TABLE OF CONTENTS




|                               |                                                                                                |  |  |  |  |  |  | 
|------------------------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements.                                                                 
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                               | Item 3. Quantitative and Qualitative Disclosures about Market Risk.                           
|PART II OTHER INFORMATION     
|                               | Item 1. Legal Proceedings.                                                                    
|                               | Item 2. Changes in Securities and Use of Proceeds.                                            
|                               | Item 3. Defaults upon Senior Securities.                                                      
|                               | Item 4. Submission of Matters to a Vote of Security Holders.                                  
|                               | Item 5. Other Information.                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K.                                                     
|                               | (a) Exhibit Index.                                                                            



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##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

(Mark One)

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: July 28, 2001

OR

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

For the transition period from: _______ to _______

Commission file number: 333-57011



Iron Age Corporation


|                                                           |  |                                        
|---------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                   |  | 25-1376723                             
|                                                           |  |                                        
|(State or other jurisdiction
incorporation or organization |  | (I.R.S. Employer
Identification Number)



Robinson Plaza Three, Suite 400, Pittsburgh, Pennsylvania 15205




(412) 787-4100




Not Applicable.


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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ] Not Applicable.

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date. Not Applicable.





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##### Table of Contents






PART 1  FINANCIAL INFORMATION




Item 1. Financial Statements.



| |                                                         
| | --------------------------------------------------------
| | The following financial statements are presented herein:



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | Condensed Consolidated Balance Sheets as of July 28, 2001 and
January 27, 2001                                              
|
| | Condensed Consolidated Statements of Income (Loss) for the three months
and six months ended July 28, 2001 and July 29, 2000
|
| | Condensed Consolidated Statements of Cash Flows for the six months
ended July 28, 2001 and July 29, 2000                    
|
| | Notes to Condensed Consolidated Financial Statements                                                                        

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##### Table of Contents



Iron Age Corporation
Condensed Consolidated Balance Sheets

|                                           |                                                                                   |   |                        |        |            |   |         |        |  
|------------------------------------------ | --------------------------------------------------------------------------------- | - | ---------------------- | ------ | ---------- | - | ------- | ------ | -
|                                           |                                                                                   |   | July 28                |        | January 27
|                                           |                                                                                   |   | 2001                   |        | 2001      
|                                           |                                                                                   |   |                        |        |           
|                                           |                                                                                   |   | (unaudited)           
|                                           |                                                                                   |   | (Dollars in Thousands)
|Assets                                    
|                                          
|                                          
|                                          
|                                          
|Current assets:                           
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                         |   | $                      | 91     |            |   | $       | 82     |  
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts receivable, net                                                          |   |                        | 14,896 |            |   |         | 16,960 |  
|                                          
|                                          
|                                          
|                                          
|                                           | Inventories (Note 2)                                                              |   |                        | 35,882 |            |   |         | 33,452 |  
|                                          
|                                          
|                                          
|                                          
|                                           | Prepaid expenses                                                                  |   |                        | 2,802  |            |   |         | 2,386  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Deferred income taxes                                                             |   |                        | 837    |            |   |         | 839    |  
|                                           |                                                                                   |   |                        |        |            |   |         |       
|Total current assets                       |                                                                                   |   | 54,508                 |        |            |   | 53,719  |       
|                                          
|                                          
|                                          
|                                          
|Other noncurrent assets                    |                                                                                   |   | 4,687                  |        |            |   | 3,656   |       
|                                          
|                                          
|                                          
|                                          
|Property and equipment, net                |                                                                                   |   | 9,912                  |        |            |   | 10,210  |       
|                                          
|                                          
|                                          
|                                          
|Intangible assets, net                     |                                                                                   |   | 96,788                 |        |            |   | 98,662  |       
|                                           |                                                                                   |   |                        |        |            |   |         |       
|Total assets                               |                                                                                   | $ | 165,895                |        |            | $ | 166,247 |       
|                                           |                                                                                   |   |                        |        |            |   |         |       
|Liabilities and stockholders equity      
|                                          
|                                          
|                                          
|                                          
|Current liabilities:                      
|                                          
|                                          
|                                          
|                                          
|                                           | Current maturities of long-term debt                                              |   | $                      | 6,735  |            |   | $       | 5,194  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable                                                                  |   |                        | 5,705  |            |   |         | 3,027  |  
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued expenses                                                                  |   |                        | 4,885  |            |   |         | 6,555  |  
|                                           |                                                                                   |   |                        |        |            |   |         |       
|Total current liabilities                  |                                                                                   |   | 17,325                 |        |            |   | 14,776  |       
|                                          
|                                          
|                                          
|                                          
|Long-term debt, less current maturities    |                                                                                   |   | 90,650                 |        |            |   | 93,272  |       
|                                          
|                                          
|                                          
|                                          
|Other noncurrent liabilities               |                                                                                   |   | 356                    |        |            |   | 380     |       
|                                          
|                                          
|                                          
|                                          
|Deferred income taxes                      |                                                                                   |   | 6,463                  |        |            |   | 5,777   |       
|                                           |                                                                                   |   |                        |        |            |   |         |       
|Total liabilities                          |                                                                                   |   | 114,794                |        |            |   | 114,205 |       
|                                          
|                                          
|                                          
|                                          
|Commitments and contingencies              |                                                                                   |   |                       |        |            |   |        |       
|                                          
|                                          
|                                          
|                                          
|Series B redeemable preferred stock        |                                                                                   |   | 7,241                  |        |            |   | 6,647   |       
|                                          
|                                          
|                                          
|                                          
|Series C redeemable preferred stock        |                                                                                   |   | 5,797                  |        |            |   | 5,152   |       
|                                          
|                                          
|                                          
|                                          
|Stockholders equity:                     
|                                          
|                                          
|                                          
|                                          
|                                           | Common stock, $1 par value; 1,000 shares
authorized,       issued and outstanding |   |                        | 1      |            |   |         | 1      |  
|                                          
|                                          
|                                          
|                                          
|                                           | Additional paid-in capital                                                        |   |                        | 44,466 |            |   |         | 44,466 |  
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated deficit                                                               |   |                        | (6,151 | )          |   |         | (4,003 | )
|                                          
|                                          
|                                          
|                                          
|                                           | Other comprehensive loss                                                          |   |                        | (253   | )          |   |         | (221   | )
|                                           |                                                                                   |   |                        |        |            |   |         |       
|Total stockholders equity                 |                                                                                   |   | 38,063                 |        |            |   | 40,243  |       
|                                           |                                                                                   |   |                        |        |            |   |         |       
|Total liabilities and stockholders equity |                                                                                   | $ | 165,895                |        |            | $ | 166,247 |       
|                                           |                                                                                   |   |                        |        |            |   |         |       

See accompanying notes.

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Iron Age Corporation
Condensed Consolidated Statements of Income (Loss) (Unaudited)

|                                    |  |                    |                  |         |  |                        |        |         |  |   |        |   |  |   |        | 
|----------------------------------- |  | ------------------ | ---------------- | ------- |  | ---------------------- | ------ | ------- |  | - | ------ | - |  | - | ------ | 
|                                    |  | Three months
ended | Six months ended
|                                    |  |                    |                  |        
|                                    |  | July 28            |                  | July 29 |  | July 28                |        | July 29
|                                    |  | 2001               |                  | 2000    |  | 2001                   |        | 2000   
|                                    |  |                    |                  |         |  |                        |        |        
|                                    |  |                    |                  |         |  | (Dollars in Thousands)
|Net sales                           |  | $                  | 25,512           |         |  | $                      | 28,976 |         |  | $ | 55,523 |   |  | $ | 61,101 | 
|                                   
|                                   
|                                   
|                                   
|Cost of sales                       |  |                    | 12,487           |         |  |                        | 14,024 |         |  |   | 26,868 |   |  |   | 29,664 | 
|                                    |  |                    |                  |         |  |                        |        |         |  |   |        |   |  |   |        | 
|Gross profit                        |  |                    | 13,025           |         |  |                        | 14,952 |         |  |   | 28,655 |   |  |   | 31,437 | 
|                                   
|                                   
|                                   
|                                   
|Selling, general and administrative |  |                    | 9,973            |         |  |                        | 10,709 |         |  |   | 20,869 |   |  |   | 21,656 | 
|                                   
|                                   
|                                   
|                                   
|Depreciation                        |  |                    | 643              |         |  |                        | 396    |         |  |   | 1,065  |   |  |   | 797    | 
|                                   
|                                   
|                                   
|                                   
|Amortization of intangible assets   |  |                    | 1,069            |         |  |                        | 986    |         |  |   | 2,114  |   |  |   | 1,956  | 
|                                    |  |                    |                  |         |  |                        |        |         |  |   |        |   |  |   |        | 
|Operating income                    |  |                    | 1,340            |         |  |                        | 2,861  |         |  |   | 4,607  |   |  |   | 7,028  | 
|                                   
|                                   
|                                   
|                                   
|Interest expense                    |  |                    | 2,184            |         |  |                        | 2,836  |         |  |   | 4,308  |   |  |   | 5,724  | 
|                                    |  |                    |                  |         |  |                        |        |         |  |   |        |   |  |   |        | 
|(Loss) income before income taxes   |  |                    | (844             | )       |  |                        | 25     |         |  |   | 299    |   |  |   | 1,304  | 
|                                   
|                                   
|                                   
|                                   
|Income tax expense                  |  |                    | 559              |         |  |                        | 262    |         |  |   | 1,208  |   |  |   | 1,052  | 
|                                    |  |                    |                  |         |  |                        |        |         |  |   |        |   |  |   |        | 
|Net (loss) income                   |  | $                  | (1,403           | )       |  | $                      | (237   | )       |  | $ | (909   | ) |  | $ | 252    | 
|                                    |  |                    |                  |         |  |                        |        |         |  |   |        |   |  |   |        | 

See accompanying notes.

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Iron Age Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)

|                                                                                         |                                                              |                              |         |                        |        |            |        |     |        |  
|---------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ---------------------------- | ------- | ---------------------- | ------ | ---------- | ------ | --- | ------ | -
|                                                                                         |                                                              |                              |         | Six months             |        | Six months
|                                                                                         |                                                              |                              |         | ended                  |        | ended     
|                                                                                         |                                                              |                              |         | July 28                |        | July 29   
|                                                                                         |                                                              |                              |         | 2001                   |        | 2000      
|                                                                                         |                                                              |                              |         |                        |        |           
|                                                                                         |                                                              |                              |         | (Dollars in Thousands)
|Operating activities                                                                    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Net (loss) income                                                                        |                                                              | $                            | (909    | )                      |        | $          | 252    |    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Adjustments to reconcile net (loss) income to net cash provided
by operating activities:
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Change in fair market value of interest rate swap                                        |                                                              |                              | (587    | )                      |        |            |       |    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Depreciation and amortization                                                            |                                                              |                              | 3,419   |                        |        |            | 2,996  |    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Amortization of deferred financing fees included in interest |                              |         | 272                    |        |            |        | 294 |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Provision for losses on accounts receivable                  |                              |         | 20                     |        |            |        | 287 |       
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Deferred income taxes                                        |                              |         | 688                    |        |            |        | (31 | )     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Changes in operating assets and liabilities:                
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                              | Accounts receivable          |         |                        | 2,044  |            |        |     | (16    | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                              | Inventories                  |         |                        | (2,430 | )          |        |     | 1,114  |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                              | Prepaid expenses             |         |                        | (416   | )          |        |     | (438   | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                              | Other assets                 |         |                        | 100    |            |        |     | (54    | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                              | Accounts payable             |         |                        | 2,678  |            |        |     | (231   | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                              | Accrued expenses             |         |                        | (1,670 | )          |        |     | (1,245 | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         |                                                              | Other noncurrent liabilities |         |                        | (24    | )          |        |     | (25    | )
|                                                                                         |                                                              |                              |         |                        |        |            |        |    
|Net cash provided by operating activities                                                |                                                              |                              | 3,185   |                        |        |            | 2,903  |    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Investing activities                                                                    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Capitalization of internal-use software costs                                            |                                                              |                              | (773    | )                      |        |            | (790   | )  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Purchases of property and equipment                                                      |                                                              |                              | (1,007  | )                      |        |            | (765   | )  
|                                                                                         |                                                              |                              |         |                        |        |            |        |    
|Net cash used in investing activities                                                    |                                                              |                              | (1,780  | )                      |        |            | (1,555 | )  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Financing activities                                                                    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Borrowings under revolving credit agreement                                              |                                                              |                              | 9,150   |                        |        |            | 7,250  |    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Principal payments on debt                                                               |                                                              |                              | (10,250 | )                      |        |            | (8,250 | )  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Payment of financing costs                                                               |                                                              |                              | (178    | )                      |        |            | (25    | )  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Principal payments on capital leases                                                     |                                                              |                              | (86     | )                      |        |            | (44    | )  
|                                                                                         |                                                              |                              |         |                        |        |            |        |    
|Net cash used in financing activities                                                    |                                                              |                              | (1,364  | )                      |        |            | (1,069 | )  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Effect of exchange rate changes on cash and cash equivalents                             |                                                              |                              | (32     | )                      |        |            | (49    | )  
|                                                                                         |                                                              |                              |         |                        |        |            |        |    
|Increase (decrease) in cash and cash equivalents                                         |                                                              |                              | 9       |                        |        |            | 230    |    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Cash and cash equivalents at beginning of period                                         |                                                              |                              | 82      |                        |        |            | 260    |    
|                                                                                         |                                                              |                              |         |                        |        |            |        |    
|Cash and cash equivalents at end of period                                               |                                                              | $                            | 91      |                        |        | $          | 490    |    
|                                                                                         |                                                              |                              |         |                        |        |            |        |    
|Supplemental schedule of noncash investing
and financing activities                     
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Dividends and accretion on preferred stock                                               |                                                              | $                            | 1,239   |                        |        | $          | 693    |    
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Transition adjustment related to the adoption of SFAS No. 133                            |                                                              |                              | 113     |                        |        |            |       |    

See accompanying notes.

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Iron Age Corporation
Notes to Condensed Consolidated
Financial Statements (Unaudited)

July 28, 2001

1. Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six month period
ended July 28, 2001 are not necessarily indicative of the results that may be
expected for the fiscal year ended January 26, 2002. For further information,
refer to Iron Age Corporations (Iron Age or the Company) consolidated
financial statements and footnotes thereto for the fiscal year ended January
27, 2001.

2. Inventories

Inventories consist of the following:

|                |  |                        |        |            |  |   |        | 
|--------------- |  | ---------------------- | ------ | ---------- |  | - | ------ | 
|                |  | July 28                |        | January 27
|                |  | 2001                   |        | 2001      
|                |  |                        |        |           
|                |  | (Dollars in Thousands)
|Raw materials   |  | $                      | 1,963  |            |  | $ | 2,116  | 
|               
|               
|               
|               
|Work-in-process |  |                        | 729    |            |  |   | 640    | 
|               
|               
|               
|               
|Finished goods  |  |                        | 33,190 |            |  |   | 30,696 | 
|                |  |                        |        |            |  |   |        | 
|                |  | $                      | 35,882 |            |  | $ | 33,452 | 
|                |  |                        |        |            |  |   |        | 

3. Derivative Financial Instrument

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS
No. 133). SFAS No. 133 requires the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If a derivative is a hedge, depending
upon the nature of the hedge, changes in the fair value of the derivative will
either be offset against the change in fair value of the hedged asset,
liability or firm commitment through earnings, or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivatives change in fair value will be immediately
recognized in earnings.

The Company has entered into an interest rate swap agreement to modify the
interest characteristics of a portion of its outstanding long-term debt. The
interest rate swap does not

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##### Table of Contents



meet the criteria for a hedging transaction as
defined in SFAS No. 133. The Company records the swap agreement on the balance
sheet at fair value and unrealized gains and losses are recognized in earnings
(interest expense) in each period. Upon adoption, the Company recorded an
asset of approximately $0.1 million representing the fair market value of its
interest rate swap agreement and an offsetting premium on its fixed rate debt.
The debt premium is being amortized to earnings over the life of the debt using
the interest method.

The interest rate swap asset was approximately $0.7 million as of July 28, 2001
and is included in other noncurrent assets. A gain of approximately $0.6
million was included in interest expense for the six months ended July 28,
2001.

4. Comprehensive (Loss) Income

|                                         |  |                    |        |                  |                        |          |      |          |  |   |      |   |  |   |     |  
|---------------------------------------- |  | ------------------ | ------ | ---------------- | ---------------------- | -------- | ---- | -------- |  | - | ---- | - |  | - | --- | -
|                                         |  | Three Months Ended |        | Six Months Ended
|                                         |  |                    |        |                 
|                                         |  | July 28,           |        | July 29,         |                        | July 28, |      | July 29,
|                                         |  | 2001               |        | 2000             |                        | 2001     |      | 2000    
|                                         |  |                    |        |                  |                        |          |      |         
|                                         |  |                    |        |                  | (Dollars in Thousands)
|Net (loss) income                        |  | $                  | (1,403 | )                |                        | $        | (237 | )        |  | $ | (909 | ) |  | $ | 252 |  
|                                        
|                                        
|                                        
|                                        
|Foreign currency translation gain (loss) |  |                    | 15     |                  |                        |          | 6    |          |  |   | (32  | ) |  |   | (49 | )
|                                         |  |                    |        |                  |                        |          |      |          |  |   |      |   |  |   |     |  
|Total comprehensive (loss) income        |  | $                  | (1,388 | )                |                        | $        | (231 | )        |  | $ | (941 | ) |  | $ | 203 |  
|                                         |  |                    |        |                  |                        |          |      |          |  |   |      |   |  |   |     |  

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##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.

General

The following discussions should be read in conjunction with the accompanying
Condensed Consolidated Financial Statements for the period ended July 28, 2001,
and the Companys audited consolidated financial statements and Annual Report
on Form 10-K for the fiscal year ended January 27, 2001.

Results of Operations

Three Months ended July 28, 2001 compared to Three Months ended July 29, 2000

Net Salesfor the three months ended July 28, 2001 (second quarter 2002) were
$25.5 million compared to $29.0 million for the comparable three month period
ended July 29, 2000 (second quarter 2001), a decrease of $3.5 million, or
12.1%. The decrease in net sales was attributable to a decrease of $0.9
million, or 3.1%, in the Companys footwear distribution business line, related
to a large customer order in second quarter 2001 and other decreases of $1.9
million, or 6.6%, in the Companys footwear distribution business line related
to a decline in the general economic environment, including plant closings and
employee layoffs that affected the Companys customers. The decrease in net
sales was also related to a decrease of $0.6 million, or 2.1%, in the Companys
branded wholesale business line due to reduced sales to the Companys primary
wholesale customer.

Gross Profitfor second quarter 2002 was $13.0 million compared to $15.0
million for second quarter 2001, a decrease of $2.0 million, or 13.3%. The
decrease in gross profit was primarily related to the decrease in net sales as
discussed above. As a percentage of net sales, gross profit for second quarter
2002 decreased to 51.1%, a decrease of 0.5% from second quarter 2001, due
primarily to a reduced gross profit percentage in the Companys manufacturing
subsidiary, relating to reduced sales and the effect of fixed manufacturing
costs in that subsidiary.

Selling, General and Administrative Expensesfor second quarter 2002 were $10.0
million compared to $10.7 million for second quarter 2001, a decrease of $0.7
million, or 6.5%, due primarily to the effect of employee related cost
reductions, including commissions, and decreases in advertising costs and bad
debts.

Operating Incomefor second quarter 2002 was $1.3 million compared to $2.9
million for second quarter 2000, a decrease of $1.6 million, or 55.2%. As a
percentage of net sales, operating income was 5.1% of net sales for second
quarter 2002 compared to 10.0% of net sales for second quarter

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2001. The decrease was primarily attributable to the decrease in gross profit partially
offset by the decrease in selling, general and administrative expenses as
discussed above.

Interest Expensefor second quarter 2002 was $2.2 million compared to $2.8
million for second quarter 2001, a decrease of $0.6 million, or 21.4%. The
decrease in interest expense primarily relates to the favorable change of $0.3
million in the fair market value of the Companys interest rate swap agreement
due to a decrease in interest rates in second quarter 2002. The decrease in
interest expense was also attributable to decreased indebtedness of the Company
related to the repurchase of a portion of its 9 7/8% Senior Subordinated Notes
due 2008 (the Senior Subordinated Notes) in October 2000 and a decrease in
interest rates in second quarter 2002 compared to second quarter 2001.

Income Tax Expensefor second quarter 2002 was an income
tax expense of $0.6
million compared to an income tax expense of $0.3 million for second quarter
2001. Second quarter 2002 and second quarter 2001 reflect the
nondeductibility of goodwill amortization. In addition, second
quarter 2002 included a charge related to the recognition of a
valuation allowance against the deferred tax benefit for state net
operating loss carryforwards. At January 27, 2001, the Company had
available state net operating loss carryforwards of approximately
$0.7 million, which expire in various years beginning in 2002
through 2019. As of second quarter 2002, the Company reviewed the
likelihood of utilizing the state net operating loss carryforwards
and determined that it is currently more likely than not that the
benefit will not be realized. The Company will continually monitor
its state tax position and may determine in the future that some or
all of the state net operating losses becomes realizable. At that
point, the valuation allowance will be reduced to reflect the net
realizable amount which will result in an increase in net income.

Six Months ended July 28, 2001 compared to Six Months ended July 29, 2000

Net Salesfor the six months ended July 28, 2001 (first half 2002) were $55.5
million compared to $61.1 million for the comparable six month period ended
July 29, 2000 (first half 2001), a decrease of $5.6 million, or 9.2%. The
decrease in net sales was attributable to a decrease of $0.9 million, or 1.5%,
in the Companys footwear distribution business line, related to a large
customer order in first half 2001 and other decreases in the Companys footwear
distribution business line of $3.5 million, or 5.7%, related to a decline in
the general economic environment, including plant closings and employee layoffs
that affected the Companys customers. The decrease in net sales was also
related to a decrease of $0.8 million, or 1.3%, in the Companys branded
wholesale business line due to reduced sales to the Companys primary wholesale
customer. In addition, net sales to non-affiliated customers in the Companys
manufacturing facility decrease by $0.3 million, or 0.5%, for first half 2002
compared to first half 2001.

Gross Profitfor first half 2002 was $28.7 million compared to $31.4 million
for first half 2001, a decrease of $2.7 million, or 8.6%. The decrease in gross
profit was primarily related to the decrease in net sales as discussed above.
As a percentage of net sales, gross profit for first half 2002 increased to
51.6%, an increase of 0.1% from first half 2001. The increase is generally
attributable to improved gross profit margins in the Companys footwear
distribution business line.

Selling, General and Administrative Expensesfor first half 2002 were $20.9
million compared to $21.7 million for first half 2001, a decrease of $0.8
million, or 3.7%, due primarily to the effect of employee related cost
reductions, including commissions, and decreases in advertising costs and bad
debts.

Operating Incomefor first half 2002 was $4.6 million compared to $7.0 million
for first half 2001, a decrease of $2.4 million, or 34.3%. As a percentage of
net sales, operating income was 8.3% of net sales for first half 2002 compared
to 11.5% of net sales for first half 2001. The decrease was

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primarily attributable to the decrease in gross profit and was partially offset by the
decrease in selling, general and administrative expenses as discussed above.

Interest Expensefor first half 2002 was $4.3 million compared to $5.7 million
for first half 2001, a decrease of $1.4 million, or 24.6%. The decrease in
interest expense relates to the favorable change of $0.6 million in the fair
market value of the Companys interest rate swap agreement due to decreases in
interest rates in first half 2002. The decrease in interest expense was also
attributable to decreased indebtedness of the Company related to the repurchase
of a portion of the Senior Subordinated Notes in October 2000 and a decrease in
interest rates in first half 2002 compared to first half 2001.




Income Tax Expensefor first half 2002 was an income
tax expense of $1.2 million compared to an income tax expense of
$1.1 million for first half 2001. First half 2002 and first half 2001 reflect the
nondeductibility of goodwill amortization. In addition, first half
2002 included a charge related to the recognition of a valuation
allowance against the deferred tax benefit for state net operating
loss carryforwards. At January 27, 2001, the Company had available
state net operating loss carryforwards of approximately
$0.7 million, which expire in various years beginning in 2002
through 2019. For first half 2002, the Company reviewed the likelihood
of utilizing the state net operating loss carryforwards and
determined that it is currently more likely than not that the benefit
will not be realized. The Company will continually monitor its state
tax position and may determine in the future that some or all of the
state net operating losses becomes realizable. At that point, the
valuation allowance will be reduced to reflect the net realizable
amount which will result in an increase in net income.




Liquidity and Capital Resources

The Companys primary cash needs are working capital, capital expenditures and
debt service. The Company anticipates that it may use cash in the future to
finance acquisitions. The Company has financed cash requirements primarily
through internally generated cash flow and funds borrowed under credit
facilities.

Net cash provided by operating activities was $3.2 million for first half 2002,
an increase of $0.3 million as compared to net cash provided by operating
activities of $2.9 million in first half 2001.

The Companys investing activities for first half 2002 consisted of capital
expenditures of approximately $1.0 million for improvements in footwear and
vision retail stores, shoemobiles, vision vans and equipment and approximately
$0.8 million for the acquisition of software for internal use. Capital
expenditures of approximately $1.6 million for first half 2001 included capital
expenditures of approximately $0.8 million for improvements in footwear and
vision retail stores, shoemobiles and equipment and approximately $0.8 million
for the acquisition of software for internal use.

The Company used approximately $1.4 million for financing activities for first
half 2002, which primarily consisted of net working capital payments. The
Company used approximately $1.1 million for financing activities for first half
2001 which primarily consisted of net working capital payments.

The Companys total working capital as of July 28, 2001 was $37.2 million. At
January 27, 2001, working capital was $38.9 million.

Cash flow from operations for first half 2002 was sufficient to cover debt
service requirements under a $51.1 million, as amended, syndicated senior
secured bank credit facility (the Bank Credit Facility). The Companys
ability to make scheduled payments of principal, or to pay the interest or
premium (if any) on, or to refinance, its indebtedness, or to fund planned
capital expenditures will

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depend on its future performance, which, to a certain
extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond its control. Based upon the
current level of operations, management believes that cash flow from operations
and available cash, together with available borrowings under the Bank Credit
Facility, will be adequate to meet the Companys anticipated future
requirements for working capital, budgeted capital expenditures and scheduled
payments of principal and interest on its indebtedness for the next several
years, including approximately $6.7 million that will become due within the
next twelve month period. There can be no assurance that the Companys
business will generate sufficient cash flow from operations or that future
borrowing will be available under the Bank Credit Facility in an amount
sufficient to enable the Company to service its indebtedness, including the
Senior Subordinated Notes, or to make capital expenditures.

The Companys debt consists of the Senior Subordinated Notes, the Bank Credit
Facility and certain other debt. The Bank Credit Facility, as amended,
consists of a $21.1 million acquisition term loan facility (the Acquisition
Credit Facility) and $30.0 million in revolving credit loans, letters of
credit and swing line loans (the Revolving Credit Facility). The Companys
other debt of $0.8 million consists of capital leases and other notes. As of
July 28, 2001, approximately $21.1 million of the Acquisition Credit Facility
and approximately $10.4 million of the Revolving Credit Facility were
outstanding. The Company has no additional borrowing availability under the
Acquisition Credit Facility and approximately $19.6 million under the Revolving
Credit Facility. The Acquisition Credit Facility matures in quarterly
installments from July 2001 until final payment in April 2004. The Revolving
Credit Facility will mature in April 2004 and has no scheduled interim
principal payments.

The Senior Subordinated Notes are fully and unconditionally guaranteed on an
unsecured, senior subordinated basis by each Domestic Restricted Subsidiary
that is a Material Subsidiary (as such terms are defined in the indenture for
the Senior Subordinated Notes (the Senior Subordinated Notes Indenture))
(whether currently existing, newly acquired or created). Each such subsidiary
guaranty (a Subsidiary Guaranty) will provide that the subsidiary guarantor,
as primary obligor and not merely as surety, will irrevocably and
unconditionally guarantee on an unsecured, senior subordinated basis the
performance and punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of the Company under the Senior
Subordinated Notes Indenture and the Senior Subordinated Notes, whether for
payment of principal or of interest on the Senior Subordinated Notes, expenses,
indemnification or otherwise. As of July 28, 2001, none of the Companys
Domestic Restricted Subsidiaries was a Material Subsidiary, and therefore no
Subsidiary Guaranty was in force or effect.

Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities (the
Statement). As amended by FASB Statement No. 137, Deferral of the Effective
Date of FASB Statement No. 133, the Statement is required to be adopted for all
fiscal quarters in years beginning after June 15, 2000. The Statement

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permits
early adoption as of the beginning of any fiscal quarter after its issuance.
The Company adopted the Statement effective with the first fiscal quarter of
fiscal year 2002. The Statement requires the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not
hedges must be adjusted to fair value through income. If a derivative is a
hedge, depending upon the nature of the hedge, changes in the fair value of the
derivative will either be offset against the change in fair value of the hedged
asset, liability or firm commitment through earnings, or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivatives change in fair value will be immediately
recognized in earnings.

Based upon the Companys derivative position at January 27, 2001, the Company,
upon adoption, recorded an asset of approximately $0.1 million representing the
fair market value of its interest rate swap agreement and an offsetting premium
on its fixed rate debt. Subsequent changes in the fair value of the Companys
interest rate swap agreement will be recognized immediately in earnings. The
debt premium is being amortized to earnings over the life of the debt using the
interest method.

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning
after December 15, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests in accordance with the Statements. Other intangible
assets will continue to be amortized over their useful lives.

The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of the 2003 fiscal year. The
company will perform the first of the required impairment tests of goodwill and
indefinite lived intangible assets as of January 27, 2002 and has not yet
determined what the effect of these tests will be on the earnings and financial
position of the Company. The Company has also not determined the effect that
the nonamortization provisions of the Statement will have on net income each
year after adoption.

Inflation and Changing Prices

The Companys sales and costs are subject to inflation and price fluctuations.
However, they historically have not, and in the future are not expected to
have, a material adverse effect on the Companys results of operations.

Forward Looking Statements

When used in this quarterly report, the words believes, anticipates,
expects and similar expressions are used to identify forward looking
statements. Such statements are subject to risks and uncertainties which could
cause actual results to differ materially from those projected. The Company
wishes to caution readers that the following important factors and others in
some cases have affected and in the future could affect the Companys actual
results and could cause the Companys actual results to differ materially from
those expressed in any forward statements made by the Company: (i) economic
conditions in the safety shoe market, (ii) availability of credit, (iii)
increase in interest rates, (iv) cost of raw materials, (v) inability to
maintain state-of-the-art manufacturing facilities, (vi) heightened
competition, including intensification of price and service

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competition, the
entry of new competitors and the introduction of new products by existing
competitors, (vii) inability to capitalize on opportunities presented by
industry consolidation, (viii) loss or retirement of key executives, (ix) loss
or disruption of the Companys relationships with its major suppliers,
including the Companys largest supplier in China and (x) inability to grow by
acquisition of additional safety shoe distributors or to effectively
consolidate operations of businesses acquired.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The Company is exposed to market risk primarily from changes in interest rates
and foreign exchange rates.

The following discussion of the Companys exposure to various market risks
contains forward looking statements that are subject to risks and
uncertainties. These projected results have been prepared utilizing certain
assumptions considered reasonable in the circumstances and in light of
information currently available to the Company. Nevertheless, because of the
inherent unpredictability of interest rates and foreign currency translation
rates, actual results could differ materially from those projected in such
forward looking statements.

Interest Rates

At July 28, 2001, the Company had fixed-rate debt totaling $65.8 million in
principal amount and having a fair value of $43.7 million. These instruments
bear interest at a fixed rate and, therefore, do not expose the Company to the
risk of earnings loss due to changes in market interest rates. However, the
fair value of these instruments would decrease (to the holder) by approximately
$3.6 million if interest rates were to increase by 10% from their levels at
July 28, 2001 (i.e., an increase from the weighted average interest rate of
9.9% to a weighted average interest rate of 10.9%).

The Company has entered into an interest rate swap agreement with a notional
amount of $25.0 million to reduce the exposure that adverse fluctuations in
interest rates may have on the fair market values of its fixed-rate debt,
rather than for trading purposes. The Company has not entered into any
derivative financial instruments for trading purposes. If interest rates were
to increase by 10% from their levels at July 28, 2001, the Company would incur
additional annual interest of approximately $0.2 million.

At July 28, 2001, the Company had variable-rate debt totaling $31.5 million in
principal amount and having a fair value of $31.5 million. These borrowings
are under the Bank Credit Facility. If interest rates were to increase by 10%
from their levels at July 28, 2001, the Company would incur additional annual
interest expense of approximately $0.2 million.

Foreign Exchange Rates

Information relating to the sensitivity to foreign currency exchange rate
changes is omitted as foreign exchange exposure risk has not materially changed
from that disclosed in the Companys Annual Report on Form 10-K for the year
ended January 27, 2001.

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PART II OTHER INFORMATION




Item 1. Legal Proceedings.

None.




Item 2. Changes in Securities and Use of Proceeds.

None.




Item 3. Defaults upon Senior Securities.

None.




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

None.




Item 5. Other Information.

None.




Item 6. Exhibits and Reports on Form 8-K.




(a) Exhibit Index.

|         |  |                                                                                                                                                         
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(1)   |  | Iron Age Certificate of Incorporation, as amended.                                                                                                      
|        
|        
|        
|        
|3.2(1)   |  | Iron Age By-laws.                                                                                                                                       
|        
|        
|        
|        
|4.1(1)   |  | Indenture dated as of April 24, 1998.                                                                                                                   
|        
|        
|        
|        
|10.1(1)  |  | Credit Agreement dated as of April 24, 1998.                                                                                                            
|        
|        
|        
|        
|10.2(1)  |  | Security Agreement dated April 24, 1998.                                                                                                                
|        
|        
|        
|        
|10.3(1)  |  | Intellectual Property Security Agreement dated April 24, 1998.                                                                                          
|        
|        
|        
|        
|10.4(1)  |  | Canadian Security Agreement dated April 24, 1998.                                                                                                       
|        
|        
|        
|        
|10.5(1)  |  | Mortgage, Assignment of Leases and Rents, Fixture Filing, Security
Agreement and Financing Statement dated February 26, 1997, as amended
April 24, 1998.
|        
|        
|        
|        
|10.6(1)  |  | Intercompany Subordination agreement dated April 24, 1998.                                                                                              
|        
|        
|        
|        
|10.7(1)  |  | Subsidiary Guaranty dated April 24, 1998.                                                                                                               
|        
|        
|        
|        
|10.8(1)  |  | Iron Age Trademark License Agreement with W.L Gore & Associates, Inc.
dated August 15, 1994.                                                            
|        
|        
|        
|        
|10.9(1)  |  | Falcon Trademark License Agreement with W.L. Gore & Associates, Inc. dated
July 25, 1994.                                                               
|        
|        
|        
|        
|10.10(1) |  | Falcon Manufacturing Certification Agreement with W.L Gore &
Associates, Inc. dated July 25, 1994.                                                      
|        
|        
|        
|        
|10.11(1) |  | General Services Administration Contract effective July 26, 1994, as modified
May 24, 1995.                                                             

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|         |  |                                                                                                                                               
|-------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|        
|        
|        
|        
|10.12(1) |  | Amended and Restated Management Agreement dated as of February 26, 1997.                                                                      
|        
|        
|        
|        
|10.13(1) |  | Stockholders Agreement dated as of February 26, 1997.                                                                                         
|        
|        
|        
|        
|10.14(1) |  | Amendment No. 1 to Stockholders Agreement dated as of March 25, 1997.                                                                         
|        
|        
|        
|        
|10.15(1) |  | American Home Assurance Company Joinder to the Stockholders Agreement
dated as of March 25, 1997.                                             
|        
|        
|        
|        
|10.16(1) |  | Banque Nationale de Paris Joinder to the Stockholders Agreement dated as of
March 25, 1997.                                                   
|        
|        
|        
|        
|10.17(1) |  | Stock Option Plan dated February 26, 1997.                                                                                                    
|        
|        
|        
|        
|10.18(1) |  | Securities Purchase Agreement dated February 26, 1997.                                                                                        
|        
|        
|        
|        
|10.19(1) |  | Stock Purchase Agreement dated as of December 26, 1996.                                                                                       
|        
|        
|        
|        
|10.20(1) |  | Amendment No. 1 to the Stock Purchase Agreement dated as of February 26, 1997.                                                                
|        
|        
|        
|        
|10.21(1) |  | Pittsburgh, Pennsylvania Lease Agreement dated March 1, 1993, as amended
June 2, 1994, as amended June 12, 1996, as amended December 10, 1997.
|        
|        
|        
|        
|10.22(1) |  | Jerusalem, New York Lease Agreement dated December 9, 1992, as amended
January 1, 1994, as amended April 1997.                                
|        
|        
|        
|        
|10.23(1) |  | Jerusalem, New York Lease Agreement dated June 20, 1997, as amended
January 9, 1998.                                                          
|        
|        
|        
|        
|10.24(1) |  | Lewiston, Maine Lease Agreement dated January 14, 1994.                                                                                       
|        
|        
|        
|        
|10.25(1) |  | Lewiston, Maine Lease Agreement dated November 30, 1990, as amended
June 8, 1994.                                                             
|        
|        
|        
|        
|10.26(1) |  | Ontario, Canada Lease Agreement dated June 11, 1991, as amended
November 23, 1995.                                                            
|        
|        
|        
|        
|10.27(1) |  | Jensen Employment Agreement dated February 26, 1997.                                                                                          
|        
|        
|        
|        
|10.28(1) |  | Mills Employment Agreement dated November 20, 1995.                                                                                           
|        
|        
|        
|        
|10.29(1) |  | McDonough Employment Agreement dated November 20, 1995.                                                                                       
|        
|        
|        
|        
|10.30(1) |  | Johanson Employment Agreement date August 1, 1994.                                                                                            
|        
|        
|        
|        
|10.31(1) |  | Johanson Non-Competition Agreement dated August 1, 1994.                                                                                      
|        
|        
|        
|        
|10.32(2) |  | Taaffe Severance Agreement dated January 13, 1999.                                                                                            
|        
|        
|        
|        
|10.33(2) |  | Taaffe Agreement and General Release dated January 13, 1999.                                                                                  
|        
|        
|        
|        
|10.34(2) |  | Letter Waiver to Banque Nationale de Paris Credit Agreement dated
August 28, 1998.                                                            
|        
|        
|        
|        
|10.35(2) |  | Amendment No. 2 and Waiver to Banque Nationale de Paris Credit
Agreement dated February 26, 1999.                                             
|        
|        
|        
|        
|10.36(2) |  | Election to reduce Acquisition Commitment of Banque Nationale de Paris
Credit Agreement dated March 5, 1999                                   
|        
|        
|        
|        
|10.37(3) |  | Amendment No. 3 to Banque Nationale de Paris Credit Agreement dated
June 23, 1999.                                                            
|        
|        
|        
|        
|10.38(4) |  | Amendment No. 4 to Banque Nationale de Paris Credit Agreement dated
March 17, 2000.                                                           
|        
|        
|        
|        
|10.39(4) |  | Amendment No. 1 to Stock Option Plan dated April 8, 1999.                                                                                     
|        
|        
|        
|        
|10.40(4) |  | Amendment No. 2 to Stock Option Plan dated January 29, 2000.                                                                                  
|        
|        
|        
|        
|10.41(4) |  | Johanson Consulting Agreement dated February 1, 2000.                                                                                         
|        
|        
|        
|        
|10.42(4) |  | Certificate of Designation, Preferences and Rights of the Series B
Preferred Stock of Iron Age Holdings Corporation dated December 29, 1999.  
|        
|        
|        
|        
|10.43(5) |  | Amendment No. 5 to Banque Nationale de Paris Credit Agreement dated
September 15, 2000.                                                       
|        
|        
|        
|        
|10.44(6) |  | Certificate of Designation, Preferences and Rights of the Series C
Preferred Stock of Iron Age Holdings Corporation dated December 29, 2000.  

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|         |  |                                                                                    
|-------- |  | -----------------------------------------------------------------------------------
|        
|        
|        
|        
|10.45(6) |  | Amendment No. 6 to Banque Nationale de Paris Credit Agreement dated
April 24, 2001.
|        
|        
|        
|        
|21.1(1)  |  | Subsidiaries of Iron Age.                                                          

|    |  |                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Registration Statement on Form S-4, No. 333-57009, filed June
17, 1998.
|   
|(2) |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Annual Report on Form 10-K, filed April 30, 1999.                      
|   
|(3) |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Quarterly Report on Form 10-Q, filed September 14, 1999.               
|   
|(4) |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Annual Report on Form 10-K, filed April 18, 2000.                      
|   
|(5) |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Quarterly Report on Form 10-Q, filed December 11, 2000.                
|   
|(6) |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Annual Report on Form 10-K, filed April 26, 2001.                      

| |  |                                                                                 
| |  | --------------------------------------------------------------------------------
| |  | (b) Reports on Form 8-K.                                                        
|
| |  | No reports on Form 8-K were filed during the second quarter ended July 28, 2001.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                          |  |                                                                                                                                                           | 
|------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|                          |  | IRON AGE CORPORATION                                                                                                                                     
|                         
|                          |  | By: /s/ Keith A. McDonough                                                                                                                               
|                          |  |                                                                                                                                                          
|Dated: September 11, 2001 |  | Name: Keith A. McDonough
Title: Executive Vice President
Chief Financial Officer and
Chief Operating Officer
(Principal financial and accounting officer)

-18-