Toys "R" Us, Inc.: United States Securities and Exchange Commission FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 29, 2017
Commission file number 1-11609
TOYS “R” US, INC.

(Exact name of registrant as specified in its charter)
_________________________________________________________________
Delaware 22-3260693
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
One Geoffrey Way Wayne, New Jersey 07470

(Address of principal executive offices) (Zip code)
(973) 617-3500
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days. Yes ¨ No ¨
(Note: As a voluntary filer not subject to the filing requirements of Section 13(a) or 15(d) of the Exchange Act, the registrant has filed all reports pursuant to Section 13(a) or
15(d) of the Exchange Act during the preceding 12 months as if the registrant were subject to such filing requirements.)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
As of June 7, 2017, there were 49,353,943 outstanding shares of common stock of Toys “R” Us, Inc., none of which were publicly traded.
TOYS “R” US, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Statements of Comprehensive Loss 3
Condensed Consolidated Statements of Cash Flows 4
Condensed Consolidated Statements of Stockholders’ Deficit 5
Notes to the Condensed Consolidated Financial Statements 6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk 28
Item 4. Controls and Procedures 28
PART II — OTHER INFORMATION
Item 1. Legal Proceedings 30
Item 1A. Risk Factors 30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30
Item 3. Defaults Upon Senior Securities 30
Item 4. Mine Safety Disclosures 30
Item 5. Other Information 30
Item 6. Exhibits 30
SIGNATURE 31
INDEX TO EXHIBITS 32
PART I — FINANCIAL INFORMATION
Item 1. Financial
Statements

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
April 29, January 28, April 30,

(In millions) 2017 2017 2016
ASSETS
Current Assets:
Cash and cash equivalents $ 301 $ 566 $ 458
Accounts and other receivables 229 255 249
Merchandise inventories 2,429 2,476 2,433
Prepaid expenses and other current assets 132 92 144
Total current assets 3,091 3,389 3,284
Property and equipment, net 3,030 3,067 3,163
Goodwill 64 64 64
Deferred tax assets 130 129 104
Restricted cash 56 54 54
Other assets 201 205 255
Total Assets $ 6,572 $ 6,908 $ 6,924
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

Current Liabilities:
Accounts payable $ 1,204 $ 1,695 $ 1,352
Accrued expenses and other current liabilities 759 897 817
Income taxes payable 20 27 33
Current portion of long-term debt 163 119 83
Total current liabilities 2,146 2,738 2,285
Long-term debt 5,049 4,642 5,185
Deferred tax liabilities 77 75 64
Deferred rent liabilities 342 342 347
Other non-current liabilities 277 271 265
Temporary equity — 132 119
Total stockholders’ deficit (1,319) (1,292) (1,341)
Total Liabilities, Temporary Equity and Stockholders’ Deficit $ 6,572 $ 6,908 $ 6,924
See Notes to the Condensed Consolidated Financial Statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
13 Weeks Ended
April 29, April 30,
(In millions) 2017 2016
Net sales $ 2,206 $ 2,319
Cost of sales 1,423 1,473
Gross margin 783 846
Selling, general and administrative expenses 779 805
Depreciation and amortization 75 80
Other income, net (17) (32)
Total operating expenses 837 853
Operating loss (54) (7)
Interest expense (107) (123)
Interest income 1 1
Loss before income taxes (160) (129)
Income tax expense (benefit) 3 (4)
Net loss (163) (125)
Less: Net earnings attributable to noncontrolling interest 1 1
Net loss attributable to Toys “R” Us, Inc. $ (164) $ (126)
2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
13 Weeks Ended
April 29, April 30,
Net loss $ (163) $ (125)
Other comprehensive income, net of tax
Foreign currency translation adjustments 4 68
Unrealized actuarial losses (1) —
Unrealized loss on hedged transactions (1) —
Total other comprehensive income, net of tax 2 68
Comprehensive loss, net of tax (161) (57)
Less: Comprehensive income attributable to noncontrolling interest 1 1
Comprehensive loss attributable to Toys “R” Us, Inc. $ (162) $ (58)
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
13 Weeks Ended
April 29, April 30,
Cash Flows from Operating Activities:
Net loss $ (163) $ (125)
Adjustments to reconcile Net loss to Net cash used in operating activities:
Amortization and write-off of debt issuance costs and debt discount 9 9
Deferred income taxes 2 2
Unrealized losses (gains) on foreign exchange 5 (13)
Other 3 16
Changes in operating assets and liabilities:
Accounts and other receivables 36 7
Merchandise inventories 56 (101)
Prepaid expenses and other operating assets (37) (21)
Accounts payable, Accrued expenses and other liabilities (629) (576)
Income taxes payable, net (14) (22)
Net cash used in operating activities (657) (744)
Cash Flows from Investing Activities:
Capital expenditures (39) (50)
Proceeds from sales of assets — 2
Increase in restricted cash (1) —
Net cash used in investing activities (40) (48)
Cash Flows from Financing Activities:
Long-term debt borrowings 554 563
Long-term debt repayments (130) (9)
Short-term debt borrowings, net 4 5
Capitalized debt issuance costs — (1)
Distribution to noncontrolling interest — (12)
Net cash provided by financing activities 428 546
Effect of exchange rate changes on Cash and cash equivalents 4 24
Cash and cash equivalents:
Net decrease during period (265) (222)
Cash and cash equivalents at beginning of period 566 680
Cash and cash equivalents at end of period $ 301 $ 458
4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
Toys “R” Us, Inc. Stockholders

Common Stock (1) Accumulated
Additional Total Other Total
Issued Treasury Paid-in Accumulated Comprehensive Stockholders’
(In millions) Shares Amount Capital Deficit Loss Deficit Noncontrolling Interest Total Deficit
Balance, January 30, 2016 49 $ — $ 67 $ (1,062) $ (270) $ (1,265) $ — $ (1,265)
Net loss attributable to Toys
“R” Us, Inc. — — — (126) — (126) — (126)
Total other comprehensive
income, net of tax — — — — 68 68 — 68
Stock compensation expense — — 1 — — 1 — 1
Adjustment of noncontrolling
interest to redemption value — — — (19) — (19) — (19)
Balance, April 30, 2016 49 $ — $ 68 $ (1,207) $ (202) $ (1,341) $ — $ (1,341)
Balance, January 28, 2017 49 $ — $ 72 $ (1,124) $ (240) $ (1,292) $ — $ (1,292)

Net (loss) earnings — — — (164) — (164) 1 (163)
Total other comprehensive
income, net of tax — — — — 2 2 — 2
Stock compensation expense — — 2 — — 2 — 2
Reclassification from
Temporary Equity — — — — — — 132 132
Adjustment of noncontrolling
interest — — — 68 — 68 (68) —
Balance, April 29, 2017 49 $ — $ 74 $ (1,220) $ (238) $ (1,384) $ 65 $ (1,319)
(1) For all periods presented, the par value amount of Common Stock issued is less than$1 million. The number of Common Stock shares in treasury is also
less than 1 million.
5
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of presentation
As used herein, the “Company,” “we,” “us,” or “our” means Toys “R” Us, Inc., and its consolidated subsidiaries, except as expressly indicated or unless the
context otherwise requires. The Condensed Consolidated Balance Sheets as of April 29, 2017, January 28, 2017 and April 30, 2016, the Condensed Consolidated
Statements of Operations, the Condensed Consolidated Statements of Comprehensive Loss, the Condensed Consolidated Statements of Cash Flows and the
Condensed Consolidated Statements of Stockholders’ Deficit for the thirteen weeks ended April 29, 2017 and April 30, 2016, have been prepared by us in
conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim reporting, and in accordance with the
requirements of this Quarterly Report on Form 10-Q. Our interim Condensed Consolidated Financial Statements are unaudited and are subject to year-end
adjustments. In the opinion of management, the financial statements include all known adjustments (which consist primarily of normal, recurring accruals,
estimates and assumptions that impact the financial statements) necessary to present fairly the financial position at the balance sheet dates and the results of
operations for the thirteen weeks then ended. The Condensed Consolidated Balance Sheet at January 28, 2017, presented herein, has been derived from our audited
balance sheet included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017, but does not include all disclosures required by GAAP.
These financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included within our Annual Report on
Form 10-K for the fiscal year ended January 28, 2017. The results of operations for the thirteen weeks ended April 29, 2017 and April 30, 2016 are not necessarily
indicative of operating results for the full year.
Toys-Japan/Asia JV Transaction
On March 24, 2017, the Company combined the legal entity structure for its Toys-Japan and Toys (Labuan) Holding Limited (“Asia JV”) businesses (the “Asia
Merger”). The combination was effected by the issuance of new shares of the Asia JV in exchange for our contribution of Toys-Japan, which resulted in Fung
Retailing’s ownership of 15% in the combined company and our ownership of 85% in the combined company. In connection with the Asia Merger, we no longer
hold a future option or requirement to acquire Fung Retailing’s ownership interest in the Asia JV. As a result, the Noncontrolling interest is no longer redeemable at
the option of the holder and was reclassified from Temporary equity to Stockholders’ deficit on the Condensed Consolidated Balance Sheet in fiscal 2017. We
recorded a $68 million adjustment to Noncontrolling interest to reflect Fung Retailing’s ownership of the combined company’s net assets at book value.
6
2. Short-term borrowings and long-term debt
A summary of the Company’s consolidated Short-term borrowings and Long-term debt as ofApril 29, 2017, January 28, 2017 and April 30, 2016 is outlined in the
table below:

(In millions) 2017 2017 2016
Short-term borrowings
Asia JV uncommitted lines of credit $ 4 $ — $ 5
Long-term debt
10.375% senior notes, due fiscal 2017 (1) — — 444
Toys-Japan unsecured credit lines, expire fiscals 2017-2018 — — 6
8.500% senior secured notes, due fiscal 2017 (2) — — 717
French real estate credit facility, due fiscal 2018 49 48 51
Incremental secured term loan facility, due fiscal 2018 (3) 124 125 128
Second incremental secured term loan facility, due fiscal 2018 (3) 62 62 64
7.375% senior notes, due fiscal 2018 (1) 209 209 401
$1.85 billion secured revolving credit facility, expires fiscal 2019 (3) 861 465 586
Senior unsecured term loan facility, due fiscal 2019 (4) 875 874 912
Tranche A-1 loan facility, due fiscal 2019 (3) 273 272 270
Propco II mortgage loan, due fiscal 2019 (2) 488 489 —
Giraffe Junior mezzanine loan, due fiscal 2019 (5) 73 78 —
Secured term B-4 loan facility, due fiscal 2020 (3) 981 982 985
UK real estate credit facility, due fiscal 2020 334 323 374
European and Australian asset-based revolving credit facility, expires fiscal 2020 52 — 54
Toys-Japan 1.85%-2.18% loans, due fiscals 2019-2021 40 44 52
12.000% Taj senior secured notes, due fiscal 2021 578 577 —
8.750% debentures, due fiscal 2021 (6) 22 22 22
Finance obligations associated with capital projects 178 179 182
Capital lease and other obligations 13 12 20
5,212 4,761 5,268
Less: current portion 163 119 83
Total Long-term debt (7) $ 5,049 $ 4,642 $ 5,185
(1) Represents obligations of Toys “R” Us, Inc. (the “Parent Company”).
(2) Represents obligations of Toys “R” Us Property Company II, LLC (“TRU Propco II”). TRU Propco II is a single-purpose entity and is a separate entity
from the Company. The assets and credit of TRU Propco II and its direct parent Giraffe Junior Holdings, LLC (“Giraffe Junior”) are not available to
satisfy the debts or other obligations of the Company or any affiliate.
(3) Represents obligations of Toys “R” Us – Delaware, Inc (“Toys-
Delaware”).
(4) Represents obligations of Toys “R” Us Property Company I, LLC and its subsidiaries (“TRU Propco
I”).
(5) Represents obligations of Giraffe Junior.
(6) Represents obligations of the Parent Company and Toys-
Delaware.
(7) We may maintain derivative instruments on certain of our long-term debt. Refer to Note 3 entitled “Derivative instruments and hedging activities” for
further details.
The Parent Company is a holding company and conducts its operations through its subsidiaries, certain of which have incurred their own indebtedness. Our credit
facilities, loan agreements and indentures contain customary covenants that, among other things, restrict our ability to:
• incur certain additional
indebtedness;
7
• transfer money between the Parent Company and our various
subsidiaries;
• pay dividends on, repurchase or make distributions with respect to our or our subsidiaries’ capital stock or make other restricted
payments;
• issue stock of
subsidiaries;
• make certain investments, loans or
advances;
• transfer and sell certain
assets;
• create or permit liens on assets;
• consolidate, merge, sell or otherwise dispose of all or substantially all of our
assets;
• enter into certain transactions with our affiliates;
and
• amend certain
documents.
The amount of total net assets that were subject to such restrictions was$84 million as of April 29, 2017. Our agreements also contain various and customary
events of default with respect to the indebtedness, including, without limitation, the failure to pay interest or principal when the same is due under the agreements,
cross default and cross acceleration provisions, the failure of representations and warranties contained in the agreements to be true and certain insolvency events. If
an event of default occurs and is continuing, the principal amounts outstanding thereunder, together with all accrued and unpaid interest and other amounts owed
thereunder, may be declared immediately due and payable by the lenders.
We are dependent on the borrowings provided by the lenders to support our working capital needs, capital expenditures and to service debt. As of April 29, 2017,
we have funds available to finance our operations under our $1.85 billion secured revolving credit facility (“ABL Facility”) through March 2019, subject to an
earlier springing maturity, our two Toys-Japan unsecured credit lines through June 2017 and June 2018 and our European and Australian asset-based revolving
credit facility (“European ABL Facility”) through December 2020. In addition, Asia JV and Toys-Japan have uncommitted lines of credit due on demand.
Asia JV uncommitted lines of credit, due on demand ($4 million at April 29, 2017)
Asia JV has several uncommitted unsecured lines of credit with various financial institutions with total availability of HK$282 million ($36 million at April 29,
2017). As of April 29, 2017, we had $4 million of borrowings, which has been included in Accrued expenses and other current liabilities on the Condensed
Consolidated Balance Sheet and $4 million of bank guarantees issued under these facilities. The remaining availability under these facilities was $28 million. The
average interest rate on the drawn borrowings was 1.15% and 1.89% at April 29, 2017 and April 30, 2016, respectively.
Toys-Japan unsecured credit lines, expire fiscals 2017-2018 ($0 million at April 29, 2017)
Toys-Japan currently has an agreement with a syndicate of financial institutions, which includestwo unsecured loan commitment lines of credit, “Tranche 1A” due
fiscal 2017 and “Tranche 2” due fiscal 2018. Tranche 1A is available in amounts of up to ¥9.45 billion ($85 million at April 29, 2017) and expires on June 30,
2017. As of April 29, 2017 we had no outstanding borrowings under Tranche 1A, with $85 million of remaining availability. Tranche 2 is available in amounts of
up to ¥9.45 billion ($85 million at April 29, 2017) and expires on June 29, 2018. As of April 29, 2017, we had no outstanding borrowings under Tranche 2, with
$85 million of remaining availability.
Additionally, Toys-Japan has two uncommitted lines of credit with ¥1.0 billion and ¥0.5 billion of total availability, respectively. At April 29, 2017, we had no
outstanding borrowings under these uncommitted lines of credit with a total of ¥1.5 billion ($13 million at April 29, 2017) of incremental availability.
$1.85 billion secured revolving credit facility, expires fiscal 2019 ($861 million at April 29, 2017)
Under our ABL Facility which expires on March 21, 2019 subject to an earlier springing maturity, we had outstanding borrowings of$861 million, a total of $93
million of outstanding letters of credit and excess availability of $301 million as of April 29, 2017. We are subject to a minimum excess availability covenant of
$125 million, with remaining availability of $176 million in excess of the covenant at April 29, 2017. Availability is determined pursuant to a borrowing base,
consisting of specified percentages of eligible inventory and credit card receivables and certain Canadian real estate less any applicable availability reserves, and
generally peaks in the third quarter of our fiscal year.
European and Australian asset-based revolving credit facility, expires fiscal 2020 ($52 million at April 29, 2017)
The European ABL Facility, as amended, provides for a five-year £138 million ($179 million at April 29, 2017) asset-based senior secured revolving credit facility
which expires on December 18, 2020. As of April 29, 2017, we had outstanding borrowings of $52 million, with $54 million of remaining availability under the
European ABL Facility.
8
Giraffe Junior mezzanine loan, due fiscal 2019 ($73 million at April 29, 2017)
The Giraffe Junior mezzanine loan due fiscal 2019 requires TRU Propco II to make principal repayments of (i) available excess cash flow, (ii) escrow refunds and
(iii) excess release proceeds, each as defined in the Giraffe Junior mezzanine loan agreement, following payment of monthly debt service and required reserves
under the Propco II mortgage loan and Giraffe Junior mezzanine loan. During the thirteen weeks ended April 29, 2017, TRU Propco II made prepayments of $5
million related to available excess cash flow.
Subsequent Event
Senior unsecured term loan facility, due fiscal 2019 ($875 million at April 29, 2017)
The senior unsecured term loan facility due fiscal 2019 (the “Propco I Term Loan Facility”) requires TRU Propco I to prepay outstanding term loans with25% of
TRU Propco I’s annual excess cash flow (as defined in the Propco I Term Loan Facility), subject to the rights of the lenders to decline such prepayment. As a
result, TRU Propco I made a prepayment of $29 million on May 9, 2017.
3. Derivative instruments and hedging activities

We are exposed to market risk from potential changes in interest rates and foreign currency exchange rates. We regularly evaluate our exposure and enter into
derivative financial instruments to economically manage these risks. We record all derivatives as either assets or liabilities on the Condensed Consolidated Balance
Sheets measured at estimated fair value and we do not offset assets and liabilities with the same counterparty. We recognize the changes in fair value as unrealized
gains and losses. The recognition of these gains or losses depends on our intended use of the derivatives and the resulting designation. In certain defined
conditions, we may designate a derivative as a hedge for a particular exposure.
Interest Rate Contracts

As of April 29, 2017 and January 28, 2017, we had two interest rate caps designated as cash flow hedges. As of April 30, 2016, we had one interest rate cap
designated as a cash flow hedge. No material ineffectiveness was recorded for the thirteen weeks ended April 29, 2017 and April 30, 2016. We expect to reclassify
a net loss of less than $1 million over the next 12 months to Interest expense from Accumulated other comprehensive loss.
Foreign Exchange Contracts

As of April 29, 2017, January 28, 2017 and April 30, 2016, we had foreign currency forward contracts to economically hedge the U.S. Dollar merchandise
purchases of our foreign subsidiaries and our short-term, cross-currency intercompany loans with and between our foreign subsidiaries. These derivative contracts
are not designated as hedges.
As of April 29, 2017, January 28, 2017 and April 30, 2016, derivative liabilities related to agreements that contain credit-risk related contingent features had fair
values of $3 million, $1 million and $11 million, respectively.
The following table sets forth the net impact of the effective portion of derivatives designated as cash flow hedges onAccumulated other comprehensive loss on
our Condensed Consolidated Statements of Stockholders’ Deficit for the thirteen weeks ended April 29, 2017 and April 30, 2016:
13 Weeks Ended
April 29, April 30,
Derivatives designated as cash flow hedges:
Beginning balance $ 2 $ 1
Change in fair value recognized in Accumulated other comprehensive loss - Interest Rate Contracts (1) —
Reclassifications from Accumulated other comprehensive loss - Interest Rate Contracts — —

Ending balance $ 1 $ 1
9
The following table sets forth the impact of derivatives on Interest expense in our Condensed Consolidated Statements of Operations for thethirteen weeks ended
April 29, 2017 and April 30, 2016:
13 Weeks Ended
April 29, April 30,
Derivatives not designated for hedge accounting:
Loss on the change in fair value - Intercompany Loan Foreign Exchange Contracts (1) $ (11) $ (2)
Loss on the change in fair value - Merchandise Purchases Program Foreign Exchange Contracts — (15)
Total Interest expense $ (11) $ (17)
(1) (Losses) gains related to our short-term intercompany loan foreign exchange contracts are recorded in Interest expense, in addition to the corresponding
foreign exchange gains and losses related to our short-term, cross-currency intercompany loans.
The following table contains the notional amounts and related fair values of our derivatives included within our Condensed Consolidated Balance Sheets as of
April 29, 2017, January 28, 2017 and April 30, 2016:
2017 2017 2016
Fair Value Fair Value Fair Value
Notional Assets/ Notional Assets/ Notional Assets/
(In millions) Amount (Liabilities) Amount (Liabilities) Amount (Liabilities)
Interest Rate Contracts designated as cash flow hedges:
Prepaid expenses and other current assets $ 50 $ — $ — $ — $ — $ —
Other assets 510 1 560 1 53 —
Foreign Currency Contracts not designated for hedge
accounting:
Prepaid expenses and other current assets 190 6 229 7 80 1
Accrued expenses and other current liabilities 398 (7) 226 (2) 313 (15)
Total derivative contracts outstanding:
Prepaid expenses and other current assets 240 6 229 7 80 1
Other assets 510 1 560 1 53 —
Total derivative assets (1) $ 750 $ 7 $ 789 $ 8 $ 133 $ 1
Accrued expenses and other current liabilities 398 (7) 226 (2) 313 (15)
Total derivative liabilities (1) $ 398 $ (7) $ 226 $ (2) $ 313 $ (15)
(1) Refer to Note 4 entitled “Fair value measurements” for the classification of our derivative instruments within the fair value
hierarchy.
4. Fair value measurements

To determine the fair value of our assets and liabilities, we utilize the established fair value hierarchy that distinguishes between market participant assumptions
based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and
the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).
Assets and Liabilities Measured at Fair Value on a Recurring Basis

Derivative Financial Instruments
Currently, we use derivative financial arrangements to manage a variety of risk exposures, including interest rate risk associated with our Long-term debt and
foreign currency risk relating to cross-currency intercompany lending and merchandise purchases. The valuation of our foreign currency contracts is determined
using market-based foreign exchange rates, which are classified as Level 2 inputs.
10
The valuation of our interest rate contracts is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash
flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs,
including interest rate curves, foreign exchange rates and implied volatilities. At the end of each period, we evaluate the inputs used to value our derivatives, which
are primarily classified as Level 2.
Any transfer into or out of a level of the fair value hierarchy is recognized based on the value of the instruments at the end of the reporting period.
The tables below present our assets and liabilities measured at fair value on a recurring basis as ofApril 29, 2017, January 28, 2017 and April 30, 2016, aggregated
by level in the fair value hierarchy within which those measurements fall.
Quoted Prices in
Active Markets for Significant
Identical Assets Significant Other Unobservable
and Liabilities Observable Inputs Inputs Balance at
(In millions) (Level 1) (Level 2) (Level 3) April 29, 2017
Assets
Derivative financial instruments:
Interest rate contracts $ — $ 1 $ — $ 1
Foreign exchange contracts — 6 — 6
Total assets $ — $ 7 $ — $ 7
Liabilities
Foreign exchange contracts $ — $ 7 $ — $ 7
Total liabilities $ — $ 7 $ — $ 7
Quoted Prices in
(In millions) (Level 1) (Level 2) (Level 3) January 28, 2017
Assets
Interest rate contracts $ — $ 1 $ — $ 1
Total assets $ — $ 8 $ — $ 8
Liabilities
Foreign exchange contracts $ — $ 2 $ — $ 2
Quoted Prices in
(In millions) (Level 1) (Level 2) (Level 3) April 30, 2016
Assets
Interest rate contracts $ — $ — $ — $ —
Total assets $ — $ 1 $ — $ 1
Liabilities
Interest rate contracts $ — $ — $ — $ —
11
For the periods ended April 29, 2017, January 28, 2017 and April 30, 2016, we had no derivative financial instruments within Level 3 of the fair value hierarchy.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain of our assets and liabilities are measured at fair value on a nonrecurring basis. We evaluate the carrying value of all long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. For the thirteen weeks ended April 29, 2017 and
April 30, 2016, we did not have any long-lived asset impairments.
Other Financial Instruments

The fair values of our Long-term debt including current portion are estimated using quoted market prices for the same or similar issues and other pertinent
information available to management as of the end of the respective periods. The fair values of debt instruments classified as Level 1 are based on quoted prices in
reasonably active markets and Level 2 instruments are valued using market prices we obtain from external third parties. Debt instruments classified as Level 3 are
not publicly traded, and therefore we are unable to obtain quoted market prices, and are generally valued using estimated spreads, a present value calculation or a
cash flow analysis, as appropriate. There have been no significant changes in valuation technique or related inputs for Long-term debt for the thirteen weeks ended
April 29, 2017 and April 30, 2016. The table below presents the carrying values and fair values of our Long-term debt including current portion as of April 29,
2017, January 28, 2017 and April 30, 2016, aggregated by level in the fair value hierarchy within which those measurements fall.
Long-term Debt
Quoted Prices in
Identical Assets and Significant Other Unobservable
Liabilities Observable Inputs Inputs
(In millions) Carrying Value Fair Value (Level 1) (Level 2) (Level 3)
April 29, 2017 $ 5,212 $ 5,022 $ 197 $ 2,696 $ 2,129
January 28, 2017 4,761 4,560 204 2,679 1,677
April 30, 2016 5,268 4,935 1,435 2,152 1,348
Other financial instruments that are not measured at fair value on our Condensed Consolidated Balance Sheets include cash and cash equivalents, accounts
receivable, accounts payable, accrued expenses and short-term borrowings. Due to the short-term nature of these assets and liabilities, their carrying amounts
approximate fair value.
5. Income taxes
The following table summarizes our Income tax expense (benefit) and effective tax rates for the thirteen weeks ended April 29, 2017 and April 30, 2016:
13 Weeks Ended
April 29, April 30,
($ In millions) 2017 2016
Loss before income taxes $ (160) $ (129)
Effective tax rate (1.9)% 3.1%
The effective tax rates for the thirteen weeks ended April 29, 2017 and April 30, 2016 were based on our forecasted effective tax rates, adjusted for discrete items
that occurred within the periods presented. Our forecasted effective tax rate was (1.5)% for the thirteen weeks ended April 29, 2017 compared to 4.1% for the same
period last year. The difference between our forecasted effective tax rates was primarily due to a change in the mix and level of earnings between jurisdictions.
There were no significant discrete items that impacted our effective tax rate for thethirteen weeks ended April 29, 2017. For the thirteen weeks ended April 30,
2016, our effective tax rate was impacted by a tax expense of$1 million related to adjustments to deferred taxes resulting from a change in statutory tax rate.
6. Segments
Our reportable segments are Toys “R” Us – Domestic (“Domestic”), which provides toy and baby product offerings in49 states in the United States, Puerto Rico
and Guam, and Toys “R” Us – International (“International”), which operates or licenses “R” Us branded retail stores in 37 foreign countries and jurisdictions with
operated stores in Australia, Austria, Brunei, Canada,
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China, France, Germany, Hong Kong, Japan, Malaysia, Poland, Portugal, Singapore, Spain, Switzerland, Taiwan, Thailand and the United Kingdom. Our
Domestic and International segments also include their respective e-commerce operations. Segment Operating earnings (loss) excludes corporate related charges
and income. All intercompany transactions between the segments have been eliminated. Revenues from external customers are derived primarily from
merchandise sales and we do not generate material sales from any single customer.
The following tables show our percentage of Net sales by product category:
13 Weeks Ended
April 29, April 30,
Domestic: 2017 2016
Baby 46.7% 48.8%
Core Toy 15.1% 13.7%
Entertainment 6.0% 5.6%
Learning 18.2% 17.9%
Seasonal 13.4% 13.7%
Other (1) 0.6% 0.3%
Total 100% 100%
(1) Consists primarily of non-product related

revenues.
13 Weeks Ended
April 29, April 30,
International: 2017 2016
Baby 26.1% 26.9%
Core Toy 20.8% 20.6%
Other (1) 0.9% 0.9%
Total 100% 100%
(1) Consists primarily of non-product related revenues, including licensing revenue from unaffiliated third
parties.
From time to time, we may make revisions to our prior period Net sales by product category to conform to the current period allocation. These revisions did not
have a significant impact to our prior year disclosure.
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A summary of financial information by reportable segment is as follows:
13 Weeks Ended
April 29, April 30,
Net sales
Domestic $ 1,366 $ 1,458
International 840 861
Net sales $ 2,206 $ 2,319
Gross margin
Domestic $ 459 $ 515
International 324 331
Gross margin $ 783 $ 846
Operating earnings (loss)
Domestic $ 29 $ 67
International — 10
Corporate and other (83) (84)
Operating loss (54) (7)
Interest expense (107) (123)
Interest income 1 1

(In millions) 2017 2017 2016
Merchandise inventories
Domestic $ 1,552 $ 1,708 $ 1,509
International 877 768 924
Merchandise inventories $ 2,429 $ 2,476 $ 2,433
7. Litigation and legal proceedings

We are, and in the future may be, involved in various lawsuits, claims and proceedings incident to the ordinary course of business. The results of litigation are
inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of
management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those
legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary
stages, and until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii)
many of these proceedings involve matters of which the outcomes are inherently difficult to predict. However, based upon our historical experience with similar
matters, we do not expect that any such additional losses would be material to our consolidated financial position, results of operations or cash flows.
8. Related party transactions
Sponsor Advisory Agreement

We are owned by an investment group led by entities advised by or affiliated with Bain Capital Private Equity, L.P., Kohlberg Kravis Roberts & Co. L.P. (together
with its affiliates, “KKR”) and Vornado Realty Trust (“Vornado”) (collectively, the “Sponsors”). The Sponsors provide management and advisory services to us
pursuant to an advisory agreement executed at the closing of the merger transaction effective as of July 21, 2005 and amended June 10, 2008, February 1, 2009,
August 29, 2014, June 1, 2015 and December 1, 2015 (“Advisory Agreement”). The term of the Advisory Agreement is currently a one-year renewable term
unless we or the Sponsors provide notice of termination to the other. Management and advisory fees (the “Advisory Fees”) of $6 million per annum are payable on
a quarterly basis. We recorded Advisory Fees of $2 million for each of the thirteen weeks ended April 29, 2017 and April 30, 2016. During each of the thirteen
weeks ended April 29, 2017 and April 30, 2016, we also paid the Sponsors for nominal out-of-pocket expenses.
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Other Relationships and Transactions with our Sponsors
From time to time, we and our subsidiaries, as well as the Sponsors or their affiliates, may acquire debt or debt securities issued by us or our subsidiaries in open
market transactions, tender offers, exchange offers, privately negotiated transactions or otherwise. The Sponsors did not own any of our debt during the thirteen
weeks ended April 29, 2017. During the thirteen weeks ended April 30, 2016, affiliates of KKR held debt and debt securities issued by the Company and its
subsidiaries. The interest amounts on such debt and debt securities held by related parties were $1 million during the thirteen weeks ended April 30, 2016.
Additionally, under lease agreements with affiliates of Vornado, we paid an aggregate amount of$3 million and $2 million for the thirteen weeks ended April 29,
2017 and April 30, 2016, respectively, with respect to less than 1% of our operated stores, which include Toys “R” Us Express stores. Of the aggregate amount
paid, $1 million and less than $1 million for the thirteen weeks ended April 29, 2017 and April 30, 2016, respectively, was allocable to joint-venture parties not
otherwise affiliated with Vornado.
Each of the Sponsors, either directly or through affiliates, has ownership interests in a broad range of companies (“Portfolio Companies”) with whom we may
from time to time enter into commercial transactions in the ordinary course of business, primarily for the purchase of goods and services. We believe that none of
our transactions or arrangements with Portfolio Companies are significant enough to be considered material to the Sponsors or to our business.
9. Dispositions
During the thirteen weeks ended April 29, 2017, we sold certain assets for nominal proceeds, resulting in nominal net gains. Net gains on sales are included in
Other income, net on our Condensed Consolidated Statements of Operations.
10. Accumulated other comprehensive loss

Total other comprehensive income, net of tax is included in the Condensed Consolidated Statements of Comprehensive Loss and Condensed Consolidated
Statements of Stockholders’ Deficit. Accumulated other comprehensive loss is reflected in Total stockholders’ deficit on the Condensed Consolidated Balance
Sheets, as follows:
Foreign currency Unrealized gain Accumulated
translation on hedged Unrecognized other
adjustments, transactions, actuarial losses, comprehensive
(In millions) net of tax net of tax net of tax loss
Balance, January 30, 2016 $ (249) $ 1 $ (22) $ (270)
Change 68 — — 68
Balance, April 30, 2016 $ (181) $ 1 $ (22) $ (202)
Foreign currency Unrealized gain Accumulated

translation on hedged Unrecognized other
adjustments, transactions, actuarial losses, comprehensive
(In millions) net of tax net of tax net of tax loss
Balance, January 28, 2017 $ (210) $ 2 $ (32) $ (240)
Change 4 (1) (1) 2
Balance, April 29, 2017 $ (206) $ 1 $ (33) $ (238)
11. Recent accounting pronouncements

In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09 “Compensation-Stock
Compensation (Topic 718)” (“ASU 2017-09”). ASU 2017-09 provides clarification on when modification accounting should be used for changes to the terms or
conditions of a share-based payment award. This ASU does not change the accounting for modifications but clarifies that modification accounting guidance should
only be applied if there is a change to the value, vesting conditions or award classification and would not be required if the changes are considered non-
substantive. The amendments of this ASU are effective for reporting periods beginning after December 15, 2017, with early adoption permitted. The adoption of
ASU 2017-09 is not expected to have an impact on our Condensed Consolidated Financial Statements.
In February 2016, the FASB issued ASU No. 2016-02 “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and
comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing
arrangements. Under ASU 2016-02, a lessee will recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-
to-use asset representing its
15
right to use the underlying asset for the lease term. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee
have not significantly changed from current GAAP. ASU 2016-02 retains a distinction between finance leases (i.e. capital leases under current GAAP) and
operating leases. The classification criteria for distinguishing between finance leases and operating leases will be substantially similar to the classification criteria
for distinguishing between capital leases and operating leases under current GAAP. The accounting applied by the lessor is largely unchanged from that applied
under current GAAP. The amendments of this ASU are effective for reporting periods beginning after December 15, 2018, with early adoption permitted. An
entity will be required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Management is
currently assessing the impact the adoption of ASU 2016-02 will have on our Condensed Consolidated Financial Statements.
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 amends the guidance
for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial
Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer
of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from
contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is
considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances.
The amendments of ASU 2014-09 were effective for reporting periods beginning after December 15, 2016, with early adoption prohibited. Entities can transition
to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.
Subsequent to issuing ASU 2014-09, the FASB issued the following amendments concerning the adoption and clarification of ASU 2014-09. In August 2015, the
FASB issued ASU No. 2015-14 “Revenue from Contracts with Customers (Topic 606), Deferral of the Effective Date,” which deferred the effective date one year.
As a result, the amendments of ASU 2014-09 are effective for reporting periods beginning after December 15, 2017, with early adoption permitted only as of
annual reporting periods beginning after December 15, 2016. In March 2016, the FASB issued ASU No. 2016-08 “Revenue from Contracts with Customers
(Topic 606), Principal versus Agent Considerations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal
versus agent considerations in the new revenue recognition standard. ASU 2016-08 clarifies how an entity should identify the unit of accounting (i.e. the specified
good or service) for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. In April 2016, the FASB
issued ASU No. 2016-10 “Revenue from Contracts with Customers (Topic 606), Identifying Performance Obligations and Licensing,” which reduces the
complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation
guidance. In May 2016, the FASB issued ASU No. 2016-12 “Revenue from Contracts with Customers (Topic 606), Narrow-Scope Improvements and Practical
Expedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes.
ASU 2016-12 clarifies that, for a contract to be considered completed at transition, all (or substantially all) of the revenue must have been recognized under legacy
GAAP. In addition, ASU 2016-12 clarifies how an entity should evaluate the collectability threshold and when an entity can recognize nonrefundable
consideration received as revenue if an arrangement does not meet the standard’s contract criteria. In December, FASB issued ASU No. 2016-20 “Technical
Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”). ASU 2016-20 provides update to Accounting Standards
Codification 606, “Revenue from Contracts with Customers,” which will allow entities not to make quantitative disclosures about remaining performance
obligations in certain cases and require entities that use any of the new or previously existing optional exemptions to expand their qualitative disclosures. It also
makes 12 additional technical corrections and improvements to the new revenue standard. While the Company is continuing to assess all of the potential impacts of
the new standard, we generally anticipate having substantially similar performance obligations under the amended guidance. The Company does not expect the
implementation of the standard will have a material effect on the Company's consolidated results of operations, cash flows or financial position. The Company
currently anticipates utilizing the full retrospective method of adoption allowed by the standard, in order to provide for comparative results in all periods presented,
and plans to adopt the standard as of the first day of fiscal 2018 (February 4, 2018).
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
As used herein, the “Company,” “we,” “us,” or “our” means Toys “R” Us, Inc. and its consolidated subsidiaries, except as expressly indicated or unless the context
otherwise requires. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help
facilitate an understanding of our historical results of operations during the periods presented and our financial condition. Throughout this MD&A when discussing
our results of operations, we refer to the impact of foreign currency translation on our International results. Transactions in our International segment are recorded
in each market’s functional currency, then converted to U.S. Dollar for financial reporting. We calculate the effect of changes in foreign currency exchange rates
by measuring the difference between current period activity translated at the current period’s foreign exchange rates and current period activity translated at last
period’s rates. This MD&A should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 28, 2017 and the Condensed
Consolidated Financial Statements and the accompanying notes thereto, and contains forward-looking statements that involve risks and uncertainties. See
“Forward-Looking Statements” below.
Our Business
We generate sales, earnings and cash flows by retailing a variety of toy and baby products worldwide through our omnichannel offerings that leverage the
synergies between our brick-and-mortar stores and e-commerce. Our reportable segments are Toys “R” Us – Domestic (“Domestic”), which operates in 49 states,
Puerto Rico and Guam, and Toys “R” Us – International (“International”), which operates or licenses stores in 37 foreign countries and jurisdictions. As of
April 29, 2017, there were 1,694 operated and 259 licensed “R” Us branded retail stores worldwide. Our Domestic and International segments also include their
respective e-commerce operations.
Financial Performance
As discussed in more detail in this MD&A, the following financial data represents an overview of our financial performance for thethirteen weeks ended April 29,
2017 compared to the thirteen weeks ended April 30, 2016:
13 Weeks Ended
April 29, April 30,
Net sales $ 2,206 $ 2,319
Same store sales (4.1)% 0.9%
Gross margin $ 783 $ 846
Gross margin as a percentage of Net sales 35.5 % 36.5%
Selling, general and administrative expenses (“SG&A”) $ 779 $ 805
SG&A as a percentage of Net sales 35.3 % 34.7%
Non-GAAP Financial Measure:
Adjusted EBITDA (1) $ 44 $ 79
(1) For an explanation of Adjusted EBITDA as a measure of the Company’s operating performance and a reconciliation toNet loss attributable to Toys “R”
Us, Inc., see “Non-GAAP Financial Measure - Adjusted EBITDA”.
First quarter 2017 financial highlights:

• Net sales decreased by $113 million compared to the prior year period, due to a decline in same store
sales.
• Consolidated same store sales decreased by 4.1 percentage points as a result of declines in both our Domestic and International
segments.
• Gross margin, as a percentage of Net sales, (“Gross margin rate”) declined in our Domestic segment, while International remained relatively consistent
with the prior year period.
• SG&A decreased by $26 million primarily due to reductions in professional fees.
• Net loss attributable to Toys “R” Us, Inc. increased by $38
million.
Same Store Sales

In computing same store sales, we include stores that have been open for at least 56 weeks from their “soft” opening date. A soft opening is typically two weeks
prior to the grand opening. Express stores that have a cumulative lease term of at least two years (“Long-Term Express”) and have been open for at least 56 weeks
from their soft opening date are also included in the computation of same store sales.
17
Our same store sales computation includes the following:
• stores that have been remodeled while remaining
open;
• stores that have been relocated and/or expanded to new buildings within the same trade area, in which the new store opens at about the same time as the
old store closes;
• stores that have expanded or contracted within their current locations;
and
• sales from our e-commerce
businesses.
By measuring the year-over-year sales of merchandise in the stores that have been open for 56 weeks or more and online, we can better gauge how the core store
base and e-commerce business is performing since same store sales excludes the impact of store openings and closings. We calculate International same store sales
by applying prior year foreign exchange rates to both current year and prior year sales to provide a consistent basis for comparison.
Various factors affect same store sales, including the number of and timing of stores we open, close, convert, relocate, expand or contract, the number of
transactions, the average transaction amount, the general retail sales environment, current local and global economic conditions, consumer preferences and buying
trends, changes in sales mix among distribution channels, our ability to efficiently source and distribute products, changes in our merchandise mix, competition, the
timing of the release of new merchandise and our promotional events, the success of marketing programs and the cannibalization of existing store net sales by new
stores. Among other things, weather conditions, terrorism and catastrophic events can affect same store sales because they may discourage travel or require
temporary store closures, thereby reducing customer traffic. These factors have caused our same store sales to fluctuate significantly in the past on a monthly,
quarterly and annual basis and, as a result, we expect that same store sales will continue to fluctuate in the future.
The changes in our same store sales for the thirteen weeks ended April 29, 2017 and April 30, 2016 are as follows:
13 Weeks Ended
April 29, 2017 April 30, 2016
vs. 2016 vs. 2015
Domestic (6.2)% 0.1%
International (0.6)% 2.5%
Toys “R” Us - Consolidated (4.1)% 0.9%
Percentage of Net Sales by Product Category
13 Weeks Ended
April 29, April 30,
Domestic: 2017 2016
Baby 46.7% 48.8%
Core Toy 15.1% 13.7%
Other (1) 0.6% 0.3%
Total 100% 100%
(1) Consists primarily of non-product related

revenues.
18
13 Weeks Ended
April 29, April 30,
International: 2017 2016
Baby 26.1% 26.9%
Core Toy 20.8% 20.6%
Other (1) 0.9% 0.9%
Total 100% 100%
(1) Consists primarily of non-product related revenues, including licensing revenue from unaffiliated third
parties.
From time to time, we may make revisions to our prior period Net sales by product category to conform to the current period allocation. These revisions did not
have a significant impact to our prior year disclosure.
Store Count by Segment
Domestic International Toys “R” Us - Consolidated

April 29, April 30, April 29, April 30, April 29, April 30,
Store Type 2017 2016 2017 (1) 2016 2017 2016
Traditional Toy 358 361 578 533 936 894
Side by Side 212 213 207 203 419 416
Baby 223 222 12 13 235 235
Long-Term Express 42 45 18 7 60 52
Outlet 44 30 — — 44 30
Total Operated 879 871 815 756 1,694 1,627
Excluded from store count:

Licensed — — 259 250 259 250
Temporary Express 10 19 23 24 33 43
(1) The net increase in International stores compared to the prior year is primarily due to 35 stores in China and Southeast
Asia.
Net Loss Attributable to Toys “R” Us, Inc.
13 Weeks Ended
April 29, April 30,
(In millions) 2017 2016 Change
Toys “R” Us - Consolidated $ (164) $ (126) $ (38)
Net loss attributable to Toys “R” Us, Inc. increased by $38 million to $164 million for the thirteen weeks ended April 29, 2017, compared to $126 million for the
same period last year. The increase was primarily due to a $63 million decline in Gross margin, partially offset by a reduction in SG&A of$26 million.
Net Sales
13 Weeks Ended
Percentage of Net Sales
April 29, April 30, April 29, April 30,
($ In millions) 2017 2016 $ Change % Change 2017 2016
Domestic $ 1,366 $ 1,458 $ (92) (6.3)% 61.9% 62.9%
International
840 861 (21) (2.4)% 38.1% 37.1%
Toys “R” Us - Consolidated $ 2,206 $ 2,319 $ (113) (4.9)% 100.0% 100.0%
Net sales decreased by $113 million or 4.9%, to $2,206 million for the thirteen weeks ended April 29, 2017, compared to $2,319 million for the same period last
year. Foreign currency translation decreased Net sales by $24 million for the thirteen weeks ended April 29, 2017.
19
Excluding the impact of foreign currency translation, the decrease in Net sales was primarily due to a decline in same store sales driven by a decrease in the number
of transactions. Consolidated e-commerce sales increased 3% for the thirteen weeks ended April 29, 2017, compared to the same period last year.
Domestic
Net sales for our Domestic segment decreased by $92 million or 6.3%, to $1,366 million for the thirteen weeks ended April 29, 2017, primarily due to a decline in
same store sales of 6.2%.
The decrease in same store sales resulted primarily from decreases in our baby and seasonal categories. The decline in our baby category was mainly due to baby
gear and infant care products. The decline in our seasonal category was predominantly due to outdoor products.
International
Net sales for our International segment decreased by $21 million or 2.4%, to $840 million for the thirteen weeks ended April 29, 2017. Excluding a $24 million
decrease from foreign currency translation, International Net sales improved by$3 million, primarily as a result of an increase in net sales from new locations,
partially offset by a 0.6% decrease in same store sales driven by our Europe market.
The decrease in same store sales resulted primarily from decreases in our baby and learning categories. The decrease in our baby category was mainly due to
consumables and infant care products. The decrease in our learning category was predominantly due to construction toys. Partially offsetting these decreases was
an increase in our entertainment category, primarily due to video game systems.
Gross Margin
The following are reflected in “Cost of sales”:
• the cost of merchandise acquired from
vendors;
• freight in;
• provision for excess and obsolete
inventory;
• shipping costs to consumers;
• provision for inventory shortages; and
• credits and allowances from our merchandise
vendors.
We record the costs associated with operating our distribution networks as a part of SG&A, including those costs that primarily relate to transporting merchandise
from distribution centers to stores. Therefore, our consolidated Gross margin may not be comparable to the gross margins of other retailers that include similar
costs in their cost of sales.
13 Weeks Ended
($ In millions) 2017 2016 $ Change 2017 2016 Change
Domestic $ 459 $ 515 $ (56) 33.6% 35.3% (1.7)%
International 324 331 (7) 38.6% 38.4% 0.2 %
Toys “R” Us - Consolidated $ 783 $ 846 $ (63) 35.5% 36.5% (1.0)%
Gross margin decreased by $63 million to $783 million for the thirteen weeks ended April 29, 2017, compared to $846 million for the same period last year.
Foreign currency translation decreased Gross margin by $10 million.
Gross margin rate decreased by 100 basis points for the thirteen weeks ended April 29, 2017, compared to the same period last year. The decrease in Gross margin
rate was due to margin rate declines in our Domestic segment.
Domestic
Gross margin decreased by $56 million to $459 million for the thirteen weeks ended April 29, 2017. Gross margin rate decreased by 170 basis points for the
thirteen weeks ended April 29, 2017, compared to the same period last year.
The decrease in Gross margin rate for the thirteen weeks ended April 29, 2017 resulted primarily from an increase in sales of products on promotion and an
increase in recorded inventory reserves.
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International
Gross margin decreased by $7 million to $324 million for the thirteen weeks ended April 29, 2017. Foreign currency translation decreased Gross margin by $10
million. Gross margin rate remained relatively consistent for the thirteen weeks ended April 29, 2017, compared to the same period last year.
Selling, General and Administrative Expenses

The following table presents expenses as a percentage of consolidated SG&A:
13 Weeks Ended
April 29, April 30,
2017 2016
Payroll and related benefits 46.1% 45.4%
Occupancy costs 31.8% 31.7%
Advertising and promotional expenses 7.1% 7.0%
Transaction fees (1) 3.2% 3.6%
Professional fees 2.4% 3.3%
Other (2) 9.4% 9.0%
Total 100.0% 100.0%
(1) Primarily consists of credit card

fees.
(2) Includes costs related to website hosting, transporting merchandise from distribution centers to stores, store related supplies and signage and other
corporate-related expenses.
13 Weeks Ended
($ In millions) 2017 2016 $ Change 2017 2016 Change
Toys “R” Us - Consolidated $ 779 $ 805 $ (26) 35.3% 34.7% 0.6%
SG&A decreased by $26 million to $779 million for the thirteen weeks ended April 29, 2017, compared to $805 million for the same period last year. Foreign
currency translation decreased SG&A by $9 million. As a percentage of Net sales, SG&A increased by 60 basis points.
Excluding the impact of foreign currency translation, SG&A decreased by $17 million primarily due to an $8 million decline in professional fees, which included
$4 million of litigation expenses in the prior year.
Depreciation and Amortization
13 Weeks Ended
April 29, April 30,
Toys “R” Us - Consolidated $ 75 $ 80 $ (5)
Depreciation and amortization decreased by $5 million for the thirteen weeks ended April 29, 2017, compared to the same period last year. The decrease was
primarily due to fully depreciated assets.
Other Income, Net

Other income, net includes the following:
• credit card program
income;
• gift card breakage
income;
• foreign exchange gains and
losses;
• net gains on
sales;
• impairment of long-lived assets;

and
• other operating income and expenses.
21
13 Weeks Ended
April 29, April 30,
Other income, net decreased by $15 million to $17 million for the thirteen weeks ended April 29, 2017. The decrease was primarily due to an $18 million increase
in unrealized loss on foreign exchange related to the re-measurement of the Tranche A-1 loan facility attributed to Toys-Canada Ltd. Toys “R” Us (Canada) Ltee
(“Toys-Canada”).
Interest Expense
13 Weeks Ended
April 29, April 30,
Interest expense decreased by $16 million for the thirteen weeks ended April 29, 2017, compared to the same period last year. The decrease was primarily due to
the change in fair value of derivative contracts.
Interest Income
13 Weeks Ended
April 29, April 30,
Toys “R” Us - Consolidated $ 1 $ 1 $ —
Interest income remained consistent for the thirteen weeks ended April 29, 2017, compared to the same period last year.
Income Tax Expense (Benefit)

The following table summarizes our Income tax expense (benefit) and effective tax rates for the thirteen weeks ended April 29, 2017 and April 30, 2016:
13 Weeks Ended
April 29, April 30,
Effective tax rate (1.9)% 3.1%
The effective tax rates for the thirteen weeks ended April 29, 2017 and April 30, 2016 were based on our forecasted effective tax rates, adjusted for discrete items
that occurred within the periods presented. Our forecasted effective tax rate was (1.5)% for the thirteen weeks ended April 29, 2017 compared to 4.1% for the same
period last year. The difference between our forecasted effective tax rates was primarily due to a change in the mix and level of earnings between jurisdictions.
There were no significant discrete items that impacted our effective tax rate for thethirteen weeks ended April 29, 2017. For the thirteen weeks ended April 30,
2016, our effective tax rate was impacted by a tax expense of$1 million related to adjustments to deferred taxes resulting from a change in statutory tax rate.
Non-GAAP Financial Measure - Adjusted EBITDA

We believe Adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in the evaluation of
companies in our industry. Investors in the Company regularly request Adjusted EBITDA as a supplemental analytical measure to, and in conjunction with, the
Company’s financial data prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). We understand that investors use
Adjusted EBITDA, among other things, to assess our period-to-period operating performance and to gain insight into the manner in which management analyzes
operating performance.
In addition, we believe that Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the
calculation of EBITDA and Adjusted EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and
acquisitions, which items may vary for different companies for reasons unrelated to overall operating performance. We use the non-GAAP financial measures for
planning and
22
forecasting and measuring results against the forecast and in certain cases we use similar measures for bonus targets for certain of our employees. Using several
measures to evaluate the business allows us and investors to assess our relative performance against our competitors.
Although we believe that Adjusted EBITDA can make an evaluation of our operating performance more consistent because it removes items that do not reflect our
core operations, other companies, even in the same industry, may define Adjusted EBITDA differently than we do. As a result, it may be difficult to use Adjusted
EBITDA or similarly named non-GAAP measures that other companies may use to compare the performance of those companies to our performance. The
Company does not, and investors should not, place undue reliance on EBITDA or Adjusted EBITDA as measures of operating performance.
Reconciliation of Net loss attributable to Toys “R” Us, Inc. to EBITDA and Adjusted EBITDA is as follows:
13 Weeks Ended
April 29, April 30,
Add:
Interest expense, net 106 122
EBITDA 20 72
Adjustments:
Severance 10 2
Foreign currency re-measurement (a) 5 (13)
Compensation expense (b) 3 7
Certain transaction costs (c) 3 5
Sponsors’ management and advisory fees (d) 2 2
Net earnings attributable to noncontrolling interest 1 1
Litigation (e) — 4
Property losses, net of insurance recoveries (f) — (1)
Adjusted EBITDA (g) $ 44 $ 79
(a) Represents the unrealized loss (gain) on foreign exchange related to the re-measurement of the portion of the Tranche A-1 loan facility attributed to Toys-
Canada.
(b) Represents the incremental compensation expense related to certain one-time awards and modifications, net of forfeitures of certain officers’
awards.
(c) Represents expenses associated with the transition of our U.S. e-commerce operations and other transaction
costs.
(d) Represents the fees expensed to our Sponsors in accordance with the advisory
agreement.
(e) Represents certain litigation expenses and settlements recorded for legal
matters.
(f) Represents property losses and insurance claims
recognized.
(g) Adjusted EBITDA is defined as EBITDA (earnings (loss) before net interest income (expense), income tax expense (benefit), depreciation and
amortization), as further adjusted to exclude the effects of certain income and expense items that management believes make it more difficult to assess the
Company’s actual operating performance including certain items which are generally non-recurring. We have excluded the impact of such items from
internal performance assessments. We believe that excluding items such as Sponsors’ management and advisory fees, asset impairment charges,
severance, impact of litigation, store closure costs, noncontrolling interest, net gains on sales and other charges, helps investors compare our operating
performance with our results in prior periods. We believe it is appropriate to exclude these items as they are not related to ongoing operating performance
and, therefore, limit comparability between periods and between us and similar companies.
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Liquidity and Capital Resources
Overview
As of April 29, 2017, we were in compliance with all of the covenants related to our outstanding debt. Under the $1.85 billion secured revolving credit facility
(“ABL Facility”), we had outstanding borrowings of $861 million, a total of $93 million of outstanding letters of credit and excess availability of $301 million as of
April 29, 2017. We are subject to a minimum excess availability covenant of $125 million, with remaining availability of $176 million in excess of the covenant at
April 29, 2017. Availability is determined pursuant to a borrowing base, consisting of specified percentages of eligible inventory among other assets, and generally
peaks in the third quarter of our fiscal year. As of April 29, 2017, Toys “R” Us – Delaware, Inc. and its subsidiaries had total liquidity of$211 million, which
included cash and cash equivalents of $35 million.
Toys “R” Us – Japan, Ltd. (“Toys-Japan”) has an agreement with a syndicate of financial institutions, which includes two unsecured loan commitment lines of
credit, “Tranche 1A” due fiscal 2017 and “Tranche 2” due fiscal 2018. Tranche 1A is available in amounts of up to ¥9.45 billion ($85 million at April 29, 2017).
As of April 29, 2017, we had no outstanding borrowings under Tranche 1A, with $85 million of remaining availability. Tranche 2 is available in amounts of up to
¥9.45 billion ($85 million at April 29, 2017). As of April 29, 2017, we had no outstanding borrowings under Tranche 2, with $85 million of remaining availability.
As of April 29, 2017, Toys-Japan had total liquidity of $214 million under committed facilities, which included cash and cash equivalents of $44 million.
Additionally, Toys-Japan has two uncommitted lines of credit with ¥1.0 billion and ¥0.5 billion of total availability, respectively. At April 29, 2017, we had no
outstanding borrowings under these uncommitted lines of credit with a total of ¥1.5 billion ($13 million at April 29, 2017) of incremental availability.
Our European and Australian asset-based revolving credit facility as amended (the “European ABL Facility”) provides for a five-year £138 million ($179 million at
April 29, 2017) asset-based senior secured revolving credit facility. As of April 29, 2017, we had outstanding borrowings of $52 million, with $54 million of
remaining availability under the European ABL Facility. As of April 29, 2017, Europe and Australia had total liquidity of $114 million, which included cash and
cash equivalents of $60 million.
Toys (Labuan) Holding Limited (“Asia JV”) has several uncommitted unsecured lines of credit with various financial institutions with total availability of HK$282
million ($36 million at April 29, 2017). As of April 29, 2017, we had $4 million of borrowings and $4 million of bank guarantees issued under these facilities. The
remaining availability under these facilities was $28 million.
We are dependent on the borrowings provided by our lenders to support our working capital needs, capital expenditures and to service debt. As of April 29, 2017,
we have funds available to finance our operations under our ABL Facility through March 2019, subject to an earlier springing maturity, our Toys-Japan unsecured
credit lines with a tranche expiring June 2017 and a tranche expiring June 2018 and our European ABL Facility through December 2020. In addition, Asia JV and
Toys-Japan have uncommitted lines of credit, which are due on demand. If our cash flow and capital resources do not provide the necessary liquidity, it could have
a significant negative effect on our results of operations.
In general, our primary uses of cash are providing for working capital purposes (which principally represents the purchase of inventory), servicing debt,enhancing
information technology, remodeling existing stores, financing construction of new stores and paying expenses, such as payroll costs and rental expense, to operate
our stores. Our working capital needs follow a seasonal pattern, peaking in the third quarter of the year when inventory is purchased for the fourth quarter holiday
selling season. Our largest source of operating cash flows is cash collections from our customers. We have been able to meet our cash needs principally by using
cash on hand, cash flows from operations and borrowings under our revolving credit facilities and credit lines.
Although we believe that cash generated from operations, along with our existing cash, revolving credit facilities and credit lines will be sufficient to fund our
expected cash flow requirements and planned capital expenditures for at least the next 12 months, financial market disruption could have a negative impact on our
ability to refinance our maturing debt and available resources in the future.
As of April 29, 2017, we had approximately $446 million of debt maturities before the end of fiscal 2018, which were primarily comprised of the Incremental
secured term loan facility of $125 million and Second incremental secured term loan facility of $63 million maturing in May of 2018, and 7.375% senior notes of
$208 million maturing in October of 2018. We believe we will have the ability to refinance this debt, a portion of which may be repaid using cash on hand;
however, a number of factors including factors beyond our control could reduce or restrict our ability to refinance these debt obligations on favorable terms.
24
We continue to work with Lazard and have engaged them as our advisor to assist us in connection with a potential debt refinancing to address these upcoming
maturities.
Capital Expenditures
A component of our long-term strategy is our capital expenditure program. Our capital expenditures are primarily for enhancing our e-commerce and other
information technology and logistics systems, as well as improving existing stores and construction of new stores. Capital expenditures are funded primarily
through cash provided by operating activities, as well as available cash.
The following table presents our capital expenditures for the thirteen weeks ended April 29, 2017 and April 30, 2016:
13 Weeks Ended
April 29, April 30,
Information technology $ 16 $ 16
Store improvements 7 15
New stores 5 6
Distribution centers 4 7
Other store-related projects (1) 7 6
Total capital expenditures $ 39 $ 50
(1) Includes remodels and other store
updates.
Cash Flows
13 Weeks Ended
April 29, April 30,
Net cash used in operating activities $ (657) $ (744) $ 87
Net cash used in investing activities (40) (48) 8
Net cash provided by financing activities 428 546 (118)
Effect of exchange rate changes on Cash and cash equivalents 4 24 (20)
Net decrease during period in Cash and cash equivalents $ (265) $ (222) $ (43)
Cash Flows Used in Operating Activities

Net cash used in operating activities decreased by $87 million to $657 million for the thirteen weeks ended April 29, 2017, compared to $744 million for the
thirteen weeks ended April 30, 2016. The decrease was primarily due to a reduction in Domestic merchandise purchases and annual bonus payments, partially
offset by a decline in operating performance.
Cash Flows Used in Investing Activities

Net cash used in investing activities decreased by $8 million to $40 million for the thirteen weeks ended April 29, 2017, compared to $48 million for the thirteen
weeks ended April 30, 2016, primarily due to an $11 million decrease in capital expenditures.
Cash Flows Provided by Financing Activities

Net cash provided by financing activities decreased by $118 million to $428 million for the thirteen weeks ended April 29, 2017, compared to $546 million for the
thirteen weeks ended April 30, 2016. The decrease was primarily due to a $130 million decrease in net long-term debt borrowings primarily under our revolving
credit facilities, partially offset by a $12 million distribution to the Asia JV’s minority interest partner in fiscal 2016.
Debt
As of April 29, 2017, we had total indebtedness of $5.2 billion, of which $3.9 billion was secured indebtedness. During the thirteen weeks ended April 29, 2017,
there were no significant events that occurred with respect to our debt structure. Refer to Note 2 to our Condensed Consolidated Financial Statements entitled
“Short-term borrowings and long-term debt” for further details regarding our debt.
25
Our ability to refinance our indebtedness on favorable terms, or at all, is directly affected by global economic and financial market conditions and other economic
factors that may be outside our control. Such refinancings may include the issuance or guarantee of debt by certain of our subsidiaries, and may be accompanied
by transactions or asset transfers among certain of our subsidiaries. Any debt issued in such transactions may be issued or guaranteed by entities that are not
obligors on the debt being refinanced, and may have liens on assets that are not pledged to secure the debt being refinanced.
In addition, our ability to incur secured indebtedness (which may enable us to achieve better pricing than the incurrence of unsecured indebtedness) depends in part
on the covenants in our credit facilities and indentures and the value of our assets, which depends, in turn, on the strength of our cash flows, results of operations,
economic and market conditions and other factors.
We and our subsidiaries, as well as the Sponsors or their affiliates, may from time to time prepay, repurchase, refinance or otherwise acquire debt or debt securities
issued by us or our subsidiaries in open market transactions, tender offers, exchange offers, privately negotiated transactions or otherwise. Any such transactions,
and the amounts involved, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved
may be material. Refer to Note 8 to our Condensed Consolidated Financial Statements entitled “Related party transactions” and Note 16 to our Consolidated
Financial Statements entitled “RELATED PARTY TRANSACTIONS” in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017.
Contractual Obligations
Our contractual obligations consist mainly of payments related to Long-term debt and related interest, operating leases related to real estate used in the operation of
our business and product purchase obligations. Refer to the “Contractual Obligations” section of “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017 for details on our contractual obligations.
Critical Accounting Policies

Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses, and the related disclosures of contingent assets and liabilities as of the date of the financial statements and during the applicable periods.
We base these estimates on historical experience and on other factors that we believe are reasonable under the circumstances. Actual results may differ materially
from these estimates under different assumptions or conditions and could have a material impact on our Condensed Consolidated Financial Statements. Refer to
the Annual Report on Form 10-K for the fiscal year ended January 28, 2017 for a discussion of critical accounting policies.
Recently Adopted Accounting Pronouncements

In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-17 “Consolidation (Topic 810),
Interests Held Through Related Parties That Are Under Common Control” (“ASU 2016-17”). ASU 2016-17 changes how a single decision maker will consider its
indirect interests when performing the primary beneficiary analysis under the variable interest entity (“VIE”) model. Under previous guidance, a single decision
maker was required to consider an indirect interest held by a related party under common control in its entirety. Under ASU 2016-17, the single decision maker
will consider the indirect interest on a proportionate basis. ASU 2016-17 does not change the characteristics of a primary beneficiary in the VIE model. The
Company adopted the amendments of ASU 2016-17, effective January 29, 2017. The adoption of ASU 2016-17 did not have an impact on our Condensed
Consolidated Financial Statements.
In March 2016, the FASB issued ASU No. 2016-09 “Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment
Accounting” (“ASU 2016-09”). Under ASU 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital
(“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and the APIC pools will be
eliminated. In addition, ASU 2016-09 eliminates the requirement that excess tax benefits be realized before companies can recognize them. ASU 2016-09 also
requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU
2016-09 will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares
used to satisfy the employer’s statutory income tax withholding obligation. An employer with a statutory income tax withholding obligation will now be allowed to
withhold shares with a fair value up to the amount of taxes owed using the maximum statutory tax rate in the employee’s applicable jurisdiction(s). ASU 2016-09
requires a company to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing
activity on the statement of cash flows. Under previous practice, it was not specified how these cash flows should be classified. In addition, companies will now
have
26
to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards
expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. The Company adopted the amendments of ASU 2016-09,
effective January 29, 2017. The Company has elected to recognize forfeitures as they occur and the cumulative effect adjustment of that change in accounting
policy has a nominal impact on our Condensed Consolidated Financial Statements. The remaining provisions of ASU 2016-09 did not have a material impact on
our Condensed Consolidated Financial Statements.
In March 2016, the FASB issued ASU No. 2016-07 “Investments - Equity Method and Joint Ventures (Topic 323), Simplifying the Transition to the Equity
Method of Accounting” (“ASU 2016-07”). ASU 2016-07 eliminates the requirement that when an investment subsequently qualifies for use of the equity method
as a result of an increase in level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings
retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. This ASU requires
that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and to
adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. In addition, ASU 2016-07 requires that an
entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized gain or
loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The Company adopted the
amendments of ASU 2016-07 as of January 29, 2017 on a prospective basis. The adoption did not have an impact on our Condensed Consolidated Financial
Statements.
In March 2016, the FASB issued ASU No. 2016-06 “Derivatives and Hedging (Topic 815), Contingent Put and Call Options in Debt Instruments” (“ASU 2016-
06”). ASU 2016-06 clarifies the requirements for assessing whether contingent put or call options that can accelerate the payment of principal on debt instruments
are clearly and closely related. Under previous practice, two divergent approaches developed. Under the first approach, the assessment of whether contingent put or
call options are clearly and closely related to the debt host only requires an analysis of the four-step decision sequence of Accounting Standards Codification
(“ASC”) 815-15-25-42. Under the second approach, in addition to the four-step decision sequence of ASC 815-15-2-42, some entities evaluate whether the ability
to exercise the put or call options are triggered by the entities interest rates or credit risk. ASU 2016-06 clarifies that an entity is required to assess whether the
economic characteristics and risks of embedded put or call options are clearly and closely related to those of their debt hosts only in accordance with the four-step
decision sequence of ASC 815-15-2-42. An entity should not assess whether the event that triggers the ability to exercise a put or call option is related to interest
rates or credit risk of the entity. ASU 2016-06 does not change the existing criteria for determining when bifurcation of an embedded put or call option in a debt
instrument is required. Entities are required to apply the guidance to existing debt instruments using a modified retrospective transition method as of the period of
adoption. The Company adopted the amendments of ASU 2016-06, effective January 29, 2017. The adoption did not have an impact on our Condensed
Consolidated Financial Statements.
In March 2016, the FASB issued ASU No. 2016-05 “Derivatives and Hedging (Topic 815), Effect of Derivative Contract Novations on Existing Hedge
Accounting Relationships” (“ASU 2016-05”). ASU 2016-05 provides guidance clarifying that the novation of a derivative contract (i.e. a change in counterparty)
in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship. This ASU amends ASC 815 to clarify that
such a change does not, in and of itself, represent a termination of the original derivative instrument or a change in the critical terms of the hedge relationship. ASU
2016-05 allows the hedging relationship to continue uninterrupted if all of the other hedge accounting criteria are met, including the expectation that the hedge will
be highly effective when the creditworthiness of the new counterpart to the derivative contract is considered. Entities may adopt the guidance prospectively or use a
modified retrospective approach. The Company adopted the amendments of ASU 2016-05, effective January 29, 2017. The adoption of ASU 2016-05 did not have
an impact on our Condensed Consolidated Financial Statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q, the other reports and documents that we have filed or may in the future file with the Securities and Exchange Commission
and other publicly released materials and statements, both oral and written, that we have made or may make in the future, may contain “forward looking”
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
such disclosures are intended to be covered by the safe harbors created thereby. These forward looking statements reflect our current views with respect to, among
other things, our operations and financial performance. All statements herein or therein 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,” “project,”
“expect,” “believe,” “intend,” “foresee,” “forecast,” “will,” “may,” “outlook” or the negative version of these words or other similar words or phrases. These
statements discuss, among other things, our strategy, our “Strategic Pillars,” store openings, integration and remodeling, the development, implementation and
integration of our e-commerce business, future financial or operational performance, projected sales for
27
certain periods, same store sales from one period to another, cost savings, results of store closings and restructurings, outcome or impact of pending or threatened
litigation, domestic or international developments, amount and allocation of future capital expenditures, growth initiatives, inventory levels, cost of goods,
selection and type of merchandise, marketing positions, implementation of safety standards, access to trade credit, future financings, refinancings and debt
repayments, estimates regarding future effective tax rates, future interest payments, and other goals and targets and statements of the assumptions underlying or
relating to any such statements.
These statements are subject to risks, uncertainties and other factors, including, among others, the seasonality of our business, competition in ht e retail industry,
changes in our product distribution mix and distribution channels, general economic factors in the United States and other countries in which we conduct our
business, consumer spending patterns, birth rates, our ability to implement our strategy including implementing initiatives for season, our ability to recognize cost
savings, implementation and operation of our new e-commerce platform, marketing strategies, the availability of adequate financing, ability to repatriate cash from
our foreign operations, ability to distribute cash from our operating subsidiaries to their parent entities, access to trade credit, changes in consumer preferences,
changes in employment legislation, our dependence on key vendors for our merchandise, political and other developments associated with our international
operations, costs of goods that we sell, labor costs, transportation costs, domestic and international events affecting the delivery of toys and other products to our
stores, product safety issues including product recalls, the existence of adverse litigation, changes in laws including tax that impact our business, our substantial
level of indebtedness and related debt-service obligations, restrictions imposed by covenants in our debt agreements and other risks, uncertainties and factors set
forth under Item 1A entitled “RISK FACTORS” of our Annual Report on Form 10-K for the fiscal year ended January 28, 2017, and in our other reports and
documents filed with the Securities and Exchange Commission. In addition, we typically earn a disproportionate part of our annual operating earnings in the fourth
quarter as a result of seasonal buying patterns and these buying patterns are difficult to forecast with certainty. These factors should not be construed as exhaustive,
and should be read in conjunction with the other cautionary statements that are included in this report. We believe that all forward-looking statements are based on
reasonable assumptions when made; however, we caution that it is impossible to predict actual results or outcomes or the effects of risks, uncertainties or other
factors on anticipated results or outcomes and that, accordingly, one should not place undue reliance on these statements. Forward-looking statements speak only as
of the date they were made, and we undertake no obligation to update these statements in light of subsequent events or developments unless required by the
Securities and Exchange Commission’s rules and regulations. Actual results and outcomes may differ materially from anticipated results or outcomes discussed in
any forward-looking statement.
Item 3. Quantitative and Qualitative Disclosures About Market

Risk
There has been no significant change in our exposure to market risk during thethirteen weeks ended April 29, 2017. For a discussion of our exposure to market
risk, refer to Item 7A entitled “QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK” in our Annual Report on Form 10-K for the
fiscal year ended January 28, 2017.
Item 4. Controls and Procedures
Disclosure Controls and Procedures

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed by the issuer in the
reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the issuer’s management, including the principal executive and principal financial officer, or persons performing similar
functions, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives.
We have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the
effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this
report.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls andprocedures were
effective as of the end of the period covered by this Quarterly Report on Form 10-Q to accomplish their objectives at the reasonable assurance level.
28
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during ourfirst quarter of fiscal 2017 that have materially affected, or are reasonably likely
to materially affect, the Company’s internal control over financial reporting.
29
PART II — OTHER INFORMATION
Item 1. Legal Proceedings

We are, and in the future may be, involved in various lawsuits, claims and proceedings incident to the ordinary course of business. The results of litigation are
inherently unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of
management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range of reasonably possible losses for those
legal matters for which losses are not probable and estimable, primarily for the following reasons: (i) many of the relevant legal proceedings are in preliminary
stages, and until such proceedings develop further, there is often uncertainty regarding the relevant facts and circumstances at issue and potential liability; and (ii)
many of these proceedings involve matters of which the outcomes are inherently difficult to predict. However, based upon our historical experience with similar
matters, we do not expect that any such additional losses would be material to our consolidated financial position, results of operations or cash flows.
Item 1A. Risk Factors

As of the date of this report, there have been no material changes to the information related to Item 1A entitled “RISK FACTORS” disclosed in our Annual Report
on Form 10-K for the fiscal year ended January 28, 2017.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.
Item 3. Defaults Upon Senior

Securities
None.
Item 4. Mine Safety Disclosures

None.
Item 5. Other Information

None.
Item 6. Exhibits
See the Index to Exhibits immediately following the signature page hereto, which Index to Exhibits is incorporated herein by reference.
30
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TOYS “R” US, INC.

(Registrant)
Date: June 13, 2017 /s/ Michael J. Short

Michael J. Short
Executive Vice President – Chief Financial Officer
31
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Amended and Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of the State of Delaware on June 10, 2008
(filed as Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q, filed on June 10, 2008 and incorporated herein by reference).
3.2 Amendment No. 1 to the Amended and Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of the State of
Delaware on June 3, 2015 (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on June 12, 2015 and incorporated herein
by reference).
3.3 Amendment No. 2 to the Amended and Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of the State of
Delaware on March 22, 2016 (filed as Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended January 30, 2016,
filed on March 24, 2016 and incorporated herein by reference).
3.4 Amended and Restated By-Laws of the Registrant, dated June 10, 2008 (filed as Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q,
filed on June 10, 2008 and incorporated herein by reference).
31.1 Certification of Chief Executive Officer pursuant to Rule 13a - 14(a) and Rule 15d - 14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Rule 13a - 14(a) and Rule 15d - 14(a) of the Securities Exchange Act of 1934, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
32
Exhibit 31.1
CERTIFICATION
I, David A. Brandon, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Toys “R” Us,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: June 13, 2017
/s/ David A. Brandon

David A. Brandon
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION
I, Michael J. Short, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Toys “R” Us,
Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting, to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: June 13, 2017
/s/ Michael J. Short

Michael J. Short
Executive Vice President -
Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
Certification Pursuant To 18 U.S.C. Section 1350 By The Chief Executive Officer,
As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.
I, David A. Brandon, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1. The Quarterly Report on Form 10-Q of Toys “R” Us, Inc. (the “Company”) for the quarterly period endedApril 29, 2017 (the “Report”) fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
June 13, 2017
/s/ David A. Brandon

David A. Brandon
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Exhibit 32.2
Certification Pursuant To 18 U.S.C. Section 1350 By The Chief Financial Officer,
As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.
I, Michael J. Short, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1. The Quarterly Report on Form 10-Q of Toys “R” Us, Inc. (the “Company”) for the quarterly period endedApril 29, 2017 (the “Report”) fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m); and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
June 13, 2017
/s/ Michael J. Short

Michael J. Short
Executive Vice President -
Chief Financial Officer
(Principal Financial Officer)

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Toys "R" Us, Inc.: United States Securities and Exchange Commission FORM 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Commission file number 1-11609

TOYS “R” US, INC.

One Geoffrey Way Wayne, New Jersey 07470

Large accelerated filer ¨ Accelerated filer ¨

Emerging growth company ¨

TOYS “R” US, INC. AND SUBSIDIARIES

April 29, January 28, April 30,

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

See Notes to the Condensed Consolidated Financial Statements.

See Notes to the Condensed Consolidated Financial Statements.

See Notes to the Condensed Consolidated Financial Statements.

See Notes to the Condensed Consolidated Financial Statements.

Toys “R” Us, Inc. Stockholders

Balance, January 28, 2017 49 $ — $ 72 $ (1,124) $ (240) $ (1,292) $ — $ (1,292)

See Notes to the Condensed Consolidated Financial Statements.

April 29, January 28, April 30,

3. Derivative instruments and hedging activities

Interest Rate Contracts

Foreign Exchange Contracts

Reclassifications from Accumulated other comprehensive loss - Interest Rate Contracts — —

4. Fair value measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Other Financial Instruments

(1) Consists primarily of non-product related

April 29, January 28, April 30,

7. Litigation and legal proceedings

8. Related party transactions

Sponsor Advisory Agreement

10. Accumulated other comprehensive loss

Foreign currency Unrealized gain Accumulated

11. Recent accounting pronouncements

First quarter 2017 financial highlights:

Same Store Sales

Percentage of Net Sales by Product Category

(1) Consists primarily of non-product related

Store Count by Segment

Domestic International Toys “R” Us - Consolidated

Excluded from store count:

Net Loss Attributable to Toys “R” Us, Inc.

Selling, General and Administrative Expenses

(1) Primarily consists of credit card

Depreciation and Amortization

Other Income, Net

• impairment of long-lived assets;

Income Tax Expense (Benefit)

Non-GAAP Financial Measure - Adjusted EBITDA

Cash Flows Used in Operating Activities

Cash Flows Used in Investing Activities

Cash Flows Provided by Financing Activities

Critical Accounting Policies

Recently Adopted Accounting Pronouncements

Item 3. Quantitative and Qualitative Disclosures About Market

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Item 1. Legal Proceedings

Item 1A. Risk Factors