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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K



|           |  |                                                                                                                                               
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|(Mark One)
|x          |  | Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended: January
25, 2003   OR         
|          
|o          |  | 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:  333-57009

Iron Age Holdings Corporation

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(Exact name of registrant as specified in its charter)


|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Delaware                                                       |  | 04-3349775                             
|                                                               |  |                                        
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification Number)

Robinson Plaza Three, Suite 400, Pittsburgh, Pennsylvania 15205

---

(Address of principal executive offices)


(412) 787-4100

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(Registrants telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:   None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part II of this Form 10-K or any amendment to this
Form 10-K.   x

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes
 o   No  x

Applicable only to registrants 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
 o   No  o
  Not Applicable.

Applicable only to corporate
registrants: As of May 12, 2003, Iron Age
Holdings Corporation had 99,991.94 shares of Common Stock issued and
outstanding.

Documents incorporated by reference: None





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TABLE OF CONTENTS



|                                  |                                                                                                                                                                                                                                                                                                                                                                                                                  |  |  |  |  |  |  | 
|--------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                  | Item 1. Business.                                                                                                                                                                                                                                                                                                                                                                                               
|                                  | Item 2. Properties.                                                                                                                                                                                                                                                                                                                                                                                             
|                                  | Item 3. Legal Proceedings.                                                                                                                                                                                                                                                                                                                                                                                      
|                                  | Item 4. Submission of Matters to a Vote of Security Holders.                                                                                                                                                                                                                                                                                                                                                    
|Part II                          
|                                  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters.                                                                                                                                                                                                                                                                                                                                  
|                                  | Item 6. Selected Financial Data.                                                                                                                                                                                                                                                                                                                                                                                
|                                  | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.                                                                                                                                                                                                                                                                                                                  
|                                  | customer in October 2001. In addition, sales decreased by $0.5 million, or 25.9% in Holdings manufacturing subsidiary, due to decreased sales to its external customers. Also, for fiscal 2003, there were no sales relating to Holdings vision products business line, which was sold in December 2001, compared to $1.2 million in net sales for fiscal 2002, or 23.5% of the overall decrease in net sales.
|                                  | Item 7A. Quantitative and Qualitative Disclosures about Market Risk.                                                                                                                                                                                                                                                                                                                                            
|                                  | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.                                                                                                                                                                                                                                                                                                                   
|Part III                         
|                                  | Item 10. Directors and Executive Officers of the Registrant.                                                                                                                                                                                                                                                                                                                                                    
|                                  | Item 11. Executive Compensation.                                                                                                                                                                                                                                                                                                                                                                                
|                                  | Item 12. Security Ownership of Certain Beneficial Owners and Management.                                                                                                                                                                                                                                                                                                                                        
|                                  | Item 13. Certain Relationships and Related Transactions.                                                                                                                                                                                                                                                                                                                                                        
|                                  | Item 14. Controls and Procedures.                                                                                                                                                                                                                                                                                                                                                                               
|Part IV                          
|                                  | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.                                                                                                                                                                                                                                                                                                                                      
|SIGNATURES                       
|CERTIFICATIONS                   
|Management Incentive Plan        
|Manadement Incentive Plan        
|Manadement Incentive Plan        
|Supplemental Indenture           
|Amendment to Loan Agreement      
|Amendment to Consulting Agreement
|CEO Certification                
|CFO Certification                



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FORM 10-K INDEX

|         |          |                                        |                                                     |  |    |    |      |  | 
|-------- | -------- | -------------------------------------- | --------------------------------------------------- |  | -- | -- | ---- |  | 
|         |          |                                        |                                                     |  |    |    | Page
|         |          |                                        |                                                     |  |    |    |     
|Part I   |          |                                        |                                                     |  |    |    | 3    | 
|         | Item 1.  |                                        | Business                                            |  |    | 3  |     
|         | Item 2.  |                                        | Properties                                          |  |    | 7  |     
|         | Item 3.  |                                        | Legal Proceedings                                   |  |    | 7  |     
|         | Item 4.  |                                        | Submission of Matters to a Vote of Security Holders |  |    | 7  |     
|        
|Part II  |          |                                        |                                                     |  |    |    | 8    | 
|         | Item 5.  |                                        | Market for Registrants Common Equity               |  |    |    |     
|         |          | and Related Stockholder Matters        |                                                     |  | 8  |   
|         | Item 6.  |                                        | Selected Financial Data                             |  |    | 8  |     
|         | Item 7.  |                                        | Managements Discussion and Analysis of Financial   |  |    |    |     
|         |          | Condition and Results of Operations    |                                                     |  | 9  |   
|         | Item 7A. |                                        | Quantitative and Qualitative Disclosures about      |  |    |    |     
|         |          | Market Risk                            |                                                     |  | 19 |   
|         | Item 8.  |                                        | Financial Statements and Supplementary Data         |  |    | 20 |     
|         | Item 9.  |                                        | Changes in and Disagreements with Accountants       |  |    |    |     
|         |          | on Accounting and Financial Disclosure |                                                     |  | 49 |   
|        
|Part III |          |                                        |                                                     |  |    |    | 50   | 
|         | Item 10. |                                        | Directors and Executive Officers of the Registrant  |  |    | 50 |     
|         | Item 11. |                                        | Executive Compensation                              |  |    | 52 |     
|         | Item 12. |                                        | Security Ownership of Certain Beneficial Owners     |  |    |    |     
|         |          | and Management                         |                                                     |  | 57 |   
|         | Item 13. |                                        | Certain Relationships and Related Transactions      |  |    | 60 |     
|         | Item 14. |                                        | Controls and Procedures                             |  |    | 61 |     
|        
|Part IV  |          |                                        |                                                     |  |    |    | 63   | 
|         | Item 15. |                                        | Exhibits, Financial Statement Schedules,            |  |    |    |     
|         |          | and Reports on Form 8-K                |                                                     |  | 63 |   

Reference in this Annual Report on Form 10-K is made to the Iron Age®,
Knapp® and Grabber® trademarks which are owned by Iron Age Holdings Corporation
or its subsidiaries.

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Part I




Item 1.  Business.

Iron Age Holdings Corporation (the Company or Holdings), together with
its wholly-owned subsidiary, Iron Age Corporation (Iron Age), is a leading
distributor of safety shoes in the United States. The Companys primary
business is the specialty distribution of safety, work and uniform shoes
primarily under the Iron Age®, Knapp® and Grabber® brand names, which comprised
82% of fiscal 2003 sales. In addition, the Company also offered safety, work
and uniform shoes under other third-party consumer brands, primarily
Timberland® andDr. Martens, which comprised 16% of sales in fiscal 2003. The
Company also distributes footwear directly to retail and wholesale customers
through its wholesale division and manufacturing subsidiary Falcon Shoe Mfg.
Co. (Falcon). The Company distributes directly to its customers over 300
styles of footwear primarily under the Iron Age, Knapp, Grabber, Timberlandand
Dr. Martensbrand names. The Iron Age, Knappand Grabberproducts and services
are marketed principally to industrial, service and government employers, many
of which require safety shoes to be worn at the workplace and provide purchase
subsidies under employer safety programs to the end-user employee.

Company History

Iron Age was founded in 1817 and has specialized in safety footwear since
the popularization of steel toe shoes during the 1940s. On February 26, 1997,
Fenway Partners Capital Fund, L.P. (Fenway), together with certain investors,
in partnership with certain members of management, formed Holdings in order to
effect the acquisition of 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 Iron Age entered
into a syndicated senior bank loan facility (the Old Credit Facility), (ii)
Iron Age issued its 12.5% Senior Subordinated Notes due 2006 (the Old
Subordinated Notes) in the amount of $14.55 million, (iii) Holdings issued
shares of Series A Preferred Stock (the Holdings Series A Preferred Stock)
for $14.9 million, (iv) Holdings issued shares of Common Stock for
approximately $32.2 million, (v) Holdings issued warrants to acquire Common
Stock of Holdings for $0.1 million, and (vi) management rolled over certain
options and were granted additional options to acquire shares of Common Stock
of Holdings.

On April 24, 1998, (i) Holdings issued its 12 1/8% Senior Discount Notes
due 2009 (the Discount Notes) in an aggregate principal amount at maturity of
$45.14 million, (ii) Iron Age issued its 9 7/8% Senior Subordinated Notes due
2008 (the Senior Subordinated Notes) in an aggregate principal amount of
$100.0 million, and (iii) Holdings and Iron Age entered into a new credit
facility (the Previous Bank Credit Facility) that, as amended, provided for a
$41.1 million senior secured credit facility consisting of a $20.0 million
revolving working capital facility (the Previous Revolving Credit Facility)
and a $21.1 million acquisition term loan (the Acquisition Term Loan).
Holdings used excess cash and net proceeds from the Discount Notes, the Senior
Subordinated Notes and the Previous Bank Credit Facility to repay the Old
Credit Facility, repay the Old Subordinated Notes and redeem the Holdings
Series A Preferred Stock. The transactions described in this paragraph are
collectively referred to herein as the April 1998 Transactions.

On September 23, 2002, Holdings, Iron Age and Falcon, entered into a $50.0
million Loan and Security Agreement (the Bank Credit Facility) with a
financial institution and another lender. The Bank Credit Facility consists of
a $38.0 million revolving credit facility (the Revolving Credit Facility),
including a $2.0 million letter of credit subfacility, and two term loans: Term
Loan A of up to an aggregate of $1.0 million and Term loan B of up to an
aggregate of $3.0 million. In addition, the Bank Credit Facility includes a
third term loan, Term Loan C, of up to an aggregate of $12.0 million. At
closing, Holdings drew the entire amount of Term Loan A, Term Loan B and Term
Loan C and approximately $14.2 million on the Revolving Credit Facility, to
refinance its Previous Bank Credit Facility of approximately $27.6 million,
including accrued interest, and to pay certain financing fees and expenses. The
transactions described in this paragraph are collectively referred to herein as
the September 2002 Transactions.

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Industry Overview

The work shoe market consists of mens and womens work, safety, uniform
and non-slip shoes and boots. In the United States, the safety shoe sector of
the work shoe market is comprised of three types of customersindustrial or
commercial, government and mass merchandising retail. End-user safety shoe
customers include workers in the primary metals, chemical and petroleum,
automotive, paper, mining, utilities, electronics, aerospace, food service,
hospitality and entertainment, pharmaceutical, biomedical, agriculture,
construction and retail and wholesale trade industries.

A significant factor influencing the demand for safety shoes is the
increasing concern regarding workplace safety that is derived from the
employers desire to reduce employee costs from on-the-job injury and to reduce
workers compensation expenses. Beginning in the 1970s, the federal government
adopted Occupational Safety and Health Administration (OSHA) regulations
establishing heightened workplace safety standards, including regulations
governing footwear. OSHA regulations established standards requiring employers
to provide their workers with workplaces free from recognized hazards that
could cause serious injury or death and requiring employees to abide by all
safety and health standards that apply to their jobs. Changes to OSHA
regulations in 1994 required employers to assess footwear related hazards and
implement a program designed to mitigate such hazards.

In order to satisfy the criteria set forth in OSHA regulations, protective
footwear must comply with standards (the ANSI Standards) established by the
American National Standards Institute (ANSI). There are six ANSI categories
for foot protection: impact and compression, metatarsal footwear, conductive
footwear, electrical hazard footwear, sole puncture resistance footwear and
electro-static dissipative footwear. These OSHA regulations, stricter
regulatory enforcement and increased consumer awareness of the regulations have
heightened the focus on safety in the workplace.

Within the service sector of the work shoe market, a growing category of
safety footwear is non-slip footwear. Uniform shoes with non-slip soles are
used increasingly by customers in the food service, hotel, gaming, cruise line
and resort industries. Fueling the demand are some of the same factors
influencing traditional safety shoe users including the increasing concern
regarding workplace safety. In addition, employers in these industries require
consistency and uniformity in the performance and appearance of their
employees footwear.

In the industrial sector of the work shoe market, sales are made primarily
between the distributor and employer, which generally maintain safety
departments that monitor compliance with overall safety requirements and
provide safety shoe purchase subsidies. Distributors of safety shoes to
industrial customers typically provide a range of services, including advice
with respect to assessment of workplace safety requirements, recommendations as
to appropriate product selection, coordination of employer safety subsidy
programs, worksite delivery and fitting of shoes and feedback and follow-up
with corporate employers. During the past 24 months, the industrial sector has
been adversely affected by the general economic downturn in the United States
and Canada, resulting in significant reductions in the industrial work force
that require safety shoes.

Government sales, which include armed forces, penal institutions, federal,
state, and local municipal employees or civilian employees, are made to two
primary purchasers: Government Services Administration(GSA) contracted
vendors and the military. GSA-contracted purchases of safety shoes include
retail sales to GSA-contracted vendors through store and shoemobile service and
catalog operations. These orders are made for a variety of purposes and
activities and involve a wide range of products. Suppliers bid for these orders
on the basis of product style and quality, distribution capability and customer
service. Sales to the military consist of price-sensitive, large-volume orders
that are designed to strict specifications and are generally bid directly by
the manufacturers. Style selection is minimal and geared towards a specific
purpose.

The retail/mass merchandiser sector includes large retail chain stores,
specialty retailers and other retail outlets. This is a source of low-end,
protective footwear, the buyers of which include workers whose employers do not
have company-sponsored programs as well as self-employed individuals,
occupational users and agricultural workers.

The Company primarily services industrial companies throughout North
America. During the past 24 months, the Companys customer base was
significantly affected by the general economic downturn, which included plant

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closings and employee layoffs. From the US Department of Labor, according to
the Bureau of Labor Statistics on Laborers, total unemployment continues to
approximate 6%. Further, unemployment in the Durable Goods Manufacturing sector
remains at approximately 7% in February 2003. The continued economic downturn
has had a significant adverse impact on the Companys results of operations.
In addition, the work shoe market is a mature industry that has experienced
limited growth in the recent past.

Sales and Distribution

Substantially all shoes sourced for distribution by the Company in the
United States, Canada and Mexico are transported to its central distribution
facility in Penn Yan, New York. From Penn Yan, the Company distributes its
product to end-users through its multi-pronged distribution network. The
Company also distributes its products through catalog operations and channels
associated with consumer brands, which include wholesale merchandising,
independent sales representatives and third-party vendors.

Mobile and Store Centers.Each mobile and store center consists of a
retail store for its products and generally one or more affiliated shoemobiles.
Each shoemobile acts as a mobile selling vehicle for the Companys products,
operating generally within a 150-mile radius of its affiliated retail store.
Through the retail store channel, the Company is able to service corporate and
individual customers generally located within a 40-mile radius of a given
store.

The Company operates its fleet of shoemobiles throughout the United
States, Canada and Mexico. Shoemobiles vary in sizetransporting from 900 to
1,600 pairs of shoesand each contains a display area and a fitting room. The
shoemobile driver/salesperson is responsible for the fitting of footwear and
processing of orders.

Catalog Direct and E-Commerce.The Company reaches both large and small
customers with its safety shoe catalogs and web site. These sectors of the
Companys business provide direct service to certain customers who are either
too small or do not require direct shoemobile service or who are remotely
located. Sales are promoted through a combination of the product catalogs, the
web site, the Companys field sales force and trade advertising.

In-Plant Stores.To add further flexibility to its distribution
capabilities, the Company offers large-volume customers an in-plant store
program, which provides the customer with a base stock of inventory and a sales
staff to manage the store on-site at the customers manufacturing facility. The
customer provides the Company with the necessary store space and all utilities.

Consumer Channels.The Company markets primarily Knappbranded products
directly to consumers through a Direct Mail and Counselor (independent sales
representatives) business unit.

Falcon Manufacturing.Through its Falcon subsidiary, the Company
manufactures private label footwear for such well known customers as Black
Diamond, Wearguard Work Clothes and Cabelas Inc.

Products

The Companys product line addresses a full range of protective footwear
applications covering all six ANSI categories and non-slip footwear in styles
for both men and women in both steel and non-metallic toe caps. Product
categories include work, athletic, hikers, metatarsal, dress/casual and rubber
footwear and consist of over 300 individual styles ranging in price from $15.00
for an inexpensive steel PVC boot to a $222.00 leather fire retardant boot. The
Companys safety footwear is manufactured in more than 300 length and width
combinations, ranging in sizes from 5 to 17. All the Companys work and safety
shoes and boots are designed, manufactured and laboratory tested to meet or
exceed applicable ANSI Standards. Through its long-standing relationship with
users of safety footwear, the Company has assembled a product line that is
widely regarded as the industrys most complete. In addition to the Iron Age
product line, the Company distributes work, service oxfords, non-slip and
high-end work and hunting boots under the brand names Knapp, Grabberand other
consumer brands.

The Company has successfully adapted its product line to meet new customer
demands and substantially

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increased the categories and types of footwear
offered. As the safety shoe market has diversified, the Company has modified
its product line, moving from the basic heavy-duty styles toward casual,
lightweight safety footwear that meet the needs of professional, light
industrial and service sector employees.

Manufacturing

Company Facilities.Work shoes are manufactured in the Falcon facility in
Lewiston, Maine, primarily for sale by the Company under the Iron Ageand Knapp
brand names. Approximately 89% of Falcons net sales are to the Company. In
addition, the Company sells work shoes manufactured at the Falcon facility
directly to third parties, including Black Diamond, Wearguard Work Clothes and
Cabelas Inc. Falcon manufactures approximately 19% of total pairs of shoes
sold by Holdings.

Outside Suppliers.As a result of its market leadership position and long
operating history, the Company has developed key supply arrangements with 35
leading footwear manufacturers in twelve countries: the United States, China,
Italy, Canada, Maylasia, Dominican Republic, United Kingdom, Thailand, Vietnam,
Myanmar, Macao and the Netherlands. Although in fiscal 2003 one supplier in
China manufactured approximately 27% of the pairs of shoes sold by the Company,
the Company does not believe that it is dependent upon any specific supplier
for its product manufacturing. In fiscal 2003, 68% of its total pairs sold were
produced by foreign suppliers, with 61% produced in China. The Company has not
experienced any material adverse effects as a result of any economic downturn
in Asia. However, the economic climate could have an adverse effect on the
Companys suppliers located in Asia. The Company believes that it could find
alternative manufacturing sources for those products it currently sources from
Asia, including its largest supplier in China, through its existing
relationships with independent third-party manufacturing facilities located
outside of Asia. However, the loss of a substantial portion of this
manufacturing capacity or the inability of Asian suppliers to provide products
on schedule or on terms satisfactory to the Company, could have a material
adverse effect on the Companys business, financial condition or results of
operations during the transition to alternative manufacturing facilities.

Transportation/Freight.The Company primarily utilizes its own trucks as
well as common carriers to deliver product orders from its Penn Yan
distribution center and Falcon manufacturing subsidiary to its mobile and store
centers.

Competition

The work shoe market is highly competitive. Management believes that
competition in the industry is based on distribution capabilities, retail
presence, brand name recognition, corporate relationships, systems, service,
product characteristics, product quality and price. The Companys major
competitors in the safety shoe sector of the work shoe industry are Lehigh
Safety Shoe, Inc., Hy-Test (a subsidiary of Wolverine World Wide, Inc.) and Red
Wing Shoe Co. According to the SATRA-World Safety Market Overviewand the
Occupational Safety &Industrial Hygiene Marketreports, annual sales in the
safety footwear market are more than $800 million. The Company sells in the
$350 million industrial sector of the safety footwear market. The Companys
market share of the industrial sector is believed to be approximately 28%.

Environmental Matters

The Companys operations, primarily manufacturing, are subject to federal,
state, local, and foreign laws and regulations relating to the storage,
handling, generation, treatment, emission, release, transportation, discharge
and disposal of certain substance and waste materials. Permits are required for
certain of the Companys manufacturing operations, and these permits are
subject to revocation, modification and renewal by issuing authorities.
Governmental authorities have the power to enforce compliance with their
regulations, and violations may result in the payment of fines or the entry of
injunctions, or both. The Company does not believe it will be required under
existing environmental laws and enforcement policies to expend amounts that
will have a material adverse effect on its results of operations or financial
condition. The requirements of such laws and enforcement policies, however,
have generally become more strict in recent years. Accordingly, the Company is
unable to predict the ultimate cost of compliance with environmental laws and
enforcement policies.

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Employees

As of January 25, 2003, Iron Age employed 754 people in sales and
distribution, manufacturing and administration. None of Iron Ages employees is
presently covered by collective bargaining agreements. Management considers its
employee relations to be good.




Item 2.  Properties.

The Companys executive offices are located in Pittsburgh, Pennsylvania.
All of the Companys properties are maintained on a regular basis and are
adequate for the Companys present requirements.

The following table identifies, as of January 25, 2003, the principal
properties utilized by the Company.

|                              |  |           |  |                          |  |            |         | 
|----------------------------- |  | --------- |  | ------------------------ |  | ---------- | ------- | 
|                              |  |           |  |                          |  | Square    
|Facility                      |  | Own/Lease |  | Location                 |  | Footage(1)
|                              |  |           |  |                          |  |           
|Corporate Headquarters        |  | Lease     |  | Pittsburgh, Pennsylvania |  |            | 20,000  | 
|Distribution Facility         |  | Own       |  | Penn Yan, New York       |  |            | 175,000 | 
|Falcon Manufacturing Facility |  | Lease     |  | Lewiston, Maine          |  |            | 120,000 | 

(1)  Square footage has been rounded up to the nearest 500 square feet.




Item 3.  Legal Proceedings.

Iron Age is a party to various legal actions arising in the ordinary
course of its business. Iron Age believes that the resolution of these legal
actions will not have a material adverse effect on Iron Ages business, results
of operations and financial condition.




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

The Company did not submit any matters during the fourth quarter of the
fiscal year covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.

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Part II




Item 5.  Market for Registrants Common Equity and Related Stockholder Matters.

As of May 12, 2003, Holdings had 200,000 authorized shares of common
stock, par value $.01, of which 99,991.94 were issued and outstanding. There
is no established public trading market for Holdings common stock. As of May
12, 2003, there were eight holders of Holdings common stock. Holdings ability
to pay dividends is limited under an indenture dated as of April 24, 1998
between Holdings and JPMorgan Chase Bank, as trustee (the Indenture).




Item 6.  Selected Financial Data.

The following table sets forth selected historical consolidated financial
data of Holdings for the five-year period ended January 25, 2003 which were
derived from audited consolidated financial statements of Holdings. The
following table should be read in conjunction with Managements Discussion and
Analysis of Financial Condition and Results of Operations and the consolidated
financial statements and accompanying notes thereto included in Item 8 of this
Annual Report on Form 10-K.

|                                                                                       |  |             |         |             |  |                        |         |             |  |             |         |      |  |   |         |      |  |   |         |        
|-------------------------------------------------------------------------------------- |  | ----------- | ------- | ----------- |  | ---------------------- | ------- | ----------- |  | ----------- | ------- | ---- |  | - | ------- | ---- |  | - | ------- | -------
|                                                                                       |  |             |         |             |  | Fiscal
Years Ending(1) |         |             |  |             |         |      |  |  
|                                                                                       |  |             |         |             |  |                        |         |             |  |             |         |      |  |  
|                                                                                       |  | January 25, |         | January 26, |  | January 27,            |         | January 29, |  | January 30,
|                                                                                       |  | 2003        |         | 2002        |  | 2001                   |         | 2000        |  | 1999       
|                                                                                       |  |             |         |             |  |                        |         |             |  |            
|Summary of Operations:                                                                 |  |             |         |             |  |                        |         |             |  |             |         |      |  |   |         |      |  |   |         |        
|Net sales                                                                              |  | $           | 100,449 |             |  | $                      | 105,517 |             |  | $           | 118,932 |      |  | $ | 120,351 |      |  | $ | 124,294 |        
|Operating income                                                                       |  | $           | 5,712   |             |  | $                      | 3,804   |             |  | $           | 12,646  |      |  | $ | 13,857  |      |  | $ | 9,019   |        
|Loss before cumulative effect
of change in accounting
principle and extraordinary
item |  | $           | (6,538  | )           |  | $                      | (7,907  | )           |  | $           | (2,516  | )    |  | $ | (2,094  | )    |  | $ | (3,273  | )      
|Net loss (2)                                                                           |  | $           | (77,968 | )(8)(9)(10) |  | $                      | (7,907  | )(7)        |  | $           | (231    | )(6) |  | $ | (290    | )(5) |  | $ | (7,288  | )(3)(4)
|Financial Position at Year End:                                                        |  |             |         |             |  |                        |         |             |  |             |         |      |  |   |         |      |  |   |         |        
|Total assets                                                                           |  | $           | 76,845  |             |  | $                      | 156,014 |             |  | $           | 166,886 |      |  | $ | 170,753 |      |  | $ | 180,032 |        
|Total debt                                                                             |  | $           | 132,039 |             |  | $                      | 131,703 |             |  | $           | 133,120 |      |  | $ | 139,988 |      |  | $ | 151,058 |        
|Holdings Series B Preferred
Stock                                                      |  | $           | 10,100  |             |  | $                      | 8,300   |             |  | $           | 6,647   |      |  | $ | 5,361   |      |  | $ |        |        
|Holdings Series C Preferred
Stock                                                      |  | $           | 8,193   |             |  | $                      | 6,545   |             |  | $           | 5,152   |      |  | $ |        |      |  | $ |        |        



---

|(1)  |  | Holdings utilizes a fiscal year of 52 or 53 weeks, ending on the last
Saturday in January. Each of Holdings fiscal years set forth herein
contained 52 weeks.                                                                                                                                  
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Includes goodwill amortization of $0, $2,297, $2,304, $2,247 and $2,218
for the fiscal years ending January 25, 2003, January 26, 2002, January
27, 2001, January 29, 2000 and January 30, 1999, respectively.                                                                                  
|    
|(3)  |  | Includes an extraordinary loss on early extinguishment of debt, net of
tax effect, of $4,015 and compensation payments to certain members of
management of Iron Age, net of tax effect, of $1,285 incurred in
connection with the April 1998 Transactions.                                      
|    
|(4)  |  | Includes a gain of $1,678 related to the sale of the Dunhamtrademark and
related trademarks on August 31, 1998.                                                                                                                                                                                 
|    
|(5)  |  | Includes an extraordinary gain of $1,804, net of tax effect of $1,310,
due to the repurchase, at a discount, of a portion of the Senior
Subordinated Notes related to the July 1999 Transaction and the September
1999 Transaction.                                                             
|    
|(6)  |  | Includes an extraordinary gain of $2,285, net of tax effect of $1,655,
due to the repurchase, at a discount, of a portion of the Senior
Subordinated Notes related to the October 2000 Transaction.                                                                                             
|    
|(7)  |  | Includes a loss of $1,860 related to the sale of the vision products
business line on December 14, 2001.                                                                                                                                                                                        
|    
|(8)  |  | Includes a loss relating to the cumulative effect of a change in
accounting principle of $77,510, net of tax effect of $1,718, due to the
impairment of goodwill, in connection with the adoption of Statement on
Financial Accounting Standards No. 142 Goodwill and Other Intangible
Assets.
|    
|(9)  |  | Includes an extraordinary gain of $6,286, net of tax effect of $1,267,
due to the repurchase, at a discount, of a portion of the Senior Discount
Notes related to the October 2002 Transaction and the November 2002
Transaction.                                                               
|    
|(10) |  | Includes an extraordinary loss of $206 net of tax effect of $138, due to
the write-off of unamortized debt issue costs related to the Previous Bank
Credit Facility, in conjunction with the closing of the Bank Credit
Facility on September 23, 2002.                                         

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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations.

The following is managements discussion and analysis of the financial
condition and results of operations of Holdings for the fiscal years ended
January 25, 2003 (fiscal 2003), January 26, 2002 (fiscal 2002) and January
27, 2001 (fiscal 2001). This discussion and analysis should be read in
conjunction with, and is qualified in its entirety by, Selected Financial
Data and the consolidated financial statements and accompanying notes thereto
included in Item 8 of this Annual Report on Form 10-K.

Overview

Holdings primary business is the specialty distribution of safety, work,
uniform and non-slip shoes directly to end users primarily under the Iron Age,
Knappand Grabberbrand names, which comprised 82% of fiscal 2003 sales. In
addition, Holdings also offered other consumer brands, primarily Timberland and
Dr. Martens, which comprised 16% of sales in fiscal 2003. Holdings also
distributes footwear directly to retail and wholesale customers through its
wholesale division and its manufacturing subsidiary Falcon. Approximately 89%
of Falcons net sales are to Holdings. Further, Falcon manufactures
approximately 19% of total pairs of shoes sold by Holdings. In addition,
Holdings began distributing prescription safety eyewear, on a limited basis, in
conjunction with the acquisition of a regional distributor in April 1998.
Holdings sold its prescription safety eyewear business line in December 2001,
as discussed below. Holdings net sales decreased by 4.8% in fiscal 2003. The
decrease in net sales was due primarily to the continued decline in the general
economic environment, which included plant closings and employee layoffs by
Holdings customers.

Certain Transactions

On November 27, 2002, Holdings purchased $3.205 million in face value of
its Discount Notes for $0.617 million. The purchase was funded by borrowings
of Iron Age under the Bank Credit Facility, which were loaned to Holdings
pursuant to the promissory note between Holdings and Iron Age. Holdings
recorded an extraordinary gain of approximately $1.96 million, net of
unamortized deferred financing costs and expenses of $0.07 million and income
taxes of $0.41 million. Following the purchase, such principal amount of the
Discount Notes were retired. The transaction described in this paragraph is
referred to as the November 2002 Transaction.

On October 11, 2002, Holdings purchased $6.801 million in face value of
its Discount Notes for $1.037 million. The purchase was funded by borrowings
under the Bank Credit Facility, which were loaned to Holdings pursuant to the
promissory note between Holdings and Iron Age. Holdings recorded an
extraordinary gain of $4.33 million, net of unamortized deferred financing
costs of $0.14 million and income taxes of $0.85 million. Following the
purchase, such principal amount of the Discount Notes was retired. The
transaction described in this paragraph is referred to as the October 2002
Transaction.

On December 14, 2001, Iron Age sold the assets of its vision products
business line, which consisted primarily of inventory, accounts receivable,
fixed assets and certain intangible assets with a carrying value of
approximately $2.6 million and revenues of approximately $1.2 million to AEARO
Company I for approximately $0.7 million. The sale resulted in a loss of
approximately $1.9 million. Holdings net income from the vision products
business line was not material.

On October 20, 2000, Holdings purchased $16.4 million in principal amount
of Iron Ages outstanding Senior Subordinated Notes for $11.9 million. The
purchase was funded by $7.1 million of borrowings under the Bank Credit
Facility and the issuance of $4.8 million of Series C Preferred Stock of
Holdings (the Holdings Series C Preferred Stock) to Fenway Partners Capital
Fund II, L.P. (Fenway II), an affiliate of Holdings majority stockholder,
Fenway. Holdings recorded an extraordinary gain of $2.3 million, net of
unamortized deferred financing costs of $0.6 million, and income taxes of $1.7
million. Following the purchase, such principal amount of the Senior
Subordinated Notes was retired. The transaction described in this paragraph is
referred to as the October 2000 Transaction.

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On August 29, 2000, Fenway II purchased Discount Notes with a face value
of approximately $7.3 million for approximately $1.4 million. The purchase
resulted in an income tax liability to Holdings of approximately $0.9 million.
In October 2000, Fenway II funded the income tax liability through a capital
contribution.

On February 7, 2000, Fenway purchased Discount Notes with a face value of
approximately $10.0 million for approximately $1.9 million. The purchase
resulted in an income tax liability to Holdings of approximately $1.3 million.
In May 2000, Fenway funded the income tax liability through a capital
contribution. On February 6, 2001, Fenway transferred the Discount Notes to
Fenway II.

Critical Accounting Policies

Allowance for Doubtful Accounts-Methodology

Holdings evaluates the collectability of its accounts receivable based on
a combination of factors. In circumstances where Holdings is aware of a
specific customers inability to meet its financial obligations (e.g.,
bankruptcy filings, substantial downgrading of credit ratings), Holdings
records a specific reserve for bad debts against amounts due to reduce the net
recognized receivable to the amount reasonably believed will be collected. For
all other customers, Holdings recognizes reserves for bad debts based upon
historical bad debt experience ranging from approximately 5% of total
delinquent receivables to approximately 16% for amounts delinquent more than 60
days. If circumstances change (i.e., higher than expected defaults or an
unexpected material adverse change in a major customers ability to meet its
financial obligations), Holdings estimates of the recoverability of amounts
due could be reduced by a material amount.

Inventories  Slow Moving and Obsolescence

Historically, a reserve has not been necessary. Merchandise risk is not
considered inherent to industrial footwear as merchandise is not tied as
closely to fashion trends as consumer footwear. Although Holdings has recently
increased its purchased volume of outside branded product, Holdings does not
believe this increases the risk of obsolescence as these products have replaced
previous styles in the Holdings product offerings. Further, Holdings
continuously reviews its inventory levels and consumption rates, by style, and
adjusts its purchase of new merchandise as necessary. Holdings routinely
reviews the on-hand merchandise to identify slowdowns in particular products
and follows up with sales promotions to sell that specific footwear, primarily
through rack rooms in its retail stores.

Income Taxes-Valuation Allowance

Holdings calculates income taxes in accordance with Statement on Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, which
requires the use of the asset and liability method. Under this method, deferred
tax assets and liabilities are recognized based on the difference between the
consolidated financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using the tax rates in effect in the years when those temporary
differences are expected to reverse. Holdings has generated foreign and state
operating loss carryforwards. Management has determined that it is currently
more likely than not that the benefit will not be realized and has established
a valuation allowance against these assets. The utilization of the remaining
net deferred tax asset is dependent on the execution of certain tax planning
strategies. Holdings has continuously implemented these tax planning
strategies and plans to implement these strategies in the future. Holdings will
continue to evaluate the need for a valuation allowance on a quarterly basis.

Goodwill Impairment

In fiscal 2003, Holdings adopted the new standard of accounting for
goodwill and intangible assets with indefinite lives. The cumulative effect
adjustment recognized on January 27, 2002, upon adoption of the new standard,
was a charge of approximately $77.5 million, net of tax effect of approximately
$1.7 million. Also, in fiscal 2003, Holdings ceased amortizing itsgoodwill.
Total amortization expense recognized for the fiscal years

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ended January 25, 2003, January 26, 2002 and January 27, 2001 was approximately $2.2 million,
$4.3 million and $4.0 million, respectively. Holdings identified two reporting
units, distribution and manufacturing, and determined the carrying value of
those units as of the date of adoption. Only the distribution reporting unit
had related goodwill. Holdings assessed the fair value of the distribution
reporting unit and compared it to the reporting units carrying amount. The
fair value of the distribution reporting unit was determined using a 5-year
discounted cash flow model. Key assumptions included managements estimates of
future profitability, capital requirements, a discount rate of 14.6% and a
terminal growth rate of 2%. However, actual fair values that could be realized
in an actual transaction may differ from those used to evaluate the impairment
of goodwill.

Asset Impairment

Holdings is required to test for asset impairment whenever events or
changes in circumstances indicate that the carrying value of an asset might not
be recoverable. Holdings applies SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets, in order to determine whether or not an asset
is impaired. Management evaluates the ongoing value of assets associated with
retail stores that have been open longer than one year. When undiscounted cash
flows estimated to be generated by those assets are less than the carrying
value of those assets, impairment losses are recorded. When events such as
these occur, the impaired assets are adjusted to estimated fair value and an
impairment loss is recorded in selling, general and administrative expenses.
Should actual results or market conditions differ from those anticipated,
additional losses may be recorded.

Results of Operations

The following table sets forth for the period indicated certain historical
income statement data derived from the consolidated statement of income of
Holdings.

|                                                                       |  |             |         |             |  |             |         |   |  |   |         |  
|---------------------------------------------------------------------- |  | ----------- | ------- | ----------- |  | ----------- | ------- | - |  | - | ------- | -
|                                                                       |  | Fiscal 2003 |         | Fiscal 2002 |  | Fiscal 2001
|                                                                       |  |             |         |             |  |            
|Income Statement Data:                                                 |  |             |         |             |  |             |         |   |  |   |         |  
|Net sales                                                              |  | $           | 100,449 |             |  | $           | 105,517 |   |  | $ | 118,932 |  
|Gross profit                                                           |  |             | 50,759  |             |  |             | 53,884  |   |  |   | 61,701  |  
|Selling, general and administrative                                    |  |             | 41,200  |             |  |             | 41,951  |   |  |   | 43,400  |  
|Depreciation and amortization                                          |  |             | 3,847   |             |  |             | 6,269   |   |  |   | 5,655   |  
|Loss on divestiture                                                    |  |             |        |             |  |             | 1,860   |   |  |   |        |  
|Operating income                                                       |  |             | 5,712   |             |  |             | 3,804   |   |  |   | 12,646  |  
|Interest expense                                                       |  |             | 14,035  |             |  |             | 13,097  |   |  |   | 15,368  |  
|Income tax benefit                                                     |  |             | (1,785  | )           |  |             | (1,386  | ) |  |   | (206    | )
|Cumulative effect of change in accounting
principle, net of tax effect |  |             | (77,510 | )           |  |             |        |   |  |   |        |  
|Extraordinary gain, net of tax effect                                  |  |             | 6,080   |             |  |             |        |   |  |   | 2,285   |  
|Other Data:                                                            |  |             |         |             |  |             |         |   |  |   |         |  
|Gross profit margin                                                    |  |             | 50.5    | %           |  |             | 51.1    | % |  |   | 51.9    | %
|Operating income margin                                                |  |             | 5.7     | %           |  |             | 3.6     | % |  |   | 10.6    | %

Fiscal 2003 Compared to Fiscal 2002

Net Sales.Net sales for fiscal 2003 were $100.4 million compared to
$105.5 million for fiscal 2002, a decrease of $5.1 million, or 4.8%. The
decrease in net sales was attributable to a decrease of $3.4 million, or 3.3%,
in Holdings primary footwear distribution business line, primarily related to
(a) a decrease of $2.0 million, or 11.4%, in Holdings industrial direct
business line, from customers who purchase directly from Holdings distribution
center, as a result of decreases in purchases by several large customers,
reflecting a continued softness in the general economic environment, (b) a
decrease of $0.5 million, or 0.6%, in Holdings retail business line, from
customers who purchase from Holdings retail stores and shoemobiles, reflecting
a decline in the general economic environment, including plant closings and
employee layoffs that affected Holdings customers, (c) a decrease in Holdings
direct mail business line of $0.4 million, or 7.3%, related to the general
condition of the economy and (d) a decrease of $0.4 million, or 7.8% of the
overall decrease in net sales, in Holdings branded wholesale business line, as
there were no sales to Holdings primary wholesale customer in fiscal 2003, due
to the bankruptcy of that

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customer in October 2001. In addition,
sales decreased by $0.5 million, or 25.9% in Holdings
manufacturing subsidiary, due to decreased sales to its external
customers. Also, for fiscal 2003, there were no sales relating to Holdings vision products business line, which was
sold in December 2001, compared to $1.2 million in net sales for
fiscal 2002, or 23.5% of the overall decrease in net sales.

Gross Profit.Gross profit for fiscal 2003 was $50.8 million compared to
$53.9 million for fiscal 2002, a decrease of $3.1 million, or 5.8%. 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 fiscal 2003
decreased to 50.5%, a decrease of 0.6% from fiscal 2002. Gross profit
percentage decreased in Holdings primary footwear distribution line by 1.4%
for fiscal 2003, due primarily to general changes in product mix and the impact
of competitive pricing strategies. The decrease in gross profit percentage was
partially offset by a 5.0% increase in gross profit percentage in Holdings
manufacturing subsidiary, primarily due to a higher volume in net sales.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses for fiscal 2003 were $41.2 million compared to $42.0
million for fiscal 2002, a decrease of $0.8 million, or 1.9%. The decrease was
due primarily to the effect of employee related cost reductions, including
salaries and wages, decreases in advertising costs and telephone expenses of
approximately $1.5 million. The decrease was partially offset by increases in
professional fees of $0.5 million, related to legal, accounting and consulting
services and executive recruitment fees. In addition, the decrease was
partially offset by increases of approximately $0.3 million in insurance costs
related to more expensive insurance markets.

Loss on Divestiture.Loss on divestiture for fiscal 2002 was $1.9
million. The loss on divestiture relates to the sale of the vision products
business line in December 2001 as discussed above.

Operating Income.Operating income for fiscal 2003 was $5.7 million, or
5.7% of net sales, compared to $3.8 million, or 3.6% of net sales, for fiscal
2002. The increase in operating income is the result of the decrease in gross
profit, offset by decreases in selling, general and administrative expenses as
discussed above, the loss on divestiture that occurred in fiscal 2002 as
discussed above and a decrease of $2.3 million of goodwill amortization, as
Holdings did not amortize goodwill in fiscal 2003 in conjunction with its
adoption of SFAS No. 142, Goodwill and Other Intangible Assets.

Interest Expense.Interest expense for fiscal 2003 was $14.0 million
compared to $13.1 million for fiscal 2002, an increase of $0.9 million, or
6.9%. For fiscal 2002, interest expense was favorably impacted by an increase
of approximately $0.8 million in the fair market value of Holdings interest
rate swap agreement due to decreases in interest rates. The interest rate swap
agreement was terminated in October 2001. Excluding the favorable impact of the
interest rate swap agreement in fiscal 2002, interest expense for fiscal 2003
increased due to the effect of an increase in interest expense of approximately
$0.2 million related to the Discount Notes, partially offset by lower interest
rates and decreased indebtedness relating to the Previous Bank Credit
Facility.

Income Tax Expense.Income taxes for fiscal 2003 was a $1.8 million
income tax benefit compared to an income tax benefit of $1.4 million for fiscal
2002. Income tax benefit for fiscal 2003 differs from that of the statutory
income tax rate due primarily to the nondeductibility of goodwill amortization.
Upon adoption of SFAS No. 142, Holdings recorded no goodwill amortization for
fiscal 2003. During fiscal 2003, Holdings increased its valuation allowance
related to the deferred tax benefit for foreign and state net operating loss
carryforwards by $0.8 million. In addition, fiscal 2002 included a charge of
approximately $1.2 million related to the recognition of a valuation allowance
against the deferred tax benefit for foreign and state net operating loss
carryforwards.

At January 25, 2003, Holdings had available foreign and state net
operating loss carryforwards of approximately $1.0 million and $15.3 million,
respectively, which expire in various years through 2020. Holdings reviewed
the likelihood of utilizing the foreign and state net operating loss
carryforwards and determined that it is currently more likely than not that the
benefit will not be realized. Holdings will continually monitor its foreign
and state tax position and may determine in the future that some or all of the
net operating losses will be realizable. At that point, the valuation
allowance will be reduced to reflect the net realizable amount which will
result in an increase in net income.

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Holdings has recognized a net deferred tax asset of $1.2 million. The
utilization of the net deferred tax asset is dependent on the execution of
certain tax planning strategies. Holdings has continuously implemented these
tax planning strategies and plans to implement these strategies in the future.
As of January 25, 2003, Holdings would need to recognize approximately $3.7
million in taxable income to utilize the net deferred tax asset.

Cumulative Effect of Change in Accounting Principle.For fiscal 2003,
Holdings adopted SFAS No. 141, Business Combinations, and SFAS No. 142,
Goodwill and Other Intangible Assets. In connection with the adoption of SFAS
No. 142, Holdings tested its goodwill for impairment, which required an
assessment of whether there is an indication that goodwill is impaired as of
the date of adoption, January 27, 2002. Management, using an independent
valuation firm, determined that all of Holdings goodwill was impaired at
January 27, 2002. Holdings recorded a goodwill impairment charge of $77.5
million, net of tax of $1.7 million, as a cumulative effect of change in
accounting for goodwill, for fiscal 2003.

Extraordinary Item.For fiscal 2003, Holdings recorded an extraordinary
gain of $6.3 million, net of a $1.3 million tax expense, due to the repurchase,
at a discount, and subsequent retirement of a portion of the Discount Notes in
the October 2002 Transaction and November 2002 Transaction. In addition,
Holdings recorded an extraordinary loss of approximately $0.2 million, net of
tax effect of $0.14 million, related to the write-off of unamortized debt issue
costs for the Previous Bank Credit Facility which was refinanced in September
2002.

Fiscal 2002 Compared to Fiscal 2001

Net Sales.Net sales for fiscal 2002 were $105.5 million compared to
$118.9 million for fiscal 2001, a decrease of $13.4 million, or 11.3%. The
decrease in net sales was primarily attributable to decreased sales of $12.5
million, or 10.5%, in Holdings primary footwear distribution business line,
including decreases of approximately $9.0, or 7.6%, in Holdings industrial
business line, due to a decline in the general economic environment, which
included plant closings and employee layoffs that affected Holdings customers.
Included in the decrease in net sales in Holdings industrial business line was
a decrease of approximately $1.6 million, or 1.4%, related to the loss of a
large customer order that occurred in fiscal 2001 and did not occur in fiscal
2002. The decrease in fiscal 2002 was also attributable to a decrease of
approximately $1.9 million, or 1.6%, in Holdings branded wholesale business
line due to reduced sales to Holdings primary wholesale customer, Quality
Stores, Inc., which filed for protection under Chapter 11 in fiscal 2002. The
decrease in fiscal 2002 was also attributable to decreased sales to
non-affiliated customers in Holdings manufacturing subsidiary of $0.6 million,
or 0.5% of the decrease in net sales. In addition, $0.3 million, or 0.2%, of
the decrease was due to decreased sales in Holdings vision products business
line, which was sold in December 2001.

Gross Profit.Gross profit for fiscal 2002 was $53.9 million compared to
$61.7 million for fiscal 2001, a decrease of $7.8 million, or 12.6%. The
decrease in gross profit was primarily related to the decrease in net sales as
previously discussed. Total gross profit percentage decreased 0.8% to 51.1% in
fiscal 2002 compared to fiscal 2001. The decrease in gross profit percentage
was primarily related to a reduced gross profit percentage in Holdings
manufacturing subsidiary, relating to reduced sales and the effect of fixed
manufacturing costs in that subsidiary

Selling, General and Administrative Expenses.Selling, general and
administrative expenses for fiscal 2002 were $42.0 million compared to $43.4
million for fiscal 2001, a decrease of $1.4 million, or 3.2%, due primarily to
the effect of employee related cost reductions, including salaries, wages and
commissions, and decreases in advertising costs and bad debts. The decrease in
selling, general and administrative expenses was partially offset by an
increase of approximately $0.3 million or 0.7% in insurance costs, including
various casualty and property coverages.

Loss on Divestiture.Loss on divestiture for fiscal 2002 was $1.9
million. The loss on divestiture relates to the sale of the vision products
business line in December 2001 as discussed above. A provision for impairment
of $1.8 million was established for the third quarter ended October 27, 2001
because Holdings had committed to a plan to sell the assets. The provision for
impairment included goodwill and certain other intangible assets, including
customer lists, that Holdings management deemed to be impaired.

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Operating Income.Operating income for fiscal 2002 was $3.8 million, or
3.6% of net sales, compared to $12.6 million, or 10.6% of net sales, for fiscal
2001. The decrease was primarily attributable to decreased net sales and the
associated decrease in gross margins and the loss on divestiture, partially
offset by decreased selling, general and administrative expenses as discussed
above.

Interest Expense.Interest expense for fiscal 2002 was $13.1 million
compared to $15.4 million for fiscal 2001, a decrease of $2.3 million, or
14.9%. The decrease in interest expense was primarily attributable to decreased
indebtedness of Holdings related to the repurchase of a portion of the Senior
Subordinated Notes in the October 2000 Transaction and by decreased
indebtedness and lower interest rates under the Previous Bank Credit Facility.
In addition, the decrease in interest expense relates to the favorable change
of approximately $0.8 million in the fair market value of Holdings interest
rate swap agreement due to decreases in interest rates for fiscal 2002. The
interest rate swap agreement was terminated in October 2001.

Income Tax Expense.Income tax expense for fiscal 2002 was a $1.4
million income tax benefit compared to income tax benefit of $0.2 million for
fiscal 2001. Income tax benefit for fiscal 2002 differs from that of the
statutory income tax rate due primarily to the nondeductibility of goodwill
amortization. In addition, fiscal 2002 included a charge of approximately $1.0
million related to the recognition of a valuation allowance against the
deferred tax benefit for state net operating loss carryforwards. At January
26, 2002, Holdings had available state net operating loss carryforwards of
approximately $10.4 million, which expire in various years beginning in 2002
through 2019. Holdings reviewed the likelihood of utilizing the state net
operating loss carryforwards and determined that it is currently more likely
than not that the benefit will not be realized. Holdings will continually
monitor its state tax position and may determine in the future that some or all
of the state net operating losses will be realizable. At that point, the
valuation allowance will be reduced to reflect the net realizable amount which
will result in an increase in net income.

Extraordinary Item.For fiscal 2001, Holdings recorded an extraordinary
gain of $2.3 million, net of a $1.7 million tax expense, due to the repurchase,
at a discount, and subsequent retirement of a portion of the Senior
Subordinated Notes in the October 2000 Transaction.

Liquidity and Capital Resources

Contractual Obligations and Commercial Commitments

|                                   |  |                        |         |        |  |           |         |           |  |         |       |  |  |   |    |       |  |   |   | 
|---------------------------------- |  | ---------------------- | ------- | ------ |  | --------- | ------- | --------- |  | ------- | ----- |  |  | - | -- | ----- |  | - | - | 
|                                   |  | Payments Due by Period
|                                   |  | (Thousands of Dollars)
|                                   |  |                        |         |        |  | Less than |         |           |  |         |       |  |  |   |    | After
|Contractual Obligations:           |  | Total                  |         | 1 year |  | 1-3 years |         | 4-5 years |  | 5 years
|                                   |  |                        |         |        |  |           |         |           |  |        
|Long-Term Debt                     |  | $                      | 132,025 |        |  | $         | 132,025 |           |  | $       |      |  |  | $ |   |       |  | $ |  | 
|Capital Lease Obligations          |  |                        | 1,017   |        |  |           | 1,017   |           |  |         |      |  |  |   |   |       |  |   |  | 
|Operating Leases                   |  |                        | 5,655   |        |  |           | 2,762   |           |  |         | 2,816 |  |  |   | 77 |       |  |   |  | 
|Unconditional Purchase Obligations |  |                        | 9,603   |        |  |           | 9,603   |           |  |         |      |  |  |   |   |       |  |   |  | 
|Other Long-Term Obligations        |  |                        |        |        |  |           |        |           |  |         |      |  |  |   |   |       |  |   |  | 
|Total Contractual Cash Obligations |  | $                      | 148,300 |        |  | $         | 145,407 |           |  | $       | 2,816 |  |  | $ | 77 |       |  | $ |  | 

|                               |  |                                            |       |        |  |           |       |           |  |         |   |  |  |   |   |      |  |   |  |  |  |  |   | 
|------------------------------ |  | ------------------------------------------ | ----- | ------ |  | --------- | ----- | --------- |  | ------- | - |  |  | - | - | ---- |  | - |  |  |  |  | - | 
|                               |  | Amount of Commitment Expiration Per Period |       |        |  |          
|                               |  | (Thousands of Dollars)                     |       |        |  |          
|                               |  |                                            |       |        |  | Less than |       |           |  |         |   |  |  |   |   | Over |  |   |  | 
|Other Commercial Commitments:  |  | Total                                      |       | 1 year |  | 1-3 years |       | 4-5 years |  | 5 years |   |  |  |  
|                               |  |                                            |       |        |  |           |       |           |  |         |   |  |  |  
|Lines of Credit                |  | $                                          | 2,000 |        |  | $         | 2,000 |           |  | $       |  |  |  | $ |  |      |  | $ |  |  |  |  |  | 
|Guarantees                     |  |                                            |      |        |  |           |      |           |  |         |  |  |  |   |  |      |  |   |  |  |  |  |  | 
|Standby Repurchase Obligations |  |                                            |      |        |  |           |      |           |  |         |  |  |  |   |  |      |  |   |  |  |  |  |  | 
|Other Commercial Commitments   |  |                                            |      |        |  |           |      |           |  |         |  |  |  |   |  |      |  |   |  |  |  |  |  | 
|Total Commercial Commitments   |  | $                                          | 2,000 |        |  | $         | 2,000 |           |  | $       |  |  |  | $ |  |      |  | $ |  |  |  |  |  | 

Holdings primary cash needs are working capital, capital expenditures and
debt service. Holdings has financed

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cash requirements primarily through internally generated cash flow and funds borrowed under Holdings and Iron
Ages credit facilities.

Net cash provided by operating activities was $1.6 million in fiscal 2003,
as compared to net cash provided by operating activities of $9.3 million in
fiscal 2002 and net cash provided by operating activities of $6.1 million in
fiscal 2001. The decrease in cash provided by operating activities was
primarily related to changes in operating assets and liabilities, particularly
increases in accounts receivable and decreases in accounts payable. The change
in accounts receivable relates to the impact of new orders from a large
customer in fiscal 2003 as well as collection activity in fiscal 2003 that
paralleled the decline in sales volume. The change in accounts payable
reflects a reduced level of product purchases and the timing of payments to
certain key vendors.

Holdings investing activities for fiscal 2003 consisted of capital
expenditures of approximately $2.9 million for improvements in footwear retail
stores, shoemobiles and equipment and approximately $0.3 million related to the
acquisition of software for internal use (included in Property and equipment
on the Balance Sheet). Holdings investing activities for fiscal 2002 consisted
of capital expenditures of approximately $1.5 million for improvements in
footwear retail stores, shoemobiles and equipment and expenditures of
approximately $1.1 million related to the acquisition of software for internal
use (included in Property and equipment on the Balance Sheet).

Holdings financing activities for fiscal 2003, primarily under the Bank
Credit Facility and the Previous Bank Credit Facility, were net borrowings of
approximately $1.2 million. Financing activities included the scheduled
principal payments of approximately $0.3 million on the Bank Credit Facility
and $4.6 million on the Previous Bank Credit Facility and $2.3 million of
financing costs related to the refinancing of the Previous Bank Credit
Facility. Holdings used approximately $6.0 million for financing activities in
fiscal 2002, which primarily consisted of payments related to the Previous Bank
Credit Facility, including approximately $3.8 million in payment of the
Acquisition Term Loan. Holdings used approximately $1.8 million for financing
activities in fiscal 2001, which included payments of approximately $1.5
million related to the Previous Bank Credit Facility, excluding the October
2000 Transaction. Holdings financing activities also included a borrowing of
$7.1 million on the Previous Bank Credit Facility in October 2000. The
proceeds were used to pay for the repurchase of a portion of the Senior
Subordinated Notes in the October 2000 Transaction. The remaining portion of
the repurchase was provided by a $4.8 million aggregate equity contribution
from Fenway II, for which Fenway II received Holdings Series C Preferred Stock.
In addition to the aforementioned transactions, during fiscal 2001, Fenway and
Fenway II purchased a portion of the Discount Notes, which resulted in a $2.2
million tax liability to Holdings. This liability was funded by a capital
contribution to Holdings from Fenway and Fenway II.

Holdings total working capital as of January 25, 2003 was $22.3 million.
At January 26, 2002, working capital was $33.0 million. The decrease in working
capital is primarily related to the classification of the revolving credit
facility as current in accordance with SFAS No. 6, Classification of Short Term
Obligations Expected to be Refinanced.

Holdings is a holding company, and its ability to pay interest on the
Discount Notes in the future is dependent upon the receipt of dividends from
its subsidiaries. Holdings does not have, and may not in the future have, any
significant assets other than the common stock of Iron Age (which is pledged to
secure the obligations of Iron Age under the Bank Credit Facility). Iron Age is
a party to the Bank Credit Facility and the indenture for the Senior
Subordinated Notes, each of which imposes substantial restrictions on Iron
Ages ability to pay dividends to Holdings.

Cash flow from operations
for fiscal 2003 was sufficient to cover debt service requirements under the Bank
Credit Facility. Holdings ability to make scheduled payments of principal,
or to pay the interest or premium (if any) on, or to refinance, its indebtedness
(including the Discount Notes), 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, will not
be adequate to meet Holdings anticipated future requirements for working
capital, budgeted capital expenditures and scheduled payments of principal and
interest on its indebtedness through fiscal 2004 and that the terms of the Bank
Credit Facility should be amended to provide sufficient borrowing capacity to
allow Holdings to meet its anticipated future requirements for working capital,
budgeted capital expenditures and scheduled payments of principal and interest
on its indebtedness through fiscal 2004. As a result, there can be no assurance
that Holdings business will generate sufficient cash flow from operations
or that future borrowing will be available under the Bank Credit Facility in an
amount sufficient to enable Holdings to service its indebtedness, including the
Discount Notes, or to make capital expenditures.

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As of January 25, 2003, Holdings debt consisted of the Discount Notes,
the Senior Subordinated Notes, the Bank Credit Facility and certain other debt.
The Bank Credit Facility consists of a $38.0 million revolving credit facility
(the Revolving Credit Facility), including a $2.0 million letter of credit
subfacility, and two term loans: Term Loan A of up to an aggregate $1.0 million
and Term Loan B of up to an aggregate of $3.0 million. In addition, the Bank
Credit Facility includes a third term loan, Term Loan C, of up to an aggregate
of $12.0 million. Holdings other debt of $1.0 million consists of capital
leases. As of January 25, 2003, approximately $16.1 million of the Revolving
Credit Facility was outstanding. In addition, outstanding balances as of
January 25, 2003, for Term Loan A, Term Loan B and Term Loan C were
approximately $0.9 million, $2.8 million and $12.1 million, respectively.
Holdings has borrowing availability of approximately $5.0 million under the
Revolving Credit Facility as of January 25, 2003. Term Loan A and Term Loan B
mature in monthly installments from October 2002 until final payment in
September 2007. The Revolving Credit Facility and Term Loan C will mature in
September 2007 and have no scheduled interim principal payments.

The Senior Subordinated Notes are fully and unconditionally guaranteed on
an unsecured, senior subordinated basis by each Domestic Restricted Subsidiary
that is a Material Subsidiary (as such terms are defined in the indenture for
the Senior Subordinated Notes (the Senior Subordinated Notes Indenture))
(whether currently existing, newly acquired or created). Each such subsidiary
guaranty (a Subsidiary Guaranty) will provide that the subsidiary guarantor,
as primary obligor and not merely as surety, will irrevocably and
unconditionally guarantee on an unsecured, senior subordinated basis the
performance and punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of Iron Age 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 January 25, 2003, Iron Age Investment
Company, one of Iron Ages Domestic Restricted Subsidiaries became a Material
Subsidiary, and therefore was required to provide a Subsidiary Guaranty with
respect to the Senior Subordinated Notes. As of January 25, 2003, none of Iron
Ages other Domestic Restricted Subsidiaries became a Material Subsidiary and
were not required to provide a Subsidiary Guaranty with respect to the Senior
Subordinated Notes.

Long-Term Debt

On September 23, 2002, Holdings, Iron Age and Falcon, entered into the
Bank Credit Facility with a financial institution and another lender. The Bank
Credit Facility consists of the Revolving Credit Facility, including a $2.0
million letter of credit subfacility, and two term loans: Term Loan A of up to
an aggregate of $1.0 million and Term loan B of up to an aggregate of $3.0
million. In addition, the Bank Credit Facility includes a third term loan, Term
Loan C, of up to an aggregate of $12.0 million. Availability under the Bank
Credit Facility is governed by a borrowing base determined by advance rates
against the inventory and accounts receivable of the Company and Falcon.

The Revolving Credit Facility and the Term Loan C are due in full on
September 23, 2007. The outstanding balances of the Term Loan A and the Term
Loan B are due in installments through September 23, 2007. Term Loan A, Term
Loan B and the Revolving Credit Facility bear interest at either the prime rate
or LIBOR, at the option of Holdings, plus an applicable margin. As of January
25, 2003, outstanding borrowings on the Revolving Credit Facility at prime rate
plus a margin of 1.50% and LIBOR plus a margin of 3.75% are approximately $2.1
million and $14.0 million, respectively. As of January 25, 2003, borrowings of
approximately $0.9 million for Term Loan A are at prime rate plus a margin of
1.50%. As of January 25, 2003, borrowings on Term Loan B at prime rate plus a
margin of 3.25% and LIBOR plus a margin of 5.50% are approximately $0.3 million
and $2.5 million, respectively. The interest rate for Term Loan C is 13.25%,
including 2.00% paid-in-kind. As of January 25, 2003, outstanding borrowings
For Term Loan C, including paid-in-kind interest, approximate $12.1 million.
Holdings pays a 0.375% commitment fee on the undrawn amounts of the Revolving
Credit Facility. Holdings pays a 2.00% letter of credit fee on any outstanding
Letters of Credit.

At closing, Holdings drew the entire amount of Term Loan A, Term Loan B
and Term Loan C and approximately $14.2 million on the Revolving Credit
Facility, to refinance its Previous Bank Credit Facility of

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approximately $27.6 million, including accrued interest, and to pay certain financing fees and
expenses. In connection with the refinancing of Holdings Previous Bank Credit
Facility, Holdings wrote-off approximately $0.2, million, net of tax of
approximately $0.1 million, of unamortized debt issuance costs remaining from
its Previous Bank Credit Facility.

Holdings incurred approximately $2.1 million in capitalizable debt
issuance costs in connection with the Bank Credit Facility which are being
amortized over its term.

Although the Bank Credit Facility expires on September 23, 2007, the Revolving
Credit Facility has been classified as current in accordance with SFAS No. 6,
Classification of Short Term Obligations Expected to be Refinanced.

Debt Covenants

Iron Ages Bank Credit Facility, which is guaranteed by Holdings, requires
Holdings to maintain certain financial ratios as discussed in Note 7 to
Holdings consolidated financial statements. Holdings and the subsidiaries
whose debt Holdings guarantees complied with these covenants as of January 25,
2003. The Bank Credit Facility also limits Holdings ability to incur
additional indebtedness, restricting the amount of capital expenditures that
may be incurred, and limiting transaction with affiliates. The Bank Credit
Facility also limits Holdings ability to engage in mergers or acquisitions,
sell certain assets, pay dividends or repurchase its stock. The Bank Credit
Facility is secured by a first priority security interest in substantially all
of Holdings assets. Holdings domestic and Canadian subsidiaries are required
to guarantee its obligations under the Bank Credit Facility. If Holdings
defaults on this debt, due to cross-default provisions in the indentures for
the Discount Notes and Senior Subordinated Notes, this debt would also be in
default.

Holdings and the
subsidiaries whose debt Holdings guarantees complied with all debt covenants as
of January 25, 2003. Historically, Holdings has not met its debt covenants and
has had to amend its credit agreements or receive waivers from its lending
institutions. During a review of anticipated net income and cash flows for the
first quarter of the year ending January 31, 2004, management has determined
that, more likely than not, Holdings will not be in compliance with the
financial covenants under the Bank Credit Facility, including the Senior Debt
Ratio and Fixed Charge Coverage Ratio (as defined in the Bank Credit Facility).
As a result, Holdings has requested that the senior lenders to the Bank Credit
Facility amend the financial covenants for the first quarter and
every other quarter of the year ending January 31, 2004 to a level that considering Holdings current operations and forecasts would make it probable that Holdings will be in compliance with its Bank Credit Facility. Holdings was not in compliance with its financial covenants for the first quarter ending April 26, 2003. Effective May 12, 2003, all of Holdings long-term debt
and debt payable to majority stockholder having been classified as current liabilities. As of May 12, 2003, Holdings and the senior
lenders have not finalized negotiations of an amendment to the Bank Credit
Facility with respect to the covenants of the second, third and fourth quarter for the year ending January 31, 2004.
Holdings and the senior lenders under the Bank Credit Facility have entered into
the First Amendment to Loan and Security
Agreement and Limited Waiver (the First Amendment) to the
Bank Credit Facility that will allow Holdings to
continue to operate under the existing requirements of the Bank Credit Facility,
for an additional 45 days through June 25, 2003, with certain modifications
relating to excess cash availability, and will allow Holdings and the lenders
under the Bank Credit Facility to continue to negotiate financial covenants for
the year ending January 31, 2004. During the 45-day period of the First
Amendment, Holdings is required to maintain excess cash availability of at least
$3.0 million. As of May 12, 2003, Holdings cash availability was $3.3
million. Should Holdings and its senior lenders not be able to reach an
agreement on an additional amendment to the Bank Credit Facility prior to the
expiration of the First Amendment or not be able to obtain an additional waiver,
Holdings would be in default under the Bank Credit Facility and such default
would also constitute an event of default under the terms of the Discount Notes
and the Senior Subordinated Notes, which would have a material adverse impact on
its reported financial position and results of its operations. Holdings plans to
continue to negotiate with its senior lenders to amend the Bank Credit Facility
during the next 45 days to amend the financial covenants to levels for the year
ending January 31, 2004 that more closely correspond to Holdings current
operations. Holdings ability to continue as a going concern is largely
dependent on its ability to maintain its existing financing arrangements to
operate the business.

Recently Issued Accounting Standards

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities (FIN
46). A variable interest entity (VIE) is one where the contractual or
ownership interests in an entity change with changes in the entitys net asset
value. This interpretation requires the consolidation of a VIE by the primary
beneficiary, and also requires disclosure about VIEs where an enterprise has a
significant variable interest but is not the primary beneficiary. At the
effective date, Holdings has not entered into any VIEs.

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of the Indebtedness of Others (FIN 45). This interpretation
changes the accounting recognition and disclosure requirements for certain
guarantees issued on behalf of other parties which represent either a
contingent or a non-contingent obligation for the guarantor to make payments or
to perform specified activities. Effective January 1, 2003, FIN 45 mandates the
separate fair value recognition of guarantees entered into on or after that
date. At January 25, 2003, Holdings has no material guarantees as defined in
FIN 45.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 requires entities to record the fair
value of a liability for an asset retirement obligation in the period in which
it is incurred. When the liability is initially recorded, the entity
capitalizes the cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its present value
each period, and the

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capitalized cost is depreciated over the useful life of
the related asset. Upon settlement of the liability, an entity either settles
the obligation for its recorded amount or incurs a gain or loss upon
settlement. This standard is effective for fiscal years beginning after June
15, 2002, with earlier application encouraged. Holdings is currently
evaluating the provisions of SFAS No. 143, but does not believe that SFAS No.
143 will have a material impact on its financial statements.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, addresses financial accounting and reporting for costs associated
with exit or disposal activities and nullifies EITF Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring).The
principal differences between SFAS No. 146 and Issue 94-3 relates to No. SFAS
146s requirements for recognition of a liability for a cost associated with an
exit or disposal activity. SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability
is incurred. Under Issue 94-3, a liability for an exit cost as generally
defined in Issue 94-3 was recognized at the date of an entitys commitment to
an exit plan. A fundamental conclusion reached by the FASB in SFAS No. 146 is
that an entitys commitment to a plan, by itself, does not create an obligation
that meets the definition of a liability. Therefore, SFAS No. 146 eliminates
the definition and requirements for recognition of exit costs in Issue 94-3.
This Statement also establishes that fair value is the objective for initial
measurement of the liability. The provisions of SFAS No. 146 are effective for
exit or disposal activities that are initiated after December 31, 2002.
Holdngs adopted SFAS No. 146 on January 1, 2003. Subsequent to the adoption,
SFAS No. 146 may affect the periods in which costs are recognized for workforce
reductions of facility closures, although the ultimate amount of costs
recognized would be the same.

Inflation and Changing Prices

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

Forward Looking Statements

When used in this Annual Report on Form 10-K, 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.
Holdings wishes to caution readers that the following important factors in some
cases have affected and in the future could affect Holdings actual results and
could cause Holdings actual results to differ materially from those expressed
in any forward looking statements made by Holdings: (i) economic conditions in
the safety shoe market, (ii) availability and terms of credit and debt
arrangements, (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 Holdings relationships with its major
suppliers, including Holdings 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 7A.  Quantitative and Qualitative Disclosures about Market Risk.

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

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

Interest Rates

At January 25, 2003, Holdings had fixed-rate debt totaling $113.2 million
in principal amount and having a fair value of $47.4 million. These instruments
bear interest at a fixed rate and, therefore, do not expose Holdings to the
risk of earnings loss due to changes in market interest rates. However, the
fair value of these instruments would decrease (to the holder) by approximately
$4.7 million if interest rates were to increase by 10% from their levels at
January 25, 2003 (i.e., an increase from the weighted average interest rate of
10.9% to a weighted average interest rate of 12.0%). At January 26, 2002,
Holdings had fixed-rate debt totaling $110.9 million in principal amount and
having a fair value of $33.8 million, which would have decreased to $30.8
million had interest rates increased 10% from January 26, 2002 levels.

At January 25, 2003, Holdings had variable-rate debt totaling $19.8
million in principal amount and having a fair value of $19.8 million. These
borrowings are under the Bank Credit Facility (see Notes to Consolidated
Financial Statements-Note 7, Long-term debt). If interest rates were to
increase by 10% from their levels at January 25, 2003, Holdings would incur
additional annual interest expense of approximately $0.1 million. At January
26, 2002, Holdings had variable-rate debt totaling $27.0 million in principal
amount and having a fair value of $27.0 million. Holdings would have incurred
additional interest expense of approximately $0.1 million had interest rates
increased by 10% from their levels at January 26, 2002.

Foreign Exchange Rates

A substantial majority of Holdings sales, expenses and cash flows are
transacted in U.S. dollars. For the fiscal year ended January 25, 2003, sales
denominated in currencies other than U.S. dollars (primarily Mexican peso and
the Canadian dollar) totaled $6.2 million, or approximately 6.1% of total
sales. Net losses incurred at Holdings subsidiaries that operate in Mexico
and Canada were $1.6 million for the fiscal year ended January 25, 2003. An
adverse change in exchange rates of 10% would have resulted in a decrease in
sales of approximately $0.6 million and an increase in net loss of
approximately $0.2 million for the fiscal year ended January 25, 2003.
Holdings subsidiaries that operate in Mexico and Canada have certain accounts
receivable and payable accounts in their home currencies which further mitigate
the impact of foreign exchange rate changes. Holdings has no foreign currency
exchange contracts.

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Item 8.  Financial Statements and Supplementary Data.

Iron Age Holdings Corporation

Consolidated Financial Statements

Years ended January 25, 2003 and January 26, 2002

Contents

|                                                          |  |  |    | 
|--------------------------------------------------------- |  |  | -- | 
|Report of Independent Auditors                            |  |  | 21 | 
|Audited Consolidated Financial Statements                 |  |  |    | 
|Consolidated Balance Sheets                               |  |  | 22 | 
|Consolidated Statements of Operations                     |  |  | 23 | 
|Consolidated Statements of Stockholders (Deficit) Equity |  |  | 24 | 
|Consolidated Statements of Cash Flows                     |  |  | 25 | 
|Notes to Consolidated Financial Statements                |  |  | 27 | 
|Schedule II-Valuation and Qualifying Accounts             |  |  | 49 | 

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REPORT OF INDEPENDENT AUDITORS

Board of Directors
Iron Age Holdings Corporation

We have audited the accompanying consolidated balance sheets of Iron Age
Holdings Corporation (Holdings) as of January 25, 2003 and January 26, 2002,
and the related consolidated statements of operations, stockholders (deficit)
equity, and cash flows for the years ended January 25, 2003, January 26, 2002
and January 27, 2001. Our audits also included the financial statement schedule
listed in the index at Item 8. These financial statements and schedule are the
responsibility of Holdings management. Our responsibility is to express an
opinion on these financial statements and schedule based upon our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Iron Age Holdings
Corporation at January 25, 2003 and January 26, 2002, and the consolidated
results of its operations and its cash flows for the years ended January 25,
2003, January 26, 2002 and January 27, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

The accompanying financial statements have been
prepared assuming that Holdings will continue as a going concern.
As more fully described in Note 1, Holdings has incurred
recurring operating losses and there is uncertainty regarding
Holdings ability to meet the debt covenants of its credit
facilities with banks. These conditions raise substantial doubt about
Holdings ability to continue as a going concern.
Managements plans in regard to these matters are also described
in Note 1. The financial statements do not include any
adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the outcome of this uncertainty.

As discussed in Note 1 to the financial statements, in 2001 Holdings changed
its method of accounting for derivative financial instruments to conform with
the adoption of Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities.

As discussed in Note 6 to the financial statements, in 2003 Holdings changed
its method of accounting for goodwill and other intangible assets to conform
with the adoption of Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets.

Ernst & Young LLP

Pittsburgh, Pennsylvania
March 28, 2003, except for
certain matters discussed in
Note 1, as to which the date is May 12, 2003

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Iron Age Holdings Corporation

Consolidated Balance Sheets

|                                             |                           |                                                                                        |         |                |          |             |         |        |         |  
|-------------------------------------------- | ------------------------- | -------------------------------------------------------------------------------------- | ------- | -------------- | -------- | ----------- | ------- | ------ | ------- | -
|                                             |                           |                                                                                        |         | January 25,    |          | January 26,
|                                             |                           |                                                                                        |         | 2003           |          | 2002       
|                                             |                           |                                                                                        |         |                |          |            
|                                             |                           |                                                                                        |         | (In Thousands)
|Assets                                       |                           |                                                                                        |         |                |          |             |         |       
|Current assets:                              |                           |                                                                                        |         |                |          |             |         |       
|                                             | Cash and cash equivalents |                                                                                        | $       | 332            |          |             | $       | 624    |        
|                                             | Accounts receivable, net  |                                                                                        |         | 13,014         |          |             |         | 13,549 |        
|                                             | Inventories               |                                                                                        |         | 31,671         |          |             |         | 32,089 |        
|                                             | Prepaid expenses          |                                                                                        |         | 3,196          |          |             |         | 2,210  |        
|                                             | Deferred income taxes     |                                                                                        |         | 713            |          |             |         | 726    |        
|                                             |                           |                                                                                        |         |                |          |             |         |       
|Total current assets                         |                           |                                                                                        | 48,926  |                |          |             | 49,198  |       
|Property and equipment, net                  |                           |                                                                                        | 12,681  |                |          |             | 12,674  |       
|Deferred income taxes                        |                           |                                                                                        | 530     |                |          |             |        |       
|Other noncurrent assets                      |                           |                                                                                        | 170     |                |          |             | 212     |       
|Intangible assets, net                       |                           |                                                                                        | 14,538  |                |          |             | 93,930  |       
|                                             |                           |                                                                                        |         |                |          |             |         |       
|Total assets                                 |                           | $                                                                                      | 76,845  |                |          | $           | 156,014 |       
|                                             |                           |                                                                                        |         |                |          |             |         |       
|Liabilities and stockholders deficit        |                           |                                                                                        |         |                |          |             |         |       
|Current liabilities:                         |                           |                                                                                        |         |                |          |             |         |       
|                                             |                           | Long-term
debt and revolving credit facilities                                         |         | $              | 99,087   |             |         | $      | 116,728 |  
|                                             |                           | Long-term debt payable to majority stockholder                                         |         |                | 16,845   |             |         |        | 14,975  |  
|                                             |                           | Revolving credit facility                                                              |         |                | 16,107   |             |         |        |        |  
|                                             |                           | Accounts payable                                                                       |         |                | 3,272    |             |         |        | 4,687   |  
|                                             |                           | Accrued expenses                                                                       |         |                | 5,999    |             |         |        | 5,076   |  
|                                             |                           |                                                                                        |         |                |          |             |         |       
|Total current liabilities                    |                           |                                                                                        | 141,310 |                |          |             | 141,466 |       
|Other noncurrent liabilities                 |                           |                                                                                        | 324     |                |          |             | 390     |       
|Deferred income taxes                        |                           |                                                                                        |        |                |          |             | 1,064   |       
|                                             |                           |                                                                                        |         |                |          |             |         |       
|Total liabilities                            |                           |                                                                                        | 141,634 |                |          |             | 142,920 |       
|Commitments and contingencies                |                           |                                                                                        |        |                |          |             |        |       
|Holdings Series B redeemable preferred stock |                           |                                                                                        | 10,100  |                |          |             | 8,300   |       
|Holdings Series C redeemable preferred stock |                           |                                                                                        | 8,193   |                |          |             | 6,545   |       
|Stockholders deficit:                       |                           |                                                                                        |         |                |          |             |         |       
|                                             |                           | Common stock, $.01 par value, 200,000
shares authorized, 99,992 issued and
outstanding |         |                | 1        |             |         |        | 1       |  
|                                             |                           | Additional paid-in capital                                                             |         |                | 40,254   |             |         |        | 40,254  |  
|                                             |                           | Accumulated deficit                                                                    |         |                | (123,050 | )           |         |        | (41,635 | )
|                                             |                           | Accumulated other comprehensive loss                                                   |         |                | (287     | )           |         |        | (371    | )
|                                             |                           |                                                                                        |         |                |          |             |         |       
|Total stockholders deficit                  |                           |                                                                                        | (83,082 | )              |          |             | (1,751  | )     
|                                             |                           |                                                                                        |         |                |          |             |         |       
|Total liabilities and stockholders deficit  |                           | $                                                                                      | 76,845  |                |          | $           | 156,014 |       
|                                             |                           |                                                                                        |         |                |          |             |         |       
|See accompanying notes.                     

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##### Table of Contents



Iron Age Holdings Corporation

Consolidated Statements of Operations

|                                  |                                                                                                      |  |                  |         |                  |  |                  |         |   |  |       |         |  
|--------------------------------- | ---------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | ---------------- |  | ---------------- | ------- | - |  | ----- | ------- | -
|                                  |                                                                                                      |  |                  |         |                  |  | Year ended       |         |   |  |      
|                                  |                                                                                                      |  | January 25, 2003 |         | January 26, 2002 |  | January 27, 2001
|                                  |                                                                                                      |  |                  |         |                  |  |                 
|                                  |                                                                                                      |  | (In Thousands)  
|                                  | Net sales                                                                                            |  | $                | 100,449 |                  |  | $                | 105,517 |   |  | $     | 118,932 |  
|                                  | Cost of sales                                                                                        |  |                  | 49,690  |                  |  |                  | 51,633  |   |  |       | 57,231  |  
|                                  |                                                                                                      |  |                  |         |                  |  |                  |         |   |  |       |        
|                                  | Gross profit                                                                                         |  |                  | 50,759  |                  |  |                  | 53,884  |   |  |       | 61,701  |  
|                                  | Selling, general and administrative                                                                  |  |                  | 41,200  |                  |  |                  | 41,951  |   |  |       | 43,400  |  
|                                  | Depreciation                                                                                         |  |                  | 1,653   |                  |  |                  | 1,938   |   |  |       | 1,681   |  
|Amortization of intangible assets |                                                                                                      |  | 2,194            |         |                  |  | 4,331            |         |   |  | 3,974 |        
|                                  | Loss on divestiture                                                                                  |  |                  |        |                  |  |                  | 1,860   |   |  |       |        |  
|                                  |                                                                                                      |  |                  |         |                  |  |                  |         |   |  |       |        
|                                  | Operating income                                                                                     |  |                  | 5,712   |                  |  |                  | 3,804   |   |  |       | 12,646  |  
|                                  | Interest expense                                                                                     |  |                  | 14,035  |                  |  |                  | 13,097  |   |  |       | 15,368  |  
|                                  |                                                                                                      |  |                  |         |                  |  |                  |         |   |  |       |        
|                                  | Loss before income taxes,
cumulative effect of change in
accounting principle and
extraordinary item |  |                  | (8,323  | )                |  |                  | (9,293  | ) |  |       | (2,722  | )
|                                  | Income tax benefit                                                                                   |  |                  | (1,785  | )                |  |                  | (1,386  | ) |  |       | (206    | )
|                                  |                                                                                                      |  |                  |         |                  |  |                  |         |   |  |       |        
|                                  | Loss before cumulative effect of
change in accounting principle and
extraordinary item               |  |                  | (6,538  | )                |  |                  | (7,907  | ) |  |       | (2,516  | )
|                                  | Cumulative effect of change in
accounting principle, net of tax
of $1,718 (Note 6 )                  |  |                  | (77,510 | )                |  |                  |        |   |  |       |        |  
|                                  | Extraordinary gain, net of tax of
$1,129 in fiscal 2003 and $1,655
in fiscal 2001 (Note 7)           |  |                  | 6,080   |                  |  |                  |        |   |  |       | 2,285   |  
|                                  |                                                                                                      |  |                  |         |                  |  |                  |         |   |  |       |        
|                                  | Net loss                                                                                             |  | $                | (77,968 | )                |  | $                | (7,907  | ) |  | $     | (231    | )
|                                  |                                                                                                      |  |                  |         |                  |  |                  |         |   |  |       |        
|                                 
|See accompanying notes.           |                                                                                                      | 

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Iron Age Holdings Corporation

Consolidated Statements of Stockholders (Deficit) Equity

|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |   |         |  
|--------------------------- | ------------------- | ---------------------------------------------------------------------- | ------ | -------------- | - | ------- | - | ----------- | - | ------------- | ------ | ---- | ----- | ----- | -------- | - | ------- | - | ---- | ----------- | ---- | - | ------- | - | ------- | -
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      | Accumulated |      |   |         |  
|                            |                     |                                                                        |        | Common Stock   |   |         |   |             |   |               |        |      |       | Other |          |   |         |  
|                            |                     |                                                                        |        |                |   | Paid-In |   | Accumulated |   | Comprehensive |        |      |       |      
|                            |                     |                                                                        |        | Shares         |   | Amounts |   | Capital     |   | Deficit       |        | Loss |       | Total
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |      
|                            |                     |                                                                        |        | (In Thousands)
|Balance at January 29, 2000 |                     |                                                                        | 99,992 |                |   | $       | 1 |             |   | $             | 38,099 |      |       | $     | (26,553  | ) |         | $ | (124 | )           |      | $ | 11,423  |  
|                            | Comprehensive loss: |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |   |        
|                            |                     | Net loss                                                               |        |                |  |         |   |             |  |               |        |      |      |       |          |   | (231    | ) |      |             |     |   |         |   | (231    | )
|                            |                     | Foreign currency
translation adjustment,
net of tax                    |        |                |  |         |   |             |  |               |        |      |      |       |          |   |        |   |      |             | (97  | ) |         |   | (97     | )
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |  
|                            |                     | Comprehensive loss                                                     |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |   | (328    | )
|                            |                     | Capital Contribution by
majority stockholder                           |        |                |  |         |   |             |  |               |        |      | 2,155 |       |          |   |        |   |      |             |     |   |         |   | 2,155   |  
|                            |                     | Payment of taxes on
purchase of discount
notes by majority
stockholder |        |                |  |         |   |             |  |               |        |      |      |       |          |   | (2,220  | ) |      |             |     |   |         |   | (2,220  | )
|                            |                     | Dividends and accretion
on preferred stock                             |        |                |  |         |   |             |  |               |        |      |      |       |          |   | (1,678  | ) |      |             |     |   |         |   | (1,678  | )
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |  
|Balance at January 27, 2001 |                     |                                                                        | 99,992 |                |   |         | 1 |             |   |               | 40,254 |      |       |       | (30,682  | ) |         |   | (221 | )           |      |   | 9,352   |  
|                            | Comprehensive loss: |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |   |        
|                            |                     | Net loss                                                               |        |                |  |         |   |             |  |               |        |      |      |       |          |   | (7,907  | ) |      |             |     |   |         |   | (7,907  | )
|                            |                     | Foreign currency
translation
Adjustment, net of tax                    |        |                |  |         |   |             |  |               |        |      |      |       |          |   |        |   |      |             | (150 | ) |         |   | (150    | )
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |  
|                            |                     | Comprehensive loss                                                     |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |   | (8,057  | )
|                            |                     | Dividends and accretion
on preferred stock                             |        |                |  |         |   |             |  |               |        |      |      |       |          |   | (3,046  | ) |      |             |     |   |         |   | (3,046  | )
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |  
|Balance at January 26, 2002 |                     |                                                                        | 99,992 |                |   |         | 1 |             |   |               | 40,254 |      |       |       | (41,635  | ) |         |   | (371 | )           |      |   | (1,751  | )
|                            | Comprehensive loss: |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |   |        
|                            |                     | Net loss                                                               |        |                |  |         |   |             |  |               |        |      |      |       |          |   | (77,968 | ) |      |             |     |   |         |   | (77,968 | )
|                            |                     | Foreign currency
translation adjustment,
net of tax                    |        |                |  |         |   |             |  |               |        |      |      |       |          |   |        |   |      |             | 84   |   |         |   | 84      |  
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |  
|                            |                     | Comprehensive loss                                                     |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |   | (77,884 | )
|                            |                     | Dividends and accretion
on preferred stock                             |        |                |  |         |   |             |  |               |        |      |      |       |          |   | (3,447  | ) |      |             |     |   |         |   | (3,447  | )
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |  
|Balance at January 25, 2003 |                     |                                                                        | 99,992 |                |   | $       | 1 |             |   | $             | 40,254 |      |       | $     | (123,050 | ) |         | $ | (287 | )           |      | $ | (83,082 | )
|                            |                     |                                                                        |        |                |   |         |   |             |   |               |        |      |       |       |          |   |         |   |      |             |      |   |         |  
|                           
|See accompanying notes.     |                     |                                                                       

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Iron Age Holdings Corporation

Consolidated Statements of Cash Flows

|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |        |        |  
|---------------------------------------------------------------------- | --------------------------------------------------------------- | --------------------------------------- | ------- | ---------------- | ------ | ---------------- | ------- | ---------------- | ------ | - | ------- | ------ | ------ | -
|                                                                       |                                                                 |                                         |         |                  |        |                  |         | Year ended       |        |   |         |       
|                                                                       |                                                                 |                                         |         | January 25, 2003 |        | January 26, 2002 |         | January 27, 2001
|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                 
|                                                                       |                                                                 |                                         |         | (In Thousands)  
|Operating activities                                                   |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Net loss                                                               |                                                                 | $                                       | (77,968 | )                |        | $                | (7,097  | )                |        | $ | (231    | )     
|Adjustments to reconcile net loss to net cash provided by              |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|operating activities:                                                  |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|                                                                       | Cumulative effect of change in accounting principle,
net of tax |                                         |         | 77,510           |        |                  |         |                 |        |   |         |       |       
|                                                                       | Extraordinary gain, net of tax                                  |                                         |         | (6,080           | )      |                  |         |                 |        |   |         | (2,285 | )     
|                                                                       | Loss on divestiture                                             |                                         |         |                 |        |                  |         | 1,860            |        |   |         |       |       
|                                                                       | Increase in fair value of interest rate swap                    |                                         |         |                 |        |                  |         | (764             | )      |   |         |       |       
|                                                                       | Depreciation and amortization                                   |                                         |         | 4,314            |        |                  |         | 6,753            |        |   |         | 6,122  |       
|                                                                       | Amortization of deferred financing fees included in
interest    |                                         |         | 788              |        |                  |         | 822              |        |   |         | 669    |       
|                                                                       | Accretion of original issue discount                            |                                         |         | 4,561            |        |                  |         | 4,329            |        |   |         | 3,848  |       
|                                                                       | Accrual of paid-in-kind interest                                |                                         |         | 84               |        |                  |         |                 |        |   |         |       |       
|                                                                       | Provision for losses on accounts receivable                     |                                         |         | 331              |        |                  |         | 418              |        |   |         | 565    |       
|                                                                       | Deferred income taxes                                           |                                         |         | (1,131           | )      |                  |         | (1,283           | )      |   |         | (1,021 | )     
|                                                                       | Stock-based compensation                                        |                                         |         | 132              |        |                  |         |                 |        |   |         |       |       
|                                                                       | Changes in operating assets and liabilities:                    |                                         |         |                  |        |                  |         |                  |        |   |         |        |       
|                                                                       |                                                                 | Accounts receivable                     |         |                  | 72     |                  |         |                  | 2,492  |   |         |        | 180    |  
|                                                                       |                                                                 | Inventories                             |         |                  | 418    |                  |         |                  | 1,363  |   |         |        | 958    |  
|                                                                       |                                                                 | Prepaid expenses                        |         |                  | (986   | )                |         |                  | 221    |   |         |        | (703   | )
|                                                                       |                                                                 | Other noncurrent assets                 |         |                  | 148    |                  |         |                  | 2,638  |   |         |        | (96    | )
|                                                                       |                                                                 | Accounts payable                        |         |                  | (1,415 | )                |         |                  | 1,660  |   |         |        | 454    |  
|                                                                       |                                                                 | Accrued expenses                        |         |                  | 923    |                  |         |                  | (3,242 | ) |         |        | (2,316 | )
|                                                                       |                                                                 | Payment of other noncurrent liabilities |         |                  | (66    | )                |         |                  | (87    | ) |         |        | (50    | )
|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Net cash provided by operating activities                              |                                                                 |                                         | 1,635   |                  |        |                  | 9,273   |                  |        |   | 6,094   |       
|Investing activities                                                   |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Capitalization of internal use software costs                          |                                                                 |                                         | (305    | )                |        |                  | (1,116  | )                |        |   | (2,526  | )     
|Purchases of property and equipment, net                               |                                                                 |                                         | (2,866  | )                |        |                  | (1,465  | )                |        |   | (1,895  | )     
|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Net cash used in investing activities                                  |                                                                 |                                         | (3,171  | )                |        |                  | (2,581  | )                |        |   | (4,421  | )     
|Financing activities                                                   |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Borrowing under revolving credit agreement                             |                                                                 |                                         | 81,587  |                  |        |                  | 18,825  |                  |        |   | 48,650  |       
|Issuance of redeemable preferred stock                                 |                                                                 |                                         |        |                  |        |                  |        |                  |        |   | 4,761   |       
|Payment of taxes on purchase of discount notes by majority
stockholder |                                                                 |                                         |        |                  |        |                  |        |                  |        |   | (2,220  | )     
|Capital contribution by majority stockholder                           |                                                                 |                                         |        |                  |        |                  |        |                  |        |   | 2,155   |       
|Principal payments on debt                                             |                                                                 |                                         | (78,613 | )                |        |                  | (24,384 | )                |        |   | (54,911 | )     
|Payment of financing costs                                             |                                                                 |                                         | (2,291  | )                |        |                  | (263    | )                |        |   | (232    | )     
|Principal payments on capital leases, net                              |                                                                 |                                         | 477     |                  |        |                  | (187    | )                |        |   | 43      |       
|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Net cash provided by (used in) financing activities                    |                                                                 |                                         | 1,160   |                  |        |                  | (6,009  | )                |        |   | (1,754  | )     
|Effect of exchange rate changes on cash and cash equivalents           |                                                                 |                                         | 84      |                  |        |                  | (150    | )                |        |   | (97     | )     
|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Increase (decrease) in cash and cash equivalents                       |                                                                 |                                         | (292    | )                |        |                  | 533     |                  |        |   | (178    | )     
|Cash and cash equivalents at beginning of year                         |                                                                 |                                         | 624     |                  |        |                  | 91      |                  |        |   | 269     |       
|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       
|Cash and cash equivalents at end of year                               |                                                                 | $                                       | 332     |                  |        | $                | 624     |                  |        | $ | 91      |       
|                                                                       |                                                                 |                                         |         |                  |        |                  |         |                  |        |   |         |       

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Consolidated Statements of Cash Flows (continued)

|                                                                    |              |   |                  |       |                  |   |                  |       |  |   |       |        | 
|------------------------------------------------------------------- | ------------ | - | ---------------- | ----- | ---------------- | - | ---------------- | ----- |  | - | ----- | ------ | 
|                                                                    |              |   |                  |       |                  |   | Year ended       |       |  |   |      
|                                                                    |              |   | January 25, 2003 |       | January 26, 2002 |   | January 27, 2001
|                                                                    |              |   |                  |       |                  |   |                 
|                                                                    |              |   | (In Thousands)  
|Supplemental disclosures of cash flow information                   |              |   |                  |       |                  |   |                  |       |  |   |       |       
|Cash paid during the period for:                                    |              |   |                  |       |                  |   |                  |       |  |   |       |       
|                                                                    | Interest     |   | $                | 9,249 |                  |   | $                | 8,637 |  |   | $     | 10,782 | 
|                                                                    | Income taxes |   |                  | 387   |                  |   |                  | 925   |  |   |       | 3,238  | 
|Supplemental schedule of noncash investing and
financing activities |              |   |                  |       |                  |   |                  |       |  |   |       |       
|Dividends and accretion on redeemable preferred stock               |              | $ | 3,447            |       |                  | $ | 3,046            |       |  | $ | 1,678 |       
|Capital lease agreements for equipment                              |              |   | 797              |       |                  |   | 253              |       |  |   | 450   |       
|                                                                   
|See accompanying notes.                                             |              |  

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Iron Age Holdings Corporation

Notes to Consolidated Financial Statements

January 25, 2003 and January 26, 2002

1.     Organization and Significant Accounting Policies

Organization and Activities

The accompanying consolidated financial statements include the accounts of Iron
Age Holdings Corporation and its wholly owned subsidiaries, Iron Age
Corporation (Iron Age), Falcon Shoe Mfg. Co. (Falcon), Iron Age Investment
Company, Iron Age Mexico S.A. de C.V. (Mexico) and Iron Age Canada Ltd.
(Canada) (together, ''Holdings). All significant intercompany accounts and
transactions have been eliminated in consolidation. Holdings is majority-owned
by Fenway Partners Capital Fund, L.P. (Fenway).

Going Concern

Holdings was in compliance
with its debt covenants under the Bank Credit Facility (see Note 7 to financial
statements) as of January 25, 2003. However, during a review of anticipated net
income and cash flows for the first quarter of the year ending January 31, 2004,
management has determined that, more likely than not, Holdings will not be in
compliance with the financial covenants under the Bank Credit Facility,
including the Senior Debt Ratio and Fixed Charge Coverage Ratio (as defined in
the Bank Credit Facility). As a result, Holdings has requested that the senior
lenders to the Bank Credit Facility amend the financial covenants for the first
quarter and every other quarter of the year ending January 31, 2004 to a level that
considering Holdings' current operations and forecasts would make it
probable that holdings will be in compliance with its Bank Credit
Facility. Holdings was not in compliance with its financial
covenants for the first quarter ending April 26, 2003. Effective May
12, 2003, all of Holdings' long-term debt and debt payable to
majority stockholders have been classified as current liabilities. As of May 12,
2003, Holdings and the senior lenders have not finalized negotiations of an
amendment to the Bank Credit Facility with respect to the covenants
of the second, third and fourth quarter for the year
ending January 31, 2004. Holdings and the senior lender under the Bank Credit
Facility have entered into the First Amendment to Loan and Security
Agreement and Limited Waiver (the First Amendment) to the
Bank Credit Facility that
will allow Holdings to continue to operate under the existing requirements of
the Bank Credit Facility for an additional 45 days through June 25, 2003, with
certain modifications relating to excess cash availability, and will allow
Holdings and the lenders under the Bank Credit Facility to continue to negotiate
financial covenants for the year ending January 31, 2004. During the 45-day
period of the First Amendment, Holdings is required to maintain excess cash
availability of at least $3.0 million. As of May 12, 2003, Holdings cash
availability was $3.3 million. Should Holdings and its senior lenders not be
able to reach an agreement on an additional amendment to the Bank Credit
Facility prior to the expiration of the First Amendment or not be able to obtain
an additional waiver, Holdings would be in default under the Bank Credit
Facility and such default would also constitute an event of default under the
terms of the Discount Notes and the Senior Subordinated Notes, which would have
a material adverse impact on Holdings reported financial position and results of
its operations. Holdings ability to continue as a going concern is largely
dependent on its ability to maintain its existing financing arrangements to
operate the business.

The accompanying financial
statements have been prepared assuming Holdings will continue as a going
concern. However, as discussed above, Holdings does not anticipate being in
compliance with certain financial covenants under the Bank Credit Facility at
the end of the first quarter of the year ending January 31, 2004. Holdings plans
to continue to negotiate with its senior lenders to amend the Bank Credit
Facility during the next 45 days to amend the financial covenants to levels for
the year ending January 31, 2004 that more closely correspond to Holdings
current operations.

Holdings distributes and manufactures work footwear with operations
concentrated in North America. As a percentage of sales, 98% and 2% of
Holdings operations are related to distributing and manufacturing,
respectively. Holdings has one reportable segment, distribution of work
footwear in the United States.

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1.     Organization and Significant Accounting Policies (continued)

Fiscal Year

Holdings utilizes a fiscal year of 52 or 53 weeks, ending on the last Saturday
in January. Each of Holdings fiscal years set forth herein contained 52
weeks.

Cash and Cash Equivalents

Holdings considers all highly liquid investments with a maturity of 90 days or
less at the time of original purchase to be cash equivalents.

Inventories

Approximately 94% of inventories at January 25, 2003 and 93% of inventories at
January 26, 2002 are stated at the lower of last-in, first-out (LIFO) cost or
market. The remaining inventories are stated at the lower of first-in,
first-out (FIFO) cost or market.

Catalog Costs

Holdings produces periodic catalogs and amortizes the mailing and production
costs over the related revenue stream, generally four to twelve months.
Holdings has approximately $0.3 million and $0.4 million of unamortized catalog
costs at January 25, 2003 and January 26, 2002, respectively. For the years
ended January 25, 2003, January 26, 2002 and January 27, 2001, advertising
expense recorded by Holdings was approximately $1.4 million, $1.8 million and
$2.1 million, respectively.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.
Depreciation is provided on the straight-line method based on estimated useful
lives, as follows:

|                          |  |          
|------------------------- |  | ---------
|Building and improvements |  | 40years  
|Machinery and equipment   |  | 3-10years

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1.     Organization and Significant Accounting Policies (continued)

Property and Equipment (continued)

Leasehold improvements are amortized over the shorter of the useful life of the
asset or the term of the lease. Expenses for repairs, maintenance and renewals
are charged to operations as incurred. Expenditures which improve an asset or
extend its useful life are capitalized.

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets,management evaluates the ongoing value of leasehold
improvements and store fixtures associated with retail stores which have been
open longer than one year. Impairment losses are recorded on long-lived assets
used in operations when events and circumstances indicate that the assets might
be impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets. When events such as
these occur, the impaired assets are adjusted to estimated fair value and an
impairment loss is recorded in selling, general and administrative expenses.

Intangible Assets

Customer ListsCustomer lists represent the estimated cost of replacing
Holdings customer base and are being amortized by the straight-line method
over 15 years. The amortization period of 15 years approximates Holdings
historical customer loss experience.

Deferred Financing CostDeferred financing costs relate to the costs of
obtaining financing. These costs are being amortized over the period the
related loans are outstanding.

Internal Use Software Costs

Holdings records internal use software costs in accordance with Statement of
Position 98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. Holdings capitalized approximately $0.3 million,
$1.1 million and $2.5 million related to internal use software costs for the
fiscal years ended January 25, 2003, January 26, 2002 and January 27, 2001,
respectively. These costs are included in Property and equipment in the
financial statements. Internal use software costs are being amortized by the
straight-line method over three to five years.

Foreign Currency Translation

The assets and liabilities of Holdings foreign subsidiaries are measured using
the local currency as the functional currency and are translated into U.S.
dollars at exchange rates as of the balance sheet date. Income statement
amounts are translated at the weighted average rates of exchange during the
year. The translation adjustment is accumulated in other comprehensive loss.
Foreign currency transaction gains and losses are included in determining net
income. Such amounts are not material.

Revenue Recognition

Revenue from product sales is recognized at the time products are shipped, at
which time title passes to the customer.

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1.     Organization and Significant Accounting Policies (continued)

Shipping and handling costs associated with the delivery of products to
Holdings customers, retail stores and shoemobiles of approximately $2.4
million, $2.1 million and $2.2 million are recorded as components of selling,
general and administrative expenses for the years ended January 25, 2003,
January 26, 2002 and January 27, 2001, respectively.

Financial Instruments

Effective January 28, 2001, Holdings adopted SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities.

Holdings periodically enters into interest rate swap agreements to moderate its
exposure to interest rate changes. Until its termination on October 19, 2001,
the interest rate swap agreement had a notional amount of $25 million. Holdings
paid floating rate amounts computed at 4.16% above the LIBOR rate in exchange
for fixed interest payments at a rate of 9.875%. Upon adoption, Holdings
recorded the cumulative fair value of the interest rate swap of $0.1 million in
other noncurrent assets, with a corresponding amount to other noncurrent
liabilities. Interest payment amounts were exchanged over the life of the
agreement without an exchange of the underlying principal amounts. The
differential paid or received was accrued as interest rates changed and was
recognized as an adjustment to interest expense related to the debt. The
related amount payable to or receivable from counterparties was included in
accrued interest. Since the interest rate swap agreement was not determined to
be highly effective, it was not designated as a hedge. Based upon the terms of
the agreement, the fair value of the interest rate swap was recognized in the
financial statements and changes in the fair value were included in interest
expense. Total gains recognized in interest expense, including the gain on
termination, were $0.8 million for the fiscal year ended January 26, 2002.

Stock-Based Compensation

Certain members of Holdings management are granted options to purchase stock
in Holdings. Holdings recognizes stock-based compensation using the intrinsic
value method. Compensation expense related to stock option grants is reflected
in Holdings financial statements as a charge to income and as an addition to
paid-in capital. For disclosure purposes, pro forma net income is provided as
if the fair value method had been applied.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure, which amends SFAS No. 123, Accounting
for Stock-Based Compensation,to provide alternative methods of transition for
an entity that voluntarily changes to the fair value based method of accounting
for stock-based employee compensation. Holdings continues to account for its
stock-based employee compensation plan using the intrinsic value method under
Accounting Principles Board Opinion No. 25.

Pro forma information regarding net income and earnings per share is required
by SFAS No. 148, which also requires that the information be determined as if
Holdings has accounted for its employee stock options granted beginning in the
fiscal year subsequent to December 31, 1994 under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions:

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For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period. Holdings pro forma
information follows:

|          |                                                                                               |  |                  |         |                  |  |                  |        |   |  |   |      |  
|--------- | --------------------------------------------------------------------------------------------- |  | ---------------- | ------- | ---------------- |  | ---------------- | ------ | - |  | - | ---- | -
|          |                                                                                               |  |                  |         |                  |  | Year ended       |        |   |  |  
|          |                                                                                               |  | January 25, 2003 |         | January 26, 2002 |  | January 27, 2001
|          |                                                                                               |  |                  |         |                  |  |                 
|          |                                                                                               |  | (In Thousands)  
|Net loss: |                                                                                               |  |                  |         |                  |  |                  |        |   |  |   |     
|          | As reported                                                                                   |  | $                | (77,968 | )                |  | $                | (7,907 | ) |  | $ | (231 | )
|          | Less:   Total
stock-based
compensation
expense
determined under
fair value
method, net of
tax |  |                  | (27     | )                |  |                  | (36    | ) |  |   | (21  | )
|          | Pro forma                                                                                     |  |                  | (77,995 | )                |  |                  | (7,943 | ) |  |   | (252 | )

Income Taxes

Deferred income taxes are provided for the tax consequences of temporary
differences between financial statement carrying amounts and the tax bases of
assets and liabilities. The effect on deferred taxes of a change in tax rates
is recognized in income in the period of the enactment.

Other Comprehensive Income

Holdings applies SFAS No. 130, Reporting Comprehensive Income,in accounting
for foreign currency translation gains and losses. SFAS No. 130 requires
foreign currency translation gains and losses, which are reported separately in
stockholders equity, to be included in other comprehensive income.

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1.  Organization and Significant Accounting Policies (continued)

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

Recently Issued Accounting Standards

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities (FIN
46). A variable interest entity (VIE) is one where the contractual or
ownership interests in an entity change with changes in the entitys net asset
value. This interpretation requires the consolidation of a VIE by the primary
beneficiary, and also requires disclosure about VIEs where an enterprise has a
significant variable interest but is not the primary beneficiary. At the
effective date, Holdings has not entered into any VIEs.

In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of the Indebtedness of Others (FIN 45). This interpretation
changes the accounting recognition and disclosure requirements for certain
guarantees issued on behalf of other parties which represent either a
contingent or a non-contingent obligation for the guarantor to make payments or
to perform specified activities. Effective January 1, 2003, FIN 45 mandates the
separate fair value recognition of guarantees entered into on or after that
date. At January 25, 2003, Holdings has no material guarantees as defined in
FIN 45.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes the
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset.
Upon settlement of the liability, an entity either settles the obligation for
its recorded amount or incurs a gain or loss upon settlement. This standard is
effective for fiscal years beginning after June 15, 2002, with earlier
application encouraged. Holdings is currently evaluating the provisions of
SFAS No. 143, but does not believe that SFAS No. 143 will have a material
impact on its financial statements.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities,
addresses financial accounting and reporting for costs associated with exit or
disposal activities and nullifies EITF Issue No. 94-3, Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an
Activity(including Certain Costs Incurred in a Restructuring).The principal
differences between SFAS No. 146 and Issue 94-3 relates to SFAS No. 146s
requirements for recognition of a liability for a cost associated with an exit
or disposal activity. SFAS No. 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized when the liability
is incurred. Under Issue 94-3, a liability for an exit cost as generally
defined in Issue 94-3 was recognized at the date of an entitys commitment to
an exit plan. A fundamental conclusion reached by the FASB in SFAS No. 146 is
that an entitys commitment to a plan, by itself, does not create an obligation
that meets the definition of a liability. Therefore, SFAS No. 146 eliminates
the definition and requirements for recognition of exit costs in Issue 94-3.
This Statement also establishes that fair value is the objective for initial
measurement of the liability. The provisions of SFAS No. 146 are effective for
exit or disposal activities that are initiated after December 31, 2002, with
early application encouraged. Holdings is currently evaluating the provisions
of SFAS No. 146 to determine what impact, if any, it will have on its financial
statements.

Reclassifications

The year ended January 26, 2002 financial
statements have been reclassified to conform with the current year
presentation.

2.  Divestitures

On December 14, 2001, Iron Age sold the assets of its vision products business
line, which consisted primarily of inventory, accounts receivable, fixed assets
and certain intangible assets with a carrying value of approximately $2.6

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million and revenues of approximately $1.2 million to AEARO Company I for
approximately $0.7 million. The sale resulted in a loss of approximately $1.9
million. Holdings net income from the vision products business line was not
material.

3.   Accounts Receivable

Accounts receivable are presented net of an allowance for doubtful accounts of
approximately $0.5 million and $0.4 million as of January 25, 2003 and January
26, 2002, respectively. Holdings does not require collateral for its trade
accounts receivable. Management continually evaluates its accounts receivable
and adjusts its allowance for doubtful accounts for changes in potential credit
risk. Holdings serves a diverse customer base and believes there is minimal
concentration of credit risk.

4.   Inventories

The major components of inventories are as follows:

|                                                      |  |                |        |             |  |   |        | 
|----------------------------------------------------- |  | -------------- | ------ | ----------- |  | - | ------ | 
|                                                      |  | January 25,    |        | January 26,
|                                                      |  | 2003           |        | 2002       
|                                                      |  |                |        |            
|                                                      |  | (In Thousands)
|Finished products                                     |  | $              | 29,625 |             |  | $ | 29,894 | 
|Raw materials and work in process                     |  |                | 1,940  |             |  |   | 2,689  | 
|                                                      |  |                |        |             |  |   |        | 
|                                                      |  |                | 31,565 |             |  |   | 32,583 | 
|Less excess of current cost over LIFO inventory value |  |                | (106   | )           |  |   | 494    | 
|                                                      |  |                |        |             |  |   |        | 
|Inventories                                           |  | $              | 31,671 |             |  | $ | 32,089 | 
|                                                      |  |                |        |             |  |   |        | 

5.   Property and Equipment

Property and equipment consist of the following:

|                                               |  |                |        |             |  |   |        | 
|---------------------------------------------- |  | -------------- | ------ | ----------- |  | - | ------ | 
|                                               |  | January 25,    |        | January 26,
|                                               |  | 2003           |        | 2002       
|                                               |  |                |        |            
|                                               |  | (In Thousands)
|Land and buildings                             |  | $              | 3,165  |             |  | $ | 3,189  | 
|Vehicles                                       |  |                | 6,993  |             |  |   | 5,231  | 
|Furniture and fixtures                         |  |                | 1,615  |             |  |   | 1,475  | 
|Machinery and equipment                        |  |                | 7,859  |             |  |   | 7,298  | 
|Leasehold improvements                         |  |                | 2,199  |             |  |   | 1,846  | 
|Software                                       |  |                | 5,265  |             |  |   | 4,966  | 
|                                               |  |                |        |             |  |   |        | 
|                                               |  |                | 27,096 |             |  |   | 24,005 | 
|Less accumulated depreciation and amortization |  |                | 14,415 |             |  |   | 11,331 | 
|                                               |  |                |        |             |  |   |        | 
|Net property and equipment                     |  | $              | 12,681 |             |  | $ | 12,674 | 
|                                               |  |                |        |             |  |   |        | 

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6.  Intangible Assets

Intangible assets consist of the following:

|                              |  |                |        |             |  |   |         | 
|----------------------------- |  | -------------- | ------ | ----------- |  | - | ------- | 
|                              |  | January 25,    |        | January 26,
|                              |  | 2003           |        | 2002       
|                              |  |                |        |            
|                              |  | (In Thousands)
|Goodwill                      |  | $              |       |             |  | $ | 90,290  | 
|Customer lists                |  |                | 16,680 |             |  |   | 16,654  | 
|Deferred financing costs      |  |                | 6,378  |             |  |   | 6,120   | 
|Other                         |  |                | 152    |             |  |   | 152     | 
|                              |  |                |        |             |  |   |         | 
|                              |  |                | 23,210 |             |  |   | 113,216 | 
|Less accumulated amortization |  |                |        |             |  |   |         | 
|Goodwill                      |  |                |       |             |  |   | 11,065  | 
|Customer lists                |  |                | 6,570  |             |  |   | 5,443   | 
|Deferred financing costs      |  |                | 1,971  |             |  |   | 2,669   | 
|Other                         |  |                | 131    |             |  |   | 109     | 
|                              |  |                |        |             |  |   |         | 
|                              |  |                | 8,672  |             |  |   | 19,286  | 
|                              |  |                |        |             |  |   |         | 
|Intangible assets, net        |  | $              | 14,538 |             |  | $ | 93,930  | 
|                              |  |                |        |             |  |   |         | 

Effective January 27, 2002, Holdings adopted SFAS No. 141, Business
Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. Under
the new rules, goodwill and intangible assets deemed to have indefinite lives
are no longer amortized but are subject to annual impairment tests in
accordance with the provisions of SFAS No. 142. While amortization of goodwill
will no longer be reflected in Holdings financial statements, amortization
related to certain of Holdings other intangible assets will continue to be
deductible for income tax purposes. Amortization expense related to Holdings
goodwill was $2.3 million for the fiscal years ended January 26, 2002 and
January 27, 2001.

In connection with the adoption of SFAS No. 142, Holdings tested its goodwill
for impairment, which required an assessment of whether there is an indication
that goodwill is impaired as of the date of adoption, January 27, 2002.
Holdings identified two reporting units, distribution and manufacturing, and
determined the carrying value of those units as of the date of adoption. Only
the distribution reporting unit had related goodwill. Holdings assessed the
fair value of the distribution reporting unit and compared it to the reporting
units carrying amount, as computed in Step 1 of the evaluation. The fair
value of the distribution reporting unit in Step 1 of the evaluation was
determined using a 5-year discounted cash flow model. Key assumptions included
managements estimates of future profitability, capital requirements, a
discount rate of 14.6% and a terminal growth rate of 2%. Based upon the initial
evaluation, Step 2 of the evaluation was required, as the distribution
reporting unit had a carrying value in excess of its fair value. In
conjunction with Step 2, Holdings retained an independent valuation firm to
prepare a valuation of Holdings assets and liabilities. Step 2 requires the
implied fair value of goodwill to be calculated by allocating the fair value of
the reporting unit to its tangible and intangible net assets, other than
goodwill. The remaining unallocated fair value represents the implied fair
value of the goodwill. Management, using the independent valuation firm, has
determined that all of Holdings goodwill was impaired at January 27, 2002.
Accordingly, Holdings has recorded a goodwill impairment charge of $77.5
million, net of tax of $1.7 million, as a cumulative effect of change in
accounting for goodwill, for the fiscal year ended January 25, 2003. The
goodwill impairment charge has no effect on cash, the ongoing operation of
Holdings, the covenants relating to the Bank Credit Facility or the indentures
for the Discount Notes and the Senior Subordinated Notes.

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The following table presents reported net (loss) income exclusive of goodwill
amortization expense for the years ended January 25, 2003, January 26, 2002 and
January 27,2001, respectively.

|                                  |  |   |             |   |             |   |                |   |  |   |       |   | 
|--------------------------------- |  | - | ----------- | - | ----------- | - | -------------- | - |  | - | ----- | - | 
|                                  |  |   | January 25, |   | January 26, |   | January 27,   
|                                  |  |   | 2003        |   | 2002        |   | 2001          
|                                  |  |   |             |   |             |   |               
|                                  |  |   |             |   |             |   | (In Thousands) |   |  |   |      
|Reported net loss                 |  | $ | (77,968     | ) |             | $ | (7,097         | ) |  | $ | (231  | )
|Add back:                         |  |   |             |   |             |   |                |   |  |   |       |  
|Goodwill amortization, net of tax |  |   |            |   |             |   | 2,297          |   |  |   | 2,304 |  
|                                  |  |   |             |   |             |   |                |   |  |   |       |  
|Adjusted net (loss) income        |  | $ | (77,968     | ) |             | $ | (4,800         | ) |  | $ | 2,073 |  
|                                  |  |   |             |   |             |   |                |   |  |   |       |  

Amortization expense for other intangible assets subject to amortization for
the year ended January 25, 2003, January 26, 2002 and January 27, 2001 are
$2.1 million, $2.0 million and $1.6 million, respectively. Estimated
amortization expense for the next five fiscal years is approximately $2.2
million per year.

Financing costs incurred in connection with obtaining the Senior Subordinated
Notes, the Discount Notes and the Bank Credit Facility of approximately $4.4
million have been deferred by Holdings as of January 25, 2003 and will be
amortized over the period the Senior Subordinated Notes, the Discount Notes and
the Bank Credit Facility are outstanding (see Note 7).

During the year ended January 25, 2003, Holdings expensed approximately $0.2
million, in connection with certain repurchases of the Discount Notes (see Note
7). During the year ended January 27, 2001, Holdings expensed approximately
$0.6 million, in connection with the repurchase of certain Senior Subordinated
Notes (see Note 7).

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7.  Long-Term Debt

Long-term debt consists of the following:

|                                          |  |   |                |   |             |   |         |   | 
|----------------------------------------- |  | - | -------------- | - | ----------- | - | ------- | - | 
|                                          |  |   | January 25,    |   | January 26,
|                                          |  |   | 2003           |   | 2002       
|                                          |  |   |                |   |            
|                                          |  |   | (In Thousands)
|Revolving Credit Facility                 |  | $ | 16,107         |   |             | $ |        |  
|Term Loan A                               |  |   | 933            |   |             |   |        |  
|Term Loan B                               |  |   | 2,767          |   |             |   |        |  
|Term Loan C                               |  |   | 12,084         |   |             |   |        |  
|Previous Bank Credit Facility             |  |   |               |   |             |   | 27,002  |  
|9-7/8% Senior Subordinated Notes due 2008 |  |   | 65,000         |   |             |   | 65,000  |  
|12-1/8% Senior Discount Notes due 2009    |  |   | 35,134         |   |             |   | 45,140  |  
|Other notes                               |  |   |               |   |             |   | 178     |  
|Capitalized lease obligations             |  |   | 1,017          |   |             |   | 540     |  
|Unamortized
discount                      |  |   | (1,003         | ) |             |   | (6,157  | )
|                                          |  |   |                |   |             |   |         |  
|                                          |  | $ | 132,039        |   |             | $ | 131,703 |  
|                                          |  |   |                |   |             |   |         |  

Bank Credit Facility

On September 23, 2002, Holdings, Iron Age and Falcon, one of Iron Ages
wholly-owned subsidiaries, entered into a $50.0 million Loan and Security
Agreement (the Bank Credit Facility) with a financial institution and another
lender. The Bank Credit Facility consists of a $38.0 million revolving credit
facility (the Revolving Credit Facility), including a $2.0 million letter of
credit subfacility, and two term loans: Term Loan A of up to an aggregate of
$1.0 million and Term loan B of up to an aggregate of $3.0 million. In
addition, the Bank Credit Facility includes a third term loan, Term Loan C, of
up to an aggregate of $12.0 million. Availability under the Bank Credit
Facility is governed by a borrowing base determined by advance rates against
the qualified inventory and accounts receivable of Iron Age and Falcon, as
defined in the Bank Credit Facility agreement. Outstanding obligations under
the letter of credit subfacility were $0.5 million at January 25, 2003.

The Revolving Credit Facility and the Term Loan C are due in full on September
23, 2007. The outstanding balances of the Term Loan A and the Term Loan B are
due in installments through September 23, 2007. Term Loan A, Term Loan B and
the Revolving Credit Facility bear interest at either the prime rate or LIBOR,
at the option of Holdings, plus an applicable margin. As of January 25, 2003,
outstanding borrowings on the Revolving Credit Facility at prime rate plus a
margin of 1.50% and LIBOR plus a margin of 3.75% are approximately $2.1 million
and $14.0 million, respectively. As of January 25, 2003, borrowings of
approximately $0.9 million for Term Loan A are at prime rate plus a margin of
1.50%. As of January 25, 2003, borrowings on Term Loan B at prime rate plus a
margin of 3.25% and LIBOR plus a margin of 5.50% are approximately $0.3 million
and $2.5 million, respectively. The interest rate for Term Loan C is 13.25%,
including 2.00% paid-in-kind. Holdings pays a 0.375% commitment fee on the
undrawn amounts of the Revolving Credit Facility and a 2.00% letter of credit
fee on any outstanding Letters of Credit. As of January 25, 2003, the prime
rate was 4.25% and the LIBOR rate was

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approximately 1.40%.

At closing, Holdings drew the entire amount of Term Loan A, Term Loan B and
Term Loan C and approximately $14.2 million on the Revolving Credit Facility,
to refinance its Previous Bank Credit Facility of approximately $27.6 million,
including accrued interest, and to pay certain financing fees and expenses. In
connection with the refinancing of Holdings Previous Bank Credit Facility,
Holdings wrote-off approximately $0.2 million, net of tax of approximately $0.1
million, of unamortized debt issuance costs remaining from its Previous Bank
Credit Facility.

Holdings incurred approximately $2.1 million in capitalizable debt issuance
costs, in connection with the Bank Credit Facility, which are being amortized
over its term.

The Bank Credit Facility contains certain financial and other covenants,
including covenants requiring Holdings to maintain various financial ratios,
limiting its ability to incur additional indebtedness, restricting
Iron Ages ability to upstream cash to Holdings for payment of
interest on the Discount Notes, restricting the amount
of capital expenditures that may be incurred, and limiting transactions with
affiliates. The Bank Credit Facility also limits Holdings ability to engage
in mergers or acquisitions, sell certain assets, pay dividends or repurchase
its stock. The Bank Credit Facility is secured by a first priority security
interest in substantially all of Holdings assets. Holdings domestic and
Canadian subsidiaries are required to guarantee its obligations under the Bank
Credit Facility.

Although the Bank Credit Facility expires on September 23, 2007, the Revolving
Credit Facility has been classified as current in accordance with SFAS No. 6,
Classification of Short Term Obligations Expected to be Refinanced.

Previous Bank Credit Facility

Iron Age and Holdings entered into the Previous Bank Credit Facility with a
syndicate of lenders and a financial institution, as agent for itself and the
other lenders which, as amended, provided for a $41.1 million senior secured
credit facility that was comprised of a $20.0 million revolving working capital
facility and, as amended, a $21.1 million acquisition term loan facility. The
Previous Bank Credit Facility was paid in full on September 23, 2002, in
conjunction with closing on the Bank Credit Facility, as discussed above.

Borrowings under the Previous Bank Credit Facility accrued interest, at the
option of Iron Age, at either LIBOR plus 3.25% or the greater of the financial
institutions prime rate and the federal funds rate plus 1.75%. Borrowings on
the Previous Bank Credit Facility accrued interest at 6.50% for prime rate
borrowings and between 5.00% and 5.44% for LIBOR borrowings, respectively, at
January 26, 2002.

Iron Age classified its borrowings under the Previous Bank Credit Facility as
long-term as of January 26, 2002 due to its ability and intent to maintain such
borrowings on a long-term basis.

9-7/8% Senior Subordinated Notes Due 2008

The 9-7/8% Senior Subordinated Notes (the Senior Subordinated Notes) accrue
interest at the rate of 9-7/8% per annum and are payable semiannually in
arrears on May 1 and November 1, commencing on November 1, 1998.

The Senior Subordinated Notes are subordinated in right of payment to all
existing and future senior indebtedness of Iron Age.

The Senior Subordinated Notes are redeemable at the option of Iron Age on and
after May 1, 2003 at prices

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decreasing from 104.938% of the principal amount
thereof to par on May 1, 2006 and thereafter. Iron Age is required to redeem
the outstanding Senior Subordinated Notes based upon certain events as
described in the indenture for the Senior Subordinated Notes.

The indenture for the Senior Subordinated Notes requires Iron Age and its
subsidiaries to comply with certain restrictive covenants, including a
restriction on dividends and limitations on incurrence of indebtedness, certain
payments and distributions and sales of Iron Ages assets and stock.

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 Iron Age 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 January 25, 2003, Iron Age Investment
Company, one of Iron Ages Domestic Restricted Subsidiaries, became a Material
Subsidiary and was required to provide a Subsidiary Guaranty with respect to
the Senior Subordinated Notes. As of January 25, 2003, none of Iron Ages
other Domestic Restricted Subsidiaries became a Material Subsidiary and were
not required to provide a Subsidiary Guaranty with respect to the Senior
Subordinated Notes.

On October 20, 2000, Holdings purchased $16.4 million in principal amount of
its Senior Subordinated Notes for $11.9 million (the October 2000
Transaction). The purchase was funded by $7.1 million of borrowings under the
Bank Credit Facility and the issuance of $4.8 million of Holdings Series C
Preferred Stock to Fenway Partners Capital Fund II, L.P. (Fenway II), an
affiliate of Holdings majority stockholder, Fenway. Holdings recorded an
extraordinary gain of $2.3 million, net of unamortized deferred financing costs
of $0.6 million, and income taxes of $1.7 million. Following the purchase,
such principal amount of the Senior Subordinated Notes was retired. The
transactions described in this paragraph are referred to herein as the October
2000 Transaction.

12-1/8% Senior Discount Notes Due 2009

The 12-1/8% Senior Discount Notes (the Discount Notes) accrue interest at the
rate of 12-1/8% per annum beginning May 1, 2003 and is payable semiannually in
arrears on May 1 and November 1, commencing on November 1, 2003.

The Discount Notes are subordinated in right of payment to all existing and
future senior indebtedness of Holdings.

The Discount Notes are redeemable at the option of Holdings on and after May 1,
2003 at prices decreasing from 106.063% of the principal amount thereof to par
on May 1, 2006 and thereafter. Holdings is required to redeem the outstanding
Discount Notes based upon certain events as described in the indenture for the
Discount Notes.

The indenture for the Discount Notes requires Holdings and its subsidiaries to
comply with certain restrictive covenants, including a restriction on dividends
and limitations on the incurrence of indebtedness, certain payments and
distributions and sales of Holdings assets and stock.

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The ability of Holdings to pay principal and interest on the Discount Notes and
to satisfy other existing and future debt obligations will depend on Iron Ages
ability to distribute dividends to Holdings. Iron Age is party to the Bank
Credit Facility and the indenture for the Senior Subordinated Notes, each of
which imposes substantial restrictions (including the satisfaction of certain
financial conditions) on Iron Ages ability to pay dividends or make other
payments to Holdings. The ability of Iron Age to comply with such conditions
under the Bank Credit Facility and the indenture for the Senior Subordinated
Notes may be affected by events that are beyond the control of Holdings. Future
borrowings by Iron Age can be expected to contain restrictions or prohibitions
on the payment of dividends by Iron Age to Holdings. Applicable state laws may
also, under certain circumstances, impose significant restrictions on the
payment of dividends by Iron Age or Holdings other subsidiaries.

On October 11, 2002, Holdings purchased $6.801 million in face value of its
Discount Notes for $1.037 million. The purchase was funded by borrowings under
the Bank Credit Facility, which were loaned to Holdings pursuant to the
promissory note between Holdings and Iron Age. Holdings recorded an
extraordinary gain of $4.33 million, net of unamortized deferred financing
costs of $0.14 million and income taxes of $0.85 million. Following the
purchase, such principal amount of the Discount Notes was retired.

On November 27, 2002, Holdings purchased $3.205 million in face value of its
Discount Notes for $0.617 million. The purchase was funded by borrowings of
Iron Age under the Bank Credit Facility, which were loaned to Holdings pursuant
to the promissory note between Holdings and Iron Age. Holdings will record an
extraordinary gain of approximately $1.96 million, net of unamortized deferred
financing costs and expenses of $0.07 million and income taxes of $0.41
million. Following the purchase, such principal amount of the Discount Notes
were retired.

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8.  Fair Values of Financial Instruments

The following methods and assumptions were used by Holdings in estimating its
fair value disclosures for financial instruments:

Cash and cash equivalentsThe carrying amount reported in the balance sheet for
cash and cash equivalents approximates its fair value.

Long-term debtThe carrying amounts of Holdings borrowings under its Bank
Credit Facility approximate its fair value because the Bank Credit Facility is
a variable rate debt instrument. The fair values of Holdings Senior
Subordinated Notes and Senior Discount Notes are estimated based upon quoted
market prices. The fair values of Holdings capital lease obligations and other
notes and are estimated using discounted cash flow analysis, based on Holdings
current incremental borrowing rates for similar types of arrangements.

The carrying amounts and fair values of Holdings financial instruments at
January 25, 2003 and January 26, 2002 are as follows:

|                                          |  |                  |        |                  |  |                |        |       |  |   |        |  |  |   |        | 
|----------------------------------------- |  | ---------------- | ------ | ---------------- |  | -------------- | ------ | ----- |  | - | ------ |  |  | - | ------ | 
|                                          |  | January 25, 2003 |        | January 26, 2002
|                                          |  |                  |        |                 
|                                          |  | Carrying         |        | Fair             |  | Carrying       |        | Fair 
|                                          |  | Amount           |        | Value            |  | Amount         |        | Value
|                                          |  |                  |        |                  |  |                |        |      
|                                          |  |                  |        |                  |  | (In Thousands) |        |       |  |  
|Cash and cash equivalents                 |  | $                | 332    |                  |  | $              | 332    |       |  | $ | 624    |  |  | $ | 624    | 
|Bank credit facility                      |  |                  | 31,891 |                  |  |                | 31,891 |       |  |   | 27,002 |  |  |   | 27,002 | 
|9-7/8% Senior Subordinated Notes due
2008 |  |                  | 65,000 |                  |  |                | 32,500 |       |  |   | 65,000 |  |  |   | 29,900 | 
|12-1/8% Senior Discount Notes due 2009    |  |                  | 34,131 |                  |  |                | 1,757  |       |  |   | 38,983 |  |  |   | 3,160  | 
|Other notes                               |  |                  |       |                  |  |                |       |       |  |   | 178    |  |  |   | 178    | 
|Capital lease obligations                 |  |                  | 1,017  |                  |  |                | 1,027  |       |  |   | 540    |  |  |   | 545    | 

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9.  Employee Benefit Plans

Holdings sponsors a 401(k) profit sharing defined contribution pension plan.
Contributions to the plan are based on a percentage of profits, but may be
increased or decreased at the discretion of the Board of Directors. The plan
covers substantially all of its salaried employees. For the fiscal years ended
January 25, 2003, January 26, 2002 and January 27, 2001, pension and profit
sharing expenses were approximately $0.4 million, $0.4 million and $0.6
million, respectively.

10.  Income Taxes

Income tax benefit before extraordinary gains and losses consists of the
following:

|                        |           |         |        |                  |        |                  |        |                  |        |   |        |   |        |  
|----------------------- | --------- | ------- | ------ | ---------------- | ------ | ---------------- | ------ | ---------------- | ------ | - | ------ | - | ------ | -
|                        |           |         |        |                  |        |                  |        | Year ended       |        |   |        |  
|                        |           |         |        | January 25, 2003 |        | January 26, 2002 |        | January 27, 2001
|                        |           |         |        |                  |        |                  |        |                 
|                        |           |         |        | (In Thousands)  
|Income taxes (benefit): |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        | Current:  |         |        |                  |        |                  |        |                  |        |   |        |   |       
|                        |           | Federal |        | $                | (1,034 | )                |        | $                | (162   | ) |        | $ | 1,174  |  
|                        |           | State   |        |                  |       |                  |        |                  |       |   |        |   | (459   | )
|                        |           | Foreign |        |                  | 158    |                  |        |                  | 59     |   |        |   | 100    |  
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        |           |         | (876   | )                |        |                  | (103   | )                |        |   | 815    |  
|                        | Deferred: |         |        |                  |        |                  |        |                  |        |   |        |   |       
|                        |           | Federal |        |                  | (870   | )                |        |                  | (1,300 | ) |        |   | (1,074 | )
|                        |           | State   |        |                  | (39    | )                |        |                  | 17     |   |        |   | 53     |  
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        |           |         | (909   | )                |        |                  | (1,283 | )                |        |   | (1,021 | )
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        |           | $       | (1,785 | )                |        | $                | (1,386 | )                |        | $ | (206   | )
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  

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A reconciliation of U.S. income tax benefit computed at the statutory rate and
actual expense is as follows:

|                                  |                                                          |   |                  |      |                  |   |                  |       |   |   |      |      |  
|--------------------------------- | -------------------------------------------------------- | - | ---------------- | ---- | ---------------- | - | ---------------- | ----- | - | - | ---- | ---- | -
|                                  |                                                          |   |                  |      |                  |   | Year ended       |       |   |   |     
|                                  |                                                          |   | January 25, 2003 |      | January 26, 2002 |   | January 27, 2001
|                                  |                                                          |   |                  |      |                  |   |                 
|                                  |                                                          |   | (In Thousands)  
|Amount computed at statutory
rate |                                                          | $ | (2,830           | )    |                  | $ | (3,177           | )     |   | $ | (925 | )   
|                                  | State and local taxes less
applicable federal income tax |   |                  | (394 | )                |   |                  | (273  | ) |   |      | (302 | )
|                                  | Taxes on foreign investments                             |   |                  | 158  |                  |   |                  | 59    |   |   |      | 100  |  
|                                  | Goodwill and other amortization                          |   |                  |     |                  |   |                  | 1,547 |   |   |      | 836  |  
|                                  | Increase in valuation allowance                          |   |                  | 632  |                  |   |                  | 872   |   |   |      |     |  
|                                  | Increase in tax reserves                                 |   |                  | 525  |                  |   |                  |      |   |   |      |     |  
|                                  | Tax rate change                                          |   |                  |     |                  |   |                  | (425  | ) |   |      |     |  
|                                  | Other                                                    |   |                  | 124  |                  |   |                  | 11    |   |   |      | 85   |  
|                                  |                                                          |   |                  |      |                  |   |                  |       |   |   |      |     
|                                  |                                                          | $ | (1,785           | )    |                  | $ | (1,386           | )     |   | $ | (206 | )   
|                                  |                                                          |   |                  |      |                  |   |                  |       |   |   |      |     

The components of the net deferred tax asset and liability are as follows:

|                                      |                                                |   |                |       |             |   |       |       | 
|------------------------------------- | ---------------------------------------------- | - | -------------- | ----- | ----------- | - | ----- | ----- | 
|                                      |                                                |   | January 25,    |       | January 26,
|                                      |                                                |   | 2003           |       | 2002       
|                                      |                                                |   |                |       |            
|                                      |                                                |   | (In Thousands)
|Deferred tax liabilities:             |                                                |   |                |       |             |   |       |      
|                                      | Inventory                                      |   | $              | 1,753 |             |   | $     | 1,678 | 
|                                      | Property and equipment                         |   |                | 1,081 |             |   |       | 999   | 
|                                      | Customer lists                                 |   |                | 3,469 |             |   |       | 3,851 | 
|                                      | Other                                          |   |                |      |             |   |       | 554   | 
|                                      |                                                |   |                |       |             |   |       |      
|Total deferred tax liabilities        |                                                |   | 6,303          |       |             |   | 7,082 |      
|Deferred tax assets:                  |                                                |   |                |       |             |   |       |      
|                                      | Interest expense                               |   |                | 5,312 |             |   |       | 6,133 | 
|                                      | Foreign and State operating loss carryforwards |   |                | 2,013 |             |   |       | 1,211 | 
|                                      | Goodwill                                       |   |                | 1,250 |             |   |       | -     | 
|                                      | Accrued expenses                               |   |                | 406   |             |   |       | 428   | 
|                                      | Other                                          |   |                | 578   |             |   |       | 183   | 
|                                      |                                                |   |                |       |             |   |       |      
|Total deferred tax assets             |                                                |   | 9,559          |       |             |   | 7,955 |      
|                                      |                                                |   |                |       |             |   |       |      
|                                      |                                                |   | 3,256          |       |             |   | (873  | )    
|Valuation allowance                   |                                                |   | 2,013          |       |             |   | 1,211 |      
|                                      |                                                |   |                |       |             |   |       |      
|Net deferred tax assets (liabilities) |                                                | $ | 1,243          |       |             | $ | (338  | )    
|                                      |                                                |   |                |       |             |   |       |      

As of January 25, 2003, Holdings has foreign and state net operating loss
carryforwards (NOLs) of approximately $1.0 million and approximately $15.3
million, respectively. The NOLs expire at various times through 2020. At
January 26, 2002, Holdings management assessed the likelihood of utilizing the
net operating loss carryforwards,

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determined that it is currently more likely
than not that the benefit will not be realized and established a valuation
allowance of approximately $1.2 million. At January 25, 2003, Holdings
increased the valuation allowance to $2.0 million to fully reserve for net
operating loss carryforwards generated in fiscal 2003.

Income and (loss) before income taxes for Canada were $(0.7) million, $(0.4)
million and $(0.04) million and for Mexico were $(0.07) million, $(0.02)
million and $0.06 million for the fiscal years ended January 25, 2003, January
26, 2002 and January 27, 2001, respectively.

11.     Commitments and Contingencies

Purchase Commitments

Holdings purchases the majority of its inventory through purchase order
commitments which are denominated in U.S. dollars. Holdings purchased
approximately 27%, 29%, and 29% of its inventory from one vendor for the fiscal
years ended January 25, 2003, January 26, 2002 and January 27, 2001,
respectively. At January 25, 2003 and January 26, 2002, Holdings had
outstanding inventory purchase commitments of approximately $9.6 million and
$12.3 million, respectively.

A significant amount of Holdings products are produced in the Far East. As a
result, Holdings operations could be adversely affected by political
instability resulting in the disruption of trade from the countries in which
these suppliers are located or by the imposition of additional duties or
regulations relating to imports or by the suppliers inability to meet
Holdings production requirements.

Lease Commitments

Holdings leases substantially all of its vehicles and certain other equipment
and facilities. These leases are subject to renewal options for varying
periods. Future minimum payments, by year and in the aggregate, under capital
leases and noncancelable operating leases with initial or remaining terms of
one year or more consisted of the following:

|                                               |  |         |       |                  |  |   |       | 
|---------------------------------------------- |  | ------- | ----- | ---------------- |  | - | ----- | 
|                                               |  | Capital |       |                  |  |  
|                                               |  | Leases  |       | Operating Leases
|                                               |  |         |       |                 
|2003                                           |  | $       | 375   |                  |  | $ | 2,762 | 
|2004                                           |  |         | 318   |                  |  |   | 1,684 | 
|2005                                           |  |         | 265   |                  |  |   | 878   | 
|2006                                           |  |         | 184   |                  |  |   | 254   | 
|2007                                           |  |         | 57    |                  |  |   | 77    | 
|                                               |  |         |       |                  |  |   |       | 
|Total minimum lease payments                   |  |         | 1,199 |                  |  | $ | 5,655 | 
|                                               |  |         |       |                  |  |   |       | 
|Less amounts representing interest             |  |         | 182   |                  |  |   |       | 
|                                               |  |         |       |                  |  |   |       | 
|Present value of future minimum lease payments |  | $       | 1,017 |                  |  |   |       | 
|                                               |  |         |       |                  |  |   |       | 

Operating lease expense under such arrangements was approximately $3.5 million
for each of the fiscal years ended January 25, 2003, January 26, 2002 and
January 27, 2001, respectively. Amortization of assets recorded under capital
leases is included with depreciation expense in Holdings results of
operations.

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11.     Commitments and Contingencies (continued)

Lease Commitments (continued)

At January 25, 2003 and January 26, 2002, property and equipment include
capitalized vehicle leases of approximately $3.1 million and $2.3 million,
respectively, and accumulated amortization of approximately $2.1 million and
$1.7 million, respectively.

Litigation

Holdings is involved from time to time in lawsuits that arise in the normal
course of business. Holdings actively and vigorously defends all lawsuits.
Management believes that there are no lawsuits that will have a material effect
on Holdings financial position, results of operations or liquidity.

12.     Stock Purchase Warrants and Redeemable Preferred Stock

On February 26, 1997, Holdings issued to New York Life Insurance Company and
American Home Assurance Company (the Outside Investors) common stock purchase
warrants (Warrants) to acquire 6,962 shares of Holdings common stock for an
aggregate consideration of $0.1 million. The Warrants can be exercised at any
time through February 26, 2007 for an exercise price of approximately $186 per
share. No Warrants have been exercised as of January 25, 2003.

On December 20, 1999, Holdings authorized 2,500 shares of Series B non voting,
cumulative, redeemable preferred stock with a par value of $0.01 per share
(the Holdings Series B Preferred Stock). Holdings issued 1,000 shares of
Holdings Series B Preferred Stock to Fenway during fiscal 2000 for
approximately $4.9 million, with a liquidation preference of $4,938 per share
plus an additional amount of approximately $2.0 million divided by the total
number of outstanding and accrued shares of Holdings Series B Preferred Stock
as of the event of liquidation. A sale of all or substantially all of
Holdings assets, merger or other change of control constitutes a liquidation.
Dividends are cumulative at an annual rate of $953.97 per share and are payable
in-kind, semi annually in arrears on February 21 and August 21, beginning
February 21, 2000. The Holdings Series B Preferred Stock ranks junior to
outstanding Holdings Series A Preferred Stock, if any, and is senior to
Holdings common stock in dividends and liquidation. The Holdings Series B
Preferred Stock is redeemable upon a change of control or a public offering, as
defined in the indenture governing the Senior Subordinated Notes. The
redemption price will be equal to the amount that would be paid to the Holdings
Series B Preferred Stock under a liquidation. The difference between the
carrying value and redemption amount is being accreted as a charge to retained
earnings using the interest method.

On December 29, 2000, in connection with the October 2000 Transaction as
described in Note 7, Holdings authorized 2,500 shares of Series C non voting,
cumulative, redeemable preferred stock with a par value of $0.01 per share
(the Holdings Series C Preferred Stock). Holdings issued 1,000 shares of
Holdings Series C Preferred Stock to Fenway II during fiscal 2001 for
approximately $4.8 million, with a liquidation preference of $4,761 per share
plus an additional amount of approximately $2.3 million divided by the total
number of outstanding and accrued shares of Holdings Series C Preferred Stock
as of the event of liquidation. A sale of all or substantially all of
Holdings assets, merger or other change of control constitutes a liquidation.
Dividends are cumulative at an annual rate of $985.42 per share and are payable
in-kind, semi annually in arrears on April 13 and October 13, beginning April
13, 2001. The Holdings Series C Preferred Stock ranks junior to outstanding
Holdings Series A

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Preferred Stock, if any, pari passu,with Holdings Series B
Preferred Stock and senior to Holdings common stock in dividends and
liquidation. The Holdings Series C Preferred Stock is redeemable upon a change
of control or a public offering, as defined in the indenture governing the
Senior Subordinated Notes. The redemption price will be equal to the amount
that would be paid to the Holdings Series C Preferred Stock under a
liquidation. The difference between the carrying value and redemption amount is
being accreted as a charge to retained earnings using the interest method.

13.     Stock Options

Holdings 1997 Stock Option Plan (the ''Option Plan) provides for the
granting of either incentive stock options or nonqualified stock options to
purchase shares of Holdings common stock and for other stock-based awards to
officers, directors, key employees, consultants and advisors who, in the
opinion of Holdings Board of Directors, are in a position to make a
significant contribution to the success of Holdings and its subsidiaries. The
Option Plan authorized the issuance of options to purchase up to an aggregate
of 20,245 shares of Holdings common stock, 11,528 of which shall be for Series
A Options and 8,717 of which shall be for Series B Options.

Nonqualified Series A Options of 11,528 were granted to certain officers of
Iron Age in connection with the Fenway Acquisition effective February 26, 1997
in exchange for options to acquire shares of the predecessor to Holdings. The
exercise price of Series A Options 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
$3.8 million, or approximately $328 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 of Holdings.
The basis used to determine the fair market value of Holdings common stock was
the purchase price paid by Fenway as of the date of the Fenway Acquisition,
which was the date of grant of the Series A Options. No Series A Options were
exercised during the years ended January 25, 2003, January 26, 2002 or January
27, 2001. As of January 25, 2003, 10,794 Series A Options are fully vested and
exercisable.

Nonqualified Series B Options of 8,567 were granted in August 1997 in
connection with the Fenway Acquisition to certain officers of Iron Age with an
exercise price of approximately $364 per share. Approximately 65% of the
options (Series B Basic) become exercisable, subject to the achievement of
certain target earnings by Holdings and continued employment of the
optionholder, at the rate of 20% per year commencing with Holdings fiscal year
ended January 31, 1998. Holdings is deemed to have achieved the target
earnings in a given fiscal year if Holdings net income before interest, taxes,
depreciation, amortization, extraordinary or unusual gains or losses,
management fees payable to Fenway Partners, Inc., an affiliate of Fenway,
directors fees and expenses payable to Fenway representatives and fees and
expenses associated with acquisitions equals or exceeds the target amount set
by the Board of Directors for such fiscal year. The remaining 35% of Series B
Options (Series B Extra) vest upon a change of control of Iron Age and the
attainment of certain internal rate of return objectives by Holdings
stockholders as defined in the Option Plan. The exercise price of Series B
Options granted in August 1997 was approximately $364 per share at the time
such Series B Options were granted. On April 24, 1998, in connection with the
April 1998 Transactions, the exercise price of Series B Options that were not
vested as of April 24, 1998 was reduced. The exercise price of (i) Series B
Options of 7,465 that were not vested (as such term is defined in the Option
Plan) as of April 24, 1998 is approximately $186 per share and (ii) Series B
Options of 1,102 that were vested (as such term is defined in the Option Plan)
as of April 24, 1998 is approximately $364 per share. Upon the vesting of the
Series B Options, Holdings will recognize compensation expense related to the
Series B Options

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based upon the difference, if any, between the estimated fair
value of Holdings common stock at the time such options vest and the exercise
prices of $186 or $364, respectively. During the years ended January 25, 2003,
January 26, 2002 and January 27, 2001, no Series B Basic options that vest
subject to the achievement of target earnings were exercised.

During the year ended January 25, 2003, 171 Series B Basic options became
vested at an exercise price of approximately $186 per share. In addition, 909
Series B Basic options were forfeited due to the failure to meet certain target
earnings.

During the year ended January 26, 2002, 685 Series B Basic options were granted
and became exercisable on a pro rata basis over the years ended in 2002 and
2003. One hundred seventy one of these Series B Basic options became vested
during the year ended January 26, 2002 at an exercise price of approximately
$186 per share. In addition, 906 Series B Basic options were forfeited due to
the failure to meet certain target earnings.

During the year ended January 27, 2001, 250 Series B Basic options were granted
and become exercisable on a pro rata basis over the years ended 2001, 2002 and
2003. Eighty three of these Series B Basic options became vested during the
year ended January 27, 2001 at an exercise price of approximately $186 per
share. In addition, 598 Series B Basic options were forfeited due to the
failure to meet certain target earnings.

The fair values of options granted were estimated at the date of grant using
the minimum value option-pricing model based on the following assumptions:

|                        |  |                  |   |                  |  |                  |     |        |  |  |     | 
|----------------------- |  | ---------------- | - | ---------------- |  | ---------------- | --- | ------ |  |  | --- | 
|                        |  |                  |   |                  |  | Year ended       |     |        |  | 
|                        |  | January 25, 2003 |   | January 26, 2002 |  | January 27, 2001
|                        |  |                  |   |                  |  |                 
|Risk-free interest rate |  |                  |  |                  |  |                  | 6.0 |        |  |  | 6.0 | 
|Dividend yield          |  |                  |  |                  |  |                  | 0.0 |        |  |  | 0.0 | 
|Expected life           |  |                  |  |                  |  | 5years           |     | 5years
|Volatility              |  |                  |  |                  |  |                  |    |        |  |  |    | 

A summary of the status of the shares under the Option Plan is as follows:

|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|---------------------------------- |  | ---------------- | ------ | ---------------- |  | ---------------- | ------ | - |  |  | ------ | -
|                                   |  |                  |        |                  |  | Year ended       |        |   |  | 
|                                   |  | January 25, 2003 |        | January 26, 2002 |  | January 27, 2001
|                                   |  |                  |        |                  |  |                 
|Outstanding, beginning of year     |  |                  | 17,112 |                  |  |                  | 18,134 |   |  |  | 18,515 |  
|Exercised                          |  |                  |       |                  |  |                  |       |   |  |  |       |  
|Granted                            |  |                  |       |                  |  |                  | 685    |   |  |  | 500    |  
|Forfeited                          |  |                  | (1,553 | )                |  |                  | (1,707 | ) |  |  | (881   | )
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|Outstanding, end of year           |  |                  | 15,559 |                  |  |                  | 17,112 |   |  |  | 18,134 |  
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|Options exercisable at end of year |  |                  | 12,284 |                  |  |                  | 12,601 |   |  |  | 12,596 |  
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  

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##### Table of Contents



13.     Stock Options (continued)

Additional information regarding stock options granted in connection with the
Option Plan is outlined below:

|                                                                                 |  |                  |        |                  |  |                  |       |        |  |       |       |       |  |        |        |        |  |       |       |  |  |        |       |        |  |  |        |  |  |  |       |  |  |  |       | 
|-------------------------------------------------------------------------------- |  | ---------------- | ------ | ---------------- |  | ---------------- | ----- | ------ |  | ----- | ----- | ----- |  | ------ | ------ | ------ |  | ----- | ----- |  |  | ------ | ----- | ------ |  |  | ------ |  |  |  | ----- |  |  |  | ----- | 
|                                                                                 |  | Year ended      
|                                                                                 |  |                 
|                                                                                 |  | January 25, 2003 |        | January 26, 2002 |  | January 27, 2001
|                                                                                 |  |                  |        |                  |  |                 
|                                                                                 |  |                  |        |                  |  | Series           |       | Series |  |       |       |       |  | Series |        | Series |  |       |       |  |  | Series |       | Series
|                                                                                 |  | Series           |        | B                |  | B                |       | Series |  | B     |       | B     |  | Series |        | B      |  | B    
|                                                                                 |  | A                |        | Basic            |  | Extra            |       | A      |  | Basic |       | Extra |  | A      |        | Basic  |  | Extra
|                                                                                 |  |                  |        |                  |  |                  |       |        |  |       |       |       |  |        |        |        |  |      
|Weighted average fair value of
options at grant date                             |  |                  |       |                  |  |                  |      |        |  |       |      |       |  |        |       |        |  |       | 52    |  |  |        |      |        |  |  |       |  |  |  | 52    |  |  |  |      | 
|Weighted average exercise price
of all outstanding options                       |  |                  | 36     |                  |  |                  | 250   |        |  |       | 186   |       |  |        | 36     |        |  |       | 235   |  |  |        | 186   |        |  |  | 36     |  |  |  | 223   |  |  |  | 186   | 
|Weighted average exercise price
of options exercisable                           |  |                  | 36     |                  |  |                  | 285   |        |  |       |      |       |  |        | 36     |        |  |       | 298   |  |  |        |      |        |  |  | 36     |  |  |  | 303   |  |  |  |      | 
|Weighted average exercise price
of options granted during the
year               |  |                  |       |                  |  |                  |      |        |  |       |      |       |  |        |       |        |  |       | 186   |  |  |        |      |        |  |  |       |  |  |  | 186   |  |  |  |      | 
|Weighted average exercise price
of options exercised during the
year             |  |                  |       |                  |  |                  |      |        |  |       |      |       |  |        |       |        |  |       |      |  |  |        |      |        |  |  |       |  |  |  |      |  |  |  |      | 
|Weighted average exercise price
of options expired and forfeited
during the year |  |                  |       |                  |  |                  | 197   |        |  |       |      |       |  |        |       |        |  |       | 189   |  |  |        |      |        |  |  |       |  |  |  | 192   |  |  |  |      | 
|Weighted average remaining
contractual life of options
outstanding               |  |                  | 4.1    |                  |  |                  | 5.0   |        |  |       | 4.1   |       |  |        | 5.1    |        |  |       | 6.0   |  |  |        | 5.1   |        |  |  | 6.1    |  |  |  | 7.0   |  |  |  | 6.1   | 
|Options outstanding at end of year                                               |  |                  | 10,794 |                  |  |                  | 2,316 |        |  |       | 2,449 |       |  |        | 11,161 |        |  |       | 3,447 |  |  |        | 2,504 |        |  |  | 11,161 |  |  |  | 4,469 |  |  |  | 2,504 | 
|Options exercisable at end of year                                               |  |                  | 10,794 |                  |  |                  | 1,490 |        |  |       |      |       |  |        | 11,161 |        |  |       | 1,440 |  |  |        |      |        |  |  | 11,161 |  |  |  | 1,435 |  |  |  |      | 

14.     Related Party Transactions

Fenway Partners Resources, Inc., an affiliate of Fenway (Fenway Resources),
provides consulting and advisory services to Holdings and Iron Age pursuant to
a consulting agreement effective April 1, 2002, and as amended on December 20,
2002 (the Consulting Agreement) among Holdings, Iron Age and Fenway
Resources. Pursuant to the Consulting Agreement, Iron Age pays Fenway Resources
a quarterly consulting fee of $12,500 plus all out-of -pocket expenses incurred
by Fenway Resources. For the fiscal year ended January 25, 2003, Iron Age paid
Fenway Resources consulting fees of approximately $0.04 million and reimbursed
Fenway Resources an immaterial amount for out-of-pocket expenses.

Fenway Partners, Inc., an affiliate of Fenway (Fenway Partners), provides
management services to Holdings and Iron Age pursuant to an amended and
restated management agreement (the ''Management Agreement) among Holdings,
Iron Age and Fenway Partners. Pursuant to the Management Agreement, Fenway
Partners provides Holdings and Iron Age with general management, advisory and
consulting services with respect to Iron Ages business and with respect to
such other matters as Holdings may reasonably request from time to time,
including, without limitation, strategic planning, financial planning, business
acquisition and general business development services. Holdings paid management
fees of approximately $0.3 million in each of the fiscal years ended January
25, 2003, January 26, 2002 and January 27, 2001, for management and other
advisory services. In addition, Holdings has reimbursed Fenway Partners for
certain related expenses incurred in connection with rendering such services in
an amount equal to approximately $0.06 million, $0.1 million and $0.1 million
for the fiscal years ended

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##### Table of Contents



January 25, 2003, January 26, 2002 and January 27,
2001, respectively.

Holdings, Fenway, the Outside Investors, Iron Age management and all of the
other stockholders and optionholders of Holdings are party to a stockholders
agreement (the ''Stockholders Agreement) that, among other things, provides
for tag-along rights, registration rights, restrictions on the transfer of
shares held by parties to the Stockholders Agreement, certain rights of first
refusal for Holdings and certain preemptive rights for certain stockholders.
The Stockholders Agreement also provides that the parties thereto will vote
their shares in the same manner as Fenway in connection with certain
transactions and that Fenway will be entitled to fix the number of directors of
Holdings. Pursuant to the Stockholders Agreement, Fenway is entitled to
designate a sufficient number of directors to maintain a majority of the board
of directors of Holdings and Donald R. Jensen is entitled to designate one
director.

On October 1, 2002, Holdings and Iron Age entered into a promissory note
permitting Holdings to borrow up to $4.8 million for purposes of repurchasing
Holdings Discount Notes. The promissory note bears interest at 14.0% and
matures on October 1, 2009. Holdings borrowed approximately $1.04 million from
Iron Age under the promissory note on October 11, 2002 to fund its repurchase
of $6.801 million in face value of its Discount Notes. In addition, Holdings
borrowed approximately $0.62 million from Iron Age under the promissory note on
November 27, 2002 to fund its repurchase of $3.057 million in face value of its
Discount Notes.

On May 23, 2002, Iron Age purchased 25.08 shares of Holdings Series B Preferred
Stock from certain officers of Iron Age, in exchange for the unpaid balance of
principal and accrued interest of their outstanding Term Promissory Notes in
the amount of approximately $0.14 million. Following the purchase, these
officers held 22.67 shares of Holdings Series B Preferred Stock. Holdings
recorded $0.13 million as stock-based compensation for the year ended January
25, 2003.

On August 29, 2000, Fenway II purchased Discount Notes with a face value of
approximately $7.3 million for approximately $1.4 million. The purchase
resulted in an income tax liability to Holdings of approximately $0.9 million.
In October 2000, Fenway II funded the income tax liability through a capital
contribution.

On February 7, 2000, Fenway purchased Discount Notes with a face value of
approximately $10.0 million for approximately $1.9 million. The purchase
resulted in an income tax liability to Holdings of approximately $1.3 million.
In May 2000, Fenway funded the income tax liability through a capital
contribution. On February 6, 2001, Fenway transferred the Discount Notes to
Fenway II.

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##### Table of Contents



SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
IRON AGE HOLDINGS CORPORATION
January 25, 2003

|                             |                                |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |         |     |  |   |         | 
|---------------------------- | ------------------------------ | ------------------------------- |  | ------------ | ------- | ---------- | --------- | ----------- | ------- | -------------- |  |  | - |  |  | - | ------- | --- |  | - | ------- | 
|COL. A                       |                                | COL. B                          |  | COL. C       |         | COL. D     |           | COL. E      |        
|                             |                                |                                 |  |              |         |            |           |             |        
|                             |                                |                                 |  |              |         |            |           | Additions   |         |                |  |  |   |  |  |  
|                             |                                |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |        
|                             |                                |                                 |  |              |         |            |           | Charged to  |         |                |  |  |   |  |  |   |         |     |  |  
|                             |                                |                                 |  | Balance at   |         | Charged to | Other     |             |         |                |  |  |   | 
|                             |                                |                                 |  | Beginning of |         | Costs and  | Accounts | Deductions |         | Balance at End
|Descriptions                 |                                | Period                          |  | Expenses     |         | Describe   |           | Describe    |         | Of Period     
|                             |                                |                                 |  |              |         |            |           |             |         |               
|                            
|Year ended January 25, 2003: |                                |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |         |     |  |  
|                             | Deducted from assets accounts: |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |         |     |  |   |        
|                             |                                | Allowance for doubtful
accounts |  | $            | 431,000 |            |           | $           | 331,000 |                |  |  |  |  |  | $ | 267,000 | (1) |  | $ | 495,000 | 
|                            
|Year ended January 26, 2002: |                                |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |         |     |  |  
|                             | Deducted from assets accounts: |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |         |     |  |   |        
|                             |                                | Allowance for doubtful
accounts |  | $            | 612,000 |            |           | $           | 418,000 |                |  |  |  |  |  | $ | 599,000 | (1) |  | $ | 431,000 | 
|                            
|Year ended January 27, 2001: |                                |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |         |     |  |  
|                             | Deducted from assets accounts: |                                 |  |              |         |            |           |             |         |                |  |  |   |  |  |   |         |     |  |   |        
|                             |                                | Allowance for doubtful
accounts |  | $            | 444,000 |            |           | $           | 565,000 |                |  |  |  |  |  | $ | 397,000 | (1) |  | $ | 612,000 | 



---

|(1) |  | Uncollectible accounts written off, net of recoveries.
|--- |  | ------------------------------------------------------




Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

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Part III




Item 10. Directors and Executive Officers of the Registrant.

The following table sets forth certain information regarding Holdings
directors and executive officers, including their respective ages, as of May
12, 2003.

|                      |  |     |    |          |  |                                                                                   
|--------------------- |  | --- | -- | -------- |  | ----------------------------------------------------------------------------------
|Name                  |  | Age |    | Position
|                      |  |     |    |         
|William J. Mills      |  |     | 43 |          |  | President and Director                                                            
|                     
|Bart R. Huchel        |  |     | 47 |          |  | Vice President-Finance, Chief
Financial Officer, Treasurer and
Assistant Secretary
|                     
|Richard A. Kusmer     |  |     | 50 |          |  | Vice President, Sales and Marketing                                               
|                     
|Sean M. Cumbie        |  |     | 43 |          |  | Vice President, Operations                                                        
|                     
|Dale F. Morrison      |  |     | 54 |          |  | Chairman and Director                                                             
|                     
|Andrea Geisser        |  |     | 60 |          |  | Vice President and Director                                                       
|                     
|John Q. Anderson      |  |     | 51 |          |  | Director                                                                          
|                     
|Charles M. LaFollette |  |     | 38 |          |  | Director                                                                          

William J. Millsis President of Holdings and President and Chief
Executive Officer of Iron Age. Prior to February 1, 1999, he was the Executive
Vice President of Holdings and President and Chief Operating Officer of Iron
Age. Mr. Mills joined Iron Age in 1987 as a District Manager before moving on
to manage all national accounts and assume the position of National Sales
Manager. He was promoted to regional Vice President of Sales in 1991 and to
Executive Vice President in 1994. Prior to 1987, he held various positions at
Endicott Johnson in product development, sales, importing and sales management.

Bart R. Huchelis Vice President-Finance, Chief Financial Officer and
Treasurer of Holdings and Iron Age. Mr. Huchel is responsible for all financial
matters, including Accounting, Treasury, Taxes and Investor Relations. Prior
to August 2001, he was the Chief Financial Officer of HVL, Inc., a manufacturer
and distributor of dietary supplements. From October 1995 to January 1999, he
was Vice President-Corporate Development for Centimark Corporation, a national
roofing contracor, where he directed acquisition, financing and planning
activities. Prior to October 1995, he was a senior manager in Ernst &Young,
LLPs business valuation practice. Prior to 1994, he held various financial
management positions with Westinghouse Credit Corporation, Allegheny
International and Texas Instruments.

Richard A. Kusmerbecame Vice President, Sales and Marketing of Holdings
and Executive Vice President, Sales and Marketing of Iron Age in November 2002.
Prior to joining Iron Age, Mr. Kusmer was Vice President, General Manager of
Fisher Safety, a division of Fisher Scientific from 2000 to 2001. Mr. Kusmer
also was Vice President, Sales and Marketing, Americas for the automotive group
of Allied Signal from 1997 to 2000 and Vice President-Northeast Account Group
for Coca Cola USA from 1989 to 1997. Mr Kusmer has also held various other
general management, sales and marketing positions within the consumer
environment industry during his 27 year career.

Sean M. Cumbiebecame Vice President, Operations of Holdings and Executive
Vice President, Operations of Iron Age in September 2002. Mr. Cumbie is
responsible for Store Operations, Purchasing, Distribution, Transportation,
Customer Service, Information Technology and Facilities. Prior to joining Iron
Age, Mr. Cumbie was Executive Vice President of Operations of Fatbrain.com, a
division of Barnes & Noble.com from October 1998 to May 2002. From October
1996 to September 1998, Mr. Cumbie owned Cumbie and Associates, Inc., a
logistics management consulting firm. From January 1993 to November 1996, Mr.
Cumbie served as Vice President of

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Logistics for West Marine, Inc., a retailer
of recreational boating supplies and apparel.

Dale F. Morrisonbecame Chairman and a director of Holdings in April 2002
and of Iron Age in June 2002. Mr. Morrison is Chief Executive Officer of
Fenway Partners Resources, Inc. Prior to joining Fenway Partners Resources
Inc., from 2000 to 2001, Mr. Morrison was Chief Executive Officer of Ci4net, a
technology equity holding company. From 1995 to 2000, Mr. Morrison was with
Campbell Soup Company and served as President, Chief Executive Officer and a
director from 1997 to 2000. Mr. Morrison currently serves as a director of
several companies, including Aurora Foods, Inc. and Simmons Company.

Andrea Geisserbecame a director and Vice President of Holdings and
director of Iron Age in 1997. Mr. Geisser has been a Managing Director of
Fenway Partners since its formation in 1994. From February 1989 to June 1994,
Mr. Geisser was a Managing Director of Butler Capital Corporation. From 1986 to
1989, Mr. Geisser served as a Managing Director of Onex Investment Corporation,
the largest Canadian leveraged buyout company. Mr. Geisser currently serves as
a director of Aurora Foods, Inc., DCI Holdings, Inc. and Harry Winston, Inc.

John Q. Andersonbecame a director of Holdings and Iron Age in 2001. Mr.
Anderson is Chairman of Big Wheel Partners, Inc., an affiliate of Fenway
Partners, investing in transportation and logistics companies. From May 1996 to
October 1999, he served as Executive Vice-President of CSX Transportation.
Prior to that, he was with BNSF and served as a senior executive in charge of
sales and marketing with additional responsibilities for field operations.
Prior to that, Mr. Anderson was with McKinsey & Company. Mr. Anderson is a
director of Transport Industries, L.P. and elogex, Inc.

Charles M. LaFollettebecame a director of Holdings in 2000. Mr.
LaFollette is a Principal of Fenway Partners. Prior to joining Fenway Partners
in July 2000, Mr. LaFollette was in the Leveraged Finance group at Credit
Suisse First Boston, most recently as a Director. Mr. LaFollette is a director
of DCI Holdings, Inc.

All directors are elected and serve until a successor is duly elected and
qualified or until the earlier of his death, resignation or removal. There are
no family relationships among any of the directors or executive officers of
Holdings or Iron Age. The executive officers of Holdings and Iron Age are
elected by and serve at the discretion of their respective Boards of Directors.

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##### Table of Contents






Item 11. Executive Compensation.

The following table sets forth information concerning the compensation
earned in fiscal 2001, 2002 and 2003 by Mr. Mills, Holdings President, and
each of the other two most highly compensated executive officers of Holdings
(collectively, the Named Executive Officers). The current compensation
arrangements, if any, for these officers are described in Employment
Agreements.

Summary Compensation Table

|                                      |  |          |      |            |  |                     |         |                 |  |  |        |  |  |           |        |     
|------------------------------------- |  | -------- | ---- | ---------- |  | ------------------- | ------- | --------------- |  |  | ------ |  |  | --------- | ------ | ----
|                                      |  |          |      |            |  | Annual Compensation
|                                      |  |          |      |            |  |                    
|                                      |  |          |      |            |  |                     |         |                 |  |  |        |  |  | All Other
|Name and Position                     |  | Year (1) |      | Salary ($) |  | Bonus($) (2)        |         | Compensation($)
|                                      |  |          |      |            |  |                     |         |                
|William J. Mills                      |  |          | 2001 |            |  |                     | 217,253 |                 |  |  | 51,600 |  |  |           | 13,237 | (3) 
|President                             |  |          | 2002 |            |  |                     | 211,087 |                 |  |  | 39,070 |  |  |           | 11,303 | (4) 
|                                      |  |          | 2003 |            |  |                     | 229,744 |                 |  |  |       |  |  |           | 6,300  | (5) 
|                                     
|Bart R. Huchel                        |  |          | 2002 |            |  |                     | 57,732  |                 |  |  |       |  |  |           | 90     | (6) 
|Vice President/Finance, Chief         |  |          | 2003 |            |  |                     | 128,172 |                 |  |  |       |  |  |           | 360    | (7) 
|Financial Officer, Treasurer and      |  |          |      |            |  |                     |         |                 |  |  |        |  |  |           |        |     
|Assistant Secretary                   |  |          |      |            |  |                     |         |                 |  |  |        |  |  |           |        |     
|                                     
|Keith A. McDonough                    |  |          | 2001 |            |  |                     | 140,628 |                 |  |  | 34,400 |  |  |           | 11,032 | (8) 
|Formerly Vice President and Assistant |  |          | 2002 |            |  |                     | 137,689 |                 |  |  | 26,659 |  |  |           | 8,037  | (9) 
|Secretary                             |  |          | 2003 |            |  |                     | 134,750 |                 |  |  |       |  |  |           | 4,771  | (10)



---

|(1)  |  | 2001: Fiscal year ended
January 27, 2001.
2002: Fiscal year ended January 26, 2002.
2003: Fiscal year ended January 25, 2003.                                                                                             
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Bonuses earned in fiscal 2000 were paid in fiscal 2001. Bonuses earned
in fiscal 2001 were paid in fiscal 2002. No bonuses were earned in fiscal
2002 or 2003.                                                            
|    
|(3)  |  | Includes Iron Age allocations of $7,210 under defined contribution plan
for the Plan Year ended December 31, 2000 and group life insurance
premiums of $300 paid by Iron Age during the Plan Year ended December 31,
2000.
|    
|(4)  |  | Includes Iron Age allocations of $5,100 under defined contribution plan
for the Plan Year ended December 31, 2001 and group life insurance
premiums of $300 paid by Iron Age during the Plan Year ended December 31,
2001.
|    
|(5)  |  | Includes Iron Age allocations of $6,000 under defined contribution plan
for the Plan Year ended December 31, 2002 and group life insurance
premiums of $300 paid by Iron Age during the Plan Year ended December 31,
2002.
|    
|(6)  |  | Represents group life insurance premiums of $90 paid by Iron Age during
the Plan Year ended December 31, 2001.                                                                                                            
|    
|(7)  |  | Represents group life insurance premiums of $360 paid by Iron Age during
the Plan Year ended December 31, 2002.                                                                                                           
|    
|(8)  |  | Includes Iron Age allocations of $7,210 under defined contribution plan
for the Plan Year ended December 31, 2000 and group life insurance
premiums of $275 paid by Iron Age during the Plan Year ended December 31,
2000.
|    
|(9)  |  | Includes Iron Age allocations of $4,950 under defined contribution plan
for the Plan Year ended December 31, 2001 and group life insurance
premiums of $300 paid by Iron Age during the Plan Year ended December 31,
2001.
|    
|(10) |  | Represents Iron Age allocations of $4,471 under defined contribution plan
for the Plan Year ended December                                                                                                                

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##### Table of Contents



31, 2002 and group life insurance
premiums of $300 paid by Iron Age during the Plan Year ended December 31,
2002.

Aggregated Fiscal Year-End Option Values

The following table sets forth information concerning the value of
unexercised stock options granted under the 1997 Stock Option Plan (the Option
Plan) at the end of fiscal 2003 for the Named Executive Officers.

Aggregated Fiscal Year-End Option Values

|                   |                  |               |                        |               |                      |  |  |           | 
|------------------ | ---------------- | ------------- | ---------------------- | ------------- | -------------------- |  |  | --------- | 
|                   |                  |               | Number of Securities   |               | Value of Unexercised
|                   |                  |               | Underlying             |               | In-the-Money Options
|                   |                  |               | Unexercised Options at |               | at Fiscal Year      
|                   |                  |               | Fiscal Year End(#)(1)  |               | End($)(2)           
|                   |                  |               |                        |               |                     
|                   |                  |               | Exercisable/           |               | Exercisable/        
|Name               |                  | Unexercisable |                        | Unexercisable
|                   |                  |               |                        |              
|William J. Mills   |                  |               |                        |               |                      |  |  |          
|                   | Series A         |               |                        | 2,194.43/0    |                      |  |  | 327,321/0 | 
|                   | Series BBasic B |               |                        | 248/177       |                      |  |  | 0/0       | 
|                   | Series BExtra B |               |                        | 0/600         |                      |  |  | 0/0       | 
|                  
|Keith A. McDonough |                  |               |                        |               |                      |  |  |          
|                   | Series A         |               |                        | 2,194.42/0    |                      |  |  | 327,321/0 | 
|                   | Series BBasic B |               |                        | 227/158       |                      |  |  | 0/0       | 
|                   | Series BExtra B |               |                        | 0/600         |                      |  |  | 0/0       | 



---

|(1) |  | Options to acquire common stock of Holdings.                          
|--- |  | ----------------------------------------------------------------------
|   
|(2) |  | Value based on assumed value at January 25, 2003 of $185.52 per share.

Long-Term Incentive Plan Awards

The Iron Age Corporation 2002 Management Incentive Plan (Incentive Plan)
provides awards in the form of Class A and Class B Units to directors and
members of management based upon the net proceeds (Net Proceeds) arising out
of a sale of substantially all the assets of Iron Age, all the stock of Iron
Age or at least 50% of the stock of Holdings in a single transaction or a
series of transactions (collectively a Liquidity Event). Net Proceeds are
defined as all the proceeds of a Liquidity Event, minusall debt of Holdings,
Iron Age and all subsidiaries, minusthe Preferred Stock initial share value,
minusall transaction costs and fees and minusthe value of any additional
securities, if any, which may be issued by Holdings in the future and any
accrued and unpaid dividends thereon. All awards are paid in cash following a
Liquidity Event.

The aggregate number of Class A Units that may be granted under the
Incentive Plan is 100 and the aggregate number of Class B Units is 200. The
value of a Class A Unit is 1% of the lesserof 10% of Net Proceeds or
$2,000,000 times the vested percentage. The value of a Class B Unit is .5% of
the lesserof (i) 5% of Net Proceeds minus$2,000,000 or (ii) the Preferred
Stock initial share value and the value of any additional securities, if any,
plusaccrued and unpaid dividends thereon, and plus$18,000,000 times the
vested percentage.

Class A and Class B Units vested ratably over three years of participation
beginning on the later of February 1, 2003 or the second anniversary of
employment.

On December 20, 2002, Iron Age awarded 100 Class A Units and 186.66 Class
B Units to certain management employees and directors.

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##### Table of Contents



The following table sets forth information concerning Management Incentive
awards made in fiscal 2003 for the applicable Named Executive Officers.

|                 |  |                      |    |                      |  |                |    |  |  |                   |         | 
|---------------- |  | -------------------- | -- | -------------------- |  | -------------- | -- |  |  | ----------------- | ------- | 
|                 |  |                      |    |                      |  |                |    |  |  | Estimated Future 
|                 |  |                      |    |                      |  |                |    |  |  | Payouts under    
|                 |  |                      |    |                      |  |                |    |  |  | Non-Stock        
|                 |  |                      |    |                      |  |                |    |  |  | Price-Based Plans
|Name             |  | No. of Class A Units |    | No. of Class B Units |  | Maximum ($)(1)
|                
|William J. Mills |  |                      | 32 |                      |  |                | 32 |  |  |                   | 640,000 | 
|Bart R. Huchel   |  |                      | 12 |                      |  |                | 12 |  |  |                   | 240,000 | 



|(1) |  | It is only possible to estimate the maximum future value of Class A Units
because of the $2 Million ceiling. It is not possible to estimate the
maximum value of Class B Units because all calculations require a
Liquidity Event to occur at some future unknown date.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Compensation of Directors

Holdings pays no compensation to its independent directors and pays no
additional remuneration to its employees or to executives of Holdings for
serving as directors except for certain options provided to Mr. Anderson under
the Option Plan, certain awards granted to Mr. Morrison under the Incentive
Plan and a $3,750 per meeting fee paid to Mr. Anderson. On October 12, 2001,
Mr. Anderson was granted 685 Series B Options at an exercise price of $185.52
per share. One half of these Series B Options vest ratably over the years
ended in 2002 and 2003 and one half are subject to certain vesting restrictions
based upon performance. On December 20, 2002, Mr. Morrison was granted 12
Class A Units and 12 Class B Units under the Incentive Plan. One third of
these Units vest ratably each February 1 of 2003, 2004 and 2005.

Employment Agreements

Mr. Mills is currently employed by Iron Age pursuant to an amended and
restated agreement dated August 1, 2002. Under this amended and restated
agreement, which is extended from year to year in the absence of a notice of
non-renewal given at least 90 days prior to end of each fiscal year, Mr. Mills
receives an annual salary of $240,000, subject to annual increases, and is
eligible for a bonus of not less than $120,000 based upon Iron Ages
achievement of EBITDA targets. If Mr. Mills is terminated other than for cause
or resigns voluntarily for good reason, he is entitled to receive continued
salary for 18 months and continued coverage under group health plans for one
year following his termination or resignation

Mr. McDonough prior to his resignation on December 31, 2002 was employed
by Iron Age pursuant to an agreement dated November 20, 1995 and as amended on
May 28, 2002. Under this amended agreement, he is entitled to receive
continued salary for 18 months and continued coverage under group health plans
for one year following December 31, 2002. In lieu of further salary
continuation, Mr. McDonough is entitled to a lump-sum cash payment equal to six
months salary if he accepts full time employment with another employer on or
before June 30, 2003.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee (the Committee) was formed on September 15,
1998. Membership as of January 25, 2003 consisted of Messrs. Anderson and
Geisser.

Concurrent with the formation of the Committee on September 15, 1998, the
Audit Committee was formed.

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Membership as of January 25, 2003 consists of
Messrs. Anderson, Geisser and LaFollette.

Compensation Committee Report on Executive Compensation

The Committee is responsible for the general compensation policies of
Holdings, and in particular is responsible for setting and administering the
policies that govern executive compensation. The Committee evaluates the
performance of management and determines the compensation levels for the Chief
Executive Officer (the CEO) and the executive officers of the Company. The
CEO determines compensation levels for all other executive officers subject to
the informal approval of the Committee.

The objective of the Committee is to establish policies and programs to
attract and retain key executives, and to reward performance by these
executives which benefit the Company. The primary elements of executive
compensation are base salary, annual cash bonus and Incentive Plan awards. The
salary is based on factors such as the individual executive officers level of
responsibility, and comparison to similar positions in the Company and in
comparable companies. The annual cash bonuses are currently based on the
Companys performance measured against attainment of financial objectives.
Incentive Plan awards are intended to align the executive officers interests
with those of the Company and its stockholders in promoting a merger or sale of
the Company or Iron Age, and are determined based on the executive officers
level of responsibility and contributions toward achieving the objectives of
the Company and its stockholders. Further information on each of these
compensation elements follows.

SALARIES

Base salaries are adjusted annually, following a review by the CEO. In the
course of the review, performance of the individual with respect to specific
objectives is evaluated, as are any increases in responsibility and salaries
for similar positions. The specific objectives for each executive officer are
set by the CEO, and will vary for each executive position and for each year.
Because the focus of the review is individual achievement, performance of the
Company does not weigh heavily in the result. When all reviews are completed,
the CEO makes a recommendation to the Committee for their review and final
approval.

With respect to the CEO, his employment agreement fixes his base salary,
but the Committee reviews and assesses his performance and its expectations as
to his future contributions. The Committees review takes place annually.

ANNUAL CASH BONUSES

Certain of the Companys employees, including the CEO (pursuant to his
employment agreement), are eligible to receive annual cash bonuses based upon
the financial performance of the Company.

LONG-TERM INCENTIVE PLAN AWARDS

Holdings adopted the Incentive Plan to provide long-term incentives to our
executive employees by granting them awards tied to a potential merger or sale
of Holdings or Iron Age. These Incentive Plan awards are intended to provide an
incentive to create value in Holdings and Iron Age, and to align their interest
with Holdings and its stockholders in consummating a merger or sale
transaction. In making grants, the Committee takes into account the total
number of units available for grant, prior grants outstanding, and estimated
requirements for future grants. Individual awards take into account the
executive officers contributions to the Company, scope of responsibilities,
strategies and operational goals. In determining unit grants for the CEO, the
Holdings compensation committee weighs all of the above factors, but also
recognizes the CEOs critical role in developing strategies for Holdings and
Iron Age in consummating a merger or sale transaction.

OTHER BENEFITS

Periodically, the Committee assesses the other benefits provided to
Executive Officers of the Company, including annual contributions to its
defined contribution pension plan.

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The Committee continually reviews the Companys compensation programs to
ensure the overall package is competitive, balanced, and that proper incentives
and rewards are provided.

Compensation Committee:

John Q. Anderson
Andrea Geisser

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Item 12. Security Ownership of Certain Beneficial Owners and Management.

The following table shows, as of January 25, 2003, the number of shares of
common stock of Holdings that could be issued upon exercise of outstanding
options, the weighted average exercise price of the outstanding options and the
remaining shares available for future issuance inder the Option Plan approved
by the shareholders of Holdings.

|                                                       |                  |     |                                      |        |                   |     |                  |     |          |  |            |     | 
|------------------------------------------------------ | ---------------- | --- | ------------------------------------ | ------ | ----------------- | --- | ---------------- | --- | -------- |  | ---------- | --- | 
|                                                       |                  |     | Equity Compensation Plan Information
|                                                       |                  |     |                                      |        |                   |     |                  |     |          |  | Number of 
|                                                       |                  |     |                                      |        |                   |     |                  |     |          |  | securities
|                                                       |                  |     |                                      |        |                   |     |                  |     |          |  | remaining 
|                                                       |                  |     |                                      |        |                   |     |                  |     |          |  | available 
|                                                       |                  |     |                                      |        |                   |     |                  |     |          |  | for future
|                                                       |                  |     | Number of                            |        |                   |     |                  |     | issuance
|                                                       |                  |     | securities to be                     |        | Weighted-         |     | under equity    
|                                                       |                  |     | issued upon                          |        | average exercise  |     | compensation    
|                                                       |                  |     | exercise of                          |        | price of          |     | plans (excluding
|                                                       |                  |     | outstanding                          |        | outstanding       |     | securities      
|                                                       |                  |     | options, warrants                    |        | options, warrants |     | reflected in    
|                                                       |                  |     | and rights                           |        | and rights        |     | column (a))     
|Plan Category                                          |                  | (a) |                                      | (b)    |                   | (c)
|                                                      
|Equity compensation
plans approved by
shareholders     |                  |     |                                      |        |                   |     |                  |     |          |  |            |    
|                                                       | Series A         |     |                                      | 10,794 |                   |     | $                | 36  |          |  |            | 367 | 
|                                                       | Series B Basic-B |     |                                      | 2,316  |                   |     | $                | 250 |          |  |            | 636 | 
|                                                       | Series B Extra-B |     |                                      | 2,449  |                   |     | $                | 186 |          |  |            | 610 | 
|Equity compensation
plans not approved
by shareholders |                  |     |                                     |        |                   |     |                 |     |          |  |           |    
|Total                                                  |                  |     | 15,559                               |        |                   | $   | 92               |     |          |  | 1,613      |    

As of May 12, 2003, the outstanding capital stock of Holdings consisted of
99,991.94 shares of common stock, par value $0.01 per share, 999.13 shares of
Holdings Series B Preferred Stock, par value $0.01 per share and 1,000 shares
of Holdings Series C Preferred Stock, par value $0.01 per share.

The following table sets forth certain information as of May 12, 2003
regarding the beneficial ownership of (i) each class of voting securities of
Holdings by each person known to Holdings to own more than 5% of any class of
outstanding voting securities of Holdings and (ii) the equity securities of
Holdings by each director of Holdings, each executive officer of Holdings, and
the directors and executive officers of Holdings as a group. To the knowledge
of Holdings, each such stockholder has sole voting and investment power as to
the shares owned unless otherwise noted. Beneficial ownership of the
securities listed in the table has been determined in accordance with the
applicable rules and regulations promulgated under the Securities Exchange Act
of 1934, as amended.

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|                                                                                   |                              |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|---------------------------------------------------------------------------------- | ---------------------------- | ------ | ------------ | ----- | ------------------------ | ------ | ------------------------ | ----- | ------------- | ------ | ---------------------------- | ----- | ------------- |  | ----- | - |  |  | ----- |  |  |  | --- | - | 
|                                                                                   |                              |        |              |       |                          |        |                          |       |               |        | Shares Beneficially Owned(1) |       |               |  |       |   |  |  |      
|                                                                                   |                              |        | Common Stock |       | Series B Preferred Stock |        | Series C Preferred Stock
|                                                                                   |                              |        |              |       |                          |        |                         
|                                                                                   |                              |        | Number of    |       | Percentage of            |        | Number of                |       | Percentage of |        | Number of                    |       | Percentage of
|Name and Address                                                                   |                              | Shares |              | Class |                          | Shares |                          | Class |               | Shares |                              | Class
|                                                                                   |                              |        |              |       |                          |        |                          |       |               |        |                              |      
|Principal Stockholders:                                                            |                              |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |  
|Fenway Entities(2)                                                                 |                              |        | 88,431.57    |       |                          |        | 88.44                    | %     |               |        | 949.88                       |       |               |  | 94.99 | % |  |  | 1,000 |  |  |  | 100 | %
|                                                                                   | 152 West 57th Street         |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|                                                                                   | New York, New York 10019     |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|                                                                                  
|New York Life Insurance Company(3)                                                 |                              |        | 11,187.21    |       |                          |        | 10.69                    |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|                                                                                   | 51 Madison Avenue            |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|                                                                                   | New York, NY 10010           |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|                                                                                  
|American Home Assurance Company(4)                                                 |                              |        | 5,593.61     |       |                          |        | 5.47                     |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|                                                                                   | c/o AIG Global Investment Co |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|                                                                                   | 200 Liberty Street           |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|                                                                                   | New York, NY 10281           |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|                                                                                  
|Directors and Executive Officers:                                                  |                              |        |              |       |                          |        |                          |       |               |        |                              |       |               |  |       |   |  |  |       |  |  |  |     |  
|William J. Mills(5)                                                                |                              |        | 2,442.43     |       |                          |        | 2.38                     |       |               |        | 7.34                         |       |               |  | *     |   |  |  |      |  |  |  |    |  
|Bart R. Huchel                                                                     |                              |        |             |       |                          |        |                         |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|Richard A. Kusmer                                                                  |                              |        |             |       |                          |        |                         |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|Sean M. Cumbie                                                                     |                              |        |             |       |                          |        |                         |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|Keith A. McDonough(6)                                                              |                              |        | 2,421.42     |       |                          |        | 2.36                     |       |               |        | 4.90                         |       |               |  | *     |   |  |  |      |  |  |  |    |  
|Andrea Geisser(7)                                                                  |                              |        |             |       |                          |        |                         |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|Charles M. LaFollette(7                                                            |                              |        |             |       |                          |        |                         |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|John Q. Anderson(8)                                                                |                              |        | 342.00       |       |                          |        | *                        |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|Dale F. Morrison(9)                                                                |                              |        |             |       |                          |        |                         |       |               |        |                             |       |               |  |      |   |  |  |      |  |  |  |    |  
|All directors and executive officers as a group,
including the above named persons |                              |        | 5,205.85     |       |                          |        | 4.95                     | %     |               |        | 12.24                        |       |               |  | 1.21  | % |  |  |      |  |  |  |    |  



|*   |  | Less than one percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) |  | As used in this table, beneficial ownership means the sole or shared
power to vote, or to direct the voting of a security, or the sole shared
power to dispose, or direct the disposition, of a security and includes
options and warrants exercisable within 60 days.                                                                                                                                                                                                                                          
|   
|(2) |  | Includes (a) 85,968.12 shares of common stock held by Fenway, (b)
2,463.45 shares of common stock held by its affiliated entities, FPIP, LLC
and FPIP Trust, LLC, (c) 921.52 shares of Holdings Series B Preferred
Stock held by Fenway, (d) 28.36 shares of Holdings Series B Preferred
Stock held by its affiliated entities, FPIP, LLC and FPIP Trust, LLC, and
(e) 1,000 shares of Holdings Series C Preferred Stock held by Fenway II,
an affiliate of Fenway.                                             
|   
|(3) |  | Includes 4,641.66 shares of common stock subject to acquisition from
Holdings at a purchase price of $185.52 per share pursuant to a warrant
that expires on February 26, 2007.                                                                                                                                                                                                                                                                                                                                 
|   
|(4) |  | Includes 2,320.83 shares of common stock subject to acquisition from
Holdings at a purchase price of $185.52 per share pursuant to a warrant
that expires on February 26, 2007.                                                                                                                                                                                                                                                                                                                                 
|   
|(5) |  | Includes 2,194.43 shares of common stock that may be acquired upon the
exercise of outstanding Series A Options at an exercise price of $36.36
per share, 165 shares that may be acquired upon the exercise of
outstanding Series B Options at an exercise price of $363.60 per share and
83 shares that may be acquired upon the exercise of outstanding Series B
Options at an exercise price of $185.52 per share pursuant to the Option
Plan (as defined) of Holdings. See Management Equity Arrangements.
|   
|(6) |  | Includes 2,194.42 shares of common stock that may be acquired upon the
exercise of outstanding Series A Options at an exercise price of $36.36
per share, 153 shares that may be acquired upon the exercise of
outstanding Series B Options at an exercise price of $363.60 per share and
74 shares that may be acquired upon the exercise of outstanding Series B
Options at an exercise price of $185.52 per share pursuant to the Option                                                                     

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|    |  | Plan of Holdings. See Management Equity Arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(7) |  | Mr. Geisser is a limited partner of Fenway Partners, L.P., the general
partner of Fenway. Accordingly, Mr. Geisser may be deemed to beneficially
own shares owned by Fenway. Messrs. Geisser and LaFollette are members of
Fenway Partners II, LLC, the general partner of Fenway II, and accordingly
may be deemed to beneficially own shares owned by Fenway II. Messrs.
Geisser and LaFollette are members of FPIP, LLC and FPIP Trust, LLC and,
accordingly, may be deemed to beneficially own shares owned by such funds.
Messrs. Geisser and LaFollette disclaim beneficial ownership of any such
shares in which they do not have pecuniary interests. The business address
of each of the foregoing is c/o Fenway Partners, Inc., 152 West 57thStreet,
New York, New York 10019.
|   
|(8) |  | Represents 342 shares of common stock that may be acquired upon exercise
of outstanding Series B Options at an exercise price of $185.52 per share
pursuant to the Option Plan of Holdings. See Management Equity
Arrangements. Mr. Andersons business address is c/o Big Wheel Partners,
4190 Belfort Road, Jacksonville, Florida 32216.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(9) |  | Mr. Morrisons business address is c/o Fenway Partners Resources, Inc.,
152 West 57thStreet, New York, New York 10019.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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Item 13. Certain Relationships and Related Transactions.

Management Equity Arrangements

Holdings adopted a Stock Option Plan (the Option Plan) for the benefit
of directors, executive officers, other employees, consultants and advisors of
Holdings and its subsidiaries on February 26, 1997. The Plan provides for
issuance of Series A options (Series A Options) and Series B options (Series
B Options). Series B Options are designated as either Series BBasic B
Options or Series BExtra B Options. Series A Options vest immediately in
full on the date such options are granted, Series BBasic B Options are subject
to certain time and performance vesting restrictions and Series BExtra B
Options vest only in connection with the consummation by Fenway of a sale,
other than to one of its affiliates, of its entire equity interest in Holdings
and the attainment of certain internal rate of return objectives. Holdings has
reserved 20,244.70 shares of Holdings common stock for issuance under the
Option Plan, 11,527.78 of which shares are reserved for Series A Options and
8,716.92 of which shares are reserved for Series B Options.

In February 1997, Holdings granted Series A Options to certain management
employees to purchase an aggregate of 11,527.78 shares of common stock at an
exercise price of $36.36 per share. These Series A Options were issued in
exchange for existing options for shares of the parent of the predecessor in
connection with the Fenway Acquisition. The Series A Options granted expire on
February 28, 2007. In August 1997, Holdings granted to certain management
employees Series BBasic B Options to purchase an aggregate of 5,508 shares of
common stock and Series BExtra B Options to purchase an aggregate of 3,058.77
shares of common stock. All of the Series B Options granted expire on February
28, 2007. The exercise price of Series B Options granted in August 1997 (i)
that were not vested (as such term is defined in the Option Plan) as of April
24, 1998 is approximately $186 per share and (ii) that were vested (as such
term is defined in the Option Plan) as of April 24, 1998 is approximately $364
per share. 367.05 of the Series A Options granted under the Option Plan have
been exercised.

On May 23, 2000, in connection with the February 7, 2000 Fenway purchase
of Discount Notes (see Related Party Transactions), Fenway and Holdings,
pursuant to a secutities purchase agreed to sell 50.12 shares of Holdings
Series B Preferred Stock to a group of officers, including Mr. Mills, and
certain other management employees for an aggregate purchase price of
approximately $0.26 million. One third of the purchase price was paid in cash
and the remaining two-thirds was loaned by Iron Age to the officers and other
management employees pursuant to non-recourse interest bearing notes which
mature on May 22, 2003. Mr. Mills purchased 15.19 shares for a purchase price
of approximately $0.08 million, of which approximately $0.05 million was
borrowed from Iron Age. On May 23, 2002, Iron Age purchased 7.85 shares of
Holdings Series B Preferred Stock from Mr. Mills, in exchange for the unpaid
principal balance of approximately $0.04 million and accrued interest on his
outstanding term promissory note (see Related Party Transactions).

Stockholders Agreement

Holdings, Fenway and all of the other stockholders and optionholders of
Holdings entered into a stockholders agreement (the Stockholders Agreement)
that, among other things, provides for tag-along rights, take-along rights,
registration rights, restrictions on the transfer of shares held by parties to
the Stockholders Agreement, certain rights of first refusal for Holdings and
certain preemptive rights for certain stockholders. The Stockholders Agreement
also provides that the parties thereto will vote their shares in the same
manner as Fenway in connection with certain transactions and that Fenway will
be entitled to fix the number of directors of Holdings. Pursuant to the
Stockholders Agreement, Fenway is entitled to designate a sufficient number of
directors to maintain a majority of the board of directors of Holdings and
Donald R. Jensen is entitled to designate one director.

Management Agreement

Holdings and Iron Age are party to the amended and restated management
agreement (the Management Agreement) with Fenway Partners, Inc., an affiliate
of Fenway (Fenway Partners) pursuant to which Fenway Partners agreed to
provide management and advisory services to Holdings and Iron Age. In exchange
for such

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services, Holdings and Iron Age agreed to pay Fenway Partners (i)
annual management fees equal to $250,000 for fiscal 1999, $275,000 for fiscal
2000, $300,000 for fiscal 2001 and, for each subsequent fiscal year, 0.25% of
the net sales for the immediately preceding fiscal year which annual management
fees shall be increased by an amount to be negotiated in good faith in the
event of an acquisition of a business with an enterprise value in excess of
$50.0 million, (ii) fees in connection with the negotiation and consummation by
Fenway Partners of senior financing for any acquisition transactions, which
fees shall not exceed the greater of $1.0 million or 1.5% of the aggregate
transaction value and (iii) certain fees and expenses, including legal and
accounting fees and any out-of-pocket expenses incurred by Fenway Partners in
connection with providing services to Holdings and Iron Age. Holdings and Iron
Age also agreed to indemnify Fenway Partners under certain circumstances. In
addition, pursuant to the Management Agreement, Fenway Partners received
approximately $2.1 million in connection with the structuring of the Fenway
Acquisition and the related senior secured financing. Holdings believes that
the fees payable pursuant to the Management Agreement are comparable to fees
payable to unaffiliated third parties for similar services.

Related Party Transactions

Fenway Partners Resources, an affiliate of Fenway, provides consulting and
advisory services to Holdings and Iron Age pursuant to a consulting agreement
effective April 1, 2002, and as amended on December 20, 2002 (the Consulting
Agreement) among Holdings, Iron Age and Fenway Partners Resources. Pursuant to
the Consulting Agreement, Holdings and Iron Age pay Fenway Partners Resources a
quarterly consulting fee of $12,500 plus all out-of -pocket expenses incurred
by Fenway Partners Resources. For the fiscal year ended January 25, 2003,
Holdings and Iron Age paid Fenway Partners Resources consulting fees of
approximately $0.04 million and reimbursed Fenway Partners Resources an
immaterial amount for out-of-pocket expenses.

On October 1, 2002, Holdings and Iron Age entered into a promissory note
permitting Holdings to borrow up to $4.8 million for purposes of repurchasing
its Discount Notes. The promissory note bears interest at 14.0% and matures on
October 1, 2009. Holdings borrowed approximately $1.04 million from Iron Age
under the promissory note on October 11, 2002 to fund its repurchase of $6.801
million in face value of its Discount Notes. In addition, Holdings borrowed
approximately $0.62 million from Iron Age under the promissory note on November
27, 2002 to fund its repurchase of $3.057 million in face value of its Discount
Notes.

On May 23, 2002, Iron Age purchased 25.08 shares of Holdings Series B
Preferred Stock from certain officers and management employees of Iron Age, in
exchange for the unpaid balance of principal and accrued interest of their
outstanding Term Promissory Notes in the amount of approximately $0.14 million.
Following the purchase, these officers and management employees held 21.40
shares of Holdings Series B Preferred Stock. Holdings recorded $0.13 million
as stock-based compensation for the fiscal year ended January 25, 2003.

On August 29, 2000, Fenway II purchased Discount Notes with a face value
of approximately $7.3 million for approximately $1.4 million. The purchase
resulted in an income tax liability to Holdings of approximately $0.9 million.
In October 2000, Fenway II funded the income tax liability through a capital
contribution.

On February 7, 2000, Fenway purchased Discount Notes with a face value of
approximately $10.0 million for approximately $1.9 million. The purchase
resulted in an income tax liability to Holdings of approximately $1.3 million.
In May 2000, Fenway funded the income tax liability through a capital
contribution. On February 6, 2001, Fenway transferred the Discount Notes to
Fenway II.




Item 14. Controls and Procedures.

Within the 90 days prior to the date of filing this Annual Report on Form 10-K,
Holdings carried out an evaluation, under the supervision and with the
participation of its disclosure committee and management, including the
President (Chief Executive Officer) and the Treasurer (Chief Financial
Officer), of the effectiveness of the design and operation of Holdings
disclosure controls and procedures pursuant to Exchange Act Rule 15d-14. Based
upon that evaluation, the President (Chief Executive Officer) and the Treasurer
(Chief Financial Officer) concluded that Holdings disclosure controls and
procedures are effective in timely alerting them to material information
relating to

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Holdings (including its consolidated subsidiaries) required to be
included in Holdings periodic SEC filings. Subsequent to the date of that
evaluation, there have been no significant changes in the Holdings internal
controls or in other factors that could significantly affect internal controls,
nor were any corrective actions required with regard to significant
deficiencies and material weaknesses.

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Part IV




Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)(1) Financial Statements

See
Index to Financial Statements appearing at page 20.

(a)(2) Financial Statement Schedules



| |  | The following Financial Statement
Schedule is included at page 49:                                                                                                        
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Schedule II  Valuation and Qualifying Accounts.                                                                                                                          
|
| |  | Information required by other schedules called for under Regulation S-X
is either not applicable or is included in the consolidated financial
statements or notes thereto.

(a)(3) Exhibit Index

|         |  |                                                                                                                                                         
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(1)   |  | Holdings Certificate of Incorporation, as amended.                                                                                                      
|3.2(1)   |  | Holdings By-laws.                                                                                                                                       
|4.1(1)   |  | Indenture dated as of April 24, 1998.                                                                                                                   
|10.1(1)  |  | Credit Agreement dated as of April 24, 1998.                                                                                                            
|10.2(1)  |  | Security Agreement dated April 24, 1998.                                                                                                                
|10.3(1)  |  | Intellectual Property Security Agreement dated April 24, 1998.                                                                                          
|10.4(1)  |  | Canadian Security Agreement dated April 24, 1998.                                                                                                       
|10.5(1)  |  | Mortgage, Assignment of Leases and Rents, Fixture Filing, Security
Agreement and Financing Statement dated February 26, 1997, as amended
April 24, 1998.
|10.6(1)  |  | Intercompany Subordination agreement dated April 24, 1998.                                                                                              
|10.7(1)  |  | Subsidiary Guaranty dated April 24, 1998.                                                                                                               
|10.8(1)  |  | Iron Age Trademark License Agreement with W.L Gore & Associates, Inc. dated August 15, 1994.                                                            
|10.9(1)  |  | Falcon Trademark License Agreement with W.L. Gore & Associates, Inc. dated July 25, 1994.                                                               
|10.10(1) |  | Falcon Manufacturing Certification Agreement with W.L Gore &
Associates, Inc. dated July 25, 1994.                                                      
|10.11(1) |  | General Services Administration Contract effective July 26, 1994, as modified May 24, 1995.                                                             
|10.12(1) |  | Amended and Restated Management Agreement dated as of February 26, 1997.                                                                                
|10.13(1) |  | Stockholders Agreement dated as of February 26, 1997.                                                                                                   
|10.14(1) |  | Amendment No. 1 to Stockholders Agreement dated as of March 25, 1997.                                                                                   
|10.15(1) |  | American Home Assurance Company Joinder to the Stockholders Agreement
dated as of March 25, 1997.                                                       
|10.16(1) |  | Banque Nationale de Paris Joinder to the Stockholders Agreement dated as of March 25, 1997.                                                             
|10.17(1) |  | Stock Option Plan dated February 26, 1997.                                                                                                              
|10.18(1) |  | Securities Purchase Agreement dated February 26, 1997.                                                                                                  
|10.19(1) |  | Stock Purchase Agreement dated as of December 26, 1996.                                                                                                 
|10.20(1) |  | Amendment No. 1 to the Stock Purchase Agreement dated as of February 26, 1997.                                                                          
|10.21(1) |  | Pittsburgh, Pennsylvania Lease Agreement dated March 1, 1993, as amended
June 2, 1994, as amended June 12, 1996, as amended December 10, 1997.          
|10.22(1) |  | Jerusalem, New York Lease Agreement dated December 9, 1992, as amended
January 1, 1994, as amended April 1997.                                          
|10.23(1) |  | Jerusalem, New York Lease Agreement dated June 20, 1997, as amended January 9, 1998.                                                                    
|10.24(1) |  | Lewiston, Maine Lease Agreement dated January 14, 1994.                                                                                                 
|10.25(1) |  | Lewiston, Maine Lease Agreement dated November 30, 1990, as amended June 8, 1994.                                                                       
|10.26(1) |  | Ontario, Canada Lease Agreement dated June 11, 1991, as amended November 23, 1995.                                                                      

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##### Table of Contents



|          |  |                                                                                                                                                                                     
|--------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.27(1)  |  | Jensen Employment Agreement dated February 26, 1997.                                                                                                                                
|10.28(1)  |  | Mills Employment Agreement dated November 20, 1995.                                                                                                                                 
|10.29(1)  |  | McDonough Employment Agreement dated November 20, 1995.                                                                                                                             
|10.30(1)  |  | Johanson Employment Agreement dated August 1, 1994.                                                                                                                                 
|10.31(1)  |  | Johanson Non-Competition Agreement dated August 1, 1994.                                                                                                                            
|10.32(2)  |  | Taaffe Severance Agreement dated January 13, 1999.                                                                                                                                  
|10.33(2)  |  | Taaffe Agreement and General Release dated January 13, 1999.                                                                                                                        
|10.34(2)  |  | Letter Waiver to Banque Nationale de Paris Credit Agreement dated August 28, 1998.                                                                                                  
|10.35(2)  |  | Amendment No. 2 and Waiver to Banque Nationale de Paris Credit
Agreement dated February 26, 1999.                                                                                   
|10.36(2)  |  | Election to reduce Acquisition Commitment of Banque Nationale de Paris
Credit Agreement dated March 5, 1999                                                                         
|10.37(3)  |  | Amendment No. 3 to Banque Nationale de Paris Credit Agreement dated June 23, 1999.                                                                                                  
|10.38(4)  |  | Amendment No. 4 to Banque Nationale de Paris Credit Agreement dated March 17, 2000.                                                                                                 
|10.39(4)  |  | Amendment No. 1 to Stock Option Plan dated April 8, 1999.                                                                                                                           
|10.40(4)  |  | Amendment No. 2 to Stock Option Plan dated January 29, 2000.                                                                                                                        
|10.41(4)  |  | Johanson Consulting Agreement dated February 1, 2000.                                                                                                                               
|10.42(4)  |  | Certificate of Designation, Preferences and Rights of the Series B
Preferred Stock of Iron Age Holdings Corporation dated December 29, 1999.                                        
|10.43(5)  |  | Amendment No. 5 to Banque Nationale de Paris Credit Agreement dated
September 15, 2000.                                                                                             
|10.44(6)  |  | Certificate of Designation, Preferences and Rights of the Series C
Preferred Stock of Iron Age Holdings Corporation dated December 29, 2000.                                        
|10.45(6)  |  | Amendment No. 6 to Banque Nationale de Paris Credit Agreement dated April 24, 2001.                                                                                                 
|10.46(7)  |  | Amendment No. 7 to Banque Nationale de Paris Credit Agreement dated December 10, 2001.                                                                                              
|10.47(8)  |  | Amendment to Mills Employment Agreement dated August 1, 2002.                                                                                                                       
|10.48(8)  |  | Amendment to McDonough Employment Agreement dated May 28, 2002.                                                                                                                     
|10.49(8)  |  | Morrison Consulting Agreement dated September 1, 2002.                                                                                                                              
|10.50(8)  |  | Letter Waiver to Banque Nationale de Paris Credit Agreement dated September 4, 2002.                                                                                                
|10.51(9)  |  | Promissory Note between Iron Age Holdings Corporation and Iron Age
Corporation dated October 1, 2002.                                                                               
|10.52(10) |  | Loan and Security Agreement dated September 23, 2002.                                                                                                                               
|10.53(10) |  | Mortgage, Assignment of Leases and Rents Security Agreement dated September 23, 2002.                                                                                               
|10.54(10) |  | Holdings and Subsidiary Guaranty dated September 23, 2002.                                                                                                                          
|10.55(10) |  | Guarantor Security Agreement dated September 23, 2002.                                                                                                                              
|10.56(10) |  | Pledge and Security Agreement dated September 23, 2002.                                                                                                                             
|10.57(10) |  | Patent Security Agreement dated September 23, 2002.                                                                                                                                 
|10.58(10) |  | Trademark Security Agreement dated September 23, 2002.                                                                                                                              
|10.59(10) |  | Canadian Guarantee Agreement dated September 23, 2002                                                                                                                               
|10.60(10) |  | Canadian Security Agreement dated September 23, 2002.                                                                                                                               
|10.61(10) |  | Letter Agreement dated September 23, 2002.                                                                                                                                          
|10.62(10) |  | Contribution Agreement dated September 23, 2002.                                                                                                                                    
|10.63(10) |  | Intercompany Subordination Agreement dated September 23, 2002.                                                                                                                      
|10.64(10) |  | Payoff Letter for Banque Nationale de Paris Credit Agreement dated September 23, 2002.                                                                                              
|10.65     |  | Iron Age 2002 Management Incentive Plan adopted December 20,2002.                                                                                                                   
|10.66     |  | Form Class A Unit Certificate under 2002 Management Incentive Plan.                                                                                                                 
|10.67     |  | Form Class B Unit Certificate under 2002 Management Incentive Plan.                                                                                                                 
|10.68     |  | Supplemental Indenture, dated as of January 25, 2003, among Iron Age,
Iron Age Investment Company and JP Morgan Chase Bank, as trustee under the
Senior Subordinated Note Indenture.
|10.69     |  | First Amendment to Loan and Security
Agreement and Limited Waiver dated May 12, 2003.                                                                                               
|10.70     |  | Amendment to Morrison Consulting Agreement dated December 20, 2002.                                                                                                                 
|21.1(1)   |  | Subsidiaries of Holdings.                                                                                                                                                           
|99.1      |  | Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                      

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##### Table of Contents



|     |  |                                                                                                                              
|---- |  | -----------------------------------------------------------------------------------------------------------------------------
|99.2 |  | Certification by CFO pursuant to 18 U.S.C Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



---

|(1)  |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Registration Statement on Form S-4, No. 333-57009, filed June
17, 1998.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Annual Report on
Form 10-K, filed April 30, 1999.                      
|    
|(3)  |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Quarterly Report on
Form 10-Q, filed September 14, 1999.               
|    
|(4)  |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Annual Report on Form 10K, filed April 18, 2000.                       
|    
|(5)  |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Quarterly Report on
Form 10Q, filed December 11, 2000.                 
|    
|(6)  |  | Incorporated by reference to the similarly numbered exhibit in the
Companys Annual Report on Form 10K, filed April 26, 2001.                       
|    
|(7)  |  | Incorporated by reference to the similarly number exhibit in the
Companys Quarterly Report on Form 10Q, filed December 11, 2001.                   
|    
|(8)  |  | Incorporated by reference to the similarly number exhibit in the
Companys Quarterly Report on Form 10Q, filed September 10, 2002.                  
|    
|(9)  |  | Incorporated by reference to the similarly number exhibit in the
Companys Quarterly Report on Form 10Q, filed December 10, 2002.                   
|    
|(10) |  | Incorporated by reference to the similarly number exhibit in the
Companys Report on Form 8K, filed September 27, 2002.                             

(b)  Reports on Form 8-K.

A report on Form 8-K was filed on September 27, 2002 to disclose the terms
of the Bank Credit Facility that the Company completed on September 23, 2002,
as discussed elsewhere in this Annual Report on Form 10K

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.



| | Iron Age Holdings Corporation
| | -----------------------------



|Dated: May 12, 2003 | By: /S/BART R. HUCHEL
Vice President-Finance, Chief Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
|------------------- | --------------------------------------------------------------------------------------------------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

|                                               |  |                                                                                                            |  |             
|---------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------- |  | ------------
|SIGNATURE                                      |  | TITLE                                                                                                      |  | DATE        
|                                               | 
|/S/WILLIAM J. MILLS
William J. Mills           |  | President and Director
(principal executive officer)                                                       |  | May 12, 2003
|                                              
|/S/BART R. HUCHEL
Bart R. Huchel               |  | Vice President-Finance,
Chief Financial Officer and
Treasurer (principal financial
and accounting officer) |  | May 12, 2003
|                                              
|/S/DALE F. MORRISON
Dale F. Morrison           |  | Chairman and Director                                                                                      |  | May 12, 2003
|                                              
|/S/JOHN Q. ANDERSON
John Q. Anderson           |  | Director                                                                                                   |  | May 12, 2003
|                                              
|/S/ANDREA GEISSER
Andrea Geisser               |  | Vice President and Director                                                                                |  | May 12, 2003
|                                              
|/S/CHARLES M. LAFOLLETTE
Charles M. LaFollette |  | Director                                                                                                   |  | May 12, 2003

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##### Table of Contents






CERTIFICATIONS

I, William J. Mills, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Iron Age Holdings
Corporation;                                                                                                                                                                                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                      
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                  



| | (a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                     



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have identified
for the registrants auditors any material weaknesses in internal
controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | /s/William J. Mills
William J. Mills
President and Director
| | -----------------------------------------------------------

Dated: May 12, 2003

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##### Table of Contents



I, Bart R. Huchel, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of Iron Age Holdings
Corporation;                                                                                                                                                                                                                                          
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
annual report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                  



| | (a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                     



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to
record, process, summarize and report financial data and have
identified for the registrants auditors any material weaknesses in
internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | /s/Bart R. Huchel
Bart R. Huchel
Vice President  Finance and Treasurer and Chief
Financial Officer
| | ---------------------------------------------------------------------------------------------------

Dated: May 12, 2003

-68-