Edgar Filing: TOYS R US INC

Filed Pursuant to Rule 424(b)(1) of the Rules and Regulations
Under the Securities Act of 1933
Registration No. 333-103983

PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 2, 2003

$400,000,000

[Toys R Us Logo]

Toys "R" Us, Inc.

7.875% Notes Due 2013

----------------

We will pay interest on the notes on April 15 and October 15 of each year.
The first interest payment will be made on October 15, 2003. The notes will
mature on April 15, 2013.

We may redeem the notes in whole or in part, at our option, at any time at
the redemption prices described on page S-13.

----------------

Investment in the notes involves risks. See "Risk Factors" beginning on page
5 of the accompanying prospectus.

----------------

Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions Toys "R" Us(1)
------------ -------------- --------------

Per Note.......................... 98.305% 0.750% 97.555%
Total............................. $393,220,000 $3,000,000 $390,220,000

(1) Plus accrued interest, if any, from April 8, 2003.

Delivery of the notes in book-entry form will be made on or about April 8,
2003.

The notes will not be listed on any exchange. Currently, there is no public
market for the notes.

Neither the Securities and Exchange Commission nor any state or other
securities commission has approved or disapproved these securities or
determined if this prospectus supplement or the accompanying prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.

----------------

Barclays Capital Credit Suisse First Boston JPMorgan

BNY Capital Markets, Inc. Banc One Capital Markets, Inc. The Royal Bank of Scotland
Salomon Smith Barney SG Cowen Wachovia Securities

----------------

The date of this prospectus supplement is April 2, 2003.

TABLE OF CONTENTS

Prospectus Supplement

Page
----

About This Prospectus Supplement .. .. .. ... .. .. .. ... .. .. S-1
Summary .. .. .. ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. S-2
Use of Proceeds. ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. S-4
Capitalization . ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. S-4
Selected Consolidated Financial Data .. .. ... .. .. .. ... .. .. S-5
Recent Developments. .. .. .. ... .. .. .. ... .. .. .. ... .. .. S-7
Description of the Notes . .. ... .. .. .. ... .. .. .. ... .. . S-13
Underwriting. .. ... .. .. .. ... .. .. .. ... .. .. .. ... .. . S-15
Notice to Canadian Residents. ... .. .. .. ... .. .. .. ... .. . S-16
Legal Matters .. ... .. .. .. ... .. .. .. ... .. .. .. ... .. . S-17

Prospectus

Page
----

About This Prospectus .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 2
Where You Can Find More Information.. .. .. ... .. .. .. ... .. .. . 3
Incorporation of Certain Documents
by Reference. .. ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 3
Toys "R" Us, Inc. ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 4
Risk Factors.. .. ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 5
Forward-Looking Statements ... .. .. .. ... .. .. .. ... .. .. . 8
Use of Proceeds.. .. .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 8
Ratio of Earnings to Fixed Charges . .. ... .. .. .. ... .. .. . 9
Description of Debt Securities .. .. .. ... .. .. .. ... .. .. . 10
United States Federal Income Tax
Consequences. .. .. .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 23
Plan of Distribution. .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 31
Legal Matters. .. ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 34
Experts. .. .. .. ... .. .. .. ... .. .. .. ... .. .. .. ... .. .. . 34

S-i

[This Page Intentionally Left Blank]

S-ii

ABOUT THIS PROSPECTUS SUPPLEMENT

You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone else to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. This prospectus supplement contains the terms of this offering of
notes. This prospectus supplement, or the information incorporated by
reference in this prospectus supplement, may add, update or change information
in the accompanying prospectus. If this prospectus supplement is inconsistent
with the accompanying prospectus, you should rely on this prospectus
supplement. We are not, and the underwriters are not, making an offer of these
notes in any state or jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus
supplement, the accompanying prospectus or in any document incorporated by
reference is accurate only as of the respective dates thereof. Our business,
financial condition, results of operations and prospects may have changed
since those dates.

As used in this prospectus supplement, "Toys `R' Us," "company," "we," "us"
and "our" generally refer to Toys "R" Us, Inc., together with its consolidated
subsidiaries, unless the context otherwise indicates. However, in the
"Description of the Notes" section in this prospectus supplement, whenever we
refer to "Toys `R' Us," "company," "us," "we" or "our," we are referring to
Toys "R" Us, Inc. and not any of its subsidiaries. When we refer to "you" or
"yours," we mean the holders of the notes offered hereby.

Our fiscal year ends on the Saturday nearest to January 31 of each calendar
year. Unless the context otherwise indicates, references to 2002, 2001 and
2000 are to our fiscal years, which are the 52 weeks ended February 1, 2003
and February 2, 2002 and the 53 weeks ended February 3, 2001, respectively.

Toys "R" Us, Kids "R" Us, Babies "R" Us, Imaginarium and certain other brand
names used in this prospectus supplement are our registered trademarks.

We are not incorporating by reference in this prospectus supplement any
material from our web sites. The references to our web sites are inactive
textual references to the uniform resource locators (URLs) and are for your
reference only.

S-1

SUMMARY

Toys "R" Us, Inc.

We are one of the world's leading retailers of toys, children's apparel and
baby products, based upon our consolidated net sales in 2002. As of February 1,
2003, we operated 1,595 retail stores worldwide. These stores consist of 1,051
U.S. locations comprised of 681 toy stores under the name "Toys "R" Us," 183
infant-toddler stores under the name "Babies "R" Us," 146 children's clothing
stores under the name "Kids "R" Us," 37 educational specialty stores under the
name "Imaginarium" and 4 "Geoffrey" stores which include products from Toys
"R" Us, Babies "R" Us and Kids "R" Us. Internationally, as of February 1,
2003, we operated 544 stores, including licensed and franchised stores. We
also sell merchandise through Internet sites at www.toysrus.com,
www.babiesrus.com, www.imaginarium.com and www.giftsrus.com.

We are incorporated under the laws of the State of Delaware. Our principal
executive offices are located at 461 From Road, Paramus, New Jersey 07652, and
our telephone number is (201) 262-7800.

Recent Developments

On March 5, 2003, we announced our results for the full year and fourth
quarter of 2002, which ended on February 1, 2003. These results are
preliminary and subject to audit. Total net sales were $11.3 billion and $4.9
billion for 2002 and the fourth quarter of 2002, respectively, up from $11.0
billion and $4.8 billion for the corresponding periods of 2001. Net earnings
were $229 million, or $1.09 per share, for 2002, compared with $67 million, or
$0.33 per share, for 2001. For the fourth quarter of 2002, net earnings were
$278 million, or $1.30 per share, compared with net earnings of $158 million,
or $0.78 per share, for the corresponding quarter of 2001. The 2001 results
included restructuring and other charges of $213 million ($126 million, net of
tax) that were recorded in the fourth quarter of that year. Excluding the
impact of these restructuring and other charges, net earnings were
$193 million, or $0.94 per share, for 2001 and $284 million, or $1.39 per
share, for the fourth quarter of 2001. See "Recent Developments".

S-2

The Offering

Issuer....................... Toys "R" Us, Inc.

Securities Offered........... $400,000,000 aggregate principal amount of 7.875% Notes Due 2013.

Interest Rate................ 7.875% per annum.

Maturity Date................ April 15, 2013.

Interest Payment Dates....... April 15, and October 15 of each year, commencing on October 15, 2003.

Optional Redemption.......... We may redeem the notes, in whole at any time or in part from time to time,
at our option on not less than 30 nor more than 60 days' notice, at the
redemption prices described under "Description of the Notes--Optional
Redemption".

Ranking...................... The notes will be our senior unsecured debt securities. See "Description of
Debt Securities--Status of Debt Securities" in the accompanying prospectus.

Covenants.................... The indenture governing the notes contains covenants limiting our ability
and the ability of our domestic subsidiaries to:
o create liens; and
o engage in sale and leaseback transactions.

These covenants are subject to important exceptions and qualifications
described under "Description of Debt Securities--Covenants" in the
accompanying prospectus.

Use of Proceeds.............. We estimate that we will receive net proceeds from this offering of
approximately $389,820,000, which we intend to use for the repayment of
indebtedness maturing in calendar year 2004, and pending such repayment,
for working capital needs and other general corporate purposes. See "Use of
Proceeds".

Further Issues............... We may, without your consent, create and issue additional notes ranking
equally and ratably with the notes in all respects, so that such additional
notes will be consolidated and form a single series with the notes and will
have the same terms as the notes.

Form of Notes................ The notes will be issued in book-entry form only, subject to limited
exceptions, and will be represented by one or more global securities
deposited with or on behalf of The Depository Trust Company.

Listing...................... The notes will not be listed on any exchange.

Federal Income Tax You should refer to the section entitled "United States Federal Income Tax
Consequences................. Consequences" in the accompanying prospectus for a discussion of federal
income tax considerations.

Risk Factors................. You should refer to the sections entitled "Risk Factors" and "Forward-
Looking Statements" in the accompanying prospectus for an explanation of
risks of investing in the notes.

S-3

USE OF PROCEEDS

We estimate that the net proceeds from this offering, after deducting
estimated fees and expenses, will be approximately $389,820,000. We intend to
use the net proceeds from this offering to repay a portion of our indebtedness
maturing in calendar year 2004. This indebtedness consists of Euro 500 million
($466 million) bonds due February 13, 2004 with an effective annual rate of
interest of 7.43% per annum and a 475 million Swiss franc ($342 million) note
due January 28, 2004, with a floating rate of interest equal to three-month
LIBOR. The weighted average interest rate on the Swiss franc note was 1.65% in
2002. Pending use of these proceeds to repay this indebtedness, the proceeds may
be used for working capital needs and other general corporate purposes,
including, among other things, temporary investment in investment grade
securities or repayment of short-term or revolving indebtedness.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and
consolidated capitalization as of February 1, 2003:

o on an actual basis; and

o on an as adjusted basis to give effect to the issuance of the notes
offered hereby.

As of February 1,
2003(1)
--------------------
Actual As Adjusted
------ -----------
(in millions)

Cash and cash equivalents .............................. $1,023 $1,413
====== ======
Current debt
Short-term borrowings (2) ............................. $ -- $ --
Current portion of long-term debt ..................... 379 379
------ ------
Total current debt ................................. 379 379
Long-term debt, less current portion
Bonds and notes (3) ................................... 2,127 2,127
7.875% Notes Due 2013 (4).............................. -- 393
Capital leases ........................................ 12 12
------ ------
Total long-term debt................................. 2,139 2,532
Total debt ........................................ 2,518 2,911
Minority interest in Toysrus.com ....................... 13 13
Total stockholders' equity ............................. 4,030 4,030
------ ------
Total capitalization .................................. $6,561 $6,954
====== ======

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(1) Preliminary, subject to audit of financial statements for the fiscal year
ended February 1, 2003.

(2) Our short-term borrowings outstanding fluctuate and reflect the seasonal
nature of our business.

(3) In May 2002, we issued $402 million of equity security units, $14 million
of which was allocated to the purchase contracts and was recorded in
stockholders' equity and $388 million of which was allocated to the
senior notes and recorded in long-term debt.

(4) The $400 million aggregate principal amount of notes were issued and sold
at a price to public of 98.305%, or approximately $393.2 million.

You should read the above table in conjunction with our consolidated
financial statements and accompanying notes, the selected financial data and
management's discussion and analysis of financial condition and results of
operations included or incorporated by reference in the accompanying
prospectus.

S-4

SELECTED CONSOLIDATED FINANCIAL DATA

We derived the selected consolidated financial data shown below for the
fiscal years ended February 2, 2002, February 3, 2001, January 29, 2000,
January 30, 1999 and January 31, 1998 from our audited consolidated financial
statements and for the thirty-nine week periods ended November 2, 2002 and
November 3, 2001 from our unaudited consolidated financial statements. We
believe that our unaudited financial statements include all adjustments,
consisting only of normal, recurring adjustments, necessary to present fairly,
in all material respects, our results of operations and financial condition as
of and for the periods presented. You should read the following financial
information in conjunction with our consolidated financial statements and
accompanying notes, the selected financial data and management's discussion
and analysis of financial condition and results of operations included or
incorporated by reference in the accompanying prospectus.

Thirty-Nine Weeks
Ended Fiscal Year Ended
------------------- ------------------------------------------------------
November November February February January January January
2, 2002 3, 2001 2, 2002 3, 2001 29, 2000 30, 1999 31, 1998
-------- -------- -------- -------- -------- -------- --------
(in millions, except per share, ratio and other operating results data)
(unaudited)

Consolidated Operating Data(1):
Net sales......................................... $6,436 $6,260 $11,019 $11,332 $11,862 $11,170 $11,038
Cost of sales..................................... 4,362 4,224 7,604 7,815 8,321 8,191 7,710
------ ------ ------- ------- ------- ------- -------
Gross margin..................................... 2,074 2,036 3,415 3,517 3,541 2,979 3,328
Selling, general and administrative expenses...... 1,829 1,864 2,721 2,801 2,743 2,443 2,231
Depreciation and amortization..................... 236 225 308 290 278 255 253
Restructuring and other charges................... -- -- 186 -- -- 294 --
------ ------ ------- ------- ------- ------- -------
Operating earnings/(loss)......................... 9 (53) 200 426 520 (13) 844
Gain from initial public offering of Toys "R" Us--
Japan............................................ -- -- -- (315) -- -- --
Interest expense, net............................. 87 90 109 104 80 93 72
------ ------ ------- ------- ------- ------- -------
Earnings/(loss) before income taxes............... (78) (143) 91 637 440 (106) 772
Income taxes (benefit)............................ (29) (52) 24 233 161 26 282
------ ------ ------- ------- ------- ------- -------
Net earnings/(loss)............................... $ (49) $ (91) $ 67 $ 404 $ 279 $ (132) $ 490
====== ====== ======= ======= ======= ======= =======
Earnings/(loss) per share(2)...................... $(0.24) $(0.46) $ 0.33 $ 1.88 $ 1.14 $ (0.50) $ 1.70
====== ====== ======= ======= ======= ======= =======
Weighted average shares outstanding(2)............ 206.0 197.9 206.0 215.0 245.4 265.4 288.4

Consolidated Balance Sheet Data
(at period end)(1):
Property and equipment, net....................... $4,699 $4,484 $ 4,544 $ 4,257 $ 4,455 $ 4,226 $ 4,212
Merchandise inventories........................... 3,541 3,547 2,041 2,307 2,027 1,902 2,464
Total assets...................................... 9,904 9,588 8,076 8,003 8,353 7,899 7,963
Accounts payable.................................. 1,755 2,023 878 1,152 1,617 1,415 1,280
Total debt........................................ 2,901 2,918 1,855 1,724 1,529 1,401 1,006
Stockholders' equity.............................. 3,696 3,281 3,414 3,418 3,680 3,624 4,428

Other Financial Data(1):
Ratio of earnings to fixed charges(3)............. --(4) --(4) 1.14 3.00 2.66 --(4) 4.19

Other Operating Results(1):
Number of Stores by Division
Toys "R" Us--United States....................... 686 703 701 710 710 704 700
Toys "R" Us--International(5).................... 525 504 507 491 462 452 441
Babies "R" Us.................................... 178 159 165 145 131 113 98
Kids "R" Us...................................... 148 185 184 198 205 212 215
Imaginarium...................................... 43 48 42 37 40 -- --
Geoffrey......................................... 3 -- -- -- -- -- --
Percentage increase/(decrease) in comparable store
net sales for Toys "R" Us--United States(6)...... (1)% (4)% (1)% 1% 3% (4)% 6%

---------------

(footnotes on next page)

S-5

(1) Results for the thirty-nine weeks ended November 2, 2002 and November 3,
2001 and the fiscal years ended February 2, 2002 and February 3, 2001
reflect the deconsolidation of Toys "R" Us--Japan, which has been accounted
for using the "equity method" since its initial public offering on April 24,
2000. For example, sales from Toys "R" Us--Japan accounted for $277 million
and $1,208 million of our total net sales in fiscal year 2000 and 1999,
respectively.

(2) Earnings per share is calculated based on the diluted weighted average
shares outstanding, and (loss) per share is calculated based on the basic
weighted average shares outstanding. Weighted average shares outstanding
presents diluted shares, except in periods where there was a loss, in which
case basic shares are presented.

(3) For purposes of calculating the ratio of earnings to fixed charges,
earnings were calculated by adding (a) earnings from continuing operations
before minority interest and income taxes, (b) interest expense, including
the portion of rents representative of an interest factor, (c) amortization
of debt issue costs, and (d) the amount of our undistributed (income)
losses of less than 50%-owned companies. Fixed charges consist of interest
expense, amortization of debt issue costs, and the portion of rents
representative of an interest factor.

(4) Earnings were insufficient to cover fixed charges for the thirty-nine weeks
ended November 2, 2002 by $97 million, for the thirty-nine weeks ended
November 3, 2001 by $171 million and for fiscal year ended January 30, 1999
by $103 million; therefore, the ratio is less than one-to-one and is not
shown.

(5) Number of stores of Toys "R" Us--International includes operated, licensed
and franchised stores.

(6) Comparable store net sales data is shown for U.S. toy stores only and is
based on the change in net sales of all stores opened for more than one
year. Increases for our fiscal year ended February 3, 2001 have been
adjusted to exclude the effect of the 53rd week in 2000.

S-6

RECENT DEVELOPMENTS

On March 5, 2003, we announced our results for the full year and fourth
quarter of 2002, which ended on February 1, 2003. These results are
preliminary and subject to audit.

Total net sales were $11.3 billion and $4.9 billion for 2002 and the fourth
quarter of 2002, respectively, up from $11.0 billion and $4.8 billion for the
corresponding periods of 2001. Excluding the impact of currency translation,
total net sales increased 1% for 2002 and were constant in the fourth quarter
of the fiscal year compared with the corresponding periods in 2001.

Net earnings were $229 million, or $1.09 per share, for 2002, compared with
$67 million, or $0.33 per share, for 2001. For the fourth quarter of 2002, net
earnings were $278 million, or $1.30 per share, compared with net earnings of
$158 million, or $0.78 per share, for the corresponding quarter of 2001. The
2001 results included restructuring and other charges of $213 million
($126 million, net of tax), of which $27 million was included in cost of goods
sold, that were recorded in the fourth quarter of that year. Excluding the
impact of these restructuring and other charges, net earnings were
$193 million, or $0.94 per share, for 2001 and $284 million, or $1.39 per
share, for the fourth quarter of 2001. Currency translation had a 4% and 3%
positive effect on net earnings for the full year and the fourth quarter of
2002, respectively. (All per share figures in this paragraph refer to diluted
per share amounts.)

Our Babies "R" Us, International and Toysrus.com divisions produced record
results for both the full year and the fourth quarter of 2002. Toysrus.com
achieved profitability for the first time during the fourth quarter. However,
our overall fourth quarter financial performance was negatively affected by
the weak performance of our U.S. toy stores during the holiday sales period.

We had more than $1 billion in cash at year-end 2002. Our net cash from
operating activities was $574 million in 2002 as compared with $504 million in
2001. Our net capital expenditures were $398 million in 2002, compared to
$705 million in 2001. Our cash flow from operating activities minus capital
expenditures thus was $176 million in 2002 as compared to a deficit of
$201 million in 2001.

Inventory at year-end 2002 was $2.2 billion, up $149 million as compared
with 2001, primarily due to the weaker holiday sales in our U.S. toy stores.
However, we believe that the quality of the U.S. toy store inventory improved
in 2002. We do not anticipate that any unusual markdowns will be required to
reduce inventory levels.

Initiatives to Reduce Costs and Improve Efficiency

In January 2002, we announced that we would implement a shared services
model for corporate support functions to improve efficiency and reduce costs
in our company. During 2002, we implemented shared services in a variety of
functional groups, which, together with other initiatives, helped us to reduce
selling, general and administrative expenses by 70 basis points as a
percentage of net sales. Our ongoing assessment of our corporate organization
has enabled us to identify additional opportunities to streamline operations
and reduce headcount in our national headquarters. Among other measures, we
expect to eliminate approximately 200 positions, or approximately 10%, of our
total headquarters staff during the first quarter of fiscal 2003. We will be
recording severance expense relating to headcount reductions, principally in
the first quarter of fiscal 2003.

In January 2003, we announced a reallocation of personnel in our U.S. toy
stores, with the elimination of approximately 700 store management and
supervisory positions. We are now implementing initiatives to increase sales
associate hours in our stores and to provide expanded sales training for all
associates. As we work to improve store operations and enhance our service
capability, we plan to take further steps to maximize sales associate hours
and better align those hours with customer shopping patterns.

Business Segment Performance

In the U.S. Toy Store division, comparable store sales decreased 1% both for
the full year and for the fourth quarter of 2002. Operating earnings were
$280 million in 2002 as compared with $308 million in 2001. Operating earnings
for the fourth quarter of 2002 were $271 million as compared with $331 million
in

S-7

2001. Operating earnings for both the fourth quarter and full year 2001
include the impact of $15 million of markdowns related to store closings
announced as part of restructuring activities.

Comparable toy store sales in the International division increased 6% in
local currencies for 2002 and 5% during the fourth quarter of the fiscal year,
with the United Kingdom and Spain posting particularly strong results. The
International division achieved record high operating income of $160 million
for 2002, an increase of 22% from $131 million in 2001. Operating income for
the fourth quarter of 2002 was $157 million, up nearly 20% from $131 million
in the corresponding quarter of 2001. Excluding the impact of currency
fluctuations, operating income increased 10% for the year and for the fourth
quarter of 2002.

Babies "R" Us posted a 12% increase in total sales, a 3% increase in
comparable store sales and a 26% increase in operating earnings to $174 million
for the year in 2002. For the fourth quarter of 2002, comparable store sales
increased 2% and operating earnings were $40 million, a 38% increase from
operating earnings of $29 million in 2001. We opened 19 new Babies "R" Us
stores during 2002. We plan to open approximately 20 new stores during 2003.

At Toysrus.com, net sales totaled $340 million in 2002, an increase of 23%
from $277 million in 2001. For the fourth quarter of 2002, net sales increased
11%, to $193 million from $174 million in the fourth quarter of 2001.
Toysrus.com recorded its first operating profit of $3 million during the
fourth quarter of 2002 as compared to an operating loss of $17 million for the
corresponding quarter of 2001. The operating loss for 2002 was reduced to
$37 million, representing an improvement of 51% over an operating loss of
$76 million for 2001. Factors contributing to this improved operating
performance included higher merchandise margins due to more effective bundled
offerings and growth in Babiesrus.com and Imaginarium.com, expense controls,
reduced inventory levels and increased integration between Babiesrus.com and
the Babies "R" Us stores.

Kids "R" Us reported a 10% comparable store sales decline for 2002. For the
fourth quarter of the year, comparable store sales declined 9%. We closed 37
Kids "R" Us stores during 2002 as part of a restructuring initiative announced
in January 2002.

Our business is highly seasonal, with net sales and earnings generally
highest in the fourth quarter of each fiscal year. In addition, our results may
be affected by dates on which important holidays fall (e.g., Easter in March in
2002 and April in 2003) and shopping patterns relating to those holidays. See
"Risk Factors - Our business is highly seasonal, and our financial performance
depends upon the results of the fourth quarter of each fiscal year" in the
accompanying prospectus.

The following tables present selected financial data for the year and for
the fourth quarter of 2002. The data have been derived from our preliminary
financial statements as of and for the year ended February 1, 2003, which are
subject to final audit.

S-8

Consolidated Statement of Earnings Data:

Fiscal Quarter Ended Fiscal Year Ended
------------------------- -------------------------
February 1, February 2, February 1, February 2,
2003 2002 2003 2002
----------- ----------- ----------- -----------
(in millions, except per share data)
(unaudited)

Net sales ............................................................... $4,869 $4,759 $11,305 $11,019
Cost of sales ........................................................... 3,437 3,380 7,799 7,604
------ ------ ------- -------
Gross margin ........................................................... 1,432 1,379 3,506 3,415
------ ------ ------- -------
Selling, general and administrative expenses ............................ 889 857 2,718 2,721
Depreciation and amortization ........................................... 81 83 317 308
Restructuring and other charges ......................................... -- 186 -- 186
------ ------ ------- -------
Total operating expenses ............................................... 970 1,126 3,035 3,215
------ ------ ------- -------
Operating earnings ...................................................... 462 253 471 200
Interest expense, net ................................................... 23 19 110 109
------ ------ ------- -------
Earnings before income taxes ............................................ 439 234 361 91
Income taxes ............................................................ 161 76 132 24
------ ------ ------- -------
Net earnings ............................................................ $ 278 $ 158 $ 229 $ 67
====== ====== ======= =======
Basic earnings per share ................................................ $ 1.31 $ 0.80 $ 1.10 $ 0.34
====== ====== ======= =======
Diluted earnings per share .............................................. $ 1.30 $ 0.78 $ 1.09 $ 0.33
====== ====== ======= =======
Restructuring and other charges, net of tax ............................. $ -- $ 126 $ -- $ 126
------ ------ ------- -------
Net earnings, excluding restructuring and other charges ................. $ 278 $ 284 $ 229 $ 193
====== ====== ======= =======
Diluted earnings per share, excluding restructuring and other charges ... $ 1.30 $ 1.39 $ 1.09 $ 0.94
====== ====== ======= =======
Average basic shares outstanding ........................................ 212.5 196.8 207.6 197.6
====== ====== ======= =======
Average diluted shares outstanding ...................................... 214.4 203.6 209.6 206.0
====== ====== ======= =======
Common shares outstanding at end of period .............................. 212.5 196.7
======= =======

---------------
Note: We adopted Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets, on February 3, 2002. Accordingly,
application of the non-amortization provisions resulted in an increase
in net earnings of $2 million and $8 million for the fourth quarter and
the fiscal year ended February 1, 2003, respectively.

S-9

Segment Information:

Net sales
Toys "R" Us--United States ............................................. $3,114 $3,202 $ 6,743 $ 6,877
Toys "R" Us--International ............................................. 1,069 915 2,161 1,889
Babies "R" Us .......................................................... 381 342 1,595 1,421
Toysrus.com(1) ......................................................... 193 174 340 277
Other(2) ............................................................... 112 126 466 555
------ ------ ------- -------
Total ................................................................... $4,869 $4,759 $11,305 $11,019
====== ====== ======= =======
Operating earnings
Toys "R" Us--United States ............................................. $ 271 $ 331 $ 280 $ 308
Toys "R" Us--International ............................................. 157 131 160 131
Babies "R" Us .......................................................... 40 29 174 138
Toysrus.com, net of minority interest(3) ............................... 3 (17) (37) (76)
Other(4) ............................................................... (9) (35) (106) (115)
Restructuring and other charges ........................................ -- (186) -- (186)
------ ------ ------- -------
Operating earnings ...................................................... 462 253 471 200
Interest expense, net ................................................... 23 19 110 109
------ ------ ------- -------
Earnings before income taxes ............................................ $ 439 $ 234 $ 361 $ 91
====== ====== ======= =======

---------------
(1) Includes the sales of Toysrus.com--Japan.
(2) Includes the sales of the Kids "R" Us and Geoffrey divisions.
(3) Includes the operations of Toysrus.com--Japan, net of minority interest.
(4) Includes corporate expenses, the operating results of the Kids "R" Us and
Geoffrey divisions and the equity in net earnings of Toys "R" Us--Japan.

S-10

Consolidated Balance Sheet Data:

As of
-------------------------
February 1, February 2,
2003 2002
----------- -----------
(in millions)
(unaudited)

Assets
Cash and cash equivalents ......................... $1,023 $ 283
Restricted cash ................................... 60 --
Merchandise inventories ........................... 2,190 2,041
Other current assets .............................. 287 307
------ ------
Total current assets .............................. 3,560 2,631
Property and equipment, net ....................... 4,763 4,544
Goodwill, net ..................................... 348 348
Other assets ...................................... 726 553
------ ------
Total assets .................................. $9,397 $8,076
====== ======
Liabilities and Stockholders' Equity
Short-term borrowings ............................. $ -- $ --
Accounts payable .................................. 896 878
Income taxes payable .............................. 279 319
Accrued expenses and other current liabilities .... 824 738
Current portion of long-term debt ................. 379 39
------ ------
Total current liabilities ......................... 2,378 1,974
Long-term debt .................................... 2,139 1,816
Other non-current liabilities ..................... 837 845
Minority interest in Toysrus.com .................. 13 27
Total stockholders' equity ........................ 4,030 3,414
------ ------
Total liabilities and stockholders' equity .... $9,397 $8,076
====== ======

S-11

Consolidated Cash Flow Data:

Fiscal Year Ended
-----------------------------------
February 1, 2003 February 2, 2002
---------------- ----------------
(in millions)
(unaudited)

Cash Flows from Operating Activities
Net earnings ............................ $ 229 $ 67
Depreciation and amortization ........... 317 308
Deferred income taxes ................... 99 (6)
Restructuring and other charges ......... -- 109
Other non-cash items .................... (45) (53)
Change in merchandise inventories ....... (100) 217
Change in accounts payable, accrued
expenses and other liabilities......... 112 (242)
Changes in other operating assets and
liabilities............................ (38) 104
------ ------
Net cash from operating activities ...... 574 504
------ ------
Cash Flows from Investing Activities
Capital expenditures, net ............... (398) (705)
------ ------
Cash Flows from Financing Activities
Short-term debt borrowings, net ......... -- (588)
Long-term debt borrowings ............... 548 1,214
Long-term debt repayment ................ (141) (410)
Proceeds from issuance of common stock .. 266 --
Increase in restricted cash ............. (60) --
Other ................................... -- (25)
------ ------
Net cash from financing activities ...... 613 191
------ ------
Effect of exchange rate changes on cash
and cash equivalents................... (49) 18
------ ------
Cash and Cash Equivalents
Net increase during period .............. 740 8
Beginning of period ..................... 283 275
------ ------
End of period ........................... $1,023 $ 283
====== ======

S-12

DESCRIPTION OF THE NOTES

The following description of the terms and provision of the notes
supplements the description in the accompanying prospectus of the general
terms and provisions of the debt securities, to which description reference is
hereby made. The accompanying prospectus contains a detailed summary of
additional provisions of the notes and the indenture, dated as of May 28,
2002, between Toys "R" Us, Inc. and The Bank of New York, as trustee.

General

The notes will mature on April 15, 2013.

Interest on the notes will accrue from April 8, 2003, at the rate of 7.875%
per year and will be payable semiannually in arrears on April 15 and October 15
of each year, commencing October 15, 2003, to the persons in whose names the
notes are registered at the close of business on the April 1 and October 1
immediately preceding the respective interest payment dates. If any payment is
not a business day, then payment will be made on the next business day, but
without any additional interest or other amount. Interest will be computed on
the notes on the basis of a 360-day year of twelve 30-day months.

The notes will be senior unsecured obligations of Toys "R" Us and will rank
equal in right of payment with all existing and future unsecured and
unsubordinated indebtedness of Toys "R" Us. See "Description of Debt
Securities--Status of Debt Securities" in the accompanying prospectus.

The notes will not be subject to any sinking fund.

The notes will be represented by one or more registered securities in global
form, but in certain limited circumstances may be represented by notes in
definitive form. See "Description of Debt Securities--Global Debt Securities"
in the accompanying prospectus. The notes will only be issued in minimum
denominations of $1,000, and integral multiples thereof.

The notes will constitute a series of debt securities to be issued under the
indenture referred to above.

Optional Redemption

We may redeem the notes, in whole at any time and in part from time to time,
at our option, at a redemption price equal to the greater of:

o 100% of the principal amount of the notes to be redeemed plus accrued and
unpaid interest thereon to the date of redemption; and

o the sum of the remaining scheduled payments of principal of and interest
on the notes to be redeemed (not including any portion of the payments of
interest accrued as of the date of redemption), discounted to its present
value as of the date of redemption on a semi-annual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted Treasury
Rate, as determined by the Quotation Agent, plus 50 basis points, plus
accrued and unpaid interest on the principal amount being redeemed to the
date of redemption.

"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.

"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the
remaining term of the notes to be redeemed that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing
new issues of corporate debt securities of comparable maturity to the
remaining term of the notes.

"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such

S-13

Reference Treasury Dealer Quotations, or (ii) if the trustee obtains fewer
than three Reference Treasury Dealer Quotations, the average of all Reference
Treasury Dealer Quotations.

"Quotation Agent" means the Reference Treasury Dealer appointed by us.

"Reference Treasury Dealer" means (i) each of Barclays Capital Inc., Credit
Suisse First Boston LLC and J.P. Morgan Securities Inc., and its respective
successors, and one other nationally recognized investment banking firm that is
a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer") specified from time to time by us; provided, however, if any
of the foregoing shall cease to be a Primary Treasury Dealer, we shall
substitute therefor another Primary Treasury Dealer; and (ii) any other Primary
Treasury Dealer selected by us.

"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by us, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the trustee
by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the
third business day preceding such redemption date.

Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of the notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the notes or portions
thereof called for redemption.

Covenants

The notes will have the benefit of the covenants set forth under
"Description of Debt Securities--Covenants" in the accompanying prospectus.

Events of Default

The notes will include the events of default set forth under "Description of
Debt Securities--Events of Default, Notices, and Waiver--Events of Default" in
the accompanying prospectus.

Further Issues

The notes are initially being offered in the principal amount of
$400,000,000. We may from time to time, without notice to or consent of the
holders of the notes, create and issue additional notes ranking equally and
ratably with the notes in all respects (or in all respects except for the
payment of interest accruing prior to the issue date of such additional notes
or except, in some cases, for the first payment of interest following the
issue date of the additional notes) that will be consolidated and form a
single series with the notes and will have the same terms as to status,
redemption or otherwise as the notes.

Same-Day Settlement and Payment

The notes will trade in the same-day funds settlement system of The
Depository Trust Company, or "DTC," until maturity or unless we otherwise
issue the notes in definitive form. DTC will therefore require secondary
market trading activity in the notes to settle in immediately available funds.
We can give no assurance as to the effect, if any, of settlement in
immediately available funds on trading activity in the notes. See "Description
of Debt Securities--Global Debt Securities" in the accompanying prospectus.

CUSIP AND ISIN Numbers

The CUSIP No. and ISIN No. for the notes are as follows:

CUSIP No. ................... 892335AK6
ISIN No. .................... US892335AK69

S-14

UNDERWRITING

Under the terms and subject to the conditions contained in a terms agreement
dated the date of this prospectus supplement which incorporates by reference
the underwriting agreement dated the date of this prospectus supplement, we
have agreed to sell to each of the underwriters named below, for whom Barclays
Capital Inc., Credit Suisse First Boston LLC and J.P. Morgan Securities Inc.
are acting as representatives, the following respective principal amounts of
notes.

Principal Amount
Underwriter of Notes
----------- ----------------

Barclays Capital Inc. ....................................... $120,000,000
Credit Suisse First Boston LLC .............................. 120,000,000
J.P. Morgan Securities Inc. ................................. 120,000,000
BNY Capital Markets, Inc. ................................... 20,000,000
Banc One Capital Markets, Inc. .............................. 4,000,000
The Royal Bank of Scotland plc............................... 4,000,000
Salomon Smith Barney Inc. ................................... 4,000,000
SG Cowen Securities Corporation.............................. 4,000,000
Wachovia Securities, Inc. ................................... 4,000,000
------------
Total .................................................... $400,000,000
============

The underwriting agreement provides that the underwriters are obligated to
purchase all of the notes if any are purchased. The underwriting agreement
also provides that if an underwriter defaults the purchase commitments of non-
defaulting underwriters may be increased or the offering of the notes may be
terminated.

The underwriters propose to offer the notes initially at the public offering
price on the cover page of this prospectus supplement and to selling group
members at that price less a selling concession of .450% of the principal amount
per note. The underwriters and selling group members may allow a discount of
..250% of the principal amount per note on sales to other broker/ dealers. After
the initial public offering the representatives may change the public offering
price and concession and discount to broker/dealers.

We estimate that our out-of-pocket expenses for this offering will be
approximately $400,000.

The notes are a new issue of securities with no established trading market.
One or more of the underwriters intends to make a secondary market for the
notes. However, they are not obligated to do so and may discontinue making a
secondary market for the notes at any time without notice. We can give no
assurances as to the liquidity of the trading market for the notes.

We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be
required to make in that respect.

In connection with the offering the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Securities Exchange Act
of 1934.

o Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.

o Over-allotment involves sales by the underwriters of notes in excess of
the principal amount of the notes the underwriters are obligated to
purchase, which creates a syndicate short position.

o Syndicate covering transactions involve purchases of the notes in the
open market after the distribution has been completed in order to cover
syndicate short positions. A short position is more likely to be created
if the underwriters are concerned that there may be downward pressure on
the price of the notes in the open market after pricing that could
adversely affect investors who purchase in the offering.

S-15

o Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the notes originally sold by the syndicate
member are purchased in a stabilizing transaction or a syndicate covering
transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
notes or preventing or retarding a decline in the market price of the notes.
As a result the price of the notes may be higher than the price that might
otherwise exist in the open market. These transactions, if commenced, may be
discontinued at any time.

Certain of the underwriters will make the notes available for distribution on
the Internet through a proprietary Web site and/or a third-party system operated
by Market Axess Inc., an Internet-based communications technology provider.
Market Axess Inc. is providing the system as a conduit for communications
between certain of the underwriters and their customers and is not a party to
any transactions. Market Axess Inc., a registered broker-dealer, will receive
compensation from an underwriter based on the transactions it conducts through
the system. Certain of the underwriters will make the notes available to their
customers through the Internet distributions, whether made through a proprietary
or third-party system, on the same terms as distributions made through other
channels.

Certain of the underwriters and their affiliates have provided from time to
time, and expect to provide in the future, investment banking, lending,
financial advisory and other related services to us and our affiliates, for
which they have received and may continue to receive customary fees and
commissions. In addition, the underwriters or their affiliates are lenders under
our revolving credit facilities, and an affiliate of BNY Capital Markets, Inc.
is the trustee under the indenture pursuant to which we will issue the notes and
under one of our other existing indentures.

NOTICE TO CANADIAN RESIDENTS

Resale Restrictions

The distribution of the notes in Canada is being made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of notes are made. Any resale of the notes in Canada must be made under
applicable securities laws which will vary depending on the relevant
jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of the notes.

Representations of Purchasers

By purchasing notes in Canada and accepting a purchase confirmation a
purchaser is representing to us and the dealer from whom the purchase
confirmation is received that:

o the purchaser is entitled under applicable provincial securities laws to
purchase the notes without the benefit of a prospectus qualified under
those securities laws;

o where required by law, that the purchaser is purchasing as principal and
not as agent; and

o the purchaser has reviewed the text above under "--Resale Restrictions".

Rights of Action -- Ontario Purchasers Only

Under Ontario securities legislation, a purchaser who purchases a security
offered by this prospectus during the period of distribution will have a
statutory right of action for damages, or while still the owner of the notes,
for rescission against us in the event that this prospectus contains a
misrepresentation. A purchaser will be deemed to have relied on the
misrepresentation. The right of action for damages is exercisable not later than
the earlier of 180 days from the date the purchaser first had knowledge of the
facts giving rise to the cause of action and three years from the date on which
payment is made for the notes. The right of action for rescission is exercisable
not later than 180 days from the date on which payment is made for the notes. If
a purchaser elects to exercise the right of action for rescission, the purchaser
will have no right of action for

S-16

damages against us. In no case will the amount recoverable in any action exceed
the price at which the notes were offered to the purchaser and if the purchaser
is shown to have purchased the securities with knowledge of the
misrepresentation, we will have no liability. In the case of an action for
damages, we will not be liable for all or any portion of the damages that are
proven to not represent the depreciation in value of the notes as a result of
the misrepresentation relied upon. These rights are in addition to, and without
derogation from, any other rights or remedies available at law to an Ontario
purchaser. The foregoing is a summary of the rights available to an Ontario
purchaser. Ontario purchasers should refer to the complete text of the relevant
statutory provisions.

Enforcement of Legal Rights

All of our directors and officers as well as the experts named herein may be
located outside of Canada and, as a result, it may not be possible for
Canadian purchasers to effect service of process within Canada upon us or
those persons. All or a substantial portion of our assets and the assets of
those persons may be located outside of Canada and, as a result, it may not be
possible to satisfy a judgment against us or those persons in Canada or to
enforce a judgment obtained in Canadian courts against us or those persons
outside of Canada.

Taxation and Eligibility for Investment

Canadian purchasers of notes should consult their own legal and tax advisors
with respect to the tax consequences of an investment in the notes in their
particular circumstances and about the eligibility of the notes for investment
by the purchaser under relevant Canadian legislation.

LEGAL MATTERS

The validity of the notes offered hereby will be passed upon for us by
Simpson Thacher & Bartlett, New York, New York, our counsel, and for the
underwriters by Shearman & Sterling, New York, New York.

S-17

PROSPECTUS

TOYS "R" US, INC.

$800,000,000

DEBT SECURITIES

----------------

We may offer and sell the debt securities from time to time in one or more
offerings. This prospectus provides you with a general description of the debt
securities that we may offer.

Each time that we sell debt securities we will provide a prospectus
supplement to this prospectus that contains specific information about the
offering and the terms of the debt securities. The prospectus supplement may
also add, update or change information contained in this prospectus. You
should carefully read this prospectus and any prospectus supplement before you
invest in any of our debt securities.

We may offer and sell senior unsecured debt securities under this
prospectus.

We have not yet determined whether any of the debt securities will be listed
on any exchange or over-the-counter market. If we decide to seek the listing
of the debt securities, the prospectus supplement relating to such debt
securities will disclose the exchange or market on which the debt securities
will be listed.

----------------

Investment in the debt securities involves risks. See "Risk Factors"
beginning on page 5.

----------------

Neither the Securities and Exchange Commission nor any state or other
securities commission has approved or disapproved these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

----------------

The debt securities will be sold directly by us, through agents, dealers or
underwriters designated from time to time, or through a combination of such
methods. If our agents or any dealers or underwriters are involved in the sale
of the debt securities, the names of such agents, dealers or underwriters and
any applicable commissions or discounts will be set forth in the applicable
prospectus supplement.

This prospectus may not be used to consummate sales of debt securities
unless accompanied by an applicable prospectus supplement.

----------------

The date of this prospectus is April 2, 2003.

TABLE OF CONTENTS

Page
----

About This Prospectus ................................................... 2
Where You Can Find More Information ..................................... 3
Incorporation of Certain Documents by Reference ......................... 3
Toys "R" Us, Inc. ....................................................... 4
Risk Factors ............................................................ 5
Forward-Looking Statements .............................................. 8
Use of Proceeds ......................................................... 8
Ratio of Earnings to Fixed Charges ...................................... 9
Description of Debt Securities .......................................... 10
United States Federal Income Tax Consequences ........................... 23
Plan of Distribution .................................................... 31
Legal Matters ........................................................... 34
Experts ................................................................. 34

ABOUT THIS PROSPECTUS

This prospectus is part of a "shelf" registration statement that we filed
with the Securities and Exchange Commission, or SEC. By using a shelf
registration statement, we may sell up to $800,000,000 aggregate offering
price of any combination of the debt securities described in this prospectus
from time to time and in one or more offerings. This prospectus only provides
you with a general description of the debt securities that we may offer. Each
time we sell debt securities, we will provide a supplement to this prospectus
that contains specific information about the terms of the debt securities. The
prospectus supplement may also add, update or change information contained in
this prospectus. Before purchasing any debt securities, you should carefully
read both this prospectus and any prospectus supplement, together with the
additional information described under the heading "Where You Can Find More
Information" and "Incorporation of Certain Documents by Reference".

You should rely only on the information contained or incorporated by
reference in this prospectus and in any prospectus supplement. We have not
authorized anyone else to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely
on it. We are not making an offer of these debt securities in any state or
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus or any prospectus supplement or
in any document incorporated by reference is accurate only as of the
respective dates thereof. Our business, financial condition, results of
operations and prospects may have changed since those dates.

As used in this prospectus, "Toys `R' Us," "company," "we," "us" and "our"
refer to Toys "R" Us, Inc., together with its consolidated subsidiaries,
unless the context otherwise indicates. However, in the "Description of Debt
Securities" section in this prospectus, whenever we refer to "Toys `R' Us,"
"company," "us," "we" or "our," we are referring to Toys "R" Us, Inc. and not
any of its subsidiaries. When we refer to "you" or "yours," we mean the
holders of the applicable series of debt securities.

Toys "R" Us, Kids "R" Us, Babies "R" Us, Imaginarium and certain other brand
names used in this prospectus are our registered trademarks.

We are not incorporating by reference in this prospectus any material from
our web sites. The references to our web sites are inactive textual references
to the uniform resource locators (URLs) and are for your reference only.

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You can inspect and copy these reports, proxy
statements and other information at the public reference facilities of the
SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You can also
obtain copies of these materials from the public reference section of the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You
may call the SEC at 1-800-SEC-0330 for further information on its public
reference room. The SEC also maintains a web site that contains reports, proxy
statements and other information regarding registrants, including us, that
file electronically with the SEC (http://www.sec.gov). You can also inspect
reports and other information that we file at the office of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.

This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC covering sales of the debt securities. For further
information concerning us and the debt securities, you should refer to the
registration statement, including its exhibits. The indenture and forms of the
other documents establishing the terms of the offered debt securities are
filed as exhibits to the registration statement or will be filed as exhibits
to a document incorporated by reference in the registration statement of which
this prospectus forms a part. This prospectus summarizes material provisions
of the debt securities and the indenture. Because this prospectus may not
contain all the information that you may find important, you should review the
full text of these documents.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The SEC allows us to "incorporate by reference" the information that we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and later information that we file with
the SEC will automatically update and supersede this information.

We incorporate by reference the following documents previously filed by us
with the SEC and any future filings made by us with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
after the date of this prospectus and prior to termination of the offering of
the securities that we have registered under the registration statement of
which this prospectus forms a part. These documents contain important
information about us.

o Annual Report on Form 10-K for the fiscal year ended February 2, 2002;

o Quarterly Report on Form 10-Q for the quarter ended May 4, 2002;

o Quarterly Report on Form 10-Q and Form 10-Q/A for the quarter ended
August 3, 2002;

o Quarterly Report on Form 10-Q and Form 10-Q/A for the quarter ended
November 2, 2002;

o Current Report on Form 8-K filed with the SEC on May 13, 2002;

o Current Report on Form 8-K filed with the SEC on May 20, 2002; and

o Current Report on Form 8-K filed with the SEC on January 21, 2003.

Any statement contained in a document incorporated by reference, or deemed
to be incorporated by reference, in this prospectus shall be deemed to be
modified or superseded for purposes of this prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated by reference in this prospectus modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.

You may request a copy of these reports and other filings, other than
exhibits unless those exhibits are specifically incorporated by reference into
those filings, at no cost by writing to Ursula H. Moran, Vice President-Investor
Relations, Toys "R" Us, Inc., 461 From Road, Paramus, New Jersey 07652, or
telephoning us at (201) 262-7800.

TOYS "R" US, INC.

We are incorporated under the laws of the State of Delaware. Our principal
executive offices are located at 461 From Road, Paramus, New Jersey 07652, and
our telephone number is (201) 262-7800.

RISK FACTORS

An investment in our debt securities involves risks. You should carefully
consider the risks and uncertainties described below and the other information
contained or incorporated by reference in this prospectus before you decide
whether to invest in our debt securities. If any of the following risks
actually occurs, our business, financial condition, results of operations and
liquidity could be materially adversely affected. This may affect our ability
to pay interest on such debt securities or repay the principal when due, and
you may lose part or all of your investment.

Our industry is highly competitive, and competitive conditions may adversely
affect our revenues and overall profitability.

Our industry is highly competitive, and our results of operations are
sensitive to, and may be adversely affected by, competitive pricing,
promotional pressures, additional store openings and other factors. We compete
with discount and mass merchandisers, such as Wal-Mart, Kmart and Target,
national and regional chains and local retailers in the market areas served by
our company. Discount and mass merchandisers use aggressive pricing policies
and, during the holiday season, enlarged toy selling areas to build traffic
for other store departments. Competition is principally based on price, store
location, advertising and promotion, product selection, quality and service.
In addition, competition in the retail apparel business consists of discount
and mass merchandisers, national and regional chains, and local retailers as
well as Internet and catalog businesses. Kids "R" Us is vulnerable to demand
and pricing shifts for apparel and to less than optimal selection as a result
of these factors. Some of our competitors may have greater financial
resources, lower merchandise acquisition costs and lower operating expenses
than our company. If we fail to compete successfully, we could face lower net
sales and be required to offer greater discounts to our customers, which could
result in decreased profitability.

Our business is highly seasonal, and our financial performance depends upon
the results of the fourth quarter of each fiscal year.

Our business is highly seasonal, with net sales and earnings generally
highest in the fourth quarter. During the last three fiscal years, more than 40%
of our net sales and the substantial portion of our operating earnings have been
generated in the fourth quarter. Our results of operations depend significantly
upon the holiday selling season in the fourth quarter. If we achieve less than
satisfactory net sales during the key fourth quarter, we may not be able to
compensate sufficiently for lower net sales during the first three quarters of
the fiscal year. In addition, our results may be affected by dates on which
important holidays fall and shopping patterns relating to those holidays.

We may not retain or attract customers if we fail to implement successfully
our strategy.

We continue to implement a series of customer-oriented strategic initiatives
to differentiate and strengthen our core merchandise content and service
levels. We also are continuing with initiatives to reduce and optimize our
operating expense structure. The success of these initiatives will depend on
various factors, including the appeal of renovated store formats and new
products to customers, competitive conditions and economic conditions. If we
are unsuccessful at implementing some or all of our strategic initiatives, we
may be unable to retain or attract customers, which could result in lower net
sales and a failure to realize the benefit of the sizeable expenditures
incurred for these strategic initiatives.

Our net sales may be adversely affected if we fail to respond to changes in
consumer preferences in a timely manner.

Our financial performance depends on our ability to identify, originate and
define product trends as well as to anticipate, gauge and react to changing
consumer demands in a timely manner. Our toy and other products must appeal to
a broad range of consumers whose preferences cannot be predicted with
certainty and are subject to change. We cannot assure you that we will be able
to continue to meet changing consumer demands in the future. If we misjudge
the market for our products, we may be faced with significant excess
inventories for some products and missed opportunities for other products. In
addition, because we place

orders for products well in advance of purchases by our customers, we could
experience excess inventory if our customers purchase fewer products than
anticipated.

Our net sales may be affected by changes in consumer spending patterns.

Sales of toys and other products may depend upon discretionary consumer
spending, which may be affected by general economic conditions, consumer
confidence and other factors beyond our control. A decline in consumer
spending could, among other things, negatively affect our net sales and could
also result in excess inventories, which could, in turn, lead to increased
inventory financing expenses. As a result, changes in consumer spending
patterns could adversely affect our profitability.

Our operations depend on the availability of adequate financing.

We have significant liquidity and capital requirements, and we depend on our
ability to generate cash flow from operations, borrow funds and issue
securities in the capital markets. Although we currently retain lower-tier
investment grade ratings from Standard & Poor's Ratings Group and Moody's
Investors Service, Inc. (although not from a third rating agency), future
rating agency actions could affect our ability to obtain financing on
satisfactory terms. We currently have adequate sources of liquidity and
capital resources; however, any inability on our part to have access in the
future to financing when needed would have a negative effect on our results of
operations and financial condition.

We depend on key vendors to supply the merchandise that we sell to our
customers.

We have over 2,000 vendor relationships through which we procure the
merchandise that we offer to customers. For 2002, our top 20 vendors based on
our purchase volume represented approximately 45% of the total merchandise we
purchased on an annual basis. If our relationships with major vendors
deteriorate or we become unable to negotiate reasonable terms to acquire
merchandise from any of these vendors and then fail to obtain similar products
from alternative sources, our net sales and profitability would be negatively
affected.

International events could delay or prevent the delivery of products to our
stores.

A significant portion of the toys and other products sold by us is
manufactured outside the United States, particularly in Asia. As a result, any
event causing a disruption of imports, including the imposition of import
restrictions or trade restrictions in the form of tariffs or otherwise, acts
of war or international or domestic terrorism, could increase the cost and
reduce the supply of products available to us, which could, in turn,
negatively affect our net sales and profitability.

Economic, political and other risks associated with our international
operations could adversely affect our business.

We have operations in 29 countries outside the United States, including,
among others, the United Kingdom, Canada, Germany and France. We intend to
pursue opportunities that may arise in these and other countries. Net sales in
foreign countries (excluding sales by licensees and franchisees) represented
approximately 19% of our net sales in 2002. We are subject to the risks
inherent in conducting business across national boundaries, many of which are
outside our control. These risks include the following:

o economic downturns;

o currency exchange rate and interest rate fluctuations;

o changes in governmental policy, including, among others, those relating
to taxation;

o international military, political and diplomatic incidents;

o government instability;

o nationalization of foreign assets; and

o tariffs and governmental trade policies.

We cannot assure you that one or more of these factors will not negatively
affect our international operations and, as a result, harm our business and
financial performance.

As of the date of this prospectus, we are unable to predict the effect of
the current war in Iraq on consumer spending patterns or on our net sales and
profitability.

Our business operations could be disrupted if our existing and new management
information systems fail to perform adequately.

We depend upon our management information systems in the conduct of our
operations. We are in the process of upgrading our inventory management,
distribution and supply chain management systems and our point of sale
systems, as well as other essential information technology. We have spent in
excess of $100 million on systems in each of the last three fiscal years.
Implementation of major new systems and enhancements to existing systems could
cause disruptions in our operations. If our major management information
systems fail to perform as anticipated, we could experience difficulties in
replenishing inventories or in delivering toys and other products to store
locations in response to customer demands. Any of these or other systems-
related problems could, in turn, adversely affect our net sales and
profitability.

In the event of our liquidation or reorganization, holders of debt securities
will generally have a junior position to claims of creditors of our
subsidiaries.

The debt securities are obligations exclusively of Toys "R" Us and not of
its subsidiaries. We are a holding company and conduct substantially all of
our operations through subsidiaries. Our ability to meet our obligations under
the debt securities will be dependent on the earnings and cash flows of those
subsidiaries and the ability of those subsidiaries to pay dividends or to
advance or repay funds to us. Our right to participate as an equity holder in
any distribution of assets of any subsidiary (and thus the ability of holders
of the debt securities to benefit as creditors of our company from such
distribution) is junior to creditors of that subsidiary, including trade
creditors, debt holders, secured creditors, taxing authorities and any
guarantee holders. As a result, claims of holders of the debt securities will
be effectively subordinated to the existing and future creditors of our
subsidiaries. In the event of our liquidation or reorganization, holders of
debt securities will generally have a junior position to claims of creditors
of our subsidiaries. As of February 1, 2003, Toys "R" Us, Inc. had
approximately $2,340 million of outstanding indebtedness. At the same date,
our subsidiaries had approximately $178 million of outstanding indebtedness
and had also guaranteed approximately $342 million of outstanding indebtedness
of Toys "R" Us, Inc.

Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the debt securities or to provide
us with funds for our payment obligations, whether by dividend, distribution,
loans or other payments. In addition, any payment of dividends, distributions,
loans or advances by our subsidiaries to us could be subject to contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings and business considerations.

The debt securities will not be secured so that the debt securities will be
effectively subordinated to our existing and future secured indebtedness to
the extent of the value of the assets securing that indebtedness. As of
February 1, 2003, we had no secured senior debt outstanding, other than
mortgages and capital leases.

The debt securities will not contain certain restrictive covenants.

Unless otherwise provided in the prospectus supplement applicable to a
particular series of debt securities, the debt securities will not contain
some covenants that could protect holders of debt securities from certain
transactions. For example, the indenture does not contain covenants that:

o limit the ability of us or our subsidiaries to incur additional
indebtedness;

o limit our ability to pay dividends or make distributions on, or redeem or
repurchase our equity securities;

o prevent us from selling or otherwise transferring any shares of, or
securities convertible into, or options, warrants or rights to purchase
shares of, voting stock of any of our subsidiaries, or prohibit

any subsidiary from issuing any shares of, securities convertible into,
or options, warrants or rights purchase shares of, voting stock of such
subsidiary; or

o give holders of the debt securities the right to require us to repurchase
their debt securities in the event of a change of control of our company
due to a takeover, recapitalization or similar restructuring, or for any
other reason.

An active trading market for the debt securities may not develop.

A trading market may not develop for any particular series of debt
securities. Unless otherwise provided in the applicable prospectus supplement,
the debt securities will not be listed on any national securities exchange or
automated quotation system. The liquidity of any market for any series of debt
securities will depend on the number of holders of such debt securities, the
interest of securities dealers in making a market in such debt securities and
other factors. The price at which you will be able to sell such debt
securities may be less than the price paid for them due to prevailing interest
rates, the market for similar securities, general economic conditions, our
performance and business prospects and other factors.

FORWARD-LOOKING STATEMENTS

This prospectus, any prospectus supplement and the documents incorporated
herein by reference contain certain statements that are, or may be considered
to be, forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements that are not historical facts, including statements about our
beliefs or expectations, are forward-looking statements. We generally identify
these statements by words or phrases such as "anticipate," "estimate," "plan,"
"expect," "believe," "intend," "foresee," "will," "may" and similar words or
phrases. These statements discuss, among other things, our strategy, store
openings and renovations, future performance and anticipated cost savings,
results of our restructuring, anticipated international development and other
goals and targets. All of these forward-looking statements are subject to
risks, uncertainties and assumptions. Consequently, actual events and results
may vary significantly from those included in or contemplated or implied by
our forward-looking statements. The forward-looking statements included in
this prospectus, any prospectus supplement or the relevant incorporated
document are made only as of the date of this prospectus, the relevant
prospectus supplement or the relevant incorporated document, as the case may
be, and, except as required by law, we undertake no obligation to publicly
update these forward-looking statements to reflect subsequent events or
circumstances, new information or otherwise. Factors that could cause our
actual results to differ materially include the factors that we describe in
this prospectus, including under "Risk Factors," the relevant prospectus
supplement and in the documents we incorporate by reference.

USE OF PROCEEDS

Unless otherwise specified in the applicable prospectus supplement, we will
use the net proceeds from the sale of the debt securities for repayment of
debt and our general corporate purposes. General corporate purposes may
include, in addition to the repayment of debt, working capital needs, capital
expenditures, possible acquisitions and any other purposes that may be
identified in any prospectus supplement. The net proceeds may be invested
temporarily in investment grade securities or applied to repay short-term or
revolving debt until they are used for their stated purpose.

RATIO OF EARNINGS TO FIXED CHARGES

The following table presents our consolidated ratio of earnings to fixed
charges for the periods indicated.

Fiscal Year | Thirty-Nine Fiscal Year Ended
Ended | Weeks Ended ---------------------------------------------------------------------
February 1, | November 2, February 2, February 3, January 29, January 30, January 31,
2003(1) | 2002 2002 2001 2000 1999 1998
----------- | ----------- ----------- ----------- ----------- ----------- -----------

Ratio of Earnings to Fixed |
Charges.................... 2.26 | --(2) 1.14 3.00 2.66 --(2) 4.19

---------------
(1) Preliminary, subject to audit of financial statements for the fiscal year
ended February 1, 2003.

(2) Earnings were insufficient to cover fixed charges for the thirty-nine weeks
ended November 2, 2002 by $97 million and for the fiscal year ended
January 30, 1999 by $103 million; therefore, the ratio is less than one-to-
one and is not shown.

For purposes of calculating the ratio of earnings to fixed charges, earnings
were calculated by adding (a) earnings from continuing operations before
minority interest and income taxes; (b) interest expense, including the
portion of rents representative of an interest factor; (c) amortization of
debt issue costs; and (d) the amount of our undistributed (income) losses of
less than 50% owned companies. Fixed charges consist of interest expense,
amortization of debt issue costs, and the portion of rents representative of
an interest factor.

DESCRIPTION OF DEBT SECURITIES

The following description discusses the general terms and provisions of the
debt securities that we may offer and sell with this prospectus. The
particular terms of the debt securities offered will be set forth in a
prospectus supplement relating to those debt securities. The debt securities
offered by this prospectus will be our senior unsecured obligations. The debt
securities will be issued under the debt indenture, dated as of May 28, 2002,
between us and The Bank of New York, as trustee.

The debt securities will be governed by the indenture. The indenture gives
us broad authority to set the particular terms of each series of debt
securities, including the right to modify certain of the terms contained in
the indenture. The particular terms of a series of debt securities and the
extent, if any, to which the particular terms of the issue modify the terms of
the indenture will be described in the prospectus supplement relating to the
debt securities. The terms of the debt securities will include those stated in
the indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939, as amended.

The indenture contains the full legal text of the matters described in this
section. Because this section is a summary, it does not describe every provision
of the debt securities or the indenture. This summary is subject to and
qualified in its entirety by reference to all the provisions of the indenture,
including definitions of terms used in the indenture. The indenture has been
incorporated by reference as an exhibit to the registration statement of which
this prospectus forms a part. You should read the indenture, including the
defined terms, and the particular terms of the debt securities for provisions
that may be important to you. Whenever we refer to defined terms or particular
sections of the indenture in this prospectus or any prospectus supplement, those
defined terms or sections are incorporated by reference herein or therein as
applicable. You should read the prospectus supplement relating to a series of
debt securities for more information about the terms of a particular series of
debt securities, including variations from the terms described in this
prospectus. This summary is subject to and qualified by reference to the
description of the particular terms of the debt securities in the applicable
prospectus supplement.

The trustee for the debt securities will be The Bank of New York, unless
otherwise provided in the applicable prospectus supplement.

Capitalized terms used below are defined under "Covenants--Defined Terms".

General

The indenture provides that our debt securities may be issued without limit
as to aggregate principal amount, in one or more series, and in any currency
or currency units, in each case as established from time to time in or under
authority granted by one or more resolutions of our board of directors and set
forth in an officers' certificate or as established in one or more
supplemental indentures. All debt securities of one series need not be issued
at the same time, and, unless otherwise provided, any series may be reopened,
without the consent of the holders of the debt securities of that series, for
issuances of additional debt securities of that series. Each time that we
issue a new series of debt securities or reopen any existing series, the
prospectus supplement relating to those debt securities will specify the
particular amount, price and other terms of those debt securities, including
the following:

o the title of the debt securities;

o any limit on the total principal amount of the debt securities;

o the date or dates on which the principal of the debt securities will be
payable or their manner of determination;

o the interest rate or rates of the debt securities (which may be fixed or
variable); the date or dates from which interest will accrue on the debt
securities; and the interest payment dates and the regular record dates
for the debt securities; or, in each case, their manner of determination;

o if other than the principal corporate office of the trustee, the place or
places where the principal of and premium, if any, and interest on the
debt securities will be paid;

o the period or periods within which (or their manner of determination),
the price or prices at which (or their manner of determination), the
currency or currency unit, if other than U.S. dollars, in which and the
terms on which any of the debt securities may be redeemed, in whole or in
part at our option;

o the obligation, if any, we have to redeem, repay or purchase debt
securities under any sinking fund, mandatory redemption or analogous
provision or at the option of the holder; and the period or periods
within which (or their manner of determination), the price or prices at
which (or their manner of determination), the currency or currency unit,
if other than U.S. dollars, in which and the terms and conditions on
which the debt securities will be so redeemed, repaid or purchased in
whole or in part;

o the denomination in which the debt securities will be issued, if other
than denominations of $1,000 and any whole multiple thereof, or, in the
case of bearer securities, $5,000;

o the portion of the principal amount of the debt securities that is
payable on the declaration of acceleration of the maturity, if other than
their principal amount (these debt securities could include original
issue discount, or OID, debt securities or indexed debt securities, which
are each described below);

o the obligation, if any, we have to pay additional amounts under any debt
securities held by a person who is not a U.S. person for tax payments,
assessments or other governmental charges and whether we have the option
to redeem the debt securities which are affected by the additional
amounts instead of paying the additional amounts;

o the form in which we will issue the debt securities, whether registered,
bearer or both, and any restrictions on the exchange of one form of debt
securities for another and on the offer, sale and delivery of the debt
securities in either form;

o whether the debt securities will be issuable as global securities;

o whether the amounts of payments of principal of, premium, if any, and
interest, if any, on the debt securities are to be determined with
reference to an index, formula or other method, and if so, the manner in
which such amounts will be determined;

o if the debt securities are issuable in definitive form upon the
satisfaction of certain conditions, the form and terms of such
conditions;

o the trustee, if other than The Bank of New York, and any paying agents,
transfer agents, registrars, depositories, currency determination agents
or similar agents with respect to the debt securities;

o any additions or deletions to the terms of the debt securities with
respect to the events of default or covenants governing the debt
securities;

o the currency or currency units in which payment of the principal of and
premium and interest on any debt securities will be made, if other than
U.S. dollars, and our or the holders' right, if any, to elect payment in
a currency or currency unit other than that in which the debt securities
are payable; and, if applicable, the method of establishing an exchange
rate;

o whether and to what extent the debt securities are subject to defeasance
on terms different from those described under "--Defeasance of the
Indenture"; and

o any other terms of the debt securities that are not inconsistent with the
indenture.

We may issue indexed debt securities. Payments of principal of, and premium
and interest on, indexed debt securities are determined with reference to the
rate of exchange between the currency or currency unit in which the debt
security is denominated and any other currency or currency unit specified by
us, to the relationship between two or more currencies or currency units or by
other similar methods or formulas specified in the prospectus supplement.

The indenture permits us to issue debt securities which are subordinated to
present and future senior indebtedness and debt securities. We do not intend
to issue subordinated debt securities under this prospectus.

The terms on which a series of debt securities may be convertible into or
exchangeable for other securities of Toys "R" Us or another party will be set
forth in the prospectus supplement relating to that series. The terms will
include provisions as to whether conversion or exchange is mandatory, at the
option of the holder or at our option. The terms may include provisions under
which the number of other securities to be received by the holders of a series
of debt securities may be adjusted.

We may also issue debt securities as original issue discount (OID) debt
securities. OID debt securities bear no interest or bear interest at below-
market rates and are sold at a discount below their stated principal amount.
Upon acceleration of maturity, the holder of an OID debt security will be
entitled to a specified amount that is less than the principal amount. If we
issue OID debt securities, the prospectus supplement will contain the issue
price, the rate at which interest will accrete, and the date from which such
interest will accrete on the OID debt securities.

The above list is not intended to be an exclusive list of the terms that may
be applicable to any series of debt securities, and we are not limited in any
respect in our ability to issue debt securities with terms different from or
in addition to those described above or elsewhere in this prospectus, provided
that the terms are not inconsistent with the indenture.

The indenture does not contain restrictions on the amount of additional debt
that we or our subsidiaries may incur in the future. In addition, the
indenture does not contain covenants that prevent us from selling,
transferring or otherwise disposing of any shares of, or securities
convertible into, or options, warrants or rights to subscribe for or purchase
shares of, voting stock of any of our subsidiaries, nor does it prohibit any
subsidiary from issuing any shares of, securities convertible into, or
options, warrants or rights to subscribe for or purchase shares of, voting
stock of such subsidiary.

Status of Debt Securities

The debt securities will be our senior unsecured obligations and will rank
equal in right of payment with all of our existing and future unsecured and
unsubordinated debt.

Form

Unless otherwise indicated in the prospectus supplement, the debt securities
will be issued in fully registered form, without coupons.

Payment

Unless otherwise indicated in the applicable prospectus supplement, we will
pay principal of and premium, if any, and interest on registered debt securities
at the office of the trustee or at any other office or agency maintained by us
for such purpose. We will pay installments of interest on any registered debt
security to the person in whose name the registered debt security is registered
on the applicable record date for these payments. We will pay principal and
premium, if any, on debt securities only against surrender of these debt
securities. If we issue debt securities in bearer form, the prospectus
supplement will describe where and how payment will be made.

Covenants

The indenture includes each of the material covenants discussed below.

Limitation on Liens

The indenture provides that we will not, and will not permit any of our
Domestic Subsidiaries, directly or indirectly, to issue, assume or guarantee
any debt for borrowed money if that debt is secured by any Lien upon any
Principal Property of ours or of a Domestic Subsidiary or upon any shares of
stock or debt of any Domestic Subsidiary, whether owned at May 28, 2002 (the
date of the indenture) or thereafter acquired, without effectively securing
the debt securities equally and ratably with that debt. The foregoing
restriction does not apply to:

(1) Liens on any property acquired, constructed or improved by us or any
Domestic Subsidiary after May 28, 2002, which are created or assumed
contemporaneously with or within three years (four years in the case
of Liens on warehouses and distribution centers) after its
acquisition, or completion of construction or improvement, or within
six months thereafter pursuant to a firm commitment for financing
arrangements entered into within that three-year period (or in the
case of warehouses and distribution centers, four-year period) to
secure or provide for the payment of the purchase price or cost
thereof; or in addition to Liens contemplated by clauses (2) and (3)
below, Liens existing on any property at the time of acquisition
thereof;

(2) Liens existing on any property, shares of stock or debt at the time
of acquisition thereof from a Person merged or consolidated with or
into us or a Domestic Subsidiary;

(3) Liens on property of any Person existing at the time it becomes a
Domestic Subsidiary;

(4) Liens to secure debt of a Domestic Subsidiary owed to us or debt of
us or one of our Domestic Subsidiaries owed to another Domestic
Subsidiary;

(5) Liens in favor of governmental bodies to secure partial progress,
advance or other payments pursuant to any contract or statute or to
secure debt incurred to finance all or any part of the purchase
price or cost of constructing or improving the property subject to
the Liens;

(6) any Lien existing on May 28, 2002; or

(7) Liens for the sole purpose of extending, renewing or replacing debt
secured by any Lien referred to in the foregoing clauses (1) to (6),
inclusive; provided, however, that the principal amount of debt
secured by that Lien shall not exceed the principal amount of debt
so secured at the time of such extension, renewal or replacement,
and that such extension, renewal or replacement shall be limited to
the property that secured the Lien so extended, renewed or replaced
(plus improvements on such property).

The limitation on liens shall not apply to the issuance, assumption or
guarantee by us or any Domestic Subsidiary of debt secured by a Lien which
would otherwise be subject to the foregoing restrictions up to an aggregate
amount which, together with all other debt of ours and our Domestic
Subsidiaries secured by Liens (not including Liens permitted under the
foregoing exceptions) that would otherwise be subject to the foregoing
restrictions and the Value of Sale and Leaseback Transactions existing at that
time (other than Sale and Leaseback Transactions that, if such Sale and
Leaseback Transaction had been a Lien, would have been

permitted under clause (1) above and other than Sale and Leaseback
Transactions as to which application of amounts have been made in accordance
with clause (3) under "--Limitation on Sale and Leaseback Transactions"), does
not at the time exceed the greater of 10% of Consolidated Net Tangible Assets
or 15% of Consolidated Capitalization.

The indenture does not limit the ability of our Subsidiaries that are not
Domestic Subsidiaries to issue, assume or guarantee any secured debt.

Limitation on Sale and Leaseback Transactions

The indenture provides that we will not, and will not permit any of our
Domestic Subsidiaries to, enter into any Sale and Leaseback Transaction unless
the net proceeds of the Sale and Leaseback Transaction are at least equal to
the sum of all costs incurred by us or any Domestic Subsidiary in connection
with the acquisition of, and construction of any improvements on, the
Principal Property to be leased and:

(1) we or the Domestic Subsidiary would be entitled to incur debt
secured by a Lien on the Principal Property to be leased without
equally and ratably securing the debt securities, pursuant to clause
(1) under "--Limitation on Liens;" or

(2) we or the Domestic Subsidiary would be entitled to incur debt
secured by a Lien on the Principal Property to be leased without
equally and ratably securing the debt securities, pursuant to the
second to last sentence under "--Limitation on Liens;" or

(3) we or the Domestic Subsidiary shall, within 120 days of the
effective date of any such arrangement (or, in the case of (ii)
below, within six months thereafter pursuant to a firm purchase
commitment entered into within such 120 day period) apply an amount
equal to the proceeds from such Sale and Leaseback Transaction
relating to such Principal Property:

(i) to the payment or other retirement of debt incurred or assumed
by us or any Subsidiary that ranks senior to or equal with the
debt securities (other than debt owned by us or any
Subsidiary); or

(ii) to the purchase of other Principal Property.

The indenture does not limit the ability of our Subsidiaries that are not
Domestic Subsidiaries to enter into Sale and Leaseback Transactions.

Merger, Consolidation or Sale or Conveyance of Assets

The indenture provides that we may not consolidate or merge with or into any
other Person or convey or transfer our properties and assets substantially as
an entirety to any Person, unless:

(1) the successor Person (if not Toys "R" Us) shall be a corporation,
partnership, limited liability company or trust organized and
existing under the laws of the United States, any State thereof or
the District of Columbia, and shall expressly assume, by a
supplemental indenture reasonably satisfactory to the trustee, the
due and punctual payment of the principal of, premium, if any, and
interest on the debt securities and the performance of every
covenant in the indenture on our part;

(2) immediately after giving effect to such transaction, no event of
default, and no event which, after notice or lapse of time or both,
would become an event of default, shall have occurred and be
continuing; and

(3) we shall have delivered to the trustee an officers' certificate and
an opinion of counsel, each stating that the consolidation, merger,
conveyance or transfer and the supplemental indenture comply with
clauses (1) and (2) above and all other conditions precedent
specified in the indenture relating to the transaction have been
complied with.

In the case of any consolidation, merger, conveyance or transfer, the
successor Person will succeed to and be substituted for Toys "R" Us as obligor
on the debt securities, with the same effect as if it had been

named in the indenture as Toys "R" Us, and we will be relieved of all
obligations under the debt securities and the indenture.

The covenant described above includes a phrase relating to the sale,
assignment, conveyance, transfer or other disposition of "assets substantially
as an entirety". Like the phrase "all or substantially all" of a company's
assets, there is no precise, established definition of the phrase "assets
substantially as an entirety" under applicable law. In interpreting this
phrase, courts, among other things, make a subjective determination as to the
portion of assets conveyed, considering many factors, including the value of
assets conveyed, the proportion of a company's income derived from the assets
conveyed and the significance of those assets to the ongoing business of the
company. To the extent the meaning of such phrase is uncertain, uncertainty
will exist as to whether or not the covenant described above may apply.

Defined Terms

"Consolidated Capitalization" means the total of all the assets appearing on
the consolidated balance sheet of Toys "R" Us and its Subsidiaries, less the
following: (A) current liabilities; and (B) deferred income taxes.

"Consolidated Net Tangible Assets" means the total of all the assets
appearing on the consolidated balance sheet of Toys "R" Us and its
Subsidiaries, less the following: (A) current liabilities; (B) intangible
assets, including without limitation, such items as goodwill, trademarks,
trade names, patents and unamortized debt discount and expense carried as an
asset on said balance sheet; and (C) appropriate adjustments on account of
minority interests of other Persons holding stock in any of our Subsidiaries.

"Domestic Subsidiary" means a Subsidiary formed under the laws of, or
conducting its principal operations within, the United States or any State or
territory thereof.

"Lien" means any mortgage, pledge, lien, encumbrance, charge or security
interest of any kind, excluding, pledges or deposits under worker's
compensation, unemployment insurance or similar statutes, mechanics',
workmen's or other similar liens arising in the ordinary course of business or
deposits or pledges to obtain the release of any such liens, certain liens for
taxes, assessments or governmental charges or levies, landlord's liens on
property held under lease, easements and other liens or encumbrances similar
to the foregoing.

"Person" means an individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.

"Principal Property" means any real property or any permanent improvement
thereon owned by us or any Domestic Subsidiary including, without limitation,
any store, warehouse, manufacturing facility or plant.

"Sale and Leaseback Transaction" means any arrangement with any Person
providing for the leasing to us or any Domestic Subsidiary of any Principal
Property (except for temporary leases for a term, including any renewal
thereof, of not more than 36 months and except for leases between us and a
Subsidiary or between Subsidiaries), which Principal Property has been or is
to be sold or transferred by us or such Domestic Subsidiary to such Person.

"Subsidiary" means with respect to any Person, any corporation, association
or other business entity of which more than 50% of the outstanding voting
stock is owned, directly or indirectly, by such Person or one or more
Subsidiaries of such Person (or a combination thereof). Unless otherwise
specified, "Subsidiary" means a direct or indirect Subsidiary of ours.

"Value" means, with respect to a Sale and Leaseback Transaction, as of any
particular time, the amount equal to the greater of (1) the net proceeds from
the sale or transfer of the property leased pursuant to such Sale and
Leaseback Transaction and (2) the sum of all costs of us or any Domestic
Subsidiary incurred in connection with the acquisition of such property and
the construction of any improvements thereon, as determined in good faith by
us or such Domestic Subsidiary at the time of entering into such Sale and
Leaseback Transaction, in either case multiplied by a fraction, the numerator
of which shall be equal to the number of full years of the term of the lease
that is part of such Sale and Leaseback Transaction remaining at

the time of determination and the denominator of which shall be equal to the
number of full years of such term, without regard to any renewal or extension
options contained in the lease.

Other Covenants

The applicable prospectus supplement will describe any other material
covenants in respect of a series of debt securities. Other than our covenants
included in the indenture as described above or as described in the applicable
prospectus supplement, the debt securities will not have the benefit of any
covenants that limit or restrict our business or operations or the incurrence
of additional indebtedness by us, and there are no covenants or other
provisions in the indenture providing for a put or increased interest or
otherwise that would afford holders of debt securities additional protection
in the event of a recapitalization transaction, a change of control
transaction or a highly leveraged transaction.

Registration of Transfer and Exchange

All debt securities issued upon any registration of transfer or exchange of
debt securities will be valid obligations of ours, evidencing the same debt
and entitled to the same rights under the indenture as the debt securities
surrendered in the registration of transfer or exchange. We will not apply any
service charge for the registration of transfer or exchange, but we may in
some cases require payment of a sum to cover any tax or other governmental
charges.

Subject to the limitations applicable to global securities, holders of
registered debt securities may present their securities for registration of
transfer at the office of one or more security registrars designated and
maintained by us. At your option, you may exchange your registered debt
securities of any series, except a global security, for an equal principal
amount of other registered debt securities of the same series having
authorized denominations upon surrender to our designated agent.

We will not be required to register the transfer of or exchange (1) any debt
securities during a period of 15 days before any mailing of a notice of
redemption of any securities selected for redemption or (2) any debt
securities selected for redemption, in whole or in part, except the unredeemed
portion of any debt securities being redeemed in part or the exchange of any
bearer securities so selected for redemption for registered securities of the
same series and like tenor.

No global security may be exchanged for registered debt securities in the
name of any person other than the depositary for that global security or any
nominee of the depositary for that global security except in the limited
circumstances described below or in the prospectus supplement relating to
those debt securities. We may at any time, at our option, exchange debt
securities issued as one or more global securities for an equal principal
amount of debt securities of the same series in definitive registered form. In
this case we will deliver to the holders new debt securities in definitive
registered form in the same aggregate principal amount as the global
securities being exchanged.

Global Debt Securities

Most offered debt securities will be book-entry (global) debt securities.
Upon issuance, all book-entry debt securities will be represented by one or
more fully registered global debt securities, without coupons. Unless
otherwise stated in the applicable prospectus supplement, each global debt
security will be deposited with, or on behalf of, The Depository Trust
Company, or "DTC," a securities depository, and will be registered in the name
of DTC or a nominee of DTC. DTC will thus be the only registered holder of
these debt securities.

Purchasers of debt securities may only hold interests in the global debt
securities through DTC if they are participants in the DTC system. Purchasers
may also hold interests through a securities intermediary -- banks, brokerage
houses and other institutions that maintain securities accounts for customers
that have an account with DTC or its nominee. DTC will maintain accounts
showing the debt security holdings of its participants, and these participants
will in turn maintain accounts showing the debt security holdings of their
customers. Some of these customers may themselves be securities intermediaries
holding debt securities for their customers. Ownership of beneficial interests
in book-entry debt securities will be shown only on, and the

transfer of those ownership interests will be effected only through, records
maintained by DTC or its nominee with respect to participants' interests or by
the participant with respect to interests of persons held by the participants
on their behalf.

The debt securities of each beneficial owner of a book-entry debt security
will be evidenced solely by entries on the books of the beneficial owner's
securities intermediary. The actual purchaser of the debt securities will
generally not be entitled to have the debt securities represented by the
global debt securities registered in its name and will not be considered the
owner under the indenture. Accordingly, each beneficial owner must rely on the
procedures of DTC or if such person is not a participant, on the procedures of
the participant through which such person owns its interest to exercise any
rights of a holder under the indenture. In most cases, a beneficial owner will
also not be able to obtain a paper certificate evidencing the holder's
ownership of debt securities. The book-entry system for holding debt
securities eliminates the need for physical movement of certificates and is
the system through which most publicly traded securities are held in the
United States. However, the laws of some jurisdictions require some purchasers
of debt securities to take physical delivery of their debt securities in
definitive form. These laws may impair the ability to own, pledge or transfer
book-entry debt securities.

A beneficial owner of book-entry debt securities represented by a global
debt security may exchange the debt securities for definitive (paper) debt
securities only if:

o DTC is unwilling or unable to continue as depositary for such global debt
security or is no longer eligible to act as depositary and we do not
appoint a qualified replacement for DTC within 90 days after we receive
notice or become aware of this ineligibility;

o we in our sole discretion decide to allow some or all book-entry debt
securities to be exchangeable for definitive debt securities in
registered form; or

o an event of default has occurred and is continuing with respect to the
debt securities of a particular series.

Unless we indicate otherwise, any global debt security that is exchangeable
will be exchangeable in whole for definitive debt securities in registered
form, with the same terms and of an equal aggregate principal amount.
Definitive debt securities will be registered in the name or names of the
person or persons specified by DTC in a written instruction to the registrar
of the debt securities. DTC may base its written instruction upon directions
that it receives from its participants.

In this prospectus, for book-entry debt securities, references to actions
taken by debt security holders will mean actions taken by DTC upon
instructions from its participants, and references to payments and notices of
redemption to debt security holders will mean payments and notices of
redemption to DTC as the registered holder of the debt securities for
distribution to participants in accordance with DTC's procedures. All payments
on the book-entry debt securities will be made to DTC or its nominee as their
holder.

DTC is a limited purpose trust company organized under the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under section 17A of the Securities Exchange Act of 1934. The rules
applicable to DTC and its participants are on file with the SEC.

None of the trustee, any paying agent, any security registrar or us will
have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interest in the book-
entry debt securities or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests.

Defeasance of the Indenture

Unless otherwise specified in the prospectus supplement, we can terminate
all of our obligations under the indenture with respect to the debt securities
of any series, other than the obligation to pay interest on, premium, if any,
and the principal of the debt securities of such series and certain other
obligations, known as "covenant defeasance," at any time by:

o depositing money or U.S. government obligations with the trustee in an
amount sufficient to pay the principal of and interest on the debt
securities of such series to their maturity; and

o complying with certain other conditions, including delivery to the
trustee of an opinion of counsel to the effect that holders of debt
securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of our covenant defeasance.

In addition, unless otherwise specified in the prospectus supplement, we can
terminate all of our obligations under the indenture with respect to the debt
securities of any series, including the obligation to pay interest on,
premium, if any, and the principal of the debt securities of such series,
known as "legal defeasance," at any time by:

o depositing money or U.S. government obligations with the trustee in an
amount sufficient to pay the principal of and interest on the debt
securities of such series to their maturity; and

o complying with certain other conditions, including delivery to the
trustee of an opinion of counsel stating that there has been a change in
the federal tax law since the date of the indenture to the effect that
holders of debt securities of such series will not recognize income, gain
or loss for federal income tax purposes as a result of our legal
defeasance or the delivery to the trustee of a ruling or other formal
statement or action by the Internal Revenue Service to the same effect.

Payments of Unclaimed Moneys

Moneys deposited with the trustee or any paying agent for the payment of
principal of or premium and interest on any debt security that remains
unclaimed for two years will be repaid to us at our request, unless the law
requires otherwise. If you want to claim any unclaimed moneys, you must look
to us and not to the trustee or paying agent.

Events of Default, Notices, and Waiver

Events of Default

An "event of default" regarding any series of debt securities is any one of
the following events:

o default for 30 days in the payment of interest on the debt securities of
that series;

o default in payment when due of principal of, or premium, if any, on debt
securities of that series or default in the deposit of any sinking fund
payment when and as due by the terms of the debt securities of that
series;

o our failure to comply with any covenant or agreement in the indenture or
debt security of that series for a period of 90 days after notice is
provided to us by the trustee or to us and the trustee by the holders of
at least 25% in aggregate principal amount of the then outstanding debt
securities of that series;

o certain events of bankruptcy, insolvency and reorganization with respect
to us; and

o any other event of default of that series that is specified in the
prospectus supplement.

A default regarding a single series of debt securities will not necessarily
constitute a default regarding any other series.

Certain of our indebtedness may provide for events of default which differ
from the events of default for the debt securities. In addition, the indenture
permits series of debt securities to be issued that include additional or
different events of default as compared with the events of default listed
above.

If an event of default for any series of debt securities occurs and is
continuing (other than an event of default involving the bankruptcy,
insolvency or reorganization of us), either the trustee or the holders of 25%
in principal amount of the outstanding debt securities of that series may
declare the principal (or, in the case of (a) OID debt securities, such lesser
amount as provided in those OID debt securities or (b) indexed debt
securities, the amount determined by the terms of those indexed debt
securities), of all the debt securities of

that series, together with any accrued interest on the debt securities, to be
immediately due and payable by notice in writing to us. If it is the holders
of debt securities who give notice of that declaration of acceleration to us,
then they must also give notice to the trustee.

If an event of default occurs which involves the bankruptcy, insolvency or
reorganization of us, as set forth above, then all unpaid principal amounts
(or, if the debt securities are (a) OID debt securities, such lesser amount as
provided in those OID debt securities or (b) indexed debt securities, the
amount determined by the terms of those indexed debt securities) and accrued
interest on all debt securities of each series will immediately become due and
payable, without any action by the trustee or any holder of debt securities.
In the event that we become subject to a bankruptcy proceeding, liquidation or
reorganization, the claim of a holder of an OID debt security will be limited
by the bankruptcy court to the accreted value, rather than the face amount, of
the OID debt security.

In order for holders of debt securities to initiate proceedings for a remedy
under the indenture, holders of 25% in principal amount of those debt
securities must:

o first give notice to the trustee as provided above;

o request that the relevant trustee initiate a proceeding in its own name;
and

o offer that trustee indemnity reasonably satisfactory to it against costs
and liabilities.

If the trustee still refuses for 60 days to initiate the proceeding, and no
inconsistent direction has been given to the trustee by holders of a majority
of the debt securities of the same series, the holders may initiate a
proceeding.

The holders of a majority in principal amount of the outstanding debt
securities of a series may rescind a declaration of acceleration with respect
to the debt securities of that series if all events of default, besides the
failure to pay principal or interest due solely because of the declaration of
acceleration, have been cured or waived.

A judgment for money damages by courts in the United States, including a
money judgment based on an obligation expressed in a foreign currency, will
ordinarily be rendered only in U.S. dollars. A New York statute provides that
a court shall render a judgment or decree in the foreign currency of the
underlying obligation and that the judgment or decree shall be converted into
U.S. dollars at the exchange rate prevailing on the date of entry of the
judgment or decree.

We are required under the indenture to file an officers' certificate with
the trustee every year as to our compliance with all conditions and covenants
in the indenture.

Notices

The trustee is required to give notice to holders of a series of debt
securities of a default, which remains uncured, has not been waived and that
is known to the trustee, within 90 days after the default has occurred. If a
default occurs in the performance of any covenant in the debt securities or
the indenture, other than a default in the payment of principal of and premium
or interest on any of the debt securities, the trustee shall not give notice
to the holders of debt securities until 90 days after the occurrence of the
default. The trustee may withhold notice of a default if the trustee
determines in good faith that doing so is in the interest of the holders, but
may not withhold the notice in the case of a default in the payment of
principal of and premium or interest on any of the debt securities or the
deposit of any sinking fund payment.

Waiver

The holders of a majority in principal amount of the outstanding debt
securities of a series may waive any past default or event of default except a
default in the payment of principal of or premium or interest on the debt
securities of that series or a default relating to a provision that cannot be
amended without the consent of each affected holder.

Rights and Duties of the Trustee

The holders of a majority in principal amount of outstanding debt securities
of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
other power conferred on the trustee. The trustee may decline to follow that
direction if it would involve the trustee in personal liability or would be
illegal. During an event of default, the trustee is required to exercise the
standard of care and skill that a prudent person would exercise under the
circumstances in the conduct of his own affairs. The trustee is not obligated
to exercise any of its rights or powers under the indenture at the request or
direction of any of the holders of debt securities unless those holders have
offered to the trustee security or indemnity reasonably satisfactory to it.

The trustee is entitled, in the absence of bad faith on its part, to rely on
an officers' certificate before taking action under the indenture.

Supplemental Indentures

Supplemental Indentures Not Requiring Consent of Holders

Without the consent of any holders of debt securities, we and the trustee
may supplement the indenture, among other things, to:

o reflect that another Person has succeeded us and assumed our covenants
and obligations under the debt securities and the indenture;

o cure any ambiguity, inconsistency or defect in the indenture or in the
debt securities, or make any other provisions or changes with respect to
matters or questions arising under the indenture;

o issue and establish the form and terms of any series of debt securities
as provided in the indenture;

o provide for any guarantee of the debt securities of any series, secure
any debt securities of any series or confirm and evidence the release,
termination or discharge of any such guarantee or lien securing any debt
securities of any series when such release, termination or discharge is
permitted by the indenture;

o add to our covenants further covenants or surrender any right or power
conferred upon us by the indenture for the benefit of the holders of debt
securities and, if the covenants or the surrender of such right or power
are for the benefit of less than all series of debt securities, stating
which series are entitled to benefit;

o add any additional event of default and, if the new event of default
applies to fewer than all series of debt securities, stating to which
series it applies;

o change the trustee for a series of debt securities or provide for an
additional trustee;

o provide additional provisions for bearer debt securities;

o change or eliminate any provision of the indenture, so long as no
outstanding debt securities exist which are entitled to the benefit of
that provision;

o supplement any provisions of the indenture to the extent necessary to
permit or facilitate the defeasance and discharge of any series of debt
securities, provided that any such action will not adversely affect the
interests of the holders of debt securities of that series or any other
series of debt securities issued under the indenture in any material
respect;

o modify or supplement any provisions of the indenture necessary to permit
the reopening of any series of debt securities;

o modify the indenture in order to achieve or continue its qualification
under the Trust Indenture Act of 1939 or as may be necessary or desirable
in accordance with amendments to that Act;

o add to the conditions, limitations and restrictions on the authorized
amount, form, terms or purposes of issue, authentication and delivery of
debt securities; or

o for any other reason specified in the applicable prospectus supplement.

Supplemental Indentures Requiring Consent of Holders

We and the trustee, with the consent of the holders of at least a majority
in principal amount of each series of the debt securities that would be
affected by a modification of the indenture, may supplement the indenture or
modify in any way the terms of that indenture or the rights of the holders of
the debt securities. However, without the consent of each holder of all of the
debt securities affected by that modification, we and the trustee may not:

o reduce the principal of or premium, if any, on or change the stated
maturity of any debt security;

o reduce the rate of or change the time for payment of interest on any debt
security or, in the case of OID debt securities, reduce the rate of
accretion of the OID;

o change any of our obligations to pay additional amounts, if any, under
the indenture (except as contemplated by clause (1) under "--Merger,
Consolidation or Sale or Conveyance of Assets" and permitted by the first
bullet point under "--Supplemental Indentures Not Requiring Consent of
Holders");

o reduce or alter the method of computation of any amount payable upon
redemption, repayment or purchase of any debt security by us, or the time
when the redemption, repayment or purchase may be made;

o make the principal or interest on any debt security payable in a currency
other than the currency stated in the debt security or change the place
of payment;

o reduce the amount of principal due on an OID debt security upon
acceleration of maturity or provable in bankruptcy or reduce the amount
payable under the terms of an indexed debt security upon acceleration of
maturity or provable in bankruptcy;

o impair any right of repayment or purchase at the option of any holder of
debt securities;

o adversely affect the conversion rights of any holder of debt securities;

o impair the right of any holder of debt securities to sue for payment of
the principal, premium, if any, or interest on a debt security that would
be due and payable at the stated maturity thereof or upon redemption;

o reduce the percentage in principal amount of the outstanding debt
securities of any series required to supplement the indenture or to waive
any of its provisions; or

o modify the foregoing except to increase any such percentage or
provide that other provisions of the indenture cannot be modified or
waived without the consent of the holder of each debt security
affected thereby.

A supplemental indenture which modifies or eliminates a provision intended
to benefit the holders of one series of debt securities will not affect the
rights under the indenture of holders of other series of debt securities.

Waiver of Covenants

We may omit to comply with some of our covenants and conditions set forth in
the indenture if the holders of at least a majority in aggregate principal
amount of the outstanding securities of each series affected by such omission
waive that compliance.

Redemption

The specific terms, if any, of any redemption of a series of debt securities
will be contained in the prospectus supplement for that series. Generally, we
must send notice of redemption to the holders at least 30 days but not more
than 60 days prior to the redemption date. The notice will specify:

o the redemption date;

o the redemption price;

o the place or places of payment;

o the CUSIP or other identifying number of the debt securities being
redeemed, if any;

o whether the redemption is pursuant to a sinking fund;

o that on the redemption date, interest, or, in the case of OID debt
securities, original issue discount and interest, if any, will cease to
accrue; and

o if bearer debt securities are being redeemed, that those bearer debt
securities must be accompanied by all coupons maturing after the
redemption date or the amount of the missing coupons will be deducted
from the redemption price, or indemnity must be furnished, and whether
those bearer debt securities may be exchanged for registered debt
securities not being redeemed.

On or before any redemption date, we will deposit an amount of money with
the trustee or with a paying agent sufficient to pay the redemption price.

If less than all the debt securities are being redeemed, the trustee shall
select the debt securities to be redeemed using a method it considers fair.
From and after the redemption date, unless we default in the payment of the
redemption price, the debt securities will cease to bear interest and, in the
case of bearer securities, the coupons for such interest will be void.

Concerning the Trustee

We may from time to time maintain lines of credit and have other customary
banking relationships with the trustee and its affiliates. We also have
agreed, pursuant to the indenture, to indemnify the trustee for certain
losses, liabilities and expenses.

Governing Law

The indenture and the debt securities will be governed by, and construed in
accordance with, the laws of the State of New York.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following summary describes the material U.S. federal income tax
consequences of the purchase, ownership and disposition of debt securities as
of the date of this prospectus. Except where noted, this summary deals only
with debt securities purchased on original issue at their issue price and held
as capital assets by United States holders, and does not deal with special
situations. For example, this summary does not address:

o tax consequences to holders who may be subject to special tax treatment,
such as dealers in securities or currencies, financial institutions, real
estate investment trusts, regulated investment companies, tax-exempt
entities, insurance companies, traders in securities that elect to use a
mark-to-market method of accounting for their securities holdings,
investors in pass-through entities or persons liable for alternative
minimum tax;

o tax consequences to persons holding debt securities as part of a hedging,
integrated, conversion or constructive sale transaction or a straddle;

o tax consequences to U.S. holders (as defined below) of debt securities
whose "functional currency" is not the U.S. dollar;

o alternative minimum tax consequences, if any; or

o any state, local or foreign tax consequences.

The discussion below is based upon the provisions of the Internal Revenue
Code of 1986 (the Code), and regulations, rulings and judicial decisions as of
the date of this prospectus. Those authorities may be changed, possibly with
retroactive effect, which could result in U.S. federal income tax consequences
that are different from those discussed below. The discussion set forth below
also assumes that all debt securities issued under this prospectus constitute
debt for U.S. federal income tax purposes. If any debt security does not
constitute debt for U.S. federal income tax purposes, the tax consequences of
the ownership of that debt security could differ materially from the tax
consequences described herein. We will summarize any special U.S. federal
income tax considerations relevant to a particular issue of debt securities in
the applicable prospectus supplement.

For the purposes of this summary, a "United States holder" means a
beneficial owner of the debt securities offered in this prospectus that is:

o a citizen or resident of the United States;

o a corporation or partnership created or organized in or under the laws of
the United States or any political subdivision of the United States;

o an estate the income of which is subject to U.S. federal income taxation
regardless of its source; or

o a trust if (x) it is subject to the primary supervision of a court within
the United States and one or more United States persons have the
authority to control all substantial decisions of the trust or (y) it has
a valid election in effect under applicable U.S. Treasury regulations to
be treated as a United States person.

A "non-United States holder" means a beneficial owner of the debt securities
that is not a United States holder.

If a partnership holds the debt securities offered in this prospectus, the
tax treatment of a partner will generally depend upon the status of the
partner and the activities of the partnership. If you are a partner of a
partnership holding the offered debt securities, you should consult your tax
advisors.

If you are considering the purchase of debt securities, you should consult
your own tax advisors concerning the U.S. federal income tax consequences to
you and any consequences arising under the laws of any other taxing
jurisdiction.

Consequences to United States Holders

The following is a summary of certain U.S. federal income tax consequences
that will apply to you if you are a United States holder of debt securities.

Payments of Interest

Except as set forth below, stated interest on a debt security will generally
be taxable to you as ordinary income from domestic sources at the time it is
paid or accrued in accordance with your method of accounting for tax purposes.

Original Issue Discount

If you own debt securities issued with original issue discount (OID), you
will be subject to special tax accounting rules, as described in greater
detail below. In that case, you should be aware that you generally must
include OID in gross income in advance of the receipt of cash attributable to
that income. However, you generally will not be required to include separately
in income cash payments received on the debt securities, even if denominated
as interest, to the extent those payments do not constitute qualified stated
interest, as defined below. Notice will be given in the applicable prospectus
supplement when we determine that a particular debt security will be an
original issue discount debt security.

Additional rules applicable to OID debt securities that are denominated in
or determined by reference to a currency other than the U.S. dollar are
described below under "--Foreign Currency Debt Securities".

A debt security with an issue price that is less than the "stated redemption
price at maturity" (the sum of all payments to be made on the debt security
other than "qualified stated interest") generally will be issued with OID if
that difference is at least 0.25% of the stated redemption price at maturity
multiplied by the number of complete years to maturity. The "issue price" of
each debt security in a particular offering will be the first price at which a
substantial amount of that particular offering is sold to the public. The term
"qualified stated interest" means stated interest that is unconditionally
payable in cash or in property, other than debt instruments of the issuer,
provided the interest to be paid meets all of the following conditions:

o it is payable at least once per year;

o it is payable over the entire term of the debt security; and

o it is payable at a single fixed rate or, subject to certain conditions,
based on one or more interest indices.

We will give you notice in the applicable prospectus supplement when we
determine that a particular debt security will bear interest that is not
qualified stated interest.

If you own a debt security issued with "de minimis" OID, which is an amount
of discount that is less than 0.25% of the stated redemption price at maturity
multiplied by the number of complete years to maturity, the debt security will
not be considered to be issued with OID, and you generally must include the de
minimis OID in income at the time stated principal payments on the debt
securities are made in proportion to the amount of such payments. Any amount
of de minimis OID that you have included in income will be treated as capital
gain.

Certain of the debt securities may contain provisions permitting them to be
redeemed prior to their stated maturity at our option and/or at your option.
OID debt securities containing those features may be subject to rules that
differ from the general rules discussed herein. If you are considering the
purchase of OID debt securities with those features, you should carefully
examine the applicable prospectus supplement and should consult your own tax
advisors with respect to those features since the tax consequences to you with
respect to OID will depend, in part, on the particular terms and features of
the debt securities.

If you own OID debt securities with a maturity upon issuance of more than
one year you generally must include OID in income in advance of the receipt of
some or all of the related cash payments using the "constant yield method"
described in the following paragraph. This method takes into account the

compounding of interest. The accruals of OID on an OID debt security will
generally be less in the early years and more in the later years.

The amount of OID that you must include in income if you are the initial
United States holder of an OID debt security is the sum of the "daily
portions" of OID with respect to the debt security for each day during the
taxable year or portion of the taxable year in which you held that debt
security (accrued OID). The daily portion is determined by allocating to each
day in any "accrual period" a pro rata portion of the OID allocable to that
accrual period. The "accrual period" for an OID debt security may be of any
length and may vary in length over the term of the debt security, provided
that each accrual period is no longer than one year and each scheduled payment
of principal or interest occurs on the first day or the final day of an
accrual period. The amount of OID allocable to any accrual period is an amount
equal to the excess, if any, of:

o the debt security's adjusted issue price at the beginning of the accrual
period multiplied by its yield to maturity, determined on the basis of
compounding at the close of each accrual period and properly adjusted for
the length of the accrual period, over

o the aggregate of all qualified stated interest allocable to the accrual
period.

OID allocable to a final accrual period is the difference between the amount
payable at maturity, other than a payment of qualified stated interest, and
the adjusted issue price at the beginning of the final accrual period. The
"adjusted issue price" of a debt security at the beginning of any accrual
period is equal to its issue price increased by the accrued OID for each prior
accrual period, determined without regard to the amortization of any
acquisition or bond premium, as described below, and reduced by any payments
made on the debt security (other than qualified stated interest) on or before
the first day of the accrual period. Under these rules, you will have to
include in income increasingly greater amounts of OID in successive accrual
periods. We are required to provide information returns stating the amount of
OID accrued on debt securities held of record by persons other than
corporations and other exempt holders.

Floating rate debt securities are subject to special OID rules. In the case
of an OID debt security that is a floating rate debt security, both the "yield
to maturity" and "qualified stated interest" will be determined solely for
purposes of calculating the accrual of OID as though the debt security will
bear interest in all periods at a fixed rate generally equal to the rate that
would be applicable to interest payments on the debt security on its date of
issue or, in the case of certain floating rate debt securities, the rate that
reflects the yield to maturity that is reasonably expected for the debt
security. Additional rules may apply if:

o the interest on a floating rate debt security is based on more than one
interest index; or

o the principal amount of the debt security is indexed in any manner.

You may elect to treat all interest on any debt security as OID and
calculate the amount includible in gross income under the constant yield
method described above. For purposes of this election, interest includes
stated interest, acquisition discount, OID, de minimis OID, market discount,
de minimis market discount and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium. You should consult with your
own tax advisors about this election.

Short-Term Debt Securities

In the case of debt securities having a term of one year or less, all
payments, including all stated interest, will be included in the stated
redemption price at maturity and will not be qualified stated interest. As a
result, you will generally be taxed on the discount instead of stated
interest. The discount will be equal to the excess of the stated redemption
price at maturity over the issue price of a short-term debt security, unless
you elect to compute this discount using tax basis instead of issue price.

In general, individual and certain other cash method United States holders
of short-term debt securities are not required to include accrued discount in
their income currently unless they elect to do so, but may be required to
include stated interest in income as the interest is received. United States
holders that report income for U.S. federal income tax purposes on the accrual
method and certain other United States holders are required to accrue discount
on short-term debt securities (as ordinary income) on a straight-line basis,
unless an election is made to accrue the discount according to a constant
yield method based on daily

compounding. If you are not required, and do not elect, to include discount in
income currently, any gain you realize on the sale, exchange or retirement of
a short-term debt security will generally be ordinary income to you to the
extent of the discount accrued by you through the date of sale, exchange or
retirement. In addition, if you do not elect to currently include accrued
discount in income you may be required to defer deductions for a portion of
your interest expense with respect to any indebtedness attributable to the
short-term debt securities.

Market Discount

If you purchase a debt security, other than an OID debt security, for an
amount that is less than its stated redemption price at maturity, or, in the
case of an OID debt security, its adjusted issue price, the amount of the
difference will be treated as "market discount" for U.S. federal income tax
purposes, unless that difference is less than a specified de minimis amount.
Under the market discount rules, you will be required to treat any payment,
other than qualified stated interest, on, or any gain on the sale, exchange,
retirement or other disposition of, a debt security as ordinary income to the
extent of the market discount that you have not previously included in income
and are treated as having accrued on the debt security at the time of its
payment or disposition. In addition, you may be required to defer, until the
maturity of the debt security or its earlier disposition in a taxable
transaction, the deduction of all or a portion of the interest expense on any
indebtedness attributable to the debt security.

Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the debt security, unless
you elect to accrue on a constant yield method. You may elect to include
market discount in income currently as it accrues, on either a ratable or
constant yield method, in which case the rule described above regarding
deferral of interest deductions will not apply.

Acquisition Premium, Amortizable Bond Premium

If you purchase an OID debt security for an amount that is greater than its
adjusted issue price but equal to or less than the sum of all amounts payable
on the debt security after the purchase date other than payments of qualified
stated interest, you will be considered to have purchased that debt security
at an "acquisition premium". Under the acquisition premium rules, the amount
of OID that you must include in gross income with respect to the debt security
for any taxable year will be reduced by the portion of the acquisition premium
properly allocable to that year.

If you purchase a debt security (including an OID debt security) for an
amount in excess of the sum of all amounts payable on the debt security after
the purchase date other than qualified stated interest, you will be considered
to have purchased the debt security at a "premium" and, if it is an OID debt
security, you will not be required to include any OID in income. You generally
may elect to amortize the premium over the remaining term of the debt security
on a constant yield method as an offset to interest when includible in income
under your regular accounting method. Special rules limit the amortization of
premium in the case of convertible debt securities. If you do not elect to
amortize bond premium, that premium will decrease the gain or increase the
loss you would otherwise recognize on disposition of the debt security.

Sale, Exchange and Retirement of Debt Securities

Your adjusted tax basis in a debt security will, in general, be your cost
for that debt security, increased by OID, market discount or any discount with
respect to a short-term debt security that you previously included in income,
and reduced by any amortized premium and any cash payments on the debt
security other than qualified stated interest. Upon the sale, exchange,
retirement or other disposition of a debt security, you will recognize gain or
loss equal to the difference between the amount you realize upon the sale,
exchange, retirement or other disposition (less an amount equal to any accrued
and unpaid interest, which will be treated as a payment of interest for
federal income tax purposes) and the adjusted tax basis of the debt security.
Except as described above with respect to certain short-term debt securities
or with respect to market discount, or as described below with respect to
foreign currency debt securities, that gain or loss will be capital gain or
loss. Capital gains of individuals derived in respect of capital assets held
for more than one year are eligible for reduced rates of taxation. The
deductibility of capital losses is subject to limitations.

Foreign Currency Debt Securities

Payments of Interest

If you receive interest payments made in a foreign currency and you use the
cash basis method of accounting, you will be required to include in income the
U.S. dollar value of the amount received, determined by translating the
foreign currency received at the "spot rate" for such foreign currency on the
date such payment is received regardless of whether the payment is in fact
converted into U.S. dollars. You will not recognize exchange gain or loss with
respect to the receipt of such payment.

If you use the accrual method of accounting, you may determine the amount of
income recognized with respect to such interest in accordance with either of
two methods. Under the first method, you will be required to include in income
for each taxable year the U.S. dollar value of the interest that has accrued
during such year, determined by translating such interest at the average rate
of exchange for the period or periods during which such interest accrued.
Under the second method, you may elect to translate interest income at the
spot rate on:

o the last day of the accrual period;

o the last day of the taxable year if the accrual period straddles your
taxable year; or

o the date the interest payment is received if such date is within five
days of the end of the accrual period.

This election must be applied consistently to all debt instruments from year
to year and may not be revoked without the consent of the Internal Revenue
Service (the IRS).

Upon receipt of an interest payment on such debt security (including, upon
the sale of such debt security, the receipt of proceeds which include amounts
attributable to accrued interest previously included in income), you will
recognize ordinary income or loss in an amount equal to the difference between
the U.S. dollar value of such payment (determined by translating the foreign
currency received at the spot rate for such foreign currency on the date such
payment is received) and the U.S. dollar value of the interest income you
previously included in income with respect to such payment.

Original Issue Discount

OID on a debt security that is also a foreign currency debt security will be
determined for any accrual period in the applicable foreign currency and then
translated into U.S. dollars, in the same manner as interest income accrued by
a holder on the accrual basis, as described above. You will recognize exchange
gain or loss when OID is paid (including, upon the sale of such debt security,
the receipt of proceeds which include amounts attributable to OID previously
included in income) to the extent of the difference between the U.S. dollar
value of such payment (determined by translating the foreign currency received
at the spot rate for such foreign currency on the date such payment is
received) and the U.S. dollar value of the accrued OID (determined in the same
manner as for accrued interest). For these purposes, all receipts on a debt
security will be viewed:

o first, as the receipt of any stated interest payment called for under the
terms of the debt security;

o second, as the receipt of previously accrued OID (to the extent thereof),
with payments considered made for the earliest accrual periods first; and

o third, as the receipt of principal.

Market Discount and Bond Premium

The amount of market discount on foreign currency debt securities includible
in income will generally be determined by translating the market discount
determined in the foreign currency into U.S. dollars at the spot rate on the
date the foreign currency debt security is retired or otherwise disposed of.
If you have elected to accrue market discount currently, then the amount which
accrues is determined in the foreign currency and then translated into U.S.
dollars on the basis of the average exchange rate in effect during such
accrual

period. You will recognize exchange gain or loss with respect to market
discount which is accrued currently using the approach applicable to the
accrual of interest income as described above.

Bond premium on a foreign currency debt security will be computed in the
applicable foreign currency. If you have elected to amortize the premium, the
amortizable bond premium will reduce interest income in the applicable foreign
currency. At the time bond premium is amortized, exchange gain or loss, which
is generally ordinary gain or loss, will be realized based on the difference
between spot rates at such time and the time of acquisition of the foreign
currency debt security.

If you elect not to amortize bond premium, you must translate the bond
premium computed in the foreign currency into U.S. dollars at the spot rate on
the maturity date and such bond premium will constitute a capital loss which
may be offset or eliminated by exchange gain.

Sale, Exchange or Retirement

Upon the sale, exchange, retirement or other taxable disposition of a
foreign currency debt security, you will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange, retirement or
other disposition (less an amount equal to any accrued and unpaid interest,
which will be treated as a payment of interest for federal income tax
purposes) and your adjusted tax basis in the foreign currency debt security.
Subject to the foreign currency rules discussed below, such gain or loss will
be capital gain or loss. Capital gains of individuals derived with respect to
capital assets held for more than one year are eligible for reduced rates of
taxation. The deductibility of capital losses is subject to limitations.

If your foreign currency debt security is sold, exchanged or retired for an
amount denominated in foreign currency, then your amount realized generally
will be based on the spot rate of the foreign currency on the date of sale,
exchange or retirement. If the foreign currency debt securities are traded on
an established securities market and held by a cash method taxpayer, foreign
currency paid or received is translated into U.S. dollars at the spot rate on
the settlement date of the purchase or sale. An accrual method taxpayer may
elect the same treatment with respect to the purchase and sale of foreign
currency debt securities traded on an established securities market, provided
that the election is applied consistently.

Your tax basis in a foreign currency debt security generally will be your
cost therefor. If you purchased a foreign currency debt security with foreign
currency, your cost will be the U.S. dollar value of the foreign currency
amount paid for such foreign currency debt security determined at the time of
such purchase. If you purchased a foreign currency debt security with
previously owned foreign currency, you will recognize ordinary exchange gain
or loss at the time of purchase attributable to the difference at the time of
purchase, if any, between your tax basis in such foreign currency and the fair
market value of the foreign currency debt security in U.S. dollars on the date
of purchase. If the foreign currency debt securities are traded on an
established securities market and held by a cash method taxpayer, foreign
currency paid or received is translated into U.S. dollars at the spot rate on
the settlement date of the purchase or sale. An accrual method taxpayer may
elect the same treatment with respect to the purchase and sale of foreign
currency debt securities traded on an established securities market.

Upon the sale, exchange or retirement of a foreign currency debt security,
you will recognize exchange gain or loss with respect to the principal amount
of such foreign currency debt security. For these purposes, the principal
amount of the foreign currency debt security is your purchase price for the
foreign currency debt security calculated in the foreign currency on the date
of purchase, and the amount of exchange gain or loss recognized is equal to
the difference between (i) the U.S. dollar value of the principal amount
determined on the date of the sale, exchange, retirement or other disposition
of the foreign currency debt security and (ii) the U.S. dollar value of the
principal amount determined on the date you purchased the foreign currency
debt security. Such gain or loss will be treated as ordinary income or loss
and generally will be U.S. source gain or loss. The realization of such gain
or loss will be limited to the amount of overall gain or loss realized on the
disposition of a foreign currency debt security.

Exchange Gain or Loss with Respect to Foreign Currency

Your tax basis in the foreign currency received as interest on a foreign
currency debt security will be the U.S. dollar value thereof at the spot rate
in effect on the date the foreign currency is received. Your tax basis in
foreign currency received on the sale, exchange or retirement of a foreign
currency debt security will be equal to the U.S. dollar value of the foreign
currency, determined at the time of the sale, exchange or retirement, or, if
the foreign currency debt securities are traded on an established securities
market, the spot rate of exchange on the settlement date, in the case of a
cash basis United States holder or an electing accrual basis United States
holder as described above.

Any gain or loss recognized by you on a sale, exchange or other disposition
of the foreign currency will be ordinary income or loss and generally will be
U.S. source gain or loss.

Dual Currency Debt Securities

If so specified in an applicable prospectus supplement relating to a foreign
currency debt security, we may have the option to make all payments of
principal and interest scheduled after the exercise of such option in a
currency other than the specified currency. The U.S. federal income tax
treatment of dual currency debt securities is uncertain. U.S. Treasury
regulations currently in effect do not address the tax treatment of dual
currency debt securities.

An IRS announcement states that the IRS is considering issuing proposed
regulations that would:

o apply the principles contained in regulations governing contingent debt
instruments to dual currency debt securities in the "predominant
currency" of the dual currency debt securities; and

o apply the rules discussed above with respect to foreign currency debt
securities with OID for the translation of interest and principal into
U.S. dollars.

The IRS states that these concepts are still under consideration. Persons
considering the purchase of dual currency debt securities should carefully
examine the applicable prospectus supplement and should consult their own tax
advisors regarding the U.S. federal income tax consequences of the ownership
and disposition of such debt securities.

If we exercise such an option, you may be considered to have exchanged your
debt security denominated in the specified currency for a debt security
denominated in the optional payment currency. If the exercise is treated as a
deemed exchange, you will recognize gain or loss, if any, equal to the
difference between your basis in the debt security denominated in the
specified currency and the value of the debt security denominated in the
optional payment currency. If the exercise of the option is not treated as a
deemed exchange, you will not recognize gain or loss and your basis in the
debt security will be unchanged.

Consequences to Non-United States Holders

Under present U.S. federal income and estate tax law, and subject to the
discussion below concerning backup withholding:

(a) no withholding of U.S. federal income tax will be required with respect
to the payment by us or any of our paying agents of principal or interest
(which for purposes of this discussion includes OID) on a debt security owned
by you under the "portfolio interest rule", provided that:

o interest paid on the debt security is not effectively connected with your
conduct of a trade or business in the United States;

o you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to vote within
the meaning of section 871(h)(3) of the Code and the regulations
thereunder;

o you are not a controlled foreign corporation that is related to us
through stock ownership;

o you are not a bank whose receipt of interest on a debt security is
described in section 881(c)(3)(A) of the Code;

o the beneficial owner satisfies the statement requirement (described
generally below) set forth in section 871(h) and section 881(c) of the
Code and the regulations thereunder; and

o such interest is not considered contingent interest under
Section 871(h)(4)(A) of the Code and the regulations thereunder;

(b) no withholding of U.S. federal income tax generally will be required
with respect to any gain realized by you upon the sale, exchange, retirement
or other disposition of a debt security; and

(c) a debt security beneficially owned by an individual who at the time of
death is a non-United States holder will not be subject to U.S. federal estate
tax as a result of such individual's death, provided that any payment to you
on the debt securities, including original issue discount, would be eligible
for exemption from the 30% federal withholding tax under the rules described
in paragraph (a) above without regard to the statement requirement described
in the fifth bullet point under paragraph (a) above.

To satisfy the requirement referred to in the fifth bullet point under
paragraph (a) above, you, or a financial institution holding the debt security
on your behalf, must provide, in accordance with specified procedures, a
paying agent of ours with a statement to the effect that you are not a
U.S. person. Currently, these requirements will be met if:

o you provide your name and address, and certifies, under penalties of
perjury, that you are not a U.S. person (which certification may be made
on an IRS Form W-8BEN); or

o a financial institution holding the debt security on your behalf
certifies, under penalties of perjury, that such statement has been
received by it and furnishes a paying agent with a copy thereof.

The statement requirement referred to in the fifth bullet point under
paragraph (a) above may also be satisfied with other documentary evidence with
respect to an offshore account or through certain foreign intermediaries.

If you cannot satisfy the requirements of the "portfolio interest" exception
described in (a) above, payments of premium, if any, and interest (including
OID) made to you will be subject to a 30% withholding tax unless you provide
us or our paying agent, as the case may be, with a properly executed:

o IRS Form W-8BEN claiming an exemption from or reduction in withholding
under the benefit of an applicable income tax treaty; or

o IRS Form W-8ECI stating that interest paid on the debt security is not
subject to withholding tax because it is effectively connected with your
conduct of a trade or business in the United States.

Alternative documentation may be applicable in certain situations.

If you are engaged in a trade or business in the United States and premium,
if any, or interest (including OID) on the debt security is effectively
connected with the conduct of such trade or business, you, although exempt
from the withholding tax discussed above (provided the certification
requirements described above are satisfied), will be subject to U.S. federal
income tax on such premium, interest and OID on a net income basis in the same
manner as if you were a United States holder. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax equal to 30%
(or lesser rate under an applicable income tax treaty) of such amount, subject
to adjustments.

Any gain realized upon the sale, exchange, retirement or other disposition
of a debt security generally will not be subject to U.S. federal income tax
unless:

o such gain is effectively connected with your trade or business in the
United States, if any; or

o if you are an individual, you are present in the United States for 183
days or more in the taxable year of such sale, exchange, retirement or
other disposition, and certain other conditions are met.

Special rules may apply to certain non-United States holders, such as
"controlled foreign corporations," "passive foreign investment companies,"
"foreign personal holding companies" and certain expatriates, that are subject
to special treatment under the Code. Such entities should consult their own
tax advisors to determine the U.S. federal, state, local and other tax
consequences that may be relevant to them.

Information Reporting and Backup Withholding

United States Holders

In general, information reporting requirements will apply to payments of
principal, interest, OID and premium, paid on debt securities and to the
proceeds of sale of a debt security made to you (unless you are an exempt
recipient such as a corporation). A backup withholding tax will apply to such
payments if you fail to provide a taxpayer identification number or
certification of exempt status, or fail to report in full dividend and
interest income.

Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against your U.S. federal income tax liability provided the
required information is furnished to the IRS.

Non-United States Holders

Information reporting will generally apply to payments of interest on the
debt securities to you and the amount of tax, if any, withheld with respect to
such payments. Copies of the information returns reporting such interest
payments and any withholding may also be made available to the tax authorities
in the country in which you reside under the provisions of an applicable
income tax treaty.

In general, no backup withholding will be required regarding payments that
we make to you provided that we do not have actual knowledge or reason to know
that you are a United States person and we have received from you the
certification described above under "--Consequences to Non-United States
Holders" (such as an IRS Form W-8BEN).

In addition, no information reporting or backup withholding will be required
regarding the proceeds of the sale of a debt security made within the United
States or conducted through certain United States-related financial
intermediaries, if:

o the payor receives the certification described above and does not have
actual knowledge or reason to know that you are a United States person;
or

o you otherwise establish an exemption.

PLAN OF DISTRIBUTION

We may sell the debt securities described in this prospectus from time to
time in one or more transactions as follows:

o through underwriters or dealers;

o through agents;

o directly to purchasers; or

o through a combination of the foregoing methods of sale.

The prospectus supplement for each offering of debt securities will
describe, among other things, the following:

o the name or names of any underwriters, dealers or agents;

o the purchase price and the proceeds to us from that sale;

o any underwriting discounts, commissions or agents' fees and other items
constituting underwriters' or agents' compensation;

o any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers; and

o any securities exchanges on which the debt securities may be listed.

Underwriters

Unless otherwise set forth in the prospectus supplement, the obligations of
the underwriters to purchase debt securities will be subject to conditions.
The underwriters will be obligated to purchase all the debt securities if any
are purchased.

The applicable prospectus supplement will name any underwriter involved in a
sale of debt securities. The debt securities will be acquired by the
underwriters for their own account and may be resold by them from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale.
Underwriters may be deemed to have received compensation from us in the form
of underwriting discounts or commissions and may also receive commissions from
the purchasers of debt securities for whom they may act as agent. Underwriters
may also sell debt securities to or through dealers. These dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters and/or commissions from the purchasers for whom they may act as
agent. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.

We may authorize underwriters to solicit offers by certain types of
institutions to purchase debt securities from it at the public offering price
stated in the prospectus supplement required by delayed delivery contracts
providing for payment and delivery on a specified date in the future. If we
sell debt securities under these delayed delivery contracts, the prospectus
supplement will state that as well as the conditions to which these delayed
delivery contracts will be subject and the commissions payable for that
solicitation.

The applicable prospectus supplement will set forth whether or not
underwriters may over-allot or effect transactions that stabilize, maintain or
otherwise affect the market price of the debt securities at levels above those
that might otherwise prevail in the open market, including, for example, by
entering stabilizing bids, effecting syndicate covering transactions or
imposing penalty bids.

Agents

We may also sell debt securities through agents designated by us from time
to time. We will name any agents involved in the offer or sale of the debt
securities and will list commissions payable by us to these agents in the
prospectus supplement. These agents will be acting on a best efforts basis to
solicit purchases for the period of their appointment, unless we state
otherwise in the prospectus supplement.

Direct Sales

We may sell debt securities directly to purchasers. In this case, we may not
engage underwriters or agents in the offer and sale of debt securities.

Remarketing Transactions

We may also sell debt securities that we have purchased, redeemed or repaid
or which are being remarketed on behalf of holders through one or more
remarketing firms acting as principals for their own accounts or as our
agents. The applicable prospectus supplement will identify any remarketing
firms and describe the terms of our agreement with them and their
compensation. Remarketing firms may be deemed to be underwriters of the debt
securities under the Securities Act of 1933.

Indemnification

We may indemnify underwriters, dealers or agents who participate in the
distribution of debt securities against certain liabilities, including
liabilities under the Securities Act of 1933, and agree to contribute to
payments which these underwriters, dealers or agents may be required to make.

Relationships with Agents, Underwriters, Dealers and Remarketing Firms

Agents, underwriters, dealers and remarketing firms, and their affiliates,
may engage in transactions with, or perform services for, us in the ordinary
course of business. This includes commercial banking and investment banking
transactions.

Trading Market for Debt Securities

Unless otherwise indicated in the prospectus supplement, we will not list
the debt securities on any securities exchange. Typically, the debt securities
will be new issues of securities with no established trading market. Any
underwriters that purchase debt securities from us may make a market in these
debt securities. The underwriters will not be obligated, however, to make a
market in the debt securities and may discontinue market-making at any time
without notice to holders of those securities. We cannot assure you that there
will be liquidity in the trading market for any debt securities.

LEGAL MATTERS

The validity of the debt securities will be passed upon for us by Simpson
Thacher & Bartlett, New York, New York, our counsel. The validity of the debt
securities will be passed upon for any agents or underwriters by Shearman &
Sterling, New York, New York.

EXPERTS

Our financial statements as of February 2, 2002 and February 3, 2001 and for
each of the fiscal years in the three-year period ended February 2, 2002
incorporated by reference in our Annual Report on Form 10-K for the fiscal
year ended February 2, 2002, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report incorporated by reference
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given on the authority of such firm as experts in accounting and auditing.

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