##### Table of Contents



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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 26, 2002

OR

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

for the transition period from:
________________ to ________________

Commission file number:
333-57009

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

---

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
[   ]

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
[   ]     No
[   ]   Not Applicable.

(Applicable only to corporate registrants:) As of April 25, 2002, Iron Age
Holdings Corporation had 99,991.94 shares of Common Stock issued and
outstanding.

Documents incorporated by reference: None

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (§229.405 of this chapter) 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]



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TABLE OF CONTENTS



|           |                                                                                                |  |  |  |  |  |  | 
|---------- | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Part I    
|           | 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.
|           | Item 7A. Quantitative and Qualitative Disclosures about Market Risk.                          
|           | Item 8. Financial Statements and Supplementary Data.                                          
|           | 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.                                      
|Part IV   
|           | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.                    
|SIGNATURES



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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                            |  |  | 17 |     
|        
|        
|        
|        
|         | Item 8.  |  | Financial Statements and Supplementary Data                                           |  |  | 18 |     
|        
|        
|        
|        
|         | Item 9.  |  | Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure  |  |  | 46 |     
|        
|Part III |          |  |                                                                                       |  |  |    | 47   | 
|        
|        
|        
|        
|         | Item 10. |  | Directors and Executive Officers of the Registrant                                    |  |  | 47 |     
|        
|        
|        
|        
|         | Item 11. |  | Executive Compensation                                                                |  |  | 49 |     
|        
|        
|        
|        
|         | Item 12. |  | Security
Ownership of Certain Beneficial Owners and Management                        |  |  | 53 |     
|        
|        
|        
|        
|         | Item 13. |  | Certain Relationships and Related Transactions                                        |  |  | 55 |     
|        
|Part IV  |          |  |                                                                                       |  |  |    | 57   | 
|        
|        
|        
|        
|         | Item 14. |  | Exhibits,
Financial Statement Schedules, and Reports on Form 8-K                      |  |  | 57 |     

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 97% of fiscal
2002 sales. 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 under the Iron Age, Knappand Grabber
brand 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 Bank Credit Facility) that, as amended, provides for a $41.1
million senior secured credit facility consisting of a $20.0 million revolving
working capital facility (the Revolving Credit Facility) and a $21.1 million
acquisition term loan (the Acquisition Term Loan). The Company used excess
cash and net proceeds from the Discount Notes, the Senior Subordinated Notes
and the 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.

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

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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.

Government sales, which include armed forces, penal institutions, federal,
state, and local municipal employees or civilian employees, are made to two
primary purchasers: GSA (Government Services Administration)-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 fiscal 2002, the Companys customer base was significantly
affected by the general economic downturn, which included plant closings and
employee layoffs. From the US Department of Labor, according to the Bureau of
Labor Statistics on Laborers, from February 2001 to February 2002, total
unemployment has risen from approximately 7% to approximately 9% in the
industrial services sector. Further, unemployment in the Durable Goods
Manufacturing sector has risen more than 3% from February 2001 to a level of
7.5% in February 2002. The economic downturn 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.

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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 L.L. Bean,
Inc., Cabelas Inc., LaCrosse Footwear and Black Diamond.

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 $188.00 leather waterproof boot. The
Companys safety footwear is manufactured in more than 300 length and width
combinations, ranging in sizes from 5 to 17. Sales of Iron Ageproducts are
concentrated in traditional, well-established styles, with sales of new styles
representing less than 18% of net sales in fiscal 2002 and less than 6% of net
sales in fiscal 2001. 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 Ageproduct 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 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. In addition, the Company sells work shoes manufactured at the
Falcon facility directly to third parties, including L.L. Bean, Inc., Cabelas
Inc., LaCrosse Footwear and Black Diamond. Falcon manufactures approximately
20% of total pairs of shoes sold by Holdings.

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Outside Suppliers.As a result of its market leadership position and long
operating history, the Company has developed key supply arrangements with 37
leading footwear manufacturers in twelve countries: the United States, China,
Korea, Canada, Mexico, Maylasia, Dominican Republic, United Kingdom, Thailand,
Vietnam, Macau and the Netherlands. Although in fiscal 2002 one supplier in
China manufactured approximately 29% 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 2002, 65% of its total pairs sold were
produced by foreign suppliers, with 59% 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 the 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 (a
subsidiary of Citicorp Venture Capital), Hy-Test (a subsidiary of Wolverine
World Wide, Inc.) and Red Wing Shoe Co. Some of the Companys competitors have
greater financial and other resources than the Company. Because of the lack of
reliable published statistics, the Company is unable to state with certainty
its position in the work shoe industry. Market shares in the work shoe industry
are highly fragmented and no one company has a dominant market position.
However, the Company believes that it is the largest provider of work shoes in
the work shoe industry.

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.

Employees

As of January 26, 2002, the Company employed 787 people in sales and
distribution, manufacturing and administration. None of the Companys employees
is presently covered by collective bargaining agreements. Management considers
its employee relations to be good.

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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 26, 2002, 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 | 



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




Item 3. Legal Proceedings.

The Company is a party to various legal actions arising in the ordinary
course of its business. The Company believes that the resolution of these legal
actions will not have a material adverse effect on the Company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 April 25, 2002, 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
April 25, 2002, 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 The Chase Manhattan Bank, as trustee (the
Indenture).




Item 6. Selected Financial Data.

The following table sets forth selected historical consolidated financial
data of Holdings and its predecessor for the five-year period ended January 26,
2002 which were derived from audited consolidated financial statements of
Holdings and its predecessor. 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.

|                                         |  |                        |         |              |  |                  |         |             |  |             |         |              |  |   |         |         |  |   |         |  |  |   |        |     
|---------------------------------------- |  | ---------------------- | ------- | ------------ |  | ---------------- | ------- | ----------- |  | ----------- | ------- | ------------ |  | - | ------- | ------- |  | - | ------- |  |  | - | ------ | ----
|                                         |  | Successor              |         | Predecessor 
|                                         |  |                        |         |             
|                                         |  | Fiscal Years Ending(1) |         |              |  |                 
|                                         |  |                        |         | February 27, |  | January 26, 1997
|                                         |  |                        |         | 1997 through |  | through         
|                                         |  | January 26,            |         | January 27,  |  | January 29,      |         | January 30, |  | January 31, |         | February 26,
|                                         |  | 2002                   |         | 2001         |  | 2000             |         | 1999        |  | 1998(2)     |         | 1997        
|                                         |  |                        |         |              |  |                  |         |             |  |             |         |             
|                                         |  | (Thousands of Dollars)
|Summary of Operations:                   |  |                        |         |              |  |                  |         |             |  |             |         |              |  |   |         |         |  |   |         |  |  |   |        |     
|                                        
|                                        
|                                        
|                                        
|Net sales                                |  | $                      | 105,517 |              |  | $                | 118,932 |             |  | $           | 120,351 |              |  | $ | 124,294 |         |  | $ | 107,769 |  |  | $ | 10,937 |     
|                                        
|                                        
|                                        
|                                        
|(Loss) income before
extraordinary items |  | $                      | (7,907  | )            |  | $                | (2,516  | )           |  | $           | (2,094  | )            |  | $ | (3,273  | )       |  | $ | 1,957   |  |  | $ | (695   | )   
|                                        
|                                        
|                                        
|                                        
|Net (loss) income                        |  | $                      | (7,907  | )(8)         |  | $                | (231    | )(7)        |  | $           | (290    | )(6)         |  | $ | (7,288  | )(4)(5) |  | $ | 1,957   |  |  | $ | (695   | )(3)
|                                        
|Financial Position at Year End:          |  |                        |         |              |  |                  |         |             |  |             |         |              |  |   |         |         |  |   |         |  |  |   |        |     
|                                        
|                                        
|                                        
|                                        
|Total assets                             |  | $                      | 156,014 |              |  | $                | 166,886 |             |  | $           | 170,753 |              |  | $ | 180,032 |         |  | $ | 174,801 |  |  | $ |       |     
|                                        
|                                        
|                                        
|                                        
|Total debt                               |  | $                      | 131,703 |              |  | $                | 133,120 |             |  | $           | 139,988 |              |  | $ | 151,058 |         |  | $ | 101,675 |  |  | $ |       |     
|                                        
|                                        
|                                        
|                                        
|Holdings Series A Preferred
Stock        |  | $                      |        |              |  | $                |        |             |  | $           |        |              |  | $ |        |         |  | $ | 17,031  |  |  | $ |       |     
|                                        
|                                        
|                                        
|                                        
|Holdings Series B Preferred
Stock        |  | $                      | 8,300   |              |  | $                | 6,647   |             |  | $           | 5,361   |              |  | $ |        |         |  | $ |        |  |  | $ |       |     
|                                        
|                                        
|                                        
|                                        
|Holdings Series C Preferred
Stock        |  | $                      | 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 except for its fiscal year ended January 31, 1998 which
contained 53 weeks.                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The Summary of Operations data for the period February 27, 1997 through
January 31, 1998 include the results of Knapp since it was acquired by
Holdings on March 14, 1997.                                                                                
|   
|   
|   
|   
|(3) |  | Includes $1,054 of non-cash stock-based compensation and $1,000 of
non-recurring management bonuses paid in connection with the Fenway
Acquisition.                                                                                                       
|   
|   
|   
|   
|(4) |  | 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.
|   
|   
|   
|   
|(5) |  | Includes a gain of $1,678 related to the sale of the Dunhamtrademark and
related trademarks on August 31, 1998.                                                                                                                                           
|   
|   
|   
|   
|(6) |  | 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.                       
|   
|   
|   
|   
|(7) |  | 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.                                                       
|   
|   
|   
|   
|(8) |  | Includes a loss of $1,860 related to the sale of the vision products
business line on December 14, 2001.                                                                                                                                                  

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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 26, 2002 (fiscal 2002), January 27, 2001 (fiscal 2001) and January
29, 2000 (fiscal 2000). 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 97% of fiscal 2002 sales.
Holdings also distributes footwear directly to retail and wholesale customers
through its wholesale division and its manufacturing subsidiary Falcon. Falcon
manufactures approximately 20% 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 11.3% in fiscal
2002. The decrease in net sales was due primarily to a decline in the general
economic environment, which included plant closings and employee layoffs by
Holdings customers.

Certain Transactions

On October 20, 2000, Holdings purchased $16.4 million in principal amount
of its 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.

On September 22, 1999, Holdings purchased $9.0 million in principal amount
of its outstanding Senior Subordinated Notes for $7.1 million. The purchase
was funded by $4.7 million of borrowings under the Bank Credit Facility and the
issuance of $2.4 million of Series B Preferred Stock of Holdings (the
Holdings Series B Preferred Stock) to Holdings majority stockholder, Fenway.
Holdings recorded an extraordinary gain of $0.9 million, net of unamortized
deferred financing costs of $0.4 million, and income taxes of $0.6 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
September 1999 Transaction.

On July 20, 1999, Holdings purchased $9.6 million in principal amount of
its outstanding Senior Subordinated Notes for $7.7 million. The purchase was
funded by $5.1 million of borrowings under the Bank Credit Facility and the
issuance of $2.6 million of Holdings Series B Preferred Stock to Holdings
majority stockholder, Fenway. Holdings recorded an extraordinary gain of $0.9
million, net of unamortized deferred financing costs of $0.4 million, and
income taxes of $0.7 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 July 1999 Transaction.

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

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##### Table of Contents



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.

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 May 25, 1999, Iron Age sold the assets of its safety and medical
products line, a component of Safety Supplies business, which consisted
primarily of inventory, with a carrying value of approximately $0.4 million to
Stratford Safety Products, Inc. for $0.5 million. The sale resulted in a gain
of approximately $0.1 million, which was reflected as a reduction of goodwill
that was recorded in connection with the acquisition of Safety Supplies.
Holdings net income from the safety and medical products line was not
material.

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 4% of total
outstanding receivables to approximately 12% 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 the incremental sales of
outside brands are at the high-end of the market, which is a smaller
segment of the overall market. Holdings routinely reviews the on-hand merchandise to
identify slowdowns in particular products and follows up with sales promotions
to sell that specific footwear.

Goodwill

Holdings evaluates the carrying value of goodwill for potential impairment
on an ongoing basis. Such evaluation considers projected future operating
results, trends and other circumstances. By applying the standards of
Financial Accounting Standards Board (FASB) Statement No. 122, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of, Holdings has determined that future undiscounted cash flows support the
carrying value of goodwill and that no impairment was necessary at January 26,
2002. If future undiscounted cash flows were to be 10% less than the
projected amounts, an impairment
charge would be necessary.

FASB Statement No. 141, Business Combinations, and FASB Statement No.
142, Goodwill and Other Intangible Assets, are effective for Holdings
fiscal year ended January 25, 2003. Under the new rules, goodwill and
intangible assets deemed to have indefinite lives will no longer be amortized
but will be subject to annual impairment tests in accordance with the
Statements. Holdings is currently assessing, but has not yet determined the
impact, including the potential for an impairment charge in accordance with the
Statements, on its financial position and results of operations.

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Debt

The Critical Accounting Policy relating to Debt is discussed below in
Liquidity and Capital Resources.

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 2002 |         | Fiscal 2001 |  | Fiscal 2000
|                                      |  |             |         |             |  |            
|Income Statement Data:                |  |             |         |             |  |             |         |   |  |   |         |  
|                                     
|                                     
|                                     
|                                     
|Net sales                             |  | $           | 105,517 |             |  | $           | 118,932 |   |  | $ | 120,351 |  
|                                     
|                                     
|                                     
|                                     
|Gross profit                          |  |             | 53,884  |             |  |             | 61,701  |   |  |   | 60,826  |  
|                                     
|                                     
|                                     
|                                     
|Selling, general and administrative   |  |             | 41,951  |             |  |             | 43,400  |   |  |   | 41,515  |  
|                                     
|                                     
|                                     
|                                     
|Depreciation and amortization         |  |             | 6,269   |             |  |             | 5,655   |   |  |   | 5,454   |  
|                                     
|                                     
|                                     
|                                     
|Loss on divestiture                   |  |             | 1,860   |             |  |             |        |   |  |   |        |  
|                                     
|                                     
|                                     
|                                     
|Operating income                      |  |             | 3,804   |             |  |             | 12,646  |   |  |   | 13,857  |  
|                                     
|                                     
|                                     
|                                     
|Interest expense                      |  |             | 13,097  |             |  |             | 15,368  |   |  |   | 15,740  |  
|                                     
|                                     
|                                     
|                                     
|(Benefit) provision for income taxes  |  |             | (1,386  | )           |  |             | (206    | ) |  |   | 211     |  
|                                     
|                                     
|                                     
|                                     
|Extraordinary gain, net of tax effect |  |             |        |             |  |             | 2,285   |   |  |   | 1,804   |  
|                                     
|Other Data:                           |  |             |         |             |  |             |         |   |  |   |         |  
|                                     
|                                     
|                                     
|                                     
|Gross profit margin                   |  |             | 51.1    | %           |  |             | 51.9    | % |  |   | 50.5    | %
|                                     
|                                     
|                                     
|                                     
|Operating income margin               |  |             | 3.6     | %           |  |             | 10.6    | % |  |   | 11.5    | %

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%, due to a decline in the
general economic environment, which included plant closings and employee
layoffs that affected Holdings customers. In addition, 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.

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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.

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 of Iron Age in the October 2000 Transaction and by decreased
indebtedness and lower interest rates under the 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, Iron Age had available state net operating loss carryforwards of
approximately $10.4 million, which expire in various years beginning in 2002
through 2019. Iron Age 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. Iron Age 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.

Fiscal 2001 Compared to Fiscal 2000

Net Sales.Net sales for fiscal 2001 were $118.9 million compared to
$120.4 million for fiscal 2000, a decrease of $1.5 million, or 1.2%. The
decrease in fiscal 2001 was primarily attributable to decreased sales to
non-affiliated customers in Holdings manufacturing subsidiary of $0.9 million,
or 60.0% of the decrease in net sales. In addition, $0.5 million, or 33.3%, of
the decrease was due to the sale of Holdings safety and medical products
business line in fiscal 2000. The decrease in net sales was partially offset
by increased sales of $0.3 million in Holdings vision products business line.

Gross Profit.Gross profit for fiscal 2001 was $61.7 million compared to
$60.8 million for fiscal 2000, an increase of $0.9 million, or 1.5%. Total
gross profit percentage increased 1.4% to 51.9% in fiscal 2001 compared to
fiscal 2000. Gross profit percentage increased in Holdings primary footwear
distribution business line by 0.9% in fiscal 2001. The increase is generally
attributed to improved gross profit margins in Holdings primary footwear
distribution business, including sales to a large customer of higher gross
profit margin safety footwear produced by Holdings manufacturing subsidiary.
The increase in gross margin percentage was also attributable to a decrease in
sales related to the lower gross profit margin safety and medical product
business lines.

Selling, General and Administrative Expenses.Selling, general and
administrative expenses for fiscal 2001 were $43.4 million compared to $41.5
million for fiscal 2000, an increase of $1.9 million, or 4.6%, related to the
effect of general inflationary increases in operating expenses, including
rising fuel prices that affected fleet

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##### Table of Contents



operating costs and freight, bad debts, due primarily to the bankruptcy of Safety-Kleen Corp.,
a customer of Holdings, and the adverse effect of changes in foreign exchange rates.

Operating Income.Operating income for fiscal 2001 was $12.6 million, or
10.6% of net sales, compared to $13.9 million, or 11.5% of net sales, for
fiscal 2000. The decrease was primarily attributable to decreased net sales and
increased selling, general and administrative expenses as discussed above.

Interest Expense.Interest expense for fiscal 2001 was $15.4 million
compared to $15.7 million for fiscal 2000, a decrease of $0.3 million, or 1.9%.
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 July 1999 Transaction, the September 1999 Transaction
and the October 2000 Transaction, partially offset by increased indebtedness
under the New Credit Facility.

Income Tax Expense.Income tax expense for fiscal 2001 was a $0.2
million income tax benefit compared to income tax expense of $0.2 million for
fiscal 2000. Income tax benefit for fiscal 2001 differs from that of the
statutory income tax rate due primarily to nondeductible goodwill amortization.
Iron Age recognized a state income tax benefit of $1.1 million from net
operating loss carryforwards for fiscal 1999, $0.2 million of which was offset
against state income tax liabilities in fiscal 2001.

Iron Age needs to generate $6.1 million of state taxable income to realize
this benefit before expiration of the net operating loss carryforward periods,
which begin in fiscal 2002 through fiscal 2019. Iron Age evaluates the adequacy
of the valuation reserve and the realization of the deferred tax benefit on an
ongoing basis. Management believes that future taxable income will more likely
than not allow Iron Age to realize this benefit.

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. For fiscal 2000, Holdings recorded an extraordinary
gain of $1.8 million, net of a $1.3 million tax expense, due to the repurchase,
at a discount, and subsequent retirement of a portion of the Senior
Subordinated Notes in the July 1999 Transaction and the September 1999
Transaction.

Liquidity and Capital Resources

Amendment to the Bank Credit Facility

On December 10, 2001, the Bank Credit Facility was amended to (i) amend
the definition of Applicable Margin; (ii) amend the definition of EBITDA
and Loan Value, (iii) amend certain negative covenants, (iv) amend certain
covenants relating to the Leverage Ratio, Fixed Charge Coverage Ratio,
Interest Coverage Ratio and Capital Expenditures for fiscal 2002 and fiscal
2003 and add a Senior Leverage Ratio for fiscal 2003 and (v) waive the
restriction of asset sales, in order to permit the sale of assets related to
the optical business line.

Contractual Obligations and Commercial Commitments

|                                   |  |                        |         |                  |  |           |        |           |  |               |        |  |  |   |     |  |  |   |         | 
|---------------------------------- |  | ---------------------- | ------- | ---------------- |  | --------- | ------ | --------- |  | ------------- | ------ |  |  | - | --- |  |  | - | ------- | 
|                                   |  | Payments Due by Period
|                                   |  | (Thousands of Dollars)
|Contractual Obligations:           |  | Total                  |         | Less than 1 year |  | 1-3 years |        | 4-5 years |  | After 5 years
|                                   |  |                        |         |                  |  |           |        |           |  |              
|Long-Term Debt                     |  | $                      | 137,142 |                  |  | $         | 6,107  |           |  | $             | 20,895 |  |  | $ |    |  |  | $ | 110,140 | 
|                                  
|                                  
|                                  
|                                  
|Capital Lease Obligations          |  |                        | 540     |                  |  |           | 190    |           |  |               | 271    |  |  |   | 79  |  |  |   |        | 
|                                  
|                                  
|                                  
|                                  
|Operating Leases                   |  |                        | 6,234   |                  |  |           | 2,908  |           |  |               | 2,964  |  |  |   | 362 |  |  |   |        | 
|                                  
|                                  
|                                  
|                                  
|Unconditional Purchase Obligations |  |                        | 12,300  |                  |  |           | 12,300 |           |  |               |       |  |  |   |    |  |  |   |        | 
|                                  
|                                  
|                                  
|                                  
|Other Long-Term Obligations        |  |                        | 178     |                  |  |           | 178    |           |  |               |       |  |  |   |    |  |  |   |        | 
|                                  
|                                  
|                                  
|                                  
|Total Contractual Cash Obligations |  | $                      | 156,394 |                  |  | $         | 21,683 |           |  | $             | 24,130 |  |  | $ | 441 |  |  | $ | 110,140 | 

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|                               |  |                                            |        |                  |  |           |       |           |  |              |        |  |  |   |   |  |  |   |   | 
|------------------------------ |  | ------------------------------------------ | ------ | ---------------- |  | --------- | ----- | --------- |  | ------------ | ------ |  |  | - | - |  |  | - | - | 
|                               |  | Amount of Commitment Expiration Per Period
|                               |  | (Thousands of Dollars)                    
|Other Commercial Commitments:  |  | Total                                      |        | Less than 1 year |  | 1-3 years |       | 4-5 years |  | Over 5 years
|                               |  |                                            |        |                  |  |           |       |           |  |             
|Lines of Credit(1)             |  | $                                          | 37,302 |                  |  | $         | 6,107 |           |  | $            | 31,195 |  |  | $ |  |  |  | $ |  | 
|                              
|                              
|                              
|                              
|Guarantees                     |  |                                            |       |                  |  |           |      |           |  |              |       |  |  |   |  |  |  |   |  | 
|                              
|                              
|                              
|                              
|Standby Repurchase Obligations |  |                                            |       |                  |  |           |      |           |  |              |       |  |  |   |  |  |  |   |  | 
|                              
|                              
|                              
|                              
|Other Commercial Commitments   |  |                                            |       |                  |  |           |      |           |  |              |       |  |  |   |  |  |  |   |  | 
|                              
|                              
|                              
|                              
|Total Commercial Commitments   |  | $                                          | 37,302 |                  |  | $         | 6,107 |           |  | $            | 31,195 |  |  | $ |  |  |  | $ |  | 



---

|(1) |  | Includes $2,000 for Letters of
Credit, which were available to the extent that available borrowings
exceed such an amount.
|--- |  | --------------------------------------------------------------------------------------------------------------------------

Holdings primary cash needs are working capital, capital expenditures and
debt service. Holdings has financed 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 $9.3 million in fiscal 2002,
as compared to net cash provided by operating activities of $6.1 million in
fiscal 2001 and net cash provided by operating activities of $8.7 million in
fiscal 2000. The increase in cash provided by operating activities in fiscal
2002 from fiscal 2001 is primarily the result of overall decreases in its
working capital amounts.

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 approximately $1.1 million related to the
acquisition of software for internal use (included in Other noncurrent assets
on the Balance Sheet). Holdings investing activities for fiscal 2001 consisted
of capital expenditures of approximately $1.9 million for improvements in
footwear and vision retail stores, shoemobiles and equipment and expenditures
of approximately $2.5 million related to the acquisition of software for
internal use (included in Other noncurrent assets on the Balance Sheet).

Holdings used approximately $6.0 million for financing activities in
fiscal 2002, which primarily consisted of payments related to the 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 Bank Credit Facility, excluding the October 2000 Transaction. Holdings
financing activities also included a borrowing of $7.1 million on the 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, an affiliate of Holdings
majority stockholder, Fenway, for which Fenway II received Holdings Series C
Preferred Stock. Holdings used approximately $6.0 million from financing
activities in fiscal 2000, which consisted of payments of approximately $5.5
million related to the Bank Credit Facility, excluding the July 1999
Transaction and the September 1999 transaction. Holdings financing activities
also included a borrowing of $5.1 million on the Bank Credit Facility in July
1999 and a borrowing of $4.7 million in September 1999. The proceeds were used
to pay for the repurchase of a portion of the Senior Subordinated Notes in the
July 1999 Transaction and the September 1999 Transaction. The remaining
portion of the repurchase was provided by a $4.9 million aggregate equity
contribution from Holdings majority stockholder, Fenway, for which Fenway
received Holdings Series B 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 from Fenway and Fenway II.

Holdings total working capital as of January 26, 2002 was $33.0 million.
At January 27, 2001, working capital was $38.5 million. The primary reason for
the decrease to working capital were decreases in certain working capital
items, primarily accounts receivable and inventory and an increase in current
maturities of long-term debt of the Bank Credit Facility.

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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 2002 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, together with available borrowings by Iron Age
under the Bank Credit Facility, will 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
2003. However, 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.

As of January 26, 2002 Holdings debt consisted of the Discount Notes, the
Senior Subordinated Notes, the Bank Credit Facility and certain other debt. As
of January 26, 2002, the Bank Credit Facility, as amended, consisted of a $21.1
million Acquisition Term Loan and a $20.0 million Revolving Credit Facility
consisting of revolving credit loans, letters of credit and swing line loans.
Holdings other debt of $0.7 million consisted of capital leases and other
notes. As of January 26, 2002, approximately $17.3 million of the Acquisition
Term Loan and approximately $9.7 million of the Revolving Credit Facility were
outstanding. Holdings has no additional borrowing availability under the
Acquisition Term Loan and had approximately $10.3 million availability under
the Revolving Credit Facility. The Acquisition Term Loan matures in quarterly
installments from July 2001 until final payment in April 2004. The Revolving
Credit Facility will mature in April 2004 and has no scheduled interim
principal payments.

The Senior Subordinated Notes are fully and unconditionally guaranteed on
an unsecured, senior subordinated basis by each Domestic Restricted Subsidiary
that is a Material Subsidiary (as such terms are defined in the indenture for
the Senior Subordinated Notes (the Senior Subordinated Notes Indenture))
(whether currently existing, newly acquired or created). Each such subsidiary
guaranty (a Subsidiary Guaranty) will provide that the subsidiary guarantor,
as primary obligor and not merely as surety, will irrevocably and
unconditionally guarantee on an unsecured, senior subordinated basis the
performance and punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of 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 26, 2002, none of Iron Ages
Domestic Restricted Subsidiaries was a Material Subsidiary, and therefore no
Subsidiary Guaranty was in force or effect.

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 26,
2002. If Holdings defaults on this debt, due to cross-default provisions in the
indentures for the Senior Discount Notes and Senior Subordinated Notes, this
debt would also be in default. Holdings ability to avoid a default will depend
on an improvement in its results of operation in the fiscal year ending January
25, 2003. Expectations of future operating results and continued compliance
with the debt covenants cannot be assured. If projections of future operating
results are not achieved and waivers are not obtained and the debt is in
default, Holdings could experience a material adverse impact on its reported
financial position and results of operations.

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Recently Issued Accounting Standards

Effective January 28, 2001, Holdings adopted Financial Accounting
Standards Board (FASB) Statement No. 133, Accounting for Derivative Instruments
and Hedging Activities. Based upon Holdings derivative position at January 27,
2001, Holdings recorded an asset of approximately $0.1 million representing the
fair market value of its interest rate swap agreement and an offsetting premium
on its fixed rate debt. Subsequent changes in the fair value of Holdings
interest rate swap agreement were recognized immediately in earnings. The debt
premium is being amortized to earnings over the life of the debt using the
interest method. The interest rate swap agreement was terminated on October
19, 2001.

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

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

In August 2001, Statement of Financial Accounting Standards No. 144 (FAS
144), Accounting for the Impairment or Disposal of Long-Lived Assets, was
issued. This Statement addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. This Statement supercedes FAS Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of, and the accounting and reporting provisions of
Accounting Principles Board (APB) Opinion No. 30, Reporting the Results of
Operations-Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business (as previously defined in that
Opinion). FAS 144 is effective for Holdings fiscal year ended January 25,
2003. Holdings is currently assessing, but has not yet determined, the impact
of FAS 144 on its financial position and results of operations.

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 of credit, (iii) increase in interest
rates, (iv) cost of raw materials, (v) inability to maintain state-of-the-art
manufacturing facilities, (vi) heightened competition, including
intensification of price and service competition, the entry of new competitors
and the introduction of new products by existing competitors, (vii) inability
to capitalize on opportunities presented by industry consolidation, (viii) loss
or retirement of key executives, (ix) loss or disruption of 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 26, 2002, Holdings had fixed-rate debt totaling $110.9 million
in principal amount and having a fair value of $33.8 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
$3.0 million if interest rates were to increase by 10% from their levels at
January 26, 2002 (i.e., an increase from the weighted average interest rate of
10.8% to a weighted average interest rate of 11.9%). At January 27, 2001,
Holdings had fixed-rate debt totaling $111.0 million in principal amount and
having a fair value of $52.7 million, which would have decreased to $48.1
million had interest rates increased 10% from January 27, 2001 levels.

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. 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 26, 2002, Holdings would incur
additional annual interest expense of approximately $0.1 million. At January
27, 2001, Holdings had variable-rate debt totaling $32.6 million in principal
amount and having a fair value of $32.6 million. Holdings would have incurred
additional interest expense of approximately $0.3 million had interest rates
increased by 10% from their levels at January 27, 2001.

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 26, 2002, sales
denominated in currencies other than U.S. dollars (primarily Mexican peso and
the Canadian dollar) totaled $6.3 million, or approximately 6.0% of total
sales. Net loss denominated in currencies other than U.S. dollars was $0.4
million for the fiscal year ended January 26, 2002. 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 $0.04
million for the fiscal year ended January 26, 2002. 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 26, 2002 and January 27, 2001

Contents

|                                                          |  |  |    | 
|--------------------------------------------------------- |  |  | -- | 
|Report of Independent Auditors                            |  |  | 19 | 
|                                                         
|Audited Consolidated Financial Statements                 |  |  |    | 
|                                                         
|                                                         
|                                                         
|                                                         
|Consolidated Balance Sheets                               |  |  | 20 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Consolidated Statements of Operations                     |  |  | 21 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Consolidated Statements of Stockholders (Deficit) Equity |  |  | 22 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Consolidated Statements of Cash Flows                     |  |  | 23 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Notes to Consolidated Financial Statements                |  |  | 25 | 
|                                                         
|                                                         
|                                                         
|                                                         
|Schedule II-Valuation and Qualifying Accounts             |  |  | 46 | 

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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 26, 2002 and January 27, 2001,
and the related consolidated statements of operations, stockholders (deficit)
equity, and cash flows for the years ended January 26, 2002, January 27, 2001
and January 29, 2000. 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 26, 2002 and January 27, 2001, and the consolidated
results of its operations and its cash flows for the years ended January 26,
2002, January 27, 2001 and January 29, 2000, 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.

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.

Ernst & Young LLP

Pittsburgh, Pennsylvania
March 28, 2002

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Iron Age Holdings Corporation

Consolidated Balance Sheets

|                                                          |                           |                                                                                                                                               |         |                |         |             |         |        |         |  
|--------------------------------------------------------- | ------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -------------- | ------- | ----------- | ------- | ------ | ------- | -
|                                                          |                           |                                                                                                                                               |         | January 26,    |         | January 27,
|                                                          |                           |                                                                                                                                               |         | 2002           |         | 2001       
|                                                          |                           |                                                                                                                                               |         |                |         |            
|                                                          |                           |                                                                                                                                               |         | (In Thousands)
|Assets
Current assets:                                    |                           |                                                                                                                                               |         |                |         |             |         |       
|                                                          | Cash and cash equivalents |                                                                                                                                               | $       | 624            |         |             | $       | 91     |        
|                                                          | Accounts receivable, net  |                                                                                                                                               |         | 13,549         |         |             |         | 16,459 |        
|                                                          | Inventories               |                                                                                                                                               |         | 32,089         |         |             |         | 33,452 |        
|                                                          | Prepaid expenses          |                                                                                                                                               |         | 2,210          |         |             |         | 2,431  |        
|                                                          | Deferred income taxes     |                                                                                                                                               |         | 726            |         |             |         | 839    |        
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       
|Total current assets                                      |                           |                                                                                                                                               | 49,198  |                |         |             | 53,272  |       
|Other noncurrent assets                                   |                           |                                                                                                                                               | 3,633   |                |         |             | 3,656   |       
|Property and equipment, net                               |                           |                                                                                                                                               | 9,253   |                |         |             | 10,210  |       
|Intangible assets, net                                    |                           |                                                                                                                                               | 93,930  |                |         |             | 99,748  |       
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       
|Total assets                                              |                           | $                                                                                                                                             | 156,014 |                |         | $           | 166,886 |       
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       
|Liabilities and stockholders equity
Current liabilities: |                           |                                                                                                                                               |         |                |         |             |         |       
|                                                          |                           | Current maturities of long-term debt                                                                                                          |         | $              | 6,475   |             |         | $      | 5,194   |  
|                                                          |                           | Accounts payable                                                                                                                              |         |                | 4,687   |             |         |        | 3,027   |  
|                                                          |                           | Accrued expenses                                                                                                                              |         |                | 5,076   |             |         |        | 6,555   |  
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       
|Total current liabilities                                 |                           |                                                                                                                                               | 16,238  |                |         |             | 14,776  |       
|Long-term debt payable to majority stockholder            |                           |                                                                                                                                               | 14,975  |                |         |             | 13,312  |       
|Long-term debt, less current maturities                   |                           |                                                                                                                                               | 110,253 |                |         |             | 114,614 |       
|Other noncurrent liabilities                              |                           |                                                                                                                                               | 390     |                |         |             | 380     |       
|Deferred income taxes                                     |                           |                                                                                                                                               | 1,064   |                |         |             | 2,653   |       
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       
|Total liabilities                                         |                           |                                                                                                                                               | 142,920 |                |         |             | 145,735 |       
|Commitments and contingencies                             |                           |                                                                                                                                               |        |                |         |             |        |       
|Series B redeemable preferred stock                       |                           |                                                                                                                                               | 8,300   |                |         |             | 6,647   |       
|Series C redeemable preferred stock                       |                           |                                                                                                                                               | 6,545   |                |         |             | 5,152   |       
|Stockholders equity:                                     |                           |                                                                                                                                               |         |                |         |             |         |       
|                                                          |                           | Common stock, $.01 par value, 200,000 shares authorized, 99,992
issued and outstanding at January 26, 2002 and January 27, 2001,
respectively |         |                | 1       |             |         |        | 1       |  
|                                                          |                           | Additional paid-in capital                                                                                                                    |         |                | 40,254  |             |         |        | 40,254  |  
|                                                          |                           | Accumulated deficit                                                                                                                           |         |                | (41,635 | )           |         |        | (30,682 | )
|                                                          |                           | Accumulated other comprehensive loss                                                                                                          |         |                | (371    | )           |         |        | (221    | )
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       
|Total stockholders (deficit) equity                      |                           |                                                                                                                                               | (1,751  | )              |         |             | 9,352   |       
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       
|Total liabilities and stockholders equity                |                           | $                                                                                                                                             | 156,014 |                |         | $           | 166,886 |       
|                                                          |                           |                                                                                                                                               |         |                |         |             |         |       

See accompanying notes.

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Iron Age Holdings Corporation

Consolidated Statements of Operations

|                                     |  |                  |         |                  |  |                  |         |   |  |   |         |  
|------------------------------------ |  | ---------------- | ------- | ---------------- |  | ---------------- | ------- | - |  | - | ------- | -
|                                     |  |                  |         |                  |  | Year ended       |         |   |  |  
|                                     |  | January 26, 2002 |         | January 27, 2001 |  | January 29, 2000
|                                     |  |                  |         |                  |  |                 
|                                     |  |                  |         |                  |  | (In Thousands)   |         |   |  |  
|Net sales                            |  | $                | 105,517 |                  |  | $                | 118,932 |   |  | $ | 120,351 |  
|Cost of sales                        |  |                  | 51,633  |                  |  |                  | 57,231  |   |  |   | 59,525  |  
|                                     |  |                  |         |                  |  |                  |         |   |  |   |         |  
|Gross profit                         |  |                  | 53,884  |                  |  |                  | 61,701  |   |  |   | 60,826  |  
|Selling, general and administrative  |  |                  | 41,951  |                  |  |                  | 43,400  |   |  |   | 41,515  |  
|Depreciation                         |  |                  | 1,938   |                  |  |                  | 1,681   |   |  |   | 1,816   |  
|Amortization of intangible assets    |  |                  | 4,331   |                  |  |                  | 3,974   |   |  |   | 3,638   |  
|Loss on divestiture                  |  |                  | 1,860   |                  |  |                  |        |   |  |   |        |  
|                                     |  |                  |         |                  |  |                  |         |   |  |   |         |  
|Operating income                     |  |                  | 3,804   |                  |  |                  | 12,646  |   |  |   | 13,857  |  
|Interest expense                     |  |                  | 13,097  |                  |  |                  | 15,368  |   |  |   | 15,740  |  
|                                     |  |                  |         |                  |  |                  |         |   |  |   |         |  
|Loss before income taxes             |  |                  | (9,293  | )                |  |                  | (2,722  | ) |  |   | (1,883  | )
|(Benefit) provision for income taxes |  |                  | (1,386  | )                |  |                  | (206    | ) |  |   | 211     |  
|                                     |  |                  |         |                  |  |                  |         |   |  |   |         |  
|Loss before extraordinary gain       |  |                  | (7,907  | )                |  |                  | (2,516  | ) |  |   | (2,094  | )
|Extraordinary gain, net of tax       |  |                  |        |                  |  |                  | 2,285   |   |  |   | 1,804   |  
|                                     |  |                  |         |                  |  |                  |         |   |  |   |         |  
|Net loss                             |  | $                | (7,907  | )                |  | $                | (231    | ) |  | $ | (290    | )
|                                     |  |                  |         |                  |  |                  |         |   |  |   |         |  

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) Income  |         | Total 
|                            |                                                                                     |                              |                        |                        |   |              |   |         |   |             |        |               |   |                |         |       
|                            |                                                                                     |                              |                        |                        |   |              |   |         |   |             |        |               |   | (In Thousands) |         |        |      |   |      |      |   |            
|Balance at January 30, 1999 |                                                                                     |                              | 99,625                 |                        |   | $            | 1 |         |   | $           | 38,086 |               |   | $              | (25,840 | )      |      | $ | (186 | )    |   | $           | 12,061 |       
|                            | Comprehensive loss:                                                                 |                              |                        |                        |   |              |   |         |   |             |        |               |   |                |         |        |      |   |      |      |   |             |        |        |     
|                            | Net loss                                                                            |                              |                        |                       |   |              |   |        |   |             |        |              |   |                |         | (290   | )    |   |      |     |   |             |        | (290   | )   
|                            | Foreign currency
translation                                                       
|                            |                                                                                     |                              | adjustment, net of tax |                        |   |             |   |         |   |            |        |               |   |               |         |        |      |  |      |      |   | 62          |        |        |      | 62 |    
|                            |                                                                                     |                              |                        |                        |   |              |   |         |   |             |        |               |   |                |         |        |      |   |      |      |   |             |        |       
|                            | Comprehensive loss                                                                  |                              |                        |                        |   |              |   |         |   |             |        |               |   |                |         |        |      |   |      |      |   |             |        | (228   | )   
|                            | Capital Contribution                                                                |                              |                        | 367                    |   |              |   |        |   |             |        | 13            |   |                |         |       |      |   |      |     |   |             |        | 13     |     
|                            | Dividends accrued on
    preferred stock                                            |                              |                        |                       |   |              |   |        |   |             |        |              |   |                |         | (423   | )    |   |      |     |   |             |        | (423   | )   
|                            |                                                                                     |                              |                        |                        |   |              |   |         |   |             |        |               |   |                |         |        |      |   |      |      |   |             |        |       
|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   | )   
|                            | Dividends and accretion on
      preferred stock                                    |                              |                        |                       |   |              |   |        |   |             |        |              |   |                |         | (1,678 | )    |   |      |     |   |             |        | (1,678 | )   
|                            | Capital contribution by
majority
      stockholder                                  |                              |                        |                       |   |              |   |        |   |             |        | 2,155         |   |                |         |       |      |   |      |     |   |             |        | 2,155  |     
|                            | Payment of taxes on
      purchase of discount notes 
      by majority stockholder |                              |                        |                       |   |              |   |        |   |             |        |              |   |                |         | (2,220 | )    |   |      |     |   |             |        | (2,220 | )   
|                            |                                                                                     |                              |                        |                        |   |              |   |         |   |             |        |               |   |                |         |        |      |   |      |      |   |             |        |       
|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 | )     
|                            |                                                                                     |                              |                        |                        |   |              |   |         |   |             |        |               |   |                |         |        |      |   |      |      |   |             |        |       

See accompanying notes.

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Iron Age Holdings Corporation

Consolidated Statements of Cash Flows

|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |        |        |  
|------------------------------------------------------------------------------- | ----------------------------------------------------------------- | --------------------------------------- | ------- | ---------------- | ------ | ---------------- | ------- | ---------------- | ------ | ---- | ------- | ------ | ------ | -
|                                                                                |                                                                   |                                         |         |                  |        |                  |         | Year ended       |        |      |         |       
|                                                                                |                                                                   |                                         |         | January 26, 2002 |        | January 27, 2001 |         | January 29, 2000
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                 
|                                                                                |                                                                   |                                         |         |                  |        |                  |         | (In Thousands)   |        |      |         |       
|Operating activities                                                            |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Net loss                                                                        |                                                                   | $                                       | (7,907  | )                |        | $                | (231    | )                |        | $    | (290    | )     
|Adjustments to reconcile net loss to net cash
provided by operating activities: |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|                                                                                | Extraordinary gain, net of tax                                    |                                         |         |                 |        |                  |         | (2,285           | )      |      |         | (1,804 | )     
|                                                                                | Loss on divestiture                                               |                                         |         | 1,860            |        |                  |         |                 |        |      |         |       |       
|                                                                                | Increase in fair market value of interest rate                    |                                         |         | (764             | )      |                  |         |                 |        |      |         |       |       
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        | swap
|                                                                                | Depreciation and amortization                                     |                                         |         | 6,753            |        |                  |         | 6,122            |        |      |         | 5,943  |       
|                                                                                | Amortization of deferred financing fees
included
     in interest |                                         |         | 822              |        |                  |         | 669              |        |      |         | 897    |       
|                                                                                | Accretion of original issue discount                              |                                         |         | 4,329            |        |                  |         | 3,848            |        |      |         | 3,421  |       
|                                                                                | Provision for losses on accounts receivable                       |                                         |         | 418              |        |                  |         | 565              |        |      |         | 174    |       
|                                                                                | Deferred income taxes                                             |                                         |         | (1,283           | )      |                  |         | (1,021           | )      |      |         | (1,147 | )     
|                                                                                | Changes in operating assets and liabilities:                      |                                         |         |                  |        |                  |         |                  |        |      |         |        |       
|                                                                                |                                                                   | Accounts receivable                     |         |                  | 2,492  |                  |         |                  | 180    |      |         |        | (413   | )
|                                                                                |                                                                   | Inventories                             |         |                  | 1,363  |                  |         |                  | 958    |      |         |        | 2,271  |  
|                                                                                |                                                                   | Prepaid expenses                        |         |                  | 221    |                  |         |                  | (703   | )    |         |        | 2,741  |  
|                                                                                |                                                                   | Other noncurrent assets                 |         |                  | 2,638  |                  |         |                  | (96    | )    |         |        | (95    | )
|                                                                                |                                                                   | Accounts payable                        |         |                  | 1,660  |                  |         |                  | 454    |      |         |        | (734   | )
|                                                                                |                                                                   | Accrued expenses                        |         |                  | (3,242 | )                |         |                  | (2,316 | )    |         |        | (2,224 | )
|                                                                                |                                                                   | Payment of other noncurrent liabilities |         |                  | (87    | )                |         |                  | (50    | )    |         |        |       |  
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Net cash provided by operating activities                                       |                                                                   |                                         | 9,273   |                  |        |                  | 6,094   |                  |        |      | 8,740   |       
|Investing activities                                                            |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Capitalization of internal use software costs                                   |                                                                   |                                         | (1,116  | )                |        |                  | (2,526  | )                |        |      | (1,277  | )     
|Purchases of property and equipment, net                                        |                                                                   |                                         | (1,465  | )                |        |                  | (1,895  | )                |        |      | (1,760  | )     
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Net cash used in investing activities                                           |                                                                   |                                         | (2,581  | )                |        |                  | (4,421  | )                |        |      | (3,037  | )     
|Financing activities                                                            |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Borrowing under revolving credit agreement                                      |                                                                   |                                         | 18,825  |                  |        |                  | 48,650  |                  |        |      | 24,925  |       
|Issuance of common stock                                                        |                                                                   |                                         |        |                  |        |                  |        |                  |        |      | 13      |       
|Issuance of redeemable preferred stock                                          |                                                                   |                                         |        |                  |        |                  | 4,761   |                  |        |      | 4,938   |       
|Payment of taxes on purchase of discount notes by majority stockholder          |                                                                   |                                         |        |                  |        |                  | (2,220  | )                |        |      |        |       
|Capital contribution by majority stockholder                                    |                                                                   |                                         |        |                  |        |                  | 2,155   |                  |        |      |        |       
|Principal payments on debt                                                      |                                                                   |                                         | (24,384 | )                |        |                  | (54,911 | )                |        |      | (35,460 | )     
|Payment of financing costs                                                      |                                                                   |                                         | (263    | )                |        |                  | (232    | )                |        |      | (317    | )     
|Principal payments on capital leases, net                                       |                                                                   |                                         | (187    | )                |        |                  | 43      |                  |        |      | (112    | )     
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Net cash used in financing activities                                           |                                                                   |                                         | (6,009  | )                |        |                  | (1,754  | )                |        |      | (6,013  | )     
|Effect of exchange rate changes on cash and cash                                |                                                                   |                                         | (150    | )                |        |                  | (97     | )                |        |      | 62      |       
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Increase (decrease) in cash and cash equivalents                                |                                                                   |                                         | 533     |                  |        |                  | (178    | )                |        |      | (248    | )     
|Cash and cash equivalents at beginning of year                                  |                                                                   |                                         | 91      |                  |        |                  | 269     |                  |        |      | 517     |       
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       
|Cash and cash equivalents at end of year                                        |                                                                   | $                                       | 624     |                  |        | $                | 91      |                  |        | $    | 269     |       
|                                                                                |                                                                   |                                         |         |                  |        |                  |         |                  |        |      |         |       

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Consolidated Statements of Cash Flows (continued)

|                                                                                                                            |              |   |                  |       |                  |   |                  |        |  |   |     |        | 
|--------------------------------------------------------------------------------------------------------------------------- | ------------ | - | ---------------- | ----- | ---------------- | - | ---------------- | ------ |  | - | --- | ------ | 
|                                                                                                                            |              |   |                  |       |                  |   | Year ended       |        |  |   |    
|                                                                                                                            |              |   | January 26, 2002 |       | January 27, 2001 |   | January 29, 2000
|                                                                                                                            |              |   |                  |       |                  |   |                 
|                                                                                                                            |              |   |                  |       |                  |   | (In Thousands)   |        |  |   |    
|Supplemental disclosures of cash flow information
Cash paid during the period for:                                          |              |   |                  |       |                  |   |                  |        |  |   |     |       
|                                                                                                                            | Interest     |   | $                | 8,637 |                  |   | $                | 10,782 |  |   | $   | 11,728 | 
|                                                                                                                            | Income taxes |   | $                | 925   |                  |   | $                | 3,238  |  |   | $   | 2,371  | 
|Supplemental schedule of noncash investing and
financing   activities
Dividends and accretion on redeemable preferred stock |              | $ | 3,046            |       |                  | $ | 1,678            |        |  | $ | 423 |       
|Capital lease agreements for equipment                                                                                      |              | $ | 253              |       |                  | $ | 450              |        |  | $ | 226 |       

See accompanying notes.

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Iron Age Holdings Corporation

Notes to Consolidated Financial Statements

January 26, 2002 and January 27, 2001

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).

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 93% of inventories at January 26, 2002 and January 27, 2001 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.

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

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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.

Intangible Assets

GoodwillGoodwill represents the excess of amounts paid over the fair value of
identifiable tangible and intangible assets acquired and liabilities assumed in
purchase business combinations. This amount is amortized using the straight-line
method over a period of 40 years. Holdings evaluates the carrying value of
goodwill for potential impairment on an ongoing basis. Such evaluation considers
projected future operating results, trends and other circumstances. If factors
indicated that goodwill could be impaired, Holdings would use an estimate of the
related undiscounted future cash flows over the remaining life of the goodwill
in measuring whether the goodwill is recoverable. If such an analysis indicated
that impairment had occurred, Holdings would adjust the book value of the
goodwill to fair value.

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 $1.1 million and
$2.5 million related to internal use software costs for the fiscal years ended
January 26, 2002 and January 27, 2001, respectively. These costs are included in
Other noncurrent assets 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.

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Revenue Recognition

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

1. Organization and Significant Accounting Policies (continued)

Shipping and handling costs associated with the delivery of products to our
customers, retail stores and shoemobiles of approximately $2.1 million, $2.2
million and $2.2 million are recorded as components of selling, general and
administrative expenses for the years ended January 26, 2002, January 27, 2001
and January 29, 2000, respectively.

Financial Instruments

Effective January 28, 2001, Holdings adopted Statement of Financial Accounting
Standards 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 are 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.

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 Financial Accounting Standards Board Statement No. 130,
Reporting Comprehensive Income in accounting for foreign currency translation
gains and losses. Statement 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.

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
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 May 25, 1999, Iron Age sold the assets of its safety and medical products
line, a component of Safety Supplies business, which consisted primarily of
inventory, with a carrying value of approximately $0.4 million to Stratford
Safety Products, Inc. for $0.5 million. The sale resulted in a gain of
approximately $0.1 million, which was reflected as a reduction of goodwill that
was recorded in connection with the acquisition of Safety Supplies. Holdings
net income from the safety and medical products line was not material.

3. Accounts Receivable

Accounts receivable are presented net of allowance for doubtful accounts of
approximately $0.4 million and $0.6 million as of January 26, 2002 and January
27, 2001, 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 26,    |        | January 27,
|                                                      |  | 2002           |        | 2001       
|                                                      |  |                |        |            
|                                                      |  | (In Thousands)
|Finished products                                     |  | $              | 29,894 |             |  | $ | 31,578 | 
|Raw materials                                         |  |                | 2,689  |             |  |   | 2,756  | 
|                                                      |  |                |        |             |  |   |        | 
|                                                      |  |                | 32,583 |             |  |   | 34,334 | 
|Less excess of current cost over LIFO inventory value |  |                | 494    |             |  |   | 882    | 
|                                                      |  |                |        |             |  |   |        | 
|Inventories                                           |  | $              | 32,089 |             |  | $ | 33,452 | 
|                                                      |  |                |        |             |  |   |        | 

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5. Property and Equipment

Property and equipment consist of the following:

|                                               |  |                |        |             |  |   |        | 
|---------------------------------------------- |  | -------------- | ------ | ----------- |  | - | ------ | 
|                                               |  | January 26,    |        | January 27,
|                                               |  | 2002           |        | 2001       
|                                               |  |                |        |            
|                                               |  | (In Thousands)
|Land and buildings                             |  | $              | 3,189  |             |  | $ | 3,401  | 
|Vehicles                                       |  |                | 5,231  |             |  |   | 5,151  | 
|Furniture and fixtures                         |  |                | 1,475  |             |  |   | 1,399  | 
|Machinery and equipment                        |  |                | 7,298  |             |  |   | 6,776  | 
|Leasehold improvements                         |  |                | 1,846  |             |  |   | 1,529  | 
|                                               |  |                |        |             |  |   |        | 
|                                               |  |                | 19,039 |             |  |   | 18,256 | 
|Less accumulated depreciation and amortization |  |                | 9,786  |             |  |   | 8,046  | 
|                                               |  |                |        |             |  |   |        | 
|Net property and equipment                     |  | $              | 9,253  |             |  | $ | 10,210 | 
|                                               |  |                |        |             |  |   |        | 

6. Intangible Assets

Intangible assets consist of the following:

|                              |  |                |         |             |  |   |         | 
|----------------------------- |  | -------------- | ------- | ----------- |  | - | ------- | 
|                              |  | January 26,    |         | January 27,
|                              |  | 2002           |         | 2001       
|                              |  |                |         |            
|                              |  | (In Thousands)
|Goodwill                      |  | $              | 90,290  |             |  | $ | 91,962  | 
|Customer lists                |  |                | 16,654  |             |  |   | 17,023  | 
|Deferred financing costs      |  |                | 6,120   |             |  |   | 5,857   | 
|Other                         |  |                | 152     |             |  |   | 214     | 
|                              |  |                |         |             |  |   |         | 
|                              |  |                | 113,216 |             |  |   | 115,056 | 
|Less accumulated amortization |  |                | 19,286  |             |  |   | 15,308  | 
|                              |  |                |         |             |  |   |         | 
|Intangible assets, net        |  | $              | 93,930  |             |  | $ | 99,748  | 
|                              |  |                |         |             |  |   |         | 

Financing costs incurred in connection with obtaining the Senior Subordinated
Notes, the Discount Notes and the Bank Credit Facility of approximately $3.4
million have been deferred by Holdings as of January 26, 2002 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 27, 2001, Holdings expensed approximately $0.6
million, in connection with certain repurchases of the Senior Subordinated Notes
(see Note 7).

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7. Long-Term Debt

Long-term debt consists of the following:

|                                          |                      |   |                |       |             |   |         |        | 
|----------------------------------------- | -------------------- | - | -------------- | ----- | ----------- | - | ------- | ------ | 
|                                          |                      |   | January 26,    |       | January 27,
|                                          |                      |   | 2002           |       | 2001       
|                                          |                      |   |                |       |            
|                                          |                      |   | (In Thousands)
|Bank Credit Facility                      |                      | $ | 27,002         |       |             | $ | 32,561  |       
|9-7/8% Senior Subordinated Notes due 2008 |                      |   | 65,000         |       |             |   | 65,000  |       
|12-1/8% Senior Discount Notes due 2009    |                      |   | 45,140         |       |             |   | 45,140  |       
|Other notes                               |                      |   | 178            |       |             |   | 178     |       
|Capitalized lease obligations             |                      |   | 540            |       |             |   | 727     |       
|                                          |                      |   |                |       |             |   |         |       
|                                          |                      |   | 137,860        |       |             |   | 143,606 |       
|Less:                                     |                      |   |                |       |             |   |         |       
|                                          | Current maturities   |   |                | 6,475 |             |   |         | 5,194  | 
|                                          | Unamortized discount |   |                | 6,157 |             |   |         | 10,486 | 
|                                          |                      |   |                |       |             |   |         |       
|Long-term debt, less current maturities   |                      | $ | 125,228        |       |             | $ | 127,926 |       
|                                          |                      |   |                |       |             |   |         |       

Bank Credit Facility

Iron Age and Holdings have entered into a Bank Credit Facility with a syndicate
of lenders and a financial institution, as agent for itself and the other
lenders which, as amended, provides for a $41.1 million senior secured credit
facility that is comprised of a $20.0 million revolving working capital facility
and, as amended, a $21.1 million acquisition term loan facility. The working
capital facility matures on April 24, 2004. The acquisition term loan facility
matures in quarterly installments from July 31, 2001 to April 30, 2004. Under
the working capital facility, Iron Age has a $2.0 million letter of credit and a
$3.0 million swing line facility which will expire April 24, 2004. Outstanding
obligations under the letter of credit and the swing line facility were $0.06
million and $0, respectively, at January 26, 2002.

Borrowings under the Bank Credit Facility may be used to fund Iron Ages working
capital requirements and general corporate requirements of Holdings and pay fees
and expenses related to the foregoing. Iron Age is required to pay a 0.4375% fee
on the average daily unused portion of the Bank Credit Facility. Iron Age is
also subject to mandatory prepayment terms as described in the Bank Credit
Facility.

Borrowings under the Bank Credit Facility accrue 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 Bank Credit
Facility accrue interest at 6.50% for prime rate borrowings and between 5.00%
and 5.44% for LIBOR borrowings, at January 26, 2002.

Iron Age has classified its borrowings under the 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.

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The Bank Credit Facility is guaranteed on a senior basis by Holdings and is
collateralized by substantially all of Iron Ages and its subsidiaries assets.
The Bank Credit Facility contains certain covenants which require Iron Age to
maintain leverage ratios, fixed charge coverage ratios and interest coverage
ratios. The Bank Credit Facility further limits capital expenditures and sales
of assets, declaration of dividends and other restricted payments, and
additional indebtedness. The Bank Credit Facility also restricts the sale or
transferring of Iron Ages assets or capital stock.

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 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 26, 2002, none of Iron Ages Domestic Restricted Subsidiaries was a
Material Subsidiary, and therefore no Subsidiary Guaranty was in force or
effect.

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.

On September 22, 1999, Holdings purchased $9.0 million in principal amount of
its Senior Subordinated Notes for $7.1 million (the September 1999
Transaction). The purchase was funded by $4.7 million of borrowings under the
Bank Credit Facility and the issuance of $2.4 million of Holdings Series B
Preferred Stock to Holdings majority

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stockholder, Fenway. Holdings recorded an extraordinary gain of $0.9 million,
net of unamortized deferred financing costs of $0.4 million, and income taxes of
$0.6 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 September 1999 Transaction.

On July 20, 1999, Holdings purchased $9.6 million in principal amount of its
Senior Subordinated Notes for $7.7 million (the July 1999 Transaction). The
purchase was funded by $5.1 million of borrowings under the Bank Credit Facility
and the issuance of $2.6 million of Holdings Series B Preferred Stock to
Holdings majority stockholder, Fenway. Holdings recorded an extraordinary gain
of $0.9 million, net of unamortized deferred financing costs of $0.4 million,
and income taxes of $0.7 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 July 1999 Transaction.

12-1/8% Senior Discount Notes Due 2009

The 12-1/8% Senior Discount Notes (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.

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.

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7. Long-Term Debt (continued)

Other Notes

Holdings has other notes of approximately $0.2 million at January 26, 2002 and
January 27, 2001, respectively. The notes accrue interest at 9.5%.

Future Maturities of Long-Term Debt

Five-year maturities of long-term debt are as follows (in thousands):

|           |  |   |         | 
|---------- |  | - | ------- | 
|2002       |  | $ | 6,475   | 
|2003       |  |   | 7,283   | 
|2004       |  |   | 13,883  | 
|2005       |  |   | 64      | 
|2006       |  |   | 15      | 
|Thereafter |  |   | 103,983 | 
|           |  |   |         | 
|           |  | $ | 131,703 | 
|           |  |   |         | 

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.

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The carrying amounts and fair values of Holdings financial instruments at
January 26, 2002 and January 27, 2001 are as follows:

|                                          |  |                  |        |                  |  |                |        |       |  |   |        |  |  |   |        | 
|----------------------------------------- |  | ---------------- | ------ | ---------------- |  | -------------- | ------ | ----- |  | - | ------ |  |  | - | ------ | 
|                                          |  | January 26, 2002 |        | January 27, 2001
|                                          |  |                  |        |                 
|                                          |  | Carrying         |        | Fair             |  | Carrying       |        | Fair 
|                                          |  | Amount           |        | Value            |  | Amount         |        | Value
|                                          |  |                  |        |                  |  |                |        |      
|                                          |  |                  |        |                  |  | (In Thousands) |        |       |  |  
|Cash and cash equivalents                 |  | $                | 624    |                  |  | $              | 624    |       |  | $ | 91     |  |  | $ | 91     | 
|Bank Credit Facility                      |  |                  | 27,002 |                  |  |                | 27,002 |       |  |   | 32,561 |  |  |   | 32,561 | 
|9-7/8% Senior Subordinated Notes due 2008 |  |                  | 65,000 |                  |  |                | 29,900 |       |  |   | 65,000 |  |  |   | 44,525 | 
|12-1/8% Senior Discount Notes due 2009    |  |                  | 38,983 |                  |  |                | 3,160  |       |  |   | 34,654 |  |  |   | 7,222  | 
|Other notes                               |  |                  | 178    |                  |  |                | 178    |       |  |   | 178    |  |  |   | 178    | 
|Capital lease obligations                 |  |                  | 540    |                  |  |                | 545    |       |  |   | 727    |  |  |   | 732    | 
|Interest rate swap                        |  |                  |       |                  |  |                |       |       |  |   |       |  |  |   | 113    | 

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 26, 2002, January 27, 2001 and January 29, 2000, pension and profit
sharing expenses were approximately $0.4 million, $0.6 million and $0.5 million,
respectively.

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10. Income Taxes

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

|                        |           |         |        |                  |        |                  |        |                  |        |   |        |   |        |  
|----------------------- | --------- | ------- | ------ | ---------------- | ------ | ---------------- | ------ | ---------------- | ------ | - | ------ | - | ------ | -
|                        |           |         |        | Year ended      
|                        |           |         |        | January 26, 2002 |        | January 27, 2001 |        | January 29, 2000
|                        |           |         |        |                  |        |                  |        |                 
|                        |           |         |        |                  |        |                  |        | (In Thousands)   |        |   |        |  
|Income taxes (benefit): |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        | Current:  |         |        |                  |        |                  |        |                  |        |   |        |   |       
|                        |           | Federal |        | $                | (162   | )                |        | $                | 1,174  |   |        | $ | 1,641  |  
|                        |           | State   |        |                  | 59     |                  |        |                  | (359   | ) |        |   | (283   | )
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        |           |         | (103   | )                |        |                  | 815    |                  |        |   | 1,358  |  
|                        | Deferred: |         |        |                  |        |                  |        |                  |        |   |        |   |       
|                        |           | Federal |        |                  | (1,300 | )                |        |                  | (1,074 | ) |        |   | (1,270 | )
|                        |           | State   |        |                  | 17     |                  |        |                  | 53     |   |        |   | 123    |  
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        |           |         | (1,283 | )                |        |                  | (1,021 | )                |        |   | (1,147 | )
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        |           | $       | (1,386 | )                |        | $                | (206   | )                |        | $ | 211    |  
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  

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

|                                  |                                                          |   |                  |       |                  |   |                  |      |   |   |      |      |  
|--------------------------------- | -------------------------------------------------------- | - | ---------------- | ----- | ---------------- | - | ---------------- | ---- | - | - | ---- | ---- | -
|                                  |                                                          |   | Year ended      
|                                  |                                                          |   | January 26, 2002 |       | January 27, 2001 |   | January 29, 2000
|                                  |                                                          |   |                  |       |                  |   |                 
|                                  |                                                          |   |                  |       |                  |   | (In Thousands)   |      |   |   |     
|Amount computed at statutory rate |                                                          | $ | (3,177           | )     |                  | $ | (925             | )    |   | $ | (640 | )   
|                                  | State and local taxes less
applicable federal income tax |   |                  | (214  | )                |   |                  | (202 | ) |   |      | (106 | )
|                                  | Goodwill and other amortization                          |   |                  | 1,547 |                  |   |                  | 836  |   |   |      | 830  |  
|                                  | Change in valuation allowance                            |   |                  | 689   |                  |   |                  |     |   |   |      |     |  
|                                  | Tax rate change                                          |   |                  | (425  | )                |   |                  |     |   |   |      |     |  
|                                  | Other                                                    |   |                  | 194   |                  |   |                  | 85   |   |   |      | 127  |  
|                                  |                                                          |   |                  |       |                  |   |                  |      |   |   |      |     
|                                  |                                                          | $ | (1,386           | )     |                  | $ | (206             | )    |   | $ | 211  |     
|                                  |                                                          |   |                  |       |                  |   |                  |      |   |   |      |     

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10. Income Taxes (continued)

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

|                               |                                        |   |                |       |             |   |       |       | 
|------------------------------ | -------------------------------------- | - | -------------- | ----- | ----------- | - | ----- | ----- | 
|                               |                                        |   | January 26,    |       | January 27,
|                               |                                        |   | 2002           |       | 2001       
|                               |                                        |   |                |       |            
|                               |                                        |   | (In Thousands)
|Deferred tax liabilities:      |                                        |   |                |       |             |   |       |      
|                               | Inventory                              |   | $              | 2,139 |             |   | $     | 2,244 | 
|                               | Property and equipment                 |   |                | 999   |             |   |       | 1,060 | 
|                               | Customer lists                         |   |                | 3,851 |             |   |       | 4,657 | 
|                               | Other                                  |   |                | 554   |             |   |       | 440   | 
|                               |                                        |   |                |       |             |   |       |      
|Total deferred tax liabilities |                                        |   | 7,543          |       |             |   | 8,401 |      
|Deferred tax assets:           |                                        |   |                |       |             |   |       |      
|                               | Interest expense                       |   |                | 6,133 |             |   |       | 4,732 | 
|                               | State net operating loss carryforwards |   |                | 1,044 |             |   |       | 698   | 
|                               | Inventory                              |   |                | 461   |             |   |       | 488   | 
|                               | Accrued expenses                       |   |                | 428   |             |   |       | 521   | 
|                               | Other                                  |   |                | 183   |             |   |       | 148   | 
|                               |                                        |   |                |       |             |   |       |      
|Total deferred tax assets      |                                        |   | 8,249          |       |             |   | 6,587 |      
|                               |                                        |   |                |       |             |   |       |      
|                               |                                        |   | (706           | )     |             |   | 1,814 |      
|Valuation allowance            |                                        |   | 1,044          |       |             |   |      |      
|                               |                                        |   |                |       |             |   |       |      
|Net deferred tax liabilities   |                                        | $ | 338            |       |             | $ | 1,814 |      
|                               |                                        |   |                |       |             |   |       |      

State net operating loss carryforwards (NOLs) were generated during the 1999
and 2002 fiscal years, primarily related to the state income tax benefit from
extraordinary losses incurred in connection with the early debt extinguishment
(see Note 7). The NOLs expire at various times beginning in fiscal year 2002
through 2019. At January 26, 2002, Holdings management assessed the likelihood
of utilizing the state net operating loss carryforwards, determined that it is
currently more likely than not that the benefit will not be realized and
established a valuation allowance of approximately $1.0 million.

Income and (loss) before income taxes for Canada were $(0.4) million, $(0.04)
million and $(0.1) million and for Mexico were $(0.02) million, $0.06 million
and $0.1 million for the fiscal years ended January 26, 2002, January 27, 2001
and January 29, 2000, 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 29%, 29%, and 24% of its inventory from one vendor for the fiscal
years ended January 26, 2002, January 27, 2001 and January 29, 2000,
respectively. At January 26, 2002 and January 27, 2001, Holdings had outstanding
inventory purchase commitments of approximately $12.3 million and $15.3 million,
respectively.

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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.

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11. Commitments and Contingencies (continued)

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
|                                                     |  |         |     |                 
|2002                                                 |  | $       | 227 |                  |  | $ | 2,908 | 
|2003                                                 |  |         | 186 |                  |  |   | 2,019 | 
|2004                                                 |  |         | 128 |                  |  |   | 945   | 
|2005                                                 |  |         | 75  |                  |  |   | 291   | 
|2006                                                 |  |         | 16  |                  |  |   | 71    | 
|Thereafter                                           |  |         |    |                  |  |   |      | 
|                                                     |  |         |     |                  |  |   |       | 
|Total minimum lease payments                         |  |         | 632 |                  |  | $ | 6,234 | 
|                                                     |  |         |     |                  |  |   |       | 
|Less amounts representing interest                   |  |         | 92  |                  |  |   |       | 
|                                                     |  |         |     |                  |  |   |       | 
|Present value of future minimum lease payments       |  |         | 540 |                  |  |   |       | 
|Less current maturities of capital lease obligations |  |         | 190 |                  |  |   |       | 
|                                                     |  |         |     |                  |  |   |       | 
|Capital lease obligations                            |  | $       | 350 |                  |  |   |       | 
|                                                     |  |         |     |                  |  |   |       | 

Operating lease expense under such arrangements was approximately $3.5 million,
$3.5 million and $3.5 million, for the fiscal years ended January 26, 2002,
January 27, 2001 and January 29, 2000, 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 26, 2002 and January 27, 2001, property and equipment include
capitalized vehicle leases of approximately $2.3 million and $2.3 million,
respectively, and accumulated amortization of approximately $1.7 million and
$1.4 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 26, 2002.

On December 20, 1999, in connection with the September 1999 Transaction and the
July 1999 Transaction as described in Note 7, 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,

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beginning April 13, 2001. The Holdings Series C Preferred Stock ranks junior to
outstanding Holdings Series A 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

The 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. During the year ended January 29, 2000,
367 Series A Options were exercised. No Series A Options were exercised during
the years ended January 26, 2002 or January 27, 2001. The 11,161 remaining
Series A Options are fully vested and exercisable as of January 26, 2002.

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

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vesting of the Series B Options, Holdings will recognize compensation expense
related to the Series B Options 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 26, 2002, January 27, 2001 and January 29, 2000, no Series B Basic
options that vest subject to the achievement of target earnings were exercised.

During the year ended January 26, 2002, 685 Series B Basic options were granted,
342 of which become exercisable on a pro rata basis over the years ended in 2002
and 2003, and the remainder of which become exercisable subject to the
achievement of certain performance objectives. One hundred seventy one of these
Series B Basic options that vest over time 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, 500 Series B Basic options were granted,
250 of which become exercisable on a pro rata basis over the years ended 2001,
2002 and 2003, and the remainder of which become exercisable subject to the
achievement of certain performance objectives. Eighty three of these Series B
Basic options that vest over time 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.

During the year ended January 29, 2000, 452 non vested Series B Basic options
became vested and exercisable at an exercise price of approximately $186 per
share. An additional 452 non vested Series B Basic options were reclassified
from options which vest over time, subject to the achievement of certain target
earnings, to options which vest upon a change of control of Iron Age and the
attainment of certain internal rate of return objectives by Holdings
stockholders.

Holdings applies APB Opinion No. 25, Accounting for Stock Issued to Employees,
and related interpretations in accounting for its stock option plan. For the
fiscal years ended January 26, 2002, January 27, 2001 and January 29, 2000, no
compensation cost has been recognized in the Holdings financial statements.

Had compensation cost for Holdings stock option plan been determined based on
the fair value of such awards at the grant date, consistent with Financial
Accounting Standards Board Statement No. 123, Accounting for Stock-Based
Compensation, Holdings total net income would have been as follows:

|          |             |  |                  |        |                  |  |                  |      |   |  |   |      |  
|--------- | ----------- |  | ---------------- | ------ | ---------------- |  | ---------------- | ---- | - |  | - | ---- | -
|          |             |  | Year ended      
|          |             |  | January 26, 2002 |        | January 27, 2001 |  | January 29, 2000
|          |             |  |                  |        |                  |  |                 
|          |             |  |                  |        |                  |  | (In Thousands)   |      |   |  |  
|Net loss: |             |  |                  |        |                  |  |                  |      |   |  |   |     
|          | As reported |  | $                | (7,907 | )                |  | $                | (231 | ) |  | $ | (290 | )
|          | Pro forma   |  |                  | (7,943 | )                |  |                  | (252 | ) |  |   | (303 | )

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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 26, 2002 |     | January 27, 2001 |  | January 29, 2000
|                        |  |                  |     |                  |  |                 
|Risk-free interest rate |  |                  | 6.0 |                  |  |                  | 6.0 |  |  |  | 6.0 | 
|Dividend yield          |  |                  | 0.0 |                  |  |                  | 0.0 |  |  |  | 0.0 | 
|Expected life           |  | 5 years          |     | 5 years          |  | 3 years         
|Volatility              |  | Not applicable   |     | Not applicable   |  | Not applicable  

A summary of the status of the shares under Holdings stock option plan is as
follows:

|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|---------------------------------- |  | ---------------- | ------ | ---------------- |  | ---------------- | ------ | - |  |  | ------ | -
|                                   |  | Year ended      
|                                   |  | January 26, 2002 |        | January 27, 2001 |  | January 29, 2000
|                                   |  |                  |        |                  |  |                 
|Outstanding, beginning of year     |  |                  | 18,134 |                  |  |                  | 18,515 |   |  |  | 20,095 |  
|Exercised                          |  |                  |       |                  |  |                  |       |   |  |  | (367   | )
|Granted                            |  |                  | 685    |                  |  |                  | 500    |   |  |  | 1,145  |  
|Forfeited                          |  |                  | (1,707 | )                |  |                  | (881   | ) |  |  | (2,358 | )
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|Outstanding, end of year           |  |                  | 17,112 |                  |  |                  | 18,134 |   |  |  | 18,515 |  
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|Options exercisable at end of year |  |                  | 12,601 |                  |  |                  | 12,596 |   |  |  | 12,590 |  
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  

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13. Stock Options (continued)

Additional information regarding stock options granted in connection with the
1997 stock option plan is outlined below:

|                                                                                 |  |                  |        |                  |                  |        |       |        |  |       |       |        |  |        |        |       |  |       |       |        |  |        |       |  |  |  |        |  |  |  |       |  |  |  |       | 
|-------------------------------------------------------------------------------- |  | ---------------- | ------ | ---------------- | ---------------- | ------ | ----- | ------ |  | ----- | ----- | ------ |  | ------ | ------ | ----- |  | ----- | ----- | ------ |  | ------ | ----- |  |  |  | ------ |  |  |  | ----- |  |  |  | ----- | 
|                                                                                 |  | Year ended      
|                                                                                 |  | January 26, 2002 |        | January 27, 2001 | January 29, 2000
|                                                                                 |  |                  |        |                  |                 
|                                                                                 |  | Series           |        | 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    |        |  |        |      |  |  |  |       |  |  |  | 52    |  |  |  |      | 
|Weighted average exercise price of
all outstanding options                       |  |                  | 36     |                  |                  |        | 235   |        |  |       | 186   |        |  |        | 36     |       |  |       | 223   |        |  |        | 186   |  |  |  | 36     |  |  |  | 220   |  |  |  | 186   | 
|Weighted average exercise price of
options exercisable                           |  |                  | 36     |                  |                  |        | 298   |        |  |       |      |        |  |        | 36     |       |  |       | 303   |        |  |        |      |  |  |  | 36     |  |  |  | 307   |  |  |  |      | 
|Weighted average exercise price of
options granted during the year               |  |                  |       |                  |                  |        | 186   |        |  |       |      |        |  |        |       |       |  |       | 186   |        |  |        |      |  |  |  |       |  |  |  | 186   |  |  |  |      | 
|Weighted average exercise price of
options exercised during the year             |  |                  |       |                  |                  |        |      |        |  |       |      |        |  |        |       |       |  |       |      |        |  |        |      |  |  |  | 36     |  |  |  |      |  |  |  |      | 
|Weighted average exercise price of
options expired and forfeited
during the year |  |                  |       |                  |                  |        | 189   |        |  |       |      |        |  |        |       |       |  |       | 192   |        |  |        |      |  |  |  |       |  |  |  | 194   |  |  |  |      | 
|Weighted average remaining
contractual life of options
outstanding               |  |                  | 5.1    |                  |                  |        | 6.0   |        |  |       | 5.1   |        |  |        | 6.1    |       |  |       | 7.0   |        |  |        | 6.1   |  |  |  | 7.1    |  |  |  | 7.6   |  |  |  | 7.1   | 
|Options outstanding at end of year                                               |  |                  | 11,161 |                  |                  |        | 3,447 |        |  |       | 2,504 |        |  |        | 11,161 |       |  |       | 4,469 |        |  |        | 2,504 |  |  |  | 11,161 |  |  |  | 4,850 |  |  |  | 2,504 | 
|Options exercisable at end of year                                               |  |                  | 11,161 |                  |                  |        | 1,440 |        |  |       |      |        |  |        | 11,161 |       |  |       | 1,435 |        |  |        |      |  |  |  | 11,161 |  |  |  | 1,429 |  |  |  |      | 

14. Related Party Transactions

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, $0.3 million and $0.3 million in the fiscal years
ended January 26, 2002, January 27, 2001 and January 29, 2000, respectively, 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 $0.1 for the year
ended January 26, 2002 and approximately $0.1 million for the year ended January
27, 2001.

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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 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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SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
IRON AGE HOLDINGS CORPORATION
January 26, 2002

|                             |                                |                                 |  |              |         |            |  |           |         |             |  |                |   |  |  |   |         |     |  |   |         |  |  |  |  | 
|---------------------------- | ------------------------------ | ------------------------------- |  | ------------ | ------- | ---------- |  | --------- | ------- | ----------- |  | -------------- | - |  |  | - | ------- | --- |  | - | ------- |  |  |  |  | 
|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 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 | 
|Year ended January 29, 2000: |                                |                                 |  |              |         |            |  |           |         |             |  |                |   |  |  |   |         |     |  |  
|                             | Deducted from assets accounts: |                                 |  |              |         |            |  |           |         |             |  |                |   |  |  |   |         |     |  |   |        
|                             |                                | Allowance for doubtful accounts |  | $            | 275,000 |            |  | $         | 274,000 |             |  |                |  |  |  | $ | 105,000 | (1) |  | $ | 444,000 | 



| |  | (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 April
25, 2002.

|                      |  |     |    |          |  |                                                              
|--------------------- |  | --- | -- | -------- |  | -------------------------------------------------------------
|Name                  |  | Age |    | Position
|William J. Mills      |  |     | 42 |          |  | President and Director                                       
|                      |  |     |    |          |  |                                                              
|Keith A. McDonough    |  |     | 43 |          |  | Vice President and Assistant Secretary                       
|                      |  |     |    |          |  |                                                              
|Bart R. Huchel        |  |     | 46 |          |  | Vice President-Finance, Chief Financial Officer and
Treasurer
|                      |  |     |    |          |  |                                                              
|Nicholas C. Bayley    |  |     | 39 |          |  | President and Chief Executive Officer, Falcon Shoe
Mfg. Co.  
|                      |  |     |    |          |  |                                                              
|Joseph J. Sebes       |  |     | 42 |          |  | Executive Vice President/Corporate Accounts, Iron Age        
|                      |  |     |    |          |  |                                                              
|Dale F. Morrison      |  |     | 53 |          |  | Chairman and Director                                        
|                      |  |     |    |          |  |                                                              
|Andrea Geisser        |  |     | 59 |          |  | Vice President and Director                                  
|                      |  |     |    |          |  |                                                              
|John Q. Anderson      |  |     | 50 |          |  | Director                                                     
|                      |  |     |    |          |  |                                                              
|W. Gregory Smart      |  |     | 42 |          |  | Director                                                     
|                      |  |     |    |          |  |                                                              
|Charles M. LaFollette |  |     | 37 |          |  | 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.

Keith A. McDonoughis Vice President of Holdings and Assistant Secretary.
Mr. McDonough joined Iron Age in 1981. He was appointed Chief Operating Officer
of Iron Age in February 2001 and has been the Executive Vice President of Iron
Age since 1997. Mr. McDonough was Chief Financial Officer of Holdings from 1990
to August 2001. Mr. McDonough has direct oversight of Information Technology,
Human Resources, Operations and Merchandising.

Bart R. Huchelis Vice President-Finance, Chief Financial Officer and
Treasurer of Holdings. 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 contractor, 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.

Nicholas C. Bayleyis President and Chief Executive Officer of Falcon.
Prior to February 2000, he was the Vice President and Chief Financial Officer of
Falcon. From May 1996 to July 1997, he was Vice President and Chief Financial
Officer of Knapp Shoes. Prior to that time, he held various positions in public
accounting. Mr. Bayley currently serves as a director of BB Realty Co., LLC.

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Joseph J. Sebesis Executive Vice President/Corporate Accounts of Iron Age.
Prior to 1999, he served as Vice President/National Sales. From 1992 to 1997, he
was Regional Vice President of Sales. Mr. Sebes joined Iron Age in 1990 as the
District Sales Manager in North Carolina and South Carolina. Prior to that time,
he held various sales and management positions in the food and beverage industry
with Hilton Hotels Corporation and Kraft Foods.

Dale F. Morrisonbecame Chairman and a director of Holdings in April 2002.
Mr. Morrison is Chief Executive Officer of Fenway Partners Resources LLC. From
2001 to April 2002, Mr. Morrison was Chief Executive Officer of Ci4net, a
technology equity holding company. From 1995 to 2000, Mr. Morrison was
associated with Campbell Soup Company and served as President, Chief Executive
Officer and a director from 1997 to 2000. From 1994 to 1995, Mr. Morrison was
President, Frito Lay North. From 1993 to 1994, Mr. Morrison was Vice-President
Marketing and Sales, Frito Lay Central. Prior to 1993, Mr. Morrison held various
general management positions at Pepsico and General Foods Corporation.

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., Decorative Concepts, Harry Winston and Valley
Dynamo, LLP.

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.

W.     Gregory Smartbecame a director of Holdings in 2001. Mr. Smart is a
Managing Director of Fenway Partners. Prior to joining Fenway in 1999, Mr. Smart
was a Managing Director, Investment Banking, with Merrill Lynch & Co. Mr. Smart
currently serves as a director of MW Manufacturers, Inc., M2 Automotive, Inc.,
elogex, Inc. and Transport Industries, L.P.

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.

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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Item 11. Executive Compensation.

The following table sets forth information concerning the compensation
earned in fiscal 2000, 2001 and 2002 by Mr. Jensen, Holdings Chairman until
December 31, 2001, Mr. Mills, Holdings President, and each of the other three
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

|                                       |  |          |      |            |  |                     |         |                 |                 |  |        |  |  |            |     |           |  |  |        |     
|-------------------------------------- |  | -------- | ---- | ---------- |  | ------------------- | ------- | --------------- | --------------- |  | ------ |  |  | ---------- | --- | --------- |  |  | ------ | ----
|                                       |  |          |      |            |  |                     |         |                 |                 |  |        |  |  | Long Term  |     | All Other
|                                       |  |          |      |            |  | Annual Compensation |         | Compensation($) | Compensation($)
|                                       |  |          |      |            |  |                    
|                                       |  |          |      |            |  |                     |         |                 |                 |  |        |  |  | Number of  |     |           |  | 
|                                       |  |          |      |            |  |                     |         |                 |                 |  |        |  |  | Securities |     |           |  | 
|                                       |  |          |      |            |  |                     |         |                 |                 |  |        |  |  | Underlying |     |           |  | 
|Name and Position                      |  | Year (1) |      | Salary ($) |  | Bonus($)(2)         |         | Options(3)      |                 | 
|                                       |  |          |      |            |  |                     |         |                 |                 | 
|William J. Mills                       |  |          | 2000 |            |  |                     | 200,793 |                 |                 |  |       |  |  |            | 138 |           |  |  | 20,507 | (4) 
|President and Chief Executive Officer  |  |          | 2001 |            |  |                     | 217,253 |                 |                 |  | 51,600 |  |  |            |    |           |  |  | 13,237 | (5) 
|                                       |  |          | 2002 |            |  |                     | 211,087 |                 |                 |  | 39,070 |  |  |            |    |           |  |  | 11,303 | (6) 
|                                      
|Donald R. Jensen                       |  |          | 2000 |            |  |                     | 240,248 |                 |                 |  |       |  |  |            |    |           |  |  | 26,571 | (7) 
|Chairman                               |  |          | 2001 |            |  |                     | 248,020 |                 |                 |  | 68,800 |  |  |            |    |           |  |  | 9,190  | (8) 
|                                       |  |          | 2002 |            |  |                     | 220,412 |                 |                 |  | 45,964 |  |  |            |    |           |  |  | 7,080  | (9) 
|                                      
|Keith A. McDonough                     |  |          | 2000 |            |  |                     | 124,011 |                 |                 |  |       |  |  |            | 118 |           |  |  | 20,833 | (10)
|Executive Vice President and Chief     |  |          | 2001 |            |  |                     | 140,628 |                 |                 |  | 34,400 |  |  |            |    |           |  |  | 11,032 | (11)
|Operating Officer, Iron Age            |  |          | 2002 |            |  |                     | 137,689 |                 |                 |  | 26,659 |  |  |            |    |           |  |  | 8,037  | (12)
|                                      
|Nicholas C. Bayley                     |  |          | 2000 |            |  |                     | 94,372  |                 |                 |  | 7,280  |  |  |            |    |           |  |  | 6,079  | (13)
|President and Chief Executive Officer, |  |          | 2001 |            |  |                     | 115,350 |                 |                 |  | 7,982  |  |  |            |    |           |  |  | 5,286  | (14)
|Falcon Shoe Mfg. Co.                   |  |          | 2002 |            |  |                     | 101,816 |                 |                 |  | 11,262 |  |  |            |    |           |  |  | 7,054  | (15)
|                                      
|Joseph J. Sebes                        |  |          | 2000 |            |  |                     | 106,282 |                 |                 |  | 8,000  |  |  |            | 80  |           |  |  | 7,668  | (16)
|Executive Vice President/Corporate     |  |          | 2001 |            |  |                     | 112,453 |                 |                 |  | 19,264 |  |  |            |    |           |  |  | 6,475  | (17)
|Accounts, Iron Age                     |  |          | 2002 |            |  |                     | 117,823 |                 |                 |  | 13,330 |  |  |            |    |           |  |  | 5,463  | (18)



|(1) |  | 2000: Fiscal year ended January 29, 2000. 2001: Fiscal year ended January                                                                                                                                                    
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | 27, 2001. 2002: Fiscal year ended January 26, 2002.                                                                                                                                                                          
|   
|(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.                                                                       
|   
|(3) |  | Options to acquire common stock of Holdings.                                                                                                                                                                                 
|   
|(4) |  | Includes Iron Age allocations of $15,609 under defined contribution plan
for the Plan Year ended December 31, 1999 and group life insurance premiums
of $300 paid by Iron Age during the Plan Year ended December 31, 1999.  
|   
|(5) |  | 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.   
|   
|(6) |  | 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.   
|   
|(7) |  | Includes Iron Age allocations of $15,311 under defined contribution plan
for the Plan Year ended December 31, 1999 and group life insurance premiums
of $1,980 paid by Iron Age during the Plan Year ended December 31, 1999.
|   
|(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
$1,980 paid by Iron Age during the Plan year ended December 31,       

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|     |  | 2000.                                                                                                                                                                                                                         
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(9)  |  | Represents Iron Age allocations of $5,100 under defined contribution plan
for the Plan Year ended December 31, 2001 and group life insurance premiums
of $1,980 paid by Iron Age during the Plan year ended December 31, 2001.
|    
|(10) |  | Includes Iron Age allocations of $16,496 under defined contribution plan
for the Plan Year ended December 31, 1999 and group life insurance premiums
of $300 paid by Iron Age during the Plan Year ended December 31, 1999.   
|    
|(11) |  | 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.    
|    
|(12) |  | 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.    
|    
|(13) |  | Represents Falcon allocation of $6,079 under defined contribution plan for
the Plan Year ended December 31, 1999.                                                                                                             
|    
|(14) |  | Represents Falcon allocation of $5,286 under defined contribution plan for
the Plan Year ended December 31, 2000.                                                                                                             
|    
|(15) |  | Includes Falcon allocation of $3,380 under defined contribution plan for
the Plan Year ended December 31, 2001.                                                                                                               
|    
|(16) |  | Includes Iron Age allocations of $5,632 under defined contribution plan for
the Plan Year ended December 31, 1999 and group life insurance premiums of
$310 paid by Iron Age during the Plan Year ended December 31, 1999.    
|    
|(17) |  | Includes Iron Age allocations of $5,577 under defined contribution plan for
the Plan Year ended December 31, 2000 and group life insurance premiums of
$222 paid by Iron Age during the Plan Year ended December 31, 2000.    
|    
|(18) |  | Includes Iron Age allocations of $3,920 under defined contribution plan for
the Plan Year ended December 31, 2001 and group life insurance premiums of
$256 paid by Iron Age during the Plan year ended December 31, 2001.    

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Aggregated Fiscal Year-End Option Values

The following table sets forth information concerning the value of
unexercised stock options at the end of fiscal 2002 for the Named Executive
Officers.

Aggregated Fiscal Year-End Option Values

|                   |                  |               |                       |                          |              |  |  |           | 
|------------------ | ---------------- | ------------- | --------------------- | ------------------------ | ------------ |  |  | --------- | 
|                   |                  |               | Number of Securities  |                          | Value of    
|                   |                  |               | Underlying            |                          | Unexercised 
|                   |                  |               | Unexercised           |                          | In-the-Money
|                   |                  |               | Options at            |                          | Options     
|                   |                  |               | Fiscal Year End(#)(1) | at Fiscal Year End($)(2)
|                   |                  |               |                       |                         
|                   |                  |               | Exercisable/          |                          | Exercisable/
|Name               |                  | Unexercisable |                       | Unexercisable           
|                   |                  |               |                       |                         
|William J. Mills   |                  |               |                       |                          |              |  |  |          
|                   | Series A         |               |                       | 2,194.43/0               |              |  |  | 327,321/0 | 
|                   | Series BBasic B |               |                       | 248/335                  |              |  |  | 0/0       | 
|                   | Series BExtra B |               |                       | 0/600                    |              |  |  | 0/0       | 
|Donald R. Jensen   |                  |               |                       |                          |              |  |  |          
|                   | Series A         |               |                       | 6,404.83/0               |              |  |  | 955,345/0 | 
|                   | Series BBasic B |               |                       | 340/200                  |              |  |  | 0/0       | 
|                   | Series BExtra B |               |                       | 0/1,248.77               |              |  |  | 0/0       | 
|Keith A. McDonough |                  |               |                       |                          |              |  |  |          
|                   | Series A         |               |                       | 2,194.42/0               |              |  |  | 327,321/0 | 
|                   | Series BBasic B |               |                       | 227/300                  |              |  |  | 0/0       | 
|                   | Series BExtra B |               |                       | 0/600                    |              |  |  | 0/0       | 
|Nicholas C. Bayley |                  |               |                       |                          |              |  |  |          
|                   | Series BBasic B |               |                       | 30/40                    |              |  |  | 0/0       | 
|Joseph J. Sebes    |                  |               |                       |                          |              |  |  |          
|                   | Series A         |               |                       | 367.05/0                 |              |  |  | 54,749/0  | 
|                   | Series BBasic B |               |                       | 80/104                   |              |  |  | 0/0       | 
|                   | Series BExtra B |               |                       | 0/55                     |              |  |  | 0/0       | 



|(1) |  | Options to acquire common stock of Holdings.                          
|--- |  | ----------------------------------------------------------------------
|(2) |  | Value based on assumed value at January 26, 2002 of $185.52 per share.

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 of Holdings 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 two years and one half are subject to certain vesting restrictions
based upon performance.

Employment Agreements

Mr. Mills is currently employed by Iron Age pursuant to an agreement dated
November 20, 1995. Under this 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 $181,380, subject to
annual increases, and is eligible for a bonus of not less than $75,000 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

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Mr. Jensen resigned as Chairman of the Board of Directors of Holdings and
Iron Age on December 31, 2001 and as a Director on March 31, 2002. Under the
terms of an agreement dated February 26, 1997, Mr. Jensen is entitled to
continued coverage under group health plans for him and his spouse until June
30, 2005 if he dies prior to such date. Under this agreement, Mr. Jensen may
also borrow from Iron Age on an interest-free basis up to $125,000 per calendar
quarter beginning January 1, 2002. The maximum loan amount is equal to 100% of
the fair market value of all of Mr. Jensens vested options as determined by
Holdings Board of Directors. Each loan will be secured by a pledge of Mr.
Jensens vested options of equivalent fair market value. All loans will become
due and payable upon a public offering of Iron Age shares or the occurrence of
certain other Liquidity Events as defined in the agreement. As of
January 26, 2002, there were no outstanding loans.

Mr. McDonough is currently employed by Iron Age pursuant to an agreement
dated November 20, 1995. Under this 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. McDonough receives an annual salary of $126,000,
subject to annual increases, and is eligible for a bonus of not less than
$50,000 based upon Iron Ages achievement of EBITDA targets. If Mr. McDonough 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.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee was formed on September 15, 1998. Membership as
of January 26, 2002 consisted of Messrs. Anderson and Geisser.

Concurrent with the formation of the Compensation Committee on September
15, 1998, the Audit Committee was formed. Membership as of January 26, 2002
consists of Messrs. Anderson, Geisser and LaFollette.

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

As of April 25, 2002, 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 April 25, 2002
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
Holding by each director of Holdings, each Named 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.

|                                                                                   |                               |        |                              |       |                          |        |                          |       |               |        |           |       |               |  |       |   |  |  |       |  |  |  |     |   | 
|---------------------------------------------------------------------------------- | ----------------------------- | ------ | ---------------------------- | ----- | ------------------------ | ------ | ------------------------ | ----- | ------------- | ------ | --------- | ----- | ------------- |  | ----- | - |  |  | ----- |  |  |  | --- | - | 
|                                                                                   |                               |        | 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    |       |               |  | 95.07 | % |  |  | 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                     |       |               |        | 15.19     |       |               |  | 1.50  |   |  |  |      |  |  |  |    |  
|Donald R. Jensen(6)                                                                |                               |        | 6,744.83                     |       |                          |        | 6.32                     |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|Keith A. McDonough(7)                                                              |                               |        | 2,421.42                     |       |                          |        | 2.36                     |       |               |        | 10.13     |       |               |  | 1.00  |   |  |  |      |  |  |  |    |  
|Bart R. Huchel                                                                     |                               |        |                             |       |                          |        |                         |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|Nicholas C. Bayley(8)                                                              |                               |        | 30.00                        |       |                          |        | *                        |       |               |        | 1.62      |       |               |  | *     |   |  |  |      |  |  |  |    |  
|Joseph J. Sebes(9)                                                                 |                               |        | 447.05                       |       |                          |        | *                        |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|W. Gregory Smart(10)                                                               |                               |        |                             |       |                          |        |                         |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|Andrea Geisser(10)                                                                 |                               |        |                             |       |                          |        |                         |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|Charles M. LaFollette(10)                                                          |                               |        |                             |       |                          |        |                         |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|John Q. Anderson(11)                                                               |                               |        | 171.00                       |       |                          |        | *                        |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|Dale F. Morrison(12)                                                               |                               |        |                             |       |                          |        |                         |       |               |        |          |       |               |  |      |   |  |  |      |  |  |  |    |  
|All directors and executive officers as a group,
including the above named persons |                               |        | 12,256.73                    |       |                          |        | 10.92                    |       |               |        | 26.94     |       |               |  | 2.63  |   |  |  |      |  |  |  |    |  



|*   |  | 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

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|     |  | 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 6,404.83 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 and 340 shares that may be acquired upon the exercise of outstanding
Series B Options at an exercise price of $363.60 per share pursuant to the
Option Plan of Holdings. See Management Equity Arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|(7)  |  | 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 Plan of
Holdings. See Management Equity Arrangements.                                                                                                                                                                                                                                                                                                          
|(8)  |  | Includes 20 shares of common stock that may be acquired upon the exercise
of outstanding Series B Options at an exercise price of $363.60 per share
and 10 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 of Holdings. See Management Equity Arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(9)  |  | Includes 367.05 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, 55 shares that may be acquired upon the exercise of outstanding
Series B Options at an exercise price of $363.60 per share and 25 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 of
Holdings. See Management Equity Arrangements.                                                                                                                                                                                                                                                                                                             
|(10) |  | 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, LaFollette and Smart 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, LaFollette and Smart are members of FPIP, LLC and FPIP
Trust, LLC and, accordingly, may be deemed to beneficially own shares owned
by such funds. Messrs. Geisser, LaFollette and Smart 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.
|(11) |  | Represents 171 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(12) |  | Mr. Morrisons business address is c/o Fenway Partners Resources, 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, for an aggregate
purchase price of $263,604. One third of the purchase price was paid in cash and
the remaining two-thirds was loaned by Iron Age to the officers pursuant to
non-recourse interest bearing notes which mature on May 22, 2003. Mr. Mills
purchased 15.19 shares for a purchase price of $79,880, of which $53,256 was
borrowed from Iron Age.

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 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

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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

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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Part IV




Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

(a)(1) Financial Statements

| |  |                                                        
| |  | -------------------------------------------------------
| |  | See Index to Financial Statements appearing at page 18.

(a)(2) Financial Statement Schedules

| |  |                                                                                                                                                                           
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The following Financial Statement Schedule is included at page 46:                                                                                                        
|
| |  | 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.                                                                       

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##### Table of Contents



|         |  |                                                                                                                                             
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|10.26(1) |  | Ontario, Canada Lease Agreement dated June 11, 1991, as amended November 23, 1995.                                                          
|10.27(1) |  | Jensen Employment Agreement dated February 26, 1997.                                                                                        
|10.28(1) |  | Mills Employment Agreement dated November 20, 1995.                                                                                         
|10.29(1) |  | McDonough Employment Agreement dated November 20, 1995.                                                                                     
|10.30(1) |  | Johanson Employment Agreement date August 1, 1994.                                                                                          
|10.31(1) |  | Johanson Non-Competition Agreement dated August 1, 1994.                                                                                    
|10.32(2) |  | Taaffe Severance Agreement dated January 13, 1999.                                                                                          
|10.33(2) |  | Taaffe Agreement and General Release dated January 13, 1999.                                                                                
|10.34(2) |  | Letter Waiver to Banque Nationale de Paris Credit Agreement dated August 28, 1998.                                                          
|10.35(2) |  | Amendment No. 2 and Waiver to Banque Nationale de Paris Credit Agreement dated February 26,
1999.                                           
|10.36(2) |  | Election to reduce Acquisition Commitment of Banque Nationale de Paris
Credit Agreement dated March 5, 1999                                 
|10.37(3) |  | Amendment No. 3 to Banque Nationale de Paris Credit Agreement dated June 23, 1999.                                                          
|10.38(4) |  | Amendment No. 4 to Banque Nationale de Paris Credit Agreement dated March 17, 2000.                                                         
|10.39(4) |  | Amendment No. 1 to Stock Option Plan dated April 8, 1999.                                                                                   
|10.40(4) |  | Amendment No. 2 to Stock Option Plan dated January 29, 2000.                                                                                
|10.41(4) |  | Johanson Consulting Agreement dated February 1, 2000.                                                                                       
|10.42(4) |  | Certificate of Designation, Preferences and Rights of the Series B Preferred Stock of Iron Age Holdings
Corporation dated December 29, 1999.
|10.43(5) |  | Amendment No. 5 to Banque Nationale de Paris Credit Agreement dated September 15, 2000.                                                     
|10.44(6) |  | Certificate of Designation, Preferences and Rights of the Series C Preferred Stock of Iron Age Holdings
Corporation dated December 29, 2000.
|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                                                       
|21.1(1)  |  | Subsidiaries of Holdings.                                                                                                                   



|(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.                   

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the fourth quarter of the fiscal
year ended January 26, 2002.

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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: April 25, 2002 |  | 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)                                                       |  | April 25, 2002
|                                                |  |                                                                                                            |  |               
|/S/ BART R. HUCHEL
Bart R. Huchel               |  | Vice President-Finance,
Chief Financial Officer and Treasurer
(principal financial and accounting
officer) |  | April 25, 2002
|                                                |  |                                                                                                            |  |               
|/S/ KEITH A. MCDONOUGH
Keith A. McDonough       |  | Vice President                                                                                             |  | April 25, 2002
|                                                |  |                                                                                                            |  |               
|/S/ JOSEPH J. SEBES
Joseph J. Sebes             |  | Executive Vice President/Corporate
Accounts, Iron Age                                                      |  | April 25, 2002
|                                                |  |                                                                                                            |  |               
|/S/ JOHN Q. ANDERSON
John Q. Anderson           |  | Director                                                                                                   |  | April 25, 2002
|                                                |  |                                                                                                            |  |               
|/S/ ANDREA GEISSER
Andrea Geisser               |  | Vice President and Director                                                                                |  | April 25, 2002
|                                                |  |                                                                                                            |  |               
|/S/ CHARLES M. LAFOLLETTE
Charles M. LaFollette |  | Director                                                                                                   |  | April 25, 2002
|                                                |  |                                                                                                            |  |               
|/S/ W. GREGORY SMART
W. Gregory Smart           |  | Director                                                                                                   |  | April 25, 2002

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