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.                                                     



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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: October 30, 1999                             
|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                                                                                                                                                       
|                                                                                                                                                                           
|(Exact name of registrant as specified in its charter)                                                                                                                     

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

|                                                                                  
|----------------------------------------------------------------------------------
|Robinson Plaza Three, Suite 400, Pittsburgh, Pennsylvania 15205                   
|                                                                                  
|(Address of principal executive offices)
(Zip Code)                               
|                                                                                  
|(412) 787-4100                                                                    
|                                                                                  
|(Registrants telephone number, including area code)                               
|                                                                                  
|Not Applicable                                                                    
|                                                                                  
|(Former name, former address and former fiscal year, if changed since last report)

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 October 30, 1999 and
January 30, 1999

Condensed Consolidated Statements of Income for the three months and
nine months ended October 30, 1999 and October 31, 1998

Condensed Consolidated Statements of Cash Flows for the nine months
ended October 30, 1999 and October 31, 1998

Notes to Condensed Consolidated Financial Statements





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##### Table of Contents



Iron Age Corporation
Condensed Consolidated Balance Sheets

|                                               |                                                                             |   |                        |        |            |   |         |        |  
|---------------------------------------------- | --------------------------------------------------------------------------- | - | ---------------------- | ------ | ---------- | - | ------- | ------ | -
|                                               |                                                                             |   | October 30             |        | January 30
|                                               |                                                                             |   | 1999                   |        | 1999      
|                                               |                                                                             |   |                        |        |           
|                                               |                                                                             |   | (unaudited)           
|                                               |                                                                             |   | (Dollars in Thousands)
|Assets                                        
|                                              
|                                              
|                                              
|                                              
|Current assets:                               
|                                              
|                                              
|                                              
|                                              
|                                               | Cash and cash equivalents                                                   |   | $                      | 164    |            |   | $       | 508    |  
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts receivable, net                                                    |   |                        | 17,406 |            |   |         | 17,455 |  
|                                              
|                                              
|                                              
|                                              
|                                               | Inventories (Note 2)                                                        |   |                        | 36,020 |            |   |         | 36,681 |  
|                                              
|                                              
|                                              
|                                              
|                                               | Prepaid expenses                                                            |   |                        | 710    |            |   |         | 4,433  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Deferred income taxes                                                       |   |                        | 865    |            |   |         | 861    |  
|                                               |                                                                             |   |                        |        |            |   |         |       
|Total current assets                           |                                                                             |   | 55,165                 |        |            |   | 59,938  |       
|                                              
|                                              
|                                              
|                                              
|Notes receivable and other assets              |                                                                             |   | 1,304                  |        |            |   | 431     |       
|                                              
|                                              
|                                              
|                                              
|Property and equipment, net                    |                                                                             |   | 10,326                 |        |            |   | 11,008  |       
|                                              
|                                              
|                                              
|                                              
|Intangible assets, net                         |                                                                             |   | 104,029                |        |            |   | 107,851 |       
|                                               |                                                                             |   |                        |        |            |   |         |       
|Total assets                                   |                                                                             | $ | 170,824                |        |            | $ | 179,228 |       
|                                               |                                                                             |   |                        |        |            |   |         |       
|Liabilities and stockholders equity          
|                                              
|                                              
|                                              
|                                              
|Current liabilities:                          
|                                              
|                                              
|                                              
|                                              
|                                               | Current maturities of long-term debt                                        |   | $                      | 516    |            |   | $       | 544    |  
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts payable                                                            |   |                        | 2,240  |            |   |         | 3,307  |  
|                                              
|                                              
|                                              
|                                              
|                                               | Accrued expenses                                                            |   |                        | 8,908  |            |   |         | 8,134  |  
|                                               |                                                                             |   |                        |        |            |   |         |       
|Total current liabilities                      |                                                                             |   | 11,664                 |        |            |   | 11,985  |       
|                                              
|                                              
|                                              
|                                              
|Long-term debt, less current maturities        |                                                                             |   | 108,629                |        |            |   | 123,130 |       
|                                              
|                                              
|                                              
|                                              
|Accrued pension liability                      |                                                                             |   | 431                    |        |            |   | 516     |       
|                                              
|                                              
|                                              
|                                              
|Deferred income taxes                          |                                                                             |   | 5,621                  |        |            |   | 5,728   |       
|                                               |                                                                             |   |                        |        |            |   |         |       
|Total liabilities                              |                                                                             |   | 126,345                |        |            |   | 141,359 |       
|                                              
|                                              
|                                              
|                                              
|Commitments and contingencies                  |                                                                             |   |                       |        |            |   |        |       
|                                              
|                                              
|                                              
|                                              
|Subscribed redeemable preferred stock (Note 4) |                                                                             |   | 5,064                  |        |            |   |        |       
|                                              
|                                              
|                                              
|                                              
|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                                                         |   |                        | (4,912 | )          |   |         | (6,412 | )
|                                              
|                                              
|                                              
|                                              
|                                               | Other comprehensive loss                                                    |   |                        | (140   | )          |   |         | (186   | )
|                                               |                                                                             |   |                        |        |            |   |         |       
|Total stockholders equity                     |                                                                             |   | 39,415                 |        |            |   | 37,869  |       
|                                               |                                                                             |   |                        |        |            |   |         |       
|Total liabilities and stockholders equity     |                                                                             | $ | 170,824                |        |            | $ | 179,228 |       
|                                               |                                                                             |   |                        |        |            |   |         |       

See accompanying notes.

3



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##### Table of Contents



Iron Age Corporation
Condensed Consolidated Statements of Income (Unaudited)

|                                                         |  |                    |        |                   |  |                        |        |            |  |   |        |   |  |   |        |  
|-------------------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---------------------- | ------ | ---------- |  | - | ------ | - |  | - | ------ | -
|                                                         |  | Three months ended |        | Nine months ended
|                                                         |  |                    |        |                  
|                                                         |  | October 30         |        | October 31        |  | October 30             |        | October 31
|                                                         |  | 1999               |        | 1998              |  | 1999                   |        | 1998      
|                                                         |  |                    |        |                   |  |                        |        |           
|                                                         |  |                    |        |                   |  | (Dollars in Thousands)
|Net sales                                                |  | $                  | 29,641 |                   |  | $                      | 32,592 |            |  | $ | 91,026 |   |  | $ | 93,871 |  
|                                                        
|                                                        
|                                                        
|                                                        
|Cost of sales                                            |  |                    | 14,635 |                   |  |                        | 17,070 |            |  |   | 45,151 |   |  |   | 47,918 |  
|                                                         |  |                    |        |                   |  |                        |        |            |  |   |        |   |  |   |        |  
|Gross profit                                             |  |                    | 15,006 |                   |  |                        | 15,522 |            |  |   | 45,875 |   |  |   | 45,953 |  
|                                                        
|                                                        
|                                                        
|                                                        
|Selling, general and administrative                      |  |                    | 10,474 |                   |  |                        | 11,320 |            |  |   | 31,555 |   |  |   | 35,399 |  
|                                                        
|                                                        
|                                                        
|                                                        
|Depreciation                                             |  |                    | 472    |                   |  |                        | 454    |            |  |   | 1,391  |   |  |   | 1,304  |  
|                                                        
|                                                        
|                                                        
|                                                        
|Amortization of intangible assets                        |  |                    | 908    |                   |  |                        | 879    |            |  |   | 2,709  |   |  |   | 2,603  |  
|                                                         |  |                    |        |                   |  |                        |        |            |  |   |        |   |  |   |        |  
|Operating income                                         |  |                    | 3,152  |                   |  |                        | 2,869  |            |  |   | 10,220 |   |  |   | 6,647  |  
|                                                        
|                                                        
|                                                        
|                                                        
|Gain on divestiture (Note 6)                             |  |                    |       |                   |  |                        | 1,686  |            |  |   |       |   |  |   | 1,686  |  
|                                                        
|                                                        
|                                                        
|                                                        
|Interest expense                                         |  |                    | 2,829  |                   |  |                        | 3,161  |            |  |   | 9,333  |   |  |   | 9,147  |  
|                                                         |  |                    |        |                   |  |                        |        |            |  |   |        |   |  |   |        |  
|Income (loss) before income taxes and extraordinary item |  |                    | 323    |                   |  |                        | 1,394  |            |  |   | 887    |   |  |   | (814   | )
|                                                        
|                                                        
|                                                        
|                                                        
|Income tax provision                                     |  |                    | 343    |                   |  |                        | 868    |            |  |   | 1,064  |   |  |   | 471    |  
|                                                         |  |                    |        |                   |  |                        |        |            |  |   |        |   |  |   |        |  
|(Loss) income before extraordinary item                  |  |                    | (20    | )                 |  |                        | 526    |            |  |   | (177   | ) |  |   | (1,285 | )
|                                                        
|                                                        
|                                                        
|                                                        
|Extraordinary gain (loss), net of tax effect (Note 3)    |  |                    | 880    |                   |  |                        |       |            |  |   | 1,804  |   |  |   | (4,015 | )
|                                                         |  |                    |        |                   |  |                        |        |            |  |   |        |   |  |   |        |  
|Net income (loss)                                        |  | $                  | 860    |                   |  | $                      | 526    |            |  | $ | 1,627  |   |  | $ | (5,300 | )
|                                                         |  |                    |        |                   |  |                        |        |            |  |   |        |   |  |   |        |  

See accompanying notes.

4



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##### Table of Contents



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

|                                                                                                   |                                                              |                     |         |                        |        |                   |          |       |        |  
|-------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------- | ------- | ---------------------- | ------ | ----------------- | -------- | ----- | ------ | -
|                                                                                                   |                                                              |                     |         | Nine months ended      |        | Nine months ended
|                                                                                                   |                                                              |                     |         | October 30             |        | October 31       
|                                                                                                   |                                                              |                     |         | 1999                   |        | 1998             
|                                                                                                   |                                                              |                     |         |                        |        |                  
|                                                                                                   |                                                              |                     |         | (Dollars in Thousands)
|Operating activities                                                                              
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Net income (loss)                                                                                  |                                                              | $                   | 1,627   |                        |        | $                 | (5,300   | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Extraordinary item, net of tax                               |                     |         | (1,804                 | )      |                   |          | 4,015 |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Depreciation and amortization                                |                     |         | 4,462                  |        |                   |          | 4,251 |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Amortization of deferred financing fees included in interest |                     |         | 644                    |        |                   |          | 360   |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Provision for losses on accounts receivable                  |                     |         | 89                     |        |                   |          | 94    |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Deferred income taxes                                        |                     |         | (111                   | )      |                   |          | (231  | )     
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Changes in operating assets and liabilities:                                                      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                                              | Accounts receivable |         |                        | (40    | )                 |          |       | (1,195 | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                                              | Inventories         |         |                        | 661    |                   |          |       | 1,944  |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                                              | Prepaid expenses    |         |                        | 2,626  |                   |          |       | 295    |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                                              | Other assets        |         |                        | (218   | )                 |          |       | (537   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                                              | Accounts payable    |         |                        | (1,067 | )                 |          |       | (665   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                                              | Accrued expenses    |         |                        | 578    |                   |          |       | 2,003  |  
|                                                                                                   |                                                              |                     |         |                        |        |                   |          |      
|Net cash provided by operating activities                                                          |                                                              |                     | 7,447   |                        |        |                   | 5,034    |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Investing activities                                                                              
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Net cash used in business acquisitions                                                             |                                                              |                     |        |                        |        |                   | (5,240   | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Capitalization of internal-use software costs                                                      |                                                              |                     | (830    | )                      |        |                   |         |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Purchases of property and equipment                                                                |                                                              |                     | (1,071  | )                      |        |                   | (1,671   | )    
|                                                                                                   |                                                              |                     |         |                        |        |                   |          |      
|Net cash used in investing activities                                                              |                                                              |                     | (1,901  | )                      |        |                   | (6,911   | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Financing activities                                                                              
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Borrowing under revolving credit agreement                                                         |                                                              |                     | 18,050  |                        |        |                   | 40,150   |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Proceeds from senior subordinated notes                                                            |                                                              |                     |        |                        |        |                   | 100,000  |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Issuance of redeemable preferred stock subscriptions                                               |                                                              |                     | 4,938   |                        |        |                   |         |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Contribution by Holdings                                                                           |                                                              |                     |        |                        |        |                   | 6,380    |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Principal payment on debt                                                                          |                                                              |                     | (28,485 | )                      |        |                   | (121,323 | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Payment of financing costs                                                                         |                                                              |                     | (187    | )                      |        |                   | (5,269   | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Call premium on early extinguishment of old subordinated notes                                     |                                                              |                     |        |                        |        |                   | (1,562   | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Redemption of Preferred Stock, including
Cumulative unpaid dividends                               |                                                              |                     |        |                        |        |                   | (17,664  | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Principal payments on capital leases                                                               |                                                              |                     | (252    | )                      |        |                   | (85      | )    
|                                                                                                   |                                                              |                     |         |                        |        |                   |          |      
|Net cash (used in) provided by financing activities                                                |                                                              |                     | (5,936  | )                      |        |                   | 627      |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Effect of exchange rate changes on cash and cash equivalents                                       |                                                              |                     | 46      |                        |        |                   | (212     | )    
|                                                                                                   |                                                              |                     |         |                        |        |                   |          |      
|Decrease in cash and cash equivalents                                                              |                                                              |                     | (344    | )                      |        |                   | (1,462   | )    
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Cash and cash equivalents at beginning of period                                                   |                                                              |                     | 508     |                        |        |                   | 2,060    |      
|                                                                                                   |                                                              |                     |         |                        |        |                   |          |      
|Cash and cash equivalents at end of period                                                         |                                                              | $                   | 164     |                        |        | $                 | 598      |      
|                                                                                                   |                                                              |                     |         |                        |        |                   |          |      

See accompanying notes.

5



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##### Table of Contents



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

October 30, 1999

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 nine month period
ended October 30, 1999 are not necessarily indicative of the results that may
be expected for the fiscal year ended January 29, 2000. 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 30, 1999.

2. Inventory

|                                      |                 |   |            |        |            |   |        |        | 
|------------------------------------- | --------------- | - | ---------- | ------ | ---------- | - | ------ | ------ | 
|                                      |                 |   | October 30 |        | January 30
|                                      |                 |   | 1999       |        | 1999      
|                                      |                 |   |            |        |           
|Inventories consist of the following:
|                                     
|                                     
|                                     
|                                     
|                                      | Raw materials   |   | $          | 1,985  |            |   | $      | 2,328  | 
|                                     
|                                     
|                                     
|                                     
|                                      | Work-in-process |   |            | 673    |            |   |        | 815    | 
|                                     
|                                     
|                                     
|                                     
|                                      | Finished goods  |   |            | 33,362 |            |   |        | 33,538 | 
|                                      |                 |   |            |        |            |   |        |       
|                                      |                 | $ | 36,020     |        |            | $ | 36,681 |       
|                                      |                 |   |            |        |            |   |        |       

3. Extraordinary Gain

On September 22, 1999, the Company repurchased $9.0 million in principal amount
of its 9 7/8% Senior Subordinated Notes due 2008 (the Senior Subordinated
Notes) for $7.13 million. The Company recorded an extraordinary gain of $0.88
million, net of unamortized deferred financing costs of $0.35 million and
income taxes of $0.64 million.

On July 20, 1999, the Company repurchased $9.64 million in principal amount of
its Senior Subordinated Notes for $7.66 million. The Company recorded an
extraordinary gain of $0.92 million, net of unamortized deferred financing
costs of $0.38 million and income taxes of $0.67 million.

6



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##### Table of Contents



4. Subscribed Redeemable Preferred Stock

In connection with the repurchase of the Senior Subordinated Notes as described
in Note 3, on July 20, 1999 the Company borrowed $5.1 million under its new
credit facility (the New Credit Facility) and Iron Age Holdings Corporation
(Holdings), the sole stockholder of the Company, made an equity contribution
of $2.563 million, which was funded by a $2.563 million equity contribution from Holdings
majority stockholder, Fenway Partners Capital Fund, L.P (Fenway) and on
September 22, 1999, the Company borrowed $4.7 million under the New Credit
Facility and Holdings made an equity contribution of
$2.375 million, which was funded by a
$2.375 million equity contribution from Fenway. Fenway will be issued an
aggregate of 1,000 shares of Series B Preferred Stock of Holdings (the Series
B Preferred) for its equity contribution. The Series B Preferred will have a
price per share of $4,938 and will have a per share annual dividend amount
equal to $953.97, which dividends shall accrue from August 21, 1999 and shall
be payable in-kind, semi-annually in arrears on February 21 and August 21,
beginning February 21, 2000. The Series B Preferred will be junior to
outstanding Series A Preferred Stock, if any, and senior to the Common Stock in
dividends and liquidation. On liquidation, the Series B Preferred shall
receive all accrued and unpaid dividends, payable as additional shares of
Series B Preferred. All oustanding and accrued shares of Series B Preferred
will have a per share liquidation preference equal to $4,938 plus an
Additional Amount, which is defined as $2,044,324.70 divided by the total
number of outstanding and accrued shares of Series B Preferred as of the event
of liquidation. The Series B Preferred will be redeemable upon a Change of
Control or a Public Offering, as such terms are defined in the indenture
governing the Senior Subordinated Notes, at a redemption price equal to the
amount that would be paid to the Series B Preferred in the event of a
liquidation.

5. Comprehensive Income (Loss)

|                                            |  |                    |     |                   |  |             |     |             |  |   |       |  |  |   |        |  
|------------------------------------------- |  | ------------------ | --- | ----------------- |  | ----------- | --- | ----------- |  | - | ----- |  |  | - | ------ | -
|                                            |  | Three Months Ended |     | Nine Months Ended
|                                            |  |                    |     |                  
|                                            |  | October 30,        |     | October 31,       |  | October 30, |     | October 31,
|                                            |  | 1999               |     | 1998              |  | 1999        |     | 1998       
|                                            |  |                    |     |                   |  |             |     |            
|Net income (loss)                           |  | $                  | 860 |                   |  | $           | 526 |             |  | $ | 1,627 |  |  | $ | (5,300 | )
|                                           
|                                           
|                                           
|                                           
|Foreign currency translation gains (losses) |  |                    | 17  |                   |  |             | (96 | )           |  |   | 46    |  |  |   | (212   | )
|                                            |  |                    |     |                   |  |             |     |             |  |   |       |  |  |   |        |  
|Total comprehensive income (loss)           |  | $                  | 877 |                   |  | $           | 430 |             |  | $ | 1,673 |  |  | $ | (5,512 | )
|                                            |  |                    |     |                   |  |             |     |             |  |   |       |  |  |   |        |  

6. Divestiture

On May 25, 1999, the Company sold the assets (primarily inventory) of its
safety and medical products line with a carrying value of approximately $0.4
million to Stratford Safety Products, Inc. for $0.5 million. The sale resulted
in a gain of $0.085 million, which was reflected as a reduction of goodwill
that was recorded in connection with the acquisition of Safety Supplies
and Service Co., Inc. The Companys net income from the safety and medical
products line was not material from the date of the acquisition to the date of
sale.

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On September 9, 1998, the Company announced the sale of the Dunhamtrademark
and related trademarks with no carrying value to New Balance Athletic Shoe,
Inc. and New Balance Trading Company, Ltd. (New Balance), effective August
31, 1998, for $2.0 million and recorded a gain of $1.7 million, net of certain
transaction costs (the Dunham Sale). Dunham wholesale sales were $3.1
million in fiscal 1999, consisting of Dunham sales of $1.3 million prior to the
Dunham Sale, sales of on-hand inventory to New Balance for approximately $0.6
million in conjunction with the Dunham Sale and sales of Dunham products of
$1.2 million to New Balance after the Dunham Sale. In conjunction with the
Dunham Sale, the Companys manufacturing subsidiary, Falcon Shoe Mfg. Co.
(Falcon), agreed to manufacture for New Balance certain products which New
Balance will continue to sell under the Dunhambrand name pursuant to a two
year supply agreement with New Balance. The supply agreement does not contain
a minimum purchase quantity and prices under the supply agreement are based
upon the volume purchased annually by New Balance.

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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 October 30,
1999, and the Companys audited consolidated financial statements and Annual
Report on Form 10-K for the fiscal year ended January 30, 1999.

September 1999 Transaction

On September 22, 1999, the Company repurchased $9.0 million in principal amount
of the Senior Subordinated Notes for $7.13 million. The purchase price was
funded by $4.7 million of borrowings under the New Credit Facility and a $2.375
million equity contribution from Holdings, which was funded by a
$2.375 million equity contribution from
Holdings majority stockholder, Fenway, for which Fenway will receive Series B
Preferred. The Company recorded an extraordinary gain of $0.88 million, net of
unamortized deferred financing costs of $0.35 million, and income taxes of
$0.64 million. Following the repurchase, such principal amount of the Senior
Subordinated Notes was retired. The transaction described in this paragraph is
referred to herein as the September 1999 Transaction. The Company may, under
favorable market conditions, repurchase additional Senior Subordinated Notes.

July 1999 Transaction

On July 20, 1999, the Company repurchased $9.64 million in principal amount of
the Senior Subordinated Notes for $7.66 million. The purchase price was funded
by $5.1 million of borrowings under the New Credit Facility and a $2.563
million equity contribution from Holdings, which was funded by a
$2.563 million equity contribution from
Holdings majority stockholder, Fenway, for which Fenway will receive Series B
Preferred. The Company recorded an extraordinary gain of $0.92 million, net of
unamortized deferred financing costs of $0.38 million, and income taxes of
$0.67 million. Following the repurchase, such principal amount of the Senior
Subordinated Notes was retired. The transaction described in this paragraph is
referred to herein as the July 1999 Transaction. The Company may, under
favorable market conditions, repurchase additional Senior Subordinated Notes.

Acquisitions and Capital Restructuring

On February 26, 1997, Fenway, together with certain other investors, in
partnership with certain members of management, acquired all of the outstanding
stock of the predecessor to Holdings for an aggregate purchase price of $143.6
million (the Fenway Acquisition). Concurrent with the Fenway Acquisition,
(i) Holdings and the Company entered into a syndicated senior bank loan
facility (the Old Credit Facility), (ii) the Company issued its 12.5 % Senior
Subordinated Notes due 2006 (the Old Subordinated Notes) in the amount of
$14.55 million (net of a $0.45 million discount), (iii) Holdings issued 1,500 shares of Series A Preferred Stock (the
Series A Preferred) for an aggregate consideration of $14.9 million, (iv)
Holdings issued 88,625 shares of Common Stock for an aggregate consideration of
approximately $32.2 million, (v) Holdings issued warrants to acquire
approximately 7,000 shares of Common Stock of Holdings at an exercise price of
$185.52 per share for an aggregate consideration of $0.1 million, and (vi)
management rolled over certain options to acquire approximately 6,000 shares of
the predecessor company at an exercise price of $62 per share into options to
acquire approximately 11,500 shares of Common Stock of Holdings at an exercise
price of $36.36 per share and were granted additional options to acquire shares
of Common Stock of Holdings at an exercise price of $363.60 per share. The
total fair value of the exchanged options was recognized as a capital
contribution to Holdings because the exchanged options represented a portion of
the purchase price for Holdings. The Fenway Acquisition was accounted for by
the purchase method and the purchase price has been allocated to the Companys
assets and liabilities based on fair market value. The Fenway Acquisition
resulted in goodwill of approximately $84.1 million, which is being amortized
over 40 years. The exercise price of the options which were rolled over by
management is approximately $36 per share and represents the difference between
the fair market value of Holdings Common Stock at the date of grant and the
total fair value of the exchanged options which was recognized as a capital
contribution to Holdings of approximately $3,772,700, or approximately $328 per
share.

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The Company acquired Knapp Shoes, Inc. (Knapp) on March 14, 1997 (the
Knapp Acquisition). As part of the Knapp Acquisition, Holdings contributed
an additional $4.0 million of common equity. The Knapp Acquisition was
accounted for under the purchase method for business combinations and,
accordingly, the results of operations for Knapp are included in the Companys
financial statements only from the date of the Knapp Acquisition.

On April 24, 1998, (i) Holdings consummated the sale of the Discount
Notes, its 12 1/8% Senior Discount Notes due 2009, in an aggregate principal
amount at maturity of $45.14 million, in a transaction exempt from the
registration requirements of the Securities Act, (ii) the Company issued the
Senior Subordinated Notes in an aggregate principal amount of $100 million in a
transaction exempt from the registration requirements of the Securities Act,
and (iii) Holdings and the Company entered into the New Credit Facility, which,
as amended, provides for a $61.6 million senior secured credit facility
consisting of a $30.0 million revolving working capital facility and a $31.6
million revolving acquisition facility. Holdings and the Company used excess
cash and net proceeds from the Discount Notes, the Senior Subordinated Notes
and the New Credit Facility to repay the Old Credit Facility and the Old
Subordinated Notes, to make compensation payments to certain members of
management and to pay a dividend to Holdings to allow Holdings to redeem the
Series A Preferred. The transactions described in this paragraph are
collectively referred to herein as the April 1998 Transactions.

On October 21, 1998, the Company consummated an exchange offer of Senior
Subordinated Notes registered under the Securities Act of 1933, as amended.
The Senior Subordinated Notes and the notes exchanged therefor are referred to
as the Senior Subordinated Notes.

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In April 1998, the Company, through its subsidiary IA Vision Acquisition Co.,
acquired the stock of Safety Supplies & Service Company, Inc. and acquired
certain assets and assumed certain liabilities of Safety Depot Ltd., ACT
Safety, Inc. and J Mars-Knapp Shoes (the First Quarter 1998 Acquisitions).
The combined purchase price for the First Quarter 1998 Acquisitions was
approximately $4.64 million, including transaction costs of approximately $0.15
million. In addition, on July 7, 1998, the Company acquired certain assets of
Work-Saf, Inc. for approximately $0.75 million (the Second Quarter 1998
Acquisition). The First Quarter 1998 Acquisitions and the Second Quarter 1998
Acquisition have been accounted for using the purchase method of accounting for
business combinations, and accordingly, (i) the results of operations for each
of the acquired companies are included in the Companys financial statements
only from the date of the respective acquisitions and (ii) the purchase price
has been allocated to the Companys assets and liabilities based upon fair
market value. The First Quarter 1998 Acquisitions and the Second Quarter 1998
Acquisition resulted in goodwill of approximately $2.8 million, which is being
amortized over 40 years.

Divestitures

On May 25, 1999, the Company sold its safety and medical products line to
Stratford Safety Products, Inc. for $0.5 million. The sale resulted in a gain
of $0.085 million, which was reflected as a reduction of goodwill that was
recorded in connection with the acquisition of Safety Supplies & Service Co.,
Inc.

Effective August 31, 1998, the Company sold the Dunhamtrademark and related
trademarks with no carrying value to New Balance Athletic Shoe, Inc. (New
Balance) for $2.0 million and recorded a gain of $1.7 million (the Dunham
Sale). Dunham wholesale sales were $3.1 million in fiscal 1999, consisting of
Dunham sales of $1.3 million prior to the Dunham Sale, sales of on-hand
inventory to New Balance for approximately $0.6 million in conjunction with the
Dunham Sale and sales of Dunham products of $1.2 million to New Balance after
the Dunham Sale. In conjunction with the Dunham Sale, the Companys
subsidiary, Falcon Shoe Mfg. Co. (Falcon), agreed to manufacture for New
Balance certain products which New Balance will continue to sell under the
Dunhambrand name pursuant to a two year supply agreement with New Balance.

Results of Operations

Three Months ended October 30, 1999 compared to
Three Months ended October 31, 1998

Net Salesfor the three months ended October 30, 1999 (third quarter 2000)
were $29.6 million compared to $32.6 million for the comparable three month
period ended October 31, 1998 (third quarter 1999), a decrease of $3.0 million, or 9.2%. The decrease in net sales
was primarily attributable to decreased sales of $0.8 million, or 2.5%, related
to the Dunham Sale, including the sale in third quarter 1999 of approximately $0.6 million of on-hand
inventory to New Balance in conjunction with the Dunham Sale and a decrease of
$0.8 million, or 2.5%, related to decreased sales to the
Companys other wholesale customers. The decrease in net sales
was also attributable to a decrease of $0.4 million, or 1.2%, related
to the sale of the Companys safety and medical products business line in May
1999 and decreased sales of $0.3 million, or 0.9%, related to redundant and
non-performing store closings. The Company also experienced a $0.7 million, or
2.2%, decrease in net sales in the primary footwear distribution business that
was primarily related to a decrease of $0.2 million, or 0.6%, due to a
hurricane along the eastern seaboard in September 1999 that forced cancellation
of scheduled customer appointments. A general reduced demand in the Companys
primary footwear distribution business also contributed to decreased sales of
$0.5 million, or 1.5%.

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Gross Profitfor third quarter 2000 was $15.0 million compared to $15.5 million
for third quarter 1999, a decrease of $0.5 million, or 3.2%. 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 third quarter 2000
increased to 50.6%, an increase of 3.0% from the third quarter 1999.
Approximately 0.2% of the increase in the gross profit percentage is related to
the decrease in the LIFO inventory provision. The remainder of the increase is
generally attributable to improved gross profit margins in the Companys
primary footwear distribution business and the sale in May 1999
of the lower gross margin safety and medical business products line.

Selling, General and Administrative Expensesfor third quarter 2000 were $10.5
million compared to $11.3 million for third quarter 1999, a decrease of $0.8
million, or 7.1%, due primarily to the effect of cost containment initiatives
which included the consolidation of the Knapp division into the Companys
primary footwear distribution business, redundant and non-performing store
closings and the sale of the Companys safety and medical products line.

Operating Incomefor third quarter 2000 was $3.2 million, or 10.8% of net
sales, compared to $2.9 million, or 8.9% of net sales, for third quarter 1999.
The increase was primarily attributable to the decrease in selling, general and
administrative expenses as discussed above.

Interest Expensefor third quarter 2000 was $2.8 million compared to $3.2
million for third quarter 1999, a decrease of $0.4 million, or 12.5%. The
decrease in interest expense was primarily attributable to decreased
indebtedness of the Company related to the repurchase of a portion of the
Senior Subordinated Notes in the July 1999 Transaction and the September 1999
Transaction.

Income Tax Expensefor third quarter 2000 was an income tax expense of $0.3
million compared to an income tax expense of $0.9 million for third quarter
1999. Income tax expense for third quarter 2000 and income tax expense for
third quarter 1999 differ from that of the statutory income tax rate due
primarily to nondeductible goodwill amortization.

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Extraordinary Itemfor third quarter 2000 was an extraordinary gain of $0.88
million, net of a $0.64 million tax expense, due to the repurchase, at a
discount, and subsequent retirement of a portion of the Senior Subordinated
Notes in the September 1999 Transaction.

Nine Months ended October 30, 1999 compared to
Nine Months ended October 31, 1998

Net Salesfor the nine months ended October 30, 1999 (first three quarters
2000) were $91.0 million compared to $93.9 million for the comparable nine
month period ended October 31, 1998 (first three quarters 1999), a decrease
of $2.9 million, or 3.1%. The decrease in net sales was primarily related to
decreased sales of $0.6 million, or 0.6%, related to the Dunham
Sale, including the sale in first three quarters 1999 of
approximately $0.6 million of on-hand inventory to New Balance in
conjunction with the Dunham Sale and a decrease of $1.6 million, or 1.7%,
related to decreased sales to the Companys other wholesale
customers. The decrease in net sales was also attributable to a decrease of $0.5 million, or 0.5%, related to the sale of the
Companys safety and medical products business line in May 1999 and a $0.6
million, or 0.6%, decrease in net sales related to redundant and non-performing
store closings. The decrease in net sales was partially offset by increased
sales of $0.4 million, or 0.4%, relating to the Companys vision products
business line.

Gross Profitfor first three quarters 2000 was $45.9 million compared to $46.0
million for first three quarters 1999, a decrease of $0.1 million, or 0.2%. 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 three
quarters 2000 increased to 50.4%, an increase of 1.4% from first three quarters
1999. Approximately 0.4% of the increase in the gross profit percentage is
related to the decrease in the LIFO inventory provision. The remainder of the
increase is generally attributable to improved gross profit margins in the
Companys primary footwear distribution business and the sale in
May 1999 of the lower gross margin safety and medical
products business line.

Selling, General and Administrative Expensesfor first three quarters 2000 were
$31.6 million compared to $35.4 million for first three quarters 1999, a
decrease of $3.8 million, or 10.7%. Excluding the effect of $2.2 million of
compensation payments to certain members of management in connection with the
April 1998 Transactions in first quarter of 1999, selling, general and
administrative expenses decreased by $1.6 million, or 4.8%, due primarily to
the effect of cost containment initiatives which included the consolidation of
the Knapp division into the Companys primary footwear distribution business,
redundant and non-performing store closings and the sale of the Companys
safety and medical products line.

Operating Incomefor first three quarters 2000 was $10.2 million, or 11.2% of
net sales, compared to $6.6 million, or 7.0% of net sales, for first three
quarters 1999. The increase was primarily attributable to the decrease in
selling, general and administrative expenses as discussed above.

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Interest Expensefor first three quarters 2000 was $9.3 million compared to
$9.1 million for first three quarters 1999, an increase of $0.2 million, or
2.2%. The increase in interest expense was primarily attributable to increased
indebtedness of the Company resulting from the April 1998 Transactions. The
increase was partially offset by decreased indebtedness of the Company related
to the repurchase of a portion of the Senior Subordinated Notes in the July
1999 Transaction and the September 1999 Transaction.

Income Tax Expensefor first three quarters 2000 was an income tax expense of
$1.1 million compared to an income tax expense of $0.5 million for first three
quarters 1999. Income tax expense for first three quarters 2000 and income tax
expense for first three quarters 1999 differ from that of the statutory income
tax rate due primarily to nondeductible goodwill amortization.

As of January 30, 1999, the Company recognized a state income tax benefit of
$1.1 million from net operating loss carryforwards. The Company needs to
generate $10.0 million of state taxable income to realize this benefit. The
Company evaluates the adequacy of the valuation reserve and the realization of
the deferred tax benefit on an ongoing basis. Management believes that future
taxable income will more likely than not allow the Company to realize this
benefit.

Extraordinary Itemfor first three quarters 2000 was an extraordinary gain of
$1.8 million, net of a $1.3 million tax expense, due to the repurchase, at a
discount, and subsequent retirement of a portion of the Senior Subordinated
Notes in the July 1999 Transaction and the September 1999 Transaction.
Extraordinary item for first three quarters 1999 was an extraordinary loss of
$4.0 million, net of a $2.9 million tax benefit, due to the early
extinguishment of indebtedness resulting from the repayment of the Old
Subordinated Notes and the Old Credit Facility in the April 1998 Transactions.

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 $7.4 million for first three
quarters 2000, an increase of $2.4 million as compared to net cash provided by
operating activities of $5.0 million for first three quarters 1999. The
increase in cash from operating activities is primarily the result of improved
operating results for first three quarters 2000 and overall reductions in
working capital.

Excluding cash paid for acquisitions, the Companys investing activities
consisted of capital expenditures of $1.9 million for first three quarters 2000
and $1.7 million for first three quarters 1999. Capital expenditures for first
three quarters 2000 included capital expenditures related to the acquisition of
software for internal use and improvements in footwear and vision retail
stores, vision vans, information technology equipment and the final cost of the
Falcon and Knapp factory integration. Capital expenditures for first three quarters 1999 included $0.2
million in remaining costs related to the addition to the Companys central
distribution center building. The remaining $1.5 million in capital
expenditures was related to improvements in retail stores, shoemobiles and
equipment in the primary footwear distribution business and installing POS
(Point-of-Sale) systems in stores and trucks acquired in connection with the
First Quarter 1998 Acquisitions.

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The Company used approximately $5.9 million from financing activities for first
three quarters 2000, which consisted of net working capital repayments of
approximately $5.4 million excluding the July 1999 Transaction and the
September 1999 Transaction. The Companys financing activities in first three
quarters 2000 also included a borrowing of $5.1 million on the New Credit
Facility in July 1999 and a borrowing of $4.7 million in September 1999. The
proceeds were used to pay for a portion of the repurchase of a portion of the
Senior Subordinated Notes in the July 1999 Transaction and the September 1999
Transaction. The remaining portion of the repurchase was provided by a $4.938
million aggregate equity contribution from Holdings. The amount of such equity
contribution was provided to Holdings by a $4.938 million aggregate equity
contribution from Holdings majority stockholder, Fenway, for which Fenway will
receive Series B Preferred.

The Companys total working capital as of October 30, 1999 was $43.5 million.
At January 30, 1999, working capital was $48.0 million. The primary reason for
the decrease to working capital was a reduction in accounts receivable and
inventory and the receipt of an income tax refund related to the April 1998
Transactions.

Cash flow from operations for first three quarters 2000 was sufficient to cover
debt service requirements under the New 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 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 New 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. 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 New 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 New Credit
Facility and certain other debt. The New Credit Facility, as amended, consists
of a $31.6 million multiple draw acquisition term loan facility (the New
Acquisition Credit Facility) and $30.0 million in revolving credit loans,
letters of credit and swing line loans (the New Revolving Credit Facility).
The Companys other debt of $0.7 million consists of capital leases and other
notes. As of October 30, 1999, approximately $21.1 million of the New
Acquisition Credit Facility and approximately $6.0 million of the New Revolving
Credit Facility were outstanding. The Company has additional
borrowing availability of $10.5 million under the New Acquisition Credit
Facility and approximately $24.0 million under the New Revolving Credit
Facility. The New Acquisition Credit Facility matures in quarterly installments
from July 2001 until final payment in April 2004. The New Revolving Credit
Facility will mature in April 2004 and has no scheduled interim principal
payments.

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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 October 30, 1999, none of the Companys
Domestic Restricted Subsidiaries was a Material Subsidiary, and therefore no
Subsidiary Guaranty was in force or effect.

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Amendments to the New Credit Facility

On February 26, 1999, the New Credit Facility was amended to (i) amend the
definition of EBITDA for fiscal year 2000 for certain purposes of the New
Credit Facility, (ii) add as a condition to drawing on the New Acquisition
Credit Facility prior to April 2000 certain required interest coverage ratios
and leverage ratios, (iii) amend required interest coverage ratios applicable
to fiscal year 2000, and (iv) add to the financial covenants applicable to
fiscal year 2000 certain required senior coverage ratios.

On June 23, 1999, the New Credit Facility was amended to (i) permit the use of
up to $13,300,000 of the New Acquisition Credit Facility to repurchase Senior
Subordinated Notes at or below par value; provided that no more than two-thirds
of the purchase price of such Senior Subordinated Notes comes from borrowings
under the New Acquisition Credit Facility; (ii) amend the definition of Fixed
Charge Coverage Ratio to eliminate the tax effect of any permitted repurchases
of the Senior Subordinated Notes; (iii) add as a permitted use of proceeds of
the New Acquisition Credit Facility the permitted repurchases of the Senior
Subordinated Notes; (iv) reduce the borrowing base availability under the New
Revolving Credit Facility by $3,000,000 from the time the Company first borrows
under the New Acquisition Credit Facility to repurchase Senior Subordinated
Notes until the lenders consent to terminate such restriction on availability;
(v) amend the required interest coverage ratios applicable to fiscal year 2000;
and (vi) amend the required senior leverage ratios applicable to fiscal year
2000.

Year 2000 Issue

Many existing computer programs use only two digits, rather than four, to
represent a year. The Year 2000 issue arises because date-sensitive software
or hardware written or developed in this manner may recognize a date using 00
as the year 1900 rather than the year 2000. This could potentially result in
system failures or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.

The Company classifies its response to the Year 2000 Issue into five phases:
inventory, assessment, renovation, validation and implementation. Inventory is
the process in which all electronic/computer components are defined for all
systems (information technology (IT) and non-information technology
(non-IT)). Assessment is the process in which all components are classified
as either compliant or non-compliant. Renovation is the process in which a
system is upgraded, replaced or retired. Validation is the process in which
compliant systems are tested within the Companys infrastructure to validate
that either the initial compliant assessment is correct or the upgrade or
replacement from the renovation phase is compliant with the Companys
infrastructure. Implementation is the process in which a compliant system is
installed into the Companys production environment and is used to support
business operations.

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The Company has completed the inventory, assessment, renovation and validation
of its IT systems, and implemented these systems in March 1999. In the ordinary
course of business, the Company upgraded the applications software covering the
main integrated system. As of October 30, 1999, the Company had expended
approximately $50,000 and has a total expected cost of $65,000 to replace,
renovate, validate and implement software to address the Year 2000 Issue. This
cost is being funded out of operating cash flow with the entire amount being
capitalized as new hardware and software, in accordance with EITF 96-14.

The Companys inventory and assessment of its non-IT systems (including
telephone, heating/air-conditioning, electricity and security systems) was
completed by December 31, 1998. This is being followed by any required
renovation in calendar year 1999. The Company is using internal resources to
address the Year 2000 Issue of its non-IT systems and has not incurred
significant, separately identifiable costs through October 30, 1999 but does
expect to incur additional costs of approximately $20,000 in order to upgrade
its non-IT systems. All validation and implementation of these non-IT systems
is expected to be completed by the end of December 1999. This cost is being
funded out of operating cash flow with the entire amount being capitalized as
new hardware and software.

The costs of the systems implementation and Year 2000 modifications are based
upon managements best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, and other factors. However, there can be no guarantee that these
estimates will be achieved and actual results could differ materially from
those anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes,
and similar uncertainties. As of October 30, 1999, the cost of bringing the
Companys IT and non-IT systems into Year 2000 compliance is not expected to
have a material effect on the Companys financial condition or results of
operations.

In addition to reviewing its internal systems, the Company has polled its major
footwear and other vendors to determine whether they are Year 2000 compliant or
to identify any potential issues. As a result of the correspondence,
management has no reason to believe that the Companys major footwear and other
vendors will not be Year 2000 compliant. If the Companys customers and
vendors do not achieve Year 2000 compliance before the end of 1999, the Company
may experience a variety of problems which may have a material adverse effect
on the Company. To the extent such vendors are not Year 2000 compliant by the
end of 1999, such vendors may fail to deliver ordered materials and products to
the Company and may fail to bill the Company properly and promptly.
Consequently, the Company may experience delays in sourcing product to send to
its customers. The Company plans to address potential problems with its vendors
by identifying and arranging for alternate sources of supply. Due to the
nature of its product, the Company does not believe it has any exposure to
contingencies related to the Year 2000 Issue for the products it has sold.

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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 permits early adoption as of the beginning of any fiscal quarter
after its issuance. The Company expects to adopt the new Statement effective
with the first fiscal quarter of fiscal year 2002. The Statement will require
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 does not anticipate
that the adoption of this Statement will have a significant effect on its
results of operations or financial position.

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 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.

There have been no material changes in the Companys exposure to market risk
since January 30, 1999.







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*   |  | Iron Age Certificate of Incorporation, as amended.                                                                                                      
|      
|      
|      
|      
|3.2*   |  | Iron Age By-laws.                                                                                                                                       
|      
|      
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|      
|4.1*   |  | Indenture dated as of April 24, 1998.                                                                                                                   
|      
|      
|      
|      
|10.1*  |  | Credit Agreement dated as of April 24, 1998.                                                                                                            
|      
|      
|      
|      
|10.2*  |  | Security Agreement dated April 24, 1998.                                                                                                                
|      
|      
|      
|      
|10.3*  |  | Intellectual Property Security Agreement April 24, 1998.                                                                                                
|      
|      
|      
|      
|10.4*  |  | Canadian Security Agreement dated April 24, 1998.                                                                                                       
|      
|      
|      
|      
|10.5*  |  | Mortgage, Assignment of Leases and Rents, Fixture Filing, Security
Agreement and Financing Statement
dated February 26, 1997, as amended April 24, 1998.
|      
|      
|      
|      
|10.6*  |  | Intercompany Subordination Agreement dated April 24, 1998.                                                                                              
|      
|      
|      
|      
|10.7*  |  | Subsidiary Guaranty dated April 24, 1998.                                                                                                               
|      
|      
|      
|      
|10.8*  |  | Iron Age Trademark License Agreement with W.L. Gore & Associates, Inc. dated August 15, 1994.                                                           
|      
|      
|      
|      
|10.9*  |  | Falcon Trademark License Agreement with W.L. Gore & Associates, inc. dated July 25, 1994.                                                               
|      
|      
|      
|      
|10.10* |  | Falcon Manufacturing Certification Agreement with W.L. Gore & Associates, Inc. dated July 25, 1994.                                                     
|      
|      
|      
|      
|10.11* |  | General Services Administration Contract effective July 26, 1994, as modified May 24, 1995.                                                             
|      
|      
|      
|      
|10.12* |  | Amended and Restated Management Agreement dated as of February 26, 1997.                                                                                
|      
|      
|      
|      
|10.13* |  | Stockholders Agreement dated as of February 26, 1997.                                                                                                   
|      
|      
|      
|      
|10.14* |  | Amendment No. 1 to Stockholders Agreement dated as of March 25, 1997.                                                                                   
|      
|      
|      
|      
|10.15* |  | American Home Assurance Company Joinder to the Stockholders Agreement dated as of March 25, 1997.                                                       
|      
|      
|      
|      
|10.16* |  | Banque Nationale de Paris Joinder to the Stockholders Agreement dated as of March 25, 1997.                                                             
|      
|      
|      
|      
|10.17* |  | Stock Option Plan dated February 26, 1997.                                                                                                              
|      
|      
|      
|      
|10.18* |  | Securities Purchase Agreement dated February 26, 1997.                                                                                                  
|      
|      
|      
|      
|10.19* |  | Stock Purchase Agreement dated as of December 26, 1996.                                                                                                 
|      
|      
|      
|      
|10.20* |  | Amendment No. 1 to the Stock Purchase Agreement dated as of February 26, 1997.                                                                          
|      
|      
|      
|      
|10.21* |  | 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* |  | Jerusalem, New York Lease Agreement dated December 9, 1992, as amended January 1, 1994, as amended April 1997.                                          
|      
|      
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|      
|10.23* |  | Jerusalem, New York Lease Agreement dated June 20, 1997, as amended January 9, 1998.                                                                    
|      
|      
|      
|      
|10.24* |  | Lewiston, Maine Lease Agreement dated January 14, 1994.                                                                                                 
|      
|      
|      
|      
|10.25* |  | Lewiston, Maine Lease Agreement dated November 30, 1990, as amended June 8, 1994.                                                                       
|      
|      
|      
|      
|10.26* |  | Ontario, Canada Lease Agreement dated June 11, 1991, as renewed November 23, 1995.                                                                      

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|         |  |                                                                                                             
|-------- |  | ------------------------------------------------------------------------------------------------------------
|        
|        
|        
|        
|10.27*   |  | Jensen Employment Agreement dated February 26, 1997.                                                        
|        
|        
|        
|        
|10.28*   |  | Mills Employment Agreement dated November 20, 1995.                                                         
|        
|        
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|        
|10.29*   |  | McDonough Employment Agreement dated November 20, 1995.                                                     
|        
|        
|        
|        
|10.30*   |  | Johanson Employment Agreement dated August 1, 1994.                                                         
|        
|        
|        
|        
|10.31*   |  | Johanson Non-Competition Agreement dated August 1, 1994.                                                    
|        
|        
|        
|        
|10.32**  |  | Taaffe Severance Agrement dated January 13, 1999.                                                           
|        
|        
|        
|        
|10.33**  |  | Taaffe Agreement and General Release dated January 13, 1999.                                                
|        
|        
|        
|        
|10.34**  |  | Letter Waiver to Banque Nationale de Paris Credit Agreement dated August 28, 1998.                          
|        
|        
|        
|        
|10.35**  |  | Amendment No. 2 and Waiver to Banque Nationale de Paris Credit Agreement dated February 26, 1999.           
|        
|        
|        
|        
|10.36**  |  | Election to reduce Acquisition Commitment of Banque Nationale de Paris Credit Agreement dated March 5, 1999.
|        
|        
|        
|        
|10.37*** |  | Amendment No. 3 to Banque Nationale de Paris Credit Agreement dated June 23, 1999.                          
|        
|        
|        
|        
|27.1     |  | Financial Data Schedules.                                                                                   



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|*   |  | Incorporated by reference to the similarly numbered exhibit in the Companys Registration Statement on Form S-4, No. 333-57011, filed June 17, 1998.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|**  |  | Incorporated by reference to the similarly numbered exhibit in the Companys Annual Report on Form 10-K, filed April 30, 1999.                      
|   
|   
|   
|   
|*** |  | Incorporated by reference to the similarly numbered exhibit in the Companys Quarterly Report on Form 10-Q, filed September 14, 1999.               

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the third quarter ended October
30, 1999.

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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                                                                                                                                      
|                        
|Dated: December 14, 1999 |  | By:  /s/Keith A. McDonough
Name: Keith A. McDonough
Title:   Executive Vice President
Chief Financial Officer
(Principal financial and
accounting officer)

22