1. Basis of presentation

As used herein, the “Company,” “we,” “us,” or “our” means Toys “R” Us, Inc., and its subsidiaries, except as expressly indicated or unless the context otherwise requires. The Condensed Consolidated Balance Sheets as of October 29, 2011, January 29, 2011, and October 30, 2010, the Condensed Consolidated Statements of Operations for the thirteen and thirty-nine weeks ended October 29, 2011 and October 30, 2010, the Condensed Consolidated Statements of Cash Flows and the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the thirty-nine weeks ended October 29, 2011 and October 30, 2010, have been prepared by us in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim reporting, and in accordance with the requirements of this Quarterly Report on Form 10-Q. Our interim Condensed Consolidated Financial Statements are unaudited and are subject to year-end adjustments. In the opinion of management, the financial statements include all known adjustments (which consist primarily of normal, recurring accruals, estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the thirteen and thirty-nine weeks then ended. The Condensed Consolidated Balance Sheet at January 29, 2011, presented herein, has been derived from our audited balance sheet included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2011, but does not include all disclosures required by GAAP. These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included within our Annual Report on Form 10-K for the fiscal year ended January 29, 2011. The results of operations for the thirteen and thirty-nine weeks ended October 29, 2011 and October 30, 2010 are not necessarily indicative of operating results for the full year.

Acquisition of Debt Securities

During the third quarter of fiscal 2011, we acquired from unaffiliated parties $36 million face value debt securities of Vanwall Finance PLC for approximately $26 million, of which $2 million was paid subsequent to the third quarter of fiscal 2011. During the second quarter of fiscal 2010, we acquired from an unaffiliated party $17 million face value debt securities of Vanwall Finance PLC for approximately $9 million. This debt matures on April 7, 2013. These debt securities are included in Other assets within the Condensed Consolidated Balance Sheets and are classified as held-to-maturity debt and are reported at amortized cost.

Loss per share

Loss per share is computed as follows (in millions, except for share data):



	13 Weeks Ended
	October 29, 2011							October 30, 2010
	Net Loss Attributable to Toys “R” Us, Inc.			Weighted Average Shares	Per Share Amount			Net Loss Attributable to Toys “R” Us, Inc.			Weighted Average Shares	Per Share Amount
Basic loss per share	$	(93	)	48,989,686	$	(1.90	)	$	(93	)	48,928,139	$	(1.90	)
Effect of dilutive share-based awards	—			—	—			—			—	—
Diluted loss per share	$	(93	)	48,989,686	$	(1.90	)	$	(93	)	48,928,139	$	(1.90	)



	39 Weeks Ended
	October 29, 2011							October 30, 2010
	Net Loss Attributable to Toys “R” Us, Inc.			Weighted Average Shares	Per Share Amount			Net Loss Attributable to Toys “R” Us, Inc.			Weighted Average Shares	Per Share Amount
Basic loss per share	$	(194	)	48,974,110	$	(3.96	)	$	(162	)	48,935,524	$	(3.31	)
Effect of dilutive share-based awards	—			—	—			—			—	—
Diluted loss per share	$	(194	)	48,974,110	$	(3.96	)	$	(162	)	48,935,524	$	(3.31	)

Basic loss per share is computed by dividing Net loss attributable to Toys “R” Us, Inc. by the weighted average number of shares of common stock outstanding during the thirteen and thirty-nine weeks ended October 29, 2011 and October 30, 2010. Diluted loss per share is determined based on the dilutive effect of share-based awards using the treasury stock method.

For the thirteen weeks ended October 29, 2011 and October 30, 2010, the effect of dilutive stock-based awards would have been approximately 1.2 million shares, respectively. For the thirty-nine weeks ended October 29, 2011 and October 30, 2010, the effect of dilutive stock-based awards would have been approximately 1.2 million and 1.0 million shares, respectively. As the Company incurred a Net loss for the thirteen and thirty-nine week periods presented, these incremental shares have been excluded from the computation of diluted loss per share as the effect of their inclusion would be anti-dilutive.