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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

  FORM 10-K

(Mark One)

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
         OF 1934.

For the fiscal year ended January 31, 2004

OR

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

Commission file number 1-10738

ANNTAYLOR STORES CORPORATION
(Exact name of registrant as specified in its charter)

(212) 541-3300
(Registrant’s telephone number, including area code)

______________

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:  None

________________

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

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X|.

         Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes |X|  No      .

        The aggregate market value of the registrant's voting stock held by non-affiliates of the registrant as of August 2, 2003 was $1,345,276,718.

        The number of shares of the registrant's common stock outstanding as of February 27, 2004 was 45,495,072.

         Documents Incorporated By Reference:

        Portions of the Registrant's Proxy Statement for the Registrant's 2004 Annual Meeting of Stockholders to be held on April 29, 2004 are incorporated by reference into Part III.

PART I

ITEM 1. Business

General

        AnnTaylor Stores Corporation (the “Company”), through its wholly owned subsidiaries, is a leading national specialty retailer of better quality women’s apparel, shoes and accessories sold primarily under the “Ann Taylor” and “Ann Taylor Loft” brands. The Company’s stores offer a full range of career and casual separates, dresses, tops, weekend wear, shoes and accessories, coordinated as part of a total wardrobing strategy. This total wardrobing strategy is reinforced by an emphasis on client service. Ann Taylor sales associates are trained to assist clients in merchandise selection and wardrobe coordination, helping them achieve the “Ann Taylor look” while reflecting the clients’ personal styles. Unless the context indicates otherwise, all references herein to the Company include the Company and its wholly owned subsidiaries.

        The Company believes that “Ann Taylor” is a highly recognized national brand that defines a distinct fashion point of view. The Ann Taylor brand appeals to a broad range of clients through the Company’s Ann Taylor and Ann Taylor Loft concepts. Ann Taylor merchandise represents classic styles, updated to reflect current fashion trends.

        The Company is dedicated to maintaining the right merchandise mix in its stores among suits and separates, tops, footwear and accessories. The Company concentrates on calibrating the timing of its product offerings to address clients’ wardrobing needs, anticipating fabric and yarn preferences on a regional and seasonal basis, and timing direct marketing efforts accordingly.

        The Ann Taylor client base consists primarily of fashion conscious women from the ages of 25 to 55. The Ann Taylor concept appeals to professional women with limited time to shop, who are attracted to Ann Taylor by its focused merchandising and total wardrobing strategy, personalized client service, efficient store layouts and continual flow of new merchandise. The Ann Taylor Loft concept appeals to women with a more relaxed lifestyle and work environment, who appreciate the Ann Taylor style and compelling value. Certain clients of Ann Taylor and Ann Taylor Loft cross-shop both brands.

        As of January 31, 2004, the Company operated 648 retail stores in 43 states, the District of Columbia and Puerto Rico, of which 354 were Ann Taylor stores, 268 were Ann Taylor Loft stores and 26 were Ann Taylor Factory stores. The Company’s operations are conducted within one segment for financial reporting purposes. See “Stores and Expansion” for further discussion.

        In Fiscal 2000, the Company launched anntaylor.com (the “Online Store”), making Ann Taylor merchandise available for direct retail sale to clients over the Internet. The Online Store was designed as an extension of the in-store experience and offers a wide selection of each season’s Ann Taylor collection. The Company believes that the Online Store further builds the Ann Taylor brand and enhances the Company’s relationships with clients, as well as creates the opportunity for sales to new and existing clients.

        In January 2003, the Company launched anntaylorloft.com (collectively with anntaylor.com, the “Online Stores”). The site currently offers clients a search vehicle for locating stores, as well as the opportunity to sign up to receive catalogs and other promotional materials via regular mail or email. The site is scheduled to allow internet sales in Spring 2004.

Merchandise Design and Production

        Substantially all merchandise offered by the Company’s stores is developed by the Company’s in-house product design and development teams, which design merchandise exclusively for the Company. The Company’s merchandising groups determine inventory needs for the upcoming season, edit the assortments developed by the design teams, plan monthly merchandise flows, and arrange for the production of merchandise by independent manufacturers, primarily through the Company’s sourcing division or through private label specialists.

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        The Company’s production management and quality assurance departments establish the technical specifications for all Company merchandise and inspect merchandise on a test basis for uniformity of size and color, as well as for conformity with specifications and overall quality of manufacturing in order to identify potential problems prior to shipment. In addition, spot inspections are performed in factories which produce the Company’s merchandise, including periodic in-line inspections while goods are in production.

        The Company sources merchandise from approximately 260 manufacturers and vendors, none of which accounted for more than 4% of the Company’s merchandise purchases in Fiscal 2003. The Company’s merchandise is manufactured in over 24 countries, with approximately 27% of the Company’s merchandise manufactured in China, 13% in Hong Kong, 13% in the Philippines, and 8% in Korea. Substantially all of the Company’s foreign purchases are negotiated and paid in U.S. dollars.

        The Company cannot predict with certainty whether any of the foreign countries in which its products are currently manufactured or any of the countries in which the Company may manufacture its products in the future will be subject to future import restrictions by the U.S. government, including the likelihood, type or degree of effect of any such new trade restriction.  Trade restrictions, including increased tariffs or quotas, against apparel, footwear or other items sold by the Company could affect the importation of such merchandise and could increase the cost or reduce the supply of merchandise available to the Company and adversely affect the Company’s business, financial condition, results of operations and liquidity.

        On January 1, 2005, in accordance with its commitments under the World Trade Organization (“WTO”) the United States will no longer apply quantitative limits (“quotas”) on the import of apparel from other WTO Members. This action may create short-term cost pressures and reduce availability in certain key product categories from certain countries, specifically China and the Philippines among others, in the fourth quarter of 2004. In 2005, this event should initially improve flexibility obtaining imported merchandise manufactured in countries currently subject to quotas, however this flexibility may be reduced or eliminated if new restrictions are imposed on the import of apparel from other countries. Although the Company cannot predict with certainty the effect the elimination of quotas will have on its business, management believes that any impact on operations arising from changes to quotas or other trade restrictions will not be material.

        The Company’s merchandise flow may also be adversely affected by financial or political instability in any of the countries in which its goods are manufactured, the potential impact of health concerns relating to severe infectious diseases, particularly on manufacturing operations of the Company’s vendors in Asia and elsewhere, or acts of war or terrorism in the United States or worldwide, if it affects the production, shipment or receipt of merchandise from such countries.  Merchandise flow may also be adversely affected by significant fluctuation in the value of the U.S. dollar against foreign currencies or restrictions on the transfer of funds. See “Statement Regarding Forward Looking Disclosures”.

        The Company does not maintain any long-term or exclusive commitments or arrangements to purchase merchandise from any single supplier. The Company believes it has good relationships with its suppliers and that, subject to the discussion above, there will continue to be adequate sources to produce a sufficient supply of quality goods in a timely manner and on satisfactory economic terms.

Inventory Control and Merchandise Allocation

        The Company’s planning departments analyze each store’s size, location, demographics, sales and inventory history to determine the quantity of merchandise to be purchased for, and the allocation of merchandise to, the Company’s stores. Upon receipt, merchandise is allocated to achieve an emphasis that is suited to each store’s client base. Merchandise typically is sold at its original marked price for several weeks, with the length of time varying by item. The Company reviews its inventory levels on an on-going basis in order to identify slow-moving merchandise styles and broken assortments (items no longer in stock in a sufficient range of sizes) and uses markdowns to clear this merchandise. Markdowns may be used if inventory exceeds client demand for reasons of design, seasonal adaptation or changes in client preference, or if it is determined that the inventory will not sell at its currently marked price. Some marked-down items remaining unsold are moved periodically to the Company’s Ann Taylor Factory stores, where additional markdowns may be taken.

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        In Fiscal 2003, inventory turned 4.1 times compared to 3.5 times in Fiscal 2002 and 3.7 times in Fiscal 2001. Inventory turnover is determined by dividing cost of sales by the average of the cost of inventory at the beginning and the end of the period.

        The Company’s comprehensive merchandising information system provides systems support for the Company’s merchandising functions. This system serves as the Company’s central source of information regarding merchandise items, inventory management, purchasing, replenishment, receiving and distribution. During 2003 the Company introduced a new store planning system to improve the management of store inventory levels.

        The Company uses a centralized distribution system, under which nearly all merchandise is distributed to the Company’s stores through its distribution center, located in Louisville, Kentucky. See “Properties”. Merchandise is shipped by the distribution center to the Company’s stores several times each week.

Stores and Expansion

        An important aspect of the Company’s business strategy is a real estate expansion program designed to reach new clients through the opening of new stores. The Company opens new stores in markets that it believes have a sufficient concentration of its target clients. The Company also adds stores, or expands the size of existing stores, in markets where the Company already has a presence, as market conditions warrant and sites become available. Store locations are determined on the basis of various factors, including geographic location, demographic studies, anchor tenants in a mall location, other specialty stores in a mall or specialty center location or in the vicinity of a village location, and the proximity to professional offices in a downtown or village location. Stores opened in factory outlet centers are located in factory outlet malls in which co-tenants generally include a significant number of outlet or discount stores operated under nationally recognized upscale brand names. Store size also is determined on the basis of various factors, including geographic location, demographic studies, and space availability.

        As of January 31, 2004, the Company operated 648 stores throughout the United States, the District of Columbia and Puerto Rico, of which 354 were Ann Taylor stores, 268 were Ann Taylor Loft stores, and 26 were Ann Taylor Factory Stores.

        The average Ann Taylor store is approximately 5,000 square feet in size. The Company also has three flagship Ann Taylor stores in New York City, San Francisco and Chicago, which represent the fullest assortment of Ann Taylor merchandise. In Fiscal 2003, the Company opened 8 Ann Taylor stores that averaged approximately 4,600 square feet. In Fiscal 2004, the Company plans to open approximately 10 — 15 Ann Taylor stores, which are expected to average approximately 5,000 square feet.

        Ann Taylor Loft stores average approximately 6,000 square feet. In Fiscal 2003, the Company opened 61 Ann Taylor Loft stores that averaged approximately 5,400 square feet. In Fiscal 2004, the Company expects to open approximately 65 — 70 Ann Taylor Loft stores, which are expected to average approximately 5,500 square feet.

        The Company’s 26 Ann Taylor Factory stores average approximately 9,200 square feet. In Fiscal 2003 the Company opened 1 Ann Taylor Factory store that was approximately 7,400 square feet. In Fiscal 2004, the Company expects to open approximately seven Ann Taylor Factory stores, which are expected to average about 7,200 square feet.

        The Company’s stores typically have approximately 20% of their total square footage allocated to stockroom and other non-selling space.

        The following table sets forth certain information regarding store openings, expansions and closings for Ann Taylor stores (“ATS”), Ann Taylor Loft stores (“ATL”), and Ann Taylor Factory stores (“ATFS”) over the past five years:

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(a)	All stores expanded and all stores closed were ATS stores, except that in 2003, two stores closed were ATFS stores; in 2002, one store closed was an ATFS store; in 2001, five stores closed were ATFS stores, and two stores closed were ATL stores; and in 2000, two stores closed were ATL stores and one store closed was an ATFS store. In addition, two stores closed in 2000 and four stores closed in 1999 were ATS stores that were replaced in the same locations with new ATL stores.
(b)	In 2002, 2001 and 2000, 18, two and three ATL stores located in factory outlet malls were converted to ATFS stores, respectively.

        The Company believes that its existing store base is a significant strategic asset of its business, and its stores are located in some of the most productive retail centers in the United States. The Company has invested approximately $219,000,000 in its store base since the beginning of Fiscal 1999; approximately 53% of its stores are either new or have been remodeled, as a result of an expansion or relocation, in the last five years.

        The Company’s Fiscal 2003 real estate expansion plan resulted in an increase in the Company’s total store square footage of approximately 357,000 square feet (net of store closings), or 10.8%, from approximately 3,305,000 square feet at the end of Fiscal 2002 to approximately 3,662,000 square feet at the end of Fiscal 2003. In Fiscal 2004, the Company intends to increase store square footage by approximately 470,000 square feet, or 12.8%.

        The Company’s expansion in Fiscal 2004 may include increased implementation of new ideas in design and product mix similar to those tested in the Company’s store in the Short Hills Mall in New Jersey. This 11,000 square foot store features a more striking and sophisticated look, consistent with this upscale mall, and includes a separate entrance for Ann Taylor Petite clients.

        Capital expenditures for the Company’s Fiscal 2003 store expansion program, net of landlord construction allowances, totaled approximately $33,000,000 and expenditures for store refurbishing and refixturing totaled approximately $15,000,000. The Company expects that capital expenditures for its Fiscal 2004 store expansion program, net of landlord construction allowances, will be approximately $50,000,000 and expenditures for store refurbishing and refixturing will be approximately $22,000,000.

        The Company’s ability to continue to increase store square footage will be dependent upon, among other things, general economic and business conditions affecting consumer confidence and spending, the availability of desirable locations and the negotiation of acceptable lease terms. See “Statement Regarding Forward Looking Disclosures” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”.

Customer Credit

        On February 4, 2002, the Company sold its proprietary credit card portfolio to World Financial Network National Bank and contracted with Alliance Data Systems Corporation, to provide private label credit card services to proprietary Ann Taylor credit card customers. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”.

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Information Systems

        During Fiscal 2003 the Company continued its ongoing commitment to make investments and enhancements to information services and technology. The Company continued to rollout enhancements to its performance measurement software which enables the measurement of store associate job performance against learning and productivity goals. The Company completed the rollout of a store based Wide Area Network that has resulted in improved communication between corporate offices and stores, and will provide a platform for future operational improvements. In addition, the Company completed several new initiatives in fiscal 2003. These include the deployment of an application that serves to locate product across the chain for clients; and the implementation of a price optimization system which will help improve the profitability of merchandising decisions and improve gross margin by optimally pricing product relative to client demand.

Brand Building and Marketing

        The Company believes that its Ann Taylor and Ann Taylor Loft brands are among its most important assets. The ability of the Company to continuously evolve these brands to appeal to the changing needs and priorities of their target client bases is a key source of its competitive advantage. All aspects of brand development for both retail concepts, including product design, store merchandising and shopping environments, channels of distribution, and marketing and advertising, are controlled by the Company. The Company continues to invest in the development of these brands through, among other things, client research, advertising, in-store marketing, direct mail marketing, and its internet presence. The Company also makes investments to enhance the overall client experience through the opening of new stores, the expansion and remodeling of existing stores, and a focus on client service.

        The Company believes it is strategically important to communicate on a regular basis directly with its current client base and with potential clients, through national and regional advertising, as well as through direct mail marketing and in-store presentation. Marketing expenditures as a percentage of sales were 2.5% in Fiscal 2003, 2.2% in Fiscal 2002 and 2.6% in Fiscal 2001.

Trademarks and Service Marks

         The “AnnTaylor” and “AnnTaylor Loft” trademarks are registered with the United States Patent and Trademark Office and with the trademark registries of many foreign countries. The Company’s rights in the “AnnTaylor” and “AnnTaylor Loft” marks are a significant part of the Company’s business, as the Company believes those trademarks are well known in the women’s retail apparel industry. Accordingly, the Company intends to maintain its “AnnTaylor” and “AnnTaylor Loft” marks and related registrations and vigorously protect its trademarks against infringement.

Competition

        The women’s retail apparel industry is highly competitive. The Company’s stores compete with certain departments in national or local department stores, and with other specialty store chains, independent retail stores, catalog and internet businesses that offer similar categories of merchandise. The Company believes that its focused merchandise selection, exclusive fashions, personalized service, wardrobing advice and convenience distinguish it from other apparel retailers. Many of the Company’s competitors are considerably larger and have substantially greater financial, marketing and other resources than the Company and there is no assurance that the Company will be able to compete successfully with them in the future.

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Employees

        As of January 31, 2004, the Company had approximately 13,000 employees, of which 3,100 were full-time salaried employees, 1,700 were full-time hourly employees and 8,200 were part-time hourly employees working less than 30 hours per week. None of the Company’s employees are represented by a labor union. The Company believes that its relationship with its employees is good.

Available Information

        The Company makes available free of charge on its website, http://investor.anntaylor.com, copies of its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after filing such material electronically with, or otherwise furnishing it to, the United States Securities and Exchange Commission (the “SEC”). Copies of the charters of each of the Company’s Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, as well as the Company’s Corporate Governance Guidelines and Business Conduct Guidelines, are also available on the website or in print upon written request by any shareholder.

Statement Regarding Forward-Looking Disclosures

        Sections of this annual report on Form 10-K, including the following Management’s Discussion and Analysis of Financial Condition and Results of Operations, contain various forward-looking statements, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements may use the words “expect”, “anticipate”, “plan”, “intend”, “project”, “may”, “believe” and similar expressions. These forward-looking statements reflect the Company’s current expectations concerning future events, and actual results may differ materially from current expectations or historical results. Any such forward-looking statements are subject to various risks and uncertainties, including failure by the Company to predict accurately client fashion preferences; decline in the demand for merchandise offered by the Company; competitive influences; changes in levels of store traffic or consumer spending habits; effectiveness of the Company’s brand awareness and marketing programs; general economic conditions or a downturn in the retail industry; the inability of the Company to locate new store sites or negotiate favorable lease terms for additional stores or for the expansion of existing stores; lack of sufficient consumer interest in the Company’s Online Store(s); a significant change in the regulatory environment applicable to the Company’s business; risks associated with the possible inability of the Company, particularly through its sourcing and logistics functions, to operate within production and delivery constraints; the impact of quotas, and the elimination thereof; an increase in the rate of import duties or export quotas with respect to the Company’s merchandise; financial or political instability in any of the countries in which the Company’s goods are manufactured; the potential impact of health concerns relating to severe infectious diseases, particularly on manufacturing operations of the Company’s vendors in Asia and elsewhere; acts of war or terrorism in the United States or worldwide; work stoppages, slowdowns or strikes; the inability of the Company to hire, retain and train key personnel, and other factors set forth in the Company’s filings with the SEC. The Company does not assume any obligation to update or revise any forward-looking statements at any time for any reason.

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ITEM 2.    Properties

        As of January 31, 2004, the Company operated 648 stores in 43 states, the District of Columbia and Puerto Rico, all of which were leased. Store leases typically provide for initial terms of ten years, although some leases have shorter or longer initial periods. Some of the leases grant the Company the right to extend the term for one or two additional five-year periods. Some leases also contain early termination options, which can be exercised by the Company under specific conditions. Most of the store leases require the Company to pay a specified minimum rent, plus a contingent rent based on a percentage of the store’s net sales in excess of a specified threshold. Most of the leases also require the Company to pay real estate taxes, insurance and certain common area and maintenance costs. The current terms of the Company’s leases, including renewal options, expire as follows:

        Ann Taylor leases corporate offices at 142 West 57th Street in New York City, containing approximately 140,000 square feet and approximately 93,000 square feet of office space at 1372 Broadway in New York City. The leases for these premises expire in 2006 and 2010, respectively. The Company also leases office space in New Haven, Connecticut, containing approximately 39,000 square feet. This lease expires in October 2004. The Company is currently evaluating alternative office locations in the New Haven area.

        Ann Taylor’s wholly owned subsidiary, AnnTaylor Distribution Services, Inc., owns its 256,000 square foot distribution center located in Louisville, Kentucky. Nearly all Ann Taylor merchandise is distributed to the Company’s stores through this facility. The parcel on which the Louisville distribution center is located comprises approximately 20 acres and could accommodate possible future expansion of the facility.
 

ITEM 3.    Legal Proceedings

        The Company is a party to routine litigation incidental to its business. Although the amount of any liability that could arise with respect to these actions cannot be accurately predicted, in the opinion of the Company, any such liability will not have a material adverse effect on the consolidated financial position, consolidated results of operations, or liquidity of the Company.
 

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

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PART II

ITEM 5.    Market for Registrant’s Common Equity and Related Stockholder Matters

         The Company’s common stock is listed and traded on the New York Stock Exchange under the symbol ANN. The number of holders of record of common stock at February 27, 2004 was 579. The following table sets forth the high and low sale prices for the common stock on the New York Stock Exchange for the periods indicated.

        In April 2002, the Company’s Board of Directors approved a 3-for-2 split of the Company’s common stock, in the form of a stock dividend. One additional share of Common stock for every two shares owned was distributed on May 20, 2002 to stockholders of record at the close of business on May 2, 2002. All share and per share amounts for all periods presented in this report have been restated to reflect the stock split.

        The Company has never paid cash dividends on its common stock. As a holding company, the Company’s ability to pay dividends is dependent upon the receipt of dividends or other payments from its subsidiaries, including the Company’s direct wholly owned subsidiary AnnTaylor, Inc. (“Ann Taylor”). In addition, any determination to pay cash dividends is at the discretion of the Company’s Board of Directors. The payment of dividends by Ann Taylor to the Company is subject to certain restrictions under Ann Taylor’s Credit Facility. The Company is also subject to certain restrictions contained in the Credit Facility on the payment of cash dividends on its common stock. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources”.

ITEM 6.    Selected Financial Data

        The following historical consolidated income statement and consolidated balance sheet information has been derived from the audited consolidated financial statements of the Company. The Company’s consolidated statements of income, stockholders’ equity and cash flows for each of the three fiscal years ended January 31, 2004, February 1, 2003 and February 2, 2002 and consolidated balance sheets as of January 31, 2004 and February 1, 2003, as audited by Deloitte & Touche LLP, independent auditors, appear elsewhere in this document. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto of the Company included elsewhere in this document. All references to years are to the fiscal year of the Company, which ends on the Saturday nearest January 31 in the following calendar year. All fiscal years for which financial information is set forth below had 52 weeks, except the fiscal year ended February 3, 2001 which had 53 weeks.

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(Footnotes on following page)       

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          (Footnotes for preceding page)

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ITEM 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

Management Overview

        The Company experienced record sales and earnings in Fiscal 2003, due in large part to client acceptance of the Company’s product offerings, managed store growth, focused inventory management and control over expenses. These factors contributed to a 27.1% increase in operating income and a $0.41 increase in diluted earnings per share over Fiscal 2002, and are each key to the Company’s continued growth.

        Positive client acceptance of the Company’s product offerings was a primary factor in the strong earnings performance experienced in Fiscal 2003. This is evidenced by a 5.3% increase in comparable store sales over last year, with both Ann Taylor and Ann Taylor Loft achieving double-digit comparable store sales growth in the fourth quarter of Fiscal 2003. The Company plans to continue its focus on strengthening the Ann Taylor brand through the further development of its collections and successful product extensions.

        In Fiscal 2003, the Company opened 70 new stores funded by operating cash flow, and is planning to open 80 to 90 stores next year, also expected to be funded by operating cash flow. The Company believes controlled store growth is one factor critical to its success in achieving continued economic growth, and is committed to continuing to identify the best properties and negotiating the most favorable lease terms in order to achieve this objective.

        Disciplined inventory and expense management each contributed to the Company’s earnings growth in Fiscal 2003, and will continue to be a focus in the future. Improved inventory management, which centered on offering the right product to clients at the right locations, resulted in an increase in inventory turns from 3.5 times in Fiscal 2002 to 4.1 times in Fiscal 2003. In addition, while total net sales increased 15.0% in Fiscal 2003 over Fiscal 2002, selling, general and administrative expenses as a percentage of net sales decreased 0.6% due in part to management’s efforts to control costs and monitor spending.

        While the Company’s financial results have grown steadily and record sales performance was achieved during the 2003 holiday season, the retail environment remains very competitive. Management’s plan for future growth builds on the strengths discussed above, and is based on offering clients brand-appropriate merchandise at convenient, accessible locations. The Company’s ability to achieve this objective will be dependent on factors such as those outlined in the “Statement Regarding Forward-Looking Disclosures”.

        The Company’s reported operating results and financial position include the application of critical accounting policies. Management has determined that the Company’s most critical accounting policies are those related to merchandise inventory valuation, intangible asset impairment and income taxes. These critical policies are discussed further below and in the Notes to the Company’s Consolidated Financial Statements.

Results of Operations

        The following table sets forth consolidated income statement data expressed as a percentage of net sales:

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        The following table sets forth selected consolidated income statement data expressed as a percentage change from the prior period:

Sales

        The following table sets forth certain sales and store data:

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        The Company’s net sales increased $206,742,000, or 15.0% in Fiscal 2003 from Fiscal 2002. The increase in net sales is due to the combined effect of an increase in comparable store sales and the opening of new stores. Management believes that the increase in comparable store sales was due to client acceptance of the merchandise assortment available at both Ann Taylor and Ann Taylor Loft, particularly in the fourth quarter.

        The Company’s net sales increased $81,393,000, or 6.3% in Fiscal 2002 from Fiscal 2001. The increase in net sales was primarily attributable to the opening of new stores, partially offset by a decrease in comparable store sales. Management believes that the decrease in comparable store sales was, in part, the result of client dissatisfaction with certain of the Company’s product offerings and merchandise assortment available in Ann Taylor stores in the fall 2002 season. Fiscal 2002 sales were also impacted by an overall reduction in client spending caused by the economic environment.

        The Company’s net sales do not show significant seasonal variation, although net sales in the fourth quarter have historically been higher than in the other quarters. As a result, the Company has not had significant overhead and other costs generally associated with large seasonal variations.

Gross Margin

        Gross margin as a percentage of sales increased to 54.5% in Fiscal 2003 from 54.1% in Fiscal 2002.

        Gross margin as a percentage of net sales increased to 54.1% in Fiscal 2002 from 49.8% in Fiscal 2001. The increase in gross margin is the combined result of higher full price sales and higher margin rates achieved on full price and non-full price sales at both divisions. Fiscal 2001 gross margin was impacted by approximately $4,100,000 in pre-tax nonrecurring charges, which related to the inventory write-off associated with the discontinuation of the Ann Taylor cosmetics line, and inventory costs associated with canceling certain Fall 2001 and Spring 2002 merchandise orders.

Selling, General and Administrative Expenses

        Selling, general and administrative expenses as a percentage of net sales decreased 0.6% in Fiscal 2003 from Fiscal 2002. The decrease was primarily due to increased leverage on fixed expenses resulting from the increase in comparable store sales.

        Selling, general and administrative expenses as a percentage of net sales decreased 0.1% in Fiscal 2002 from Fiscal 2001. Lower internet operating costs and reduced marketing spending were offset by an increase in the provision for management performance bonus and higher tenancy expenses. Fiscal 2001 selling, general and administrative expenses included approximately $12,900,000 in pre-tax nonrecurring charges. Approximately $7,200,000 of this amount related to the write-down of certain anntaylor.com assets, based upon projected cash flows, which were not deemed adequate to support the carrying value of the assets associated with this ongoing business. An additional $3,300,000 related to the cost, net of insurance proceeds, of settling a class action lawsuit. The remaining $2,400,000 represented the write-off of certain fixed assets related to the discontinuation of the Ann Taylor cosmetics line, and severance costs associated with reductions made in the Company’s store and home office workforce.

Interest Income

        Interest income was substantially unchanged in Fiscal 2003.

        Interest income increased $1,889,000 in Fiscal 2002 from Fiscal 2001. The increase was primarily attributable to higher cash on hand during Fiscal 2002 compared to Fiscal 2001, partially offset by lower interest rates.

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Interest Expense

        There has been no significant change in interest expense during the years presented.

        The weighted average interest rate on the Company’s outstanding indebtedness at January 31, 2004, February 1, 2003 and February 2, 2002 was 3.75%. Interest expense also includes various other charges, the largest of which are fees related to the Company’s revolving credit facility. See Note 3 to the Consolidated Financial Statements for further discussion of the Company’s revolving credit facility.

Income Taxes

        The effective income tax rate was 40.0%, 39.0% and 46.8% of net income in Fiscal 2003, Fiscal 2002 and Fiscal 2001, respectively.

        The increase in the effective income tax rate in Fiscal 2003 from Fiscal 2002 is due to higher state income taxes.

        The decrease in the effective income tax rate in Fiscal 2002 from Fiscal 2001 was the result of non-deductible goodwill amortization expense which, as discussed in the Notes to the Company’s Consolidated Financial Statements, has not been recorded since Fiscal 2001.

Liquidity and Capital Resources

        The Company’s primary source of working capital is cash flow from operations. The following table sets forth material measures of the Company’s liquidity:

        As presented in the Company’s Consolidated Statements of Cash Flows, cash provided by operating activities in each of the fiscal years presented primarily resulted from net earnings before non-cash expenses such as depreciation and amortization. Cash used for investing activities in each of the fiscal years presented includes capital expenditures, offset in Fiscal 2002 by proceeds from the sale of the Company’s proprietary credit card portfolio. Cash provided by financing activities in each of the fiscal years presented includes proceeds from the exercise of stock options and other employee stock based compensation programs.

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        On November 14, 2003, Ann Taylor and certain of its subsidiaries entered into a Second Amended and Restated $175,000,000 senior secured revolving credit facility (the “Credit Facility”) with Bank of America N.A. and a syndicate of lenders. The Credit Facility which, at the Company’s option, provides for an increase in the total facility and the aggregate commitments thereunder up to $250,000,000, amended Ann Taylor’s then existing $175,000,000 bank credit agreement scheduled to expire in April 2004. The Credit Facility matures on November 13, 2008 and will be used by Ann Taylor and certain of its subsidiaries for letters of credit and other general corporate purposes. The Credit Facility contains financial and other covenants regarding indebtedness, liens and dividends. There were no borrowings outstanding under the Credit Facility at any point during Fiscal 2003 or as of the date of this filing. Commercial and standby letters of credit outstanding under the Credit Facility totaled $96,814,000 and $97,114,000 as of January 31, 2004 and February 1, 2003, respectively. See Note 3 to the Consolidated Financial Statements for further discussion of the Credit Facility.

        Merchandise inventories decreased $10,926,000, or 6.0% in Fiscal 2003 from Fiscal 2002. The decrease in merchandise inventories is primarily due to strong holiday and post-holiday sales, particularly at Ann Taylor Loft, offset in part by inventory purchased to support new stores opened since the beginning of Fiscal 2003. Merchandise inventory on a per-square-foot basis was approximately $47 at the end of Fiscal 2003 compared to $55 at the end of Fiscal 2002. Inventory turned 4.1 times in Fiscal 2003 compared to 3.5 times in Fiscal 2002. Inventory turnover is determined by dividing cost of sales by the average of the cost of inventory at the beginning and end of the period.

        The following table sets forth the Company’s capital expenditures (in thousands):

        The Company expects its total capital expenditure requirements in Fiscal 2004 will be approximately $116,000,000. Approximately $50,000,000 will be spent on new store construction, store expansion and relocation, for a planned square footage increase of approximately 470,000 square feet, or 12.8%. Another $22,000,000 is planned for store renovation and refurbishment programs. Approximately $28,000,000 will be spent to support continued investments in information systems, and $16,000,000 is planned for corporate office and distribution center initiatives and other general corporate purposes. The actual amount of the Company’s capital expenditures will depend in part on the number of stores opened, expanded and refurbished and on the amount of construction allowances the Company receives from the landlords of its new or expanded stores. See “Business — Stores and Expansion”.

        In order to finance its operations and capital requirements, the Company expects to use internally generated funds. The Company believes that cash flow from operations will be sufficient to enable it to meet its ongoing cash needs for its business, as presently conducted, for the foreseeable future.

        On February 4, 2002, the Company sold its proprietary credit card portfolio to World Financial Network National Bank. The associated gain of $2,095,000 is reported in selling, general and administrative expenses in the Consolidated Statement of Income for Fiscal 2002. In connection with the sale, the Company contracted with Alliance Data Systems Corporation (“ADS”) to provide private label credit card services to proprietary Ann Taylor credit card clients. ADS pays the Company a percentage of all collected finance charges.

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        During Fiscal 1999, the Company completed the issuance of an aggregate of $199,072,000 principal amount at maturity of its Convertible Subordinated Debentures due 2019 (“Convertible Debentures”). The Convertible Debentures were sold at an original issue price of $552.56 per $1,000 principal amount at maturity of Debenture. Cash interest is payable on the principal amount at maturity of the Convertible Debentures at the rate of 0.55% per annum. This interest rate and the accrual of original issue discount represent a yield to maturity on the Convertible Debentures of 3.75%. The Convertible Debentures are convertible at the option of the holders thereof into 18.117 shares of the Company’s common stock per $1,000 principal amount at maturity of Debenture. The Convertible Debentures may be redeemed at the Company’s option on or after June 18, 2004. In addition, the Company is obligated to purchase on specified purchase dates, beginning June 18, 2004 and each five years thereafter, at specified Put Prices plus accrued cash interest to the purchase date, any outstanding Convertible Debentures for which a written notice has been received from the holder. The Company is evaluating possible options related to the Convertible Debentures however, as of the date of this filing, the Company has no intention to redeem any of the Convertible Debentures. The Company’s obligations with respect to the Convertible Debentures are guaranteed on a subordinated basis by Ann Taylor.

        In August 2002, the Company’s Board of Directors authorized a $50,000,000 securities repurchase program, which was increased to $75,000,000 (not including the value of shares already repurchased under the original program) by the Company’s Board of Directors on March 9, 2004. The repurchase program is subject to compliance with the Company’s Credit Facility. Pursuant to this program, purchases of shares of the Company’s common stock and/or its Convertible Debentures due 2019 may be made from time to time, subject to market conditions and at prevailing market prices, through open market purchases or in privately negotiated transactions. Repurchased shares of common stock will become treasury shares available for general corporate and other purposes. Repurchased Convertible Debentures will be cancelled. The Company repurchased 680,000 shares of its common stock during the first quarter of Fiscal 2003 in connection with this securities repurchase program, at a total cost of approximately $12,800,000. No Convertible Debentures have been repurchased.

        During Fiscal 2002 the seven-year mortgage loan related to the Company’s distribution center land and building in Louisville, Kentucky was paid in full. Ann Taylor and its wholly owned subsidiary, AnnTaylor Distribution Services, Inc., were parties to the $7,000,000 seven-year mortgage loan.

        Substantially all full-time employees of the Company are covered under a noncontributory defined benefit pension plan. The Company’s funding obligations and liability under the terms of the plan are determined using certain actuarial assumptions, including a discount rate and an expected long-term rate of return on plan assets. The discount rate selected was determined based on the change in the Moody’s Aa corporate bond yields, and was adjusted from 6.75% at February 1, 2003 to 6.0% at January 31, 2004. The market-related value of plan assets for determining pension expense is equal to the fair value of plan assets. Plan assets as of January 31, 2004 are allocated 58% in equities, 23% in bond related funds and 19% in short-term investments. To develop the expected long-term rate of return on plan assets, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. In light of this, and in view of current market conditions, the expected long-term rate of return on plan assets was reduced from 8.5% for the fiscal year ended January 31, 2004 to 7.25% for the fiscal year ending January 29, 2005. While no contributions to the plan have been required, as the fair value of plan assets has been greater than the benefit obligation for all periods presented, the Company contributed $4,000,000 and $9,522,000 to the pension plan in Fiscal 2003 and Fiscal 2002, respectively. Although not required to make a contribution to the pension plan next year, the Company may likewise make a contribution in Fiscal 2004.

        In April 2002, the Company’s Board of Directors approved a 3-for-2 stock split of the Company’s common stock in the form of a stock dividend. One additional share of common stock for every two shares owned was distributed on May 20, 2002 to stockholders of record at the close of business on May 2, 2002. See the Consolidated Statements of Stockholders’ Equity for adjusted shares and per share data reflecting the issuance of additional shares in connection with the stock split.

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        On May 18, 2000, the Board of Directors of the Company adopted a Stockholder Rights Plan (“Rights Plan”). Rights under the Rights Plan (“Rights”) were distributed as a dividend at the rate of one Right for each share of common stock of the Company held by stockholders of record as of the close of business on May 30, 2000. As a result of the 3-for-2 split of the Company’s common stock on May 20, 2002, each share of common stock now represents two-thirds of a Right. Each Right entitles stockholders to buy one unit of a share of a new series of preferred stock for $125. Under certain circumstances, if a person or group acquires beneficial ownership of 15% or more of the voting power of the Company as represented by the Company’s common stock, or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15% or more of the voting power of the Company as represented by the Company’s common stock, holders of the Rights, other than the person or group triggering their exercise, will be able to purchase, in exchange for the $125 exercise price, shares of the Company’s common stock or of any company into which the Company is merged having a value of $250. The Rights will expire on May 18, 2010. No Rights were exercised under the Rights Plan in Fiscal 2003.

        The Company is self-insured for expenses related to its employee point of service medical and dental plans, and its workers’ compensation plan, up to certain thresholds. Claims filed, as well as claims incurred but not reported, are accrued based on management’s estimates, using information received from plan administrators, historical analysis, and other relevant data. Management believes that it has taken reasonable steps to ensure that the Company is adequately accrued for costs incurred related to these programs at January 31, 2004.

Off Balance Sheet Arrangements

        The Company has no off balance sheet arrangements as defined by Regulation 229.303 Item 303 (a) (4).

Contractual Obligations

        The following table sets forth the Company’s contractual obligations as of January 31, 2004:

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Recent Accounting Pronouncements

        In December 2003, Financial Accounting Standards Board (the “FASB”) revised and reissued FASB Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities – an Interpretation of Accounting Research Bulletin No. 51". FIN No. 46 requires unconsolidated variable interest entities to be consolidated by their primary beneficiaries if the entities do not effectively disperse the risks and rewards of ownership among their owners and other parties involved. The provisions of FIN No. 46 must be applied no later than as of the end of the first reporting period ending after March 15, 2004. Management has determined FIN No. 46 will have no impact on the Company’s consolidated financial statements.

        In April 2003 the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”. SFAS No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003. Management has evaluated the provisions of SFAS No. 149, and determined that it has had no impact on the Company’s consolidated financial statements for the periods presented. The Company will evaluate contracts entered into in future periods and record them in accordance with the provisions of SFAS No. 149.

        In May 2003 the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 requires that an issuer classify financial instruments that are within its scope as a liability. Many of those instruments were classified as equity under previous guidance. Most of the guidance in SFAS No. 150 is effective for certain financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003 for financial instruments included in its scope. The adoption of SFAS No. 150 has had no impact on the Company’s consolidated financial statements for the periods presented. The Company will record financial instruments entered into or modified in future periods in accordance with the provisions of SFAS No. 150.

        In December 2003 the FASB revised and reissued SFAS No. 132. This Statement revises disclosures about pension plans and other postretirement benefit plans, and is effective for fiscal years ending after December 15, 2003. The Company has adopted the additional disclosure requirements of this Statement, which are presented in the Notes to the Company’s Consolidated Financial Statements.

Critical Accounting Policies

        Management has determined that the Company’s most critical accounting policies are those related to merchandise inventory valuation, intangible asset impairment and income taxes. These policies are also discussed in the Notes to the Consolidated Financial Statements, and in relevant sections of this discussion and analysis.

        Merchandise inventories are valued at the lower of average cost or market, at the individual item level. Market is determined based on the estimated net realizable value, which is generally the merchandise selling price. Merchandise inventory levels are monitored to identify slow-moving items and broken assortments (items no longer in stock in a sufficient range of sizes) and markdowns are used to clear such merchandise. Merchandise inventory value is reduced if the selling price is marked below cost. Physical inventory counts are performed annually in January, and estimates are made for any shortages between the previous physical inventory count and the balance sheet date.

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        The Company follows SFAS No. 142, “Goodwill and Other Intangible Assets”, which requires that amortization of goodwill and indefinite life intangible assets be replaced with annual impairment tests. Intangible assets with finite lives will continue to be amortized over their useful lives. The Company performs impairment testing annually to determine whether an impairment charge related to the carrying value of the Company’s recorded goodwill is necessary. The most recent impairment tests did not result in an impairment charge. In the case of long-lived tangible assets, if the undiscounted future cash flows related to the long-lived assets are less than the assets’ carrying value, a similar impairment charge would be considered. Management’s estimate of future cash flows is based on historical experience, knowledge, and market data. These estimates can be affected by factors such as those outlined in the “Statement Regarding Forward-Looking Disclosures”.

        The Company follows SFAS No. 109 “Accounting for Income Taxes,” which requires the use of the liability method. Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Inherent in the measurement of these deferred balances are certain judgments and interpretations of existing tax law and other published guidance as applied to the Company’s operations. No valuation allowance has been provided for deferred tax assets, since management anticipates that the full amount of these assets should be realized in the future. The Company’s effective tax rate considers management’s judgment of expected tax liabilities in the various taxing jurisdictions within which it is subject to tax. The Company is involved in both state and local tax audits. At any given time, many tax years are subject to audit by various taxing authorities. The recorded amounts of income tax are subject to adjustment upon audit, changes in interpretation and changes in judgment utilized in determining estimates. While no adjustments to recorded amounts are anticipated, a 1% variance in the Company’s effective tax rate would affect pre-tax income by approximately $1,700,000 in Fiscal 2003.

Statement Regarding Forward-Looking Disclosures

        Sections of this annual report on Form 10-K, including the preceding Management’s Discussion and Analysis of Financial Condition and Results of Operations, contain various forward-looking statements, made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements may use the words “expect”, “anticipate”, “plan”, “intend”, “project”, “may”, “believe” and similar expressions. These forward-looking statements reflect the Company’s current expectations concerning future events, and actual results may differ materially from current expectations or historical results. Any such forward-looking statements are subject to various risks and uncertainties, including failure by the Company to predict accurately client fashion preferences; decline in the demand for merchandise offered by the Company; competitive influences; changes in levels of store traffic or consumer spending habits; effectiveness of the Company’s brand awareness and marketing programs; general economic conditions or a downturn in the retail industry; the inability of the Company to locate new store sites or negotiate favorable lease terms for additional stores or for the expansion of existing stores; lack of sufficient consumer interest in the Company’s Online Store(s); a significant change in the regulatory environment applicable to the Company’s business; risks associated with the possible inability of the Company, particularly through its sourcing and logistics functions, to operate within production and delivery constraints; the impact of quotas, and the elimination thereof; an increase in the rate of import duties or export quotas with respect to the Company’s merchandise; financial or political instability in any of the countries in which the Company’s goods are manufactured; the potential impact of health concerns relating to severe infectious diseases, particularly on manufacturing operations of the Company’s vendors in Asia and elsewhere; acts of war or terrorism in the United States or worldwide; work stoppages, slowdowns or strikes; the inability of the Company to hire, retain and train key personnel, and other factors set forth in the Company’s filings with the SEC. The Company does not assume any obligation to update or revise any forward-looking statements at any time for any reason.

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ITEM 7A.    Quantitative and Qualitative Disclosures About Market Risk

        The Company currently maintains all of its cash and cash equivalents in financial instruments with original maturity dates of three months or less. The Company’s Credit Facility allows for investments in financial instruments with original maturity dates of up to 12 months. Generally, over approximately 60% of these financial instruments have a fixed rate of return and are therefore subject to interest rate risk. These fixed rate investments will decline in value if interest rates increase. Due to the short duration of these financial instruments, a change of 100 basis points in interest rates would not have a material effect on the Company’s financial condition.

        The Company’s outstanding long-term debt as of January 31, 2004 bears interest at fixed rates; therefore, the Company’s consolidated results of operations would only be affected by interest rate changes to the extent that fluctuating rate loans are outstanding under the Credit Facility. As of January 31, 2004, the Company has no such amounts outstanding. The effect of interest rate changes on the Company would depend on the amount of indebtedness outstanding at the time and the amount of such change.

ITEM 8.    Financial Statements and Supplementary Data

        The following consolidated financial statements of the Company for the years ended January 31, 2004, February 1, 2003 and February 2, 2002 are included as a part of this Report (See Item 15):

ITEM 9.    Changes in and Disagreement with Accountants on Accounting and Financial Disclosures

ITEM 9A.    Controls and Procedures

        Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company has conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report (the “Evaluation Date”). There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s reports filed or submitted under the Exchange Act.

        There was no change in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART III

ITEM 10.    Directors and Executive Officers of the Registrant.

        The information required by this item is incorporated herein by reference to the Sections entitled “Election of Class I Directors”, “Executive Officers”, “Audit Committee Report” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s Proxy Statement for its 2004 Annual Meeting of Stockholders.

        The Company has Business Conduct Guidelines that apply to all Ann Taylor associates, including its chief executive officer, chief financial officer, and principal accounting officer/controller, as well as members of the Company’s Board of Directors. A copy of the Business Conduct Guidelines is available on the Company’s Investor Relations website at http://investor.anntaylor.com. Any future changes or amendments to the Business Conduct Guidelines, and any waiver that applies to the Company’s chief executive officer, chief financial officer, or principal accounting officer/controller, will also be posted on http://investor.anntaylor.com.
 

ITEM 11.     Executive Compensation.

        The information required by this Item is incorporated herein by reference to the Sections entitled “Compensation of Directors and Related Matters”, “Compensation Committee Interlocks and Insider Participation in Compensation Decisions” and “Executive Compensation” in the Company’s Proxy Statement for its 2004 Annual Meeting of Stockholders.
 

ITEM 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
                   Matters.

        The information required by this Item is incorporated herein by reference to the Sections entitled “Beneficial Ownership of Common Stock” and “Equity Compensation Plan Information” in the Company’s Proxy Statement for its 2004 Annual Meeting of Stockholders.
 

ITEM 13.    Certain Relationships and Related Transactions.

        The information required by this item is incorporated herein by reference to the Section entitled “Compensation Committee Interlocks and Insider Participation in Compensation Decisions” in the Company’s Proxy Statement for its 2004 Annual Meeting of Stockholders.
 

ITEM 14.    Principal Accountant Fees and Services.

        The information required by this item is incorporated herein by reference to the Section entitled “Ratification of Engagement of Independent Auditors” in the Company’s Proxy Statement for its 2004 Annual Meeting of Stockholders.

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PART IV

ITEM 15.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

    (a)        List of documents filed as part of this Annual Report:

    (b)        Reports on Form 8-K:

                The Company filed the following reports on Form 8-K during the quarter ended January 31, 2004:
 

         The report on Form 8-K dated November 12, 2003 included the Company’s Condensed Consolidated Statements of Operations for the quarters and 9 months ended November 1, 2003 and November 2, 2002 and Condensed Consolidated Balance Sheets at November 1, 2003 and February 1, 2003.

(c)   Exhibit Index.

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24

25

26

*Filed electronically herewith.
†Management contract or compensatory plan or arrangement.

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SIGNATURES

        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.

        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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ANNTAYLOR STORES CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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INDEPENDENT AUDITORS’ REPORT

To the Stockholders of
      ANNTAYLOR STORES CORPORATION:

        We have audited the accompanying consolidated financial statements of AnnTaylor Stores Corporation and its subsidiaries, listed in the accompanying index. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

        In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries at January 31, 2004 and February 1, 2003 and the results of their operations and their cash flows for each of the three fiscal years in the period ended January 31, 2004 in conformity with accounting principles generally accepted in the United States of America.

        As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for goodwill on February 3, 2002 to conform to Statement of Financial Accounting Standards No. 142.

/s/ DELOITTE & TOUCHE LLP

Deloitte & Touche LLP
New York, New York
March 9, 2004

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ANNTAYLOR STORES CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
For the Fiscal Years Ended January 31, 2004, February 1, 2003 and February 2, 2002
 
 

See accompanying notes to consolidated financial statements.
 
 
 

31

ANNTAYLOR STORES CORPORATION
CONSOLIDATED BALANCE SHEETS
January 31, 2004 and February 1, 2003

See accompanying notes to consolidated financial statements.

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ANNTAYLOR STORES CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the Fiscal Years Ended January 31, 2004, February 1, 2003 and February 2, 2002
(in thousands)

See accompanying notes to consolidated financial statements.


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ANNTAYLOR STORES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended January 31, 2004, February 1, 2003 and February 2, 2002