The Company sells its merchandise to retail customers for cash and accepts checks and most major credit cards. The Company's "Cohoes" division also offers its own credit card. In addition, the Company maintains a layaway plan and offers special orders on selected merchandise. It does not offer refunds, except on defective merchandise and certain sales from specialty retail operations, but will exchange merchandise or give store credit for merchandise returned within a prescribed period of time.. The Company's subsidiary, Burlington Coat Factory Direct Corporation, offers refunds for merchandise purchased through its online shopping website if the merchandise is returned within a prescribed period of time.

The Company advertises primarily on television and, to a lesser extent, in regional and local newspapers and radio. During the past three fiscal years, advertising expenditures have averaged approximately 2.1% of total revenues.

The Company has two major product segments, apparel and home products. The apparel segment includes departments offering all clothing items for men, women and children and apparel accessories such as shoes, jewelry, perfumes and watches. The home products segment includes departments offering linens, home furnishings, gifts, baby furniture and baby furnishings. Net sales from continuing operations from the sale of apparel products for fiscal years 2005, 2004 and 2003 were $2.5 billion, $2.2 billion and $2.1 billion, respectively. Net sales from continuing operations from the sale of home products for fiscal years 2005, 2004 and 2003 were $0.6 billion, $0.6 billion and $0.6 billion, respectively.

As of July 31, 2005, the Company operated three hundred sixty-one department stores, all but forty-five of which are located in leased facilities ranging in size (including storage space) from approximately 18,000 to approximately 207,000 square feet, with an average area of approximately 81,000 square feet. Total store gross square footage increased to approximately 29.3 million square feet, an increase of 7.2% over a year ago. Selling space accounts for over sixty-eight percent of the total area in most stores.

All of the Company's department stores are either free-standing or are located in shopping malls, strip shopping centers or other commercial complexes. The Company believes that its customers are attracted to its stores principally by the availability of a large assortment of first-quality current brand name merchandise at attractive prices.

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The Company also operates stores under the names "Cohoes Fashions," "MJM Designer Shoes", "Luxury Linens" and "Super Baby Depot." Cohoes Fashions offers merchandise in the middle to higher price range. MJM Designer Shoes offers moderately priced designer and fashion shoes. The Super Baby Depot Stores are stand-alone stores based on the same merchandising concepts as those of the Baby Depot departments in the Burlington Coat Factory stores. Luxury Linens is a specialty store for linens, bath shop items, gifts and accessories and offers merchandise in the middle to higher range. Through June 2003, the Company operated seven stores under the name "Decelle." During July 2003, these stores were closed. The Company converted three stores formerly operated as Decelle stores to Burlington Coat Factory Stores during fiscal 2004, and converted two stores formerly operated as Decelle stores to Cohoes Fashions stores during fiscal 2005. Through August 2004, the Company operated one store under the name "Totally 4 Kids." In October 2004, this store was converted into two separate stores: a Super Baby Depot store and an MJM Designer Shoe Store. The Company plans to close its two stand-alone Luxury Linens stores during the first half of fiscal 2006 but will continue to operate Luxury Linens as a department within its Burlington Coat Factory stores.*

The stores generally are located in close proximity to population centers, other department stores and other retail operations and are usually established near a major highway or thoroughfare, making them easily accessible by automobile. It is likely that the Company would be adversely affected by any conditions which were to result in the reduction of automobile use.

The Company owns substantially all the equipment used in its stores and believes that its selling space is well utilized and that its equipment is well maintained and suitable for its requirements.

Some stores contain departments licensed to unaffiliated parties for the sale of items such as lingerie, fragrances, shoes and jewelry. During the fiscal year ended May 28, 2005, the Company's rental income from all of its licensed departments aggregated less than 1% of the Company's total revenues.

Statements made in this report that are forward-looking (within the meaning of the Private Securities Litigation Reform Act of 1995) are not historical facts and involve a number of risks and uncertainties. Such statements include, but are not limited to, proposed store openings and closings, proposed capital expenditures, projected financing requirements, proposed developmental projects, projected sales and earnings, and the Company's ability to maintain selling margins. Among the factors that could cause actual results to differ materially are the following: general economic conditions; consumer demand; consumer preferences; weather patterns; competitive factors, including pricing and promotional activities of major competitors; the availability of desirable store locations on suitable terms; the availability, selection and purchasing of attractive merchandise on favorable terms; import risks; the Company's ability to control costs and expenses; unforeseen computer related problems; any unforeseen material loss or casualty; the effect of inflation; and other factors that may be described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied will not be realized.

Since 1972 when its first store was opened in Burlington, New Jersey, the Company has expanded to three hundred thirty five Burlington Coat Factory department stores, seven Cohoes Fashions stores, fifteen MJM Designer Shoes stores, two stand-alone Luxury Linens stores which will be closed during fiscal 2006, and two stand-alone Super Baby Depot stores. During fiscal 2005, the Company opened one Super Baby Depot store in Moorestown, New Jersey and one in Ontario, California. The Super Baby Depot store in Ontario, California is the result of the conversion of the former Totally 4 Kids store into two separate stores, a Super Baby Depot store and an MJM Designer Shoes store. The two Super Baby Depot Stores are stand-alone stores based on the same merchandising concepts as those of the Baby Depot departments in the Burlington Coat Factory stores.

At July 31, 2005 the Company operated stores in 42 states and is exploring expansion opportunities both within its current market areas and in other regions. For fiscal 2006, the Company plans to open approximately ten additional Burlington Coat Factory department stores and four MJM Designer Shoes stores.* In addition, the Company plans to close its two stand-alone Luxury Linens stores and instead continue to operate Luxury Linens as a separate department within its Burlington Coat Factory stores.*

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For fiscal 2006, the Company has planned store expansions and remodelings for approximately sixteen stores.* In addition, the Company plans to relocate approximately eight of its stores to new locations within the same trading market.* The Company continues to monitor store profitability and should economic factors change, some store closings could be possible.

The Company believes that its ability to find satisfactory locations for its stores is essential for the continued growth of its business. The opening of stores generally is contingent upon a number of factors, including the availability of desirable locations with suitable structures and the negotiation of acceptable lease terms. There can be no assurance, however, that the Company will be able to find suitable locations for new stores or that even if such locations are found and acceptable lease terms are obtained, the Company will be able to open the number of new stores presently planned.

During fiscal 2004, the Company completed construction of a new warehouse and distribution facility of approximately 650,000 square feet in Edgewater Park, New Jersey. This facility expanded the Company's warehousing and distribution capacity and allowed the Company to increase its percentage of centrally received goods. The facility began processing merchandise in August of 2003 and has been fully operational since August 2004. During fiscal 2005, the Company began implementing a new warehouse management system that the Company believes will (i) reduce receiving, sorting and other merchandise handling times, (ii) improve planning and allocation efficiency and (iii) reduce merchandise processing and handling costs.* The Company continues to develop this warehouse management system. The facility also contains a new data center. This data center and the existing data center at the Company's corporate headquarters are active operational data centers connected by a high speed telecommunications network. These facilities provide back up to each other in the case of an event causing a loss of data at one of the facilities.

To assist with inventory management, the Company is currently in the process of implementing a third party markdown optimization software system throughout its stores. Management believes that the system will improve the Company's ability to monitor the performance of merchandise on a regional basis in order to clear underperforming merchandise earlier in the season, purchase newer or more in-demand items more quickly and manage pricing decisions.* The initial implementation of the system is limited to certain ladies' and girls' sportswear items for the 2005 fall season.

Early in fiscal 2004, the Company completed a roll-out of a new point-of-sale register systems to all of the Company's stores. The new register systems allow the Company to use new payment methodologies and technologies and provides necessary flexibility as these methodologies and technologies evolve over time.* During fiscal 2005, the Company began processing customers' paper checks electronically through the Automated Clearinghouse (ACH) system. As a result, the rate of accepting bad checks at stores has been reduced. The Company believes that further implementation of this process may reduce annual bad check expense by approximately $5 million.* During fiscal 2004, the Company also completed a roll-out of new debit card and electronic signature capture terminals. These roll-outs were part of a multi-year store systems upgrade which includes gift cards, new software and customer loyalty programs.

During the second quarter of fiscal 2003, the Company launched its stored value card and gift card programs. The cards are reusable plastic wallet-sized cards that substantially replace the Company's paper gift certificates and store credits. The cards allow for improved control over the administration of store credit and gift certificate services. The Company hopes that these cards will be the foundation of its customer loyalty program.*

During fiscal 2005, the Company continued its drive to increase the percentage of its merchandise purchases performed via electronic data interchange ("EDI"). Conducting transactions via EDI, rather than via paper purchase orders and paper invoices, improves efficiency in submitting merchandise orders, receiving merchandise and processing payments for merchandise orders.* By the end of fiscal 2005, approximately 50% of all the Company's merchandise purchases were being conducted via EDI.

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In fiscal 2005, the Company began a pilot program using kiosks in its stores to perform a variety of employment and customer service functions. The kiosks allow customers to enroll in and search the Company's Baby Depot gift registry, place and retrieve information regarding the status of special merchandise orders. In addition, the kiosks gather customer information for direct marketing and promotional purposes and allow prospective employees to submit employment applications.

The Company offers merchandise for sale through its Internet subsidiary, Burlington Coat Factory Direct Corporation, on its online shopping website (www.burlingtoncoatfactory.com). The site features thousands of merchandise items, shopping cart functionality, item search capability and a secure online payment processing system. An order management system allows for vendor direct, warehouse and store-based fulfillment of orders. Website product data is tied to the Company's inventory systems for maintenance of prices and item availability.

The Company seeks to maintain its competitive position and improve its prospects by periodically reevaluating its methods of operation, including its pricing and inventory policies, the format of its stores and its ownership or leasing of stores.

Each store has a manager and one or more assistant managers, as well as department managers. The Company also employs regional and district managers to supervise overall store operating and merchandising policies. Major merchandising decisions are made, overall policies are set, and accounting and general financial functions for the Company's stores are conducted, at corporate headquarters. In addition, other operations such as real estate, store operations, loss prevention, merchandise presentation, customer service, and human resources, are managed on a Company-wide basis.

General. The retail business is highly competitive. Competitors include other department stores as well as individual, regional, and national "off-price" retailers and discount store chains. At various times throughout the year, traditional full-price department store chains and specialty shops offer brand name merchandise at substantial markdowns, which can result in prices approximating those offered by the Company at its Burlington Coat Factory department stores. Some of the Company's competitors

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are considerably larger than the Company and have substantially greater financial and other resources.

Resale Price Maintenance. Since it is the general policy of the Company to sell at lower than the traditional full retail price, its business may be adversely affected by manufacturers who attempt to maintain the resale price of their merchandise by refusing to sell or grant advertising allowances to purchasers who do not adhere to their suggested retail prices. Federal legislation and regulations have been proposed from time to time which, if enacted, would be helpful to manufacturers attempting to establish minimum prices or withhold allowances. In addition, the rules against resale price maintenance have been subject to challenge in the courts from time to time.

The Company has, on several occasions in the past, brought lawsuits against certain manufacturers and department store chains and complained to the Federal Trade Commission seeking more vigorous enforcement of existing Federal laws, as well as testified before Congress in connection with proposed legislation concerning the Federal antitrust laws.

The Company's website is www.burlingtoncoatfactory.com. The Company makes available on this website, free of charge, the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those filings, as soon as practical after such reports are filed with the Securities and Exchange Commission. The Company also makes available on this website its Code of Business Conduct and Ethics (which includes the Company's Code of Ethics for the Chief Executive Officer and Senior Financial Officers), its Corporate Governance Guidelines, and its Audit Committee Charter. Information contained on this website is not part of this report. Printed copies of information referred to in this paragraph is also available by writing to the Company at: Corporate Secretary, Burlington Coat Factory Warehouse Corporation, 1830 Rt. 130, Burlington, NJ 08016.

Item 2. Properties

The Company owns the land and/or building for forty-five of its stores. Generally, however, the Company's policy has been to lease its stores. Store leases generally provide for fixed monthly rental payments, plus the payment, in most cases, of real estate taxes and other charges with escalation clauses. In many locations, the Company's store leases contain formulas providing for the payment of additional rent based on sales.

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The following table shows the years in which store leases existing at July 31, 2005 expire:

The Company owns five buildings in Burlington, New Jersey. Of these buildings, two are used by the Company as retail space. In addition, the Company owns approximately 97 acres of land in the Townships of Burlington and Florence, New Jersey on which the Company has constructed its corporate office and a warehouse/distribution facility. The Company leases a warehouse facility of approximately 300,000 square feet in Bristol, Pennsylvania. The Company leases approximately 20,000 square feet of office space in New York City. The Company owns approximately forty-six acres of land in Edgewater Park, New Jersey on which the Company has constructed a facility of approximately 650,000 square feet. This facility expanded the Company's warehousing and distribution capabilities. The facility began processing merchandise in August of 2003 and has been fully operational since August 2004.

Item 3. Legal Proceedings

The Company is a defendant in Lewis v. Burlington Coat Factory Warehouse Corporation, a putative class action filed on November 10, 2004 in the Superior Court of California for the County of Alameda. The plaintiff, a former employee, filed this putative class action on behalf of himself and certain current and former management-level employees at the Company's California stores. The plaintiff alleges that the Company violated a California state law by classifying these employees as "exempt" managerial/executive employees for purposes of the payment of overtime compensation and failing to pay them the overtime premium required for non-exempt employees. The lawsuit also claims that the Company failed to provide employees with meal and rest periods required under California law. In its complaint, the plaintiff sought certification as a class, damages and penalties in unspecified amounts, statutory damages, restitution, disgorgement, injunctive and declaratory relief, and costs of litigation, including attorney fees. The Company filed an answer denying the claims and asserting various affirmative defenses on December 22, 2004. On July 22, 2005, the Company entered into an agreement with the plaintiffs to settle this claim. The settlement is subject to court approval. The Company does not believe that this settlement, if approved by the court, will have a material adverse effect on the Company's consolidated financial position, results of operations or cash flows.

In the past, the Company has initiated several lawsuits in its effort to stop what it believes to be unlawful practices on the part of certain manufacturers and large retailers to control the prices at which certain items of merchandise may be sold at the Company's stores.

Item 4. Submission of Matters to a Vote of Security Holders

The Company did not submit any matter to a vote of its security holders during the fourth quarter of fiscal 2004.

PART II

The Company's Common Stock is traded on the New York Stock Exchange and its trading symbol is "BCF."

The following table provides the high and low closing prices on the New York Stock Exchange for each fiscal quarter for the period from June 1, 2003 to May 28, 2005 and for the two months ended July 31, 2005.

At July 31, 2005, there were 208 record holders of the Company's Common Stock. The number of record holders does not reflect the number of beneficial owners of the Company's Common Stock for whom shares are held by Cede & Co., certain brokerage firms and others.

On November 4, 2004, the Board of Directors of the Company authorized a stock repurchase plan allowing for the repurchase of up to $10 million of the Company's common stock. Any such repurchases under the plan shall be made in the open market or in negotiated transactions from time to time over the three year period commencing November 5, 2004 at such time as deemed prudent and appropriate by the President of the Company in his discretion. As of May 28, 2005, the Company had not authorized the repurchase of any additional shares of stock. The Company did not repurchase any shares of its stock during fiscal 2005.

The following table summarizes the Company's common stock repurchase activity for the three month period ended May 28, 2005 and the approximate value of shares of common stock that may yet be repurchased.

The following table sets forth the Company's shares authorized for issuance under its equity compensation plans at May 28, 2005:

The table set forth above does not include options to purchase an aggregate 73,600 shares of common stock at $26.00 per share approved for grant by the Stock Incentive Committee of the Company's Board of Directors in January 2005 subject to approval of the Company's stockholders.

Item 6. Selected Financial Data

The following table sets forth certain selected financial data, which have been adjusted to give effect to the reclassification of the fiscal 2005 discontinued store operations, as discussed in Note A.29 to the consolidated financial statements (in thousands except with respect to share data):

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Burlington Coat Factory experienced an increase in sales in each quarter of fiscal 2005 as compared with the corresponding quarter of the prior year. Comparative store sales increased by 6.3% in fiscal 2005 as compared with the same twelve-month period a year ago. Consolidated net sales for the 2005 fiscal year increased 11.9% over the twelve-month period a year ago. While improving economic conditions contributed to the improved performance during fiscal 2005, the increase in consolidated net sales for the year also resulted from the sales contributed by the new stores that opened in fiscal 2005 and from the colder temperatures throughout the country compared with the prior year.

Management considers numerous factors in assessing the Company's performance. Key performance measures used by management include comparative store sales, inventory turnover, inventory levels, gross margin, net margin and liquidity.

Comparative store sales is a measure of the performance of a store during the current reporting period against the performance of the same store in the corresponding period of the previous year. The Company experienced an increase in comparative store sales of 6.3% in fiscal 2005 compared with fiscal 2004. This increase is primarily due to stronger demand for apparel merchandise compared with the prior fiscal year, as well as colder temperatures in the fall season which positively impacted sales of outerwear.

Inventory turnover is a measure that indicates how efficiently inventory is bought and sold. It measures the length of time the Company owns its inventory. This is significant because usually the longer the inventory is owned, the more likely markdowns may be required to sell the inventory. Inventory turnover is calculated by dividing the retail sales before sales discounts by the average retail stock for the period being measured. The Company's inventory turnover rate was 2.4 in fiscal 2005 and fiscal 2004.

Inventory levels are monitored by management to assure that the stores are properly stocked to service customer needs while at the same time assuring that stores are not over-stocked which would necessitate increased markdowns to move slow-selling merchandise. To assist with inventory management, the Company is currently in the process of implementing a third party markdown optimization software system throughout its stores. Management believes that the system will improve the Company's ability to monitor the performance of merchandise on a regional basis in order to clear underperforming merchandise earlier in the season, purchase newer or more in-demand items more quickly and manage pricing decisions.* The initial implementation of the system is limited to ladies' and girls' sportswear for the 2005 fall season. At the end of fiscal 2005, inventory was $720.9 million versus $622.5 million at the end of fiscal 2004. This increase in inventory is due to the increase in the number of stores operating in fiscal 2005 compared with fiscal 2004, as well as the Company's pre-season purchases of inventory. The Company purchases inventory in advance in an effort to obtain better pricing.* The inventory per store was $2.0 million in fiscal 2005 and $1.8 million in fiscal 2004.

Gross margin is a measure used by management to indicate whether the Company is selling merchandise at an appropriate gross profit. Gross margin is the difference between net sales and the cost of sales. The Company experienced a slight decrease in gross margin for fiscal 2005 to 37.3%, from 37.7% for fiscal 2004.

Net operating margin provides management with an indication of the operating profitability of the Company. Net operating margin is the difference between revenues (net sales and other revenue) and the combination of the cost of sales and operating expenses (selling and administrative expenses and depreciation). The Company's net margin was $164.8 million in fiscal 2005 and $110.5 million in fiscal 2004.

Liquidity measures the Company's ability to generate cash. Management measures liquidity through cash flow and working capital. Cash flow is the measure of cash generated from operating, financing, and investing activities. The Company experienced an increase in cash flow from operations of $120.2 million as compared with the prior fiscal year. The increase in cash flow for fiscal 2005 is primarily the result of an increase in net income from continuing operations offset in part by acquisitions of inventory, property, and equipment. Along with cash flow, working capital assists management in determining the Company's ability to meet its cash requirements. Working capital measures the Company's current financial position. Working capital is current assets, excluding assets from discontinued operations, minus current liabilities. Working capital for fiscal 2005 was $407.2 million, compared with $330.0 million in fiscal 2004. This increase in working capital resulted from increases in merchandise inventory offset in part by an increase in accounts payable and a decrease in investments.

The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities; (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and (iii) the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue returns, bad debts, inventories, income taxes, financing operations, asset impairment, retirement benefits, risk participation agreements, vendor promotional allowances, reserves for closed stores and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes that the following represent its more critical estimates and assumptions used in the preparation of the consolidated financial statements:

Inventory. The Company's inventory is valued at the lower of cost or market using the retail first-in, first-out ("FIFO") inventory method. Under the retail inventory method, the valuation of inventory at cost and resulting gross margin are calculated by applying a calculated cost to retail ratio to the retail value of inventory. The retail inventory method is an averaging method that has been widely used in the retail industry due to its practicality. Additionally, the use of the retail inventory method will result in valuing inventory at the lower of cost or market if markdowns are currently taken as a reduction of the retail value of inventory. Inherent in the retail inventory method calculation are certain significant management judgments and estimates including, merchandise markon, markups, markdowns and shrinkage which significantly impact the ending inventory valuation at cost as well as the resulting gross margin. Management believes that the Company's retail inventory method and application of FIFO provides an inventory valuation which approximates cost using a first-in, first-out assumption and results in carrying value at the lower of cost or market. Estimates are used to charge inventory shrinkage for the first three fiscal quarters of the fiscal year. An actual physical inventory is conducted at the end of the fiscal year to calculate actual shrinkage. The Company also estimates its required markdown allowances. If actual market conditions are less favorable than those projected by management, additional markdowns may be required. While the Company makes estimates on the basis of the best information available to it at the time estimates are made, over accruals or under accruals may be uncovered as a result of the physical inventory requiring fourth quarter adjustments.

Insurance. The Company has risk participation agreements with insurance carriers with respect to workers' compensation and liability insurance. Pursuant to these arrangements, the Company is responsible for paying individual claims up to designated dollar limits. The amounts included in the Company's costs related to these claims are estimated and can vary based on changes in assumptions or claims experience included in the associated insurance programs. An increase in worker's compensation claims by employees or liability claims will result in a corresponding increase in the Company's costs related to these claims.

Reserves for Revenue Returns. The Company records reserves for future revenue returns. The reserves are based on current revenue volume and historical claim experience. If claims experience differs from historical levels, revisions in the Company's estimates may be required.

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Long-Lived Assets. The Company tests for recoverability of long-lived assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. This includes performing an analysis of anticipated undiscounted future net cash flows of long-lived assets. If the carrying value of the related assets exceeds the undiscounted cash flow, the Company reduces the carrying value to its fair value, which is generally calculated using discounted cash flows. Various factors including future sales growth and profit margins are included in this analysis. To the extent these future projections change, the conclusion regarding impairment may differ from the estimates. Future adverse changes in market conditions or poor operating results of underlying assets could result in losses or an inability to recover the carrying value of the assets that may not be reflected in an asset's current carrying value, thereby possibly requiring an impairment charge in the future.

Allowance for Doubtful Accounts. The Company maintains allowances for uncollectible receivables, primarily bad checks and losses on credit card accounts. This reserve is calculated based upon historical collection activities adjusted for current conditions.

In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures financial instruments that are within the pronouncement's scope as a liability because it embodies an obligation of the issuer. Provisions of this standard are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements, while other provisions revise that definition to include certain obligations that a reporting entity can or must settle through issuance of its own equity shares. SFAS No. 150 was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted this statement in the second quarter of fiscal 2004. The adoption of SFAS No. 150 had no material effect on the Company's consolidated financial position, results of operations or cash flows. In November 2003, the FASB decided to defer certain provisions of SFAS No. 150 related to mandatorily redeemable financial instruments representing non-controlling interests in subsidiaries included in consolidated financial statements. Management will monitor the actions of the FASB and assess the impact, if any, that these actions may have on the Company's consolidated financial position, results of operations or cash flows.

In March 2004, the EITF issued a consensus on EITF Issue No. 03-01, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments. In this consensus, the EITF required certain quantitative and qualitative disclosures related to debt and marketable equity securities classified as available-for-sale or held-to-maturity under SFAS No. 115 that are in an unrealized loss position at the balance sheet date but for which an other-than-temporary impairment has not been recognized. In addition, the EITF developed a basic model in evaluating whether investments within the scope of EITF Issue No. 03-01 have other-than-temporary impairment. In September 2004, the FASB issued FASB Staff Position 03-1-1, which delays the effective date until additional guidance is issued for the application of the recognition and measurement provisions of EITF Issue No. 03-01 to investments in securities that are impaired. The Company does not believe that the adoption of EITF Issue No. 03-01 will have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In November 2004, the EITF issued a consensus on EITF Issue No. 03-13, Applying the Conditions in Paragraph 42 of FASB Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", in Determining Whether to Report Discontinued Operations. In this consensus, the EITF provided guidance on how an ongoing entity should evaluate whether the operations and cash flow of a disposed component have been or will be eliminated from the ongoing operations of the entity. The Company adopted the requirements of EITF No. 03-13 during fiscal 2005. The adoption did not have a material effect on the Company's consolidated financial position, results of operations or cash flows.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an Amendment of ARB No. 43, Chapter 4 "Inventory Pricing". The standard requires that abnormal amounts of idle facility expense, freight, handling costs and wasted materials (spoilage) should be excluded from the cost of inventory and expensed when incurred. The provision is effective for fiscal periods beginning after June 15, 2005. The Company does not expect the adoption of this standard to have a material effect on its consolidated financial position, results of operations or cash flows.

In December 2004, the FASB issued SFAS No. 123(R) Share Based Payment. This statement establishes standards for the accounting of transactions in which an entity exchanges its equity instruments for goods and services, primarily with respect to accounting for transactions in which an entity obtains employee services in share-based payment transactions. It also addresses transactions in which an entity incurs liabilities in exchange for goods and services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. Entities will be required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period). The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models. If an equity award is modified after the grant date, incremental compensation cost will be recognized in an amount equal to the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. This statement is effective for the first fiscal year beginning after June 15, 2005. The Company will adopt Statement No. 123(R) beginning with its second quarter of fiscal 2006. The statement requires the Company to use either the modified-prospective method or modified retrospective method. Under the modified-prospective method, the Company must recognize compensation cost for all awards subsequent to adopting the standard and for the unvested portion of previously granted awards outstanding upon adoption. Under the modified retrospective method, the Company must restate its previously issued financial statements to recognize the amounts it previously calculated and reported on a pro-forma basis, as if the prior standard had been adopted. Under both methods, the statement permits the use of either the straight-line or an accelerated method to amortize the cost as an expense for awards with graded vesting. Currently, the Company follows APB No. 25 which does not require the recognition of compensation expense relating to the issuance of stock options so long as the quoted market price of the Company's stock at the date of grant is less than or equal to the amount an employee must pay to acquire the stock. The Company is currently evaluating the provisions of SFAS No. 123(R) and has not yet determined the effect that adoption of this standard will have on its financial statements.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets--An Amendment of APB Opinion No. 29. SFAS No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exemption for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange is considered to have commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provision is effective for fiscal years beginning after June 15, 2005. The adoption of SFAS No. 153 is not expected to have any impact on the Company's current consolidated financial condition, results of operations or cash flows.

In March 2005, the FASB issued Financial Interpretation Number (FIN) 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of SFAS 143 (Asset Retirement Obligations). FIN 47 addresses diverse accounting practices that have developed with regard to the timing of liability recognition for legal obligations associated with the retirement of a tangible long-lived asset in which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the entity. FIN 47 also clarifies when an entity should have sufficient information to reasonably estimate the fair value of an asset retirement obligation. The provision is effective for fiscal years ending after December 15, 2005. The Company has not determined the impact that the adoption of FIN 47 will have on its consolidated financial position, results of operations or cash flows.

In May 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle, such as a change in nondiscretionary profit-sharing payments resulting from an accounting change, should be recognized in the period of the accounting change. SFAS No. 154 also requires that a change in depreciation, amortization, or depletion method for long-lived, nonfinancial assets be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company will adopt the provisions of SFAS No. 154 as applicable beginning in fiscal 2007.

The Company maintains its records on the basis of a 52-53 week fiscal year ending on the Saturday closest to May 31. The following discussion compares the twelve month period (52 weeks) ended May 28, 2005 with the twelve month period (52 weeks) ended May 29, 2004 and the twelve month period (52 weeks) ended May 29, 2004 with the twelve month period (52 weeks) ended May 31, 2003.

The following table sets forth certain items, relating to continuing operations, in the Consolidated Statements of Operations as a percentage of net sales for the twelve month periods ended May 28, 2005 and May 29, 2004 (prior year information reclassified to conform to current year presentation).

Sales

Consolidated net sales from continuing operations increased $337.8 million (11.9%) for fiscal 2005 compared with the similar period of a year ago, due in part to sales from the new stores, and in part to comparative stores sales, which increased 6.3% for fiscal 2005. The increase in comparative store sales was in part the result of colder temperatures throughout the country in the fall months compared with the prior year, and an overall increase in customer demand for apparel merchandise.

Since fiscal 2004, the Company has defined its comparative store sales as sales of those stores (net of sales discounts) that are beginning their four hundred and twenty-fifth day of operation (approximately 1 year and 2 months). Existing stores whose square footage has been changed by more than 20% and relocated stores are classified as new stores for comparative store sales purposes. Prior to fiscal 2004: (i) the Company defined comparative store sales as sales of those stores beginning their three hundred and sixty-fifth day of operation; (ii) comparative store sales did not include sales discounts; (iii) comparative store sales included sales of all expanded stores; (iv) relocated stores were treated as new stores for comparative store sales purposes.

Comparative store sales of linens and home furnishings (a subset of the home products segment) decreased 2.6% in fiscal 2005 as compared with fiscal 2004. This decrease in the comparative store sales of linens and home furnishings can be attributed to strong competition among retailers of home products. The expansion of stores by competitors, combined with increased product lines being offered by our competitors, has challenged the Company to continue to find ways to prevent further erosion of its market share. In order to counter this trend, the Company is reevaluating the linen and home furnishings product lines available in our stores, expanding the sections that are experiencing strong sales and improving merchandising methods for obtaining home products.

Nine new Burlington Coat Factory department stores opened during fiscal 2005 contributed $50.9 million to this year's net sales. Stores opened during fiscal 2004 contributed $79.0 million to this year's net sales from the beginning of fiscal 2005 to the anniversary of their opening date. The Company closed two Burlington Coat Factory department stores during fiscal 2005.

Through June 2003, the Company operated seven stores under the name "Decelle." During July 2003, these stores were closed. The Company converted three of these stores to Burlington Coat Factory stores during fiscal 2004 and two of these stores to Cohoes Fashions stores during fiscal 2005. The Company had no net sales in fiscal 2005 for the Decelle stores. Net sales in fiscal 2004 for the Decelle stores were $3.2 million.

The Cohoes Fashions stores contributed $46.4 million to consolidated net sales for the twelve month period ended May 28, 2005 compared with $38.9 million for the twelve month period ended May 29, 2004. Cohoes Fashions comparative store sales increased 2.1% for the twelve month period ended May 28, 2005. During fiscal 2005, the Company converted two former Decelle stores into Cohoes Fashions stores. These two stores contributed $6.6 million to net sales for the twelve month period ended May 28, 2005.

The MJM Designer Shoes stores contributed $44.6 million to this year's net sales compared with $29.4 million a year ago. As of May 28, 2005, fifteen MJM Designer Shoes stores were operating. Four new MJM Designer Shoes stores opened during fiscal 2005 contributed $9.2 million to net sales for the twelve month period ended May 28, 2005.

The Company opened one new Super Baby Depot store in the second half of fiscal 2005, and converted the sole Totally 4 Kids store into a Super Baby Depot store during the second quarter of fiscal 2005. These two stores contributed $2.2 million to net sales for the twelve month period ended May 28, 2005.

Other Revenue

Other revenue increased to $28.6 million for fiscal 2005 compared with $26.5 million for the similar period of a year ago. Other revenue consists primarily of rental income from leased departments, sublease rental income, layaway and alteration service charges, and other miscellaneous revenue items, each of which increased compared with the prior year.

Cost of Sales

Cost of sales increased $221.7 million (12.6%) for the twelve month period ended May 28, 2005 compared with the twelve month period ended May 29, 2004. The dollar increase in cost of sales was due to the increase in net sales during the current fiscal year compared with the prior year. Cost of sales as a percentage of net sales increased slightly from 62.3% in fiscal 2004 to 62.7% in fiscal 2005. The increase in cost of sales, as a percentage of sales, for fiscal 2005 compared with fiscal 2004 was primarily the result of increased markdowns. The Company's cost of sales and gross margin may not be comparable to those of other entities, since some entities include all of the costs related to their buying and distribution functions in cost of sales. The Company includes these costs in the Selling and Administrative Expenses line item in its Consolidated Statements of Operations. The Company includes in its Cost of Sales line item all costs of merchandise (net of purchase discounts and certain vendor allowances), inbound freight, warehouse outbound freight and freight related to internally transferred merchandise and certain merchandise acquisition costs, primarily commissions and import fees.

Selling and Administrative Expenses

Selling and administrative expenses, including amortization of leasehold purchases, increased $58.0 million (6.4%) from the 2004 period to the 2005 period. The increase in selling and administrative expenses was due primarily to the increased number of stores in operation during fiscal 2005 as compared with fiscal 2004. As a percentage of net sales, selling and administrative expenses were 30.2% for the twelve month period ended May 28, 2005 and 31.8% for the twelve month period ended May 29, 2004. The percentage decrease is primarily related to comparative store sales increases during fiscal 2005. As a percentage of net sales, payroll related costs declined 0.8% for fiscal 2005 compared with fiscal 2004 as a result of the Company's budgetary controls over payroll expenditures. In addition, occupancy-related expenses declined 0.5% for the current fiscal year as compared with the similar period of a year ago. During fiscal 2005, fiscal 2004 and fiscal 2003, the Company established reserves of $0.3 million, $1.5 million and $0.4 million, respectively, for future lease obligations relating to stores closed during these periods, of which $0.8 million was paid during fiscal 2005 and $0.5 million was paid during fiscal 2004.

Depreciation Expense

Depreciation expense amounted to $89.9 million in the twelve month period ended May 28, 2005 compared with $83.9 million in the twelve month period ended May 29, 2004. This increase of $6.0 million in the fiscal 2005 period compared with the comparative 2004 period is attributable primarily to capital additions relating to new store purchases, improvements, expansions and remodelings over the past two fiscal years.

Interest Expense

Interest expense increased $1.3 million for the twelve month period ended May 28, 2005 compared with the similar period of a year ago. The increase in interest expense is primarily related to the $100.0 million of senior notes issued by the Company in September 2003 as the interest expense for fiscal 2005 includes twelve months of interest on the notes as compared with the prior year, which included approximately eight months of interest on the notes.

Other Income, Net

Other Income, Net (consisting of investment income, gains and losses from sale of assets and other miscellaneous items) increased to $14.6 million for fiscal 2005 compared with $10.3 million for the similar period of a year ago. During fiscal 2005, the Company received $4.2 million in settlement of claims the Company had filed in the bankruptcy proceedings of Kmart Corporation in respect of four lease locations which Kmart had subleased to the Company but had rejected in the bankruptcy proceedings. Of the $4.2 million, $2.8 million relate to stores at three locations at which the Company has continuing operations, and $1.4 million relate to one location at which the Company was required to discontinue operations. During fiscal 2005 and fiscal 2004, the Company recognized $4.8 million and $5.0 million, respectively, in other income due to a reduction in reserves for disputed claims. For the twelve month period ended May 28, 2005, the Company had net gains on disposition of property and equipment of $0.8 million, compared with net gains of $1.6 million for the similar period of a year ago. Investment related income amounted to $4.7 million for twelve month period ended May 28, 2005, compared to $2.3 million for the similar period of a year ago. These increases are primarily related to increases in interest income realized from higher amounts of investable funds and to increases in investment rates.

Income Tax

The provision for income taxes was $66.2 million for the twelve month period ended May 28, 2005 and $42.6 million for the similar fiscal period a year ago. The effective tax rate for fiscal 2005 was 38.4% compared with 37.1% in the prior fiscal year. The increase in the effective tax rate is primarily the result of an increase in the Company's expected effective state income tax rate.

Income from Continuing Operations

Income from continuing operations amounted to $106.0 million for the year ended May 28, 2005 compared with $72.3 million for the comparative period of a year ago. Basic and diluted income per share from continuing operations was $2.37 per share for fiscal 2005 compared with basic and diluted income per share from continuing operations of $1.62 per share for fiscal 2004.

Discontinued Operations

During the fiscal year ended May 28, 2005, the Company discontinued the operations of three stores and the operations of one of its consolidated investments. Net sales for these entities amounted to $11.2 million in fiscal 2005. Gross margins amounted to $2.4 million for entities closed during fiscal 2005. Net loss from discontinued operations amounted to $1.0 million during fiscal 2005. During the fiscal year ended May 29, 2004, the Company discontinued the operations of eight stores. Net sales for these stores and the three stores closed during fiscal 2005 amounted to $22.7 million in fiscal 2004. Gross margins amounted to $7.0 million for stores closed during fiscal 2004. Net loss from discontinued operations amounted to $4.4 million during fiscal 2004. Loss per share from discontinued operations was $0.02 per share for fiscal 2005 and $0.10 per share for fiscal 2004.

Net Income

Net income increased $37.1 million to $105.0 million for the fiscal 2005 period from $68.0 million for the comparative 2004 period. Basic and diluted net income per share was $2.35 per share for fiscal 2005 compared with $1.52 per share for the comparative 2004 period.

The following table sets forth certain items, relating to continuing operations, in the Consolidated Statements of Operations as a percentage of net sales for the twelve month periods ended May 29, 2004 and May 31, 2003 (prior year information reclassified to conform to current year presentation).

Sales

Consolidated net sales increased $178.4 million (6.7%) for fiscal 2004 compared with the similar period of a year ago, due primarily to sales from the new stores. Comparative stores sales decreased 0.3% for fiscal 2004.

Beginning in fiscal 2004, the Company changed its method of calculating comparative store sales in order to mitigate the effect of store grand openings and store expansions. The Company now defines its comparative store sales as sales of those stores (net of sales discounts) that are beginning their four hundred and twenty-fifth day of operation (approximately 1 year and 2 months). Existing stores whose square footage has been changed by more than 20% and relocated stores are classified as new stores for comparative store sales purposes. This method is the method used in this section comparing the results of operations for the twelve month period ended May 29, 2004 with the results of operations for the twelve month period ended May 31, 2003. Previously: (i) the Company defined comparative store sales as sales of those stores beginning their three hundred and sixty-fifth day of operation; (ii) comparative store sales did not include sales discounts; (iii) comparative store sales included sales of all expanded stores; (iv) relocated stores were treated as new stores for comparative store sales purposes.

Sales of linens and home furnishings (a subset of the home products segment) decreased to $274 million in fiscal 2004, compared with $283 million in fiscal 2003 and $283 million in fiscal 2002. This decrease in the sales of linens and home furnishings can be attributed to strong competition among retailers of home products. The expansion of stores by competitors combined with increased product lines being offered by our competitors, has challenged the Company to continue to find ways to prevent further erosion of its market share. In order to counter this trend, the Company is increasing the linen and home furnishings product lines available in our stores, expanding the sections that are experiencing strong sales and improving merchandising methods for obtaining home products.

Twenty-four new and nine relocated Burlington Coat Factory department stores opened during fiscal 2004 contributed $165.5 million to net sales for fiscal 2004. Stores opened during fiscal 2003 contributed $65.6 million to this net sales for fiscal 2004 from the beginning of fiscal 2004 to the anniversary of their opening date.

The Cohoes Fashions stores contributed $38.9 million to consolidated sales for the twelve month period ended May 29, 2004 compared with $38.4 million for the twelve month period ended May 31, 2003. Cohoes Fashions comparative store sales increased 1.0% for the twelve month period.

Through June 2003, the Company operated seven stores under the name "Decelle." During July 2003, these stores were closed. The Company converted three of these stores to Burlington Coat Factory stores during fiscal 2004 and intends to convert two stores to Cohoes Fashions stores. Sales in fiscal 2004 for the Decelle stores were $3.2 million compared with $25.2 million for the twelve month period ended May 31, 2003.

The MJM Designer Shoes stores contributed $29.4 million to this year's sales compared with $19.4 million a year ago. As of May 29, 2004, eleven MJM Designer Shoes stores were operating.

Other Revenue

Other revenue (primarily consisting of rental income from leased departments, sublease rental income, layaway and alteration service charges, and other miscellaneous revenue items) increased to $26.5 million for fiscal 2004 compared with $23.1 million for the similar period of a year ago. Rental income increased by approximately $2.9 million during fiscal 2004 as compared with fiscal 2003. Rental income increases were primarily related to sublease rental and license fee income from new stores and from two shopping centers controlled by the Company.

Cost of Sales

Cost of sales increased $105.3 million (6.3%) for the twelve month period ended May 29, 2004 compared with the twelve month period ended May 31, 2003. The dollar increase in cost of sales was due to the increase in net sales during the current fiscal year compared with the prior year. Cost of sales as a percentage of net sales decreased slightly from 62.5% in fiscal 2003 to 62.3% in fiscal 2004. During fiscal 2004, initial margins remained relatively unchanged as compared with fiscal 2003. The improvement in margins was related primarily to slight decreases in markdowns and inventory shrinkage as a percentage of sales for fiscal 2004 as compared with fiscal 2003.

Selling and Administrative Expenses

Selling and administrative expenses, including amortization of leasehold purchases, increased $61.3 million (7.3%) from the 2003 period to the 2004 period. The increase in selling and administrative expenses was due primarily to the increased number of stores in operation during fiscal 2004 as compared with fiscal 2003 as well as a $5.0 million increase in the Company's self funded insurance reserves. As a percentage of net sales, selling and administrative expenses were 31.8% for the twelve month period ended May 29, 2004 and 31.6% for the twelve month period ended May 31, 2003. As a percentage of net sales, payroll related costs declined 0.1% for fiscal 2004 compared with fiscal 2003 as a result of the Company's budgetary controls over payroll expenditures. In addition, advertising expense declined 0.1% for the current fiscal year as compared with the similar period of a year ago. During fiscal 2001, the Company established a $2.4 million reserve for the costs associated with the contractual lease payments and related ancillary costs associated to the relocation of several stores. During fiscal 2003 and 2002, the Company paid $0.4 million and $1.0 million of these costs, respectively. In addition, during fiscal 2002, $1.0 million of the reserve was relieved due to an early termination of the lease by the landlord. During fiscal 2004 and fiscal 2003, the Company established reserves of $1.5 million and $0.4 million, respectively, for future lease obligations relating to stores closed during these periods of which $0.5 million was paid during fiscal 2004.

Depreciation Expense

Depreciation expense amounted to $83.9 million in the twelve month period ended May 29, 2004 compared with $69.1 million in the twelve month period ended May 31, 2003. This increase of $14.8 million in the fiscal 2004 period compared with the comparative 2003 period is attributable primarily to capital additions relating to new store purchases, improvements, expansions and remodelings over the past two fiscal years.

Interest Expense

Interest expense increased $3.1 million for the twelve month period ended May 29, 2004 compared with the similar period of a year ago. The increase in interest expense is primarily related to the $100.0 million of senior notes issued by the Company in September 2003 and to the Company's capital lease obligations.

Other Income, Net

Other Income, Net (consisting of investment income, gains and losses from sale of assets and other miscellaneous items) increased to $10.3 million for fiscal 2004 compared with $6.0 million for the similar period of a year ago. Increases in investment income of approximately $0.6 million were offset by decreases of miscellaneous items of $1.3 million. Interest income increases were the result of higher levels of investable funds during fiscal 2004 compared with fiscal 2003. In addition, $5.0 million in other income was recognized due to a reduction in reserve for disputed claims.

Income Tax

The provision for income taxes was $42.6 million for the twelve month period ended May 29, 2004 and $42.8 million for the similar fiscal period a year ago. The effective tax rate for fiscal 2004 was 37.1% compared with 37.8% in the prior fiscal year. The decrease in the effective tax rate is primarily the result of prior year adjustments of state income taxes.

Income from Continuing Operations

Income from continuing operations amounted to $72.3 million for the year ended May 29, 2004 compared with $70.5 million for the comparative period of a year ago. Basic and diluted income per share from continuing operations was $1.62 per share for fiscal 2004 compared with basic income per share from continuing operations of $1.59 per share and diluted income per share from continuing operations of $1.58 per share for fiscal 2003.

Discontinued Operations

Discontinued operations information has been restated to reflect the eight stores closed during fiscal 2003 and 2004 and the three stores closed during fiscal 2005. Net sales for these stores amounted to $22.7 million in fiscal 2004. Gross margins for these stores amounted to $7.0 million in fiscal 2004. Net loss from discontinued operations amounted to $4.4 million during fiscal 2004. During fiscal 2003, the closed stores had sales of $42.3 million and gross margins of $15.5 million. Net loss from discontinued operations amounted to $4.4 million during fiscal 2003. Loss per share from discontinued operations was $0.10 per share for each of fiscal 2004 and fiscal 2003.

Net Income

Net income increased $1.9 million to $68.0 million for the fiscal 2004 period from $66.1 million for the comparative 2003 period. Basic net income per share was $1.52 per share for fiscal 2004 compared with $1.49 per share for the comparative 2003 period. Diluted net income per share was $1.52 per share for fiscal 2004 as compared with $1.48 per share for fiscal 2003.

Recent Developments. On June 27, 2005, the Company announced that its Board of Directors is exploring possible strategic alternatives for the Company to enhance stockholder value. No decision has been made to engage in a transaction or transactions resulting from the Board's exploration of strategic alternatives, and there can be no assurance that any transaction will occur or, if undertaken, of the terms or timing thereof. The Company has retained Goldman, Sachs & Co. as its financial advisor to assist in this process.

Overview

The Company was able to satisfy its cash requirements for current operations, expansions (such as new store openings), and other initiatives primarily from cash flows provided by operating activities, combined with the sale of senior notes, short-term borrowings and utilizing available lines of credit.

Operational Growth

During fiscal 2005, the Company opened nine Burlington Coat Factory Warehouse department stores, four MJM Designer Shoes stores and one Super Baby Depot store, and converted the last Totally 4 Kids store into a Super Baby Depot store. In addition, two store locations previously operated as Decelle stores were converted to Cohoes Fashions stores. The Company also closed two Burlington Coat Factory stores and one Luxury Linens store, and relocated six Burlington Coat Factory stores to new locations within their trading areas. During fiscal 2004, seven Decelle stores were

closed. Three of these locations were converted in fiscal 2004 to Burlington Coat Factory Warehouse department stores. During fiscal 2005, the Company incurred expenditures of approximately $29.0 million to acquire, set up and fixture new stores opened during fiscal 2005, and expenditures of approximately $46.3 million for store relocations, store expansions and store refurbishings. The Company purchased one of its stores for $3.0 million during fiscal 2005. The Company acquired the leases of two locations for $4.2 million in fiscal 2005. In addition, expenditures during fiscal 2005 for store locations to be opened during fiscal 2006 amounted to $2.6 million. Other capital expenditures consisted primarily of computer system enhancements of $5.7 million and warehouse-related capital expenditures of $5.8 million for fiscal 2005. For fiscal 2006, the Company estimates that it will spend approximately $87.0 million for capital expenditures (i.e., building acquisitions, fixtures, equipment and leasehold improvements) in connection with the opening of approximately twenty-two new stores (including store relocations), remodeling and expansion of existing stores, upgrades of the Company's existing home office and warehouse facilities, and computer enhancement projects.*

The Company monitors the availability of desirable locations for its stores from such sources as dispositions by other retail chains and bankruptcy auctions. The Company may seek to acquire a number of such locations in one or more transactions. Additionally, the Company may consider strategic acquisitions. If the Company undertakes such transactions, the Company may seek additional financing to fund acquisition and carry charges (i.e., the cost of rental, maintenance, tax and other obligations associated with such properties from the time of commitment to acquire to the time that such locations can be readied for opening as Company stores) related to these stores.* There can be no assurances, however, that any additional locations will become available from other retailers or that, if available, the Company will undertake to bid or be successful in bidding for such locations. Furthermore, to the extent that the Company decides to purchase additional store locations, it may be necessary to finance such acquisitions with additional long-term borrowings.* Management expects that growth in the acquisition of store locations will slow in the near term as real estate opportunities decrease due to the rise in rental levels.*

Stock Repurchases

From time to time, the Company repurchases shares of its stock. These purchases are reflected as treasury stock in the equity section of the balance sheet. During fiscal 2005, the Company did not repurchase any shares of its stock. During fiscal 2005, the Company reissued 47,474 shares of treasury stock as part of its required contribution to the Company's 401(k) and profit sharing plans. As of May 28, 2005, the Company had authority to purchase an additional $10.0 million of its stock.

Working Capital

Working capital increased to $407.2 million at May 28, 2005 from $330.0 million at May 29, 2004. The increase is primarily related to increases in merchandise inventory, offset in part by an increase in accounts payable and a decrease in investments.

Net Cash from Operating Activities

Net cash provided by continuing operations of $142.0 million for fiscal 2005 increased by $118.7 million from $23.3 million in net cash provided by operating activities for fiscal 2004. This increase in net cash from continuing operations was due primarily to an increase in income from continuing operations of $33.7 million from fiscal 2004, decreases in short term investments and from increases in accounts payable and other current liabilities. Offsetting these increases in part were increases in the Company's merchandise inventory.

Dividends

On January 10, 2005 the Board of Directors of the Company declared a special cash dividend of fifty-six cents ($0.56) per share payable on February 21, 2005 to stockholders of record on January 20, 2005. The special dividend was declared as a result of the Company's cash position being in excess of its expected cash requirements for the remainder of the year.* The paid dividend amounted to $25.0 million. On August 5, 2004, the Board of Directors of the Company declared a cash dividend in the amount of four cents ($0.04) per share payable on December 15, 2004 to stockholders of record on November 22, 2004. The paid dividend amounted to $1.8 million.

Long-Term Borrowings and Capital Lease Obligations

The Company's long-term borrowings at May 28, 2005 consisted of $100.0 million of Senior Notes issued to institutional investors in a private placement, an industrial development refunding bond of $5.7 million issued by the New Jersey Economic Development Authority (the "Refunding Bonds"), a $1.3 million loan from the Burlington County Board of Chosen Freeholders and capital lease obligations of $26.5 million.

Refunding Bonds. The Refunding Bonds consist of term bonds. The term bonds consist of two portions, $0.7 million maturing on September 1, 2005 and $5.0 million maturing on September 1, 2010. The term bonds bear interest at the rates of 5.6% for the portion maturing on September 1, 2005 and 6.125% per annum for the portion maturing on September 1, 2010. The average interest rate and average scheduled maturity of the Refunding Bonds are 6.1% and 3.0 years, respectively. During fiscal 2005, the Company expended approximately $0.7 million for the repayment of the Refunding Bonds. Payment of the principal and interest are guaranteed under an irrevocable letter of credit in the amount of $5.9 million.

Loan from Burlington County Board of Freeholders. On December 5, 2001, the Company borrowed $2.0 million from the Burlington County Board of Chosen Freeholders. The proceeds were used for part of the acquisition and development costs of a new warehouse facility in Edgewater Park, New Jersey. The loan is interest-free and matures on January 1, 2012. The loan is to be repaid in monthly installments of $16,667, which began on February 1, 2002. The loan is secured by a letter of credit in the amount of $1.2 million.

Senior Notes. On August 15, 2003, the Company and its wholly-owned subsidiary, Burlington Coat Factory Warehouse of New Jersey, Inc., entered into a Note Purchase Agreement with a group of institutional investors for the sale of an aggregate of $100.0 million of Senior Notes. The Notes were issued on September 30, 2003 in two tranches. The Series A Notes aggregated $36 million at an interest rate of 4.06% due in annual payments of various amounts from September 30, 2006 to September 30, 2010. The Series B Notes aggregated $64 million at an interest rate of 4.67% due in annual payments of various amounts from September 30, 2007 to September 30, 2013. The Company intends to use the proceeds from the sale of the Notes for general corporate purposes and the build-out of additional stores, including associated real estate acquisitions.

Capital Lease Obligations. The Company has capital lease obligations relating to two of its stores. The lease terms for these locations extend over twenty-three years and twenty-one years. The capital lease obligations equal the present value of the minimum lease payments under the leases and amounted to $27.1 million. At May 28, 2005, capital lease obligations amounted to $26.5 million. During fiscal 2005, $0.2 million of lease payments were applied against the capital lease obligations and $2.3 million were applied to interest expense.

Lines of Credit

As of May 28, 2005 and May 29, 2004, the Company had in place a committed four year revolving line of credit agreement in the amount of $100.0 million. The term of the committed revolving line of credit automatically renews for an additional year on its anniversary unless the lender gives notice of its intention to not renew, in which case the revolving line of credit will continue until the remaining three year term expires. Short term borrowings against the Company's lines of credit bear interest at or below the lending bank's prime rate (6.0% at May 28, 2005). The Company had letter of credit commitments outstanding against the committed line of credit of $29.5 million at the end of fiscal 2005 and $33.1 million at the end of fiscal 2004. At May 28, 2005 and during the 2005 fiscal year, the Company had no borrowing under the line of credit. Maximum borrowing amounted to $62.9 million during the first quarter of fiscal 2004 and $74.9 million during the second quarter of fiscal 2004. The average borrowing under the line of credit during the first quarter of fiscal 2004 was $33.3 million, at an average interest rate of 1.6%. During the second quarter of fiscal 2004, the average borrowing under the line of credit was $53.7 million, at an average interest rate of 1.6%. During the third and fourth quarters of fiscal 2004, there were no borrowings under the line of credit. Borrowings under the Company's line of credit were necessary during the first six months of fiscal 2004 primarily because of the purchase of inventory during the period and capital expenditure requirements.

Letters of Credit

The Company also had letter of credit agreements in the amount of $2.4 million guaranteeing performance under various leases, insurance contracts and utility agreements at the end of each of fiscal 2005 and fiscal 2004.

Liquidity and Capital Resources Summary

The Company believes that its current capital expenditures and operating requirements can be satisfied from internally generated funds, from the proceeds of the sale of the $100.0 million of senior notes, from short term borrowings under its revolving credit loan agreement.* Furthermore, to the extent that the Company decides to purchase additional store locations, or to undertake unusual transactions such as an acquisition, it may be necessary to finance such transactions with additional long term borrowings.*

Contractual Obligations

The following table sets forth certain information regarding the Company's contractual obligations as of May 28, 2005 (in millions):

Purchase obligations are agreements to purchase goods or services that are enforceable and legally binding on the Company and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. The expected timing for payment of the contractual obligations discussed above is estimated based on current information. Timing of payments and actual amounts paid may be different depending on the timing of receipt of goods or services or changes to agreed-upon amounts for some obligations.

Other than operating leases entered into during the normal course of business, the Company has not entered into any off-balance sheet arrangements.

Inflation

The Company does not believe that its operating results have been materially affected by inflation during the past year. Historically, the Company has been able to increase its selling prices as the costs of merchandising and related operating expenses have increased, and therefore, inflation has not had a significant effect on operations.*

The Company does not have any derivative financial instruments. The Company's primary market risk exposure with regard to financial instruments is to changes in interest rates. Pursuant to the terms of certain revolving credit arrangements, changes in the lenders' prime rate, LIBOR or other stated interest rates could affect the rates at which the Company could borrow funds thereunder. At May 28, 2005, the Company had no outstanding borrowings against the credit facilities. The table below summarizes the fair value and contract terms of the Company's fixed rate debt and capital lease obligations at May 28, 2005:

Expected Maturity Date of Long-Term Debt and Capital Lease Obligations (Including Current Portion) at May 28, 2005 (in thousands):

Item 8. Financial Statements and Supplementary Data

     None.

Item 9A. Controls and Procedures.

The Company's principal executive officer, Monroe G. Milstein, and the Company's principal financial officer, Robert L. LaPenta, Jr. have reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures as of May 28, 2005. Based on their review, these officers have concluded that, as of May 28, 2005, the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) were functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. A controls system, no matter how well designed and operated, cannot provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended May 28, 2005 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of Burlington Coat Factory Warehouse Corporation and its subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process designed under the supervision of the Company's principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

The Company's internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and, even when determined to be effective, can only provide reasonable, not absolute, assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate as a result of changes in conditions or deterioration in the degree of compliance.

As of May 28, 2005, management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has determined that the Company's internal control over financial reporting as of May 28, 2005 is effective.

Deloitte & Touche LLP, the Company's independent registered public accounting firm who audited the Company's consolidated financial statements, has issued a report on management's assessment of the Company's internal control over financial reporting as of May 28, 2005 and is included on page 34 herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Burlington Coat Factory Warehouse Corporation
Burlington, New Jersey

We have audited management's assessment, included in the accompanying Management's Report on Internal Control over Financial Reporting, that Burlington Coat Factory Warehouse Corporation and subsidiaries (the "Company") maintained effective internal control over financial reporting as of May 28, 2005, based on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of May 28, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of May 28, 2005, based on the criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended May 28, 2005 of the Company and our report, dated August 26, 2005, expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche, LLP

Philadelphia, Pennsylvania
August 26, 2005

PART III

Item 11. Executive Compensation

Item 13. Certain Relationships and Related Transactions

Item 14. Principal Accountant Fees and Services

In accordance with General Instruction G(3) of the General Instructions to Form 10-K, the information called for by Items 10, 11, 12, 13 and 14 is omitted from this Report and is incorporated by reference to the definitive Proxy Statement to be filed by the Company pursuant to Regulation l4A of the General Rules and Regulations under the Securities Exchange Act of 1934, which the Company will file not later than 120 days after May 28, 2005.

PART IV

Page 37

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
(registrant)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

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To the Board of Directors and Stockholders of
Burlington Coat Factory Warehouse Corporation
Burlington, New Jersey

We have audited the accompanying consolidated balance sheets of Burlington Coat Factory Warehouse Corporation and subsidiaries (the "Company") as of May 28, 2005 and May 29, 2004, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended May 28, 2005. Our audits also included the financial statement schedule listed in the Index at Item 15(a)(2). These financial statements and the financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of May 28, 2005, based on the criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 26, 2005 expressed an unqualified opinion on management's assessment of the effectiveness of the Company's internal control over financial reporting and an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Philadelphia, Pennsylvania
August 26, 2005

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data)

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except share data)

Page 44

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FISCAL YEAR ENDED MAY 31, 2003, MAY 29, 2004 AND MAY 28, 2005
(All amounts in thousands)

BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)