S a l e  o f  C h a d w i c k ' s  o f  B o s t o n : During the fourth quarter of fiscal 1997, the Company sold its Chadwick's of Boston catalog division to Brylane, L.P. Proceeds of approximately $300 million included cash, a 10 year $20 million Convertible Subordinated Note at 6% interest (the "Brylane note") and Chadwick's consumer credit card receivables. During the second quarter of fiscal 1998, the Company paid Brylane $28.8 million as an estimated adjustment to the cash proceeds based on the closing balance sheet of Chadwick's as of December 7, 1996 as prepared by the Company. During the quarter ended October 1997, the Company paid Brylane $4.4 million upon agreement of the final closing balance sheet of Chadwick's as of December 7, 1996. The results of Chadwick's for all periods prior to December 7, 1996 have been reclassified to discontinued operations. The cash provided by discontinued operations for fiscal 1998 represents the collection of the remaining balance of the Chadwick's consumer credit card receivables outstanding as of January 25, 1997. During the quarter ended October 1997, the Company converted a portion of the Brylane note into 352,908 shares of Brylane, Inc. common stock which it sold for $15.7 million. This sale resulted in an after-tax gain of $3.6 million, or $.02 per share. Subsequent to the end of the year, the Company converted an additional portion of the Brylane note into 258,836 shares of Brylane, Inc. common stock. The Company donated 181,818 of these shares to the Company's charitable foundation and sold the remaining 77,018 shares during the first quarter of fiscal 1999. The net after-tax impact of these transactions on the Company's first quarter results is immaterial. Pursuant to the acquisition, the Company agreed to purchase certain amounts of excess inventory from Chadwick's through fiscal 2000.
  The Chadwick's of Boston catalog division had net sales of $464.8 million and recorded income from operations of $29.4 million, net of income taxes of $20.9 million, for the fiscal year ended January 25, 1997, which represents the results through December 7, 1996, the effective date of the transaction. The results of Chadwick's for all periods prior to December 7, 1996 have been reclassified to discontinued operations. The sale of the division resulted in a gain on disposal of $125.6 million, net of income taxes of $15.2 million, or $.72 per share. This gain allowed the Company to utilize its $139 million capital loss carryforward (see Note G). Interest expense was allocated to discontinued operations based on their respective proportion of assets to total assets.
  Net sales for Chadwick's were $472.4 million and income from operations was $12.0 million, net of income taxes of $8.1 million, for fiscal 1996.

S a l e  o f  H i t  o r  M i s s : Effective September 30, 1995, the Company sold its Hit or Miss division to members of Hit or Miss management and outside investors. The Company received $3 million in cash and a 7 year $10 million note with interest at 10%. During fiscal year ended 1998, the Company forgave a portion of this note and was released from certain obligations and guarantees which reduced the note to $5.5 million.
  The Hit or Miss division had net sales of $165.4 million and recorded an operating loss of $2.3 million, net of income tax benefits of $1.4 million, for the fiscal year ended January 27, 1996, which represents results through July 29, 1995, the measurement date of the transaction. Hit or Miss' operating results for all prior periods have been reclassified to discontinued operations. The sale of the division resulted in a loss on disposal of $31.7 million (net of income tax benefits of $19.8 million) and includes the operating results from July 30, 1995 through the closing date, as well as the cost to the Company of closing 69 Hit or Miss stores. Interest expense was allocated to discontinued operations based on their respective proportion of assets to total assets.

A c q u i s i t i o n  o f  M a r s h a l l s : On November 17, 1995, the Company acquired the Marshalls family apparel chain from Melville Corporation. The Company paid $424.3 million in cash and $175 million in junior convertible preferred stock. The total purchase price of Marshalls, including acquisition costs, was $606 million.
  The acquisition has been accounted for using the purchase method of accounting and accordingly, the purchase price has been allocated to the assets purchased and the liabilities assumed based upon their fair values at the date of acquisition. The purchase accounting method allows a one year period to finalize the fair values of the net assets acquired. No further adjustments to fair market values are made after that point. The final allocation of purchase price resulted in the fair value of the net assets acquired exceeding the purchase price, creating negative goodwill of $86.4 million. The negative goodwill was allocated to the long-term assets acquired. During fiscal 1998, the store closing and restructuring reserve established in the final allocation of the purchase price was reduced by an additional $15.8 million as the Company closed fewer stores than initially planned. The $15.8 million reserve reduction was offset by a reduction of $10.0 million to property, plant and equipment and a reduction of $5.8 million to tradename. The final allocation of purchase price as adjusted for the reserve adjustment in fiscal 1998 is summarized below:

In Thousands
Current assets	$ 718,627
Property, plant and equipment	227,071
Tradename	130,046
Current liabilities	(469,744)
Total purchase price	$ 606,000

The operating results of Marshalls have been included in the consolidated results of the Company from the date of acquisition on November 17, 1995. The following unaudited pro forma consolidated financial results for the fiscal year ended January 1996, are presented as if the acquisition had taken place at the beginning of the period:

Dollars in Thousands Except Per Share Amounts	Fiscal Year Ended January 27, 1996
Net sales	$6,085,509
Income from continuing operations	$20,838
Average shares outstanding for diluted earnings per share calculations	147,557,961
Income from continuing operations per share, diluted	$.02

The foregoing unaudited pro forma consolidated financial results give effect to, among other pro forma adjustments, the following: