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<P ALIGN="RIGHT"><FONT SIZE=2><B>Registration No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B> As filed with the Securities and Exchange Commission on May&nbsp;22, 2003  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=5><B>SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>WASHINGTON, D.C. 20549  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=5><B>FORM S-1<BR>  </B></FONT><FONT SIZE=2><B>REGISTRATION STATEMENT<BR>
UNDER<BR>
THE SECURITIES ACT OF 1933  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=5><B>THE WHITE HOUSE,&nbsp;INC.<BR>  </B></FONT><FONT SIZE=2>(Exact name of registrant as specified in its charter) </FONT></P>

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<TD WIDTH="32%" ALIGN="CENTER"><FONT SIZE=2><B>Maryland<BR> </B></FONT><FONT SIZE=2>(State or Other Jurisdiction of<BR>
Incorporation or Organization)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="32%" ALIGN="CENTER"><FONT SIZE=2><B>5621<BR> </B></FONT><FONT SIZE=2>(Primary Standard Industrial<BR>
Classification Code Number)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="32%" ALIGN="CENTER"><FONT SIZE=2><B>52-1413575<BR> </B></FONT><FONT SIZE=2>(I.R.S. Employer<BR>
Identification No.)</FONT></TD>
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<TD COLSPAN=5 ALIGN="CENTER" VALIGN="TOP"><BR><FONT SIZE=2><B>6711 Baymeadow Drive<BR>
Glen Burnie, Maryland 21060<BR>
(410)&nbsp;487-7747</B></FONT><FONT SIZE=2><BR>
(Address, including zip code, and telephone number, including area code, of<BR>
registrant's principal executive offices)</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2><B>Richard D. Sarmiento<BR>
Chairman, President, and Chief Executive Officer<BR>
The White House,&nbsp;Inc.<BR>
6711 Baymeadow Drive<BR>
Glen Burnie, Maryland 21060<BR>
(410)&nbsp;487-7747<BR>  </B></FONT><FONT SIZE=2>(Name, address, including zip code, and telephone number, including area code, of agent for service) </FONT></P>

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<TD COLSPAN=3 ALIGN="CENTER" VALIGN="TOP"><FONT SIZE=2><BR>
<BR></FONT> <FONT SIZE=2><B>Copies to:</B></FONT></TD>
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<TD WIDTH="46%" ALIGN="CENTER"><FONT SIZE=2><B>Elizabeth R. Hughes<BR>
Matthew B. Swartz<BR>
Venable, Baetjer, Howard &amp; Civiletti, LLP<BR>
1201 New York Avenue, N.W.<BR>
Suite 1000<BR>
Washington, DC 20005-3917<BR>
(202) 962-4800</B></FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="46%" ALIGN="CENTER"><FONT SIZE=2><B>Michael M. Froy<BR>
Mark L. Dosier<BR>
Sonnenschein Nath &amp; Rosenthal<BR>
233 South Wacker Drive<BR>
8000 Sears Tower<BR>
Chicago, Illinois 60606<BR>
(312) 876-8000</B></FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2><B>Approximate date of commencement of proposed sale to the public:<BR>
As soon as practicable after the effective date of this Registration Statement.  </B></FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under the Securities Act of
1933, as amended, check the following box.&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is filed to register additional securities for an offering pursuant to Rule&nbsp;462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
delivery of the prospectus is expected to be made pursuant to Rule&nbsp;434, please check the following box.&nbsp;&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><B>CALCULATION OF REGISTRATION FEE  </B></FONT></P>

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<TH WIDTH="38%" ALIGN="CENTER"><FONT SIZE=1><B>Title of each class of<BR>
securities to be registered</B></FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="30%" ALIGN="CENTER"><FONT SIZE=1><B>Proposed maximum<BR>
aggregate offering price(1)</B></FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="30%" ALIGN="CENTER"><FONT SIZE=1><B>Amount of<BR>
registration fee</B></FONT><BR></TH>
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<TD WIDTH="38%"><FONT SIZE=2>Common Stock, $.01 par value</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="30%" ALIGN="CENTER" VALIGN="BOTTOM"><FONT SIZE=2>$50,000,000</FONT></TD>
<TD WIDTH="1%" VALIGN="BOTTOM"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="30%" ALIGN="CENTER" VALIGN="BOTTOM"><FONT SIZE=2>$4,045</FONT></TD>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Estimated
solely for purposes of determining the registration fee pursuant to Rule&nbsp;457 under the Securities Act of 1933, as amended. </FONT></DD></DL>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall
file&nbsp;a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section&nbsp;8(a) of the Securities Act of 1933, as
amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section&nbsp;8(a), may determine.  </B></FONT></P>

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<P ALIGN="CENTER"><FONT COLOR="#FF4040" SIZE=2><B>SUBJECT TO COMPLETION, DATED MAY 22, 2003</B></FONT></P>

<P><FONT COLOR="#FF4040" SIZE=2><B>The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction
where the offer or sale is not permitted. </B></FONT></P>

<P><FONT SIZE=2><B>PROSPECTUS  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=4><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=4><B>
<IMG SRC="g212157.jpg" ALT="GRAPHIC" WIDTH="444" HEIGHT="118">
  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=4><B>Common Stock  </B></FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This is the initial public offering of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock of The White
House,&nbsp;Inc. We are selling&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares and certain of our stockholders are selling&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock. We will not receive any of the proceeds from the sale by the
selling stockholders. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
expect that the initial public offering price will be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of common stock. Prior to the offering, there has been no public market
for our common stock. The market price of the shares after the offering may be higher or lower than the offering price. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have applied to have our shares of common stock approved for listing on the Nasdaq National Market under the symbol "WHBK." </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=3><B>Investing in our common stock involves risks. See "Risk Factors" beginning on page&nbsp;7.  </B></FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><B>Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these
securities or determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.  </B></FONT></P>

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<TH WIDTH="79%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Per Share</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
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<TD WIDTH="79%"><FONT SIZE=2>Public offering price</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
</TR>
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<TD WIDTH="79%"><FONT SIZE=2>Underwriting discount</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
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<TD WIDTH="79%"><FONT SIZE=2>Proceeds, before expenses, to us</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
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<TD WIDTH="79%"><FONT SIZE=2>Proceeds to the selling stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
of the selling stockholders have granted the underwriters the option to purchase up to an additional&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares at the public offering price, less
the underwriting
discount, within 30&nbsp;days from the date of this prospectus to cover over-allotments. If such shares are sold, we will not receive any of the proceeds from the sale by the selling
stockholders. </FONT></P>

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<P><FONT SIZE=5><B>William Blair&nbsp;&amp; Company  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B> SG Cowen  </B></FONT></P>

<P ALIGN="RIGHT"><FONT SIZE=5><B> RBC Capital Markets  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>The date of this prospectus is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003  </B></FONT></P>

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<IMG SRC="g212157.jpg" ALT="GRAPHIC" WIDTH="444" HEIGHT="118">
  </B></FONT></P>

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<IMG SRC="g430929.jpg" ALT="GRAPHIC" WIDTH="550" HEIGHT="715">
  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5>For both sides of you </FONT></P>

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<BR></FONT><FONT SIZE=2><B>Table of Contents    <BR>    </B></FONT></P>

<P><FONT SIZE=2>
<A NAME="BG1425_TOC"></A> </FONT></P>

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<TH WIDTH="100%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#ca1425_prospectus_summary"><FONT SIZE=2>Prospectus Summary</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#de1425_risk_factors"><FONT SIZE=2><BR>
Risk Factors</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#di1425_forward-looking_statements"><FONT SIZE=2><BR>
Forward-Looking Statements</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#di1425_use_of_proceeds"><FONT SIZE=2><BR>
Use of Proceeds</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#di1425_dividend_policy"><FONT SIZE=2><BR>
Dividend Policy</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#dk1425_capitalization"><FONT SIZE=2><BR>
Capitalization</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#dk1425_dilution"><FONT SIZE=2><BR>
Dilution</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#dm1425_selected_financial_and_operating_data"><FONT SIZE=2><BR>
Selected Financial and Operating Data</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#do1425_management_s_discussion_and_an__man03466"><FONT SIZE=2><BR>
Management's Discussion and Analysis of Financial Condition and Results of Operations</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#ds1425_business"><FONT SIZE=2><BR>
Business</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#dw1425_management"><FONT SIZE=2><BR>
Management</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#ea1425_related_party_transactions"><FONT SIZE=2><BR>
Related Party Transactions</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#ea1425_principal_and_selling_stockholders"><FONT SIZE=2><BR>
Principal and Selling Stockholders</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#ec1425_description_of_capital_stock"><FONT SIZE=2><BR>
Description of Capital Stock</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#ee1425_shares_eligible_for_future_sale"><FONT SIZE=2><BR>
Shares Eligible for Future Sale</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#eg1425_underwriting"><FONT SIZE=2><BR>
Underwriting</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#eg1425_legal_matters"><FONT SIZE=2><BR>
Legal Matters</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#eg1425_experts"><FONT SIZE=2><BR>
Experts</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><A HREF="#ei1425_where_you_can_find_additional_information"><FONT SIZE=2><BR>
Where You Can Find Additional Information</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="100%" VALIGN="TOP"><FONT SIZE=2><BR>
Index to Financial Statements</FONT></TD>
</TR>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that which is
set forth in this prospectus. We are offering to sell shares of our common stock and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. Our business,
financial condition, results of operations, and prospects may have changed after the date of this prospectus.  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>ii</FONT></P>

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<A NAME="toc_ca1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>PROSPECTUS SUMMARY    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>This summary does not contain all the information that you should consider before investing. You should read the entire prospectus
carefully, including the section entitled "Risk Factors" and our audited financial statements and the accompanying notes included elsewhere in this prospectus, before you decide to invest in our
common stock. In this prospectus, references to "White&nbsp;House&nbsp;</I></FONT><FONT SIZE=2>--&nbsp;</FONT><FONT SIZE=2><I>Black&nbsp;Market," "we," "us," and "our" mean The White
House,&nbsp;Inc., and our fiscal years ended on January&nbsp;30, 1999, January&nbsp;29, 2000, February&nbsp;3, 2001, February&nbsp;2, 2002, and February&nbsp;1, 2003 are referred to as
fiscal 1998, fiscal 1999, fiscal 2000, fiscal 2001, and fiscal 2002, respectively. The convention that is used in determining our fiscal year end is the Saturday nearest to the last day of
January.</I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>We currently have two classes of common stock and no series of preferred stock outstanding. Upon completion of the offering, we will have one class of common
stock and no series of preferred stock outstanding. Unless otherwise indicated, the information contained in this prospectus (i)&nbsp;assumes the conversion of all outstanding shares of our
Class&nbsp;A common stock and Class&nbsp;C common stock into a single class of common stock, (ii)&nbsp;reflects a one-for-3.25 reverse split of our common stock, and
(iii)&nbsp;assumes that the underwriters will not exercise their over-allotment option to purchase additional shares of common stock.</I></FONT></P>


<P><FONT SIZE=2><B>Overview  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a specialty retailer offering distinctive private brand women's apparel in the classic and timeless colors of white and black. We target educated,
middle-to-upper income, youthful women between the ages of 30 and 50 who lead active work and social lives and place a premium on contemporary, feminine clothing and a high
level of personalized service. Our goal is to make our customers "look and feel beautiful" by offering a unique assortment of quality and fashionable apparel designed for a woman's everyday and
special occasion needs. Our boutique-like stores are designed to highlight the distinctiveness of our merchandise, which together with our high level of personalized service, enhance
customer recognition and loyalty to our brand. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
offer high quality, competitively priced separates and coordinated outfits, carefully selected with our customers' preferences and lifestyles in mind. Substantially all of our
merchandise is marketed under our White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market private brand. Our merchandise strategy recognizes that white and black
and related shades are essential to a woman's wardrobe and emphasizes styles that are consistent with current fashion trends. We have developed a highly successful and productive store format that
consistently produces strong unit economics across a variety of retail settings, such as lifestyle centers, street front locations, and regional malls. As of April&nbsp;30, 2003, we operated 96
stores located throughout the United States, Puerto Rico, and the U.S. Virgin Islands. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over
the past three years, we have refined our merchandise strategy, improved our operations, enhanced our infrastructure, and rapidly expanded our store base. Over the
three-year period ended fiscal 2002, we increased our store base from 60 to 92 and achieved a compound annual growth rate in net sales of 32.9%. Our comparable store sales gains averaged
11.5% per fiscal year during this period, increasing 13.1% in fiscal 2001 and 16.3% in fiscal 2002, and our operating income increased from $272,000 in fiscal 1999 to $6.8&nbsp;million in fiscal
2002. </FONT></P>

<P><FONT SIZE=2><B>Business Strategy and Competitive Differentiation  </B></FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We know our customer and are dedicated to making her "look and feel beautiful."</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe the
continued success of our brand will be driven by our commitment to making our customers "look and feel beautiful" by offering distinctive merchandise with a superior level of personalized service. We
have concentrated our marketing and merchandising efforts on women between the ages of 30 and 50 who seek distinctive apparel in order to project a contemporary, feminine, and youthful
self-image. Internally, we refer to our target customer as "Sydney" and believe she represents a middle-to-upper income woman who is well-educated, active, and
appearance-conscious. She considers herself to be </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>1</FONT></P>

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<P><FONT SIZE=2>feminine
and sexy, with a youthful attitude, regardless of her age. We believe Sydney looks to White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market to provide her with clothing that is fashionable
and appropriate for the occasion and enables her to express the fun and original side of her personality and lifestyle. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that our target customer values our edited selection and is generally underserved by the broad offerings of department stores. In addition, other specialty stores have
increasingly targeted other segments, such as teens and plus-sizes, or customers with either more conservative or trendier style preferences. We believe that women are increasingly
demanding a youthful, feminine, and contemporary look regardless of age and that we are well-positioned to capitalize on this demand. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We project a powerful brand identity through our distinctive merchandise concept.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our brand identity
is based on providing our customers with a distinctive assortment of quality, competitively priced,
fashionable apparel and accessories all in the classic and timeless colors of white and black. This differentiated merchandise concept projects a powerful visual image within our stores and enables us
to clearly communicate our unique brand identity. We believe that white and black and related shades represent significant and essential components of our customers' wardrobes. By further
differentiating our assortment with new designs and fabrications, we establish White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market as a highly relevant resource for our customers' everyday and
special occasion needs, regardless of season, color trends, or regional preferences. Over the three-year period ended fiscal 2002, our comparable store sales gains averaged 11.5% per
fiscal year and our average sales per gross square foot increased from $468 in fiscal 1999 to $559 in fiscal 2002. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a proven and versatile store model that produces compelling returns.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The broad appeal of our
merchandise concept has enabled us to profitably operate our stores in diverse regions of the country, across climates, and in a variety of retail settings, including lifestyle centers, street front
locations, and regional malls. We believe this strategy reduces the risks of geographic or regional mall concentration and enhances our platform for future growth. Our market and site selection is
based on local demographics, population trends, traffic patterns, and the proximity of other retail stores as well as recreational destinations such as restaurants and movie theaters that appeal to
our target customers. Our store model for fiscal 2003 requires an average total investment of approximately $190,000 per store, inclusive of pre-opening costs, fixtures, equipment, leasehold
improvements, and inventory, but net of landlord allowances and vendor financing. Based on our store opening and operating experience, we expect our new stores opening in fiscal 2003 to produce a cash
payback in approximately 14 months and a cash return on invested capital of approximately 90% in their first full year of operation. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have achieved superior financial results due to our centralized and disciplined operations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our
centralized merchandising and operating processes are designed to achieve a consistent, chainwide "one-store experience" and enable our sales associates to focus on serving our customers.
We facilitate frequent communication throughout our organization in order to quickly respond to changes in fashion trends and customer preferences. Our flexible third-party vendor sourcing strategy
and disciplined approach to inventory management are designed to achieve the proper balance between new, faster-turning merchandise and core items while controlling our aged inventory and markdowns.
We believe our operating discipline is a key factor in our historical ability to operate highly productive stores. In each of the last two fiscal years, our gross profit percentage exceeded 55% of our
net sales and our average annual inventory turnover rate exceeded 5.0 times. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<P><FONT SIZE=2><B>Growth Strategy  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we are well-positioned to capitalize on our distinctive brand identity, open an increasing number of stores, and pursue our goal of
becoming a leading national chain in the women's apparel industry. Key elements of our growth strategy include the following: </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Open New Stores.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have demonstrated our ability to open new stores that provide compelling
investment returns in new markets and geographic territories and across a variety of retail settings. We opened 16 stores in fiscal 2002 and ended the year with 92 stores. In fiscal 2003, we plan to
open 22 stores and end the year with 111 stores. As of April&nbsp;30, 2003, we have opened five stores and have signed leases for an additional ten stores. In fiscal 2004, we plan to open 25 to 30
stores and have identified 27 potential store sites, 12 of which have been approved by our site selection committee. The average size of our stores has increased modestly over the past several years
and, as of February&nbsp;1, 2003, was 1,457 square feet. We plan to increase the size of our new store prototype to an average of 1,750 to 1,800 square feet. Based on our internal analysis, we
believe the potential exists for at least 400 White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market stores nationwide. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Improve Store Productivity and Overall Profitability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe we can continue to increase our
store sales productivity by implementing the following marketing and merchandising initiatives: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>We
continuously review our merchandise offering to identify opportunities to increase sales productivity by increasing store-level inventory density, extending product lines
or categories, and promoting additional wardrobe selling.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>To
date, our direct marketing efforts have consisted of sending periodic mailings offering selected discounts to certain customers and hosting VIP parties in our stores. In
the future, we plan to initiate a more efficient and measurable direct marketing program designed to communicate to a broader customer base on a more frequent basis and use more sophisticated
marketing vehicles that better communicate our distinctive product offering.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>In
order to enhance our value proposition and brand loyalty, we plan to initiate a customer loyalty program designed to reward our frequent customers with price discounts or
other incentives. We are currently enhancing our point-of-sale and management information systems to facilitate more extensive customer data collection. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe we have opportunities to further increase our operating margins in the future by leveraging store-level operating and corporate infrastructure costs over a larger sales base
and capitalizing on enhanced purchasing power. </FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Our principal executive offices are located at 6711 Baymeadow Drive, Glen Burnie, Maryland 21060 and our telephone number is (410)&nbsp;487-7747.
Our web site address is www.whiteandblack.com. Information on our website is not a part of this prospectus.</I></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

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<BR></FONT><FONT SIZE=2><B>The Offering    <BR>    </B></FONT></P>

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<TD WIDTH="50%" VALIGN="TOP"><FONT SIZE=2>Common stock offered by us</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="47%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="50%" VALIGN="TOP"><FONT SIZE=2><BR>
Common stock offered by the selling stockholders</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="47%"><FONT SIZE=2><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="50%" VALIGN="TOP"><FONT SIZE=2><BR>
Total shares offered</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="47%"><FONT SIZE=2><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="50%" VALIGN="TOP"><FONT SIZE=2><BR>
Common stock outstanding after the offering</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="47%"><FONT SIZE=2><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares<SUP>(1)</SUP></FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="50%"><FONT SIZE=2><BR>
Use of proceeds</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="47%" VALIGN="BOTTOM"><FONT SIZE=2><BR>
We estimate that our net proceeds from the offering will be $&nbsp;&nbsp;&nbsp;&nbsp;million. We intend to use $11.8&nbsp;million of the net proceeds to us to make required distributions to certain holders of our common stock and $1.7&nbsp;million to
fund capital expenditures and pay expenses incurred in connection with the planned relocation of our headquarters and distribution center. We intend to use the remaining net proceeds to us for general corporate purposes, including the opening of new
stores and working capital. We will not receive any proceeds from the sale of shares by the selling stockholders. See "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations&#151;Amounts
Distributable to Holders of Class&nbsp;C Common Stock."</FONT></TD>
</TR>
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<TD WIDTH="50%" VALIGN="TOP"><FONT SIZE=2><BR>
Proposed Nasdaq National Market symbol</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="47%"><FONT SIZE=2><BR>
WHBK</FONT></TD>
</TR>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>The
number of shares to be outstanding upon completion of the offering is based on shares outstanding as of April&nbsp;30, 2003. This number excludes: (i)&nbsp;309,138 shares of
common stock issuable upon the exercise of outstanding stock options under our 1999 Stock Option Plan at a weighted average exercise price of $5.22 per share; and (ii)&nbsp;an aggregate of 813,939
shares of common stock available for future issuance under our 1999 Stock Option Plan, our 2003 Stock Option Plan, and our 2003 Employee Stock Purchase Plan as of the date of this prospectus. </FONT></DD></DL>
<BR>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
own or have rights to various trademarks and trade names used in our business, including </FONT> <FONT SIZE=2><I>White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market&reg;</I></FONT><FONT SIZE=2> and others. Each trademark, trade name, or service mark of
any other company
appearing in this prospectus belongs to its holder or holders. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

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<BR></FONT><FONT SIZE=2><B>Summary Financial and Operating Data    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summary statements of operations data and other data in fiscal 2000, 2001, and 2002 and the balance sheet data at the end of fiscal 2002 is derived
from our financial statements, audited by KPMG LLP, included elsewhere in this prospectus. The summary statements of operations data and other data in fiscal 1998 and fiscal 1999 are derived from
unaudited financial statements not included in this prospectus. The summary store data for all fiscal periods presented have been derived from internal records of our operations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
fiscal year consists of 52 or 53 weeks, ends on the Saturday nearest to the last day of January, and is named for the calendar year ending closest to that date. All fiscal years
presented consist of 52 weeks of operations, except fiscal 2000, which consisted of 53 weeks. You should read the information set forth below in conjunction with other sections of this prospectus,
including "Selected Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our financial statements and related notes. </FONT></P>

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<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>(in thousands, except per share, store data, and other data)<BR> </B></FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=1><B>Statement of Operations Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>24,328</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>28,530</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>37,721</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>49,532</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>66,956</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Cost of goods sold<SUP>(1)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>11,641</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>13,501</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>17,676</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>21,884</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>28,271</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>12,687</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>15,029</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>20,045</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>27,648</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>38,685</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Selling, general and administrative expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>12,124</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>14,199</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>19,101</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>24,627</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>30,414</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>593</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>558</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>912</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,176</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,492</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(30</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>32</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,845</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>6,779</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Interest expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>428</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>53</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>198</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>326</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>217</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Income (loss) before income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(458</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>219</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(166</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,519</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>6,562</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(82</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>113</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(48</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>650</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2,652</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(376</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>106</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(118</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>869</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>3,910</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Amounts distributable to Class&nbsp;C common stockholders<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>25</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>981</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,475</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,679</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,984</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net income (loss) applicable to common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(401</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(875</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(1,593</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(810</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,926</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1><BR>
Basic and diluted net income (loss) applicable to common stockholders per weighted average common share:<SUP>(3)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1><BR>
&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=1>Basic</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.28</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>0.33</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=1>Diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.28</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>0.33</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=1>Pro forma diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=6><FONT SIZE=1>Weighted average common shares outstanding:<SUP>(3)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=1>Basic</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>3,700</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,459</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=1>Diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>3,700</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,459</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5,870</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=1>Pro forma diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=1><B>Store Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Comparable store sales growth<SUP>(4)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>2.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>7.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>5.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>13.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>16.3</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Stores open at beginning of period</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>47</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>60</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>71</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>77</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>New stores</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>16</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Closed stores</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Stores open at end of period</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>60</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>71</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>77</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>92</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Total square feet at end of period<SUP>(5)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>56,659</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>72,022</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>93,751</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>105,623</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>134,061</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net sales per square foot<SUP>(6)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>441</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>468</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>460</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>494</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>559</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Average net sales per store<SUP>(7)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>516,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>551,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>593,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>679,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>790,000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=1><B>Other Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Gross profit percentage</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>52.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>52.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>53.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>55.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>57.8</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Operating income (loss) percentage</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>(0.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>0.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>3.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>10.1</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="80%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>As of February&nbsp;1, 2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Actual</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>As Adjusted<SUP>(9)</SUP></B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=1><B>Balance Sheet Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="71%"><FONT SIZE=1>Working capital<SUP>(8)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>599</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="71%"><FONT SIZE=1>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>20,223</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="71%"><FONT SIZE=1>Total debt including capital lease obligations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>1,675</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>1,675</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="71%"><FONT SIZE=1>Amounts distributable to Class&nbsp;C common stockholders<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>6,144</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="71%"><FONT SIZE=1>Total liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>15,830</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=1>9,686</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="71%"><FONT SIZE=1>Stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=1>4,393</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=9,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=203448,FOLIO='5',FILE='DISK008:[03WDC5.03WDC1425]CE1425A.;32',USER='YLEE',CD='22-MAY-2003;14:44' -->
<A NAME="page_ce1425_1_6"> </A>
<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Cost
of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the distribution center to our
stores.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Represents
amounts distributable to Class&nbsp;C common stockholders pursuant to the terms of our amended and restated articles of incorporation. The amounts distributable to
Class&nbsp;C common stockholders are not classified within stockholders' equity because of the required distribution feature. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock."
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>See
note&nbsp;3 of our financial statements for an explanation of the methods used to determine the number of shares used in computing net income (loss) per share data. Prior to the
completion of the offering, we have two classes of common stock outstanding and the net income (loss) applicable to common stockholders per share is the same for each class. Pro forma diluted net
income applicable to common stockholders per weighted average common share was calculated by dividing net income by the number of pro forma diluted weighted average shares. Pro forma diluted weighted
average shares were calculated by adding the number of shares to be issued in the offering to the diluted weighted average shares outstanding. Upon completion of the offering, all amounts accrued for
distribution to Class&nbsp;C common stockholders will be paid. In addition, payment of our obligation with respect to future distributions to Class&nbsp;C common stockholders will be accelerated,
which will result in a deduction from net income of approximately $5.0&nbsp;million in the quarter in which the offering is completed, for the purpose of determining net income applicable to common
stockholders. Accordingly, these amounts have been excluded because the distribution obligation is required to be satisfied with proceeds from the offering. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock."
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Comparable
store sales begin in a store's 15<SUP>th</SUP> month of operations.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Calculated
using gross square footage of all stores open at the end of the period.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Calculated
using net sales and gross square footage of all stores open at both the beginning and the end of the period.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Calculated
using net sales of all stores open at both the beginning and the end of the period.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Defined
as current assets less current liabilities.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD><FONT SIZE=2>The
"as adjusted" balance sheet data as of February&nbsp;1, 2003, reflects the conversion of all outstanding shares of our Class&nbsp;A common stock and Class&nbsp;C common
stock into shares of common stock upon the closing of the offering and the receipt by us of the estimated net proceeds from the sale of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock by us in the
offering at
an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share and the application of the net proceeds therefrom. See "Use of Proceeds." </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
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<A NAME="toc_de1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>RISK FACTORS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>You should carefully consider the following risks, as well as the other information contained in this prospectus, before investing in
shares of our common stock. If any of the following risks actually occur, our business could be harmed. In that case, the trading price of our common stock could decline and you might lose all or part
of your investment. You should refer to the information set forth in this prospectus and our financial statements and the related notes included elsewhere in this prospectus.</I></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="de1425_risks_related_to_our_business"> </A>
<A NAME="toc_de1425_2"> </A>
<BR></FONT><FONT SIZE=2><B><I>Risks Related to Our Business    <BR>    </I></B></FONT></P>

<P><FONT SIZE=2><B>We will be opening new stores and expanding into new geographic regions, which could strain our resources and cause us to execute our business less effectively.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our growth will largely be dependent on successfully opening and operating new stores. During fiscal 2002, we opened 16 new stores. We plan to open 22 new stores
during fiscal 2003, and end the fiscal year with 111 stores. As of April&nbsp;30, 2003, we have opened five stores and signed leases for an additional ten stores. We intend to open an increasing
number of new stores in each of the next several years. Some of our new stores will be in regions where we have not previously operated, which will require greater management resources than opening
additional stores in regions already served by us. Our proposed expansion will place increased demands on our managerial, operational, and administrative resources. These increased demands could cause
us to execute our business less effectively, which in turn could cause deterioration in the financial performance of existing and newly opened stores as well as slow our expansion. </FONT></P>

<P><FONT SIZE=2><B>Our planned expansion involves a number of risks that could prevent or delay the successful opening of new stores as well as impact the performance of our existing stores.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ability to open and operate new stores successfully depends on many factors, including, among others, our ability to: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>identify
suitable store locations;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>negotiate
acceptable lease terms, including desired tenant improvement allowances, which have been an important part of our historical ability to grow profitably;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>obtain
adequate amounts of capital;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>source,
manage, and distribute sufficient levels of inventory to meet the needs of our existing and new stores;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>foster
existing and new relationships with vendors capable of supplying merchandise meeting our fashion, fit, and quality standards;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>hire
and train store personnel, including store managers;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>successfully
integrate new stores into our existing operations; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>satisfy
the fashion preferences of new geographic areas. </FONT></DD></DL>
</UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, many of our new stores will be opened in regions of the United States and its territories in which we currently have few or no stores. Our expansion into new markets may
present competitive, merchandising, and distribution challenges that are different from those that we currently encounter in our existing markets. As a result, we can provide no assurance that our
future store openings will provide a return consistent with our past store openings, or provide any return at all. Any of these challenges could adversely affect our business, results of operations,
and financial condition. In addition, to the extent our new store openings are in existing markets, we may experience reduced net sales volumes in existing stores in those markets. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

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<P><FONT SIZE=2><B>Our success depends on our ability to anticipate, identify, and rapidly respond to consumers' fashion tastes.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The apparel industry is subject to rapidly evolving fashion trends and shifting consumer demands. Accordingly, our success is heavily dependent on both the
priority our target customers place on fashion and our ability to anticipate, identify, and capitalize upon emerging fashion trends, including products, styles, and materials, and our ability to
distinguish our brand within the women's apparel market. Our failure to anticipate, identify, or react appropriately to changes in styles, trends, or desired image preferences could lead to, among
other things, a decline in sales, excess inventories, and higher markdowns, as well as decreased appeal of our merchandise, which could have a material adverse effect on our business, results of
operations, and financial condition. </FONT></P>

<P><FONT SIZE=2><B>If at any time our comparable store sales or quarterly results of operations decline or do not meet the expectations of research analysts, the price of our common stock could
decline substantially.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our comparable store sales and quarterly results of operations have fluctuated in the past and can be expected to continue to fluctuate in the future. For
instance, while quarterly comparable store sales increased at least 10% in each of the four quarters of fiscal 2002, we expect that the rate of increase will moderate in future periods as we grow our
business. Moreover, our comparable store sales may decline. Our comparable store sales and quarterly results of operations are affected by a variety of factors, including, among others: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
timing of new store openings and the relative proportion of new stores to mature stores;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>fashion
trends, including customer response to new and existing styles;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>calendar
shifts of holiday or seasonal periods;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>our
merchandising decisions;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in our merchandise mix and the margin percent of the various products we offer;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>our
ability to effectively source, manage, and distribute inventory;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>timing
and effectiveness of marketing events and programs, including our ability to effectively deploy and manage a customer loyalty program;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in general economic conditions, the retail sales environment, and consumer spending patterns;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
cost of electricity and other utilities in the markets where our stores are located;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>regional
economic conditions in areas where we have a significant number of stores, such as Florida and California;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>actions
by competitors or mall anchor tenants;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>acts
of war or terrorism;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>weather
conditions and natural disasters; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
level of pre-opening expenses associated with new stores. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our net sales and operating results are typically lower in the third quarter of our fiscal year. See "Management's Discussion and Analysis of Financial Condition and Results
of Operations." </FONT></P>

<P><FONT SIZE=2><B>Our failure to retain our existing senior management team could adversely affect our business.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business requires disciplined execution at all levels of our organization in order to timely deliver and display fashionable merchandise in appropriate
quantities in our stores. This execution requires experienced and talented management. If we were to lose the benefit of our experienced </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>8</FONT></P>

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<P><FONT SIZE=2>management
team, and in particular if we were to lose the services of Richard D. Sarmiento, our Chairman, President, and Chief Executive Officer, or Patricia Darrow-Smith, our Executive Vice
President, Merchandising, our business could be adversely affected. We expect to enter into employment agreements with Mr.&nbsp;Sarmiento and Ms.&nbsp;Darrow-Smith, as described below in the
section entitled "Management." We maintain key person insurance on the life of Mr.&nbsp;Sarmiento with a benefit to us of $500,000. We do not maintain key person insurance on the life of
Ms.&nbsp;Darrow-Smith. The loss of the services of Mr.&nbsp;Sarmiento or Ms.&nbsp;Darrow-Smith, or any of our other officers or key employees for any reason, could have a material adverse effect
on our business, results of operations, and financial condition. </FONT></P>

<P><FONT SIZE=2><B>We rely on a single distribution center which we will be moving to a new location, together with our headquarters.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on a single distribution center in Glen Burnie, Maryland, which also serves as our corporate headquarters. We plan to relocate our corporate headquarters
and distribution center to a new facility in the greater Baltimore area and vacate our current leased facility in late fiscal 2003 or early fiscal 2004. Any natural disaster or other disruption to our
existing or new distribution facilities due to fire, tornado, or any other cause could damage a significant portion of our inventory, impair our ability to adequately stock our stores and process
returns of products to vendors, and negatively affect our sales and profitability. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
plan to use approximately $1.7&nbsp;million of the proceeds of the offering to fund capital expenditures for the new distribution center and to pay moving expenses and the costs
associated with the termination of our existing distribution center lease. Of this amount, approximately $200,000 will be reflected as an expense on our financial statements in the fiscal quarter in
which we move. Any significant delay in the availability of the new facility, or unanticipated expense, capital cost, or disruption of our business or operations caused by the relocation to the new
facility would have a material adverse effect on our financial position, results of operations, and cash flows. If we are unable to generate increased sales and gross profit sufficient to absorb the
increased overhead and other costs associated with our relocation and potential expansion, we would likely experience lower profit margins, which could have a material adverse effect on our financial
position, results of operations, and cash flows. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further,
we intend to implement new hardware and software for our new distribution center. If the distribution center software does not work effectively, we may experience delays or
failures in the operation of the distribution center. These delays or failures could adversely impact the promptness and accuracy of our transaction processing, inventory distribution, merchandise
planning, financial accounting and reporting, and our ability to properly forecast earnings and cash requirements. These events would adversely affect our business, results of operations, and
financial condition. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
expect our planned new distribution center will have the capacity, without modification or enhancement, to serve approximately 250 stores. Despite our relocation, modified,
additional, and/or alternative facilities for distribution and inventory could be required in the future if there is significant growth in customer demand for our merchandise. There can be no
assurance that suitable facilities will be available, and, in the absence of such facilities, future growth could be impaired. </FONT></P>

<P><FONT SIZE=2><B>We depend on a limited number of key vendors.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We source a significant amount of our merchandise from a limited number of vendors. In fiscal 2002, 19.4% of our vendor purchases came from one vendor and 34.9%
of our vendor purchases came from our five highest volume vendors combined. Because our merchandise strategy relies in large part on our ability to obtain merchandise meeting our fashion, fit, and
quality standards from our vendors within a short time from the date of order, our access to reliable vendors is critical. Although we believe that our vendor relationships are good, there can be no
assurance that our vendor relationships will continue as presently in effect. The loss of a key vendor, the deterioration of our relationship with </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>9</FONT></P>

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<P><FONT SIZE=2>a
key vendor, or our failure to establish good relationships with major new vendors would have a material adverse effect on our business, results of operations, and financial condition. In addition,
because we expect to grow, we cannot be certain that our existing vendors will be able to meet our increased needs for quality products and responsiveness. We also cannot be certain that new vendors
will be available to meet those increased needs. If the merchandise quality or responsiveness of any of our key vendors declines or fails to meet our standards or growing demand, our ability to sell
merchandise would be impaired and our business would be harmed. </FONT></P>

<P><FONT SIZE=2><B>Our business is subject to risks associated with selling imported products.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2002, we believe that approximately 45% of the dollar volume of our merchandise was manufactured by third parties in Asia, Latin America, Canada,
Europe, and Africa. Risks inherent in selling imported products include: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>quotas
imposed by bilateral textile agreements;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>labor
disputes involving the apparel and shipping industries;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in social, political, and economic conditions, which could result in the disruption of trade from the countries in which our manufacturers or suppliers are located;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>diseases,
quarantines, or other health-related occurrences;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
imposition of additional regulations relating to imports;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
imposition of additional duties, taxes, and other charges on imports;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>significant
fluctuations of the value of the dollar against foreign currencies; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>restrictions
on the transfer of funds. </FONT></DD></DL>
</UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
one of these factors could have a material adverse effect on our business, results of operations, and financial condition. </FONT></P>

<P><FONT SIZE=2><B>In the future, we plan to originate designs and oversee the production of a portion of the products we sell, which may not prove cost-effective.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To date, our product sourcing strategy has consisted of working closely with a number of vendors to select, modify, and combine pieces designed and manufactured
by them or their sources. We expect to continue to source inventory from vendors. As we grow, we expect to develop in-house design capabilities and source a portion of our product directly
from third-party manufacturers. We plan, however, to maintain a balance between vendor-based and direct sourcing. To do so effectively, we will need to oversee the production of this merchandise. In
addition, longer product lead times will be required than the lead times which have been required by our vendors historically. Our experience in the design process is limited, and we currently have no
experience directly overseeing the production process. While we intend to hire personnel with experience in design and production, we cannot be certain that suitable individuals will be available. If
we do not effectively manage the design and production of our own garments, our growth will be impaired and our business could be harmed. Further, originating some of our own products may result in
our carrying more inventory, which may affect inventory turns and could increase our inventory risk. </FONT></P>

<P><FONT SIZE=2><B>Our stores are heavily dependent on the customer traffic generated by larger shopping destinations.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our strategy requires that our stores be located in lifestyle centers, street front locations, and regional malls where we believe our customers and potential
customers shop. Accordingly, our stores must be located in shopping destinations where other retailers attract a significant number of customers to whom our merchandise will appeal. Our stores must
also have favorable placement within those shopping destinations. We cannot control the development of alternative shopping destinations near our </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>10</FONT></P>

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<P><FONT SIZE=2>existing
stores, or the availability or cost of appropriate locations within existing or new shopping destinations. The failure of shopping destinations where our stores are located to attract
sufficient customer traffic, the failure of our stores within successful shopping destinations to attract customers, or significant cost increases for the locations we seek, would have a material
adverse effect on our results of operations. </FONT></P>

<P><FONT SIZE=2><B>Our market share may be adversely impacted at any time by a significant number of competitors.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate in a highly competitive environment characterized by low barriers to entry. We compete against a diverse group of retailers, including national and
local specialty retail stores, regional retail chains, traditional department stores, Internet and other direct retailers, and, to a lesser extent, mass merchandisers. Our market share and results of
operations may be adversely impacted by these competitors. Many of our competitors are larger than us and have substantially greater resources than we do and, as a result, may be able to adapt to
changing market conditions, exploit new opportunities, and open new stores more quickly and effectively than we can. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additionally,
the retail industry periodically has experienced consolidation and other ownership changes. In the future, other retailers in the United States and in foreign markets may
consolidate, undergo restructurings or reorganizations, or realign their affiliations. Any of these developments could result in competitors with more buying power or market visibility than they
currently hold. Such developments could have a material adverse effect on our business, results of operations, and financial condition. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe our white and black merchandising theme is a distinguishing element of our stores and one of the important reasons for our success. Competitors may attempt to copy our white
and black merchandising theme or create other color-oriented themes. Some of our competitors have the resources to deploy such strategies nationwide quickly. Any attempt to copy or mimic our
merchandising themes could have a material adverse effect on our business, results of operations, and financial condition. </FONT></P>

<P><FONT SIZE=2><B>Our focus on selling white and black apparel exposes us to loss of market share if other colors increase in popularity and may also present low barriers to entry to potential
competitors.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for apparel is subject to change based upon shifting consumer tastes. Among the consumer preferences that change are those for color. Because we offer
only white and black merchandise, our ability to exploit consumer trends in favor of colorful styles is limited. Therefore, a rise in the popularity of colorful styles would harm our market share and
revenues and could adversely affect our results of operations. Further, our success with stores selling only white and black clothes may attract competitors. Those competitors may adopt our strategy
of selling apparel of only one or two colors. If this occurs, our market share may decline and our goodwill may be diluted. Either or both of these events would harm our business. </FONT></P>

<P><FONT SIZE=2><B>Our business is sensitive to general economic conditions and consumer spending patterns, and a substantial or sustained decline in consumer spending would likely have a
negative impact on our business, results of operations, and financial condition.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on the expenditure of discretionary income for most, if not all, of our sales. Any downturn, whether real or perceived, in economic conditions or
prospects could adversely affect consumer spending patterns and our sales and results of operations. There can be no assurance that we will be able to maintain our historical rate of growth in
revenues and earnings, or remain profitable, particularly if the retail environment remains stagnant or declines. A recession in the general economy or uncertainties regarding future economic
prospects could affect consumer spending habits and have a material adverse effect on our business, results of operations, and financial condition. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>11</FONT></P>

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<P><FONT SIZE=2><B>Our success is closely tied to our ability to hire and retain talented people.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The success of our business depends upon effective customer interaction and is highly labor-intensive. Our success depends largely on our general ability to
attract, develop, motivate, and retain highly skilled store managers and sales associates. The loss of some or a significant number of our managers or salespeople or the inability to attract, hire,
develop, train, and retain additional personnel could have serious negative effects on us. These negative effects would include impairing our ability to maintain or increase sales and profits at
individual stores and thus our ability to maintain or improve our overall results of operations. </FONT></P>

<P><FONT SIZE=2><B>We depend on our management information systems and we rely on third parties for upgrading and maintaining these systems.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success is dependent on the accuracy, reliability, and proper use of our management information systems, including merchandise management systems used to
track our sales and facilitate inventory management. Among the operations for which we rely on our management information systems are merchandise planning, replenishment, and markdowns. These
functions enhance our ability to optimize sales while limiting markdowns and reducing inventory risk by properly marking down slow selling styles, reordering existing styles and effectively
distributing new inventory to our stores. We do not currently have redundant systems for all functions performed by our management information systems or a back-up telephone system. Any
interruption in these systems could impair our ability to function effectively. This impairment could have a material adverse effect on our financial position, results of operations, and cash flows. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
depend on third-party vendors to maintain and periodically upgrade our management information systems to support our business as we expand. The software programs supporting our
inventory management functions are licensed to us by third-party vendors. The inability of these vendors to continue to maintain and upgrade these software programs would disrupt our operations if we
are unable to convert to alternate systems in an efficient and timely manner. </FONT></P>

<P><FONT SIZE=2><B>Our proprietary rights are essential to our brand, and any interference with our ability to use them effectively will interfere with our brand message and harm our business.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our trademarks and other proprietary rights are important to our success. This is particularly the case for the
"White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market" marks because the name "White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market" is well known by our customers. Even though we take actions
to establish and protect our trademarks and other proprietary rights, we cannot assure you that others will not imitate our products or infringe on our intellectual property rights. In addition, we
cannot assure you that others will not resist or seek to block the sale of our products as infringements of their trademark and proprietary rights. In certain jurisdictions, other entities may have
rights to names that would limit our ability to rely on our own name and brand recognition to expand into such jurisdictions. In addition, if we fail to obtain or perfect trademark, ownership, or
license rights, it would limit our ability to expand into certain international markets or enter such markets with the White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market name, and to capitalize
on the value of our brand. </FONT></P>

<P><FONT SIZE=2><B>Because we have not yet chosen to sell our products through the Internet, we may lose sales or customers and we may be more vulnerable to competitors.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To date, we have chosen not to offer our customers the ability to purchase our merchandise over the Internet, and we do not plan on doing so in the current or
next fiscal year. The Internet, particularly in the retail industry, has become an increasingly popular distribution channel. Because some consumers perceive purchasing apparel over the Internet as an
efficient, cost-effective means of shopping, these consumers may refrain from purchasing from our stores. For these reasons, we may </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>12</FONT></P>

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<P><FONT SIZE=2>lose
business to competitors who offer consumers the option of purchasing merchandise online. By emphasizing an online presence, new competitors may also gain disproportionate market visibility and
thus render us at a competitive disadvantage. Loss of customers to online competitors would harm our revenue growth and adversely affect our results of operation. </FONT></P>

<P><FONT SIZE=2><B>The recent outbreak of severe acute respiratory syndrome could harm our business.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The recent outbreak of severe acute respiratory syndrome, or SARS, could cause disruption to our suppliers and their manufacturers located in China and elsewhere.
Our suppliers and their manufacturers could be disrupted by worker absenteeism, quarantines, or other travel or health-related restrictions as a result of SARS outbreaks or concern over SARS. If our
suppliers or their manufacturers are so affected, our supply chain could be disrupted, our product shipments could be delayed, and our business could be seriously harmed. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dg1425_risks_relating_to_the_offering"> </A>
<A NAME="toc_dg1425_1"> </A>
<BR></FONT><FONT SIZE=2><B><I>Risks Relating to the Offering    <BR>    </I></B></FONT></P>

<P><FONT SIZE=2><B>A substantial number of our shares of common stock are eligible for future sale, and the sale of these shares may depress our stock price, even if our business is doing well.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of a substantial number of shares of common stock after the offering could adversely affect the market price of our common stock and could impair our
ability to raise capital through the sale of additional equity securities. Upon completion of the offering, we will have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding.
The&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
of common stock sold in the offering, which would be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares if the underwriters' option to purchase
additional shares is exercised in full, will be freely tradable without restriction
or further registration under the federal securities laws unless purchased by our "affiliates" as that term is defined in Rule&nbsp;144. The
remaining&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock
outstanding upon completion of the offering will be "restricted securities" as that term is defined in Rule&nbsp;144. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of our stockholders and option holders will be subject to agreements that limit their ability to sell or otherwise dispose of any shares of common stock for a period of at least
180&nbsp;days after the date of this prospectus without the prior written approval of William Blair&nbsp;&amp; Company, L.L.C. When these agreements expire, these shares and the shares underlying the
options will become eligible for sale, subject to the volume, manner of sale, and notice requirements of Rule&nbsp;144. </FONT></P>

<P><FONT SIZE=2><B>Because our principal stockholders and management may have the ability to control stockholder votes, the premium over market price that an acquirer might otherwise pay may be
reduced and any merger or takeover may be delayed.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon completion of the offering, our officers and directors will, in the aggregate, beneficially own approximately&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding common
stock. If these stockholders act together, they would have the ability to control or significantly influence all matters submitted to our stockholders for approval, including: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
election or removal of our board of directors;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
amendment of our articles of incorporation or bylaws; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
adoption of measures that could delay or prevent a change in control or impede a merger, takeover, or other business combination involving us. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These
stockholders will have substantial influence over our management and our affairs. Accordingly, this concentration of ownership may have the effect of impeding a merger,
consolidation, takeover, or other business consolidation involving us, or discouraging a potential acquirer from making </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>13</FONT></P>

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<P><FONT SIZE=2>a
tender offer for our shares. This concentration of ownership could also adversely affect our stock's market price or lessen any premium over market price that an acquirer might otherwise pay. </FONT></P>


<P><FONT SIZE=2><B>The liquidity of our stock is uncertain because it has never been publicly traded, and you may not be able to resell your shares at or above the price you paid.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the offering, there has not been a public market for our common stock. As a result, the initial public offering price will be determined by negotiations
among the underwriters, the selling stockholders, and us, and may not be indicative of prices that will prevail in the public trading markets. Further, we cannot predict the extent to which a trading
market for our common stock will develop or how liquid that market will be. You may not be able to resell your shares at or above the initial public offering price. </FONT></P>

<P><FONT SIZE=2><B>The market price of our common stock may be materially adversely affected by market volatility.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market price of our common stock is likely to fluctuate, both because of actual and perceived changes in our financial results and prospects and because of
general volatility in the stock market. The factors that could cause fluctuations in our stock price may include, among other factors discussed in this section: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>actual
or anticipated variations in comparable store sales or quarterly operating results;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in financial estimates by research analysts;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>actual
or anticipated changes in the United States economy or the retailing environment;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>acts
of terrorism or war;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in the market valuations of other specialty apparel or retail companies;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>announcements
by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures, or other strategic initiatives; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>actual
or anticipated sales of common stock by existing stockholders, whether in the market or in a public offering. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
market price of our common stock could decline as a result of market sales by our existing stockholders after the offering, or the perception that such sales will occur. These sales
also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. See "Shares Eligible for Future Sale." </FONT></P>

<P><FONT SIZE=2><B>We are subject to anti-takeover provisions which could affect the price of our common stock.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain provisions of the Maryland General Corporation Law and of our charter and bylaws could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of us. The anti-takeover provisions in our charter and bylaws include: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>classifying
our board of directors such that only one-third of the directors are elected each year;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>authorizing
the issuance of "blank check" preferred stock that could be issued by our board of directors;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>limiting
the ability of stockholders to call a special meeting, remove directors, and amend our charter or bylaws;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>establishing
advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at
stockholder meetings; and </FONT></DD></DL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>14</FONT></P>

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<UL>
</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>allowing
the board of directors to consider effects of a potential acquisition of control of us on our employees, customers, vendors, and creditors as well as the
communities in which our offices and other establishments are located. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are also subject to the anti-takeover provisions of Section&nbsp;3-602 of the Maryland General Corporation Law which prohibits "business combinations" with
persons owning 10% or more of the voting shares of a corporation's outstanding stock, unless the combination is approved by the board of directors prior to the person owning 10% or more of the stock,
for a period of five years, after which such a business combination would be subject to special stockholder approval requirements. Additionally, we are subject to Section&nbsp;3-702 of
the Maryland General Corporation Law which limits the voting rights of "control shares" acquired in a "controlled share acquisition" except to the extent approved by stockholders. These provisions
could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or may otherwise discourage a potential acquiror from attempting to obtain
control from us, which in turn could have a material adverse effect on the market price of our common stock. </FONT></P>

<P><FONT SIZE=2><B>Investors in the offering will suffer immediate and substantial dilution in the book value of their investment in our common stock.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The initial public offering price per share will significantly exceed our net tangible book value per share. Accordingly, investors in the offering will suffer
immediate and substantial dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, assuming an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share.
This dilution is due in large part to the fact that earlier
investors paid substantially less than the public offering price when they purchased their shares of our common stock. The exercise of outstanding options and warrants to purchase our common stock
will result in additional dilution per share. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>15</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="di1425_forward-looking_statements"> </A>
<A NAME="toc_di1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>FORWARD-LOOKING STATEMENTS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This prospectus contains statements about future events and expectations that constitute forward-looking statements. We generally identify forward-looking
statements by the use of terminology such as "believe," "may," "will," "should," "anticipate," "predict," "potential," "estimate," "expect," "intend," "objective," "seek," "plan," "continue,"
"strive," or similar words, or the negatives of these words. Forward-looking statements are based on management's beliefs, assumptions, and expectations of our future performance, taking into account
the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results,
performance, or financial condition to differ materially from the expectations of future results, performance, or financial condition we express or imply in any forward-looking statements. Factors
that could contribute to these differences include, but are not limited to, those identified in the foregoing "Risk Factors," the additional factors set forth below, and other matters not yet known to
us or not currently considered material by us: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
cost of purchasing merchandise inventories;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>labor
shortages or increased labor costs;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in consumer preferences and demographic trends;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in our merchandise mix and the margin percent of the various products we offer;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>increasing
competition in the market for women's clothes;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>expansion
into new markets;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
rate of growth of general and administrative expenses associated with building additional corporate infrastructure to support our growth initiatives;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>fluctuations
in our quarterly results;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>increased
government regulation;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>supply
and delivery shortages or interruptions;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>market
saturation due to new store openings;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>changes
in tax and other laws applicable to our vendors, customers, or us;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>adverse
weather conditions which impact customer traffic at our stores; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>adverse
economic conditions. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
qualify any forward-looking statements entirely by these cautionary factors. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on
such forward-looking statements. Investors should recognize these statements for what they are and not rely on them as facts. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>16</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="di1425_use_of_proceeds"> </A>
<A NAME="toc_di1425_2"> </A>
<BR></FONT><FONT SIZE=2><B>USE OF PROCEEDS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The net proceeds to us from the sale
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock being offered by us at an assumed initial public offering of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per
share, after deducting estimated underwriting discounts and commissions and estimated offering expenses, are estimated to be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million. We will not receive any
proceeds
from shares of common stock sold by the selling stockholders, nor can we participate in the sale of additional shares relating to the underwriters' over-allotment option, if exercised. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
primary purpose of the offering is to create a public market for our common stock in order to facilitate our future access to public capital. Of the net proceeds to us from the
offering, we intend to use: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>$11.8&nbsp;million
to make required distributions to certain holders of our common stock;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>$1.7&nbsp;million
to fund capital expenditures and pay expenses incurred in connection with the planned relocation of our headquarters and distribution center; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
remaining net proceeds from the offering for general corporate purposes, including the opening of new stores and working capital. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pending
application of the net proceeds as described above, we will invest the net proceeds in interest-bearing, investment-grade securities. Although we do not contemplate any changes
in our use of proceeds, we may reprioritize the uses listed above or use some proceeds for other purposes in the event the specified uses require less capital than expected. The holders of our common
stock receiving the required distribution are also selling stockholders in the offering. See "Management's Discussion and Analysis of Financial Condition and Results of Operation&#151;Amounts
Distributable to Holders of Class&nbsp;C Common Stock" and "Principal and Selling Stockholders." </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="di1425_dividend_policy"> </A>
<A NAME="toc_di1425_3"> </A>
<BR></FONT><FONT SIZE=2><B>DIVIDEND POLICY    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently intend to retain all future earnings to finance the expansion of our business. We have not paid cash dividends in the past and do not anticipate
paying cash dividends in the foreseeable future. In addition, except as described below, we are currently prohibited from paying dividends by our bank credit agreement. Any future determination
regarding cash dividend payments will be made by our board of directors and will depend upon our earnings, capital requirements, financial condition, restrictions in financing agreements, and other
factors deemed relevant by our board of directors. However, we plan to make a required distribution of $11.8&nbsp;million to holders of our Class&nbsp;C common stock upon completion of the
offering. See "Management's Discussion and Analysis of Financial Condition and Results of Operation&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock." </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>17</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk1425_capitalization"> </A>
<A NAME="toc_dk1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>CAPITALIZATION    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our capitalization as of February&nbsp;1, 2003 on an actual and as adjusted basis. The "actual" column reflects our
capitalization as of February&nbsp;1, 2003 on a historical basis, without any adjustments to reflect subsequent or anticipated events. The "as adjusted" column reflects our capitalization as of
February&nbsp;1, 2003 with adjustments to reflect: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>our
adoption of amended and restated articles of incorporation that will provide for authorized capital stock of 25,000,000 shares of common stock and 5,000,000 shares of
undesignated preferred stock;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
conversion of all outstanding shares of our Class&nbsp;A common stock and Class&nbsp;C common stock into common stock upon the closing of the offering; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
receipt by us of the estimated net proceeds from the sale of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock by us in the offering at an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share and the application of the net proceeds therefrom, including the payment of the required distributions to our Class&nbsp;C common stockholders of $11.8&nbsp;million.
See
"Use of Proceeds." </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None
of the columns shown below reflect the following: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>309,138
shares of common stock issuable as of the date of this prospectus upon the exercise of outstanding stock options under our 1999 Stock Option Plan at a weighted
average exercise price of $5.22 per share; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>an
aggregate of 813,939 shares of common stock available as of the date of this prospectus for future issuance under our 1999 Stock Option Plan, our 2003 Stock Option Plan,
and our 2003 Employee Stock Purchase Plan. </FONT></DD></DL>
</UL>
<BR>

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<TH WIDTH="5%"><FONT SIZE=1>&nbsp;</FONT></TH>
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</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>(in thousands, except share and per share data)<BR> </B></FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Cash</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,081</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Short-term debt, including current portion of capitalized lease obligations and amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>1,688</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>571</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Long-term debt, including capitalized lease obligations and amounts distributable to Class C common stockholders, net of current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>6,131</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,104</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Total debt including amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>7,819</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,675</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Stockholders' equity:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Preferred stock, $.01 par value per share, no shares authorized, issued and outstanding, actual; 5,000,000 shares authorized and no shares issued and outstanding, as adjusted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Common stock, $.01 par value per share, no shares authorized, issued and outstanding, actual; 25,000,000 shares authorized and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and
outstanding, as adjusted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Class A common stock, $.01 par value per share, 15,000,000 shares authorized and 3,425,649 issued and outstanding, actual; no shares authorized, issued and outstanding, as adjusted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>34</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Class B common stock, $.01 par value per share, 100,000 shares authorized and no shares issued and outstanding, actual; no shares authorized, issued and outstanding, as adjusted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Class C common stock, $.01 par value per share, 8,000,000 shares authorized and 2,357,422 shares issued and outstanding, actual; no shares authorized, issued and outstanding, as adjusted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>24</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>7,856</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Unearned stock compensation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(74</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>(74</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>(3,447</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Total stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>4,393</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Total capitalization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>12,212</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>18</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=22,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=57262,FOLIO='18',FILE='DISK008:[03WDC5.03WDC1425]DK1425A.;29',USER='YLEE',CD='22-MAY-2003;11:56' -->
<A NAME="page_dk1425_1_19"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dk1425_dilution"> </A>
<A NAME="toc_dk1425_2"> </A>
<BR></FONT><FONT SIZE=2><B>DILUTION    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our pro forma net tangible book value as of February&nbsp;1, 2003 was $4.4&nbsp;million, or $0.76 per share of common stock. Our pro forma net tangible book
value per share is determined by subtracting the total amount of our liabilities from the total amount of our tangible assets and dividing the remainder by the number of shares of our common stock
outstanding after giving effect to the conversion of all outstanding shares of our Class&nbsp;A common stock and Class&nbsp;C common stock into a single class of common stock. Dilution in pro
forma net tangible book value per share represents the difference between the price per share to be paid by new investors in the offering and the pro forma net tangible book value per share
immediately after the offering. After giving effect to the sale of the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock offered by us at an assumed initial public offering price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share
and deducting the underwriting discount and estimated offering expenses payable by us, and after giving effect to the $5.0&nbsp;million decrease in net tangible book value related to the required
distributions to holders of our Class&nbsp;C common stock in excess of the amount accrued, our pro forma as adjusted net tangible book value as of February&nbsp;1, 2003 would have been
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of common stock. This represents an immediate increase in net tangible book value
of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to existing stockholders and an
immediate dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to new investors in the common stock. The following table illustrates this per share dilution: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="65%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Assumed initial public offering price per share</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="74%"><FONT SIZE=2>Pro forma net tangible book value per share before the offering</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.76</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="74%"><FONT SIZE=2>Increase attributable to new investors in the offering</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="74%"><FONT SIZE=2>Decrease attributable to distributions to holders of Class&nbsp;C common stock in excess of the amount accrued</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Pro forma net tangible book value per share after the offering</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Dilution in pro forma net tangible book value per share to new investors</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="4%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth as of February&nbsp;1, 2003: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
number of shares of common stock purchased by existing stockholders (assuming the conversion of all outstanding shares of our Class&nbsp;A common stock and
Class&nbsp;C common stock into shares of common stock), the total consideration, and the average price per share paid to us for these shares;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
number of shares of our common stock purchased by new investors, the total consideration, and the price paid by them for these shares (at an assumed initial public
offering price of $&nbsp;&nbsp;&nbsp;&nbsp;per share); and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
percentage of shares purchased by the existing stockholders and new investors and the percentages of consideration paid to us for these shares. </FONT></DD></DL>
</UL>
<BR>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="91%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Shares Purchased<SUP>(1)</SUP></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=4 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total Consideration</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Average Price<BR>
Per Share</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Number</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>Percent</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Amount</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER"><FONT SIZE=1><B>Percent</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Existing stockholders<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,783,071</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>10,048,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>1.74</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>New investors<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="34%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>100.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>100</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>The
shares purchased information shown in the table excludes: (i)&nbsp;309,138 shares of common stock issuable as of the date of this prospectus upon the exercise of outstanding
stock options under our 1999 Stock Option Plan at a weighted average exercise price of $5.22 per share; and (ii)&nbsp;an aggregate of 813,939 shares of common stock available as of the date of this
prospectus for future issuance under our 1999 Stock Option Plan, our 2003 Stock Option Plan, and our 2003 Employee Stock Purchase Plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>This
table does not give effect to sales of common stock by the selling stockholders. Sales by the selling stockholders in the offering will reduce the number of shares held by
existing stockholders to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock,
or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the shares outstanding, and will increase the number of shares held by our new investors
to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of common stock, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the shares outstanding. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>19</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=2,SEQ=23,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=187298,FOLIO='19',FILE='DISK008:[03WDC5.03WDC1425]DK1425A.;29',USER='YLEE',CD='22-MAY-2003;11:56' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_dm1425_1_20"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dm1425_selected_financial_and_operating_data"> </A>
<A NAME="toc_dm1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>SELECTED FINANCIAL AND OPERATING DATA    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following selected statements of operations data and other data in fiscal 2000, 2001, and 2002 and the balance sheet data at the end of fiscal 2001 and fiscal
2002 are derived from our financial statements, audited by KPMG LLP, included elsewhere in this prospectus. The selected statements of operations data and other data in fiscal 1998 and 1999 and the
balance sheet data at the end of fiscal 1998, fiscal 1999, and fiscal 2000 are derived from unaudited financial statements not included in this prospectus. The selected store data for all fiscal
periods presented have been derived from internal records of our operations. The historical results presented below are not necessarily indicative of the results to be expected for any future period.
You should read the selected financial and operating data shown below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial
statements and related notes included elsewhere in this prospectus. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="87%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1998</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>(in thousands, except per share, store data, and other data)<BR> </B></FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=1><B>Statement of Operations Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>24,328</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>28,530</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>37,721</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>49,532</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>66,956</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Cost of goods sold<SUP>(1)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>11,641</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>13,501</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>17,676</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>21,884</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>28,271</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>12,687</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>15,029</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>20,045</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>27,648</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>38,685</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Selling, general and administrative expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>12,124</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>14,199</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>19,101</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>24,627</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>30,414</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>593</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>558</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>912</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,176</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,492</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Operating income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(30</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>272</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>32</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,845</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>6,779</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Interest expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>428</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>53</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>198</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>326</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>217</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Income (loss) before income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(458</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>219</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(166</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,519</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>6,562</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(82</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>113</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(48</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>650</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>2,652</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(376</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>106</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(118</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>869</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>3,910</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Amounts distributable to Class C common stockholders<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>25</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>981</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,475</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,679</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,984</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net income (loss) applicable to common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(401</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(875</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(1,593</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(810</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1,926</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Basic and diluted net income (loss) applicable to common stockholders per weighted average common&nbsp;share:<SUP>(3)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="31%"><FONT SIZE=1>Basic</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.28</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>0.33</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="31%"><FONT SIZE=1>Diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.28</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>0.33</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="31%"><FONT SIZE=1>Pro forma diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Weighted average common shares outstanding:<SUP>(3)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="31%"><FONT SIZE=1>Basic</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>3,700</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,459</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="31%"><FONT SIZE=1>Diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>3,700</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,459</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5,870</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="31%"><FONT SIZE=1>Pro forma diluted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=1><B>Store Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Comparable store sales growth<SUP>(4)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>2.9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>7.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>5.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>13.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>16.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Stores open at beginning of period</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>47</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>60</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>71</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>77</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>New stores</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>9</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=1>Closed stores</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Stores open at end of period</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>50</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>60</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>71</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>77</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>92</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Total square feet at end of period<SUP>(5)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>56,659</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>72,022</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>93,751</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>105,623</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>134,061</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Net sales per square foot<SUP>(6)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>441</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>468</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>460</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>494</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>559</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Average net sales per store<SUP>(7)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>516,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>551,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>593,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>679,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>790,000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=1><B>Other Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Gross profit percentage</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>52.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>52.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>53.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>55.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>57.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=1>Operating income (loss) percentage</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>(0.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>1.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>0.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>3.7</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=1>10.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="CENTER"><BR><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B><BR>
January 30,<BR>
1999</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B><BR>
January 29,<BR>
2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B><BR>
February 3,<BR>
2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B><BR>
February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1><B><BR>&nbsp;</B></FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B><BR>
February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=1><B>Balance Sheet Data:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=1>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=1>Working capital (deficit)<SUP>(8)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>66</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>1,191</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(1,271</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>(707</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>599</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=1>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>5,744</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>9,284</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>13,564</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>15,146</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>20,223</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=1>Total debt including capital lease obligations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>388</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>753</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>3,010</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>2,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>1,675</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=1>Amounts distributable to Class C common stockholders<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>25</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>1,006</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>2,481</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>4,160</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>6,144</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=1>Total liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>3,053</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>4,468</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>10,333</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>12,709</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>15,830</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="30%"><FONT SIZE=1>Stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>2,691</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>4,816</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>3,231</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>2,437</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=1>4,393</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>20</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=24,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=231848,FOLIO='20',FILE='DISK008:[03WDC5.03WDC1425]DM1425A.;27',USER='YLEE',CD='22-MAY-2003;14:44' -->
<A NAME="page_dm1425_1_21"> </A>
<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Cost
of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the distribution center to our
stores.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Represents
amounts distributable to Class&nbsp;C common stockholders pursuant to the terms of our amended and restated articles of incorporation. The amounts distributable to
Class&nbsp;C common stockholders are not classified within stockholders' equity because of the required distribution feature. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock."
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>See
note&nbsp;3 of our financial statements for an explanation of the methods used to determine the number of shares used in computing net income (loss) per share data. Prior to the
completion of the offering, we have two classes of common stock outstanding and the net income (loss) applicable to common stockholders per share is the same for each class. Pro forma diluted net
income applicable to common stockholders per weighted average common share was calculated by dividing net income by the number of pro forma diluted weighted average shares. Pro forma diluted weighted
average shares were calculated by adding the number of shares to be issued in the offering to the diluted weighted average shares outstanding. Upon completion of the offering, all amounts accrued for
distribution to Class&nbsp;C common stockholders will be paid. In addition, payment of our obligation with respect to future distributions to Class&nbsp;C common stockholders will be accelerated,
which will result in a deduction from net income of approximately $5.0&nbsp;million in the quarter in which the offering is completed, for the purpose of determining net income applicable to common
stockholders. Accordingly, these amounts have been excluded because the distribution obligation is required to be satisfied with proceeds from the offering. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock."
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Comparable
store sales begin in a store's 15<SUP>th</SUP> month of operations.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Calculated
using gross square footage of all stores open at the end of the period.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Calculated
using net sales and gross square footage of all stores open at both the beginning and the end of the period.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Calculated
using net sales of all stores open at both the beginning and the end of the period.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Defined
as current assets less current liabilities. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=2,SEQ=25,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=446311,FOLIO='21',FILE='DISK008:[03WDC5.03WDC1425]DM1425A.;27',USER='YLEE',CD='22-MAY-2003;14:44' -->
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_do1425_1_22"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="do1425_management_s_discussion_and_an__man03466"> </A>
<A NAME="toc_do1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION<BR>  AND RESULTS OF OPERATIONS    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>The following discussion and analysis should be read in conjunction with "Selected Financial and Operating Data" and our financial
statements and related notes appearing elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual
results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, but not limited to, those set forth under "Risk Factors" in this
prospectus.</I></FONT></P>

<P><FONT SIZE=2><B>Overview  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a specialty retailer offering distinctive private brand women's apparel in the classic and timeless colors of white and black. We target educated,
middle-to-upper income, youthful women between the ages 30 and 50, who lead active work and social lives and place a premium on contemporary, feminine clothing and a high level
of personalized service. Our goal is to make our customers "look and feel beautiful" by offering a unique assortment of quality and fashionable apparel designed for a woman's everyday and special
occasion needs. Our boutique-like stores are designed to highlight the distinctiveness of our merchandise, which together with our high level of personalized service, enhance customer
recognition and loyalty to our brand. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
net sales increased from $28.5&nbsp;million in fiscal 1999 to $67.0&nbsp;million in fiscal 2002, a compound annual growth rate of 32.9%. Over the three-year period
ended fiscal 2002, we increased our store base from 60 to 92 and our comparable store sales gains averaged 11.5% per fiscal year, increasing 13.1% in fiscal 2001 and 16.3% in fiscal 2002. We believe
that these increases resulted from our focus on our core customers' preferences and improvement in the execution of our merchandising strategy. Our gross profit percentage increased from 52.7% of our
net sales in fiscal 1999 to 57.8% of our net sales in fiscal 2002. Operating income increased from $272,000 in fiscal 1999 to $6.8&nbsp;million in fiscal 2002, and our net income grew from $106,000
in fiscal 1999 to $3.9&nbsp;million in fiscal 2002. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of April&nbsp;30, 2003, we operated 96 stores in the United States and its territories. Our stores are located in a variety of retail settings such as lifestyle centers, street
front locations, and regional malls. Our stores opened in fiscal 2002 required an average total investment of approximately $154,000 per store, inclusive of pre-opening costs, fixtures, equipment,
leasehold improvements, and inventory, but
net of landlord allowances and vendor financing. Our store model for fiscal 2003 requires an average total investment of approximately $190,000 per store, inclusive of pre-opening costs, fixtures,
equipment, leasehold improvements, and inventory, but net of landlord allowances and vendor financing. Our stores opened in fiscal 2001 produced a cash payback in approximately 11&nbsp;months and
provided a cash return on invested capital of approximately 112% in their first full fiscal year. Based on our store opening and operating experience, we expect our new stores opening in fiscal 2003
to produce a cash payback in approximately 14 months and a cash return on invested capital of approximately 90% in their first full year of operation. We believe that our cash flow from operations
will permit our planned store growth to continue without a substantial ongoing requirement of external capital. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
plan to open 22 additional stores during fiscal 2003 and 25 to 30 additional stores in fiscal&nbsp;2004. In fiscal 2003, we plan to close three stores. During fiscal 2004, we intend
to close one&nbsp;store&nbsp;and&nbsp;consolidate six of our white and black only single concept stores into three White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market stores. In fiscal 2005,
we plan to consolidate the remaining six single concept stores into three White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market stores. We expect that these consolidations will have a favorable
impact on our total comparable store sales. However, the net sales of the three consolidated stores are expected to be less than the historical sales of the original six single concept stores. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have established relationships with more than 100 different vendors, and rely on five to seven core vendors. These vendors supply us with approximately one-third of our
total purchases and collaborate with us for trend analysis and our private brand merchandise design. We believe that approximately 55% of our merchandise by dollar volume in fiscal 2002 was produced
domestically by our vendors and their sources, with the balance manufactured by third parties in Asia, Latin America, Canada, Europe, and Africa. Historically, domestic sourcing has resulted in
shorter lead times, more consistent delivery, smaller order quantities, and quicker response to changes in fashion and business trends. To the extent the products we sell are manufactured in foreign
countries, we are subject to certain risks associated with imports. As we grow, we expect to develop in-house design capabilities and source a portion of our product directly from
third-party manufacturers. We plan, however, to maintain a balance between vendor-based and direct sourcing, in order to preserve flexibility and design creativity while increasing production
capacity. We believe that this sourcing strategy will provide an opportunity to improve our gross profit percentage in the future. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
late fiscal 2003 or early fiscal 2004, we expect to move from the 30,400 square foot headquarters and distribution facility we have occupied since November&nbsp;1999 to a new
100,000 square foot headquarters and distribution facility. As a result, we expect a slight increase in our distribution and warehousing costs which are included as a component of our cost of goods
sold. We plan to use approximately $1.7&nbsp;million of the proceeds of the offering to fund capital expenditures for the new distribution center and to pay moving expenses and the costs associated
with the termination of our existing distribution center lease. Of this amount, approximately $200,000 will be reflected as an expense on our financial statements in the fiscal quarter in which we
move. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
were founded in 1985 by Richard Sarmiento, our Chairman, President, and Chief Executive Officer. Our initial investors were Mr.&nbsp;Sarmiento and his friends and family. From 1985
to 1999, we funded our expansion primarily from operations. In January&nbsp;1999 we raised $8.1&nbsp;million from institutional private equity investors to repay debt and provide growth capital.
We plan to distribute $11.8&nbsp;million of the proceeds to us from the offering to make required distributions to certain holders of our common stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock." </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
any given period, our gross margin may be impacted by changes in the margin percent of the various products we offer as well as changes in the relative mix of revenues from
accessories and different categories of apparel products. </FONT></P>

<P><FONT SIZE=2><B>Results of Operations  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales constitute gross sales net of returns. We include a store in comparable store sales on the first day of the 15<SUP>th</SUP> month of its operations.
Cost of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the distribution center to our stores. Selling,
general and administrative, or SG&amp;A, expenses include marketing and advertising, buying and merchandising, store occupancy, and other store and corporate expenses. The following table presents, for
the periods indicated, selected items in the statements of operations as a percentage of net sales: </FONT></P>

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<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="4%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="4%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="4%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>100.0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>100.0</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>100.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Cost of goods sold</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>46.9</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>44.2</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>42.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="65%"><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>53.1</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>55.8</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>57.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Selling, general and administrative expenses</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>50.6</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>49.7</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>45.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2.4</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2.4</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2.2</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="65%"><FONT SIZE=2>Operating income</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.1</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3.7</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>10.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Interest expense</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.5</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.6</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="65%"><FONT SIZE=2>Income (loss) before income tax expense (benefit)</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.4</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3.1</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Income tax expense (benefit)</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.1</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1.3</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>4.0</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="65%"><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.3</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>)%</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1.8</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="4%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>23</FONT></P>

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<P><FONT SIZE=2><B>Year Ended February&nbsp;1, 2003 (Fiscal 2002) Compared with Year Ended February&nbsp;2, 2002 (Fiscal 2001)  </B></FONT></P>

<P><FONT SIZE=2><I>Net Sales  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales increased by $17.4&nbsp;million, or 35.2%, to $67.0&nbsp;million in fiscal 2002 from $49.5&nbsp;million in fiscal 2001. The increase was
attributable to comparable store sales increases of 16.3%, or $7.6&nbsp;million, and sales by stores not included as comparable stores of $9.8&nbsp;million. During fiscal 2002, we opened 16 new
stores and closed one store. We believe that these net sales increases resulted from continued focus on our core customers' preferences and improvement in the execution of our merchandise strategy. </FONT></P>

<P><FONT SIZE=2><I>Gross Profit  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit in fiscal 2002 was $38.7&nbsp;million compared with $27.7&nbsp;million in fiscal 2001, an increase of 39.9%. As a percentage of net sales, gross
profit was 57.8% in fiscal 2002 compared to 55.8% in fiscal 2001. The increase in gross profit as a percentage of net sales was primarily the result of enhanced purchasing power, which generated
higher initial mark ups, and, to a lesser extent, reduced freight costs and inventory shrinkage, partially offset by a slight increase in markdowns. </FONT></P>

<P><FONT SIZE=2><I>Selling, General and Administrative Expenses  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SG&amp;A expenses in fiscal 2002 were $30.4&nbsp;million compared with $24.6&nbsp;million in fiscal 2001, an increase of 23.5%. As a percentage of sales, SG&amp;A
expenses were 45.5% in fiscal 2002 compared to 49.7% in fiscal 2001. The increase in total SG&amp;A expense is primarily the result of costs associated with new stores as well as increases in
administrative staff to support our growth and incentive compensation awards. The decrease in these expenses as a percentage of net sales is attributable to expense leverage associated with our total
net sales gains primarily in store payroll, occupancy costs, and administrative expenses. </FONT></P>

<P><FONT SIZE=2><I>Depreciation and Amortization  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization expense in fiscal 2002 was $1.5&nbsp;million compared with $1.2&nbsp;million in fiscal 2001, an increase of 26.9%. The increase
was principally related to the depreciation of furniture and fixtures and the amortization of leasehold improvements associated with new stores, the amortization of a new merchandise and point of sale
software system, and the acceleration of the amortization of leasehold improvements related to our current headquarters and distribution center due to a planned relocation in late fiscal 2003 or early
fiscal 2004. </FONT></P>

<P><FONT SIZE=2><I>Operating Income  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income in fiscal 2002 was $6.8&nbsp;million compared with $1.8&nbsp;million in fiscal 2001. As a percentage of net sales, operating income was 10.1%
in fiscal 2002 compared to 3.7% in fiscal 2001. As a percentage of net sales, the increase in operating income is primarily attributable to the increase in expense leverage associated with comparable
store sales gains and an increase in gross profit percentage. </FONT></P>


<P><FONT SIZE=2><I>Income Tax Expense (Benefit)  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense was $2.7&nbsp;million in fiscal 2002 compared with $650,000 in fiscal 2001. The effective tax rate in fiscal 2002 and fiscal 2001 was 40.4%
and 42.8%, respectively. The decrease in effective tax rate is primarily related to lower state income tax rates in new locations. </FONT></P>

<P><FONT SIZE=2><I>Net Income (Loss)  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income increased by $3.0&nbsp;million to $3.9&nbsp;million, or 5.8% of net sales, in fiscal 2002 from $869,000, or 1.8% of net sales, in fiscal 2001. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>24</FONT></P>

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<P><FONT SIZE=2><B>Year Ended February&nbsp;2, 2002 (Fiscal 2001) Compared with Year Ended February&nbsp;3, 2001 (Fiscal 2000)  </B></FONT></P>

<P><FONT SIZE=2><I>Net Sales  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net sales increased by $11.8&nbsp;million, or 31.3%, to $49.5&nbsp;million in fiscal 2001 from $37.7&nbsp;million in fiscal 2000. The increase was
attributable to comparable store sales increases of 13.1%, or $4.4&nbsp;million, and sales by stores not included as comparable stores of $7.4&nbsp;million. During fiscal 2001, we opened nine new
stores and closed three stores. </FONT></P>

<P><FONT SIZE=2><I>Gross Profit  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit in fiscal 2001 was $27.6&nbsp;million compared with $20.0&nbsp;million in fiscal 2000, an increase of 37.9%. As a percentage of net sales, gross
profit was 55.8% in fiscal 2001 compared to 53.1% in fiscal 2000. The increase in gross profit as a percentage of net sales was primarily the result of enhanced purchasing power, which generated
higher initial mark ups, and, to a lesser extent, reduced inventory shrinkage. </FONT></P>


<P><FONT SIZE=2><I>Selling, General and Administrative Expenses  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SG&amp;A expenses in fiscal 2001 were $24.6&nbsp;million compared with $19.1&nbsp;million in fiscal 2000, an increase of 28.9%. As a percentage of sales, SG&amp;A
expenses were 49.7% in fiscal 2001 compared to 50.6% in fiscal 2000. The increase in total SG&amp;A expense is primarily the result of costs associated with new stores as well as increases in
administrative staff to support our growth. The decrease in these expenses as a percentage of net sales is attributable to expense leverage associated with our total net sales gains primarily in store
payroll, occupancy costs and administrative expenses. </FONT></P>


<P><FONT SIZE=2><I>Depreciation and Amortization  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization in fiscal 2001 was $1.2&nbsp;million compared with $912,000 in fiscal 2000, an increase of 28.9%. The increase was principally
related to the depreciation of furniture and fixtures and the amortization of leasehold improvements associated with new stores. </FONT></P>

<P><FONT SIZE=2><I>Operating Income  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating income in fiscal 2001 was $1.8&nbsp;million compared with $32,000 in fiscal 2000. As a percentage of net sales, operating income was 3.7% in fiscal
2001 compared to 0.1% in fiscal 2000. As a percentage of net sales, the increase in operating income is primarily attributable to the increase in comparable store sale gains and an increase in gross
profit percentage. </FONT></P>

<P><FONT SIZE=2><I>Income Tax Expense (Benefit)  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense was $650,000 in fiscal 2001 compared with a $48,000 income tax benefit in fiscal 2000. The effective tax rates in fiscal 2001 and fiscal 2000
were 42.8% and 28.9%, respectively. </FONT></P>


<P><FONT SIZE=2><I>Net Income (Loss)  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income increased by $1.0&nbsp;million to $869,000, or 1.8% of net sales, in fiscal 2001 from a loss of ($118,000) in fiscal 2000. </FONT></P>

<P><FONT SIZE=2><B>Liquidity and Capital Resources  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our primary capital requirements are for capital investments, inventory, and pre-opening expenses for new stores as well as for store remodeling,
store fixtures, and ongoing infrastructure improvements. Historically, our main sources of liquidity have been cash flows from operations, borrowings under our credit facility, equipment financing,
and proceeds from sales of our common stock. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>25</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth elements of our cash flows and financial condition for the periods indicated (dollars in thousands): </FONT></P>

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<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="63%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Net cash provided by operating activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,281</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,564</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5,495</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(3,371</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(1,628</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(2,963</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Net cash provided by (used in) financing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,183</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(691</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(1,970</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Total debt including capital lease obligations (at end of period)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3,010</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,344</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,675</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Working capital (deficit) (at end of period)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(1,271</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(707</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>599</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Cash (at end of period)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>274</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>519</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,081</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash provided by operating activities in fiscal 2002 of $5.5&nbsp;million, primarily related to net income of $3.9&nbsp;million and depreciation and amortization
of $1.5&nbsp;million. Net cash provided by operating activities in fiscal 2001 of $2.6&nbsp;million, primarily related to net income of $869,000 and depreciation and amortization of
$1.2&nbsp;million. Net cash provided by operating activities in fiscal 2000 of $1.3&nbsp;million, primarily related to a net loss of ($118,000), depreciation and amortization of $912,000, and a
change in working capital resulting from an increase in trade accounts payable of $2.0&nbsp;million offset by an increase in merchandise inventories of $1.4&nbsp;million. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash used in investing activities in fiscal 2002 of $3.0&nbsp;million, primarily related to capital expenditures for new store openings and existing store renovations. Net cash
used in investing activities in fiscal 2001 of $1.6&nbsp;million, primarily related to capital expenditures for new store openings. Net cash used in investing activities in fiscal 2000 of
$3.4&nbsp;million, primarily related to capital expenditures for new store openings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash used in financing activities in fiscal 2002 of $2.0&nbsp;million, primarily related to net repayments of borrowing under the line of credit. Net cash used in financing
activities in fiscal 2001 of $691,000, primarily related to net repayments of borrowings under the line of credit. Net cash provided by financing activities in fiscal 2000 of $2.2&nbsp;million,
primarily related to net borrowings under the line of credit and net proceeds from equipment financing. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have a $12.0&nbsp;million line of credit agreement with Wells Fargo Bank N.A. (the bank), which included a $7.0&nbsp;million revolving line of credit (which we refer to as our
standard line) and a $5.0&nbsp;million special sub-line of credit (which we refer to as our special sub-line). The amounts are limited by borrowing base calculations, as defined in the
agreement. These borrowing base calculations take into account a number of factors, including merchandise inventories, net shrinkage, and rent. The aggregate unpaid principal amount of all advances
bears interest, until repaid, at the bank's prime rate (4.25% as of April&nbsp;30, 2003) plus 0.25% and 2.0% for the standard line and the special sub-line, respectively. We have granted the bank a
security interest in substantially all of our receivables, inventory, and cash as collateral for the line of credit. Under provisions in the agreement, we must comply with certain covenants, including
the maintenance of our inventory balance between a minimum and maximum level and achievement of certain store contribution levels. The line of credit agreement prohibits us from paying any cash
dividends or other distributions with respect to our stock without the bank's consent. The credit agreement will expire in August 2006. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of May&nbsp;3, 2003, we had outstanding borrowings under the line of credit of $926,000 and $3.1&nbsp;million of available borrowing capacity. During fiscal 2002, average
month-end outstanding borrowings were $271,000. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;INVESCO
Private Capital, Inc. and Phillips-Smith Specialty Retail Group, together with certain affiliates, currently beneficially own all of the 2,357,422 shares of Class&nbsp;C common
stock outstanding, reflecting an aggregate investment of $8.8&nbsp;million. Substantially all of these investments were made in fiscal&nbsp;1999 and fiscal 2000. In connection with the offering,
we intend to use $11.8&nbsp;million of the net proceeds from the offering to us to make distributions to holders of our Class&nbsp;C common stock which </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>26</FONT></P>

<HR NOSHADE>
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<A NAME="page_do1425_1_27"> </A>
<BR>

<P><FONT SIZE=2>are
required upon the completion of a qualified initial public offering. See "&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock." </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
capital requirements include construction and fixturing costs related to the opening of new stores and for maintenance and remodeling expenditures for existing stores. Future capital
requirements and the adequacy of available funds will depend on many factors, including the pace of expansion, the availability of suitable site locations, and the nature of arrangements negotiated
with landlords. During fiscal 2003, capital expenditures are planned to be approximately $5.5&nbsp;million. Of this amount, approximately $2.7&nbsp;million relates primarily to leasehold
improvements and furniture and fixtures for the opening of 22 new stores, and approximately $1.5&nbsp;million relates to equipment, systems, and leasehold improvements for our new headquarters and
distribution center. We expect cash flows from operations, available borrowings under the line of credit and proceeds from the offering will be sufficient to meet our cash requirements for at least
the next 12&nbsp;months. </FONT></P>


<P><FONT SIZE=2><B>Contractual Obligations and Commercial Commitments  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes our contractual obligations including both on and off-balance sheet arrangements, in effect at February&nbsp;1, 2003
(in thousands): </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="95%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Less than<BR>
1 Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>1-3<BR>
years</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>4-5<BR>
years</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>After 5<BR>
years</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Capital lease obligations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>730</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,166</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>75</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,971</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Operating leases</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>5,498</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9,463</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7,940</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12,285</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>35,186</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Required distributions to Class C common stockholders<SUP>(1)</SUP></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,117</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>8,934</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3,350</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>13,401</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="35%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>7,345</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>19,563</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>11,365</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12,285</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>50,558</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>In
connection with the offering, we intend to use $11.8&nbsp;million of the net proceeds from the offering to us to make distributions to holders of our Class&nbsp;C common stock
which are required upon the completion of a qualified initial public offering (and which otherwise would have been payable in equal amounts over the 12 consecutive quarters beginning on
December&nbsp;31, 2003). Following the offering, we will have a single class of common stock and no further required distributions to any of our stockholders. See "&#151;Amounts Distributable
to Holders of Class&nbsp;C Common Stock." </FONT></DD></DL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our only off-balance sheet contractual obligations or commercial commitments as of February&nbsp;1, 2003 relates to operating lease obligations. We have excluded these items from our
balance sheet in accordance with generally accepted accounting principles. We presently do not have any non-cancelable purchase commitments which require us to purchase goods and services
beyond a period of five months. Our non-cancelable purchase commitments relate principally to merchandise inventories to be received over the next five months. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
occupy our retail stores and administrative facilities under operating leases. Approximately 15% have early cancellation clauses, which permit the lease to be terminated if certain
sales levels are not met in specific periods. Some leases contain renewal options for periods ranging from one to five years under substantially the same terms and conditions as the original leases.
Most of the store leases require payment of a specified minimum rent, plus a contingent rent based on a percentage of the store's net sales in excess of a specified threshold. In addition, most of the
leases require payment of
real estate taxes, insurance and certain common area and maintenance costs in addition to the future minimum operating lease payments shown in the table above. </FONT></P>

<P><FONT SIZE=2><B>Amounts Distributable to Holders of Class&nbsp;C Common Stock  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Private equity funds affiliated with INVESCO and Phillips-Smith, together with certain affiliates, currently beneficially own all of the 2,357,422 shares of
Class&nbsp;C common stock outstanding, reflecting an aggregate investment of $8.8&nbsp;million. Substantially all of these investments were made in fiscal 1999 and fiscal 2000. INVESCO and
Phillips-Smith are also selling stockholders in the offering. See "Principal and Selling Stockholders." </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>27</FONT></P>

<HR NOSHADE>
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<P><FONT SIZE=2><A
NAME="page_dq1425_1_28"> </A> </FONT> <FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the offering, (i)&nbsp;we intend to use $11.8&nbsp;million of the net proceeds from the offering to us to make distributions to holders of our Class&nbsp;C
common stock which are required upon the completion of a qualified initial public offering (and which otherwise would have been payable in equal amounts over the 12 consecutive quarters beginning on
December&nbsp;31, 2003), and (ii)&nbsp;all outstanding shares of Class&nbsp;C common stock will be converted on a share-for-share basis into shares of common stock.
Following the offering, we will have a single class of common stock and no further required distributions to any of our stockholders. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
$11.8&nbsp;million required distribution amount represents a dividend equivalent to the investors' original investment plus a return to the date of the offering. In the quarter in
which we complete the offering, our obligation to the Class&nbsp;C common stockholders will be accelerated, which will result in a deduction of approximately $5.0&nbsp;million from our net income
for the purpose of determining net income applicable to common stockholders. This charge represents the net unaccrued portion of the amounts distributable to the holders of our Class&nbsp;C common
stock. The amount shown in our balance sheet as amounts distributable to Class&nbsp;C common stockholders will be retired with proceeds from the offering. See note&nbsp;11 to our financial
statements included herein for additional information. </FONT></P>

<P><FONT SIZE=2><B>Amortization of Unearned Compensation Expense  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Options were granted in May&nbsp;2002 to our employees at exercise prices which were our best estimate as to the fair value of the underlying common stock on
the date of grant. Subsequent to the grant date, management concluded that for these grants the estimates may not have fully reflected the impact of changing business conditions. Our earnings will
incur a charge associated with the difference between the exercise price and the revised, estimated fair market value amortized over the five-year vesting period. We recorded a charge of
approximately $13,000 in fiscal 2002 associated with these option grants. We expect to recognize a charge of approximately $17,000 in fiscal 2003 and for each of the following three fiscal years and a
charge of approximately $6,000 in fiscal 2007, for a total charge of approximately $87,000. This amount represents the aggregate difference between the exercise price of stock option grants and the
estimated fair market value of our common stock at the time of the grants. </FONT></P>

<P><FONT SIZE=2><B>Seasonality, Quarterly Results, and Inflation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have historically experienced and expect to continue to experience seasonal and quarterly fluctuations in our net sales and operating income. As is the case
with many retailers of apparel and
related merchandisers, our business is subject to seasonal influences. However, our net sales and operating results are typically lower in the third quarter of our fiscal year. Quarterly results of
operations may also fluctuate significantly as a result of a variety of factors, including the timing of store openings, competition, and general economic conditions. We do not believe that inflation
has had a material impact on net sales or operating results for the past three fiscal years. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth unaudited quarterly net sales, gross profit, net income, and diluted earnings per share for the periods indicated. The unaudited quarterly information has
been prepared on a basis consistent with the audited consolidated financial statements and includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a
fair presentation of the information shown. This information should be read in conjunction with the audited consolidated financial statements and the notes thereto appearing elsewhere in this
prospectus. The operating results for any quarter are not necessarily indicative of the operating results for a full year or for any future </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>28</FONT></P>

<HR NOSHADE>
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<A NAME="page_dq1425_1_29"> </A>
<BR>

<P><FONT SIZE=2>period
and there can be no assurance that any trend reflected in such results will continue in the future (in thousands, except per share amounts). </FONT></P>

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<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="27%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal 2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal 2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="27%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>First<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Second<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Third<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Fourth<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>First<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Second<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Third<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Fourth<BR>
Quarter</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="27%"><FONT SIZE=1>Net sales</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>12,332</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>12,209</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>11,014</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>13,977</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>15,978</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>17,696</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>15,049</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>18,233</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="27%"><FONT SIZE=1>Gross profit</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>6,852</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>6,823</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>6,055</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>7,918</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>9,077</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>10,224</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>8,571</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>10,813</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="27%"><FONT SIZE=1>Net income (loss)</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>528</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>308</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(208</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>241</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,129</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,408</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>247</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>1,126</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="27%"><FONT SIZE=1>Net income (loss) applicable to common stockholders</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>153</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(107</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(638</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(218</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>680</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>917</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(263</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>592</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="27%"><FONT SIZE=1>Diluted net income (loss) per share applicable to common stockholders</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>0.03</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(0.02</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(0.11</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(0.04</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>0.12</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>0.16</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>(0.05</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=1>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=1>0.10</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to completion of the offering, we have two classes of common stock outstanding. The net income (loss) applicable to common stockholders per
share is the same for each class of common stock. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
do not believe that inflation has had a material impact on our net sales or operating results for the past three years. </FONT></P>

<P><FONT SIZE=2><B>Critical Accounting Policies  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Critical accounting policies are those that are both important to the presentation of the financial condition and results of operations and require difficult,
complex, and subjective judgments. The most critical accounting policies relate to estimates related to valuation of merchandise inventories, recovery of long-lived assets, and the
valuation of deferred tax assets. </FONT></P>

<P><FONT SIZE=2><I>Valuation of Merchandise Inventories  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merchandise inventories are stated at the lower of cost or market. Cost is determined using the first-in first-out method. In assessing
the market value of inventories, particularly those with slower turnover, we consider the estimated net realizable value to assess the carrying value of inventory. We define net realizable value as
estimated sales value of the goods less costs to dispose. To the extent that carrying cost exceeds the net realizable value, the inventory is written down to net realizable value. Changes in market
conditions could impact our ability to achieve sales at the estimated selling prices and could negatively impact the carrying value of our inventory. As of February&nbsp;1, 2003, inventory was
recorded at $440,000 less than its original cost. </FONT></P>

<P><FONT SIZE=2><I>Recovery of Long-Lived Assets  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We review property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from
future cash flows associated with the asset. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying value of an asset exceeds the undiscounted future cash flows, we recognize an impairment charge equal to the amount by which the carrying value
of the asset exceeds the estimated fair value of the asset, generally determined by estimating the present value of the future cash flows. </FONT></P>

<P><FONT SIZE=2><I>Valuation of Deferred Tax Assets  </I></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. At
each balance sheet date, we make an assessment of the realizability of the deferred tax assets. In making this assessment, management considers whether it is more likely than not that some or all of
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. As of </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>29</FONT></P>

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<P><FONT SIZE=2>February&nbsp;1,
2003, we had net deferred tax assets of $1.3&nbsp;million, all of which management estimates are more likely than not to be recovered. </FONT></P>

<P><FONT SIZE=2><B>New Accounting Pronouncements  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.&nbsp;145, </FONT> <FONT SIZE=2><I>Rescission of FASB
Statements No.&nbsp;4, 44, and 64, Amendment of FASB Statement No.&nbsp;13, and Technical Corrections</I></FONT><FONT SIZE=2>. SFAS No.&nbsp;145
provides for the rescission of several previously issued accounting standards, new accounting guidance for the accounting for certain lease modifications and various technical corrections that are not
substantive in nature to existing pronouncements. We will adopt SFAS No.&nbsp;145 as of February&nbsp;2, 2003, except for the provisions relating to the amendment of SFAS No.&nbsp;13, which were
adopted for transactions occurring subsequent to May&nbsp;15, 2002. Full adoption of SFAS No.&nbsp;145 is not expected to have a material impact on our financial statements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June&nbsp;2002, the FASB issued SFAS No.&nbsp;146, </FONT><FONT SIZE=2><I>Accounting for Costs Associated with Exit or Disposal Activities</I></FONT><FONT SIZE=2>. SFAS
No.&nbsp;146 requires that a liability for a cost associated with the exit or disposal activity be recognized when incurred at fair value. SFAS No.&nbsp;146 eliminates the definition and
requirements of the FASB's Emerging Issues Task Force Issue 94-3. SFAS No.&nbsp;146 is effective for exit or disposal activities that are initiated after December&nbsp;31, 2002 and may
have an effect on the timing of future restructuring charges taken, if and when they occur. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
December&nbsp;2002, the FASB issued SFAS No.&nbsp;148, </FONT><FONT SIZE=2><I>Accounting for Stock-Based Compensation&#151;Transition and Disclosure, an amendment of FASB
Statement No.&nbsp;123</I></FONT><FONT SIZE=2>. This Statement amends FASB Statement No.&nbsp;123, </FONT><FONT SIZE=2><I>Accounting for Stock-Based Compensation</I></FONT><FONT SIZE=2>, to
provide alternative methods of transition for an entity that voluntarily changes to the fair value-based method of accounting for stock-based employee compensation. It also amends the disclosure
provisions of that Statement to require prominent disclosure about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation.
Finally, this Statement amends APB Opinion No.&nbsp;28, </FONT><FONT SIZE=2><I>Interim Financial Reporting</I></FONT><FONT SIZE=2>, to require disclosure about those effects in interim financial
information. The transition provisions of this statement will be effective for financial statements in fiscal years ending after December&nbsp;15, 2002. The disclosure provisions of this statement
will be effective for financial reports containing financial statements for interim periods beginning after December&nbsp;15, 2002. We plan to retain the intrinsic method to value stock options and
adopt only the disclosure requirement of SFAS&nbsp;148 in our quarterly and annual financial statements. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
November&nbsp;2002, the FASB issued Interpretation No.&nbsp;45, </FONT><FONT SIZE=2><I>Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others</I></FONT><FONT SIZE=2>. This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its
obligations under guarantees issued. The interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation
undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December&nbsp;15, 2002 and are not expected to have a
material effect on our financial statements. The disclosure requirements are effective for financial statements of interim and annual periods ending after December&nbsp;15, 2002. </FONT></P>

<P><FONT SIZE=2><B>Quantitative and Qualitative Disclosures About Market Risk  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of May&nbsp;3, 2003, we had outstanding borrowings under our line of credit of $926,000. Our results of operations will be affected by interest rate changes
to the extent that borrowings are outstanding under the bank credit facility. However, we do not believe that a change of 100 basis points in interest rates would have a material effect on our results
of operations or financial condition. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>30</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
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<A NAME="toc_ds1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>BUSINESS    <BR>    </B></FONT></P>


<P><FONT SIZE=2><B>Overview  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a specialty retailer offering distinctive private brand women's apparel in the classic and timeless colors of white and black. We target educated,
middle-to-upper income, youthful women between the ages 30 and 50 who lead active work and social lives and place a premium on contemporary, feminine clothing and a high level
of personalized service. Our goal is to make our customers "look and feel beautiful" by offering a unique assortment of quality and fashionable apparel designed for a woman's everyday and special
occasion needs. Our boutique-like stores are designed to highlight the distinctiveness of our merchandise, which together with our high level of personalized service, enhance customer
recognition and loyalty to our brand. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
offer high quality, competitively priced separates and coordinated outfits, carefully selected with our customers' preferences and lifestyles in mind. Substantially all of our
merchandise is marketed under our White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market private brand. Our merchandise strategy recognizes that white and black and related shades are essential to a
woman's wardrobe and emphasizes styles that are consistent with current fashion trends. We have developed a highly successful and productive store format that consistently produces strong unit
economics across a variety of retail settings, such as lifestyle centers, street front locations, and regional malls. As of April&nbsp;30, 2003, we operated 96 stores located throughout the United
States, Puerto Rico, and the U.S. Virgin Islands. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over
the past three years, we have refined our merchandise strategy, improved our operations, enhanced our infrastructure, and rapidly expanded our store base. Over the
three-year period ended fiscal 2002, we increased our store base from 60 to 92 and achieved a compound annual growth rate in net sales of 32.9%. Our comparable store sales gains averaged
11.5% per fiscal year during this period, increasing 13.1% in fiscal 2001 and 16.3% in fiscal 2002, and our operating income increased from $272,000 in fiscal 1999 to $6.8&nbsp;million in fiscal
2002. </FONT></P>

<P><FONT SIZE=2><B>History  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The White House,&nbsp;Inc. was founded in late 1985 by our Chairman, President, and Chief Executive Officer, Richard Sarmiento. Patricia Darrow-Smith, our
Executive Vice President, Merchandising, who joined us in early 1986, has been the creative force behind our merchandising strategy and brand development. The senior management team also includes
Michael Smith, our Vice President, Operations, who joined us in 1990, and Stephen Hirsch, our Vice President, Finance and Administration, and Chief Financial Officer, who joined us in 1999. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
first store was a 300 square foot boutique in Baltimore, Maryland, offering an all-white selection of apparel and other merchandise. By 1995, we had grown The White House
chain to 40&nbsp;stores, featuring exclusively all-white apparel and accessories&nbsp;for women. In response to our customers'&nbsp;interest, we opened our first Black Market store,
featuring all-black apparel and accessories&nbsp;for women in 1995. In 1997, we began combining both concepts into a single store called
White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market, which today represents substantially all of our stores and is our prototype for future expansion. We were initially funded by our founder and
his friends and family. In 1999, we raised capital from institutional private equity investors in order to repay debt and to provide growth capital. </FONT></P>


<P><FONT SIZE=2><B>Business Strategy and Competitive Differentiation  </B></FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We know our customer and are dedicated to making her "look and feel beautiful."</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe the
continued success of our brand will be driven by our commitment to making our customers "look and feel beautiful" by offering distinctive merchandise with a superior level of personalized service. We
have concentrated our marketing and merchandising efforts on women between the ages of 30 and 50 </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>31</FONT></P>

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<P><FONT SIZE=2>who
seek distinctive apparel in order to project a contemporary, feminine, and youthful self-image. Internally, we refer to our target customer as "Sydney" and believe she represents a
middle-to-upper income woman who is well-educated, active, and appearance-conscious. She considers herself to be feminine and sexy, with a youthful attitude, regardless of her
age. We believe Sydney looks to White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market to provide her with clothing that is fashionable and appropriate for the occasion and enables her to express the
fun and original side of her personality and lifestyle. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that our target customer values our edited selection and is generally underserved by the broad offerings of department stores. In addition, other specialty stores have
increasingly targeted other segments, such as teens and plus-sizes, or customers with either more conservative or
trendier style preferences. We believe that women are increasingly demanding a youthful, feminine, and contemporary look regardless of age and that we are well-positioned to capitalize on
this demand. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We project a powerful brand identity through our distinctive merchandise concept.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our brand identity
is based on providing our customers with a distinctive assortment of quality, competitively priced, fashionable apparel and accessories all in the classic and timeless colors of white and black. This
differentiated merchandise concept projects a powerful visual image within our stores and enables us to clearly communicate our unique brand identity. We believe that white and black and related
shades represent significant and essential components of our customers' wardrobes. By further differentiating our assortment with new designs and fabrications, we establish
White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market as a highly relevant resource for our customers' everyday and special occasion needs, regardless of season, color trends, or regional
preferences. Over the three-year period ended fiscal 2002, our comparable store sales gains averaged 11.5% per fiscal year and our average sales per gross square foot increased from $468
in fiscal 1999 to $559 in fiscal 2002. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have a proven and versatile store model that produces compelling returns.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The broad appeal of our
merchandise concept has enabled us to profitably operate our stores in diverse regions of the country, across climates, and in a variety of retail settings, including lifestyle centers, street front
locations, and regional malls. We believe this strategy reduces the risks of geographic or regional mall concentration and enhances our platform for future growth. Our market and site selection is
based on local demographics, population trends, traffic patterns, and the proximity of other retail stores as well as recreational destinations such as restaurants and movie theaters that appeal to
our target customers. Our store model for fiscal 2003 requires an average total investment of approximately $190,000 per store, inclusive of pre-opening costs, fixtures, equipment, leasehold
improvements, and inventory, but net of landlord allowances and vendor financing. Based on our store opening and operating experience, we expect our new stores opening in fiscal 2003 to produce a cash
payback in approximately 14 months and a cash return on invested capital of approximately 90% in their first full year of operation. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have achieved superior financial results due to our centralized and disciplined operations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our
centralized merchandising and operating processes are designed to achieve a consistent, chainwide "one-store experience" and enable our sales associates to focus on serving our customers.
We facilitate frequent communication throughout our organization in order to quickly respond to changes in fashion trends and customer preferences. Our flexible third-party vendor sourcing strategy
and disciplined approach to inventory management are designed to achieve the proper balance between new, faster-turning merchandise and core items while controlling our aged inventory and markdowns.
We believe our operating discipline is a key factor in our historical ability to operate highly productive stores. In each of the last two fiscal years, our gross profit percentage exceeded 55% of our
net sales and our average annual inventory turnover rate exceeded 5.0 times. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>32</FONT></P>

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<P><FONT SIZE=2><B>Growth Strategy  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe we are well-positioned to capitalize on our distinctive brand identity, open an increasing number of stores, and pursue our goal of
becoming a leading national chain in the women's apparel industry. Key elements of our growth strategy include the following: </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Open New Stores.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have demonstrated our ability to open new stores that provide compelling
investment returns in new markets and geographic territories and across a variety of retail settings. We opened 16 stores in fiscal 2002 and ended the year with 92 stores. In fiscal 2003, we plan to
open 22 stores and end the year with 111 stores. As of April&nbsp;30, 2003, we have opened five stores and have signed leases for an additional ten&nbsp;stores. In fiscal 2004, we plan to open 25
to 30 stores and have identified 27 potential store sites, 12 of which have been approved by our site selection committee. The average size of our stores has increased modestly over the past several
years and, as of February&nbsp;1, 2003, was 1,457 square feet. We plan to increase the size of our new store prototype to an average of 1,750 to 1,800 square feet. Based on our internal analysis, we
believe the potential exists for at least 400 White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market stores nationwide. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Improve Store Productivity and Overall Profitability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe we can continue to increase our
store sales productivity by implementing the following marketing and merchandising initiatives: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>We
continuously review our merchandise offering to identify opportunities to increase sales productivity by increasing store-level inventory density, extending product lines
or categories, and promoting additional wardrobe selling.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>To
date, our direct marketing efforts have consisted of sending periodic mailings offering selected discounts to certain customers and hosting VIP parties in our stores. In
the future, we plan to initiate a more efficient and measurable direct marketing program designed to communicate to a broader customer base on a more frequent basis and use more sophisticated
marketing vehicles that better communicate our distinctive product offering.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>In
order to enhance our value proposition and brand loyalty, we plan to initiate a customer loyalty program designed to reward our frequent customers with price discounts or
other incentives. We are currently enhancing our point-of-sale and management information systems to facilitate more extensive customer data collection. </FONT></DD></DL>
</UL>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe we have opportunities to further increase our operating margins in the future by leveraging store-level operating and corporate infrastructure costs over a larger sales base
and capitalizing on enhanced purchasing power. </FONT></P>

<P><FONT SIZE=2><B>Merchandising  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our merchandising objective is to develop a distinctive brand identity in the women's apparel marketplace by offering our customer a unique assortment of quality,
competitively priced, fashionable apparel and accessories in the classic and timeless colors of white and black. The key elements of our merchandise strategy to support this objective are as follows: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>offer
our customer feminine, flattering, and stylish White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market private brand merchandise;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>differentiate
our merchandise by using a combination of market resources and key vendors that provide us with customized product designs;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>maintain
a current merchandise profile by frequently introducing new styles and fabrications;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>maintain
an on-going dialogue with our customers and sales associates in order to better understand and anticipate fashion trends and design preferences; </FONT></DD></DL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>33</FONT></P>

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<UL>
</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>monitor
our sourcing, delivery, and sell-through levels by item and style in order to effectively manage inventory turnover and reduce markdowns;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>facilitate
the easy coordinating of outfits or wardrobing through our merchandise presentation and customer assistance in order to increase average dollars and units per
transaction; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>provide
our customers with an attractive and intimate shopping environment differentiated by our distinctive merchandise offering, presentation, boutique-like store setting,
and personalized customer service. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merchandise Organization and Process.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our merchandise organization is led by our Executive Vice
President, Merchandising, Patricia Darrow-Smith. The merchandise group consists of six buyers who report to our General Merchandise Manager and one merchandise planner and four analysts who report to
our Director of Planning and Allocation. Our buyers are responsible for trend identification, sourcing, buying, and pricing of each merchandise category. Our merchandise planners and analysts are
responsible for overall inventory management, markdowns, and allocation of merchandise to individual stores. Our technical and quality assurance group consists of a technical designer and two
assistant technical designers and is responsible for the quality, fit, color, and consistency of our products. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
merchandise calendar consists of four distinct selling seasons, supported by additional themes or collections developed by our merchandise group. These themes and collections are
developed after considering market trends, seasonal fashions, and feedback from our customers. We collaborate with our vendors to design products to meet our color, style, fabrication, fit, and
quality specifications. We currently do not employ an in-house design staff. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
merchandise planning group is responsible for merchandise allocation and utilizes an integrated allocation software system. The allocation process involves analysis of past sales
performance by store and category, current trends, and seasonality, as well as consideration of collections and desired merchandise flow. Once our merchandise is in our stores, buyers monitor sales
and trend data to make product and buying decisions, while analysts monitor sell-through, inventory levels and aging to determine replenishment, store transfers, and markdowns. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Products.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our clothing is fashionable and contemporary and the fit is comfortable, yet styled to
enhance the figure of the body-conscious woman. Sizes range from zero to 14, with the majority of our sales between sizes zero and eight. We utilize both natural and synthetic fabrics,
including cotton, linen, tencel, microfibers, and matte jersey. Our apparel has unique textures and patterns, ranging from solids to prints, stripes, and color blocking. Our collections encourage
wardrobe selling by offering coordinated styles, fabrics, texture, and fit within our white and black theme. In order to maintain a fresh look in our stores, we continually introduce new items and
replenish our stores up to five times per week. While the designs, fabrications, and styles of our products are modified frequently, we believe our singular focus on our target customer and commitment
to our white and black color palette reduce the risks inherent in changing color, fit, and finish trends. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
merchandise is competitively priced, with typical price ranges as follows: (i)&nbsp;bottoms from $58 to $98, (ii)&nbsp;tops from $28 to $68, (iii)&nbsp;sweaters from $48 to
$88, and (iv)&nbsp;dresses from $88 to $128. In fiscal 2002, approximately 83% of our sales mix consisted of apparel categorized generally as sportswear, dresses, and outerwear. Accessories,
including bags, scarves, shoes, belts, sunglasses, jewelry, and gifts, represented approximately 17% of our net sales in fiscal 2002. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product Sourcing.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A key element of our merchandise strategy is to source our private brand
merchandise from a wide variety of independent third-party vendors. While we have established relationships with more than 100 different vendors, we rely on five to seven core vendors. These vendors
supply us with approximately one-third of our total purchases and collaborate with us for trend analysis and our private brand merchandise design. We believe that approximately 55% of our </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>34</FONT></P>

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<P><FONT SIZE=2>merchandise
by dollar volume in fiscal 2002 was produced domestically by our vendors and their sources, with the balance manufactured by third parties in Asia, Latin America, Canada, Europe, and
Africa. Because our domestic sourcing has the inherent advantages of shorter lead times, more consistent delivery, smaller order quantities, and quicker response to changes in fashion and business
trends, we have sought to source a significant amount of our merchandise from domestic vendors. As we grow, we expect to develop in-house design capabilities and source a portion of our
product directly from third-party manufacturers. We plan, however, to maintain a balance between vendor-based and direct sourcing, in order to preserve flexibility and design creativity while
increasing production capacity. We believe that this sourcing strategy will provide an opportunity to improve our gross profit percentage in the future. </FONT></P>


<P><FONT SIZE=2><B>Marketing and Visual Merchandising  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the distinctive visual appeal of our stores, together with our high-visibility locations are integral to our marketing strategy. To
date, our direct marketing efforts have consisted of sending periodic mailings to certain customers offering selected discounts and hosting VIP parties in our stores. We have developed a database of
over 300,000 names gathered from our point-of-sale system and website. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the future, we plan to utilize a broader mix of channels and media, including direct mail, e-commerce, email, magazines, and billboard, in order to communicate to a
broader customer base on a more frequent basis. We have recently added a Director of Branding to our merchandising group who is responsible for maintaining a consistent brand message through all
channels visible to our customers. In order to enhance our value proposition and brand loyalty, we also plan to initiate a customer loyalty program designed to reward our best customers with price
discounts, gifts, and other merchandise incentives. We are currently in the process of upgrading our point-of-sale and management information systems to accommodate more
extensive customer data collection. We expect to introduce this new customer loyalty program in fiscal 2004. </FONT></P>

<P><FONT SIZE=2><B>Retail Stores  </B></FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Store Design.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our stores are designed to highlight our distinctive merchandise and to reinforce our
brand identity. White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market stores are bright and open, with a clean, contemporary look. We feature signature elements such as chandeliers, columns, and
archways, and utilize tile floors, painted wood fixtures, and textured white walls. Our relatively small stores have a warm and intimate boutique feel. Our merchandise is displayed by collection in a
coordinated manner. Our merchandise display techniques are designed to facilitate wardrobe selling and make a clear statement about our merchandise focus for each season. Our store layout and
merchandise presentation are consistent chain-wide, based on planning guidance established by our visual merchandising department. Our new merchandise collections are featured in our
windows and at front-of-the-store displays and are changed frequently to highlight our current product focus. The average size of our stores has increased modestly
over the past several years and, as of February&nbsp;1, 2003, was 1,457 square feet. We plan to increase the size of our new store prototype to an average of 1,750 to 1,800 square feet. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Market and Store Location Strategy.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We locate our stores in mid- to large-sized
metropolitan markets, generally with a minimum population of 500,000. Our stores are geographically dispersed between northern and southern climates and have proven to be similarly successful in all
regions of the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>35</FONT></P>

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<P><FONT SIZE=2>country
and in a variety of retail settings, such as lifestyle centers, street front locations, and regional malls. Our stores by location type as of April&nbsp;30, 2003 were as follows: </FONT></P>

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<DIV ALIGN="CENTER"><TABLE WIDTH="63%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="64%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>Number&nbsp;of&nbsp;Stores</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="13%" ALIGN="CENTER"><FONT SIZE=1><B>Average&nbsp;Store Size&nbsp;(Sq.&nbsp;Ft.)</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="64%" VALIGN="TOP"><FONT SIZE=2><B>Lifestyle Centers</B></FONT><BR>
<FONT SIZE=2><I>Fashion-oriented centers near recreational destinations such as restaurants and movie theaters</I></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>48</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>1,593</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="64%" VALIGN="TOP"><BR><FONT SIZE=2><B>Street Front Locations</B></FONT><BR>
<FONT SIZE=2><I>Street front locations in cities, towns, villages, and resort areas</I></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
21</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
1,537</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="64%" VALIGN="TOP"><BR><FONT SIZE=2><B>Regional Malls</B></FONT><BR>
<FONT SIZE=2><I>Major malls, typically anchored by two or more full-line department stores</I></FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
27</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="13%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
1,296</FONT></TD>
</TR>
</TABLE></DIV>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
specific site selection criteria considers such factors as local demographics (including age, education, and income levels), population trends, traffic patterns, and site location
visibility. We prefer to locate our stores near other retail stores and recreational destinations such as restaurants and movie theaters that appeal to our customers. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have a standardized and disciplined process to analyze and select our new markets and sites and to negotiate lease terms. Our site selection analysis is based on data provided by an
independent market research firm. We use a commercial real estate consultant to identify and recommend potential sites. Final site approval is required by our real estate committee comprised of our
Chief Executive Officer, Chief Financial Officer, Vice President of Store Operations, and two independent members of our Board. In the future, we plan to develop in-house real estate
capabilities and are currently in the process of recruiting a Director of Real Estate. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
lease terms typically range from seven to ten years and approximately 30% of our leases contain one or more renewal options. Substantially all of our leases have percentage rent
clauses which require the payment of additional rent based on the store's net sales in excess of a certain thresholds and approximately 18% of our leases have early cancellation clauses, which permit
the lease to be terminated if certain sales levels are not met in specific periods. We actively review the performance of our existing stores to identify under-performing stores. Over the past three
years we have closed a total of seven stores and plan to close three stores in fiscal 2003, one of which has already closed. During fiscal 2004, we intend to close one store and consolidate six of our
white and black only single concept stores into three White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market stores. In fiscal 2005, we plan to consolidate the remaining six single concept stores
into three White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market stores. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>36</FONT></P>

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<P><FONT SIZE=2><A
NAME="page_du1425_1_37"> </A> </FONT> <FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Existing Store Locations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As of April&nbsp;30, 2003, we operated 96 stores in 30 states, the
District of Columbia, Puerto Rico, and the U.S. Virgin Islands, as depicted on the following map. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>[Map
of U.S. and Puerto Rico with dots illustrating store locations.] </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following store list shows the number of our stores in each state or territory in which we operated as of April&nbsp;30, 2003: </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>Number of Stores by Location  </B></FONT></P>

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<DIV ALIGN="CENTER"><TABLE WIDTH="64%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Alabama</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Arizona</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>California</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>14</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Colorado</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Connecticut</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Delaware</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>District of Columbia</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Florida</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>18</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Georgia</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Hawaii</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Illinois</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Kansas</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Kentucky</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Louisiana</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Maryland</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Michigan</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Minnesota</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Missouri</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Nevada</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>New Jersey</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>New Mexico</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>New York</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>North Carolina</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Ohio</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Oklahoma</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Pennsylvania</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Puerto Rico</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Rhode Island</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>South Carolina</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Texas</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Virginia</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>U.S. Virgin Islands</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Utah</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="86%"><FONT SIZE=2><B>Total:</B></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2><B>96</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
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<P><FONT SIZE=2><B>Store Operations  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe our centralized merchandising and operating processes provide a consistent, chain-wide, "one-store experience" and enable our
store managers and sales associates to focus on providing our </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>37</FONT></P>

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<P><FONT SIZE=2>customers
with a high level of service and assistance. Our hiring, training, and compensation programs as well as our internal management and communication processes are designed to reinforce our
service and selling-oriented culture. To accomplish this, we seek to hire personable and enthusiastic managers and sales associates, provide them with frequent feedback and training, and offer them
performance-based compensation. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Organization and Store Management.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our field operations are organized into ten districts. Each
district is run by a district manager, typically responsible for eight to 12 stores and who reports to our Director of Store Operations. District managers are responsible for hiring and training store
managers and assistant managers, providing consistency of merchandise presentation across our stores, communicating corporate information to the stores, and monitoring sales and profit performance.
Store managers are responsible for hiring, training, and managing sales associates, visual merchandising, maintaining the cleanliness of our stores, and monitoring store performance. Our average store
has one manager and three to six sales associates. We utilize part-time employees to provide us greater flexibility in managing payroll hours and expense. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
management process is based on frequent and open communication throughout all areas and levels of our organization. Senior management monitors store performance and other business
trends through daily sales, profitability, and operating reports. District managers receive weekly store performance reports and have daily contact and weekly meetings with store operations
executives. Our store managers also receive weekly store sales reports and monthly profitability and operating reports and meet regularly with their district managers. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hiring, Training, and Compensation.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We seek to hire store managers who have experience with other
women's apparel retailers or by promoting our assistant managers and sales associates. We compensate our district and store managers with a salary plus incentive bonuses based on sales performance.
Our sales associates are paid on an hourly basis plus commissions on sales, receive additional incentives to encourage wardrobe selling, and receive discounts on merchandise to encourage them to wear
our apparel and reflect our image on the selling floor. We believe our store and district managers have a low turnover rate due to our competitive compensation package and attractive work environment.
Our district and store managers average 6.4 and 2.1&nbsp;years experience, respectively, with us. Ten of our store managers also act as corporate trainers, conducting training programs for other
store managers on an
ongoing basis and new store associates prior to store openings. New store managers attend a week-long training session at our corporate headquarters covering store operations and
financials, customer service, and corporate functions such as merchandising and distribution. </FONT></P>


<P><FONT SIZE=2><B>Distribution  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We currently operate a 30,400 square foot distribution facility in Glen Burnie, Maryland, which also houses our corporate headquarters. In order to accommodate
our current needs and planned growth, we have identified a site for a new 100,000 square foot central distribution and corporate headquarters facility in the greater Baltimore, Maryland area and have
initiated discussions concerning lease terms. We expect this facility to be fully operational in late fiscal 2003 or early fiscal 2004 and to incorporate improved automation and scanning technology
not currently utilized by us. We expect that our new distribution facility will have the capacity, without modification or enhancement, to service approximately 250 stores. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
estimate that approximately 95% of our merchandise is currently pre-ticketed by our vendors, which allows us to process merchandise more quickly and reduce labor costs.
Our merchandise is generally shipped to our stores within two days of receipt at the distribution center. We rely on third-party carriers to deliver our merchandise from our distribution facility to
our stores. Each store receives three to five shipments per week and merchandise is available for sale in our stores the same day it is received. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>38</FONT></P>

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<P><FONT SIZE=2><B>Management Information Systems  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our management information systems and electronic data processing systems provide a range of retail, financial, and merchandising applications. We utilize
industry standard software systems to provide various functions related to point-of-sale, inventory management, planning, distribution, and financial reporting. We communicate
with each store on a daily basis to gather information on sales, merchandise transfers, and sales trends and to transmit details regarding price changes and pending deliveries. By collecting our sales
information daily from each store's point-of-sale terminal, we are able to implement merchandising decisions, pricing changes, and inventory allocation on a timely basis. </FONT></P>

<P><FONT SIZE=2><B>Properties  </B></FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stores.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The following table, which covers all 96 of our stores existing as of April&nbsp;30, 2003,
identifies: (i)&nbsp;the number of leases that will expire each year if we do not exercise renewal options, and (ii)&nbsp;the number of leases that will expire each year if we exercise all of our
renewal options (assuming in each case the lease is not otherwise terminated by either party pursuant to any other provision thereof): </FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="32%" ALIGN="LEFT"><FONT SIZE=1><B>Fiscal Year<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="31%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Leases Expiring if No<BR>
Renewal Options are Exercised</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="31%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Leases Expiring if All<BR>
Renewal Options are Exercised</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="32%"><FONT SIZE=2>2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="32%"><FONT SIZE=2>2004</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>12</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>11</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="32%"><FONT SIZE=2>2005</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>9</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="32%"><FONT SIZE=2>2006</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>11</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="32%"><FONT SIZE=2>2007</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="32%"><FONT SIZE=2>After 2007</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>55</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="31%" ALIGN="RIGHT"><FONT SIZE=2>66</FONT></TD>
</TR>
</TABLE></DIV>
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<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distribution Center and Corporate Headquarters.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our current distribution center and principal
executive offices are located at 6711 Baymeadow Drive, Glen Burnie, Maryland 21060. The facility initially opened in November&nbsp;1999 and currently consists of a distribution center and corporate
and administrative headquarters that comprises approximately 30,400 square feet, consisting of approximately 19,400 square feet for distribution and approximately 11,000 square feet for corporate
and administrative offices. Our lease on these premises expires in July&nbsp;2009, but may be terminated early at our option in July&nbsp;2004. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
more fully described above under "&#151;Distribution," our existing distribution center and headquarters facility does not have adequate available space to accommodate our
current needs and anticipated growth. We have identified and expect to lease a new distribution center and headquarters facility in Maryland to replace our existing facility, which we would attempt to
sublet for the remainder of its lease term. </FONT></P>

<P><FONT SIZE=2><B>Competition  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We compete with a variety of retailers including other specialty stores, department stores, mass merchandisers, and direct marketers. Our competitors include Ann
Taylor, Anthropologie, Banana Republic, bebe, Cach&eacute;, Chico's, Christopher&nbsp;&amp; Banks, Coldwater Creek, J. Jill, and Talbots. We also compete with national and regional department
stores, including Bloomingdale's, Marshall Field's, Neiman Marcus, Nordstrom, and Saks Fifth Avenue. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
women's retail apparel industry is highly competitive and given relatively low barriers to entry, we expect competition in our markets to increase. The primary competitive factors in
our markets include brand recognition, product quality, style, price, store location and ambiance, and customer service levels. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>39</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many
of our competitors are considerably larger and have substantially greater financing, marketing, and other resources. We cannot assure you that we will be able to compete
successfully with them in the future, particularly in new markets. </FONT></P>

<P><FONT SIZE=2><B>Regulation of Imports  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A significant amount of the apparel and accessories we sell are manufactured outside of the United States. As a result, our business remains subject to the
various risks of doing business abroad and to the imposition of United States customs duties. In the ordinary course of our business, we may from time to time be subject to claims by the United States
Custom Service for tariffs, duties, and other charges. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
pricing of imports from certain countries may also be affected by treaties, trade relations, U.S. government legislation, and decisions of multi-national organizations such as the
World Trade Organization. Acts or decisions by any of these or similar institutions could change the pricing of imports in all categories, including apparel. We cannot predict or control the acts or
decisions of these institutions. Because a significant amount of our merchandise is imported, we could be adversely affected by these acts or decisions. </FONT></P>


<P><FONT SIZE=2><B>Intellectual Property and Proprietary Rights  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our trademarks and other proprietary rights are important to our success. This is particularly the case for the
"White&nbsp;House--&nbsp;Black&nbsp;Market" marks because the name "White&nbsp;House--&nbsp;Black&nbsp;Market" is well known by our customers. Accordingly, we intend to maintain these
marks and the related registrations and applications. We are not aware of any claims of infringement or other challenges to our rights to use these marks in any jurisdiction in which we currently
operate. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have registered "White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market" in the United States. Each of the registrations related to this name has a term of ten years and each is
renewable indefinitely if the mark is still in use in commerce at the time of renewal. We also have additional trademark rights and applications. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have registered "White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market" and "The White House Black Market" in certain jurisdictions outside the United States, including Australia,
Bermuda, The European Community, Mexico and The Netherlands Antilles, and have applications for certain trademarks pending in various other foreign jurisdictions. The various applications in foreign
jurisdictions have been made in order to provide us with the ability to expand our operations outside the United States if and when management determines such an expansion is viable and in the best
interests of our stockholders. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
take actions to establish and protect our trademarks and other proprietary rights, however we cannot assure you that others will not imitate our products or infringe on our
intellectual property rights. In addition, we cannot assure you that others will not resist or seek to block the sale of our products as infringements of their trademark and proprietary rights. In
certain jurisdictions, other entities may have rights to names that could limit our ability to expand in such jurisdictions. If we fail to obtain or perfect trademark, ownership, or license rights, it
would limit our ability to expand into certain international markets or enter such markets with the White House -- Black Market name, and to capitalize on the value of our brand. </FONT></P>

<P><FONT SIZE=2><B>Employees  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of April&nbsp;30, 2003, we employed 693 persons, approximately 46% of whom were full-time employees and approximately 54% of whom were
part-time employees. The number of part-time employees fluctuates during peak selling periods.
As of the above date, approximately 90% of our employees worked in our retail stores and in direct field supervision, 2% worked in our distribution center, and 8% worked in corporate headquarters. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
employees receive discounts on the merchandise we sell. None of our employees are represented under a collective bargaining agreement, and we are not aware of any efforts or plans to
organize any of our employees. We have never had a work stoppage and we consider our relations with our employees to be good. </FONT></P>

<P><FONT SIZE=2><B>Legal Proceedings  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are not a party to any litigation or other legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business or
financial condition. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>40</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
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<A NAME="toc_dw1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>MANAGEMENT    <BR>    </B></FONT></P>


<P><FONT SIZE=2><B>Executive Officers and Directors  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth, as of April&nbsp;30, 2003, certain information concerning our executive officers and directors: </FONT></P>

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<TR VALIGN="BOTTOM">
<TH WIDTH="31%" ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Age</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="59%" ALIGN="LEFT"><FONT SIZE=1><B>Position(s)<BR> </B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>Richard D. Sarmiento</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>58</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Chairman, President, Chief Executive Officer, and Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>Patricia Darrow-Smith</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>41</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Executive Vice President, Merchandising</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>Stephen L. Hirsch</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>50</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Vice President, Finance and Administration, and Chief Financial Officer</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>F. Michael Smith</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>47</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Vice President, Operations</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>Craig J. Foley<SUP>(1)(2)(3)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>59</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>Howard E. Goldstein<SUP>(1)(2)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>44</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>Darryl Hartley-Leonard<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>58</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="31%"><FONT SIZE=2>Sally Frame Kasaks<SUP>(2)(3)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>58</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="59%"><FONT SIZE=2>Director</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Member
of the audit committee </FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Member
of the compensation committee </FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Member
of the nominating and corporate governance committee </FONT></DD></DL>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Richard D. Sarmiento.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Sarmiento founded
White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market in 1985 and has served as a director and as our President and Chief Executive Officer since our inception. Mr.&nbsp;Sarmiento has served as
our Chairman since May&nbsp;2003. Prior to founding White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market, Mr.&nbsp;Sarmiento worked for the Hyatt Hotels Corporation. He
received&nbsp;a&nbsp;B.A. from the University of Kansas. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Patricia Darrow-Smith.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Darrow-Smith is our Executive Vice President, Merchandising, and
has served as our most senior merchandising executive since 1986. Ms.&nbsp;Darrow-Smith previously worked for the Hyatt Hotels Corporation. She received a B.A. from the College of Notre Dame of
Maryland. Ms.&nbsp;Darrow-Smith is married to F. Michael Smith, our Vice President, Operations. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stephen L. Hirsch.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Hirsch has served as our Vice President, Finance and Administration,
and Chief Financial Officer since July&nbsp;1999. From September&nbsp;1996 to June&nbsp;1999, Mr.&nbsp;Hirsch was Senior Vice President, Finance and Administration, and Chief Financial Officer
of Pic 'N Pay Stores,&nbsp;Inc., a footwear and apparel retail chain that filed a voluntary petition for bankruptcy in 2000, approximately ten&nbsp;months following Mr.&nbsp;Hirsch's departure
from the company. Mr.&nbsp;Hirsch holds a B.A. from the University of Maryland and a M.B.A. from the University of Baltimore. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;F. Michael Smith.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Smith is our Vice President, Operations, and has served as our most
senior operations executive since joining us in September&nbsp;1990. Mr.&nbsp;Smith holds a B.A. from Drew University. Mr.&nbsp;Smith is married to Patricia Darrow-Smith, our Executive Vice
President, Merchandising. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Craig J. Foley.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Foley has served as a director since January&nbsp;1999. Mr.&nbsp;Foley
has been affiliated with Phillips-Smith-Machens Venture Partners, a private equity investment firm, since April&nbsp;1994 and has served as a general partner of Wickham Capital Partners, a private
investment firm, since February&nbsp;1994. Mr.&nbsp;Foley is also a director of Starbucks Corporation. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Howard E. Goldstein.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Goldstein has served as a director since January&nbsp;1999.
Mr.&nbsp;Goldstein is a general partner of INVESCO Private Capital, Inc., a private equity firm, where he has worked since 1984. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>41</FONT></P>

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<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Darryl Hartley-Leonard.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Hartley-Leonard has served as a director since April&nbsp;1999.
Mr.&nbsp;Hartley-Leonard is Chief Executive Officer of PGI&nbsp;Inc., an event production and marketing company. Mr.&nbsp;Hartley-Leonard also serves as a director of Jones Lang LaSalle
Incorporated, Brookdale Living Communities, and Evanston Northwestern Healthcare, and as a member of the board of trustees of LaSalle Hotel Properties. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sally Frame Kasaks.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Kasaks has served as a director since May&nbsp;1999.
Ms.&nbsp;Kasaks has been President of ISTA,&nbsp;Inc., a marketing and retail consulting firm, since 1996. Prior to that, Ms.&nbsp;Kasaks served as Chairman and Chief Executive Officer at Ann
Taylor Stores, Inc. from February&nbsp;1992 to August&nbsp;1996, President and Chief Executive Officer at Abercrombie&nbsp;&amp; Fitch, a division of The Limited, Inc., from February&nbsp;1989 to
February&nbsp;1992, and Chairman and Chief Executive Officer of The Talbots,&nbsp;Inc. from November&nbsp;1985 to September&nbsp;1988. Ms.&nbsp;Kasaks is also a director of Pacific Sunwear
of California,&nbsp;Inc., Tuesday Morning Corporation, The Children's Place Retail Stores,&nbsp;Inc., Grupo Cortefiel, S.A., Coach,&nbsp;Inc., and Crane and Company. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are currently recruiting additional independent directors to serve on our board. We expect to add at least one independent director prior to completion of the offering. </FONT></P>

<P><FONT SIZE=2><B>Board Composition  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation and bylaws currently authorize five directors. Upon completion of the offering, our amended and restated articles of incorporation
and bylaws will provide that our board will be divided into three classes, Class&nbsp;I, Class&nbsp;II and Class&nbsp;III, with each class serving staggered
three-year terms. The Class&nbsp;I directors, Mr.&nbsp;Goldstein and Ms.&nbsp;Kasaks, will stand for reelection at our 2004 annual meeting of stockholders. The Class&nbsp;II
directors, Messrs.&nbsp;Foley and Hartley-Leonard, will stand for reelection at our 2005 annual meeting of stockholders. The Class&nbsp;III director, Mr.&nbsp;Sarmiento, will stand for
reelection at our 2006 annual meeting of stockholders. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly
as possible, each class will consist of one-third of the directors. This staggered classification of the board of directors may have the effect of delaying or preventing changes in control
or management. </FONT></P>

<P><FONT SIZE=2><B>Board Committees  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has a compensation committee, an audit committee, and a nominating and corporate governance committee. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation Committee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee reviews and makes recommendations to the board
regarding the compensation and benefits provided to all of our employees. As part of the foregoing, the compensation committee administers our 1999 Stock Option Plan and will administer our 2003 Stock
Option Plan. The current members of the compensation committee are Messrs.&nbsp;Goldstein, Foley and Hartley-Leonard and Ms.&nbsp;Kasaks. A subcommittee of the compensation committee, the
executive compensation subcommittee, reviews and makes recommendations to the board regarding the compensation and benefits provided executive officers and directors including stock compensation. The
executive compensation subcommittee is comprised of Messrs.&nbsp;Goldstein, Foley, and Hartley-Leonard. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit Committee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee reviews and monitors our internal accounting procedures and
reviews the results and scope of the annual audit and other services provided by our independent accountants. The audit committee also consults with our management and our independent auditors prior
to the presentation of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. The Audit Committee is also charged with overseeing our
compliance with legal and regulatory requirements, including our disclosure controls and procedures. In addition, the audit committee is responsible for considering and approving the appointment of,
and </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>42</FONT></P>

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<P><FONT SIZE=2>reviewing
fee arrangements with, our independent auditors and approving any non-audit services provided by our independent auditors. The current members of the audit committee are
Messrs.&nbsp;Foley and Goldstein. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nominating and Corporate Governance Committee.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our nominating and corporate governance committee
makes recommendations to the board concerning nominations to the board, including nominations to fill a vacancy (including a vacancy created by an increase in the board of directors). The nominating
and corporate governance committee will consider nominees for directors nominated by stockholders
upon submission in writing to our corporate secretary of the names of such nominees in accordance with our bylaws. This committee is also charged with shaping corporate governance policies and
practices and monitoring compliance with such policies. The current members of the nominating and corporate governance committee are Mr.&nbsp;Foley and Ms.&nbsp;Kasaks. </FONT></P>


<P><FONT SIZE=2><B>Director Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our non-employee directors receive a fee of $1,500 for attendance in person at each board meeting or board committee meeting and a fee of $500 for attendance by
teleconference at such meetings. In addition, our directors are reimbursed for all reasonable out-of-pocket expenses incurred in connection with their attendance at board and
board committee meetings. From time to time, certain directors who are not employees of White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market have received grants of options to purchase shares of
our common stock. In March&nbsp;2002, we granted non-qualified options to purchase 3,077 shares of our common stock at an exercise price of $2.60 per share to each of Howard Goldstein,
Craig Foley, and Darryl Hartley-Leonard. We granted non-qualified options to purchase 6,154 shares of our common stock to Sally Frame Kasaks in March&nbsp;2002 at an exercise price of
$2.60 per share. We plan to engage an independent consultant to advise us regarding compensation of our directors in the future. </FONT></P>

<P><FONT SIZE=2><B>Compensation Committee Interlocks and Insider Participation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During fiscal 2002, the compensation committee was comprised of Messrs.&nbsp;Goldstein and Hartley-Leonard and Ms.&nbsp;Kasaks. None&nbsp;of&nbsp;such
persons serves, or has at any time served, as an officer or employee of White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market. None of our executive officers has served as a member of the
compensation committee, or other committee serving an equivalent function, of any other entity, one of whose executive officers served as a member of our compensation committee. Following the
offering, our compensation committee will be comprised solely of non-employee independent directors. </FONT></P>

<P><FONT SIZE=2><B>Indemnification and Limitation on Liability  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our articles of incorporation provide that we will indemnify our current and former officers and directors against any and all liabilities and expenses incurred
in connection with their services in such capacities to the maximum extent permitted by Maryland law, as from time to time amended. The articles of incorporation further provide that the right to
indemnification also includes the right to be paid by us for expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent permitted by Maryland
law. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
articles of incorporation also provide that we may, by action of our board of directors, provide indemnification to any of our employees and agents and any other persons serving at
our request as a
director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise to such extent and to such effect as is permitted by Maryland law
and as our board of directors determines to be appropriate. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of
White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market, or is or was serving at our request as a director, officer, employee, or agent of another corporation, partnership, joint venture, </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>43</FONT></P>

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<P><FONT SIZE=2>trust,
or other enterprise against any expense, liability, or loss incurred by such person in any such capacity or arising out of his status as such, whether or not we would have the power to
indemnify such person against such liability under Maryland law. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
articles of incorporation authorize our board of directors to make further provision for indemnification of directors, officers, employees, and agents by bylaw, resolution, or
agreement. We expect to enter into agreements with each of our directors and executive officers pursuant to which we have agreed to indemnify such persons to the maximum extent permitted by Maryland
law. These agreements also require us to maintain directors' and officers' liability insurance for the benefit of each of these persons and to advance any expenses incurred by any such person in any
proceeding in which such person is entitled to indemnification. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
amendment, modification, or repeal of our articles of incorporation, nor the adoption of any additional provision of the articles of incorporation nor, to the fullest extent permitted
by Maryland law, any amendment, modification, or repeal of law will eliminate or reduce the effect of the provisions in the articles of incorporation limiting liability or indemnifying certain persons
or adversely affect any right or protection then existing thereunder in respect of any acts or omissions occurring prior to such amendment, modification, repeal, or adoption. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
articles of incorporation further provide that a director will not be personally liable for monetary damages to us or our stockholders, except to the extent such exemption from
liability or limitation thereof is not permitted under Maryland law. Maryland law does not permit the restriction or limitation of liability of directors and officers to the extent that: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
director or officer received an improper benefit or profit in money, property, or services; or
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>a
judgment or other final adjudication adverse to the director or officer is entered in a proceeding based on a finding in the proceeding that the director's or officer's
action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
limitation on liability applies to events occurring at the time the person serves as a director or officer, regardless of whether the person is a director or officer at the time of
any proceeding in which liability is asserted. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
respect to the indemnification of directors and officers for liabilities arising under the Securities Act, the SEC has opined that this indemnification is against public policy, as
expressed in the Securities Act, and is therefore unenforceable. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>44</FONT></P>

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<P><FONT SIZE=2><B>Executive Compensation  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information concerning the compensation we paid to our chief executive officer and each of our other executive officers whose total
annual compensation exceeded $100,000 (the "named executive officers") during fiscal 2002. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="dw1425_summary_compensation_table"> </A>
<A NAME="toc_dw1425_2"> </A>
<BR></FONT><FONT SIZE=2><B>Summary Compensation Table    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="92%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Annual Compensation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>Long-Term<BR>
Compensation Awards</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="30%" ALIGN="LEFT"><FONT SIZE=1><B>Name and Principal Position<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="6%" ALIGN="CENTER"><FONT SIZE=1><B>Fiscal<BR>
Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Salary</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Bonus</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Other Annual<BR>
Compensation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="17%" ALIGN="CENTER"><FONT SIZE=1><B>Securities Underlying<BR>
Options</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="30%" VALIGN="TOP"><FONT SIZE=2>Richard D. Sarmiento<BR>
Chairman, President, and Chief Executive Officer</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>2002</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>226,923</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>40,303</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>30,326</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><SUP>(1)</SUP></FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2>5,230</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="30%" VALIGN="TOP"><FONT SIZE=2><BR>
Stephen L. Hirsch<BR>
Vice President, Finance and Administration, and Chief Financial Officer</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
2002</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
171,731</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
23,030</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
25,578</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR><SUP>(2)</SUP></FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
5,230</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="30%" VALIGN="TOP"><FONT SIZE=2><BR>
Patricia Darrow-Smith<BR>
Executive Vice President, Merchandising</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
2002</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
166,923</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
28,788</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR><SUP>(3)</SUP></FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
5,230</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="30%" VALIGN="TOP"><FONT SIZE=2><BR>
F. Michael Smith<BR>
Vice President, Operations</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
2002</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
140,096</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
23,030</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
23,493</FONT></TD>
<TD WIDTH="2%" VALIGN="TOP"><FONT SIZE=2><BR><SUP>(4)</SUP></FONT></TD>
<TD WIDTH="17%" ALIGN="RIGHT" VALIGN="TOP"><FONT SIZE=2><BR>
5,230</FONT></TD>
</TR>
</TABLE>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;$13,478 in premiums for life insurance of which Mr.&nbsp;Sarmiento is the beneficiary and (ii)&nbsp;$10,021 for a car allowance paid for Mr.&nbsp;Sarmiento
by us. The balance of the other annual compensation is from reimbursements for medical expenses and matching contributions to our 401(k) plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;$7,212 in premiums for life insurance of which Mr.&nbsp;Hirsch is the beneficiary, (ii)&nbsp;$7,917 for a car allowance paid to Mr.&nbsp;Hirsch by us,
(iii)&nbsp;$1,844 for car insurance paid for Mr.&nbsp;Hirsch by us, and (iv)&nbsp;$6,460 for payment by us of medical expenses incurred by Mr.&nbsp;Hirsch. The balance of the other annual
compensation is from matching contributions to our 401(k) plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Value
of perquisites and other personal benefits for Ms.&nbsp;Darrow-Smith do not exceed the lesser of $50,000 or 10% of her total annual salary and bonus.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;$7,896 in premiums for life insurance of which Mr.&nbsp;Smith is the beneficiary, (ii)&nbsp;$7,917 for a car allowance paid to Mr.&nbsp;Smith by us, and
(iii)&nbsp;$7,175 for reimbursement by us of medical expenses incurred by Mr.&nbsp;Smith. The balance of the other annual compensation is from matching contributions to our 401(k) plan. </FONT></DD></DL>

<P><FONT SIZE=2><B>Option Grants in Fiscal 2002  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides information concerning grants of options to purchase our common stock that we made to our named executive officers during fiscal
2002. We did not grant stock appreciation rights to these individuals during fiscal 2002. All of the options were granted under our 1999 Stock Option Plan. The potential realizable value calculation
assumes that the value of the common stock appreciates at the indicated annual rate (compounded annually) from the grant date until the expiration of the option term and is calculated in accordance
with SEC rules. Potential realizable value does not represent our estimate or projections of future stock price performance. The </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>45</FONT></P>

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<P><FONT SIZE=2>assumed
initial public offering price is higher than the estimated fair market value on the date of grant, and the potential realizable value of the option grants would be significantly higher than
the numbers shown in the table if future stock prices were projected to the end of the option term by applying the same annual rates of stock price appreciation to the initial public offering price. </FONT></P>

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<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="14%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=4><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ROWSPAN=4 ALIGN="CENTER"><FONT SIZE=1><B>Percent<BR>
of Total<BR>
Options<BR>
Granted in<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term<SUP>(3)</SUP></B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="14%" ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Securities<BR>
Underlying<BR>
Options Granted<SUP>(1)</SUP></B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Exercise Price<BR>
($/Share)<SUP>(2)(3)</SUP></B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Expiration<BR>
Date</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>0%</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>5%</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>10%</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Richard D. Sarmiento</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>5,230</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2.86</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5/01/2007</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>6,799</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12,810</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>20,082</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Stephen L. Hirsch</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>5,230</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5/01/2012</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>8,159</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>21,842</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>42,834</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>Patricia Darrow-Smith</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>5,230</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2.86</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5/01/2007</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>6,799</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12,810</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>20,082</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="20%"><FONT SIZE=2>F. Michael Smith</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>5,230</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2.86</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5/01/2007</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>6,799</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12,810</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>20,082</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>The
options become exercisable in annual cumulative installments of 20%, commencing one year from the date of grant, with full vesting occurring on the 5th anniversary date of the
date of grant.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>The
exercise price was determined by our board of directors on the date of grant taking into account the purchase price paid by investors for shares of our Class&nbsp;C common
stock, the liquidation preferences and other rights, privileges, and preferences associated with the Class&nbsp;C common stock, and an evaluation by the board of directors of our revenue, operating
history, and prospects. The exercise price may be paid in cash, in shares of our common stock valued at fair market value on the exercise date, or through a cashless exercise procedure involving a
same-day sale of the purchased shares.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>For
purposes of calculating the potential realizable value at assumed annual rates of stock price appreciation, the revised, estimated fair market value of our common stock on the
date of grant is $4.16 per share. Potential realizable values are computed by (i)&nbsp;multiplying the number of shares of common stock subject to a given option by the revised fair market value on
the date of grant, (ii)&nbsp;assuming that the aggregate stock value derived from that calculation compounds annually for the entire term of the option and (iii)&nbsp;subtracting from that result
the aggregate option exercise price. </FONT></DD></DL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
May 2003, we granted options to purchase an aggregate of 80,615 shares of our common stock at a weighted average exercise price of $12.58 per share to certain employees and directors.
Among the employees receiving these grants were Messrs.&nbsp;Sarmientio, Hirsch, and Smith, and Ms.&nbsp;Darrow-Smith, who each was granted options to purchase 13,231 shares. </FONT></P>

<P><FONT SIZE=2><B>Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides summary information regarding options held by our Chief Executive Officer and named Executive Officers in fiscal 2002. The value of
unexercised in-the-money options at fiscal year end is calculated using the difference between the option exercise price and the estimated fair market value at
February&nbsp;1, 2003, which has been deemed to be $10.24 per share, multiplied by the number of shares underlying the option. An option is in-the-money if the fair market
value of the common stock subject to the option is greater than the exercise price. The assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;per share is higher than the estimated fair market
value at fiscal year end, and the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>46</FONT></P>

<HR NOSHADE>
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<A NAME="page_dw1425_1_47"> </A>
<BR>

<P><FONT SIZE=2>value
of unexercised options would be higher than the numbers shown in the table if the value were calculated by subtracting the exercise price from the initial public offering price. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Number of Securities<BR>
Underlying Unexercised<BR>
Options at Fiscal year End</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Value of Unexercised<BR>
in-the-Money Options at Fiscal Year End<SUP>(1)</SUP></B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="29%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Shares<BR>
Acquired on<BR>
Exercise</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Value<BR>
Realized</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Exercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Exercisable</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Unexercisable</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Richard D. Sarmiento.</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,230</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>38,597</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Stephen L. Hirsch</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>24,977</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>44,235</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>190,832</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>337,955</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>Patricia Darrow-Smith</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,230</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>38,597</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="29%"><FONT SIZE=2>F. Michael Smith</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,230</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>38,597</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>The
fair market value of our common stock at the end of fiscal 2002 was estimated by the board of directors on the basis of the purchase price paid by investors for shares of our
Class&nbsp;C common stock (taking into account the liquidation preferences and other rights, privileges, and preferences associated with the Class&nbsp;C common stock) and an evaluation by the
board of our revenue, operating history, and prospects. </FONT></DD></DL>


<P><FONT SIZE=2><B>1999 Stock Option Plan  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 1999 Stock Option Plan will be terminated as of the date of the completion of this offering. Such termination will not affect any option previously granted
under the 1999 Stock Option Plan. Shares available for future issuance under the 1999 Stock Option Plan will be carried over to the 2003 Stock Option Plan described below. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May&nbsp;21, 1999, we adopted our 1999 Stock Option Plan (the "1999 Stock Option Plan"), for the purpose of promoting our long-term growth and profitability by
(i)&nbsp;providing key people with incentives to improve stockholder value and contribute to our growth and financial success, and (ii)&nbsp;enabling us to attract, retain, and reward talented and
skilled persons for positions of substantial responsibility. Our stockholders approved the 1999 Stock Option Plan as of May&nbsp;1999. We use stock options as a component of compensation for our
officers and key employees. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares Reserved.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A maximum of 307,692 shares of common stock is available and reserved for issuance
under the 1999 Stock Option Plan. The 1999 Stock Option Plan has been amended, subject to
stockholder approval, to increase the number of shares available under the plan by 615,385 to a total of 923,077. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The compensation committee of our board of directors administers the 1999 Stock
Option Plan. The committee has the sole discretion to make all decisions and take all actions relating to the interpretation, administration, and operation of the 1999 Stock Option Plan. The committee
has the discretion to determine who will receive options, what type of option it will be, how many shares will be covered by the option, what the vesting requirements will be, if any, and what the
other features, terms, and conditions of each option will be. The compensation committee may also reprice the exercise price of outstanding options to the then current fair market value of the
underlying stock by accepting the surrender of outstanding options and substituting new options and modify outstanding awards in other ways. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eligibility.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The committee may grant options to our full-time employees, officers,
members of our board of directors, subcontractors, and outside consultants. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Types of Award.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 1999 Stock Option Plan provides for the issuance of incentive stock options and
non-statutory stock options to purchase shares of our common stock. Incentive stock options may be granted to employees and may qualify for favorable tax treatment under Section&nbsp;422 of the
Internal Revenue Code of 1986, as amended ("Code") if certain requirements are satisfied. Non-statutory stock options do not qualify for such favorable tax treatment. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>47</FONT></P>

<HR NOSHADE>
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<P><FONT SIZE=2><A
NAME="page_dy1425_1_48"> </A> </FONT> <FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The exercise price for options granted under the 1999 Stock Option Plan may
not be
less than 100% of the fair market value of our common stock on the option grant date. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transferability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Incentive stock options granted under the 1999 Stock Option Plan are not
transferable by the optionee except by will or the laws of descent and distributions in the event of the optionee's death. The 1999 Stock Option Plan has been amended to allow transfer of nonstatutory
stock options to certain family members and other transferees permitted by the compensation committee. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vesting and Exercise.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Options vest (that is, become exercisable) at the time or times determined by
the compensation committee. The Company may make or guarantee loans to assist grantees in exercising options and satisfying any related tax withholding obligations. In most cases, our options vest
over the five-year period following the date of grant. Options generally expire ten&nbsp;years after they are granted, except that they generally expire earlier if the optionee's service
terminates earlier. Payment of the exercise price may be made in cash or by any other means the compensation committee may prescribe, including, but not limited to, cashless exercise through a
designated brokerage firm after our stock is registered. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merger or Sale.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of any proposed sale, merger, share exchange, consolidation, or other
reorganization or business combination in which we are not the surviving corporation or in which nonvoting securities, cash, or securities of another corporation are received or if we sell all or
substantially all of our assets, then the compensation committee will take such action as it deems appropriate and equitable, including without limitation accelerating or changing the exercise dates
of any option, canceling the options and paying cash to the option holders, or causing a successor entity to replace the options with like options for other securities. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in Capitalization.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The number and price of shares covered by outstanding stock options and the
number of shares authorized under the 1999 Stock Option Plan shall be proportionately adjusted, as determined appropriate and equitable by the compensation committee, to take into account any stock
split, reverse stock split, stock dividend, recapitalization, combination or reclassification of shares, or similar event. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment or Termination.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board may amend or terminate the 1999 Stock Option Plan at any time. If
our board amends the 1999 Stock Option Plan, it does not need to ask for stockholder approval of the amendment unless such amendment increases the number of shares available under the 1999 Stock
Option Plan or applicable law requires such approval. No amendment shall impair the rights of any
optionee under an option previously granted without his or her consent. The 1999 Stock Option Plan will be terminated as of the date of the completion of this offering. Such termination will not
affect any option previously granted under the 1999 Stock Option Plan. </FONT></P>


<P><FONT SIZE=2><B>2003 Stock Option Plan  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has adopted The White House,&nbsp;Inc. 2003 Stock Option Plan (the "2003 Stock Option Plan") to replace the 1999 Stock Option Plan effective upon
completion of the offering. The 2003 Stock Option Plan will serve the same purpose of promoting our long-term growth and profitability by (i)&nbsp;providing key people with incentives to
improve stockholder value and contribute to our growth and financial success, and (ii)&nbsp;enabling us to attract, retain, and reward talented and skilled persons for positions of substantial
responsibility. We have used stock options as a component of compensation for our officers and key employees. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
differences from the 1999 Stock Plan include the following: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Securities
law requirements in the 2003 Stock Option Plan are changed to those applicable to a public company. </FONT></DD></DL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>48</FONT></P>

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<UL>
</UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
definition of "fair market value" of the common stock is changed to refer to the listed price on the Nasdaq Market.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Unless
otherwise determined by the Board, the Committee administering the 2003 Stock Option Plan is required to include solely "nonemployee directors" under
Rule&nbsp;16b-3 and "outside directors" under Code Section&nbsp;162(m).
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
number of shares subject to options that may be issued to one employee in one year is limited to 61,538 in order to meet the exception for performance-based compensation
under Code Section&nbsp;162(m).
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Nonqualified
options may have an exercise price lower than the fair market value of the common stock on the grant date.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Any
shares used to satisfy the exercise price under an option must have been held for at least six&nbsp;months.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Stock
appreciation rights may be issued under the 2003 Stock Option Plan.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>The
requirement for optionees to sign a stockholders agreement and certain repurchase rights of the company at termination of employment are eliminated. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares Reserved.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A maximum of (i)&nbsp;615,385 shares of common stock, plus (ii)&nbsp;a carryover
of the shares available for future awards under the 1999 Stock Option Plan at the date of its termination and (iii)&nbsp;any shares subject to options, or portions of options, granted under the 1999
Stock Option Plan which are forfeited, surrendered or cancelled or otherwise expire or terminate after the date of termination of the 1999 Stock Option Plan without being exercised, will be available
and reserved for issuance under the 2003 Stock Option Plan. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise determined by the Board, the compensation committee of our board of
directors will administer the Plan. The committee has the sole discretion to make all decisions and take all actions relating to the interpretation, administration, and operation of the 2003 Stock
Option Plan. The committee has the discretion to determine who will receive options, what type of option it will be, how many shares will be covered by the option, what the vesting requirements will
be (if any), and what the other features, terms, and conditions of each option will be. The compensation committee may also reprice the exercise price of outstanding options to the then current fair
market value of the underlying stock by accepting the surrender of outstanding options and substituting new ones and modify outstanding awards in other ways. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eligibility.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The committee may grant options to full-time employees, officers, members of
our board of directors, subcontractors, and outside consultants of the Company or any subsidiary. The 2003 Stock Option Plan provides that no participant may receive options covering more than 61,538
shares in any one year. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Types of Award.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The 2003 Stock Option Plan provides for the issuance of incentive stock options and
nonstatutory stock options to purchase shares of our common stock. Incentive stock options may be
granted to employees and may qualify for favorable tax treatment under Code Section&nbsp;422 if certain requirements are satisfied. Nonstatutory stock options do not qualify for such favorable tax
treatment. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The exercise price for incentive stock options granted under the 2003 Stock Option
Plan may not be less than 100% of the fair market value of our common stock on the option grant date. The price of nonstatutory stock options is determined by the committee. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transferability.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Incentive stock options granted under the 2003 Stock Option Plan are not
transferable by the optionee except by will or the laws of descent and distributions in the event of the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>49</FONT></P>

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<P><FONT SIZE=2>optionee's
death. Nonstatutory options may be transferred to certain family members and other transferees permitted by the compensation committee. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vesting and Exercise.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Options vest, or, become exercisable, at the time or times determined by the
compensation committee. The Company may make or guarantee loans to assist grantees in exercising options and satisfying any related tax withholding obligations. Payment of the exercise price may be
made in cash or by any other means the compensation committee may prescribe, including, but not limited to, cashless exercise through a designated brokerage firm after our stock is registered. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Appreciation Rights ("SARs").</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Under the 2003 Stock Option Plan, the committee may issue SARs
which entitle the holder to receive at the time prescribed in the SAR in stock or cash, as determined by the committee, the excess of the value of the number of shares under the vested portion of the
SAR over their base price stated in the SAR. SARs shall be subject to such restrictions and conditions as the committee prescribes. SARs may be issued on a free-standing basis or in tandem
with stock options. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merger or Sale.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of any proposed sale, merger, share exchange, consolidation, or other
reorganization or business combination in which we are not the surviving corporation or in which nonvoting securities, cash, or securities of another corporation are received or if we sell all or
substantially all of our assets, then the compensation committee will take such action as it deems appropriate and equitable, including without limitation accelerating or changing the exercise dates
of any option, canceling the options and paying cash to the option holders, or causing a successor entity to replace the options with like options for other securities. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in Capitalization.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The number and price of shares covered by outstanding stock options and the
number of shares authorized under the 2003 Stock Option Plan shall be proportionately adjusted, as determined appropriate and equitable by the compensation committee, to take into account any stock
split, reverse stock split, stock dividend, recapitalization, combination or reclassification of shares, or similar event. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment or Termination.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board may amend or terminate the 2003 Stock Option Plan at any time. If
our board amends the Plan, it does not need to ask for stockholder approval of the amendment unless such amendment increases the number of shares available under the 2003 Stock Option Plan or
applicable law requires such approval. No amendment shall impair the rights of any optionee under an option previously granted without his or her consent. </FONT></P>

<P><FONT SIZE=2><B>Employee Stock Purchase Plan  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has adopted an Employee Stock Purchase Plan, subject to stockholder approval. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purpose.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The purpose of the Employee Stock Purchase Plan is to provide a means by which our employees
may be given an opportunity to purchase our common stock through payroll deductions at a discounted price and upon terms that offer certain tax advantages. The rights to purchase common stock granted
under the purchase plan are intended to qualify as options issued under an "employee stock purchase plan" as that term is defined by Section&nbsp;423 of the Code. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administration.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors is responsible for administering the Employee Stock Purchase
Plan and has the final power and sole discretion to construe and interpret the terms of the purchase plan and the rights granted under it. Our board of directors has the power, subject to the
provisions of the purchase plan, to determine whether any subsidiary of ours is eligible to participate in the purchase plan, and also has the power to construe and interpret the plan and rights
granted under it, and to establish, amend, and revoke rules and regulations for its administration. The board has delegated administration of the purchase plan to the compensation committee of the
board. When the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>50</FONT></P>

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<P><FONT SIZE=2>term
"Board" is used in this section with respect to the purchase plan, it refers to the compensation committee, as well as to the board. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Offerings.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The purchase plan will be implemented by offerings of rights to all eligible employees
from time to time pursuant to the provisions thereof. The first such offering will commence on the later of the first day of the month following the completion of the offering or the beginning of our
fiscal month of August&nbsp;2003 and end on the last day of our fiscal month of January&nbsp;2004. However, in no event will the first offering period commence before a filing of a registration
statement for the Plan with the SEC. Thereafter, offerings will be semi-annual (but can be changed to annual or quarterly) and will be for a duration of six months. At the discretion of
the board, offerings may be divided into quarterly periods or combined into annual periods. Purchases of common stock will be
made on the last date of each offering period during which the Nasdaq National Market is open for trading. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Eligibility.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise determined by the board, any employee who customarily works more than
20&nbsp;hours per week and more than five months of the calendar year and who has been employed by us for at least 12&nbsp;months (or such other period as determined by the board not in excess of
two years) as of the first day of such offering period, is eligible to participate in that offering under the purchase plan. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
the foregoing, no employee is eligible for the grant of any rights under the purchase plan if, immediately after such grant, the employee would own, directly or
indirectly, stock possessing 5% or more of the total combined voting power or value of all classes of our stock (including any stock which such employee may purchase under all outstanding rights and
options), nor will any employee be granted rights that would permit him or her to buy more than $25,000 worth of stock (determined at the fair market value of the shares at the time such rights are
granted) under all employee stock purchase plans of the company in any calendar year. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Participation in the Plan; Payroll Deductions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Eligible employees become participants in the purchase
plan by delivering to us, prior to the first day of an offering period, an agreement authorizing payroll deductions in whole percentages of up to 10% of such employees' covered compensation (as
defined in the purchase plan) during the offering period. A participant may not alter the amount of the payroll deduction during an offering period, but may discontinue participation and withdraw the
accumulated payroll deductions prior to the end of the offering. All payroll deductions made for a participant are credited to his or her account under the purchase plan and deposited with our general
funds. A participant may not make any additional payments into such account. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase Price.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The purchase price per share at which shares are sold in an offering under the
purchase plan must be the lower of (i)&nbsp;85% of the closing price of a share of common stock on the Nasdaq National Market on the date of commencement of the offering (or in the event the stock
was not traded on such date, the nearest prior business day on which trading of the common stock occurred on the Nasdaq National Market), or (ii)&nbsp;85% of the closing price of a share of common
stock on the Nasdaq National Market on the last date of the offering (or in the event the stock was not traded on such date, the nearest prior business day on which trading of the common stock
occurred on the Nasdaq National Market). If the stock is not traded on the Nasdaq National Market, the committee shall determine the appropriate basis for establishing the price of the stock. The
purchase price is paid with the amounts accumulated by each participant through his or her payroll deductions. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of Stock.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;By executing an agreement to participate in the purchase plan, the employee is
deemed to have been granted a qualified option to purchase a whole number of shares of common stock equal to the amount of his/her accumulated payroll deductions divided by the purchase price at which
shares are sold in the offering. The maximum number of shares any employee may be granted the right to purchase in any one offering is 500 (or such other number approved by the committee before the
respective offering period) shares and the maximum aggregate number of shares that may </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>51</FONT></P>

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<P><FONT SIZE=2>be
purchased by all participants in any one offering is 25,000 shares (subject to adjustment for changes in the duration of offering periods and certain changes in capitalization) plus all unissued
shares from prior offerings. If the aggregate number of shares to be purchased upon exercise of rights granted in the offering would exceed the maximum aggregate number, the board would make a pro
rata allocation of shares available in a uniform and equitable manner. Unless the employee's participation is discontinued, his or her right to purchase shares is exercised automatically on the
purchase date for the offering at the applicable purchase price. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Withdrawal.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;While each participant in the purchase plan is required to sign an agreement authorizing
payroll deductions, the participant may withdraw from a given offering by terminating his or her payroll deductions and by delivering to us a notice of withdrawal from the purchase plan. Such
withdrawal may be elected at any time prior to the end of an offering. Upon withdrawal from an offering by the employee, we will distribute to the employee his or her accumulated payroll deductions,
without interest, and such employee's interest in the offering will be automatically terminated. The employee is not entitled to again participate in such offering. An employee's withdrawal from an
offering will not have any effect upon such employee's eligibility to participate in subsequent offerings under the purchase plan. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination of Employment.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Rights granted pursuant to any offering under the purchase plan terminate
immediately upon cessation of an employee's employment for any reason, and we will distribute to such employee all of his or her accumulated payroll deductions, without interest. A leave of absence in
excess of 90&nbsp;days will be regarded as a termination of employment for purposes of the purchase plan unless return to employment is guaranteed by contract or applicable law. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restrictions of Transfer.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Rights granted under the purchase plan are not transferable otherwise than
by will or the laws of descent and distribution in the event of a participant's death, or by designation of a beneficiary in accordance with the terms of the purchase plan and, otherwise during the
participant's lifetime, shall be exercisable only by the participant to whom such rights were granted. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Duration, Amendment, and Termination.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The board may suspend or terminate the purchase plan at any
time. The purchase plan shall automatically terminate on the earlier of (i)&nbsp;the day prior to the tenth anniversary of the adoption of the plan, or (ii)&nbsp;the date that the maximum number
of shares available under the purchase plan have been issued. The board may amend the purchase plan at any time. Any amendment of the purchase plan must be approved by the stockholders within
12&nbsp;months of its adoption by the board if the amendment would (i)&nbsp;increase the maximum number of shares of common
stock reserved for issuance under the purchase plan (except for adjustments upon certain changes in capitalization), or (ii)&nbsp;modify the requirements relating to eligibility for participation in
the purchase plan. Rights granted before amendment or termination of the purchase plan will not be adversely altered or impaired by any amendment or termination of such plan without consent of the
person to whom such rights were granted. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustment Provision.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The purchase plan and outstanding rights may be appropriately and
proportionally adjusted at the discretion of the Board as to classes and numbers of shares and purchase prices under current offerings in the event of changes to the common stock as a result of
merger, reorganization, recapitalization, reclassification, stock split, reverse stock split, or other similar transaction. No adjustments shall be made for stock dividends. For this purpose, any
distribution of common stock to stockholders in an amount aggregating 20% or more of the outstanding common stock shall be deemed a stock split and any distribution of common stock to stockholders in
an amount aggregating less than 20% of the outstanding common stock shall be deemed a stock dividend. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effect of Certain Corporate Events.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of a dissolution, liquidation, or specified type of
acquisition or merger of the company, the compensation committee shall take such action as it deems appropriate and equitable, which may include (i)&nbsp;a refund of payroll deductions in the
offering, </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>52</FONT></P>

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<P><FONT SIZE=2>(ii)&nbsp;shortening
the offering period, or (iii)&nbsp;providing that each participant in such offering will be entitled to receive for each share of common stock that such participant would have
purchased on the purchase date the approximate cash, securities, and/or property that a holder of one share of common stock was entitled to receive upon and at the time of such transaction. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock Subject to Purchase Plan.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;An aggregate of 200,000 shares of common stock has been reserved for
future issuance under the purchase plan. </FONT></P>

<P><FONT SIZE=2><B>Employment Agreements  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We plan to enter into employment agreements with Richard Sarmiento, Patricia Darrow-Smith, Michael Smith, and Stephen Hirsch prior to completion of the offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
entered into an employment offer letter agreement with Stephen Hirsch on July&nbsp;12, 1999. Mr.&nbsp;Hirsch's employment offer letter provides for the payment of
(i)&nbsp;12&nbsp;months salary in the event Mr.&nbsp;Hirsch's employment is terminated within 12&nbsp;months before or after a change of control of the Company and (ii)&nbsp;nine months
salary in the event we terminate him without cause. The terms "cause" and "change of control" are defined in the offer letter. We plan to replace this employment offer letter agreement with an
employment agreement prior to the offering. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>53</FONT></P>

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<BR></FONT><FONT SIZE=2><B>RELATED PARTY TRANSACTIONS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the offering, we are required to make a distribution of $11.8&nbsp;million to holders of our Class&nbsp;C common stock. The recipients of
this distribution are Craig Foley and entities affiliated with Mr.&nbsp;Foley as well as entities affiliated with Howard Goldstein. The distribution amounts are proportionate to ownership of
Class&nbsp;C shares. Messrs.&nbsp;Foley and Goldstein are members of our board of directors. See "Management's Discussion and Analysis of Financial Condition and Results of
Operations&#151;Amounts Distributable to Holders of Class&nbsp;C Common Stock." </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
January&nbsp;2002, one of our non-employee stockholders negotiated a sale of certain of her Class&nbsp;A common shares to entities affiliated with Messrs.&nbsp;Foley
and Goldstein, members of our board of directors. As part of this transaction, we agreed to exchange Class&nbsp;A common shares acquired by the entities for shares of Class&nbsp;C common stock, on
a one-for-one basis. Accordingly, we issued 92,308 shares of Class&nbsp;C common stock to these entities in exchange for 92,308 shares of Class&nbsp;A common stock. The
value of the 92,308 shares of Class&nbsp;C common stock issued was $225,000. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have from time to time retained the services of a company affiliated with a relative of Ms.&nbsp;Darrow-Smith to provide us with painting for certain of our stores. The total
consideration paid by us for those services was approximately $9,000, $97,000, and $0 in fiscal 2000, 2001, and 2002, respectively. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that the transactions disclosed above were made on terms no less favorable to us than would have been obtained from unaffiliated third parties. Our policy is that all
transactions between us and our executive officers, directors, and principal stockholders be on terms no less favorable to us than we could obtain from unaffiliated third parties or else be approved
by our disinterested directors. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>54</FONT></P>

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<BR></FONT><FONT SIZE=2><B>PRINCIPAL AND SELLING STOCKHOLDERS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information known to us regarding the beneficial ownership of our common stock as of April&nbsp;30, 2003, as adjusted to
reflect the sale of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock in the offering and the conversion of all outstanding shares of
our Class&nbsp;A common stock and Class&nbsp;C common stock into shares
of common stock, by: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>each
of our directors and named executive officers;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>our
directors and executive officers as a group;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>each
person or group known by us to own beneficially more than 5% of our outstanding common stock; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>each
selling stockholder. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. As of April&nbsp;30, 2003, we had 5,783,071 shares of common stock
outstanding, assuming conversion of all of our outstanding Class&nbsp;A common stock and Class&nbsp;C common stock on a share-for-share basis. Unless otherwise indicated,
the persons included in the table have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of common stock
subject to options that are currently exercisable or are exercisable within 60&nbsp;days of April&nbsp;30, 2003 are treated as outstanding and owned beneficially with respect to the person holding
such options for the purpose of computing the percentage ownership of such person. However, these shares are not treated as outstanding for purposes of computing the percentage ownership of any other
person. The percentages in the "Shares Beneficially Owned After the Offering" column assume that the underwriters do not exercise their over-allotment option to purchase up to
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares. </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="89%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="35%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Shares of Common<BR>
Stock Beneficially<BR>
Owned Prior<BR>
to the Offering</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=3 ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Shares<BR>
Beneficially<BR>
Owned After<BR>
the Offering</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="35%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%" ROWSPAN=3><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ROWSPAN=3 ALIGN="CENTER"><FONT SIZE=1><B>Number of<BR>
Shares of<BR>
Common Stock<BR>
to Be Sold<BR>
in the Offering</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="35%" ROWSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Name of Beneficial Owner<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Voting Power<BR>
After the<BR>
Offering</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="11%" ALIGN="CENTER"><FONT SIZE=1><B>Number</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>Percent</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="8%" ALIGN="CENTER"><FONT SIZE=1><B>Number</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="7%" ALIGN="CENTER"><FONT SIZE=1><B>Percent</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2><B>Executive Officers and Directors:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Richard D. Sarmiento</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,245,432<SUP>(1)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>21.5</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Howard E. Goldstein</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,378,872<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>23.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Craig J. Foley</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>990,849<SUP>(3)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>17.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Patricia Darrow-Smith</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,259,699<SUP>(4)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>21.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>F. Michael Smith</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,259,699<SUP>(5)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>21.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Darryl Hartley-Leonard</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>6,152<SUP>(6)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Sally Frame Kasaks</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>10,460<SUP>(6)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Stephen L. Hirsch</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>40,358<SUP>(7)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>All directors and officers as a group (8&nbsp;persons)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,931,822</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>85.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><BR><FONT SIZE=2><B>Five Percent Holders:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Entities affiliated with INVESCO Private Capital,&nbsp;Inc.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,378,872<SUP>(2)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>23.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Phillips-Smith Specialty Retail Group&nbsp;III,&nbsp;L.P.</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>990,849<SUP>(3)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>17.1</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Anne Bernholz</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>365,722<SUP>(8)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Martin Bernholz</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>365,722<SUP>(9)</SUP></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6.3</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><BR><FONT SIZE=2><B>Selling Stockholders:</B></FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Eric Ryan</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>220,536</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Roderick Ryan</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>101,948</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1.8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Ayman Sabi</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>47,412</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Nick Kahook</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>48,000</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Hagen Choi</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>30,769</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>Pat Thoman</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,538</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="35%"><FONT SIZE=2>John Roesler</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,538</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>less
than 1% </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>55</FONT></P>

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<DT style='margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;2,769 shares held by Mr.&nbsp;Sarmiento's spouse and (ii)&nbsp;1,046 shares subject to options currently exercisable or exercisable within 60&nbsp;days of
April&nbsp;30, 2003. Mr.&nbsp;Sarmiento's address is 6711&nbsp;Baymeadow Drive, Glen Burnie, Maryland 21060.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD><FONT SIZE=2>Represents
(i)&nbsp;190,888 shares held of record by Chancellor Private Capital Partners&nbsp;III,&nbsp;L.P., (ii)&nbsp;841,971 shares held of record by Citiventure 96
Partnership,&nbsp;L.P., (iii)&nbsp;25,398 shares held of record by Chancellor Private Capitol Offshore Partners&nbsp;I, C.V., (iv)&nbsp;314,468 shares held of record by Chancellor Private
Capital Offshore Partners&nbsp;II,&nbsp;L.P., and (v)&nbsp;6,147 shares subject to options held by these entities that are currently exercisable or exercisable within 60&nbsp;days of
April&nbsp;30, 2003. Mr.&nbsp;Goldstein, one of our directors, is a general partner of INVESCO Private Capital, Inc. Mr.&nbsp;Goldstein disclaims beneficial ownership of these shares except to
the extent of his pecuniary interest in these entities. Mr.&nbsp;Goldstein's business address is 1166&nbsp;Avenues of the Americas, 27th&nbsp;Floor, New York, New York 10036
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD><FONT SIZE=2>Represents
(i)&nbsp;958,398 shares held of record by Phillips-Smith Specialty Retail Group&nbsp;III,&nbsp;L.P., (ii)&nbsp;26,299 shares held of record by Mr.&nbsp;Foley, and
(iii)&nbsp;6,152 shares subject to options held by Mr.&nbsp;Foley that are currently exercisable or exercisable within 60&nbsp;days of April&nbsp;30, 2003. Mr.&nbsp;Foley, one of our
directors, is a principal of Phillips-Smith Specialty Retail Group&nbsp;III,&nbsp;L.P. Mr.&nbsp;Foley disclaims beneficial ownership of the shares not held of record by him except to the extent
of his pecuniary interest in Phillips-Smith Specialty Retail Group&nbsp;III,&nbsp;L.P. Mr.&nbsp;Foley's address is 5080&nbsp;Spectrum Drive, Suite&nbsp;700 West, Dallas, Texas 75248.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(4)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;1,046 shares subject to options that are currently exercisable or exercisable within 60&nbsp;days of April&nbsp;30, 2003, and (ii)&nbsp;477,969 shares
beneficially owned by Ms.&nbsp;Darrow-Smith's spouse, F.&nbsp;Michael Smith. Ms.&nbsp;Darrow-Smith's address is 6711&nbsp;Baymeadow Drive, Glen Burnie, Maryland 21060.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(5)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;1,046 shares subject to options that are currently exercisable or exercisable within 60&nbsp;days of April&nbsp;30, 2003, and (ii)&nbsp;781,730 shares
beneficially owned by Mr.&nbsp;Smith's spouse, Patricia Darrow-Smith. Mr.&nbsp;Smith's address is 6711&nbsp;Baymeadow Drive, Glen Burnie, Maryland 21060.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(6)</FONT></DT><DD><FONT SIZE=2>Represents
shares subject to options that are currently exercisable or exercisable within 60&nbsp;days of April&nbsp;30, 2003.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(7)</FONT></DT><DD><FONT SIZE=2>Includes
38,820 shares subject to options that are currently exercisable or exercisable within 60&nbsp;days of April&nbsp;30, 2003. Mr.&nbsp;Hirsch's address is
6711&nbsp;Baymeadow Drive, Glen Burnie, Maryland 21060.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(8)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;116,030 shares held of record by Ms.&nbsp;Bernholz's spouse, Martin&nbsp;Bernholz, and (ii)&nbsp;249,692 shares held of record by Ms.&nbsp;Bernholz.
Ms.&nbsp;Bernholz's address is 6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(9)</FONT></DT><DD><FONT SIZE=2>Includes
(i)&nbsp;249,692 shares held of record by Mr.&nbsp;Bernholz's spouse, Anne Bernholz, and (ii) 116,030 shares held of record by Mr.&nbsp;Bernholz. Mr.&nbsp;Bernholz's
address is 6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>(10)</FONT></DT><DD><FONT SIZE=2>Assumes
the underwriters' over-allotment option is not exercised. In the event that the underwriters' over-allotment option is exercised in full, the following persons will sell the
additional number of shares set forth after their respective names:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. In the event that the over-allotment
option is partially exercised, then such selling stockholders shall sell
additional shares pursuant to such exercise on a pro rata basis. </FONT></DD></DL>
<P ALIGN="CENTER"><FONT SIZE=2>56</FONT></P>

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<BR></FONT><FONT SIZE=2><B>DESCRIPTION OF CAPITAL STOCK    <BR>    </B></FONT></P>


<P><FONT SIZE=2><B>General  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information describes our common stock and preferred stock and provisions of our articles of amendment and restatement and our bylaws as in effect
upon the completion of the offering. This description is only a summary. You should also refer to the articles of amendment and restatement and our bylaws which have been filed with the SEC as
exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock reflect changes to our capital structure that will occur upon
the receipt of the requisite stockholder approvals and upon the completion of the offering in accordance with the terms of the proposed articles of amendment and articles of amendment and restatement.
As of April&nbsp;30, 2003, we had 44 stockholders of record. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the completion of the offering our authorized capital stock will consist of 25,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock,
par value $0.01 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
features of our articles of incorporation, as amended and restated, and bylaws may have the effect of delaying or preventing a change in control transaction. See "Risk
Factors&#151;Risks Relating to the Offering&#151;We are subject to anti-takeover provisions which could affect the price of our common stock." </FONT></P>


<P><FONT SIZE=2><B>Common Stock  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of our common stock are entitled to one vote per share on all matters to be voted on by stockholders. There is no cumulative voting in the election of our
directors, which means the holders of a majority of our outstanding common stock, subject to the rights of holders of our preferred stock, if any, can elect all the nominees standing for election.
Subject to the prior rights of holders of preferred
stock, if any, the holders of common stock are entitled to receive such dividends, if any, as may be declared from time to time by our board of directors in its discretion from funds legally available
therefor. Upon our liquidation or dissolution, the remainder of our assets will be distributed ratably among the holders of common stock after payment of liabilities and the liquidation preferences of
any outstanding shares of preferred stock. Our common stock has no preemptive or other subscription rights and there are no conversion rights or redemption or sinking fund provisions with respect to
such shares. All of the outstanding shares of common stock are, and the shares to be sold in the offering will be, fully paid and nonassessable. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its assets, engage in a share exchange, or engage in
similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders holding at least two-thirds of the shares entitled to vote on the matter. However,
a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage but not less than a majority of all the votes entitled to be cast on the matter. Our charter
provides for approval by a majority of all the votes entitled to be cast notwithstanding any provision of law requiring a greater percentage. </FONT></P>

<P><FONT SIZE=2><B>Preferred Stock  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective upon the completion of the offering, we will have 5,000,000 shares of undesignated preferred stock authorized. Our board of directors has the authority
to issue the preferred stock in one or more series and to fix the price, preferences, conversion or other rights, voting powers, restrictions, limitations to dividends, qualifications or terms or
conditions, terms of redemption, redemption prices, liquidation preferences, and the number of shares constituting a series or the designation of such series, without any further vote or action by our
stockholders. Our issuance of preferred stock, while providing </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>57</FONT></P>

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<P><FONT SIZE=2>desirable
flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of delaying, deferring, or preventing a change in control of
White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market without further action by the stockholders and may adversely affect the market price of, and the voting and other rights of, the holders of
common stock. We have no current plans to issue any shares of preferred stock. </FONT></P>

<P><FONT SIZE=2><B>Business Combinations  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law prohibits certain "business combinations" (including a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland corporation and an "interested stockholder." Interested stockholders are all persons (i)&nbsp;who beneficially own 10% or more
of the voting power of the corporation's shares or (ii)&nbsp;an affiliate or associate of the corporation who, at any time within the two-year
period prior to the date in question, was an interested stockholder or an affiliate or an associate thereof. Such business combinations are prohibited for five years after the most recent date on
which the interested stockholder became an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors of the corporation and approved by the
affirmative vote of at least (i)&nbsp;80% of the votes entitled to be cast by all holders of voting shares of the corporation, and (ii)&nbsp;66<SUP>2</SUP>/<SMALL>3</SMALL>% of the votes entitled to be cast
by all holders of voting shares of the corporation other than voting shares held by the interested stockholder, or an affiliate or associate of the interested stockholder, with whom the business
combination is to be effected, unless, among other things, the corporation's stockholders receive a minimum price (as defined in Maryland law) for their shares and the consideration is received in
cash or in the same form as previously paid by the interested stockholder for its shares. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted
by our board of directors prior to the time that the interested stockholder becomes an interested stockholder. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
board of directors has adopted an irrevocable resolution exempting Richard Sarmiento, Patricia Darrow-Smith and Michael Smith, and each of their respective existing and future
affiliates from the provisions of the business combination statute. The board of directors has also adopted an irrevocable resolution exempting Phillips-Smith Specialty Retail Group III, L.P. and
INVESCO Private Capital,&nbsp;Inc. and their respective existing and future affiliates and associates from the business combination statute up to the number of shares beneficially owned by them,
respectively, immediately prior to the closing of the offering. </FONT></P>

<P><FONT SIZE=2><B>Control Share Acquisitions  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maryland law provides that "control shares" of a Maryland corporation acquired in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock owned by the acquiror or by officers or directors who are employees of the
corporation. Control shares are voting shares of stock which, if aggregated with all other shares of stock previously acquired by such a person, would entitle the acquiror to exercise voting power in
electing directors within one of the following ranges of voting power: (i)&nbsp;10% or more but less than 33<SUP>1</SUP>/<SMALL>3</SMALL>%; (ii)&nbsp;33<SUP>1</SUP>/<SMALL>3</SMALL>% or more but less than a majority;
or (iii)&nbsp;a majority of all voting power. Control shares do not include shares of stock an acquiring person is entitled to vote as a result of having previously obtained stockholder approval in
accordance with the control share act. A control share acquisition means, subject to certain exceptions, the acquisition of, ownership of, or the power to direct the exercise of voting power with
respect to, control shares. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
person who has made or proposes to make a "control share acquisition," upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel the board of
directors to call a special meeting of stockholders to be held within 50&nbsp;days of demand therefor to consider the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>58</FONT></P>

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<P><FONT SIZE=2>voting
rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders' meeting. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as permitted by the statute, then, subject to certain
conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard
to voting rights, as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for
"control shares" are approved at a stockholders' meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The
fair value of the stock as determined for purposes of such appraisal rights may not be less than the highest price per share paid in the control share acquisition, and certain limitations and
restrictions otherwise applicable to the exercise of dissenters' rights do not apply in the context of a "control share acquisition." A control share acquisition does not include any merger,
consolidation or share exchange where we are a party to such transaction. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
amended and restated article of incorporation will provide that "control share acquisition" will not include any transaction by Richard Sarmiento, Patricia Darrow-Smith, Michael
Smith, or their existing or future affiliates or associates. Additionally, the amendment will provide that a "control share acquisition" does not include any transaction which would otherwise
constitute a "control share acquisition," up to the number of shares beneficially owned by them immediately prior to the effective time of the amendment, by either INVESCO Private
Capital,&nbsp;Inc., or Phillips-Smith Specialty Retail Group&nbsp;III, L.P. or their existing or future affiliates. </FONT></P>

<P><FONT SIZE=2><B>Certain Charter and Bylaw Provisions  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our charter and bylaws will be amended and restated as of the closing of the offering and, as a result of such amendment and restatement, will contain several
provisions that may make the acquisition of control of White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market by means of a proxy fight, open market purchases, tender offer, or other method more
difficult. The following is a summary of certain of these provisions. Forms of our charter and bylaws, as amended, are filed as exhibits to the registration statement filed with the Commission of
which this prospectus is a part, and the following summary is qualified in its entirety by reference to such documents. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number of Directors.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our charter and bylaws provide that the number of directors shall be fixed from
time to time by resolution adopted by a majority of the entire board of directors, but may not consist of fewer than three or such lesser number of stockholders. The size of our board of directors has
initially been set at five members. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Classified Board of Directors.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our charter divides the board of directors into three classes, with
one class having a term of one year, one class having a term of two years, and one class having a term of three years. Each class is to be as nearly equal in number as possible. At each annual meeting
of our stockholders, commencing with the annual meeting of stockholders to be held in fiscal 2004, directors
will be elected to succeed those directors whose terms have expired, and each newly elected director will serve for a three-year term. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
classification of directors and the provisions in the charter that limit the ability of stockholders to increase the size of the board of directors, together with the provisions in
our charter described below that limit the ability of stockholders to remove directors and that permit the remaining directors to fill any vacancies on the board, will have the effect of making it
more difficult for stockholders to change the composition of our board of directors. As a result, at least two annual meetings of stockholders may be required for our stockholders to change a majority
of the directors, whether or not </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>59</FONT></P>

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<P><FONT SIZE=2>a
change in the board of directors would be beneficial to us and our stockholders and whether or not a majority of our stockholders believes that such a change would be desirable. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Removal of Directors and Filling Vacancies.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our charter and bylaws provide that a director may be
removed by stockholders only "for cause" and with the approval of the holders of 80% of the total voting power of all of our outstanding securities then entitled to vote generally in the election of
directors, voting together as a single class at a special meeting of stockholders called for that purpose. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
charter and the bylaws provide that all vacancies on our board of directors, including those resulting from an increase in the number of directors, may be filled solely by a majority
of the remaining directors even if they do not constitute a quorum. If the vacancy occurs as a result of the removal of a director, our stockholders may elect a successor at the meeting at which such
removal occurs. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advance Notice Requirements for Stockholder Proposals and Director Nominations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our bylaws establish
advance notice procedures with regard to stockholder proposals and the nomination, other than by or at the direction of the board of directors or a committee thereof, of candidates for election as
directors. These procedures require that a notice of stockholder proposals and stockholder nominations for the election of directors at any meeting of stockholders must be in writing, contain certain
specified information, and be received by our corporate secretary not less than 90 nor more than 120&nbsp;days prior to the meeting (or if less than ten&nbsp;days' notice or prior public
disclosure of the date of the meeting is given, the notice of stockholder proposals or nominations must be in writing and received by the our corporate secretary no later than the close of business on
the tenth day following the day on which notice of the meeting was mailed or public disclosure thereof was made, whichever occurs first). We may reject a stockholder proposal or nomination that is not
made in accordance with such procedures. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limitations on Calling Stockholder Meetings.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our charter and bylaws provide that special meetings of
stockholders can be called only by our chairman of the board of directors, our president, our board of directors, or by the corporate secretary at the request of holders of at least a majority of all
votes entitled to be cast. These provisions may have the effect of delaying consideration of a stockholder
proposal until the next annual meeting unless a special meeting is called by the board of directors, the chairman of the board, the president, or the corporate secretary upon the request of holders of
a sufficient number of shares. </FONT></P>

<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendment of Certain Provisions of the Charter and Bylaws.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our charter provides that the affirmative
vote of the holders of at least 80% of the aggregate combined voting power of all classes of capital stock entitled to vote thereon, voting as one class, is required to amend, repeal or adopt
provisions inconsistent with certain provisions of the charter, including those provisions relating to the limitation on calling stockholder meetings, the number, election, and term of directors; the
removal of directors; the amendment of our bylaws; and the provision governing applicability of the Maryland Control Share Act (Section&nbsp;3-702 of the Maryland General Corporation
Law). Our charter further provides that board of directors shall have the exclusive right to make, alter, amend or repeal our bylaws. These requirements will have the effect of making more difficult
any amendment by our stockholders, even if a majority of our stockholders believe that such amendment would be in their best interests. </FONT></P>


<P><FONT SIZE=2><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Power to Reclassify Shares of our Stock.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our charter authorizes our board of directors to classify
and reclassify any unissued stock and permits our board, without stockholder approval, to amend the charter to increase or decrease the aggregate number of shares of stock or the number of shares of
stock of any class that we have authority to issue. Prior to issuance of shares of each class or series, the board is required by Maryland law and to set the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>60</FONT></P>

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<P><FONT SIZE=2>conditions
of redemption for each class or series. Thus, the board could authorize the issuance of shares of preferred stock with terms and conditions that could have the effect of delaying, deferring
or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. No shares of our preferred stock are
presently outstanding and we have no present plans to issue any preferred stock. </FONT></P>

<P><FONT SIZE=2><B>Registration Rights  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted holders of 4,856,644&nbsp;shares of our common stock demand and "piggyback" registration rights with respect to such shares. These rights may
require us to file registration statements under the Securities Act covering all or a portion of our common stock issued to these holders or we may be required to include such shares of our common
stock in a registration under the Securities Act that we initiate on our own behalf. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
demand registration rights granted to these holders provide that upon request of holders of a majority of the common stock held by these persons, which request can be made at any
time after the consummation of the offering, we may be required to use our best efforts to register all or a portion of
such shares under the Securities Act on a Form&nbsp;S-1 registration statement. We are obligated to effect an unlimited number of such registrations on a Form&nbsp;S-1
registration statement, but we are only required to pay for the expenses of two such registrations and we are not required to effect any demand registration within 180&nbsp;days after any other
registration statement filed pursuant to the exercise of these demand registration rights or that was subject to the piggyback registration rights described below. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These
holders of common stock also have the right to request us to register such shares under the Securities Act on a Form&nbsp;S-3 registration statement, if and when we
qualify to use this form of registration statement. There is no limit on the number of registrations on Form&nbsp;S-3 that such holders may request. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, each of these holders has certain piggyback registration rights. If we propose to register any common stock under the Securities Act for our own account (other than pursuant
to an offering in connection with the registration of securities on the Form&nbsp;S-8 or any successor form, which covers securities issued under an employee benefit plan, or on the
Form&nbsp;S-4 or any successor form, which covers securities issued in a business combination or a registered exchange offer), holders of piggyback rights may require that we include all
or a portion of their common stock in such registration. In connection with any such offering, the managing underwriter thereof can limit the number of shares held by persons with piggyback
registration rights to be included in such registration. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
will be responsible for all expenses incurred in connection with the registration rights above, excluding underwriting discounts or commissions. </FONT></P>

<P><FONT SIZE=2><B>Transfer Agent and Registrar  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The transfer agent and registrar for our common stock is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.
</FONT></P>


<P><FONT SIZE=2><B>Listing  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have applied to list our shares of common stock on the Nasdaq National Market under the symbol "WHBK." </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>61</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
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<A NAME="toc_ee1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>SHARES ELIGIBLE FOR FUTURE SALE    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the offering, there has been no public market for our common stock. Future sales of substantial amounts of common stock in the public market could lower
prevailing market prices. As described below, no shares currently outstanding (other than shares sold in the offering by the selling stockholders) will be available for sale immediately after the
offering because of contractual restrictions on resale. Sales of substantial amounts of our common stock in the public market after the restrictions lapse could harm the prevailing market price and
impair our ability to raise equity capital in the future. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
completion of the offering, we will have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding. Of these shares, the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
sold in the offering, plus any shares issued
upon exercise of the underwriters' over-allotment option, will be freely tradable without restriction under the Securities Act, unless purchased by our "affiliates" as that term is defined
in Rule&nbsp;144 under the Securities Act. In general, affiliates include officers, directors, and 10% stockholders. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
remaining&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares outstanding are "restricted securities" within the meaning of Rule&nbsp;144. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rules&nbsp;144, 144(k), or 701 promulgated under the Securities Act, which are summarized below. Sales of the restricted
securities in the public market, or the availability of such shares for sale, could adversely affect the market price of the common stock. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of our directors, officers, and securityholders have entered into lock-up agreements in connection with the offering generally providing that they will not offer, sell,
contract to sell, or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of
180&nbsp;days after the date of this prospectus without the prior written consent of William Blair&nbsp;&amp; Company, L.L.C. Taking into account the lock-up agreements, and assuming
William Blair&nbsp;&amp; Company, L.L.C. does not release stockholders from these agreements, the number of restricted shares that will be available for sale in the public market under the provisions of
Rule&nbsp;144, 144(k), and 701 will be as follows: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Beginning
on the effective date of this prospectus, only the shares sold in the offering will be immediately available for sale in the public market.
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>Beginning
180&nbsp;days after the effective date, approximately all of our&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;restricted shares will be eligible for sale. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
general, under Rule&nbsp;144, after the expiration of the lock-up agreements, a person who has beneficially owned restricted securities for at least one year would be
entitled to sell within any three-month period a number of shares that does not exceed the greater of: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>one
percent of the number of shares of common stock then outstanding, which will equal approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares immediately after the offering; or
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>the
average weekly trading volume of the common stock during the four calendar weeks preceding the sale. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales
under Rule&nbsp;144 are also subject to requirements with respect to manner of sale, notice, and the availability of current public information about us. Under
Rule&nbsp;144(k), a person who is not deemed to have been our affiliate at any time during the three months preceding a sale and who has beneficially owned the shares proposed to be sold for at
least two years, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation, or notice provisions of Rule&nbsp;144. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rule&nbsp;701
permits our employees, officers, directors, or consultants who purchased shares pursuant to a written compensatory plan or contract to resell such shares in reliance upon
Rule&nbsp;144 but without compliance with specific restrictions. Rule&nbsp;701 provides that affiliates may sell their Rule&nbsp;701 shares under Rule&nbsp;144 without complying with the
holding period requirement and that non-affiliates may sell such shares in reliance on Rule&nbsp;144 without complying with the holding period, public information, volume limitation, or
notice provisions of Rule&nbsp;144. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>62</FONT></P>

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<A NAME="toc_eg1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>UNDERWRITING    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The underwriters named below, for which William Blair&nbsp;&amp; Company, L.L.C., SG Cowen Securities Corporation, and RBC Dain Rauscher&nbsp;Inc. are acting as
representatives, have severally agreed, subject to the terms and conditions set forth in the underwriting agreement by and among the underwriters, the selling stockholders and us, to purchase from the
selling stockholders and us, the respective number of shares of common stock set forth opposite each underwriter's name in the table below. </FONT></P>

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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1><B>Underwriter<BR> </B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="16%" ALIGN="CENTER"><FONT SIZE=1><B>Number of Shares</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>William Blair&nbsp;&amp; Company, L.L.C.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>SG Cowen Securities Corporation</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>RBC Dain Rauscher Inc.</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="3%">&nbsp;</TD>
<TD WIDTH="76%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
offering will be underwritten on a firm commitment basis. In the underwriting agreement, the underwriters have agreed, subject to the terms and conditions set forth therein, to
purchase the shares of common stock being sold pursuant to this prospectus at a price per share equal to the public offering price less the underwriting discount specified on the cover page of this
prospectus. According to the terms of the underwriting agreement, the underwriters either will purchase all of the shares or none of them. In the event of default by any underwriter, in certain
circumstances, the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. In the underwriting agreement, we and the
selling stockholders have made certain representations and warranties to the underwriters and have agreed to indemnify them and their controlling persons against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect thereof. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
representatives of the underwriters have advised us and the selling stockholders that the underwriters propose to offer the common stock to the public initially at the public
offering price set forth on the cover page of this prospectus and to selected dealers at such price less a concession of not more than $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. The underwriters may allow, and
such
dealers may re-allow, a concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to certain other dealers. The underwriters will offer the shares subject to prior sale and subject to receipt
and acceptance of the shares by the underwriters. The underwriters may reject any order to purchase shares in whole or in part. The underwriters expect that we and the selling stockholders will
deliver the shares to the underwriters through the facilities of The Depository Trust Company in New York, New York on or
about&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003. At that time, the underwriters will pay us and
the selling stockholders for the shares in immediately available funds. After commencement of the public offering, the representatives may change the public offering price and other selling terms. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
of the selling stockholders have granted the underwriters an option, exercisable within 30&nbsp;days after the date of this prospectus, to purchase up to an additional
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock at the same price per share to be paid by the underwriters for the other shares offered hereby solely for the purpose of covering over-allotments. If
the underwriters purchase any such additional shares pursuant to this option, each of the underwriters will be committed to purchase such additional shares in approximately the same proportion as set
forth in the table above. The underwriters may </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>63</FONT></P>

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<P><FONT SIZE=2>exercise
the option only for the purpose of covering excess sales, if any, made in connection with the distribution of the shares of common stock offered hereby. The underwriters will offer any
additional shares that they purchase pursuant to this option on the terms described in the preceding paragraph. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
underwriters have reserved for sale, at the initial public offering price, up to 3% of the shares of common stock in the offering for our employees, relatives of our executive
officers, and business associates. Those receiving these reserved shares will not be subject to lock-up agreements by virtue of their having purchased such shares (though an employee could
otherwise be subject to a lock-up agreement). Purchases of the reserved shares would reduce the number of shares available for sale to the general public. The underwriters will offer any
reserved shares which are not so purchased to the general public on the same terms as the other shares being sold in the offering. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table summarizes the compensation to be paid by us and the selling stockholders to the underwriters. This information assumes either no exercise or full exercise by the
underwriters of their over-allotment option: </FONT></P>

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<DIV ALIGN="CENTER"><TABLE WIDTH="82%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="48%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="48%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Per Share</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Without<BR>
Over-Allotment</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>With<BR>
Over-Allotment</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Public offering price</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Underwriting discount paid by us</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="48%"><FONT SIZE=2>Underwriting discount paid by selling stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
estimate that our total expenses for the offering, excluding the underwriting discount, will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We,
and each of our directors, executive officers, and stockholders, who in the aggregate beneficially own all of our outstanding shares of common stock, have agreed, subject to limited
exceptions, for a period of 180&nbsp;days after the date of this prospectus, not to, without the prior written consent of William Blair&nbsp;&amp; Company, L.L.C.: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>directly
or indirectly offer, sell, contract to sell, assign, transfer, encumber, pledge, grant an option to purchase, make any "short" sale, establish a "put equivalent
position" within the meaning of Rule&nbsp;16a-1(h) under the Exchange Act, or otherwise dispose of any shares of the Company's common stock, or any options or warrants to purchase any
shares of common stock or any securities convertible into, exchangeable for, or that represent the right to receive shares of common stock ("common stock equivalents") held of record or beneficially
owned (within the meaning of Rule&nbsp;13d-3 under the Exchange Act);
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>enter
into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any common stock or common stock
equivalent; or
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>exercise
any registration rights with respect to any common stock or common stock equivalent. </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
agreement does not extend to bona fide gifts to immediate family members of such persons who agree to be bound by such restrictions, or to limited partners or stockholders who agree
to be bound by such restrictions. In determining whether to consent to a transaction prohibited by these restrictions, the underwriters will take into account various factors, including the number of
shares requested to be sold, the anticipated manner and timing of sale, the potential impact of the sale on the market for the common stock, and market conditions generally. We may grant options and
issue common stock under existing stock option plans and issue unregistered shares in connection with any outstanding convertible securities or options during the lock-up period. See
"Shares Eligible for Future Sale." </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>64</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
representatives have informed us that the underwriters will not confirm, without client authorization, sales to their client accounts as to which they have discretionary authority.
The representatives have also informed us that the underwriters intend to deliver all copies of this prospectus via hand delivery or through mail or courier services and only printed forms of the
prospectus are intended to be used. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the offering, the underwriters and other persons participating in the offering may engage in transactions which affect the market price of the common stock. These may
include stabilizing and over-allotment transactions and purchases to cover syndicate short positions. Stabilizing transactions consist of bids or purchases for the purpose of pegging,
fixing, or maintaining the price of the common stock. An over-allotment involves selling more shares of common stock in the offering than are specified on the cover page of this
prospectus, which results in a syndicate short position. The underwriters may cover this short position by purchasing common stock in the open market or by exercising all or part of their
over-allotment option. In addition, the representatives may impose a penalty bid. This allows the representative to reclaim the selling concession allowed to an underwriter or selling
group member if common stock sold by such underwriter or selling group member in the offering is repurchased by the representative in stabilizing or syndicate short covering transactions. These
transactions, which may be effected on the Nasdaq National Market or otherwise, may stabilize, maintain, or otherwise affect the market price of the common stock and could cause the price to be higher
than it would be without these transactions. The underwriters and other participants in the offering are not required to engage in any of these activities and may discontinue any of these activities
at any time without notice. We, the selling stockholders, and the underwriters make no representation or prediction as to whether the underwriters will engage in such transactions or choose to
discontinue any transactions engaged in or as to the direction or magnitude of any effect that these transactions may have on the price of the common stock. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have applied to list our common stock on the Nasdaq National Market under the symbol "WHBK." </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the ordinary course of business, some of the underwriters and their affiliates have provided, and may in the future provide, investment banking, commercial banking, and other services
to us for which they have received, and may in the future receive, customary fees or other compensation. </FONT></P>

<P><FONT SIZE=2><B>Determination of Offering Price  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the offering, there has been no public market for the common stock. The initial public offering price for our common stock will be determined by
negotiation between us and the representatives of the underwriters. The factors that will be considered in determining the initial public offering price are prevailing market and economic conditions,
our revenue and earnings, market valuations of other companies engaged in activities similar to us, estimates of our business potential and prospects, the present state of our business operations, our
management, and other factors deemed relevant. The estimated initial public offering price range on the cover of this preliminary prospectus is subject to change as a result of market conditions or
other factors. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>65</FONT></P>

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<A NAME="page_eg1425_1_66"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="eg1425_legal_matters"> </A>
<A NAME="toc_eg1425_2"> </A>
<BR></FONT><FONT SIZE=2><B>LEGAL MATTERS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain legal matters with respect to the validity of the common stock offered hereby will be passed on for us by Venable, Baetjer, Howard&nbsp;&amp; Civiletti,
LLP, Washington, D.C. Certain legal matters relating to the offering will be passed upon for the underwriters by Sonnenschein Nath&nbsp;&amp; Rosenthal, Chicago, Illinois. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="eg1425_experts"> </A>
<A NAME="toc_eg1425_3"> </A>
<BR></FONT><FONT SIZE=2><B>EXPERTS    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The financial statements of The White House,&nbsp;Inc. as of February&nbsp;1, 2003 and February&nbsp;2, 2002, and for each of the years in the
three-year period ended February&nbsp;1, 2003, have been included herein and in the Registration Statement in reliance upon the report of KPMG&nbsp;LLP, independent
accountants' appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
or about May&nbsp;23, 2002, our board of directors became aware that our prior auditor, Arthur Andersen LLP, was ceasing to provide audit services. Accordingly, we engaged
KPMG&nbsp;LLP as our principal accountants on November&nbsp;14, 2002. The reports of Arthur Andersen LLP on the fiscal 2000 and 2001, financial statements of
White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or principal
accounting principles. There were no disagreements with Arthur Andersen LLP during fiscal 2000 or 2001, or during fiscal 2002 preceding their replacement on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused them to make reference to the subject matter
of the disagreement in connection with their reports. None of the reportable events described under Item 304(a)(1)(v)&nbsp;of Regulation&nbsp;S-K occurred preceding Arthur Andersen
LLP's replacement. We did not consult with KPMG&nbsp;LLP during any period preceding Arthur Andersen LLP's replacement regarding any of the matters or events set forth in Item
304(a)(2)(i)&nbsp;and (ii)&nbsp;of Regulation&nbsp;S-K. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>66</FONT></P>

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<BR>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_ei1425_1_67"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ei1425_where_you_can_find_additional_information"> </A>
<A NAME="toc_ei1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>WHERE YOU CAN FIND ADDITIONAL INFORMATION    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We filed with the SEC a registration statement on Form&nbsp;S-1 under the Securities Act with respect to the shares of common stock offered hereby.
This prospectus does not contain all the information set forth in the registration statement and the exhibits and schedules filed therewith. For further information with respect to
White&nbsp;House&nbsp;--&nbsp;Black&nbsp;Market and the common stock offered hereby, reference is made to the registration statement and to the exhibits and schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete, and each such statement is qualified in all respects by reference
to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules filed therewith may be
inspected without charge at the SEC's Public Reference Room at 450 Fifth Street, N.W. Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such
Public Reference Room upon payment of the fees prescribed by the SEC. You may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains a World Wide Web site that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. The address of the site is http://www.sec.gov. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
completion of the offering, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance
therewith, will file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements, and other information will be available for inspection and copying
at the SEC's regional offices, public reference facilities and web site of the SEC referred to above. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>67</FONT></P>

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NAME="page_fa1425_1_1"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fa1425_the_white_house,_inc._index_to_financial_statements"> </A>
<A NAME="toc_fa1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Index to Financial Statements    <BR>    </B></FONT></P>

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<TH WIDTH="92%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="5%" ALIGN="CENTER"><FONT SIZE=1><B>Page</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="92%"><FONT SIZE=2>Independent Auditors' Report</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>F-2</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="92%"><FONT SIZE=2><BR>
Balance Sheets&#151;As of February&nbsp;2, 2002 and February&nbsp;1, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2><BR>
F-3</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="92%"><FONT SIZE=2><BR>
Statements of Operations&#151;For the fiscal years ended February&nbsp;3, 2001, February&nbsp;2, 2002 and February&nbsp;1, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2><BR>
F-4</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="92%"><FONT SIZE=2><BR>
Statements of Stockholders' Equity&#151;For the fiscal years ended February&nbsp;3, 2001, February&nbsp;2, 2002 and February&nbsp;1, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2><BR>
F-5</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="92%"><FONT SIZE=2><BR>
Statements of Cash Flows&#151;For the fiscal years ended February&nbsp;3, 2001, February&nbsp;2, 2002 and February&nbsp;1, 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2><BR>
F-6</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="92%"><FONT SIZE=2><BR>
Notes to Financial Statements</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2><BR>
F-7</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>F-1</FONT></P>

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<P><FONT SIZE=2><A
NAME="page_fb1425_1_2"> </A> </FONT></P>

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<P><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When the transaction referred to in the second paragraph of note&nbsp;1 of the Notes to Financial Statements has been consummated, we will be in a position to render the following
report. </FONT></P>

<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>
<UL>

<P><FONT SIZE=2>/s/
KPMG LLP </FONT></P>

</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fb1425_independent_auditors__report"> </A>
<A NAME="toc_fb1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>Independent Auditors' Report    <BR>    </B></FONT></P>

<P><FONT SIZE=2>The
Board of Directors and Stockholders<BR>
The White House,&nbsp;Inc.: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have audited the accompanying balance sheets of The White House,&nbsp;Inc. (the Company) as of February&nbsp;2, 2002 and February&nbsp;1, 2003 and the related statements of
operations, stockholders' equity and cash flows for each of the years in the three-year period ended February&nbsp;1, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The White House,&nbsp;Inc. as of February&nbsp;2, 2002
and February&nbsp;1, 2003, and the results
of its operations and its cash flows for each of the years in the three-year period ended February&nbsp;1, 2003, in conformity with accounting principles generally accepted in the United
States of America. </FONT></P>

<P><FONT SIZE=2>Baltimore,
Maryland<BR>
April&nbsp;15, 2003 (except as to the second paragraph<BR>
&nbsp;&nbsp;&nbsp;&nbsp;of note&nbsp;1 of the notes to financial statements<BR>
&nbsp;&nbsp;&nbsp;&nbsp;which is as of July&nbsp;&nbsp;&nbsp;&nbsp;, 2003) </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-2</FONT></P>

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NAME="page_fc1425_1_3"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fc1425_the_white_house,_inc._balance___the04020"> </A>
<A NAME="toc_fc1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE, INC.<BR>  <BR>    Balance Sheets<BR>  <BR>    As of February 2, 2002 and February 1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="87%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=10 ALIGN="CENTER"><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Current assets:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Cash</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>519</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,081</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Accounts receivable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>429</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>579</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Merchandise inventories</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,583</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,645</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Prepaid expenses and other current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,185</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,664</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Deferred tax assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>190</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>638</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>6,906</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>9,607</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Property and equipment, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,073</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>9,820</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Deferred tax assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>920</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>699</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Other noncurrent assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>247</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>97</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>15,146</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>20,223</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=10 ALIGN="CENTER"><FONT SIZE=2><B>Liabilities and Stockholders' Equity</B></FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Borrowings under line of credit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,606</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Current portion of capital lease obligations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>231</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>571</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,117</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Trade accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,528</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,640</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Accrued expenses and other current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,248</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,680</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,613</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>9,008</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Accrued rent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>429</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>691</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Capital lease obligations, less current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>507</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,104</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,160</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,027</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>12,709</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>15,830</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Stockholders' equity:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Preferred stock, $0.01 par value per share. Authorized 5,000,000 shares; none issued and outstanding</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Common stock, $0.01 par value. Authorized 25,000,000 shares; none issued and outstanding</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Common stock Class A, $0.01 par value. Authorized 15,000,000 shares; issued and outstanding 3,425,649 shares</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>34</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>34</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Common stock Class B, $0.01 par value. Authorized 100,000 shares; none issued and outstanding</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Common stock Class C, $0.01 par value with mandatory distribution obligation. Authorized 8,000,000 shares; issued and outstanding 2,357,422 shares</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>24</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>24</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,752</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,856</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Unearned stock compensation</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(74</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Accumulated deficit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(5,373</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(3,447</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,437</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>4,393</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4><FONT SIZE=2>Commitments and contingencies</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Total liabilities and stockholders' equity</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>15,146</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>20,223</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes to financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-3</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=74,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=382776,FOLIO='F-3',FILE='DISK008:[03WDC5.03WDC1425]FC1425A.;13',USER='YLEE',CD='22-MAY-2003;14:36' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_fe1425_1_4"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fe1425_the_white_house,_inc._statemen__the05808"> </A>
<A NAME="toc_fe1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE, INC.<BR>  <BR>    Statements of Operations<BR>  <BR>    For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003<BR>  (Dollars in thousands, except for per share data)    <BR>
</B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="91%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year Ended<BR> </B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=5 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 3,<BR>
2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>37,721</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>49,532</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>66,956</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Cost of goods sold</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>17,676</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>21,884</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>28,271</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="47%"><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>20,045</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>27,648</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>38,685</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Selling, general and administrative expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>19,101</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>24,627</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>30,414</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>912</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,176</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,492</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="47%"><FONT SIZE=2>Operating income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>32</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,845</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>6,779</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Interest expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>198</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>326</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>217</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="47%"><FONT SIZE=2>Income (loss) before income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(166</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,519</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>6,562</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(48</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>650</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,652</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="47%"><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(118</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>869</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,910</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,475</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,679</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,984</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="47%"><FONT SIZE=2>Net income (loss) applicable to common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(1,593</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(810</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,926</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=5><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=5><FONT SIZE=2>Net income (loss) per weighted average common share:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=4><FONT SIZE=2>Basic and diluted &#151; Amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.65</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.74</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.84</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=4><FONT SIZE=2>Basic and diluted &#151; Net income (loss) applicable to common stockholders:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Class A</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.28</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.33</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Class C</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.28</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>(0.14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>0.33</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes to financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-4</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=75,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=198786,FOLIO='F-4',FILE='DISK008:[03WDC5.03WDC1425]FE1425A.;13',USER='YLEE',CD='21-MAY-2003;16:25' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_fg1425_1_5"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fg1425_the_white_house,_inc._statemen__the05222"> </A>
<A NAME="toc_fg1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE, INC.<BR>  <BR>    Statements of Stockholders' Equity<BR>  <BR>    For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003<BR>  (Dollars in thousands)    <BR>    </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Common stock</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Additional<BR>
paid-in<BR>
capital</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Unearned<BR>
stock<BR>
compensation</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%" ROWSPAN=2><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Accumulated<BR>
deficit</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Class A</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Class B</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Class C</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Balance January 29, 2000</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>35</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>23</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>7,728</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(2,970</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>4,816</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Net loss</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(118</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(118</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Stock options issued to non-employees</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Amounts distributable to Class&nbsp;C common stockholders</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,475</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(1,475</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Balance February 3, 2001</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>35</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>23</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>7,736</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(4,563</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>3,231</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Net income</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>869</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>869</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,679</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(1,679</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Conversion of 92,308 shares of Class A common stock to Class C common stockholders</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(1</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>1</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Stock options issued to non-employees</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>16</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>16</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Balance February 2, 2002</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>34</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>24</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>7,752</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(5,373</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2,437</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Net income</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3,910</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>3,910</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Amounts distributable to Class C common stockholders</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,984</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(1,984</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Stock options issued to non-employees</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>17</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>17</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Unearned stock compensation related to stock options issued to employees</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>87</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(87</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="27%"><FONT SIZE=2>Stock compensation earned</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>13</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>13</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Balance February 1, 2003</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>34</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>24</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT SIZE=2>7,856</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>(74</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,447</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>4,393</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes to financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-5</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=76,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=700675,FOLIO='F-5',FILE='DISK008:[03WDC5.03WDC1425]FG1425A.;9',USER='YLEE',CD='21-MAY-2003;16:23' -->
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NAME="page_fi1425_1_6"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fi1425_the_white_house,_inc._statemen__the04773"> </A>
<A NAME="toc_fi1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE, INC.<BR>  <BR>    Statements of Cash Flows<BR>  <BR>    For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003<BR>  (Dollars in thousands)    <BR>    </B></FONT></P>

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<TR VALIGN="BOTTOM">
<TH COLSPAN=6 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Years Ended</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=6 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 3,<BR>
2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Cash flows from operating activities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(118</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>869</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3,910</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Adjustments to reconcile net income (loss) to net cash provided by operating activities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Depreciation and amortization of property and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>912</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,176</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,492</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Amortization of deferred financing costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>25</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>26</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Deferred income tax benefit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(130</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(36</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(227</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Stock compensation and value of stock options issued to non-employees</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>30</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Changes in operating assets and liabilities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accounts receivable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(144</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(56</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(150</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Merchandise inventories</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,378</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(387</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,062</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Prepaid expenses and other current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>143</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(387</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(479</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(146</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(19</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>149</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Trade accounts payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,957</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(4</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>112</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accrued expenses and other current liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>139</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,199</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,432</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Accrued rent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>38</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>168</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>262</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="44%"><FONT SIZE=2>Net cash provided by operating activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,281</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,564</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5,495</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Cash flows from investing activities &#151; purchases of property and&nbsp;equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,371</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,628</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(2,963</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Cash flows from financing activities:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>(Repayments) borrowings under line of credit, net</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,903</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(673</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,606</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Repayments of capital lease obligations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(208</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(256</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(339</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Borrowings under capital leases</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>563</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>263</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Deferred financing costs</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(75</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(25</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(25</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="44%"><FONT SIZE=2>Net cash provided by (used in) financing activities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,183</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(691</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(1,970</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="44%"><FONT SIZE=2>Net increase in cash</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>93</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>245</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>562</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Cash, beginning of year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>181</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>274</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>519</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Cash, end of year</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>274</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>519</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,081</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Supplemental disclosure of cash flow information:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Cash paid for interest</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>199</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>300</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>200</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Cash paid for income taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>98</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>2,483</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Acquisitions of property and equipment under capital leases</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>1,276</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>See
accompanying notes to financial statements. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-6</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=1,SEQ=77,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=98321,FOLIO='F-6',FILE='DISK008:[03WDC5.03WDC1425]FI1425A.;10',USER='YLEE',CD='21-MAY-2003;16:25' -->
<!-- THIS IS THE END OF A COMPOSITION COMPONENT -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_fk1425_1_7"> </A> </FONT></P>

<!-- TOC_END -->
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04457"> </A>
<A NAME="toc_fk1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Business  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The White House,&nbsp;Inc. (the Company), a Maryland corporation, operates retail stores featuring private brand women's apparel and accessories in the colors
of white and black. As of February&nbsp;1, 2003, the Company operated 92 stores located throughout the United States, Puerto Rico, and the U.S. Virgin Islands. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July&nbsp;&nbsp;&nbsp;&nbsp;, 2003, the Company's stockholders approved a one-for-3.25 reverse stock split. All common shares, stock options and per share amounts for all periods presented
have been restated to reflect the reverse stock split. In addition, the stockholders approved the authorization of 5,000,000 shares of preferred stock and 25,000,000 shares of common stock. </FONT></P>

<P><FONT SIZE=2><B>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant Accounting Policies  </B></FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Fiscal Year  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company operates on a 52/53-week year, which ends on the Saturday nearest January&nbsp;31. The periods presented in these financial statements
are the fiscal years ended February&nbsp;3, 2001 (fiscal 2000), February&nbsp;2, 2002 (fiscal 2001) and February&nbsp;1, 2003 (fiscal 2002). Fiscal 2000 had 53 weeks and fiscal 2001 and fiscal
2002 had 52 weeks. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Revenue Recognition  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue is recognized at the point of sale in the Company's stores. Purchase volume rebates received from vendors are recognized through cost of goods sold when
the related sales revenue is earned. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Cost of Goods Sold and Selling, General and Administrative Expenses  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the
distribution center to the stores. Selling, general and administrative expenses include marketing and advertising, buying and merchandising, store occupancy, and other store and corporate expenses. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Merchandise Inventories  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merchandise inventories are stated at the lower of cost or market and cost is determined using the first-in, first-out (FIFO) method. The
Company capitalizes certain warehousing and distribution costs associated with shipping its merchandise to the point of sale as merchandise inventory cost. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company obtains a significant amount of its merchandise inventories from a limited number of vendors. During fiscal 2002, the Company purchased approximately 35% of its merchandise
inventories from five vendors, with one vendor representing approximately 20% of its merchandise inventories purchases. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-7</FONT></P>

<HR NOSHADE>
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<A NAME="page_fk1425_1_8"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822"> </A>
<A NAME="toc_fk1425_2"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Property and Equipment  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment is stated at cost. Depreciation and amortization is calculated using the straight-line method over the following estimated
useful lives: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="63%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="72%" ALIGN="CENTER"><FONT SIZE=1><B>Description</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="24%" ALIGN="CENTER"><FONT SIZE=1><B>Estimated<BR>
useful lives</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Furniture and fixtures</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER"><FONT SIZE=2>10&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Equipment</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER"><FONT SIZE=2>3&nbsp;&#150;&nbsp;5&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="72%"><FONT SIZE=2>Leasehold improvements</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="24%" ALIGN="CENTER"><FONT SIZE=2>Lease terms ranging from 5&nbsp;&#150;&nbsp;10&nbsp;years</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
and amortization expense for fiscal 2000, 2001 and 2002 was approximately $912, $1,176, and $1,492, respectively. Repairs and maintenance are charged to expense as incurred. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Other Assets  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets consist primarily of deposits and deferred financing costs related to the Company's line of credit. Deferred financing costs are being amortized
using the interest method over the term of the related debt. Accumulated amortization at February&nbsp;2, 2002 and February&nbsp;1, 2003 was $24 and $25, respectively. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Income Taxes  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Advertising  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Costs associated with advertising are expensed as incurred. Advertising costs were $507, $855, and $1,136 in fiscal 2000, 2001 and 2002, respectively. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Lease Expenses  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rent expense on leases is recognized on a straight-line basis over the term of the lease, and the excess of expense over cash amounts paid is recorded
as accrued rent in the accompanying balance sheets. Percentage rents are recognized ratably over the measurement period based upon management's estimate of store net sales. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Pre-Opening Costs  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pre-opening costs incurred in connection with start-up and promotion of new store openings are expensed as incurred and are included in
selling, general and administrative expenses. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-8</FONT></P>

<HR NOSHADE>
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<A NAME="page_fk1425_1_9"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_1"> </A>
<A NAME="toc_fk1425_3"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Long-Lived Assets  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount
of the asset exceeds the fair value of the asset. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Stock Option Plan  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No.&nbsp;25, </FONT> <FONT SIZE=2><I>Accounting for Stock
Issued to Employees</I></FONT><FONT SIZE=2>, and related
interpretations including FASB Interpretation No.&nbsp;44, </FONT><FONT SIZE=2><I>Accounting for Certain Transactions involving Stock Compensation</I></FONT><FONT SIZE=2>, issued in
March&nbsp;2000, to account for its fixed-plan stock options granted to employees and directors. Under this method, compensation expense is recorded on the date of grant only if the fair
value of the underlying stock exceeded the exercise price. SFAS No.&nbsp;123, </FONT><FONT SIZE=2><I>Accounting for Stock-Based Compensation</I></FONT><FONT SIZE=2>, established accounting and
disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No.&nbsp;123, the Company has elected to continue to
apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No.&nbsp;123, as amended by SFAS No.&nbsp;148. The following table
illustrates the effect on net income (loss) if the fair-value-based method had been applied to all outstanding and unvested awards for fiscal 2000, 2001 and 2002: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net income (loss) as reported</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(118</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>869</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3,910</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Add compensation recognized under the intrinsic value method, net of taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>8</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Deduct total stock-based employee compensation expense determined under fair-value-based method for all rewards, net of taxes</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(14</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(33</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(44</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Pro forma net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(132</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>836</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3,874</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
pro forma per share amounts are the same as net income (loss) applicable to common stockholders per share reported on the Company's statements of operations. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
assumptions used in the Black-Scholes option-pricing model for determining the fair value of options granted to employees and directors were as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="83%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="66%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="66%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Risk-free interest rate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>6.50%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>5.50%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>2.75%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Expected life</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>7&nbsp;years</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>7&nbsp;years</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>7&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Volatility</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="66%"><FONT SIZE=2>Dividend rate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>F-9</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=3,SEQ=80,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=231897,FOLIO='F-9',FILE='DISK008:[03WDC5.03WDC1425]FK1425A.;29',USER='YLEE',CD='21-MAY-2003;18:08' -->
<A NAME="page_fk1425_1_10"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_2"> </A>
<A NAME="toc_fk1425_4"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company accounts for options issued to non-employees at fair value, in accordance with the provisions of SFAS No.&nbsp;123 and Emerging Issues
Task Force (EITF) No.&nbsp;96-18, </FONT><FONT SIZE=2><I>Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods
or Services</I></FONT><FONT SIZE=2>. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Segments  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has one reportable segment based upon the economic characteristics of the store formats, the similar nature of the products sold, the type of
customer, and method of distribution. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Fair Value of Financial Instruments  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The fair value of the Company's cash, accounts receivable, and accounts payable approximate their carrying value due to the short-term nature of such
instruments. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Use of Estimates  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of the financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Significant
items subject to such estimates and assumptions include the net carrying amount of property and equipment, valuation allowances for receivables, inventories and deferred income tax assets. Actual
results could differ from those estimates. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Recently Issued Accounting Standards  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2001, the FASB issued SFAS No.&nbsp;143, </FONT><FONT SIZE=2><I>Accounting for Asset Retirement Obligations</I></FONT><FONT SIZE=2>, which
requires companies to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible
long-lived assets. The Company is required to adopt SFAS No.&nbsp;143 on February&nbsp;2, 2003. The adoption of SFAS No.&nbsp;143 is not expected to have a material effect on the
Company's financial statements. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June&nbsp;2002, the FASB issued SFAS No.&nbsp;146, </FONT><FONT SIZE=2><I>Accounting for Costs Associated with Exit or Disposal Activities</I></FONT><FONT SIZE=2>. SFAS
No.&nbsp;146 requires that a liability for a cost associated with the exit or disposal activity be recognized when incurred at fair value. SFAS No.&nbsp;146 eliminates the requirements of EITF
Issue 94-3. SFAS No.&nbsp;146 is effective for exit or disposal activities that are initiated after December&nbsp;31, 2002 and may have an effect on the timing of future restructuring
and similar charges recorded, if and when they occur. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
November&nbsp;2002, the FASB issued Interpretation No.&nbsp;45, </FONT><FONT SIZE=2><I>Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No.&nbsp;5, 57 and 107 and a rescission of FASB Interpretation No.&nbsp;34</I></FONT><FONT SIZE=2>. This Interpretation
elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor
is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December&nbsp;31, 2002 and are not expected to have a material effect on the Company's financial statements. The disclosure requirements are
effective for financial statements of interim and annual periods ending after December&nbsp;15, 2002. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-10</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=4,SEQ=81,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=156888,FOLIO='F-10',FILE='DISK008:[03WDC5.03WDC1425]FK1425A.;29',USER='YLEE',CD='21-MAY-2003;18:08' -->
<A NAME="page_fk1425_1_11"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_3"> </A>
<A NAME="toc_fk1425_5"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>


<P><FONT SIZE=2><B>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Income (Loss) Per Share  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted net income (loss) per share distributable to Class&nbsp;C common stockholders is calculated by dividing the amounts distributable to
Class&nbsp;C common stockholders by the weighted average number of Class&nbsp;C common shares outstanding. Basic net income (loss) per share applicable to common stockholders is calculated by
dividing net income (loss) applicable to common stockholders by the weighted average number of Class&nbsp;A and Class&nbsp;C common shares outstanding for the period. Diluted net income (loss) per
share applicable to common stockholders is calculated by dividing net income
(loss) applicable to common stockholders by the diluted weighted average number of Class&nbsp;A and Class&nbsp;C common shares, which reflects the potential dilution from outstanding stock
options. The calculations for fiscal 2000, 2001 and 2002 are as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="91%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=6 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=6 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Numerator:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Net income (loss) applicable to common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(1,593</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>(810</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>)&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>1,926</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Denominator (in thousands):</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=5><FONT SIZE=2>Weighted average shares outstanding:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Class&nbsp;A</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3,518</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>3,514</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>3,426</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Class&nbsp;C</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,265</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2,269</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2,357</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=6><FONT SIZE=2>Effect of dilutive securities&#151;incremental shares from assumed exercise of employee stock options</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>87</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="52%"><FONT SIZE=2>Diluted weighted average common shares outstanding</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5,783</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>5,783</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>5,870</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=6><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
effects on weighted average shares outstanding of options to purchase common stock and other potentially dilutive securities of the Company were not included in the computation of
diluted net income (loss) per share in periods in which their effect would have been anti-dilutive. </FONT></P>

<P><FONT SIZE=2><B>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid Expenses and Other Current Assets  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets consist of the following: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="86%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="68%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Landlord construction allowances</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>163</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>444</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Prepaid rent</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>553</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>686</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Other current assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>469</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>534</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,185</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,664</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>F-11</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=5,SEQ=82,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=505384,FOLIO='F-11',FILE='DISK008:[03WDC5.03WDC1425]FK1425A.;29',USER='YLEE',CD='21-MAY-2003;18:08' -->
<A NAME="page_fk1425_1_12"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_4"> </A>
<A NAME="toc_fk1425_6"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>


<P><FONT SIZE=2><B>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and Equipment, Net  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment, net consists of the following: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="86%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="68%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Furniture and fixtures</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,848</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,590</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,212</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,416</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Leasehold improvements</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>8,777</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>10,533</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Construction in progress</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>88</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>253</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>12,925</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>16,792</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Less accumulated depreciation and amortization</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>5,852</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>6,972</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>7,073</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>9,820</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is obligated under capital leases for certain property and equipment that expire at various dates during the next five years. The net carrying amount of property and
equipment under capital leases at February&nbsp;2, 2002 and February&nbsp;1, 2003 was $839 and $1,870, respectively. </FONT></P>

<P><FONT SIZE=2><B>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowings Under Line of Credit  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of February&nbsp;1, 2003, the Company had a $12,000 line of credit agreement with Wells Fargo Bank N.A. (the Bank), which included a $7,000 revolving line of
credit (Standard Line) and a $5,000 special sub-line of credit (Special Subline). The amounts are limited by borrowing base calculations, as defined in the agreement. The aggregate unpaid
principal amount of all advances bear interest (calculated based upon a 360-day year), at the Bank's prime rate (4.25% at
February&nbsp;1, 2003) plus 0.25% and 2.0% for the Standard Line and the Special Subline, respectively. The Company has granted the Bank a security interest in virtually all assets of the Company as
collateral for the line of credit. Under the agreement, the Company must comply with certain covenants including the maintenance of its inventory balance between a minimum and maximum level and
achievement of certain store contribution levels. The agreement expires in August&nbsp;2006, provided the Company achieves certain EDITDA targets and has obtained a waiver of the payments required
by the Class&nbsp;C stockholders by July&nbsp;31, 2005. In the event the targets have not been achieved or the waiver has not been obtained, the agreement expires on September&nbsp;30, 2004.
During fiscal 2002, average month-end outstanding borrowings were $271. As of February&nbsp;1, 2003, the Company had no borrowings or letters of credit outstanding under the line of credit and
$3,727 of available borrowings. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-12</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=6,SEQ=83,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=570454,FOLIO='F-12',FILE='DISK008:[03WDC5.03WDC1425]FK1425A.;29',USER='YLEE',CD='21-MAY-2003;18:08' -->
<A NAME="page_fk1425_1_13"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_5"> </A>
<A NAME="toc_fk1425_7"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>

<P><FONT SIZE=2><B>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued Expenses and Other Current Liabilities  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities consist of the following: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="86%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="68%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Accrued salaries and benefits</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>554</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,176</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Income taxes payable</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>650</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,221</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Gift certificate liabilities</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>409</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>518</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>Other accrued expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>635</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>765</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>2,248</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>3,680</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="68%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leases  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has several noncancelable operating leases, primarily for retail stores and office space that expire over the next ten years. These leases generally
contain renewal options for periods ranging from three to five years and require the Company to pay all executory costs such as maintenance and insurance. Rental payments include minimum rentals plus
contingent rentals based on sales. Rent expense for operating leases for fiscal 2000, 2001 and 2002 was as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="86%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Minimum rentals</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>4,546</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5,788</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6,888</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Contingent rentals</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>66</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>79</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>141</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="62%"><FONT SIZE=2>Rent expense</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>4,612</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>5,867</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7,029</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future
minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments
as of February&nbsp;1, 2003 are: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="84%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Operating<BR>
leases</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Capital<BR>
leases</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>Fiscal year:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>2003</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5,498</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>730</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>2004</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>5,039</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>679</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>2005</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,424</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>487</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>2006</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>4,239</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>66</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>2007</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>3,701</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=3><FONT SIZE=2>Later years, through 2012</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>12,285</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Total minimum lease payments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>35,186</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,971</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Less amount representing interest (at rates ranging from 5.9% to 21.1%)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>296</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2><BR>
Present value of net minimum capital lease payments</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2><BR>
1,675</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Less current portion of capital lease obligations</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>571</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Capital lease obligations, less current portion</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,104</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=4><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>F-13</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=7,SEQ=84,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=1024355,FOLIO='F-13',FILE='DISK008:[03WDC5.03WDC1425]FK1425A.;29',USER='YLEE',CD='21-MAY-2003;18:08' -->
<A NAME="page_fk1425_1_14"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_6"> </A>
<A NAME="toc_fk1425_8"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>


<P><FONT SIZE=2><B>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax expense (benefit) for fiscal 2000, 2001 and 2002 consists of the following: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="88%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>Current:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Federal</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>70</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>569</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,375</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>State</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>117</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>504</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>82</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>686</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,879</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>Deferred:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Federal</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(104</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(19</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(160</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>State</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(26</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(17</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(67</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(130</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(36</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(227</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="63%"><FONT SIZE=2>Income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(48</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>650</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>2,652</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Federal
income tax expense for fiscal 2001 and 2002 include foreign taxes of $92 and $260, respectively. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reconciliations
of the recorded income tax expense (benefit) and the "expected" tax expense (benefit) based on the statutory federal income tax rate of 34% for fiscal 2000, 2001 and 2002
are as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="91%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="7%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Computed federal income tax expense (benefit) at statutory rate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(57</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>517</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2,231</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>State income taxes, net of federal income tax effect</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(9</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>)&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>66</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>288</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Other</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>18</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>67</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>133</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="61%"><FONT SIZE=2>Income tax expense (benefit)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>(48</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="5%" ALIGN="RIGHT"><FONT SIZE=2>650</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="6%" ALIGN="RIGHT"><FONT SIZE=2>2,652</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets consists of the following: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="86%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 2,<BR>
2002</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>February 1,<BR>
2003</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>Deferred tax assets:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Inventories</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>29</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>167</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Property and equipment</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>920</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>660</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD COLSPAN=2><FONT SIZE=2>Other accrued expenses</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>161</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>510</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="64%"><FONT SIZE=2>Total deferred tax assets</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,110</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE=2>1,337</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=3><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent primarily upon the generation of future taxable income </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-14</FONT></P>

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<A NAME="page_fk1425_1_15"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_7"> </A>
<A NAME="toc_fk1425_9"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>

<P><FONT SIZE=2>during the period in which those temporary differences become deductible. Management considers the projected future taxable income and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more
likely than not that the Company will realize the deferred tax assets at February&nbsp;1, 2003. </FONT></P>


<P><FONT SIZE=2><B>10.&nbsp;&nbsp;&nbsp;Related Party Transactions  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A member of the Company's management is affiliated with another organization that provides decorating services for certain stores. The Company paid this
organization approximately $9 and $97 in fiscal 2000 and 2001, respectively. There were no services rendered in fiscal 2002. </FONT></P>

<P><FONT SIZE=2><B>11.&nbsp;&nbsp;&nbsp;Stockholders' Equity  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During January&nbsp;1999, the Articles of Incorporation were amended to authorize the following shares: </FONT></P>

<UL>
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>15,000,000
Class&nbsp;A voting shares, $0.01 par value;
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>100,000
Class&nbsp;B nonvoting shares, $0.01 par value; and
<BR><BR></FONT></DD><DT style='margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD><FONT SIZE=2>8,000,000
Class&nbsp;C voting shares, $0.01 par value, 8% cumulative yield (subject to increase upon certain events of default). </FONT></DD></DL>
</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company entered into a Stock Purchase Agreement (the Agreement) dated January&nbsp;19, 1999, whereby various third parties purchased an aggregate of 1,476,160 Class&nbsp;C shares
at $3.81 per share. Of these shares, 1,338,093 were purchased directly from the Company and 138,067 were Class&nbsp;A shares purchased from existing investors and exchanged for Class&nbsp;C
shares. The agreement also contains remedies that will grant additional Class&nbsp;C shares if the Company incurs legal costs or settlements in excess of $100,000 in connection with claims involving
certain specified intellectual property, ERISA, or securities law matters. These remedies are in place for a ten-year period and allow for the purchase of additional shares based on a
formula defined in the agreement. During fiscal 1999, the investors purchased an additional 788,954 Class&nbsp;C shares at $3.81 per share. During fiscal 2001, the investors purchased 92,308 shares
at $2.44 per share from a Class&nbsp;A common stockholder. The Company then exchanged the Class&nbsp;A shares for Class&nbsp;C shares. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Concurrent
with the Stock Purchase Agreement, individual Stock Purchase Warrants were issued with each purchase of Class&nbsp;C shares. These warrants have a ten-year term
and provide for the issuance of Class&nbsp;A shares at a price of $0.01 per share upon dilution of the Company through stock issuances below $3.81 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Class&nbsp;C voting shares provide for mandatory distributions of the original cost and an 8% annual yield on the original costs upon sale or dissolution of the Company, an initial
public offering, or certain events of default. If none of these events occurs prior to December&nbsp;31, 2003, 12 equal distributions will commence, repaying the original cost and the 8% stated
yield or a weighted average effective yield of 16.6%. Upon payment of these distributions, the Class&nbsp;C shares remain outstanding. If the Company makes each of the 12 quarterly distributions in
accordance with terms of the distribution right, commencing on December&nbsp;31, 2003 and ending on September&nbsp;30, 2006, distributions to the Class&nbsp;C common stockholders will aggregate
$13,402. If the Company had elected to extinguish the </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-15</FONT></P>

<HR NOSHADE>
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<A NAME="page_fk1425_1_16"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_8"> </A>
<A NAME="toc_fk1425_10"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>

<P><FONT SIZE=2>distribution obligation early, the amount due on February&nbsp;1, 2003 would have been $11,474. Upon payment of the mandatory distribution obligation, the Class&nbsp;C
participates with Class&nbsp;A stockholders in all further distributions, as if they held Class&nbsp;A common shares. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Class&nbsp;C common stock has been accounted for by the Company similar to a preferred stock with a mandatory dividend. The Company is accruing the aggregate distribution amount
over the period from issuance to the date of final distribution using the interest method. As of February&nbsp;2, 2002 and February&nbsp;1, 2003, the Company has accrued $4,160 and $6,144,
respectively, which has been reflected in the accompanying balance sheets as amounts distributable to Class&nbsp;C common stockholders. The annual increase in the amounts distributable to
Class&nbsp;C common stockholders for fiscal 2000, 2001 and 2003 of $1,475, $1,679 and $1,984, respectively have been presented in the accompanying statements of operations as deduction from net
income in the determination of net income (loss) applicable to common stockholders. Based on the Class&nbsp;C common stock outstanding at February&nbsp;1, 2003, the mandatory distributions
required for each of the next four fiscal years are as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="66%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="85%"><FONT SIZE=2>Fiscal 2003</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1,117</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="85%"><FONT SIZE=2>Fiscal 2004</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>4,467</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="85%"><FONT SIZE=2>Fiscal 2005</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>4,467</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="85%"><FONT SIZE=2>Fiscal 2006</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>3,351</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>12.&nbsp;&nbsp;&nbsp;Stock Option Plan  </B></FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Options Granted to Employees and Directors  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company implemented a stock option plan (the Plan) authorizing the grant of options to certain employees, directors, and consultants. Stock options vest over
a five-year period and generally expire ten years from the date granted. As of February&nbsp;1, 2003, 66,554 options are available for grant under the Plan. Subsequent to year end, the
Board of Directors authorized the reserve of an additional 615,385 common shares for issuance of future stock options. The authorization is subject to shareholder approval. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
summary of options granted to employees and directors during fiscal 2000, 2001 and 2002, is as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="85%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>Options</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Weighted<BR>
average<BR>
exercise price</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Outstanding options January&nbsp;29, 2000</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Granted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>114,138</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Forfeited</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(5,692</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Outstanding options February&nbsp;3, 2001</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>108,446</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Granted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>74,462</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Forfeited</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(12,462</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Outstanding options February&nbsp;2, 2002</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>170,446</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Granted</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>61,846</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.67</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="67%"><FONT SIZE=2>Forfeited</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>(3,461</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.60</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><HR NOSHADE></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>Outstanding options February&nbsp;1, 2003</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT SIZE=2>228,831</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>2.63</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD COLSPAN=2><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="14%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<P ALIGN="CENTER"><FONT SIZE=2>F-16</FONT></P>

<HR NOSHADE>
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<A NAME="page_fk1425_1_17"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_9"> </A>
<A NAME="toc_fk1425_11"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes information about outstanding and exercisable options at February&nbsp;1, 2003: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="54%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="20%" ALIGN="CENTER"><FONT SIZE=1><B>Number<BR>
outstanding</B></FONT><HR NOSHADE></TH>
<TH WIDTH="19%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="23%" ALIGN="CENTER"><FONT SIZE=1><B>Weighted<BR>
average<BR>
remaining<BR>
contractual life</B></FONT><HR NOSHADE></TH>
<TH WIDTH="19%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER"><FONT SIZE=1><B>Number<BR>
exercisable</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>80,215</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>7.3</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>32,086</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>21,692</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>7.6</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>8,677</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>53,154</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>8.3</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>10,631</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>15,385</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>9.0</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>15,385</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="20%" ALIGN="RIGHT"><FONT SIZE=2>58,385</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="23%" ALIGN="RIGHT"><FONT SIZE=2>9.3</FONT></TD>
<TD WIDTH="19%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="RIGHT"><FONT SIZE=2>&#151;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management
estimated that the fair value of the Company's common stock exceeded the option price of certain options granted in fiscal 2002. The Company recognized compensation expense
relating to these options during fiscal 2002 of approximately $13. The unearned compensation of $74 at February&nbsp;1, 2003, will be recognized through charges to expense in various amounts over
the next five fiscal years. Management estimated the fair value of the Company's common stock based upon earnings multiples of public companies in the apparel industry. </FONT></P>

<UL>

<P><FONT SIZE=2><B><I> Options Issued to Non-Employees  </I></B></FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company accounts for options issued to non-employees at fair values, in accordance with the provisions of SFAS No.&nbsp;123 and Emerging Issues
Task Force (EITF) No.&nbsp;96-18, </FONT><FONT SIZE=2><I>Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods
or Services</I></FONT><FONT SIZE=2>. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
fiscal 2000, 2001 and 2002, the Company granted options to non-employees to purchase 3,077, 6,154, and 3,077 of Class&nbsp;A common stock at $2.60 per share,
respectively. In accordance with EITF 96-18, the Company has established the grant date to be the
measurement date for such options in that the recipients have no further performance obligations with respect to the grants. The estimated fair value of the options were determined using the
Black-Scholes option pricing model with the following weighted average assumptions. The Company recognized compensation expense relating to the options during fiscal 2000, 2001 and 2002 of
approximately $8, $16 and $17, respectively. </FONT></P>

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<TABLE WIDTH="84%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH WIDTH="63%" ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH WIDTH="63%" ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>2000</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="10%" ALIGN="CENTER"><FONT SIZE=1><B>2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Risk-free interest rate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>6.50%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>5.50%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>2.75%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Expected life</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>10&nbsp;years</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>10&nbsp;years</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>10&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Volatility</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>200%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>200%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>200%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="63%"><FONT SIZE=2>Dividend rate</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="10%" ALIGN="CENTER"><FONT SIZE=2>0%</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->


<P><FONT SIZE=2><B>13.&nbsp;&nbsp;&nbsp;Retirement Plan  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company maintains a qualified 401(k) retirement plan for the benefit of all eligible employees. The eligible employees may make voluntary contributions to the
plan between 1% and 15% of compensation, with the Company matching 10% of the employees' contributions, up to 6% of compensation. The Company's contributions for fiscal 2000, 2001 and 2002 were
approximately $11, $14 and $17, respectively. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-17</FONT></P>

<HR NOSHADE>
<!-- ZEQ.=11,SEQ=88,EFW="2108895",CP="THE WHITE HOUSE, INC.",DN="1",CHK=889858,FOLIO='F-17',FILE='DISK008:[03WDC5.03WDC1425]FK1425A.;29',USER='YLEE',CD='21-MAY-2003;18:08' -->
<A NAME="page_fk1425_1_18"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="fk1425_the_white_house,_inc._notes_to__the04822_10"> </A>
<A NAME="toc_fk1425_12"> </A>
<BR></FONT><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.    <BR>    <BR>    Notes to Financial Statements (Continued)    <BR>    <BR>    February&nbsp;2, 2002 and February&nbsp;1, 2003<BR>  (Dollars in thousands, except per share data)    <BR>
</B></FONT></P>


<P><FONT SIZE=2><B>14.&nbsp;&nbsp;&nbsp;Legal Matters  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lawsuits and claims are filed from time to time against the Company in the ordinary course of business. Management, after reviewing developments to date with
legal counsel, is of the opinion that the outcome of such matters will not have a material adverse effect on the financial position of the Company or the accompanying financial statements taken as a
whole. </FONT></P>

<P><FONT SIZE=2><B>15.&nbsp;&nbsp;&nbsp;Unaudited Quarterly Information  </B></FONT></P>

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="95%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year 2001</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>First<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Second<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Third<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Fourth<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
<TH WIDTH="1%"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12,332</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>12,209</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>11,014</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>13,977</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>49,532</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6,852</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6,823</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>6,055</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>7,918</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>27,648</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net income (loss)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>528</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>308</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(208</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>241</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>869</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net income (loss) applicable to common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>153</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(107</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(638</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(218</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(810</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Diluted net income (loss) per share applicable to common stockholders:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Class&nbsp;A</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.03</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.02</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.04</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.14</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="37%"><FONT SIZE=2>Class&nbsp;C</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.03</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.02</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.11</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.04</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.14</FONT></TD>
<TD WIDTH="1%"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE>
<!-- end of user-specified TAGGED TABLE -->

<!-- User-specified TAGGED TABLE -->
<TABLE WIDTH="94%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER"><FONT SIZE=1><B>Fiscal Year 2002</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>First<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Second<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Third<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Fourth<BR>
Quarter</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER"><FONT SIZE=1><B>Total</B></FONT><HR NOSHADE></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net sales</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>15,978</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>17,696</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>15,049</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>18,233</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>66,956</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Gross profit</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>9,077</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>10,224</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>8,571</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>10,813</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>38,685</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net income</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,129</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,408</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>247</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,126</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>3,910</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Net income (loss) applicable to common stockholders</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>680</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>917</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(263</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>592</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>1,926</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2><FONT SIZE=2>Diluted net income (loss) per share applicable to common stockholders:</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="38%"><FONT SIZE=2>Class&nbsp;A</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.05</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.33</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD WIDTH="2%">&nbsp;</TD>
<TD WIDTH="38%"><FONT SIZE=2>Class&nbsp;C</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.12</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.16</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>(0.05</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>)</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.10</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE=2>0.33</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2><B>16.&nbsp;&nbsp;&nbsp;Subsequent Events (unaudited)  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On May&nbsp;15, 2003, the Company's Board of Directors approved the Company's plan for an initial public offering. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>F-18</FONT></P>

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<IMG SRC="g408225.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="394">
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<P ALIGN="CENTER"><FONT SIZE=2>[picture
of lifestyle center store front] </FONT></P>

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<TR VALIGN="TOP">
<TD WIDTH="50%" ALIGN="RIGHT"><BR><FONT SIZE=2><B>
<IMG SRC="g455681.jpg" ALT="GRAPHIC" WIDTH="306" HEIGHT="790">
 </B></FONT></TD>
<TD WIDTH="50%"><BR><FONT SIZE=2><B>
<IMG SRC="g417265.jpg" ALT="GRAPHIC" WIDTH="306" HEIGHT="790">
 </B></FONT></TD>
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<IMG SRC="g212157.jpg" ALT="GRAPHIC" WIDTH="444" HEIGHT="118">
  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>
<IMG SRC="g444329.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="445">
  </B></FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><B>
<IMG SRC="g212157.jpg" ALT="GRAPHIC" WIDTH="444" HEIGHT="118">
  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>
<IMG SRC="g395529.jpg" ALT="GRAPHIC" WIDTH="684" HEIGHT="414">
  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=4><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Shares  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=4><B> Common Stock  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=3><B> PROSPECTUS  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003  </B></FONT></P>

<HR NOSHADE ALIGN="CENTER" WIDTH="120">
<P ALIGN="CENTER"><FONT SIZE=5><B>William Blair&nbsp;&amp; Company  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B> SG Cowen  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=5><B> RBC Capital Markets  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Until&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2003 (25&nbsp;days after the date
of this prospectus), all dealers that effect transactions in these securities, whether
or not participating in the offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions. </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_ja1425_1_1"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ja1425_part_ii_information_not_required_in_prospectus"> </A>
<A NAME="toc_ja1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>Part&nbsp;II    <BR>    <BR>    Information Not Required in Prospectus    <BR>    </B></FONT></P>

<P><FONT SIZE=2><B>Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;Other Expenses of Issuance and Distribution.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We estimate that our expenses to be paid in connection with the offering (other than underwriting discounts, commissions, and reasonable expense allowances) will
be as follows: </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE WIDTH="67%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>SEC registration fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>4,045</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>NASD filing fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>5,500</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Nasdaq National Market listing fee</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE=2>100,000</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Printing and engraving expenses</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Accounting fees and expenses</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Legal fees and expenses</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Miscellaneous</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>Total</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>$</FONT></TD>
<TD WIDTH="12%" ALIGN="CENTER"><FONT SIZE=2>*</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="82%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2 ALIGN="RIGHT"><HR NOSHADE SIZE=4></TD>
</TR>
</TABLE></DIV>
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<HR NOSHADE ALIGN="LEFT" WIDTH="120">
<DL compact>
<DT style='margin-bottom:-11pt;'><FONT SIZE=2>*</FONT></DT><DD><FONT SIZE=2>To
be completed by amendment. </FONT></DD></DL>

<P><FONT SIZE=2>The
foregoing items, except for the Securities and Exchange Commission and NASD fees, are estimated. All expenses will be borne by us. </FONT></P>

<P><FONT SIZE=2><B>Item&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of Directors and Officers.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Section&nbsp;2-418
of the Corporations and Associations Article of the Annotated Code of Maryland permits a corporation to indemnify its present and former
directors, among others, against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by
reason of their services in those or other capacities, unless it is established that (a)&nbsp;the act or omission of the director or officer was material to the matter giving rise to such proceeding
and (i)&nbsp;was committed in bad faith or (ii)&nbsp;was the result of active and deliberate dishonesty; or (b)&nbsp;the director or officer actually received an improper personal benefit in
money, property, or services; or (c)&nbsp;in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. Maryland law permits
a corporation to indemnify a present and former officer to the same extent as a director, and to provide additional indemnification to an officer who is not also a director. In addition,
Section&nbsp;2-418(f) of the Corporations and Associations Article of the Annotated Code of Maryland permits a corporation to pay or reimburse, in advance of the final disposition of a
proceeding, reasonable expenses (including attorney's fees) incurred by a present or former director or officer made a party to the proceeding by reason of his service in that capacity, provided that
the corporation shall have received (a)&nbsp;a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the
corporation; and (b)&nbsp;a written undertaking by or on his behalf to repay the amount paid or reimbursed by the corporation if it shall ultimately be determined that the standard of conduct was
not met. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
charter requires us to indemnify our currently acting and former directors and officers against any and all liabilities and expenses incurred in connection with their services in
such capacities to the maximum extent permitted by Maryland law. Our charter and bylaws also require that, upon approval of the board of directors, we indemnify our employees, agents and persons who
serve and have served, at its request as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture or other enterprise or employee benefit plan to the
extent determined appropriate by our board of directors. Additionally, our charter provides that we advance expenses to our directors and officers entitled to indemnification to the maximum extent
permitted by Maryland </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>II-1</FONT></P>

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<A NAME="page_ja1425_1_2"> </A>
<BR>

<P><FONT SIZE=2>law
and may in our discretion advance expense to employees, agents and others who may be granted indemnification. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or
controlling persons in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
Maryland law, a corporation is permitted to limit by provision in its articles of incorporation the liability of directors and officers, so that no director or officer of the
corporation shall be liable to the corporation or to any stockholder for money damages except to the extent that (i)&nbsp;the director or officer actually received an improper benefit in money,
property, or services, for the amount of the benefit or profit in money, property or services actually received, or (ii)&nbsp;a judgment or other final adjudication adverse to the director or
officer is entered in a proceeding based on a finding in the proceeding that the director's or officer's action, or failure to act, was the result or active and deliberate dishonesty and was material
to the cause of action adjudicated in the proceeding. The registrant's charter contains such a provision which eliminates directors' and officers' liability to the maximum extent permitted by Maryland
law. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
form of Underwriting Agreement (to be filed as Exhibit&nbsp;1.1 to this registration statement) will provide for indemnification by the underwriters of The White House,&nbsp;Inc.
and its officers and directors for certain liabilities arising under the Securities Act of 1933, or otherwise. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
maintain directors' and officers' liability insurance policies covering certain liabilities of persons serving as officers and directors and providing reimbursement to us for our
indemnification of such persons. </FONT></P>


<P><FONT SIZE=2><B>Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;Recent Sales of Unregistered Securities.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the three years preceding the filing of this registration statement, we issued the securities described below (adjusted to give effect to a
one-for-3.25 reverse stock split) that were not registered under the Securities Act. None of the transactions involved any underwriters, underwriting discounts, or commissions
or any public offering, and we believe that each transaction, if deemed to be a sale of a security, was exempt from the registration requirements of the Securities Act by virtue of Section&nbsp;4(2)
thereof, Regulation&nbsp;D promulgated thereunder, or Rule&nbsp;701 pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule&nbsp;701. The recipients
of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, such
securities were restricted as to transfers and appropriate legends were affixed to the share certificates and instruments issued in such transactions. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Richard D. Sarmiento, our Chairman, President, and Chief
Executive Officer, and a member of our board of directors, to purchase an aggregate of 13,231 shares of our common stock at an exercise price of $13.20 per share. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>II-2</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Stephen L. Hirsch, our Vice President, Finance and
Administration, and Chief Financial Officer, to purchase an aggregate of 13,231&nbsp;shares of our common stock at an exercise price of $12.00 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Patricia Darrow-Smith, our Executive Vice President,
Merchandising, to purchase an aggregate of 13,231 shares of our common stock at an exercise price of $13.20 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to F. Michael Smith, our Vice President, Operations, to purchase an
aggregate of 13,231 shares of our common stock at an exercise price of $13.20 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)&nbsp;&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Craig&nbsp;J. Foley, a member of our board of directors, to
purchase an aggregate of 4,615 shares of our common stock at an exercise price of $12.00 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Sally Frame Kasaks, a member of our board of directors, to
purchase an aggregate of 4,615 shares of our common stock at an exercise price of $12.00 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(7)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Howard E. Goldstein, a member of our board of directors, to
purchase an aggregate of 3,077 shares of our common stock at an exercise price of $12.00 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(8)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Darryl Hartley-Leonard, a member of our board of directors, to
purchase an aggregate of 3,077 shares of our common stock at an exercise price of $12.00 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(9)&nbsp;&nbsp;On
May&nbsp;15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 12,308
shares of our common stock at an exercise price of $12.00 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(10)&nbsp;&nbsp;On
June&nbsp;28, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Rod Olson, a consultant to the Company, to purchase an
aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(11)&nbsp;&nbsp;On
May&nbsp;1, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 55,692
shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(12)&nbsp;&nbsp;On
March&nbsp;12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Sally Frame Kasaks, a member of our board of directors, to
purchase an aggregate of 6,154 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(13)&nbsp;&nbsp;On
March&nbsp;12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Craig Foley, a member of our board of directors, to purchase
an aggregate of 3,077 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(14)&nbsp;&nbsp;On
March&nbsp;12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Darryl Leonard-Hartley, a member of our board of directors, to
purchase an aggregate of 3,077 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(15)&nbsp;&nbsp;On
March&nbsp;12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Michael Machens, an advisory board member, to purchase an
aggregate of 3,077 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>II-3</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(16)&nbsp;&nbsp;On
March&nbsp;12, 2002, we issued stock options to Chancellor Private Capital Offshore Partners I to purchase an aggregate of 61 shares of our common stock at an
exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(17)&nbsp;&nbsp;On
March&nbsp;12, 2002, we issued stock options to Chancellor Private Capital Offshore Partners II to purchase an aggregate of 707 shares of our common stock at an
exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(18)&nbsp;&nbsp;On
March&nbsp;12, 2002, we issued stock options to Chancellor Private Capital Offshore Partners III to purchase an aggregate of 430 shares of our common stock at an
exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(19)&nbsp;&nbsp;On
March&nbsp;12, 2002, we issued stock options to Citiventure Partnership 96, L.P., to purchase an aggregate of 1,876 shares of our common stock at an exercise price
of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(20)&nbsp;&nbsp;On
May&nbsp;15, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 29,230
shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(21)&nbsp;&nbsp;On
May&nbsp;9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Sally Frame Kasaks, a member of our board of directors, to
purchase an aggregate of 6,153 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(22)&nbsp;&nbsp;On
May&nbsp;9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Craig Foley, a member of our board of directors, to purchase an
aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(23)&nbsp;&nbsp;On
May&nbsp;9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Darryl Leonard-Hartley, a member of our board of directors, to
purchase an aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(24)&nbsp;&nbsp;On
May&nbsp;9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Michael Machens, an advisory board member, to purchase an
aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(25)&nbsp;&nbsp;On
May&nbsp;9, 2001, we issued stock options to Chancellor Private Capital Offshore Partners I to purchase an aggregate of 61 shares of our common stock at an
exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(26)&nbsp;&nbsp;On
May&nbsp;9, 2001, we issued stock options Chancellor Private Capital Offshore Partners II to purchase an aggregate of 707 shares of our common stock at an exercise
price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(27)&nbsp;&nbsp;On
May&nbsp;9, 2001, we issued stock options to Chancellor Private Capital Offshore Partners III to purchase an aggregate of 430 shares of our common stock at an
exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(28)&nbsp;&nbsp;On
May&nbsp;9, 2001, we issued stock options to Citiventure Partnership 96, L.P., to purchase an aggregate of 1,876 shares of our common stock at an exercise price of
$2.60 per share. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(29)&nbsp;&nbsp;On
August&nbsp;1, 2000, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 20,923
shares of our common stock at an exercise price of $2.60 per share. </FONT></P>

<P><FONT SIZE=2><B>Item&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;Exhibits.
The following exhibits are filed as part of this registration statement: </FONT></P>

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<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Exhibit No.</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="89%" ALIGN="CENTER"><FONT SIZE=1><B>Description</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Form of Underwriting Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House, Inc. Articles of Amendment and Restatement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House,&nbsp;Inc. Articles of Amendment</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>II-4</FONT></P>

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<TABLE WIDTH="100%" BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.3</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Articles of Amendment and Restatement of The White House, Inc., as currently in effect</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.4</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of Amended and Restated Bylaws of The White House, Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Amended and Restated Bylaws of The White House, Inc., as currently in effect</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
4.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of specimen certificate representing The White House, Inc.'s common stock</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
4.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, and 3.5</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
5.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Opinion of Venable, Baetjer, Howard &amp; Civiletti, LLP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
The White House, Inc. 1999 Stock Option Plan and form of Grant Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House, Inc. Employee Stock Purchase Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.3</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and Richard D. Sarmiento</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.4</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and Patricia Darrow-Smith</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and F. Michael Smith</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.6</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and Stephen L. Hirsch</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.7</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment offer letter between The White House, Inc. and Stephen L. Hirsch dated July&nbsp;12, 1999</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.8</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
2002 Stock Purchase and Exchange Agreement, dated January&nbsp;15, 2002, among Anne Bernholz, certain purchasers, and The White House,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.9</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Registration Agreement dated January 19, 1999 among The White House, Inc. and the investors and executives specified therein</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.10</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House, Inc. 2003 Stock Option Plan and form of Grant Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.11</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of Director Indemnification Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.12</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of Officer Indemnification Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.13</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Loan and Security Agreement dated August 23, 2000 between Paragon Capital&nbsp;LLC (subsequently known as Wells Fargo Retail Finance&nbsp;LLC) and The White House, Inc., including First Amendment dated June&nbsp;25, 2001, Second Amendment dated
September 2002, Third Amendment dated November 2002, Fourth Amendment (undated) and Fifth Amendment (undated)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.14</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Non-Competition and Confidentiality Agreement, dated January 19, 1999, between The White House, Inc. and Richard Sarmiento</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.15*</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Master Lease Agreement (undated) by and between Carlton Financial Corporation and The White House, Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
23.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Consent of KPMG LLP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
23.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Consent of Venable, Baetjer, Howard &amp; Civiletti, LLP (to be included in Exhibit 5.1)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
24.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Power of Attorney (included on signature page)</FONT></TD>
</TR>
</TABLE>
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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
be filed by amendment </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#134;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicates
compensatory plan or arrangement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Financial
Statement Schedules </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>II-5</FONT></P>

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<A NAME="page_ja1425_1_6"> </A>
<BR>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Schedules
have been omitted for the reason that they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto. </FONT></P>

<P><FONT SIZE=2><B>Item&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;Undertakings.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;The
undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations
and registered in such names as required by the underwriter to permit prompt delivery to each purchaser. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;The
undersigned registrant hereby undertakes that: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule&nbsp;430A and contained in a form of prospectus filed by the Registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared effective. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;For
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial </FONT><FONT SIZE=2><I>bona
fide</I></FONT><FONT SIZE=2> offering thereof. </FONT></P>

</UL>
<P ALIGN="CENTER"><FONT SIZE=2>II-6</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="page_jc1425_1_7"> </A> </FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="jc1425_signatures"> </A>
<A NAME="toc_jc1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>SIGNATURES    <BR>    </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Glen Burnie, Maryland on the 22nd day of May&nbsp;2003. </FONT></P>

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<TD WIDTH="39%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=2><FONT SIZE=2><B>THE WHITE HOUSE,&nbsp;INC.</B></FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="39%"><FONT SIZE=2><B><BR>
&nbsp;</B></FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD WIDTH="5%"><BR><FONT SIZE=2>By:</FONT></TD>
<TD WIDTH="53%" ALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>RICHARD D. SARMIENTO</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Richard D. Sarmiento<BR></FONT> <FONT SIZE=2><I>Chairman, President, Chief Executive
Officer</I></FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="jc1425_power_of_attorney"> </A>
<A NAME="toc_jc1425_2"> </A>
<BR></FONT><FONT SIZE=2><B>POWER OF ATTORNEY    <BR>    </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below hereby constitutes and appoints, jointly and severally, Richard D. Sarmiento and
Stephen L. Hirsch and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to sign any registration statement for the
offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule&nbsp;462(b) under the Securities Act of 1933, as amended, and all post effective amendments
thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated. </FONT></P>

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<TH WIDTH="37%" ALIGN="CENTER"><FONT SIZE=1><B>Signature</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="40%" ALIGN="CENTER"><FONT SIZE=1><B>Title</B></FONT><HR NOSHADE></TH>
<TH WIDTH="2%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="18%" ALIGN="CENTER"><FONT SIZE=1><B>Date</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" ALIGN="CENTER" VALIGN="CENTER"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="CENTER"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" VALIGN="CENTER"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="37%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2>/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>RICHARD D. SARMIENTO</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Richard D. Sarmiento</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="CENTER"><FONT SIZE=2>Chairman, President, Chief Executive Officer, and Director (Principal Executive Officer)</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2>May&nbsp;22, 2003</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="37%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>STEPHEN L. HIRSCH</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Stephen L. Hirsch</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="CENTER"><FONT SIZE=2><BR>
Vice President, Finance and Administration, and Chief Financial Officer (Principal Financial and Accounting Officer)</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
May&nbsp;22, 2003</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>CRAIG J. FOLEY</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Craig J. Foley</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="CENTER"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
May&nbsp;22, 2003</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>DARRYL HARTLEY-LEONARD</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Darryl Hartley-Leonard</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="CENTER"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
May&nbsp;22, 2003</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>HOWARD E. GOLDSTEIN</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Howard E. Goldstein</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="CENTER"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
May&nbsp;22, 2003</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="37%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
/s/&nbsp;&nbsp;</FONT><FONT SIZE=2>SALLY FRAME KASAKS</FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><HR NOSHADE><FONT SIZE=2> Sally Frame Kasaks</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="40%" VALIGN="CENTER"><FONT SIZE=2><BR>
Director</FONT></TD>
<TD WIDTH="2%" VALIGN="CENTER"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="18%" ALIGN="CENTER" VALIGN="CENTER"><FONT SIZE=2><BR>
May&nbsp;22, 2003</FONT></TD>
</TR>
</TABLE>
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<P ALIGN="CENTER"><FONT SIZE=2>II-7</FONT></P>

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<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ka1425_exhibit_index"> </A>
<A NAME="toc_ka1425_1"> </A>
<BR></FONT><FONT SIZE=2><B>EXHIBIT INDEX    <BR>    </B></FONT></P>

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<TH WIDTH="9%" ALIGN="CENTER"><FONT SIZE=1><B>Exhibit No.</B></FONT><HR NOSHADE></TH>
<TH WIDTH="3%"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH WIDTH="89%" ALIGN="CENTER"><FONT SIZE=1><B>Description</B></FONT><HR NOSHADE></TH>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2>1.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2>Form of Underwriting Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House, Inc. Articles of Amendment and Restatement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House,&nbsp;Inc. Articles of Amendment</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.3</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Articles of Amendment and Restatement of The White House, Inc., as currently in effect</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.4</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of Amended and Restated Bylaws of The White House, Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
3.5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Amended and Restated Bylaws of The White House, Inc., as currently in effect</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
4.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of specimen certificate representing The White House, Inc.'s common stock</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
4.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, and 3.5</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
5.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Opinion of Venable, Baetjer, Howard &amp; Civiletti, LLP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
The White House, Inc. 1999 Stock Option Plan and form of Grant Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House, Inc. Employee Stock Purchase Plan</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.3</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and Richard D. Sarmiento</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.4</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and Patricia Darrow-Smith</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.5</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and F. Michael Smith</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.6</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment Agreement between The White House, Inc. and Stephen L. Hirsch</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.7</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Employment offer letter between The White House, Inc. and Stephen L. Hirsch dated July&nbsp;12, 1999</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.8</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
2002 Stock Purchase and Exchange Agreement, dated January&nbsp;15, 2002, among Anne Bernholz, certain purchasers, and The White House,&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.9</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Registration Agreement dated January 19, 1999 among The White House, Inc. and the investors and executives specified therein</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.10</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR> &#134;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of The White House, Inc. 2003 Stock Option Plan and form of Grant Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.11</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of Director Indemnification Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.12</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Form of Officer Indemnification Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.13</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Loan and Security Agreement dated August 23, 2000 between Paragon Capital&nbsp;LLC (subsequently known as Wells Fargo Retail Finance&nbsp;LLC) and The White House, Inc., including First Amendment dated June&nbsp;25, 2001, Second Amendment dated
September 2002, Third Amendment dated November 2002, Fourth Amendment (undated) and Fifth Amendment (undated)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.14</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Non-Competition and Confidentiality Agreement, dated January 19, 1999, between The White House, Inc. and Richard Sarmiento</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
10.15*</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Master Lease Agreement (undated) by and between Carlton Financial Corporation and The White House, Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
23.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Consent of KPMG LLP</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
23.2</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>*</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Consent of Venable, Baetjer, Howard &amp; Civiletti, LLP (to be included in Exhibit 5.1)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD WIDTH="9%" ALIGN="RIGHT"><FONT SIZE=2><BR>
24.1</FONT></TD>
<TD WIDTH="3%"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD WIDTH="89%"><FONT SIZE=2><BR>
Power of Attorney (included on signature page)</FONT></TD>
</TR>
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be filed by amendment </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#134;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicates
compensatory plan or arrangement. </FONT></P>

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Use these links to rapidly review the document
Table of Contents
Registration No. 333-
As filed with the Securities and Exchange Commission on May 22, 2003
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE WHITE HOUSE, INC.
(Exact name of registrant as specified in its charter)
Maryland
(State or Other Jurisdiction of
Incorporation or Organization)
5621
(Primary Standard Industrial
Classification Code Number)
52-1413575
(I.R.S. Employer
Identification No.)
6711 Baymeadow Drive
Glen Burnie, Maryland 21060
(410) 487-7747
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Richard D. Sarmiento
Chairman, President, and Chief Executive Officer
The White House, Inc.
6711 Baymeadow Drive
Glen Burnie, Maryland 21060
(410) 487-7747
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Elizabeth R. Hughes
Matthew B. Swartz
Venable, Baetjer, Howard & Civiletti, LLP
1201 New York Avenue, N.W.
Suite 1000
Washington, DC 20005-3917
(202) 962-4800
Michael M. Froy
Mark L. Dosier
Sonnenschein Nath & Rosenthal
233 South Wacker Drive
8000 Sears Tower
Chicago, Illinois 60606
(312) 876-8000
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, check the following box.
o
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
o
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
o
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering.
o
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.
o
CALCULATION OF REGISTRATION FEE
Title of each class of
securities to be registered
Proposed maximum
aggregate offering price(1)
Amount of
registration fee
Common Stock, $.01 par value
$50,000,000
$4,045
(1)
Estimated
solely for purposes of determining the registration fee pursuant to Rule 457 under the Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall
file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED MAY 22, 2003
The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting offers to buy these securities in any jurisdiction
where the offer or sale is not permitted.
PROSPECTUS
Shares
Common Stock
This is the initial public offering of                  shares of common stock of The White
House, Inc. We are selling                  
shares and certain of our stockholders are selling                  shares of our common stock. We will not receive any of the proceeds from the sale by the
selling stockholders.
We
expect that the initial public offering price will be between $                  and
$                  per share of common stock. Prior to the offering, there has been no public market
for our common stock. The market price of the shares after the offering may be higher or lower than the offering price.
We
have applied to have our shares of common stock approved for listing on the Nasdaq National Market under the symbol "WHBK."
Investing in our common stock involves risks. See "Risk Factors" beginning on page 7.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these
securities or determined that this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Per Share
Total
Public offering price
$
$
Underwriting discount
$
$
Proceeds, before expenses, to us
$
$
Proceeds to the selling stockholders
$
$
Certain
of the selling stockholders have granted the underwriters the option to purchase up to an additional                  shares at the public offering price, less
the underwriting
discount, within 30 days from the date of this prospectus to cover over-allotments. If such shares are sold, we will not receive any of the proceeds from the sale by the selling
stockholders.
William Blair & Company
SG Cowen
RBC Capital Markets
The date of this prospectus is                          , 2003
For both sides of you
Table of Contents
Prospectus Summary
Risk Factors
Forward-Looking Statements
Use of Proceeds
Dividend Policy
Capitalization
Dilution
Selected Financial and Operating Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Business
Management
Related Party Transactions
Principal and Selling Stockholders
Description of Capital Stock
Shares Eligible for Future Sale
Underwriting
Legal Matters
Experts
Where You Can Find Additional Information
Index to Financial Statements
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that which is
set forth in this prospectus. We are offering to sell shares of our common stock and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of these securities. Our business,
financial condition, results of operations, and prospects may have changed after the date of this prospectus.
ii
PROSPECTUS SUMMARY
This summary does not contain all the information that you should consider before investing. You should read the entire prospectus
carefully, including the section entitled "Risk Factors" and our audited financial statements and the accompanying notes included elsewhere in this prospectus, before you decide to invest in our
common stock. In this prospectus, references to "White House
--
Black Market," "we," "us," and "our" mean The White
House, Inc., and our fiscal years ended on January 30, 1999, January 29, 2000, February 3, 2001, February 2, 2002, and February 1, 2003 are referred to as
fiscal 1998, fiscal 1999, fiscal 2000, fiscal 2001, and fiscal 2002, respectively. The convention that is used in determining our fiscal year end is the Saturday nearest to the last day of
January.
We currently have two classes of common stock and no series of preferred stock outstanding. Upon completion of the offering, we will have one class of common
stock and no series of preferred stock outstanding. Unless otherwise indicated, the information contained in this prospectus (i) assumes the conversion of all outstanding shares of our
Class A common stock and Class C common stock into a single class of common stock, (ii) reflects a one-for-3.25 reverse split of our common stock, and
(iii) assumes that the underwriters will not exercise their over-allotment option to purchase additional shares of common stock.
Overview
We are a specialty retailer offering distinctive private brand women's apparel in the classic and timeless colors of white and black. We target educated,
middle-to-upper income, youthful women between the ages of 30 and 50 who lead active work and social lives and place a premium on contemporary, feminine clothing and a high
level of personalized service. Our goal is to make our customers "look and feel beautiful" by offering a unique assortment of quality and fashionable apparel designed for a woman's everyday and
special occasion needs. Our boutique-like stores are designed to highlight the distinctiveness of our merchandise, which together with our high level of personalized service, enhance
customer recognition and loyalty to our brand.
We
offer high quality, competitively priced separates and coordinated outfits, carefully selected with our customers' preferences and lifestyles in mind. Substantially all of our
merchandise is marketed under our White House -- Black Market private brand. Our merchandise strategy recognizes that white and black
and related shades are essential to a woman's wardrobe and emphasizes styles that are consistent with current fashion trends. We have developed a highly successful and productive store format that
consistently produces strong unit economics across a variety of retail settings, such as lifestyle centers, street front locations, and regional malls. As of April 30, 2003, we operated 96
stores located throughout the United States, Puerto Rico, and the U.S. Virgin Islands.
Over
the past three years, we have refined our merchandise strategy, improved our operations, enhanced our infrastructure, and rapidly expanded our store base. Over the
three-year period ended fiscal 2002, we increased our store base from 60 to 92 and achieved a compound annual growth rate in net sales of 32.9%. Our comparable store sales gains averaged
11.5% per fiscal year during this period, increasing 13.1% in fiscal 2001 and 16.3% in fiscal 2002, and our operating income increased from $272,000 in fiscal 1999 to $6.8 million in fiscal
2002.
Business Strategy and Competitive Differentiation
We know our customer and are dedicated to making her "look and feel beautiful."
We believe the
continued success of our brand will be driven by our commitment to making our customers "look and feel beautiful" by offering distinctive merchandise with a superior level of personalized service. We
have concentrated our marketing and merchandising efforts on women between the ages of 30 and 50 who seek distinctive apparel in order to project a contemporary, feminine, and youthful
self-image. Internally, we refer to our target customer as "Sydney" and believe she represents a middle-to-upper income woman who is well-educated, active, and
appearance-conscious. She considers herself to be
1
feminine
and sexy, with a youthful attitude, regardless of her age. We believe Sydney looks to White House -- Black Market to provide her with clothing that is fashionable
and appropriate for the occasion and enables her to express the fun and original side of her personality and lifestyle.
We
believe that our target customer values our edited selection and is generally underserved by the broad offerings of department stores. In addition, other specialty stores have
increasingly targeted other segments, such as teens and plus-sizes, or customers with either more conservative or trendier style preferences. We believe that women are increasingly
demanding a youthful, feminine, and contemporary look regardless of age and that we are well-positioned to capitalize on this demand.
We project a powerful brand identity through our distinctive merchandise concept.
Our brand identity
is based on providing our customers with a distinctive assortment of quality, competitively priced,
fashionable apparel and accessories all in the classic and timeless colors of white and black. This differentiated merchandise concept projects a powerful visual image within our stores and enables us
to clearly communicate our unique brand identity. We believe that white and black and related shades represent significant and essential components of our customers' wardrobes. By further
differentiating our assortment with new designs and fabrications, we establish White House -- Black Market as a highly relevant resource for our customers' everyday and
special occasion needs, regardless of season, color trends, or regional preferences. Over the three-year period ended fiscal 2002, our comparable store sales gains averaged 11.5% per
fiscal year and our average sales per gross square foot increased from $468 in fiscal 1999 to $559 in fiscal 2002.
We have a proven and versatile store model that produces compelling returns.
The broad appeal of our
merchandise concept has enabled us to profitably operate our stores in diverse regions of the country, across climates, and in a variety of retail settings, including lifestyle centers, street front
locations, and regional malls. We believe this strategy reduces the risks of geographic or regional mall concentration and enhances our platform for future growth. Our market and site selection is
based on local demographics, population trends, traffic patterns, and the proximity of other retail stores as well as recreational destinations such as restaurants and movie theaters that appeal to
our target customers. Our store model for fiscal 2003 requires an average total investment of approximately $190,000 per store, inclusive of pre-opening costs, fixtures, equipment, leasehold
improvements, and inventory, but net of landlord allowances and vendor financing. Based on our store opening and operating experience, we expect our new stores opening in fiscal 2003 to produce a cash
payback in approximately 14 months and a cash return on invested capital of approximately 90% in their first full year of operation.
We have achieved superior financial results due to our centralized and disciplined operations.
Our
centralized merchandising and operating processes are designed to achieve a consistent, chainwide "one-store experience" and enable our sales associates to focus on serving our customers.
We facilitate frequent communication throughout our organization in order to quickly respond to changes in fashion trends and customer preferences. Our flexible third-party vendor sourcing strategy
and disciplined approach to inventory management are designed to achieve the proper balance between new, faster-turning merchandise and core items while controlling our aged inventory and markdowns.
We believe our operating discipline is a key factor in our historical ability to operate highly productive stores. In each of the last two fiscal years, our gross profit percentage exceeded 55% of our
net sales and our average annual inventory turnover rate exceeded 5.0 times.
2
Growth Strategy
We believe we are well-positioned to capitalize on our distinctive brand identity, open an increasing number of stores, and pursue our goal of
becoming a leading national chain in the women's apparel industry. Key elements of our growth strategy include the following:
Open New Stores.
We have demonstrated our ability to open new stores that provide compelling
investment returns in new markets and geographic territories and across a variety of retail settings. We opened 16 stores in fiscal 2002 and ended the year with 92 stores. In fiscal 2003, we plan to
open 22 stores and end the year with 111 stores. As of April 30, 2003, we have opened five stores and have signed leases for an additional ten stores. In fiscal 2004, we plan to open 25 to 30
stores and have identified 27 potential store sites, 12 of which have been approved by our site selection committee. The average size of our stores has increased modestly over the past several years
and, as of February 1, 2003, was 1,457 square feet. We plan to increase the size of our new store prototype to an average of 1,750 to 1,800 square feet. Based on our internal analysis, we
believe the potential exists for at least 400 White House -- Black Market stores nationwide.
Improve Store Productivity and Overall Profitability.
We believe we can continue to increase our
store sales productivity by implementing the following marketing and merchandising initiatives:
•
We
continuously review our merchandise offering to identify opportunities to increase sales productivity by increasing store-level inventory density, extending product lines
or categories, and promoting additional wardrobe selling.
•
To
date, our direct marketing efforts have consisted of sending periodic mailings offering selected discounts to certain customers and hosting VIP parties in our stores. In
the future, we plan to initiate a more efficient and measurable direct marketing program designed to communicate to a broader customer base on a more frequent basis and use more sophisticated
marketing vehicles that better communicate our distinctive product offering.
•
In
order to enhance our value proposition and brand loyalty, we plan to initiate a customer loyalty program designed to reward our frequent customers with price discounts or
other incentives. We are currently enhancing our point-of-sale and management information systems to facilitate more extensive customer data collection.
We
believe we have opportunities to further increase our operating margins in the future by leveraging store-level operating and corporate infrastructure costs over a larger sales base
and capitalizing on enhanced purchasing power.
Our principal executive offices are located at 6711 Baymeadow Drive, Glen Burnie, Maryland 21060 and our telephone number is (410) 487-7747.
Our web site address is www.whiteandblack.com. Information on our website is not a part of this prospectus.
3
The Offering
Common stock offered by us
shares
Common stock offered by the selling stockholders
shares
Total shares offered
shares
Common stock outstanding after the offering
shares
(1)
Use of proceeds
We estimate that our net proceeds from the offering will be $    million. We intend to use $11.8 million of the net proceeds to us to make required distributions to certain holders of our common stock and $1.7 million to
fund capital expenditures and pay expenses incurred in connection with the planned relocation of our headquarters and distribution center. We intend to use the remaining net proceeds to us for general corporate purposes, including the opening of new
stores and working capital. We will not receive any proceeds from the sale of shares by the selling stockholders. See "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Amounts
Distributable to Holders of Class C Common Stock."
Proposed Nasdaq National Market symbol
WHBK
(1)
The
number of shares to be outstanding upon completion of the offering is based on shares outstanding as of April 30, 2003. This number excludes: (i) 309,138 shares of
common stock issuable upon the exercise of outstanding stock options under our 1999 Stock Option Plan at a weighted average exercise price of $5.22 per share; and (ii) an aggregate of 813,939
shares of common stock available for future issuance under our 1999 Stock Option Plan, our 2003 Stock Option Plan, and our 2003 Employee Stock Purchase Plan as of the date of this prospectus.
We
own or have rights to various trademarks and trade names used in our business, including
White House -- Black Market®
and others. Each trademark, trade name, or service mark of
any other company
appearing in this prospectus belongs to its holder or holders.
4
Summary Financial and Operating Data
The following summary statements of operations data and other data in fiscal 2000, 2001, and 2002 and the balance sheet data at the end of fiscal 2002 is derived
from our financial statements, audited by KPMG LLP, included elsewhere in this prospectus. The summary statements of operations data and other data in fiscal 1998 and fiscal 1999 are derived from
unaudited financial statements not included in this prospectus. The summary store data for all fiscal periods presented have been derived from internal records of our operations.
Our
fiscal year consists of 52 or 53 weeks, ends on the Saturday nearest to the last day of January, and is named for the calendar year ending closest to that date. All fiscal years
presented consist of 52 weeks of operations, except fiscal 2000, which consisted of 53 weeks. You should read the information set forth below in conjunction with other sections of this prospectus,
including "Selected Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our financial statements and related notes.
Fiscal Year
1998
1999
2000
2001
2002
(in thousands, except per share, store data, and other data)
Statement of Operations Data:
Net sales
$
24,328
$
28,530
$
37,721
$
49,532
$
66,956
Cost of goods sold
(1)
11,641
13,501
17,676
21,884
28,271
Gross profit
12,687
15,029
20,045
27,648
38,685
Selling, general and administrative expenses
12,124
14,199
19,101
24,627
30,414
Depreciation and amortization
593
558
912
1,176
1,492
Operating income (loss)
(30
)
272
32
1,845
6,779
Interest expense
428
53
198
326
217
Income (loss) before income tax expense (benefit)
(458
)
219
(166
)
1,519
6,562
Income tax expense (benefit)
(82
)
113
(48
)
650
2,652
Net income (loss)
(376
)
106
(118
)
869
3,910
Amounts distributable to Class C common stockholders
(2)
25
981
1,475
1,679
1,984
Net income (loss) applicable to common stockholders
$
(401
)
$
(875
)
$
(1,593
)
$
(810
)
$
1,926
Basic and diluted net income (loss) applicable to common stockholders per weighted average common share:
(3)
Basic
$
(0.11
)
$
(0.16
)
$
(0.28
)
$
(0.14
)
$
0.33
Diluted
$
(0.11
)
$
(0.16
)
$
(0.28
)
$
(0.14
)
$
0.33
Pro forma diluted
$
Weighted average common shares outstanding:
(3)
Basic
3,700
5,459
5,783
5,783
5,783
Diluted
3,700
5,459
5,783
5,783
5,870
Pro forma diluted
Store Data:
Comparable store sales growth
(4)
2.9
%
7.3
%
5.0
%
13.1
%
16.3
%
Stores open at beginning of period
47
50
60
71
77
New stores
3
10
14
9
16
Closed stores
—
—
3
3
1
Stores open at end of period
50
60
71
77
92
Total square feet at end of period
(5)
56,659
72,022
93,751
105,623
134,061
Net sales per square foot
(6)
$
441
$
468
$
460
$
494
$
559
Average net sales per store
(7)
$
516,000
$
551,000
$
593,000
$
679,000
$
790,000
Other Data:
Gross profit percentage
52.1
%
52.7
%
53.1
%
55.8
%
57.8
%
Operating income (loss) percentage
(0.1
)%
1.0
%
0.1
%
3.7
%
10.1
%
As of February 1, 2003
Actual
As Adjusted
(9)
Balance Sheet Data:
Working capital
(8)
$
599
$
Total assets
20,223
Total debt including capital lease obligations
1,675
1,675
Amounts distributable to Class C common stockholders
(2)
6,144
—
Total liabilities
15,830
9,686
Stockholders' equity
4,393
5
(1)
Cost
of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the distribution center to our
stores.
(2)
Represents
amounts distributable to Class C common stockholders pursuant to the terms of our amended and restated articles of incorporation. The amounts distributable to
Class C common stockholders are not classified within stockholders' equity because of the required distribution feature. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation—Amounts Distributable to Holders of Class C Common Stock."
(3)
See
note 3 of our financial statements for an explanation of the methods used to determine the number of shares used in computing net income (loss) per share data. Prior to the
completion of the offering, we have two classes of common stock outstanding and the net income (loss) applicable to common stockholders per share is the same for each class. Pro forma diluted net
income applicable to common stockholders per weighted average common share was calculated by dividing net income by the number of pro forma diluted weighted average shares. Pro forma diluted weighted
average shares were calculated by adding the number of shares to be issued in the offering to the diluted weighted average shares outstanding. Upon completion of the offering, all amounts accrued for
distribution to Class C common stockholders will be paid. In addition, payment of our obligation with respect to future distributions to Class C common stockholders will be accelerated,
which will result in a deduction from net income of approximately $5.0 million in the quarter in which the offering is completed, for the purpose of determining net income applicable to common
stockholders. Accordingly, these amounts have been excluded because the distribution obligation is required to be satisfied with proceeds from the offering. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Amounts Distributable to Holders of Class C Common Stock."
(4)
Comparable
store sales begin in a store's 15
th
month of operations.
(5)
Calculated
using gross square footage of all stores open at the end of the period.
(6)
Calculated
using net sales and gross square footage of all stores open at both the beginning and the end of the period.
(7)
Calculated
using net sales of all stores open at both the beginning and the end of the period.
(8)
Defined
as current assets less current liabilities.
(9)
The
"as adjusted" balance sheet data as of February 1, 2003, reflects the conversion of all outstanding shares of our Class A common stock and Class C common
stock into shares of common stock upon the closing of the offering and the receipt by us of the estimated net proceeds from the sale of            shares of common stock by us in the
offering at
an assumed initial public offering price of $            per share and the application of the net proceeds therefrom. See "Use of Proceeds."
6
RISK FACTORS
You should carefully consider the following risks, as well as the other information contained in this prospectus, before investing in
shares of our common stock. If any of the following risks actually occur, our business could be harmed. In that case, the trading price of our common stock could decline and you might lose all or part
of your investment. You should refer to the information set forth in this prospectus and our financial statements and the related notes included elsewhere in this prospectus.
Risks Related to Our Business
We will be opening new stores and expanding into new geographic regions, which could strain our resources and cause us to execute our business less effectively.
Our growth will largely be dependent on successfully opening and operating new stores. During fiscal 2002, we opened 16 new stores. We plan to open 22 new stores
during fiscal 2003, and end the fiscal year with 111 stores. As of April 30, 2003, we have opened five stores and signed leases for an additional ten stores. We intend to open an increasing
number of new stores in each of the next several years. Some of our new stores will be in regions where we have not previously operated, which will require greater management resources than opening
additional stores in regions already served by us. Our proposed expansion will place increased demands on our managerial, operational, and administrative resources. These increased demands could cause
us to execute our business less effectively, which in turn could cause deterioration in the financial performance of existing and newly opened stores as well as slow our expansion.
Our planned expansion involves a number of risks that could prevent or delay the successful opening of new stores as well as impact the performance of our existing stores.
Our ability to open and operate new stores successfully depends on many factors, including, among others, our ability to:
•
identify
suitable store locations;
•
negotiate
acceptable lease terms, including desired tenant improvement allowances, which have been an important part of our historical ability to grow profitably;
•
obtain
adequate amounts of capital;
•
source,
manage, and distribute sufficient levels of inventory to meet the needs of our existing and new stores;
•
foster
existing and new relationships with vendors capable of supplying merchandise meeting our fashion, fit, and quality standards;
•
hire
and train store personnel, including store managers;
•
successfully
integrate new stores into our existing operations; and
•
satisfy
the fashion preferences of new geographic areas.
In
addition, many of our new stores will be opened in regions of the United States and its territories in which we currently have few or no stores. Our expansion into new markets may
present competitive, merchandising, and distribution challenges that are different from those that we currently encounter in our existing markets. As a result, we can provide no assurance that our
future store openings will provide a return consistent with our past store openings, or provide any return at all. Any of these challenges could adversely affect our business, results of operations,
and financial condition. In addition, to the extent our new store openings are in existing markets, we may experience reduced net sales volumes in existing stores in those markets.
7
Our success depends on our ability to anticipate, identify, and rapidly respond to consumers' fashion tastes.
The apparel industry is subject to rapidly evolving fashion trends and shifting consumer demands. Accordingly, our success is heavily dependent on both the
priority our target customers place on fashion and our ability to anticipate, identify, and capitalize upon emerging fashion trends, including products, styles, and materials, and our ability to
distinguish our brand within the women's apparel market. Our failure to anticipate, identify, or react appropriately to changes in styles, trends, or desired image preferences could lead to, among
other things, a decline in sales, excess inventories, and higher markdowns, as well as decreased appeal of our merchandise, which could have a material adverse effect on our business, results of
operations, and financial condition.
If at any time our comparable store sales or quarterly results of operations decline or do not meet the expectations of research analysts, the price of our common stock could
decline substantially.
Our comparable store sales and quarterly results of operations have fluctuated in the past and can be expected to continue to fluctuate in the future. For
instance, while quarterly comparable store sales increased at least 10% in each of the four quarters of fiscal 2002, we expect that the rate of increase will moderate in future periods as we grow our
business. Moreover, our comparable store sales may decline. Our comparable store sales and quarterly results of operations are affected by a variety of factors, including, among others:
•
the
timing of new store openings and the relative proportion of new stores to mature stores;
•
fashion
trends, including customer response to new and existing styles;
•
calendar
shifts of holiday or seasonal periods;
•
our
merchandising decisions;
•
changes
in our merchandise mix and the margin percent of the various products we offer;
•
our
ability to effectively source, manage, and distribute inventory;
•
timing
and effectiveness of marketing events and programs, including our ability to effectively deploy and manage a customer loyalty program;
•
changes
in general economic conditions, the retail sales environment, and consumer spending patterns;
•
the
cost of electricity and other utilities in the markets where our stores are located;
•
regional
economic conditions in areas where we have a significant number of stores, such as Florida and California;
•
actions
by competitors or mall anchor tenants;
•
acts
of war or terrorism;
•
weather
conditions and natural disasters; and
•
the
level of pre-opening expenses associated with new stores.
In
addition, our net sales and operating results are typically lower in the third quarter of our fiscal year. See "Management's Discussion and Analysis of Financial Condition and Results
of Operations."
Our failure to retain our existing senior management team could adversely affect our business.
Our business requires disciplined execution at all levels of our organization in order to timely deliver and display fashionable merchandise in appropriate
quantities in our stores. This execution requires experienced and talented management. If we were to lose the benefit of our experienced
8
management
team, and in particular if we were to lose the services of Richard D. Sarmiento, our Chairman, President, and Chief Executive Officer, or Patricia Darrow-Smith, our Executive Vice
President, Merchandising, our business could be adversely affected. We expect to enter into employment agreements with Mr. Sarmiento and Ms. Darrow-Smith, as described below in the
section entitled "Management." We maintain key person insurance on the life of Mr. Sarmiento with a benefit to us of $500,000. We do not maintain key person insurance on the life of
Ms. Darrow-Smith. The loss of the services of Mr. Sarmiento or Ms. Darrow-Smith, or any of our other officers or key employees for any reason, could have a material adverse effect
on our business, results of operations, and financial condition.
We rely on a single distribution center which we will be moving to a new location, together with our headquarters.
We rely on a single distribution center in Glen Burnie, Maryland, which also serves as our corporate headquarters. We plan to relocate our corporate headquarters
and distribution center to a new facility in the greater Baltimore area and vacate our current leased facility in late fiscal 2003 or early fiscal 2004. Any natural disaster or other disruption to our
existing or new distribution facilities due to fire, tornado, or any other cause could damage a significant portion of our inventory, impair our ability to adequately stock our stores and process
returns of products to vendors, and negatively affect our sales and profitability.
We
plan to use approximately $1.7 million of the proceeds of the offering to fund capital expenditures for the new distribution center and to pay moving expenses and the costs
associated with the termination of our existing distribution center lease. Of this amount, approximately $200,000 will be reflected as an expense on our financial statements in the fiscal quarter in
which we move. Any significant delay in the availability of the new facility, or unanticipated expense, capital cost, or disruption of our business or operations caused by the relocation to the new
facility would have a material adverse effect on our financial position, results of operations, and cash flows. If we are unable to generate increased sales and gross profit sufficient to absorb the
increased overhead and other costs associated with our relocation and potential expansion, we would likely experience lower profit margins, which could have a material adverse effect on our financial
position, results of operations, and cash flows. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Further,
we intend to implement new hardware and software for our new distribution center. If the distribution center software does not work effectively, we may experience delays or
failures in the operation of the distribution center. These delays or failures could adversely impact the promptness and accuracy of our transaction processing, inventory distribution, merchandise
planning, financial accounting and reporting, and our ability to properly forecast earnings and cash requirements. These events would adversely affect our business, results of operations, and
financial condition.
We
expect our planned new distribution center will have the capacity, without modification or enhancement, to serve approximately 250 stores. Despite our relocation, modified,
additional, and/or alternative facilities for distribution and inventory could be required in the future if there is significant growth in customer demand for our merchandise. There can be no
assurance that suitable facilities will be available, and, in the absence of such facilities, future growth could be impaired.
We depend on a limited number of key vendors.
We source a significant amount of our merchandise from a limited number of vendors. In fiscal 2002, 19.4% of our vendor purchases came from one vendor and 34.9%
of our vendor purchases came from our five highest volume vendors combined. Because our merchandise strategy relies in large part on our ability to obtain merchandise meeting our fashion, fit, and
quality standards from our vendors within a short time from the date of order, our access to reliable vendors is critical. Although we believe that our vendor relationships are good, there can be no
assurance that our vendor relationships will continue as presently in effect. The loss of a key vendor, the deterioration of our relationship with
9
a
key vendor, or our failure to establish good relationships with major new vendors would have a material adverse effect on our business, results of operations, and financial condition. In addition,
because we expect to grow, we cannot be certain that our existing vendors will be able to meet our increased needs for quality products and responsiveness. We also cannot be certain that new vendors
will be available to meet those increased needs. If the merchandise quality or responsiveness of any of our key vendors declines or fails to meet our standards or growing demand, our ability to sell
merchandise would be impaired and our business would be harmed.
Our business is subject to risks associated with selling imported products.
During fiscal 2002, we believe that approximately 45% of the dollar volume of our merchandise was manufactured by third parties in Asia, Latin America, Canada,
Europe, and Africa. Risks inherent in selling imported products include:
•
quotas
imposed by bilateral textile agreements;
•
labor
disputes involving the apparel and shipping industries;
•
changes
in social, political, and economic conditions, which could result in the disruption of trade from the countries in which our manufacturers or suppliers are located;
•
diseases,
quarantines, or other health-related occurrences;
•
the
imposition of additional regulations relating to imports;
•
the
imposition of additional duties, taxes, and other charges on imports;
•
significant
fluctuations of the value of the dollar against foreign currencies; and
•
restrictions
on the transfer of funds.
Any
one of these factors could have a material adverse effect on our business, results of operations, and financial condition.
In the future, we plan to originate designs and oversee the production of a portion of the products we sell, which may not prove cost-effective.
To date, our product sourcing strategy has consisted of working closely with a number of vendors to select, modify, and combine pieces designed and manufactured
by them or their sources. We expect to continue to source inventory from vendors. As we grow, we expect to develop in-house design capabilities and source a portion of our product directly
from third-party manufacturers. We plan, however, to maintain a balance between vendor-based and direct sourcing. To do so effectively, we will need to oversee the production of this merchandise. In
addition, longer product lead times will be required than the lead times which have been required by our vendors historically. Our experience in the design process is limited, and we currently have no
experience directly overseeing the production process. While we intend to hire personnel with experience in design and production, we cannot be certain that suitable individuals will be available. If
we do not effectively manage the design and production of our own garments, our growth will be impaired and our business could be harmed. Further, originating some of our own products may result in
our carrying more inventory, which may affect inventory turns and could increase our inventory risk.
Our stores are heavily dependent on the customer traffic generated by larger shopping destinations.
Our strategy requires that our stores be located in lifestyle centers, street front locations, and regional malls where we believe our customers and potential
customers shop. Accordingly, our stores must be located in shopping destinations where other retailers attract a significant number of customers to whom our merchandise will appeal. Our stores must
also have favorable placement within those shopping destinations. We cannot control the development of alternative shopping destinations near our
10
existing
stores, or the availability or cost of appropriate locations within existing or new shopping destinations. The failure of shopping destinations where our stores are located to attract
sufficient customer traffic, the failure of our stores within successful shopping destinations to attract customers, or significant cost increases for the locations we seek, would have a material
adverse effect on our results of operations.
Our market share may be adversely impacted at any time by a significant number of competitors.
We operate in a highly competitive environment characterized by low barriers to entry. We compete against a diverse group of retailers, including national and
local specialty retail stores, regional retail chains, traditional department stores, Internet and other direct retailers, and, to a lesser extent, mass merchandisers. Our market share and results of
operations may be adversely impacted by these competitors. Many of our competitors are larger than us and have substantially greater resources than we do and, as a result, may be able to adapt to
changing market conditions, exploit new opportunities, and open new stores more quickly and effectively than we can.
Additionally,
the retail industry periodically has experienced consolidation and other ownership changes. In the future, other retailers in the United States and in foreign markets may
consolidate, undergo restructurings or reorganizations, or realign their affiliations. Any of these developments could result in competitors with more buying power or market visibility than they
currently hold. Such developments could have a material adverse effect on our business, results of operations, and financial condition.
We
believe our white and black merchandising theme is a distinguishing element of our stores and one of the important reasons for our success. Competitors may attempt to copy our white
and black merchandising theme or create other color-oriented themes. Some of our competitors have the resources to deploy such strategies nationwide quickly. Any attempt to copy or mimic our
merchandising themes could have a material adverse effect on our business, results of operations, and financial condition.
Our focus on selling white and black apparel exposes us to loss of market share if other colors increase in popularity and may also present low barriers to entry to potential
competitors.
The market for apparel is subject to change based upon shifting consumer tastes. Among the consumer preferences that change are those for color. Because we offer
only white and black merchandise, our ability to exploit consumer trends in favor of colorful styles is limited. Therefore, a rise in the popularity of colorful styles would harm our market share and
revenues and could adversely affect our results of operations. Further, our success with stores selling only white and black clothes may attract competitors. Those competitors may adopt our strategy
of selling apparel of only one or two colors. If this occurs, our market share may decline and our goodwill may be diluted. Either or both of these events would harm our business.
Our business is sensitive to general economic conditions and consumer spending patterns, and a substantial or sustained decline in consumer spending would likely have a
negative impact on our business, results of operations, and financial condition.
We rely on the expenditure of discretionary income for most, if not all, of our sales. Any downturn, whether real or perceived, in economic conditions or
prospects could adversely affect consumer spending patterns and our sales and results of operations. There can be no assurance that we will be able to maintain our historical rate of growth in
revenues and earnings, or remain profitable, particularly if the retail environment remains stagnant or declines. A recession in the general economy or uncertainties regarding future economic
prospects could affect consumer spending habits and have a material adverse effect on our business, results of operations, and financial condition.
11
Our success is closely tied to our ability to hire and retain talented people.
The success of our business depends upon effective customer interaction and is highly labor-intensive. Our success depends largely on our general ability to
attract, develop, motivate, and retain highly skilled store managers and sales associates. The loss of some or a significant number of our managers or salespeople or the inability to attract, hire,
develop, train, and retain additional personnel could have serious negative effects on us. These negative effects would include impairing our ability to maintain or increase sales and profits at
individual stores and thus our ability to maintain or improve our overall results of operations.
We depend on our management information systems and we rely on third parties for upgrading and maintaining these systems.
Our success is dependent on the accuracy, reliability, and proper use of our management information systems, including merchandise management systems used to
track our sales and facilitate inventory management. Among the operations for which we rely on our management information systems are merchandise planning, replenishment, and markdowns. These
functions enhance our ability to optimize sales while limiting markdowns and reducing inventory risk by properly marking down slow selling styles, reordering existing styles and effectively
distributing new inventory to our stores. We do not currently have redundant systems for all functions performed by our management information systems or a back-up telephone system. Any
interruption in these systems could impair our ability to function effectively. This impairment could have a material adverse effect on our financial position, results of operations, and cash flows.
We
depend on third-party vendors to maintain and periodically upgrade our management information systems to support our business as we expand. The software programs supporting our
inventory management functions are licensed to us by third-party vendors. The inability of these vendors to continue to maintain and upgrade these software programs would disrupt our operations if we
are unable to convert to alternate systems in an efficient and timely manner.
Our proprietary rights are essential to our brand, and any interference with our ability to use them effectively will interfere with our brand message and harm our business.
We believe that our trademarks and other proprietary rights are important to our success. This is particularly the case for the
"White House -- Black Market" marks because the name "White House -- Black Market" is well known by our customers. Even though we take actions
to establish and protect our trademarks and other proprietary rights, we cannot assure you that others will not imitate our products or infringe on our intellectual property rights. In addition, we
cannot assure you that others will not resist or seek to block the sale of our products as infringements of their trademark and proprietary rights. In certain jurisdictions, other entities may have
rights to names that would limit our ability to rely on our own name and brand recognition to expand into such jurisdictions. In addition, if we fail to obtain or perfect trademark, ownership, or
license rights, it would limit our ability to expand into certain international markets or enter such markets with the White House -- Black Market name, and to capitalize
on the value of our brand.
Because we have not yet chosen to sell our products through the Internet, we may lose sales or customers and we may be more vulnerable to competitors.
To date, we have chosen not to offer our customers the ability to purchase our merchandise over the Internet, and we do not plan on doing so in the current or
next fiscal year. The Internet, particularly in the retail industry, has become an increasingly popular distribution channel. Because some consumers perceive purchasing apparel over the Internet as an
efficient, cost-effective means of shopping, these consumers may refrain from purchasing from our stores. For these reasons, we may
12
lose
business to competitors who offer consumers the option of purchasing merchandise online. By emphasizing an online presence, new competitors may also gain disproportionate market visibility and
thus render us at a competitive disadvantage. Loss of customers to online competitors would harm our revenue growth and adversely affect our results of operation.
The recent outbreak of severe acute respiratory syndrome could harm our business.
The recent outbreak of severe acute respiratory syndrome, or SARS, could cause disruption to our suppliers and their manufacturers located in China and elsewhere.
Our suppliers and their manufacturers could be disrupted by worker absenteeism, quarantines, or other travel or health-related restrictions as a result of SARS outbreaks or concern over SARS. If our
suppliers or their manufacturers are so affected, our supply chain could be disrupted, our product shipments could be delayed, and our business could be seriously harmed.
Risks Relating to the Offering
A substantial number of our shares of common stock are eligible for future sale, and the sale of these shares may depress our stock price, even if our business is doing well.
Sales of a substantial number of shares of common stock after the offering could adversely affect the market price of our common stock and could impair our
ability to raise capital through the sale of additional equity securities. Upon completion of the offering, we will have            shares of common stock outstanding.
The                        shares
of common stock sold in the offering, which would be                        shares if the underwriters' option to purchase
additional shares is exercised in full, will be freely tradable without restriction
or further registration under the federal securities laws unless purchased by our "affiliates" as that term is defined in Rule 144. The
remaining                        shares of common stock
outstanding upon completion of the offering will be "restricted securities" as that term is defined in Rule 144.
All
of our stockholders and option holders will be subject to agreements that limit their ability to sell or otherwise dispose of any shares of common stock for a period of at least
180 days after the date of this prospectus without the prior written approval of William Blair & Company, L.L.C. When these agreements expire, these shares and the shares underlying the
options will become eligible for sale, subject to the volume, manner of sale, and notice requirements of Rule 144.
Because our principal stockholders and management may have the ability to control stockholder votes, the premium over market price that an acquirer might otherwise pay may be
reduced and any merger or takeover may be delayed.
Upon completion of the offering, our officers and directors will, in the aggregate, beneficially own approximately    % of our outstanding common
stock. If these stockholders act together, they would have the ability to control or significantly influence all matters submitted to our stockholders for approval, including:
•
the
election or removal of our board of directors;
•
the
amendment of our articles of incorporation or bylaws; and
•
the
adoption of measures that could delay or prevent a change in control or impede a merger, takeover, or other business combination involving us.
These
stockholders will have substantial influence over our management and our affairs. Accordingly, this concentration of ownership may have the effect of impeding a merger,
consolidation, takeover, or other business consolidation involving us, or discouraging a potential acquirer from making
13
a
tender offer for our shares. This concentration of ownership could also adversely affect our stock's market price or lessen any premium over market price that an acquirer might otherwise pay.
The liquidity of our stock is uncertain because it has never been publicly traded, and you may not be able to resell your shares at or above the price you paid.
Prior to the offering, there has not been a public market for our common stock. As a result, the initial public offering price will be determined by negotiations
among the underwriters, the selling stockholders, and us, and may not be indicative of prices that will prevail in the public trading markets. Further, we cannot predict the extent to which a trading
market for our common stock will develop or how liquid that market will be. You may not be able to resell your shares at or above the initial public offering price.
The market price of our common stock may be materially adversely affected by market volatility.
The market price of our common stock is likely to fluctuate, both because of actual and perceived changes in our financial results and prospects and because of
general volatility in the stock market. The factors that could cause fluctuations in our stock price may include, among other factors discussed in this section:
•
actual
or anticipated variations in comparable store sales or quarterly operating results;
•
changes
in financial estimates by research analysts;
•
actual
or anticipated changes in the United States economy or the retailing environment;
•
acts
of terrorism or war;
•
changes
in the market valuations of other specialty apparel or retail companies;
•
announcements
by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures, or other strategic initiatives; and
•
actual
or anticipated sales of common stock by existing stockholders, whether in the market or in a public offering.
The
market price of our common stock could decline as a result of market sales by our existing stockholders after the offering, or the perception that such sales will occur. These sales
also might make it difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. See "Shares Eligible for Future Sale."
We are subject to anti-takeover provisions which could affect the price of our common stock.
Certain provisions of the Maryland General Corporation Law and of our charter and bylaws could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of us. The anti-takeover provisions in our charter and bylaws include:
•
classifying
our board of directors such that only one-third of the directors are elected each year;
•
authorizing
the issuance of "blank check" preferred stock that could be issued by our board of directors;
•
limiting
the ability of stockholders to call a special meeting, remove directors, and amend our charter or bylaws;
•
establishing
advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon by stockholders at
stockholder meetings; and
14
•
allowing
the board of directors to consider effects of a potential acquisition of control of us on our employees, customers, vendors, and creditors as well as the
communities in which our offices and other establishments are located.
We
are also subject to the anti-takeover provisions of Section 3-602 of the Maryland General Corporation Law which prohibits "business combinations" with
persons owning 10% or more of the voting shares of a corporation's outstanding stock, unless the combination is approved by the board of directors prior to the person owning 10% or more of the stock,
for a period of five years, after which such a business combination would be subject to special stockholder approval requirements. Additionally, we are subject to Section 3-702 of
the Maryland General Corporation Law which limits the voting rights of "control shares" acquired in a "controlled share acquisition" except to the extent approved by stockholders. These provisions
could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or may otherwise discourage a potential acquiror from attempting to obtain
control from us, which in turn could have a material adverse effect on the market price of our common stock.
Investors in the offering will suffer immediate and substantial dilution in the book value of their investment in our common stock.
The initial public offering price per share will significantly exceed our net tangible book value per share. Accordingly, investors in the offering will suffer
immediate and substantial dilution of $            per share, assuming an initial public offering price of $            per share.
This dilution is due in large part to the fact that earlier
investors paid substantially less than the public offering price when they purchased their shares of our common stock. The exercise of outstanding options and warrants to purchase our common stock
will result in additional dilution per share.
15
FORWARD-LOOKING STATEMENTS
This prospectus contains statements about future events and expectations that constitute forward-looking statements. We generally identify forward-looking
statements by the use of terminology such as "believe," "may," "will," "should," "anticipate," "predict," "potential," "estimate," "expect," "intend," "objective," "seek," "plan," "continue,"
"strive," or similar words, or the negatives of these words. Forward-looking statements are based on management's beliefs, assumptions, and expectations of our future performance, taking into account
the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties that may cause our actual results,
performance, or financial condition to differ materially from the expectations of future results, performance, or financial condition we express or imply in any forward-looking statements. Factors
that could contribute to these differences include, but are not limited to, those identified in the foregoing "Risk Factors," the additional factors set forth below, and other matters not yet known to
us or not currently considered material by us:
•
the
cost of purchasing merchandise inventories;
•
labor
shortages or increased labor costs;
•
changes
in consumer preferences and demographic trends;
•
changes
in our merchandise mix and the margin percent of the various products we offer;
•
increasing
competition in the market for women's clothes;
•
expansion
into new markets;
•
the
rate of growth of general and administrative expenses associated with building additional corporate infrastructure to support our growth initiatives;
•
fluctuations
in our quarterly results;
•
increased
government regulation;
•
supply
and delivery shortages or interruptions;
•
market
saturation due to new store openings;
•
changes
in tax and other laws applicable to our vendors, customers, or us;
•
adverse
weather conditions which impact customer traffic at our stores; and
•
adverse
economic conditions.
We
qualify any forward-looking statements entirely by these cautionary factors. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on
such forward-looking statements. Investors should recognize these statements for what they are and not rely on them as facts.
16
USE OF PROCEEDS
The net proceeds to us from the sale
of                        shares of common stock being offered by us at an assumed initial public offering of
$            per
share, after deducting estimated underwriting discounts and commissions and estimated offering expenses, are estimated to be approximately $            million. We will not receive any
proceeds
from shares of common stock sold by the selling stockholders, nor can we participate in the sale of additional shares relating to the underwriters' over-allotment option, if exercised.
A
primary purpose of the offering is to create a public market for our common stock in order to facilitate our future access to public capital. Of the net proceeds to us from the
offering, we intend to use:
•
$11.8 million
to make required distributions to certain holders of our common stock;
•
$1.7 million
to fund capital expenditures and pay expenses incurred in connection with the planned relocation of our headquarters and distribution center; and
•
the
remaining net proceeds from the offering for general corporate purposes, including the opening of new stores and working capital.
Pending
application of the net proceeds as described above, we will invest the net proceeds in interest-bearing, investment-grade securities. Although we do not contemplate any changes
in our use of proceeds, we may reprioritize the uses listed above or use some proceeds for other purposes in the event the specified uses require less capital than expected. The holders of our common
stock receiving the required distribution are also selling stockholders in the offering. See "Management's Discussion and Analysis of Financial Condition and Results of Operation—Amounts
Distributable to Holders of Class C Common Stock" and "Principal and Selling Stockholders."
DIVIDEND POLICY
We currently intend to retain all future earnings to finance the expansion of our business. We have not paid cash dividends in the past and do not anticipate
paying cash dividends in the foreseeable future. In addition, except as described below, we are currently prohibited from paying dividends by our bank credit agreement. Any future determination
regarding cash dividend payments will be made by our board of directors and will depend upon our earnings, capital requirements, financial condition, restrictions in financing agreements, and other
factors deemed relevant by our board of directors. However, we plan to make a required distribution of $11.8 million to holders of our Class C common stock upon completion of the
offering. See "Management's Discussion and Analysis of Financial Condition and Results of Operation—Amounts Distributable to Holders of Class C Common Stock."
17
CAPITALIZATION
The following table sets forth our capitalization as of February 1, 2003 on an actual and as adjusted basis. The "actual" column reflects our
capitalization as of February 1, 2003 on a historical basis, without any adjustments to reflect subsequent or anticipated events. The "as adjusted" column reflects our capitalization as of
February 1, 2003 with adjustments to reflect:
•
our
adoption of amended and restated articles of incorporation that will provide for authorized capital stock of 25,000,000 shares of common stock and 5,000,000 shares of
undesignated preferred stock;
•
the
conversion of all outstanding shares of our Class A common stock and Class C common stock into common stock upon the closing of the offering; and
•
the
receipt by us of the estimated net proceeds from the sale of            shares of common stock by us in the offering at an assumed initial public offering price of
$            per share and the application of the net proceeds therefrom, including the payment of the required distributions to our Class C common stockholders of $11.8 million.
See
"Use of Proceeds."
None
of the columns shown below reflect the following:
•
309,138
shares of common stock issuable as of the date of this prospectus upon the exercise of outstanding stock options under our 1999 Stock Option Plan at a weighted
average exercise price of $5.22 per share; and
•
an
aggregate of 813,939 shares of common stock available as of the date of this prospectus for future issuance under our 1999 Stock Option Plan, our 2003 Stock Option Plan,
and our 2003 Employee Stock Purchase Plan.
As of February 1, 2003
Actual
As Adjusted
(in thousands, except share and per share data)
Cash
$
1,081
$
Short-term debt, including current portion of capitalized lease obligations and amounts distributable to Class C common stockholders
$
1,688
$
571
Long-term debt, including capitalized lease obligations and amounts distributable to Class C common stockholders, net of current portion
6,131
1,104
Total debt including amounts distributable to Class C common stockholders
7,819
1,675
Stockholders' equity:
Preferred stock, $.01 par value per share, no shares authorized, issued and outstanding, actual; 5,000,000 shares authorized and no shares issued and outstanding, as adjusted
—
—
Common stock, $.01 par value per share, no shares authorized, issued and outstanding, actual; 25,000,000 shares authorized and            shares issued and
outstanding, as adjusted
—
Class A common stock, $.01 par value per share, 15,000,000 shares authorized and 3,425,649 issued and outstanding, actual; no shares authorized, issued and outstanding, as adjusted
34
—
Class B common stock, $.01 par value per share, 100,000 shares authorized and no shares issued and outstanding, actual; no shares authorized, issued and outstanding, as adjusted
—
—
Class C common stock, $.01 par value per share, 8,000,000 shares authorized and 2,357,422 shares issued and outstanding, actual; no shares authorized, issued and outstanding, as adjusted
24
—
Additional paid-in capital
7,856
Unearned stock compensation
(74
)
(74
)
Accumulated deficit
(3,447
)
Total stockholders' equity
4,393
Total capitalization
$
12,212
$
18
DILUTION
Our pro forma net tangible book value as of February 1, 2003 was $4.4 million, or $0.76 per share of common stock. Our pro forma net tangible book
value per share is determined by subtracting the total amount of our liabilities from the total amount of our tangible assets and dividing the remainder by the number of shares of our common stock
outstanding after giving effect to the conversion of all outstanding shares of our Class A common stock and Class C common stock into a single class of common stock. Dilution in pro
forma net tangible book value per share represents the difference between the price per share to be paid by new investors in the offering and the pro forma net tangible book value per share
immediately after the offering. After giving effect to the sale of the            shares of common stock offered by us at an assumed initial public offering price of
$            per share
and deducting the underwriting discount and estimated offering expenses payable by us, and after giving effect to the $5.0 million decrease in net tangible book value related to the required
distributions to holders of our Class C common stock in excess of the amount accrued, our pro forma as adjusted net tangible book value as of February 1, 2003 would have been
$            million, or $            per share of common stock. This represents an immediate increase in net tangible book value
of $            per share to existing stockholders and an
immediate dilution of $            per share to new investors in the common stock. The following table illustrates this per share dilution:
Assumed initial public offering price per share
$
Pro forma net tangible book value per share before the offering
$
0.76
Increase attributable to new investors in the offering
Decrease attributable to distributions to holders of Class C common stock in excess of the amount accrued
Pro forma net tangible book value per share after the offering
Dilution in pro forma net tangible book value per share to new investors
$
The
following table sets forth as of February 1, 2003:
•
the
number of shares of common stock purchased by existing stockholders (assuming the conversion of all outstanding shares of our Class A common stock and
Class C common stock into shares of common stock), the total consideration, and the average price per share paid to us for these shares;
•
the
number of shares of our common stock purchased by new investors, the total consideration, and the price paid by them for these shares (at an assumed initial public
offering price of $    per share); and
•
the
percentage of shares purchased by the existing stockholders and new investors and the percentages of consideration paid to us for these shares.
Shares Purchased
(1)
Total Consideration
Average Price
Per Share
Number
Percent
Amount
Percent
Existing stockholders
(2)
5,783,071
%
$
10,048,000
%
$
1.74
New investors
(2)
Total
100.0
%
$
100
%
(1)
The
shares purchased information shown in the table excludes: (i) 309,138 shares of common stock issuable as of the date of this prospectus upon the exercise of outstanding
stock options under our 1999 Stock Option Plan at a weighted average exercise price of $5.22 per share; and (ii) an aggregate of 813,939 shares of common stock available as of the date of this
prospectus for future issuance under our 1999 Stock Option Plan, our 2003 Stock Option Plan, and our 2003 Employee Stock Purchase Plan.
(2)
This
table does not give effect to sales of common stock by the selling stockholders. Sales by the selling stockholders in the offering will reduce the number of shares held by
existing stockholders to                        shares of common stock,
or            % of the shares outstanding, and will increase the number of shares held by our new investors
to                        
shares of common stock, or            % of the shares outstanding.
19
SELECTED FINANCIAL AND OPERATING DATA
The following selected statements of operations data and other data in fiscal 2000, 2001, and 2002 and the balance sheet data at the end of fiscal 2001 and fiscal
2002 are derived from our financial statements, audited by KPMG LLP, included elsewhere in this prospectus. The selected statements of operations data and other data in fiscal 1998 and 1999 and the
balance sheet data at the end of fiscal 1998, fiscal 1999, and fiscal 2000 are derived from unaudited financial statements not included in this prospectus. The selected store data for all fiscal
periods presented have been derived from internal records of our operations. The historical results presented below are not necessarily indicative of the results to be expected for any future period.
You should read the selected financial and operating data shown below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial
statements and related notes included elsewhere in this prospectus.
Fiscal Year
1998
1999
2000
2001
2002
(in thousands, except per share, store data, and other data)
Statement of Operations Data:
Net sales
$
24,328
$
28,530
$
37,721
$
49,532
$
66,956
Cost of goods sold
(1)
11,641
13,501
17,676
21,884
28,271
Gross profit
12,687
15,029
20,045
27,648
38,685
Selling, general and administrative expenses
12,124
14,199
19,101
24,627
30,414
Depreciation and amortization
593
558
912
1,176
1,492
Operating income (loss)
(30
)
272
32
1,845
6,779
Interest expense
428
53
198
326
217
Income (loss) before income tax expense (benefit)
(458
)
219
(166
)
1,519
6,562
Income tax expense (benefit)
(82
)
113
(48
)
650
2,652
Net income (loss)
(376
)
106
(118
)
869
3,910
Amounts distributable to Class C common stockholders
(2)
25
981
1,475
1,679
1,984
Net income (loss) applicable to common stockholders
$
(401
)
$
(875
)
$
(1,593
)
$
(810
)
$
1,926
Basic and diluted net income (loss) applicable to common stockholders per weighted average common share:
(3)
Basic
$
(0.11
)
$
(0.16
)
$
(0.28
)
$
(0.14
)
$
0.33
Diluted
$
(0.11
)
$
(0.16
)
$
(0.28
)
$
(0.14
)
$
0.33
Pro forma diluted
$
Weighted average common shares outstanding:
(3)
Basic
3,700
5,459
5,783
5,783
5,783
Diluted
3,700
5,459
5,783
5,783
5,870
Pro forma diluted
Store Data:
Comparable store sales growth
(4)
2.9
%
7.3
%
5.0
%
13.1
%
16.3
%
Stores open at beginning of period
47
50
60
71
77
New stores
3
10
14
9
16
Closed stores
—
—
3
3
1
Stores open at end of period
50
60
71
77
92
Total square feet at end of period
(5)
56,659
72,022
93,751
105,623
134,061
Net sales per square foot
(6)
$
441
$
468
$
460
$
494
$
559
Average net sales per store
(7)
$
516,000
$
551,000
$
593,000
$
679,000
$
790,000
Other Data:
Gross profit percentage
52.1
%
52.7
%
53.1
%
55.8
%
57.8
%
Operating income (loss) percentage
(0.1
)%
1.0
%
0.1
%
3.7
%
10.1
%
January 30,
1999
January 29,
2000
February 3,
2001
February 2,
2002
February 1,
2003
Balance Sheet Data:
Working capital (deficit)
(8)
$
66
$
1,191
$
(1,271
)
$
(707
)
$
599
Total assets
5,744
9,284
13,564
15,146
20,223
Total debt including capital lease obligations
388
753
3,010
2,344
1,675
Amounts distributable to Class C common stockholders
(2)
25
1,006
2,481
4,160
6,144
Total liabilities
3,053
4,468
10,333
12,709
15,830
Stockholders' equity
2,691
4,816
3,231
2,437
4,393
20
(1)
Cost
of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the distribution center to our
stores.
(2)
Represents
amounts distributable to Class C common stockholders pursuant to the terms of our amended and restated articles of incorporation. The amounts distributable to
Class C common stockholders are not classified within stockholders' equity because of the required distribution feature. See "Management's Discussion and Analysis of Financial Condition and
Results of Operation—Amounts Distributable to Holders of Class C Common Stock."
(3)
See
note 3 of our financial statements for an explanation of the methods used to determine the number of shares used in computing net income (loss) per share data. Prior to the
completion of the offering, we have two classes of common stock outstanding and the net income (loss) applicable to common stockholders per share is the same for each class. Pro forma diluted net
income applicable to common stockholders per weighted average common share was calculated by dividing net income by the number of pro forma diluted weighted average shares. Pro forma diluted weighted
average shares were calculated by adding the number of shares to be issued in the offering to the diluted weighted average shares outstanding. Upon completion of the offering, all amounts accrued for
distribution to Class C common stockholders will be paid. In addition, payment of our obligation with respect to future distributions to Class C common stockholders will be accelerated,
which will result in a deduction from net income of approximately $5.0 million in the quarter in which the offering is completed, for the purpose of determining net income applicable to common
stockholders. Accordingly, these amounts have been excluded because the distribution obligation is required to be satisfied with proceeds from the offering. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Amounts Distributable to Holders of Class C Common Stock."
(4)
Comparable
store sales begin in a store's 15
th
month of operations.
(5)
Calculated
using gross square footage of all stores open at the end of the period.
(6)
Calculated
using net sales and gross square footage of all stores open at both the beginning and the end of the period.
(7)
Calculated
using net sales of all stores open at both the beginning and the end of the period.
(8)
Defined
as current assets less current liabilities.
21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with "Selected Financial and Operating Data" and our financial
statements and related notes appearing elsewhere in this prospectus. This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual
results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, but not limited to, those set forth under "Risk Factors" in this
prospectus.
Overview
We are a specialty retailer offering distinctive private brand women's apparel in the classic and timeless colors of white and black. We target educated,
middle-to-upper income, youthful women between the ages 30 and 50, who lead active work and social lives and place a premium on contemporary, feminine clothing and a high level
of personalized service. Our goal is to make our customers "look and feel beautiful" by offering a unique assortment of quality and fashionable apparel designed for a woman's everyday and special
occasion needs. Our boutique-like stores are designed to highlight the distinctiveness of our merchandise, which together with our high level of personalized service, enhance customer
recognition and loyalty to our brand.
Our
net sales increased from $28.5 million in fiscal 1999 to $67.0 million in fiscal 2002, a compound annual growth rate of 32.9%. Over the three-year period
ended fiscal 2002, we increased our store base from 60 to 92 and our comparable store sales gains averaged 11.5% per fiscal year, increasing 13.1% in fiscal 2001 and 16.3% in fiscal 2002. We believe
that these increases resulted from our focus on our core customers' preferences and improvement in the execution of our merchandising strategy. Our gross profit percentage increased from 52.7% of our
net sales in fiscal 1999 to 57.8% of our net sales in fiscal 2002. Operating income increased from $272,000 in fiscal 1999 to $6.8 million in fiscal 2002, and our net income grew from $106,000
in fiscal 1999 to $3.9 million in fiscal 2002.
As
of April 30, 2003, we operated 96 stores in the United States and its territories. Our stores are located in a variety of retail settings such as lifestyle centers, street
front locations, and regional malls. Our stores opened in fiscal 2002 required an average total investment of approximately $154,000 per store, inclusive of pre-opening costs, fixtures, equipment,
leasehold improvements, and inventory, but
net of landlord allowances and vendor financing. Our store model for fiscal 2003 requires an average total investment of approximately $190,000 per store, inclusive of pre-opening costs, fixtures,
equipment, leasehold improvements, and inventory, but net of landlord allowances and vendor financing. Our stores opened in fiscal 2001 produced a cash payback in approximately 11 months and
provided a cash return on invested capital of approximately 112% in their first full fiscal year. Based on our store opening and operating experience, we expect our new stores opening in fiscal 2003
to produce a cash payback in approximately 14 months and a cash return on invested capital of approximately 90% in their first full year of operation. We believe that our cash flow from operations
will permit our planned store growth to continue without a substantial ongoing requirement of external capital.
We
plan to open 22 additional stores during fiscal 2003 and 25 to 30 additional stores in fiscal 2004. In fiscal 2003, we plan to close three stores. During fiscal 2004, we intend
to close one store and consolidate six of our white and black only single concept stores into three White House -- Black Market stores. In fiscal 2005,
we plan to consolidate the remaining six single concept stores into three White House -- Black Market stores. We expect that these consolidations will have a favorable
impact on our total comparable store sales. However, the net sales of the three consolidated stores are expected to be less than the historical sales of the original six single concept stores.
22
We
have established relationships with more than 100 different vendors, and rely on five to seven core vendors. These vendors supply us with approximately one-third of our
total purchases and collaborate with us for trend analysis and our private brand merchandise design. We believe that approximately 55% of our merchandise by dollar volume in fiscal 2002 was produced
domestically by our vendors and their sources, with the balance manufactured by third parties in Asia, Latin America, Canada, Europe, and Africa. Historically, domestic sourcing has resulted in
shorter lead times, more consistent delivery, smaller order quantities, and quicker response to changes in fashion and business trends. To the extent the products we sell are manufactured in foreign
countries, we are subject to certain risks associated with imports. As we grow, we expect to develop in-house design capabilities and source a portion of our product directly from
third-party manufacturers. We plan, however, to maintain a balance between vendor-based and direct sourcing, in order to preserve flexibility and design creativity while increasing production
capacity. We believe that this sourcing strategy will provide an opportunity to improve our gross profit percentage in the future.
In
late fiscal 2003 or early fiscal 2004, we expect to move from the 30,400 square foot headquarters and distribution facility we have occupied since November 1999 to a new
100,000 square foot headquarters and distribution facility. As a result, we expect a slight increase in our distribution and warehousing costs which are included as a component of our cost of goods
sold. We plan to use approximately $1.7 million of the proceeds of the offering to fund capital expenditures for the new distribution center and to pay moving expenses and the costs associated
with the termination of our existing distribution center lease. Of this amount, approximately $200,000 will be reflected as an expense on our financial statements in the fiscal quarter in which we
move.
We
were founded in 1985 by Richard Sarmiento, our Chairman, President, and Chief Executive Officer. Our initial investors were Mr. Sarmiento and his friends and family. From 1985
to 1999, we funded our expansion primarily from operations. In January 1999 we raised $8.1 million from institutional private equity investors to repay debt and provide growth capital.
We plan to distribute $11.8 million of the proceeds to us from the offering to make required distributions to certain holders of our common stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operation—Amounts Distributable to Holders of Class C Common Stock."
In
any given period, our gross margin may be impacted by changes in the margin percent of the various products we offer as well as changes in the relative mix of revenues from
accessories and different categories of apparel products.
Results of Operations
Net sales constitute gross sales net of returns. We include a store in comparable store sales on the first day of the 15
th
month of its operations.
Cost of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the distribution center to our stores. Selling,
general and administrative, or SG&A, expenses include marketing and advertising, buying and merchandising, store occupancy, and other store and corporate expenses. The following table presents, for
the periods indicated, selected items in the statements of operations as a percentage of net sales:
Fiscal Year
2000
2001
2002
Net sales
100.0
%
100.0
%
100.0
%
Cost of goods sold
46.9
44.2
42.2
Gross profit
53.1
55.8
57.8
Selling, general and administrative expenses
50.6
49.7
45.5
Depreciation and amortization
2.4
2.4
2.2
Operating income
0.1
3.7
10.1
Interest expense
0.5
0.6
0.3
Income (loss) before income tax expense (benefit)
(0.4
)
3.1
9.8
Income tax expense (benefit)
(0.1
)
1.3
4.0
Net income (loss)
(0.3
)%
1.8
%
5.8
%
23
Year Ended February 1, 2003 (Fiscal 2002) Compared with Year Ended February 2, 2002 (Fiscal 2001)
Net Sales
Net sales increased by $17.4 million, or 35.2%, to $67.0 million in fiscal 2002 from $49.5 million in fiscal 2001. The increase was
attributable to comparable store sales increases of 16.3%, or $7.6 million, and sales by stores not included as comparable stores of $9.8 million. During fiscal 2002, we opened 16 new
stores and closed one store. We believe that these net sales increases resulted from continued focus on our core customers' preferences and improvement in the execution of our merchandise strategy.
Gross Profit
Gross profit in fiscal 2002 was $38.7 million compared with $27.7 million in fiscal 2001, an increase of 39.9%. As a percentage of net sales, gross
profit was 57.8% in fiscal 2002 compared to 55.8% in fiscal 2001. The increase in gross profit as a percentage of net sales was primarily the result of enhanced purchasing power, which generated
higher initial mark ups, and, to a lesser extent, reduced freight costs and inventory shrinkage, partially offset by a slight increase in markdowns.
Selling, General and Administrative Expenses
SG&A expenses in fiscal 2002 were $30.4 million compared with $24.6 million in fiscal 2001, an increase of 23.5%. As a percentage of sales, SG&A
expenses were 45.5% in fiscal 2002 compared to 49.7% in fiscal 2001. The increase in total SG&A expense is primarily the result of costs associated with new stores as well as increases in
administrative staff to support our growth and incentive compensation awards. The decrease in these expenses as a percentage of net sales is attributable to expense leverage associated with our total
net sales gains primarily in store payroll, occupancy costs, and administrative expenses.
Depreciation and Amortization
Depreciation and amortization expense in fiscal 2002 was $1.5 million compared with $1.2 million in fiscal 2001, an increase of 26.9%. The increase
was principally related to the depreciation of furniture and fixtures and the amortization of leasehold improvements associated with new stores, the amortization of a new merchandise and point of sale
software system, and the acceleration of the amortization of leasehold improvements related to our current headquarters and distribution center due to a planned relocation in late fiscal 2003 or early
fiscal 2004.
Operating Income
Operating income in fiscal 2002 was $6.8 million compared with $1.8 million in fiscal 2001. As a percentage of net sales, operating income was 10.1%
in fiscal 2002 compared to 3.7% in fiscal 2001. As a percentage of net sales, the increase in operating income is primarily attributable to the increase in expense leverage associated with comparable
store sales gains and an increase in gross profit percentage.
Income Tax Expense (Benefit)
Income tax expense was $2.7 million in fiscal 2002 compared with $650,000 in fiscal 2001. The effective tax rate in fiscal 2002 and fiscal 2001 was 40.4%
and 42.8%, respectively. The decrease in effective tax rate is primarily related to lower state income tax rates in new locations.
Net Income (Loss)
Net income increased by $3.0 million to $3.9 million, or 5.8% of net sales, in fiscal 2002 from $869,000, or 1.8% of net sales, in fiscal 2001.
24
Year Ended February 2, 2002 (Fiscal 2001) Compared with Year Ended February 3, 2001 (Fiscal 2000)
Net Sales
Net sales increased by $11.8 million, or 31.3%, to $49.5 million in fiscal 2001 from $37.7 million in fiscal 2000. The increase was
attributable to comparable store sales increases of 13.1%, or $4.4 million, and sales by stores not included as comparable stores of $7.4 million. During fiscal 2001, we opened nine new
stores and closed three stores.
Gross Profit
Gross profit in fiscal 2001 was $27.6 million compared with $20.0 million in fiscal 2000, an increase of 37.9%. As a percentage of net sales, gross
profit was 55.8% in fiscal 2001 compared to 53.1% in fiscal 2000. The increase in gross profit as a percentage of net sales was primarily the result of enhanced purchasing power, which generated
higher initial mark ups, and, to a lesser extent, reduced inventory shrinkage.
Selling, General and Administrative Expenses
SG&A expenses in fiscal 2001 were $24.6 million compared with $19.1 million in fiscal 2000, an increase of 28.9%. As a percentage of sales, SG&A
expenses were 49.7% in fiscal 2001 compared to 50.6% in fiscal 2000. The increase in total SG&A expense is primarily the result of costs associated with new stores as well as increases in
administrative staff to support our growth. The decrease in these expenses as a percentage of net sales is attributable to expense leverage associated with our total net sales gains primarily in store
payroll, occupancy costs and administrative expenses.
Depreciation and Amortization
Depreciation and amortization in fiscal 2001 was $1.2 million compared with $912,000 in fiscal 2000, an increase of 28.9%. The increase was principally
related to the depreciation of furniture and fixtures and the amortization of leasehold improvements associated with new stores.
Operating Income
Operating income in fiscal 2001 was $1.8 million compared with $32,000 in fiscal 2000. As a percentage of net sales, operating income was 3.7% in fiscal
2001 compared to 0.1% in fiscal 2000. As a percentage of net sales, the increase in operating income is primarily attributable to the increase in comparable store sale gains and an increase in gross
profit percentage.
Income Tax Expense (Benefit)
Income tax expense was $650,000 in fiscal 2001 compared with a $48,000 income tax benefit in fiscal 2000. The effective tax rates in fiscal 2001 and fiscal 2000
were 42.8% and 28.9%, respectively.
Net Income (Loss)
Net income increased by $1.0 million to $869,000, or 1.8% of net sales, in fiscal 2001 from a loss of ($118,000) in fiscal 2000.
Liquidity and Capital Resources
Our primary capital requirements are for capital investments, inventory, and pre-opening expenses for new stores as well as for store remodeling,
store fixtures, and ongoing infrastructure improvements. Historically, our main sources of liquidity have been cash flows from operations, borrowings under our credit facility, equipment financing,
and proceeds from sales of our common stock.
25
The
following table sets forth elements of our cash flows and financial condition for the periods indicated (dollars in thousands):
Fiscal Year
2000
2001
2002
Net cash provided by operating activities
$
1,281
$
2,564
$
5,495
Net cash used in investing activities
(3,371
)
(1,628
)
(2,963
)
Net cash provided by (used in) financing activities
2,183
(691
)
(1,970
)
Total debt including capital lease obligations (at end of period)
3,010
2,344
1,675
Working capital (deficit) (at end of period)
(1,271
)
(707
)
599
Cash (at end of period)
274
519
1,081
Net
cash provided by operating activities in fiscal 2002 of $5.5 million, primarily related to net income of $3.9 million and depreciation and amortization
of $1.5 million. Net cash provided by operating activities in fiscal 2001 of $2.6 million, primarily related to net income of $869,000 and depreciation and amortization of
$1.2 million. Net cash provided by operating activities in fiscal 2000 of $1.3 million, primarily related to a net loss of ($118,000), depreciation and amortization of $912,000, and a
change in working capital resulting from an increase in trade accounts payable of $2.0 million offset by an increase in merchandise inventories of $1.4 million.
Net
cash used in investing activities in fiscal 2002 of $3.0 million, primarily related to capital expenditures for new store openings and existing store renovations. Net cash
used in investing activities in fiscal 2001 of $1.6 million, primarily related to capital expenditures for new store openings. Net cash used in investing activities in fiscal 2000 of
$3.4 million, primarily related to capital expenditures for new store openings.
Net
cash used in financing activities in fiscal 2002 of $2.0 million, primarily related to net repayments of borrowing under the line of credit. Net cash used in financing
activities in fiscal 2001 of $691,000, primarily related to net repayments of borrowings under the line of credit. Net cash provided by financing activities in fiscal 2000 of $2.2 million,
primarily related to net borrowings under the line of credit and net proceeds from equipment financing.
We
have a $12.0 million line of credit agreement with Wells Fargo Bank N.A. (the bank), which included a $7.0 million revolving line of credit (which we refer to as our
standard line) and a $5.0 million special sub-line of credit (which we refer to as our special sub-line). The amounts are limited by borrowing base calculations, as defined in the
agreement. These borrowing base calculations take into account a number of factors, including merchandise inventories, net shrinkage, and rent. The aggregate unpaid principal amount of all advances
bears interest, until repaid, at the bank's prime rate (4.25% as of April 30, 2003) plus 0.25% and 2.0% for the standard line and the special sub-line, respectively. We have granted the bank a
security interest in substantially all of our receivables, inventory, and cash as collateral for the line of credit. Under provisions in the agreement, we must comply with certain covenants, including
the maintenance of our inventory balance between a minimum and maximum level and achievement of certain store contribution levels. The line of credit agreement prohibits us from paying any cash
dividends or other distributions with respect to our stock without the bank's consent. The credit agreement will expire in August 2006.
As
of May 3, 2003, we had outstanding borrowings under the line of credit of $926,000 and $3.1 million of available borrowing capacity. During fiscal 2002, average
month-end outstanding borrowings were $271,000.
INVESCO
Private Capital, Inc. and Phillips-Smith Specialty Retail Group, together with certain affiliates, currently beneficially own all of the 2,357,422 shares of Class C common
stock outstanding, reflecting an aggregate investment of $8.8 million. Substantially all of these investments were made in fiscal 1999 and fiscal 2000. In connection with the offering,
we intend to use $11.8 million of the net proceeds from the offering to us to make distributions to holders of our Class C common stock which
26
are
required upon the completion of a qualified initial public offering. See "—Amounts Distributable to Holders of Class C Common Stock."
Our
capital requirements include construction and fixturing costs related to the opening of new stores and for maintenance and remodeling expenditures for existing stores. Future capital
requirements and the adequacy of available funds will depend on many factors, including the pace of expansion, the availability of suitable site locations, and the nature of arrangements negotiated
with landlords. During fiscal 2003, capital expenditures are planned to be approximately $5.5 million. Of this amount, approximately $2.7 million relates primarily to leasehold
improvements and furniture and fixtures for the opening of 22 new stores, and approximately $1.5 million relates to equipment, systems, and leasehold improvements for our new headquarters and
distribution center. We expect cash flows from operations, available borrowings under the line of credit and proceeds from the offering will be sufficient to meet our cash requirements for at least
the next 12 months.
Contractual Obligations and Commercial Commitments
The following table summarizes our contractual obligations including both on and off-balance sheet arrangements, in effect at February 1, 2003
(in thousands):
Less than
1 Year
1-3
years
4-5
years
After 5
years
Total
Capital lease obligations
$
730
$
1,166
$
75
$
—
$
1,971
Operating leases
5,498
9,463
7,940
12,285
35,186
Required distributions to Class C common stockholders
(1)
1,117
8,934
3,350
—
13,401
Total
$
7,345
$
19,563
$
11,365
$
12,285
$
50,558
(1)
In
connection with the offering, we intend to use $11.8 million of the net proceeds from the offering to us to make distributions to holders of our Class C common stock
which are required upon the completion of a qualified initial public offering (and which otherwise would have been payable in equal amounts over the 12 consecutive quarters beginning on
December 31, 2003). Following the offering, we will have a single class of common stock and no further required distributions to any of our stockholders. See "—Amounts Distributable
to Holders of Class C Common Stock."
Our only off-balance sheet contractual obligations or commercial commitments as of February 1, 2003 relates to operating lease obligations. We have excluded these items from our
balance sheet in accordance with generally accepted accounting principles. We presently do not have any non-cancelable purchase commitments which require us to purchase goods and services
beyond a period of five months. Our non-cancelable purchase commitments relate principally to merchandise inventories to be received over the next five months.
We
occupy our retail stores and administrative facilities under operating leases. Approximately 15% have early cancellation clauses, which permit the lease to be terminated if certain
sales levels are not met in specific periods. Some leases contain renewal options for periods ranging from one to five years under substantially the same terms and conditions as the original leases.
Most of the store leases require payment of a specified minimum rent, plus a contingent rent based on a percentage of the store's net sales in excess of a specified threshold. In addition, most of the
leases require payment of
real estate taxes, insurance and certain common area and maintenance costs in addition to the future minimum operating lease payments shown in the table above.
Amounts Distributable to Holders of Class C Common Stock
Private equity funds affiliated with INVESCO and Phillips-Smith, together with certain affiliates, currently beneficially own all of the 2,357,422 shares of
Class C common stock outstanding, reflecting an aggregate investment of $8.8 million. Substantially all of these investments were made in fiscal 1999 and fiscal 2000. INVESCO and
Phillips-Smith are also selling stockholders in the offering. See "Principal and Selling Stockholders."
27
In connection with the offering, (i) we intend to use $11.8 million of the net proceeds from the offering to us to make distributions to holders of our Class C
common stock which are required upon the completion of a qualified initial public offering (and which otherwise would have been payable in equal amounts over the 12 consecutive quarters beginning on
December 31, 2003), and (ii) all outstanding shares of Class C common stock will be converted on a share-for-share basis into shares of common stock.
Following the offering, we will have a single class of common stock and no further required distributions to any of our stockholders.
The
$11.8 million required distribution amount represents a dividend equivalent to the investors' original investment plus a return to the date of the offering. In the quarter in
which we complete the offering, our obligation to the Class C common stockholders will be accelerated, which will result in a deduction of approximately $5.0 million from our net income
for the purpose of determining net income applicable to common stockholders. This charge represents the net unaccrued portion of the amounts distributable to the holders of our Class C common
stock. The amount shown in our balance sheet as amounts distributable to Class C common stockholders will be retired with proceeds from the offering. See note 11 to our financial
statements included herein for additional information.
Amortization of Unearned Compensation Expense
Options were granted in May 2002 to our employees at exercise prices which were our best estimate as to the fair value of the underlying common stock on
the date of grant. Subsequent to the grant date, management concluded that for these grants the estimates may not have fully reflected the impact of changing business conditions. Our earnings will
incur a charge associated with the difference between the exercise price and the revised, estimated fair market value amortized over the five-year vesting period. We recorded a charge of
approximately $13,000 in fiscal 2002 associated with these option grants. We expect to recognize a charge of approximately $17,000 in fiscal 2003 and for each of the following three fiscal years and a
charge of approximately $6,000 in fiscal 2007, for a total charge of approximately $87,000. This amount represents the aggregate difference between the exercise price of stock option grants and the
estimated fair market value of our common stock at the time of the grants.
Seasonality, Quarterly Results, and Inflation
We have historically experienced and expect to continue to experience seasonal and quarterly fluctuations in our net sales and operating income. As is the case
with many retailers of apparel and
related merchandisers, our business is subject to seasonal influences. However, our net sales and operating results are typically lower in the third quarter of our fiscal year. Quarterly results of
operations may also fluctuate significantly as a result of a variety of factors, including the timing of store openings, competition, and general economic conditions. We do not believe that inflation
has had a material impact on net sales or operating results for the past three fiscal years.
The
following table sets forth unaudited quarterly net sales, gross profit, net income, and diluted earnings per share for the periods indicated. The unaudited quarterly information has
been prepared on a basis consistent with the audited consolidated financial statements and includes all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a
fair presentation of the information shown. This information should be read in conjunction with the audited consolidated financial statements and the notes thereto appearing elsewhere in this
prospectus. The operating results for any quarter are not necessarily indicative of the operating results for a full year or for any future
28
period
and there can be no assurance that any trend reflected in such results will continue in the future (in thousands, except per share amounts).
Fiscal 2001
Fiscal 2002
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Net sales
$
12,332
$
12,209
$
11,014
$
13,977
$
15,978
$
17,696
$
15,049
$
18,233
Gross profit
6,852
6,823
6,055
7,918
9,077
10,224
8,571
10,813
Net income (loss)
528
308
(208
)
241
1,129
1,408
247
1,126
Net income (loss) applicable to common stockholders
153
(107
)
(638
)
(218
)
680
917
(263
)
592
Diluted net income (loss) per share applicable to common stockholders
0.03
(0.02
)
(0.11
)
(0.04
)
0.12
0.16
(0.05
)
0.10
Prior to completion of the offering, we have two classes of common stock outstanding. The net income (loss) applicable to common stockholders per
share is the same for each class of common stock.
We
do not believe that inflation has had a material impact on our net sales or operating results for the past three years.
Critical Accounting Policies
Critical accounting policies are those that are both important to the presentation of the financial condition and results of operations and require difficult,
complex, and subjective judgments. The most critical accounting policies relate to estimates related to valuation of merchandise inventories, recovery of long-lived assets, and the
valuation of deferred tax assets.
Valuation of Merchandise Inventories
Merchandise inventories are stated at the lower of cost or market. Cost is determined using the first-in first-out method. In assessing
the market value of inventories, particularly those with slower turnover, we consider the estimated net realizable value to assess the carrying value of inventory. We define net realizable value as
estimated sales value of the goods less costs to dispose. To the extent that carrying cost exceeds the net realizable value, the inventory is written down to net realizable value. Changes in market
conditions could impact our ability to achieve sales at the estimated selling prices and could negatively impact the carrying value of our inventory. As of February 1, 2003, inventory was
recorded at $440,000 less than its original cost.
Recovery of Long-Lived Assets
We review property and equipment for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from
future cash flows associated with the asset. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying value of an asset exceeds the undiscounted future cash flows, we recognize an impairment charge equal to the amount by which the carrying value
of the asset exceeds the estimated fair value of the asset, generally determined by estimating the present value of the future cash flows.
Valuation of Deferred Tax Assets
Deferred income taxes arise from temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. At
each balance sheet date, we make an assessment of the realizability of the deferred tax assets. In making this assessment, management considers whether it is more likely than not that some or all of
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary
differences become deductible. As of
29
February 1,
2003, we had net deferred tax assets of $1.3 million, all of which management estimates are more likely than not to be recovered.
New Accounting Pronouncements
In April 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 145,
Rescission of FASB
Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections
. SFAS No. 145
provides for the rescission of several previously issued accounting standards, new accounting guidance for the accounting for certain lease modifications and various technical corrections that are not
substantive in nature to existing pronouncements. We will adopt SFAS No. 145 as of February 2, 2003, except for the provisions relating to the amendment of SFAS No. 13, which were
adopted for transactions occurring subsequent to May 15, 2002. Full adoption of SFAS No. 145 is not expected to have a material impact on our financial statements.
In
June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities
. SFAS
No. 146 requires that a liability for a cost associated with the exit or disposal activity be recognized when incurred at fair value. SFAS No. 146 eliminates the definition and
requirements of the FASB's Emerging Issues Task Force Issue 94-3. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002 and may
have an effect on the timing of future restructuring charges taken, if and when they occur.
In
December 2002, the FASB issued SFAS No. 148,
Accounting for Stock-Based Compensation—Transition and Disclosure, an amendment of FASB
Statement No. 123
. This Statement amends FASB Statement No. 123,
Accounting for Stock-Based Compensation
, to
provide alternative methods of transition for an entity that voluntarily changes to the fair value-based method of accounting for stock-based employee compensation. It also amends the disclosure
provisions of that Statement to require prominent disclosure about the effects on reported net income of an entity's accounting policy decisions with respect to stock-based employee compensation.
Finally, this Statement amends APB Opinion No. 28,
Interim Financial Reporting
, to require disclosure about those effects in interim financial
information. The transition provisions of this statement will be effective for financial statements in fiscal years ending after December 15, 2002. The disclosure provisions of this statement
will be effective for financial reports containing financial statements for interim periods beginning after December 15, 2002. We plan to retain the intrinsic method to value stock options and
adopt only the disclosure requirement of SFAS 148 in our quarterly and annual financial statements.
In
November 2002, the FASB issued Interpretation No. 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others
. This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its
obligations under guarantees issued. The interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation
undertaken. The initial recognition and measurement provisions of the Interpretation are applicable to guarantees issued or modified after December 15, 2002 and are not expected to have a
material effect on our financial statements. The disclosure requirements are effective for financial statements of interim and annual periods ending after December 15, 2002.
Quantitative and Qualitative Disclosures About Market Risk
As of May 3, 2003, we had outstanding borrowings under our line of credit of $926,000. Our results of operations will be affected by interest rate changes
to the extent that borrowings are outstanding under the bank credit facility. However, we do not believe that a change of 100 basis points in interest rates would have a material effect on our results
of operations or financial condition.
30
BUSINESS
Overview
We are a specialty retailer offering distinctive private brand women's apparel in the classic and timeless colors of white and black. We target educated,
middle-to-upper income, youthful women between the ages 30 and 50 who lead active work and social lives and place a premium on contemporary, feminine clothing and a high level
of personalized service. Our goal is to make our customers "look and feel beautiful" by offering a unique assortment of quality and fashionable apparel designed for a woman's everyday and special
occasion needs. Our boutique-like stores are designed to highlight the distinctiveness of our merchandise, which together with our high level of personalized service, enhance customer
recognition and loyalty to our brand.
We
offer high quality, competitively priced separates and coordinated outfits, carefully selected with our customers' preferences and lifestyles in mind. Substantially all of our
merchandise is marketed under our White House -- Black Market private brand. Our merchandise strategy recognizes that white and black and related shades are essential to a
woman's wardrobe and emphasizes styles that are consistent with current fashion trends. We have developed a highly successful and productive store format that consistently produces strong unit
economics across a variety of retail settings, such as lifestyle centers, street front locations, and regional malls. As of April 30, 2003, we operated 96 stores located throughout the United
States, Puerto Rico, and the U.S. Virgin Islands.
Over
the past three years, we have refined our merchandise strategy, improved our operations, enhanced our infrastructure, and rapidly expanded our store base. Over the
three-year period ended fiscal 2002, we increased our store base from 60 to 92 and achieved a compound annual growth rate in net sales of 32.9%. Our comparable store sales gains averaged
11.5% per fiscal year during this period, increasing 13.1% in fiscal 2001 and 16.3% in fiscal 2002, and our operating income increased from $272,000 in fiscal 1999 to $6.8 million in fiscal
2002.
History
The White House, Inc. was founded in late 1985 by our Chairman, President, and Chief Executive Officer, Richard Sarmiento. Patricia Darrow-Smith, our
Executive Vice President, Merchandising, who joined us in early 1986, has been the creative force behind our merchandising strategy and brand development. The senior management team also includes
Michael Smith, our Vice President, Operations, who joined us in 1990, and Stephen Hirsch, our Vice President, Finance and Administration, and Chief Financial Officer, who joined us in 1999.
Our
first store was a 300 square foot boutique in Baltimore, Maryland, offering an all-white selection of apparel and other merchandise. By 1995, we had grown The White House
chain to 40 stores, featuring exclusively all-white apparel and accessories for women. In response to our customers' interest, we opened our first Black Market store,
featuring all-black apparel and accessories for women in 1995. In 1997, we began combining both concepts into a single store called
White House -- Black Market, which today represents substantially all of our stores and is our prototype for future expansion. We were initially funded by our founder and
his friends and family. In 1999, we raised capital from institutional private equity investors in order to repay debt and to provide growth capital.
Business Strategy and Competitive Differentiation
We know our customer and are dedicated to making her "look and feel beautiful."
We believe the
continued success of our brand will be driven by our commitment to making our customers "look and feel beautiful" by offering distinctive merchandise with a superior level of personalized service. We
have concentrated our marketing and merchandising efforts on women between the ages of 30 and 50
31
who
seek distinctive apparel in order to project a contemporary, feminine, and youthful self-image. Internally, we refer to our target customer as "Sydney" and believe she represents a
middle-to-upper income woman who is well-educated, active, and appearance-conscious. She considers herself to be feminine and sexy, with a youthful attitude, regardless of her
age. We believe Sydney looks to White House -- Black Market to provide her with clothing that is fashionable and appropriate for the occasion and enables her to express the
fun and original side of her personality and lifestyle.
We
believe that our target customer values our edited selection and is generally underserved by the broad offerings of department stores. In addition, other specialty stores have
increasingly targeted other segments, such as teens and plus-sizes, or customers with either more conservative or
trendier style preferences. We believe that women are increasingly demanding a youthful, feminine, and contemporary look regardless of age and that we are well-positioned to capitalize on
this demand.
We project a powerful brand identity through our distinctive merchandise concept.
Our brand identity
is based on providing our customers with a distinctive assortment of quality, competitively priced, fashionable apparel and accessories all in the classic and timeless colors of white and black. This
differentiated merchandise concept projects a powerful visual image within our stores and enables us to clearly communicate our unique brand identity. We believe that white and black and related
shades represent significant and essential components of our customers' wardrobes. By further differentiating our assortment with new designs and fabrications, we establish
White House -- Black Market as a highly relevant resource for our customers' everyday and special occasion needs, regardless of season, color trends, or regional
preferences. Over the three-year period ended fiscal 2002, our comparable store sales gains averaged 11.5% per fiscal year and our average sales per gross square foot increased from $468
in fiscal 1999 to $559 in fiscal 2002.
We have a proven and versatile store model that produces compelling returns.
The broad appeal of our
merchandise concept has enabled us to profitably operate our stores in diverse regions of the country, across climates, and in a variety of retail settings, including lifestyle centers, street front
locations, and regional malls. We believe this strategy reduces the risks of geographic or regional mall concentration and enhances our platform for future growth. Our market and site selection is
based on local demographics, population trends, traffic patterns, and the proximity of other retail stores as well as recreational destinations such as restaurants and movie theaters that appeal to
our target customers. Our store model for fiscal 2003 requires an average total investment of approximately $190,000 per store, inclusive of pre-opening costs, fixtures, equipment, leasehold
improvements, and inventory, but net of landlord allowances and vendor financing. Based on our store opening and operating experience, we expect our new stores opening in fiscal 2003 to produce a cash
payback in approximately 14 months and a cash return on invested capital of approximately 90% in their first full year of operation.
We have achieved superior financial results due to our centralized and disciplined operations.
Our
centralized merchandising and operating processes are designed to achieve a consistent, chainwide "one-store experience" and enable our sales associates to focus on serving our customers.
We facilitate frequent communication throughout our organization in order to quickly respond to changes in fashion trends and customer preferences. Our flexible third-party vendor sourcing strategy
and disciplined approach to inventory management are designed to achieve the proper balance between new, faster-turning merchandise and core items while controlling our aged inventory and markdowns.
We believe our operating discipline is a key factor in our historical ability to operate highly productive stores. In each of the last two fiscal years, our gross profit percentage exceeded 55% of our
net sales and our average annual inventory turnover rate exceeded 5.0 times.
32
Growth Strategy
We believe we are well-positioned to capitalize on our distinctive brand identity, open an increasing number of stores, and pursue our goal of
becoming a leading national chain in the women's apparel industry. Key elements of our growth strategy include the following:
Open New Stores.
We have demonstrated our ability to open new stores that provide compelling
investment returns in new markets and geographic territories and across a variety of retail settings. We opened 16 stores in fiscal 2002 and ended the year with 92 stores. In fiscal 2003, we plan to
open 22 stores and end the year with 111 stores. As of April 30, 2003, we have opened five stores and have signed leases for an additional ten stores. In fiscal 2004, we plan to open 25
to 30 stores and have identified 27 potential store sites, 12 of which have been approved by our site selection committee. The average size of our stores has increased modestly over the past several
years and, as of February 1, 2003, was 1,457 square feet. We plan to increase the size of our new store prototype to an average of 1,750 to 1,800 square feet. Based on our internal analysis, we
believe the potential exists for at least 400 White House -- Black Market stores nationwide.
Improve Store Productivity and Overall Profitability.
We believe we can continue to increase our
store sales productivity by implementing the following marketing and merchandising initiatives:
•
We
continuously review our merchandise offering to identify opportunities to increase sales productivity by increasing store-level inventory density, extending product lines
or categories, and promoting additional wardrobe selling.
•
To
date, our direct marketing efforts have consisted of sending periodic mailings offering selected discounts to certain customers and hosting VIP parties in our stores. In
the future, we plan to initiate a more efficient and measurable direct marketing program designed to communicate to a broader customer base on a more frequent basis and use more sophisticated
marketing vehicles that better communicate our distinctive product offering.
•
In
order to enhance our value proposition and brand loyalty, we plan to initiate a customer loyalty program designed to reward our frequent customers with price discounts or
other incentives. We are currently enhancing our point-of-sale and management information systems to facilitate more extensive customer data collection.
We
believe we have opportunities to further increase our operating margins in the future by leveraging store-level operating and corporate infrastructure costs over a larger sales base
and capitalizing on enhanced purchasing power.
Merchandising
Our merchandising objective is to develop a distinctive brand identity in the women's apparel marketplace by offering our customer a unique assortment of quality,
competitively priced, fashionable apparel and accessories in the classic and timeless colors of white and black. The key elements of our merchandise strategy to support this objective are as follows:
•
offer
our customer feminine, flattering, and stylish White House -- Black Market private brand merchandise;
•
differentiate
our merchandise by using a combination of market resources and key vendors that provide us with customized product designs;
•
maintain
a current merchandise profile by frequently introducing new styles and fabrications;
•
maintain
an on-going dialogue with our customers and sales associates in order to better understand and anticipate fashion trends and design preferences;
33
•
monitor
our sourcing, delivery, and sell-through levels by item and style in order to effectively manage inventory turnover and reduce markdowns;
•
facilitate
the easy coordinating of outfits or wardrobing through our merchandise presentation and customer assistance in order to increase average dollars and units per
transaction; and
•
provide
our customers with an attractive and intimate shopping environment differentiated by our distinctive merchandise offering, presentation, boutique-like store setting,
and personalized customer service.
Merchandise Organization and Process.
Our merchandise organization is led by our Executive Vice
President, Merchandising, Patricia Darrow-Smith. The merchandise group consists of six buyers who report to our General Merchandise Manager and one merchandise planner and four analysts who report to
our Director of Planning and Allocation. Our buyers are responsible for trend identification, sourcing, buying, and pricing of each merchandise category. Our merchandise planners and analysts are
responsible for overall inventory management, markdowns, and allocation of merchandise to individual stores. Our technical and quality assurance group consists of a technical designer and two
assistant technical designers and is responsible for the quality, fit, color, and consistency of our products.
Our
merchandise calendar consists of four distinct selling seasons, supported by additional themes or collections developed by our merchandise group. These themes and collections are
developed after considering market trends, seasonal fashions, and feedback from our customers. We collaborate with our vendors to design products to meet our color, style, fabrication, fit, and
quality specifications. We currently do not employ an in-house design staff.
Our
merchandise planning group is responsible for merchandise allocation and utilizes an integrated allocation software system. The allocation process involves analysis of past sales
performance by store and category, current trends, and seasonality, as well as consideration of collections and desired merchandise flow. Once our merchandise is in our stores, buyers monitor sales
and trend data to make product and buying decisions, while analysts monitor sell-through, inventory levels and aging to determine replenishment, store transfers, and markdowns.
Products.
Our clothing is fashionable and contemporary and the fit is comfortable, yet styled to
enhance the figure of the body-conscious woman. Sizes range from zero to 14, with the majority of our sales between sizes zero and eight. We utilize both natural and synthetic fabrics,
including cotton, linen, tencel, microfibers, and matte jersey. Our apparel has unique textures and patterns, ranging from solids to prints, stripes, and color blocking. Our collections encourage
wardrobe selling by offering coordinated styles, fabrics, texture, and fit within our white and black theme. In order to maintain a fresh look in our stores, we continually introduce new items and
replenish our stores up to five times per week. While the designs, fabrications, and styles of our products are modified frequently, we believe our singular focus on our target customer and commitment
to our white and black color palette reduce the risks inherent in changing color, fit, and finish trends.
Our
merchandise is competitively priced, with typical price ranges as follows: (i) bottoms from $58 to $98, (ii) tops from $28 to $68, (iii) sweaters from $48 to
$88, and (iv) dresses from $88 to $128. In fiscal 2002, approximately 83% of our sales mix consisted of apparel categorized generally as sportswear, dresses, and outerwear. Accessories,
including bags, scarves, shoes, belts, sunglasses, jewelry, and gifts, represented approximately 17% of our net sales in fiscal 2002.
Product Sourcing.
A key element of our merchandise strategy is to source our private brand
merchandise from a wide variety of independent third-party vendors. While we have established relationships with more than 100 different vendors, we rely on five to seven core vendors. These vendors
supply us with approximately one-third of our total purchases and collaborate with us for trend analysis and our private brand merchandise design. We believe that approximately 55% of our
34
merchandise
by dollar volume in fiscal 2002 was produced domestically by our vendors and their sources, with the balance manufactured by third parties in Asia, Latin America, Canada, Europe, and
Africa. Because our domestic sourcing has the inherent advantages of shorter lead times, more consistent delivery, smaller order quantities, and quicker response to changes in fashion and business
trends, we have sought to source a significant amount of our merchandise from domestic vendors. As we grow, we expect to develop in-house design capabilities and source a portion of our
product directly from third-party manufacturers. We plan, however, to maintain a balance between vendor-based and direct sourcing, in order to preserve flexibility and design creativity while
increasing production capacity. We believe that this sourcing strategy will provide an opportunity to improve our gross profit percentage in the future.
Marketing and Visual Merchandising
We believe that the distinctive visual appeal of our stores, together with our high-visibility locations are integral to our marketing strategy. To
date, our direct marketing efforts have consisted of sending periodic mailings to certain customers offering selected discounts and hosting VIP parties in our stores. We have developed a database of
over 300,000 names gathered from our point-of-sale system and website.
In
the future, we plan to utilize a broader mix of channels and media, including direct mail, e-commerce, email, magazines, and billboard, in order to communicate to a
broader customer base on a more frequent basis. We have recently added a Director of Branding to our merchandising group who is responsible for maintaining a consistent brand message through all
channels visible to our customers. In order to enhance our value proposition and brand loyalty, we also plan to initiate a customer loyalty program designed to reward our best customers with price
discounts, gifts, and other merchandise incentives. We are currently in the process of upgrading our point-of-sale and management information systems to accommodate more
extensive customer data collection. We expect to introduce this new customer loyalty program in fiscal 2004.
Retail Stores
Store Design.
Our stores are designed to highlight our distinctive merchandise and to reinforce our
brand identity. White House -- Black Market stores are bright and open, with a clean, contemporary look. We feature signature elements such as chandeliers, columns, and
archways, and utilize tile floors, painted wood fixtures, and textured white walls. Our relatively small stores have a warm and intimate boutique feel. Our merchandise is displayed by collection in a
coordinated manner. Our merchandise display techniques are designed to facilitate wardrobe selling and make a clear statement about our merchandise focus for each season. Our store layout and
merchandise presentation are consistent chain-wide, based on planning guidance established by our visual merchandising department. Our new merchandise collections are featured in our
windows and at front-of-the-store displays and are changed frequently to highlight our current product focus. The average size of our stores has increased modestly
over the past several years and, as of February 1, 2003, was 1,457 square feet. We plan to increase the size of our new store prototype to an average of 1,750 to 1,800 square feet.
Market and Store Location Strategy.
We locate our stores in mid- to large-sized
metropolitan markets, generally with a minimum population of 500,000. Our stores are geographically dispersed between northern and southern climates and have proven to be similarly successful in all
regions of the
35
country
and in a variety of retail settings, such as lifestyle centers, street front locations, and regional malls. Our stores by location type as of April 30, 2003 were as follows:
Number of Stores
Average Store Size (Sq. Ft.)
Lifestyle Centers
Fashion-oriented centers near recreational destinations such as restaurants and movie theaters
48
1,593
Street Front Locations
Street front locations in cities, towns, villages, and resort areas
21
1,537
Regional Malls
Major malls, typically anchored by two or more full-line department stores
27
1,296
Our
specific site selection criteria considers such factors as local demographics (including age, education, and income levels), population trends, traffic patterns, and site location
visibility. We prefer to locate our stores near other retail stores and recreational destinations such as restaurants and movie theaters that appeal to our customers.
We
have a standardized and disciplined process to analyze and select our new markets and sites and to negotiate lease terms. Our site selection analysis is based on data provided by an
independent market research firm. We use a commercial real estate consultant to identify and recommend potential sites. Final site approval is required by our real estate committee comprised of our
Chief Executive Officer, Chief Financial Officer, Vice President of Store Operations, and two independent members of our Board. In the future, we plan to develop in-house real estate
capabilities and are currently in the process of recruiting a Director of Real Estate.
Our
lease terms typically range from seven to ten years and approximately 30% of our leases contain one or more renewal options. Substantially all of our leases have percentage rent
clauses which require the payment of additional rent based on the store's net sales in excess of a certain thresholds and approximately 18% of our leases have early cancellation clauses, which permit
the lease to be terminated if certain sales levels are not met in specific periods. We actively review the performance of our existing stores to identify under-performing stores. Over the past three
years we have closed a total of seven stores and plan to close three stores in fiscal 2003, one of which has already closed. During fiscal 2004, we intend to close one store and consolidate six of our
white and black only single concept stores into three White House -- Black Market stores. In fiscal 2005, we plan to consolidate the remaining six single concept stores
into three White House -- Black Market stores.
36
Existing Store Locations.
As of April 30, 2003, we operated 96 stores in 30 states, the
District of Columbia, Puerto Rico, and the U.S. Virgin Islands, as depicted on the following map.
[Map
of U.S. and Puerto Rico with dots illustrating store locations.]
The
following store list shows the number of our stores in each state or territory in which we operated as of April 30, 2003:
Number of Stores by Location
Alabama
1
Arizona
3
California
14
Colorado
1
Connecticut
1
Delaware
1
District of Columbia
2
Florida
18
Georgia
4
Hawaii
3
Illinois
3
Kansas
1
Kentucky
1
Louisiana
2
Maryland
5
Michigan
3
Minnesota
1
Missouri
2
Nevada
2
New Jersey
2
New Mexico
1
New York
2
North Carolina
4
Ohio
1
Oklahoma
1
Pennsylvania
1
Puerto Rico
1
Rhode Island
1
South Carolina
4
Texas
5
Virginia
1
U.S. Virgin Islands
3
Utah
1
Total:
96
Store Operations
We believe our centralized merchandising and operating processes provide a consistent, chain-wide, "one-store experience" and enable our
store managers and sales associates to focus on providing our
37
customers
with a high level of service and assistance. Our hiring, training, and compensation programs as well as our internal management and communication processes are designed to reinforce our
service and selling-oriented culture. To accomplish this, we seek to hire personable and enthusiastic managers and sales associates, provide them with frequent feedback and training, and offer them
performance-based compensation.
Organization and Store Management.
Our field operations are organized into ten districts. Each
district is run by a district manager, typically responsible for eight to 12 stores and who reports to our Director of Store Operations. District managers are responsible for hiring and training store
managers and assistant managers, providing consistency of merchandise presentation across our stores, communicating corporate information to the stores, and monitoring sales and profit performance.
Store managers are responsible for hiring, training, and managing sales associates, visual merchandising, maintaining the cleanliness of our stores, and monitoring store performance. Our average store
has one manager and three to six sales associates. We utilize part-time employees to provide us greater flexibility in managing payroll hours and expense.
Our
management process is based on frequent and open communication throughout all areas and levels of our organization. Senior management monitors store performance and other business
trends through daily sales, profitability, and operating reports. District managers receive weekly store performance reports and have daily contact and weekly meetings with store operations
executives. Our store managers also receive weekly store sales reports and monthly profitability and operating reports and meet regularly with their district managers.
Hiring, Training, and Compensation.
We seek to hire store managers who have experience with other
women's apparel retailers or by promoting our assistant managers and sales associates. We compensate our district and store managers with a salary plus incentive bonuses based on sales performance.
Our sales associates are paid on an hourly basis plus commissions on sales, receive additional incentives to encourage wardrobe selling, and receive discounts on merchandise to encourage them to wear
our apparel and reflect our image on the selling floor. We believe our store and district managers have a low turnover rate due to our competitive compensation package and attractive work environment.
Our district and store managers average 6.4 and 2.1 years experience, respectively, with us. Ten of our store managers also act as corporate trainers, conducting training programs for other
store managers on an
ongoing basis and new store associates prior to store openings. New store managers attend a week-long training session at our corporate headquarters covering store operations and
financials, customer service, and corporate functions such as merchandising and distribution.
Distribution
We currently operate a 30,400 square foot distribution facility in Glen Burnie, Maryland, which also houses our corporate headquarters. In order to accommodate
our current needs and planned growth, we have identified a site for a new 100,000 square foot central distribution and corporate headquarters facility in the greater Baltimore, Maryland area and have
initiated discussions concerning lease terms. We expect this facility to be fully operational in late fiscal 2003 or early fiscal 2004 and to incorporate improved automation and scanning technology
not currently utilized by us. We expect that our new distribution facility will have the capacity, without modification or enhancement, to service approximately 250 stores.
We
estimate that approximately 95% of our merchandise is currently pre-ticketed by our vendors, which allows us to process merchandise more quickly and reduce labor costs.
Our merchandise is generally shipped to our stores within two days of receipt at the distribution center. We rely on third-party carriers to deliver our merchandise from our distribution facility to
our stores. Each store receives three to five shipments per week and merchandise is available for sale in our stores the same day it is received.
38
Management Information Systems
Our management information systems and electronic data processing systems provide a range of retail, financial, and merchandising applications. We utilize
industry standard software systems to provide various functions related to point-of-sale, inventory management, planning, distribution, and financial reporting. We communicate
with each store on a daily basis to gather information on sales, merchandise transfers, and sales trends and to transmit details regarding price changes and pending deliveries. By collecting our sales
information daily from each store's point-of-sale terminal, we are able to implement merchandising decisions, pricing changes, and inventory allocation on a timely basis.
Properties
Stores.
The following table, which covers all 96 of our stores existing as of April 30, 2003,
identifies: (i) the number of leases that will expire each year if we do not exercise renewal options, and (ii) the number of leases that will expire each year if we exercise all of our
renewal options (assuming in each case the lease is not otherwise terminated by either party pursuant to any other provision thereof):
Fiscal Year
Number of Leases Expiring if No
Renewal Options are Exercised
Number of Leases Expiring if All
Renewal Options are Exercised
2003
4
4
2004
12
11
2005
9
8
2006
11
5
2007
5
2
After 2007
55
66
Distribution Center and Corporate Headquarters.
Our current distribution center and principal
executive offices are located at 6711 Baymeadow Drive, Glen Burnie, Maryland 21060. The facility initially opened in November 1999 and currently consists of a distribution center and corporate
and administrative headquarters that comprises approximately 30,400 square feet, consisting of approximately 19,400 square feet for distribution and approximately 11,000 square feet for corporate
and administrative offices. Our lease on these premises expires in July 2009, but may be terminated early at our option in July 2004.
As
more fully described above under "—Distribution," our existing distribution center and headquarters facility does not have adequate available space to accommodate our
current needs and anticipated growth. We have identified and expect to lease a new distribution center and headquarters facility in Maryland to replace our existing facility, which we would attempt to
sublet for the remainder of its lease term.
Competition
We compete with a variety of retailers including other specialty stores, department stores, mass merchandisers, and direct marketers. Our competitors include Ann
Taylor, Anthropologie, Banana Republic, bebe, Caché, Chico's, Christopher & Banks, Coldwater Creek, J. Jill, and Talbots. We also compete with national and regional department
stores, including Bloomingdale's, Marshall Field's, Neiman Marcus, Nordstrom, and Saks Fifth Avenue.
The
women's retail apparel industry is highly competitive and given relatively low barriers to entry, we expect competition in our markets to increase. The primary competitive factors in
our markets include brand recognition, product quality, style, price, store location and ambiance, and customer service levels.
39
Many
of our competitors are considerably larger and have substantially greater financing, marketing, and other resources. We cannot assure you that we will be able to compete
successfully with them in the future, particularly in new markets.
Regulation of Imports
A significant amount of the apparel and accessories we sell are manufactured outside of the United States. As a result, our business remains subject to the
various risks of doing business abroad and to the imposition of United States customs duties. In the ordinary course of our business, we may from time to time be subject to claims by the United States
Custom Service for tariffs, duties, and other charges.
The
pricing of imports from certain countries may also be affected by treaties, trade relations, U.S. government legislation, and decisions of multi-national organizations such as the
World Trade Organization. Acts or decisions by any of these or similar institutions could change the pricing of imports in all categories, including apparel. We cannot predict or control the acts or
decisions of these institutions. Because a significant amount of our merchandise is imported, we could be adversely affected by these acts or decisions.
Intellectual Property and Proprietary Rights
We believe that our trademarks and other proprietary rights are important to our success. This is particularly the case for the
"White House-- Black Market" marks because the name "White House-- Black Market" is well known by our customers. Accordingly, we intend to maintain these
marks and the related registrations and applications. We are not aware of any claims of infringement or other challenges to our rights to use these marks in any jurisdiction in which we currently
operate.
We
have registered "White House -- Black Market" in the United States. Each of the registrations related to this name has a term of ten years and each is
renewable indefinitely if the mark is still in use in commerce at the time of renewal. We also have additional trademark rights and applications.
We
have registered "White House -- Black Market" and "The White House Black Market" in certain jurisdictions outside the United States, including Australia,
Bermuda, The European Community, Mexico and The Netherlands Antilles, and have applications for certain trademarks pending in various other foreign jurisdictions. The various applications in foreign
jurisdictions have been made in order to provide us with the ability to expand our operations outside the United States if and when management determines such an expansion is viable and in the best
interests of our stockholders.
We
take actions to establish and protect our trademarks and other proprietary rights, however we cannot assure you that others will not imitate our products or infringe on our
intellectual property rights. In addition, we cannot assure you that others will not resist or seek to block the sale of our products as infringements of their trademark and proprietary rights. In
certain jurisdictions, other entities may have rights to names that could limit our ability to expand in such jurisdictions. If we fail to obtain or perfect trademark, ownership, or license rights, it
would limit our ability to expand into certain international markets or enter such markets with the White House -- Black Market name, and to capitalize on the value of our brand.
Employees
As of April 30, 2003, we employed 693 persons, approximately 46% of whom were full-time employees and approximately 54% of whom were
part-time employees. The number of part-time employees fluctuates during peak selling periods.
As of the above date, approximately 90% of our employees worked in our retail stores and in direct field supervision, 2% worked in our distribution center, and 8% worked in corporate headquarters.
All
employees receive discounts on the merchandise we sell. None of our employees are represented under a collective bargaining agreement, and we are not aware of any efforts or plans to
organize any of our employees. We have never had a work stoppage and we consider our relations with our employees to be good.
Legal Proceedings
We are not a party to any litigation or other legal proceedings that we believe could reasonably be expected to have a material adverse effect on our business or
financial condition.
40
MANAGEMENT
Executive Officers and Directors
The following table sets forth, as of April 30, 2003, certain information concerning our executive officers and directors:
Name
Age
Position(s)
Richard D. Sarmiento
58
Chairman, President, Chief Executive Officer, and Director
Patricia Darrow-Smith
41
Executive Vice President, Merchandising
Stephen L. Hirsch
50
Vice President, Finance and Administration, and Chief Financial Officer
F. Michael Smith
47
Vice President, Operations
Craig J. Foley
(1)(2)(3)
59
Director
Howard E. Goldstein
(1)(2)
44
Director
Darryl Hartley-Leonard
(2)
58
Director
Sally Frame Kasaks
(2)(3)
58
Director
(1)
Member
of the audit committee
(2)
Member
of the compensation committee
(3)
Member
of the nominating and corporate governance committee
Richard D. Sarmiento.
Mr. Sarmiento founded
White House -- Black Market in 1985 and has served as a director and as our President and Chief Executive Officer since our inception. Mr. Sarmiento has served as
our Chairman since May 2003. Prior to founding White House -- Black Market, Mr. Sarmiento worked for the Hyatt Hotels Corporation. He
received a B.A. from the University of Kansas.
Patricia Darrow-Smith.
Ms. Darrow-Smith is our Executive Vice President, Merchandising, and
has served as our most senior merchandising executive since 1986. Ms. Darrow-Smith previously worked for the Hyatt Hotels Corporation. She received a B.A. from the College of Notre Dame of
Maryland. Ms. Darrow-Smith is married to F. Michael Smith, our Vice President, Operations.
Stephen L. Hirsch.
Mr. Hirsch has served as our Vice President, Finance and Administration,
and Chief Financial Officer since July 1999. From September 1996 to June 1999, Mr. Hirsch was Senior Vice President, Finance and Administration, and Chief Financial Officer
of Pic 'N Pay Stores, Inc., a footwear and apparel retail chain that filed a voluntary petition for bankruptcy in 2000, approximately ten months following Mr. Hirsch's departure
from the company. Mr. Hirsch holds a B.A. from the University of Maryland and a M.B.A. from the University of Baltimore.
F. Michael Smith.
Mr. Smith is our Vice President, Operations, and has served as our most
senior operations executive since joining us in September 1990. Mr. Smith holds a B.A. from Drew University. Mr. Smith is married to Patricia Darrow-Smith, our Executive Vice
President, Merchandising.
Craig J. Foley.
Mr. Foley has served as a director since January 1999. Mr. Foley
has been affiliated with Phillips-Smith-Machens Venture Partners, a private equity investment firm, since April 1994 and has served as a general partner of Wickham Capital Partners, a private
investment firm, since February 1994. Mr. Foley is also a director of Starbucks Corporation.
Howard E. Goldstein.
Mr. Goldstein has served as a director since January 1999.
Mr. Goldstein is a general partner of INVESCO Private Capital, Inc., a private equity firm, where he has worked since 1984.
41
Darryl Hartley-Leonard.
Mr. Hartley-Leonard has served as a director since April 1999.
Mr. Hartley-Leonard is Chief Executive Officer of PGI Inc., an event production and marketing company. Mr. Hartley-Leonard also serves as a director of Jones Lang LaSalle
Incorporated, Brookdale Living Communities, and Evanston Northwestern Healthcare, and as a member of the board of trustees of LaSalle Hotel Properties.
Sally Frame Kasaks.
Ms. Kasaks has served as a director since May 1999.
Ms. Kasaks has been President of ISTA, Inc., a marketing and retail consulting firm, since 1996. Prior to that, Ms. Kasaks served as Chairman and Chief Executive Officer at Ann
Taylor Stores, Inc. from February 1992 to August 1996, President and Chief Executive Officer at Abercrombie & Fitch, a division of The Limited, Inc., from February 1989 to
February 1992, and Chairman and Chief Executive Officer of The Talbots, Inc. from November 1985 to September 1988. Ms. Kasaks is also a director of Pacific Sunwear
of California, Inc., Tuesday Morning Corporation, The Children's Place Retail Stores, Inc., Grupo Cortefiel, S.A., Coach, Inc., and Crane and Company.
We
are currently recruiting additional independent directors to serve on our board. We expect to add at least one independent director prior to completion of the offering.
Board Composition
Our articles of incorporation and bylaws currently authorize five directors. Upon completion of the offering, our amended and restated articles of incorporation
and bylaws will provide that our board will be divided into three classes, Class I, Class II and Class III, with each class serving staggered
three-year terms. The Class I directors, Mr. Goldstein and Ms. Kasaks, will stand for reelection at our 2004 annual meeting of stockholders. The Class II
directors, Messrs. Foley and Hartley-Leonard, will stand for reelection at our 2005 annual meeting of stockholders. The Class III director, Mr. Sarmiento, will stand for
reelection at our 2006 annual meeting of stockholders. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly
as possible, each class will consist of one-third of the directors. This staggered classification of the board of directors may have the effect of delaying or preventing changes in control
or management.
Board Committees
Our board of directors has a compensation committee, an audit committee, and a nominating and corporate governance committee.
Compensation Committee.
Our compensation committee reviews and makes recommendations to the board
regarding the compensation and benefits provided to all of our employees. As part of the foregoing, the compensation committee administers our 1999 Stock Option Plan and will administer our 2003 Stock
Option Plan. The current members of the compensation committee are Messrs. Goldstein, Foley and Hartley-Leonard and Ms. Kasaks. A subcommittee of the compensation committee, the
executive compensation subcommittee, reviews and makes recommendations to the board regarding the compensation and benefits provided executive officers and directors including stock compensation. The
executive compensation subcommittee is comprised of Messrs. Goldstein, Foley, and Hartley-Leonard.
Audit Committee.
Our audit committee reviews and monitors our internal accounting procedures and
reviews the results and scope of the annual audit and other services provided by our independent accountants. The audit committee also consults with our management and our independent auditors prior
to the presentation of financial statements to stockholders and, as appropriate, initiates inquiries into aspects of our financial affairs. The Audit Committee is also charged with overseeing our
compliance with legal and regulatory requirements, including our disclosure controls and procedures. In addition, the audit committee is responsible for considering and approving the appointment of,
and
42
reviewing
fee arrangements with, our independent auditors and approving any non-audit services provided by our independent auditors. The current members of the audit committee are
Messrs. Foley and Goldstein.
Nominating and Corporate Governance Committee.
Our nominating and corporate governance committee
makes recommendations to the board concerning nominations to the board, including nominations to fill a vacancy (including a vacancy created by an increase in the board of directors). The nominating
and corporate governance committee will consider nominees for directors nominated by stockholders
upon submission in writing to our corporate secretary of the names of such nominees in accordance with our bylaws. This committee is also charged with shaping corporate governance policies and
practices and monitoring compliance with such policies. The current members of the nominating and corporate governance committee are Mr. Foley and Ms. Kasaks.
Director Compensation
Our non-employee directors receive a fee of $1,500 for attendance in person at each board meeting or board committee meeting and a fee of $500 for attendance by
teleconference at such meetings. In addition, our directors are reimbursed for all reasonable out-of-pocket expenses incurred in connection with their attendance at board and
board committee meetings. From time to time, certain directors who are not employees of White House -- Black Market have received grants of options to purchase shares of
our common stock. In March 2002, we granted non-qualified options to purchase 3,077 shares of our common stock at an exercise price of $2.60 per share to each of Howard Goldstein,
Craig Foley, and Darryl Hartley-Leonard. We granted non-qualified options to purchase 6,154 shares of our common stock to Sally Frame Kasaks in March 2002 at an exercise price of
$2.60 per share. We plan to engage an independent consultant to advise us regarding compensation of our directors in the future.
Compensation Committee Interlocks and Insider Participation
During fiscal 2002, the compensation committee was comprised of Messrs. Goldstein and Hartley-Leonard and Ms. Kasaks. None of such
persons serves, or has at any time served, as an officer or employee of White House -- Black Market. None of our executive officers has served as a member of the
compensation committee, or other committee serving an equivalent function, of any other entity, one of whose executive officers served as a member of our compensation committee. Following the
offering, our compensation committee will be comprised solely of non-employee independent directors.
Indemnification and Limitation on Liability
Our articles of incorporation provide that we will indemnify our current and former officers and directors against any and all liabilities and expenses incurred
in connection with their services in such capacities to the maximum extent permitted by Maryland law, as from time to time amended. The articles of incorporation further provide that the right to
indemnification also includes the right to be paid by us for expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent permitted by Maryland
law.
Our
articles of incorporation also provide that we may, by action of our board of directors, provide indemnification to any of our employees and agents and any other persons serving at
our request as a
director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise to such extent and to such effect as is permitted by Maryland law
and as our board of directors determines to be appropriate.
We
have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of
White House -- Black Market, or is or was serving at our request as a director, officer, employee, or agent of another corporation, partnership, joint venture,
43
trust,
or other enterprise against any expense, liability, or loss incurred by such person in any such capacity or arising out of his status as such, whether or not we would have the power to
indemnify such person against such liability under Maryland law.
Our
articles of incorporation authorize our board of directors to make further provision for indemnification of directors, officers, employees, and agents by bylaw, resolution, or
agreement. We expect to enter into agreements with each of our directors and executive officers pursuant to which we have agreed to indemnify such persons to the maximum extent permitted by Maryland
law. These agreements also require us to maintain directors' and officers' liability insurance for the benefit of each of these persons and to advance any expenses incurred by any such person in any
proceeding in which such person is entitled to indemnification.
No
amendment, modification, or repeal of our articles of incorporation, nor the adoption of any additional provision of the articles of incorporation nor, to the fullest extent permitted
by Maryland law, any amendment, modification, or repeal of law will eliminate or reduce the effect of the provisions in the articles of incorporation limiting liability or indemnifying certain persons
or adversely affect any right or protection then existing thereunder in respect of any acts or omissions occurring prior to such amendment, modification, repeal, or adoption.
The
articles of incorporation further provide that a director will not be personally liable for monetary damages to us or our stockholders, except to the extent such exemption from
liability or limitation thereof is not permitted under Maryland law. Maryland law does not permit the restriction or limitation of liability of directors and officers to the extent that:
•
the
director or officer received an improper benefit or profit in money, property, or services; or
•
a
judgment or other final adjudication adverse to the director or officer is entered in a proceeding based on a finding in the proceeding that the director's or officer's
action, or failure to act, was the result of active and deliberate dishonesty and was material to the cause of action adjudicated in the proceeding.
This
limitation on liability applies to events occurring at the time the person serves as a director or officer, regardless of whether the person is a director or officer at the time of
any proceeding in which liability is asserted.
With
respect to the indemnification of directors and officers for liabilities arising under the Securities Act, the SEC has opined that this indemnification is against public policy, as
expressed in the Securities Act, and is therefore unenforceable.
44
Executive Compensation
The following table sets forth information concerning the compensation we paid to our chief executive officer and each of our other executive officers whose total
annual compensation exceeded $100,000 (the "named executive officers") during fiscal 2002.
Summary Compensation Table
Annual Compensation
Long-Term
Compensation Awards
Name and Principal Position
Fiscal
Year
Salary
Bonus
Other Annual
Compensation
Securities Underlying
Options
Richard D. Sarmiento
Chairman, President, and Chief Executive Officer
2002
$
226,923
$
40,303
$
30,326
(1)
5,230
Stephen L. Hirsch
Vice President, Finance and Administration, and Chief Financial Officer
2002
171,731
23,030
25,578
(2)
5,230
Patricia Darrow-Smith
Executive Vice President, Merchandising
2002
166,923
28,788
—
(3)
5,230
F. Michael Smith
Vice President, Operations
2002
140,096
23,030
23,493
(4)
5,230
(1)
Includes
(i) $13,478 in premiums for life insurance of which Mr. Sarmiento is the beneficiary and (ii) $10,021 for a car allowance paid for Mr. Sarmiento
by us. The balance of the other annual compensation is from reimbursements for medical expenses and matching contributions to our 401(k) plan.
(2)
Includes
(i) $7,212 in premiums for life insurance of which Mr. Hirsch is the beneficiary, (ii) $7,917 for a car allowance paid to Mr. Hirsch by us,
(iii) $1,844 for car insurance paid for Mr. Hirsch by us, and (iv) $6,460 for payment by us of medical expenses incurred by Mr. Hirsch. The balance of the other annual
compensation is from matching contributions to our 401(k) plan.
(3)
Value
of perquisites and other personal benefits for Ms. Darrow-Smith do not exceed the lesser of $50,000 or 10% of her total annual salary and bonus.
(4)
Includes
(i) $7,896 in premiums for life insurance of which Mr. Smith is the beneficiary, (ii) $7,917 for a car allowance paid to Mr. Smith by us, and
(iii) $7,175 for reimbursement by us of medical expenses incurred by Mr. Smith. The balance of the other annual compensation is from matching contributions to our 401(k) plan.
Option Grants in Fiscal 2002
The following table provides information concerning grants of options to purchase our common stock that we made to our named executive officers during fiscal
2002. We did not grant stock appreciation rights to these individuals during fiscal 2002. All of the options were granted under our 1999 Stock Option Plan. The potential realizable value calculation
assumes that the value of the common stock appreciates at the indicated annual rate (compounded annually) from the grant date until the expiration of the option term and is calculated in accordance
with SEC rules. Potential realizable value does not represent our estimate or projections of future stock price performance. The
45
assumed
initial public offering price is higher than the estimated fair market value on the date of grant, and the potential realizable value of the option grants would be significantly higher than
the numbers shown in the table if future stock prices were projected to the end of the option term by applying the same annual rates of stock price appreciation to the initial public offering price.
Percent
of Total
Options
Granted in
2002
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
(3)
Number of
Securities
Underlying
Options Granted
(1)
Name
Exercise Price
($/Share)
(2)(3)
Expiration
Date
0%
5%
10%
Richard D. Sarmiento
5,230
8
%
$
2.86
5/01/2007
$
6,799
$
12,810
$
20,082
Stephen L. Hirsch
5,230
8
2.60
5/01/2012
8,159
21,842
42,834
Patricia Darrow-Smith
5,230
8
2.86
5/01/2007
6,799
12,810
20,082
F. Michael Smith
5,230
8
2.86
5/01/2007
6,799
12,810
20,082
(1)
The
options become exercisable in annual cumulative installments of 20%, commencing one year from the date of grant, with full vesting occurring on the 5th anniversary date of the
date of grant.
(2)
The
exercise price was determined by our board of directors on the date of grant taking into account the purchase price paid by investors for shares of our Class C common
stock, the liquidation preferences and other rights, privileges, and preferences associated with the Class C common stock, and an evaluation by the board of directors of our revenue, operating
history, and prospects. The exercise price may be paid in cash, in shares of our common stock valued at fair market value on the exercise date, or through a cashless exercise procedure involving a
same-day sale of the purchased shares.
(3)
For
purposes of calculating the potential realizable value at assumed annual rates of stock price appreciation, the revised, estimated fair market value of our common stock on the
date of grant is $4.16 per share. Potential realizable values are computed by (i) multiplying the number of shares of common stock subject to a given option by the revised fair market value on
the date of grant, (ii) assuming that the aggregate stock value derived from that calculation compounds annually for the entire term of the option and (iii) subtracting from that result
the aggregate option exercise price.
In
May 2003, we granted options to purchase an aggregate of 80,615 shares of our common stock at a weighted average exercise price of $12.58 per share to certain employees and directors.
Among the employees receiving these grants were Messrs. Sarmientio, Hirsch, and Smith, and Ms. Darrow-Smith, who each was granted options to purchase 13,231 shares.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table provides summary information regarding options held by our Chief Executive Officer and named Executive Officers in fiscal 2002. The value of
unexercised in-the-money options at fiscal year end is calculated using the difference between the option exercise price and the estimated fair market value at
February 1, 2003, which has been deemed to be $10.24 per share, multiplied by the number of shares underlying the option. An option is in-the-money if the fair market
value of the common stock subject to the option is greater than the exercise price. The assumed initial public offering price of $    per share is higher than the estimated fair market
value at fiscal year end, and the
46
value
of unexercised options would be higher than the numbers shown in the table if the value were calculated by subtracting the exercise price from the initial public offering price.
Number of Securities
Underlying Unexercised
Options at Fiscal year End
Value of Unexercised
in-the-Money Options at Fiscal Year End
(1)
Name
Shares
Acquired on
Exercise
Value
Realized
Exercisable
Unexercisable
Exercisable
Unexercisable
Richard D. Sarmiento.
—
$
—
—
5,230
$
—
$
38,597
Stephen L. Hirsch
—
—
24,977
44,235
190,832
337,955
Patricia Darrow-Smith
—
—
—
5,230
—
38,597
F. Michael Smith
—
—
—
5,230
—
38,597
(1)
The
fair market value of our common stock at the end of fiscal 2002 was estimated by the board of directors on the basis of the purchase price paid by investors for shares of our
Class C common stock (taking into account the liquidation preferences and other rights, privileges, and preferences associated with the Class C common stock) and an evaluation by the
board of our revenue, operating history, and prospects.
1999 Stock Option Plan
The 1999 Stock Option Plan will be terminated as of the date of the completion of this offering. Such termination will not affect any option previously granted
under the 1999 Stock Option Plan. Shares available for future issuance under the 1999 Stock Option Plan will be carried over to the 2003 Stock Option Plan described below.
On
May 21, 1999, we adopted our 1999 Stock Option Plan (the "1999 Stock Option Plan"), for the purpose of promoting our long-term growth and profitability by
(i) providing key people with incentives to improve stockholder value and contribute to our growth and financial success, and (ii) enabling us to attract, retain, and reward talented and
skilled persons for positions of substantial responsibility. Our stockholders approved the 1999 Stock Option Plan as of May 1999. We use stock options as a component of compensation for our
officers and key employees.
Shares Reserved.
A maximum of 307,692 shares of common stock is available and reserved for issuance
under the 1999 Stock Option Plan. The 1999 Stock Option Plan has been amended, subject to
stockholder approval, to increase the number of shares available under the plan by 615,385 to a total of 923,077.
Administration.
The compensation committee of our board of directors administers the 1999 Stock
Option Plan. The committee has the sole discretion to make all decisions and take all actions relating to the interpretation, administration, and operation of the 1999 Stock Option Plan. The committee
has the discretion to determine who will receive options, what type of option it will be, how many shares will be covered by the option, what the vesting requirements will be, if any, and what the
other features, terms, and conditions of each option will be. The compensation committee may also reprice the exercise price of outstanding options to the then current fair market value of the
underlying stock by accepting the surrender of outstanding options and substituting new options and modify outstanding awards in other ways.
Eligibility.
The committee may grant options to our full-time employees, officers,
members of our board of directors, subcontractors, and outside consultants.
Types of Award.
The 1999 Stock Option Plan provides for the issuance of incentive stock options and
non-statutory stock options to purchase shares of our common stock. Incentive stock options may be granted to employees and may qualify for favorable tax treatment under Section 422 of the
Internal Revenue Code of 1986, as amended ("Code") if certain requirements are satisfied. Non-statutory stock options do not qualify for such favorable tax treatment.
47
Exercise Price.
The exercise price for options granted under the 1999 Stock Option Plan may
not be
less than 100% of the fair market value of our common stock on the option grant date.
Transferability.
Incentive stock options granted under the 1999 Stock Option Plan are not
transferable by the optionee except by will or the laws of descent and distributions in the event of the optionee's death. The 1999 Stock Option Plan has been amended to allow transfer of nonstatutory
stock options to certain family members and other transferees permitted by the compensation committee.
Vesting and Exercise.
Options vest (that is, become exercisable) at the time or times determined by
the compensation committee. The Company may make or guarantee loans to assist grantees in exercising options and satisfying any related tax withholding obligations. In most cases, our options vest
over the five-year period following the date of grant. Options generally expire ten years after they are granted, except that they generally expire earlier if the optionee's service
terminates earlier. Payment of the exercise price may be made in cash or by any other means the compensation committee may prescribe, including, but not limited to, cashless exercise through a
designated brokerage firm after our stock is registered.
Merger or Sale.
In the event of any proposed sale, merger, share exchange, consolidation, or other
reorganization or business combination in which we are not the surviving corporation or in which nonvoting securities, cash, or securities of another corporation are received or if we sell all or
substantially all of our assets, then the compensation committee will take such action as it deems appropriate and equitable, including without limitation accelerating or changing the exercise dates
of any option, canceling the options and paying cash to the option holders, or causing a successor entity to replace the options with like options for other securities.
Change in Capitalization.
The number and price of shares covered by outstanding stock options and the
number of shares authorized under the 1999 Stock Option Plan shall be proportionately adjusted, as determined appropriate and equitable by the compensation committee, to take into account any stock
split, reverse stock split, stock dividend, recapitalization, combination or reclassification of shares, or similar event.
Amendment or Termination.
Our board may amend or terminate the 1999 Stock Option Plan at any time. If
our board amends the 1999 Stock Option Plan, it does not need to ask for stockholder approval of the amendment unless such amendment increases the number of shares available under the 1999 Stock
Option Plan or applicable law requires such approval. No amendment shall impair the rights of any
optionee under an option previously granted without his or her consent. The 1999 Stock Option Plan will be terminated as of the date of the completion of this offering. Such termination will not
affect any option previously granted under the 1999 Stock Option Plan.
2003 Stock Option Plan
The Company has adopted The White House, Inc. 2003 Stock Option Plan (the "2003 Stock Option Plan") to replace the 1999 Stock Option Plan effective upon
completion of the offering. The 2003 Stock Option Plan will serve the same purpose of promoting our long-term growth and profitability by (i) providing key people with incentives to
improve stockholder value and contribute to our growth and financial success, and (ii) enabling us to attract, retain, and reward talented and skilled persons for positions of substantial
responsibility. We have used stock options as a component of compensation for our officers and key employees.
The
differences from the 1999 Stock Plan include the following:
•
Securities
law requirements in the 2003 Stock Option Plan are changed to those applicable to a public company.
48
•
The
definition of "fair market value" of the common stock is changed to refer to the listed price on the Nasdaq Market.
•
Unless
otherwise determined by the Board, the Committee administering the 2003 Stock Option Plan is required to include solely "nonemployee directors" under
Rule 16b-3 and "outside directors" under Code Section 162(m).
•
The
number of shares subject to options that may be issued to one employee in one year is limited to 61,538 in order to meet the exception for performance-based compensation
under Code Section 162(m).
•
Nonqualified
options may have an exercise price lower than the fair market value of the common stock on the grant date.
•
Any
shares used to satisfy the exercise price under an option must have been held for at least six months.
•
Stock
appreciation rights may be issued under the 2003 Stock Option Plan.
•
The
requirement for optionees to sign a stockholders agreement and certain repurchase rights of the company at termination of employment are eliminated.
Shares Reserved.
A maximum of (i) 615,385 shares of common stock, plus (ii) a carryover
of the shares available for future awards under the 1999 Stock Option Plan at the date of its termination and (iii) any shares subject to options, or portions of options, granted under the 1999
Stock Option Plan which are forfeited, surrendered or cancelled or otherwise expire or terminate after the date of termination of the 1999 Stock Option Plan without being exercised, will be available
and reserved for issuance under the 2003 Stock Option Plan.
Administration.
Unless otherwise determined by the Board, the compensation committee of our board of
directors will administer the Plan. The committee has the sole discretion to make all decisions and take all actions relating to the interpretation, administration, and operation of the 2003 Stock
Option Plan. The committee has the discretion to determine who will receive options, what type of option it will be, how many shares will be covered by the option, what the vesting requirements will
be (if any), and what the other features, terms, and conditions of each option will be. The compensation committee may also reprice the exercise price of outstanding options to the then current fair
market value of the underlying stock by accepting the surrender of outstanding options and substituting new ones and modify outstanding awards in other ways.
Eligibility.
The committee may grant options to full-time employees, officers, members of
our board of directors, subcontractors, and outside consultants of the Company or any subsidiary. The 2003 Stock Option Plan provides that no participant may receive options covering more than 61,538
shares in any one year.
Types of Award.
The 2003 Stock Option Plan provides for the issuance of incentive stock options and
nonstatutory stock options to purchase shares of our common stock. Incentive stock options may be
granted to employees and may qualify for favorable tax treatment under Code Section 422 if certain requirements are satisfied. Nonstatutory stock options do not qualify for such favorable tax
treatment.
Exercise Price.
The exercise price for incentive stock options granted under the 2003 Stock Option
Plan may not be less than 100% of the fair market value of our common stock on the option grant date. The price of nonstatutory stock options is determined by the committee.
Transferability.
Incentive stock options granted under the 2003 Stock Option Plan are not
transferable by the optionee except by will or the laws of descent and distributions in the event of the
49
optionee's
death. Nonstatutory options may be transferred to certain family members and other transferees permitted by the compensation committee.
Vesting and Exercise.
Options vest, or, become exercisable, at the time or times determined by the
compensation committee. The Company may make or guarantee loans to assist grantees in exercising options and satisfying any related tax withholding obligations. Payment of the exercise price may be
made in cash or by any other means the compensation committee may prescribe, including, but not limited to, cashless exercise through a designated brokerage firm after our stock is registered.
Stock Appreciation Rights ("SARs").
Under the 2003 Stock Option Plan, the committee may issue SARs
which entitle the holder to receive at the time prescribed in the SAR in stock or cash, as determined by the committee, the excess of the value of the number of shares under the vested portion of the
SAR over their base price stated in the SAR. SARs shall be subject to such restrictions and conditions as the committee prescribes. SARs may be issued on a free-standing basis or in tandem
with stock options.
Merger or Sale.
In the event of any proposed sale, merger, share exchange, consolidation, or other
reorganization or business combination in which we are not the surviving corporation or in which nonvoting securities, cash, or securities of another corporation are received or if we sell all or
substantially all of our assets, then the compensation committee will take such action as it deems appropriate and equitable, including without limitation accelerating or changing the exercise dates
of any option, canceling the options and paying cash to the option holders, or causing a successor entity to replace the options with like options for other securities.
Change in Capitalization.
The number and price of shares covered by outstanding stock options and the
number of shares authorized under the 2003 Stock Option Plan shall be proportionately adjusted, as determined appropriate and equitable by the compensation committee, to take into account any stock
split, reverse stock split, stock dividend, recapitalization, combination or reclassification of shares, or similar event.
Amendment or Termination.
Our board may amend or terminate the 2003 Stock Option Plan at any time. If
our board amends the Plan, it does not need to ask for stockholder approval of the amendment unless such amendment increases the number of shares available under the 2003 Stock Option Plan or
applicable law requires such approval. No amendment shall impair the rights of any optionee under an option previously granted without his or her consent.
Employee Stock Purchase Plan
Our board of directors has adopted an Employee Stock Purchase Plan, subject to stockholder approval.
Purpose.
The purpose of the Employee Stock Purchase Plan is to provide a means by which our employees
may be given an opportunity to purchase our common stock through payroll deductions at a discounted price and upon terms that offer certain tax advantages. The rights to purchase common stock granted
under the purchase plan are intended to qualify as options issued under an "employee stock purchase plan" as that term is defined by Section 423 of the Code.
Administration.
Our board of directors is responsible for administering the Employee Stock Purchase
Plan and has the final power and sole discretion to construe and interpret the terms of the purchase plan and the rights granted under it. Our board of directors has the power, subject to the
provisions of the purchase plan, to determine whether any subsidiary of ours is eligible to participate in the purchase plan, and also has the power to construe and interpret the plan and rights
granted under it, and to establish, amend, and revoke rules and regulations for its administration. The board has delegated administration of the purchase plan to the compensation committee of the
board. When the
50
term
"Board" is used in this section with respect to the purchase plan, it refers to the compensation committee, as well as to the board.
Offerings.
The purchase plan will be implemented by offerings of rights to all eligible employees
from time to time pursuant to the provisions thereof. The first such offering will commence on the later of the first day of the month following the completion of the offering or the beginning of our
fiscal month of August 2003 and end on the last day of our fiscal month of January 2004. However, in no event will the first offering period commence before a filing of a registration
statement for the Plan with the SEC. Thereafter, offerings will be semi-annual (but can be changed to annual or quarterly) and will be for a duration of six months. At the discretion of
the board, offerings may be divided into quarterly periods or combined into annual periods. Purchases of common stock will be
made on the last date of each offering period during which the Nasdaq National Market is open for trading.
Eligibility.
Unless otherwise determined by the board, any employee who customarily works more than
20 hours per week and more than five months of the calendar year and who has been employed by us for at least 12 months (or such other period as determined by the board not in excess of
two years) as of the first day of such offering period, is eligible to participate in that offering under the purchase plan.
Notwithstanding
the foregoing, no employee is eligible for the grant of any rights under the purchase plan if, immediately after such grant, the employee would own, directly or
indirectly, stock possessing 5% or more of the total combined voting power or value of all classes of our stock (including any stock which such employee may purchase under all outstanding rights and
options), nor will any employee be granted rights that would permit him or her to buy more than $25,000 worth of stock (determined at the fair market value of the shares at the time such rights are
granted) under all employee stock purchase plans of the company in any calendar year.
Participation in the Plan; Payroll Deductions.
Eligible employees become participants in the purchase
plan by delivering to us, prior to the first day of an offering period, an agreement authorizing payroll deductions in whole percentages of up to 10% of such employees' covered compensation (as
defined in the purchase plan) during the offering period. A participant may not alter the amount of the payroll deduction during an offering period, but may discontinue participation and withdraw the
accumulated payroll deductions prior to the end of the offering. All payroll deductions made for a participant are credited to his or her account under the purchase plan and deposited with our general
funds. A participant may not make any additional payments into such account.
Purchase Price.
The purchase price per share at which shares are sold in an offering under the
purchase plan must be the lower of (i) 85% of the closing price of a share of common stock on the Nasdaq National Market on the date of commencement of the offering (or in the event the stock
was not traded on such date, the nearest prior business day on which trading of the common stock occurred on the Nasdaq National Market), or (ii) 85% of the closing price of a share of common
stock on the Nasdaq National Market on the last date of the offering (or in the event the stock was not traded on such date, the nearest prior business day on which trading of the common stock
occurred on the Nasdaq National Market). If the stock is not traded on the Nasdaq National Market, the committee shall determine the appropriate basis for establishing the price of the stock. The
purchase price is paid with the amounts accumulated by each participant through his or her payroll deductions.
Purchase of Stock.
By executing an agreement to participate in the purchase plan, the employee is
deemed to have been granted a qualified option to purchase a whole number of shares of common stock equal to the amount of his/her accumulated payroll deductions divided by the purchase price at which
shares are sold in the offering. The maximum number of shares any employee may be granted the right to purchase in any one offering is 500 (or such other number approved by the committee before the
respective offering period) shares and the maximum aggregate number of shares that may
51
be
purchased by all participants in any one offering is 25,000 shares (subject to adjustment for changes in the duration of offering periods and certain changes in capitalization) plus all unissued
shares from prior offerings. If the aggregate number of shares to be purchased upon exercise of rights granted in the offering would exceed the maximum aggregate number, the board would make a pro
rata allocation of shares available in a uniform and equitable manner. Unless the employee's participation is discontinued, his or her right to purchase shares is exercised automatically on the
purchase date for the offering at the applicable purchase price.
Withdrawal.
While each participant in the purchase plan is required to sign an agreement authorizing
payroll deductions, the participant may withdraw from a given offering by terminating his or her payroll deductions and by delivering to us a notice of withdrawal from the purchase plan. Such
withdrawal may be elected at any time prior to the end of an offering. Upon withdrawal from an offering by the employee, we will distribute to the employee his or her accumulated payroll deductions,
without interest, and such employee's interest in the offering will be automatically terminated. The employee is not entitled to again participate in such offering. An employee's withdrawal from an
offering will not have any effect upon such employee's eligibility to participate in subsequent offerings under the purchase plan.
Termination of Employment.
Rights granted pursuant to any offering under the purchase plan terminate
immediately upon cessation of an employee's employment for any reason, and we will distribute to such employee all of his or her accumulated payroll deductions, without interest. A leave of absence in
excess of 90 days will be regarded as a termination of employment for purposes of the purchase plan unless return to employment is guaranteed by contract or applicable law.
Restrictions of Transfer.
Rights granted under the purchase plan are not transferable otherwise than
by will or the laws of descent and distribution in the event of a participant's death, or by designation of a beneficiary in accordance with the terms of the purchase plan and, otherwise during the
participant's lifetime, shall be exercisable only by the participant to whom such rights were granted.
Duration, Amendment, and Termination.
The board may suspend or terminate the purchase plan at any
time. The purchase plan shall automatically terminate on the earlier of (i) the day prior to the tenth anniversary of the adoption of the plan, or (ii) the date that the maximum number
of shares available under the purchase plan have been issued. The board may amend the purchase plan at any time. Any amendment of the purchase plan must be approved by the stockholders within
12 months of its adoption by the board if the amendment would (i) increase the maximum number of shares of common
stock reserved for issuance under the purchase plan (except for adjustments upon certain changes in capitalization), or (ii) modify the requirements relating to eligibility for participation in
the purchase plan. Rights granted before amendment or termination of the purchase plan will not be adversely altered or impaired by any amendment or termination of such plan without consent of the
person to whom such rights were granted.
Adjustment Provision.
The purchase plan and outstanding rights may be appropriately and
proportionally adjusted at the discretion of the Board as to classes and numbers of shares and purchase prices under current offerings in the event of changes to the common stock as a result of
merger, reorganization, recapitalization, reclassification, stock split, reverse stock split, or other similar transaction. No adjustments shall be made for stock dividends. For this purpose, any
distribution of common stock to stockholders in an amount aggregating 20% or more of the outstanding common stock shall be deemed a stock split and any distribution of common stock to stockholders in
an amount aggregating less than 20% of the outstanding common stock shall be deemed a stock dividend.
Effect of Certain Corporate Events.
In the event of a dissolution, liquidation, or specified type of
acquisition or merger of the company, the compensation committee shall take such action as it deems appropriate and equitable, which may include (i) a refund of payroll deductions in the
offering,
52
(ii) shortening
the offering period, or (iii) providing that each participant in such offering will be entitled to receive for each share of common stock that such participant would have
purchased on the purchase date the approximate cash, securities, and/or property that a holder of one share of common stock was entitled to receive upon and at the time of such transaction.
Stock Subject to Purchase Plan.
An aggregate of 200,000 shares of common stock has been reserved for
future issuance under the purchase plan.
Employment Agreements
We plan to enter into employment agreements with Richard Sarmiento, Patricia Darrow-Smith, Michael Smith, and Stephen Hirsch prior to completion of the offering.
We
entered into an employment offer letter agreement with Stephen Hirsch on July 12, 1999. Mr. Hirsch's employment offer letter provides for the payment of
(i) 12 months salary in the event Mr. Hirsch's employment is terminated within 12 months before or after a change of control of the Company and (ii) nine months
salary in the event we terminate him without cause. The terms "cause" and "change of control" are defined in the offer letter. We plan to replace this employment offer letter agreement with an
employment agreement prior to the offering.
53
RELATED PARTY TRANSACTIONS
In connection with the offering, we are required to make a distribution of $11.8 million to holders of our Class C common stock. The recipients of
this distribution are Craig Foley and entities affiliated with Mr. Foley as well as entities affiliated with Howard Goldstein. The distribution amounts are proportionate to ownership of
Class C shares. Messrs. Foley and Goldstein are members of our board of directors. See "Management's Discussion and Analysis of Financial Condition and Results of
Operations—Amounts Distributable to Holders of Class C Common Stock."
In
January 2002, one of our non-employee stockholders negotiated a sale of certain of her Class A common shares to entities affiliated with Messrs. Foley
and Goldstein, members of our board of directors. As part of this transaction, we agreed to exchange Class A common shares acquired by the entities for shares of Class C common stock, on
a one-for-one basis. Accordingly, we issued 92,308 shares of Class C common stock to these entities in exchange for 92,308 shares of Class A common stock. The
value of the 92,308 shares of Class C common stock issued was $225,000.
We
have from time to time retained the services of a company affiliated with a relative of Ms. Darrow-Smith to provide us with painting for certain of our stores. The total
consideration paid by us for those services was approximately $9,000, $97,000, and $0 in fiscal 2000, 2001, and 2002, respectively.
We
believe that the transactions disclosed above were made on terms no less favorable to us than would have been obtained from unaffiliated third parties. Our policy is that all
transactions between us and our executive officers, directors, and principal stockholders be on terms no less favorable to us than we could obtain from unaffiliated third parties or else be approved
by our disinterested directors.
54
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information known to us regarding the beneficial ownership of our common stock as of April 30, 2003, as adjusted to
reflect the sale of                        shares of common stock in the offering and the conversion of all outstanding shares of
our Class A common stock and Class C common stock into shares
of common stock, by:
•
each
of our directors and named executive officers;
•
our
directors and executive officers as a group;
•
each
person or group known by us to own beneficially more than 5% of our outstanding common stock; and
•
each
selling stockholder.
We
have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. As of April 30, 2003, we had 5,783,071 shares of common stock
outstanding, assuming conversion of all of our outstanding Class A common stock and Class C common stock on a share-for-share basis. Unless otherwise indicated,
the persons included in the table have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of common stock
subject to options that are currently exercisable or are exercisable within 60 days of April 30, 2003 are treated as outstanding and owned beneficially with respect to the person holding
such options for the purpose of computing the percentage ownership of such person. However, these shares are not treated as outstanding for purposes of computing the percentage ownership of any other
person. The percentages in the "Shares Beneficially Owned After the Offering" column assume that the underwriters do not exercise their over-allotment option to purchase up to
            additional shares.
Shares of Common
Stock Beneficially
Owned Prior
to the Offering
Shares
Beneficially
Owned After
the Offering
Number of
Shares of
Common Stock
to Be Sold
in the Offering
Name of Beneficial Owner
Voting Power
After the
Offering
Number
Percent
Number
Percent
Executive Officers and Directors:
Richard D. Sarmiento
1,245,432
(1)
21.5
%
%
%
Howard E. Goldstein
1,378,872
(2)
23.8
Craig J. Foley
990,849
(3)
17.1
Patricia Darrow-Smith
1,259,699
(4)
21.8
F. Michael Smith
1,259,699
(5)
21.8
Darryl Hartley-Leonard
6,152
(6)
*
Sally Frame Kasaks
10,460
(6)
*
Stephen L. Hirsch
40,358
(7)
*
All directors and officers as a group (8 persons)
4,931,822
85.3
Five Percent Holders:
Entities affiliated with INVESCO Private Capital, Inc.
1,378,872
(2)
23.8
Phillips-Smith Specialty Retail Group III, L.P.
990,849
(3)
17.1
Anne Bernholz
365,722
(8)
6.3
Martin Bernholz
365,722
(9)
6.3
Selling Stockholders:
Eric Ryan
220,536
3.8
Roderick Ryan
101,948
1.8
Ayman Sabi
47,412
*
Nick Kahook
48,000
*
Hagen Choi
30,769
*
Pat Thoman
1,538
*
John Roesler
1,538
*
*
less
than 1%
55
(1)
Includes
(i) 2,769 shares held by Mr. Sarmiento's spouse and (ii) 1,046 shares subject to options currently exercisable or exercisable within 60 days of
April 30, 2003. Mr. Sarmiento's address is 6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
(2)
Represents
(i) 190,888 shares held of record by Chancellor Private Capital Partners III, L.P., (ii) 841,971 shares held of record by Citiventure 96
Partnership, L.P., (iii) 25,398 shares held of record by Chancellor Private Capitol Offshore Partners I, C.V., (iv) 314,468 shares held of record by Chancellor Private
Capital Offshore Partners II, L.P., and (v) 6,147 shares subject to options held by these entities that are currently exercisable or exercisable within 60 days of
April 30, 2003. Mr. Goldstein, one of our directors, is a general partner of INVESCO Private Capital, Inc. Mr. Goldstein disclaims beneficial ownership of these shares except to
the extent of his pecuniary interest in these entities. Mr. Goldstein's business address is 1166 Avenues of the Americas, 27th Floor, New York, New York 10036
(3)
Represents
(i) 958,398 shares held of record by Phillips-Smith Specialty Retail Group III, L.P., (ii) 26,299 shares held of record by Mr. Foley, and
(iii) 6,152 shares subject to options held by Mr. Foley that are currently exercisable or exercisable within 60 days of April 30, 2003. Mr. Foley, one of our
directors, is a principal of Phillips-Smith Specialty Retail Group III, L.P. Mr. Foley disclaims beneficial ownership of the shares not held of record by him except to the extent
of his pecuniary interest in Phillips-Smith Specialty Retail Group III, L.P. Mr. Foley's address is 5080 Spectrum Drive, Suite 700 West, Dallas, Texas 75248.
(4)
Includes
(i) 1,046 shares subject to options that are currently exercisable or exercisable within 60 days of April 30, 2003, and (ii) 477,969 shares
beneficially owned by Ms. Darrow-Smith's spouse, F. Michael Smith. Ms. Darrow-Smith's address is 6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
(5)
Includes
(i) 1,046 shares subject to options that are currently exercisable or exercisable within 60 days of April 30, 2003, and (ii) 781,730 shares
beneficially owned by Mr. Smith's spouse, Patricia Darrow-Smith. Mr. Smith's address is 6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
(6)
Represents
shares subject to options that are currently exercisable or exercisable within 60 days of April 30, 2003.
(7)
Includes
38,820 shares subject to options that are currently exercisable or exercisable within 60 days of April 30, 2003. Mr. Hirsch's address is
6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
(8)
Includes
(i) 116,030 shares held of record by Ms. Bernholz's spouse, Martin Bernholz, and (ii) 249,692 shares held of record by Ms. Bernholz.
Ms. Bernholz's address is 6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
(9)
Includes
(i) 249,692 shares held of record by Mr. Bernholz's spouse, Anne Bernholz, and (ii) 116,030 shares held of record by Mr. Bernholz. Mr. Bernholz's
address is 6711 Baymeadow Drive, Glen Burnie, Maryland 21060.
(10)
Assumes
the underwriters' over-allotment option is not exercised. In the event that the underwriters' over-allotment option is exercised in full, the following persons will sell the
additional number of shares set forth after their respective names:                        . In the event that the over-allotment
option is partially exercised, then such selling stockholders shall sell
additional shares pursuant to such exercise on a pro rata basis.
56
DESCRIPTION OF CAPITAL STOCK
General
The following information describes our common stock and preferred stock and provisions of our articles of amendment and restatement and our bylaws as in effect
upon the completion of the offering. This description is only a summary. You should also refer to the articles of amendment and restatement and our bylaws which have been filed with the SEC as
exhibits to our registration statement, of which this prospectus forms a part. The descriptions of the common stock and preferred stock reflect changes to our capital structure that will occur upon
the receipt of the requisite stockholder approvals and upon the completion of the offering in accordance with the terms of the proposed articles of amendment and articles of amendment and restatement.
As of April 30, 2003, we had 44 stockholders of record.
Upon
the completion of the offering our authorized capital stock will consist of 25,000,000 shares of common stock, par value $0.01 per share, and 5,000,000 shares of preferred stock,
par value $0.01 per share.
Certain
features of our articles of incorporation, as amended and restated, and bylaws may have the effect of delaying or preventing a change in control transaction. See "Risk
Factors—Risks Relating to the Offering—We are subject to anti-takeover provisions which could affect the price of our common stock."
Common Stock
Holders of our common stock are entitled to one vote per share on all matters to be voted on by stockholders. There is no cumulative voting in the election of our
directors, which means the holders of a majority of our outstanding common stock, subject to the rights of holders of our preferred stock, if any, can elect all the nominees standing for election.
Subject to the prior rights of holders of preferred
stock, if any, the holders of common stock are entitled to receive such dividends, if any, as may be declared from time to time by our board of directors in its discretion from funds legally available
therefor. Upon our liquidation or dissolution, the remainder of our assets will be distributed ratably among the holders of common stock after payment of liabilities and the liquidation preferences of
any outstanding shares of preferred stock. Our common stock has no preemptive or other subscription rights and there are no conversion rights or redemption or sinking fund provisions with respect to
such shares. All of the outstanding shares of common stock are, and the shares to be sold in the offering will be, fully paid and nonassessable.
Under
Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, sell all or substantially all of its assets, engage in a share exchange, or engage in
similar transactions outside the ordinary course of business, unless approved by the affirmative vote of stockholders holding at least two-thirds of the shares entitled to vote on the matter. However,
a Maryland corporation may provide in its charter for approval of these matters by a lesser percentage but not less than a majority of all the votes entitled to be cast on the matter. Our charter
provides for approval by a majority of all the votes entitled to be cast notwithstanding any provision of law requiring a greater percentage.
Preferred Stock
Effective upon the completion of the offering, we will have 5,000,000 shares of undesignated preferred stock authorized. Our board of directors has the authority
to issue the preferred stock in one or more series and to fix the price, preferences, conversion or other rights, voting powers, restrictions, limitations to dividends, qualifications or terms or
conditions, terms of redemption, redemption prices, liquidation preferences, and the number of shares constituting a series or the designation of such series, without any further vote or action by our
stockholders. Our issuance of preferred stock, while providing
57
desirable
flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of delaying, deferring, or preventing a change in control of
White House -- Black Market without further action by the stockholders and may adversely affect the market price of, and the voting and other rights of, the holders of
common stock. We have no current plans to issue any shares of preferred stock.
Business Combinations
Maryland law prohibits certain "business combinations" (including a merger, consolidation, share exchange, or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland corporation and an "interested stockholder." Interested stockholders are all persons (i) who beneficially own 10% or more
of the voting power of the corporation's shares or (ii) an affiliate or associate of the corporation who, at any time within the two-year
period prior to the date in question, was an interested stockholder or an affiliate or an associate thereof. Such business combinations are prohibited for five years after the most recent date on
which the interested stockholder became an interested stockholder. Thereafter, any such business combination must be recommended by the board of directors of the corporation and approved by the
affirmative vote of at least (i) 80% of the votes entitled to be cast by all holders of voting shares of the corporation, and (ii) 66
2
/
3
% of the votes entitled to be cast
by all holders of voting shares of the corporation other than voting shares held by the interested stockholder, or an affiliate or associate of the interested stockholder, with whom the business
combination is to be effected, unless, among other things, the corporation's stockholders receive a minimum price (as defined in Maryland law) for their shares and the consideration is received in
cash or in the same form as previously paid by the interested stockholder for its shares. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted
by our board of directors prior to the time that the interested stockholder becomes an interested stockholder.
Our
board of directors has adopted an irrevocable resolution exempting Richard Sarmiento, Patricia Darrow-Smith and Michael Smith, and each of their respective existing and future
affiliates from the provisions of the business combination statute. The board of directors has also adopted an irrevocable resolution exempting Phillips-Smith Specialty Retail Group III, L.P. and
INVESCO Private Capital, Inc. and their respective existing and future affiliates and associates from the business combination statute up to the number of shares beneficially owned by them,
respectively, immediately prior to the closing of the offering.
Control Share Acquisitions
Maryland law provides that "control shares" of a Maryland corporation acquired in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock owned by the acquiror or by officers or directors who are employees of the
corporation. Control shares are voting shares of stock which, if aggregated with all other shares of stock previously acquired by such a person, would entitle the acquiror to exercise voting power in
electing directors within one of the following ranges of voting power: (i) 10% or more but less than 33
1
/
3
%; (ii) 33
1
/
3
% or more but less than a majority;
or (iii) a majority of all voting power. Control shares do not include shares of stock an acquiring person is entitled to vote as a result of having previously obtained stockholder approval in
accordance with the control share act. A control share acquisition means, subject to certain exceptions, the acquisition of, ownership of, or the power to direct the exercise of voting power with
respect to, control shares.
A
person who has made or proposes to make a "control share acquisition," upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel the board of
directors to call a special meeting of stockholders to be held within 50 days of demand therefor to consider the
58
voting
rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders' meeting.
If
voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as permitted by the statute, then, subject to certain
conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard
to voting rights, as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for
"control shares" are approved at a stockholders' meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The
fair value of the stock as determined for purposes of such appraisal rights may not be less than the highest price per share paid in the control share acquisition, and certain limitations and
restrictions otherwise applicable to the exercise of dissenters' rights do not apply in the context of a "control share acquisition." A control share acquisition does not include any merger,
consolidation or share exchange where we are a party to such transaction.
Our
amended and restated article of incorporation will provide that "control share acquisition" will not include any transaction by Richard Sarmiento, Patricia Darrow-Smith, Michael
Smith, or their existing or future affiliates or associates. Additionally, the amendment will provide that a "control share acquisition" does not include any transaction which would otherwise
constitute a "control share acquisition," up to the number of shares beneficially owned by them immediately prior to the effective time of the amendment, by either INVESCO Private
Capital, Inc., or Phillips-Smith Specialty Retail Group III, L.P. or their existing or future affiliates.
Certain Charter and Bylaw Provisions
Our charter and bylaws will be amended and restated as of the closing of the offering and, as a result of such amendment and restatement, will contain several
provisions that may make the acquisition of control of White House -- Black Market by means of a proxy fight, open market purchases, tender offer, or other method more
difficult. The following is a summary of certain of these provisions. Forms of our charter and bylaws, as amended, are filed as exhibits to the registration statement filed with the Commission of
which this prospectus is a part, and the following summary is qualified in its entirety by reference to such documents.
Number of Directors.
Our charter and bylaws provide that the number of directors shall be fixed from
time to time by resolution adopted by a majority of the entire board of directors, but may not consist of fewer than three or such lesser number of stockholders. The size of our board of directors has
initially been set at five members.
Classified Board of Directors.
Our charter divides the board of directors into three classes, with
one class having a term of one year, one class having a term of two years, and one class having a term of three years. Each class is to be as nearly equal in number as possible. At each annual meeting
of our stockholders, commencing with the annual meeting of stockholders to be held in fiscal 2004, directors
will be elected to succeed those directors whose terms have expired, and each newly elected director will serve for a three-year term.
The
classification of directors and the provisions in the charter that limit the ability of stockholders to increase the size of the board of directors, together with the provisions in
our charter described below that limit the ability of stockholders to remove directors and that permit the remaining directors to fill any vacancies on the board, will have the effect of making it
more difficult for stockholders to change the composition of our board of directors. As a result, at least two annual meetings of stockholders may be required for our stockholders to change a majority
of the directors, whether or not
59
a
change in the board of directors would be beneficial to us and our stockholders and whether or not a majority of our stockholders believes that such a change would be desirable.
Removal of Directors and Filling Vacancies.
Our charter and bylaws provide that a director may be
removed by stockholders only "for cause" and with the approval of the holders of 80% of the total voting power of all of our outstanding securities then entitled to vote generally in the election of
directors, voting together as a single class at a special meeting of stockholders called for that purpose.
The
charter and the bylaws provide that all vacancies on our board of directors, including those resulting from an increase in the number of directors, may be filled solely by a majority
of the remaining directors even if they do not constitute a quorum. If the vacancy occurs as a result of the removal of a director, our stockholders may elect a successor at the meeting at which such
removal occurs.
Advance Notice Requirements for Stockholder Proposals and Director Nominations.
Our bylaws establish
advance notice procedures with regard to stockholder proposals and the nomination, other than by or at the direction of the board of directors or a committee thereof, of candidates for election as
directors. These procedures require that a notice of stockholder proposals and stockholder nominations for the election of directors at any meeting of stockholders must be in writing, contain certain
specified information, and be received by our corporate secretary not less than 90 nor more than 120 days prior to the meeting (or if less than ten days' notice or prior public
disclosure of the date of the meeting is given, the notice of stockholder proposals or nominations must be in writing and received by the our corporate secretary no later than the close of business on
the tenth day following the day on which notice of the meeting was mailed or public disclosure thereof was made, whichever occurs first). We may reject a stockholder proposal or nomination that is not
made in accordance with such procedures.
Limitations on Calling Stockholder Meetings.
Our charter and bylaws provide that special meetings of
stockholders can be called only by our chairman of the board of directors, our president, our board of directors, or by the corporate secretary at the request of holders of at least a majority of all
votes entitled to be cast. These provisions may have the effect of delaying consideration of a stockholder
proposal until the next annual meeting unless a special meeting is called by the board of directors, the chairman of the board, the president, or the corporate secretary upon the request of holders of
a sufficient number of shares.
Amendment of Certain Provisions of the Charter and Bylaws.
Our charter provides that the affirmative
vote of the holders of at least 80% of the aggregate combined voting power of all classes of capital stock entitled to vote thereon, voting as one class, is required to amend, repeal or adopt
provisions inconsistent with certain provisions of the charter, including those provisions relating to the limitation on calling stockholder meetings, the number, election, and term of directors; the
removal of directors; the amendment of our bylaws; and the provision governing applicability of the Maryland Control Share Act (Section 3-702 of the Maryland General Corporation
Law). Our charter further provides that board of directors shall have the exclusive right to make, alter, amend or repeal our bylaws. These requirements will have the effect of making more difficult
any amendment by our stockholders, even if a majority of our stockholders believe that such amendment would be in their best interests.
Power to Reclassify Shares of our Stock.
Our charter authorizes our board of directors to classify
and reclassify any unissued stock and permits our board, without stockholder approval, to amend the charter to increase or decrease the aggregate number of shares of stock or the number of shares of
stock of any class that we have authority to issue. Prior to issuance of shares of each class or series, the board is required by Maryland law and to set the preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or
60
conditions
of redemption for each class or series. Thus, the board could authorize the issuance of shares of preferred stock with terms and conditions that could have the effect of delaying, deferring
or preventing a transaction or a change in control that might involve a premium price for holders of our common stock or otherwise be in their best interest. No shares of our preferred stock are
presently outstanding and we have no present plans to issue any preferred stock.
Registration Rights
We have granted holders of 4,856,644 shares of our common stock demand and "piggyback" registration rights with respect to such shares. These rights may
require us to file registration statements under the Securities Act covering all or a portion of our common stock issued to these holders or we may be required to include such shares of our common
stock in a registration under the Securities Act that we initiate on our own behalf.
The
demand registration rights granted to these holders provide that upon request of holders of a majority of the common stock held by these persons, which request can be made at any
time after the consummation of the offering, we may be required to use our best efforts to register all or a portion of
such shares under the Securities Act on a Form S-1 registration statement. We are obligated to effect an unlimited number of such registrations on a Form S-1
registration statement, but we are only required to pay for the expenses of two such registrations and we are not required to effect any demand registration within 180 days after any other
registration statement filed pursuant to the exercise of these demand registration rights or that was subject to the piggyback registration rights described below.
These
holders of common stock also have the right to request us to register such shares under the Securities Act on a Form S-3 registration statement, if and when we
qualify to use this form of registration statement. There is no limit on the number of registrations on Form S-3 that such holders may request.
In
addition, each of these holders has certain piggyback registration rights. If we propose to register any common stock under the Securities Act for our own account (other than pursuant
to an offering in connection with the registration of securities on the Form S-8 or any successor form, which covers securities issued under an employee benefit plan, or on the
Form S-4 or any successor form, which covers securities issued in a business combination or a registered exchange offer), holders of piggyback rights may require that we include all
or a portion of their common stock in such registration. In connection with any such offering, the managing underwriter thereof can limit the number of shares held by persons with piggyback
registration rights to be included in such registration.
We
will be responsible for all expenses incurred in connection with the registration rights above, excluding underwriting discounts or commissions.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is                    .
Listing
We have applied to list our shares of common stock on the Nasdaq National Market under the symbol "WHBK."
61
SHARES ELIGIBLE FOR FUTURE SALE
Prior to the offering, there has been no public market for our common stock. Future sales of substantial amounts of common stock in the public market could lower
prevailing market prices. As described below, no shares currently outstanding (other than shares sold in the offering by the selling stockholders) will be available for sale immediately after the
offering because of contractual restrictions on resale. Sales of substantial amounts of our common stock in the public market after the restrictions lapse could harm the prevailing market price and
impair our ability to raise equity capital in the future.
Upon
completion of the offering, we will have            shares of common stock outstanding. Of these shares, the            shares
sold in the offering, plus any shares issued
upon exercise of the underwriters' over-allotment option, will be freely tradable without restriction under the Securities Act, unless purchased by our "affiliates" as that term is defined
in Rule 144 under the Securities Act. In general, affiliates include officers, directors, and 10% stockholders.
The
remaining            shares outstanding are "restricted securities" within the meaning of Rule 144. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rules 144, 144(k), or 701 promulgated under the Securities Act, which are summarized below. Sales of the restricted
securities in the public market, or the availability of such shares for sale, could adversely affect the market price of the common stock.
All
of our directors, officers, and securityholders have entered into lock-up agreements in connection with the offering generally providing that they will not offer, sell,
contract to sell, or grant any option to purchase or otherwise dispose of our common stock or any securities exercisable for or convertible into our common stock owned by them for a period of
180 days after the date of this prospectus without the prior written consent of William Blair & Company, L.L.C. Taking into account the lock-up agreements, and assuming
William Blair & Company, L.L.C. does not release stockholders from these agreements, the number of restricted shares that will be available for sale in the public market under the provisions of
Rule 144, 144(k), and 701 will be as follows:
•
Beginning
on the effective date of this prospectus, only the shares sold in the offering will be immediately available for sale in the public market.
•
Beginning
180 days after the effective date, approximately all of our            restricted shares will be eligible for sale.
In
general, under Rule 144, after the expiration of the lock-up agreements, a person who has beneficially owned restricted securities for at least one year would be
entitled to sell within any three-month period a number of shares that does not exceed the greater of:
•
one
percent of the number of shares of common stock then outstanding, which will equal approximately            shares immediately after the offering; or
•
the
average weekly trading volume of the common stock during the four calendar weeks preceding the sale.
Sales
under Rule 144 are also subject to requirements with respect to manner of sale, notice, and the availability of current public information about us. Under
Rule 144(k), a person who is not deemed to have been our affiliate at any time during the three months preceding a sale and who has beneficially owned the shares proposed to be sold for at
least two years, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation, or notice provisions of Rule 144.
Rule 701
permits our employees, officers, directors, or consultants who purchased shares pursuant to a written compensatory plan or contract to resell such shares in reliance upon
Rule 144 but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the
holding period requirement and that non-affiliates may sell such shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation, or
notice provisions of Rule 144.
62
UNDERWRITING
The underwriters named below, for which William Blair & Company, L.L.C., SG Cowen Securities Corporation, and RBC Dain Rauscher Inc. are acting as
representatives, have severally agreed, subject to the terms and conditions set forth in the underwriting agreement by and among the underwriters, the selling stockholders and us, to purchase from the
selling stockholders and us, the respective number of shares of common stock set forth opposite each underwriter's name in the table below.
Underwriter
Number of Shares
William Blair & Company, L.L.C.
SG Cowen Securities Corporation
RBC Dain Rauscher Inc.
Total
This
offering will be underwritten on a firm commitment basis. In the underwriting agreement, the underwriters have agreed, subject to the terms and conditions set forth therein, to
purchase the shares of common stock being sold pursuant to this prospectus at a price per share equal to the public offering price less the underwriting discount specified on the cover page of this
prospectus. According to the terms of the underwriting agreement, the underwriters either will purchase all of the shares or none of them. In the event of default by any underwriter, in certain
circumstances, the purchase commitments of the non-defaulting underwriters may be increased or the underwriting agreement may be terminated. In the underwriting agreement, we and the
selling stockholders have made certain representations and warranties to the underwriters and have agreed to indemnify them and their controlling persons against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect thereof.
The
representatives of the underwriters have advised us and the selling stockholders that the underwriters propose to offer the common stock to the public initially at the public
offering price set forth on the cover page of this prospectus and to selected dealers at such price less a concession of not more than $            per share. The underwriters may allow, and
such
dealers may re-allow, a concession not in excess of $            per share to certain other dealers. The underwriters will offer the shares subject to prior sale and subject to receipt
and acceptance of the shares by the underwriters. The underwriters may reject any order to purchase shares in whole or in part. The underwriters expect that we and the selling stockholders will
deliver the shares to the underwriters through the facilities of The Depository Trust Company in New York, New York on or
about                        , 2003. At that time, the underwriters will pay us and
the selling stockholders for the shares in immediately available funds. After commencement of the public offering, the representatives may change the public offering price and other selling terms.
Certain
of the selling stockholders have granted the underwriters an option, exercisable within 30 days after the date of this prospectus, to purchase up to an additional
            shares of common stock at the same price per share to be paid by the underwriters for the other shares offered hereby solely for the purpose of covering over-allotments. If
the underwriters purchase any such additional shares pursuant to this option, each of the underwriters will be committed to purchase such additional shares in approximately the same proportion as set
forth in the table above. The underwriters may
63
exercise
the option only for the purpose of covering excess sales, if any, made in connection with the distribution of the shares of common stock offered hereby. The underwriters will offer any
additional shares that they purchase pursuant to this option on the terms described in the preceding paragraph.
The
underwriters have reserved for sale, at the initial public offering price, up to 3% of the shares of common stock in the offering for our employees, relatives of our executive
officers, and business associates. Those receiving these reserved shares will not be subject to lock-up agreements by virtue of their having purchased such shares (though an employee could
otherwise be subject to a lock-up agreement). Purchases of the reserved shares would reduce the number of shares available for sale to the general public. The underwriters will offer any
reserved shares which are not so purchased to the general public on the same terms as the other shares being sold in the offering.
The
following table summarizes the compensation to be paid by us and the selling stockholders to the underwriters. This information assumes either no exercise or full exercise by the
underwriters of their over-allotment option:
Total
Per Share
Without
Over-Allotment
With
Over-Allotment
Public offering price
$
$
$
Underwriting discount paid by us
$
$
$
Underwriting discount paid by selling stockholders
$
$
$
We
estimate that our total expenses for the offering, excluding the underwriting discount, will be approximately $            .
We,
and each of our directors, executive officers, and stockholders, who in the aggregate beneficially own all of our outstanding shares of common stock, have agreed, subject to limited
exceptions, for a period of 180 days after the date of this prospectus, not to, without the prior written consent of William Blair & Company, L.L.C.:
•
directly
or indirectly offer, sell, contract to sell, assign, transfer, encumber, pledge, grant an option to purchase, make any "short" sale, establish a "put equivalent
position" within the meaning of Rule 16a-1(h) under the Exchange Act, or otherwise dispose of any shares of the Company's common stock, or any options or warrants to purchase any
shares of common stock or any securities convertible into, exchangeable for, or that represent the right to receive shares of common stock ("common stock equivalents") held of record or beneficially
owned (within the meaning of Rule 13d-3 under the Exchange Act);
•
enter
into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any common stock or common stock
equivalent; or
•
exercise
any registration rights with respect to any common stock or common stock equivalent.
This
agreement does not extend to bona fide gifts to immediate family members of such persons who agree to be bound by such restrictions, or to limited partners or stockholders who agree
to be bound by such restrictions. In determining whether to consent to a transaction prohibited by these restrictions, the underwriters will take into account various factors, including the number of
shares requested to be sold, the anticipated manner and timing of sale, the potential impact of the sale on the market for the common stock, and market conditions generally. We may grant options and
issue common stock under existing stock option plans and issue unregistered shares in connection with any outstanding convertible securities or options during the lock-up period. See
"Shares Eligible for Future Sale."
64
The
representatives have informed us that the underwriters will not confirm, without client authorization, sales to their client accounts as to which they have discretionary authority.
The representatives have also informed us that the underwriters intend to deliver all copies of this prospectus via hand delivery or through mail or courier services and only printed forms of the
prospectus are intended to be used.
In
connection with the offering, the underwriters and other persons participating in the offering may engage in transactions which affect the market price of the common stock. These may
include stabilizing and over-allotment transactions and purchases to cover syndicate short positions. Stabilizing transactions consist of bids or purchases for the purpose of pegging,
fixing, or maintaining the price of the common stock. An over-allotment involves selling more shares of common stock in the offering than are specified on the cover page of this
prospectus, which results in a syndicate short position. The underwriters may cover this short position by purchasing common stock in the open market or by exercising all or part of their
over-allotment option. In addition, the representatives may impose a penalty bid. This allows the representative to reclaim the selling concession allowed to an underwriter or selling
group member if common stock sold by such underwriter or selling group member in the offering is repurchased by the representative in stabilizing or syndicate short covering transactions. These
transactions, which may be effected on the Nasdaq National Market or otherwise, may stabilize, maintain, or otherwise affect the market price of the common stock and could cause the price to be higher
than it would be without these transactions. The underwriters and other participants in the offering are not required to engage in any of these activities and may discontinue any of these activities
at any time without notice. We, the selling stockholders, and the underwriters make no representation or prediction as to whether the underwriters will engage in such transactions or choose to
discontinue any transactions engaged in or as to the direction or magnitude of any effect that these transactions may have on the price of the common stock.
We
have applied to list our common stock on the Nasdaq National Market under the symbol "WHBK."
In
the ordinary course of business, some of the underwriters and their affiliates have provided, and may in the future provide, investment banking, commercial banking, and other services
to us for which they have received, and may in the future receive, customary fees or other compensation.
Determination of Offering Price
Prior to the offering, there has been no public market for the common stock. The initial public offering price for our common stock will be determined by
negotiation between us and the representatives of the underwriters. The factors that will be considered in determining the initial public offering price are prevailing market and economic conditions,
our revenue and earnings, market valuations of other companies engaged in activities similar to us, estimates of our business potential and prospects, the present state of our business operations, our
management, and other factors deemed relevant. The estimated initial public offering price range on the cover of this preliminary prospectus is subject to change as a result of market conditions or
other factors.
65
LEGAL MATTERS
Certain legal matters with respect to the validity of the common stock offered hereby will be passed on for us by Venable, Baetjer, Howard & Civiletti,
LLP, Washington, D.C. Certain legal matters relating to the offering will be passed upon for the underwriters by Sonnenschein Nath & Rosenthal, Chicago, Illinois.
EXPERTS
The financial statements of The White House, Inc. as of February 1, 2003 and February 2, 2002, and for each of the years in the
three-year period ended February 1, 2003, have been included herein and in the Registration Statement in reliance upon the report of KPMG LLP, independent
accountants' appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.
On
or about May 23, 2002, our board of directors became aware that our prior auditor, Arthur Andersen LLP, was ceasing to provide audit services. Accordingly, we engaged
KPMG LLP as our principal accountants on November 14, 2002. The reports of Arthur Andersen LLP on the fiscal 2000 and 2001, financial statements of
White House -- Black Market did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or principal
accounting principles. There were no disagreements with Arthur Andersen LLP during fiscal 2000 or 2001, or during fiscal 2002 preceding their replacement on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused them to make reference to the subject matter
of the disagreement in connection with their reports. None of the reportable events described under Item 304(a)(1)(v) of Regulation S-K occurred preceding Arthur Andersen
LLP's replacement. We did not consult with KPMG LLP during any period preceding Arthur Andersen LLP's replacement regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.
66
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby.
This prospectus does not contain all the information set forth in the registration statement and the exhibits and schedules filed therewith. For further information with respect to
White House -- Black Market and the common stock offered hereby, reference is made to the registration statement and to the exhibits and schedules filed therewith.
Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete, and each such statement is qualified in all respects by reference
to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules filed therewith may be
inspected without charge at the SEC's Public Reference Room at 450 Fifth Street, N.W. Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such
Public Reference Room upon payment of the fees prescribed by the SEC. You may obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintains a World Wide Web site that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. The address of the site is http://www.sec.gov.
Upon
completion of the offering, we will become subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, and, in accordance
therewith, will file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements, and other information will be available for inspection and copying
at the SEC's regional offices, public reference facilities and web site of the SEC referred to above.
67
THE WHITE HOUSE, INC.
Index to Financial Statements
Page
Independent Auditors' Report
F-2
Balance Sheets—As of February 2, 2002 and February 1, 2003
F-3
Statements of Operations—For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003
F-4
Statements of Stockholders' Equity—For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003
F-5
Statements of Cash Flows—For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003
F-6
Notes to Financial Statements
F-7
F-1
When the transaction referred to in the second paragraph of note 1 of the Notes to Financial Statements has been consummated, we will be in a position to render the following
report.
/s/
KPMG LLP
Independent Auditors' Report
The
Board of Directors and Stockholders
The White House, Inc.:
We
have audited the accompanying balance sheets of The White House, Inc. (the Company) as of February 2, 2002 and February 1, 2003 and the related statements of
operations, stockholders' equity and cash flows for each of the years in the three-year period ended February 1, 2003. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The White House, Inc. as of February 2, 2002
and February 1, 2003, and the results
of its operations and its cash flows for each of the years in the three-year period ended February 1, 2003, in conformity with accounting principles generally accepted in the United
States of America.
Baltimore,
Maryland
April 15, 2003 (except as to the second paragraph
of note 1 of the notes to financial statements
which is as of July    , 2003)
F-2
THE WHITE HOUSE, INC.
Balance Sheets
As of February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
February 2,
2002
February 1,
2003
Assets
Current assets:
Cash
$
519
$
1,081
Accounts receivable
429
579
Merchandise inventories
4,583
5,645
Prepaid expenses and other current assets
1,185
1,664
Deferred tax assets
190
638
Total current assets
6,906
9,607
Property and equipment, net
7,073
9,820
Deferred tax assets
920
699
Other noncurrent assets
247
97
Total assets
$
15,146
$
20,223
Liabilities and Stockholders' Equity
Current liabilities:
Borrowings under line of credit
$
1,606
$
—
Current portion of capital lease obligations
231
571
Amounts distributable to Class C common stockholders
—
1,117
Trade accounts payable
3,528
3,640
Accrued expenses and other current liabilities
2,248
3,680
Total current liabilities
7,613
9,008
Accrued rent
429
691
Capital lease obligations, less current portion
507
1,104
Amounts distributable to Class C common stockholders
4,160
5,027
Total liabilities
12,709
15,830
Stockholders' equity:
Preferred stock, $0.01 par value per share. Authorized 5,000,000 shares; none issued and outstanding
—
—
Common stock, $0.01 par value. Authorized 25,000,000 shares; none issued and outstanding
—
—
Common stock Class A, $0.01 par value. Authorized 15,000,000 shares; issued and outstanding 3,425,649 shares
34
34
Common stock Class B, $0.01 par value. Authorized 100,000 shares; none issued and outstanding
—
—
Common stock Class C, $0.01 par value with mandatory distribution obligation. Authorized 8,000,000 shares; issued and outstanding 2,357,422 shares
24
24
Additional paid-in capital
7,752
7,856
Unearned stock compensation
—
(74
)
Accumulated deficit
(5,373
)
(3,447
)
Total stockholders' equity
2,437
4,393
Commitments and contingencies
Total liabilities and stockholders' equity
$
15,146
$
20,223
See
accompanying notes to financial statements.
F-3
THE WHITE HOUSE, INC.
Statements of Operations
For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003
(Dollars in thousands, except for per share data)
Fiscal Year Ended
February 3,
2001
February 2,
2002
February 1,
2003
Net sales
$
37,721
$
49,532
$
66,956
Cost of goods sold
17,676
21,884
28,271
Gross profit
20,045
27,648
38,685
Selling, general and administrative expenses
19,101
24,627
30,414
Depreciation and amortization
912
1,176
1,492
Operating income
32
1,845
6,779
Interest expense
198
326
217
Income (loss) before income tax expense (benefit)
(166
)
1,519
6,562
Income tax expense (benefit)
(48
)
650
2,652
Net income (loss)
(118
)
869
3,910
Amounts distributable to Class C common stockholders
1,475
1,679
1,984
Net income (loss) applicable to common stockholders
$
(1,593
)
$
(810
)
$
1,926
Net income (loss) per weighted average common share:
Basic and diluted — Amounts distributable to Class C common stockholders
$
0.65
$
0.74
$
0.84
Basic and diluted — Net income (loss) applicable to common stockholders:
Class A
$
(0.28
)
$
(0.14
)
$
0.33
Class C
$
(0.28
)
$
(0.14
)
$
0.33
See
accompanying notes to financial statements.
F-4
THE WHITE HOUSE, INC.
Statements of Stockholders' Equity
For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003
(Dollars in thousands)
Common stock
Additional
paid-in
capital
Unearned
stock
compensation
Accumulated
deficit
Class A
Class B
Class C
Total
Balance January 29, 2000
$
35
$
—
$
23
$
7,728
$
—
$
(2,970
)
$
4,816
Net loss
—
—
—
—
—
(118
)
(118
)
Stock options issued to non-employees
—
—
—
8
—
—
8
Amounts distributable to Class C common stockholders
—
—
—
—
—
(1,475
)
(1,475
)
Balance February 3, 2001
35
—
23
7,736
—
(4,563
)
3,231
Net income
—
—
—
—
—
869
869
Amounts distributable to Class C common stockholders
—
—
—
—
—
(1,679
)
(1,679
)
Conversion of 92,308 shares of Class A common stock to Class C common stockholders
(1
)
—
1
—
—
—
—
Stock options issued to non-employees
—
—
—
16
—
—
16
Balance February 2, 2002
34
—
24
7,752
—
(5,373
)
2,437
Net income
—
—
—
—
—
3,910
3,910
Amounts distributable to Class C common stockholders
—
—
—
—
—
(1,984
)
(1,984
)
Stock options issued to non-employees
—
—
—
17
—
—
17
Unearned stock compensation related to stock options issued to employees
—
—
—
87
(87
)
—
—
Stock compensation earned
—
—
—
—
13
—
13
Balance February 1, 2003
$
34
$
—
$
24
$
7,856
$
(74
)
$
(3,447
)
$
4,393
See
accompanying notes to financial statements.
F-5
THE WHITE HOUSE, INC.
Statements of Cash Flows
For the fiscal years ended February 3, 2001, February 2, 2002 and February 1, 2003
(Dollars in thousands)
Fiscal Years Ended
February 3,
2001
February 2,
2002
February 1,
2003
Cash flows from operating activities:
Net income (loss)
$
(118
)
$
869
$
3,910
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of property and equipment
912
1,176
1,492
Amortization of deferred financing costs
—
25
26
Deferred income tax benefit
(130
)
(36
)
(227
)
Stock compensation and value of stock options issued to non-employees
8
16
30
Changes in operating assets and liabilities:
Accounts receivable
(144
)
(56
)
(150
)
Merchandise inventories
(1,378
)
(387
)
(1,062
)
Prepaid expenses and other current assets
143
(387
)
(479
)
Other assets
(146
)
(19
)
149
Trade accounts payable
1,957
(4
)
112
Accrued expenses and other current liabilities
139
1,199
1,432
Accrued rent
38
168
262
Net cash provided by operating activities
1,281
2,564
5,495
Cash flows from investing activities — purchases of property and equipment
(3,371
)
(1,628
)
(2,963
)
Cash flows from financing activities:
(Repayments) borrowings under line of credit, net
1,903
(673
)
(1,606
)
Repayments of capital lease obligations
(208
)
(256
)
(339
)
Borrowings under capital leases
563
263
—
Deferred financing costs
(75
)
(25
)
(25
)
Net cash provided by (used in) financing activities
2,183
(691
)
(1,970
)
Net increase in cash
93
245
562
Cash, beginning of year
181
274
519
Cash, end of year
$
274
$
519
$
1,081
Supplemental disclosure of cash flow information:
Cash paid for interest
$
199
$
300
$
200
Cash paid for income taxes
$
11
$
98
$
2,483
Acquisitions of property and equipment under capital leases
$
—
$
—
$
1,276
See
accompanying notes to financial statements.
F-6
THE WHITE HOUSE, INC.
Notes to Financial Statements
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
1.     The Business
The White House, Inc. (the Company), a Maryland corporation, operates retail stores featuring private brand women's apparel and accessories in the colors
of white and black. As of February 1, 2003, the Company operated 92 stores located throughout the United States, Puerto Rico, and the U.S. Virgin Islands.
On
July    , 2003, the Company's stockholders approved a one-for-3.25 reverse stock split. All common shares, stock options and per share amounts for all periods presented
have been restated to reflect the reverse stock split. In addition, the stockholders approved the authorization of 5,000,000 shares of preferred stock and 25,000,000 shares of common stock.
2.     Significant Accounting Policies
Fiscal Year
The Company operates on a 52/53-week year, which ends on the Saturday nearest January 31. The periods presented in these financial statements
are the fiscal years ended February 3, 2001 (fiscal 2000), February 2, 2002 (fiscal 2001) and February 1, 2003 (fiscal 2002). Fiscal 2000 had 53 weeks and fiscal 2001 and fiscal
2002 had 52 weeks.
Revenue Recognition
Revenue is recognized at the point of sale in the Company's stores. Purchase volume rebates received from vendors are recognized through cost of goods sold when
the related sales revenue is earned.
Cost of Goods Sold and Selling, General and Administrative Expenses
Cost of goods sold includes costs of merchandise, distribution and warehousing costs, and freight from vendors to the distribution center and from the
distribution center to the stores. Selling, general and administrative expenses include marketing and advertising, buying and merchandising, store occupancy, and other store and corporate expenses.
Merchandise Inventories
Merchandise inventories are stated at the lower of cost or market and cost is determined using the first-in, first-out (FIFO) method. The
Company capitalizes certain warehousing and distribution costs associated with shipping its merchandise to the point of sale as merchandise inventory cost.
The
Company obtains a significant amount of its merchandise inventories from a limited number of vendors. During fiscal 2002, the Company purchased approximately 35% of its merchandise
inventories from five vendors, with one vendor representing approximately 20% of its merchandise inventories purchases.
F-7
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
Property and Equipment
Property and equipment is stated at cost. Depreciation and amortization is calculated using the straight-line method over the following estimated
useful lives:
Description
Estimated
useful lives
Furniture and fixtures
10 years
Equipment
3 – 5 years
Leasehold improvements
Lease terms ranging from 5 – 10 years
Depreciation
and amortization expense for fiscal 2000, 2001 and 2002 was approximately $912, $1,176, and $1,492, respectively. Repairs and maintenance are charged to expense as incurred.
Other Assets
Other assets consist primarily of deposits and deferred financing costs related to the Company's line of credit. Deferred financing costs are being amortized
using the interest method over the term of the related debt. Accumulated amortization at February 2, 2002 and February 1, 2003 was $24 and $25, respectively.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Advertising
Costs associated with advertising are expensed as incurred. Advertising costs were $507, $855, and $1,136 in fiscal 2000, 2001 and 2002, respectively.
Lease Expenses
Rent expense on leases is recognized on a straight-line basis over the term of the lease, and the excess of expense over cash amounts paid is recorded
as accrued rent in the accompanying balance sheets. Percentage rents are recognized ratably over the measurement period based upon management's estimate of store net sales.
Pre-Opening Costs
Pre-opening costs incurred in connection with start-up and promotion of new store openings are expensed as incurred and are included in
selling, general and administrative expenses.
F-8
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
Long-Lived Assets
Long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash
flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount
of the asset exceeds the fair value of the asset.
Stock Option Plan
The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock
Issued to Employees
, and related
interpretations including FASB Interpretation No. 44,
Accounting for Certain Transactions involving Stock Compensation
, issued in
March 2000, to account for its fixed-plan stock options granted to employees and directors. Under this method, compensation expense is recorded on the date of grant only if the fair
value of the underlying stock exceeded the exercise price. SFAS No. 123,
Accounting for Stock-Based Compensation
, established accounting and
disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to
apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123, as amended by SFAS No. 148. The following table
illustrates the effect on net income (loss) if the fair-value-based method had been applied to all outstanding and unvested awards for fiscal 2000, 2001 and 2002:
Fiscal Year
2000
2001
2002
Net income (loss) as reported
$
(118
)
$
869
$
3,910
Add compensation recognized under the intrinsic value method, net of taxes
—
—
8
Deduct total stock-based employee compensation expense determined under fair-value-based method for all rewards, net of taxes
(14
)
(33
)
(44
)
Pro forma net income (loss)
$
(132
)
$
836
$
3,874
The
pro forma per share amounts are the same as net income (loss) applicable to common stockholders per share reported on the Company's statements of operations.
The
assumptions used in the Black-Scholes option-pricing model for determining the fair value of options granted to employees and directors were as follows:
Fiscal Year
2000
2001
2002
Risk-free interest rate
6.50%
5.50%
2.75%
Expected life
7 years
7 years
7 years
Volatility
0%
0%
0%
Dividend rate
0%
0%
0%
F-9
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
The Company accounts for options issued to non-employees at fair value, in accordance with the provisions of SFAS No. 123 and Emerging Issues
Task Force (EITF) No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods
or Services
.
Segments
The Company has one reportable segment based upon the economic characteristics of the store formats, the similar nature of the products sold, the type of
customer, and method of distribution.
Fair Value of Financial Instruments
The fair value of the Company's cash, accounts receivable, and accounts payable approximate their carrying value due to the short-term nature of such
instruments.
Use of Estimates
The preparation of the financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses during the reporting period. Significant
items subject to such estimates and assumptions include the net carrying amount of property and equipment, valuation allowances for receivables, inventories and deferred income tax assets. Actual
results could differ from those estimates.
Recently Issued Accounting Standards
In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations
, which
requires companies to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible
long-lived assets. The Company is required to adopt SFAS No. 143 on February 2, 2003. The adoption of SFAS No. 143 is not expected to have a material effect on the
Company's financial statements.
In
June 2002, the FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities
. SFAS
No. 146 requires that a liability for a cost associated with the exit or disposal activity be recognized when incurred at fair value. SFAS No. 146 eliminates the requirements of EITF
Issue 94-3. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002 and may have an effect on the timing of future restructuring
and similar charges recorded, if and when they occur.
In
November 2002, the FASB issued Interpretation No. 45,
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others, an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation No. 34
. This Interpretation
elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. The Interpretation also clarifies that a guarantor
is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition and measurement provisions of the Interpretation are
applicable to guarantees issued or modified after December 31, 2002 and are not expected to have a material effect on the Company's financial statements. The disclosure requirements are
effective for financial statements of interim and annual periods ending after December 15, 2002.
F-10
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
3.     Net Income (Loss) Per Share
Basic and diluted net income (loss) per share distributable to Class C common stockholders is calculated by dividing the amounts distributable to
Class C common stockholders by the weighted average number of Class C common shares outstanding. Basic net income (loss) per share applicable to common stockholders is calculated by
dividing net income (loss) applicable to common stockholders by the weighted average number of Class A and Class C common shares outstanding for the period. Diluted net income (loss) per
share applicable to common stockholders is calculated by dividing net income
(loss) applicable to common stockholders by the diluted weighted average number of Class A and Class C common shares, which reflects the potential dilution from outstanding stock
options. The calculations for fiscal 2000, 2001 and 2002 are as follows:
Fiscal Year
2000
2001
2002
Numerator:
Net income (loss) applicable to common stockholders
$
(1,593
)
$
(810
)
$
1,926
Denominator (in thousands):
Weighted average shares outstanding:
Class A
3,518
3,514
3,426
Class C
2,265
2,269
2,357
Effect of dilutive securities—incremental shares from assumed exercise of employee stock options
—
—
87
Diluted weighted average common shares outstanding
5,783
5,783
5,870
The
effects on weighted average shares outstanding of options to purchase common stock and other potentially dilutive securities of the Company were not included in the computation of
diluted net income (loss) per share in periods in which their effect would have been anti-dilutive.
4.     Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following:
February 2,
2002
February 1,
2003
Landlord construction allowances
$
163
$
444
Prepaid rent
553
686
Other current assets
469
534
$
1,185
$
1,664
F-11
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
5.     Property and Equipment, Net
Property and equipment, net consists of the following:
February 2,
2002
February 1,
2003
Furniture and fixtures
$
2,848
$
3,590
Equipment
1,212
2,416
Leasehold improvements
8,777
10,533
Construction in progress
88
253
12,925
16,792
Less accumulated depreciation and amortization
5,852
6,972
$
7,073
$
9,820
The
Company is obligated under capital leases for certain property and equipment that expire at various dates during the next five years. The net carrying amount of property and
equipment under capital leases at February 2, 2002 and February 1, 2003 was $839 and $1,870, respectively.
6.     Borrowings Under Line of Credit
As of February 1, 2003, the Company had a $12,000 line of credit agreement with Wells Fargo Bank N.A. (the Bank), which included a $7,000 revolving line of
credit (Standard Line) and a $5,000 special sub-line of credit (Special Subline). The amounts are limited by borrowing base calculations, as defined in the agreement. The aggregate unpaid
principal amount of all advances bear interest (calculated based upon a 360-day year), at the Bank's prime rate (4.25% at
February 1, 2003) plus 0.25% and 2.0% for the Standard Line and the Special Subline, respectively. The Company has granted the Bank a security interest in virtually all assets of the Company as
collateral for the line of credit. Under the agreement, the Company must comply with certain covenants including the maintenance of its inventory balance between a minimum and maximum level and
achievement of certain store contribution levels. The agreement expires in August 2006, provided the Company achieves certain EDITDA targets and has obtained a waiver of the payments required
by the Class C stockholders by July 31, 2005. In the event the targets have not been achieved or the waiver has not been obtained, the agreement expires on September 30, 2004.
During fiscal 2002, average month-end outstanding borrowings were $271. As of February 1, 2003, the Company had no borrowings or letters of credit outstanding under the line of credit and
$3,727 of available borrowings.
F-12
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
7.     Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following:
February 2,
2002
February 1,
2003
Accrued salaries and benefits
$
554
$
1,176
Income taxes payable
650
1,221
Gift certificate liabilities
409
518
Other accrued expenses
635
765
$
2,248
$
3,680
8.     Leases
The Company has several noncancelable operating leases, primarily for retail stores and office space that expire over the next ten years. These leases generally
contain renewal options for periods ranging from three to five years and require the Company to pay all executory costs such as maintenance and insurance. Rental payments include minimum rentals plus
contingent rentals based on sales. Rent expense for operating leases for fiscal 2000, 2001 and 2002 was as follows:
Fiscal Year
2000
2001
2002
Minimum rentals
$
4,546
$
5,788
$
6,888
Contingent rentals
66
79
141
Rent expense
$
4,612
$
5,867
$
7,029
Future
minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments
as of February 1, 2003 are:
Operating
leases
Capital
leases
Fiscal year:
2003
$
5,498
$
730
2004
5,039
679
2005
4,424
487
2006
4,239
66
2007
3,701
9
Later years, through 2012
12,285
—
Total minimum lease payments
$
35,186
1,971
Less amount representing interest (at rates ranging from 5.9% to 21.1%)
296
Present value of net minimum capital lease payments
1,675
Less current portion of capital lease obligations
571
Capital lease obligations, less current portion
$
1,104
F-13
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
9.     Income Taxes
Income tax expense (benefit) for fiscal 2000, 2001 and 2002 consists of the following:
Fiscal Year
2000
2001
2002
Current:
Federal
$
70
$
569
$
2,375
State
12
117
504
82
686
2,879
Deferred:
Federal
(104
)
(19
)
(160
)
State
(26
)
(17
)
(67
)
(130
)
(36
)
(227
)
Income tax expense (benefit)
$
(48
)
$
650
$
2,652
Federal
income tax expense for fiscal 2001 and 2002 include foreign taxes of $92 and $260, respectively.
Reconciliations
of the recorded income tax expense (benefit) and the "expected" tax expense (benefit) based on the statutory federal income tax rate of 34% for fiscal 2000, 2001 and 2002
are as follows:
Fiscal Year
2000
2001
2002
Computed federal income tax expense (benefit) at statutory rate
$
(57
)
$
517
$
2,231
State income taxes, net of federal income tax effect
(9
)
66
288
Other
18
67
133
Income tax expense (benefit)
$
(48
)
$
650
$
2,652
The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets consists of the following:
February 2,
2002
February 1,
2003
Deferred tax assets:
Inventories
$
29
$
167
Property and equipment
920
660
Other accrued expenses
161
510
Total deferred tax assets
$
1,110
$
1,337
In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent primarily upon the generation of future taxable income
F-14
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
during the period in which those temporary differences become deductible. Management considers the projected future taxable income and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more
likely than not that the Company will realize the deferred tax assets at February 1, 2003.
10.   Related Party Transactions
A member of the Company's management is affiliated with another organization that provides decorating services for certain stores. The Company paid this
organization approximately $9 and $97 in fiscal 2000 and 2001, respectively. There were no services rendered in fiscal 2002.
11.   Stockholders' Equity
During January 1999, the Articles of Incorporation were amended to authorize the following shares:
•
15,000,000
Class A voting shares, $0.01 par value;
•
100,000
Class B nonvoting shares, $0.01 par value; and
•
8,000,000
Class C voting shares, $0.01 par value, 8% cumulative yield (subject to increase upon certain events of default).
The
Company entered into a Stock Purchase Agreement (the Agreement) dated January 19, 1999, whereby various third parties purchased an aggregate of 1,476,160 Class C shares
at $3.81 per share. Of these shares, 1,338,093 were purchased directly from the Company and 138,067 were Class A shares purchased from existing investors and exchanged for Class C
shares. The agreement also contains remedies that will grant additional Class C shares if the Company incurs legal costs or settlements in excess of $100,000 in connection with claims involving
certain specified intellectual property, ERISA, or securities law matters. These remedies are in place for a ten-year period and allow for the purchase of additional shares based on a
formula defined in the agreement. During fiscal 1999, the investors purchased an additional 788,954 Class C shares at $3.81 per share. During fiscal 2001, the investors purchased 92,308 shares
at $2.44 per share from a Class A common stockholder. The Company then exchanged the Class A shares for Class C shares.
Concurrent
with the Stock Purchase Agreement, individual Stock Purchase Warrants were issued with each purchase of Class C shares. These warrants have a ten-year term
and provide for the issuance of Class A shares at a price of $0.01 per share upon dilution of the Company through stock issuances below $3.81 per share.
The
Class C voting shares provide for mandatory distributions of the original cost and an 8% annual yield on the original costs upon sale or dissolution of the Company, an initial
public offering, or certain events of default. If none of these events occurs prior to December 31, 2003, 12 equal distributions will commence, repaying the original cost and the 8% stated
yield or a weighted average effective yield of 16.6%. Upon payment of these distributions, the Class C shares remain outstanding. If the Company makes each of the 12 quarterly distributions in
accordance with terms of the distribution right, commencing on December 31, 2003 and ending on September 30, 2006, distributions to the Class C common stockholders will aggregate
$13,402. If the Company had elected to extinguish the
F-15
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
distribution obligation early, the amount due on February 1, 2003 would have been $11,474. Upon payment of the mandatory distribution obligation, the Class C
participates with Class A stockholders in all further distributions, as if they held Class A common shares.
The
Class C common stock has been accounted for by the Company similar to a preferred stock with a mandatory dividend. The Company is accruing the aggregate distribution amount
over the period from issuance to the date of final distribution using the interest method. As of February 2, 2002 and February 1, 2003, the Company has accrued $4,160 and $6,144,
respectively, which has been reflected in the accompanying balance sheets as amounts distributable to Class C common stockholders. The annual increase in the amounts distributable to
Class C common stockholders for fiscal 2000, 2001 and 2003 of $1,475, $1,679 and $1,984, respectively have been presented in the accompanying statements of operations as deduction from net
income in the determination of net income (loss) applicable to common stockholders. Based on the Class C common stock outstanding at February 1, 2003, the mandatory distributions
required for each of the next four fiscal years are as follows:
Fiscal 2003
$
1,117
Fiscal 2004
4,467
Fiscal 2005
4,467
Fiscal 2006
3,351
12.   Stock Option Plan
Options Granted to Employees and Directors
The Company implemented a stock option plan (the Plan) authorizing the grant of options to certain employees, directors, and consultants. Stock options vest over
a five-year period and generally expire ten years from the date granted. As of February 1, 2003, 66,554 options are available for grant under the Plan. Subsequent to year end, the
Board of Directors authorized the reserve of an additional 615,385 common shares for issuance of future stock options. The authorization is subject to shareholder approval.
A
summary of options granted to employees and directors during fiscal 2000, 2001 and 2002, is as follows:
Options
Weighted
average
exercise price
Outstanding options January 29, 2000
—
$
—
Granted
114,138
2.60
Forfeited
(5,692
)
2.60
Outstanding options February 3, 2001
108,446
2.60
Granted
74,462
2.60
Forfeited
(12,462
)
2.60
Outstanding options February 2, 2002
170,446
2.60
Granted
61,846
2.67
Forfeited
(3,461
)
2.60
Outstanding options February 1, 2003
228,831
$
2.63
F-16
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
The following table summarizes information about outstanding and exercisable options at February 1, 2003:
Number
outstanding
Weighted
average
remaining
contractual life
Number
exercisable
80,215
7.3
32,086
21,692
7.6
8,677
53,154
8.3
10,631
15,385
9.0
15,385
58,385
9.3
—
Management
estimated that the fair value of the Company's common stock exceeded the option price of certain options granted in fiscal 2002. The Company recognized compensation expense
relating to these options during fiscal 2002 of approximately $13. The unearned compensation of $74 at February 1, 2003, will be recognized through charges to expense in various amounts over
the next five fiscal years. Management estimated the fair value of the Company's common stock based upon earnings multiples of public companies in the apparel industry.
Options Issued to Non-Employees
The Company accounts for options issued to non-employees at fair values, in accordance with the provisions of SFAS No. 123 and Emerging Issues
Task Force (EITF) No. 96-18,
Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods
or Services
.
During
fiscal 2000, 2001 and 2002, the Company granted options to non-employees to purchase 3,077, 6,154, and 3,077 of Class A common stock at $2.60 per share,
respectively. In accordance with EITF 96-18, the Company has established the grant date to be the
measurement date for such options in that the recipients have no further performance obligations with respect to the grants. The estimated fair value of the options were determined using the
Black-Scholes option pricing model with the following weighted average assumptions. The Company recognized compensation expense relating to the options during fiscal 2000, 2001 and 2002 of
approximately $8, $16 and $17, respectively.
Fiscal Year
2000
2001
2002
Risk-free interest rate
6.50%
5.50%
2.75%
Expected life
10 years
10 years
10 years
Volatility
200%
200%
200%
Dividend rate
0%
0%
0%
13.   Retirement Plan
The Company maintains a qualified 401(k) retirement plan for the benefit of all eligible employees. The eligible employees may make voluntary contributions to the
plan between 1% and 15% of compensation, with the Company matching 10% of the employees' contributions, up to 6% of compensation. The Company's contributions for fiscal 2000, 2001 and 2002 were
approximately $11, $14 and $17, respectively.
F-17
THE WHITE HOUSE, INC.
Notes to Financial Statements (Continued)
February 2, 2002 and February 1, 2003
(Dollars in thousands, except per share data)
14.   Legal Matters
Lawsuits and claims are filed from time to time against the Company in the ordinary course of business. Management, after reviewing developments to date with
legal counsel, is of the opinion that the outcome of such matters will not have a material adverse effect on the financial position of the Company or the accompanying financial statements taken as a
whole.
15.   Unaudited Quarterly Information
Fiscal Year 2001
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
Net sales
$
12,332
$
12,209
$
11,014
$
13,977
$
49,532
Gross profit
6,852
6,823
6,055
7,918
27,648
Net income (loss)
528
308
(208
)
241
869
Net income (loss) applicable to common stockholders
153
(107
)
(638
)
(218
)
(810
)
Diluted net income (loss) per share applicable to common stockholders:
Class A
0.03
(0.02
)
(0.11
)
(0.04
)
(0.14
)
Class C
0.03
(0.02
)
(0.11
)
(0.04
)
(0.14
)
Fiscal Year 2002
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
Net sales
$
15,978
$
17,696
$
15,049
$
18,233
$
66,956
Gross profit
9,077
10,224
8,571
10,813
38,685
Net income
1,129
1,408
247
1,126
3,910
Net income (loss) applicable to common stockholders
680
917
(263
)
592
1,926
Diluted net income (loss) per share applicable to common stockholders:
Class A
0.12
0.16
(0.05
)
0.10
0.33
Class C
0.12
0.16
(0.05
)
0.10
0.33
16.   Subsequent Events (unaudited)
On May 15, 2003, the Company's Board of Directors approved the Company's plan for an initial public offering.
F-18
[picture
of lifestyle center store front]
Shares
Common Stock
PROSPECTUS
, 2003
William Blair & Company
SG Cowen
RBC Capital Markets
Until                        , 2003 (25 days after the date
of this prospectus), all dealers that effect transactions in these securities, whether
or not participating in the offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
Part II
Information Not Required in Prospectus
Item 13.    Other Expenses of Issuance and Distribution.
We estimate that our expenses to be paid in connection with the offering (other than underwriting discounts, commissions, and reasonable expense allowances) will
be as follows:
SEC registration fee
$
4,045
NASD filing fee
5,500
Nasdaq National Market listing fee
100,000
Printing and engraving expenses
*
Accounting fees and expenses
*
Legal fees and expenses
*
Miscellaneous
*
Total
$
*
*
To
be completed by amendment.
The
foregoing items, except for the Securities and Exchange Commission and NASD fees, are estimated. All expenses will be borne by us.
Item 14.    Indemnification of Directors and Officers.
(a)   Section 2-418
of the Corporations and Associations Article of the Annotated Code of Maryland permits a corporation to indemnify its present and former
directors, among others, against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by
reason of their services in those or other capacities, unless it is established that (a) the act or omission of the director or officer was material to the matter giving rise to such proceeding
and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty; or (b) the director or officer actually received an improper personal benefit in
money, property, or services; or (c) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. Maryland law permits
a corporation to indemnify a present and former officer to the same extent as a director, and to provide additional indemnification to an officer who is not also a director. In addition,
Section 2-418(f) of the Corporations and Associations Article of the Annotated Code of Maryland permits a corporation to pay or reimburse, in advance of the final disposition of a
proceeding, reasonable expenses (including attorney's fees) incurred by a present or former director or officer made a party to the proceeding by reason of his service in that capacity, provided that
the corporation shall have received (a) a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the
corporation; and (b) a written undertaking by or on his behalf to repay the amount paid or reimbursed by the corporation if it shall ultimately be determined that the standard of conduct was
not met.
Our
charter requires us to indemnify our currently acting and former directors and officers against any and all liabilities and expenses incurred in connection with their services in
such capacities to the maximum extent permitted by Maryland law. Our charter and bylaws also require that, upon approval of the board of directors, we indemnify our employees, agents and persons who
serve and have served, at its request as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture or other enterprise or employee benefit plan to the
extent determined appropriate by our board of directors. Additionally, our charter provides that we advance expenses to our directors and officers entitled to indemnification to the maximum extent
permitted by Maryland
II-1
law
and may in our discretion advance expense to employees, agents and others who may be granted indemnification.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or
controlling persons in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we
will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Under
Maryland law, a corporation is permitted to limit by provision in its articles of incorporation the liability of directors and officers, so that no director or officer of the
corporation shall be liable to the corporation or to any stockholder for money damages except to the extent that (i) the director or officer actually received an improper benefit in money,
property, or services, for the amount of the benefit or profit in money, property or services actually received, or (ii) a judgment or other final adjudication adverse to the director or
officer is entered in a proceeding based on a finding in the proceeding that the director's or officer's action, or failure to act, was the result or active and deliberate dishonesty and was material
to the cause of action adjudicated in the proceeding. The registrant's charter contains such a provision which eliminates directors' and officers' liability to the maximum extent permitted by Maryland
law.
The
form of Underwriting Agreement (to be filed as Exhibit 1.1 to this registration statement) will provide for indemnification by the underwriters of The White House, Inc.
and its officers and directors for certain liabilities arising under the Securities Act of 1933, or otherwise.
We
maintain directors' and officers' liability insurance policies covering certain liabilities of persons serving as officers and directors and providing reimbursement to us for our
indemnification of such persons.
Item 15.    Recent Sales of Unregistered Securities.
In the three years preceding the filing of this registration statement, we issued the securities described below (adjusted to give effect to a
one-for-3.25 reverse stock split) that were not registered under the Securities Act. None of the transactions involved any underwriters, underwriting discounts, or commissions
or any public offering, and we believe that each transaction, if deemed to be a sale of a security, was exempt from the registration requirements of the Securities Act by virtue of Section 4(2)
thereof, Regulation D promulgated thereunder, or Rule 701 pursuant to compensatory benefit plans and contracts relating to compensation as provided under Rule 701. The recipients
of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, such
securities were restricted as to transfers and appropriate legends were affixed to the share certificates and instruments issued in such transactions.
(1)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Richard D. Sarmiento, our Chairman, President, and Chief
Executive Officer, and a member of our board of directors, to purchase an aggregate of 13,231 shares of our common stock at an exercise price of $13.20 per share.
II-2
(2)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Stephen L. Hirsch, our Vice President, Finance and
Administration, and Chief Financial Officer, to purchase an aggregate of 13,231 shares of our common stock at an exercise price of $12.00 per share.
(3)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Patricia Darrow-Smith, our Executive Vice President,
Merchandising, to purchase an aggregate of 13,231 shares of our common stock at an exercise price of $13.20 per share.
(4)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to F. Michael Smith, our Vice President, Operations, to purchase an
aggregate of 13,231 shares of our common stock at an exercise price of $13.20 per share.
(5)   On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Craig J. Foley, a member of our board of directors, to
purchase an aggregate of 4,615 shares of our common stock at an exercise price of $12.00 per share.
(6)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Sally Frame Kasaks, a member of our board of directors, to
purchase an aggregate of 4,615 shares of our common stock at an exercise price of $12.00 per share.
(7)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Howard E. Goldstein, a member of our board of directors, to
purchase an aggregate of 3,077 shares of our common stock at an exercise price of $12.00 per share.
(8)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Darryl Hartley-Leonard, a member of our board of directors, to
purchase an aggregate of 3,077 shares of our common stock at an exercise price of $12.00 per share.
(9)  On
May 15, 2003, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 12,308
shares of our common stock at an exercise price of $12.00 per share.
(10)  On
June 28, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Rod Olson, a consultant to the Company, to purchase an
aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share.
(11)  On
May 1, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 55,692
shares of our common stock at an exercise price of $2.60 per share.
(12)  On
March 12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Sally Frame Kasaks, a member of our board of directors, to
purchase an aggregate of 6,154 shares of our common stock at an exercise price of $2.60 per share.
(13)  On
March 12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Craig Foley, a member of our board of directors, to purchase
an aggregate of 3,077 shares of our common stock at an exercise price of $2.60 per share.
(14)  On
March 12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Darryl Leonard-Hartley, a member of our board of directors, to
purchase an aggregate of 3,077 shares of our common stock at an exercise price of $2.60 per share.
(15)  On
March 12, 2002, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Michael Machens, an advisory board member, to purchase an
aggregate of 3,077 shares of our common stock at an exercise price of $2.60 per share.
II-3
(16)  On
March 12, 2002, we issued stock options to Chancellor Private Capital Offshore Partners I to purchase an aggregate of 61 shares of our common stock at an
exercise price of $2.60 per share.
(17)  On
March 12, 2002, we issued stock options to Chancellor Private Capital Offshore Partners II to purchase an aggregate of 707 shares of our common stock at an
exercise price of $2.60 per share.
(18)  On
March 12, 2002, we issued stock options to Chancellor Private Capital Offshore Partners III to purchase an aggregate of 430 shares of our common stock at an
exercise price of $2.60 per share.
(19)  On
March 12, 2002, we issued stock options to Citiventure Partnership 96, L.P., to purchase an aggregate of 1,876 shares of our common stock at an exercise price
of $2.60 per share.
(20)  On
May 15, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 29,230
shares of our common stock at an exercise price of $2.60 per share.
(21)  On
May 9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Sally Frame Kasaks, a member of our board of directors, to
purchase an aggregate of 6,153 shares of our common stock at an exercise price of $2.60 per share.
(22)  On
May 9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Craig Foley, a member of our board of directors, to purchase an
aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share.
(23)  On
May 9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Darryl Leonard-Hartley, a member of our board of directors, to
purchase an aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share.
(24)  On
May 9, 2001, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to Michael Machens, an advisory board member, to purchase an
aggregate of 3,076 shares of our common stock at an exercise price of $2.60 per share.
(25)  On
May 9, 2001, we issued stock options to Chancellor Private Capital Offshore Partners I to purchase an aggregate of 61 shares of our common stock at an
exercise price of $2.60 per share.
(26)  On
May 9, 2001, we issued stock options Chancellor Private Capital Offshore Partners II to purchase an aggregate of 707 shares of our common stock at an exercise
price of $2.60 per share.
(27)  On
May 9, 2001, we issued stock options to Chancellor Private Capital Offshore Partners III to purchase an aggregate of 430 shares of our common stock at an
exercise price of $2.60 per share.
(28)  On
May 9, 2001, we issued stock options to Citiventure Partnership 96, L.P., to purchase an aggregate of 1,876 shares of our common stock at an exercise price of
$2.60 per share.
(29)  On
August 1, 2000, pursuant to the terms of the 1999 Stock Option Plan, we issued stock options to certain of our employees to purchase an aggregate of 20,923
shares of our common stock at an exercise price of $2.60 per share.
Item 16.    Exhibits.
(a)   Exhibits.
The following exhibits are filed as part of this registration statement:
Exhibit No.
Description
1.1
*
Form of Underwriting Agreement
3.1
Form of The White House, Inc. Articles of Amendment and Restatement
3.2
Form of The White House, Inc. Articles of Amendment
II-4
3.3
Articles of Amendment and Restatement of The White House, Inc., as currently in effect
3.4
Form of Amended and Restated Bylaws of The White House, Inc.
3.5
Amended and Restated Bylaws of The White House, Inc., as currently in effect
4.1
*
Form of specimen certificate representing The White House, Inc.'s common stock
4.2
Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, and 3.5
5.1
*
Opinion of Venable, Baetjer, Howard & Civiletti, LLP
10.1
†
The White House, Inc. 1999 Stock Option Plan and form of Grant Agreement
10.2
†
Form of The White House, Inc. Employee Stock Purchase Plan
10.3
†*
Employment Agreement between The White House, Inc. and Richard D. Sarmiento
10.4
†*
Employment Agreement between The White House, Inc. and Patricia Darrow-Smith
10.5
†*
Employment Agreement between The White House, Inc. and F. Michael Smith
10.6
†*
Employment Agreement between The White House, Inc. and Stephen L. Hirsch
10.7
†
Employment offer letter between The White House, Inc. and Stephen L. Hirsch dated July 12, 1999
10.8
2002 Stock Purchase and Exchange Agreement, dated January 15, 2002, among Anne Bernholz, certain purchasers, and The White House, Inc.
10.9
Registration Agreement dated January 19, 1999 among The White House, Inc. and the investors and executives specified therein
10.10
†
Form of The White House, Inc. 2003 Stock Option Plan and form of Grant Agreement
10.11
Form of Director Indemnification Agreement
10.12
Form of Officer Indemnification Agreement
10.13
Loan and Security Agreement dated August 23, 2000 between Paragon Capital LLC (subsequently known as Wells Fargo Retail Finance LLC) and The White House, Inc., including First Amendment dated June 25, 2001, Second Amendment dated
September 2002, Third Amendment dated November 2002, Fourth Amendment (undated) and Fifth Amendment (undated)
10.14
Non-Competition and Confidentiality Agreement, dated January 19, 1999, between The White House, Inc. and Richard Sarmiento
10.15*
Master Lease Agreement (undated) by and between Carlton Financial Corporation and The White House, Inc.
23.1
Consent of KPMG LLP
23.2
*
Consent of Venable, Baetjer, Howard & Civiletti, LLP (to be included in Exhibit 5.1)
24.1
Power of Attorney (included on signature page)
*      To
be filed by amendment
†      Indicates
compensatory plan or arrangement.
(b)   Financial
Statement Schedules
II-5
Schedules
have been omitted for the reason that they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto.
Item 17.    Undertakings.
(a)   The
undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations
and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.
(b)   Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(c)   The
undersigned registrant hereby undertakes that:
(1)   For
purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared effective.
(2)   For
the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial
bona
fide
offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in Glen Burnie, Maryland on the 22nd day of May 2003.
THE WHITE HOUSE, INC.
By:
/s/
RICHARD D. SARMIENTO
Richard D. Sarmiento
Chairman, President, Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below hereby constitutes and appoints, jointly and severally, Richard D. Sarmiento and
Stephen L. Hirsch and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place,
and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to sign any registration statement for the
offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and all post effective amendments
thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature
Title
Date
/s/
RICHARD D. SARMIENTO
Richard D. Sarmiento
Chairman, President, Chief Executive Officer, and Director (Principal Executive Officer)
May 22, 2003
/s/
STEPHEN L. HIRSCH
Stephen L. Hirsch
Vice President, Finance and Administration, and Chief Financial Officer (Principal Financial and Accounting Officer)
May 22, 2003
/s/
CRAIG J. FOLEY
Craig J. Foley
Director
May 22, 2003
/s/
DARRYL HARTLEY-LEONARD
Darryl Hartley-Leonard
Director
May 22, 2003
/s/
HOWARD E. GOLDSTEIN
Howard E. Goldstein
Director
May 22, 2003
/s/
SALLY FRAME KASAKS
Sally Frame Kasaks
Director
May 22, 2003
II-7
EXHIBIT INDEX
Exhibit No.
Description
1.1
*
Form of Underwriting Agreement
3.1
Form of The White House, Inc. Articles of Amendment and Restatement
3.2
Form of The White House, Inc. Articles of Amendment
3.3
Articles of Amendment and Restatement of The White House, Inc., as currently in effect
3.4
Form of Amended and Restated Bylaws of The White House, Inc.
3.5
Amended and Restated Bylaws of The White House, Inc., as currently in effect
4.1
*
Form of specimen certificate representing The White House, Inc.'s common stock
4.2
Reference is made to Exhibits 3.1, 3.2, 3.3, 3.4, and 3.5
5.1
*
Opinion of Venable, Baetjer, Howard & Civiletti, LLP
10.1
†
The White House, Inc. 1999 Stock Option Plan and form of Grant Agreement
10.2
†
Form of The White House, Inc. Employee Stock Purchase Plan
10.3
†*
Employment Agreement between The White House, Inc. and Richard D. Sarmiento
10.4
†*
Employment Agreement between The White House, Inc. and Patricia Darrow-Smith
10.5
†*
Employment Agreement between The White House, Inc. and F. Michael Smith
10.6
†*
Employment Agreement between The White House, Inc. and Stephen L. Hirsch
10.7
†
Employment offer letter between The White House, Inc. and Stephen L. Hirsch dated July 12, 1999
10.8
2002 Stock Purchase and Exchange Agreement, dated January 15, 2002, among Anne Bernholz, certain purchasers, and The White House, Inc.
10.9
Registration Agreement dated January 19, 1999 among The White House, Inc. and the investors and executives specified therein
10.10
†
Form of The White House, Inc. 2003 Stock Option Plan and form of Grant Agreement
10.11
Form of Director Indemnification Agreement
10.12
Form of Officer Indemnification Agreement
10.13
Loan and Security Agreement dated August 23, 2000 between Paragon Capital LLC (subsequently known as Wells Fargo Retail Finance LLC) and The White House, Inc., including First Amendment dated June 25, 2001, Second Amendment dated
September 2002, Third Amendment dated November 2002, Fourth Amendment (undated) and Fifth Amendment (undated)
10.14
Non-Competition and Confidentiality Agreement, dated January 19, 1999, between The White House, Inc. and Richard Sarmiento
10.15*
Master Lease Agreement (undated) by and between Carlton Financial Corporation and The White House, Inc.
23.1
Consent of KPMG LLP
23.2
*
Consent of Venable, Baetjer, Howard & Civiletti, LLP (to be included in Exhibit 5.1)
24.1
Power of Attorney (included on signature page)
*      To
be filed by amendment
†      Indicates
compensatory plan or arrangement.