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 27, 2001

OR

[  ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the
transition            period from:   ________________ to _______________________

Commission file number:333-57009

Iron Age Holdings Corporation

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|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|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

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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 26, 2001, 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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FORM 10-K INDEX

|         |          |  |                                                                                       |      |    | 
|-------- | -------- |  | ------------------------------------------------------------------------------------- | ---- | -- | 
|         |          |  |                                                                                       | Page
|         |          |  |                                                                                       |     
|Part I   |          |  |                                                                                       | 3    |   
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|         | Item 1.  |  | Business                                                                              |      | 3  | 
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|         | Item 2.  |  | Properties                                                                            |      | 7  | 
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|         | Item 3.  |  | Legal Proceedings                                                                     |      | 7  | 
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|         | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |      | 7  | 
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|Part II  |          |  |                                                                                       | 8    |   
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|         | Item 5.  |  | Market for Registrant's Common Equity and Related Stockholder Matters                 |      | 8 
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|         | Item 6.  |  | Selected Financial Data                                                               |      | 8  | 
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|         | Item 7.  |  | Management's Discussion and
Analysis of Financial Condition and Results of Operations |      | 9  | 
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|         | Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                            |      | 17 | 
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|         | Item 8.  |  | Financial Statements and Supplementary Data                                           |      | 18 | 
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|         | Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |      | 48 | 
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|Part III |          |  |                                                                                       | 49   |   
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|         | Item 10. |  | Directors and Executive Officers of the Registrant                                    |      | 49 | 
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|         | Item 11. |  | Executive Compensation                                                                |      | 51 | 
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|         | Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |      | 55 | 
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|         | Item 13. |  | Certain Relationships and Related Transactions                                        |      | 57 | 
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|Part IV  |          |  |                                                                                       | 59   |   
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|         | Item 14. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                      |      | 59 | 

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 under
the Iron Age®, Knapp® and Grabber® brand
names, which comprised 95% of fiscal 2001 sales. The Company also distributes
footwear directly to retail and wholesale customers through its wholesale
division and manufacturing subsidiary Falcon Shoe Mfg. Co. (Falcon). In
addition, the Company distributes prescription safety eyewear, on a limited
basis. The Company distributes directly to its customers over 300 styles of
footwear under the Iron Age, Knapp and Grabber brand names. The Iron Age, Knapp
and Grabber products 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 New Credit Facility) that, as amended, provides for a $61.6
million senior secured credit facility consisting of a $30.0 million revolving
working capital facility and a $31.6 million revolving acquisition facility.
The Company used excess cash and net proceeds from the Discount Notes, the
Senior Subordinated Notes and the New Credit Facility to repay the Old Credit
Facility, 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. The Company estimates
that sales to industrial and government customers represent over 60% of the
safety shoe market. 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

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Health Administration (OSHA) regulations
establishing heightened workplace safety standards, including
regulations governing footwear. OSHA regulations established standards
requiring employers to provide their workers with workplaces free from
recognized hazards that could cause serious injury or death and requiring
employees to abide by all safety and health standards that apply to their jobs.
Changes to OSHA regulations in 1994 required employers to assess footwear
related hazards and implement a program designed to mitigate such hazards.

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

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

In the industrial sector of the work shoe market, sales are made primarily
between the distributor and employer, which generally maintain safety
departments that monitor compliance with overall safety requirements and
provide safety shoe purchase subsidies. Distributors of safety shoes to
industrial customers typically provide a range of services, including advice
with respect to assessment of workplace safety requirements, recommendations as
to appropriate product selection, coordination of employer safety subsidy
programs, worksite delivery and fitting of shoes and feedback and follow-up
with corporate employers.

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

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

Safety prescription eyewear is a related product that the Company entered
into distribution. Eye protection is another element of personal protective
equipment that is regulated by OSHA. Many of the same customers to whom the
Company currently sells safety footwear have similar requirements for safety
eyewear.

Sales and Distribution

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

Mobile and Store Centers. Each mobile and store center consists of a
retail store for its products and generally one or more affiliated shoemobiles.
Each shoemobile acts as a mobile selling vehicle for the Companys products,
operating generally within a 150-mile radius of its affiliated retail store.
This sector of the Companys

-4-



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business has grown as its customers have become
more demanding and have required a higher level of customer service. 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 provides 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.

Wholesale and Consumer Channels. The Company markets branded products to
select third-party retail customers. The Company also markets
primarily Knapp
branded 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 New
Balance Athletic Shoes, Inc., Browning Arms Company, L.L. Bean, Inc., Cabelas
Inc. and Black Diamond.

Iron Age Vision. The Company markets safety prescription eyewear to its
existing industrial customer base through distribution methods identical to its
safety footwear distribution. Mobile service is utilized to bring the product
on site for the customer, where the selection, fitting and sale may be
consummated utilizing a mobile point-of-sale (POS) system designed
specifically for prescription eyewear.

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 $185.00 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 Age products are
concentrated in traditional, well-established styles, with sales of new styles
representing less than 16% of net sales in fiscal 1999 and less than 11% and 6%
of net sales in fiscal 2000 and fiscal 2001, respectively. All the Companys
work and safety shoes and boots are designed, manufactured and laboratory
tested to meet or exceed applicable ANSI Standards. Through its long-standing
relationship with users of safety footwear, the Company has assembled a product
line that is widely regarded as the industrys most complete. In addition to
the Iron Age product line, the Company distributes work, service oxfords,
non-slip and high-end work and hunting boots under the Knapp
and Grabber brand
names. In 1997, the Company acquired and successfully integrated Knapp Shoes,
Inc. (Knapp), an underperforming competitor with a strong franchise in the
uniform and service sector market (the Knapp Acquisition). On August 31,
1998, the Company sold the Dunham® trademark and related
trademarks for $2.0 million and on-hand Dunham inventory for approximately $0.6
million to New Balance Athletic Shoe, Inc. and New Balance Trading Company,
Ltd. (together, New Balance). In connection therewith, the Company agreed to
manufacture for New Balance certain products which New Balance will continue to
sell under the Dunham brand name. Net sales of Dunham products in fiscal 1998,
the last full fiscal year of ownership, were $4.0 million. This transaction did
not have a material effect on the results of operations.

-5-



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The Company has successfully expanded 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
expanded 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 primarily for sale by the Company under the Iron Age and Knapp brand
names. In addition, the Company sells work shoes manufactured at the Falcon
facility directly to third parties, including New Balance, Browning Arms
Company, L.L. Bean, Inc., Cabelas Inc. and Black Diamond. Falcon manufactures
approximately 21% of total pairs of shoes sold by Holdings.

Outside Suppliers. As a result of its market leadership position and long
operating history, the Company has developed key supply arrangements with 27
leading footwear manufacturers in seven countries: the United States, China,
Korea, Canada, Mexico, Maylasia and the Netherlands. Although in fiscal 2001
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 2001, 58% of its
total pairs sold were produced by foreign suppliers. In addition, 46% of its
total pairs sold in fiscal 2001 were 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 utilizes its own trucks as well as
common carriers to deliver product orders from its Falcon manufacturing
subsidiary and 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 U.S. Industries, Inc.), 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. In addition, the work
shoe market is a mature industry that could experience limited growth.

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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 27, 2001, the Company employed 967 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.

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 27, 2001, the principal
properties utilized by the Company.

|                              |  |           |  |                          |  |            |         |  |  |        |  | 
|----------------------------- |  | --------- |  | ------------------------ |  | ---------- | ------- |  |  | ------ |  | 
|                              |  |           |  |                          |  |            |         |  |  | Square
|Facility                      |  | Own/Lease |  | Location                 |  | Footage(1)
|                              |  |           |  |                          |  |           
|Corporate Headquarters        |  | Lease     |  | Pittsburgh, Pennsylvania |  |            | 20,500  | 
|                             
|                             
|                             
|                             
|Distribution Facility         |  | Own       |  | Penn Yan, New York       |  |            | 175,000 | 
|                             
|                             
|                             
|                             
|Falcon Manufacturing Facility |  | Lease     |  | Lewiston, Maine          |  |            | 112,000 | 



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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 26, 2001, 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 26, 2001, 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 27,
2001 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) |         |              |  |             |         | Fiscal Year
|                                         |  |                        |         | February 27, |  | January 26, |         | Ending(1)  
|                                         |  |                        |         |              |  |             |         |             |  |                        |         |             |  | 1997 through |         | 1997 through |  |  
|                                         |  | January 27,            |         | January 29,  |  | January 30, |         | January 31, |  | February 26,           |         | January 25,
|                                         |  | 2001                   |         | 2000         |  | 1999        |         | 1998(2)     |  | 1997                   |         | 1997       
|                                         |  |                        |         |              |  |             |         |             |  |                        |         |             |  |             
|                                         |  |                        |         |              |  |             |         |             |  | (Thousands of Dollars)
|Summary of Operations:                  
|                                        
|                                        
|                                        
|                                        
|Net sales                                |  | $                      | 118,932 |              |  | $           | 120,351 |             |  | $                      | 124,294 |             |  | $            | 107,769 |              |  | $ | 10,937 |      |  | $ | 99,360 | 
|                                        
|                                        
|                                        
|                                        
|(Loss) income before
extraordinary
items |  | $                      | (2,516  | )            |  | $           | (2,094  | )           |  | $                      | (3,273  | )           |  | $            | 1,957   |              |  | $ | (695   | )    |  | $ | 3,590  | 
|                                        
|                                        
|                                        
|                                        
|Net (loss) income                        |  | $                      | (231    | )(6)         |  | $           | (290    | )(5)        |  | $                      | (7,288  | )(4)        |  | $            | 1,957   |              |  | $ | (695   | )(3) |  | $ | 3,590  | 
|                                        
|                                        
|                                        
|                                        
|Financial Position at Year End:         
|                                        
|                                        
|                                        
|                                        
|Total assets                             |  | $                      | 166,886 |              |  | $           | 170,753 |             |  | $                      | 180,032 |             |  | $            | 174,801 |              |  | $ |       |      |  | $ | 90,043 | 
|                                        
|                                        
|                                        
|                                        
|Total debt                               |  | $                      | 133,120 |              |  | $           | 139,988 |             |  | $                      | 151,058 |             |  | $            | 101,675 |              |  | $ |       |      |  | $ | 19,212 | 
|                                        
|                                        
|                                        
|                                        
|Holdings Series A Preferred
Stock        |  | $                      |        |              |  | $           |        |             |  | $                      |        |             |  | $            | 17,031  |              |  | $ |       |      |  | $ |       | 
|                                        
|                                        
|                                        
|                                        
|Holdings Series B Preferred
Stock        |  | $                      | 6,647   |              |  | $           | 5,361   |             |  | $                      |        |             |  | $            |        |              |  | $ |       |      |  | $ |       | 
|                                        
|                                        
|                                        
|                                        
|Holdings Series C Preferred
Stock        |  | $                      | 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 statement of income data and other financial 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 an extraordinary gain of $1,804, net of tax effect of $1,310,
due to the repurchase, at a discount, of a portion of the Senior
Subordinated Notes related to the July 1999 Transaction and the September
1999 Transaction.                       
|   
|   
|   
|   
|(6) |  | Includes an extraordinary gain of $2,285, net of tax effect of $1,655,
due to the repurchase, at a discount, of a portion of the Senior
Subordinated Notes related to the October 2000 Transaction.                                                       

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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 27, 2001 (fiscal 2001), January 29, 2000 (fiscal 2000) and January
30, 1999 (fiscal 1999). 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 related shoes directly to end users under the Iron Age,
Knapp and Grabber brand names, which comprised 95% of fiscal 2001 sales.
Holdings also distributes footwear directly to retail and wholesale customers
through its wholesale division and its manufacturing subsidiary Falcon. Falcon
manufactures approximately 21% 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 net sales decreased by 1.2% in fiscal 2001. The decrease in net
sales was due primarily to decreased sales to non-affiliated customers in
Holdings manufacturing subsidiary and a decrease in net sales related to the
Holdings safety and medical products business line which was sold in May 1999.

Holdings has an extended history of sales and income growth. Historically,
Holdings growth has been generated both internally and through the acquisition
of regional independent distributors. From fiscal 1989 to fiscal 2001,
Holdings net sales and EBITDA have increased at a compound annual growth rate
(CAGR) of 9.4% and 10.6%, respectively.

October 2000 Transaction

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 New 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. Holdings may, under favorable market conditions, purchase
additional Senior Subordinated Notes.

September 1999 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 New 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.

July 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 New 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

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Subordinated Notes was retired. The transaction described in this paragraph is
referred to as the July 1999 Transaction.

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.

Capital Restructuring and Acquisitions

On April 24, 1998, in the April 1998 Transactions, (i) Holdings
consummated the sale of the Discount Notes, in an aggregate principal amount
at maturity of $45.14 million, in a transaction exempt from the registration
requirements of the Securities Act, (ii) Iron Age issued the Senior
Subordinated Notes, in an aggregate principal amount of $100.0 million in a
transaction exempt from the registration requirements of the Securities Act,
and (iii) Holdings and Iron Age entered into the New Credit Facility, which, as
amended, provides for a $61.6 million senior secured credit facility consisting
of a $30.0 million revolving working capital facility and a $31.6 million
revolving acquisition facility. Holdings and Iron Age used excess cash and net
proceeds from the Discount Notes, the Senior Subordinated Notes and the New
Credit Facility to repay the Old Credit Facility and the Old Subordinated
Notes, to make compensation payments to certain members of management, to pay a
dividend to Holdings stockholders and to redeem the Holdings Series A
Preferred Stock.

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

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

In April 1998, Holdings, through its subsidiary IA Vision, acquired the
stock of Safety Supplies & Service Co., Inc. (Safety Supplies) and Holdings
acquired certain assets and assumed certain liabilities of Safety Depot Ltd.,
ACT Safety, Inc. and J. Mars Knapp Shoes (the First Quarter 1999
Acquisitions). The combined purchase price for the First Quarter 1999
Acquisitions was approximately $4.6 million, including transactions costs of
approximately $0.2 million. In addition, on July 7, 1998, the Company acquired
certain assets of Work-Saf, Inc. for approximately $0.8 million (the Second
Quarter 1999 Acquisition). The First Quarter 1999 Acquisitions and the Second
Quarter 1999 Acquisition have been accounted for using the purchase method of
accounting for business combinations, and accordingly, (i) the results of
operations for each of the acquired companies are included in Holdings
financial statements from the date of the respective acquisitions and (ii) the
purchase price has been allocated to Holdings net assets based upon their fair
market values. The First Quarter 1999 Acquisitions and the Second Quarter 1999
Acquisition resulted in goodwill of approximately $2.8 million, which is being
amortized over 40 years.

Divestitures

On May 25, 1999, Holdings 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
from the date of the acquisition to the date of sale.

Effective August 31,
1998, Holdings sold the Dunham trademark and related
trademarks with no carrying value to New Balance for $2.0 million and recorded
a gain of $1.7 million, net of certain transaction costs (the Dunham

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Sale).
Dunham wholesale sales were $3.1 million in fiscal 1999, consisting of Dunham
sales of $1.3 million prior to the Dunham Sale, sales of on-hand inventory to New Balance for approximately
$0.6 million in conjunction with the Dunham Sale and sales of Dunham products
of $1.2 million to New Balance after the Dunham Sale. In conjunction with the
Dunham Sale, Falcon agreed to manufacture for New Balance certain products
which New Balance will continue to sell under the Dunham brand name pursuant to
a two year supply agreement with New Balance. The supply agreement does not
contain a minimum purchase quantity and prices under the supply agreement are
based upon the volume purchased annually by New Balance.

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 2001 |         | Fiscal 2000 |  | Fiscal 1999
|                                             |  |             |         |             |  |            
|Income Statement Data:                      
|                                            
|                                            
|                                            
|                                            
|Net sales                                    |  | $           | 118,932 |             |  | $           | 120,351 |   |  | $ | 124,294 |  
|                                            
|                                            
|                                            
|                                            
|Gross profit                                 |  |             | 61,701  |             |  |             | 60,826  |   |  |   | 61,066  |  
|                                            
|                                            
|                                            
|                                            
|Selling, general and administrative          |  |             | 43,400  |             |  |             | 41,515  |   |  |   | 46,854  |  
|                                            
|                                            
|                                            
|                                            
|Depreciation and amortization                |  |             | 5,655   |             |  |             | 5,454   |   |  |   | 5,193   |  
|                                            
|                                            
|                                            
|                                            
|Operating income                             |  |             | 12,646  |             |  |             | 13,857  |   |  |   | 9,019   |  
|                                            
|                                            
|                                            
|                                            
|Gain on divestiture                          |  |             |        |             |  |             |        |   |  |   | 1,678   |  
|                                            
|                                            
|                                            
|                                            
|Interest expense                             |  |             | 15,368  |             |  |             | 15,740  |   |  |   | 14,844  |  
|                                            
|                                            
|                                            
|                                            
|(Benefit) provision for income taxes         |  |             | (206    | )           |  |             | 211     |   |  |   | (874    | )
|                                            
|                                            
|                                            
|                                            
|Extraordinary gain (loss), net of tax effect |  |             | 2,285   |             |  |             | 1,804   |   |  |   | (4,015  | )
|                                            
|                                            
|                                            
|                                            
|Other Data:                                 
|                                            
|                                            
|                                            
|                                            
|Gross profit margin                          |  |             | 51.9    | %           |  |             | 50.5    | % |  |   | 49.1    | %
|                                            
|                                            
|                                            
|                                            
|Operating income margin                      |  |             | 10.6    | %           |  |             | 11.5    | % |  |   | 7.2     | %

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 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.

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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.
Holdings 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.

Holdings 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. Holdings 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 Holdings 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.

Fiscal 2000 Compared to Fiscal 1999

Net Sales. Net sales for fiscal 2000 were $120.4 million compared to
$124.3 million for fiscal 1999, a decrease of $3.9 million, or 3.2%. The
decrease in fiscal 2000 was primarily attributable to decreased wholesale sales
of $2.9 million, or 2.3%, including a decrease in Dunham wholesale sales,
related to the Dunham Sale and a decrease in sales to Holdings other wholesale
customers. In addition, $0.9 million, or 0.7%, of the decrease was due to the
sale of Holdings safety and medical products business line and $0.8 million,
or 0.6%, of the decrease was related to store closings in fiscal 2000. The
decrease in net sales was partially offset by increased sales of $0.2 million
in Holdings primary footwear distribution business line and increased sales of
$0.5 million, or 0.4%, relating to increased sales in Holdings vision products
business line.

Gross Profit. Gross profit for fiscal 2000 was $60.8 million compared to
$61.1 million for fiscal 1999, a decrease of $0.3 million, or 0.5%. Total gross
profit percentage increased 1.4% to 50.5% in fiscal 2000 compared to fiscal
1999. Gross profit percentage increased in Holdings primary footwear
distribution business line by 0.6% in fiscal 2000. The increase in gross profit
percentage was also attributable to a decrease in sales related to the lower
gross profit margin wholesale and safety and medical product business lines.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for fiscal 2000 were $41.5 million compared to $46.9
million for fiscal 1999, a decrease of $5.4 million, or 11.5%. Excluding the
effect of $2.2 million of compensation payments to certain members of
management in connection with the April 1998 Transactions, selling, general and
administrative expenses decreased by $3.2 million, or 7.2%, due primarily to
the effect of cost containment initiatives which included the consolidation of
the Knapp division into Holdings primary footwear distribution business line,
store closings and the sale of the Companys safety and medical products
business line. In addition, selling, general and administrative expenses for
fiscal 1999 included a $0.2 million charge related to store closings and $0.2
million of recruitment fees.

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Operating Income. Operating income for fiscal 2000 was $13.9 million, or
11.5% of net sales, compared to $9.0 million, or 7.2% of net sales, for fiscal
1999. The increase was attributable to the decreased selling, general and
administrative expenses as discussed above.

Gain on Divestiture. Gain on divestiture for fiscal 1999 was $1.7 million
which was related to the gain on the Dunham Sale discussed above.

Interest Expense. Interest expense for fiscal 2000 was $15.7 million
compared to $14.8 million for fiscal 1999, an increase of $0.9 million, or
6.1%. The increase in interest expense was primarily attributable to increased
indebtedness of Holdings resulting from the April 1998 Transactions. The
increase was partially offset by decreased indebtedness of Holdings related to
the repurchase of a portion of the Senior Subordinated Notes in the July 1999
Transaction and the September 1999 Transaction.

Income Tax Expense. Income tax expense for fiscal 2000 was $0.2 million
compared to an income tax benefit of $0.9 million for fiscal 1999. Income tax
expense for fiscal 2000 differs from that of the statutory income tax rate due
primarily to nondeductible goodwill amortization. Holdings 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 2000.

Holdings needs to generate $8.0 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. Holdings 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 Holdings to realize this benefit.

Extraordinary Item. 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. For fiscal 1999, Holdings recorded an extraordinary loss of $4.0
million, net of a $2.9 million tax benefit, due to the early extinguishment of
indebtedness resulting from the repayment of the Old Subordinated Notes and the
Old Credit Facility in the April 1998 Transactions.

Liquidity and Capital Resources

Holdings primary cash needs are working capital, capital expenditures and
debt service. Holdings anticipates that it may use cash in the future to
finance acquisitions. 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 $6.1 million in fiscal 2001,
as compared to net cash provided by operating activities of $8.7 million in
fiscal 2000 and net cash provided by operating activities of $1.4 million in
fiscal 1999. The reduction in net cash provided by operating
activities in fiscal 2001 from
fiscal 2000 is primarily the result of a smaller decrease in working
capital than in the prior year.

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 approximately $2.5 million
related to the acquisition of software for internal use. Holdings investing
activities for fiscal 2000 consisted of capital expenditures of approximately
$1.8 million for improvements in footwear and vision retail stores, vision
vans, information technology equipment and the remaining cost of the Falcon and
Knapp factory integration and expenditures of approximately $1.3 million
related to the acquisition of software for internal use.

Holdings used approximately
$1.8 million from financing activities in
fiscal 2001, which included net working capital payments of approximately $1.5
million, excluding the October 2000 Transaction. Holdings financing
activities also included a borrowing of $7.1 million on the New 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

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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 net working capital
payments of approximately $5.5 million, excluding the July 1999 Transaction and
the September 1999 transaction. Holdings financing activities also included a
borrowing of $5.1 million on the New Credit Facility in July 1999 and a
borrowing of $4.7 million in September 1999. The proceeds were used to pay for
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. Excluding cash paid for regional distributor
acquisitions and proceeds from the divestiture, Holdings used approximately
$3.0 million from financing activities in fiscal 1999, due primarily to the
April 1998 Transactions.

Holdings total working capital as of January 27, 2001 was $38.5 million.
At January 29, 2000, working capital was $44.2 million. The primary reason for
the decrease to working capital was an increase in current maturities of
long-term debt of the New Credit Facility.

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
assets other than the common stock of Iron Age (which is pledged to secure the
obligations of Iron Age under the New Credit Facility). Iron Age is a party to
the New 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 2001 was sufficient to cover debt
service requirements under the New 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 New 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 for the next
several years. There can be no assurance that Holdings business will generate
sufficient cash flow from operations or that future borrowing will be available
under the New Credit Facility in an amount sufficient to enable Holdings to
service its indebtedness, including the Discount Notes, or to make capital
expenditures.

As of January 27, 2001 Holdings debt consisted of the Discount Notes, the
Senior Subordinated Notes, the New Credit Facility and certain other debt. As
of January 27, 2001, the New Credit Facility, as amended, consisted of a $31.6
million multiple draw acquisition term loan facility (the Acquisition Credit
Facility) and approximately $30.0 million in revolving credit loans, letters
of credit and swing line loans (the Revolving Credit Facility). Holdings
other debt of $0.9 million consisted of capital leases and other notes. As of
January 27, 2001, approximately $21.1 million of the Acquisition Credit
Facility and approximately $11.5 million of the Revolving Credit Facility were
outstanding. Holdings had additional borrowing availability of $10.5 million
under the Acquisition Credit Facility and under the Revolving Credit Facility
of approximately $18.5 million. The Acquisition Credit Facility matures in
quarterly installments from July 2001 until final payment in April 2004. The
Revolving Credit Facility will mature in April 2004 and has no scheduled
interim principal payments.

The Senior Subordinated Notes are fully and unconditionally guaranteed on
an unsecured, senior subordinated basis by each Domestic Restricted Subsidiary
that is a Material Subsidiary (as such terms are defined in the indenture for
the Senior Subordinated Notes (the Senior Subordinated Notes Indenture))
(whether currently existing, newly acquired or created). Each such subsidiary
guaranty (a Subsidiary Guaranty) will provide that the subsidiary guarantor,
as primary obligor and not merely as surety, will irrevocably and
unconditionally guarantee on an unsecured, senior subordinated basis the
performance and punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all obligations of 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 27, 2001, none of Iron Ages
Domestic Restricted Subsidiaries was a Material Subsidiary, and therefore no
Subsidiary Guaranty was in force or effect.

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Amendments to the New Credit Facility

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

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

On March 17, 2000, the New Credit Facility was amended to (i) permit the
use of up to $1,500,000 of the Acquisition Credit Facility to repurchase
Discount Notes at or below par value; (ii) extend the right to purchase the
Senior Subordinated Notes and the Discount Notes through August 31, 2000; (iii)
amend the definition of Fixed Charge Coverage Ratio to eliminate the tax
effect of any permitted repurchases of the Discount Notes; (iv) add as a
permitted use of proceeds of the Acquisition Credit Facility the permitted
repurchases of the Discount Notes; and (v) reinstate the borrowing base
availability under the Revolving Credit Facility by $3,000,000.

On September 15, 2000, the New Credit Facility was amended to (i) permit
the use of up to $10,800,000 of the Revolving Credit Facility, on or prior to
April 24, 2001, to repurchase Senior Subordinated Notes at or below a price
equal to 80% of par value; provided that no more than 60% of the purchase price
of such Senior Subordinated Notes, after September 1, 2000, comes from
borrowings under the Revolving Credit Facility; (ii) amend the definition of
Fixed Charge Coverage Ratio to eliminate the tax effect of any permitted
repurchases of the Senior Subordinated Notes; (iii) eliminate as a permitted
use of proceeds of the Acquisition Credit Facility the repurchase of Discount
Notes; and (iv) amend the definition of Permitted Issuance to provide that
the equity securities sold to Fenway shall not be less than its pro rata share
of such sale or issuance.

On April 24, 2001, the New Credit Facility was amended to (i) amend the
definitions of Applicable Margin, Conversion Date to mean April 24, 2001,
EBITDA to exclude any income or loss resulting from a change to the fair
market value of any Hedge Agreement as defined in the New Credit Facility,
Fenway Fund to collectively include Fenway and Fenway II and Interest
Expense to exclude any amount resulting from a change to the fair market value
of any Hedge Agreement as defined in the New Credit Facility; and (ii) amend
the required interest coverage ratios applicable to fiscal 2002.

Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities
(the Statement). As amended by FASB Statement No. 137, Deferral of the
Effective Date of FASB Statement No. 133, the Statement is required to be
adopted for all fiscal quarters in years beginning after June 15, 2000. The
Statement permits early adoption as of the beginning of any fiscal quarter
after its issuance. Holdings expects to adopt the Statement effective with the
first fiscal quarter of fiscal year 2002. The Statement will require Holdings
to recognize all derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through income. If a
derivative is a hedge, depending upon the nature of the hedge, changes in the
fair value of the derivative will either be offset against the change in fair
value of the hedged asset, liability or firm commitment through earnings, or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivatives change in fair value

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---



will be immediately recognized in earnings.

Based upon the Holdings derivative position at January 27, 2001, Holdings,
upon adoption, will record 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 will be recognized immediately in
earnings. The debt premium will be amortized to earnings over the life of the
debt using the interest method.

In December 1999, the Staff of the Securities and Exchange Commission released
Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition, to provide
guidance on the recognition, presentation and disclosure of revenues in
financial statements. Holdings revenue recognition practices are in
conformity with SAB No. 101.

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.

-16-



---



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 27, 2001, Holdings had fixed-rate debt totaling $111.0 million
in principal amount and having a fair value of $52.7 million. These instruments
bear interest at a fixed rate and, therefore, do not expose Holdings to the
risk of earnings loss due to changes in market interest rates. However, the
fair value of these instruments would decrease (to the holder) by approximately
$4.6 million if interest rates were to increase by 10% from their levels at
January 27, 2001 (i.e., an increase from the weighted average interest rate of
10.8% to a weighted average interest rate of 11.9%). At January 29, 2000,
Holdings had fixed-rate debt totaling $127.4 million in principal amount and
having a fair value of $72.1 million, which would have decreased to $65.8
million had interest rates increased 10% from January 29, 2000 levels.

Holdings has entered into an interest rate swap agreement with a notional
amount of $25.0 million to reduce the exposure that adverse fluctuations in
interest rates may have on the fair market values of its fixed-rate debt,
rather than for trading purposes. Holdings has not entered into any derivative
financial instruments for trading purposes. If interest rates were to
increase by 10% from their levels at January 27, 2001 and
January 29, 2000, the Company would incur additional annual
interest expense of approximately $0.3 million and
$0.2 million, respectively.

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. These
borrowings are under the New 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 27, 2001, Holdings would incur
additional annual interest expense of approximately $0.3 million. At January
29, 2000, Holdings had variable-rate debt totaling $27.0 million in principal
amount and having a fair value of $27.0 million. Holdings would have incurred
additional interest expense of approximately $0.2 million had interest rates
increased by 10% from their levels at January 29, 2000.

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 27, 2001, sales
denominated in currencies other than U.S. dollars (primarily Mexican peso and
the Canadian dollar) totaled $7.8 million, or approximately 6.6% of total
sales. Net loss denominated in currencies other than U.S. dollars was
immaterial for the fiscal year ended January 27, 2001. An adverse change in
exchange rates of 10% would have resulted in a decrease in sales of $0.8
million and an immaterial increase in net loss for the fiscal year ended
January 27, 2001. 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.

-17-



---



Item 8. Financial Statements and Supplementary Data.

Iron Age Holdings Corporation

Consolidated Financial Statements

Years ended January 27, 2001 and January 29, 2000

Contents

|                                                |  |  |    | 
|----------------------------------------------- |  |  | -- | 
|Report of Independent Auditors                  |  |  | 19 | 
|                                               
|                                               
|                                               
|                                               
|Audited Consolidated Financial Statements      
|                                               
|                                               
|                                               
|                                               
|Consolidated Balance Sheets                     |  |  | 20 | 
|                                               
|                                               
|                                               
|                                               
|Consolidated Statements of Income               |  |  | 21 | 
|                                               
|                                               
|                                               
|                                               
|Consolidated Statements of Stockholders Equity |  |  | 22 | 
|                                               
|                                               
|                                               
|                                               
|Consolidated Statements of Cash Flows           |  |  | 23 | 
|                                               
|                                               
|                                               
|                                               
|Notes to Consolidated Financial Statements      |  |  | 25 | 
|                                               
|                                               
|                                               
|                                               
|Schedule II-Valuation and Qualifying Accounts   |  |  | 48 | 

-18-



---



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 27, 2001 and January 29, 2000,
and the related consolidated statements of income, stockholders equity, and
cash flows for the years ended January 27, 2001, January 29, 2000 and January
30, 1999. 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 27, 2001 and January 29, 2000, and the consolidated
results of their operations and their cash flows for the years ended January
27, 2001, January 29, 2000 and January 30, 1999, 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.

Ernst & Young LLP

Pittsburgh, Pennsylvania
March 16, 2001

-19-



---



Iron Age Holdings Corporation

Consolidated Balance Sheets

|                                               |                                                                                                                                               |                                      |         |         |                |   |             |         |        |  | 
|---------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------- | ------- | -------------- | - | ----------- | ------- | ------ |  | 
|                                               |                                                                                                                                               |                                      |         |         | January 27,    |   | January 29,
|                                               |                                                                                                                                               |                                      |         |         | 2001           |   | 2000       
|                                               |                                                                                                                                               |                                      |         |         |                |   |            
|                                               |                                                                                                                                               |                                      |         |         | (In Thousands)
|Assets                                         |                                                                                                                                               |                                      |         |         |                |   |             |        
|Current assets:                                |                                                                                                                                               |                                      |         |         |                |   |             |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Cash and cash equivalents            |         | $       | 91             |   |             | $       | 269    | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Accounts receivable, net             |         |         | 16,459         |   |             |         | 17,204 | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Inventories                          |         |         | 33,452         |   |             |         | 34,410 | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Prepaid expenses                     |         |         | 2,431          |   |             |         | 1,728  | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Deferred income taxes                |         |         | 839            |   |             |         | 875    | 
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        
|Total current assets                           |                                                                                                                                               |                                      | 53,272  |         |                |   | 54,486      |        
|                                              
|                                              
|                                              
|                                              
|Other noncurrent assets                        |                                                                                                                                               |                                      | 3,656   |         |                |   | 1,537       |        
|                                              
|                                              
|                                              
|                                              
|Property and equipment, net                    |                                                                                                                                               |                                      | 10,210  |         |                |   | 10,463      |        
|                                              
|                                              
|                                              
|                                              
|Intangible assets, net                         |                                                                                                                                               |                                      | 99,748  |         |                |   | 104,267     |        
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        
|                                              
|                                              
|                                              
|                                              
|Total assets                                   |                                                                                                                                               | $                                    | 166,886 |         |                | $ | 170,753     |        
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        
|Liabilities and stockholders equity           |                                                                                                                                               |                                      |         |         |                |   |             |        
|Current liabilities:                           |                                                                                                                                               |                                      |         |         |                |   |             |        
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Current maturities of long-term debt |         | $       | 5,194          |   |             | $       | 458    | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Accounts payable                     |         |         | 3,027          |   |             |         | 2,573  | 
|                                              
|                                              
|                                              
|                                              
|                                               |                                                                                                                                               | Accrued expenses                     |         |         | 6,555          |   |             |         | 7,216  | 
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        
|Total current liabilities                      |                                                                                                                                               |                                      | 14,776  |         |                |   | 10,247      |        
|                                              
|                                              
|                                              
|                                              
|Long-term debt payable to majority stockholder |                                                                                                                                               |                                      | 13,312  |         |                |   |            |        
|                                              
|                                              
|                                              
|                                              
|Long-term debt, less current maturities        |                                                                                                                                               |                                      | 114,614 |         |                |   | 139,530     |        
|                                              
|                                              
|                                              
|                                              
|Other noncurrent liabilities                   |                                                                                                                                               |                                      | 380     |         |                |   | 430         |        
|                                              
|                                              
|                                              
|                                              
|Deferred income taxes                          |                                                                                                                                               |                                      | 2,653   |         |                |   | 3,762       |        
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        
|Total liabilities                              |                                                                                                                                               |                                      | 145,735 |         |                |   | 153,969     |        
|                                              
|                                              
|                                              
|                                              
|Commitments and contingencies                  |                                                                                                                                               |                                      |        |         |                |   |            |        
|                                              
|                                              
|                                              
|                                              
|                                              
|Series B redeemable preferred stock            |                                                                                                                                               |                                      | 6,647   |         |                |   | 5,361       |        
|                                              
|                                              
|                                              
|                                              
|Series C redeemable preferred stock            |                                                                                                                                               |                                      | 5,152   |         |                |   |            |        
|                                              
|                                              
|                                              
|                                              
|Stockholders equity:                         
|                                              
|                                              
|                                              
|                                              
|                                               | Common stock, $.01 par value, 200,000
shares authorized, 99,992 issued and
outstanding at January 27, 2001 and
January 29, 2000, respectively |                                      |         | 1       |                |   |             | 1       |       
|                                              
|                                              
|                                              
|                                              
|                                               | Additional paid-in capital                                                                                                                    |                                      |         | 40,254  |                |   |             | 38,099  |       
|                                              
|                                              
|                                              
|                                              
|                                               | Accumulated deficit                                                                                                                           |                                      |         | (30,682 | )              |   |             | (26,553 | )     
|                                              
|                                              
|                                              
|                                              
|                                               | Accumulated other comprehensive loss                                                                                                          |                                      |         | (221    | )              |   |             | (124    | )     
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        
|                                              
|                                              
|                                              
|                                              
|Total stockholders equity                     |                                                                                                                                               |                                      | 9,352   |         |                |   | 11,423      |        
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        
|Total liabilities and stockholders equity     |                                                                                                                                               | $                                    | 166,886 |         |                | $ | 170,753     |        
|                                               |                                                                                                                                               |                                      |         |         |                |   |             |        

See accompanying notes.

-20-



---



Iron Age Holdings Corporation

Consolidated Statements of Income

| |                                        |  |                  |         |                  |  |                  |         |   |  |   |         |  
| | -------------------------------------- |  | ---------------- | ------- | ---------------- |  | ---------------- | ------- | - |  | - | ------- | -
| |                                        |  |                  |         |                  |  | Year ended      
| |                                        |  |                 
| |                                        |  | January 27, 2001 |         | January 29, 2000 |  | January 30, 1999
| |                                        |  |                  |         |                  |  |                 
| |                                        |  | (In Thousands)  
| | Net sales                              |  | $                | 118,932 |                  |  | $                | 120,351 |   |  | $ | 124,294 |  
|
|
|
|
| | Cost of sales                          |  |                  | 57,231  |                  |  |                  | 59,525  |   |  |   | 63,228  |  
| |                                        |  |                  |         |                  |  |                  |         |   |  |   |        
| | Gross profit                           |  |                  | 61,701  |                  |  |                  | 60,826  |   |  |   | 61,066  |  
|
|
|
|
| | Selling, general and administrative    |  |                  | 43,400  |                  |  |                  | 41,515  |   |  |   | 46,854  |  
|
|
|
|
| | Depreciation                           |  |                  | 1,681   |                  |  |                  | 1,816   |   |  |   | 1,670   |  
|
|
|
|
| | Amortization of intangible assets      |  |                  | 3,974   |                  |  |                  | 3,638   |   |  |   | 3,523   |  
| |                                        |  |                  |         |                  |  |                  |         |   |  |   |        
|
|
|
|
| | Operating income                       |  |                  | 12,646  |                  |  |                  | 13,857  |   |  |   | 9,019   |  
|
|
|
|
| | Gain on divestiture                    |  |                  |        |                  |  |                  |        |   |  |   | 1,678   |  
|
|
|
|
| | Interest expense                       |  |                  | 15,368  |                  |  |                  | 15,740  |   |  |   | 14,844  |  
| |                                        |  |                  |         |                  |  |                  |         |   |  |   |        
| | Loss before income taxes               |  |                  | (2,722  | )                |  |                  | (1,883  | ) |  |   | (4,147  | )
|
|
|
|
| | (Benefit) provision for income taxes   |  |                  | (206    | )                |  |                  | 211     |   |  |   | (874    | )
| |                                        |  |                  |         |                  |  |                  |         |   |  |   |        
|
|
|
|
| | Loss before extraordinary gain (loss)  |  |                  | (2,516  | )                |  |                  | (2,094  | ) |  |   | (3,273  | )
|
|
|
|
| | Extraordinary gain (loss) , net of tax |  |                  | 2,285   |                  |  |                  | 1,804   |   |  |   | (4,015  | )
| |                                        |  |                  |         |                  |  |                  |         |   |  |   |        
|
|
|
|
| | Net loss                               |  | $                | (231    | )                |  | $                | (290    | ) |  | $ | (7,288  | )
| |                                        |  |                  |         |                  |  |                  |         |   |  |   |        

See accompanying notes.

-21-



---



Iron Age Holdings Corporation

Consolidated Statements of Stockholders Equity

|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        |                |       |       |         |   |         |   |      |             |      |   |        |  |         |  
|--------------------------- | ------------------- | ---------------------------------------------------------------------------- | ------ | ------------ | --- | ------- | - | ----------- | - | ------------- | ------ | -------------- | ----- | ----- | ------- | - | ------- | - | ---- | ----------- | ---- | - | ------ |  | ------- | -
|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        |                |       |       |         |   |         |   |     
|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        |                |       |       |         |   |         |   |      | Accumulated
|                            |                     |                                                                              |        | Common Stock |     |         |   |             |   |               |        |                |       | Other
|                            |                     |                                                                              |        |              |     | Paid-In |   | Accumulated |   | Comprehensive
|                            |                     |                                                                              |        | Shares       |     | Amounts |   | Capital     |   | Deficit       |        | Loss           |       | Total
|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        |                |       |      
|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        | (In Thousands)
|Balance at January 31, 1998 |                     |                                                                              | 99,625 |              |     | $       | 1 |             |   | $             | 38,086 |                |       | $     | (174    | ) |         | $ | (65  | )           |      | $ | 37,848 | 
|                           
|                           
|                           
|                           
|                            | Comprehensive loss:
|                           
|                           
|                           
|                           
|                            |                     | Net loss                                                                     |        |              |    |         |   |             |  |               |        |                |      |       |         |   | (7,288  | ) |      |             |     |   |        |  | (7,288  | )
|                           
|                           
|                           
|                           
|                            |                     | Foreign currency
translation adjustment,
   net of tax                       |        |              |    |         |   |             |  |               |        |                |      |       |         |   |        |   |      |             | (121 | ) |        |  | (121    | )
|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        |                |       |       |         |   |         |   |      |             |      |   |        | 
|                           
|                           
|                           
|                           
|                            |                     | Comprehensive loss                                                           |        |              |     |         |   |             |   |               |        |                |       |       |         |   |         |   |      |             |      |   |        |  | (7,409  | )
|                           
|                           
|                           
|                           
|                            |                     | Dividends paid on
preferred stock                                            |        |              |    |         |   |             |  |               |        |                |      |       |         |   | (633    | ) |      |             |     |   |        |  | (633    | )
|                           
|                           
|                           
|                           
|                            |                     | Dividends paid on common
stock                                               |        |              |    |         |   |             |  |               |        |                |      |       |         |   | (17,745 | ) |      |             |     |   |        |  | (17,745 | )
|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        |                |       |       |         |   |         |   |      |             |      |   |        | 
|                           
|                           
|                           
|                           
|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      |  
|                           
|                           
|                           
|                           
|                            |                     | Dividend 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  | 
|                            |                     |                                                                              |        |              |     |         |   |             |   |               |        |                |       |       |         |   |         |   |      |             |      |   |        | 

See accompanying notes.

-22-



---



Iron Age Holdings Corporation

Consolidated Statements of Cash Flows

|                                                                                          |  |                                                              |         |                  |        |                  |         |                  |        |   |          |   |        |  
|----------------------------------------------------------------------------------------- |  | ------------------------------------------------------------ | ------- | ---------------- | ------ | ---------------- | ------- | ---------------- | ------ | - | -------- | - | ------ | -
|                                                                                          |  |                                                              |         |                  |        |                  |         | Year ended      
|                                                                                          |  |                                                              |         |                 
|                                                                                          |  |                                                              |         | January 27, 2001 |        | January 29, 2000 |         | January 30, 1999
|                                                                                          |  |                                                              |         |                  |        |                  |         |                 
|                                                                                          |  |                                                              |         |                  |        |                  |         | (In Thousands)  
|Operating activities                                                                      |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Net loss                                                                                  |  | $                                                            | (231    | )                |        | $                | (290    | )                |        | $ | (7,288   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Adjustments to reconcile net
loss to net cash provided by
   operating activities:       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Extraordinary (gain) loss, net of tax                        |         |                  | (2,285 | )                |         |                  | (1,804 | ) |          |   | 4,015  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Gain on divestiture                                          |         |                  |       |                  |         |                  |       |   |          |   | (1,678 | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Depreciation and amortization                                |         |                  | 6,122  |                  |         |                  | 5,943  |   |          |   | 5,592  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Amortization of deferred financing fees included in
interest |         |                  | 669    |                  |         |                  | 897    |   |          |   | 606    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Accretion of original issue discount                         |         |                  | 3,848  |                  |         |                  | 3,421  |   |          |   | 2,400  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Provision for losses on accounts receivable                  |         |                  | 565    |                  |         |                  | 174    |   |          |   | (107   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Deferred income taxes                                        |         |                  | (1,073 | )                |         |                  | (1,208 | ) |          |   | (2,383 | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Changes in operating assets and liabilities:                
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Accounts receivable                                          |         |                  | 180    |                  |         |                  | (413   | ) |          |   | 85     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Inventories                                                  |         |                  | 958    |                  |         |                  | 2,271  |   |          |   | 502    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Prepaid expenses                                             |         |                  | (703   | )                |         |                  | 2,741  |   |          |   | 99     |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Other noncurrent assets                                      |         |                  | (44    | )                |         |                  | (34    | ) |          |   | (15    | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Accounts payable                                             |         |                  | 454    |                  |         |                  | (734   | ) |          |   | (981   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Accrued expenses                                             |         |                  | (2,316 | )                |         |                  | (2,224 | ) |          |   | 593    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |  | Payment of other noncurrent liabilities                      |         |                  | (50    | )                |         |                  |       |   |          |   |       |  
|                                                                                          |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Net cash provided by operating activities                                                 |  |                                                              | 6,094   |                  |        |                  | 8,740   |                  |        |   | 1,440    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Investing activities                                                                      |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Net cash used in business acquisitions                                                    |  |                                                              |        |                  |        |                  |        |                  |        |   | (5,241   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Capitalization of internal use software costs                                             |  |                                                              | (2,526  | )                |        |                  | (1,277  | )                |        |   |         |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Proceeds from divestiture                                                                 |  |                                                              |        |                  |        |                  |        |                  |        |   | 2,544    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Purchases of property and equipment                                                       |  |                                                              | (1,895  | )                |        |                  | (1,760  | )                |        |   | (2,338   | )
|                                                                                          |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Net cash used in investing activities                                                     |  |                                                              | (4,421  | )                |        |                  | (3,037  | )                |        |   | (5,035   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Financing activities                                                                      |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Borrowing under revolving credit agreement                                                |  |                                                              | 48,650  |                  |        |                  | 24,925  |                  |        |   | 49,150   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Proceeds from senior subordinated notes                                                   |  |                                                              |        |                  |        |                  |        |                  |        |   | 100,000  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Proceeds from senior discount notes                                                       |  |                                                              |        |                  |        |                  |        |                  |        |   | 25,001   |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|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                                                                |  |                                                              | (54,911 | )                |        |                  | (35,460 | )                |        |   | (127,683 | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Payment of financing costs                                                                |  |                                                              | (232    | )                |        |                  | (317    | )                |        |   | (6,897   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Call premium on early
extinguishment of
   old subordinated
notes                         |  |                                                              |        |                  |        |                  |        |                  |        |   | (1,562   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Redemption of Holdings
Series A Preferred Stock, including
   cumulative unpaid dividends |  |                                                              |        |                  |        |                  |        |                  |        |   | (17,664  | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Dividends paid on common stock                                                            |  |                                                              |        |                  |        |                  |        |                  |        |   | (17,745  | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Principal payments on capital leases, net                                                 |  |                                                              | 43      |                  |        |                  | (112    | )                |        |   | (333     | )
|                                                                                          |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Net cash (used in)
provided by financing activities                                       |  |                                                              | (1,754  | )                |        |                  | (6,013  | )                |        |   | 2,267    |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Effect of exchange rate
changes on cash and cash
   equivalents                           |  |                                                              | (97     | )                |        |                  | 62      |                  |        |   | (224     | )
|                                                                                          |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Decrease in cash and cash equivalents                                                     |  |                                                              | (178    | )                |        |                  | (248    | )                |        |   | (1,552   | )
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Cash and cash equivalents at beginning of year                                            |  |                                                              | 269     |                  |        |                  | 517     |                  |        |   | 2,069    |  
|                                                                                          |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  
|Cash and cash equivalents at end of year                                                  |  | $                                                            | 91      |                  |        | $                | 269     |                  |        | $ | 517      |  
|                                                                                          |  |                                                              |         |                  |        |                  |         |                  |        |   |          |  

-23-



---



Consolidated Statements of Cash Flows (continued)

|                                                                                          |                                        |              |                        |   |                  |   |                  |   |                  |   |     |       |        |        |  
|----------------------------------------------------------------------------------------- | -------------------------------------- | ------------ | ---------------------- | - | ---------------- | - | ---------------- | - | ---------------- | - | --- | ----- | ------ | ------ | -
|                                                                                          |                                        |              |                        |   |                  |   |                  |   | Year ended      
|                                                                                          |                                        |              |                        |   |                 
|                                                                                          |                                        |              |                        |   | January 27, 2001 |   | January 29, 2000 |   | January 30, 1999
|                                                                                          |                                        |              |                        |   |                  |   |                  |   |                 
|                                                                                          |                                        |              |                        |   |                  |   |                  |   | (In Thousands)  
|Supplemental disclosures of cash flow information                                        
|Cash paid during the period for:                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                        | Interest     |                        | $ | 10,782           |   |                  | $ | 11,728           |   |     | $     | 10,377 |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                        | Income taxes |                        | $ | 3,238            |   |                  | $ | 2,371            |   |     | $     | 1,254  |       
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Supplemental schedule of noncash investing and
financing activities                      
|Dividends and accretion on redeemable preferred stock                                     |                                        | $            | 1,678                  |   |                  | $ | 423              |   |                  | $ |    |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Capital lease agreements for equipment                                                    |                                        | $            | 450                    |   |                  | $ | 226              |   |                  | $ | 373 |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Assets acquired and
liabilities assumed in
   connection with acquisitions (fair values):
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                        |              | Assets acquired        |   | $                |  |                  |   | $                |  |     |       | $      | 6,626  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                        |              | Liabilities assumed    |   |                  |  |                  |   |                  |  |     |       |        | (1,236 | )
|                                                                                          |                                        |              |                        |   |                  |   |                  |   |                  |   |     |      
|                                                                                          |                                        |              | Cash paid              |   |                  |  |                  |   |                  |  |     |       |        | 5,390  |  
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          |                                        |              | Less fees and expenses |   |                  |  |                  |   |                  |  |     |       |        | (149   | )
|                                                                                          |                                        |              |                        |   |                  |   |                  |   |                  |   |     |      
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                          | Net cash used in business acquisitions |              | $                      |  |                  |   | $                |  |                  |   | $   | 5,241 |       
|                                                                                          |                                        |              |                        |   |                  |   |                  |   |                  |   |     |      

See accompanying notes.

-24-



---



Iron Age Holdings Corporation

Notes to Consolidated Financial Statements

January 27, 2001 and January 29, 2000

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., Iron Age Canada Ltd., IA Vision
Acquisition Co., and Safety Supplies and Service Company, Inc. (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).

Effective April 24, 1998, Holdings refinanced its old credit facility (the Old
Credit Facility) and its old subordinated notes (the Old Subordinated Notes)
with a new credit facility (the New Credit Facility), 9-7/8% senior
subordinated notes due 2008 (the Senior Subordinated Notes), and 12-1/8%
senior discount notes due 2009 (the Discount Notes) (collectively, the April
1998 Transactions) (see Note 7).

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.

-25-



---



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 27, 2001 and January 29, 2000 are
stated at the lower of last-in, first-out (LIFO) cost or market. The
remaining inventories are stated at the lower of first-in, first-out (FIFO)
cost or market.

Catalog Costs

Holdings produces periodic catalogs and amortizes the mailing and production
costs over the related revenue stream, generally four to twelve months.
Holdings has approximately $0.4 million and $0.8 million of unamortized catalog
costs at January 27, 2001 and January 29, 2000, respectively. For the years
ended January 27, 2001, January 29, 2000, and January 30, 1999, advertising
expense recorded by Holdings was approximately $2.1 million, $2.1 million and
$2.5 million, respectively.

Property and Equipment

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

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

-26-



---



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 $2.5 million and
$1.3 million related to internal use software costs for the fiscal years ended
January 27, 2001 and January 29, 2000, respectively. Internal use software
costs are being amortized by the straight-line method over three to five years.

Foreign Currency Translation

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

Revenue Recognition

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

-27-



---



Shipping and handling costs of approximately $2.2 million, $2.2 million and
$2.2 million are recorded as components of selling, general and administrative
expenses for the years ended January 27, 2001, January 29, 2000 and January 30,
1999, respectively.

-28-



---



1. Organization and Significant Accounting Policies (continued)

Financial Instruments

Holdings periodically enters into interest rate swap agreements to moderate its
exposure to interest rate changes. The interest rate swap agreement has a
notional amount of $25 million. Holdings pays floating rate amounts computed at
4.16% above the LIBOR rate in exchange for fixed interest payments at a rate of
9.875% through May 1, 2003. Interest payment amounts are exchanged over the
life of the agreement without an exchange of the underlying principal amounts.
The differential to be paid or received is accrued as interest rates change and
is recognized as an adjustment to interest expense related to the debt. The
related amount payable to or receivable from counterparties is included in
accrued interest. Based upon the terms of the agreement, the fair value of the
interest rate swap agreement is not recognized in the financial statements.
The fair value of the interest rate swap agreement is $113,000 and $(190,000)
at January 27, 2001 and January 29, 2000, respectively.

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 Incomein 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.

-29-



---



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. Acquisitions and Divestitures

Acquisitions

During the year ended January 30, 1999, Holdings acquired the stock of Safety
Supplies & Service Co., Inc. (Safety Supplies), and acquired certain assets
and assumed certain liabilities of Safety Depot Ltd., ACT Safety, Inc., J. Mars
Knapp Shoes and Work-Saf, Inc. for approximately $5.4 million, including
transaction costs of approximately $0.2 million. The results of operations are
included from the date of the acquisitions. The acquisitions have been
accounted for using the purchase method of accounting and, accordingly, the
purchase price and transaction costs have been allocated to assets acquired and
liabilities assumed based upon their estimated fair values. The excess of
consideration paid over the estimated fair value of assets acquired and
liabilities assumed of approximately $2.8 million is being amortized on the
straight-line basis, over 40 years.

Divestitures

On May 25, 1999, Holdings 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 from the
date of the acquisition to the date of sale.

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

3. Accounts Receivable

Accounts receivable are presented net of allowance for doubtful accounts of
approximately $0.6 million and $0.4 million as of January 27, 2001 and January
29, 2000, 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.

-30-



---



4. Inventories

The major components of inventories are as follows:

|                                                      |  |                |        |             |  |   |        | 
|----------------------------------------------------- |  | -------------- | ------ | ----------- |  | - | ------ | 
|                                                      |  | January 27,    |        | January 29,
|                                                      |  | 2001           |        | 2000       
|                                                      |  |                |        |            
|                                                      |  | (In Thousands)
|Finished products                                     |  | $              | 31,578 |             |  | $ | 32,134 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Raw materials                                         |  |                | 2,756  |             |  |   | 2,602  | 
|                                                      |  |                |        |             |  |   |        | 
|                                                      |  |                | 34,334 |             |  |   | 34,736 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Less excess of current cost over LIFO inventory value |  |                | 882    |             |  |   | 326    | 
|                                                      |  |                |        |             |  |   |        | 
|                                                      |  | $              | 33,452 |             |  | $ | 34,410 | 
|                                                      |  |                |        |             |  |   |        | 

5. Property and Equipment

Property and equipment consist of the following:

|                                               |  |                |        |             |  |   |        | 
|---------------------------------------------- |  | -------------- | ------ | ----------- |  | - | ------ | 
|                                               |  | January 27,    |        | January 29,
|                                               |  | 2001           |        | 2000       
|                                               |  |                |        |            
|                                               |  | (In Thousands)
|Land and buildings                             |  | $              | 3,401  |             |  | $ | 3,314  | 
|                                              
|                                              
|                                              
|                                              
|Vehicles                                       |  |                | 5,151  |             |  |   | 4,217  | 
|                                              
|                                              
|                                              
|                                              
|Furniture and fixtures                         |  |                | 1,399  |             |  |   | 1,380  | 
|                                              
|                                              
|                                              
|                                              
|Machinery and equipment                        |  |                | 6,776  |             |  |   | 6,217  | 
|                                              
|                                              
|                                              
|                                              
|Leasehold improvements                         |  |                | 1,529  |             |  |   | 1,310  | 
|                                               |  |                |        |             |  |   |        | 
|                                               |  |                | 18,256 |             |  |   | 16,438 | 
|                                              
|                                              
|                                              
|                                              
|Less accumulated depreciation and amortization |  |                | 8,046  |             |  |   | 5,975  | 
|                                               |  |                |        |             |  |   |        | 
|                                              
|                                              
|                                              
|                                              
|Net property and equipment                     |  | $              | 10,210 |             |  | $ | 10,463 | 
|                                               |  |                |        |             |  |   |        | 

-31-



---



6. Intangible Assets

Intangible assets consist of the following:

|                              |  |                |         |             |  |   |         | 
|----------------------------- |  | -------------- | ------- | ----------- |  | - | ------- | 
|                              |  | January 27,    |         | January 29,
|                              |  | 2001           |         | 2000       
|                              |  |                |         |            
|                              |  | (In Thousands)
|Goodwill                      |  | $              | 91,962  |             |  | $ | 91,999  | 
|                             
|                             
|                             
|                             
|Customer lists                |  |                | 17,023  |             |  |   | 17,042  | 
|                             
|                             
|                             
|                             
|Deferred financing costs      |  |                | 5,857   |             |  |   | 6,370   | 
|                             
|                             
|                             
|                             
|Other                         |  |                | 214     |             |  |   | 214     | 
|                              |  |                |         |             |  |   |         | 
|                              |  |                | 115,056 |             |  |   | 115,625 | 
|                             
|                             
|                             
|                             
|Less accumulated amortization |  |                | 15,308  |             |  |   | 11,358  | 
|                              |  |                |         |             |  |   |         | 
|                             
|                             
|                             
|                             
|                              |  | $              | 99,748  |             |  | $ | 104,267 | 
|                              |  |                |         |             |  |   |         | 

In connection with the April 1998 Transactions, Holdings expensed approximately
$4.9 million of unamortized deferred financing costs related to the Old Credit
Facility and the Old Subordinated Notes. Such costs are included in Holdings
extraordinary loss, net of tax, for the year ended January 30, 1999. Financing
costs incurred in connection with obtaining the Senior Subordinated Notes, the
Discount Notes and the New Credit Facility of approximately $4.0 million have
been deferred by Holdings as of January 27, 2001 and will be amortized over the
period the Senior Subordinated Notes, the Discount Notes and the New Credit
Facility are outstanding (see Note 7).

During the years ended January 27, 2001 and January 29, 2000, the Holdings
expensed approximately $0.6 million and $0.7 million, respectively, in
connection with certain repurchases of the Senior Subordinated Notes (see Note
7).

-32-



---



7. Long-Term Debt

Long-term debt consists of the following:

|                                          |                      |   |                |        |             |   |         |        | 
|----------------------------------------- | -------------------- | - | -------------- | ------ | ----------- | - | ------- | ------ | 
|                                          |                      |   | January 27,    |        | January 29,
|                                          |                      |   | 2001           |        | 2000       
|                                          |                      |   |                |        |            
|                                          |                      |   | (In Thousands)
|9-7/8% Senior Subordinated Notes due 2008 |                      | $ | 65,000         |        |             | $ | 81,360  |       
|                                         
|                                         
|                                         
|                                         
|12-1/8% Senior Discount Notes due 2009    |                      |   | 45,140         |        |             |   | 45,140  |       
|                                         
|                                         
|                                         
|                                         
|New Credit Facility                       |                      |   | 32,561         |        |             |   | 26,961  |       
|                                         
|                                         
|                                         
|                                         
|Other notes                               |                      |   | 178            |        |             |   | 178     |       
|                                         
|                                         
|                                         
|                                         
|Capitalized lease obligations             |                      |   | 727            |        |             |   | 684     |       
|                                          |                      |   |                |        |             |   |         |       
|                                          |                      |   | 143,606        |        |             |   | 154,323 |       
|                                         
|                                         
|                                         
|                                         
|Less:                                    
|                                         
|                                         
|                                         
|                                         
|                                          | Current maturities   |   |                | 5,194  |             |   |         | 458    | 
|                                         
|                                         
|                                         
|                                         
|                                          | Unamortized discount |   |                | 10,486 |             |   |         | 14,335 | 
|                                          |                      |   |                |        |             |   |         |       
|                                         
|                                         
|                                         
|                                         
|                                          |                      | $ | 127,926        |        |             | $ | 139,530 |       
|                                          |                      |   |                |        |             |   |         |       

9-7/8% Senior Subordinated Notes Due 2008

On April 24, 1998, Iron Age issued $100.0 million of Senior Subordinated Notes.
Iron Age used the net proceeds from the issuance of the Senior Subordinated
Notes, approximately $21.6 million of borrowings under its New Credit Facility
and approximately $1.2 million of cash to (i) extinguish certain existing
indebtedness, (ii) redeem a portion of the Holdings Series A Preferred Stock,
and (iii) pay fees and expenses related to these transactions. These
transactions resulted in the recording of an extraordinary loss during April
1998 of approximately $6.9 million, excluding related tax effect of
approximately $2.9 million. The extraordinary loss on the extinguishment of
debt is comprised of prepayment penalties on the Old Subordinated Notes of
approximately $1.6 million; unamortized deferred financing fees of
approximately $4.9 million; and unamortized discount on the Old Subordinated
Notes of approximately $0.4 million.

-33-



---



7. Long-Term Debt (continued)

9-7/8% Senior Subordinated Notes Due 2008 (continued)

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 27, 2001, none of Iron Ages
Domestic Restricted Subsidiaries was a Material Subsidiary, and therefore no
Subsidiary Guaranty was in force or effect.

Effective September 15, 1998, Iron Age filed a registration statement on Form
S-4 under the Securities Act of 1933, as amended (the Securities Act), with
respect to its offer to exchange an aggregate principal amount of up to $100.0
million of its 9-7/8% Senior Subordinated Notes due 2008 (the Exchange
Notes), which have been registered under the Securities Act, for a like
principal amount of its Senior Subordinated Notes, which have not been so
registered. The terms of the Exchange Notes are identical in all material
respects to the Senior Subordinated Notes, except for certain transfer
restrictions and registration rights relating to the Senior Subordinated Notes.

On October 20, 2000, Holdings purchased $16.4 million in principal amount of
its Senior Subordinated Notes for $11.9 million (the October 2000
Transaction). The purchase was funded by $7.1 million of borrowings under the
New 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.

-34-



---



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
New Credit Facility and the issuance of $2.4 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 $0.6 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 New 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

On April 24, 1998, Holdings issued $45.1 million principal amount at maturity
of Discount Notes, the proceeds of which were used (i) to pay a dividend to
Holdings stockholders of $17.7 million, (ii) to redeem a portion of the
Holdings Series A Preferred Stock, (iii) to make a capital contribution to Iron
Age of approximately $2.2 million for compensation payments to certain members
of management and (iv) to pay fees and expenses related to these transactions.
The Discount Notes accrete at a rate of 12-1/8% per annum compounded
semiannually until May 1, 2003. No interest will accrue prior to May 1, 2003.
Interest will accrue thereafter at a rate of 12-1/8% per annum and is payable
semiannually in arrears on May 1 and November 1, commencing on November 1,
2003. The Discount Notes mature on May 1, 2009.

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 New
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 New 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.

-35-



---



Effective September 15, 1998, Holdings filed a registration statement on Form
S-4 under the Securities Act with respect to its offer to exchange an aggregate
principal amount of up to $45.1 million at maturity of its 12-1/8% Senior
Discount Notes due 2009 (the Exchange Discount Notes), which have been
registered under the Securities Act, for a like principal amount at maturity of
its Discount Notes, which have not been so registered. The terms of the
Exchange Discount Notes are identical in all material respects to the Discount
Notes, except for certain transfer restrictions and registration rights
relating to the Discount Notes.

-36-



---



7. Long-Term Debt (continued)

New Credit Facility

On April 24, 1998, Iron Age and Holdings entered into a New 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 $61.6 million senior
secured credit facility that is comprised of a $30.0 million revolving working
capital facility and, as amended, a $31.6 million revolving acquisition
facility. The working capital facility matures on April 24, 2004. The balance
of the revolving acquisition facility converts into a term loan on April 30,
2001 and 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 $0.07 million and $0, respectively, at January 27, 2001.

Borrowings under the New Credit Facility may be used to fund Iron Ages working
capital requirements, finance certain permitted acquisitions 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 New Credit Facility. Iron Age is also subject to
mandatory prepayment terms as described in the New Credit Facility.

Borrowings under the New Credit Facility accrue interest, at the option of Iron
Age, at either LIBOR plus 2.00% or the greater of the financial institutions
prime rate and the federal funds rate plus 0.50%. Borrowings on the New Credit
Facility accrue interest at 9.50% for prime rate borrowings and between 7.88%
and 8.88% for LIBOR borrowings, at January 27, 2001.

Iron Age has classified its borrowings under the New Credit Facility as
long-term as of January 27, 2001 due to its ability and intent to maintain such
borrowings on a long-term basis.

The New 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 New Credit Facility contains certain covenants which require Iron Age to
maintain leverage ratios, fixed charge coverage ratios and interest coverage
ratios. The New Credit Facility further limits capital expenditures and sales
of assets, declaration of dividends and other restricted payments, and
additional indebtedness. The New Credit Facility also restricts the sale or
transferring of Iron Ages assets or capital stock.

-37-



---



7. Long-Term Debt (continued)

Other Notes

Holdings has other notes of approximately $0.2 million at January 27, 2001 and
January 29, 2000, 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):

| |            |   |         |        | 
| | ---------- | - | ------- | ------ | 
| | 2001       |   | $       | 5,194  | 
|
|
|
|
| | 2002       |   |         | 6,517  | 
|
|
|
|
| | 2003       |   |         | 8,040  | 
|
|
|
|
| | 2004       |   |         | 13,681 | 
|
|
|
|
| | 2005       |   |         | 34     | 
|
|
|
|
| | Thereafter |   |         | 99,654 | 
| |            |   |         |       
| |            | $ | 133,120 |       
| |            |   |         |       

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 and interest rate swap agreements The carrying amounts of
Holdings borrowings under its New Credit Facility approximate its fair value
because the New 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, other notes and interest rate swap agreements are estimated
using discounted cash flow analysis, based on Holdings current incremental
borrowing rates for similar types of borrowing arrangements.

-38-



---



The carrying amounts and fair values of Holdings financial instruments at
January 27, 2001 and January 29, 2000 are as follows:

|                                          |  |                  |        |                  |  |                |        |       |  |   |        |  |  |   |        |  
|----------------------------------------- |  | ---------------- | ------ | ---------------- |  | -------------- | ------ | ----- |  | - | ------ |  |  | - | ------ | -
|                                          |  | January 27, 2001 |        | January 29, 2000
|                                          |  |                  |        |                 
|                                          |  | Carrying         |        | Fair             |  | Carrying       |        | Fair 
|                                          |  | Amount           |        | Value            |  | Amount         |        | Value
|                                          |  |                  |        |                  |  |                |        |      
|                                          |  |                  |        |                  |  | (In Thousands)
|Cash and cash equivalents                 |  | $                | 91     |                  |  | $              | 91     |       |  | $ | 269    |  |  | $ | 269    |  
|                                         
|                                         
|                                         
|                                         
|9-7/8% Senior Subordinated Notes due
2008 |  |                  | 65,000 |                  |  |                | 44,525 |       |  |   | 81,360 |  |  |   | 58,579 |  
|                                         
|                                         
|                                         
|                                         
|New Credit Facility                       |  |                  | 32,561 |                  |  |                | 32,561 |       |  |   | 26,961 |  |  |   | 26,961 |  
|                                         
|                                         
|                                         
|                                         
|12-1/8% Senior Discount Notes due 2009    |  |                  | 34,654 |                  |  |                | 7,222  |       |  |   | 30,805 |  |  |   | 12,639 |  
|                                         
|                                         
|                                         
|                                         
|Other notes                               |  |                  | 178    |                  |  |                | 178    |       |  |   | 178    |  |  |   | 178    |  
|                                         
|                                         
|                                         
|                                         
|Interest rate swap asset (liability)      |  |                  |       |                  |  |                | 113    |       |  |   |       |  |  |   | (190   | )
|                                         
|                                         
|                                         
|                                         
|Capital lease obligations                 |  |                  | 727    |                  |  |                | 732    |       |  |   | 684    |  |  |   | 689    |  

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 27, 2001, January 29, 2000 and January 30, 1999, pension and profit
sharing expenses were approximately $0.6 million, $0.5 million and $0.5
million, respectively.

-39-



---



10. Income Taxes

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

|                        |           |         |        |                  |        |                  |        |                  |        |   |        |   |        |  
|----------------------- | --------- | ------- | ------ | ---------------- | ------ | ---------------- | ------ | ---------------- | ------ | - | ------ | - | ------ | -
|                        |           |         |        |                  |        |                  |        | Year ended      
|                        |           |         |        |                 
|                        |           |         |        | January 27, 2001 |        | January 29, 2000 |        | January 30, 1999
|                        |           |         |        |                  |        |                  |        |                 
|                        |           |         |        |                  |        |                  |        | (In Thousands)  
|Income taxes (benefit):
|                       
|                       
|                       
|                       
|                        | Current: 
|                       
|                       
|                       
|                       
|                        |           | Federal |        | $                | 1,174  |                  |        | $                | 1,641  |   |        | $ | 533    |  
|                       
|                       
|                       
|                       
|                        |           | State   |        |                  | (359   | )                |        |                  | (283   | ) |        |   | 145    |  
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                        |           |         | 815    |                  |        |                  | 1,358  |                  |        |   | 678    |  
|                       
|                       
|                       
|                       
|                        | Deferred:
|                       
|                       
|                       
|                       
|                        |           | Federal |        |                  | (1,074 | )                |        |                  | (1,270 | ) |        |   | (1,098 | )
|                       
|                       
|                       
|                       
|                        |           | State   |        |                  | 53     |                  |        |                  | 123    |   |        |   | (454   | )
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                       
|                       
|                       
|                       
|                        |           |         | (1,021 | )                |        |                  | (1,147 | )                |        |   | (1,552 | )
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  
|                       
|                       
|                       
|                       
|                        |           | $       | (206   | )                |        | $                | 211    |                  |        | $ | (874   | )
|                        |           |         |        |                  |        |                  |        |                  |        |   |        |  

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

|                                  |                                                          |   |                  |      |                  |   |                  |      |   |   |        |      |  
|--------------------------------- | -------------------------------------------------------- | - | ---------------- | ---- | ---------------- | - | ---------------- | ---- | - | - | ------ | ---- | -
|                                  |                                                          |   |                  |      |                  |   | Year ended      
|                                  |                                                          |   |                 
|                                  |                                                          |   | January 27, 2001 |      | January 29, 2000 |   | January 30, 1999
|                                  |                                                          |   |                  |      |                  |   |                 
|                                  |                                                          |   |                  |      |                  |   | (In Thousands)  
|                                 
|Amount computed at statutory
rate |                                                          | $ | (925             | )    |                  | $ | (640             | )    |   | $ | (1,410 | )   
|                                 
|                                 
|                                 
|                                 
|                                  | State and local taxes less
applicable federal income tax |   |                  | (202 | )                |   |                  | (106 | ) |   |        | (203 | )
|                                 
|                                 
|                                 
|                                 
|                                  | Goodwill and other amortization                          |   |                  | 836  |                  |   |                  | 830  |   |   |        | 788  |  
|                                 
|                                 
|                                 
|                                 
|                                  | Other                                                    |   |                  | 85   |                  |   |                  | 127  |   |   |        | (49  | )
|                                  |                                                          |   |                  |      |                  |   |                  |      |   |   |        |     
|                                 
|                                 
|                                 
|                                 
|                                  |                                                          | $ | (206             | )    |                  | $ | 211              |      |   | $ | (874   | )   
|                                  |                                                          |   |                  |      |                  |   |                  |      |   |   |        |     

-40-



---



10. Income Taxes (continued)

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

|                               |                                        |   |                |       |             |   |       |       | 
|------------------------------ | -------------------------------------- | - | -------------- | ----- | ----------- | - | ----- | ----- | 
|                               |                                        |   | January 27,    |       | January 29,
|                               |                                        |   | 2001           |       | 2000       
|                               |                                        |   |                |       |            
|                               |                                        |   | (In Thousands)
|Deferred tax liabilities:     
|                              
|                              
|                              
|                              
|                               | Inventory                              |   | $              | 2,244 |             |   | $     | 2,244 | 
|                              
|                              
|                              
|                              
|                               | Property and equipment                 |   |                | 1,060 |             |   |       | 1,096 | 
|                              
|                              
|                              
|                              
|                               | Customer lists                         |   |                | 4,657 |             |   |       | 5,068 | 
|                              
|                              
|                              
|                              
|                               | Other                                  |   |                | 440   |             |   |       | 385   | 
|                               |                                        |   |                |       |             |   |       |      
|Total deferred tax liabilities |                                        |   | 8,401          |       |             |   | 8,793 |      
|                              
|                              
|                              
|                              
|Deferred tax assets:          
|                              
|                              
|                              
|                              
|                               | Interest expense                       |   |                | 4,732 |             |   |       | 3,895 | 
|                              
|                              
|                              
|                              
|                               | State net operating loss carryforwards |   |                | 698   |             |   |       | 880   | 
|                              
|                              
|                              
|                              
|                               | Inventory                              |   |                | 488   |             |   |       | 509   | 
|                              
|                              
|                              
|                              
|                               | Accrued expenses                       |   |                | 521   |             |   |       | 530   | 
|                              
|                              
|                              
|                              
|                               | Other                                  |   |                | 148   |             |   |       | 92    | 
|                               |                                        |   |                |       |             |   |       |      
|                              
|                              
|                              
|                              
|Total deferred tax assets      |                                        |   | 6,587          |       |             |   | 5,906 |      
|                               |                                        |   |                |       |             |   |       |      
|Net deferred tax liabilities   |                                        | $ | 1,814          |       |             | $ | 2,887 |      
|                               |                                        |   |                |       |             |   |       |      

State net operating loss carryforwards (NOLs) were generated during the 1999
fiscal year, 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.

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%, 24%, and 20% of its inventory from one vendor for the fiscal
years ended January 27, 2001, January 29, 2000 and January 30, 1999,
respectively. At January 27, 2001 and January 29, 2000, Holdings had
outstanding inventory purchase commitments of approximately $15.3 million and
$13.4 million, respectively.

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

-41-



---



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                                                 |  | $       | 349 |                  |  | $ | 3,045 | 
|                                                    
|                                                    
|                                                    
|                                                    
|2003                                                 |  |         | 246 |                  |  |   | 2,261 | 
|                                                    
|                                                    
|                                                    
|                                                    
|2004                                                 |  |         | 170 |                  |  |   | 1,399 | 
|                                                    
|                                                    
|                                                    
|                                                    
|2005                                                 |  |         | 59  |                  |  |   | 724   | 
|                                                    
|                                                    
|                                                    
|                                                    
|2006                                                 |  |         | 69  |                  |  |   | 486   | 
|                                                    
|                                                    
|                                                    
|                                                    
|Thereafter                                           |  |         |    |                  |  |   | 112   | 
|                                                     |  |         |     |                  |  |   |       | 
|Total minimum lease payments                         |  |         | 893 |                  |  | $ | 8,027 | 
|                                                     |  |         |     |                  |  |   |       | 
|Less amounts representing interest                   |  |         | 166 |                 
|                                                     |  |         |     |                 
|Present value of future minimum lease payments       |  |         | 727 |                 
|                                                    
|                                                    
|                                                    
|                                                    
|Less current maturities of capital lease obligations |  |         | 277 |                 
|                                                     |  |         |     |                 
|                                                    
|                                                    
|                                                    
|                                                    
|Capital lease obligations                            |  | $       | 450 |                 
|                                                     |  |         |     |                 

Operating lease expense under such arrangements was approximately $3.5 million,
$3.5 million and $4.0 million, for the fiscal years ended January 27, 2001,
January 29, 2000 and January 30, 1999, respectively. Amortization of assets
recorded under capital leases is included with depreciation expense in
Holdings results of operations.

-42-



---



11. Commitments and Contingencies (continued)

Lease Commitments (continued)

At January 27, 2001 and January 29, 2000, property and equipment include
capitalized vehicle leases of approximately $2.3 million and $1.8 million,
respectively, and accumulated amortization of approximately $1.4 million and
$1.1 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. Redeemable Preferred Stock and Stock Purchase Warrants

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

On December 29, 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.

-43-



---



In February 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 27, 2001.

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 27, 2001 or January 30, 1999.
The 11,161 remaining Series A Options are fully vested and exercisable as of
January 27, 2001.

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

-44-



---



ended January 27, 2001, January 29, 2000 and January 30, 1999, no Series B Basic
options that vest subject to the achievement of target earnings became
exercisable.

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

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.

During the year ended January 30, 1999, 1,145 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. No Series B Options became exercisable during the year
ended January 30, 1999.

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 27, 2001, January 29, 2000 and January 30, 1999, 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 27, 2001 |      | January 29, 2000 |  | January 30, 1999
|          |             |  |                  |      |                  |  |                 
|          |             |  | (In Thousands)  
|Net loss:
|         
|         
|         
|         
|          | As reported |  | $                | (231 | )                |  | $                | (290 | ) |  | $ | (7,288 | )
|         
|         
|         
|         
|          | Pro forma   |  |                  | (252 | )                |  |                  | (303 | ) |  |   | (7,366 | )

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 27, 2001 |                | January 29, 2000 |  | January 30, 1999
|                        |  |                  |                |                  |  |                 
|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 | 

-45-



---



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

|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|---------------------------------- |  | ---------------- | ------ | ---------------- |  | ---------------- | ------ | - |  |  | ------ | -
|                                   |  |                  |        |                  |  | Year ended      
|                                   |  | January 27, 2001 |        | January 29, 2000 |  | January 30, 1999
|                                   |  |                  |        |                  |  |                 
|Outstanding, beginning of year     |  |                  | 18,515 |                  |  |                  | 20,095 |   |  |  | 20,095 |  
|                                  
|                                  
|                                  
|                                  
|Exercised                          |  |                  |       |                  |  |                  | (367   | ) |  |  |       |  
|                                  
|                                  
|                                  
|                                  
|Granted                            |  |                  | 500    |                  |  |                  | 1,145  |   |  |  | 100    |  
|                                  
|                                  
|                                  
|                                  
|Forfeited                          |  |                  | (881   | )                |  |                  | (2,358 | ) |  |  | (100   | )
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|                                  
|                                  
|                                  
|                                  
|Outstanding, end of year           |  |                  | 18,134 |                  |  |                  | 18,515 |   |  |  | 20,095 |  
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|                                  
|                                  
|                                  
|                                  
|Options exercisable at end of year |  |                  | 12,596 |                  |  |                  | 12,590 |   |  |  | 12,610 |  
|                                   |  |                  |        |                  |  |                  |        |   |  |  |        |  
|13. Stock Options (continued)     

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

|                                                                                 |  |                  |        |                  |  |                  |  |         |  |              |  |              |  |         |  |              |  |              |  |       |  |  |  |       |  |  |  |        |  |  |  |       |  |  |  |      
|-------------------------------------------------------------------------------- |  | ---------------- | ------ | ---------------- |  | ---------------- |  | ------- |  | ------------ |  | ------------ |  | ------- |  | ------------ |  | ------------ |  | ----- |  |  |  | ----- |  |  |  | ------ |  |  |  | ----- |  |  |  | -----
|                                                                                 |  | Year ended      
|                                                                                 |  |                 
|                                                                                 |  | January 27, 2001 |        | January 29, 2000 |  | January 30, 1999
|                                                                                 |  |                  |        |                  |  |                  | 
|                                                                                 |  | SeriesA          |        | SeriesBBasic     |  | SeriesBExtra     |  | SeriesA |  | SeriesBBasic |  | SeriesBExtra |  | SeriesA |  | SeriesBBasic |  | SeriesBExtra
|                                                                                 |  |                  |        |                  |  |                  |  |         |  |              |  |              |  |         |  |              |  |             
|Weighted average fair value of
options at grant date                             |  |                  |       |                  |  |                  |  | 52      |  |              |  |             |  |         |  |             |  |              |  | 52    |  |  |  |      |  |  |  | 5      |  |  |  | 51    |  |  |  | 26   
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Weighted average exercise price
of all outstanding options                       |  |                  | 36     |                  |  |                  |  | 223     |  |              |  | 186          |  |         |  | 36           |  |              |  | 220   |  |  |  | 186   |  |  |  | 36     |  |  |  | 228   |  |  |  | 186  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Weighted average exercise price
of options exercisable                           |  |                  | 36     |                  |  |                  |  | 303     |  |              |  |             |  |         |  | 36           |  |              |  | 307   |  |  |  |      |  |  |  | 36     |  |  |  | 364   |  |  |  |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Weighted average exercise price
of options granted during the year               |  |                  |       |                  |  |                  |  | 186     |  |              |  |             |  |         |  |             |  |              |  | 186   |  |  |  |      |  |  |  |       |  |  |  | 186   |  |  |  |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Weighted average exercise price
of options exercised during the year             |  |                  |       |                  |  |                  |  |        |  |              |  |             |  |         |  | 36           |  |              |  |      |  |  |  |      |  |  |  |       |  |  |  | 186   |  |  |  |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Weighted average exercise price
of options expired and forfeited
during the year |  |                  |       |                  |  |                  |  | 192     |  |              |  |             |  |         |  |             |  |              |  | 194   |  |  |  |      |  |  |  |       |  |  |  | 186   |  |  |  |     
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Weighted average remaining
contractual life of options
outstanding               |  |                  | 6.1    |                  |  |                  |  | 7.0     |  |              |  | 6.1          |  |         |  | 7.1          |  |              |  | 7.6   |  |  |  | 7.1   |  |  |  | 8.1    |  |  |  | 8.1   |  |  |  | 8.1  
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Options outstanding at end of year                                               |  |                  | 11,161 |                  |  |                  |  | 4,469   |  |              |  | 2,504        |  |         |  | 11,161       |  |              |  | 4,850 |  |  |  | 2,504 |  |  |  | 11,528 |  |  |  | 5,508 |  |  |  | 3,059
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Options exercisable at end of year                                               |  |                  | 11,161 |                  |  |                  |  | 1,435   |  |              |  |             |  |         |  | 11,161       |  |              |  | 1,429 |  |  |  |      |  |  |  | 11,528 |  |  |  | 1,082 |  |  |  |     

-46-



---



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 27, 2001, January 29, 2000 and January 30, 1999,
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 million for the year ended January 27, 2001 and approximately $0.1 million for the
year ended January 29, 2000.

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, 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.

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.

In connection with the April 1998 Transactions, members of management of Iron
Age holding vested options received aggregate payments of approximately $2.2
million which reflects the decrease in the equity value of the Company as a
result of the cash distribution to the stockholders of Holdings in the April
1998 Transactions.

In connection with the Fenway Acquisition and the Knapp Acquisition, Holdings
paid approximately $2.1 million and approximately $0.2 million, respectively,
to Fenway Partners for financial advisory fees.

-47-



---



SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
IRON AGE HOLDINGS CORPORATION
January 27, 2001

|                             |                                |                                 |  |              |         |            |  |           |         |             |  |                |   |  |  |   |         |     |  |   |         | 
|---------------------------- | ------------------------------ | ------------------------------- |  | ------------ | ------- | ---------- |  | --------- | ------- | ----------- |  | -------------- | - |  |  | - | ------- | --- |  | - | ------- | 
|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 27, 2001:
|                            
|                            
|                            
|                            
|                             | Deducted from assets accounts:
|                            
|                            
|                            
|                            
|                             |                                | Allowance for doubtful accounts |  | $            | 444,000 |            |  | $         | 565,000 |             |  |                |  |  |  | $ | 397,000 | (2) |  | $ | 612,000 | 
|                            
|                            
|                            
|                            
|Year ended January 29, 2000:
|                            
|                            
|                            
|                            
|                             | Deducted from assets accounts:
|                            
|                            
|                            
|                            
|                             |                                | Allowance for doubtful accounts |  | $            | 275,000 |            |  | $         | 274,000 |             |  |                |  |  |  | $ | 105,000 | (2) |  | $ | 444,000 | 
|                            
|                            
|                            
|                            
|Year ended January 30, 1999:
|                            
|                            
|                            
|                            
|                             | Deducted from assets accounts:
|                            
|                            
|                            
|                            
|                             |                                | Allowance for doubtful accounts |  | $            | 382,000 |            |  | $         | 151,000 |             |  |                |  |  |  | $ | 258,000 | (1) |  | $ | 275,000 | 



|(1) |  | Uncollectible accounts written off, net of recoveries and adjustments
related to the Dunham Sale.
|--- |  | -------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Uncollectible accounts written off, net of recoveries.                                           

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

None.

-48-



---



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
26, 2001.

|                      |  |     |  |                                                                             |  | 
|--------------------- |  | --- |  | --------------------------------------------------------------------------- |  | 
|Name                  |  | Age |  | Position                                                                   
|                      |  |     |  |                                                                            
|William J. Mills      |  | 41  |  | President, Chief Executive Officer and Director                            
|Donald R. Jensen      |  | 63  |  | Chairman and Director                                                      
|Keith A. McDonough    |  | 42  |  | Vice President-Finance, Chief Financial Officer and Chief Operating Officer
|Nicholas C. Bayley    |  | 38  |  | President and Chief Executive Officer Falcon Shoe Mfg. Co.                
|Joseph J. Sebes       |  | 41  |  | Executive Vice President/Sales, Iron Age                                   
|Peter Lamm            |  | 49  |  | Director                                                                   
|Andrea Geisser        |  | 58  |  | Vice President and Director                                                
|Charles M. LaFollette |  | 36  |  | Director                                                                   
|James T. McKitrick    |  | 55  |  | Director                                                                   

William J. Mills is 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.

Donald R. Jensen is Chairman of Holdings and Iron Age. Mr. Jensen has been
Chairman of Holdings and Iron Age since 1994. Mr. Jensen retired as President
and Chief Executive Officer of Holdings and as Chief Executive Officer of Iron
Age on February 1, 1999. He joined Iron Age as its President and Chief
Executive Officer in 1986. Prior to that time, Mr. Jensen worked in the
automotive parts supply business from 1960 to 1970 and held various positions
with Endicott Johnson Corporation from 1970 to 1985, beginning as a territory
salesman. At Endicott Johnson Corporation, he served as Vice President in
charge of the product development, importing, athletic footwear and rubber
footwear divisions before being named Executive Vice President in 1985.

Keith A. McDonough is Vice President-Finance, Chief Financial Officer and
Chief Operating Officer of Holdings. Mr. McDonough joined Iron Age in 1981. He
was appointed Chief Operating Officer of Iron Age and Holdings in February
2001, has been the Executive Vice President of Iron Age since 1997 and has been
Iron Ages and Holdings Chief Financial Officer since 1990. Mr. McDonough is
responsible for all financial matters, including Accounting, Treasury, Taxes
and Investor Relations. Mr. McDonough also has direct oversight of Information
Technology, Human Resources, Operations, Merchandising and Marketing.

Nicholas C. Bayley is 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.

-49-



---



Joseph J. Sebes became Executive Vice President/Sales of Iron Age in July
2000. From February 1999 to July 2000, he was Executive Vice
President/Corporate Accounts of Iron Age. From 1997 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.

Peter Lamm became a director of Holdings and Iron Age in 1997. Mr. Lamm is
Chairman and Chief Executive Officer of Fenway Partners, a New York-based
direct investment firm for institutional investors with a primary objective of
acquiring leading middle-market companies. From February 1982 to April 1994,
Mr. Lamm was a member of Butler Capital Corporation, a private investment firm,
most recently as Senior Direct Investment Officer and Managing Director. Mr.
Lamm currently serves as a director of Aurora Foods, Inc., Simmons Company,
Delimex, Quality Stores, Inc. and Blue Capital.

Andrea Geisser became 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 and Valley Dynamo, LLP.

Charles M. LaFollette became a director of Holdings in 2000. Mr.
LaFollette is a Vice President 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.

James T. McKitrick became a director of Holdings in 2000. From July 1992
through 2000, Mr. McKitrick was President and Chief Executive Officer of
Quality Stores, Inc. Prior to July 1992, he was President and Chief Executive
Officer of Builders Emporium, a California-based home improvement center
chain. Previously, he was with Ames Department Stores from 1987 through 1990,
where he held the positions of Executive Vice President, Chairman of Zayre
Discount Store Division and President and Chief Executive Officer of G.C.
Murphy Division. Mr. McKitrick also served as President and Chief Executive
Officer of Warehouse Club, Inc. from 1986 through 1987 and Executive Vice
President of Merchandising for T.G.&Y. Stores Company from 1984 through 1986.
From 1963 through 1984, Mr. McKitrick was with the Kmart Corporation.

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 other than that Mr. Sebes is married to Mr. Jensens
daughter. The executive officers of Holdings and Iron Age are elected by and
serve at the discretion of their respective Boards of Directors.

-50-



---



Item 11. Executive Compensation.

The following table sets forth information concerning the compensation
earned in fiscal 1999, 2000 and 2001 by Mr. Jensen, Holdings Chairman, Mr.
Mills, Holdings President since February 1, 1999, 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 ($) |  | Bonus($)            |                         | Options(2)     
|                                                                                               |  |          |                |            |  |                     |                         |                
|William J. Mills
President and Chief Executive Officer                                         |  |          | 1999
2000
2001 |            |  |                     | 172,780
200,793
217,253 |                 |  | 431,394
-
51,600   | (3)  |  | -
138
-    |  |           | 11,085
20,507
13,237 | (4)
(5)
(6)   
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Donald R. Jensen
Chairman                                                                      |  |          | 1999
2000
2001 |            |  |                     | 397,961
240,248
248,020 |                 |  | 1,488,774
-
68,800 | (7)  |  | -
-
-      |  |           | 23,307
26,571
9,190  | (8)(9)(10)    
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Keith A. McDonough
Vice President-Finance, Chief
Financial Officer and Chief Operating
Officer |  |          | 1999
2000
2001 |            |  |                     | 122,777
124,011
140,628 |                 |  | 416,495
-
34,400   | (11) |  | -
118
-    |  |           | 10,437
20,833
11,032 | (12)
(13)
(14)
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Nicholas C. Bayley (15)
President and Chief Executive Officer,
Falcon Shoe Mfg. Co.            |  |          | 1999
2000
2001 |            |  |                     | 91,248
94,372
115,350   |                 |  | 16,757
7,280
7,982 |      |  | -
-
-      |  |           | 4,145
6,079
5,286    | (16)(17)(18)  
|                                                                                              
|                                                                                              
|                                                                                              
|                                                                                              
|Joseph J. Sebes
Executive Vice President/Sales, Iron
Age                                       |  |          | 1999
2000
2001 |            |  |                     | 85,943
106,282
112,453  |                 |  | -
8,000
19,264     |      |  | -
80
-     |  |           | 5,329
7,668
6,475    | (19)(20)(21)  



---

|(1)  |  | 1999: Fiscal year ended January 30, 1999.                                                                                                                                                                                        
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|     |  | 2000: Fiscal year ended January 29, 2000.                                                                                                                                                                                        
|    
|    
|    
|    
|     |  | 2001: Fiscal year ended January 27, 2001.                                                                                                                                                                                        
|    
|    
|    
|    
|(2)  |  | Options to acquire common stock of Holdings.                                                                                                                                                                                     
|    
|    
|    
|    
|(3)  |  | Includes $367,881 bonus paid by Iron Age in connection with the April
1998 Transactions.                                                                                                                                         
|    
|    
|    
|    
|(4)  |  | Includes Iron Age allocations of $8,000 under defined contribution plan
for the Plan Year ended December 31, 1998 and group life insurance
premiums of $330 paid by Iron Age during the Plan Year ended December 31,
1998.       
|    
|    
|    
|    
|(5)  |  | 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.      
|    
|    
|    
|    
|(6)  |  | 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.       
|    
|    
|    
|    
|(7)  |  | Includes $1,202,966 bonus paid by Iron Age in connection with the April
1998 Transactions.                                                                                                                                       
|    
|    
|    
|    
|(8)  |  | Includes Iron Age allocations of $8,000 under defined contribution plan
for the Plan Year ended December 31, 1998 and group term life insurance
premiums of $3,510 paid by Iron Age during the Plan Year ended December
31, 1998.
|    
|    
|    
|    
|(9)  |  | 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.    
|    
|    
|    
|    
|(10) |  | Includes Iron Age allocations of $7,210 under defined contribution plan
for the Plan Year ended December 31,                                                                                                                     

-51-



---



|     |  | 2000 and group life insurance
premiums of $1,980 paid by Iron Age during the Plan year ended December
31, 2000.                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|    
|    
|    
|(11) |  | Includes $365,685 bonus paid by Iron Age in connection with the April
1998 Transactions.                                                                                                                                       
|    
|    
|    
|    
|(12) |  | Includes Iron Age allocations of $8,000 under defined contribution plan
for the Plan Year ended December 31, 1998 and group term life insurance
premiums of $386 paid by Iron Age during the Plan Year ended December 31,
1998.
|    
|    
|    
|    
|(13) |  | 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.    
|    
|    
|    
|    
|(14) |  | 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.     
|    
|    
|    
|    
|(15) |  | Mr. Bayley became President and Chief Executive Officer of Falcon on
February 1, 2000.                                                                                                                                         
|    
|    
|    
|    
|(16) |  | Represents Falcon allocation under defined contribution plan for the Plan
Year ended December 31, 1998.                                                                                                                        
|    
|    
|    
|    
|(17) |  | Represents Falcon allocation of $6,079 under defined contribution plan
for the Plan Year ended December 31, 1999.                                                                                                              
|    
|    
|    
|    
|(18) |  | Represents Falcon allocation of $5,286 under defined contribution plan
for the Plan Year ended December 31, 2000.                                                                                                              
|    
|    
|    
|    
|(19) |  | Includes Iron Age allocations of $4,301 under defined contribution plan
for the Plan Year ended December 31, 1998 and group life insurance
premiums of $224 paid by Iron Age during the Plan Year ended December 31,
1998.     
|    
|    
|    
|    
|(20) |  | 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.     
|    
|    
|    
|    
|(21) |  | 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.     

-52-



---



Aggregated Fiscal Year-End Option Values

The following table sets forth information concerning the value of
unexercised stock options at the end of fiscal 2001 for the Named Executive
Officers.

Aggregated Fiscal Year-End Option Values

|                   |  |                        |  |                     
|------------------ |  | ---------------------- |  | --------------------
|                   |  | Number of Securities   |  | Value of Unexercised
|                   |  | Underlying Unexercised |  | In-the-Money Options
|                   |  | Options at             |  | at Fiscal Year      
|                   |  | Fiscal Year End(#)(1)  |  | End($)(2)           
|                   |  |                        |  |                     
|                   |  | Exercisable/           |  | Exercisable/        
|Name               |  | Unexercisable          |  | Unexercisable       
|                   |  |                        |  |                     
|William J. Mills   |  |                        | 
|Series A           |  | 2,194.43/0             |  | 327,321/0           
|Series BBasic B   |  | 248/493                |  | 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   |  | 340/400                |  | 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   |  | 227/442                |  | 0/0                 
|Series BExtra B   |  | 0/600                  |  | 0/0                 
|Nicholas C. Bayley |  |                        | 
|Series BBasic B   |  | 30/60                  |  | 0/0                 
|Joseph J. Sebes    |  |                        | 
|Series A           |  | 367.05/0               |  | 54,749/0            
|Series BBasic B   |  | 80/150                 |  | 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 27, 2001 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. McKitrick under
the Option Plan of Holdings and a $3,750 per meeting fee paid to Mr. McKitrick.
In May 2000, Mr. McKitrick was granted 500 Series B Options at an exercise
price of $185.52 per share. One half of these Series B Options vest ratably
over three 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 $210,000, 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

Mr. Jensen is currently employed as Chairman of the Board of Directors of
Holdings and Iron Age pursuant to an agreement dated February 26, 1997. Under this agreement, Mr. Jensen is
entitled to receive an annual salary of $250,000. In addition, Mr. Jensen is
eligible for an annual bonus of up to $100,000 determined by Iron Ages

-53-



---



achievement of EBITDA targets. If Mr. Jensen is terminated other than for
cause or resigns voluntarily for good reason, he is entitled to receive
continued salary until December 31, 2001 and continued coverage under group
health plans for himself and his spouse until his 65th birthday, or until his
spouses 65th birthday if he dies prior to age 65. If Mr. Jensens employment
is terminated by reason of his death and he is survived by his spouse, his
surviving spouse is entitled to receive a continuation of his salary until the
month of his 62nd birthday and continued coverage under group health plans
until her 65th birthday. If Mr. Jensens employment is terminated by reason of
his incapacity, Mr. Jensen is entitled to receive continued salary less amounts
received by him under group disability plans and social security disability
benefits until earlier of his death or his 65th birthday and continued coverage
under group health plans for him and his spouse until his 65th birthday if he
dies prior to age 65. 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.

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 $136,000,
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

Messrs. Lamm, Geisser and Jensen were appointed to the Compensation
Committee by Holdings Board of Directors on September 15, 1998. Mr. Jensen is
an executive officer of Holdings. Mr. Jensens compensation for fiscal 2001
was previously established by the terms of his employment agreement.

Concurrent with the formation of the Compensation Committee on September
19, 1998, the Audit Committee was formed. Membership as of January 27, 2001
consists of Messrs. Geisser, Jensen and LaFollette.

-54-



---



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

As of April 26, 2001, the outstanding capital stock of Holdings consisted
of 99,991.94 shares of common stock, par value $0.01 per share, 1,000 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 26, 2001
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)
    152 West 57th Street
    New York, New York
    10019                                           |  |              | 88,431.57 |                          |  |                          | 88.44 | %             |  |                              | 949.88 |               |  |  | 94.99 | % |  |  | 1,000 |  |  |  | 100 | %
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|New York Life Insurance Company(3)
    51 Madison Avenue
    New York, NY 10010                                        |  |              | 11,187.21 |                          |  |                          | 10.69 |               |  |                              |       |               |  |  |      |   |  |  |      |  |  |  |    |  
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|American Home Assurance Company(4)
    c/o AIG Global
    Investment Co.
    200 Liberty Street
    New York, NY 10281 |  |              | 5,593.61  |                          |  |                          | 5.47  |               |  |                              |       |               |  |  |      |   |  |  |      |  |  |  |    |  
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|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  |   |  |  |      |  |  |  |   
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Nicholas C. Bayley(8)                                                                                                  |  |              | 30.00     |                          |  |                          | *     |               |  |                              | 1.62   |               |  |  | *     |   |  |  |      |  |  |  |   
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Joseph J. Sebes(9)                                                                                                     |  |              | 447.05    |                          |  |                          | *     |               |  |                              |       |               |  |  |      |   |  |  |      |  |  |  |   
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Peter Lamm(10)                                                                                                         |  |              |          |                          |  |                          |      |               |  |                              |       |               |  |  |      |   |  |  |      |  |  |  |   
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Andrea Geisser(10)                                                                                                     |  |              |          |                          |  |                          |      |               |  |                              |       |               |  |  |      |   |  |  |      |  |  |  |   
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Charles M. LaFollette(10)                                                                                              |  |              |          |                          |  |                          |      |               |  |                              |       |               |  |  |      |   |  |  |      |  |  |  |   
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|James T. McKitrick(11)                                                                                                 |  |              | 83.00     |                          |  |                          | *     |               |  |                              |       |               |  |  |      |   |  |  |      |  |  |  |   
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|All directors and executive officers as a group,
including the above named persons                                     |  |              | 12,168.73 |                          |  |                          | 10.85 |               |  |                              | 26.94  |               |  |  | 2.62  |   |  |  |      |  |  |  |   



|*   |  | Less than one percent.                                                                                                                                                                                                                                                
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(1) |  | As used in this table, beneficial ownership means the sole or shared
power to vote, or to direct the voting of a security, or the sole shared
power to dispose, or direct the disposition, of a security and includes
options and warrants exercisable within 60 days.
|   
|   
|   
|   
|(2) |  | Includes (a) 85,968.12 shares of common stock held by Fenway, (b)
2,463.45 shares of common stock held by                                                                                                                                                             

-55-



---



|     |  | its affiliated entities, FPIP, LLC
and FPIP Trust, LLC, (c) 949.88 shares of Holdings Series B Preferred
Stock held by Fenway and (d) 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) |  | Messrs. Lamm and Geisser are limited partners of Fenway Partners,
L.P., the general
partner of Fenway. Accordingly, Messrs. Lamm and Geisser may be deemed to
beneficially own shares    owned by Fenway. Messrs. Lamm, Geisser and
LaFollette are members of Fenway Partners II, LLC, the general partner of
Fenway II, and accordingly may be deemed to beneficially own shares owned by
Fenway II. Messrs. Lamm , Geisser and LaFollette are members of FPIP, LLC
and FPIP Trust, LLC and, accordingly, may be deemed to beneficially own
shares owned by such funds. Messrs. Lamm, Geisser and LaFollette disclaim
beneficial ownership of any such shares in which they do not have pecuniary
interests. The business address of each of the foregoing is c/o Fenway
Partners, Inc., 152 West 57th Street, New York, New York 10019.
|    
|    
|    
|    
|(11) |  | Represents 83 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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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.

In connection with the April 1998 Transactions, members of management of
Iron Age holding vested options received aggregate payments of approximately
$2.2 million which reflects the decrease in the equity value of the Company as
a result of the cash distribution to the stockholders of Holdings in the April
1998 Transactions.

Stockholders Agreement

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

Management Agreement

Holdings and Iron Age are party to the amended and restated management
agreement (the Management Agreement) with Fenway Partners, Inc., an affiliate
of Fenway (Fenway Partners) pursuant to which Fenway Partners agreed to
provide management and advisory services to Holdings and Iron Age. In exchange
for such services, Holdings and Iron Age agreed to pay Fenway Partners (i)
annual management fees equal to $250,000 for fiscal 1999, $275,000 for fiscal
2000, $300,000 for fiscal 2001 and, for each subsequent fiscal year, 0.25% of
the net sales for the immediately preceding fiscal year which annual management
fees shall be increased by an amount to be negotiated in good faith in the
event of an acquisition of a business with an enterprise value in excess of
$50.0 million, (ii) fees in connection with the negotiation and consummation by
Fenway Partners of senior financing for any acquisition transactions, which
fees shall not exceed the greater of $1.0 million or 1.5% of the aggregate
transaction value and (iii) certain fees and expenses, including legal and
accounting fees and any out-of-pocket expenses incurred by Fenway Partners in
connection with providing services to Holdings and Iron Age. Holdings

-57-



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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.

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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 48:



| |                                                
| | -----------------------------------------------
| | Schedule II Valuation and Qualifying Accounts.



| |                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Information required by other schedules called for under Regulation S-X
is either not applicable or      is included in the consolidated financial
statements or notes thereto.

(a)(3) Exhibit Index

|         |  |                                                                                                                                                         
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1(1)   |  | Holdings Certificate of Incorporation, as amended.                                                                                                      
|        
|        
|        
|        
|3.2(1)   |  | Holdings By-laws.                                                                                                                                       
|        
|        
|        
|        
|4.1(1)   |  | Indenture dated as of April 24, 1998.                                                                                                                   
|        
|        
|        
|        
|10.1(1)  |  | Credit Agreement dated as of April 24, 1998.                                                                                                            
|        
|        
|        
|        
|10.2(1)  |  | Security Agreement dated April 24, 1998.                                                                                                                
|        
|        
|        
|        
|10.3(1)  |  | Intellectual Property Security Agreement dated April 24, 1998.                                                                                          
|        
|        
|        
|        
|10.4(1)  |  | Canadian Security Agreement dated April 24, 1998.                                                                                                       
|        
|        
|        
|        
|10.5(1)  |  | Mortgage, Assignment of Leases and Rents, Fixture Filing, Security
Agreement and Financing Statement dated February 26, 1997, as amended
April 24, 1998.
|        
|        
|        
|        
|10.6(1)  |  | Intercompany Subordination agreement dated April 24, 1998.                                                                                              
|        
|        
|        
|        
|10.7(1)  |  | Subsidiary Guaranty dated April 24, 1998.                                                                                                               
|        
|        
|        
|        
|10.8(1)  |  | Iron Age Trademark License Agreement with W.L Gore & Associates, Inc. dated August 15, 1994.                                                            
|        
|        
|        
|        
|10.9(1)  |  | Falcon Trademark License Agreement with W.L. Gore & Associates, Inc. dated July 25, 1994.                                                               
|        
|        
|        
|        
|10.10(1) |  | Falcon Manufacturing Certification Agreement with W.L Gore &
Associates, Inc. dated July 25, 1994.                                                      
|        
|        
|        
|        
|10.11(1) |  | General Services Administration Contract effective July 26, 1994, as modified May 24, 1995.                                                             
|        
|        
|        
|        
|10.12(1) |  | Amended and Restated Management Agreement dated as of February 26, 1997.                                                                                
|        
|        
|        
|        
|10.13(1) |  | Stockholders Agreement dated as of February 26, 1997.                                                                                                   
|        
|        
|        
|        
|10.14(1) |  | Amendment No. 1 to Stockholders Agreement dated as of March 25, 1997.                                                                                   
|        
|        
|        
|        
|10.15(1) |  | American Home Assurance Company Joinder to the Stockholders Agreement
dated as of March 25, 1997.                                                       
|        
|        
|        
|        
|10.16(1) |  | Banque Nationale de Paris Joinder to the Stockholders Agreement dated as of March 25, 1997.                                                             
|        
|        
|        
|        
|10.17(1) |  | Stock Option Plan dated February 26, 1997.                                                                                                              
|        
|        
|        
|        
|10.18(1) |  | Securities Purchase Agreement dated February 26, 1997.                                                                                                  
|        
|        
|        
|        
|10.19(1) |  | Stock Purchase Agreement dated as of December 26, 1996.                                                                                                 
|        
|        
|        
|        
|10.20(1) |  | Amendment No. 1 to the Stock Purchase Agreement dated as of February 26, 1997.                                                                          
|        
|        
|        
|        
|10.21(1) |  | Pittsburgh, Pennsylvania Lease Agreement dated March 1, 1993, as amended
June 2, 1994, as amended June 12, 1996, as amended December 10, 1997.          
|        
|        
|        
|        
|10.22(1) |  | Jerusalem, New York Lease Agreement dated December 9, 1992, as amended
January 1, 1994, as amended April 1997.                                          
|        
|        
|        
|        
|10.23(1) |  | Jerusalem, New York Lease Agreement dated June 20, 1997, as amended January 9, 1998.                                                                    
|        
|        
|        
|        
|10.24(1) |  | Lewiston, Maine Lease Agreement dated January 14, 1994.                                                                                                 
|        
|        
|        
|        
|10.25(1) |  | Lewiston, Maine Lease Agreement dated November 30, 1990, as amended June 8, 1994.                                                                       
|        
|        
|        
|        
|10.26(1) |  | Ontario, Canada Lease Agreement dated June 11, 1991, as amended November 23, 1995.                                                                      
|        
|        
|        
|        
|10.27(1) |  | Jensen Employment Agreement dated February 26, 1997.                                                                                                    
|        
|        
|        
|        
|10.28(1) |  | Mills Employment Agreement dated November 20, 1995.                                                                                                     

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|         |  |                                                                                                                                             
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
|        
|        
|        
|        
|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    |  | Certificate of Designation, Preferences and Rights of the Series C
Preferred Stock of Iron Age Holdings Corporation dated December 29, 2000.
|        
|        
|        
|        
|10.45    |  | Amendment No. 6 to Banque Nationale de Paris Credit Agreement dated
April 24, 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.                 

(b) Reports on Form 8-K.

No reports on Form 8-K were filed during the fourth quarter of the fiscal
year ended January 27, 2001.

-60-



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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                                                                                                                    
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|Dated: April 26, 2001 |  | By:/S/KEITH A. MCDONOUGH
Vice President Finance,
Chief Financial Officer and
Chief Operating Officer
(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. MILLSWilliam J. Mills           |  | President and Director(principal executive officer)                                                                     |  | April 26, 2001
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|/S/DONALD R. JENSENDonald R. Jensen           |  | Chairman and Director                                                                                                   |  | April 26, 2001
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|/S/KEITH A. MCDONOUGHKeith A. McDonough       |  | Vice President Finance,Chief Financial Officer and Chief Operating
Officer (principal financial and accounting
officer) |  | April 26, 2001
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|/S/JOSEPH J. SEBESJoseph J. Sebes             |  | Executive Vice President/Sales,Iron Age                                                                                 |  | April 26, 2001
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|/S/PETER LAMMPeter Lamm                       |  | Director                                                                                                                |  | April 26, 2001
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|/S/ANDREA GEISSERAndrea Geisser               |  | Vice President and Director                                                                                             |  | April 26, 2001
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|/S/CHARLES M. LAFOLLETTECharles M. LaFollette |  | Director                                                                                                                |  | April 26, 2001
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|/S/JAMES T. MCKITRICKJames T. McKitrick       |  | Director                                                                                                                |  | April 26, 2001

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