement, pursuant to Burlington Holdings, Inc. 2006 Management Incentive Plan, between Burlington Holdings, Inc. and Employees without Employment Agreements.
10.4 (2)		Form of Non-Qualified Stock Option Agreement, pursuant to Burlington Holdings, Inc. 2006 Management Incentive Plan, between Burlington Holdings, Inc. and Employees with Employment Agreements.
10.5 (2)		Form of Non-Qualified Stock Option Agreement, pursuant to Burlington Holdings, Inc. 2006 Management Incentive Plan, dated as of June 17, 2013, between Burlington Holdings, Inc. and Tom Kingsbury.
31.1		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

40(1) Incorporated by reference to our Quarterly Report on Form 10-Q filed on June 18, 2013.

(2)	Incorporated by reference to Amendment No. 2 to Burlington Holdings, Inc. Registration Statement on Form S-1, No. 333-189632, filed on September 6, 2013.

Exhibit		Description
10.1 (1)		Amended and Restated Advisory Agreement, dated as of February 14, 2013, by and among Burlington Holdings, Inc., Burlington Coat Factory Holdings, Inc., Burlington Coat Factory Warehouse Corporation and Bain Capital Partners, LLC.
10.2 (1)		Termination Agreement, dated as of February 14, 2013, by and among Burlington Coat Factory Holdings, Inc., Bain Capital Integral Investors, LLC, Bain Capital Fund IX, LLC, BCIP Associates-G and BCIP TCV, LLC.
10.3 (1)		Stockholders Agreement, dated as of February 14, 2013, by and among Burlington Holdings, Inc. and the investors and managers from time to time party thereto.
10.4 (2)		Amendment No. 2, dated February 15, 2013, by and among Burlington Coat Factory Warehouse Corporation, the facility guarantors signatory thereto, each lender party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
10.5 (3)		Amendment No. 3, dated May 17, 2013, by and among Burlington Coat Factory Warehouse Corporation, the facility guarantors signatory thereto, each lender party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent.
10.6		Burlington Holdings, Inc. 2006 Management Incentive Plan (Amended and Restated May 1, 2013).
31.1		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

(1) Incorporated by reference to our Annual Report on Form 10-K filed on April 26, 2013.

(2) Incorporated by reference to our Current Report on Form 8-K filed on February 21, 2013.

(3) Incorporated by reference to our Current Report on Form 8-K filed on May 22, 2013.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BURLINGTON COAT FACTORY

INVESTMENTS HOLDINGS, INC.

/S/ THOMAS A. KINGSBURY

Thomas A. Kingsbury

President & Chief Executive Officer

/S/ TODD WEYHRICH

Todd Weyhrich

Executive Vice President & Chief Financial Officer

(Principal Financial Officer)

Date: ~~June 18~~September 19, 2013

4253

INDEX TO EXHIBITS

Exhibit		Description
10.6		Burlington Holdings, Inc. 2006 Management Incentive Plan (Amended and Restated May 1, 2013).
31.1		Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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